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 funded 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 16 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 $4,780, $5,319 and $5,106 in 2013, 2012 and 2011, 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 Industrial, the Company’s Corporate Office and certain other U.S. employees at the businesses within the former Distribution segment. 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. In 2012, the Company closed the U.S. salaried defined benefit pension plan (the "U.S. Salaried Plan") to employees hired on or after January 1, 2013, with no impact to the benefits of existing participants. Certain salaried employees hired on or after January 1, 2013 will be eligible to receive, in place of pensionable benefits under the closed U.S. Salaried Plan, contributions under a Retirement Contribution Plan. 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 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 funded status of the Company’s defined benefit pension plans at December 31, 2013 and 2012, respectively. Reconciliations of the obligations and funded status of the plans follow:



	2013									2012
	U.S.			Non-U.S.			Total			U.S.			Non-U.S.			Total
Benefit obligation, January 1	$	423,547		$	72,769		$	496,316		$	377,982		$	63,444		$	441,426
Service cost	5,403			778			6,181			5,860			670			6,530
Interest cost	17,571			2,541			20,112			18,800			2,824			21,624
Amendments	—			—			—			158			—			158
Actuarial (gain) loss	(40,734		)	31			(40,703		)	43,155			4,820			47,975
Benefits paid	(23,348		)	(4,712		)	(28,060		)	(22,408		)	(3,740		)	(26,148		)
Transfers in	—			6,786			6,786			—			2,588			2,588
Plan curtailments	(8,715		)	—			(8,715		)	—			—			—
Plan settlements	—			—			—			—			(769		)	(769		)
Special termination benefit	1,016			—			1,016			—			—			—
Participant contributions	—			545			545			—			469			469
Foreign exchange rate changes	—			244			244			—			2,463			2,463
Benefit obligation, December 31	374,740			78,982			453,722			423,547			72,769			496,316
Fair value of plan assets, January 1	323,711			63,842			387,553			283,538			56,832			340,370
Actual return on plan assets	74,622			6,357			80,979			42,755			4,158			46,913
Company contributions	4,074			1,910			5,984			19,826			2,591			22,417
Participant contributions	—			545			545			—			469			469
Benefits paid	(23,348		)	(4,712		)	(28,060		)	(22,408		)	(3,740		)	(26,148		)
Plan settlements	—			—			—			—			(769		)	(769		)
Transfers in	—			6,627			6,627						2,086			2,086
Foreign exchange rate changes	—			(50		)	(50		)	—			2,215			2,215
Fair value of plan assets, December 31	379,059			74,519			453,578			323,711			63,842			387,553
Funded/(underfunded) status, December 31	$	4,319		$	(4,463	)	$	(144	)	$	(99,836	)	$	(8,927	)	$	(108,763	)

In 2013 and 2012, "transfers in" relate to the defined benefit pension plans associated with the acquisitions of the Männer Business and Synventive, respectively. See Note 3 of the Consolidated Financial Statements. In 2013, plan curtailments and special termination benefits relate to the sale of BDNA. See Note 2 of the Consolidated Financial Statements.

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



	2013						2012
	U.S.		Non-U.S.		Total		U.S.		Non-U.S.		Total
Projected benefit obligation	$	31,231	$	27,415	$	58,646	$	396,695	$	72,769	$	469,464
Fair value of plan assets	—		19,353		19,353		294,040		63,842		357,882

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



	2013						2012
	U.S.		Non-U.S.		Total		U.S.		Non-U.S.		Total
Projected benefit obligation	$	31,231	$	9,421	$	40,652	$	396,695	$	62,831	$	459,526
Accumulated benefit obligation	30,913		8,994		39,907		382,023		62,355		444,378
Fair value of plan assets	—		1,779		1,779		294,040		54,350		348,390

The accumulated benefit obligation for all defined benefit pension plans was $444,096 and $480,027 at December 31, 2013 and 2012, respectively.

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



	2013									2012
	U.S.			Non-U.S.			Total			U.S.			Non-U.S.			Total
Other assets	$	35,550		$	3,599		$	39,149		$	2,819		$	—		$	2,819
Accrued liabilities	2,707			627			3,334			2,720			389			3,109
Accrued retirement benefits	28,524			7,435			35,959			99,935			8,538			108,473
Accumulated other non-owner changes to equity, net	(48,564		)	(18,858		)	(67,422		)	(116,305		)	(23,803		)	(140,108		)

Amounts related to pensions recognized in accumulated other non-owner changes to equity, net of tax, at December 31, 2013 and 2012, respectively, consist of:



	2013									2012
	U.S.			Non-U.S.			Total			U.S.			Non-U.S.			Total
Net actuarial loss	$	(47,538	)	$	(18,477	)	$	(66,015	)	$	(114,748	)	$	(23,318	)	$	(138,066	)
Prior service costs	(1,026		)	(381		)	(1,407		)	(1,557		)	(485		)	(2,042		)
	$	(48,564	)	$	(18,858	)	$	(67,422	)	$	(116,305	)	$	(23,803	)	$	(140,108	)

The accompanying balance sheets reflect the underfunded status of the Company’s other postretirement benefit plans at December 31, 2013 and 2012. Reconciliations of the obligations and underfunded status of the plans follow:



	2013			2012
Benefit obligation, January 1	$	53,988		$	54,587
Service cost	233			273
Interest cost	2,061			2,532
Actuarial (gain) loss	(2,328		)	745
Benefits paid	(9,133		)	(6,922		)
Curtailment gain	(1,675		)	—
Participant contributions	3,039			2,782
Foreign exchange rate changes	58			(9		)
Benefit obligation, December 31	46,243			53,988
Fair value of plan assets, January 1	—			—
Company contributions	6,094			4,140
Participant contributions	3,039			2,782
Benefits paid	(9,133		)	(6,922		)
Fair value of plan assets, December 31	—			—
Underfunded status, December 31	$	46,243		$	53,988

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



	2013			2012
Accrued liabilities	$	4,891		$	5,075
Accrued retirement benefits	41,352			48,913
Accumulated other non-owner changes to equity, net	(5,804		)	(6,286		)

Amounts related to other postretirement benefits recognized in accumulated other non-owner changes to equity, net of tax, at December 31, 2013 and 2012 consist of:



	2013			2012
Net actuarial loss	$	(6,885	)	$	(9,895	)
Prior service credits	1,081			3,609
	$	(5,804	)	$	(6,286	)

The sources of changes in accumulated other non-owner changes to equity, net, during 2013 were:



	Pension			Other Postretirement Benefits
Prior service cost	$	—		$	—
Net gain	61,770			2,522
Amortization of prior service costs (credits)	622			(2,565		)
Amortization of actuarial loss	11,179			620
Foreign exchange rate changes	(754		)	(95		)
Acquisition	(131		)	—
	$	72,686		$	482

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



	2013		2012
U.S. plans:
Discount rate	5.20	%	4.25	%
Increase in compensation	3.72	%	3.71	%
Non-U.S. plans:
Discount rate	3.93	%	3.73	%
Increase in compensation	2.76	%	2.69	%

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, 2013 and 2012, 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, 2013
Cash and short-term investments	$	18,885	$	18,885	$	—	$	—
Equity securities:
U.S. large-cap	131,749		61,257		70,492		—
U.S. mid-cap	47,276		47,276		—		—
U.S. small-cap	53,627		53,627		—		—
International equities	80,479		—		80,479		—
Fixed income securities:
U.S. bond funds	65,740		—		65,740		—
International bonds	37,357		—		37,357		—
Real estate securities	16,686		—		16,686		—
Other	1,779		—		—		1,779
	$	453,578	$	181,045	$	270,754	$	1,779
December 31, 2012
Cash and short-term investments	$	14,633	$	14,633	$	—	$	—
Equity securities:
U.S. large-cap	95,145		43,388		51,757		—
U.S. mid-cap	41,090		41,090		—		—
U.S. small-cap	42,558		42,558		—		—
International equities	77,111		—		77,111		—
Fixed income securities:
U.S. bond funds	66,276		—		66,276		—
International bonds	29,032		—		29,032		—
Real estate securities	20,174		—		20,174		—
Other	1,534		—		—		1,534
	$	387,553	$	141,669	$	244,350	$	1,534

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 Level 3 assets relate to the defined benefit pension plan of the Synventive business and were transferred to the Company in the August 2012 acquisition. The pension assets are fully insured and have been estimated based on the accrued pension rights and actuarial rates at December 31, 2013. The pension assets are limited to fulfilling the Company's pension obligations.

The Company expects to contribute approximately $7,400 to the pension plans in 2014.

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



	Pensions		Other Postretirement Benefits
2014	$	30,364	$	4,675
2015	29,231		4,287
2016	29,513		4,156
2017	29,737		4,276
2018	30,549		4,085
Years 2019-2023	152,050		17,319
Total	$	301,444	$	38,798

Pension and other postretirement benefit expenses consist of the following:



	Pensions									Other Postretirement Benefits
	2013			2012			2011			2013			2012			2011
Service cost	$	6,181		$	6,530		$	5,923		$	233		$	273		$	286
Interest cost	20,112			21,624			22,452			2,061			2,532			2,831
Expected return on plan assets	(33,144		)	(32,827		)	(32,041		)	—			—			—
Amortization of prior service cost (credit)	752			845			1,124			(1,006		)	(1,585		)	(1,541		)
Recognized losses	16,365			12,048			5,725			1,004			1,082			806
Curtailment loss (gain)	199			—			(1,884		)	(3,081		)	—			—
Settlement loss	637			92			304			—			—			—
Special termination benefits	1,016			—			—			—			—			—
Net periodic benefit cost	$	12,118		$	8,312		$	1,603		$	(789	)	$	2,302		$	2,382

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 2014 are $7,733 and $730, 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 2014 are $813 and $(868), respectively.

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



	2013		2012		2011
U.S. plans:
Discount rate	4.25	%	5.05	%	5.65	%
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	3.73	%	4.46	%	4.89	%
Long-term rate of return	5.33	%	5.79	%	5.87	%
Increase in compensation	2.69	%	2.76	%	2.72	%

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 7.11% and 7.35% at December 31, 2013 and 2012, respectively, 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	$	574	$	(525	)
Effect on postretirement benefit cost	25		(23		)

The Company contributed to a multi-employer defined benefit pension plan under the terms of a collective bargaining agreement. This multi-employer plan provides pension benefits to certain former union-represented employees of the Edison, New Jersey facility at BDNA. The Company determined that a withdrawal from this multi-employer plan, following its entry into a definitive agreement to sell BDNA in February 2013, was probable. The Company estimated its assessment of a withdrawal liability, on a pre-tax discounted basis, and recorded a liability of $2,788 during the first quarter of 2013. The expense was recorded within discontinued operations. The Company completed the sale of BDNA and ceased making contributions into the multi-employer plan during the second quarter of 2013. The Company settled the withdrawal liability in the fourth quarter of 2013, with the agreed-upon settlement payment being made in January 2014.

The Company actively 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 represents a multi-employer pension plan, however the pension plan was not significant in any year presented. This pension plan is not underfunded.

Contributions related to the individually insignificant multi-employer plans, as disclosure is required pursuant to the applicable accounting standards, are as follows:



	Contributions by the Company
Pension Fund:	2013		2012		2011
Teamsters Local 641 Pension Fund (Edison, New Jersey)	$	23	$	97	$	101
Swedish Pension Plan (ITP2)	414		409		292
Total Contributions	$	437	$	506	$	393

The Company also contributed to a multi-employer other postretirement benefit plan under the terms of the collective bargaining agreement at the former Edison, New Jersey facility. This postretirement benefit plan was settled in conjunction with the defined benefit pension plan. This health and welfare postretirement plan provides medical, prescription, optical and other benefits to certain former union-represented active employees and retirees. Company contributions to the postretirement plan were $40, $171 and $202 in 2013, 2012 and 2011, respectively. There have been no significant changes that affect the comparability of 2013, 2012 or 2011 contributions, however contributions to the postretirement benefit plan ceased during the second quarter of 2013 following the sale of BDNA.