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Employee Benefit Plans | 12 Months Ended
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Dec. 31, 2018
Retirement Benefits [Abstract] |
Employee Benefit Plans | Employee Benefit Plans: Over the past several years, we have frozen many of our defined benefit pension and profit sharing plans and replaced them with defined contribution plans. We have a liability for the benefits earned under these inactive plans prior to the date the benefits were frozen. We also have several active defined benefit plans that provide benefits based on years of service. Our defined contribution plans generally include both company and employee contributions which are based on predetermined percentages of compensation earned by the employee. In addition to freezing the benefits of our defined benefit pension plans, we have also eliminated nearly all of our post-retirement medical benefits. In 2012, we amended the post-retirement benefit plan to shift pre-65 medical coverage for the employees of our largest manufacturing plant so that by 2016, retirees would pay 100% of the cost of post-retirement medical coverage. This change resulted in a significant reduction in the projected benefit obligation for post-retirement medical benefits in 2012. Effective for fiscal year 2016, we adopted the full yield curve approach for estimating the service cost and interest cost components of expense for plans that use a yield curve to determine the discount rate. The new method applies the specific spot rates along the yield curve used in the most recent measurement of the benefit obligation, resulting in a more precise estimate of expense. The impact for fiscal year 2016 was a decrease in expense of approximately $3.2 million. In 2016, we offered certain former employees with vested pension benefits a lump sum payout in an effort to reduce our long-term pension obligations. As a result, for 2016, the net periodic benefit cost for our pension plans included a non-cash settlement charge of $31.4 million and the projected benefit obligation decreased by $50.6 million. We did not have similar funding of pension buyout activity in 2018 and 2017. On March 10, 2017, the FASB issued ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. ASU 2017-07 changes the income statement presentation of defined benefit plan expense by requiring separation between operating expense (service cost component) and non-operating expense (all other components, including interest cost, amortization of prior service cost, curtailments and settlements, etc.). The operating expense component is reported with similar compensation costs while the non-operating components are reported in Other expense (income), net in the Statement of Operations. In addition, only the service cost component is eligible for capitalization as part of an asset such as inventory or property, plant and equipment. We elected the practical expedient to use the prior year’s disclosure as a basis for the retroactive adoption of the ASU. The ASU did not have a material impact on our financial results. Defined Contribution Plans We recorded the following contributions to the defined contribution plans (in millions):
| For the Years Ended December 31,
| 2018 |  | 2017 |  | 2016
Contributions to defined contribution plans | $ | 18.8 |  |  | $ | 18.1 |  |  | $ | 16.3 |
Pension and Post-retirement Benefit Plans The following tables set forth amounts recognized in our financial statements and the plans’ funded status for our pension and post-retirement benefit plans (dollars in millions):
| Pension Benefits
| 2018 |  | 2017
Accumulated benefit obligation | $ | 368.0 |  |  | $ | 401.5 |
Changes in projected benefit obligation: |  |  |
Benefit obligation at beginning of year | $ | 405.5 |  |  | $ | 381.6 |
Service cost | 5.3 |  |  | 5.0 |
Interest cost | 12.3 |  |  | 12.6 |
Other | 0.3 |  |  | — |
Actuarial (gain) loss | (26.4 | ) |  | 22.1 |
Effect of exchange rates | (2.7 | ) |  | 4.3 |
Settlements and curtailments | (1.3 | ) |  | (1.3 | )
Benefits paid | (21.1 | ) |  | (18.8 | )
Benefit obligation at end of year | $ | 371.9 |  |  | $ | 405.5 |
Changes in plan assets: |  |  |
Fair value of plan assets at beginning of year | $ | 318.6 |  |  | $ | 292.5 |
Actual (loss) gain return on plan assets | (23.3 | ) |  | 39.8 |
Employer contribution | 20.6 |  |  | 3.5 |
Effect of exchange rates | (2.5 | ) |  | 2.9 |
Plan settlements | (1.3 | ) |  | (1.3 | )
Benefits paid | (21.1 | ) |  | (18.8 | )
Fair value of plan assets at end of year | 291.0 |  |  | 318.6 |
Funded status / net amount recognized | $ | (80.9 | ) |  | $ | (86.9 | )
Net amount recognized consists of: |  |  |
Non-current assets | $ | 3.3 |  |  | $ | 1.6 |
Current liability | (1.4 | ) |  | (4.0 | )
Non-current liability | (82.8 | ) |  | (84.5 | )
Net amount recognized | $ | (80.9 | ) |  | $ | (86.9 | )
| For the Years Ended December 31,
| 2018 |  | 2017
Pension plans with a benefit obligation in excess of plan assets: |  |  |
Projected benefit obligation | $ | 357.2 |  |  | $ | 394.4 |
Accumulated benefit obligation | 353.4 |  |  | 390.4 |
Fair value of plan assets | 275.0 |  |  | 305.9 |
Our U.S.-based pension plans comprised approximately 89% of the projected benefit obligation and 88% of plan assets as of December 31, 2018.
| Pension Benefits
| 2018 |  | 2017 |  | 2016
Components of net periodic benefit cost as of December 31: |  |  |  |  |
Service cost | $ | 5.3 |  |  | $ | 5.0 |  |  | $ | 4.4 |
Interest cost | 12.3 |  |  | 12.6 |  |  | 15.3 |
Expected return on plan assets | (18.8 | ) |  | (21.3 | ) |  | (21.5 | )
Amortization of prior service cost | 0.1 |  |  | 0.2 |  |  | 0.3 |
Recognized actuarial loss | 9.2 |  |  | 8.1 |  |  | 7.6 |
Settlements and curtailments(1) | 0.7 |  |  | 0.7 |  |  | 31.6 |
Net periodic benefit cost | $ | 8.8 |  |  | $ | 5.3 |  |  | $ | 37.7 |
(1) The Consolidated Statements of Operations includes $31.4 million related to pension settlement charges that represent the lump-sum payments made in the fourth quarter of 2016. The following table sets forth amounts recognized in AOCL and Other comprehensive income (loss) in our financial statements for 2018 and 2017 (in millions):
| Pension Benefits
| 2018 |  | 2017
Amounts recognized in AOCL: |  |  |
Prior service costs | $ | (0.9 | ) |  | $ | (0.8 | )
Actuarial loss | (199.4 | ) |  | (194.6 | )
Subtotal | (200.3 | ) |  | (195.4 | )
Deferred taxes | 49.5 |  |  | 71.2 |
Net amount recognized | $ | (150.8 | ) |  | $ | (124.2 | )
Changes recognized in other comprehensive income (loss): |  |  |
Current year prior service costs | 0.3 |  |  | 0.1 |
Current year actuarial (gain) loss | 15.7 |  |  | 3.7 |
Effect of exchange rates | (1.1 | ) |  | 1.7 |
Amortization of prior service (costs) credits | (0.1 | ) |  | (0.2 | )
Amortization of actuarial loss | (9.9 | ) |  | (8.8 | )
Total recognized in other comprehensive income (loss) | $ | 4.9 |  |  | $ | (3.5 | )
Total recognized in net periodic benefit cost and other comprehensive income (loss) | $ | 13.7 |  |  | $ | 1.8 |
The estimated prior service (costs) credits and actuarial losses that will be amortized from AOCL in 2019 are $(0.1) million and $(7.9) million, respectively, for pension benefits. The following tables set forth the weighted-average assumptions used to determine Benefit obligations and Net periodic benefit cost for the U.S.-based plans in 2018 and 2017:
| Pension Benefits
| 2018 |  | 2017
Weighted-average assumptions used to determine benefit obligations as of December 31: |  |  |
Discount rate | 4.32 | % |  | 3.66 | %
Rate of compensation increase | 4.23 | % |  | 4.23 | %
| Pension Benefits
| 2018 |  | 2017 |  | 2016
Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31: |  |  |  |  |
Discount rate - service cost | 3.48 | % |  | 3.96 | % |  | 4.30 | %
Discount rate - interest cost | 3.22 | % |  | 3.51 | % |  | 3.76 | %
Expected long-term return on plan assets | 6.50 | % |  | 7.50 | % |  | 7.50 | %
Rate of compensation increase | 4.23 | % |  | 4.23 | % |  | 4.23 | %
The following tables set forth the weighted-average assumptions used to determine Benefit obligations and Net periodic benefit cost for the non-U.S.-based plans in 2018 and 2017:
| Pension Benefits
| 2018 |  | 2017
Weighted-average assumptions used to determine benefit obligations as of December 31: |  |  |
Discount rate | 2.93 | % |  | 2.58 | %
Rate of compensation increase | 3.77 | % |  | 3.63 | %
| Pension Benefits
| 2018 |  | 2017 |  | 2016
Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31: |  |  |  |  |
Discount rate - service cost | 1.32 | % |  | 1.34 | % |  | 2.04 | %
Discount rate - interest cost | 2.67 | % |  | 2.75 | % |  | 3.45 | %
Expected long-term return on plan assets | 4.19 | % |  | 4.40 | % |  | 4.87 | %
Rate of compensation increase | 3.62 | % |  | 3.78 | % |  | 3.70 | %
To develop the expected long-term rate of return on assets assumption for the U.S. plans, we considered the historical returns for each asset category, as well as the target asset allocation of the pension portfolio and the effect of periodic balancing. These results were adjusted for the payment of reasonable expenses of the plan from plan assets. This resulted in the selection of the 6.50% long-term rate of return on assets assumption. A similar process was followed for the non-U.S.-based plans. To select a discount rate for the purpose of valuing the plan obligations for the U.S. plans, we performed an analysis in which the projected cash flows from defined benefit and retiree healthcare plans was matched with a yield curve based on the appropriate universe of high-quality corporate bonds that were available. We used the results of the yield curve analysis to select the discount rate for each plan. The analysis was completed separately for each U.S. pension and OPEB plan. A similar process was followed for the non-U.S.-based plans with sufficient corporate bond information. In other countries, the discount rate was selected based on the approximate duration of plan obligations. Assumed health care cost trend rates have an effect on the amounts reported for our healthcare plan. The following table sets forth the healthcare trend rate assumptions used:
| 2018 |  | 2017
Assumed health care cost trend rates as of December 31: |  |  |
Health care cost trend rate assumed for next year | 6.50 | % |  | 6.50 | %
Rate to which the cost rate is assumed to decline (the ultimate trend rate) | 5.00 | % |  | 5.00 | %
Year that the rate reaches the ultimate trend rate | 2022 |  |  | 2021 |
Expected future benefit payments are shown in the table below (in millions):
| For the Years Ended December 31,
| 2019 |  | 2020 |  | 2021 |  | 2022 |  | 2023 |  | 2024-2028
Pension benefits | $ | 19.3 |  |  | $ | 19.9 |  |  | $ | 25.8 |  |  | $ | 20.7 |  |  | $ | 23.5 |  |  | $ | 147.1 |
Pension Plan Assets We believe asset returns can be optimized at an acceptable level of risk by adequately diversifying the plan assets between equity and fixed income. In the second quarter of 2018, we changed the targeted allocations for our plan assets. The targeted allocation for fixed income and cash investments was changed to 60%, and the targeted allocation for equity investments was changed to 40%. Our targeted exposure to International equity including emerging markets was changed to 15.0% of total assets and our exposure to domestic equity was changed to 25.0%. Our U.S. pension plan represents 87%, our Canadian pension plan 6%, and our United Kingdom (“U.K.”) pension plan 7% of the total fair value of our plan assets as of December 31, 2018. Our U.S. pension plans’ weighted-average asset allocations as of December 31, 2018 and 2017, by asset category, are as follows:
| Plan Assets as of December 31,
Asset Category: | 2018 |  | 2017
U.S. equity | 24.6 | % |  | 12.5 | %
International equity | 15.5 | % |  | 15.1 | %
Fixed income | 57.2 | % |  | 71.1 | %
Money market/cash | 2.7 | % |  | 1.3 | %
Total | 100.0 | % |  | 100.0 | %
U.S. pension plan assets are invested according to the following targets:
Asset Category: | Target
U.S. equity | 25.0 | %
International equity | 15.0 | %
Fixed income | 60.0 | %
Our Canadian pension plans were invested approximately 75% in Canadian bonds and 25% in international equities. Our U.K. pension plan was invested in a broad mix of assets consisting of U.K. and international equities, and U.K. fixed income securities, including corporate and government bonds. The fair values of our pension plan assets, by asset category, are as follows (in millions):
| Fair Value Measurements as of December 31, 2018
| Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Total
Asset Category: |  |  |  |  |  |  |
Cash and cash equivalents | $ | 7.2 |  |  | $ | — |  |  | $ | — |  |  | $ | 7.2 |
Commingled pools / Collective Trusts: |  |  |  |  |  |  |
U.S. equity (1) | — |  |  | 62.7 |  |  | — |  |  | 62.7 |
International equity (2) | — |  |  | 39.5 |  |  | — |  |  | 39.5 |
Fixed income (3) | — |  |  | 146.2 |  |  | — |  |  | 146.2 |
Balanced pension trust: (4) |  |  |  |  |  |  |
International equity | — |  |  | 4.0 |  |  | — |  |  | 4.0 |
Fixed income | — |  |  | 12.0 |  |  | — |  |  | 12.0 |
Pension fund: |  |  |  |  |  |  |
International equity (5) | — |  |  | 2.7 |  |  | — |  |  | 2.7 |
Fixed income (6) | — |  |  | 8.9 |  |  | — |  |  | 8.9 |
Blend (7) | — |  |  | 7.8 |  |  | — |  |  | 7.8 |
Total | $ | 7.2 |  |  | $ | 283.8 |  |  | $ | — |  |  | $ | 291.0 |
| Fair Value Measurements as of December 31, 2017
| Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Total
Asset Category: |  |  |  |  |  |  |
Cash and cash equivalents | $ | 3.9 |  |  | $ | — |  |  | $ | — |  |  | $ | 3.9 |
Commingled pools / Collective Trusts: |  |  |  |  |  |  |
U.S. equity (1) | — |  |  | 34.7 |  |  | — |  |  | 34.7 |
International equity (2) | — |  |  | 42.2 |  |  | — |  |  | 42.2 |
Fixed income (3) | — |  |  | 197.9 |  |  | — |  |  | 197.9 |
Balanced pension trust: (4) |  |  |  |  |  |  |
International equity | — |  |  | 4.6 |  |  | — |  |  | 4.6 |
Fixed income | — |  |  | 13.6 |  |  | — |  |  | 13.6 |
Pension fund: |  |  |  |  |  |  |
International equity (5) | — |  |  | 3.3 |  |  | — |  |  | 3.3 |
Fixed income (6) | — |  |  | 5.9 |  |  | — |  |  | 5.9 |
Blend (7) | — |  |  | 12.5 |  |  | — |  |  | 12.5 |
Total | $ | 3.9 |  |  | $ | 314.7 |  |  | $ | — |  |  | $ | 318.6 |
Additional information about assets measured at Net Asset Value (“NAV”) per share (in millions):
| As of December 31, 2018
| Fair Value |  | Redemption Frequency (if currently eligible) |  | Redemption Notice Period
Asset Category: |  |  |  |  |
Commingled pools / Collective Trusts: |  |  |  |  |
U.S. equity (1) | $ | 62.7 |  |  | Daily |  | 5 days
International equity (2) | 39.5 |  |  | Daily |  | 5 days
Fixed income (3) | 146.2 |  |  | Daily |  | 5-15 days
Balanced pension trust: (4) |  |  |  |  |
International equity | 4.0 |  |  | Daily |  | 3-5 days
Fixed income | 12.0 |  |  | Daily |  | 3-5 days
Pension fund: |  |  |  |  |
International equity (5) | 2.7 |  |  | Daily |  | 1-3 days
Fixed income (6) | 8.9 |  |  | Daily |  | 1-3 days
Blend (7) | 7.8 |  |  | Daily |  | 1-3 days
Total | $ | 283.8 |  |  |  |  |
| As of December 31, 2017
| Fair Value |  | Redemption Frequency (if currently eligible) |  | Redemption Notice Period
Asset Category: |  |  |  |  |
Commingled pools / Collective Trusts: |  |  |  |  |
U.S. equity (1) | $ | 34.7 |  |  | Daily |  | 5 days
International equity (2) | 42.2 |  |  | Daily |  | 5 days
Fixed income (3) | 197.9 |  |  | Daily |  | 5-15 days
Balanced pension trust: (4) |  |  |  |  |
International equity | 4.6 |  |  | Daily |  | 3-5 days
Fixed income | 13.6 |  |  | Daily |  | 3-5 days
Pension fund: |  |  |  |  |
International equity (5) | 3.3 |  |  | Daily |  | 1-3 days
Fixed income (6) | 5.9 |  |  | Daily |  | 1-7 days
Blend (7) | 12.5 |  |  | Daily |  | 1-3 days
Total | $ | 314.7 |  |  |  |  |
(1) | This category includes investments primarily in U.S. equity securities that include large, mid and small capitalization companies.
(2) | This category includes investments primarily in international equity securities that include large, mid and small capitalization companies in large developed markets as well as emerging markets equities.
(3) | This category includes investments in U.S. investment grade and high yield fixed income securities, international fixed income securities and emerging markets fixed income securities.
(4) | The investment objectives of the plan are to provide long-term capital growth and income by investing primarily in a well-diversified, balanced portfolio of Canadian common stocks, bonds and money market securities. The plan also holds a portion of its assets in international equities, a portion of which may be invested in U.S. securities.
(5) | This category includes investments in international equity securities, a portion of which may be invested in U.S. securities and aims to provide returns consistent with the markets in which it invests and provide broad exposure to countries around the world.
(6) | This category includes investments in U.K. government index-linked securities (index-linked gilts) that have maturity periods of 5 years or longer with a derivatives overlay and investment grade corporate bonds denominated in sterling.
(7) | This category includes investments in pooled funds where the fund manager has discretion for the asset allocation and can invest in a wide range of international and US asset classes including equity, credit markets, sovereign debt and alternative assets (including derivative-based strategies).
The majority of our commingled pool/collective trusts, mutual funds, balanced pension trusts and pension funds are managed by professional investment advisors. The NAVs per share are furnished in monthly and/or quarterly statements received from the investment advisors and reflect valuations based upon their pricing policies. We assessed the fair value classification of these investments as Level 2 for commingled pool/collective trusts, balanced pension trusts and pension funds based on an examination of their pricing policies and the related controls and procedures. The fair values we report are based on the pool, trust or fund’s NAV per share. The NAVs per share are calculated periodically (daily or no less than one time per month) as the aggregate value of each pool or trust’s underlying assets divided by the number of units owned. See Note 21 for information about our fair value hierarchies and valuation techniques.

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