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 charges for its discontinued plans that are consistent with past practices. The Company uses a December 31 measurement date for all of its plans.

In the third quarter of 2018, the Company approved amendments to one of its foreign defined benefit pension plans, which closed the plan to future service accruals effective August 31, 2018. As a result of the amendments, in the third quarter of 2018, the Company recognized a curtailment gain of approximately $4.7 million, net of tax, in Accumulated other comprehensive income. In addition, effective August 31, 2018, the amortization of actuarial gains and losses is being recognized over the remaining life expectancy of the participants of this plan, as all participants are considered inactive as a result of the amendment.

In December 2016, the Company approved amendments to the domestic qualified defined benefit pension plan and non-qualified defined benefit plan, which froze service accruals for active participants effective February 28, 2017 and further will freeze compensation accruals effective December 31, 2020. The Company also froze all accruals in a second non-qualified defined benefit plan effective December 31, 2016.

As a result of these amendments, the Company recognized a $34.1 million curtailment gain in Accumulated other comprehensive income as of December 31, 2016 and also recognized $0.2 million of pension expense in 2016 associated with previously unrecognized prior service costs. In addition, effective January 1, 2017, the amortization of actuarial gains and losses of these plans is being recognized over the remaining life expectancy of participants, as all participants are considered inactive as a result of the amendment.

In 2018 and 2016, we completed transactions with third-party insurers to settle approximately $28 million and $40 million, respectively, of projected benefit obligation of our domestic qualified defined benefit pension plans.

The Company's U.S. defined benefit pension plans were approximately 88% of the $844.3 million total pension benefit obligations at December 31, 2018.

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
	2018			2017			2018			2017
Change in benefit obligation
Benefit obligation at beginning of year	$	956.1		$	917.4		$	27.0		$	26.2
Acquisitions	1.3			—			—			—
Service cost	3.8			5.9			0.1			0.1
Interest cost	34.3			37.2			1.0			1.0
Plan participants’ contributions	0.4			0.6			—			—
Amendments	3.6			0.3			—			—
Actuarial loss/(gain)	(72.4		)	29.7			(0.5		)	1.4
Curtailment gain	(5.7		)	—			—			—
Currency impact	(5.7		)	9.7			—			—
Other	(0.5		)	(0.4		)	—			—
Benefits paid	(70.9		)	(44.3		)	(1.5		)	(1.7		)
Benefit obligation at end of year	$	844.3		$	956.1		$	26.1		$	27.0
Change in plan assets
Fair value of plan assets at beginning of year	$	738.8		$	705.1		$	—		$	—
Acquisitions	1.2			—			—			—
Actual return on plan assets	(27.5		)	58.6			—			—
Employer contributions	34.0			9.8			1.5			1.7
Plan participants’ contributions	0.4			0.6			—			—
Currency impact	(5.9		)	9.0			—			—
Benefits paid	(70.9		)	(44.3		)	(1.5		)	(1.7		)
Fair value of plan assets at end of year	$	670.1		$	738.8		$	—		$	—
FUNDED STATUS	$	(174.2	)	$	(217.3	)	$	(26.1	)	$	(27.0	)
Amounts recognized in the consolidated balance sheet consist of:
Prepaid pensions (included in Other long-term assets)	$	8.0		$	1.5		$	—		$	—
Accrued benefit liability (short-term and long-term)	(182.2		)	(218.8		)	(26.1		)	(27.0		)
NET AMOUNT RECOGNIZED IN THE CONSOLIDATED BALANCE SHEET	$	(174.2	)	$	(217.3	)	$	(26.1	)	$	(27.0	)
Amounts recognized in Accumulated other comprehensive loss (income) consist of:
Net actuarial loss	$	240.8		$	270.1		$	2.4		$	3.0
Prior service cost (credit)	4.1			0.6			(1.3		)	(2.3		)
NET AMOUNT RECOGNIZED IN ACCUMULATED OTHER COMPREHENSIVE LOSS	$	244.9		$	270.7		$	1.1		$	0.7

The accumulated benefit obligation for all defined benefit pension plans was $835.6 million and $924.6 million at December 31, 2018 and 2017, respectively. Information with respect to plans with accumulated benefit obligations in excess of plan assets is as follows, (in millions):



	2018		2017
Projected benefit obligation	$	744.0	$	842.7
Accumulated benefit obligation	$	735.4	$	826.5
Fair value of plan assets	$	561.7	$	626.3

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
	2018			2017			2016			2018			2017			2016
Components of net periodic benefit cost:
Service cost	$	3.8		$	5.9		$	12.9		$	0.1		$	0.1		$	—
Interest cost	34.3			37.2			41.9			1.0			1.0			1.2
Expected return on plan assets	(33.5		)	(34.1		)	(44.3		)	—			—			—
Amortization of prior service cost (credit)	0.1			0.1			0.1			(0.8		)	(1.0		)	(1.0		)
Amortization of actuarial losses (gains)	10.5			11.4			13.9			—			—			—
Curtailment and settlement losses	—			0.4			0.2			—			—			—
Net periodic benefit cost	$	15.2		$	20.9		$	24.7		$	0.3		$	0.1		$	0.2
Changes recognized in other comprehensive loss (income), before tax:
Current year net actuarial loss (gain)	$	(15.8	)	$	4.2		$	72.0		$	(0.4	)	$	1.4		$	0.2
Current year prior service credit	2.0			0.3			—			—			—			—
Amortization of prior service (cost) credit	(0.1		)	(0.1		)	(0.1		)	1.0			1.0			1.0
Amortization of net actuarial (losses) gains	(10.5		)	(11.4		)	(13.9		)	(0.2		)	—			—
Currency impact	(1.3		)	3.5			(4.0		)	—			—			—
Other adjustments	—			(0.4		)	(0.2		)	—			—			—
Total recognized in other comprehensive loss	(25.7		)	(3.9		)	53.8			0.4			2.4			1.2
TOTAL RECOGNIZED IN NET PERIODIC PENSION COST AND OTHER COMPREHENSIVE LOSS	$	(10.5	)	$	17.0		$	78.5		$	0.7		$	2.5		$	1.4

The Company also maintains five primary defined contribution pension plans. The total cost of the Company's defined contribution plans was $22.5 million in 2018, $19.8 million in 2017 and $15.6 million in 2016, 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.

The Company participated in two multi-employer defined benefit pension plans under the terms of collective-bargaining agreements that cover its union represented employees at December 31, 2016. In 2017, the Company withdrew from one of these plans. The Company’s total contributions to plans it participated in were $0.2 million in 2018, $0.4 million in 2017, and $0.5 million in 2016. These contributions represent more than five percent of the total contributions made to one of these plans in 2018, 2017 and 2016.

The risks of participating in multi-employer plans are different from single-employer plans in that assets contributed are pooled and may be used to provide benefits to employees of other participating employers. If a participating employer stops contributing to the plan, the unfunded obligations of the plan may have to be assumed by the remaining participant employers. If we choose to stop participating in a multi-employer plan we may be required to pay those plans a withdrawal liability based on the unfunded status of the plan.

In the fourth quarter of 2016, the Company recorded a charge of $12.5 million in Cost of goods sold representing the estimated withdrawal liability from one of the multi-employer plans. Depending on actions of third parties, including bankruptcy or withdrawals from the multi-employer plan, under terms customary to multi-employer plans, it is possible that the Company could in the future be subject to certain additional liabilities associated with its participation and withdraw from the multi-employer pension plan, which the Company estimates could be up to an additional $23 million as of December 31, 2018.

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
	2018		2017		2016		2018		2017		2016
Weighted-average assumptions used to determine benefit obligations at December 31,
Discount rate	4.24	%	3.67	%	4.12	%	4.40	%	3.70	%	4.10	%
Rate of compensation increase	3.25	%	3.24	%	3.55	%	4.05	%	4.00	%	3.93	%
Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31,
Discount rate	3.67	%	4.12	%	4.71	%	3.70	%	4.10	%	4.60	%
Expected return on plan assets	4.68	%	4.94	%	6.04	%	N/A		N/A		N/A
Rate of compensation increase	3.25	%	3.55	%	3.59	%	4.00	%	3.93	%	3.92	%

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 the expected cash flows of a hypothetical portfolio of high quality, fixed income debt instruments with maturities that closely match the expected funding period of its pension liabilities. As of December 31, 2018, the Company used a discount rate of 4.40% for its U.S. pension plans compared to a discount rate of 3.80% used in 2017. For its Canadian pension plan, the Company used a discount rate of 3.60% as of December 31, 2018 compared to the 3.50% discount rate used in 2017.

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, 2018 discount rate for the UK pension plan of 2.90% as compared to a discount rate of 2.60% used in 2017.

In 2018 we changed the mortality table used to calculate the present value of our pension plan liabilities from the RP-2014 mortality table, with generational projection from 2006 using Scale MP-2017 to the RP-2014 mortality table, with generational projection from 2006 using Scale MP-2018. That change did not have a material impact to the projected benefit obligation of our U.S. plans upon remeasurement at December 31, 2018. The RP-2014 mortality table with generational projection from 2006 using Scale MP-2018 was chosen as the best estimate based on the observed and anticipated experience of the plans after considering alternative tables.

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
	2018		2017		2016
Assumed health care cost trend rates at December 31,
Health care cost trend assumed for next year	6.8	%	7.0	%	7.2	%
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

Plan Assets

The Company’s combined targeted 2019 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, 2018 and 2017 by asset category are as follows:



	Percentage of Plan Assets
	Target		Actual
Asset Category	2019		2018		2017
Equity securities	22	%	19	%	18	%
Debt securities & Cash	64	%	67	%	65	%
Alternative Investments	14	%	14	%	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. The actual and target percentages reported in the preceding table reflect the economic exposure to each asset category, including the impact of derivative positions. All futures contracts are 100% supported by cash or cash equivalent investments. At no time may derivatives be utilized to leverage the asset portfolio. At December 31, 2018 and 2017, there were no holdings of Company stock in pension plan assets.

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

The fair value of the Company’s pension plan assets at December 31, 2018 and 2017, 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		Investments Priced Using Net Asset Value
Asset Category	Total			(Level 1)			(Level 2)			(Level 3)
Cash and cash equivalents	$	47.0		$	47.0		$	—		$	—	$	—
Equity securities:
U.S. Large-cap ^(a)	8.2			8.2			—			—		—
U.S. Mid-cap and Small-cap Growth ^(b)	3.1			3.1			—			—		—
International Large-cap	8.6			8.6			—			—		—
Emerging Markets ^(c)	13.3			8.1			5.2			—		—
Common Pooled Equity Funds ^(d)	12.7			—			12.7			—		—
Fixed Income Securities:
U.S. Treasuries	378.0			—			378.0			—		—
Corporate Bonds^(e)	0.3			0.3			—			—		—
Asset Backed Securities and Other	22.8			—			22.8			—		—
Common Pooled Fixed Income Funds ^(f)	61.8			—			57.6			—		4.2
Derivatives:
Assets ^(g)	8.2			8.0			0.2			—		—
(Liabilities) ^(g)	(7.9		)	(6.9		)	(1.0		)	—		—
Alternative Investment Funds ^(h)	96.8			11.6			3.3			—		81.9
Common Pooled Funds ⁽ⁱ⁾	17.7			0.9			16.8			—		—
BALANCE AT DECEMBER 31, 2018	$	670.6		$	88.9		$	495.6		$	—	$	86.1



				Quoted Prices in Active Markets for Identical Assets		Quoted Prices in Active Market for Similar Asset			Significant Unobservable Inputs		Investments Priced Using Net Asset Value
Asset Category	Total			(Level 1)		(Level 2)			(Level 3)
Cash and cash equivalents	$	47.9		$	47.9	$	—		$	—	$	—
Equity securities:
U.S. Large-cap ^(a)	15.6			15.6		—			—		—
U.S. Mid-cap and Small-cap Growth^(b)	3.1			3.1		—			—		—
International Large-cap	30.9			30.9		—			—		—
Emerging Markets ^(c)	8.6			8.6		—			—		—
Fixed Income Securities:
U.S. Treasuries	402.2			—		402.2			—		—
Corporate Bonds ^(e)	10.6			0.3		10.3			—		—
Asset Backed Securities and Other	75.6			—		75.6			—		—
Derivatives:
Assets ^(g)	4.6			1.5		3.1			—		—
(Liabilities) ^(g)	(1.3		)	0.1		(1.4		)	—		—
Alternative Investment Funds ^(h)	123.0			50.6		—			—		72.4
Common Pooled Funds ⁽ⁱ⁾	18.0			0.8		17.2			—		—
BALANCE AT DECEMBER 31, 2017	$	738.8		$	159.4	$	507.0		$	—	$	72.4


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


(b)	Includes an investment in a small cap open ended mutual fund.


(c)	Includes open ended emerging markets mutual funds.


(d)	Investments in Common Pooled Equity Funds, including funds and fund products investing in various equity securities


(e)	Includes primarily investment grade bonds from diverse industries


(f)	Investments in Common Pooled Fixed Income Funds, including funds and fund products investing in various fixed income investments


(g)	Includes primarily U.S. and foreign equity futures as well as foreign fixed income futures and positions in U.S. Treasury futures to adjust the duration of the portfolio.


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


(i)	Investments in Common Pooled Funds, consisting of equities and fixed income securities

Investments Priced Using Net Asset Value ("NAV") within Alternative Investment Funds in the preceding tables consist of fund of fund products. These products 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.

Contributions

The Company made $27.9 million of contributions to its qualified defined benefit pension plans in 2018, including $20.0 million of U.S. voluntary contributions that were not required under the Pension Protection Act of 2006. The Company expects to contribute approximately $0.5 million to its foreign plans in 2019.

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
2019	$	50.3	$	2.4
2020	$	50.5	$	2.3
2021	$	51.8	$	2.3
2022	$	53.6	$	2.1
2023	$	54.0	$	2.0
2024-2028	$	268.9	$	8.7