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EMPLOYEE RETIREMENT PLANS | 9 Months Ended
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Sep. 30, 2013
EMPLOYEE RETIREMENT PLANS |
EMPLOYEE RETIREMENT PLANS | 11. EMPLOYEE RETIREMENT PLANS Defined Benefit Plans The Company sponsors and/or contributes to postretirement medical and insurance plans ("OPEB") and pension and other benefit plans covering many of our United States employees, in whole or in part, based on meeting certain eligibility criteria. In addition, the Company and its subsidiaries have various pension plans and other forms of postretirement arrangements outside the United States, namely in Canada and Taiwan. As part of the Merger, we assumed certain liabilities related to pensions ("Assumed Pension Plans") and other postretirement benefit plans ("Assumed Postretirement Plans"). Refer to Note 2 to the unaudited condensed consolidated financial statements for additional information related to the Merger. We had no other OPEB obligations prior to the Merger. Pension and OPEB Welfare Plans Certain employees in the United States who were hired before January 1, 2009 are covered by a defined benefit pension plan. That plan was frozen to future benefit accruals in 2009. The Assumed Pension Plans provide ongoing benefits to certain employees and are closed to new hires. The Assumed Postretirement Plans are unfunded and provide medical and life insurance benefits for certain employees of the Merged Business and their dependents. In connection with the Merger, we also acquired an Employee Group Waiver Plan ("EGWP") for certain Medicare-eligible retirees of the Merged Business and their dependents. The EGWP includes a fully-insured Medicare Part D prescription drug plan. The Assumed Pension Plans require retiree contributions based on retiree-selected coverage levels for certain retirees and their dependents and provide for sharing of future benefit cost increases between the Company and participants. Recently approved amendments to the Assumed Pension Plans for United States salaried employees will freeze all future benefit accruals for non-union employees effective January 31, 2014. Also, recently approved modifications to the Assumed Postretirement Plans were made with respect to certain participants, to deliver retiree medical benefits through health reimbursement account contributions. For the impacted participants, these retiree medical changes will become effective on January 1, 2014 for Medicare eligible retirees and will become effective January 1, 2015 for non-Medicare eligible retirees. In addition, life insurance benefits for our assumed United States non-bargained future retirees will be eliminated effective January 1, 2014. These OPEB benefit changes were approved and communicated to participants in October 2013 and the quantitative financial impact will be reflected beginning in the fourth quarter of 2013. The impact of these amendments to both the Assumed Pension Plans and the Assumed Postretirement Plans will begin to be recognized in the fourth quarter of 2013. The preliminary estimated fair value of pension investment assets related to the Assumed Pension Plans was $479.2 million as of January 28, 2013. As of the same date, our estimated preliminary projected benefit obligation with respect to these assets was $576.1 million. The unfunded status of pension obligations assumed by us and calculated on a projected benefit obligation basis as of January 28, 2013, was approximately $96.9 million. The aggregate amount of the unfunded Assumed Postretirement Plans as of January 28, 2013, was approximately $182.9 million. Net periodic benefit cost (income) for the three months ended September 30, 2013 and 2012 includes the following:
|  | Pensions Three Months Ended September 30, |  | OPEB Benefits Three Months Ended September 30, |
--- | --- | --- | --- | --- | ---
(In millions) |  | 2013 |  | 2012 |  | 2013 |
Components of net periodic benefit cost (income): |  |  |  |  |  |  |  |  |  |
Interest cost |  | $ | 7.5 |  | $ | 1.8 |  | $ | 2.0 |
Service cost |  |  | 1.7 |  |  | - |  |  | 0.6 |
Expected return on assets |  |  | (9.8 | ) |  | (2.2 | ) |  | - |
Amortization of actuarial loss |  |  | 0.5 |  |  | 0.4 |  |  | - |
Total net periodic benefit cost (income) |  | $ | (0.1 | ) | $ | - |  | $ | 2.6 |
Net periodic benefit cost (income) for the nine months ended September 30, 2013 and 2012 includes the following:
|  | Pensions Nine Months Ended September 30, |  | OPEB Benefits Nine Months Ended September 30, |
--- | --- | --- | --- | --- | ---
(In millions) |  | 2013 |  | 2012 |  | 2013 |
Components of net periodic benefit cost (income): |  |  |  |  |  |  |  |  |  |
Interest cost |  | $ | 20.5 |  | $ | 5.4 |  | $ | 5.3 |
Service cost |  |  | 4.5 |  |  | - |  |  | 1.7 |
Expected return on assets |  |  | (27.0 | ) |  | (6.5 | ) |  | - |
Amortization of actuarial loss |  |  | 1.6 |  |  | 1.3 |  |  | - |
Total net periodic benefit cost (income) |  | $ | (0.4 | ) | $ | 0.2 |  | $ | 7.0 |
Assumptions The following weighted average assumptions were used to determine the benefit obligation for the defined benefit pension and other postretirement welfare plans. The rate of compensation increase was not applicable in 2012 as all future benefits with respect to compensation increases were frozen for the plans that existed at that time.
|  | Pensions |  | OPEB Benefits
--- | --- | --- | --- | ---
|  | 2013 |  | 2012 |  | 2013
Discount rate |  | 4.09% |  | 5.00% |  |  | 4.35%
Expected return on assets |  | 6.81% |  | 8.25% |  |  | Not Applicable
Rate of compensation increase |  | 3.15% |  | Not Applicable |  |  | 3.11%
The weighted-average healthcare cost trend rate (inflation) used for 2013 is 6.64 percent declining to 4.50 percent in the year 2024. In selecting the rates for our current and long-term health care cost assumptions, we take into consideration a number of factors including our actual health care cost increases, the design of our benefit programs, the demographics of our active and retiree populations and external expectations of future medical cost inflation rates. Contributions There were no significant contributions to the pension plan trusts during the three and nine months ended September 30, 2013 and 2012. We estimate that we will make payments of approximately $2.1 million and $6.8 million, respectively, for benefit payments related to unfunded pension and OPEB plans for the year ending December 31, 2013. Defined Contribution Plans Most pre-Merger employees and employees of the Merged Business are covered by defined contribution plans under which we make contributions to individual employee accounts. Our expense related to our defined contribution plans was approximately $10.8 million and $4.1 million for the nine months ended September 30, 2013 and 2012, respectively.

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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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