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PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS | 3 Months Ended
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Mar. 31, 2014
PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS |
PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS | NOTE F – PENSION AND OTHER POSTRETIREMENT BENEFIT PLANS Nonunion Defined Benefit Pension, Supplemental Benefit, and Postretirement Health Benefit Plans The following is a summary of the components of net periodic benefit cost:
|  | Three Months Ended March 31 |
|  | Nonunion Defined |  | Supplemental |  | Postretirement |
|  | Benefit Pension Plan |  | Benefit Plan |  | Health Benefit Plan |
|  | 2014 |  | 2013 |  | 2014 |  | 2013 |  | 2014 |  | 2013 |
|  | (in thousands) |
Service cost |  | $ | — |  | $ | 2,367 |  | $ | — |  | $ | — |  | $ | 70 |  | $ | 83 |
Interest cost |  | 1,720 |  | 1,923 |  | 49 |  | 37 |  | 197 |  | 188 |
Expected return on plan assets |  | (2,831 | ) | (3,154 | ) | — |  | — |  | — |  | — |
Amortization of prior service credit |  | — |  | — |  | — |  | — |  | (47 | ) | (48 | )
Pension settlement expense |  | 3,691 |  | — |  | — |  | — |  | — |  | — |
Amortization of net actuarial loss |  | 498 |  | 2,713 |  | 56 |  | 65 |  | 23 |  | 134 |
Net periodic benefit cost |  | $ | 3,078 |  | $ | 3,849 |  | $ | 105 |  | $ | 102 |  | $ | 243 |  | $ | 357 |
Nonunion Defined Benefit Pension Plan The Company’s nonunion defined benefit pension plan covers substantially all noncontractual employees hired before January 1, 2006. In June 2013, the Company amended the nonunion defined benefit pension plan to freeze the participants’ final average compensation and years of credited service as of July 1, 2013. The plan amendment did not impact the vested benefits of retirees or former employees whose benefits have not yet been paid from the plan. Effective July 1, 2013, participants of the nonunion defined benefit pension plan who are active employees of the Company became eligible for the discretionary defined contribution feature of the Company’s nonunion defined contribution plan in which all eligible noncontractual employees hired subsequent to December 31, 2005 also participate. The June 2013 amendment to the nonunion defined benefit pension plan resulted in a plan curtailment which was recorded as of June 30, 2013. The freeze of the accrual of benefits effective as of July 1, 2013, and the reduction of the projected benefit obligation (“PBO”) upon plan curtailment eliminated the service cost of the plan and reduced the interest cost of the plan for periods subsequent to the curtailment. In consideration of the freeze of the accrual of benefits under the nonunion defined benefit pension plan effective July 1, 2013, the investment strategy has become more focused on reducing investment, interest rate, and longevity risks in the plan. As part of this strategy, in January 2014, the plan purchased a nonparticipating annuity contract from an insurance company to settle the pension obligation related to the vested benefits of 375 plan participants and beneficiaries currently receiving monthly benefit payments. Upon payment of the $25.4 million premium for the annuity contract, pension benefit obligations totaling $23.3 million were irrevocably transferred to the insurance company. Because the total of lump-sum distributions plus the nonparticipating annuity contract purchase amount will exceed the annual interest costs of the plan in 2014, the Company recognized total settlement expense related to the $25.4 million nonparticipating annuity contract purchase and $14.1 million of lump-sum distributions paid in first quarter 2014 as a component of net periodic benefit cost of $3.7 (pre-tax), or $2.3 million (after-tax), during the three months ended March 31, 2014 with a corresponding reduction of the net actuarial loss of the plan, which is reported within accumulated other comprehensive loss. The remaining pre-tax unrecognized net actuarial loss will continue to be amortized over the average remaining future years of service of the plan participants, which is approximately eight years. The Company will incur additional quarterly settlement expense related to lump-sum distributions from the nonunion defined benefit pension plan during the remainder of 2014. The following table discloses the changes in the PBO and plan assets of the nonunion defined benefit pension plan for the three months ended March 31, 2014:
|  | Nonunion Defined |
|  | Benefit Pension Plan |
|  | (in thousands) |
Change in projected benefit obligation |  |  |
Projected benefit obligation at December 31, 2013 |  | $ | 211,660 |
Interest cost |  | 1,720 |
Actuarial loss (1) |  | 8,329 |
Benefits paid(2) |  | (39,878 | )
Projected benefit obligation at March 31, 2014 |  | 181,831 |
Change in plan assets |  |  |
Fair value of plan assets at December 31, 2013 |  | 207,613 |
Actual return on plan assets |  | 2,492 |
Benefits paid(2) |  | (39,878 | )
Fair value of plan assets at March 31, 2014 |  | 170,227 |
Funded status at March 31, 2014(3) |  | $ | (11,604 | )
Accumulated benefit obligation |  | $ | 181,831 |
(1) Net actuarial loss from remeasurement upon settlements was primarily impacted by changes in the discount rate since the previous remeasurement date. The discount rate used to remeasure the PBO upon settlement was 3.5% compared to a rate of 3.8% as of the December 31, 2013 measurement date. (2) Includes purchase of nonparticipating annuity contract, lump-sum distributions, and periodic payments made by the plan during the three months ended March 31, 2014. (3) Noncurrent liability recognized within pension and postretirement liabilities in the accompanying consolidated balance sheet at March 31, 2014. The Company made no contributions to its nonunion defined benefit pension plan during the three months ended March 31, 2014 and, based upon currently available actuarial information, the Company does not have a required minimum contribution to its nonunion defined benefit pension plan for 2014. The plan had an adjusted funding target attainment percentage (“AFTAP”) of 108.0% as of the January 1, 2014 valuation date. The AFTAP is determined by measurements prescribed by the Internal Revenue Code, which differ from the funding measurements for financial statement reporting purposes. Multiemployer Plans ABF Freight contributes to multiemployer pension and health and welfare plans, which have been established pursuant to the Taft-Hartley Act, to provide benefits for its contractual employees. ABF Freight’s contributions generally are based on the time worked by its contractual employees, in accordance with the ABF NMFA, its collective bargaining agreement with the IBT, and other related supplemental agreements. ABF Freight recognizes as expense the contractually required contributions for each period and recognizes as a liability any contributions due and unpaid. ABF Freight contributes to 25 multiemployer pension plans, which vary greatly in size and in funded status. ABF Freight’s contribution obligations to these plans are specified in the ABF NMFA, which was implemented on November 3, 2013 and will remain in effect through March 31, 2018. The funding obligations to the pension plans are intended to satisfy the requirements imposed by the Pension Protection Act of 2006 (the “PPA”). Through the term of its current collective bargaining agreement, ABF Freight’s contribution obligations generally will be satisfied by making the specified contributions when due. However, the Company cannot determine with any certainty the contributions that will be required under future collective bargaining agreements for its contractual employees. In addition, notwithstanding any collective bargaining agreement, employer contribution obligations to multiemployer pension plans can be increased if the plan enters reorganization status or becomes insolvent. In those events, the contribution increase generally cannot exceed 7% per year. ABF Freight has not received notification of any plan reorganization or plan insolvency. Were ABF Freight to completely withdraw from certain multiemployer pension plans, under current law, the Company would have material liabilities for its share of the unfunded vested liabilities of each such plan. However, ABF Freight currently has no intention to withdraw from any such plan, which generally would be effected through collective bargaining. Approximately one half of ABF Freight’s total contributions to multiemployer pension plans are made to the Central States, Southeast and Southwest Areas Pension Plan (the “Central States Pension Plan”). The funded percentage of the Central States Pension Plan, as set forth in information provided by the Central States Plan, was 47.6% as of January 1, 2013. The multiemployer plan administrators have provided to the Company no other significant changes in information related to multiemployer plans from the information disclosed in the Company’s 2013 Annual Report on Form 10-K.

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- Definition The entire disclosure for pension and other postretirement benefits. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -URI http://asc.fasb.org/topic&trid=2235017 + Details
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