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EMPLOYEE RETIREMENT PLANS | 12 Months Ended
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Dec. 31, 2012
EMPLOYEE RETIREMENT PLANS |
EMPLOYEE RETIREMENT PLANS | 13. EMPLOYEE RETIREMENT PLANS We have certain employee retirement plans that cover substantially all of our employees. The expense incurred for these plans was $9.1 million, $8.0 million and $2.3 million, for the years ended December 31, 2012, 2011 and 2010, respectively. These plans are discussed below. Most employees are covered by defined contribution plans under which we made contributions to individual employee accounts. We had expense related to our U.S. defined contribution plan of approximately $4.8 million, $3.7 million and $1.3 million for the years ended December 31, 2012, 2011 and 2010, respectively. We also had an expense related to our Canadian defined contribution plan of approximately $2.5 million and $2.1 million, for the years ended December 31, 2012 and 2011, respectively. In July 2010, we announced the reinstatement of our Company match for our U.S. and Canadian retirement savings plans. On October 1, 2012, we announced and implemented an additional Company Retirement Contribution to our U.S. retirement savings plan. U.S. employees hired before January 1, 2009 are covered by a defined benefit cash balance pension plan, which was frozen to future benefit accruals in 2009. Employees who worked at our now-closed manufacturing facility in Sarnia, Ontario were previously covered by a defined benefit pension plan. In connection with the closure of that manufacturing facility in December 2008, we decided to wind-up the Canadian pension plan. All future benefit obligations for this pension plan were fully funded in 2011 with a contribution in the amount of approximately $0.8 million with a corresponding settlement charge recognized during the year ended December 31, 2011. Benefit Obligations. The reconciliation of the beginning and ending balances of the projected benefit obligation for defined benefit plans is as follows:
|  | As of December 31, |
--- | --- | --- | ---
(In thousands) |  | 2012 |  | 2011 |
Change in Benefit Obligation |  |  |  |  |  |  |
Projected benefit obligation, beginning of year |  | $ | 147,290 |  | $ | 143,133 |
Interest cost |  |  | 7,193 |  |  | 7,397 |
Actuarial loss |  |  | 19,087 |  |  | 10,226 |
Foreign currency translation adjustment |  |  | - |  |  | 58 |
Gross benefits paid |  |  | (5,059 | ) |  | (13,524 | )
Projected benefit obligation, end of year |  | $ | 168,511 |  | $ | 147,290 |
Accumulated benefit obligation, end of year |  | $ | 168,511 |  | $ | 147,290 |
The accumulated benefit obligation is defined as the actuarial present value of pension benefits (whether vested or unvested) attributed to employee service rendered before December 31, 2012 and 2011, respectively, and based on employee service and compensation prior to the applicable date. The accumulated benefit obligation is equal to the projected benefit obligation at December 31, 2012 and 2011 because no future benefits are accruing under the pension plans. Plan Assets. The summary and reconciliation of the beginning and ending balances of the fair value of the plans' assets were as follows:
|  | As of December 31, |
--- | --- | --- | ---
(In thousands) |  | 2012 |  | 2011 |
Change in Plan Assets |  |  |  |  |  |  |
Fair value of plan assets, beginning of year |  | $ | 107,738 |  | $ | 122,509 |
Actual return on plan assets |  |  | 12,732 |  |  | (2,401 | )
Foreign currency translation adjustment |  |  | - |  |  | 60 |
Employer contribution |  |  | 419 |  |  | 1,094 |
Gross benefits paid |  |  | (5,059 | ) |  | (13,524 | )
Fair value of plan assets, end of year |  | $ | 115,830 |  | $ | 107,738 |
The Plan classifies its investments based on the lowest level of input that is significant to the fair value measurement. The following table sets forth, by level within the fair value hierarchy, a summary of the Plan's investments measured at fair value and the target and current allocation.
Asset Category |  | Target Allocation 2013 |  | Percentage of Plan Assets, December 31, 2012 |  | Total |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |
--- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ---
(In thousands, except percentages) |  |  |  |  |  |  |  |  |  |  |
Short-term investment fund |  |  |  |  |  | 2 | % | $ | 2,190 |  | $ | - |  | $ | 2,190 |  | $ | - |
US Equity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer discretionary sector |  |  |  |  |  |  |  |  | 1,734 |  |  | 1,734 |  |  | - |  |  | - |
Consumer staples sector |  |  |  |  |  |  |  |  | 4,151 |  |  | 4,151 |  |  | - |  |  | - |
Energy sector |  |  |  |  |  |  |  |  | 1,158 |  |  | 1,158 |  |  | - |  |  | - |
Finance sector |  |  |  |  |  |  |  |  | 581 |  |  | 581 |  |  |  |  |  |  |
Health care sector |  |  |  |  |  |  |  |  | 2,985 |  |  | 2,985 |  |  | - |  |  | - |
Industrials sector |  |  |  |  |  |  |  |  | 1,130 |  |  | 1,130 |  |  | - |  |  | - |
Information technology sector |  |  |  |  |  |  |  |  | 4,390 |  |  | 4,390 |  |  | - |  |  | - |
Capital appreciation mutual fund |  |  |  |  |  |  |  |  | 6,365 |  |  | 6,365 |  |  | - |  |  | - |
SMALL cap growth mutual fund |  |  |  |  |  |  |  |  | 5,129 |  |  | 5,129 |  |  | - |  |  | - |
Pooled equity fund |  |  |  |  |  |  |  |  | 19,200 |  |  | - |  |  | - |  |  | 19,200 |
Other |  |  |  |  |  |  |  |  | 849 |  |  | 849 |  |  | - |  |  | - |
Total US equity securities: |  |  | 43 | % |  | 41 | % |  | 47,672 |  |  | 28,472 |  |  | - |  |  | 19,200 |
International equity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
EUROPACIFIC GROWTH fund |  |  |  |  |  |  |  |  | 24,981 |  |  | 24,981 |  |  | - |  |  | - |
Consumer staples sector |  |  |  |  |  |  |  |  | 394 |  |  | 394 |  |  | - |  |  | - |
Emerging markets fund |  |  | 5 | % |  | 5 | % |  | 5,340 |  |  | 5,340 |  |  | - |  |  | - |
Total International equity securities |  |  | 20 | % |  | 27 | % |  | 30,715 |  |  | 30,715 |  |  | - |  |  | - |
Fixed income securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pimco total return INSTL |  |  |  |  |  |  |  |  | 22,899 |  |  | 22,899 |  |  | - |  |  | - |
Financial services sector |  |  |  |  |  |  |  |  | 177 |  |  | - |  |  | 177 |  |  | - |
Total fixed income securities: |  |  | 20 | % |  | 20 | % |  | 23,076 |  |  | 22,899 |  |  | 177 |  |  | - |
Long-biased hedge fund |  |  | 10 | % |  | 9 | % |  | 10,579 |  |  | - |  |  | - |  |  | 10,579 |
Real estate partnership |  |  | 2 | % |  | 1 | % |  | 1,598 |  |  | - |  |  | - |  |  | 1,598 |
Total |  |  |  |  |  |  |  | $ | 115,830 |  | $ | 82,086 |  | $ | 2,367 |  | $ | 31,377 |
Asset Category |  | Target Allocation 2012 |  | Percentage of Plan Assets, December 31, 2011 |  | Total |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |
--- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ---
(In thousands, except percentages) |  |  |  |  |  |  |  |  |  |  |
Short-term investment fund |  |  |  |  |  | 1 | % | $ | 1,547 |  | $ | - |  | $ | 1,547 |  | $ | - |
US equity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer discretionary sector |  |  |  |  |  |  |  |  | 2,921 |  |  | 2,921 |  |  | - |  |  | - |
Consumer staples sector |  |  |  |  |  |  |  |  | 4,475 |  |  | 4,475 |  |  | - |  |  | - |
Energy sector |  |  |  |  |  |  |  |  | 1,638 |  |  | 1,638 |  |  | - |  |  | - |
Health care sector |  |  |  |  |  |  |  |  | 3,276 |  |  | 3,276 |  |  | - |  |  | - |
Industrials sector |  |  |  |  |  |  |  |  | 1,471 |  |  | 1,471 |  |  | - |  |  | - |
Information technology sector |  |  |  |  |  |  |  |  | 4,258 |  |  | 4,258 |  |  | - |  |  | - |
Capital appreciation mutual fund |  |  |  |  |  |  |  |  | 5,502 |  |  | 5,502 |  |  | - |  |  | - |
SMALL cap growth mutual fund |  |  |  |  |  |  |  |  | 6,456 |  |  | 6,456 |  |  | - |  |  | - |
Pooled equity fund |  |  |  |  |  |  |  |  | 17,308 |  |  | - |  |  | - |  |  | 17,308 |
Other |  |  |  |  |  |  |  |  | 476 |  |  | 476 |  |  | - |  |  | - |
Total US equity securities: |  |  | 43 | % |  | 45 | % |  | 47,781 |  |  | 30,473 |  |  | - |  |  | 17,308 |
International equity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
EUROPACIFIC GROWTH fund |  |  |  |  |  |  |  |  | 20,955 |  |  | 20,955 |  |  | - |  |  | - |
Consumer staples sector |  |  |  |  |  |  |  |  | 258 |  |  | 258 |  |  | - |  |  | - |
Information technology sector |  |  |  |  |  |  |  |  | 1 |  |  | 1 |  |  | - |  |  | - |
Total International equity securities |  |  | 20 | % |  | 20 | % |  | 21,214 |  |  | 21,214 |  |  | - |  |  | - |
Fixed income securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Pimco total return INSTL |  |  |  |  |  |  |  |  | 25,184 |  |  | 25,184 |  |  | - |  |  | - |
Financial services sector |  |  |  |  |  |  |  |  | 64 |  |  | - |  |  | 64 |  |  | - |
Total fixed income securities: |  |  | 20 | % |  | 23 | % |  | 25,248 |  |  | 25,184 |  |  | 64 |  |  | - |
Long-biased hedge fund |  |  | 10 | % |  | 10 | % |  | 10,359 |  |  | - |  |  | - |  |  | 10,359 |
Real estate partnership |  |  | 2 | % |  | 1 | % |  | 1,447 |  |  | - |  |  | - |  |  | 1,447 |
Other securities |  |  |  |  |  |  |  |  | 142 |  |  | 142 |  |  | - |  |  | - |
Emerging markets |  |  | 5 | % |  | - | % |  | - |  |  | - |  |  | - |  |  | - |
Total |  |  |  |  |  |  |  | $ | 107,738 |  | $ | 77,013 |  | $ | 1,611 |  | $ | 29,114 |
Funded Status. The following table shows the funded status of the pension benefits, reconciled to the amounts reported on the balance sheets:
|  | As of December 31, |
--- | --- | --- | ---
(In thousands) |  | 2012 |  | 2011 |
Funded status, end of year: |  |  |  |  |  |  |
Fair value of plan assets |  | $ | 115,830 |  | $ | 107,738 |
Benefit obligations |  |  | 168,511 |  |  | 147,290 |
Unfunded status |  |  | (52,681 | ) |  | (39,552 | )
Amount recognized, end of year |  | $ | (52,681 | ) | $ | (39,552 | )
Amounts recognized in the balance sheets consist of: |  |  |  |  |  |  |
Current liability |  | $ | (419 | ) | $ | (419 | )
Noncurrent liability |  |  | (52,262 | ) |  | (39,133 | )
Amount recognized, end of year |  | $ | (52,681 | ) | $ | (39,552 | )
Gross amounts recognized in accumulated other comprehensive loss consist of: |  |  |  |  |  |  |
Net actuarial loss |  | $ | 77,459 |  | $ | 64,095 |
Prior service cost |  |  | 99 |  |  | 103 |
Amount recognized, end of year |  | $ | 77,558 |  | $ | 64,198 |
Changes in Other Comprehensive Income (Loss). The following table summarizes the changes in plan assets and benefit obligations which were recognized in other comprehensive income (loss):
|  | Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss) for Pension |
--- | --- | --- | ---
|  | For the Years Ended December 31, |
(In thousands) |  | 2012 |  | 2011 |  | 2010 |
End of year: |  |  |  |  |  |  |  |  |  |
Current year actuarial loss |  | $ | 15,045 |  | $ | 22,172 |  | $ | 6,495 |
Amortization of actuarial loss |  |  | (1,680 | ) |  | (1,539 | ) |  | (794 | )
Current year prior service cost |  |  |  |  |  |  |  |  | 110 |
Amortization of prior service cost |  |  | (4 | ) |  | (4 | ) |  | (4 | )
Total recognized in other comprehensive income (loss) |  | $ | 13,361 |  | $ | 20,629 |  | $ | 5,807 |
Total recognized in net periodic benefit cost and other comprehensive income (loss) |  | $ | 13,549 |  | $ | 20,023 |  | $ | 4,498 |
The estimated amount that will be amortized from accumulated other comprehensive loss into net periodic benefit cost in 2013, excluding any effects of the consummation of the Transactions, is $2.1 million consisting of:
(In thousands) |  | Pension |
--- | --- | --- | ---
Actuarial loss |  | $ | 2,133 |
Prior service cost |  |  | 4 |
Total |  | $ | 2,137 |
Net Periodic Benefit Cost (Income). The amount of net periodic benefit cost (income) recognized includes the following components:
|  | Pension Benefit Years Ended December 31, |
--- | --- | --- | ---
(In thousands) |  | 2012 |  | 2011 |  | 2010 |
Components of net periodic benefit cost (income): |  |  |  |  |  |  |  |  |  |
Interest cost |  | $ | 7,193 |  | $ | 7,397 |  | $ | 7,747 |
Expected return on assets |  |  | (8,689 | ) |  | (9,548 | ) |  | (9,854 | )
Amortization of: |  |  |  |  |  |  |  |  |  |
Prior service cost |  |  | 4 |  |  | 4 |  |  | 4 |
Actuarial loss |  |  | 1,680 |  |  | 1,539 |  |  | 794 |
Total net periodic benefit cost (income) |  | $ | 188 |  | $ | (608 | ) | $ | (1,309 | )
Assumptions. The major assumption used to determine benefit obligations for our pension plans is a weighted average discount rate, which was 4.00 percent and 5.00 percent at December 31, 2012 and 2011, respectively. The pension plans were frozen prior to 2010, therefore, a rate of compensation increase is not an applicable assumption in determining benefit obligations for our pension plans. The major assumptions used to determine net periodic benefit cost (income) for pension plans are presented as weighted averages:
|  | Years Ended December 31, |
--- | --- | --- | ---
|  | 2012 |  | 2011 |  | 2010 |
Discount rate |  |  | 5.00 | % |  | 5.48 | % |  | 6.00 | %
Expected long-term rate of return on plan assets |  |  | 8.25 | % |  | 8.49 | % |  | 8.66 | %
The expected long-term rate of return on plan assets assumption is based on historical and projected rates of return for current and planned asset classes in the plan's investment portfolio. Projected rates of return for each of the plans' projected asset classes were selected after analyzing historical experience and future expectations of the returns and volatility of the various asset classes. Based on the target asset allocation for each asset class, the overall expected rate of return for the portfolio was developed and adjusted for historical and expected experience of active portfolio management results compared to the benchmark returns and for the effect of expenses paid from plan assets. Our investment committee establishes investment policies and strategies and regularly monitors the performance of the plans' funds. Our investment strategy with respect to pension assets is to invest the assets in accordance with the "prudent investor" guidelines contained in the Employee Retirement Income Security Act of 1974 and fiduciary standards. Our policy on funding is to contribute an amount within the range of the minimum required and the maximum tax-deductible contribution. Employer contributions include direct benefits paid under all pension plans of $0.4 million from employer assets in 2012, 2011 and 2010. Expected Cash Flows. We expect to make contributions of $0.4 million to our pension plans during 2013 in direct benefit payments. These contributions exclude payments to be made in connection with plans assumed upon the consummation of the Transactions. Expected benefit payments for all pension plans, excluding plans assumed in connection with the consummation of the Transactions, are as follows:
(In thousands) |  | Pension Benefits |
--- | --- | --- | ---
Expected benefit payments |  |  |  |
2013 |  | $ | 6,150 |
2014 |  |  | 6,802 |
2015 |  |  | 7,410 |
2016 |  |  | 7,996 |
2017 |  |  | 8,525 |
2018-2022 |  |  | 49,318 |

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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 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 87 -Paragraph 264 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 158 -Paragraph 7, 21, 22 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 132R -Paragraph 5 -Subparagraph b -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name FASB Staff Position (FSP) -Number FAS106-2 -Paragraph 20, 21, 22 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Implementation Guide (Q and A) -Number FAS88 -Paragraph 63 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 132R -Paragraph 5 -Subparagraph h -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Accounting Principles Board Opinion (APB) -Number 30 -Paragraph 26 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 132R -Paragraph 5 -Subparagraph a -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Emerging Issues Task Force (EITF) -Number 03-2 -Paragraph 8 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 132R -Paragraph 5, 6, 7, 8 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 132R -Paragraph 8 -Subparagraph m -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 132R -Paragraph 5 -Subparagraph q -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 106 -Paragraph 518 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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