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EMPLOYEE BENEFIT PLANS | 12 Months Ended
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Dec. 31, 2014
EMPLOYEE BENEFIT PLANS |
EMPLOYEE BENEFIT PLANS | NOTE J — EMPLOYEE BENEFIT PLANS Nonunion Defined Benefit Pension, Supplemental Benefit, and Postretirement Health Benefit Plans The Company has a noncontributory defined benefit pension plan covering substantially all noncontractual employees hired before January 1, 2006. Benefits under the defined benefit pension plan are generally based on years of service and employee compensation. 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 were active employees of the Company became eligible to participate in the Company’s nonunion defined contribution plan in which substantially all noncontractual employees hired subsequent to December 31, 2005 also participate (see Defined Contribution Plans section within this Note). 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 effect of the plan curtailment was a reduction of the projected benefit obligation (“PBO”) to the amount of the plan’s accumulated benefit obligation. The decrease in the PBO upon curtailment, as presented in the changes in benefit obligations and plan assets table within this Note, reduced the unrecognized net actuarial loss of the plan, which is reported on an after-tax basis in accumulated other comprehensive loss within stockholders’ equity in the consolidated balance sheet. No curtailment gain or loss was recognized in earnings. The unrecognized net actuarial loss was also reduced by a net actuarial gain which resulted from the remeasurement of the assets and PBO of the plan upon curtailment. The freeze of the accrual of benefits effective as of July 1, 2013, and the reduction of the 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 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 receiving monthly benefit payments at the time of the contract purchase. Upon payment by the plan of the $25.4 million premium for the annuity contract, pension benefit obligations totaling $23.3 million were irrevocably transferred to the insurance company. The nonparticipating annuity contract purchase amount of $25.4 million plus total lump-sum benefit distributions of $32.1 million exceeded the annual interest costs of the plan in 2014; therefore, the Company recognized pension settlement expense as a component of net periodic benefit cost with corresponding reductions in the unrecognized net actuarial loss of the nonunion defined benefit pension plan. The Company also recognized pension settlement expense in 2013, because total lump-sum benefit distributions from the plan exceeded the total annual service and interest cost of the plan. The pension settlement expense amounts for 2014 and 2013 are presented in the tables within this Note. The remaining pre-tax unrecognized net actuarial loss of $24.3 million 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 continue to incur quarterly settlement expense related to lump-sum benefit distributions from the nonunion defined benefit pension plan, as estimated lump sum distributions are expected to exceed annual interest costs of the plan. The Company also has an unfunded supplemental benefit plan (“SBP”) for the purpose of supplementing benefits under the Company’s nonunion defined benefit pension plan for executive officers designated as participants in the SBP by the Company’s Board of Directors. The Compensation Committee of the Company’s Board of Directors (“Compensation Committee”) elected to close the SBP to new entrants and to place a cap on the maximum payment per participant to existing participants in the SBP effective January 1, 2006. In place of the SBP, eligible officers of the Company appointed after 2005 participate in a long-term cash incentive plan (see Long-Term Cash Incentive Plan section within this Note). Effective December 31, 2009, the Compensation Committee elected to freeze the accrual of benefits for remaining participants under the SBP. With the exception of early retirement penalties that may apply in certain cases, the valuation inputs for calculating the frozen SBP benefits to be paid to participants, including final average salary and the interest rate, were frozen at December 31, 2009. The lump-sum SBP benefit exceeded the annual interest cost of the plan; therefore, pension settlement expense and a corresponding reduction in the net actuarial loss was recorded in 2014, as presented in the tables within this Note. The Company sponsors an insured postretirement health benefit plan that provides supplemental medical benefits and dental benefits primarily to certain officers of the Company and certain subsidiaries. Effective January 1, 2011, retirees began paying a portion of the premiums under the plan according to age and coverage levels. The amendment to the plan to implement retiree premiums resulted in an unrecognized prior service credit which was recorded in accumulated other comprehensive loss and is being amortized over approximately eight years. Premiums charged to retirees under the postretirement health benefit plan were increased effective January 1, 2014, which contributed to the actuarial gain recognized for the plan effective December 31, 2013. The following table discloses the changes in benefit obligations and plan assets of the Company’s nonunion defined benefit plans for years ended December 31, the measurement date of the plans:
|  | Nonunion Defined |  | Supplemental |  | Postretirement |
|  | Benefit Pension Plan |  | Benefit Plan |  | Health Benefit Plan |
|  | 2014 |  | 2013 |  | 2014 |  | 2013 |  | 2014 |  | 2013 |
|  | (in thousands) |
Change in benefit obligations |  |  |  |  |  |  |  |  |  |  |  |  |
Benefit obligations at beginning of year |  | $ | 211,660 |  | $ | 260,950 |  | $ | 7,092 |  | $ | 7,213 |  | $ | 16,318 |  | $ | 18,308 |
Service cost |  | — |  | 4,734 |  | — |  | — |  | 280 |  | 331 |
Interest cost |  | 6,039 |  | 7,784 |  | 184 |  | 150 |  | 788 |  | 751 |
Actuarial (gain) loss |  | 11,906 |  | (10,797 | ) | 53 |  | (271 | ) | 5,269 |  | (2,484 | )
Benefits paid |  | (58,047 | ) | (22,486 | ) | (853 | ) | — |  | (539 | ) | (588 | )
Curtailment gain |  | — |  | (29,262 | ) | — |  | — |  | — |  | — |
Settlement loss |  | 2,852 |  | 737 |  | 306 |  | — |  | — |  | — |
Benefit obligations at end of year |  | 174,410 |  | 211,660 |  | 6,782 |  | 7,092 |  | 22,116 |  | 16,318 |
Change in plan assets |  |  |  |  |  |  |  |  |  |  |  |  |
Fair value of plan assets at beginning of year |  | 207,613 |  | 181,225 |  | — |  | — |  | — |  | — |
Actual return on plan assets |  | 8,599 |  | 31,074 |  | — |  | — |  | — |  | — |
Employer contributions |  | 100 |  | 17,800 |  | 853 |  | — |  | 539 |  | 588 |
Benefits paid |  | (58,047 | ) | (22,486 | ) | (853 | ) | — |  | (539 | ) | (588 | )
Fair value of plan assets at end of year |  | 158,265 |  | 207,613 |  | — |  | — |  | — |  | — |
Funded status |  | $ | (16,145 | ) | $ | (4,047 | ) | $ | (6,782 | ) | $ | (7,092 | ) | $ | (22,116 | ) | $ | (16,318 | )
Accumulated benefit obligation |  | $ | 174,410 |  | $ | 211,660 |  | $ | 6,782 |  | $ | 7,092 |  | $ | 22,116 |  | $ | 16,318 |
Amounts recognized in the consolidated balance sheets at December 31 consisted of the following:
|  | Nonunion Defined |  | Supplemental |  | Postretirement |
|  | Benefit Pension Plan |  | Benefit Plan |  | Health Benefit Plan |
|  | 2014 |  | 2013 |  | 2014 |  | 2013 |  | 2014 |  | 2013 |
|  | (in thousands) |
Current liabilities (included in accrued expenses) |  | $ | — |  | $ | — |  | $ | (1,941 | ) | $ | — |  | $ | (684 | ) | $ | (610 | )
Noncurrent liabilities (included in pension and postretirement liabilities) |  | (16,145 | ) | (4,047 | ) | (4,841 | ) | (7,092 | ) | (21,432 | ) | (15,708 | )
Liabilities recognized |  | $ | (16,145 | ) | $ | (4,047 | ) | $ | (6,782 | ) | $ | (7,092 | ) | $ | (22,116 | ) | $ | (16,318 | )
The following is a summary of the components of net periodic benefit cost for the Company’s nonunion benefit plans for the years ended December 31:
|  | Nonunion Defined |  | Supplemental |  | Postretirement |
|  | Benefit Pension Plan |  | Benefit Plan |  | Health Benefit Plan |
|  | 2014 |  | 2013 |  | 2012 |  | 2014 |  | 2013 |  | 2012 |  | 2014 |  | 2013 |  | 2012 |
|  | (in thousands) |
Service cost |  | $ | — |  | $ | 4,734 |  | $ | 9,189 |  | $ | — |  | $ | — |  | $ | — |  | $ | 280 |  | $ | 331 |  | $ | 315 |
Interest cost |  | 6,039 |  | 7,784 |  | 8,692 |  | 184 |  | 150 |  | 210 |  | 788 |  | 751 |  | 749 |
Expected return on plan assets |  | (10,419 | ) | (13,313 | ) | (12,063 | ) | — |  | — |  | — |  | — |  | — |  | — |
Amortization of prior service credit |  | — |  | — |  | — |  | — |  | — |  | — |  | (190 | ) | (190 | ) | (190 | )
Pension settlement expense |  | 5,880 |  | 2,111 |  | — |  | 715 |  | — |  | — |  | — |  | — |  | — |
Amortization of net actuarial loss (1) |  | 2,398 |  | 7,140 |  | 10,767 |  | 214 |  | 260 |  | 202 |  | 93 |  | 535 |  | 416 |
Net periodic benefit cost |  | $ | 3,898 |  | $ | 8,456 |  | $ | 16,585 |  | $ | 1,113 |  | $ | 410 |  | $ | 412 |  | $ | 971 |  | $ | 1,427 |  | $ | 1,290 |
| (1) |  | The Company amortizes actuarial losses over the average remaining active service period of the plan participants and does not use a corridor approach.
The following is a summary of the pension settlement distributions and pension settlement expense for the years ended December 31:
|  | Nonunion Defined |  | Supplemental |
|  | Benefit Pension Plan |  | Benefit Plan |
|  | 2014(1) |  | 2013(2) |  | 2012 |  | 2014(3) |  | 2013 |  | 2012(4) |
|  | (in thousands, except per share data) |
Pension settlement distributions |  | $ | 57,518 |  | $ | 20,104 |  | $ | — |  | $ | 853 |  | $ | — |  | $ | 1,126 |
Pension settlement expense, pre-tax |  | $ | 5,880 |  | $ | 2,111 |  | $ | — |  | $ | 715 |  | $ | — |  | $ | — |
Pension settlement expense per diluted share, net of taxes |  | $ | 0.14 |  | $ | 0.05 |  | $ | — |  | $ | 0.02 |  | $ | — |  | $ | — |
| (1) |  | Pension settlement distributions represent $32.1 million of lump-sum benefit distributions and a $25.4 million nonparticipating annuity contract purchase.
| (2) |  | Pension settlement distributions represent lump-sum benefit distributions paid in 2013.
| (3) |  | Pension settlement expense relates to the SBP benefit for an officer retirement that occurred in 2014. The benefit distribution amount was fixed at the retirement date, but a portion of the benefit will be paid in 2015, because IRC Section 409A which requires that certain distributions to certain key employees under the SBP be delayed for six months after retirement.
| (4) |  | The 2012 SBP distribution represents the portion of a benefit related to an officer retirement that occurred in 2011 which was delayed for six months after retirement in accordance with IRC Section 409A. The pension settlement expense related to this distribution was recognized in 2011.
Included in accumulated other comprehensive loss at December 31 were the following pre-tax amounts that have not yet been recognized in net periodic benefit cost:
|  | Nonunion Defined |  | Supplemental |  | Postretirement |
|  | Benefit Pension Plan |  | Benefit Plan |  | Health Benefit Plan |
|  | 2014 |  | 2013 |  | 2014 |  | 2013 |  | 2014 |  | 2013 |
|  | (in thousands) |
Unrecognized net actuarial loss |  | $ | 24,303 |  | $ | 16,003 |  | $ | 1,207 |  | $ | 1,778 |  | $ | 5,327 |  | $ | 150 |
Unrecognized prior service credit |  | — |  | — |  | — |  | — |  | (697 | ) | (887 | )
Total |  | $ | 24,303 |  | $ | 16,003 |  | $ | 1,207 |  | $ | 1,778 |  | $ | 4,630 |  | $ | (737 | )
The following amounts, which are reported within accumulated other comprehensive loss at December 31, 2014, are expected to be recognized as components of net periodic benefit cost in 2015 on a pre-tax basis. (Amounts exclude the effect of pension settlements which the Company will incur for the nonunion defined benefit pension plan in 2015.)
|  | Nonunion |  |  |  | Postretirement |
|  | Defined Benefit |  | Supplemental |  | Health |
|  | Pension Plan |  | Benefit Plan |  | Benefit Plan |
|  | (in thousands) |
Unrecognized net actuarial loss |  | $ | 3,008 |  | $ | 159 |  | $ | 622 |
Unrecognized prior service credit |  | — |  | — |  | (190 | )
Total |  | $ | 3,008 |  | $ | 159 |  | $ | 432 |
The discount rate is determined by matching projected cash distributions with appropriate high-quality corporate bond yields in a yield curve analysis. Weighted-average assumptions used to determine nonunion benefit obligations at December 31 were as follows:
|  | Nonunion Defined |  | Supplemental |  | Postretirement |
|  | Benefit Pension Plan |  | Benefit Plan |  | Health Benefit Plan |
|  | 2014 |  | 2013 |  | 2014 |  | 2013 |  | 2014 |  | 2013 |
Discount rate |  | 3.2 | % | 3.8 | % | 2.5 | % | 2.8 | % | 3.9 | % | 4.7 | %
Weighted-average assumptions used to determine net periodic benefit cost for the Company’s nonunion benefit plans for the years ended December 31 were as follows:
|  | Nonunion Defined |  | Supplemental |  | Postretirement |
|  | Benefit Pension Plan |  | Benefit Plan |  | Health Benefit Plan |
|  | 2014(1) |  | 2013(2) |  | 2012 |  | 2014(3) |  | 2013 |  | 2012 |  | 2014 |  | 2013 |  | 2012 |
Discount rate |  | 3.8 | % | 3.1 | % | 3.7 | % | 2.8 | % | 2.1 | % | 3.2 | % | 4.7 | % | 3.8 | % | 4.3 | %
Expected return on plan assets |  | 6.5 | % | 7.5 | % | 7.5 | % | N/A |  | N/A |  | N/A |  | N/A |  | N/A |  | N/A |
Rate of compensation increase (4) |  | N/A |  | 3.3 | % | 3.3 | % | N/A |  | N/A |  | N/A |  | N/A |  | N/A |  | N/A |
| (1) |  | The discount rate presented was used to determine the first quarter 2014 credit and the interim discount rates established upon each quarterly settlement in 2014 at a rate of 3.5%, 3.3%, and 3.4% was used to calculate the credit for the second, third, and fourth quarter of 2014, respectively.
| (2) |  | The discount rate presented was used to determine expense for the first six months of 2013 and the discount rate established upon the June 30, 2013 curtailment of 3.9% and upon the September 30, 2013 settlement of 3.7% was used to calculate the credit for the third and fourth quarter of 2013, respectively.
| (3) |  | The discount rate presented was used to determine expense for the first ten months of 2014 and the discount rate of 2.5% established upon the October 31, 2014 settlement was used to calculate expense for the last two months of 2014.
| (4) |  | The compensation assumption was no longer applicable for determining net periodic benefit cost of the nonunion defined benefit pension plan upon the June 30, 2013 remeasurement for plan curtailment due to the freeze of the accrual of benefits effective July 1, 2013.
The assumed health care cost trend rates for the Company’s postretirement health benefit plan at December 31 were as follows:
|  | 2014 |  | 2013 |
|  | Pre-65 |  | Post-65 |  | Pre-65 |  | Post-65 |
Health care cost trend rate assumed for next year |  | 7.5 | % | 5.8 | % | 8.0 | % | 5.0 | %
Rate to which the cost trend rate is assumed to decline |  | 4.5 | % | 4.5 | % | 5.0 | % | 5.0 | %
Year that the rate reaches the cost trend assumed rate |  | 2027 |  | 2020 |  | 2020 |  | 2020 |
The health care cost trend rates have a significant effect on the obligations reported for health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects on the Company’s postretirement health benefit plan for the year ended December 31, 2014:
|  | One Percentage Point |
|  | Increase |  | Decrease |
|  | (in thousands) |
Effect on total of service and interest cost components |  | $ | 204 |  | $ | (164 | )
Effect on postretirement benefit obligation |  | $ | 4,321 |  | $ | (3,450 | )
Estimated future benefit payments from the Company’s nonunion defined benefit pension (paid from trust assets), SBP, and postretirement health benefit plans, which reflect expected future service as appropriate, as of December 31, 2014 are as follows:
|  | Nonunion |  |  |  | Postretirement |
|  | Defined Benefit |  | Supplemental |  | Health |
|  | Pension Plan |  | Benefit Plan |  | Benefit Plan |
|  | (in thousands) |
2015 |  | $ | 31,108 |  | $ | 1,941 |  | $ | 684 |
2016 |  | $ | 14,813 |  | $ | 1,235 |  | $ | 750 |
2017 |  | $ | 14,341 |  | $ | — |  | $ | 813 |
2018 |  | $ | 13,622 |  | $ | — |  | $ | 916 |
2019 |  | $ | 13,408 |  | $ | 3,107 |  | $ | 963 |
2020-2024 |  | $ | 55,806 |  | $ | — |  | $ | 5,509 |
The Company’s contributions to the defined benefit pension plan are based upon the minimum funding levels required under provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”) and the Pension Protection Act of 2006 (the “PPA”), with the maximum contributions not to exceed deductible limits under the IRC. Based upon currently available actuarial information, which is subject to change upon completion of the 2015 actuarial valuation of the plan, the Company does not expect to have cash outlays for required minimum contributions to its nonunion defined benefit pension plan in 2015. The Highway and Transportation Funding Act of 2014 (the “HTFA”), which was signed into law on August 8, 2014, delayed the expansion of the corridor of interest rates used in the calculation of minimum funding requirements for defined benefit pension plans, which will produce higher actuarial valuation interest rates thus lowering liabilities and funding requirements. In accordance with the HTFA, the January 1, 2014 actuarial valuation of the Company’s nonunion defined benefit pension plan was reperformed, resulting in an adjusted funding target attainment percentage (“AFTAP”) of 112.3% as of the 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. Nonunion Defined Benefit Pension Plan Assets The Company establishes the expected long-term rate of return on nonunion defined benefit pension plan assets, which are held in trust, by considering the historical returns for the current mix of investments. In addition, consideration is given to the range of expected returns for the current pension plan investment mix provided by the plan’s investment advisor. This approach is intended to establish a long-term, nonvolatile rate. The Company’s long-term expected rate of return utilized in determining its 2015 nonunion defined benefit pension plan expense is 6.5%. The overall objectives of the investment strategy for the Company’s nonunion defined benefit plan are to achieve a rate of return that over the long term will fund liabilities and provide for required benefits under the plan in a manner that satisfies the fiduciary requirements of ERISA. The investment strategy aims to maximize the long-term return on plan assets subject to an acceptable level of investment risk, liquidity risk, and funding risk utilizing target asset allocations for investments. The plan’s long-term asset allocation policy is intended to protect or improve the purchasing power of plan assets and provide adequate diversification to limit the possibility of experiencing a substantial loss over a one-year period. The weighted-average target, acceptable ranges, and actual asset allocations of the Company’s nonunion defined benefit pension plan at December 31 is summarized in the following table:
|  | 2014 |  |  |  |  |
|  | Target |  | Acceptable |  | Weighted-Average Allocation |
|  | Allocation |  | Range |  | 2014 |  | 2013 |
Equity Securities |  |  |  |  |  |  |  |  |  |  |  |  |
Large Cap U.S. Equity |  | 15.0 | % | 10.0 | % | – |  | 25.0% |  | 18.9 | % | 23.8 | %
Mid Cap U.S. Equity |  | 10.0 |  | 8.0 | % | – |  | 12.0% |  | 12.1 |  | 10.7 |
Small Cap U.S. Equity |  | 10.0 |  | 8.0 | % | – |  | 12.0% |  | 11.3 |  | 10.5 |
International Equity |  | 15.0 |  | 11.0 | % | – |  | 19.0% |  | 15.0 |  | 12.5 |
Income Securities |  |  |  |  |  |  |  |  |  |  |  |  |
Debt Instruments |  | 30.0 |  | 20.0 | % | – |  | 35.0% |  | 20.4 |  | 17.6 |
Floating Rate Loan Fund |  | 10.0 |  | 3.0 | % | – |  | 15.0% |  | 10.2 |  | 3.6 |
Cash E quivalents |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and Cash Equivalents |  | 10.0 |  | 0.0 | % | – |  | 15.0% |  | 12.1 |  | 21.3 |
|  | 100.0 | % |  |  |  |  |  |  | 100.0 | % | 100.0 | %
Investment balances and results are reviewed quarterly. Investment performance is generally compared to the three-to-five year performance of recognized market indices as well as analyzed for periods shorter than three years for each investment fund and over five years for the total fund. Although investment allocations which fall outside the acceptable range at the end of any quarter are usually rebalanced based on the target allocation, the Company has the discretion to maintain cash or other short-term investments during periods of market volatility. The plan had a higher investment allocation to cash and cash equivalents as of December 31, 2013 in preparation for investment changes anticipated in January 2014, including the plan’s previously disclosed purchase of a nonparticipating annuity contract to settle the pension obligation related to the vested benefits of plan participants and beneficiaries receiving monthly benefit payments at the time of the contract purchase. The annuity contract purchase was part of the plan’s investment strategy, which has become more focused on reducing investment, interest rate, and longevity risks in the plan following the freeze of the accrual of benefits under the plan effective July 1, 2013. Certain types of investments and transactions are prohibited or restricted by the Company’s written pension investment policy, including, but not limited to, borrowing of money; purchase of securities on margin; short sales; pledging, mortgaging, or hypothecating securities except loans of securities that are fully-collateralized; purchase or sale of futures, options, or derivatives for speculation or leverage; purchase or sale of commodities; or illiquid interests in real estate or mortgages. Historically, index funds have primarily been used for investments in equity and fixed income securities; however, in 2009, the Company began investing in actively managed portfolios which, for 2014 and 2013, included investments in an actively managed portfolio of mid-cap U.S. equity securities and separate actively managed portfolios of short-term debt instruments. The short-term debt instrument portfolios include 1-3 year and 1-5 year fixed income portfolios which aim to approximate or exceed the returns of their respective benchmarks while preserving capital and, beginning in 2014, a total return fixed income portfolio with high quality investment grade corporate bond and high yield bond holdings, which seeks to provide less volatility than longer duration fixed income strategies while generating income. In addition to the requirements of the pension investment policy, certain investment restrictions apply to the actively managed portfolios, including: guidelines for permitted investments; minimum acceptable credit quality of securities; maximum maturity of investments; limitations on the concentration of certain types of investments; and/or acceptable effective duration period ranges. The fair value of the Company’s nonunion defined benefit pension plan assets at December 31, 2014, by major asset category and fair value hierarchy level (see Fair Value Measurements accounting policy in Note B), were as follows:
|  |  |  | Fair Value Measurements Using |
|  |  |  | Quoted Prices |  | Significant |  | Significant |
|  |  |  | In Active |  | Observable |  | Unobservable |
|  |  |  | Markets |  | Inputs |  | Inputs |
|  | Total |  | (Level 1) |  | (Level 2) |  | (Level 3) |
|  |  |  | (in thousands) |
Cash and Cash Equivalents(1) |  | $ | 19,085 |  | $ | 19,085 |  | $ | — |  | $ | — |
Debt Instruments(2) |  | 32,361 |  | — |  | 32,361 |  | — |
Floating Rate Loans(3) |  | 16,106 |  | 16,106 |  | — |  | — |
Large Cap U.S. Equity |  | 29,964 |  | 29,964 |  | — |  | — |
Mid Cap U.S. Equity |  | 19,180 |  | 19,180 |  | — |  | — |
Small Cap U.S. Equity |  | 17,899 |  | 17,899 |  | — |  | — |
International Equity |  | 23,670 |  | 23,670 |  | — |  | — |
|  | $ | 158,265 |  | $ | 125,904 |  | $ | 32,361 |  | $ | — |
| (1) |  | Consists primarily of money market mutual funds.
| (2) |  | Includes corporate debt instruments (66%), mortgage-backed instruments (24%), treasury instruments (5%), municipal debt instruments (4%), and agency debt instruments (1%) which are priced using daily bid prices. The fair value measurements are provided by a pricing service which uses the market approach with inputs derived from observable market data.
| (3) |  | Consists of a floating rate loan mutual fund.
The fair value of the Company’s nonunion defined benefit pension plan assets at December 31, 2013, by major asset category and fair value hierarchy level (see Fair Value Measurements accounting policy in Note B), were as follows:
|  |  |  | Fair Value Measurements Using |
|  |  |  | Quoted Prices |  | Significant |  | Significant |
|  |  |  | In Active |  | Observable |  | Unobservable |
|  |  |  | Markets |  | Inputs |  | Inputs |
|  | Total |  | (Level 1) |  | (Level 2) |  | (Level 3) |
|  |  |  | (in thousands) |
Cash and Cash Equivalents(1) |  | $ | 44,166 |  | $ | 44,166 |  | $ | — |  | $ | — |
Debt Instruments(2) |  | 36,517 |  | — |  | 36,517 |  | — |
Floating Rate Loans(3) |  | 7,594 |  | 7,594 |  | — |  | — |
Large Cap U.S. Equity |  | 49,281 |  | 49,281 |  | — |  | — |
Mid Cap U.S. Equity |  | 22,181 |  | 22,181 |  | — |  | — |
Small Cap U.S. Equity |  | 21,848 |  | 21,848 |  | — |  | — |
International Equity |  | 26,026 |  | 26,026 |  | — |  | — |
|  | $ | 207,613 |  | $ | 171,096 |  | $ | 36,517 |  | $ | — |
| (1) |  | Consists primarily of money market mutual funds.
| (2) |  | Includes corporate debt instruments (37%), mortgage-backed instruments (27%), treasury instruments (24%), municipal debt instruments (5%), asset-backed instruments (4%), and agency debt instruments (3%) which are priced using daily bid prices. The fair value measurements are provided by a pricing service which uses the market approach with inputs derived from observable market data.
| (3) |  | Consists of a floating rate loan mutual fund.
Deferred Compensation Plans The Company has deferred salary agreements with certain executives for which liabilities of $4.7 million and $5.2 million were recorded as of December 31, 2014 and 2013, respectively. The deferred salary agreements include a provision that immediately vests all benefits and provides for a lump-sum payment upon a change in control of the Company. The Compensation Committee elected to close the deferred salary agreement program to new entrants effective January 1, 2006. In place of the deferred salary agreement program, officers appointed after 2005 participate in the Long-Term Cash Incentive Plan (see Long-Term Cash Incentive Plan section within this Note). An additional benefit plan provides certain death benefits for certain officers and directors of an acquired company and its former subsidiaries. The Company had recorded liabilities of $0.8 million at December 31, 2014 and 2013 for future costs under this plan. The Company maintains a Voluntary Savings Plan (“VSP”), a nonqualified deferred compensation program for the benefit of certain executives of the Company and certain subsidiaries. Eligible employees may defer receipt of a portion of their salary and incentive compensation into the VSP by making an election prior to the beginning of the year in which the salary compensation is payable and, for incentive compensation, by making an election at least six months prior to the end of the performance period to which the incentive relates. The Company credits participants’ accounts with applicable rates of return based on a portfolio selected by the participants from the investments available in the plan. The Company match related to the VSP was suspended beginning January 1, 2010. All deferrals, Company match, and investment earnings are considered part of the general assets of the Company until paid. Accordingly, the consolidated balance sheets reflect the fair value of the aggregate participant balances, based on quoted prices of the mutual fund investments, as both an asset and a liability of the Company. As of December 31, 2014 and 2013, VSP balances of $3.0 million and $3.1 million, respectively, were included in other long-term assets with a corresponding amount recorded in other long-term liabilities. Defined Contribution Plans The Company and its subsidiaries have various defined contribution 401(k) plans that cover substantially all employees. The plans permit participants to defer a portion of their salary up to a maximum of 69% as determined under Section 401(k) of the IRC. For certain participating subsidiaries, the Company has historically matched 50% of nonunion participant contributions up to the first 6% of annual compensation. The plans also allow for discretionary Company contributions determined annually. The Company’s matching expense for the 401(k) plans totaled $4.9 million, $4.5 million, and $3.8 million for 2014, 2013, and 2012, respectively. Effective July 1, 2013, participants in the nonunion defined benefit pension plan who were active employees of the Company became eligible for the Company’s nonunion defined contribution plan in which substantially all noncontractual employees hired subsequent to December 31, 2005 also participate. Participants are fully vested in their benefits under the defined contribution plan after three years of service. The Company may make discretionary contributions to the defined contribution plan. In 2014 and 2013, the Company recognized expense of $9.0 million and $5.9 million, respectively, related to its contributions to the defined contribution plan. No contributions were made to the plan for 2012. Long-Term Cash Incentive Plan The Company maintains a performance-based Long-Term Cash Incentive Plan (“LTIP”) for officers of the Company or its subsidiaries who are not active participants in the deferred salary agreement program. The LTIP incentive, which is generally earned over three years, is based in part upon a proportionate weighting of return on capital employed and shareholder returns compared to a peer group, as specifically defined in the plan document. As of December 31, 2014 and 2013, $7.6 million and $4.2 million, respectively, were accrued for future payments under the plans. As of December 31, 2012, minimum performance requirements were not achieved and, as a result, no incentive payments were accrued. Other Plans Other long-term assets include $44.5 million and $43.8 million at December 31, 2014 and 2013, respectively, in cash surrender value of life insurance policies. These policies are intended to provide funding for long-term nonunion benefit arrangements such as the Company’s SBP and deferred compensation plans. A portion of the Company’s cash surrender value of variable life insurance policies have investments, through separate accounts, in equity and fixed income securities and, therefore, are subject to market volatility. The Company recognized gains associated with changes in the cash surrender value and proceeds from life insurance policies of $3.8 million during 2014 and 2013 and $2.1 million during 2012. 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. As of December 2014, approximately 79% of ABF Freight’s employees were covered under the ABF NMFA. ABF Freight recognizes as expense the contractually required contributions for each period and recognizes as a liability any contributions due and unpaid. The ABF NMFA and the related supplemental agreements which were implemented on November 3, 2013, provide for continued contributions to various multiemployer health, welfare, and pension plans maintained for the benefit of ABF Freight’s employees who are members of the IBT. Rate increases under the ABF NMFA were applied retroactively to August 1, 2013. The combined contribution rates for health, welfare, and pension benefits under the ABF NMFA may increase up to $1.00 per hour each August 1 providing that the plans provide evidence that an increase is necessary. The multiemployer plans to which ABF Freight contributes are jointly-trusteed (half of the trustees of each plan are selected by the participating employers, the other half by the IBT) and cover collectively-bargained employees of multiple unrelated employers. Due to the inherent nature of multiemployer plans, there are risks associated with participation in these plans that differ from single-employer plans. Assets received by the plans are not segregated by employer, and contributions made by one employer can be and are used to provide benefits to current and former employees of other employers. If a participating employer in a multiemployer plan no longer contributes to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers. If a participating employer in a multiemployer pension plan completely withdraws from the plan, it owes to the plan its proportionate share of the plan’s unfunded vested benefits, referred to as a withdrawal liability. A complete withdrawal generally occurs when the employer permanently ceases to have an obligation to contribute to the plan. A withdrawal liability is also owed in the event the employer withdraws from a plan in connection with a mass withdrawal, which generally occurs when all or substantially all employers withdraw from the plan pursuant to an agreement in a relatively short period of time. Were ABF Freight to completely withdraw from certain multiemployer pension plans, whether in connection with a mass withdrawal or otherwise, 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 withdrawal generally would have to be effected through collective bargaining. Pension Plans The 25 multiemployer pension plans to which ABF Freight contributes 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 PPA, which was permanently extended by the Reform Act. Among other things, the PPA requires that “endangered” (generally less than 80% funded and commonly called “yellow zone”) plans adopt “funding improvement plans” and that “critical” (generally less than 65% funded and commonly called “red zone”) plans adopt “rehabilitation plans” that are intended to improve the plan’s funded status over time. 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. The Multiemployer Pension Reform Act of 2014 (the “Reform Act”), which was included in the Consolidated and Further Continuing Appropriations Act of 2015 (the “CFCAA”) that was signed into law on December 16, 2014, includes new provisions to address the funding of multiemployer pension plans in “critical and declining” status, including certain of those in which ABF Freight participates. Critical and declining status is applicable to critical status plans that are projected to become insolvent anytime in the current plan year or during the next 14 plan years, or during the next 19 plan years and either the plan’s ratio of inactive participants to active participants exceeds two to one or the plan’s funded percentage is less than 80%. Provisions of the Reform Act include, among others, providing qualifying plans the ability to self-correct funding issues, subject to various requirements and restrictions, including applying to the Pension Benefit Guaranty Corporation for the suspension of certain benefits. Any actions taken by trustees of multiemployer pension plans under the Reform Act to improve funding will not reduce benefit rates ABF Freight is obligated to pay under its current contract with the IBT. Based on the most recent annual funding notices the Company has received, most of which are for plan years ended December 31, 2013, approximately 64% of ABF Freight’s contributions to multiemployer pension plans, including the Central States, Southeast and Southwest Areas Pension Plan (the “Central States Pension Plan”) discussed below, were made to plans that were in “critical status” and approximately 3% of ABF Freight’s contributions to multiemployer pension plans were made to plans that were in “endangered status,” each as defined by the PPA. ABF Freight’s participation in multiemployer pension plans is summarized in the table below. The multiemployer pension plans listed separately in the table represent plans that are individually significant to ABF Freight based on the amount of plan contributions. The severity of a plan’s underfunded status was also considered in ABF Freight’s analysis of individually significant funds to be separately disclosed. Significant multiemployer pension funds and key participation information were as follows:
|  |  |  | Pension |  | FIP/RP |  |  |  |  |
|  |  |  | Protection Act |  | Status |  | Contributions (d) |  | Surcharge |
|  | EIN/Pension |  | Zone Status (b) |  | Pending/ |  | (in thousands) |  | Imposed |
Legal Name of Plan |  | Plan Number (a) |  | 2014 |  | 2013 |  | Implemented (c) |  | 2014 |  | 2013 |  | 2012 |  | (e) |
Central States, Southeast and Southwest Areas Pension Plan(1)(2) |  | 36-6044243 |  | Red |  | Red |  | Implemented(3) |  | $ | 74,001 |  | $ | 70,020 |  | $ | 68,683 |  | No |
Western Conference of Teamsters Pension Plan(2) |  | 91-6145047 |  | Green |  | Green |  | No(4) |  | 23,030 |  | 20,601 |  | 20,774 |  | No |
Central Pennsylvania Teamsters Defined Benefit Plan(1)(2) |  | 23-6262789 |  | Green |  | Green |  | No |  | 12,810 |  | 12,143 |  | 11,170 |  | No |
I. B. of T. Union Local No. 710 Pension Fund(6)(7) |  | 36-2377656 |  | Green(5) |  | Green(5) |  | No |  | 9,186 |  | 10,001 |  | 9,567 |  | No |
All other plans in the aggregate |  |  |  |  |  |  |  |  |  | 25,150 |  | 23,468 |  | 21,701 |  |  |
Total multiemployer pension contributions paid(8) |  |  |  |  |  |  |  |  |  | $ | 144,177 |  | $ | 136,233 |  | $ | 131,895 |  |  |
Table Heading Definitions
| (a) |  | The “EIN/Pension Plan Number” column provides the Federal Employer Identification Number (EIN) and the three-digit plan number, if applicable.
| (b) |  | Unless otherwise noted, the most recent PPA zone status available in 2014 and 2013 is for the plan’s year-end status at December 31, 2013 and 2012, respectively. The zone status is based on information ABF Freight received from the plan and was certified by the plan’s actuary. Green zone funds are those that are in neither endangered or critical status and genera l l y have a funded percentage of at least 80%.
| (c) |  | The “FIP/RP Status Pending/Implemented” column indicates if a funding improvement plan (FIP) or a rehabilitation plan (RP), if applicable, is pending or has been implemented.
| (d) |  | Amounts reflect contributions made by ABF Freight in the respective year and differ from amounts expensed during the year.
| (e) |  | The surcharge column indicates if a surcharge was paid by the employer to the plan.
| (1) |  | ABF Freight was listed by the plan as providing more than 5% of the total contributions to the plan for the plan years ended December 31, 2013 and 2012.
| (2) |  | Information for this fund was obtained from the annual funding notice, other notices received from the plan, and the Form 5500 filed for the plan years ended December 31, 2013 and 2012.
| (3) |  | Adopted a rehabilitation plan effective March 25, 2008 as updated. Utilized amortization extension effective December 31, 2003.
| (4) |  | Utilized funding relief elections under the Pension Relief Act to determine the zone status beginning with the January 1, 2011 actuarial valuation.
| (5) |  | PPA zone status relates to plan years February 1, 2013 — January 31, 2014 and February 1, 2012 — January 31, 2013.
| (6) |  | ABF Freight was listed by the plan as providing more than 5% of the total contributions to the plan for the plan years ended January 31, 2014 and 2013.
| (7) |  | Information for this fund was obtained from the annual funding notice, other notices received from the plan, and the Form 5500 filed for the plan years ended January 31, 2014 and January 31, 2013.
| (8) |  | Contribution levels can be impacted by several factors such as changes in business levels and the related time worked by contractual employees, contractual rate increases for pension benefits, and the specific funding structure, which differs among funds. The pension contribution rate for contractual employees increased an average of 2.0%, 2.0%, and 2.3% effective primarily on August 1, 2014, 2013, and 2012, respectively. The Supplemental Negotiating Committee for the Central States Pension Plan approved no pension contribution increase effective August 1, 2014, 2013, and 2012. The Supplemental Negotiating Committee for the Western Conference of Teamsters Pension Plan approved no pension increase effective August 1, 2014, 2013, and 2012. The year-over-year changes in multiemployer pension plan contributions presented above were also influenced by changes in ABF Freight’s business levels.
For 2014, 2013, and 2012, 50% to 55% of ABF Freight’s multiemployer pension contributions were made to the Central States Pension Plan. The funded percentage of the Central States Pension Fund, as set forth in information provided by the Central States Plan, was 48.4%, 47.6%, and 53.9% as of January 1, 2014, 2013, and 2012, respectively. In 2005, the IRS granted an extension of the period of time over which the Central States Pension Plan amortizes unfunded liabilities by ten years subject to the condition that a targeted funding ratio will be maintained by the plan. Based on information currently available to the Company, the Central States Pension Plan has not received notice of revocation of the ten-year amortization extension granted by the IRS. In the unlikely event that the IRS were to revoke the extension, the revocation would apply retroactively to the 2004 plan year, which would result in a material liability for ABF Freight’s share of the resulting funded deficiency, the extent of which is currently unknown to the Company. The Company believes that the occurrence of a revocation that would require recognition of liabilities for ABF Freight’s share of a funded deficiency is remote. Health and Welfare Plans ABF Freight contributes to 44 multiemployer health and welfare plans which provide health care benefits for active employees and retirees covered under ABF Freight’s labor agreements. ABF Freight’s contributions to multiemployer health and welfare plans totaled $130.5 million, $118.0 million, and $113.0 million, for the year ended December 31, 2014, 2013, and 2012, respectively. The contribution rate for health and welfare benefits increased by an average of 5.4%, 7.6%, and 5.3% primarily on August 1, 2014, 2013, and 2012, respectively, under ABF Freight’s collective bargaining agreement with the IBT. Other than changes to contribution rates and variances in rates and time worked, there have been no other significant items that affect the comparability of the 2014, 2013, and 2012 multiemployer health and welfare contributions.

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