PENSIONS AND OTHER POSTRETIREMENT BENEFITS

DEFINED BENEFIT PLANS

The Company maintains both defined benefit pension plans and postretirement health care plans that provide medical and life insurance coverage to eligible salaried and hourly retired employees in North America and their dependents. The Company maintains international defined benefit pension plans which are both noncontributory and contributory and are funded in accordance with applicable local laws. Pension or termination benefits are based primarily on years of service and the employees’ compensation.

Currently, the North American plans are closed to newly-hired employees. Effective July 1, 2011, the North American plans were frozen for most salaried and non-union hourly employees and replaced with a defined contribution plan. During 2015, the remaining union plans were closed to newly-hired employees. Also in 2015, the Company assumed defined benefit pension and postretirement benefit plans in the Cascades acquisition. These plans are closed to newly-hired employees. In 2016, the Company assumed a defined benefit plan in the WG Anderson acquisition, which was frozen for all participants on December 31, 2016.

During the fourth quarter of 2015, the Company partially settled obligations of certain of its defined benefit pension plans though lump sum payments to certain term-vested employees who were not currently receiving a monthly benefit. Term-vested employees whose future pension benefits were above an established threshold had the option to either accept the lump sum offer or continue to be entitled to their future monthly benefit. The impact of acceptance reduced the projected benefit obligation by $34.7 million and required cash payments from existing plan assets of $34.6 million.

During 2015, the Company settled obligations of a defined benefit plan associated with the Brampton, Ontario facility which was closed. The settlements resulted from lump sum payments to plan participants or the purchase of annuities.

During the fourth quarter of 2014, the Company also partially settled obligations of certain of its defined benefit pension plans though lump sum payments. The impact of acceptance reduced the projected benefit obligation by $42.0 million, required cash payment from existing plan assets of $40.2 million, and resulted in a settlement charge of $0.8 million.

Pension and Postretirement Expense

The pension and postretirement expenses related to the Company’s plans consisted of the following:



	Pension Benefits									Postretirement Benefits
	Year Ended December 31,
In millions	2016			2015			2014			2016			2015			2014
Components of Net Periodic Cost:
Service Cost	$	10.0		$	12.8		$	12.6		$	0.8		$	1.0		$	1.2
Interest Cost	43.8			54.8			57.9			1.3			1.7			2.2
Expected Return on Plan Assets	(61.3		)	(74.4		)	(79.8		)	—			—			—
Amortization:
Prior Service Cost (Credit)	0.8			0.7			0.7			(0.2		)	(0.3		)	(0.3		)
Actuarial Loss (Gain)	27.3			19.7			13.2			(2.1		)	(1.6		)	(1.0		)
Net Curtailment/Settlement Loss	1.0			1.5			0.8			—			—			—
Other	0.8			0.9			0.6			—			—			—
Net Periodic Cost	$	22.4		$	16.0		$	6.0		$	(0.2	)	$	0.8		$	2.1

Certain assumptions used in determining the pension and postretirement expenses were as follows:



	Pension Benefits						Postretirement Benefits
	Year Ended December 31,
	2016		2015		2014		2016		2015		2014
Weighted Average Assumptions:
Discount Rate	4.41	%	4.02	%	4.86	%	4.29	%	3.95	%	4.74	%
Rate of Increase in Future Compensation Levels	1.49	%	1.45	%	1.88	%	—		—		—
Expected Long-Term Rate of Return on Plan Assets	5.90	%	6.81	%	7.69	%	—		—		—
Initial Health Care Cost Trend Rate	—		—		—		7.80	%	7.38	%	7.50	%
Ultimate Health Care Cost Trend Rate	—		—		—		4.50	%	4.96	%	4.77	%
Ultimate Year	—		—		—		2024		2036		2027

Funded Status

The following table sets forth the funded status of the Company’s pension and postretirement plans as of December 31:



	Pension Benefits						Postretirement Benefits
In millions	2016			2015			2016			2015
Change in Benefit Obligation:
Benefit Obligation at Beginning of Year	$	1,239.0		$	1,366.7		$	40.8		$	43.6
Service Cost	10.0			12.8			0.8			1.0
Interest Cost	43.8			54.8			1.3			1.7
Actuarial Loss (Gain)	79.3			(84.3		)	(0.7		)	(5.4		)
Foreign Currency Exchange	(36.0		)	(16.9		)	0.1			(0.2		)
Settlement/Curtailment (Gain)	(0.9		)	(0.4		)	0.3			—
Settlements	(2.9		)	(61.1		)	—			—
Benefits Paid	(58.4		)	(55.9		)	(2.1		)	(2.8		)
Acquisition	4.1			22.4			—			2.9
Other	1.0			0.9			0.1			—
Benefit Obligation at End of Year	$	1,279.0		$	1,239.0		$	40.6		$	40.8

Change in Plan Assets:
Fair Value of Plan Assets at Beginning of Year	$	1,038.9		$	1,092.8		$	—		$	—
Actual Return on Plan Assets	116.3			3.0			—			—
Employer Contributions	51.4			53.4			2.1			2.8
Foreign Currency Exchange	(34.6		)	(15.2		)	—			—
Benefits Paid	(58.4		)	(55.9		)	(2.1		)	(2.8		)
Acquisition	4.8			21.7			—			—
Settlements	(2.9		)	(61.1		)	—			—
Other	0.1			0.2			—			—
Fair Value of Plan Assets at End of Year	$	1,115.6		$	1,038.9		$	—		$	—
Plan Assets Less than Projected Benefit Obligation	$	(163.4	)	$	(200.1	)	$	(40.6	)	$	(40.8	)

Amounts Recognized in the Consolidated Balance Sheets Consist of:
Pension Assets	$	3.0		$	10.4		$	—		$	—
Accrued Pension and Postretirement Benefits Liability — Current	$	(1.7	)	$	(1.2	)	$	(2.8	)	$	(2.8	)
Accrued Pension and Postretirement Benefits Liability — Noncurrent	$	(164.7	)	$	(209.3	)	$	(37.8	)	$	(38.0	)
Accumulated Other Comprehensive Income:
Net Actuarial Loss (Gain)	$	277.8		$	286.6		$	(18.7	)	$	(20.1	)
Prior Service Cost (Credit)	$	1.3		$	2.3		$	(1.1	)	$	(1.6	)
Weighted Average Calculations:
Discount Rate	4.01		%	4.41		%	4.10		%	4.29		%
Rates of Increase in Future Compensation Levels	1.45		%	1.49		%	—			—
Initial Health Care Cost Trend Rate	—			—			7.45		%	7.80		%
Ultimate Health Care Cost Trend Rate	—			—			4.50		%	4.50		%
Ultimate Year	—			—			2024			2024

Accumulated Benefit Obligation

The accumulated benefit obligation, (“ABO”), for all defined benefit pension plans was $1,270.0 million and $1,226.2 million at December 31, 2016 and 2015, respectively. All of the Company’s defined benefit pension plans had an ABO in excess of plan assets at December 31, 2016 and 2015, except one of the U.K. plans in 2015.

Employer Contributions

The Company made contributions of $51.4 million and $53.4 million to its pension plans during 2016 and 2015, respectively. The Company also made postretirement health care benefit payments of $2.1 million and $2.8 million during 2016 and 2015, respectively. For 2017, the Company expects to make contributions of $30 to $50 million to its pension plans and approximately $3 million to its postretirement health care plans.

Pension Assets

The Company’s overall investment strategy is to achieve a mix of investments for long-term growth and near-term benefit payments through diversification of asset types, fund strategies and fund managers. Investment risk is measured on an on-going basis through annual liability measurements, periodic asset/liability studies, and quarterly investment portfolio reviews. The plans invest in the following major asset categories: cash, equity securities, fixed income securities, real estate and diversified growth funds. At December 31, 2016 and 2015, pension investments did not include any direct investments in the Company’s stock or the Company’s debt.

The weighted average allocation of plan assets and the target allocation by asset category is as follows:



	Target		2016		2015
Cash	—	%	1.3	%	1.1	%
Equity Securities	46.6		40.0		51.7
Fixed Income Securities	53.4		53.9		41.6
Other Investments	—		4.8		5.6
Total	100.0	%	100.0	%	100.0	%

The plans’ investment in equity securities primarily includes investments in U.S. and international companies of varying sizes and industries. The strategy of these investments is to 1) exceed the return of an appropriate benchmark for such equity classes and 2) through diversification, reduce volatility while enhancing long term real growth.

The plans’ investment in fixed income securities includes government bonds, investment grade bonds and non-investment grade bonds across a broad and diverse issuer base. The strategy of these investments is to provide income and stability and to diversify the fixed income exposure of the plan assets, thereby reducing volatility.

The Company’s approach to developing the expected long-term rate of return on pension plan assets is based on fair values and combines an analysis of historical investment performance by asset class, the Company’s investment guidelines and current and expected economic fundamentals.

Since the plans are closed or frozen and as the funded status has improved, the Company is implementing a derisking or liability driven investment strategy. This strategy moves assets from return seeking (e.g. equities) to investments that mirror the underlying benefit obligations (fixed income).

The following tables set forth, by category and within the fair value hierarchy, the fair value of the Company’s pension assets at December 31, 2016 and 2015:



	Fair Value Measurements at December 31, 2016
In millions	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Asset Category:
Cash ^(a)	$	14.5	$	0.3	$	14.2	$	—
Equity Securities:
Domestic ^(a)	340.2		68.7		271.5		—
Foreign ^(a)	107.0		55.5		51.5		—
Fixed Income Securities ^(a)	600.8		194.6		406.2		—
Other Investments:
Real estate ^(a)	14.8		14.8		—		—
Diversified growth fund ^(b)	38.3		—		38.3		—
Total	$	1,115.6	$	333.9	$	781.7	$	—



	Fair Value Measurements at December 31, 2015
In millions	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Asset Category:
Cash ^(a)	$	11.4	$	5.0	$	6.4	$	—
Equity Securities:
Domestic ^(a)	397.1		79.8		317.3		—
Foreign ^(a)	140.1		63.5		76.6		—
Fixed Income Securities ^(a)	431.8		172.9		258.9		—
Other Investments:
Real estate ^(a)	22.6		22.6		—		—
Diversified growth fund ^(b)	35.9		—		—		35.9
Total	$	1,038.9	$	343.8	$	659.2	$	35.9

^(a) The Level 2 investments are held in pooled funds and fair value is determined by net asset value, based on the underlying investments, as reported on the valuation date.

^(b) The fund invests in a combination of traditional investments (equities, bonds, and foreign exchange), seeking to achieve returns through active asset allocation over a three to five year horizon.

A reconciliation of fair value measurements of plan assets using significant unobservable inputs (Level 3) is as follows:




In millions	2016			2015
Balance Beginning of Period	$	35.9		$	—
Transfers (Out) In	(35.9		)	35.8
Return on Assets Held at December 31	—			0.1
Balance at December 31,	$	—		$	35.9

Postretirement Health Care Trend Rate Sensitivity

Assumed health care cost trend rates affect the amounts reported for postretirement health care benefit plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects on 2016 data:



	One Percentage Point
In millions	Increase		Decrease
Health Care Cost Trend Rate Sensitivity:
Effect on Total Interest and Service Cost Components	$	0.2	$	(0.2	)
Effect on Year-End Postretirement Benefit Obligation	$	1.8	$	(1.6	)

Estimated Future Benefit Payments

The following represents the Company’s estimated future pension and postretirement health care benefit payments through the year 2026:



In millions	Pension Plans		Postretirement Health Care Benefits
2017	$	64.7	$	2.8
2018	67.4		3.0
2019	69.6		3.1
2020	72.0		3.4
2021	74.2		3.3
2022— 2026	394.6		15.8

Amounts in Accumulated Other Comprehensive Loss Expected to Be Recognized in Net Periodic Benefit Costs in 2017

During 2017, amounts recorded in Accumulated Other Comprehensive Loss expected to be recognized in Net Periodic Benefit Costs are as follows:



In millions	Pension Benefits		Postretirement Health Care Benefits
Recognition of Prior Service Cost	$	0.5	$	(0.3	)
Recognition of Actuarial Loss (Gain)	6.8		(2.1		)

Multi-Employer Plans

Certain of the Company’s employees participate in multi-employer plans that provide both pension and other postretirement health care benefits to employees under union-employer organization agreements. Expense related to ongoing participation in these plans for the years ended December 31, 2016 and 2015 was $2.7 million and $2.1 million, respectively.

Estimated liabilities have been established related to the partial or complete withdrawal from certain multi-employment benefit plans for facilities which have been closed. At December 31, 2016, and December 31, 2015, the Company has $30.4 million and $30.5 million, respectively, recorded in Other Noncurrent Liabilities for these withdrawal liabilities which represents the Company's best estimate of the expected withdrawal liability.

The Company's remaining participation in multi-employer pension plans consists of contributions to three plans under the terms contained in collective bargaining agreements. The risks of participating in these multi-employer plans are different from single-employer plans in the following ways:


a.	Assets contributed to the multi-employers plan by one employer may be used to provide benefits to employees of other participating employers.


b.	If a participating employer stops contributing to the plan, the unfunded obligation of the plan may be borne by the remaining participating employers.


c.	If a company chooses to stop participating in a multi-employer plan, a company may be required to pay that plan an amount based on the underfunded status of the plan, referred to as the withdrawal liability.

The Company recorded charges of $4.3 million in 2014 related to the sale of the multi-wall bag business for partial withdrawal from the PACE Industry Union - Management Pension Fund (“PIUMPF”). There were no similar charges recorded for the year ended December 31, 2016 and 2015. While it is not possible to quantify the potential impact of future actions, further reductions in participation or withdrawal from these multi-employer pension plans could have a material impact on the Company’s results of operations, financial position, or cash flows.

The Company's participation in these plans for the year ended December 31, 2016, 2015 and 2014 is shown in the table below:



		Pension Protection Act Zone Status			Company Contributions (in millions)
Multi-employer Pension Fund	EIN/Pension Plan Number	2016	2015	FIP/RP Status Implemented	2016		2015		2014		Surcharged Imposed	Expiration Date of Bargaining Agreement
Central States Southeast and Southwest Areas Pension Fund	36-6044243/001	Red	Red	Yes	$	0.1	$	0.1	$	0.1	Yes	7/31/2018
PIUMPF ⁽¹⁾⁽²⁾	11-6166763/001	Red	Red	Yes	0.1		—		0.3		Yes	6/16/2018
Western Conference of Teamsters Pension Trust - Northwest Area⁽³⁾	91-6145047/001	Green	Green	No	—		0.1		0.1		No	4/30/2017
Graphic Communications Conference of International Brotherhood of Teamster Pension Fund⁽²⁾	52-6118568/001	Red	Red	Yes	0.2		—		—		Yes	4/30/2016
Total					$	0.4	$	0.2	$	0.5

⁽¹⁾ The facility associated with this plan was divested on June 30, 2014.

⁽²⁾ In 2016, the WG Anderson acquisition included facilities with these plans.

⁽³⁾ The facility associated with this plan was closed in 2016.

The EIN Number column provides the Employer Identification Number (EIN). Unless otherwise noted, the most recent Pension Protection Act (PPA) zone status available in 2016 and 2015 is for the plan's year-end at December 31, 2015 and December 31, 2014, respectively. The zone status is based on information that the Company receives from the plan and is certified by the plan's actuary. Among other factors, plans in the red zone are generally less than 65 percent funded, plans in the yellow zone are less than 80 percent funded, and plans in the green zone are at least 80 percent funded. The "FIP/RP Status Implemented" column indicates plans for which a Financial Improvement Plan (FIP) or Rehabilitation Plan (RP) has been implemented. The Company's share of the contributions to these plans did not exceed 5% of total plan contributions for the most recent plan year.

DEFINED CONTRIBUTION PLANS

The Company provides defined contribution plans for certain eligible employees. The Company’s contributions to the plans are based upon employee contributions, a percentage of eligible compensation, and the Company’s annual operating results. Contributions to these plans for the years ended December 31, 2016, 2015 and 2014 were $34.7 million, $29.0 million and $28.9 million, respectively.