Retirement Benefits

The Company has funded and unfunded non-contributory U.S. and foreign defined benefit pension plans. Benefits under these plans are generally provided based on either years of service and final average pay or a specified dollar amount per year of service. The U.S. defined benefit pension plan has been closed to new participants since 2004, while the Canadian and UK defined benefit pension plans have been closed to new entrants since 2006 and 2007, respectively. These U.S., Canadian and UK employees are eligible instead for defined contribution plans.

The Company also has a number of health care and life insurance benefit plans covering eligible employees who reached retirement age while working for the Company. These benefits have been discontinued for substantially all future retirees. The Company anticipates future cost-sharing changes for its discontinued plans that are consistent with past practices.

The Company uses a December 31 measurement date for all of its plans. There were no amendments made in 2014 or 2013 to the defined benefit pension plans which had a significant impact on the total pension benefit obligation. The Company's U.S. defined benefit pension plans were approximately 88% of the $976.3 million total pension benefit obligations at December 31, 2014.

The following table sets forth the reconciliation of beginning and ending balances of the benefit obligations and the plan assets for the Company’s defined benefit pension and other benefit plans at December 31, (in millions):



	Pension Benefits						Other Benefits
	2014			2013			2014			2013
Change in benefit obligation
Benefit obligation at beginning of year	$	828.2		$	879.5		$	28.1		$	30.4
Service cost	15.1			16.7			0.1			—
Interest cost	40.9			36.5			1.1			1.1
Plan participants’ contributions	0.7			0.7			—			—
Amendments	—			0.4			—			—
Actuarial loss (gain)	135.1			(69.2		)	1.6			(1.4		)
Currency impact	(6.0		)	0.3			—			—
Other	(0.6		)	(0.5		)	(2.2		)	(0.1		)
Benefits paid	(37.1		)	(36.2		)	(2.0		)	(1.9		)
Benefit obligation at end of year	$	976.3		$	828.2		$	26.7		$	28.1
Change in plan assets
Fair value of plan assets at beginning of year	$	764.0		$	726.3		$	—		$	—
Actual return on plan assets	87.1			64.8			—			—
Employer contributions	27.6			8.0			—			—
Plan participants’ contributions	0.7			0.7			—			—
Currency impact	(6.6		)	0.4			—			—
Benefits paid	(37.1		)	(36.2		)	—			—
Fair value of plan assets at end of year	$	835.7		$	764.0		$	—		$	—
FUNDED STATUS	$	(140.6	)	$	(64.2	)	$	(26.7	)	$	(28.1	)
Amounts recognized in the consolidated balance sheet consist of:
Prepaid pensions (included in Other long-term assets)	$	1.0		$	18.7		$	—		$	—
Accrued benefit liability (short-term and long-term)	(141.6		)	(82.9		)	(26.7		)	(28.1		)
NET AMOUNT RECOGNIZED IN THE CONSOLIDATED BALANCE SHEET	$	(140.6	)	$	(64.2	)	$	(26.7	)	$	(28.1	)
Amounts recognized in Accumulated other comprehensive loss (income) consist of:
Net actuarial loss	$	196.4		$	107.2		$	0.7		$	(0.9	)
Prior service cost (credit)	0.8			1.0			(5.2		)	(6.2		)
NET AMOUNT RECOGNIZED IN ACCUMULATED OTHER COMPREHENSIVE LOSS	$	197.2		$	108.2		$	(4.5	)	$	(7.1	)

The accumulated benefit obligation for all defined benefit pension plans was $907.1 million and $771.9 million at December 31, 2014 and 2013, respectively. Information with respect to plans with accumulated benefit obligations in excess of plan assets is as follows, (in millions):



	2014		2013
Projected benefit obligation	$	266.5	$	77.2
Accumulated benefit obligation	$	261.1	$	74.5
Fair value of plan assets	$	168.9	$	—

The following table sets forth the components of pension and other benefit costs for the years ended December 31, (in millions):



	Pension Benefits									Other Benefits
	2014			2013			2012			2014			2013			2012
Components of net periodic benefit cost:
Service cost	$	15.1		$	16.7		$	16.0		$	0.1		$	—		$	—
Interest cost	40.9			36.5			36.5			1.1			1.1			1.3
Expected return on plan assets	(45.2		)	(46.7		)	(39.9		)	—			—			—
Amortization of prior service cost (credit)	0.2			0.2			0.2			(1.0		)	(1.0		)	(1.0		)
Amortization of actuarial losses (gains)	3.9			13.8			17.4			(0.1		)	(0.1		)	—
Other	—			—			—			(2.2		)	—			—
Curtailment and settlement losses (gains)	—			—			—			—			—			—
Net periodic benefit cost (credit)	$	14.9		$	20.5		$	30.2		$	(2.1	)	$	—		$	0.3
Changes recognized in other comprehensive loss (income), before tax:
Current year net actuarial loss (gain)	$	93.1		$	(87.8	)	$	(19.1	)	$	1.5		$	(1.4	)	$	(2.5	)
Current year prior service credit	—			0.4			—			—			—			—
Amortization of prior service (cost) credit	(0.2		)	(0.2		)	(0.2		)	1.0			1.0			1.0
Amortization of net actuarial (losses) gains	(3.9		)	(13.8		)	(17.4		)	0.1			0.1			—
Currency impact	—			(0.1		)	(0.2		)	—			—			—
Other adjustments	—			—			0.3			—			—			0.3
Total recognized in other comprehensive loss (income)	89.0			(101.5		)	(36.6		)	2.6			(0.3		)	(1.2		)
TOTAL RECOGNIZED IN NET PERIODIC PENSION COST AND OTHER COMPREHENSIVE LOSS (INCOME)	$	103.9		$	(81.0	)	$	(6.4	)	$	0.5		$	(0.3	)	$	(0.9	)
Amortization expected to be recognized through income during 2015
Amortization of prior service cost (credit)	$	0.2								$	(1.0	)
Amortization of net loss (gain)	11.9									(0.1		)
TOTAL EXPECTED TO BE RECOGNIZED THROUGH INCOME DURING NEXT FISCAL YEAR	$	12.1								$	(1.1	)

The Company also maintains six defined contribution pension plans. The total cost of these plans was $12.9 million in 2014, $11.2 million in 2013 and $10.5 million in 2012, excluding the employer match for the 401(k) plan. This cost is not included in the above net periodic benefit cost for the defined benefit pension plans.

As of December 31, 2014 and 2013, the Company participated in three multiemployer defined benefit pension plans under the terms of collective-bargaining agreements that cover its union represented employees. As of December 31, 2014 and 2013 one of the three multiemployer defined benefit pension plans in which the Company participates is considered to be less than 65 percent funded. The Company’s total contributions to these plans were $0.8 million in 2014, $0.9 million in 2013 and $0.7 million in 2012. These contributions represent more than five percent of the total contributions made to each of these plans during the past three years. After assessing future required contributions and/or the potential liabilities associated with withdrawing from these plans, the Company has concluded that none of these plans are significant.

Assumptions

The following assumptions were used to determine the projected benefit obligations at the measurement date and the net periodic benefit cost for the year:



	Pension Benefits						Other Benefits
	2014		2013		2012		2014		2013		2012
Weighted-average assumptions used to determine benefit obligations at December 31,
Discount rate	4.23	%	5.04	%	4.22	%	4.10	%	4.60	%	4.20	%
Rate of compensation increase	3.15	%	3.18	%	3.11	%	3.00	%	3.00	%	3.00	%
Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31,
Discount rate	5.04	%	4.22	%	4.42	%	4.60	%	4.20	%	4.40	%
Expected return on plan assets	6.06	%	6.70	%	6.50	%	N/A		N/A		N/A
Rate of compensation increase	3.18	%	3.11	%	3.53	%	4.50	%	3.00	%	3.50	%

At the end of each year, the Company determines the appropriate expected return on assets for each plan based upon its strategic asset allocation (see discussion below). In making this determination, the Company utilizes expected returns for each asset class based upon current market conditions and expected risk premiums for each asset class.

The Company also determines the discount rate to be used to calculate the present value of pension plan liabilities at the end of each year. The discount rate for the Company’s U.S. and Canadian pension plans is determined by matching the expected cash flows associated with its benefit obligations to a yield curve based on high quality, fixed income debt instruments with maturities that closely match the expected funding period of its pension liabilities. This yield curve is derived using a bond matching approach which incorporates a selection of bonds that align with the Company’s projected benefit obligations. As of December 31, 2014, the Company used a discount rate of 4.3% for its U.S. pension plans compared to a discount rate of 5.1% used in 2013. For its Canadian pension plan, the Company used a discount rate of 3.95% as of December 31, 2014 compared to the 4.75% discount rate used in 2013.

For its UK pension plan the discount rate was derived using a yield curve fitted to the yields on AA bonds in the Barclays Capital Sterling Aggregate Corporate Index and uses sample plan cash flow data as a proxy to plan specific liability cash flows. The derived discount rate is the single discount rate equivalent to discounting these liability cash flows at the term-dependent spot rate of AA corporate bonds. This methodology resulted in a December 31, 2014 discount rate for the UK pension plan of 3.7% as compared to a discount rate of 4.6% used in 2013.

In 2014 we changed the mortality table used to calculate the present value of our pension plan liabilities from RP-2000 to the RP-2000 with generational projection using Scale BB-2D. This mortality table was chosen after considering alternative tables including the RP-2014 projected with Scale MP-2014. We chose the RP-2000 with Scale BB-2D because it resulted in the closest match to the plans’ actual experience over the period 2009-2013. This change resulted in an approximately $40 million increase in the projected benefit obligation of our U.S. defined benefit pension plans upon remeasurement at December 31, 2014.

The rate of compensation increase assumption reflects the Company’s actual experience and best estimate of future increases.

The assumed health care cost trend rates used to determine the projected postretirement benefit obligation are as follows:



	Other Benefits
	2014		2013		2012
Assumed health care cost trend rates at December 31,
Health care cost trend assumed for next year	6.5	%	6.6	%	6.9	%
Rate to which the cost trend is assumed to decline	5.0	%	5.0	%	5.0	%
Year that the rate reaches the ultimate trend rate	2028		2028		2028

Assumed health care cost trend rates have an effect on the amounts reported for the postretirement benefit plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects (in millions):



	One Percentage Point Increase		One Percentage Point Decrease
Effect on total of service and interest cost	$	0.1	$	(0.1	)
Effect on postretirement benefit obligation	$	1.5	$	(1.5	)

Plan Assets

The Company’s combined targeted 2015 weighted average asset allocation for domestic and foreign pension plans and the actual weighted average asset allocation for domestic and foreign pension plans at December 31, 2014 and 2013 by asset category are as follows:



	Percentage of Plan Assets
	Target		Actual
Asset Category	2015		2014		2013
Equity securities	37	%	30	%	40	%
Debt securities & Cash	37	%	48	%	43	%
Alternative Investments	26	%	22	%	17	%
TOTAL	100	%	100	%	100	%

At the end of each year, the Company estimates the expected long-term rate of return on pension plan assets based on the strategic asset allocation for its plans. In making this determination, the Company utilizes expected rates of return for each asset class based upon current market conditions and expected risk premiums for each asset class. The Company has written investment policies and asset allocation guidelines for its domestic and foreign pension plans. In establishing these policies, the Company has considered that its various pension plans are a major retirement vehicle for most plan participants and has acted to discharge its fiduciary responsibilities with regard to the plans solely in the interest of such participants and their beneficiaries. The goal underlying the establishment of the investment policies is to provide that pension assets shall be invested in a prudent manner and so that, together with the expected contributions to the plans, the funds will be sufficient to meet the obligations of the plans as they become due. To achieve this result, the Company conducts a periodic strategic asset allocation study to form a basis for the allocation of pension assets between various asset categories. Specific policy benchmark percentages are assigned to each asset category with minimum and maximum ranges established for each. The assets are then tactically managed within these ranges. Equity securities include investments in large-cap, mid-cap and small-cap companies located inside and outside the United States. Fixed income securities include corporate bonds of companies from diversified industries, mortgage-backed securities and US Treasuries. Derivative investments include futures contracts used by the plan to adjust the level of its investments within an asset allocation category. All futures contracts are 100% supported by cash or cash equivalent investments. At no time may derivatives be utilized to leverage the asset portfolio.

Equity securities include Company common stock in the amounts of $37.6 million (5.2% of total domestic plan assets) and $35.0 million (5.3% of total domestic plan assets) at December 31, 2014 and 2013, respectively.

The fair value of the Company’s pension plan assets at December 31, 2014 and 2013, by asset category are as follows (in millions):



				Quoted Prices in Active Markets for Identical Assets			Quoted Prices in Active Market for Similar Asset		Significant Unobservable Inputs
Asset Category	Total			(Level 1)			(Level 2)		(Level 3)
Cash and cash equivalents	$	26.2		$	26.2		$	—	$	—
Equity securities:
US Large-cap ^(a)	35.1			35.1			—		—
US Mid-cap and Small-cap Growth ^(b)	41.5			41.5			—		—
International Large-cap	23.4			23.4			—		—
Emerging Markets ^(c)	11.3			11.3			—		—
Fixed Income Securities:
US Treasuries	57.7			—			57.7		—
Corporate Bonds^(d)	214.1			—			214.1		—
Asset Backed Securities and Other	87.9			0.4			87.5		—
Derivatives:
Assets ^(e)	150.1			149.1			1.0		—
(Liabilities) ^(e)	(15.9		)	(15.9		)	—		—
Alternative Investment Funds ^(f)	188.2			110.1			—		78.1
Common Pooled Fund ^(g)	16.1			—			16.1		—
BALANCE AT DECEMBER 31, 2014	$	835.7		$	381.2		$	376.4	$	78.1



				Quoted Prices in Active Markets for Identical			Quoted Prices in Active Market for Similar Asset		Significant Unobservable Inputs
Asset Category	Total			Assets (Level 1)			(Level 2)		(Level 3)
Cash and cash equivalents	$	23.9		$	23.9		$	—	$	—
Equity securities:
US Large-cap ^(a)	75.7			75.7			—		—
US Mid-cap and Small-cap Growth^(b)	42.0			42.0			—		—
International Large-cap	80.7			80.7			—		—
Emerging Markets ^(c)	28.3			28.3			—		—
Fixed Income Securities:
US Treasuries	59.6			—			59.6		—
Corporate Bonds ^(d)	120.7			—			120.7		—
Asset Backed Securities and Other	91.8			1.1			90.7		—
Derivatives:
Assets ^(e)	97.5			97.5			—		—
(Liabilities) ^(e)	(37.2		)	(37.2		)	—		—
Alternative Investment Funds ^(f)	165.6			33.3			—		132.3
Common Pooled Funds ^(g)	15.4			—			15.4		—
BALANCE AT DECEMBER 31, 2013	$	764.0		$	345.3		$	286.4	$	132.3


(a)	Includes an actively managed portfolio of large-cap US stocks.


(b)	Includes $37.6 million and $35.0 million of the Company’s common stock at December 31, 2014 and 2013, respectively, and an investment in a small cap open ended mutual fund.


(c)	Includes open ended emerging markets mutual funds.


(d)	Includes primarily investment grade bonds of U.S. issuers from diverse industries.


(e)	Includes primarily large-cap U.S. and foreign equity futures as well as short positions on U.S. Treasuries to adjust the duration of the portfolio.


(f)	Includes investments in hedge funds, including fund of funds products and open end mutual funds


(g)	Investments in Common Pooled Funds, consisting of equities and fixed income securities. The fair value of the Common Pooled Funds has been calculated using the Funds Net Asset Value per share of the underlying investments.

The 2013 table above has been revised due to misstatements in the assignment of certain pension plan assets between Level 1 and 2 and between asset categories. As a result, Level 2 assets reported in the 2013 table above have increased by $226.3 million compared to the amounts reported in the prior year. The Company evaluated the materiality of this misstatement and concluded it was not material to the prior year financial statements.

The following table rolls forward the fair value of the Company’s alternative investment funds measured using significant unobservable inputs (Level 3) for the years ended December 31, 2013 and December 31, 2014 (in millions):



	Alternative
	Investment Funds
BALANCE AT December 31, 2012	$	126.2
Actual return on plan assets:
Relating to assets still held at the reporting date	9.0
Relating to assets sold during the period	0.2
Purchases, sales and settlements, net	(3.1		)
Transfers in and/or out of Level 3	—
BALANCE AT December 31, 2013	$	132.3
Actual return on plan assets:
Relating to assets still held at the reporting date	4.1
Relating to assets sold during the period	0.6
Purchases, sales and settlements, net	(58.9		)
Transfers in and/or out of Level 3	—
BALANCE AT December 31, 2014	$	78.1

The alternative investments held by the Company’s pension plans and assigned to Level 3 of the fair value hierarchy consist of fund of fund products. Funds of funds invest in a number of investment funds managed by a diversified group of third-party investment managers who employ a variety of alternative investment strategies, including relative value, security selection, distressed value, global macro, specialized credit and directional strategies. The objective of these funds is to achieve the desired capital appreciation with lower volatility than either traditional equity or fixed income securities. The alternative investments are valued using net asset values provided by the fund managers. The net asset values are determined based on the fair values of the underlying investments in the funds.

The Company’s other postretirement benefits are unfunded; therefore, no asset information is reported.

Contributions

Although not required under the Pension Protection Act of 2006, the Company made a voluntary contribution to its qualified domestic defined benefit pension plan of $20.0 million in January 2015. The Company expects to contribute approximately $3.0 million to its foreign plans in 2015.

Estimated Future Benefit Payments

The following domestic and foreign benefit payments, which reflect future service, as appropriate, are expected to be paid as follows, (in millions):



	Pension Benefits		Other Benefits
2015	$	38.8	$	2.3
2016	$	40.6	$	2.3
2017	$	42.5	$	2.2
2018	$	44.7	$	2.1
2019	$	46.8	$	2.1
2020-2024	$	267.1	$	9.1