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Retirement Plans | 12 Months Ended
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Sep. 30, 2018
Defined Benefit Plan [Abstract] |
Pension and Other Postretirement Benefits Disclosure | 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. Our U.S. pension plan (“Plan”) comprised 98% of the Pension Plans’ obligations and 98% of the Pension Plans’ assets at September 30, 2018. We did not contribute to the Plan in 2018 and do not anticipate contributing to the Plan in 2019. We plan to contribute $1.2 million to Canadian pension plans in 2019. During 2018, with a recently negotiated labor contract, a group of our collectively bargained employees are no longer accruing benefits under a multi-employer pension plan. The affected employees are now participants in our defined contribution retirement plan with an employer match and one-time contribution vesting over the next three years of $0.4 million. We expect to withdraw from this multi-employer pension plan. During 2016, the 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 March 2017, the Financial Accounting Standards Board issued Accounting Standards Update No. 2017-07 (“ASU 2017-07”). ASU 2017-07 required us to exclude from operating income the components of net periodic benefit cost other than service cost. We adopted ASU 2017-07 on October 1, 2017, and this adoption required reclassification of pension costs other than service in the 2017 and 2016 results, which has the effect of increasing operating income by those amounts. The components of net periodic benefit cost for our Pension Plans are presented below.
| 2018 |  | 2017 |  | 2016
| (in millions)
Service cost | $ | 1.8 |  |  | $ | 2.0 |  |  | $ | 1.7 |
Components of net periodic benefit cost excluded from operating income following adoption of ASU 2017-07: |  |  |  |  |
Interest cost | 14.3 |  |  | 14.3 |  |  | 18.9 |
Expected return on plan assets | (16.5 | ) |  | (16.9 | ) |  | (19.7 | )
Amortization of actuarial net loss | 3.2 |  |  | 4.0 |  |  | 3.4 |
Pension settlement | — |  |  | — |  |  | 16.6 |
Other | — |  |  | — |  |  | 0.1 |
Pension costs other than service | 1.0 |  |  | 1.4 |  |  | 19.3 |
Net periodic benefit cost | $ | 2.8 |  |  | $ | 3.4 |  |  | $ | 21.0 |
Balance sheet information for Pension Plans with accumulated benefit obligations in excess of plan assets is presented below.
| September 30,
| 2018 |  | 2017
| (in millions)
Projected benefit obligations | $ | 6.2 |  |  | $ | 379.5 |
Accumulated benefit obligations | 6.2 |  |  | 379.5 |
Fair value of plan assets | 5.0 |  |  | 364.2 |
Balance sheet information for Pension Plans with accumulated benefit obligations less than plan assets is presented below.
| September 30,
| 2018 |  | 2017
| (in millions)
Projected benefit obligations | $ | 327.1 |  |  | $ | 1.0 |
Accumulated benefit obligations | 327.1 |  |  | 1.0 |
Fair value of plan assets | 338.5 |  |  | 2.1 |
Pension Plan activity in accumulated other comprehensive loss, before tax, in 2018 is presented below, in millions.
Balance at beginning of year | $ | 93.4 |
Actuarial gain | (24.2 | )
Prior year actuarial loss amortization to net periodic cost | (3.2 | )
Balance at end of year | $ | 66.0 |
We amortize amounts in accumulated other comprehensive loss representing unrecognized prior year service cost and unrecognized loss related to the Pension Plans over the weighted average life expectancy of their inactive participants. Actuarial gains and losses are amortized using a corridor approach. The gain/loss corridor is equal to ten percent of the greater of the benefit obligation and the market-related value of assets. Gains and losses in excess of the corridor are generally amortized over the average remaining lifetime of the plan participants. We expect to amortize $2.0 million of unrecognized loss into net periodic benefit cost from accumulated other comprehensive loss in 2019. 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 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
| 2018 |  | 2017 |  | 2016
Weighted average used to determine benefit obligations: |  |  |  |  |
Discount rate | 4.37 | % |  | 3.88 | % |  | 3.68 | %
Weighted average used to determine net periodic cost: |  |  |  |  |
Discount rate | 3.88 | % |  | 3.68 | % |  | 3.92 | %
Expected return on plan assets | 4.68 | % |  | 5.16 | % |  | 5.50 | %
Amounts recognized for Pension Plans are presented below.
| Pension Plans
| 2018 |  | 2017
| (in millions)
Projected benefit obligations: |  |  |
Beginning of year | $ | 380.5 |  |  | $ | 403.1 |
Service cost | 1.8 |  |  | 2.0 |
Interest cost | 14.3 |  |  | 14.3 |
Actuarial gain | (38.6 | ) |  | (14.5 | )
Benefits paid | (24.3 | ) |  | (24.8 | )
Currency translation | (0.3 | ) |  | 0.4 |
Decrease in obligation due to curtailment / settlement | — |  |  | — |
End of year | $ | 333.4 |  |  | $ | 380.5 |
Accumulated benefit obligations at end of year | $ | 333.4 |  |  | $ | 380.5 |
Plan assets: |  |  |
Beginning of year | $ | 366.3 |  |  | $ | 340.0 |
Actual return on plan assets | 2.0 |  |  | 15.8 |
Employer contributions | — |  |  | 35.0 |
Currency translation | (0.3 | ) |  | 0.4 |
Benefits paid | (24.3 | ) |  | (24.8 | )
Other | (0.2 | ) |  | (0.1 | )
End of year | $ | 343.5 |  |  | $ | 366.3 |
Accrued benefit cost at end of year: |  |  |
Funded (unfunded) status | $ | 10.1 |  |  | $ | (14.2 | )
Recognized on balance sheet: |  |  |
Other noncurrent assets | $ | 11.2 |  |  | $ | 1.1 |
Other current liabilities | (1.1 | ) |  | (1.1 | )
Other noncurrent liabilities | — |  |  | (14.2 | )
| $ | 10.1 |  |  | $ | (14.2 | )
Recognized in accumulated other comprehensive loss, before tax: |  |  |
Prior year service cost | $ | — |  |  | $ | — |
Net actuarial loss | 66.0 |  |  | 93.4 |
| $ | 66.0 |  |  | $ | 93.4 |
We maintain a single trust that holds the assets of the U.S. pension plan. For 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. Near the end of 2017, we directed our investment manager to adjust the asset allocation to about 20% equity investments. This trust’s strategic asset allocations, tactical range at September 30, 2018 and actual asset allocations are presented below.
| Strategic asset allocation |  |  |  |  |  |  | Actual asset allocations at
|  |  |  |  |  |  | September 30,
| Tactical range |  | 2018 |  | 2017 |  | 2016
Fixed income investments | 80 | % |  | 75 |  | 80 | % |  |  | 77 | % |  | 78 | % |  | 69 | %
Equity investments | 20 |  |  | 15 | - | 20 | % |  |  | 21 |  |  | 21 |  |  | 29 |
Cash | — |  |  | 0 | - | 5 | % |  |  | 2 |  |  | 1 |  |  | 2 |
| 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 assets of the Pension Plans are primarily invested in investment trusts valued at net asset value, which in turn hold fixed income and equity investments. The valuation methodologies used to measure the assets of the Pension Plans at fair value are:
• | Fixed income fund investments held by the investment trusts 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;
• | Equity investments held by the investment trusts are valued using the closing price reported on the active market when reliable market quotations are readily available. When market quotations are not readily available, these assets are valued by a method the trustees believe accurately reflects fair value; and
• | Mutual funds are valued at the closing price reported on the active market.
The assets of the Pension Plans by level within the fair value hierarchy are presented below.
| September 30, 2018
| Level 1 |  | Level 2 |  | Total
| (in millions)
Fixed income | $ | — |  |  | $ | 264.1 |  |  | $ | 264.1 |
Equity: |  |  |  |  |
Large cap stocks: |  |  |  |  |
Large cap index funds | — |  |  | 30.5 |  |  | 30.5 |
Mid cap stocks: |  |  |  |  |
Mid cap index funds | — |  |  | 10.1 |  |  | 10.1 |
Small cap stocks: |  |  |  |  |
Small cap growth funds | — |  |  | 10.0 |  |  | 10.0 |
International stocks: |  |  |  |  |
Mutual funds | 11.8 |  |  | — |  |  | 11.8 |
International funds | — |  |  | 10.3 |  |  | 10.3 |
Total equity | 11.8 |  |  | 60.9 |  |  | 72.7 |
Cash and cash equivalents | 6.6 |  |  | — |  |  | 6.6 |
| $ | 18.4 |  |  | $ | 325.0 |  |  | $ | 343.4 |
| September 30, 2017
| Level 1 |  | Level 2 |  | Total
| (in millions)
Fixed income | $ | — |  |  | $ | 284.4 |  |  | $ | 284.4 |
Equity: |  |  |  |  |
Large cap stocks: |  |  |  |  |
Large cap growth funds | $ | — |  |  | $ | 32.6 |  |  | $ | 32.6 |
Mid cap stocks: |  |  |  |  |
Mid cap index funds | — |  |  | 10.9 |  |  | 10.9 |
Small cap stocks: |  |  |  |  |
Small cap growth funds | — |  |  | 11.3 |  |  | 11.3 |
International stocks: |  |  |  |  |
Mutual funds | 15.4 |  |  | — |  |  | 15.4 |
International funds | — |  |  | 7.4 |  |  | 7.4 |
Total equity | 15.4 |  |  | 62.2 |  |  | 77.6 |
Cash and cash equivalents | 4.3 |  |  | — |  |  | 4.3 |
| $ | 19.7 |  |  | $ | 346.6 |  |  | $ | 366.3 |
Our estimated future pension benefit payments are presented below in millions.
2019 | $ | 31.2 |
2020 | 25.0 |
2021 | 24.8 |
2022 | 24.5 |
2023 | 24.2 |
2024-2028 | 113.6 |
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 $4.7 million, $4.1 million and $4.0 million during 2018, 2017 and 2016, respectively.

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