Annual report pursuant to Section 13 and 15(d)

Postretirement Benefits (Tables)

v2.4.1.9
Postretirement Benefits (Tables)
 12 Months Ended
Dec. 31, 2014
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]  
Schedule of Net Pension and Other Benefit Costs
Costs. Pension and other postretirement benefit costs included the following components for 2014, 2013 and 2012:
 
Pension Benefits
 
Other Postretirement Benefits
(in millions)
2014
 
2013
 
2012
 
2014
 
2013
 
2012
Service cost
$
—

 
$
0.1

 
$
0.2

 
$
—

 
$
—

 
$
—

Interest cost
58.6

 
54.0

 
57.7

 
2.0

 
1.9

 
2.4

Expected return on plan assets
(58.8
)
 
(57.0
)
 
(55.2
)
 
—

 
—

 
—

Amortization of prior service credits
—

 
—

 
—

 
(0.9
)
 
(5.7
)
 
(6.3
)
Amortization of net actuarial losses
15.0

 
21.4

 
21.9

 
—

 
1.3

 
0.7

Curtailment loss
—

 
—

 
0.1

 
—

 
—

 
—

Settlement loss
27.9

 
—

 
—

 
—

 
—

 
—

Net pension and other benefit costs
$
42.7

 
$
18.5

 
$
24.7

 
$
1.1

 
$
(2.5
)
 
$
(3.2
)

Reconciliation of the Changes in Plans Benefit Obligations, Fair Value of Plan Assets, and Statement of Funded Status
A reconciliation of the changes in the benefit obligations and fair value of assets over the two-year period ending December 31, 2014, and a statement of the funded status at December 31 for these years for the Company's pension and other postretirement benefit plans follow:
 
Pension Benefits
 
Other Postretirement Benefits
(in millions)
2014
 
2013
 
2014
 
2013
Reconciliation of benefit obligation:
 
 
 
 
 
 
 
Benefit obligation at previous December 31
$
1,249.3

 
$
1,388.0

 
$
47.7

 
$
58.0

Service cost
—

 
0.1

 
—

 
—

Interest cost
58.6

 
54.0

 
2.0

 
1.9

Participant contributions
—

 
—

 
0.9

 
1.1

Actuarial (gains) losses
165.9

 
(116.4
)
 
5.0

 
(5.2
)
Benefit payments
(86.5
)
 
(76.4
)
 
(6.1
)
 
(8.1
)
Settlement payments
(71.9
)
 
—

 
—

 
—

Benefit obligation at December 31
1,315.4

 
1,249.3

 
49.5

 
47.7

 
 
 
 
 
 
 
 
Reconciliation of fair value of plan assets:
 
 
 
 
 
 
 
Fair value of plan assets at previous December 31
956.0

 
898.6

 
—

 
—

Actual return on plan assets
94.5

 
80.0

 
—

 
—

Employer contributions
73.8

 
53.8

 
5.2

 
7.0

Participant contributions
—

 
—

 
0.9

 
1.1

Benefit payments
(86.5
)
 
(76.4
)
 
(6.1
)
 
(8.1
)
Settlement payments
(71.9
)
 
—

 
—

 
—

Fair value of plan assets at December 31
965.9

 
956.0

 
—

 
—

 
 
 
 
 
 
 
 
Funded status at December 31
$
(349.5
)
 
$
(293.3
)
 
$
(49.5
)
 
$
(47.7
)
Schedule of Amounts Recognized in Consolidated Balance Sheet
The amounts included in the Company's Consolidated Balance Sheets as of December 31, 2014 and 2013, were as follows:
 
Pension Benefits
 
Other Postretirement Benefits
(in millions)
2014
 
2013
 
2014
 
2013
Accrued expenses
$
3.8

 
$
3.8

 
$
4.9

 
$
5.8

Postretirement benefit liabilities
345.7

 
289.5

 
44.6

 
41.9

Net amount recognized
$
349.5

 
$
293.3

 
$
49.5

 
$
47.7

Schedule of Projected and Accumulated Benefit Obligation and Fair Value of Plan Assets
As of December 31, 2014 and 2013, the projected and accumulated benefit obligations for all of the Company's pension plans were in excess of plan assets. The projected and accumulated benefit obligations and fair value of plan assets for the Company's qualified and nonqualified pension plans at December 31 were as follows:
(in millions)
2014
 
2013
Projected benefit obligation
$
1,315.4

 
$
1,249.3

Accumulated benefit obligation
$
1,315.4

 
$
1,249.3

Fair value of plan assets
$
965.9

 
$
956.0

Funded status
73
%
 
77
%
Activity Recorded in Accumulated Other Comprehensive Income or Loss
The following pretax activity related to pensions and other postretirement benefits was recorded in Accumulated other comprehensive income (loss) as of December 31:
 
Pension Benefits
 
Other Postretirement Benefits
(in millions)
2014
 
2013
 
2014
 
2013
Prior service credits
 
 
 
 
 
 
 
Beginning balance
$
—

 
$
—

 
$
(12.5
)
 
$
(18.2
)
Prior service credits arising during the period
—

 
—

 
—

 
—

Amount recognized as component of net benefit costs
—

 
—

 
0.9

 
5.7

Ending balance
—

 
—

 
(11.6
)
 
(12.5
)
 
 
 
 
 
 
 
 
Net actuarial losses
 
 
 
 
 
 
 
Beginning balance
441.3

 
602.1

 
2.3

 
8.8

Actuarial (gains) losses arising during the period
130.2

 
(139.4
)
 
5.0

 
(5.2
)
Amount recognized as component of net benefit costs
(42.9
)
 
(21.4
)
 
—

 
(1.3
)
Ending balance
528.6

 
441.3

 
7.3

 
2.3

 
 
 
 
 
 
 
 
Total
$
528.6

 
$
441.3

 
$
(4.3
)
 
$
(10.2
)
Assumed Health Care Cost Trend Rates
The assumed health care cost trend rate for other postretirement benefits for pre-age 65 benefits as of December 31 was as follows:
 
Pre-age 65 Benefits
 
2014
 
2013
Health care cost trend rate for next year
7.1
%
 
7.3
%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
4.5
%
 
4.5
%
Year rate reaches the ultimate trend rate
2028

 
2028

Effect of One-Percentage-Point Change in Assumed Health Care Cost Trend Rates
A one percent change in the assumed health care trend rate at December 31, 2014, would have the following effects:
(in millions)
One Percent Increase
 
One Percent Decrease
Effect on total service and interest cost
$
—

 
$
—

Effect on accumulated postretirement benefit obligation
$
0.2

 
$
(0.2
)
Weighted-average assumptions used to determine benefit obligations and net pension and other postretirement benefit costs
Weighted average assumptions used to determine pension and other postretirement benefit obligations at December 31 were as follows:
 
Pension Benefits
 
Other Postretirement Benefits
 
2014
 
2013
 
2014
 
2013
Discount rate
3.95
%
 
4.85
%
 
3.75
%
 
4.40
%
Rate of compensation increase(A)
—

 
—

 
—

 
—


(A) Assumption used in determining pension benefit obligation only. The rate of compensation increase was reduced to 0.00% at December 31, 2008, as a result of the decision to freeze future benefit accruals for those plans where benefits are based on average compensation.

Weighted average assumptions used to determine net pension and other postretirement benefit costs for the years ended December 31 were as follows:
 
2014
 
2013
 
2012
Discount rate for pension benefits
4.85%
 
4.00%
 
4.50%
Discount rate for other postretirement benefits
4.40%
 
3.60%
 
4.20%
Long-term rate of return on plan assets(A)
6.25%
 
6.50%
 
7.00%
Rate of compensation increase(A)
—
 
—
 
—


(A) Assumption used in determining pension benefit cost only.

Schedule of Allocation of Plan Assets
The Trust asset allocation at December 31, 2014 and 2013, and target allocation for 2015 are as follows:
 
2014
 
2013
 
Target
Allocation for 2015
Equity securities:
 
 
 
 
 
United States
17%
 
25%
 
17%
International
3%
 
5%
 
3%
Fixed-income securities
66%
 
46%
 
80%
Short-term investments
14%
 
24%
 
—
Total
100%
 
100%
 
100%


The fair values of the Trust's pension assets at December 31, 2014, by asset class were as follows:
 
Fair Value Measurements at December 31, 2014 (A)
(in millions)
 
 
Quoted Prices in Active Markets for Identical Assets
 
Significant Observable Inputs
 
Significant Unobservable Inputs
Asset Class
Total
 
(Level 1)
 
(Level 2)
 
(Level 3)
Short-term investments
$
151.3

 
$
6.3

 
$
145.0

 
$
—

Equity securities: (B) 
 
 
 
 
 
 
 
United States
164.4

 
—

 
164.4

 
—

International
28.1

 
—

 
28.1

 
—

Fixed-income securities:
 
 
 
 
 
 
 
Government securities (C)
119.7

 
—

 
119.7

 
—

Corporate securities (D)
372.3

 
—

 
372.3

 
—

Commingled funds (E)
141.3

 
—

 
141.3

 
—

Other investments (F) 
(6.2
)
 
—

 
(6.2
)
 
—

Total pension assets at fair value
970.9

 
$
6.3

 
$
964.6

 
$
—

Other liabilities (G)
(5.0
)
 
 
 
 
 
 
Total pension plan net assets
$
965.9

 
 
 
 
 
 

(A) See Note 7 – Fair Value Measurements for a description of levels within the fair value hierarchy. The level in the fair value hierarchy within which the fair value measurement is classified is determined based on the lowest level input that is significant to the fair value measurement in its entirety. A description of the valuation methodologies is provided following these tables. There were no transfers in and/or out of Level 1, Level 2 and Level 3 in 2014.

(B) The equity assets are invested in two indexed funds based on the Russell 3000 Index (U.S.) and the MSCI EAFE Equity Index (International). The Trust did not directly own any of the Company's common stock as of December 31, 2014.

(C) Government securities are comprised of U.S. Treasury bonds and other government securities and are considered Level 2 in 2014.

(D) Corporate securities consist primarily of investment grade bonds issued by companies in diversified industries.

(E) This class includes commingled funds that primarily invest in investment grade corporate securities and government-related securities. This class also includes investments in non-agency collateralized mortgage obligation and mortgage-backed securities, futures and options.

(F) Other investments consist primarily of interest rate swaps used to manage the average duration of the fixed income portfolio.

(G) This class includes interest receivable and receivables/payables for securities sold/purchased.


The fair values of the Trust's pension assets at December 31, 2013, by asset class were as follows:
 
Fair Value Measurements at December 31, 2013 (A)
(in millions)
 
 
Quoted Prices in Active Markets for Identical Assets
 
Significant Observable Inputs
 
Significant Unobservable Inputs
Asset Class
Total
 
(Level 1)
 
(Level 2)
 
(Level 3)
Short-term investments
$
237.0

 
$
—

 
$
237.0

 
$
—

Equity securities: (B) 
 
 
 
 
 
 
 
United States
243.8

 
—

 
243.8

 
—

International
46.8

 
—

 
46.8

 
—

Fixed-income securities:
 
 
 
 
 
 
 
Government securities (C)
70.2

 
27.8

 
42.4

 
—

Corporate securities (D)
157.0

 
—

 
157.0

 
—

Commingled funds (E)
208.0

 
—

 
208.0

 
—

Other investments (F)
9.0

 
—

 
9.0

 
—

Total pension assets at fair value
971.8

 
$
27.8

 
$
944.0

 
$
—

Other liabilities (G)
(15.8
)
 
 
 
 
 
 
Total pension plan net assets
$
956.0

 
 
 
 
 
 

(A) See Note 7 – Fair Value Measurements for a description of levels within the fair value hierarchy. The level in the fair value hierarchy within which the fair value measurement is classified is determined based on the lowest level input that is significant to the fair value measurement in its entirety. A description of the valuation methodologies is provided following these tables. There were no transfers in and/or out of Level 1, Level 2 and Level 3 in 2013.

(B) The equity assets are invested in two indexed funds based on the Russell 3000 Index (U.S.) and the MSCI EAFE Equity Index (International). The Trust did not directly own any of the Company's common stock as of December 31, 2013.

(C) Government securities are comprised primarily of U.S. Treasury bonds and other government securities.

(D) Corporate securities consist primarily of investment grade bonds issued by companies in diversified industries.

(E) This class includes commingled funds that primarily invest in investment grade corporate securities and government-related securities. This class also includes investments in non-agency collateralized mortgage obligation and mortgage-backed securities, futures and options.

(F) Other investments consist primarily of interest rate swaps used to manage the average duration of the fixed income portfolio.

(G) This class includes interest receivable and receivables/payables for securities sold/purchased.
Schedule of Expected Cash Flows
The expected cash flows for the Company's pension and other postretirement benefit plans follow:
(in millions)
Pension Benefits
 
Other Postretirement Benefits
Company contributions expected to be made in 2015 (A)
$
73.8

 
$
4.9

Expected benefit payments (which reflect future service):
 
 
 
2015 (B)
$
81.5

 
$
4.9

2016
$
82.3

 
$
4.6

2017
$
82.6

 
$
4.4

2018
$
82.3

 
$
4.1

2019
$
82.0

 
$
3.8

2020-2024
$
394.1

 
$
15.2


(A) The Company currently anticipates contributing approximately $70.0 million to fund the qualified pension plans and approximately $3.8 million to cover benefit payments in the unfunded, nonqualified pension plan in 2015. Company contributions are subject to change based on market conditions or Company discretion.

(B) In addition to the 2015 expected pension benefit payments of $81.5 million, estimated lump sum pension settlement payments of $70 million are expected to be made in 2015.