PENSION PLANS

Total defined benefit, defined contribution, and multiemployer plan pension expense in 2018, 2017, and 2016 was $36.7 million, $45.0 million, and $32.1 million, respectively.

The Company sponsors 401(k) savings plans (defined contribution plans) for substantially all U.S. employees. For salaried employees, the Company contributed $1.00 for every pre-tax $1.00 an employee contributed up to seven percent in 2018 and up to eight percent in 2017 and 2016 of eligible compensation. For non-union hourly employees, the Company matched up to eight percent of eligible compensation in 2018, 2017 and 2016. The Company contributions are invested in target retirement date funds based on employees’ ages and are fully vested after three years of service. In 2016, the Company contributed $0.50 for every pre-tax $1.00 an employee contributed on the first four percent of eligible compensation plus $0.25 for every pre-tax $1.00 an employee contributed on the next four percent of eligible compensation for the plans that included a company match. The Company contributions in these years were invested in Company stock and were fully vested after three years of service. Total Company contributions for 2018, 2017, and 2016 were $25.1 million, $28.4 million, and $10.6 million, respectively.

For employees not participating in defined benefit pension plans, the Company contributed to profit sharing plans, defined contribution plans which are subject to achievement of certain financial performance goals of the Company. The profit sharing plan covering salaried and non-union hourly employees was terminated for years after 2016. Total contribution expense for profit sharing plans and other defined contribution plans (including a multiemployer defined contribution plan which the Company exited in 2016, and excluding 401(k) plans above) was $3.0 million in 2018, $2.0 million in 2017, and $11.1 million in 2016.

Two of the Company's three U.S. defined benefit plans were frozen as of December 31, 2013. The frozen plans are the salaried retirement plan that covered certain salaried employees and the unfunded supplemental retirement plan that provided senior management with benefits in excess of limits under the federal tax law. The Company’s defined benefit pension plans continue to cover a number of U.S. hourly employees, and the non-U.S. defined benefit plans cover select employees at various international locations. The benefits under the plans are based on years of service and salary levels. Certain plans covering hourly employees provide benefits of stated amounts for each year of service. In 2014, the Society of Actuaries released updated mortality tables and a mortality projection scale which the Company adopted to measure defined benefit plan liabilities. In 2017 and 2018, the Society of Actuaries published new mortality projection scales which were used in conjunction with 2014 mortality tables in measuring defined benefit plan liabilities in 2017 and 2018.

In 2017 and 2016, the Company recognized pension settlement charges, related to lump sum payments from U.S. pension plans, of $10.6 million and $5.8 million, respectively. Lump sum payments decrease the benefit obligation and are reflected as benefits paid in the "Change in Benefit Obligation" table. The payments also decrease plan assets and are reflected as benefits paid in the "Change in Plan Assets" table. During 2017 and 2016, lump sum windows were offered to certain participants of the salaried and hourly defined pension plans which resulted in lump sum payments for $41.6 million and $26.3 million, respectively. Settlement accounting was required in 2017 which resulted in the $10.6 million settlement charge. No charge was required in 2016. Also during 2016, lump sum payments from the U.S. supplemental pension plan totaled $18.1 million which resulted in the $5.8 million charge.

Net periodic pension cost for defined benefit plans included the following components for the years ended December 31, 2018, 2017, and 2016:



(in millions)	2018			2017			2016
Service cost - benefits earned during the year	$	7.6		$	7.4		$	7.6
Interest cost on projected benefit obligation	26.8			30.2			32.7
Expected return on plan assets	(43.2		)	(48.3		)	(51.4		)
Settlement loss	—			10.6			6.1
Curtailment (gain) loss	(0.2		)	(0.3		)	—
Amortization of prior service cost	0.9			0.9			0.8
Recognized actuarial net loss	16.7			14.1			14.6
Net periodic pension cost	$	8.6		$	14.6		$	10.4

Changes in benefit obligations and plan assets, and a reconciliation of the funded status at December 31, 2018 and 2017, were as follows:



	U.S. Pension Plans						Non-U.S. Pension Plans
(in millions)	2018			2017			2018			2017
Change in Benefit Obligation:
Benefit obligation at the beginning of the year	$	685.7		$	693.7		$	65.6		$	56.8
Service cost	4.0			3.8			1.8			1.7
Interest cost	25.0			28.4			1.8			1.8
Plan amendments	1.2			0.3			0.5			—
Plan settlements	—			—			(0.6		)	—
Plan curtailments	—			—			(0.3		)	(0.3		)
Benefits paid	(37.7		)	(79.6		)	(1.5		)	(1.9		)
Actuarial (gain) loss	(40.7		)	39.1			(10.8		)	1.9
Foreign currency exchange rate changes	—			—			(3.0		)	5.6
Benefit obligation at the end of the year	$	637.5		$	685.7		$	53.5		$	65.6

Accumulated benefit obligation at the end of the year	$	637.5		$	685.7		$	48.8		$	59.1



	U.S. Pension Plans						Non-U.S. Pension Plans
(in millions)	2018			2017			2018			2017
Change in Plan Assets:
Fair value of plan assets at the beginning of the year	$	647.3		$	641.4		$	57.1		$	50.2
Actual return on plan assets	(43.9		)	82.5			(3.9		)	3.0
Employer contributions	0.9			3.0			1.1			1.0
Plan settlements	—			—			(0.6		)	—
Benefits paid	(37.7		)	(79.6		)	(1.5		)	(1.9		)
Foreign currency exchange rate changes	—			—			(2.8		)	4.8
Fair value of plan assets at the end of the year	$	566.6		$	647.3		$	49.4		$	57.1

Unfunded status at year end:	$	(70.9	)	$	(38.4	)	$	(4.2	)	$	(8.5	)



	U.S. Pension Plans						Non-U.S. Pension Plans
(in millions)	2018			2017			2018			2017
Amount recognized in consolidated balance sheet consists of:
Prepaid benefit cost, non-current	$	—		$	—		$	0.3		$	—
Accrued benefit liability, current	(0.9		)	(1.0		)	(0.3		)	(0.2		)
Accrued benefit liability, non-current	(70.0		)	(37.4		)	(4.2		)	(8.3		)
Sub-total	(70.9		)	(38.4		)	(4.2		)	(8.5		)
Deferred tax asset	47.3			61.8			1.4			2.3
Accumulated other comprehensive loss	138.3			97.9			5.7			9.2
Net amount related to pension plans	$	114.7		$	121.3		$	2.9		$	3.0

Accumulated other comprehensive loss related to pension benefit plans is as follows:



	U.S. Pension Plans						Non-U.S. Pension Plans
(in millions)	2018			2017			2018			2017
Unrecognized net actuarial losses	$	182.0		$	156.5		$	5.8		$	10.6
Unrecognized net prior service costs	3.6			3.2			1.1			0.7
Unrecognized net transition costs	—			—			0.2			0.2
Tax benefit	(47.3		)	(61.8		)	(1.4		)	(2.3		)
Accumulated other comprehensive loss, end of year	$	138.3		$	97.9		$	5.7		$	9.2

Estimated amounts in accumulated other comprehensive income expected to be reclassified to net period cost during 2019 are as follows:



			Non-U.S.
(in millions)	U.S. Pension Plans		Pension Plans
Net actuarial losses	$	10.4	$	0.1
Net prior service costs	1.0		0.1
Total	$	11.4	$	0.2

The accumulated benefit obligation for all defined benefit pension plans was $686.3 million and $751.3 million at December 31, 2018 and 2017, respectively.

Presented below are the projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for pension plans with projected benefit obligations in excess of plan assets and pension plans with accumulated benefit obligations in excess of plan assets as of December 31, 2018 and 2017.



	Projected Benefit Obligation Exceeds the Fair Value of Plan’s Assets								Accumulated Benefit Obligation Exceeds the Fair Value of Plan’s Assets
	U.S. Plans				Non-U.S. Plans				U.S. Plans				Non-U.S. Plans
(in millions)	2018		2017		2018		2017		2018		2017		2018		2017
Projected benefit obligation	$	637.5	$	685.7	$	9.6	$	65.6	$	637.5	$	685.7	$	9.6	$	8.7
Accumulated benefit obligation	637.5		685.7		7.9		59.1		637.5		685.7		7.9		6.9
Fair value of plan assets	566.6		647.3		5.2		57.1		566.6		647.3		5.2		4.1

The Company’s general funding policy is to make contributions as required by applicable regulations and when beneficial to the Company for tax purposes. The employer contributions for the years ended December 31, 2018 and 2017, were $2.0 million and $4.0 million, respectively. Total expected cash contributions for 2019 are $2.0 million, which are expected to satisfy plan and regulatory funding requirements.

For the years ended December 31, 2018 and 2017, the U.S. pension plans represented approximately 92 percent and 92 percent, respectively, of the Company’s total plan assets and approximately 92 percent and 91 percent, respectively, of the Company’s total projected benefit obligation. Considering the significance of the U.S. pension plans in comparison with the Company’s total pension plans, the critical pension assumptions related to the U.S. pension plans and the non-U.S. pension plans are separately presented and discussed below.

The Company’s actuarial valuation date is December 31. The weighted-average discount rates and rates of increase in future compensation levels used in determining the actuarial present value of the projected benefit obligation for the years ended December 31 are as follows:



	U.S. Pension Plans				Non-U.S. Pension Plans
	2018		2017		2018		2017
Weighted-average discount rate	4.25	%	3.75	%	3.33	%	2.80	%
Rate of increase in future compensation levels	—		—		3.58	%	3.48	%

The weighted-average discount rates, expected returns on plan assets, and rates of increase in future compensation levels used to determine the net benefit cost for the years ended December 31 are as follows:



	U.S. Pension Plans						Non-U.S. Pension Plans
	2018		2017		2016		2018		2017		2016
Weighted-average discount rate	3.75	%	4.21	%	4.25	%	2.80	%	3.05	%	3.96	%
Expected return on plan assets	6.75	%	7.25	%	7.50	%	5.27	%	5.30	%	6.08	%
Rate of increase in future compensation levels	—		—		—		3.48	%	3.48	%	3.71	%

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:



(in millions)	U.S. Pension Plans		Non-U.S. Pension Plans
2019	$	38.4	$	1.6
2020	38.8		1.6
2021	43.0		2.2
2022	40.3		2.1
2023	40.2		2.2
Years 2023-2027	202.2		12.0

The Company's ERISA Benefit Plan Committee is responsible for overseeing the investments of the pension plans. The overall investment strategy is to achieve a long-term rate of return that maintains an adequate funded ratio and minimizes the need for future contributions through diversification of asset types, investment strategies, and investment managers. A target asset allocation policy is used to balance investments in equity securities with investments in fixed income securities. Beginning in 2013, the Company adopted a liability responsive asset allocation policy that becomes more conservative as the funded status of the plans improve. The majority of pension plan assets relate to U.S. plans and the target allocation is currently to invest approximately 69 percent in long-term corporate fixed income securities and approximately 31 percent in return seeking funds. The return seeking funds primarily include investments in diversified portfolios of large cap and small cap companies. Fixed income securities include diversified investments across a broad spectrum of primarily investment-grade debt securities. To develop the expected long-term rate of return on assets assumption, the Company considered historical returns and future expectations. Using the Company’s 2018 target asset allocation based on a liability responsive asset allocation, the Company’s outside actuaries have used their independent economic model to calculate a range of expected long-term rates of return and, based on their results, the Company has determined these assumptions to be reasonable.

The pension plan assets measured at fair value at December 31, 2018 and 2017 follow:



	2018
	U.S. Pension Plans						Non-U.S. Pension Plans
	Quoted Price In Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Quoted Price In Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in millions)	(Level 1)		(Level 2)		(Level 3)		(Level 1)		(Level 2)		(Level 3)
Cash and cash equivalents	$	6.0	$	1.2	$	—	$	—	$	—	$	—
Corporate debt securities	—		243.4		—		—		—		—
U.S. government debt securities	5.3		—		—		—		—		—
State and municipal debt securities	—		13.8		—		—		—		—
Registered investment company funds	—		—		—		44.2		—		—
Common trust funds	—		296.9		—		—		3.7		1.5
General insurance account	—		—		—		—		—		—
Balance at December 31, 2018	$	11.3	$	555.3	$	—	$	44.2	$	3.7	$	1.5



	2017
	U.S. Pension Plans						Non-U.S. Pension Plans
	Quoted Price In Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Quoted Price In Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in millions)	(Level 1)		(Level 2)		(Level 3)		(Level 1)		(Level 2)		(Level 3)
Cash and cash equivalents	$	6.5	$	2.0	$	—	$	—	$	—	$	—
Corporate debt securities	—		257.9		—		—		—		—
U.S. government debt securities	4.0		—		—		—		—		—
State and municipal debt securities	—		16.9		—		—		—		—
Corporate common stock	—		—		—		—		—		—
Registered investment company funds	—		—		—		50.8		—		—
Common trust funds	—		360.0		—		—		4.8		—
General insurance account	—		—		—		—		—		1.5
Balance at December 31, 2017	$	10.5	$	636.8	$	—	$	50.8	$	4.8	$	1.5

Cash and cash equivalents. This category consists of direct cash holdings and institutional short-term investment vehicles. Direct cash holdings are valued based on cost, which approximates fair value and are classified as Level 1. Institutional short-term investment vehicles are valued daily and are classified as Level 2.

Corporate, U.S. government, state, and municipal debt securities. These securities are valued using market inputs including benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities, bids, offers and reference data including market research publications. Inputs may be prioritized differently at certain times based on market conditions.

Corporate common stock. This category includes common and preferred stocks and index mutual funds that track U.S. and foreign indices. Fair values for the common and preferred stocks are based on quoted prices in active markets and were therefore classified within Level 1 of the fair value hierarchy. The mutual funds were valued at the unit prices established by the funds' sponsors based on the fair value of the assets underlying the funds. Since the units of the funds are not actively traded, the fair value measurements have been classified within Level 2 of the fair value hierarchy.

Registered investment company funds. This category includes mutual funds that are actively traded on public exchanges. The funds are invested in equity and debt securities that are actively traded on public exchanges.

Common trust funds. Common trust funds consist of shares in commingled funds that are not publicly traded. The funds are invested in equity and debt securities that are actively traded on public exchanges.

General insurance account. The general insurance account is primarily comprised of insurance contracts that guarantee a minimum return.

The reconciliation of the beginning and ending balances of the fair value measurements using significant unobservable inputs (Level 3) for the years ended December 31, 2018 and 2017 follows:



(in millions)	General Insurance Account
Fair value of plan assets at December 31, 2016	$	1.2
Actual return on plan assets	0.1
Foreign currency exchange rate changes	0.2
Fair value of plan assets at December 31, 2017	1.5
Actual return on plan assets	—
Foreign currency exchange rate changes	—
Fair value of plan assets at December 31, 2018	$	1.5