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Retirement Plans

12 Months Ended

Dec. 31, 2018

—Retirement Plans

Defined Benefit Plans

The Company maintains defined benefit retirement plans, primarily for certain domestic employees, as presented below. All plans are frozen to new entrants, with the exception of the executive supplemental plan. Benefits are based primarily on years of service and earnings of the employee.

The significant assumptions used in the measurement of the projected benefit obligation and net periodic benefit cost primarily include the discount rate, rate of compensation increase and expected long-term return on plan assets. Weighted‑average assumptions for the projected benefit obligation follows:



	2018		2017
Discount rate	4.1	%	3.5	%
Rate of compensation increase	3.8	%	3.8	%

Weighted‑average assumptions for net periodic benefit cost follows:



	2018		2017		2016
Discount rate	3.5	%	3.9	%	4.4	%
Rate of compensation increase	3.8	%	3.8	%	4.3	%
Expected long-term return on plan assets	6.3	%	6.3	%	6.2	%

The weighted-average cash balance interest crediting rate for the Company's cash balance defined benefit plans was 4.0% for the years ended December 31, 2018 and 2017.

The Company considers several factors in determining the long-term rate of return for plan assets. Asset-class return expectations are set using a combination of empirical and forward-looking analyses. Capital market assumptions for the composition of the Company’s asset portfolio are intended to capture the behavior of asset classes observed over several market cycles. The Company also looks to historical returns for reasonableness and appropriateness.

A reconciliation of the change in the projected benefit obligation, plan assets and the funded status follows:



(in millions)	December 31, 2018			December 31, 2017
Funded status
Projected benefit obligation
Beginning of year	$	182.8		$	172.5
Change in benefit obligation:
Service cost	3.1			2.6
Interest cost	5.5			5.3
Plan amendments	—			0.7
Actuarial (gain)/loss	(10.0		)	15.5
Benefits paid	(13.9		)	(13.8		)
End of year	$	167.5		$	182.8
Fair value of plan assets
Beginning of year	$	165.7		$	163.2
Change in plan assets:
Actual return on plan assets	(4.6		)	14.9
Company contributions	1.4			1.4
Benefits paid	(13.9		)	(13.8		)
End of year	$	148.6		$	165.7

Unfunded status end of year	$	(18.9	)	$	(17.1	)

Accumulated benefit obligation at end of year	$	167.0		$	181.1

The Company’s projected benefit obligation includes approximately $19.6 million and $22.3 million related to the Company’s executive supplemental and director defined benefit pension plans as of December 31, 2018 and 2017, respectively. The Company’s accumulated benefit obligation includes approximately $19.1 million and $20.7 million related to the Company’s executive supplemental and director defined benefit pension plans as of December 31, 2018 and 2017, respectively. The executive supplemental and director defined benefit plans have no plan assets and the Company is not required to fund the obligations. The U.S. plans required to be funded by the Company were fully funded as of December 31, 2018 and 2017.



(in millions)	December 31, 2018			December 31, 2017
Long-term assets	$	0.7		$	5.2
Current liabilities	(1.5		)	(1.4		)
Long-term liabilities	(18.1		)	(20.9		)
Net pension liability	$	(18.9	)	$	(17.1	)

The amounts included in accumulated other comprehensive income (loss) that have not been recognized in net periodic pension cost follows:



(in millions)	December 31, 2018		December 31, 2017
Unrecognized actuarial losses (gross)	$	49.3	$	48.8
Unrecognized actuarial losses (net of tax)	39.6		38.0
Unrecognized prior service costs (gross)	1.0		1.3
Unrecognized prior service costs (net of tax)	0.8		1.1

The components of net periodic benefit cost follows:



(in millions)	2018			2017			2016
Service cost	$	3.1		$	2.6		$	3.4
Interest cost	5.5			5.3			5.4
Expected return on plan assets	(10.3		)	(10.2		)	(10.1		)
Amortization of unrecognized net loss	4.3			2.3			2.1
Amortization of unrecognized prior service credit	0.3			0.2			0.2
Net periodic benefit cost	$	2.9		$	0.2		$	1.0

Disclosures on investment policies and strategies, categories of plan assets and the fair value measurements of plan assets are included below.

The Company employs a liability driven investment approach whereby plan assets are invested primarily in fixed income investments to match the changes in the projected benefit obligation of funded plans related to changes in interest rates. Risk tolerance is established through careful consideration of projected benefit obligations, plan funded status and the Company’s other obligations and strategic investments.

The established target allocation is 88.0% fixed income securities and 12.0% equity securities. Fixed income investments are diversified across U.S. treasury, long and intermediate duration and high yield bonds. Equity investments are diversified across large capitalization U.S. and international stocks. Investment risk is measured and monitored on an ongoing basis through investment portfolio reviews, annual projected benefit liability measurements and asset/liability studies.

The fair value measurement of the plans’ assets by asset category follows:



	Quoted Prices in Active Markets for Identical Assets (Level 1)
(in millions)	December 31, 2018		December 31, 2017
Cash	$	0.6	$	0.6
U.S. treasury bonds	27.0		—
Mutual funds:
Equity mutual funds ⁽¹⁾	17.8		19.4
Fixed income mutual funds⁽²⁾	103.2		145.6
Total	$	148.6	$	165.6


⁽¹⁾	This category is comprised of investments in mutual funds that invest in equity securities such as large publicly traded companies listed in the S&P 500 Index; small to medium sized companies with market capitalization in the range of the Russell 2500 Index; and foreign issuers in emerging markets.


⁽²⁾	This category is comprised of investments in mutual funds that invest in U.S. corporate fixed income securities, including asset‑backed securities; high yield fixed income securities primarily rated BB, B, CCC, CC, C and D; and US dollar denominated debt securities of government, government related and corporate issuers in emerging market countries.

The Company made contributions of $1.4 million during both 2018 and 2017, which pertain to the Company’s executive supplemental and director defined benefit pension plans. This contribution covers current participant benefits as these plans have no plan assets. No minimum contributions to the pension plans were required in 2018 and 2017. During 2019, the Company expects to pay approximately $1.5 million in participant benefits under the executive supplemental and director plans. In light of the plans’ funded status, the Company does not expect to make discretionary contributions to its pension plans in 2019.

A summary of estimated future benefits to be paid for the Company’s defined benefit pension plans as of December 31, 2018, follows:



(in millions)	Estimated Benefit Payments
2019	$	14.5
2020	14.9
2021	14.3
2022	14.5
2023	14.7
2024-2028	67.7

Defined Contribution Plan

The Company maintains defined contribution savings plans covering a significant portion of its eligible employees. Participant contributions are matched by the Company up to a 4.0% maximum of eligible compensation, subject to compensation and contribution limits as defined by the Internal Revenue Service. Employer contributions for the savings plan were $15.2 million, $14.8 million and $13.3 million in 2018, 2017 and 2016, respectively.

Matching contributions are invested in funds as directed by participants. Eligible participants may also elect to invest up to 50.0% of the Company’s matching contribution in Company common stock. Common shares held by the contribution savings plan follows:



(in millions)	December 31, 2018	December 31, 2017	December 31, 2016
Common shares held	1.0	1.1	1.2