PENSIONS

The Company and its subsidiaries sponsor two defined benefit pension plans covering certain salaried and hourly employees. These plans have been closed to new participants for a number of years. Benefits under these plans are primarily based on final average compensation and years of service as defined within the provisions of the individual plans. As a result of plan amendments, the latest of which was in 2008, the only new benefits that were being accrued through the end of 2016 were salary increases for a limited group of participants. Those benefits ceased at the end of 2016, at which point all existing plans became fully frozen.

The Company also participates in multi-employer pension plans that provide defined benefits to employees under U.S. collective bargaining agreements. None of these plans are considered individually significant to the Company. Contributions to these plans totaled $0.1 million, $0.2 million and $0.2 million for 2016, 2015 and 2014, respectively.

The following table summarizes net periodic pension expense for U.S. and non-U.S. benefit plans:



	U.S. Benefit Plan									Non-U.S. Benefit Plan
(in millions)	2016			2015			2014			2016			2015			2014
Company-sponsored plans:
Service cost	$	—		$	—		$	—		$	0.2		$	0.2		$	0.2
Interest cost	7.8			7.6			7.9			1.8			2.1			2.6
Expected return on plan assets	(10.3		)	(10.3		)	(9.1		)	(2.4		)	(2.7		)	(3.6		)
Amortization of actuarial loss	5.6			6.8			5.1			0.6			0.7			0.4
Total Company-sponsored plans	3.1			4.1			3.9			0.2			0.3			(0.4		)
Multi-employer plans	0.1			0.2			0.2			—			—			—
Net periodic pension expense	$	3.2		$	4.3		$	4.1		$	0.2		$	0.3		$	(0.4	)

The following table summarizes the weighted-average assumptions used in determining pension costs:



	U.S. Benefit Plan						Non-U.S. Benefit Plan
	2016		2015		2014		2016		2015		2014
Discount rate	4.6	%	4.2	%	5.1	%	3.7	%	3.5	%	4.5	%
Rate of increase in compensation levels	—		3.5	%	3.5	%	—		—		—
Expected long-term rate of return on plan assets	7.5	%	7.8	%	7.6	%	4.9	%	4.7	%	5.9	%

The following table summarizes the changes in the projected benefit obligation and plan assets:



	U.S. Benefit Plan						Non-U.S. Benefit Plan
(in millions)	2016			2015			2016			2015
Benefit obligation, beginning of year	$	174.3		$	186.3		$	55.7		$	62.7
Service cost	—			—			0.2			0.2
Interest cost	7.8			7.6			1.8			2.1
Actuarial loss (gain)	7.7			(10.0		)	7.8			(2.5		)
Benefits and expenses paid	(9.2		)	(9.6		)	(4.2		)	(3.5		)
Foreign currency translation	—			—			(9.6		)	(3.3		)
Benefit obligation, end of year	$	180.6		$	174.3		$	51.7		$	55.7
Accumulated benefit obligation, end of year	$	180.6		$	173.5		$	51.7		$	55.7

The following table summarizes the weighted-average assumptions used in determining benefit obligations:



	U.S. Benefit Plan				Non-U.S. Benefit Plan
	2016		2015		2016		2015
Discount rate	4.3	%	4.6	%	2.6	%	3.7	%
Rate of increase in compensation levels	—		3.5	%	—		—

The following summarizes the changes in the fair value of plan assets:



	U.S. Benefit Plan						Non-U.S. Benefit Plan
(in millions)	2016			2015			2016			2015
Fair value of plan assets, beginning of year	$	128.1		$	134.0		$	54.3		$	59.0
Actual return on plan assets^(a)	6.6			(3.3		)	6.2			0.8
Company contribution	5.6			7.0			1.3			1.1
Benefits and expenses paid	(9.2		)	(9.6		)	(4.2		)	(3.5		)
Foreign currency translation	—			—			(9.1		)	(3.1		)
Fair value of plan assets, end of year	$	131.1		$	128.1		$	48.5		$	54.3


(a)	Actual return on plan assets of the U.S. benefit plan for the years ended December 31, 2016 and 2015, was net of fees, commissions and other expenses paid from plan assets of $1.9 million and $1.5 million, respectively.

As more fully described within Note 17 – Fair Value Measurements, the Company uses a three-level fair value hierarchy that prioritizes the inputs used to measure fair value.

Following is a description of the valuation methodologies used for assets measured at fair value for the U.S. benefit plan:


•	Cash and cash equivalents are comprised of cash on deposit and a money market fund, that invests principally in short-term instruments. The money-market fund is valued at the net asset value (“NAV”) of the shares in the fund.

•

Equity investments represent domestic and foreign securities, including common stock, which are publicly traded on active exchanges and are valued based on quoted market prices. Certain equity securities, which are valued using a model that takes the underlying security’s “best” price, divides it by the applicable exchange rate and multiplies the result by a depository receipt factor, are categorized within Level 2 of the fair value hierarchy.

•

Fixed income investments include corporate bonds, asset-backed securities and treasury bonds. Corporate bonds are valued using pricing models that include bids provided by brokers or dealers, benchmark yields, base spreads and reported trades. Asset-backed securities are valued using models with readily observable data as inputs. Treasury bonds are valued based on quoted market prices in active markets.


•	Mutual funds are valued at the NAV, based on quoted market prices in active markets, of shares held by the plan at year end.


•	Real estate investments include public real estate investment trusts (“REIT”) and exchange traded REIT funds, which are publicly traded on active exchanges and are valued based on quoted market prices.

Following is a description of the valuation methodologies used for assets measured at fair value for the non-U.S. benefit plan:


•	Equity investments represent domestic and foreign securities, which are publicly traded on active exchanges and are valued based on quoted market prices. The inputs used to value certain other non-U.S. investments in equity securities both in the U.K. and other overseas markets are based on observable market information consistent with Level 2 of the fair value hierarchy inputs.


•	Fixed income investments include treasury securities, which are valued based on quoted market prices in active markets, and corporate bonds which are either valued based on quoted market prices in active markets or other readily observable market data.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The following summarizes the Company’s pension assets in a three-tier fair value hierarchy for its benefit plans:



	U. S. Benefit Plan
	2016								2015
(in millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	5.7	$	—	$	—	$	5.7	$	6.8	$	—	$	—	$	6.8
Equity securities:
U.S. Large Cap	36.4		0.1		—		36.5		37.7		0.1		—		37.8
U.S. Small and Mid Cap	16.9		—		—		16.9		18.0		—		—		18.0
Developed international	8.6		7.7		—		16.3		12.8		6.9		—		19.7
Emerging markets	11.9		0.5		—		12.4		6.9		—		—		6.9
Fixed income:
Government securities	7.1		—		—		7.1		2.7		0.3		—		3.0
Asset-backed securities	—		9.9		—		9.9		—		7.7		—		7.7
Corporate bonds	—		14.9		—		14.9		—		13.1		—		13.1
Mutual funds	—		—		—		—		0.7		—		—		0.7
Other investments:
Mutual funds	5.6		—		—		5.6		10.5		—		—		10.5
Real estate	5.4		—		—		5.4		4.0		—		—		4.0
Total assets at fair value ^(a)	$	97.6	$	33.1	$	—	$	130.7	$	100.1	$	28.1	$	—	$	128.2


(a)	Total assets at fair value in the table above exclude a net receivable of $0.4 million and a net payable of $0.1 million at December 31, 2016 and 2015, respectively.



	Non-U. S. Benefit Plan
	2016								2015
(in millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash	$	0.4	$	—	$	—	$	0.4	$	9.2	$	—	$	—	$	9.2
Equity securities	—		41.9		—		41.9		5.3		34.8		—		40.1
Fixed income:
Government securities	1.3		—		—		1.3		2.7		—		—		2.7
Corporate bonds	2.6		2.3		—		4.9		1.5		0.8		—		2.3
Total assets at fair value	$	4.3	$	44.2	$	—	$	48.5	$	18.7	$	35.6	$	—	$	54.3

The Company maintains a structured derisking investment strategy for the U.S. pension plan to improve alignment of assets and liabilities that includes: (i) maintaining a diversified portfolio that can provide a near-term weighted-average target return of approximately 7.1% or more, (ii) maintaining liquidity to meet obligations and (iii) prudently managing administrative and management costs. The target asset allocations for the U.S. pension plan are (i) between 45% and 75% equity securities, (ii) between 15% and 40% fixed income securities and (iii) between 0% and 20% in other investments, with the remainder represented by cash and cash equivalents. Other investments may include real estate investments and mutual funds investing in real estate, commodities or hedge funds.

Plan assets for the non-U.S. benefit plans consist principally of a diversified portfolio of equity securities, U.K. government securities, corporate bonds and debt securities. The target asset allocations for the non-U.S. benefit plan assets are between 70% and 80% equity securities and between 20% and 30% debt securities.

During the year ended December 31, 2015, the Company repurchased all of the remaining 0.2 million shares of its common stock from its U.S. benefit plan for a total cost of $3.6 million. The repurchases were made under authorized stock repurchase programs further outlined in Note 14 – Stockholders’ Equity. Dividends paid on the Company’s common stock held in the U.S. benefit plan did not exceed $0.1 million in each of the years ended December 31, 2015 and 2014.

The following summarizes the funded status of the Company-sponsored plans:



	U.S. Benefit Plan						Non-U.S. Benefit Plan
(in millions)	2016			2015			2016			2015
Fair value of plan assets, end of year	$	131.1		$	128.1		$	48.5		$	54.3
Benefit obligation, end of year	180.6			174.3			51.7			55.7
Funded status, end of year	$	(49.5	)	$	(46.2	)	$	(3.2	)	$	(1.4	)

The following summarizes the amounts recognized within our Consolidated Balance Sheets:



	U.S. Benefit Plan				Non-U.S. Benefit Plan
(in millions)	2016		2015		2016		2015
Amounts recognized in Total liabilities include:
Long-term pension and other post-retirement benefit liabilities	$	49.5	$	46.2	$	3.2	$	1.4
Net liability recorded	$	49.5	$	46.2	$	3.2	$	1.4
Amounts recognized in Accumulated other comprehensive loss include:
Net actuarial loss	$	84.1	$	78.2	$	18.8	$	18.7
Net amount recognized, pre-tax	$	84.1	$	78.2	$	18.8	$	18.7

As a result of the U.S. benefit plan becoming fully frozen at the end of 2016, all plan participants are now considered to be inactive. Effective in 2017, the actuarial loss associated with the U.S. benefit plan that is included in Accumulated other comprehensive loss will be amortized into net periodic benefit cost over the remaining average life expectancy of plan participants, as opposed to over the remaining average service period. The same methodology has previously been applied to the U.K. benefit plan, which has been fully frozen for a number of years. The Company expects $3.2 million of the net actuarial loss to be amortized from Accumulated other comprehensive loss into net periodic benefit cost in 2017.

The Company expects to contribute up to $5.0 million to the U.S. benefit plan and up to $1.3 million to the non-U.S. benefit plan in 2017. Future contributions to the plans will be based on such factors as annual service cost, the financial return on plan assets, interest rate movements that affect discount rates applied to plan liabilities and the value of benefit payments made.

The following summarizes the benefits expected to be paid under the Company’s defined benefit plans in each of the next five years, and in aggregate for the five years thereafter:



(in millions)	U.S. Benefit Plan		Non-U.S. Benefit Plan
2017	$	9.0	$	2.4
2018	9.0		2.5
2019	9.1		2.6
2020	9.7		2.7
2021	10.1		2.8
2022-2026	55.4		15.7

The Company also sponsors a defined contribution retirement plan covering a majority of its employees. Participation is via automatic enrollment and employees may elect to opt out of the plan. Company contributions to the plan are based on employee age and years of service, as well as the percentage of employee contributions. The cost of these plans was $6.9 million in 2016, $7.5 million in 2015 and $7.1 million in 2014.

Prior to September 30, 2003, the Company also provided medical benefits to certain eligible retired employees. These benefits are funded when the claims are incurred. Participants generally became eligible for these benefits at age 60 after completing at least 15 years of service. The plan provided for the payment of specified percentages of medical expenses reduced by any deductible and payments made by other primary group coverage and government programs. Effective September 30, 2003, the Company amended the retiree medical plan and effectively canceled coverage for all eligible active employees except for retirees and a limited group that qualified under a formula based on age and years of service. Accumulated post-retirement benefit liabilities of $0.4 million and $0.5 million at December 31, 2016 and 2015, respectively, were fully accrued. The net periodic post-retirement benefit costs have not been significant during the three-year period ended December 31, 2016.