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Employee Benefits | 12 Months Ended
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Dec. 31, 2019
Retirement Benefits [Abstract] |
Employee Benefits | Employee Benefits Employee Plans. Employee benefit plans include:
• | A defined contribution 401(k) savings plan for hourly bargaining unit employees at nine of our production facilities based on the specific collective bargaining agreement at each facility. For active bargaining unit employees at three of these production facilities, we are required to make fixed rate contributions. For active bargaining unit employees at one of these production facilities, we are required to match certain employee contributions. For active bargaining unit employees at three of these production facilities, we are required to make both fixed rate contributions and concurrent matches. For active bargaining unit employees at two remaining production facilities, we are not required to make any contributions. Fixed rate contributions either: (i) range from (in whole dollars) $800 to $2,400 per employee per year, depending on the employee's age, or (ii) vary between 2% to 10% of the employees' compensation depending on their age and years of service for employees hired prior to January 1, 2004 or is a fixed 2% annual contribution for employees hired on or after January 1, 2004.
• | A defined contribution 401(k) savings plan for salaried and certain hourly employees providing for a concurrent match of up to 4% of certain contributions made by employees plus an annual contribution of between 2% and 10% of their compensation depending on their age and years of service to employees hired prior to January 1, 2004. All new hires on or after January 1, 2004 receive a fixed 2% contribution annually.
• | A defined contribution 401(k) savings plan for certain employees providing for an annually funded discretionary Company match determined in January based on the financial results of the previous year. If a Company match is to be made, a total flat dollar amount is determined and then funded to employees' accounts based on their contribution levels.
• | A defined benefit pension plan for salaried employees at our London, Ontario facility, with annual contributions based on each salaried employee's age and years of service. At December 31, 2019, approximately 62% of the plan assets were invested in equity securities, 36% were invested in fixed income securities and 2% were invested in short-term and other securities. Our investment committee reviews and evaluates the investment portfolio. The asset mix target allocation on the long-term investments is approximately 60% in equity securities, 35% in fixed income securities and 5% in short-term securities. The plan assets of our Canadian pension plan are managed by advisors selected by us, with the investment portfolio subject to periodic review and evaluation by our investment committee. The investment of assets in the Canadian pension plan is based upon the objective of maintaining a diversified portfolio of investments in order to minimize concentration of credit and market risks (such as interest rate, currency, equity price and liquidity risks). The degree of risk and risk tolerance take into account the obligation structure of the plan, the anticipated demand for funds and the maturity profiles required from the investment portfolio in light of these demands.
• | A non-qualified, unfunded, unsecured plan of deferred compensation for certain employees who would otherwise suffer a loss of benefits under our defined contribution plan as a result of the limitations imposed by the Internal Revenue Code of 1986 ("Code"). Despite the plan being an unfunded plan, we make an annual contribution to a rabbi trust to fulfill future funding obligations, as contemplated by the terms of the plan. The assets in the trust are held in various investment funds at certain registered investment companies (see "Fair Value of Plan Assets" below) and are at all times subject to the claims of our general creditors. No participant has a claim to any assets of the trust; however, participants are eligible to receive distributions from the trust subject to vesting and other eligibility requirements. Offsetting liabilities relating to the deferred compensation plan are included in Other accrued liabilities and Long-term liabilities. Assets in the trust are accounted for as equity investments with changes in fair value recorded within Other expense, net (see Note 12).
• | An employment agreement with our chief executive officer extending through July 15, 2022. We also provide certain members of senior management, including each of our named executive officers, with benefits related to terminations of employment in specified circumstances, including in connection with a change in control, by us without cause and by the executive officer with good reason.
Salaried VEBA Postretirement Obligation. Certain retirees who retired prior to 2004 and certain employees who were hired prior to February 2002 and have subsequently retired or will retire with the requisite age and service, along with their surviving spouses and eligible dependents, are eligible to participate in a voluntary employees' beneficiary association ("VEBA") that provides healthcare cost, medical cost and long-term care insurance cost reimbursement benefits ("Salaried VEBA"). We have an ongoing obligation with no express termination date to make variable cash contributions up to a maximum of $2.9 million to the Salaried VEBA. We determined that in the first quarter of 2020, we will pay approximately $2.9 million with respect to 2019. Such amount was recorded within Other accrued liabilities as of December 31, 2019 (see Note 2). We paid $2.1 million with respect to 2018 during the first quarter of 2019. We account for the Salaried VEBA as a defined benefit plan in our financial statements. Union VEBA Postretirement Obligation. Certain other eligible retirees represented by certain unions, along with their surviving spouses and eligible dependents, participate in a separate VEBA ("Union VEBA"). During the first quarter of 2018, we made a $12.8 million cash contribution to the Union VEBA with respect to the nine months ended September 30, 2017. This was our final contribution. We have no ongoing obligation to make further variable cash contributions to the Union VEBA. Key Assumptions. The following data presents the key assumptions used and the amounts reflected in our consolidated financial statements with respect to our Canadian pension plan and the Salaried VEBA. We use a December 31 measurement date for all of the plans. Assumptions used to determine benefit obligations as of the periods presented were as follows:
|  | Canadian Pension Plan |  | Salaried VEBA
|  | December 31, 2019 |  | December 31, 2018 |  | December 31, 2019 |  | December 31, 2018
Discount rate |  | 3.10 | % |  | 3.90 | % |  | 2.95 | % |  | 3.90 | %
Expected long-term return on plan assets |  | 4.45 | % |  | 4.45 | % |  | 5.50 | % |  | 5.50 | %
Rate of compensation increase |  | 3.00 | % |  | 3.00 | % |  | — |  |  | — |
Key assumptions made in computing the net obligation of the Salaried VEBA and in total include: With respect to Salaried VEBA assets:
• | Based on the information received from the Salaried VEBA at December 31, 2019 and at December 31, 2018, the Salaried VEBA assets were invested in various managed proprietary funds.
• | Our variable payment, if any, is treated as a funding/contribution policy and not counted as a Salaried VEBA asset at December 31 for actuarial purposes.
With respect to Salaried VEBA obligations:
• | The accumulated postretirement benefit obligation ("APBO") for the Salaried VEBA was computed based on the level of benefits being provided by it at December 31, 2019 and December 31, 2018.
• | Since the Salaried VEBA was paying a fixed annual amount to its participants at both December 31, 2019 and December 31, 2018, no future cost trend rate increase has been assumed in computing the APBO for the Salaried VEBA.
Assumptions used to determine net periodic postretirement benefit cost for the years ended December 31 were:
|  | Canadian Pension Plan |  | Salaried VEBA
|  | 2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017
Discount rate |  | 3.90 | % |  | 3.40 | % |  | 3.80 | % |  | 3.90 | % |  | 3.20 | % |  | 3.60 | %
Expected long-term return on plan assets 1 |  | 4.45 | % |  | 4.45 | % |  | 4.45 | % |  | 5.50 | % |  | 5.50 | % |  | 7.75 | %
Rate of compensation increase |  | 3.00 | % |  | 3.00 | % |  | 3.00 | % |  | — |  |  | — |  |  | — |
_____________________
1. | The expected long-term rate of return assumption for the Salaried VEBA is based on the targeted investment portfolios provided to us by the trustee of the Salaried VEBA.
Benefit Obligations and Funded Status. The following table presents the benefit obligations and funded status of our Canadian pension plan and the Salaried VEBA as of December 31, 2019 and December 31, 2018 and the corresponding amounts that are included in our Consolidated Balance Sheets (in millions of dollars):
|  | Canadian Pension Plan |  | Salaried VEBA
|  | 2019 |  | 2018 |  | 2019 |  | 2018
Change in benefit obligation: |  |  |  |  |  |  |  |
Obligation at beginning of year |  | $ | 7.3 |  |  | $ | 8.5 |  |  | $ | 85.6 |  |  | $ | 90.0 |
Foreign currency translation adjustment |  | 0.3 |  |  | (0.7 | ) |  | — |  |  | — |
Service cost |  | 0.3 |  |  | 0.3 |  |  | 0.1 |  |  | 0.1 |
Interest cost |  | 0.3 |  |  | 0.3 |  |  | 3.2 |  |  | 2.7 |
Prior service cost 1 |  | — |  |  | — |  |  | 2.5 |  |  | 6.9 |
Actuarial loss (gain)2 |  | 1.1 |  |  | (0.6 | ) |  | 6.4 |  |  | (6.8 | )
Plan participants contributions |  | — |  |  | 0.1 |  |  | — |  |  | — |
Benefits paid by Company |  | (0.5 | ) |  | (0.6 | ) |  | — |  |  | — |
Benefits paid by Salaried VEBA |  | — |  |  | — |  |  | (7.6 | ) |  | (7.3 | )
Obligation at end of year 3 |  | 8.8 |  |  | 7.3 |  |  | 90.2 |  |  | 85.6 |
Change in plan assets: |  |  |  |  |  |  |  |
Fair market value of plan assets at beginning of year |  | 6.5 |  |  | 7.3 |  |  | 53.2 |  |  | 58.1 |
Foreign currency translation adjustment |  | 0.3 |  |  | (0.6 | ) |  | — |  |  | — |
Actual return on assets |  | 1.0 |  |  | (0.2 | ) |  | 9.1 |  |  | 0.3 |
Plan participants contributions |  | — |  |  | 0.1 |  |  | — |  |  | — |
Company contributions |  | 0.5 |  |  | 0.5 |  |  | 2.9 |  |  | 2.1 |
Benefits paid by Company |  | (0.5 | ) |  | (0.6 | ) |  | — |  |  | — |
Benefits paid by Salaried VEBA |  | — |  |  | — |  |  | (7.6 | ) |  | (7.3 | )
Fair market value of plan assets at end of year |  | 7.8 |  |  | 6.5 |  |  | 57.6 |  |  | 53.2 |
Net funded status 4 |  | $ | (1.0 | ) |  | $ | (0.8 | ) |  | $ | (32.6 | ) |  | $ | (32.4 | )
_____________________________
1. | The prior service cost relating to the Salaried VEBA in both 2019 and 2018 resulted from increases in the annual healthcare reimbursement benefit starting in 2019 and 2018, respectively, for plan participants.
2. | The actuarial gain relating to the Salaried VEBA in 2019 was comprised of: (i) a $6.8 million loss due to a change in the discount rate; (ii) a $0.1 million loss due to changes in census information; offset by (iii) a $0.5 million gain due to a change in the projected utilization rate.
The actuarial gain relating to the Salaried VEBA in 2018 was comprised of: (i) a $5.1 million gain due to a change in the discount rate; (ii) a $2.2 million gain due to a change in the projected utilization rate; offset by (iii) a $0.5 million loss due to changes in census information.
3. | For the Canadian pension plan, the benefit obligation is the projected benefit obligation. For the Salaried VEBA, the benefit obligation is the APBO.
4. | Net funded status relating to the Salaried VEBA at December 31, 2019 and December 31, 2018, respectively, was presented as Net liabilities of Salaried VEBA on the Consolidated Balance Sheet.
The accumulated benefit obligation for the Canadian pension plan was $7.6 million and $6.4 million at December 31, 2019 and December 31, 2018, respectively. We expect to contribute $0.5 million to the Canadian pension plan in 2020. As of December 31, 2019, the net benefits expected to be paid in each of the next five fiscal years and in the aggregate for the five fiscal years thereafter are as follows (in millions of dollars):
| Benefit Payments Due by Period
| 2020 |  | 2021 |  | 2022 |  | 2023 |  | 2024 |  | 2025-2029
Canadian pension plan benefit payments | $ | 0.3 |  |  | $ | 0.3 |  |  | $ | 0.3 |  |  | $ | 0.3 |  |  | $ | 0.3 |  |  | $ | 2.0 |
Salaried VEBA benefit payments 1 | 7.9 |  |  | 7.6 |  |  | 7.4 |  |  | 7.1 |  |  | 6.8 |  |  | 29.1 |
Total net benefits | $ | 8.2 |  |  | $ | 7.9 |  |  | $ | 7.7 |  |  | $ | 7.4 |  |  | $ | 7.1 |  |  | $ | 31.1 |
__________________________________
1. | Such amounts are based on benefit amounts and certain key assumptions obtained from the Salaried VEBA.
The amount of loss included in the Consolidated Balance Sheets (within Accumulated other comprehensive loss) associated with our Canadian pension plan and the Salaried VEBA (before tax) that had not yet been reflected in net periodic postretirement benefit cost was as follows at December 31 (in millions of dollars):
|  | Canadian Pension Plan |  | Salaried VEBA
|  | 2019 |  | 2018 |  | 2019 |  | 2018
Accumulated net actuarial loss |  | $ | (1.9 | ) |  | $ | (1.5 | ) |  | $ | (12.1 | ) |  | $ | (12.5 | )
Prior service cost |  | — |  |  | — |  |  | (41.1 | ) |  | (44.2 | )
Cumulative loss reflected in Accumulated other comprehensive loss |  | $ | (1.9 | ) |  | $ | (1.5 | ) |  | $ | (53.2 | ) |  | $ | (56.7 | )
Fair Value of Plan Assets. The plan assets of our Canadian pension plan and the Salaried VEBA are measured annually on December 31 and reflected in our Consolidated Balance Sheets at fair value. In determining the fair value of the plan assets at an annual period end, we utilize primarily the results of valuations supplied by the investment advisors responsible for managing the assets of each plan, which we independently review for reasonableness. Valuation of certain Canadian pension plan and Salaried VEBA assets are based on the net asset value ("NAV") of shares held by the plans at year end using the NAV practical expedient. With respect to the Salaried VEBA, the investment advisors providing the valuations are engaged by the Salaried VEBA trustees. Certain Salaried VEBA plan assets are valued based upon unadjusted quoted market prices in active markets that are accessible at the measurement date for identical, unrestricted assets (e.g., liquid securities listed on an exchange). Such assets are classified within Level 1 of the fair value hierarchy. Valuation of other Salaried VEBA invested plan assets is based on significant observable inputs (e.g., valuations derived from actual market transactions, broker-dealer supplied valuations or correlations between a given U.S. market and a non-U.S. security). Valuation model inputs can generally be verified and valuation techniques do not involve significant judgment. The fair values of such financial instruments are classified within Level 2 of the fair value hierarchy. In addition to the Canadian pension plan and Salaried VEBA, we also hold assets in various investment funds at certain registered investment companies in connection with our deferred compensation program. Such assets are presented within Level 2 of the fair value hierarchy and are measured and recorded at fair value based on their quoted market prices. The following table presents the fair value of plan assets, classified under the appropriate level of the fair value hierarchy, as of the periods presented (in millions of dollars):
| Level 1 |  | Level 2 |  | Level 3 |  | Total
December 31, 2019: |  |  |  |  |  |  |
Plan Assets in the Fair Value Hierarchy: |  |  |  |  |  |  |
Salaried VEBA – |  |  |  |  |  |  |
Cash and money market investments | $ | 0.9 |  |  | $ | — |  |  | $ | — |  |  | $ | 0.9 |
Diversified investment funds in registered investment companies 1 | 7.1 |  |  | — |  |  | — |  |  | 7.1 |
Total Salaried VEBA assets in the fair value hierarchy | 8.0 |  |  | — |  |  | — |  |  | 8.0 |
Deferred compensation program – Diversified investment funds in registered investment companies 1 | — |  |  | 8.1 |  |  | — |  |  | 8.1 |
Total plan assets in the fair value hierarchy | $ | 8.0 |  |  | $ | 8.1 |  |  | $ | — |  |  | $ | 16.1 |
Plan Assets Measured at NAV 2: |  |  |  |  |  |  |
Salaried VEBA – Fixed income investment funds in registered investment companies 3 |  |  |  |  |  |  | $ | 21.9 |
Salaried VEBA – Equity investment funds in registered investment companies 4 |  |  |  |  |  |  | 24.8 |
Canadian pension plan – Diversified investment funds in registered investment companies 1 |  |  |  |  |  |  | 7.8 |
Total plan assets at fair value |  |  |  |  |  |  |  |  |  | $ | 70.6 |
December 31, 2018: |  |  |  |  |  |  |
Plan Assets in the Fair Value Hierarchy: |  |  |  |  |  |  |
Salaried VEBA – |  |  |  |  |  |  |
Cash and money market investments | $ | 0.9 |  |  | $ | — |  |  | $ | — |  |  | $ | 0.9 |
Diversified investment funds in registered investment companies 1 | 8.7 |  |  | — |  |  | — |  |  | 8.7 |
Total Salaried VEBA assets in the fair value hierarchy | 9.6 |  |  | — |  |  | — |  |  | 9.6 |
Deferred compensation program – Diversified investment funds in registered investment companies 1 | — |  |  | 10.5 |  |  | — |  |  | 10.5 |
Total plan assets in the fair value hierarchy | $ | 9.6 |  |  | $ | 10.5 |  |  | $ | — |  |  | $ | 20.1 |
Plan Assets Measured at NAV 2: |  |  |  |  |  |  |
Salaried VEBA – Fixed income investment funds in registered investment companies 3 |  |  |  |  |  |  | $ | 21.2 |
Salaried VEBA – Equity investment funds in registered investment companies 4 |  |  |  |  |  |  | 20.3 |
Canadian pension plan – Diversified investment funds in registered investment companies 1 |  |  |  |  |  |  | 6.5 |
Total plan assets at fair value |  |  |  |  |  |  | $ | 68.1 |
_________________________
1. | The plan assets are invested in investment funds that hold a diversified portfolio of: (i) U.S. and international debt and equity securities; (ii) fixed income securities such as corporate bonds and government bonds; (iii) mortgage-related securities; and (iv) cash and cash equivalents.
2. | The market value of these funds has not been categorized in the fair value hierarchy and is being presented in the table above to permit a reconciliation of the fair value hierarchy to the Consolidated Balance Sheets. Equity investment funds measured at fair value using the NAV practical expedient are managed by an investment adviser registered with the SEC
under the Investment Advisers Act of 1940 and can be redeemed with five business days' notice on the 15th (or last business day prior to the 15th) and on the last business day of each month. A business day is every day that the New York Stock Exchange is open. Diversified investment funds measured at fair value using the NAV practical expedient are unitized mutual funds without externally published net asset values, which can be redeemed daily without restriction.
3. | This category represents investments in various fixed income funds with multiple registered investment companies. Such funds invest primarily in bonds (including Eurodollar and Yankee bonds), debentures, notes, securities with equity and fixed-income characteristics (such as bonds with warrants attached, convertible bonds, hybrids and certain preferred securities), cash equivalents, securities backed by mortgages and other assets, loans, pooled or collective investment vehicles made up of fixed-income securities, and other fixed-income obligations of banks, corporations and governmental authorities.
4. | This category represents investments in equity funds that invest in portfolios comprised primarily of equity and equity-related securities of U.S. and non-U.S. issuers across all market capitalizations.
The following tables present the total expense related to all benefit plans for the periods presented (in millions of dollars):
|  | Year Ended December 31,
|  | 2019 |  | 2018 |  | 2017
Canadian pension plan 1 |  | $ | 0.4 |  |  | $ | 0.4 |  |  | $ | 0.3 |
Defined contribution plans 1 |  | 8.8 |  |  | 8.8 |  |  | 8.9 |
Deferred compensation plan 1 |  | 1.6 |  |  | 1.0 |  |  | 1.8 |
Multiemployer pension plans 2 |  | 5.0 |  |  | 4.7 |  |  | 4.6 |
Net periodic postretirement benefit cost relating to Salaried VEBA 3 |  | 6.6 |  |  | 6.1 |  |  | 4.5 |
Total |  | $ | 22.4 |  |  | $ | 21.0 |  |  | $ | 20.1 |
___________________________
1. | Substantially all of these charges related to employee benefits are in Cost of products sold with the remaining balance in SG&A and R&D.
2. | See Note 6 for more information on our multiemployer defined benefit pension plans.
3. | The current service cost component of Net periodic postretirement benefit cost relating to Salaried VEBA is included within our Statements of Consolidated Income in SG&A and R&D for all periods presented. All other components of Net periodic postretirement benefit cost relating to Salaried VEBA are included within Other expense, net, in our Statements of Consolidated Income.
Components of Net Periodic Postretirement Benefit Cost. Our results of operations included the following impacts associated with our Canadian pension plan and the Salaried VEBA: (i) a charge for service rendered by employees; (ii) a charge for accretion of interest; (iii) a benefit for the return on plan assets; and (iv) amortization of prior service costs associated with plan amendments; and (v) amortization of net actuarial differences. The following table presents the components of Net periodic postretirement benefit cost for the years ended December 31 (in millions of dollars):
|  | Canadian Pension Plan |  | Salaried VEBA
|  | 2019 |  | 2018 |  | 2017 |  | 2019 |  | 2018 |  | 2017
Service cost |  | $ | 0.3 |  |  | $ | 0.3 |  |  | $ | 0.3 |  |  | $ | 0.1 |  |  | $ | 0.1 |  |  | $ | — |
Interest cost |  | 0.3 |  |  | 0.3 |  |  | 0.3 |  |  | 3.2 |  |  | 2.7 |  |  | 3.0 |
Expected return on plan assets |  | (0.3 | ) |  | (0.3 | ) |  | (0.3 | ) |  | (2.7 | ) |  | (2.9 | ) |  | (4.1 | )
Amortization of prior service cost 1 |  | — |  |  | — |  |  | — |  |  | 5.6 |  |  | 5.4 |  |  | 4.7 |
Amortization of net actuarial loss |  | 0.1 |  |  | 0.1 |  |  | — |  |  | 0.4 |  |  | 0.8 |  |  | 0.9 |
Net periodic postretirement benefit cost |  | $ | 0.4 |  |  | $ | 0.4 |  |  | $ | 0.3 |  |  | $ | 6.6 |  |  | $ | 6.1 |  |  | $ | 4.5 |
__________________________ 1. We amortize prior service cost on a straight-line basis over the average remaining years of service to full eligibility for benefits of the active plan participants.

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