BENEFIT PLANS

Qualified Retirement Benefits. The Company has qualified retirement plans covering certain U.S. employees that have been closed to new participants since 2003 and frozen since December 2013. Plans that cover salaried employees provide retirement benefits based on the employee’s compensation during the ten years before the date of the plan freeze or the date of their actual separation from service, if earlier. The Company’s funding policy for salaried plans is to contribute annually based on actuarial projections and applicable regulations. Plans covering hourly employees generally provide benefits of stated amounts for each year of service. The Company’s funding policy for hourly plans is to make at least the minimum annual contributions required by applicable regulations.

The Company also has the following defined benefit plans outside the U.S., among others:

•

In Germany, post-employment benefit plans are set up as employer funded pension plans and deferred compensation plans. The employer funded pension commitments in Germany are based upon direct performance-related commitments in terms of defined contribution plans. Each beneficiary receives, depending on individual pay-scale grouping, contractual classification, or income level, different yearly contributions. The contribution is multiplied by an age factor appropriate to the respective pension plan and credited to the individual retirement account of the employee. The retirement accounts may be used up at retirement by either a one-time lump-sum payout or payments of up to ten years. Insured events include disability, death and reaching of retirement age.


•	In Switzerland, the post-employment benefit plan is required due to statutory provisions. The employees receive their pension payments as a function of contributions paid, a fixed interest rate and annuity factors. Insured events are disability, death and reaching of retirement age.

•

In the Netherlands, there is an average career salary plan, which is employer- and employee-financed and handled by an external fund. Insured events are disability, death and reaching of retirement age. During the fourth quarter of 2016, the Company recognized a curtailment gain of $4.6 related to its Netherlands' SecurCash B.V. plan due to a restructuring and cessation of accruals in the plan as of December 31, 2016. A transfer to an industry-wide pension fund occurred in early 2017 which transferred $186.8 of obligations and assets and is included in the settlements caption in the following tables. Final settlement accounting for this plan took place and resulted in $0.4 of income for the year.

Supplemental Executive Retirement Benefits. The Company has non-qualified pension plans in the U.S. to provide supplemental retirement benefits to certain officers, which were also frozen since December 2013. Benefits are payable at retirement based upon a percentage of the participant’s compensation, as defined.

Other Benefits. In addition to providing retirement benefits, the Company provides post-retirement healthcare and life insurance benefits (referred to as other benefits) for certain retired employees. Retired eligible employees in the U.S. may be entitled to these benefits based upon years of service with the Company, age at retirement and collective bargaining agreements. There are no plan assets and the Company funds the benefits as the claims are paid. The post-retirement benefit obligation was determined by application of the terms of medical and life insurance plans together with relevant actuarial assumptions and healthcare cost trend rates.

The following tables set forth the change in benefit obligation, change in plan assets, funded status, consolidated balance sheet presentation and net periodic benefit cost for the Company’s defined benefit pension plans and other benefits at and for the years ended December 31:



	Retirement Benefits												Other Benefits
	U.S. Plans						Non-U.S. Plans
	2017			2016			2017			2016			2017			2016
Change in benefit obligation
Benefit obligation at beginning of year	$	554.5		$	544.7		$	546.9		$	1.7		$	10.8		$	12.7
Service cost	3.9			3.5			10.5			5.5			—			—
Interest cost	22.9			24.7			5.7			2.7			0.4			0.5
Actuarial (gain) loss	17.9			11.6			7.5			(44.6		)	(0.5		)	(1.3		)
Plan participant contributions	—			—			1.3			0.9			—			—
Benefits paid	(30.2		)	(30.0		)	(10.0		)	(5.1		)	(0.8		)	(1.1		)
Plan amendments	—			—			(0.8		)	—			—			—
Special termination benefits	—			—			0.1			—			—			—
Curtailment	—			—			—			(4.6		)	—			—
Settlements	—			—			(191.4		)	—			—			—
Foreign currency impact	—			—			59.2			(34.7		)	—			—
Acquired benefit plans and other	—			—			23.0			625.1			—			—
Benefit obligation at end of year	569.0			554.5			452.0			546.9			9.9			10.8
Change in plan assets
Fair value of plan assets at beginning of year	351.7			347.9			482.9			—			—			—
Actual return on plan assets	53.6			30.4			12.7			(12.3		)	—			—
Employer contributions	3.6			3.4			1.3			5.3			0.8			1.1
Plan participant contributions	—			—			1.3			0.9			—			—
Benefits paid	(30.2		)	(30.0		)	(10.0		)	(5.1		)	(0.8		)	(1.1		)
Foreign currency impact	—			—			51.7			(30.1		)	—			—
Acquired benefit plans and other	—			—			11.0			524.2			—			—
Settlements	—			—			(191.4		)	—			—			—
Fair value of plan assets at end of year	378.7			351.7			359.5			482.9			—			—
Funded status	$	(190.3	)	$	(202.8	)	$	(92.5	)	$	(64.0	)	$	(9.9	)	$	(10.8	)
Amounts recognized in balance sheets
Noncurrent assets	$	0.3		$	—		$	6.9		$	15.7		$	—		$	—
Current liabilities	3.5			3.5			3.2			3.3			1.1			1.1
Noncurrent liabilities⁽¹⁾	187.1			199.3			96.2			76.4			8.8			9.7
Accumulated other comprehensive loss:
Unrecognized net actuarial gain (loss)⁽²⁾	(154.4		)	(170.1		)	27.7			27.8			(0.5		)	(1.1		)
Unrecognized prior service benefit (cost)⁽²⁾	—			—			0.8			(0.1		)	—			—
Net amount recognized	$	35.9		$	32.7		$	121.0		$	91.7		$	9.4		$	9.7


⁽¹⁾	Included in the consolidated balance sheets in pensions and other benefits and other post-retirement benefits are international plans.


⁽²⁾	Represents amounts in accumulated other comprehensive loss that have not yet been recognized as components of net periodic benefit cost.



	Retirement Benefits												Other Benefits
	U.S. Plans						Non-U.S. Plans
	2017			2016			2017			2016			2017			2016
Change in accumulated other comprehensive loss
Balance at beginning of year	$	(170.1	)	$	(167.5	)	$	27.7		$	(0.1	)	$	(1.1	)	$	(2.6	)
Prior service cost occurring during the year	—			—			0.9			—			—			—
Net actuarial losses recognized during the year	5.9			5.6			(0.4		)	—			—			0.2
Net actuarial gains (losses) occurring during the year	9.8			(8.2		)	0.7			33.7			0.6			1.3
Net actuarial gains (losses) recognized due to settlement	—			—			(0.6		)	—			—			—
Net actuarial gains (losses) recognized due to curtailment	—			—			—			(4.8		)	—			—
Acquired benefit plans and other	—			—			(3.0		)	—			—			—
Foreign currency impact	—			—			3.2			(1.1		)	—			—
Balance at end of year	$	(154.4	)	$	(170.1	)	$	28.5		$	27.7		$	(0.5	)	$	(1.1	)



	Retirement Benefits																	Other Benefits
	U.S. Plans									Non-U.S. Plans
	2017			2016			2015			2017			2016			2015		2017		2016		2015
Components of net periodic benefit cost
Service cost	$	3.9		$	3.5		$	3.6		$	10.5		$	5.5		$	0.1	$	—	$	—	$	—
Interest cost	22.9			24.7			23.8			5.7			2.7			—		0.4		0.5		0.6
Expected return on plan assets	(25.9		)	(27.0		)	(27.0		)	(4.5		)	(3.5		)	—		—		—		—
Amortization of prior service cost ⁽¹⁾	—			—			—			—			—			—		—		—		(0.2		)
Recognized net actuarial loss	5.9			5.5			6.6			(0.4		)	—			—		—		0.2		0.3
Curtailment gain	—			—			—			0.1			(4.6		)	—		—		—		—
Settlement loss	—			—			—			(0.6		)	—			—		—		—		—
Net periodic benefit cost	$	6.8		$	6.7		$	7.0		$	10.8		$	0.1		$	0.1	$	0.4	$	0.7	$	0.7


⁽¹⁾	The annual amortization of prior service cost is determined as the increase in projected benefit obligation due to the plan change divided by the average remaining service period of participating employees expected to receive benefits under the plan.

The following table represents information for pension plans with an accumulated benefit obligation in excess of plan assets at December 31:



	U.S. Plans				Non-U.S. Plans
	2017		2016		2017		2016
Projected benefit obligation	$	569.0	$	554.5	$	452.0	$	546.9
Accumulated benefit obligation	$	569.0	$	554.5	$	439.5	$	538.2
Fair value of plan assets	$	378.7	$	351.7	$	359.5	$	482.9

The following table represents the weighted-average assumptions used to determine benefit obligations at December 31:



	Pension Benefits								Other Benefits
	U.S. Plans				Non-U.S. Plans
	2017		2016		2017		2016		2017		2016
Discount rate	3.71	%	4.24	%	1.45	%	1.63	%	3.71	%	4.62	%
Rate of compensation increase	N/A		N/A		2.75	%	2.52	%	N/A		N/A

The following table represents the weighted-average assumptions used to determine periodic benefit cost at December 31:



	Pension Benefits								Other Benefits
	U.S. Plans				Non-U.S. Plans
	2017		2016		2017		2016		2017		2016
Discount rate	4.24	%	4.62	%	1.47	%	1.16	%	4.24	%	4.62	%
Expected long-term return on plan assets	7.40	%	7.75	%	1.34	%	1.82	%	N/A		N/A
Rate of compensation increase	N/A		N/A		2.76	%	2.49	%	N/A		N/A

The discount rate is determined by analyzing the average return of high-quality (i.e., AA-rated) fixed-income investments and the year-over-year comparison of certain widely used benchmark indices as of the measurement date. The expected long-term rate of return on plan assets is primarily determined using the plan’s current asset allocation and its expected rates of return. The Company also considers information provided by its investment consultant, a survey of other companies using a December 31 measurement date and the Company’s historical asset performance in determining the expected long-term rate of return. The rate of compensation increase assumptions reflects the Company’s long-term actual experience and future and near-term outlook.

During 2017, the Society of Actuaries released new mortality improvement projection scale (MP-2017) resulting from recent studies measuring mortality rates for various groups of individuals. As of December 31, 2017, the Company adopted for the pension plan in the U.S. the use of the RP-2014 base mortality table modified to remove the post-2006 projections using the MP-2014 mortality improvement scale and replacing it with projections using the fully generational MP-2017 projection scale. For the plans outside the U.S., the mortality tables used are those either required or customary for local accounting and/or funding purposes.

The following table represents assumed healthcare cost trend rates at December 31:



	2017		2016
Healthcare cost trend rate assumed for next year	6.8	%	7.0	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	5.0	%	5.0	%
Year that rate reaches ultimate trend rate	2025		2025

The healthcare trend rates for the postemployment benefits plans in the U.S. are reviewed based upon the results of actual claims experience. The Company used initial healthcare cost trends of 6.8 percent and 7.0 percent in 2017 and 2016, respectively, with an ultimate trend rate of 5.0 percent reached in 2025. Assumed healthcare cost trend rates have a modest effect on the amounts reported for the healthcare plans.

A one-percentage-point change in assumed healthcare cost trend rates would have the following effects:



	One-Percentage-Point Increase		One-Percentage-Point Decrease
Effect on total of service and interest cost	$	—	$	—
Effect on post-retirement benefit obligation	$	0.5	$	(0.5	)

The Company has a pension investment policy in the U.S. designed to achieve an adequate funded status based on expected benefit payouts and to establish an asset allocation that will meet or exceed the return assumption while maintaining a prudent level of risk. The plans' target asset allocation adjusts based on the plan's funded status. As the funded status improves or declines, the debt security target allocation will increase and decrease, respectively. The Company utilizes the services of an outside consultant in performing asset / liability modeling, setting appropriate asset allocation targets along with selecting and monitoring professional investment managers.

The U.S. plan assets are invested in equity and fixed income securities, alternative assets and cash. Within the equities asset class, the investment policy provides for investments in a broad range of publicly-traded securities including both domestic and international stocks diversified by value, growth and cap size. Within the fixed income asset class, the investment policy provides for investments in a broad range of publicly-traded debt securities with a substantial portion allocated to a long duration strategy in order to partially offset interest rate risk relative to the plans’ liabilities. The alternative asset class includes investments in diversified strategies with a stable and proven track record and low correlation to the U.S. stock market. Several plans outside of the U.S. are also invested in various assets, under various investment policies in compliance with local funding regulations.

In connection with the Acquisition, the Company also acquired plan assets that had been created in June 2006 as part of a Contractual Trust Arrangement (CTA), under which company assets have been irrevocably transferred to a registered association (Wincor Nixdorf Pension Trust e. V.) for the exclusive purpose of securing and funding pension and other postemployment benefits obligations to employees in Belgium, Germany, France and Switzerland. The association is investing in current and non-current assets, using a funding strategy that is reviewed on a regular basis by analyzing asset development as well as the current situation of the financial market.

The following table summarizes the Company’s target allocation for these asset classes in 2018, which are readjusted at least quarterly within a defined range for the U.S., and the Company’s actual pension plan asset allocation as of December 31, 2017 and 2016:



	U.S. Plans			Non-U.S. Plans
	Target	Actual		Target	Actual
	2018	2017	2016	2018	2017	2016
Equity securities	45%	46%	45%	34%	24%	9%
Debt securities	40%	40%	41%	36%	26%	46%
Real estate	5%	5%	5%	9%	11%	4%
Other	10%	9%	9%	21%	39%	41%
Total	100%	100%	100%	100%	100%	100%

Assets are categorized into a three level hierarchy based upon the assumptions (inputs) used to determine the fair value of the assets.

Level 1 - Fair value of investments categorized as level 1 are determined based on period end closing prices in active markets. Mutual funds are valued at their net asset value (NAV) on the last day of the period.

Level 2 - Fair value of investments categorized as level 2 are determined based on the latest available ask price or latest trade price if listed. The fair value of unlisted securities is established by fund managers using the latest reported information for comparable securities and financial analysis. If the manager believes the fund is not capable of immediately realizing the fair value otherwise determined, the manager has the discretion to determine an appropriate value. Common collective trusts are valued at NAV on the last day of the period.

Level 3 - Fair value of investments categorized as level 3 represent the plan’s interest in private equity, hedge and property funds. The fair value for these assets is determined based on the NAV as reported by the underlying investment managers.

The following table summarizes the fair value of the Company’s plan assets as of December 31, 2017:



	U.S. Plans								Non-U.S. Plans
	Fair Value		Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3
Cash and short-term investments	$	3.5	$	3.5	$	—	$	—	$	82.5	$	82.1	$	0.4	$	—
Mutual funds	32.0		32.0		—		—		77.5		77.5		—		—
Equity securities
U.S. mid cap value	—		—		—		—		0.7		0.7		—		—
U.S. small cap core	19.0		19.0		—		—		—		—		—		—
International developed markets	39.3		39.3		—		—		11.2		11.2		—		—
Emerging markets	19.5		—		19.5		—		—		—		—		—
Fixed income securities
U.S. corporate bonds	50.0		—		50.0		—		—		—		—		—
International corporate bonds	—		—		—		—		86.9		5.9		81.0		—
U.S. government	7.7		—		7.7		—		—		—		—		—
Fixed and index funds	0.6		—		0.6		—		11.7		7.4		4.3		—
Common collective trusts
Real estate (a)	19.2		—		—		19.2		4.7		—		4.7		—
Other (b)	159.9		—		159.9		—		—		—		—		—
Alternative investments
Multi-strategy hedge funds (c)	18.9		—		—		18.9		1.6		—		1.6		—
Private equity funds (d)	9.1		—		—		9.1		—		—		—		—
Other alternative investments (e)	—		—		—		—		82.7		—		0.9		81.8
Fair value of plan assets at end of year	$	378.7	$	93.8	$	237.7	$	47.2	$	359.5	$	184.8	$	92.9	$	81.8

The following table summarizes the fair value of the Company’s plan assets as of December 31, 2016:



	U.S. Plans								Non-U.S. Plans
	Fair Value		Level 1		Level 2		Level 3		Fair Value		Level 1		Level 2		Level 3
Cash and short-term investments	$	3.4	$	3.4	$	—	$	—	$	92.3	$	92.3	$	—	$	—
Mutual funds	28.2		28.2		—		—		61.6		61.6		—		—
Equity securities
U.S. mid cap value	—		—		—		—		0.1		0.1		—		—
U.S. small cap core	16.9		16.9		—		—		—		—		—		—
International developed markets	36.9		36.9		—		—		9.2		9.2		—		—
Emerging markets	16.5		—		16.5		—		—		—		—		—
Fixed income securities
U.S. corporate bonds	44.8		—		44.8		—		—		—		—		—
International corporate bonds	—		—		—		—		77.3		—		77.3		—
U.S. government	7.7		—		7.7		—		—		—		—		—
Fixed and index funds	1.5		—		1.5		—		5.4		—		5.4		—
Common collective trusts
Real estate (a)	18.1		—		—		18.1		4.3		—		4.3		—
Other (b)	148.4		—		148.4		—		—		—		—		—
Alternative investments
Multi-strategy hedge funds (c)	17.6		—		—		17.6		2.8		—		2.1		0.7
Private equity funds (d)	11.7		—		—		11.7		—		—		—		—
Other alternative investments (e)	—		—		—		—		229.9		—		—		229.9
Fair value of plan assets at end of year	$	351.7	$	85.4	$	218.9	$	47.4	$	482.9	$	163.2	$	89.1	$	230.6

(a)

Real estate common collective trust. The objective of the real estate common collective trust (CCT) is to achieve long-term returns through investments in a broadly diversified portfolio of improved properties with stabilized occupancies. As of December 31, 2017, investments in this CCT, for U.S. plans, included approximately 41 percent office, 21 percent residential, 27 percent retail and 11 percent industrial, cash and other. As of December 31, 2016, investments in this CCT, for U.S. plans, included approximately 39 percent office, 20 percent residential, 25 percent retail and 16 percent industrial, cash and other. Investments in the real estate CCT can be redeemed once per quarter subject to available cash, with a 45-day notice.

(b)

Other common collective trusts. At December 31, 2017, approximately 59 percent of the other CCTs are invested in fixed income securities including approximately 15 percent in mortgage-backed securities, 54 percent in corporate bonds and 31 percent in U.S. Treasury and other. Approximately 41 percent of the other CCTs at December 31, 2017 are invested in Russell 1000 Fund large cap index funds. At December 31, 2016, approximately 60 percent of the other CCTs are invested in fixed-income securities including approximately 22 percent in mortgage-backed securities, 58 percent in corporate bonds and 20 percent in U.S. Treasury and other. Approximately 40 percent of the other CCTs at December 31, 2016 are invested in Russell 1000 Fund large cap index funds. Investments in fixed-income securities can be redeemed daily.

(c)

Multi-strategy hedge funds. The objective of the multi-strategy hedge funds is to diversify risks and reduce volatility. At December 31, 2017 and 2016, investments in this class for U.S. plans include approximately 50 percent and 43 percent long/short equity, respectively, 45 percent and 50 percent arbitrage and event investments, respectively, and 5 percent and 7 percent in directional trading, fixed income and other, respectively. Investments in the multi-strategy hedge fund can be redeemed semi-annually with a 95-day notice.

(d)

Private equity funds. The objective of the private equity funds is to achieve long-term returns through investments in a diversified portfolio of private equity limited partnerships that offer a variety of investment strategies, targeting low volatility and low correlation to traditional asset classes. As of December 31, 2017 and 2016, investments in these private equity funds include approximately 42 percent and 43 percent, respectively, in buyout private equity funds that usually invest in mature companies with established business plans, approximately 25 percent and 26 percent, respectively, in special situations private equity and debt funds that focus on niche investment strategies and approximately 33 percent and 31 percent respectively, in venture private equity funds that invest in early development or expansion of business. Investments in the private equity fund can be redeemed only with written consent from the general partner, which may or may not be granted. At December 31, 2017 and 2016, the Company had unfunded commitments of underlying funds of $5.5 in both years.


(e)	Other alternative investments. Following the Acquisition, the Company’s plan assets were expanded with a combination of insurance contracts, multi-strategy investment funds and company-owned real estate. The fair value for these assets is determined based on the NAV as reported by the underlying investment manager, insurance companies and the trustees of the CTA.

The following table summarizes the changes in fair value of level 3 assets for the years ended December 31:



	U.S. Plans						Non-U.S. Plans
	2017			2016			2017			2016
Balance, January 1	$	47.4		$	53.3		$	230.6		$	—
Dispositions	(4.3		)	(8.3		)	(175.3		)	—
Realized and unrealized gain, net	4.1			2.4			26.5			0.1
Acquisition	—			—			—			230.5
Balance, December 31	$	47.2		$	47.4		$	81.8		$	230.6

The following table represents the amortization amounts expected to be recognized during 2018:



	U.S. Pension Benefits		Non-U.S. Pension Benefits			Other Benefits
Amount of net prior service credit	$	—	$	(0.1	)	$	—
Amount of net loss	$	6.6	$	(0.6	)	$	—

The Company contributed $5.7 to its retirement plans, including contributions to the nonqualified plan, benefits paid from company assets, and a reimbursement from the CTA assets to the Company for benefits paid directly from company assets, and $0.8 to its other post-retirement benefit plan during the year ended December 31, 2017. The Company expects to contribute $1.1 to its other post-retirement benefit plan and expects to contribute $49.6 to its retirement plans, including the nonqualified plan, as well as benefits payments directly from the Company during the year ending December 31, 2018. The following benefit payments, which reflect expected future service, are expected to be paid:



	U.S. Pension Benefits		Non-U.S. Pension Benefits		Other Benefits		Other Benefits after Medicare Part D Subsidy
2018	$	27.9	$	28.7	$	1.1	$	1.0
2019	$	28.5	$	26.6	$	1.0	$	0.9
2020	$	29.1	$	25.8	$	1.0	$	0.9
2021	$	29.8	$	27.3	$	0.9	$	0.9
2022	$	30.3	$	24.6	$	0.9	$	0.8
2023-2027	$	157.6	$	130.4	$	3.7	$	3.4

Retirement Savings Plan. The Company offers employee 401(k) savings plans (Savings Plans) to encourage eligible employees to save on a regular basis by payroll deductions. The Company's basic match is 60 percent of the first 6 percent of a participant's qualified contributions, subject to IRS limits.

The Company match is determined by the Board of Directors and evaluated at least annually. Total Company match was $8.2, $8.3 and $9.5 for the years ended December 31, 2017, 2016 and 2015, respectively.

Deferred Compensation Plans. The Company has deferred compensation plans in the U.S. and Germany that enable certain employees to defer a portion of their cash wages, cash bonus, 401(k) or other compensation and non-employee directors to defer receipt of director fees at the participants’ discretion. For deferred cash-based compensation and 401(k), the Company established rabbi trusts in the U.S. which are recorded at fair value of the underlying securities within securities and other investments. The related deferred compensation liabilities are recorded at fair value within other long-term liabilities. Realized and unrealized gains and losses on marketable securities in the rabbi trusts are recognized in interest income with corresponding changes in the Company’s deferred compensation obligation recorded as compensation cost within selling and administrative expense.