Pension and Other Postretirement Benefits

The accounting standards related to employers’ accounting for defined benefit pension and other postretirement plans requires the Company to recognize the overfunded or underfunded status of its defined benefit postretirement plans as assets or liabilities in the accompanying consolidated balance sheets and to recognize changes in the funded status of the plans in comprehensive income.

The Company has various defined contribution plans the largest of which is its Retirement Savings Plan. Most U.S. salaried and non-union hourly employees are eligible to participate in this plan. See Note 17 for further discussion of the Retirement Savings Plan. The Company also maintains various defined contribution plans which cover certain other employees. Company contributions under these plans are based primarily on the performance of the business units and employee compensation. Contribution expense under these other defined contribution plans was $5,106, $3,717 and $4,120 in 2011, 2010 and 2009, respectively.

Defined benefit pension plans in the U.S. cover a majority of the Company’s U.S. employees at the Associated Spring business of Precision Components, the Company’s Corporate Office and certain other U.S. employees at the distribution businesses of Logistics and Manufacturing Services. Plan benefits for salaried and non-union hourly employees are based on years of service and average salary. Plans covering union hourly employees provide benefits based on years of service. The Company funds U.S. pension costs in accordance with the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Non-U.S. defined benefit pension plans cover certain employees of certain international locations, primarily in Europe and Canada.

The Company provides other medical, dental and life insurance postretirement benefits for certain of its retired employees in the U.S. and Canada. It is the Company’s practice to fund these benefits as incurred.

The accompanying balance sheets reflect the underfunded status of the Company’s defined benefit pension plans at December 31, 2011 and 2010, respectively. Reconciliations of the obligations and underfunded status of the plans follow:



	2011									2010
	U.S.			Non-U.S.			Total			U.S.			Non-U.S.			Total
Benefit obligation, January 1	$	343,425		$	71,548		$	414,973		$	323,347		$	65,039		$	388,386
Service cost	4,794			1,129			5,923			5,172			983			6,155
Interest cost	18,906			3,546			22,452			19,494			3,449			22,943
Amendments	117			—			117			1,656			672			2,328
Actuarial loss	33,078			1,231			34,309			16,194			3,979			20,173
Benefits paid	(22,338		)	(4,453		)	(26,791		)	(22,438		)	(4,451		)	(26,889		)
Transfers in	—			951			951			—			1,262			1,262
Plan Curtailments	—			(2,106		)	(2,106		)	—			—			—
Plan Settlements	—			(7,757		)	(7,757		)	—			—			—
Participant contributions	—			598			598			—			423			423
Foreign exchange rate changes	—			(1,243		)	(1,243		)	—			192			192
Benefit obligation, December 31	377,982			63,444			441,426			343,425			71,548			414,973
Fair value of plan assets, January 1	298,910			58,983			357,893			272,540			52,816			325,356
Actual return on plan assets	(5,808		)	1,828			(3,980		)	40,092			5,241			45,333
Company contributions	12,774			4,706			17,480			8,716			2,756			11,472
Participant contributions	—			598			598			—			423			423
Benefits paid	(22,338		)	(4,453		)	(26,791		)	(22,438		)	(4,451		)	(26,889		)
Plan Settlements	—			(5,131		)	(5,131		)	—			—			—
Transfers in	—			951			951			—			1,262			1,262
Foreign exchange rate changes	—			(650		)	(650		)	—			936			936
Fair value of plan assets, December 31	283,538			56,832			340,370			298,910			58,983			357,893
Underfunded status, December 31	$	(94,444	)	$	(6,612	)	$	(101,056	)	$	(44,515	)	$	(12,565	)	$	(57,080	)

Plan curtailments and plan settlements relate primarily to the sale of the BDE business. See Note 2 of the Consolidated Financial Statements.

Projected benefit obligations related to pension plans with benefit obligations in excess of plan assets follow:



	2011						2010
	U.S.		Non-U.S.		Total		U.S.		Non-U.S.		Total
Projected benefit obligation	$	354,287	$	62,831	$	417,118	$	321,775	$	58,255	$	380,030
Fair value of plan assets	256,518		55,933		312,451		269,896		45,628		315,524

Information related to pension plans with accumulated benefit obligations in excess of plan assets follows:



	2011						2010
	U.S.		Non-U.S.		Total		U.S.		Non-U.S.		Total
Projected benefit obligation	$	354,287	$	62,831	$	417,118	$	321,775	$	58,255	$	380,030
Accumulated benefit obligation	343,596		62,548		406,144		312,039		57,154		369,193
Fair value of plan assets	256,518		55,933		312,451		269,896		45,628		315,524

The accumulated benefit obligation for all defined benefit pension plans was $430,136 and $403,612 at December 31, 2011 and 2010, respectively.

Amounts related to pensions recognized in the accompanying balance sheets consist of:



	2011									2010
	U.S.			Non-U.S.			Total			U.S.			Non-U.S.			Total
Other assets	$	3,325		$	286		$	3,611		$	7,364		$	62		$	7,426
Accrued liabilities	2,705			386			3,091			2,725			450			3,175
Accrued retirement benefits	95,064			6,512			101,576			49,154			12,177			61,331
Accumulated other non-owner changes to equity, net	(104,960		)	(20,092		)	(125,052		)	(66,543		)	(19,711		)	(86,254		)

Amounts related to pensions recognized in accumulated other non-owner changes to equity, net of tax, at December 31, 2011 and 2010, respectively, consist of:



	2011									2010
	U.S.			Non-U.S.			Total			U.S.			Non-U.S.			Total
Net actuarial loss	$	(103,025	)	$	(19,543	)	$	(122,568	)	$	(64,031	)	$	(19,074	)	$	(83,105	)
Prior service costs	(1,935		)	(549		)	(2,484		)	(2,512		)	(637		)	(3,149		)
	$	(104,960	)	$	(20,092	)	$	(125,052	)	$	(66,543	)	$	(19,711	)	$	(86,254	)

The accompanying balance sheets reflect the underfunded status of the Company’s other postretirement benefit plans at December 31, 2011 and 2010. Reconciliations of the obligations and underfunded status of the plans follow:



	2011			2010
Benefit obligation, January 1	$	55,188		$	54,811
Service cost	286			357
Interest cost	2,831			3,182
Amendments	(2,376		)	—
Actuarial loss	5,728			2,500
Benefits paid	(9,734		)	(6,693		)
Curtailment gain	—			(950		)
Participant contributions	2,679			1,846
Foreign exchange rate changes	(15		)	135
Benefit obligation, December 31	54,587			55,188
Fair value of plan assets, January 1	—			—
Company contributions	7,055			4,847
Participant contributions	2,679			1,846
Benefits paid	(9,734		)	(6,693		)
Fair value of plan assets, December 31	—			—
Underfunded status, December 31	$	54,587		$	55,188

Amounts related to other postretirement benefits recognized in the accompanying balance sheets consist of:



	2011			2010
Accrued liabilities	$	5,314		$	5,226
Accrued retirement benefits	49,273			49,962
Accumulated other non-owner changes to equity, net	(5,601		)	(3,044		)

Amounts related to other postretirement benefits recognized in accumulated other non-owner changes to equity, net of tax, at December 31, 2011 and 2010 consist of:



	2011			2010
Net actuarial loss	$	(10,194	)	$	(7,118	)
Prior service credits	4,593			4,074
	$	(5,601	)	$	(3,044	)

The sources of changes in accumulated other non-owner changes to equity, net, during 2011 were:



	Pension			Other Postretirement Benefits
Prior service cost	$	(73	)	$	1,475
Net loss	(44,289		)	(3,574		)
Amortization of prior service costs (credits)	727			(957		)
Amortization of actuarial loss	4,298			498
Foreign exchange rate changes	531			1
Divestiture	$	8		$	—
	$	(38,798	)	$	(2,557	)

Weighted-average assumptions used to determine benefit obligations at December 31, are:



	2011		2010
U.S. plans:
Discount rate	5.05	%	5.65	%
Increase in compensation	3.71	%	3.71	%
Non-U.S. plans:
Discount rate	4.46	%	4.89	%
Increase in compensation	2.76	%	2.72	%

The investment strategy of the plans is to generate a consistent total investment return sufficient to pay present and future plan benefits to retirees, while minimizing the long-term cost to the Company. Target allocations for asset categories are used to earn a reasonable rate of return, provide required liquidity and minimize the risk of large losses. Targets may be adjusted, as necessary within certain guidelines, to reflect trends and developments within the overall investment environment. The weighted-average target investment allocations by asset category are as follows: 70% in equity securities, 20% in fixed income securities, 5% in real estate and 5% in other investments, including cash.

The fair values of the Company’s pension plan assets at December 31, 2011 and 2010, by asset category are as follows:



			Fair Value Measurements Using
Asset Category	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2011
Cash and short-term investments	$	10,227	$	10,227	$	—	$	—
Equity securities:
U.S. large-cap	86,709		41,419		45,290		—
U.S. mid-cap	33,264		33,264		—		—
U.S. small-cap	36,079		36,079		—		—
International equities	69,163		—		69,163		—
Fixed income securities:
U.S. bond funds	61,974		—		61,974		—
International bonds	27,221		—		27,221		—
Real estate securities	15,432		—		15,432		—
Other	301		—		301		—
	$	340,370	$	120,989	$	219,381	$	—
December 31, 2010
Cash and short-term investments	$	4,157	$	4,157	$	—	$	—
Equity securities:
U.S. large-cap	98,766		50,847		47,919		—
U.S. mid-cap	38,069		38,069		—		—
U.S. small-cap	38,959		38,959		—		—
International equities	74,308		—		74,308		—
Fixed income securities:
U.S. bond funds	57,547		—		57,547		—
International bonds	29,313		—		29,313		—
Real estate securities	16,199		—		16,199		—
Other	575		—		575		—
	$	357,893	$	132,032	$	225,861	$	—

The fair values of the Level 1 assets are based on quoted market prices from various financial exchanges. The fair values of the Level 2 assets are based primarily on quoted prices in active markets for similar assets or liabilities. The Level 2 assets are comprised primarily of commingled funds and fixed income securities. Commingled equity funds are valued at their net asset values based on quoted market prices of the underlying assets. Fixed income securities are valued using a market approach which considers observable market data for the underlying asset or securities.

The Company expects to contribute approximately $25,700 to the pension plans in 2012.

The following are the estimated future net benefit payments, which include future service, over the next 10 years:



	Pensions		Other Postretirement Benefits
2012	$	26,938	$	5,314
2013	27,296		5,209
2014	27,729		5,338
2015	28,178		5,110
2016	28,585		4,855
Years 2017-2021	147,981		21,544
Total	$	286,707	$	47,370

Pension and other postretirement benefit expenses consist of the following:



	Pensions									Other Postretirement Benefits
	2011			2010			2009			2011			2010			2009
Service cost	$	5,923		$	6,155		$	6,598		$	286		$	357		$	465
Interest cost	22,452			22,943			22,734			2,831			3,182			3,530
Expected return on plan assets	(32,041		)	(30,938		)	(30,676		)	—			—			—
Amortization of prior service cost	1,124			937			944			(1,541		)	(970		)	(745		)
Recognized losses	5,725			2,495			1,950			806			421			202
Curtailment (gain) loss	(1,884		)	—			71			—			(950		)	—
Settlement loss	304			—			—			—			—			—
Special termination benefits	—			—			48			—			—			—
Net periodic benefit cost	$	1,603		$	1,592		$	1,669		$	2,382		$	2,040		$	3,452

The estimated net actuarial loss and prior service cost for the defined benefit pension plans that will be amortized from accumulated other non-owner changes to equity into net periodic benefit cost in 2012 are $10,986 and $1,083, respectively. The estimated net actuarial loss and prior service credit for other defined benefit postretirement plans that will be amortized from accumulated other non-owner changes to equity into net periodic benefit cost in 2012 are $1,141 and $(1,585), respectively.

Weighted-average assumptions used to determine net benefit expense for years ended December 31, are:



	2011		2010		2009
U.S. plans:
Discount rate	5.65	%	6.20	%	6.50	%
Long-term rate of return	9.00	%	9.00	%	9.00	%
Increase in compensation	3.71	%	3.71	%	3.71	%
Non-U.S. plans:
Discount rate	4.89	%	5.59	%	6.02	%
Long-term rate of return	5.87	%	6.01	%	6.03	%
Increase in compensation	2.72	%	2.71	%	2.94	%

The expected long-term rate of return is based on the actual historical rates of return of published indices that are used to measure the plans’ target asset allocation. The historical rates are then discounted to consider fluctuations in the historical rates as well as potential changes in the investment environment.

The Company’s accumulated postretirement benefit obligations, exclusive of pensions, take into account certain cost-sharing provisions. The annual rate of increase in the cost of covered benefits (i.e., health care cost trend rate) is assumed to be 7.6% at December 31, 2011 and 2010, decreasing gradually to a rate of 4.5% by December 31, 2029. A one percentage point change in the assumed health care cost trend rate would have the following effects:



	One Percentage Point Increase		One Percentage Point Decrease
Effect on postretirement benefit obligation	$	873	$	(776	)
Effect on postretirement benefit cost	43		(39		)

The Company contributes to a multi-employer defined benefit pension plan under the terms of a collective-bargaining agreement. This multi-employer plan provides pension benefits to its union-represented employees at the Edison, New Jersey facility within the Barnes Distribution reporting unit. The risks of participating in this multi-employer plan are different from single-employer plans in the following aspects:

a. Assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees of other participating employers.

b. If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.

c. If the Company chooses to stop participating in the multi-employer plan, the Company may be required to pay to this plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

The Company's participation in this plan for the annual period ended December 31, 2011 is outlined in the table below. The “EIN/Pension Plan Number” column provides the Employee Identification Number (“EIN”) and the three-digit plan number. The most recent Pension Protection Act zone status available in 2011 and 2010 relates to the plan's year-end at February 28, 2011 and February 28, 2010, respectively. The zone status is based on information that the Company received from the plan and is certified by the plan's actuary. Among other factors, plans in the red zone are generally less than 65 percent funded, plans in the yellow zone are less than 80 percent funded, and plans in the green zone are at least 80 percent funded. The “FIP/RP Status Pending/Implemented” column indicates plans for which a financial improvement plan (FIP) or a rehabilitation plan (RP) is either pending or has been implemented. The last column lists the expiration date of the collective-bargaining agreement to which the plan is subject. There have been no significant changes that affect the comparability of 2011, 2010 or 2009 contributions.



		Pension Protection Act Zone Status			Contributions by the Company
Pension Fund	EIN/Pension Plan Number	2011	2010	FIP/RP Status Funding	2011	2010	2009	Surcharge Imposed	Expiration Date of Collective Bargaining Agreement
Teamsters Local 641 Pension Fund	22-6220288-001	Red as of March 1, 2010 for Plan year ended February 28, 2011	Red as of March 1, 2009 for Plan year ended February 28, 2010	Implemented (A)	$101	$106	$103	No Surcharge	January 31, 2014
Swedish Pension Plan (ITP2) (B)					292	280	259
			Total Contributions		$393	$386	$362

(A) Plan information is publicly available for the Local 641 Pension fund. The Form 5500 indicates that the Plan is currently underfunded. Future contributions have increased pursuant to the collective bargaining agreement (dated January 31, 2011 and expiring on January 31, 2014) and the updated Rehabilitation Plan (dated February 17, 2011). Per the terms of the Rehabilitation Plan, required contributions will increase by approximately 4% (annually) through 2018.

(B) The Company also contributes to a Swedish pension plan that supplements the Swedish social insurance system. The pension plan guarantees employees a pension based on a percentage of their salary and also represents a multi-employer pension plan, however the pension plan was not significant in any year presented. This pension plan is not underfunded.

The Company also contributes to a multi-employer other post-retirement benefit plan under the terms of the collective-bargaining agreement at the Edison, New Jersey facility. This health and welfare plan provides medical, prescription, optical and other benefits to its union-represented active employees and retirees. Company contributions to the post-retirement plan approximated $202, $238 and $233 in 2011, 2010 and 2009, respectively. There have been no significant changes that affect the comparability of 2011, 2010 or 2009 contributions.