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Retirement Plans And Other Postretirement Benefits
 12 Months Ended
Dec. 31, 2012
Retirement Plans And Other Postretirement Benefits [Abstract]  
Retirement Plans And Other Postretirement Benefits

14 RETIREMENT PLANS AND OTHER POSTRETIREMENT BENEFITS

     We sponsor noncontributory defined benefit (pension) plans covering most employees. The plans for salaried and hourly employees currently in effect are based on a formula using the participant's years of service and compensation or using the participant's years of service and a dollar amount. The plan is closed to new participants, and based on plan changes announced in 2006, pay for active participants of the plan was frozen as of December 31, 2007.

     In addition to providing pension benefits, we provide postretirement life insurance and health care benefits for certain groups of employees. Tredegar and retirees share in the cost of postretirement health care benefits, with employees hired on or before January 1, 1993, receiving a fixed subsidy to cover a portion of their health care premiums. We eliminated prescription drug coverage for Medicare-eligible retirees as of January 1, 2006. Consequently, we are not eligible for any federal subsidies.

     The following tables reconcile the changes in benefit obligations and plan assets in 2012 and 2011, and reconcile the funded status to prepaid or accrued cost at December 31, 2012 and 2011:

                Other Post-  
    Pension Benefits     Retirement Benefits  
(In Thousands)   2012     2011     2012     2011  
Change in benefit obligation:                        
Benefit obligation, beginning of year $ 272,436   $ 247,969   $ 8,422   $ 7,350  
Service cost   3,657     3,361     58     54  
Interest cost   13,084     13,024     385     395  
Effect of actuarial (gains) losses related                        
to the following:                        
Discount rate change   26,843     16,986     549     414  
Retirement rate assumptions and                        
mortality table adjustments   -     6,314     -     (52 )
Retiree medical participation rate change   -     -     -     449  
Other   (1,372 )   (3,399 )   (243 )   122  
Benefits paid   (12,363 )   (11,819 )   (292 )   (310 )
Benefit obligation, end of year $ 302,285   $ 272,436   $ 8,879   $ 8,422  
Change in plan assets:                        
Plan assets at fair value,                        
beginning of year $ 214,647   $ 239,706   $ -   $ -  
Actual return on plan assets   14,455     (13,413 )   -     -  
Employer contributions   2,296     173     292     310  
Benefits paid   (12,363 )   (11,819 )   (292 )   (310 )
Plan assets at fair value, end of year $ 219,035   $ 214,647   $ -   $ -  
Funded status of the plans $ (83,250 ) $ (57,789 ) $ (8,879 ) $ (8,422 )
Amounts recognized in the consolidated                        
balance sheets:                        
Prepaid benefit cost $ -   $ -   $ -   $ -  
Accrued benefit liability   (83,250 )   (57,789 )   (8,879 )   (8,422 )
Net amount recognized $ (83,250 ) $ (57,789 ) $ (8,879 ) $ (8,422 )

 

     Assumptions used for financial reporting purposes to compute net benefit income or cost and benefit obligations for continuing operations, and the components of net periodic benefit income or cost for continuing operations, are as follows:

                      Other Post-  
    Pension Benefits     Retirement Benefits  
(In Thousands, Except Percentages)   2012     2011     2010     2012     2011     2010  
Weighted-average assumptions used                                    
to determine benefit obligations:                                    
Discount rate   4.21 %   4.95 %   5.45 %   4.10 %   4.90 %   5.35 %
Rate of compensation increases   n/a     n/a     n/a     n/a     n/a     n/a  
Weighted-average assumptions used                                    
to determine net periodic benefit                                    
cost:                                    
Discount rate   4.95 %   5.45 %   5.70 %   4.90 %   5.35 %   5.75 %
Rate of compensation increases   n/a     n/a     n/a     n/a     n/a     n/a  
Expected long-term return on                                    
plan assets   7.75 %   8.00 %   8.25 %   n/a     n/a     n/a  
Components of net periodic benefit                                    
cost:                                    
Service cost $ (3,657 ) $ (3,361 ) $ (3,315 ) $ (58 ) $ (54 ) $ (76 )
Interest cost   (13,084 )   (13,024 )   (13,071 )   (385 )   (395 )   (467 )
Expected return on plan assets   19,108     20,448     20,530     -     -     -  
Amortization of prior service                                    
costs and gains or losses   (10,377 )   (6,359 )   (4,806 )   241     264     79  
Settlement/curtailment   (99 )   -     -     -     -     -  
Net periodic benefit cost $ (8,109 ) $ (2,296 ) $ (662 ) $ (202 ) $ (185 ) $ (464 )

 

     Net benefit income or cost is determined using assumptions at the beginning of each year. Funded status is determined using assumptions at the end of each year. Pension and other postretirement liabilities for continuing operations of $92.1 million and $66.2 million are included in "Other noncurrent liabilities" in the consolidated balance sheets at December 31, 2012 and 2011, respectively. The amount of our accumulated benefit obligation is the same as our projected benefit obligation.

     At December 31, 2012, the effect of a 1% change in the health care cost trend rate assumptions would be immaterial.

     Expected benefit payments for continuing operations over the next five years and in the aggregate for 2018-2022 are as follows:

        Other
      Post-
    Pension   Retirement
(In Thousands)   Benefits   Benefits
2013 $ 13,797 $ 474
2014   14,559   492
2015   15,316   507
2016   15,883   522
2017   16,442   530
2018 - 2022   89,505   2,731

 

     Amounts recognized in 2012, 2011 and 2010 before related deferred income taxes in accumulated other comprehensive income consist of:

                      Other Post-  
    Pension     Retirement  
(In Thousands)   2012     2011     2010     2012     2011     2010  
Prior service cost (benefit) $ (887 ) $ (1,890 ) $ (2,966 ) $ -   $ -   $ -  
Net actuarial (gain) loss   167,009     148,364     102,037     (855 )   (1,401 )   (2,598 )

 

     The amounts before related deferred income taxes in accumulated other comprehensive income that are expected to be recognized as components of net periodic benefit or cost during 2013 are as follows:

          Other Post-  
(In Thousands)   Pension     Retirement  
Prior service cost (benefit) $ (1,184 ) $ -  
Net actuarial (gain) loss   15,943     (162 )

 

     The percentage composition of assets held by pension plans for continuing operations at December 31, 2012, 2011 and 2010 are as follows:

  % Composition of Plan Assets  
  at December 31,  
  2012   2011   2010  
Pension plans related to continuing operations:            
Fixed income securities 14.7 % 9.7 % 1.9 %
Large/mid-capitalization equity securities 10.9   15.9   22.3  
Small-capitalization equity securities 5.4   6.2   6.7  
International and emerging market equity securities 10.0   14.3   21.6  
Total equity securities 26.3   36.4   50.6  
Private equity and hedge funds 50.0   41.8   42.7  
Other assets 9.0   12.1   4.8  
Total for continuing operations 100.0 % 100.0 % 100.0 %

 

     Our targeted allocation percentage for pension plan assets and the expected long-term rate of return on assets is as follows:

  Target %   Expected  
  Composition of   Long-term  
  Plan Assets *   Return %  
Pension plans related to continuing operations:        
Fixed income securities 32.0 % 5.5 %
Large/mid-capitalization equity securities 10.0   9.0  
Small-capitalization equity securities 4.0   10.2  
International and emerging market equity securities 13.0   9.9  
Total equity securities 27.0   9.6  
Private equity and hedge funds 41.0   8.4  
Other assets -   -  
Total for continuing operations 100.0 % 7.8 %

 

* Target percentages for the composition of plan assets represents a neutral position within the approved range of allocations for such assets.

     Expected long-term returns are estimated by asset class and generally are based on inflation-adjusted historical returns, volatilities, risk premiums and managed asset premiums. The portfolio of fixed income securities is structured with maturities that generally match estimated benefit payments over the next 1-2 years. Other assets are primarily comprised of cash and contracts with insurance companies. Our primary investment objective is to maximize total return with a strong emphasis on the preservation of capital. We believe that over the long term a diversified portfolio of fixed income securities, equity securities, hedge funds and private equity funds has a better risk-return profile than fixed income securities alone. The average remaining duration of benefit payments for our pension plans is about 13 years. We expect our required contributions to be approximately $0.2 million in 2013.

     Estimates of the fair value of assets held by our pension plans are provided by third parties not affiliated with Tredegar. At December 31, 2012, the pension plan assets are categorized by level within the fair value measurement hierarchy as follows:

(In Thousands)       Quoted Prices   Signficant    
        in Active   Other   Significant
        Markets for   Observable   Unobservable
        Identical Assets   Inputs   Inputs
December 31, 2012   Total   (Level 1)   (Level 2)   (Level 3)
Large/mid-capitalization equity securities $ 23,845 $ 23,845 $ - $ -
Small-capitalization equity securities   11,914   11,914   -   -
International and emerging market                
   equity securities   21,827   8,814   13,013   -
Fixed income securities   32,150   18,080   14,070   -
Private equity and hedge funds   109,690   -   101,334   8,356
Other assets   10,256   10,256   -   -
Total plan assets at fair value $ 209,682 $ 72,909 $ 128,417 $ 8,356
Contracts with insurance companies   9,353            
Total plan assets, December 31, 2012 $ 219,035            
December 31, 2011                
Large/mid-capitalization equity securities $ 34,095 $ 31,490 $ 2,605 $ -
Small-capitalization equity securities   13,281   13,281   -   -
International and emerging market                
   equity securities   30,611   30,611   -   -
Fixed income securities   20,895   10,960   9,935   -
Private equity and hedge funds   89,620   -   82,628   6,992
Other assets   16,899   11,899   5,000   -
Total plan assets at fair value $ 205,401 $ 98,241 $ 100,168 $ 6,992
Contracts with insurance companies   9,246            
Total plan assets, December 31, 2011 $ 214,647            

 

     For fair value measurements of plan assets using significant unobservable inputs (Level 3), a reconciliation of the balances from January 1, 2011 to December 31, 2012 are as follows:

    Private equity and  
(In Thousands)   hedge funds  
Balance at January 1, 2011 $ 8,042  
Purchases   2,554  
Sales   (663 )
Distributions   (2,673 )
Actual return on plan assets still held      
at year end   (268 )
Transfers in and/or out of Level 3   -  
Balance at December 31, 2011   6,992  
Purchases   3,767  
Sales   -  
Distributions   (2,094 )
Actual return on plan assets still held      
at year end   (309 )
Transfers in and/or out of Level 3   -  
Balance at December 31, 2012 $ 8,356  

 

     We also have a non-qualified supplemental pension plan covering certain employees. Effective December 31, 2005, further participation in this plan was terminated and benefit accruals for existing participants were frozen. The plan was designed to restore all or a part of the pension benefits that would have been payable to designated participants from our principal pension plans if it were not for limitations imposed by income tax regulations. The projected benefit obligation relating to this unfunded plan was $2.8 million at December 31, 2012 and $2.6 million at December 31, 2011. Pension expense recognized for this plan was $0.1 million in 2012, $0.1 million in 2011 and $0.2 million in 2010. This information has been included in the preceding pension benefit tables.

     Approximately 101 employees at our films manufacturing facility in Kerkrade, The Netherlands are covered by a collective bargaining agreement that includes participation in a multi-employer pension plan. Pension expense recognized for participation in this plan, which is equal to required contributions, was $0.5 million in 2012, $0.6 million in 2011 and $0.6 million in 2010. This information has been excluded from the preceding pension benefit tables.