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Retirement Plans | 12 Months Ended
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Dec. 31, 2014
Compensation and Retirement Disclosure [Abstract] |
Retirement Plans | Retirement Plans 401(k) Plan The Company has a defined contribution plan (“the 401(k) Plan”) whereby eligible employees may contribute up to 15.0% of their pay subject to certain limitations as defined by the 401(k) Plan. Employees are eligible to participate in the 401(k) Plan after 90 days and are eligible to receive matching contributions upon one year of employment with the Company. The 401(k) Plan provides a 100.0% match of the first 3.0% and 50.0% of the next 2.0% of eligible employee contributions. All matching contributions vest immediately. The Company incurred $5.0 million, $1.7 million and $1.5 million of expenses associated with the 401(k) Plan for the years ended December 31, 2014, 2013 and 2012, respectively. Defined Contribution Plans Substantially all employees in the Company's Sealy and Tempur North America reportable segments are covered by defined contribution profit sharing plans, where specific amounts (as annually established by the Company) are set aside in trust for retirement benefits. Profit sharing expense was $1.7 million and $4.0 million for the year ended December 31, 2014 and 2013, respectively. Company Defined Benefit Pension Plans The Company has a noncontributory, defined benefit pension plan covering current and former hourly employees at four of its active Sealy plants and eight previously closed Sealy U.S. facilities. Sealy Canada, Ltd. (a 100.0% owned subsidiary of the Company) also sponsors a noncontributory, defined benefit pension plan covering hourly employees at one of its facilities. Both plans provide retirement and survivorship benefits based on the employees’ credited years of service. The Company’s funding policy provides for contributions of an amount between the minimum required and maximum amount that can be deducted for federal income tax purposes. Pension plan assets consist of investments in various common/collective trusts with equity investment strategies diversified across multiple industry sectors and company market capitalization within specific geographical investment strategies, fixed income common/collective trusts, which invest primarily in investment-grade and high-yield corporate bonds and U.S. treasury securities, as well as money market mutual funds. The fixed income investments are diversified as to ratings, maturities, industries and other factors. The plan assets contain no significant concentrations of risk related to individual securities or industry sectors. The plan has no direct investment in the Company's common stock. The long-term rate of return for the plans is based on the weighted average of the plans’ investment allocation and the historical returns for those asset categories. Because future compensation levels are not a factor in these plans’ benefit formula, the accumulated benefit obligation is equal to the projected benefit obligation as reported below. The discount rate is based on the returns on long-term bonds in the private sector and incorporates a long-term inflation rate. Summarized information for the plans follows: Expenses and Status Components of net periodic pension cost included in the accompanying Consolidated Statements of Income for the years ended December 31 were as follows:
(in millions) | 2014 |  | 2013
Service cost | $ | 0.9 |  |  | $ | 0.9 |
Interest cost | 1.8 |  |  | 1.3 |
Expected return on assets | (2.1 | ) |  | (1.5 | )
Curtailment loss | 0.1 |  |  | — |
Amortization of net gain | (0.1 | ) |  | — |
Net periodic pension cost | $ | 0.6 |  |  | $ | 0.7 |
The other changes in plan assets and benefit obligations recognized in accumulated other comprehensive loss for the years ended December 31 were:
(in millions) | 2014 |  | 2013
Net loss (gain) | $ | 9.0 |  |  | $ | (6.2 | )
Amortization of prior service cost | (0.2 | ) |  | 1.0 |
Amortization of net gain | 0.1 |  |  | — |
New prior service cost | 0.1 |  |  | — |
Total recognized in other comprehensive income | $ | 9.0 |  |  | $ | (5.2 | )
The following assumptions, calculated on a weighted‑average basis, were used to determine net periodic pension cost for the Company’s defined benefit pension plans for the years ended December 31:
| 2014 |  | 2013
Discount rate (a) | 4.01 | % |  | 4.23 | %
Expected long term return on plan assets | 7.00 | % |  | 6.92 | %
(a) | Due to current economic differences in the interest rates in the jurisdictions of the retirement plans, the discount rates used in 2014 to determine the expenses for the United States retirement plan and Canadian retirement plan were 3.94% and 5.00%, respectively. The discount rates used in 2013 to determine the expenses for the United States retirement plan and Canadian retirement plan were 4.25% and 4.00%, respectively.
Obligations and Funded Status The measurement date for all of the Company’s defined benefit pension plans is December 31. The funded status of the defined benefit pension plans as of December 31 were as follows:
(in millions) | 2014 |  | 2013
Change in Benefit Obligation: |  |  |
Projected benefit obligation at beginning of year | $ | 36.4 |  |  | $ | 39.9 |
Service cost | 0.9 |  |  | 0.9 |
Interest cost | 1.8 |  |  | 1.3 |
Plan changes | 0.2 |  |  | 0.5 |
Actuarial loss (gain) | 9.2 |  |  | (4.8 | )
Curtailments | (0.1 | ) |  | — |
Benefits paid | (0.7 | ) |  | (0.5 | )
Expenses paid | (0.2 | ) |  | (0.3 | )
Foreign currency exchange rate changes | (0.4 | ) |  | (0.6 | )
Projected benefit obligation at end of year | $ | 47.1 |  |  | $ | 36.4 |
Change in Plan Assets: |  |  |
Fair value of plan assets at beginning of year | $ | 30.5 |  |  | $ | 26.2 |
Actual return on assets | 2.2 |  |  | 2.9 |
Employer contribution | 1.0 |  |  | 2.8 |
Plan settlements | — |  |  | (0.4 | )
Benefits paid | (0.7 | ) |  | (0.5 | )
Expenses paid | (0.2 | ) |  | (0.3 | )
Foreign currency exchange rate changes | (0.3 | ) |  | (0.2 | )
Fair value of plan assets at end of year | $ | 32.5 |  |  | $ | 30.5 |
Funded status | $ | (14.6 | ) |  | $ | (5.9 | )
The Company’s defined benefit pension plan for U.S. Sealy employees is underfunded. As of December 31, 2014, the projected benefit obligation and fair value of plan assets were $43.7 million and $28.8 million, respectively. As of December 31, 2013, the projected benefit obligation and fair value of plan assets were $33.3 million and $26.7 million, respectively. The Company’s defined benefit pension plan for employees of Sealy Canada, Ltd. is overfunded. As of December 31, 2014, the projected benefit obligation and fair value of plan assets for the Sealy Canada Ltd. pension plan were $3.4 million and $3.7 million, respectively. As of December 31, 2013, the projected benefit obligation and fair value of plan assets for the Sealy Canada Ltd. pension plan were $3.1 million and $3.8 million, respectively. The following table represents amounts recorded in the Consolidated Balance Sheet:
| December 31,
(in millions) | 2014 |  | 2013
Amounts recognized in the Consolidated Balance Sheets: |  |  |
Non-current portion of benefit liability | $ | 14.9 |  |  | $ | 6.7 |
Non-current benefit asset | 0.3 |  |  | 0.8 |
Accumulated other comprehensive income | 9.0 |  |  | (5.2 | )
The following assumptions, calculated on a weighted‑average basis, were used to determine benefit obligations for the Company’s defined benefit pension plans as of December 31:
| 2014 |  | 2013
Discount rate(a) | 5.00 | % |  | 5.00 | %
(a) | The discount rates used in 2014 and 2013 to determine the benefit obligations for the United States defined benefit pension plan and Canadian defined benefit pension plan were both 5.00%.
No material amounts are expected to be reclassified from accumulated other comprehensive loss to be recognized as components of net income during 2015. Plan Contributions and Expected Benefit Payments During 2015, the Company expects to contribute $1.6 million to the Company's pension plans from available cash and equivalents. The following table presents estimated future benefit payments:
(in millions) |
Fiscal 2015 | $ | 0.9 |
Fiscal 2016 | 1.0 |
Fiscal 2017 | 1.0 |
Fiscal 2018 | 1.1 |
Fiscal 2019 | 1.2 |
Fiscal 2020 ‑ Fiscal 2024 | 8.4 |
Pension Plan Asset Information Investment Objective and Strategies. The Company's investment objectives are to minimize the volatility of the value of the Company's pension assets relative to pension liabilities and to ensure assets are sufficient to pay plan benefits. Target and actual asset allocations are as follows:
| 2014 Target |  | 2014 Actual
Common/collective trust consisting primarily of: |  |  |
Equity securities | 60.00 | % |  | 76.86 | %
Debt securities | 40.00 | % |  | 21.77 | %
Other | — | % |  | 1.37 | %
Total plan assets | 100.00 | % |  | 100.00 | %
Investment strategies and policies reflect a balance of risk-reducing and return‑seeking considerations. The objective of minimizing the volatility of assets relative to liabilities is addressed primarily through asset diversification. Assets are broadly diversified across many asset classes to achieve risk-adjusted returns that, in total, lower asset volatility relative to liabilities. The Company's policy to rebalance the Company's investment regularly ensures that actual allocations are in line with target allocations as appropriate. Strategies to address the goal of ensuring sufficient assets to pay benefits include target allocations to a broad array of asset classes that provide return, diversification and liquidity. The plan investment fiduciaries are responsible for setting asset allocation targets, and monitoring asset allocation and investment performance. The Company’s pension investment manager has discretion to manage assets to ensure compliance with the asset allocations approved by the plan fiduciaries. Significant Concentrations of Risk Significant concentrations of risk in the Company's plan assets relate to equity, interest rate, and operating risk. In order to ensure assets are sufficient to pay benefits, a portion of plan assets is allocated to equity investments that are expected, over time, to earn higher returns with more volatility than fixed income investments which more closely match pension liabilities. Within the common/collective trusts, the plan assets contain no significant concentrations of risk related to individual securities or industry sectors. In order to minimize asset volatility relative to the liabilities, a portion of plan assets are allocated to fixed income investments that are exposed to interest rate risk. Rate increases will generally result in a decline in fixed income assets while reducing the present value of the liabilities. Conversely, rate decreases will increase fixed income assets, partially offsetting the related increase in the liabilities. Operating risks primarily include the risks of inadequate diversification and insufficient oversight. To mitigate this risk, investments are diversified across and within asset classes in support of investment objectives. Policies and practices to address operating risks include ongoing oversight, plan and asset class investment guidelines, and periodic reviews to these guidelines to ensure adherence. Expected Long-Term Return on Plan Assets The expected long-term return assumption at December 31, 2014 was 7.00% for the United States defined benefit pension plan and 6.00% for the Canadian defined benefit pension plan. The expected long-term return assumption is based on historical and projected rates of return for current and planned asset classes in the plan’s investment portfolio. The assumption considers various sources, primarily inputs from advisors for long-term capital market returns, inflation, bond yields, and other variables, adjusted for specific aspects of our investment strategy by plan. The investments in plan assets primarily consist of mutual funds and money market funds. Investments in mutual funds and money market funds are valued at the net asset value per share or unit multiplied by the number of shares or units held as of the measurement date. The fair value of the Company’s pension benefit plan assets at December 31 by asset category was as follows:
(in millions) | 2014 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Asset Category |  |  |  |  |  |  |
Common/collective trust |  |  |  |  |  |  |
U.S. equity | $ | 19.6 |  |  | $ | — |  |  | $ | 19.6 |  |  | $ | — |
International equity | 5.2 |  |  | — |  |  | 5.2 |  |  | — |
Total equity based funds | 24.8 |  |  | — |  |  | 24.8 |  |  | — |
Common/collective trust - fixed income | 7.0 |  |  | — |  |  | 7.0 |  |  | — |
Money market funds | 0.7 |  |  | — |  |  | 0.7 |  |  | — |
Total | $ | 32.5 |  |  | $ | — |  |  | $ | 32.5 |  |  | $ | — |
(in millions) | 2013 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Asset Category |  |  |  |  |  |  |
Equity |  |  |  |  |  |  |
Mutual funds—U.S. companies | $ | 13.1 |  |  | $ | 13.1 |  |  | $ | — |  |  | $ | — |
Mutual funds—International companies | 5.9 |  |  | 5.9 |  |  | — |  |  | — |
Total equity funds | 19.0 |  |  | 19.0 |  |  | — |  |  | — |
Mutual funds—fixed income | 10.5 |  |  | 10.5 |  |  | — |  |  | — |
Money market funds | 1.0 |  |  | 1.0 |  |  | — |  |  | — |
Total | $ | 30.5 |  |  | $ | 30.5 |  |  | $ | — |  |  | $ | — |
Common/collective trusts are valued at the net asset value ("NAV") per share multiplied by the number of shares held as of the measurement date. The determination of net asset value for the common/collective trusts includes market pricing of the underlying assets as well as broker quotes and other valuation techniques that represent fair value as determined by the respective administrator of the common/collective trust. Management has determined that the NAV is an appropriate estimate of the fair value of the commingled investments funds at December 31, 2014 and 2013, based on the fact that the common/collective trusts are audited and accounted for at fair value by the administrators of the respective common/collective trusts. If the Company has the ability to redeem its investment in the respective alternative investment at the net asset value with no significant restrictions on the redemption at the consolidated balance sheet date, the Company has categorized the alternative investment as a Level 2 measurement in the fair value hierarchy. The methods described above may produce a fair value that may not be indicative of net realizable value or reflective of future fair value. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the consolidated balance sheet dates. Multi‑Employer Benefit Plans Approximately 68.0% of the Company’s domestic employees are represented by various labor unions with separate collective bargaining agreements. Hourly employees working at eight of the Company’s domestic manufacturing facilities are covered by union sponsored retirement plans. Further, employees working at three of the Company’s domestic manufacturing facilities are covered by union sponsored health and welfare plans. These plans cover both active employees and retirees. Through the health and welfare plans, employees received medical, dental, vision, prescription and disability coverage. The Company’s cost associated with these plans consists of periodic contributions to these plans based upon employee participation. The expense recognized by the Company for such contributions for the years ended December 31 were as follows:
(in millions) | 2014 |  | 2013
Multi‑employer retirement plan expense | $ | 4.7 |  |  | $ | 3.9 |
Multi‑employer health and welfare plan expense | 2.2 |  |  | 2.2 |
The risks of participating in multi‑employer pension plans are different from the risks of participating in single‑employer pension plans in the following respects: 1) Assets contributed to the multi‑employer plan by one employer may be used to provide benefits to employees of other participating employers; 2) If a participating employer ceases its contributions to the plan, the unfunded obligations of the plan allocable to the withdrawing employer may be borne by the remaining participant employers and 3) If the Company withdraws from the multi‑employer pension plans in which it participates, the Company may be required to pay those plans an amount based on its allocable share of the underfunded status of the plan. The following table presents information regarding the multi‑employer pension plans that are significant to the Company for the year ended December 31, 2014 and 2013, respectively:
(in millions) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pension Fund |  | EIN/Pension Plan Number |  | Pension Protection Act Zone Status(1) 2014 |  | FIP/RP Status Pending/Implemented(2) |  | Contributions of the Company 2014 |  | Surcharge Imposed(3) |  | Expiration Date of Collective Bargaining Agreement |  | Year Contributions to Plan Exceeded More than 5 Percent of Total Contributions
United Furniture Workers Pension Fund A(4) |  | 13-5511877-001 |  | Red |  | Implemented |  | $ | 0.9 |  |  | Yes, 10.0% |  | 2016 and 2017 |  | 2013, 2014
Pension Plan of the National Retirement Fund |  | 13-6130178-001 |  | Red |  | Implemented |  | $ | 1.1 |  |  | Yes, 10.0% |  | 2016 |  | N/A
Central States, Southeast & Southwest Areas Pension Plan |  | 36-6044243-001 |  | Red |  | Implemented |  | $ | 0.4 |  |  | Yes, 10.0% |  | 2015 |  | N/A
(in millions) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pension Fund |  | EIN/Pension Plan Number |  | Pension Protection Act Zone Status(1) 2013 |  | FIP/RP Status Pending/Implemented(2) |  | Contributions of the Company 2013 |  | Surcharge Imposed(3) |  | Expiration Date of Collective Bargaining Agreement |  | Year Contributions to Plan Exceeded More than 5 Percent of Total Contributions
United Furniture Workers Pension Fund A(4) |  | 13-5511877-001 |  | Red |  | Implemented |  | $ | 0.7 |  |  | Yes, 10.0% |  | 2014 and 2016 |  | 2013
Pension Plan of the National Retirement Fund |  | 13-6130178-001 |  | Red |  | Implemented |  | $ | 0.7 |  |  | Yes, 10.0% |  | 2014 |  | N/A
(1) | The Pension Protection Act of 2006 ranks the funded status of multi-employer pension plans depending upon a plan’s current and projected funding. A plan is in the Red Zone (Critical) if it has a current funded percentage less than 65.0%. A plan is in the Yellow Zone (Endangered) if it has a current funded percentage of less than 80.0%, or projects a credit balance deficit within seven years. A plan is in the Green Zone (Healthy) if it has a current funded percentage greater than 80.0% and does not have a projected credit balance deficit within seven years. The zone status is based on the plan’s year end rather than the Company’s. The zone status listed above is based on information that the Company received from the plan and is certified by the plan’s actuary for the most recent year available.
(2) | Funding Improvement Plan or Rehabilitation Plan as defined in the Employment Retirement Security Act of 1974 has been implemented or is pending.
(3) | Indicates whether the Company paid a surcharge to the plan in the most current year due to funding shortfalls and the amount of the surcharge.
(4) | The Company represented more than 5.0% of the total contributions for the most recent plan year available.

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- Definition The entire disclosure for an entity's employee compensation and benefit plans, including, but not limited to, postemployment and postretirement benefit plans, defined benefit pension plans, defined contribution plans, non-qualified and supplemental benefit plans, deferred compensation, share-based compensation, life insurance, severance, health care, unemployment and other benefit plans. + References No definition available. + Details
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