Note 15: Pension and Other Postretirement Benefits

We sponsor defined benefit pension plans and defined contribution plans that cover substantially all employees in Canada, the Netherlands, the United Kingdom, the U.S., and certain employees in Germany. We closed the U.S. defined benefit pension plan to new entrants effective January 1, 2010. Employees who were not active participants in the U.S. defined benefit pension plan on December 31, 2009, are not eligible to participate in the plan. Annual contributions to retirement plans equal or exceed the minimum funding requirements of applicable local regulations. The assets of the funded pension plans we sponsor are maintained in various trusts and are invested primarily in equity and fixed income securities.

Benefits provided to employees under defined contribution plans include cash contributions by the Company based on either hours worked by the employee or a percentage of the employee’s compensation. Defined contribution expense for 2013, 2012, and 2011 was $13.2 million, $10.9 million, and $9.0 million, respectively. The increase in expense from 2013 to 2012 was primarily due to the impact of our acquisitions of Miranda and PPC in 2012.

We sponsor unfunded postretirement medical and life insurance benefit plans for certain of our employees in Canada and the U.S. The medical benefit portion of the U.S. plan is only for employees who retired prior to 1989 as well as certain other employees who were near retirement and elected to receive certain benefits.

The following tables provide a reconciliation of the changes in the plans’ benefit obligations and fair value of assets as well as a statement of the funded status and balance sheet reporting for these plans.


	Pension Benefits						Other Benefits
Years Ended December 31,	2013			2012			2013			2012
	(In thousands)
Change in benefit obligation:
Benefit obligation, beginning of year	$	(263,876	)	$	(240,002	)	$	(51,772	)	$	(49,118	)
Service cost		(5,554	)		(5,423	)		(125	)		(116	)
Interest cost		(9,310	)		(10,510	)		(1,910	)		(2,077	)
Participant contributions		(105	)		(146	)		(11	)		(11	)
Plan amendments		(56	)		—			—			—
Actuarial gain (loss)		8,147			(21,785	)		2,096			(1,950	)
Other		—			—			—			(204	)
Foreign currency exchange rate changes		(1,826	)		(2,542	)		2,681			(886	)
Benefits paid		14,157			16,532			2,427			2,590

Benefit obligation, end of year	$	(258,423	)	$	(263,876	)	$	(46,614	)	$	(51,772	)


	Pension Benefits						Other Benefits
Years Ended December 31,	2013			2012			2013			2012
	(In thousands)
Change in plan assets:
Fair value of plan assets, beginning of year	$	173,154		$	160,806		$	—		$	—
Actual return on plan assets		29,416			16,449			—			—
Employer contributions		10,035			10,448			2,416			2,579
Plan participant contributions		105			146			11			11
Foreign currency exchange rate changes		(186	)		1,837			—			—
Benefits paid		(14,157	)		(16,532	)		(2,427	)		(2,590	)

Fair value of plan assets, end of year	$	198,367		$	173,154		$	—		$	—


Funded status, end of year	$	(60,056	)	$	(90,722	)	$	(46,614	)	$	(51,772	)

Amounts recongized in the balance sheets:
Prepaid benefit cost	$	5,797		$	8,728		$	—		$	—
Accrued benefit liability (current)		(3,878	)		(3,900	)		(2,665	)		(3,002	)
Accrued benefit liability (noncurrent)		(61,975	)		(95,550	)		(43,949	)		(48,770	)

Net funded status	$	(60,056	)	$	(90,722	)	$	(46,614	)	$	(51,772	)

The accumulated benefit obligation for all defined benefit pension plans was $254.5 million and $258.9 million at December 31, 2013 and 2012, respectively.

The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the pension plans with an accumulated benefit obligation in excess of plan assets were $77.0 million, $75.1 million, and $11.1 million, respectively, as of December 31, 2013 and $219.4 million, $214.7 million, and $120.0 million, respectively, as of December 31, 2012. The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for pension plans with an accumulated benefit obligation less than plan assets were $181.4 million, $179.4 million, and $187.2 million, respectively, as of December 31, 2013, and were $44.5 million, $44.2 million, and $53.2 million, respectively, as of December 31, 2012.

The following table provides the components of net periodic benefit costs for the plans.


	Pension Benefits									Other Benefits
Years Ended December 31,	2013			2012			2011			2013			2012			2011
	(In thousands)
Components of net periodic benefit cost:
Service cost	$	5,554		$	5,423		$	5,863		$	125		$	116		$	92
Interest cost		9,310			10,510			11,687			1,910			2,077			2,199
Expected return on plan assets		(11,066	)		(11,112	)		(11,170	)		—			—			—
Amortization of prior service credit		(54	)		(55	)		(63	)		(108	)		(111	)		(116	)
Net loss recognition		6,388			5,974			6,030			932			842			386

Net periodic benefit cost	$	10,132		$	10,740		$	12,347		$	2,859		$	2,924		$	2,561

The following table presents the assumptions used in determining the benefit obligations and the net periodic benefit cost amounts.


	Pension Benefits						Other Benefits
Years Ended December 31,	2013			2012			2013			2012
Weighted average assumptions for benefit obligations at year end:
Discount rate		4.1	%		3.7	%		4.4	%		4.3	%
Salary increase		3.9	%		3.9	%		N/A			N/A

Weighted average assumptions for net periodic cost for the year:
Discount rate		3.7	%		4.5	%		4.3	%		4.3	%
Salary increase		3.9	%		3.9	%		N/A			N/A
Expected return on assets		6.7	%		6.9	%		N/A			N/A

Assumed health care cost trend rates:
Health care cost trend rate assumed for next year		N/A			N/A			7.3	%		7.6	%
Rate that the cost trend rate gradually declines to		N/A			N/A			5.0	%		5.0	%
Year that the rate reaches the rate it is assumed to remain at		N/A			N/A			2020			2020

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plan. A one percentage-point change in the assumed health care cost trend rates would have the following effects on 2013 expense and year-end liabilities.


	1% Increase		1% Decrease
	(In thousands)
Effect on total of service and interest cost components	$	222	$	(183	)
Effect on postretirement benefit obligation	$	5,101	$	(4,208	)

Plan assets are invested using a total return investment approach whereby a mix of equity securities and fixed income securities are used to preserve asset values, diversify risk, and achieve our target investment return benchmark. Investment strategies and asset allocations are based on consideration of the plan liabilities, the plan’s funded status, and our financial condition. Investment performance and asset allocation are measured and monitored on an ongoing basis.

Plan assets are managed in a balanced portfolio comprised of two major components: an equity portion and a fixed income portion. The expected role of equity investments is to maximize the long-term real growth of assets, while the role of fixed income investments is to generate current income, provide for more stable periodic returns, and provide some protection against a prolonged decline in the market value of equity investments.

Absent regulatory or statutory limitations, the target asset allocation for the investment of the assets for our ongoing pension plans is 30-40% in fixed income securities and 60-70% in equity securities and for our pension plans where the majority of the participants are in payment or terminated vested status is 75-80% in fixed income securities and 20-25% in equity securities. Equity securities include U.S. and international equity, primarily invested through investment funds. Fixed income securities include government securities and investment grade corporate bonds, primarily invested through investment funds and group insurance contracts. We develop our expected long-term rate of return assumptions based on the historical rates of returns for equity and fixed income securities of the type in which our plans invest.

The expected long-term rate of return on plan assets reflects the average rate of earnings expected on the invested assets and future assets to be invested to provide for the benefits included in the projected benefit obligation. We use historic plan asset returns combined with current market conditions to estimate the rate of return. The expected rate of return on plan assets is a long-term assumption based on an analysis of historical and forward looking returns considering the plan’s actual and target asset mix.

The following table presents the fair values of the pension plan assets by asset category.


	December 31, 2013								December 31, 2012
			Quoted Prices								Quoted Prices
			in Active								in Active
	Fair Market		Markets for		Significant		Significant		Fair Market		Markets for		Significant		Significant
	Value at		Identical		Observable		Unobservable		Value at		Identical		Observable		Unobservable
	December		Assets		Inputs		Inputs		December		Assets		Inputs		Inputs
	31, 2013		(Level 1)		(Level 2)		(Level 3)		31, 2012		(Level 1)		(Level 2)		(Level 3)
	(In thousands)								(In thousands)
Asset Category:
Equity securities^(a)
Large-cap fund	$	75,306	$	—	$	75,306	$	—	$	62,151	$	—	$	62,151	$	—
Mid-cap fund		13,511		—		13,511		—		11,581		—		11,581		—
Small-cap fund		19,473		—		19,473		—		15,955		—		15,955		—
Debt securities^(b)
Government bond fund		25,520		—		25,520		—		24,385		—		24,385		—
Corporate bond fund		21,679		—		21,679		—		21,819		—		21,819		—
Fixed income fund^(c)		42,847		—		42,847		—		37,231		—		37,231		—
Cash & equivalents		31		31		—		—		32		32		—		—

Total	$	198,367	$	31	$	198,336	$	—	$	173,154	$	32	$	173,122	$	—

(a)

This category includes investments in actively managed and indexed investment funds that invest in a diversified pool of equity securities of companies located in the U.S., Canada, Western Europe and other developed countries throughout the world. The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund.

(b)

This category includes investments in investment funds that invest in U.S. treasuries, other national, state and local government bonds, and corporate bonds of highly rated companies from diversified industries. The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund.

(c)	This category includes guaranteed insurance contracts.

The plans do not invest in individual securities. All investments are through well diversified investment funds. As a result, there are no significant concentrations of risk within the plan assets.

The following table reflects the benefits as of December 31, 2013 expected to be paid in each of the next five years and in the aggregate for the five years thereafter from our pension and other postretirement plans as well as Medicare subsidy receipts. Because our other postretirement plans are unfunded, the anticipated benefits with respect to these plans will come from our own assets. Because our pension plans are primarily funded plans, the anticipated benefits with respect to these plans will come primarily from the trusts established for these plans.


					Medicare
	Pension		Other		Subsidy
	Plans		Plans		Receipts
	(In thousands)
2014	$	15,505	$	2,823	$	91
2015		15,752		2,840		85
2016		17,239		2,779		78
2017		17,273		2,701		71
2018		16,796		2,653		64
2019-2023		90,585		12,890		225

Total	$	173,150	$	26,686	$	614

We anticipate contributing $8.6 million and $3.0 million to our pension and other postretirement plans, respectively, during 2014.

The pre-tax amounts in accumulated other comprehensive loss that have not yet been recognized as components of net periodic benefit cost at December 31, 2013, the changes in these amounts during the year ended December 31, 2013, and the expected amortization of these amounts as components of net periodic benefit cost for the year ended December 31, 2014 are as follows.


	Pension			Other
	Benefits			Benefits
	(In thousands)
Components of accumulated other comprehensive loss:
Net actuarial loss	$	46,468		$	9,622
Net prior service credit		(107	)		(259	)

	$	46,361		$	9,363


	Pension			Other
	Benefits			Benefits
	(In thousands)
Changes in accumulated other comprehensive loss:
Net actuarial loss, beginning of year	$	79,370		$	13,116
Amortization cost		(6,388	)		(932	)
Actuarial gain		(8,147	)		(2,096	)
Asset gain		(18,350	)		—
Currency impact		(17	)		(466	)

Net actuarial loss, end of year	$	46,468		$	9,622


Prior service credit, beginning of year	$	(224	)	$	(389	)
Amortization credit		54			108
Plan amendment		56			—
Currency impact		7			22

Prior service credit, end of year	$	(107	)	$	(259	)


	Pension			Other
	Benefits			Benefits
	(In thousands)
Expected 2014 amortization:
Amortization of prior service credit	$	(47	)	$	(104	)
Amortization of net loss		4,166			606

	$	4,119		$	502