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Retirement Plans

12 Months Ended

Sep. 30, 2019

Pension and Other Postretirement Benefits Disclosure

Retirement Plans

We have had various pension plans (“Pension Plans”), which we have funded in accordance with their requirements and, where applicable, in amounts sufficient to satisfy the minimum funding requirements of applicable laws. The Pension Plans provided benefits based on years of service and compensation or at stated amounts for each year of service. The annual measurement date for all Pension Plans was September 30.

During the quarter ended March 31, 2019, we settled our obligations to our Canadian pension plan participants through a combination of lump-sum payments and purchases of annuities. We made a net contribution to the plans of $0.7 million, which is included in pension costs other than service, to fund these settlements. As a result, we no longer have any plan assets or obligation in connection with any Canadian defined benefit pension plan.

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 of $0.4 million, which vests through 2020. During the quarter ended March 31, 2019, we recorded an estimated settlement liability for exiting this plan, which resulted in an expense of $1.1 million, which we included in other charges. During the quarter ended June 30, 2019, we paid this amount and have settled the liability to the multi-employer pension plan.

As a result, at September 30, 2019, our only remaining defined benefit plan is our U.S. Pension Plan (“Plan”).

We did not contribute to the Plan in 2018 or 2019 and do not anticipate contributing to the Plan in 2020.

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 results.

The components of net periodic benefit cost for our Pension Plans are presented below.



	2019			2018			2017
	(in millions)
Service cost	$	1.6		$	1.8		$	2.0
Components of net periodic benefit cost excluded from operating income following adoption of ASU 2017-07:
Interest cost	13.9			14.3			14.3
Expected return on plan assets	(16.2		)	(16.5		)	(16.9		)
Amortization of actuarial net loss	1.9			3.2			4.0
Pension settlement	0.7			—			—
Other	0.1			—			—
Pension costs other than service	0.4			1.0			1.4
Net periodic benefit cost	$	2.0		$	2.8		$	3.4

Balance sheet information for Pension Plans with a net liability funded status is presented below.



	September 30,
	2019		2018
	(in millions)
Projected benefit obligations	$	356.6	$	6.3
Accumulated benefit obligations	356.6		6.3
Fair value of plan assets	351.6		5.0

Balance sheet information for Pension Plans with a net asset funded status is presented below.



	September 30,
	2019		2018
	(in millions)
Projected benefit obligations	$	—	$	327.1
Accumulated benefit obligations	—		327.1
Fair value of plan assets	—		338.5

Pension Plan activity in accumulated other comprehensive loss, before tax, in 2019 is presented below, in millions.



Balance at beginning of year	$	66.0
Actuarial gain	15.9
Prior year actuarial loss amortization to net periodic cost	(3.5		)
Balance at end of year	$	78.4

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 $2.8 million of unrecognized loss into net periodic benefit cost from accumulated other comprehensive loss in 2020.

A summary of key assumptions for our Pension Plans is below.



	2019		2018		2017
Weighted average used to determine benefit obligations:
Discount rate	3.26	%	4.37	%	3.88	%
Weighted average used to determine net periodic cost:
Discount rate	4.37	%	3.88	%	3.68	%
Expected return on plan assets	4.93	%	4.68	%	5.16	%

Amounts recognized for Pension Plans are presented below.



	2019			2018
	(in millions)
Projected benefit obligations:
Beginning of year	$	333.4		$	380.5
Service cost	1.6			1.8
Interest cost	13.9			14.3
Actuarial gain	38.2			(38.6		)
Benefits paid	(23.9		)	(24.3		)
Currency translation	(0.1		)	(0.3		)
Decrease in obligation due to curtailment / settlement	(6.5		)	—
End of year	$	356.6		$	333.4
Accumulated benefit obligations at end of year	$	356.6		$	333.4
Plan assets:
Beginning of year	$	343.5		$	366.3
Actual return on plan assets	38.6			2.0
Employer contributions	0.6			—
Currency translation	(0.5		)	(0.3		)
Benefits paid	(23.9		)	(24.3		)
Settlements	(6.5		)	—
Other	(0.2		)	(0.2		)
End of year	$	351.6		$	343.5
Accrued benefit cost at end of year:
Funded (unfunded) status	$	(5.0	)	$	10.1
Recognized on balance sheet:
Other noncurrent assets	$	—		$	11.2
Other current liabilities	—			(1.1		)
Other noncurrent liabilities	(5.0		)	—
	$	(5.0	)	$	10.1
Recognized in accumulated other comprehensive loss, before tax:
Prior year service cost	$	—		$	—
Net actuarial loss	78.4			66.0
	$	78.4		$	66.0

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.

We maintain a single trust that holds the assets of the Plan. Near the end of 2017, we directed our investment manager to adjust the asset allocation from about 30% equity investments to about 20% equity investments.

This trust’s strategic asset allocations, tactical range at September 30, 2019 and actual asset allocations are presented below.



	Strategic asset allocation						Actual asset allocations at
							September 30,
			Tactical range				2019		2018		2017
Fixed income investments	80	%	75		80	%	79	%	77	%	78	%
Equity investments	20		15	-	20	%	19		21		21
Cash	—		0	-	5	%	2		2		1
	100	%					100	%	100	%	100	%

Assets of the Plan 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 Plan 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 Plan 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 Plan by level within the fair value hierarchy are presented below.



	September 30, 2019
	Level 1		Level 2		Total
	(in millions)
Fixed income	$	—	$	277.8	$	277.8
Equity:
Large cap stocks:
Large cap index funds	—		29.8		29.8
Mid cap stocks:
Mid cap index funds	—		9.8		9.8
Small cap stocks:
Small cap growth funds	—		9.6		9.6
International stocks:
Mutual funds	6.9		—		6.9
International funds	—		10.3		10.3
Total equity	6.9		59.5		66.4
Cash and cash equivalents	7.4		—		7.4
	$	14.3	$	337.3	$	351.6



	September 30, 2018
	Level 1		Level 2		Total
	(in millions)
Fixed income	$	—	$	264.1	$	264.1
Equity:
Large cap stocks:
Large cap index funds	—		30.6		30.6
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		61.0		72.8
Cash and cash equivalents	6.6		—		6.6
	$	18.4	$	325.1	$	343.5

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



2020	$	24.8
2021	24.8
2022	24.5
2023	24.2
2024	23.7
2025-2029	111.1

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 $5.5 million, $4.7 million and $4.1 million during 2019, 2018 and 2017, respectively.