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Profit Sharing Retirement Savings Plans and Defined Benefit Pension Plans
 12 Months Ended
Dec. 31, 2011
Profit Sharing, Retirement Savings Plans and Defined Benefit Pension Plans and Other Post-Employment Benefits and Other Employee Benefit Plans [Abstract]  
Profit Sharing, Retirement Savings Plans and Defined Benefit Pension Plans

Note 14    Profit Sharing, Retirement Savings Plans and Defined Benefit Pension Plans

Profit Sharing and Retirement Savings Plans

Legacy Sealed Air has a qualified non-contributory profit sharing plan covering most of its U.S. employees. Contributions to this plan, which are made at the discretion of our Board of Directors, may be made in cash, shares of our common stock, or in a combination of cash and shares of our common stock. We also maintain qualified contributory retirement savings plans in which most of our U.S. employees are eligible to participate. The qualified contributory retirement savings plans generally provide for our contributions in cash based upon the amount contributed to the plans by the participants.

Our contributions to or provisions for the profit sharing plan and retirement savings plans are charged to operations and amounted to $32 million in 2011, $27 million in 2010 and $38 million in 2009. No shares of our common stock were contributed in 2011, while 0.3 million shares were contributed in 2010 as part of our contribution to the profit sharing plan. These shares were issued out of treasury stock.

We have various international defined contribution benefit plans which cover certain employees. We have expanded use of these plans in select countries where they have been used to supplement or replace defined benefit plans.

Defined Benefit Pension Plans

We recognize the funded status of each defined pension benefit plan measured as the difference between the fair value of plan assets and the projected benefit obligations of the employee benefit plans on the consolidated balance sheet, with a corresponding adjustment to accumulated other comprehensive loss, net of taxes. Each overfunded plan is recognized as an asset and each underfunded plan is recognized as a liability on our consolidated balance sheets. Subsequent changes in the funded status are recognized in unrecognized pension items, a component of accumulated other comprehensive loss, that is included in total stockholders’ equity. The amount of unamortized pension items is recorded net of tax. The measurement date used by us to determine projected benefit obligations and plan assets is December 31.

United States

A number of our U.S. employees, including some employees who are covered by collective bargaining agreements, participate in defined benefit pension plans. The following table presents our funded status for 2011 and 2010 for our U.S. pension plans. The measurement date for the defined benefit pension plans presented below is December 31 of each period.

 

 

                 
    2011     2010  

Change in benefit obligation:

                

  Projected benefit obligation at beginning of period

   $ 54.8     $ 55.1  

  Service cost

     1.1       1.0  

  Interest cost

     4.8       2.8  

  Actuarial (gain) loss

     10.2       (1.9 ) 

  Benefits paid

     (9.3 )      (2.2 ) 

  Acquisition of Diversey

     150.5       —  
   

 

 

    

 

 

  

  Projected benefit obligation at end of period

   $ 212.1     $ 54.8  
   

 

 

    

 

 

  

  Change in plan assets:

                

  Fair value of plan assets at beginning of period

   $ 40.8     $ 37.9  

  Actual gain on plan assets

     7.5       3.9  

  Employer contributions

     4.4       1.2  

  Benefits paid

     (9.3 )      (2.2 ) 

  Acquisition of Diversey

     127.8       —  
   

 

 

    

 

 

  

  Fair value of plan assets at end of period

     171.2       40.8  
   

 

 

    

 

 

  

Underfunded status at end of year

   $ (40.9 )    $ (14.0 ) 
   

 

 

    

 

 

  

Amounts included on the consolidated balance sheets consisted of other liabilities of $41 million in 2011 and $14.0 million in 2010.

 

SEALED AIR CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

 

The following table shows the components of our net periodic benefit cost for the three years ended December 31, 2011, for our U.S. pension plans charged to operations.

 

 

                         
    2011     2010     2009  

Components of net periodic benefit cost:

                        

  Service cost

   $ 1.1     $ 1.0     $ 1.5  

  Interest cost

     4.8       2.8       3.1  

  Expected return on plan assets

     (5.1 )      (2.7 )      (2.6 ) 

  Amortization of net prior service cost

     0.2       0.3       0.5  

  Amortization of net actuarial loss

     1.3       1.2       1.4  
   

 

 

    

 

 

    

 

 

  

  Net periodic benefit cost

   $       2.3     $       2.6     $       3.9  
   

 

 

    

 

 

    

 

 

  

The amounts in accumulated other comprehensive loss, net of taxes, that have not yet been recognized as components of net periodic benefit cost at December 31, 2011, are:

 

 

         

Unrecognized prior service costs

   $ 0.5  

Unrecognized net actuarial loss

     23.7  
   

 

 

  

 Total

   $         24.2  
   

 

 

  

Changes in plan assets and benefit obligations recognized in other comprehensive loss in 2011 were as follows:

 

 

         

Current year actuarial gain

   $ 7.8  

Amortization of actuarial loss

     (1.3 ) 

Amortization of prior service cost

     (0.2 ) 
   

 

 

  

Total recognized in other comprehensive loss

   $            6.3  
   

 

 

  

The amounts in accumulated other comprehensive loss that are expected to be recognized as components of net periodic benefit cost during 2012 are as follows:

 

 

         

Unrecognized prior service costs

   $ 0.2  

Unrecognized net actuarial loss

     2.0  
   

 

 

  

 Total

   $            2.2  
   

 

 

  

Information for plans with accumulated benefit obligations in excess of plan assets as of December 31, 2011 is as follows:

 

 

         

Accumulated benefit obligation

   $         207.5  

Fair value of plan assets

     171.2  

Actuarial Assumptions

Weighted average assumptions used to determine benefit obligations at December 31, 2011 and 2010 were as follows:

 

 

                 
    2011     2010  

Discount rate

     4.6 %      5.4 % 

Rate of compensation increase

     3.5       3.5  

Weighted average assumptions used to determine net periodic benefit cost for the three years ended December 31, 2011 were as follows:

 

 

                         
    2011     2010     2009  

Discount rate

     4.9 %      5.5 %      6.0 % 

Expected long-term rate of return

     6.7       7.3       8.0  

Rate of compensation increase

     3.5       3.5       3.5  

 

SEALED AIR CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

 

Estimated Future Benefit Payments

We expect the following estimated future benefit payments, which reflect expected future service as appropriate, to be paid in the years indicated below:

 

         

Year

   Amount  

2012

   $   11.4  

2013

     12.8  

2014

     11.7  

2015

     12.4  

2016

     14.7  

2017 — 2021

     71.7  

We expect to contribute approximately $4 million of cash to our U.S. defined benefit plans in 2012.

Plan Assets

We review the expected long-term rate of return on plan assets annually, taking into consideration our asset allocation, historical returns, and the current economic environment.

Our long-term objectives for plan investments are to ensure that (a) there is an adequate level of assets to support benefit obligations to participants over the life of the plans, (b) there is sufficient liquidity in plan assets to cover current benefit obligations, and (c) there is a high level of investment return consistent with a prudent level of investment risk. The investment strategy is focused on a long-term total return in excess of a pure fixed income strategy with short-term volatility less than that of a pure equity strategy. To accomplish this objective, we cause assets to be invested in a balanced and diversified mix of equity and fixed income investments. The target asset allocation will typically be 40-50% in equity securities, with a maximum equity allocation of 70%, and 50-60% in fixed income securities, with a minimum fixed income allocation of 30% including cash.

The fair values of our U.S. pension plan assets, by asset category and by the level of fair values at December 31, 2011, are as follows:

 

                                 

Asset Category

   Total
Fair Value		     Level 1     Level 2     Level 3  

Cash and cash equivalents(1)

   $ 4.2     $ —     $ 4.2     $ —  

Fixed income funds (2)

     96.4       —       96.4       —  

Equity funds (3)

     64.8       —       64.8       —  

Other (4)

     5.8       —       0.5       5.3  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $ 171.2     $ —     $ 165.9     $ 5.3  
   

 

 

    

 

 

    

 

 

    

 

 

  

 

(1)

Short-term investment fund that invests in a collective trust that holds short-term highly liquid investments with principal preservation and daily liquidity as its primary objectives. Investments are primarily comprised of certificates of deposit, U.S. government treasuries, commercial paper, and time deposits.

 

(2)

A diversified portfolio of publicly traded government bonds, corporate bonds, and mortgage-backed securities. There are no restrictions on these investments and they are valued at the net asset value of the shares held at year end, which are supported by the value of the underlying securities and by the unit prices of actual purchase and sale transactions occurring as of or close to the financial statement date.

 

(3)

A diversified portfolio of publicly traded domestic and international common stock. There are no restrictions on these investments, and they are valued at the net asset value of the shares held at year end, which are supported by the values of the underlying securities and by the unit prices of actual purchase and sale transactions occurring as of or close to the financial statement date.

 

(4)

More than 90% is invested in real estate funds with less than $0.5 million invested in alternative investments such as private equity funds, hedge funds and commodities. The level 3 amount were from Diversey’s plans.

 

SEALED AIR CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

 

International

Some of our non-U.S. employees participate in defined benefit pension plans in their respective countries. The following table presents our funded status for 2011 and 2010 for our non-U.S. pension plans. The measurement date for the defined benefit pension plans presented below is December 31 of each period.

 

 

                 
    2011     2010  

Change in benefit obligation:

                

  Projected benefit obligation at beginning of period

   $   285.9     $   289.7  

  Service cost

     8.6       5.5  

  Interest cost

     23.1       15.5  

  Actuarial (gain) loss

     24.3       (9.0)  

  Settlement/curtailment

     (6.9)       (2.3)  

  Benefits paid

     (20.7)       (13.0)  

  Employee contributions

     2.3       1.4  

  Other

     3.0       (1.3)  

  Foreign exchange impact

     (4.8)       (0.6)  

  Acquisition of Diversey

     614.0       —  
   

 

 

    

 

 

  

  Projected benefit obligation at end of period

   $ 928.8     $ 285.9  
   

 

 

    

 

 

  

Change in plan assets:

                

  Fair value of plan assets at beginning of period

   $ 218.3     $ 204.0  

  Actual gain on plan assets

     31.9       15.8  

  Employer contributions

     23.5       9.3  

  Employee contributions

     2.3       1.4  

  Benefits paid

     (20.7)       (13.0)  

  Assets transferred to defined contribution plan

     —       —  

  Settlement/curtailment

     (7.0)       (0.8)  

  Other

     4.1       (1.9)  

  Foreign exchange impact

     (2.8)       3.5  

  Acquisition of Diversey

     501.2       —  
   

 

 

    

 

 

  

Fair value of plan assets at end of period

     750.8       218.3  
   

 

 

    

 

 

  

Underfunded status at end of year

   $   (178.0)     $   (67.6)  
   

 

 

    

 

 

  

Amounts included on the consolidated balance sheets consisted of:

 

 

                 
    2011     2010  

Other assets

   $   62.3     $   6.1  

Other current liabilities

     (5.1)       (2.6)  

Other liabilities

     (235.2)       (71.1)  
   

 

 

    

 

 

  

Net amount recognized

   $   (178.0)     $   (67.6)  
   

 

 

    

 

 

  

The following table shows the components of our net periodic benefit cost for the three years ended December 31, 2011 for our non-U.S. pension plans charged to operations.

 

 

                         
    2011     2010     2009  

Components of net periodic benefit cost:

                        

Service cost

   $   8.6     $   5.5     $   6.2  

Interest cost

     23.1       15.5       14.4  

Expected return on plan assets

       (21.8 )      (13.0 )      (10.9 ) 

Amortization of net prior service cost

     0.1       0.1       0.1  

Amortization of net actuarial loss

     4.2       7.8       6.9  
   

 

 

    

 

 

    

 

 

  

Net periodic benefit cost

   $ 14.2     $   15.9     $   16.7  
   

 

 

    

 

 

    

 

 

  

The amounts in accumulated other comprehensive loss, net of taxes, that have not yet been recognized as components of net periodic benefit cost at December 31, 2011 are:

 

 

         

Unrecognized prior service costs

   $ 0.5  

Unrecognized net actuarial loss

     62.1  
   

 

 

  

 Total

   $       62.6  
   

 

 

  

 

SEALED AIR CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

 

Changes in plan assets and benefit obligations recognized in other comprehensive loss in 2011 were as follows:

 

 

         

Current year actuarial loss

   $       14.2  

Amortization of actuarial loss

     (4.2)  

Amortization of prior service cost

     (0.1)  

Settlement/curtailment loss

     (2.6)  

Other

     (1.1)  

Effects of changes in foreign currency exchange rates

     (0.2)  
   

 

 

  

Total recognized in other comprehensive loss

   $ 6.0  
   

 

 

  

The amounts in accumulated other comprehensive loss that are expected to be recognized as components of net periodic benefit cost during 2012 are as follows:

 

 

         

Unrecognized prior service costs

   $ —  

Unrecognized net actuarial loss

     4.9  
   

 

 

  

Total

   $       4.9  
   

 

 

  

Information for plans with accumulated benefit obligations in excess of plan assets as of December 31, 2011 is as follows:

 

 

         

Accumulated benefit obligation

   $         504.9  

Fair value of plan assets

     299.8  

Actuarial Assumptions

Weighted average assumptions used to determine benefit obligations at December 31, 2011 and 2010 were as follows:

 

 

                 
    

2011

     2010  

Discount rate

     4.3%       5.7%  

Rate of compensation increase

     2.8%       3.5%  

Weighted average assumptions used to determine net periodic benefit cost for the three years ended December 31, 2011 were as follows:

 

 

                         
    2011     2010     2009  

Discount rate

     4.6%       5.6%       6.0%  

Expected long-term rate of return

     5.8          6.8          6.6     

Rate of compensation increase

     2.9          3.9          3.6     

Estimated Future Benefit Payments

We expect the following estimated future benefit payments, which reflect expected future service as appropriate, to be paid in the years indicated:

 

 

         

Year

   Amount  

2012

   $   40.6  

2013

     43.5  

2014

     39.3  

2015

     42.8  

2016

     45.0  

2017 — 2021

   $   230.3  

We expect to contribute approximately $35 million of cash to our non-U.S. defined benefit plans in 2012.

Plan Assets

We review the expected long-term rate of return on plan assets annually, taking into consideration our asset allocation, historical returns, and the current economic environment.

 

SEALED AIR CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements — (Continued)

 

Our long-term objectives for plan investments are to ensure that (a) there is an adequate level of assets to support benefit obligations to participants over the life of the plans, (b) there is sufficient liquidity in plan assets to cover current benefit obligations, and (c) there is a high level of investment return consistent with a prudent level of investment risk. The investment strategy is focused on a long-term total return in excess of a pure fixed income strategy with short-term volatility less than that of a pure equity strategy. To accomplish this objective, we cause assets to be invested primarily in a diversified mix of equity and fixed income investments.

The fair values of our non-U.S. pension plan assets, by asset category and by the level of fair values at December 31, 2011, are as follows:

 

                                 

Asset Category

   Total
Fair Value		     Level 1     Level 2     Level 3  

Cash and cash equivalents(1)

   $ 15.3     $ 8.2     $ 7.1     $ —  

Fixed income funds(2)

     383.0       —       383.0       —  

Equity funds(3)

     257.4       —       257.4       —  

Insurance asset(4)

     15.4       —       —       15.4  

Other (5)

     79.7       —       43.4       36.3  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total

   $     750.8     $       8.2     $       690.9     $   51.7  
   

 

 

    

 

 

    

 

 

    

 

 

  

 

(1)

Short-term investment fund that invests in a collective trust that holds short-term highly liquid investments with principal preservation and daily liquidity as its primary objectives. Investments are primarily comprised of certificates of deposit, government securities, commercial paper, and time deposits.

 

(2)

Fixed income funds that invest in a diversified portfolio primarily consisting of publicly traded government bonds, corporate bonds and mortgage-backed securities. There are no restrictions on these investments, and they are valued at the net asset value of shares held at year end.

 

(3)

Equity funds that invest in a diversified portfolio of publicly traded domestic and international common stock, with an emphasis in European equities. There are no restrictions on these investments, and they are valued at the net asset value of shares held at year end.

 

(4)

Represents a guaranteed insurance contract for one of our European plans. This plan asset includes company and employee contributions and accumulated interest income at a guaranteed stated interest rate and provides for benefit payments and plan expenses.

 

(5)

The majority of these assets are invested in real estate funds in Diversey’s plans.

The following table shows the activity of our plan assets, which are measured at fair value using Level 3 inputs.

 

         
    Insurance
Asset		  

Balance at December 31, 2010

   $ 14.6  

Employer contributions

     1.0  

Employee contributions

     0.4  

Actual return on asset

     (0.3)  

Benefits and expenses paid

     (0.2)  

Foreign exchange impact

     (0.1)  
   

 

 

  

Balance at December 31, 2011

   $         15.4