Post Retirement Benefits

The Company provides post retirement benefits to certain of its United States employees, including contributions to a multi-employer defined benefit pension plan, health care and life insurance benefits, and contributions to three 401(k) defined contribution plans.

The Company contributes to a multi-employer defined benefit pension plan for its employees represented by the International Association of Machinists and Aerospace Workers ("IAM") at the Company’s Columbus, Ohio production facility. The Company does not administer this plan and contributions are determined in accordance with provisions of the collective bargaining agreement. The risks of participating in this multi-employer plan are different from a single-employer plan in the following aspects:


•	Assets contributed to the multi-employer plan by one employer may be used to provide benefits to employees of other participating employers.


•	If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.


•	If the Company chooses to stop participating in its multi-employer plan, the Company may be required to pay the plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

The Company’s participation in the multi-employer defined benefit pension plan for the years ended December 31, 2013 and 2012 is outlined in the table below. The most recent Pension Protection Act ("PPA") zone status available in 2013 and 2012 is for the plan’s year-end at December 31, 2012, and December 31, 2011, respectively. The zone status is based on information the Company received from the plan and is certified by the plan’s actuary. Among other factors, plans in the red zone are generally less than 65% funded, plans in the yellow zone are less than 80% funded, and plans in the green zone are at least 80% funded. The “FIP/RP Status Pending/Implemented” column indicates whether a financial improvement plan ("FIP") or a rehabilitation plan ("RP") is either pending or has been implemented.

Pension Fund

EIN/Pension Plan Number

Pension Protection Act Zone Status

FIP/RP Status Pending/ Implemented

Contributions of the Company

Surcharge Imposed

Expiration Date of Collective Bargaining Agreement

2013

2012

2013

2012

IAM National Pension Fund / National Pension Plan ^(A)

51-6031295 - 002

Green as of 12/31/12

Green as of 12/31/11

$464,000

$443,000

8/17/2016

Total Contributions:

$464,000

$443,000

^(A) The National Pension Plan utilized a five year amortization extension in accordance with § 431(d) of the Internal Revenue Code of 1986 ("the Code") to amortize its losses from 2008. The plan re-certified its zone status after using the amortization provisions of the Code. The Company's contributions to the plan did not represent more than 5% of total contributions to the plan as indicated in the plan's most recently available annual report for the plan year ended December 31, 2012. Under the terms of the collective-bargaining agreement, the Company is required to make contributions to the plan for each hour worked up to a maximum of 40 hours per person, per week, at the following rates: $1.20 per hour from August 8, 2011 through August 12, 2012; $1.25 per hour from August 13, 2012 through August 10, 2013; $1.30 per hour from August 11, 2013 through August 10, 2014; $1.35 per hour from August 11, 2014 through August 9, 2015; and $1.40 per hour from August 10, 2015 through August 17, 2016.

Prior to the acquisition of Columbus Plastics, certain of the Company's employees were participants, or were eligible to participate, in Navistar's post retirement health and life insurance benefit plan. This plan provides healthcare and life insurance benefits for certain employees upon their retirement, along with their spouses and certain dependents and requires cost sharing between the Company, Navistar and the participants, in the form of premiums, co-payments, and deductibles. The Company and Navistar share the cost of benefits for these employees, using a formula that allocates the cost based upon the respective portion of time that the employee was an active service participant after the acquisition of Columbus Plastics to the period of active service prior to the acquisition of Columbus Plastics.

The Company also sponsors a post retirement health and life insurance benefit plan for certain union retirees of its Columbus, Ohio production facility. On August 7, 2010, the Company entered into a new collective bargaining agreement with union-represented employees at the Company’s Columbus, Ohio production facility. As part of the new agreement, the post retirement health and life insurance benefits for all current and future represented employees who were not retired as of August 7, 2010 were eliminated in exchange for a one-time cash payment of $1,257,000. Individuals who retired prior to August 7, 2010 remain eligible for post retirement health and life insurance benefits.

The elimination of post retirement health and life insurance benefits described above resulted in a reduction of the Company’s post retirement benefits liability of approximately $10,282,000 in 2010. This reduction in post retirement benefits liability was treated as a negative plan amendment and is being amortized as a reduction to net periodic benefit cost over approximately twenty years, the actuarial life expectancy of the remaining participants in the plan at the time of the amendment. This negative plan amendment resulted in net periodic benefit cost reductions of approximately $496,000 in 2012 and 2013, and will result in net periodic benefit cost reductions of approximately $496,000 in 2014 and each year thereafter during the amortization period, as well as lower interest costs associated with the reduced post retirement benefits liability.

The funded status of the Company's post retirement health and life insurance benefits plan as of December 31, 2013 and 2012 and reconciliation with the amounts recognized in the consolidated balance sheets are provided below.



	Post Retirement Benefits
	2013			2012
Change in benefit obligation:
Benefit obligation at beginning of year	$	9,987,000		$	9,582,000
Interest cost	332,000			364,000
Unrecognized (gain) loss	(2,917,000		)	792,000
Benefits paid	(628,000		)	(751,000		)
Benefit obligation at end of year	$	6,774,000		$	9,987,000
Plan Assets	—			—

Amounts recorded in accumulated other comprehensive income:
Prior service credit	$	(8,586,000	)	$	(9,082,000	)
Net loss	1,477,000			4,595,000
Total	$	(7,109,000	)	$	(4,487,000	)
Weighted-average assumptions as of December 31:
Discount rate used to determine benefit obligation and net periodic benefit cost	4.6		%	3.6		%

The components of expense for all of the Company's post retirement benefit plans for the years ended December 31, 2013 and 2012 are as follows:



	2013			2012
Pension expense:
Multi-employer plan	$	464,000		$	443,000
Defined contribution plans	571,000			527,000
Total pension expense	1,035,000			970,000

Health and life insurance:
Interest cost	332,000			364,000
Amortization of prior service costs	(496,000		)	(496,000		)
Amortization of net loss	201,000			159,000
Net periodic benefit cost	37,000			27,000
Total post retirement benefits expense	$	1,072,000		$	997,000

The Company accounts for post retirement benefits under FASB ASC 715, which requires the recognition of the funded status of a defined benefit pension or post retirement plan in the consolidated balance sheets. For the year ended December 31, 2013, the Company recognized a net actuarial gain of $2,917,000 in other comprehensive income. For the year ended December 31, 2012, the Company recognized a net actuarial loss of $792,000 in other comprehensive loss.

Amounts not yet recognized as a component of net periodic benefit costs at December 31, 2013 and 2012 were a net credit of $7,109,000 and $4,487,000, respectively. The amount in accumulated other comprehensive income expected to be recognized as components of net periodic post retirement cost during 2014 consists of a prior service credit of $496,000, and a net loss of $47,000. In addition, 2014 interest expense related to post retirement healthcare is expected to be $277,000, for a total post retirement healthcare net gain of approximately $172,000 in 2014. The Company expects contributions in 2014 to be consistent with estimated future benefit payments as shown in the table below.

The weighted average rate of increase in the per capita cost of covered health care benefits is projected to be 7%. The rate is projected to decrease gradually to 5% by the year 2019 and remain at that level thereafter. The comparable assumptions for the prior year were 7% and 5%, respectively.

The effect of changing the health care cost trend rate by one-percentage point for each future year is as follows:



	1- Percentage Point Increase		1-Percentage Point Decrease
Effect on total of service and interest cost components	$	36,000	$	(50,000	)
Effect on post retirement benefit obligation	$	504,000	$	(826,000	)

The estimated future benefit payments of the health care plan are as follows:



2014	$	943,000
2015	$	441,000
2016	$	395,000
2017	$	358,000
2018	$	350,000
2019 - 2023	$	1,837,000