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Benefit Plans | 12 Months Ended
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Dec. 31, 2018
Retirement Benefits [Abstract] |
Benefit Plans | Benefit Plans Certain of our U.S. and international subsidiaries sponsor defined benefit pension plans. In addition, we provide minimal death benefits for certain U.S. retirees and pay a portion of healthcare costs for retired U.S. salaried employees and their dependents. Benefits for participants are coordinated with Medicare and the plan mandates Medicare risk (“HMO”) coverage wherever possible and caps the total contribution for non-HMO coverage. We also sponsor a defined contribution plan for certain salaried and hourly U.S. employees. Our 401(k) plan contributions were $6.5 million for 2018, $5.7 million for 2017 and $4.9 million for 2016. Pension and Other Retirement Benefits The components of net periodic benefit cost and other amounts recognized in OCI were as follows:
| Pension benefits |  | Other retirement benefits
($ in millions) | 2018 |  | 2017 |  | 2016 |  | 2018 |  | 2017 |  | 2016
Net periodic benefit cost: |  |  |  |  |  |  |  |  |  |  |
Service cost | $ | 10.8 |  |  | $ | 10.4 |  |  | $ | 10.2 |  |  | $ | — |  |  | $ | — |  |  | $ | 0.5 |
Interest cost | 9.4 |  |  | 9.8 |  |  | 10.5 |  |  | 0.2 |  |  | 0.3 |  |  | 0.5 |
Expected return on assets | (15.7 | ) |  | (13.5 | ) |  | (12.6 | ) |  | — |  |  | — |  |  | — |
Amortization of prior service credit | (1.3 | ) |  | (1.3 | ) |  | (1.4 | ) |  | (0.7 | ) |  | (0.7 | ) |  | — |
Amortization of transition obligation | — |  |  | — |  |  | 0.1 |  |  | — |  |  | — |  |  | — |
Amortization of actuarial loss (gain) | 3.8 |  |  | 4.9 |  |  | 4.8 |  |  | (2.4 | ) |  | (2.6 | ) |  | (1.4 | )
Curtailment | — |  |  | — |  |  | (2.1 | ) |  | — |  |  | — |  |  | — |
Net periodic benefit cost | $ | 7.0 |  |  | $ | 10.3 |  |  | $ | 9.5 |  |  | $ | (2.9 | ) |  | $ | (3.0 | ) |  | $ | (0.4 | )
Other changes in plan assets and benefit obligations recognized in OCI, pre-tax: |  |  |  |  |  |  |  |  |  |  |
Net loss (gain) arising during period | $ | 3.5 |  |  | $ | (9.0 | ) |  | $ | 19.2 |  |  | $ | (1.4 | ) |  | $ | (1.1 | ) |  | $ | (0.1 | )
Prior service credit arising during period | 0.3 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (3.0 | )
Amortization of prior service credit | 1.3 |  |  | 1.3 |  |  | 1.4 |  |  | 0.7 |  |  | 0.7 |  |  | — |
Amortization of transition obligation | — |  |  | — |  |  | (0.1 | ) |  | — |  |  | — |  |  | — |
Amortization of actuarial (loss) gain | (3.8 | ) |  | (4.9 | ) |  | (4.8 | ) |  | 2.4 |  |  | 2.6 |  |  | 1.4 |
Curtailment | — |  |  | — |  |  | (3.1 | ) |  | — |  |  | — |  |  | — |
Foreign currency translation | (1.2 | ) |  | 2.6 |  |  | (3.2 | ) |  | — |  |  | — |  |  | — |
Total recognized in OCI | $ | 0.1 |  |  | $ | (10.0 | ) |  | $ | 9.4 |  |  | $ | 1.7 |  |  | $ | 2.2 |  |  | $ | (1.7 | )
Total recognized in net periodic benefit cost and OCI | $ | 7.1 |  |  | $ | 0.3 |  |  | $ | 18.9 |  |  | $ | (1.2 | ) |  | $ | (0.8 | ) |  | $ | (2.1 | )
Net periodic benefit cost by geographic location is as follows:
| Pension benefits |  | Other retirement benefits
($ in millions) | 2018 |  | 2017 |  | 2016 |  | 2018 |  | 2017 |  | 2016
U.S. plans | $ | 4.8 |  |  | $ | 7.3 |  |  | $ | 7.1 |  |  | $ | (2.9 | ) |  | $ | (3.0 | ) |  | $ | (0.4 | )
International plans | 2.2 |  |  | 3.0 |  |  | 2.4 |  |  | — |  |  | — |  |  | — |
Net periodic benefit cost | $ | 7.0 |  |  | $ | 10.3 |  |  | $ | 9.5 |  |  | $ | (2.9 | ) |  | $ | (3.0 | ) |  | $ | (0.4 | )
In March 2017, the FASB issued guidance on the presentation of net periodic pension and postretirement benefit cost (net benefit cost). We adopted this guidance as of January 1, 2018, on a retrospective basis. Please refer to Note 2, New Accounting Standards, for additional information. Effective January 1, 2019, except for interest crediting, benefit accruals under our U.S. qualified and non-qualified defined benefit pension plans will cease. During 2016, we recorded a pension curtailment gain of $2.1 million in connection with our decision to freeze both our U.S. qualified and non-qualified defined benefit pension plans as of January 1, 2019. The following table presents the changes in the benefit obligation and the fair value of plan assets, as well as the funded status of the plans:
| Pension benefits |  | Other retirement benefits
($ in millions) | 2018 |  | 2017 |  | 2018 |  | 2017
Change in benefit obligation: |  |  |  |  |  |  |
Benefit obligation, January 1 | $ | (288.0 | ) |  | $ | (262.2 | ) |  | $ | (7.1 | ) |  | $ | (8.0 | )
Service cost | (10.8 | ) |  | (10.4 | ) |  | — |  |  | — |
Interest cost | (9.4 | ) |  | (9.8 | ) |  | (0.2 | ) |  | (0.3 | )
Participants’ contributions | (0.6 | ) |  | (0.7 | ) |  | (0.6 | ) |  | (0.5 | )
Actuarial (loss) gain | 20.4 |  |  | (11.8 | ) |  | 1.4 |  |  | 1.2 |
Amendments/transfers in | (0.3 | ) |  | — |  |  | — |  |  | — |
Benefits/expenses paid | 18.0 |  |  | 14.2 |  |  | 0.5 |  |  | 0.5 |
Foreign currency translation | 3.7 |  |  | (7.3 | ) |  | — |  |  | — |
Benefit obligation, December 31 | $ | (267.0 | ) |  | $ | (288.0 | ) |  | $ | (6.0 | ) |  | $ | (7.1 | )
Change in plan assets: |  |  |  |  |  |  |
Fair value of assets, January 1 | $ | 239.5 |  |  | $ | 192.4 |  |  | $ | — |  |  | $ | — |
Actual return on assets | (8.3 | ) |  | 34.4 |  |  | — |  |  | — |
Employer contribution | 2.7 |  |  | 23.2 |  |  | (0.1 | ) |  | — |
Participants’ contributions | 0.6 |  |  | 0.7 |  |  | 0.6 |  |  | 0.5 |
Benefits/expenses paid | (18.0 | ) |  | (14.2 | ) |  | (0.5 | ) |  | (0.5 | )
Foreign currency translation | (2.0 | ) |  | 3.0 |  |  | — |  |  | — |
Fair value of assets, December 31 | $ | 214.5 |  |  | $ | 239.5 |  |  | $ | — |  |  | $ | — |
Funded status at end of year | $ | (52.5 | ) |  | $ | (48.5 | ) |  | $ | (6.0 | ) |  | $ | (7.1 | )
International pension plan assets, at fair value, included in the preceding table were $33.4 million and $34.7 million at December 31, 2018 and 2017, respectively. Amounts recognized in the balance sheet were as follows:
| Pension benefits |  | Other retirement benefits
($ in millions) | 2018 |  | 2017 |  | 2018 |  | 2017
Current liabilities | $ | (1.6 | ) |  | $ | (1.5 | ) |  | $ | (0.7 | ) |  | $ | (0.7 | )
Noncurrent liabilities | (50.9 | ) |  | (47.0 | ) |  | (5.3 | ) |  | (6.4 | )
| $ | (52.5 | ) |  | $ | (48.5 | ) |  | $ | (6.0 | ) |  | $ | (7.1 | )
The amounts in accumulated other comprehensive loss, pre-tax, consisted of:
| Pension benefits |  | Other retirement benefits
($ in millions) | 2018 |  | 2017 |  | 2018 |  | 2017
Net actuarial loss (gain) | $ | 73.0 |  |  | $ | 74.5 |  |  | $ | (9.4 | ) |  | $ | (10.4 | )
Prior service cost (credit) | 0.9 |  |  | (0.8 | ) |  | (1.7 | ) |  | (2.4 | )
Total | $ | 73.9 |  |  | $ | 73.7 |  |  | $ | (11.1 | ) |  | $ | (12.8 | )
The net actuarial loss and prior service credit for the defined benefit pension plans that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year are $2.1 million and $0.1 million, respectively. The net actuarial gain and prior service credit for the other retirement benefits plan that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $2.1 million and $0.7 million. The accumulated benefit obligation for all defined benefit pension plans was $263.0 million and $283.7 million at December 31, 2018 and 2017, respectively, including $64.0 million and $67.3 million, respectively, for international pension plans. All of the defined benefit pension plans have projected benefit obligations and accumulated benefit obligations in excess of plan assets as of December 31, 2018 and 2017. Benefit payments expected to be paid under our defined benefit pension and other retirement benefit plans in the next ten years are as follows:
($ in millions) | Domestic |  | International |  | Total
2019 | $ | 13.6 |  |  | $ | 2.1 |  |  | $ | 15.7 |
2020 | 14.6 |  |  | 2.7 |  |  | 17.3 |
2021 | 14.1 |  |  | 2.2 |  |  | 16.3 |
2022 | 14.7 |  |  | 2.9 |  |  | 17.6 |
2023 | 14.9 |  |  | 2.3 |  |  | 17.2 |
2024 to 2028 | 69.3 |  |  | 16.9 |  |  | 86.2 |
| $ | 141.2 |  |  | $ | 29.1 |  |  | $ | 170.3 |
In 2019, we expect to contribute $3.2 million to pension plans, of which $2.3 million is for international plans. In addition, we expect to contribute $0.7 million for other retirement benefits in 2019. We periodically consider additional, voluntary contributions depending on the investment returns generated by pension plan assets, changes in benefit obligation projections and other factors. Weighted average assumptions used to determine net periodic benefit cost were as follows:
| Pension benefits |  | Other retirement benefits
| 2018 |  | 2017 |  | 2016 |  | 2018 |  | 2017 |  | 2016
Discount rate | 2.91 | % |  | 3.48 | % |  | 3.99 | % |  | 3.45 | % |  | 3.90 | % |  | 4.30 | %
Rate of compensation increase | 4.00 | % |  | 4.01 | % |  | 4.04 | % |  | — |  |  | — |  |  | — |
Long-term rate of return on assets | 6.71 | % |  | 6.47 | % |  | 6.95 | % |  | — |  |  | — |  |  | — |
Weighted average assumptions used to determine the benefit obligations were as follows:
| Pension benefits |  | Other retirement benefits
| 2018 |  | 2017 |  | 2018 |  | 2017
Discount rate | 3.76 | % |  | 3.14 | % |  | 4.20 | % |  | 3.45 | %
Rate of compensation increase | 4.01 | % |  | 3.80 | % |  | — |  |  | — |
The discount rate used to determine the benefit obligations for U.S. pension plans was 4.30% and 3.65% as of December 31, 2018 and 2017, respectively. The weighted average discount rate used to determine the benefit obligations for all international plans was 2.19% and 1.62% as of December 31, 2018 and 2017, respectively. The rate of compensation increase for U.S. plans was 4.25% for 2018 and 2017, while the weighted average rate for all international plans was 2.60% for 2018 and 2.44% for 2017. Other retirement benefits were only available to U.S. employees. The expected long-term rate of return for U.S. plans, which accounts for 84.45% of global plan assets, was 7.00% for 2018, 7.00% for 2017 and 7.25% for 2016. The assumed healthcare cost trend rate used to determine benefit obligations was 6.25% for all participants in 2018, decreasing to 5.00% by 2024. A change in the assumed healthcare cost trend rate by one percentage point would have an immaterial impact in the postretirement obligation. The assumed healthcare cost trend rate used to determine net periodic benefit cost was 6.60% for all participants in 2018, decreasing to 5.00% by 2022. The effect of a one percentage point increase or decrease in the rate would have an immaterial impact in the aggregate service and interest cost components. The weighted average asset allocations by asset category for our pension plans, at December 31, were as follows:
| 2018 |  | 2017
Equity securities | 23 | % |  | 63 | %
Debt securities | 74 | % |  | 37 | %
Other | 3 | % |  | — | %
| 100 | % |  | 100 | %
Our U.S. pension plan is managed as a balanced portfolio comprised of two components: equity and fixed income debt securities. Equity investments are used to maximize the long-term real growth of fund assets, while fixed income investments are used to generate current income, provide for a more stable periodic return, and provide some protection against a prolonged decline in the market value of equity investments. Temporary funds may be held as cash. We maintain a long-term strategic asset allocation policy which provides guidelines for ensuring that the fund’s investments are managed with the short-term and long-term financial goals of the fund, while allowing the flexibility to react to unexpected changes in capital markets. Diversification across and within asset classes is the primary means by which we mitigate risk. We maintain guidelines for all asset and sub-asset categories in order to avoid excessive investment concentrations. Fund assets are monitored on a regular basis. If at any time the fund asset allocation is not within the acceptable allocation range, funds will be reallocated. We also review the fund on a regular basis to ensure that the investment returns received are consistent with the short-term and long-term goals of the fund and with comparable market returns. We are prohibited from pledging fund securities and from investing pension fund assets in our own stock, securities on margin or derivative securities. During the three months ended December 31, 2018, in anticipation of benefit accruals under our U.S. qualified and non-qualified defined benefit pension plans ceasing effective January 1, 2019, except for interest crediting, we changed the U.S. target asset allocations from 65% equity securities and 35% debt securities to 30% equity securities and 70% debt securities. The following are the U.S. target asset allocations and acceptable allocation ranges:
| Target allocation |  | Allocation range
Equity securities | 30% |  | 27% - 33%
Debt securities | 70% |  | 67% - 73%
Other | —% |  | 0% - 3%
The following tables present the fair value of our pension plan assets, utilizing the fair value hierarchy discussed in Note 11, Fair Value Measurements. In accordance with U.S. GAAP, certain pension plan assets measured at net asset value (“NAV”) have not been classified in the fair value hierarchy.
| Balance at |  |
| December 31, |  | Basis of Fair Value Measurements
($ in millions) | 2018 |  | Level 1 |  | Level 2 |  | Level 3
Cash | $ | 1.7 |  |  | $ | 1.7 |  |  | $ | — |  |  | $ | — |
Equity securities: |  |  |  |  |  |  |
International mutual funds | 17.7 |  |  | 17.7 |  |  | — |  |  | — |
Fixed income securities: |  |  |  |  |  |  |
Mutual funds | 13.9 |  |  | 13.9 |  |  | — |  |  | — |
Pension plan assets in the fair value hierarchy | $ | 33.3 |  |  | $ | 33.3 |  |  | $ | — |  |  | $ | — |
Pension plan assets measured at NAV | 181.2 |  |  |  |  |  |  |
Pension plan assets at fair value | $ | 214.5 |  |  |  |  |  |  |  |  |  |
| Balance at |  |
| December 31, |  | Basis of Fair Value Measurements
($ in millions) | 2017 |  | Level 1 |  | Level 2 |  | Level 3
Cash | $ | 1.6 |  |  | $ | 1.6 |  |  | $ | — |  |  | $ | — |
Equity securities: |  |  |  |  |  |  |
International mutual funds | 15.5 |  |  | 15.5 |  |  | — |  |  | — |
Fixed income securities: |  |  |  |  |  |  |
Mutual funds | 17.5 |  |  | 17.5 |  |  | — |  |  | — |
Pension plan assets in the fair value hierarchy | $ | 34.6 |  |  | $ | 34.6 |  |  | $ | — |  |  | $ | — |
Pension plan assets measured at NAV | 204.9 |  |  |  |  |  |  |
Pension plan assets at fair value | $ | 239.5 |  |  |  |  |  |  |

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