Note 11. Retirement Plans

The Company sponsors various defined benefit retirement income pension plans in the U.S., U.K., Canada and certain other international locations, including both funded and unfunded arrangements. The Company’s primary defined benefit plans are frozen. No new employees will be permitted to enter the Company’s frozen plans and participants will earn no additional benefits. Benefits are generally based upon years of service and compensation. These defined benefit retirement income plans are funded in conformity with the applicable government regulations. The Company funds at least the minimum amount required for all funded plans using actuarial cost methods and assumptions acceptable under government regulations.

As of December 31, 2015, the Company changed the method used to estimate the interest cost components of net pension and other postretirement benefits plan expense for its defined benefit pension and other postretirement benefit plans. Historically, the interest cost components were estimated using a single weighted-average discount rate derived from the yield curve used to measure the projected benefit obligation at the beginning of the period. The Company has elected to use a full yield curve approach in the estimation of these interest components of net pension and other postretirement benefits plan expense by applying the specific spot rates along the yield curve used in the determination of the projected benefit obligation to the relevant projected cash flows. The Company made this change to improve the correlation between projected benefit cash flows and the corresponding yield curve spot rates and to provide a more precise measurement of interest costs. This change does not affect the measurement and calculation of the Company’s total benefit obligations. The Company has accounted for this change as a change in estimate and accordingly, will account for it prospectively starting in the first quarter of 2016.

In 2014 the Company communicated to certain former employees the option to receive a lump-sum pension payment or annuity computed in accordance with statutory requirements, with payments beginning in the fourth quarter of 2014. Payments to eligible participants who elected to receive a lump-sum pension payment or annuity were funded from existing pension plan assets and constituted a complete settlement of the Company’s pension liabilities with respect to these participants. The Company’s pension assets and liabilities were remeasured as of the payout dates. The discount rates and actuarial assumptions used to calculate the payouts were determined in accordance with federal regulations. As of the remeasurement dates, the reductions in the reported pension obligations for these participants was $404.0 million, compared to payout amounts of approximately $317.7 million. The Company recorded non-cash settlement charges of $95.7 million included in selling, general and administrative expenses in the fourth quarter of 2014 in connection with the settlement payments. These charges resulted from the recognition in earnings of a portion of the losses recorded in accumulated other comprehensive loss based on the proportion of the obligation settled.

During the year ended December 31, 2014, the Company adopted the Society of Actuaries RP-2014 mortality tables which were used in the calculation of the Company’s U.S pension obligations. The Company also adopted updated mortality tables for the Canadian pension plans. The new mortality tables increased the expected life of plan participants, extending the length of time that payments may be required and increasing the plans’ total expected benefit payments. The updated mortality assumptions increased the benefit obligations for the U.S and Canadian pension plans by approximately $310.0 million as of December 31, 2014.

The Company made contributions of $15.4 million to its pension plans and $10.2 million to its other postretirement benefits plans during the year ended December 31, 2015. The Company expects to make cash contributions of approximately $25.0 million to $30.0 million to its pension and other postretirement benefits plans in 2016.

In addition to the pension plans, the Company sponsors a 401(k) savings plan, which is a defined contribution retirement income plan.

Former employees are entitled to certain healthcare and life insurance benefits provided they have met certain eligibility requirements. Generally, the Company’s benefits-eligible U.S. employees become eligible for these retiree healthcare benefits if they meet all of the following requirements at the time of termination: (a) have attained at least 55 or more points (full years of service and age combined), (b) are at least fifty years of age, (c) have at least two years of continuous, regular, full-time, benefits-eligible service and (d) have completed at least two or more years of continuous service with a participating employer, which ends on their termination date. Different requirements need to be met in order to receive subsidized medical and life insurance coverage. Certain of the plan expenses are paid through a tax-exempt trust. Most of the assets of the trust are invested in trust-owned life insurance policies covering certain current and former employees of the Company. The underlying assets of the policies are invested primarily in marketable equity, corporate fixed income and government securities.

During the fourth quarter of 2013, the Company announced the decision to reduce life insurance benefits under the Company’s other postretirement benefits plans for certain active employees and retirees effective December 31, 2013. The remeasurement of the other postretirement benefits plans’ assets and obligations due to the plan amendment resulted in a $30.1 million reduction in the accumulated other postretirement benefits obligation as of December 31, 2013, which was recorded in accumulated other comprehensive loss in the Consolidated Balance Sheets.

The Company operates a prescription drug program for certain Medicare-eligible retirees under a group-based Company sponsored Medicare Part D program, or Employer Group Waiver Program (“EGWP”). The EGWP subsidies provided to or for the benefit of this program are used to reduce the Company’s net retiree medical and prescription drug costs on a group by group basis until such net costs of the Company for such group are eliminated, and any EGWP subsidies received in excess of the amount necessary to offset such net costs are used to reduce the included group of retirees’ premiums.

The Company also maintains several pension and other postretirement benefits plans in certain international locations. The expected returns on plan assets and discount rates for these plans are determined based on each plan’s investment approach, local interest rates and plan participant profiles.

The pension and other postretirement benefits plan obligations are calculated using generally accepted actuarial methods and are measured as of December 31. Prior to the plan freezes, actuarial gains and losses were amortized using the corridor method over the average remaining service life of active plan participants. Actuarial gains and losses for frozen plans are amortized using the corridor method over the average remaining expected life of active plan participants.

The components of the net periodic benefit (income) expense and total (income) expense were as follows:

	Pension Benefits									Other Postretirement Benefits
	2015			2014			2013			2015			2014			2013
Service cost	$	1.9		$	2.2		$	2.2		$	4.7		$	4.6		$	7.3
Interest cost		178.2			194.5			178.2			16.0			16.8			16.2
Expected return on plan assets		(246.0	)		(259.0	)		(241.9	)		(13.1	)		(13.9	)		(11.8	)
Amortization of prior service credit		—			—			—			(26.9	)		(25.8	)		(19.7	)
Amortization of actuarial loss		40.5			31.9			50.5			—			—			—
Settlements		0.2			95.7			0.7			—			—			—
Net periodic benefit (income) expense	$	(25.2	)	$	65.3		$	(10.3	)	$	(19.3	)	$	(18.3	)	$	(8.0	)

Weighted average assumption used to calculate net periodic benefit expense:
Discount rate		4.1	%		5.0	%		4.2	%		3.9	%		4.5	%		3.9	%
Rate of compensation increase		0.2	%		0.2	%		0.3	%	n/a			n/a			n/a
Expected return on plan assets		7.3	%		7.6	%		7.9	%		7.3	%		7.3	%		7.3	%

	Pension Benefits						Other Postretirement Benefits
	2015			2014			2015			2014
Benefit obligation at beginning of year	$	4,452.2		$	3,952.7		$	424.6		$	382.3
Service cost		1.9			2.2			4.7			4.6
Interest cost		178.2			194.5			16.0			16.8
Plan participants' contributions		—			0.5			10.7			13.8
Medicare reimbursements		—			—			5.7			4.2
Actuarial (gain) loss		(284.9	)		652.3			(46.3	)		43.1
Plan amendments and other		—			—			(0.1	)		(7.4	)
Curtailments and settlements		—			(317.7	)		—			—
Foreign currency translation		(48.6	)		(35.3	)		(8.0	)		(4.2	)
Benefits paid		(195.7	)		(173.4	)		(32.6	)		(34.6	)
Divestitures		(0.4	)		—			—			—
Acquisitions		3.1			176.4			0.4			6.0
Benefit obligation at end of year	$	4,105.8		$	4,452.2		$	375.1		$	424.6

Fair value of plan assets at beginning of year	$	3,841.8		$	3,707.3		$	212.6		$	206.8
Actual return on assets		(31.3	)		455.4			(1.1	)		11.5
Settlements		—			(317.7	)		—			—
Employer contributions		15.4			30.9			10.2			11.0
Medicare reimbursements		—			—			5.7			4.2
Plan participants' contributions		—			0.5			10.7			13.8
Acquisitions		2.0			170.2			—			—
Foreign currency translation		(37.1	)		(31.4	)		—			(0.1	)
Benefits paid		(195.7	)		(173.4	)		(32.6	)		(34.6	)
Fair value of plan assets at end of year	$	3,595.1		$	3,841.8		$	205.5		$	212.6
Funded status at end of year	$	(510.7	)	$	(610.4	)	$	(169.6	)	$	(212.0	)

The accumulated benefit obligation for all defined benefit pension plans was $4,088.8 million and $4,428.5 million at December 31, 2015 and 2014, respectively.

Amounts recognized in the Consolidated Balance Sheets as of December 31, 2015 and 2014 were as follows:

	Pension Benefits						Other Postretirement Benefits
	2015			2014			2015			2014
Prepaid pension cost (included in other noncurrent assets)	$	15.2		$	14.4		$	—		$	—
Accrued benefit cost (included in accrued liabilities)		(11.5	)		(8.7	)		(0.8	)		(1.2	)
Pension liabilities		(514.4	)		(616.1	)		—			—
Other postretirement benefits plan liabilities		—			—			(168.8	)		(210.8	)
Net liabilities recognized in the Consolidated Balance Sheets	$	(510.7	)	$	(610.4	)	$	(169.6	)	$	(212.0	)

The amounts included in accumulated other comprehensive loss in the Consolidated Balance Sheets, excluding tax effects, that have not yet been recognized as components of net periodic benefit cost at December 31, 2015 and 2014 were as follows:

	Pension Benefits						Other Postretirement Benefits
	2015			2014			2015		2014
Accumulated other comprehensive (loss) income
Net actuarial (loss) gain	$	(1,229.9	)	$	(1,284.8	)	$	24.1	$	(8.0	)
Net transition obligation		(0.1	)		(0.1	)		—		—
Net prior service credit		—			—			31.5		58.3
Total	$	(1,230.0	)	$	(1,284.9	)	$	55.6	$	50.3

The pre-tax amounts recognized in other comprehensive income (loss) in 2015 as components of net periodic benefit costs were as follows:

	Pension Benefits		Other Postretirement Benefits
Amortization of:
Net actuarial loss	$	40.5	$	—
Net prior service credit		—		(26.9	)
Amounts arising during the period:
Net actuarial loss		7.9		32.0
Divestiture		3.8		—
Net prior service credit		—		0.1
Settlements		0.2		—
Foreign currency loss		2.5		0.1
Total	$	54.9	$	5.3

Actuarial gains and losses in excess of 10.0% of the greater of the projected benefit obligation or the market-related value of plan assets were recognized as a component of net periodic benefit costs over the average remaining service period of a plan’s active employees. As a result of the plan freezes, the actuarial gains and losses are recognized as a component of net periodic benefit costs over the average remaining life of a plan’s active employees. Unrecognized prior service costs or credits are also recognized as a component of net periodic benefit cost over the average remaining service period of a plan’s active employees. The amounts in accumulated other comprehensive loss that are expected to be recognized as components of net periodic benefit costs in 2016 are shown below:

	Pension Benefits		Other Postretirement Benefits
Amortization of:
Net actuarial loss	$	31.3	$	—
Net prior service credit		—		(16.0	)
Total	$	31.3	$	(16.0	)

The weighted average assumptions used to determine the benefit obligation at the measurement date were as follows:

	Pension Benefits						Other Postretirement Benefits
	2015			2014			2015			2014
Discount rate		4.5	%		4.1	%		4.2	%		3.9	%
Health care cost trend:
Current
Pre-Age 65		—			—			6.1	%		7.9	%
Post-Age 65		—			—			6.1	%		7.9	%
Ultimate		—			—			4.9	%		4.9	%

The following table provides a summary of under-funded or unfunded pension benefit plans with projected benefit obligations in excess of plan assets as of December 31, 2015 and 2014:

	Pension Benefits
	2015		2014
Projected benefit obligation	$	3,703.9	$	4,251.0
Fair value of plan assets		3,178.1		3,626.3

The following table provides a summary of pension plans with accumulated benefit obligations in excess of plan assets as of December 31, 2015 and 2014:

	Pension Benefits
	2015		2014
Accumulated benefit obligation	$	3,686.0	$	4,225.5
Fair value of plan assets		3,175.9		3,622.9

The current health care cost trend rate gradually declines through 2019 to the ultimate trend rate and remains level thereafter. A one-percentage point change in assumed health care cost trend rates would have the following effects:

1.0%

Increase

1.0%

Decrease

Other postretirement benefits obligation

6.3

(5.1

)

Total other postretirement benefits service and interest cost components

0.6

(0.6

)

The Company determines its assumption for the discount rate to be used for purposes of computing annual service and interest costs based on an index of high-quality corporate bond yields and matched-funding yield curve analysis as of the measurement date.

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 included a prescription drug benefit under Medicare Part D, as well as a federal subsidy that began in 2006, to sponsors of retiree health care plans that provide a benefit that is at least actuarially equivalent, as defined in the Act, to Medicare Part D. Two of the Company’s retiree health care plans were at least actuarially equivalent to Medicare Part D and were eligible for the federal subsidy. During the years ended December 31, 2015 and 2014, Medicare Part D subsidies received by the Company were negligible.

During the year ended December 31, 2015, the Company received approximately $5.7 million in EGWP subsidies.

Benefit payments are expected to be paid as follows:

	Pension Benefits		Other Postretirement Benefits-Gross		Estimated Subsidy Reimbursements
2016	$	214.8	$	28.0	$	2.2
2017		217.0		28.8		2.4
2018		221.6		29.7		2.6
2019		227.7		29.9		2.8
2020		234.4		30.0		3.0
2021-2025		1,231.3		146.4		17.1

Plan Assets

The Company’s U.S. pension plans are frozen and the Company has transitioned to a risk management approach for its U.S. pension plan assets. The overall investment objective of this approach is to further reduce the risk of significant decreases in the plan’s funded status by allocating a larger portion of the plan’s assets to investments expected to hedge the impact of interest rate risks on the plan’s obligation. Over time, the target asset allocation percentage for the pension plan is expected to decrease for equity and other “return seeking” investments and increase for fixed income and other “hedging” investments. The assumed long-term rate of return for plan assets, which is determined annually, is likely to decrease as the asset allocation shifts over time. The expected long-term rate of return for plan assets is based upon many factors including asset allocations, historical asset returns, current and expected future market conditions, risk and active management premiums. The target asset allocation percentage as of December 31, 2015, for the primary U.S. pension plan was approximately 60.0% for return seeking investments and approximately 40.0% for hedging investments.

The Company segregated its plan assets by the following major categories and levels for determining their fair value as of December 31, 2015 and 2014:

Cash and cash equivalents— Carrying value approximates fair value. As such, these assets were classified as Level 1. The Company also invests in certain short-term investments which are valued using the amortized cost method. As such, these assets were classified as Level 2.

Equity— The values of individual equity securities were based on quoted prices in active markets. As such, these assets are classified as Level 1. Additionally, the Company invests in certain equity funds that are valued at calculated net asset value per share (“NAV”), but are not quoted on active markets. As such, these assets were classified as Level 2. Additionally, this category includes underlying securities in trust owned life insurance policies which are invested in certain equity securities. These investments are not quoted on active markets; therefore, they are classified as Level 2.

Fixed income— Fixed income securities are typically priced based on a valuation model rather than a last trade basis and are not exchange-traded. These valuation models involve utilizing dealer quotes, analyzing market information, estimating prepayment speeds and evaluating underlying collateral. Accordingly, the Company classified these fixed income securities as Level 2. The Company also invests in certain fixed income funds that were priced on active markets and were classified as Level 1. Additionally, this category includes underlying securities in trust owned life insurance policies which are invested in certain fixed income securities. These investments are not quoted on active markets; therefore, they are classified as Level 2.

Derivatives and other— This category includes assets and liabilities that are futures or swaps traded on a primary exchange and are priced by multiple providers. Accordingly, the Company classified these assets and liabilities as Level 1. This category also includes various other assets in which carrying value approximates fair value. Additionally, this category includes investments in commodity and structured credit funds that are not quoted on active markets; therefore, they are classified as Level 2.

Real estate—The fair market value of real estate investment trusts is based on observable inputs for similar assets in active markets, for instance, appraisals and market comparables. Accordingly, the real estate investments were categorized as Level 2.

Private equity— Includes the Company’s interest in various private equity funds that are valued by the investment manager on a periodic basis with models that use market, income and cost valuation methods. The valuation inputs are not highly observable, and these interests are not actively traded on an open market. Accordingly, private equity was categorized as Level 3.

For Level 2 and Level 3 plan assets, management reviews significant investments on a quarterly basis including investigation of unusual fluctuations in price or returns and obtaining an understanding of the pricing methodology to assess the reliability of third-party pricing estimates.

The valuation methodologies described above may generate a fair value calculation that may not be indicative of net realizable value or future fair values. While the Company believes the valuation methodologies used are appropriate, the use of different methodologies or assumptions in calculating fair value could result in different amounts. The Company invests in various assets in which valuation is determined by NAV. The Company believes that the NAV is representative of fair value at the reporting date, as there are no significant restrictions on redemption of these investments or other reasons to indicate that the investment would be redeemed at an amount different than the NAV.

The fair values of the Company’s pension plan assets at December 31, 2015 and 2014, by asset category were as follows:

	December 31, 2015								December 31, 2014
Asset Category	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	136.2	$	105.5	$	30.7	$	—	$	66.4	$	44.1	$	22.3	$	—
Equity		1,534.0		904.3		629.7		—		1,751.7		997.5		754.2		—
Fixed income		1,713.9		36.6		1,677.3		—		1,830.6		43.0		1,787.6		—
Derivatives and other		19.4		1.4		18.0		—		12.8		0.8		12.0		—
Real estate		146.5		—		146.5		—		133.0		—		133.0		—
Private equity		45.1		—		—		45.1		47.3		—		—		47.3
Total	$	3,595.1	$	1,047.8	$	2,502.2	$	45.1	$	3,841.8	$	1,085.4	$	2,709.1	$	47.3

The fair values of the Company’s other postretirement benefits plan assets at December 31, 2015 and 2014, by asset category were as follows:

	December 31, 2015						December 31, 2014
Asset Category	Total		Level 1		Level 2		Total		Level 1		Level 2
Cash and cash equivalents	$	5.4	$	—	$	5.4	$	0.8	$	—	$	0.8
Equity		139.5		—		139.5		150.8		—		150.8
Fixed income		53.8		—		53.8		46.6		—		46.6
Other		6.8		1.2		5.6		14.4		1.0		13.4
Total	$	205.5	$	1.2	$	204.3	$	212.6	$	1.0	$	211.6

The following table provides a summary of changes in the fair value of the Company’s Level 3 assets:

	Private Equity
Balance at January 1, 2014	$	43.4
Unrealized gains - net		13.6
Purchases, sales and settlements		(9.7	)
Balance at December 31, 2014	$	47.3
Unrealized gains - net		11.9
Purchases, sales and settlements		(14.1	)
Balance at December 31, 2015	$	45.1

Employee 401(k) Savings Plan — For the benefit of most of its U.S. employees, the Company maintains a defined contribution retirement savings plan that is intended to be qualified under Section 401(a) of the Internal Revenue Code. Under this plan, employees may contribute a percentage of eligible compensation on both a before-tax and after-tax basis. The Company may provide a 401(k) discretionary match to participants, but did not in 2015, 2014 or 2013.

Multi-Employer Pension Plans — Multi-employer plans receive contributions from two or more unrelated employers pursuant to one or more collective bargaining agreements and the assets contributed by one employer may be used to fund the benefits of all employees covered within the plan. The risk and level of uncertainty related to participating in these multi-employer pension plans differs significantly from the risk associated with the Company-sponsored defined benefit plans. For example, investment decisions are made by parties unrelated to the Company and the financial stability of other employers participating in a plan may affect the Company’s obligations under the plan.

During the year ended December 31, 2015, the Company recorded charges of $5.5 million for multi-employer pension plans withdrawal obligations unrelated to facility closures. These charges were recorded as restructuring, impairment and other charges and represent the Company’s best estimate of the expected settlement of these withdrawal liabilities. As a result of the acquisition of Courier, the Company participates in two multi-employer pension plans, one of which the Company’s contributions are approximately 85% of the total plan contributions. Both plans are estimated to be underfunded and have a red zone status under the Pension Protection Act. For the year ended December 31, 2014, the Company recorded restructuring, impairment and other charges of $38.5 million associated with its estimated liability for withdrawing from four defined benefit multi-employer pension plans. Of these charges, $35.5 million were due to the Company’s decision to withdraw from the four defined benefit multi-employer pension plans and $3.0 million were primarily related to facility closures. For the year ended December 31, 2013, the Company recorded restructuring, impairment and other charges of $53.1 million related to complete or partial withdrawal from certain multi-employer pension plans. Of these charges, $38.4 million were due to the Company’s decision to withdraw from certain multi-employer pension plans and $14.7 million were primarily related to facility closures. See Note 3 for further details of charges related to complete or partial multi-employer pension plan withdrawal liabilities recognized in the Consolidated Statements of Operations.

During the years ended December 31, 2015, 2014 and 2013, the Company made regular contributions of $0.2 million, $0.3 million and $1.3 million, respectively, to these multi-employer pension plans and other plans from which the Company has completely withdrawn as of December 31, 2015.