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Profit Sharing, Retirement Savings Plans and Defined Benefit Pension Plans
 12 Months Ended
Dec. 31, 2019
Retirement Benefits [Abstract]  
Profit Sharing, Retirement Savings Plans and Defined Benefit Pension Plans Profit Sharing, Retirement Savings Plans and Defined Benefit Pension Plans
Profit Sharing and Retirement Savings Plans
We have a qualified non-contributory profit sharing plan covering most of our U.S. employees. Contributions to this plan, which are made at the discretion of our Board of Directors, may be made in cash, shares of our common stock, or in a combination of cash and shares of our common stock. We also maintain a qualified contributory retirement savings plan in which most of our U.S. employees are eligible to participate. The qualified contributory retirement savings plans generally provide for our contributions in cash based upon the amount contributed to the plans by the participants.
Our contributions to our profit sharing plan accrual and retirement savings plans are charged to operations and amounted to $39.3 million in 2019, $36.3 million in 2018 and $39.9 million in 2017. In 2019, 487,108 shares were contributed as part of our contribution to the profit sharing plan related to 2018; in 2018, 538,524 shares were contributed as part of our contribution to the profit sharing plan related to 2017, and in 2017, 502,519 shares were contributed as part of our contribution to the profit sharing plan related to 2016. These shares were issued out of treasury stock.
We have various international defined contribution benefit plans which cover certain employees. We have expanded use of these plans in select countries where they have been used to supplement or replace defined benefit plans.
Defined Benefit Pension Plans
We recognize the funded status of each defined pension benefit plan as the difference between the fair value of plan assets and the projected benefit obligation of the employee benefit plans in the Consolidated Balance Sheets, with a corresponding adjustment to accumulated other comprehensive loss, net of taxes. Each overfunded plan is recognized as an asset and each underfunded plan is recognized as a liability on our Consolidated Balance Sheets. Subsequent changes in the funded status are reflected on the Consolidated Balance Sheets in unrecognized pension items, a component of AOCL, which are included in total stockholders’ deficit. The amount of unamortized pension items is recorded net of tax.
We have amortized actuarial gains or losses over the average future working lifetime (or remaining lifetime of inactive participants if there are no active participants). We have used the corridor method, where the corridor is the greater of ten percent of the projected benefit obligation or fair value of assets at year end. If actuarial gains or losses do not exceed the corridor, then there is no amortization of gain or loss.
During the year ended December 31, 2017, several of our pension plans transferred in the sale of Diversey. Two international plans were split between Diversey and Sealed Air at the close of the sale. Unless noted, the tables in this disclosure show only activity related to plans retained by Sealed Air.
The following table shows the components of our net periodic benefit cost for the three years ended December 31, for our pension plans charged to operations:
 
 
Year Ended December 31,
(In millions)
 
2019
 
2018
 
2017
Net periodic benefit (income) cost:
 
 
 
 
 
 
U.S. and international net periodic benefit cost included in cost of sales(1)
 
$
1.1

 
$
0.8

 
$
1.4

U.S. and international net periodic benefit cost included in selling, general and administrative expenses
 
2.8

 
3.5

 
5.6

U.S. and international net periodic benefit (income) included in other (income) expense
 
(4.4
)
 
(8.4
)
 
(6.0
)
Total benefit (income) cost
 
$
(0.5
)
 
$
(4.1
)
 
$
1.0


 
       
(1) 
The amount recorded in inventory for the years ended December 31, 2019, 2018 and 2017 was not material.
A number of our U.S. employees, including some employees who are covered by collective bargaining agreements, participate in defined benefit pension plans. Some of our international employees participate in defined benefit pension plans in their respective countries. The following table presents our funded status for 2019 and 2018 for our U.S. and
international pension plans. The measurement date used to determine benefit obligations and plan assets is December 31 for all material plans.
 
 
December 31, 2019
 
December 31, 2018
(In millions)
 
U.S.
 
International
 
Total
 
U.S.
 
International
 
Total
Change in benefit obligation:
 
 
 
 
 
 
 
 
 
 
 
 
Projected benefit obligation at beginning of period
 
$
182.1

 
$
633.5

 
$
815.6

 
$
204.7

 
$
702.2

 
$
906.9

Service cost
 
0.1

 
3.8

 
3.9

 
0.1

 
4.2

 
4.3

Interest cost
 
6.9

 
15.0

 
21.9

 
6.5

 
15.2

 
21.7

Actuarial loss (gain)
 
17.0

 
60.0

 
77.0

 
(10.6
)
 
(21.5
)
 
(32.1
)
Settlement
 
—

 
(3.7
)
 
(3.7
)
 
(7.6
)
 
(15.1
)
 
(22.7
)
Benefits paid
 
(12.1
)
 
(26.4
)
 
(38.5
)
 
(11.2
)
 
(22.9
)
 
(34.1
)
Employee contributions
 
—

 
0.7

 
0.7

 
—

 
0.7

 
0.7

Business acquisition
 
—

 
9.0

 
9.0

 
—

 
—

 
—

Other
 
0.1

 
(0.3
)
 
(0.2
)
 
0.2

 
5.8

 
6.0

Foreign exchange impact
 
—

 
12.1

 
12.1

 
—

 
(35.1
)
 
(35.1
)
Projected benefit obligation at end of period
 
$
194.1

 
$
703.7

 
$
897.8

 
$
182.1

 
$
633.5

 
$
815.6

Change in plan assets:
 
 

 
 

 
 

 
 

 
 

 
 

Fair value of plan assets at beginning of period
 
$
119.9

 
$
548.8

 
$
668.7

 
$
148.7

 
$
627.5

 
$
776.2

Actual return on plan assets
 
21.3

 
67.7

 
89.0

 
(10.5
)
 
(23.5
)
 
(34.0
)
Employer contributions
 
8.1

 
12.8

 
20.9

 
0.4

 
15.3

 
15.7

Employee contributions
 
—

 
0.7

 
0.7

 
—

 
0.7

 
0.7

Benefits paid
 
(12.1
)
 
(26.4
)
 
(38.5
)
 
(11.2
)
 
(22.9
)
 
(34.1
)
Settlement
 
—

 
(3.7
)
 
(3.7
)
 
(7.6
)
 
(15.1
)
 
(22.7
)
Business acquisition
 
—

 
10.7

 
10.7

 
—

 
—

 
—

Other
 
(0.1
)
 
(0.4
)
 
(0.5
)
 
0.1

 
0.6

 
0.7

Foreign exchange impact
 
—

 
14.7

 
14.7

 
—

 
(33.8
)
 
(33.8
)
Fair value of plan assets at end of period
 
$
137.1

 
$
624.9

 
$
762.0

 
$
119.9

 
$
548.8

 
$
668.7

Underfunded status at end of year
 
$
(57.0
)
 
$
(78.8
)
 
$
(135.8
)
 
$
(62.2
)
 
$
(84.7
)
 
$
(146.9
)
Accumulated benefit obligation at end of year
 
$
194.1

 
$
690.4

 
$
884.5

 
$
182.1

 
$
620.9

 
$
803.0


Amounts included in the Consolidated Balance Sheets, including plans which were deemed immaterial and not included above, consisted of:
 
 
December 31, 2019
 
December 31, 2018
(In millions)
 
U.S.
 
International
 
Total
 
U.S.
 
International
 
Total
Other non-current assets
 
$
—

 
$
44.2

 
$
44.2

 
$
—

 
$
26.3

 
$
26.3

Other current liabilities
 
—

 
(3.4
)
 
(3.4
)
 
—

 
(2.3
)
 
(2.3
)
Other non-current liabilities
 
(57.0
)
 
(121.5
)
 
(178.5
)
 
(62.1
)
 
(109.8
)
 
(171.9
)
Net amount recognized
 
$
(57.0
)
 
$
(80.7
)
 
$
(137.7
)
 
$
(62.1
)
 
$
(85.8
)
 
$
(147.9
)

The following table shows the components of our net periodic benefit cost (income) for the years ended December 31, for our pension plans charged to operations:
 
 
December 31, 2019
 
December 31, 2018
 
December 31, 2017
(In millions)
 
U.S.
 
International
 
Total
 
U.S.
 
International
 
Total
 
U.S.
 
International
 
Total
Components of net periodic benefit (income) cost:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Service cost
 
$
0.1

 
$
3.8

 
$
3.9

 
$
0.1

 
$
4.2

 
$
4.3

 
$
0.1

 
$
6.9

 
$
7.0

Interest cost
 
6.9

 
15.0

 
21.9

 
6.5

 
15.2

 
21.7

 
6.8

 
16.1

 
22.9

Expected return on plan assets
 
(7.3
)
 
(24.7
)
 
(32.0
)
 
(8.7
)
 
(29.2
)
 
(37.9
)
 
(9.8
)
 
(30.6
)
 
(40.4
)
Other adjustments
 
—

 
—

 
—

 
0.1

 
—

 
0.1

 
—

 
—

 
—

Amortization of net prior service cost
 
—

 
0.2

 
0.2

 
—

 
—

 
—

 
—

 
(0.1
)
 
(0.1
)
Amortization of net actuarial loss
 
1.4

 
3.7

 
5.1

 
0.9

 
2.4

 
3.3

 
0.8

 
5.7

 
6.5

Net periodic benefit (income) cost
 
1.1

 
(2.0
)
 
(0.9
)
 
(1.1
)
 
(7.4
)
 
(8.5
)
 
(2.1
)
 
(2.0
)
 
(4.1
)
Cost of settlement
 
—

 
0.4

 
0.4

 
1.6

 
2.8

 
4.4

 
2.1

 
3.0

 
5.1

Total benefit (income) cost
 
$
1.1

 
$
(1.6
)
 
$
(0.5
)
 
$
0.5

 
$
(4.6
)
 
$
(4.1
)
 
$
—

 
$
1.0

 
$
1.0


As part of our acquisition of Automated, the Company acquired a frozen defined benefit pension plan in the United Kingdom. As of the date of acquisition, the plan was in a net asset position and recorded to other non-current assets on our Consolidated Balance Sheets. The plan does not have a material impact on the Company's overall defined benefit pension plans, including the weighted average of the key assumptions.
The amounts in AOCL that have not yet been recognized as components of net periodic benefit cost at December 31, 2019 and 2018 are:
 
 
December 31, 2019
 
December 31, 2018
(In millions)
 
U.S.
 
International
 
Total
 
U.S.
 
International
 
Total
Unrecognized net prior service costs
 
$
0.2

 
$
4.5

 
$
4.7

 
$
0.1

 
$
4.7

 
$
4.8

Unrecognized net actuarial loss
 
48.9

 
143.6

 
192.5

 
47.3

 
130.8

 
178.1

Total
 
$
49.1

 
$
148.1

 
$
197.2

 
$
47.4

 
$
135.5

 
$
182.9


 
Changes in plan assets and benefit obligations recognized in AOCL at December 31, 2019 and 2018 were as follows:
 
 
December 31, 2019
 
December 31, 2018
(In millions)
 
U.S.
 
International
 
Total
 
U.S.
 
International
 
Total
Current year actuarial loss
 
$
3.0

 
$
16.9

 
$
19.9

 
$
8.6

 
$
31.2

 
$
39.8

Prior year service cost occurring during the year(1)
 
0.1

 
—

 
0.1

 
—

 
4.2

 
4.2

Amortization of actuarial loss
 
(1.4
)
 
(3.7
)
 
(5.1
)
 
(0.9
)
 
(2.4
)
 
(3.3
)
Amortization of prior service cost
 
—

 
(0.2
)
 
(0.2
)
 
—

 
—

 
—

Other adjustments
 
—

 
—

 
—

 
(0.1
)
 
(0.1
)
 
(0.2
)
Settlement
 
—

 
(0.4
)
 
(0.4
)
 
(1.6
)
 
(2.7
)
 
(4.3
)
Total
 
$
1.7

 
$
12.6

 
$
14.3

 
$
6.0

 
$
30.2

 
$
36.2


 
 
       
(1) 
On October 26, 2018, the UK High Court ruled that formulas used to determine guaranteed minimum pension (GMP) benefits violated gender-pay equality laws due to differences in the way benefits were calculated for men and women. This will result in the Company amending plan benefit formulas for our UK defined benefit plans to account for the higher pension payments. While the specifics of the calculation are not yet known, the Company has recorded our current best estimate of the GMP equalization as a prior service cost deferred in AOCL. The court ruling did not have a material impact on our Consolidated Statement of Operations for the year ended December 31, 2019.
The amounts in AOCL that are expected to be recognized as components of net periodic benefit cost during the year ending December 31, 2020 are as follows:
 
 
Year Ended 2020
(In millions)
 
U.S.
 
International
 
Total
Unrecognized prior service costs
 
$
—

 
$
0.2

 
$
0.2

Unrecognized net actuarial loss
 
1.5

 
4.8

 
6.3

Total
 
$
1.5

 
$
5.0

 
$
6.5


Information for plans with accumulated benefit obligations in excess of plan assets as of December 31, 2019 and 2018 are as follows:
 
 
December 31, 2019
 
December 31, 2018
(In millions)
 
U.S.
 
International
 
Total
 
U.S.
 
International
 
Total
Accumulated benefit obligation
 
$
194.1

 
$
454.7

 
$
648.8

 
$
182.1

 
$
418.0

 
$
600.1

Fair value of plan assets
 
137.1

 
344.6

 
481.7

 
119.9

 
315.4

 
435.3


Actuarial Assumptions
Weighted average assumptions used to determine benefit obligations at December 31, 2019 and 2018 were as follows:
 
 
December 31, 2019
 
December 31, 2018
(In millions)
 
U.S.
 
International
 
U.S.
 
International
Benefit obligations
 
 

 
 

 
 

 
 

Discount rate
 
3.3
%
 
1.9
%
 
4.3
%
 
2.6
%
Rate of compensation increase
 
N/A

 
2.3
%
 
N/A

 
2.3
%

 Weighted average assumptions used to determine net periodic benefit cost for the years ended December 31, were as follows:
 
 
December 31, 2019
 
December 31, 2018
 
December 31, 2017
(In millions)
 
U.S.
 
International
 
U.S.
 
International
 
U.S.
 
International
Net periodic benefit cost
 
 

 
 

 
 

 
 

 
 

 
 

Discount rate
 
4.3
%
 
2.6
%
 
3.6
%
 
2.5
%
 
4.0
%
 
2.4
%
Expected long-term rate of return
 
6.2
%
 
4.7
%
 
6.2
%
 
4.9
%
 
6.7
%
 
5.0
%
Rate of compensation increase
 
N/A

 
2.3
%
 
N/A

 
2.3
%
 
N/A

 
2.4
%

 
Estimated Future Benefit Payments
We expect the following estimated future benefit payments, which reflect expected future service as appropriate, to be paid in the years indicated:
 
 
Amount
(in millions)
Year
 
U.S.
 
International
 
Total
2020
 
$
11.9

 
$
27.3

 
$
39.2

2021
 
11.8

 
26.5

 
38.3

2022
 
11.8

 
27.4

 
39.2

2023
 
11.8

 
27.7

 
39.5

2024
 
11.9

 
29.9

 
41.8

2025 to 2029 (combined)
 
56.7

 
158.5

 
215.2

Total
 
$
115.9

 
$
297.3

 
$
413.2


 Plan Assets
We review the expected long-term rate of return on plan assets annually, taking into consideration our asset allocation, historical returns, and the current economic environment. The expected return on plan assets is calculated based on the fair value of plan assets at year end. To determine the expected return on plan assets, expected cash flows have been taken into account.
Our long-term objectives for plan investments are to ensure that (a) there is an adequate level of assets to support benefit obligations to participants over the life of the plans, (b) there is sufficient liquidity in plan assets to cover current benefit obligations, and (c) there is a high level of investment return consistent with a prudent level of investment risk. The investment strategy is focused on a long-term total return in excess of a pure fixed income strategy with short-term volatility less than that of a pure equity strategy. To accomplish these objectives, in many instances the plan assets are invested on a glide-path which reduce the exposure to return-seeking assets as the plan's funded status increases. Overall, we invest assets primarily in a diversified mix of equity and fixed income investments. For our U.S. plan, the target asset allocation includes 65%-75% in return seeking assets, which are primarily comprised of global equities. The remainder of the assets in the U.S. plan are comprised of liability hedging assets which are primarily fixed income investments.
In some of our international pension plans, we have purchased bulk annuity contracts (buy-ins). These annuity contracts provide cash flows that match the future benefit payments for a specific group of pensioners. These contacts are issued by third party insurance companies with no affiliation to Sealed Air. Insurance companies from which we purchase the annuity contracts are assessed as credit worthy. As of December 31, 2019, buy-ins represented $119.5 million of total plan assets.
We currently expect our contributions to the pension plans to be approximately $20.0 million in 2020. Additionally, we expect benefits paid directly by the Company related to our defined benefit pension plans to be $3.6 million in 2020.
The fair values of our U.S. and international pension plan assets, by asset category and by the level of fair values are as follows: 
 
 
December 31, 2019
 
December 31, 2018
 
 
Total
 
 
 
 
 
 
 
 
 
Total
 
 
 
 
 
 
 
 
(In millions)
 
Fair Value
 
Level 1
 
Level 2
 
Level 3
 
NAV(5)
 
Fair Value
 
Level 1
 
Level 2
 
Level 3
 
NAV(5)
Cash and cash equivalents(1)
 
$
43.4

 
$
1.9

 
$
41.5

 
$
—

 
$
—

 
$
36.5

 
$
3.5

 
$
33.0

 
$
—

 
$
—

Fixed income funds(2)
 
323.8

 
—

 
210.2

 
—

 
113.6

 
283.4

 
—

 
150.6

 
—

 
132.8

Equity funds(3)
 
146.9

 
—

 
61.5

 
—

 
85.4

 
147.1

 
—

 
81.1

 
—

 
66.0

Other(4)
 
247.9

 
—

 
9.9

 
180.2

 
57.8

 
201.7

 
—

 
10.9

 
150.1

 
40.7

Total(6)
 
$
762.0

 
$
1.9

 
$
323.1

 
$
180.2

 
$
256.8

 
$
668.7

 
$
3.5

 
$
275.6

 
$
150.1

 
$
239.5

 
       
(1) 
Short-term investment fund that invests in a collective trust that holds short-term highly liquid investments with principal preservation and daily liquidity as its primary objectives. Investments are primarily comprised of certificates of deposit, government securities, commercial paper, and time deposits.
(2) 
Fixed income funds that invest in a diversified portfolio primarily consisting of publicly traded government bonds and corporate bonds. There are no restrictions on these investments, and they are valued at the net asset value of shares held at year end.
(3) 
Equity funds that invest in a diversified portfolio of publicly traded domestic and international common stock, with an emphasis in European equities. There are no restrictions on these investments, and they are valued at the net asset value of units held at year end.
(4) 
The majority of these assets are guaranteed insurance contracts, which consist of Company and employee contributions and accumulated interest income at guaranteed stated interest rates and provides for benefit payments and plan expenses. Also includes real estate and other alternative investments.
(5) 
These assets are measured at Net Asset Value (NAV) as a practical expedient under ASC 820.
(6) 
Balances as of December 31, 2018 have been revised from our 2018 Form 10-K filing to reflect changes in leveling classification of specific funds. These reclassifications did not impact the fair value of any of our pension plan assets.
The following table shows the activity of our U.S. and international plan assets, which are measured at fair value using Level 3 inputs.
 
 
December 31,
(In millions)
 
2019
 
2018
Balance at beginning of period(1)
 
$
150.1

 
$
71.5

Gains (losses) on assets still held at end of year
 
16.8

 
(16.0
)
Purchases, sales, issuance, and settlements(2)
 
8.3

 
103.7

Transfers in and/or out of Level 3
 
—

 
1.0

Foreign exchange gain (loss)
 
5.0

 
(10.1
)
Balance at end of period(1)
 
$
180.2

 
$
150.1


 
       
(1) 
Balances as of December 31, 2018 have been revised from our 2018 Form 10-K filing to reflect changes in leveling classification of specific funds. These reclassifications did not impact the fair value of any of our pension plan assets.
(2) 
Purchases of Level 3 assets in 2018 primarily represent the purchase of bulk annuity contracts (buy-ins) in some of our international plans.