EMPLOYEE BENEFIT PLANS

Defined Benefit Plans - As of December 31, 2017, the Company maintained two domestic pension plans and three German pension plans. The Company used a December 31, 2017 measurement date for these plans. One of the Company’s domestic pension plans covers one active management employee, while the other domestic plan covers all eligible employees (plan was frozen as of December 31, 2011). The two domestic and three German plans collectively comprise the ‘Pension Benefits’ disclosure caption.

Other Benefits - The Company’s other post-retirement benefit plan provides health and life insurance to domestic employees hired prior to 1992. The Company effectively capped its cost for those benefits through plan amendments made in 1992, freezing Company contributions for insurance benefits at 1991 levels for current and future beneficiaries with actuarially reduced benefits for employees who retire before age 65. The disclosures surrounding this plan are reflected in the “Other Benefits” caption.

The following table sets forth aggregated information related to the Company’s pension benefits and other postretirement benefits, including changes in the benefit obligations, changes in plan assets, funded status, amounts recognized in the balance sheet, amounts recognized in accumulated other comprehensive income, and actuarial assumptions that the Company considered in its determination of benefit obligations and plan costs. Benefit obligation balances presented below reflect the projected benefit obligation (PBO) for the Company’s pension plans, and accumulated postretirement benefit obligations (APBO) for the Company’s other benefit plans.



(In millions)	Pension Benefits						Other Benefits
	2017			2016			2017			2016
Accumulated benefit obligation, end of year	$	180.5		$	177.0		$	10.3		$	10.5

Change in benefit obligation:
Benefit obligation, beginning of year	$	181.1		$	186.9		$	10.5		$	11.3
Service cost	0.7			0.9			—			0.1
Interest cost	5.6			6.0			0.3			0.3
Actuarial (gain)/loss	7.0			4.1			0.6			—
Settlements paid	(0.2		)	(0.6		)	—			—
Benefits paid	(11.9		)	(15.7		)	(1.1		)	(1.2		)
Curtailment	—			—			—			—
Foreign currency exchange	2.8			(0.5		)	—			—
Benefit obligation, end of year	$	185.1		$	181.1		$	10.3		$	10.5

Change in plan assets:
Fair value of assets, beginning of year	$	146.1		$	147.4		$	—		$	—
Actual return on plan assets	16.1			9.5			—			—
Company contributions	2.5			5.5			1.1			1.2
Settlements paid	(0.1		)	(0.5		)	—			—
Benefits paid	(11.9		)	(15.7		)	(1.1		)	(1.2		)
Foreign currency exchange	0.6			(0.1		)	—			—
Plan assets, end of year	$	153.3		$	146.1		$	—		$	—

Funded status	$	(31.8	)	$	(35.0	)	$	(10.3	)	$	(10.5	)

Amounts recognized in balance sheet:
Current liabilities	$	(0.4	)	$	(0.3	)	$	(1.1	)	$	(1.1	)
Noncurrent liabilities	(31.4		)	(34.7		)	(9.2		)	(9.4		)
Net liability, end of year	$	(31.8	)	$	(35.0	)	$	(10.3	)	$	(10.5	)

Amount recognized in accumulated other comprehensive income/(loss):
Prior service cost	$	—		$	—		$	0.1		$	0.2
Net actuarial loss	47.6			48.9			1.1			0.9
Settlement	0.5			1.5			—			—
Total recognized in accumulated other comprehensive income/(loss)	$	48.1		$	50.4		$	1.2		$	1.1

The following table sets forth other changes in plan assets and benefit obligation recognized in other comprehensive income for 2017 and 2016:



(In millions)	Pension Benefits						Other Benefits
	2017			2016			2017			2016
Net actuarial (gain)/loss	$	(0.2	)	$	3.8		$	0.5		$	—
Amortization of:
Net actuarial gain	(2.4		)	(2.3		)	(0.1		)	(0.1		)
Prior service credit	—			—			(0.3		)	(0.4		)
Settlement recognition	(0.5		)	(1.4		)	—			—
Deferred tax asset	0.5			0.3			—			0.2
Foreign currency exchange	0.3			(0.1		)	—			—
Total recognized in other comprehensive income	$	(2.3	)	$	0.3		$	0.1		$	(0.3	)

Weighted-average assumptions used to determine domestic benefit obligations:



	Pension Benefits						Other Benefits
	2017			2016			2017		2016
Discount rate	3.61	%		4.13	%		3.51	%	3.89	%
Rate of increase in future compensation	—	%	*	—	%	*	3.00 - 8.00% (Graded)		3.00 - 8.00% (Graded)

*No rate of increases in future compensation used within assumptions for 2017 and 2016, as the cash balance component of the domestic Pension Plan was frozen and the other domestic Pension Plan components do not base benefits on compensation.

Assumptions used to determine domestic periodic benefit cost:



	Pension Benefits									Other Benefits
	2017			2016			2015			2017		2016		2015
Discount rate	4.13	%		4.40	%		4.00	%		3.91	%	4.09	%	3.75	%
Rate of increase in future compensation	—	%	*	—	%	*	—	%	*	3.00 - 8.00% (Graded)		3.00 - 8.00% (Graded)		3.00 - 8.00% (Graded)
Expected long-term rate of return on plan assets	6.25	%		6.50	%		7.00	%		—	%	—	%	—	%

*No rate of increases in future compensation used within assumptions for 2017, 2016, and 2015, as the cash balance component of the domestic Pension Plan was frozen and the other domestic Pension Plan components do not base benefits on compensation.

For the fiscal year ended December 31, 2017, the Company used the RP-2014 aggregate table adjusted to back out estimated mortality improvements from 2006 to the measurement date using Scale MP-2014, and then projected forward using Scale MP-2017 released by the Society of Actuaries during 2017 to estimate future mortality rates based upon current data. For the fiscal year ended December 31, 2016, the Company used the RP-2014 aggregate table adjusted to back out estimated mortality improvements from 2006 to the measurement date using Scale MP-2014, and then projected forward using Scale MP-2016 released by the Society of Actuaries during 2016 to estimate future mortality rates.

The following table sets forth the aggregated net periodic benefit cost for all defined benefit plans for 2017, 2016, and 2015:



(In millions)	Pension Benefits									Other Benefits
	2017			2016			2015			2017		2016		2015
Service cost	$	0.7		$	0.9		$	1.4		$	—	$	0.1	$	0.1
Interest cost	5.6			6.0			7.5			0.3		0.3		0.5
Expected return on assets	(9.0		)	(9.2		)	(9.9		)	—		—		—
Amortization of:
Transition obligation	—			—			—			—		—		—
Settlement cost	—			0.1			—			—		—		—
Prior service cost	—			—			—			0.3		0.3		0.4
Actuarial loss	2.8			2.5			3.4			0.1		0.1		0.2
Settlement cost	—			1.2			1.2			—		—		—
Net periodic benefit cost	$	0.1		$	1.5		$	3.6		$	0.7	$	0.8	$	1.2

The estimated net actuarial (gain)/loss and prior service cost/(credit) that will be amortized from accumulated other comprehensive income into net periodic benefit cost during the 2018 fiscal year are $2.9 million and $0.0 million, respectively, for the pension plans and $0.2 million and $0.1 million, respectively, for all other benefits.

The Company consults with a third party investment manager for the assets of the funded domestic defined benefit plan. The plan assets are currently invested primarily in pooled funds, where each fund in turn is composed of mutual funds that have at least daily net asset valuations. Thus, the Company’s funded domestic defined benefit plan assets are invested in a “fund of funds” approach.

The Company’s Board has delegated oversight and guidance to an appointed Employee Benefits Committee. The Committee has the tasks of reviewing plan performance and asset allocation, ensuring plan compliance with applicable laws, establishing plan policies, procedures, and controls, monitoring expenses, and other related activities.

The plan’s investment policies and strategies focus on the ability to fund benefit obligations as they come due. Considerations include the plan’s current funded level, plan design, benefit payment assumptions, funding regulations, impact of potentially volatile business results on the Company’s ability to make certain levels of contributions, and interest rate and asset return volatility among other considerations. The Company currently attempts to maintain plan funded status at approximately 80 percent or greater pursuant to the Pension Protection Act of 2007. Given the plan’s current funded status, the Company’s cash on hand, cash historically generated from business operations, and cash available under committed credit facilities, the Company sees ample liquidity to achieve this goal.

Risk management and continuous monitoring requirements are met through monthly investment portfolio reports, quarterly Employee Benefits Committee meetings, annual valuations, asset/liability studies, and the annual assumption process focusing primarily on the return on asset assumption and the discount rate assumption. As of December 31, 2017 and December 31, 2016, funds were invested in equity, fixed income, and other investments as follows:



	Target Percentage		Plan Asset Allocation at Year-End
Asset Category	at Year-End 2017		2017		2016
Equity securities	26	%	26	%	31	%
Fixed income securities	70	%	70	%	65	%
Other	4	%	4	%	4	%
Total	100	%	100	%	100	%

The Company does not see any particular concentration of risk within the plans, nor any plan assets that pose difficulties for fair value assessment. The Company currently has no allocation to potentially illiquid or potentially difficult to value assets such as hedge funds, venture capital, private equity, and real estate.

The Company works with actuaries and consultants in making its determination of the asset rate of return assumption and also the discount rate assumption.

Asset class assumptions are set using a combination of empirical and forward-looking analysis for long-term rate of return on plan assets. A variety of models are applied for filtering historical data and isolating the fundamental characteristics of asset classes. These models provide empirical return estimates for each asset class, which are then reviewed and combined with a qualitative assessment of long-term relationships between asset classes before a return estimate is finalized. This provides an additional means for correcting for the effect of unrealistic or unsustainable short-term valuations or trends, opting instead for return levels and behavior that are more likely to prevail over long periods. With that, the Company has assumed an expected long-term rate of return on plan assets of 5.90 percent for the 2018 net periodic benefit cost, down from 6.25 percent in the prior year. This decrease in the assumed long-term rate of return is primarily due to a higher percentage of assets in fixed income securities.

The Company uses the Aon Hewitt AA Above Median curve to determine the discount rate. All cash flow obligations under the plan are matched to bonds in the Aon Hewitt universe of liquid, high-quality, non-callable / non-putable corporate bonds with outliers removed. From that matching exercise, a discount rate is determined.

At January 2, 2016, the Company changed the method used to calculate the service and interest components of net periodic benefit cost for the domestic pension plans and other postretirement benefit plan. This change compared to the previous method resulted in different service and interest components of net periodic benefit cost in the 2016 fiscal year. Historically, the Company estimated these service and interest cost components utilizing a single weighted-average discount rate derived from the yield curve used to measure the benefit obligation at the beginning of the period. The Company elected to utilize a full yield curve approach in the estimation of these components by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows. The Company made this change to provide a more precise measurement of service and interest costs by improving the correlation between projected benefit cash flows to the corresponding spot yield curve rates. This change does not affect the measurement of the Company’s domestic pension and postretirement benefit obligations and is accounted for as a change in accounting estimate applied prospectively.

The Company’s German pension plans are funded by insurance contract policies whereby the insurance company guarantees a fixed minimum return. Due to tax legislation, individual pension benefits can only be financed using direct insurance policies up to certain maximums. These maximum amounts in respect of each member are paid into such an arrangement on a yearly basis.

The Company designated all equity and most domestic fixed income plan assets as Level 1, as they are mutual funds with prices that are readily available. The U.S. Treasury securities and German plan assets are designated as Level 2 inputs. The fair value of the German plan assets are measured by the reserve that is supervised by the German Federal Financial Supervisory Authority. The U.S. Treasury securities are administered by the United States government.

The fair values of the Company’s pension plan assets for 2017 and 2016 by asset category are as follows:



(In millions)	2017		Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Equity
Domestic equity mutual funds	$	24.0	$	24.0		$	—	$	—
International equity mutual funds	16.2		16.2			—		—
Fixed income
U.S. treasury and government agency securities	19.2		—			19.2		—
Fixed income mutual funds	87.9		87.9		—	—		—
Other
Insurance contracts	5.3		—			5.3		—
Cash and equivalents	0.7		0.7			—		—
Total	$	153.3	$	128.8		$	24.5	$	—



(In millions)	2016		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
Equity
Domestic equity mutual funds	$	27.8	$	27.8	$	—		$	—
International equity mutual funds	17.5		17.5		—			—
Fixed income
U.S. treasury and government agency securities	16.4		—		16.4		—	—
Fixed income mutual funds	79.1		79.1		—			—
Other
Insurance contracts	4.5		—		4.5			—
Cash and equivalents	0.8		0.8		—			—
Total	$	146.1	$	125.2	$	20.9		$	—

The Company estimates total contributions to the plans of $4 million in 2018.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid in accordance with the following schedule:



(In millions)	Pension Benefits		Other Benefits
2018	$	12.2	$	1.1
2019	11.6		1.0
2020	11.5		1.0
2021	11.4		0.9
2022	11.0		0.9
Years 2023 through 2027	59.4		3.6

Defined Contribution Plans - The Company maintained two defined contribution plans during 2017, 2016, and 2015. The Company’s cash contributions are allocated to participant’s accounts based on investment elections.

The following table sets forth Company contributions to the defined contribution plans:



(In millions)	2017		2016		2015
Company contributions to the plans	$	6.7	$	5.9	$	5.9