Retirement Plans

We have various pension plans (“Pension Plans”), which we fund in accordance with their requirements and, where applicable, in amounts sufficient to satisfy the minimum funding requirements of applicable laws. The Pension Plans provide benefits based on years of service and compensation or at stated amounts for each year of service.

The measurement date for all Pension Plans was September 30.

During 2016, our U.S. pension plan (“Plan”) completed a pension obligation settlement program targeting vested, terminated participants not yet receiving benefits. Approximately 75% of eligible participants accepted settlement offers. The Plan distributed assets totaling $58.5 million. We incurred a non-cash pension settlement charge of $16.6 million as a result of the program, which had an immaterial impact on the Plan’s funded ratio.

During 2015, we contributed $1.2 million to fully fund two of our Canadian plans and recorded a pension settlement charge of $0.5 million.

We were not required to make, and we did not make, any contributions to our U.S. pension plan in 2016, and we currently plan to make $1.3 million of contributions to a Canadian pension plan in 2017.

Our U.S. plan comprised 98% of the Pension Plans’ obligations and 98% of the Pension Plans’ assets at September 30, 2016.

The components of net periodic benefit cost are presented below.



	2016			2015			2014
	(in millions)
Service cost	$	1.7		$	1.9		$	1.7
Interest cost	18.9			20.1			19.9
Expected return on plan assets	(19.7		)	(24.6		)	(23.8		)
Amortization of net loss	3.4			3.2			3.5
Curtailment / special settlement loss	16.6			0.5			0.2
Other	0.1			—			—
Net periodic benefit cost	$	21.0		$	1.1		$	1.5

Balance sheet information for Pension Plans with accumulated benefit obligations in excess of plan assets is presented below.



	September 30,
	2016		2015
	(in millions)
Projected benefit obligations	$	402.0	$	427.0
Accumulated benefit obligations	402.0		427.0
Fair value of plan assets	337.9		381.3

Balance sheet information for Pension Plans with accumulated benefit obligations less than plan assets is presented below.



	September 30,
	2016		2015
	(in millions)
Projected benefit obligations	$	1.1	$	1.2
Accumulated benefit obligations	1.1		1.2
Fair value of plan assets	2.1		2.1

Pension Plan activity in accumulated other comprehensive loss, before tax, in 2016 is presented below, in millions.



Balance at beginning of year	$	113.5
Actuarial loss	17.3
Prior year actuarial loss amortization to net periodic cost, including effect of pension settlement	(20.0		)
Balance at end of year	$	110.8

Beginning in 2015, we amortized amounts in accumulated other comprehensive loss representing unrecognized prior year service cost and unrecognized loss related to our U.S. pension plan over the weighted average life expectancy of the plan’s inactive participants instead of the weighted average remaining service period for active participants, as we did through 2014. The effect of this change was not material to our consolidated financial statements.

The components of accumulated other comprehensive loss related to pension that we expect to amortize into net periodic benefit cost in 2017 are presented below, in millions.



Amortization of unrecognized prior year service cost	$	—
Amortization of unrecognized loss	4.0
	$	4.0

Amounts recognized for our Pension Plans and other postretirement benefit plans are presented below.



	Pension Plans
	2016			2015
	(in millions)
Projected benefit obligations:
Beginning of year	$	428.2		$	461.5
Service cost	1.7			1.9
Interest cost	18.9			20.1
Actuarial loss (gain)	37.7			(25.9		)
Benefits paid	(25.1		)	(26.0		)
Currency translation	0.2			(1.6		)
Decrease in obligation due to curtailment / settlement	(58.5		)	(1.8		)
End of year	$	403.1		$	428.2
Accumulated benefit obligations at end of year	$	403.1		$	428.2
Plan assets:
Beginning of year	$	383.4		$	410.5
Actual return on plan assets	40.1			1.3
Employer contributions	—			1.2
Settlement	(58.5		)	(1.9		)
Currency translation	0.1			(1.7		)
Benefits paid	(25.1		)	(26.0		)
End of year	$	340.0		$	383.4
Accrued benefit cost at end of year:
Unfunded status	$	(63.1	)	$	(44.8	)
Recognized on balance sheet:
Other noncurrent assets	$	1.0		$	0.9
Other current liabilities	(1.2		)	—
Other noncurrent liabilities	(62.9		)	(45.7		)
	$	(63.1	)	$	(44.8	)
Recognized in accumulated other comprehensive loss, before tax:
Prior year service cost	$	—		$	—
Net actuarial loss	110.8			113.5
	$	110.8		$	113.5

The discount rates for determining the present value of pension obligations were selected using a “bond settlement” approach, which constructs a hypothetical bond portfolio that could be purchased such that the coupon payments and maturity values could be used to satisfy the projected benefit payments. The discount rate is the equivalent rate that results in the present value of the projected benefit payments equaling the market value of this bond portfolio. Only high quality (AA graded or higher), non-callable corporate bonds are included in this bond portfolio. We rely on the Pension Plans’ actuaries to assist in the development of the discount rate model. The actuarial loss in 2016 was primarily due to the decrease in the discount rate at September 30, 2016 compared to September 30, 2015. The actuarial gain in 2015 was primarily due to the increase in the discount rate at September 30, 2015 compared to September 30, 2014.

Management’s expected returns on plan assets were determined with the assistance of the Pension Plans’ actuaries and investment consultants. Expected returns on plan assets were developed using forward looking returns over a time horizon of 10 to 15 years for major asset classes along with projected risk and historical correlations.

A summary of key assumptions for our pension plans is below.



	Pension Plans
	2016		2015		2014
Weighted average used to determine benefit obligations:
Discount rate	3.68	%	4.84	%	4.49	%
Weighted average used to determine net periodic cost:
Discount rate	3.92	%	4.49	%	5.16	%
Expected return on plan assets	5.50		6.21		6.24

We maintain a single trust to hold the assets of the U.S. pension plan. Throughout 2014, 2015, and most of 2016, the strategic asset allocation was about 40% equity investments. Near the end of 2016, we directed our investment manager to adjust the asset allocation to about 30% equity investments. This trust’s strategic asset allocations, tactical range at September 30, 2016 and actual asset allocations are presented below.



	Strategic asset allocation						Actual asset allocations at
							September 30,
			Tactical range				2016		2015		2014
Equity investments:
Large capitalization stocks	19	%
Small capitalization stocks	4
International stocks	7
	30		30	-	50	%	29	%	39	%	40	%
Fixed income investments	70		50	-	70		69		60		59
Cash	—		0	-	5		2		1		1
	100	%					100	%	100	%	100	%

Assets of the Pension Plans are allocated to various investments to attain diversification and reasonable risk-adjusted returns while also managing the exposure to asset and liability volatility. These ranges are targets and deviations may occur from time to time due to market fluctuations. Portfolio assets are typically rebalanced to the allocation targets at least annually.

The valuation methodologies used to measure the assets of the Pension Plans at fair value are:


•	Equity investments are valued at the closing price reported on the active market when reliable market quotations are readily available. When market quotations are not readily available, assets of the Pension Plans are valued by a method the trustees of the Pension Plans believe accurately reflects fair value;


•	Fixed income fund investments are valued using the closing price reported in the active market in which the investment is traded or based on yields currently available on comparable securities of issuers with similar credit ratings; and


•	Other investments are valued as determined by the trustees of the Pension Plans based on their net asset values and supported by the value of the underlying securities and by the unit prices of actual purchase and sale transactions occurring at or close to the financial statement date.

The assets of the Pension Plans by level within the fair value hierarchy are presented below.



	September 30, 2016
	Level 1		Level 2		Total
	(in millions)
Equity:
Large cap stocks:
Large cap growth funds	$	—	$	7.3	$	7.3
Large cap index funds	—		38.2		38.2
Large cap value funds	—		7.2		7.2
Small cap stocks:
Small cap growth funds	—		15.1		15.1
International stocks:
Mutual funds	13.5		—		13.5
International funds	—		18.1		18.1
Total equity	13.5		85.9		99.4
Fixed income	—		233.3		233.3
Cash and cash equivalents	7.3		—		7.3
	$	20.8	$	319.2	$	340.0



	September 30, 2015
	Level 1		Level 2		Total
	(in millions)
Equity:
Large cap stocks:
Large cap growth funds	$	—	$	32.7	$	32.7
Large cap index funds	—		27.1		27.1
Large cap value funds	—		15.7		15.7
Small cap stocks:
Small cap growth funds	—		18.5		18.5
International stocks:
Mutual funds	42.1		—		42.1
International funds	—		13.9		13.9
Total equity	42.1		107.9		150.0
Fixed income	—		229.4		229.4
Cash and cash equivalents	4.0		—		4.0
	$	46.1	$	337.3	$	383.4

Our estimated future pension benefit payments are presented below in millions.



2017	$	32.6
2018	25.7
2019	25.6
2020	25.5
2021	25.4
2022-2026	122.9

Defined Contribution Retirement Plans-Certain of our employees participate in defined contribution 401(k) plans or similar non-U.S plans. We make matching contributions as a function of employee contributions. Matching contributions were $5.9 million, $6.2 million and $5.6 million during 2016, 2015 and 2014, respectively.