Pensions and Postretirement Benefits

The Company and its subsidiaries have pension plans, principally noncontributory defined benefit or noncontributory defined contribution plans, covering substantially all employees. In addition, the Company has an unfunded postretirement benefit plan. In April 2011, the Company amended one of its plans to cover most U.S. employees not covered by collective bargaining agreements using a cash balance formula. Under a cash balance formula, a plan participant accumulates a retirement benefit consisting of pay credits that are based upon a percentage of current eligible earnings and current interest credits. For the remaining defined benefit plans, benefits are based on the employee’s years of service. For the defined contribution plans, the costs charged to operations and the amount funded are based upon a percentage of the covered employees’ compensation.

The Company's objective for the pension plan is to monitor the funded ratio, create general investment goals in regards to acceptable risk and liquidity needs ensuring the long-term interests of participants and beneficiaries are considered and manage risk by minimizing the short-term and long-term risk of actual expenses and contribution requirements.

The following tables set forth the change in benefit obligation, plan assets, funded status and amounts recognized in the consolidated balance sheet for the defined benefit pension and postretirement benefit plans as of December 31, 2015 and 2014:



	Pension Benefits						Postretirement Benefits
	2015			2014			2015			2014
	(In millions)
Change in benefit obligation
Benefit obligation at beginning of year	$	61.1		$	52.1		$	17.0		$	16.2
Service cost	2.6			2.2			—			—
Interest cost	2.3			2.2			0.5			0.6
Actuarial (gains) losses	(3.0		)	8.8			(2.7		)	1.9
Plan amendment	—			0.4			—			—
Benefits and expenses paid, net of contributions	(4.6		)	(4.6		)	(1.3		)	(1.7		)
Benefit obligation at end of year	$	58.4		$	61.1		$	13.5		$	17.0
Change in plan assets
Fair value of plan assets at beginning of year	$	125.7		$	125.4		$	—		$	—
Actual return on plan assets	(2.9		)	5.8			—			—
Company contributions	—			—			1.3			1.7
Cash transfer to fund postretirement benefit payments	(0.9		)	(0.9		)	—			—
Benefits and expenses paid, net of contributions	(4.6		)	(4.6		)	(1.3		)	(1.7		)
Fair value of plan assets at end of year	$	117.3		$	125.7		$	—		$	—
Funded (underfunded) status of the plans	$	58.9		$	64.6		$	(13.5	)	$	(17.0	)

Amounts recognized in the consolidated balance sheets consist of:



	Pension Benefits				Postretirement Benefits
	2015		2014		2015			2014
	(In millions)
Noncurrent assets	$	58.9	$	64.6	$	—		$	—
Noncurrent liabilities	—		—		12.1			15.4
Current liabilities	—		—		1.4			1.6
	$	58.9	$	64.6	$	13.5		$	17.0
Amounts recognized in accumulated other comprehensive loss
Net actuarial loss	$	25.2	$	15.3	$	4.4		$	7.6
Net prior service cost (credit)	0.3		0.4		(0.3		)	(0.4		)
Accumulated other comprehensive loss	$	25.5	$	15.7	$	4.1		$	7.2

As of December 31, 2015 and 2014, the Company’s defined benefit pension plans did not hold a material amount of shares of the Company’s common stock.

The pension plan weighted-average asset allocation at December 31, 2015 and 2014 and target allocation for 2016 are as follows:



		Plan Assets
	Target 2016	2015		2014
Asset Category
Equity securities	45-75%	62.7	%	64.6	%
Debt securities	20-40	25.4	%	27.9	%
Other	0-20	11.9	%	7.5	%
	100%	100	%	100	%

The following table sets forth, by level within the fair value hierarchy, the pension plans assets:



	2015								2014
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(In millions)
Collective trust and pooled insurance funds:
Common stock	$	38.3	$	1.5	$	—	$	39.8	$	45.6	$	2.2	$	—	$	47.8
Equity Funds	29.1		—		—		29.1		29.0		—		—		29.0
Foreign Stock	5.7		—		—		5.7		5.4		—		—		5.4
U.S. Government obligations	7.4		—		—		7.4		7.0		—		—		7.0
Fixed income funds	14.6		—		—		14.6		19.6		—		—		19.6
Corporate Bonds	6.8		—		—		6.8		7.5		—		—		7.5
Cash and Cash Equivalents	1.2		—		—		1.2		1.8		—		—		1.8
Hedge funds	—		—		12.7		12.7		—		—		7.6		7.6
	$	103.1	$	1.5	$	12.7	$	117.3	$	115.9	$	2.2	$	7.6	$	125.7

The following table presents a reconciliation of Level 3 assets, as defined in Note 1, held during the years ended December 31, 2015 and 2014.



	Balance at Beginning of Year		Net Unrealized Gain		Purchases		Balance at End of Year
	(In millions)
Hedge Funds:
2015	$	7.6	$	0.1	$	5.0	$	12.7
2014	$	7.3	$	0.3	$	—	$	7.6

The following tables summarize the assumptions used in the valuation of pension and postretirement benefit obligations at December 31, and to measure the net periodic benefit cost in the following year.



	Weighted-Average assumptions as of December 31,
	Pension Benefits						Postretirement Benefits
	2015		2014		2013		2015		2014		2013
Discount rate	4.13	%	3.82	%	4.51	%	3.80	%	3.60	%	4.21	%
Expected return on plan assets	8.25	%	8.25	%	8.25	%	N/A		N/A		N/A
Rate of compensation increase	3.00	%	3.00	%	2.00	%	N/A		N/A		N/A
Medical health care benefits rate increase	N/A		N/A		N/A		6.75	%	7.00	%	6.50	%
Medical drug benefits rate increase	N/A		N/A		N/A		6.75	%	7.00	%	6.50	%
Ultimate health care cost trend rate	N/A		N/A		N/A		5.00	%	5.00	%	5.00	%
Year of ultimate trend rate	N/A		N/A		N/A		2022		2022		2042

In determining its expected return on plan assets assumption for the year ended December 31, 2015, the Company considered historical experience, its asset allocation, expected future long-term rates of return for each major asset class, and an assumed long-term inflation rate. Based on these factors, the Company derived an expected return on plan assets for the year ended December 31, 2015 of 8.25%. This assumption was supported by the asset return generation model, which projected future asset returns using simulation and asset class correlation.



	Pension Benefits									Postretirement Benefits
	2015			2014			2013			2015			2014			2013
	(In millions)
Components of net periodic benefit cost
Service costs	$	2.6		$	2.2		$	2.6		$	—		$	—		$	0.1
Interest costs	2.3			2.2			2.0			0.6			0.6			0.6
Expected return on plan assets	(10.2		)	(10.1		)	(8.9		)	—			—			—
Amortization of prior service cost (credit)	—			0.1			—			(0.1		)	(0.1		)	(0.1		)
Recognized net actuarial loss	0.3			—			0.8			0.5			0.5			0.7
Benefit (income) costs	$	(5.0	)	$	(5.6	)	$	(3.5	)	$	1.0		$	1.0		$	1.3
Other changes in plan assets and benefit obligations recognized in accumulated other comprehensive (income) loss
AOCI at beginning of year	$	15.7		$	2.2		$	20.3		$	7.2		$	5.8		$	7.6
Net loss (gain) arising during the year	10.1			13.1			(17.3		)	(2.7		)	1.8			(1.2		)
Recognition of prior service credit	—			—			—			0.1			0.1			0.1
Recognition of actuarial loss	(0.3		)	0.4			(0.8		)	(0.5		)	(0.5		)	(0.7		)
Total recognized in accumulated other comprehensive loss at end of year	$	25.5		$	15.7		$	2.2		$	4.1		$	7.2		$	5.8

The estimated net loss, prior service cost and net transition obligation for the defined benefit pension plans that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the year ending December 31, 2016 is $1.1 million.

The estimated net loss and prior service cost for the postretirement plans that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the year ending December 31, 2016 is $0.3 million.

Below is a table summarizing the Company’s expected future benefit payments and the expected payments due to Medicare subsidy over the next ten years:



			Postretirement Benefits
	Pension Benefits		Gross		Expected Medicare Subsidy		Net including Medicare Subsidy
	(In millions)
2016	$	4.2	$	1.6	$	0.1	$	1.5
2017	4.5		1.5		0.1		1.4
2018	4.3		1.4		0.1		1.3
2019	4.3		1.3		0.1		1.2
2020	4.5		1.2		0.1		1.1
2021 to 2025	22.9		5.2		0.5		4.7

The Company has a postretirement benefit plan. Under the plan, health care benefits are provided on both a contributory and noncontributory basis. The assumed health care cost trend rate has a significant effect on the amounts reported. A one-percentage-point change in the assumed health care cost trend rate would have the following effects:



	1-Percentage Point Increase		1-Percentage Point Decrease
	(In millions)
Effect on total of service and interest cost components in 2015	$	—	$	—
Effect on postretirement benefit obligation as of December 31, 2015	$	1.0	$	(0.9	)

The Company expects to make no contributions to its defined benefit plans in 2016.

In January 2008, a Supplemental Executive Retirement Plan (“SERP”) for the Company’s Chairman of the Board of Directors and Chief Executive Officer (“CEO”) was approved by the Compensation Committee of the Board of Directors of the Company. The SERP provides an annual supplemental retirement benefit for up to $0.4 million upon the CEO’s termination of employment with the Company. The vested retirement benefit will be equal to a percentage of the Supplemental Pension that is equal to the ratio of the sum of his credited service with the Company prior to January 1, 2008 (up to a maximum of thirteen years), and his credited service on or after January 1, 2008 (up to a maximum of seven years) to twenty years of credited service. In the event of a change in control before the CEO’s termination of employment, he will receive 100% of the Supplemental Pension. The Company recorded an expense of $0.6 million in 2015, $0.5 million in 2014 and $0.5 million in 2013 related to the SERP. Additionally, a non-qualified defined contribution retirement benefit was also approved in which the Company will credit $0.1 million quarterly ($0.4 million annually) for a seven-year period to an account in which the CEO will always be 100% vested. The seven year period began on March 31, 2008.