Note 10 – Employee benefit plans:

Defined contribution plans – We maintain various defined contribution pension plans with our contributions based on matching or other formulas. Defined contribution plan expense approximated $2.6 million in 2014, $2.7 million in 2015 and $2.8 million in 2016.

Accounting for defined benefit and postretirement benefits other than pensions (OPEB) plans – We recognize an asset or liability for the over or under funded status of each of our individual defined benefit pension plans on our Consolidated Balance Sheets. Changes in the funded status of these plans are recognized either in net income (loss), to the extent they are reflected in periodic benefit cost, or through other comprehensive income (loss).

Defined benefit plans – We sponsor various defined benefit pension plans. Certain non-U.S. employees are covered by plans in their respective countries. Our U.S. plan was closed to new participants in 1996, and existing participants no longer accrued any additional benefits after that date. The benefits under our plans are based upon years of service and employee compensation. Our funding policy is to contribute annually the minimum amount required under ERISA (or equivalent non-U.S.) regulations plus additional amounts as we deem appropriate.

We expect to contribute the equivalent of approximately $14.8 million to all of our defined benefit pension plans during 2017. Benefit payments to plan participants out of plan assets are expected to be the equivalent of:

Years ending December 31,	Amount
	(In millions)
2017	$	20.1
2018		20.4
2019		20.9
2020		22.1
2021		22.6
Next 5 years		124.4

The funded status of our non-U.S. defined benefit pension plans is presented in the table below.

	December 31,
	2015			2016
	(In millions)
Change in projected benefit obligations (PBO):
Benefit obligations at beginning of the year	$	648.4		$	569.7
Service cost		11.2			9.9
Interest cost		14.6			14.7
Participant contributions		1.6			1.5
Actuarial losses (gains)		(8.7	)		33.7
Change in currency exchange rates		(76.4	)		(15.0	)
Benefits paid		(21.0	)		(20.4	)
Benefit obligations at end of the year		569.7			594.1

Change in plan assets:
Fair value of plan assets at beginning of the year		414.8			372.0
Actual return on plan assets		10.6			10.0
Employer contributions		17.1			15.3
Participant contributions		1.6			1.5
Change in currency exchange rates		(51.1	)		(6.9	)
Benefits paid		(21.0	)		(20.4	)
Fair value of plan assets at end of year		372.0			371.5
Funded status	$	(197.7	)	$	(222.6	)

Amounts recognized in the balance sheet:
Noncurrent pension asset	$	.4		$	.6
Noncurrent accrued pension costs		(198.1	)		(223.2	)
Total	$	(197.7	)	$	(222.6	)

Accumulated other comprehensive loss:
Actuarial losses	$	230.6		$	257.5
Prior service cost		1.9			1.6
Total	$	232.5		$	259.1

Accumulated benefit obligations (ABO)	$	545.2		$	569.5

The components of our net periodic defined benefit pension cost for our non-U.S. defined benefit pension plans are presented in the table below. The amounts shown below for the amortization of prior service cost, net transition obligations and recognized actuarial losses for 2014, 2015 and 2016 were recognized as components of our accumulated other comprehensive income (loss) at December 31, 2013, 2014 and 2015, respectively, net of deferred income taxes.

	Years ended December 31,
	2014			2015			2016
	(In millions)
Net periodic pension cost:
Service cost benefits	$	9.9		$	11.2		$	9.9
Interest cost on PBO		21.7			14.6			14.7
Expected return on plan assets		(20.0	)		(16.6	)		(14.4	)
Settlement gain		(.3	)		-			-
Recognized actuarial losses		10.0			13.6			11.3
Amortization of prior service cost		.5			.4			.2
Amortization of net transition obligations		.1			-			-
Total	$	21.9		$	23.2		$	21.7

Information concerning certain of our non-U.S. defined benefit pension plans (for which the ABO exceeds the fair value of plan assets as of the indicated date) is presented in the table below.

	December 31,
	2015		2016
	(In millions)
Plans for which the ABO exceeds plan assets:
PBO	$	518.1	$	541.5
ABO		498.7		521.8
Fair value of plan assets		321.6		319.5

The weighted-average rate assumptions used in determining the actuarial present value of benefit obligations for our non-U.S. defined benefit pension plans as of December 31, 2015 and 2016 are presented in the table below.

	December 31,
Rate	2015			2016
Discount rate		2.6	%		2.1	%
Increase in future compensation levels		2.9	%		2.6	%

The weighted-average rate assumptions used in determining the net periodic pension cost for our non-U.S. defined benefit pension plans for 2014, 2015 and 2016 are presented in the table below.

	Years ended December 31,
Rate	2014			2015			2016
Discount rate		3.8	%		2.5	%		2.6	%
Increase in future compensation levels		2.7	%		2.6	%		2.9	%
Long-term return on plan assets		5.0	%		4.6	%		3.9	%

Variances from actuarially assumed rates will result in increases or decreases in accumulated pension obligations, pension expense and funding requirements in future periods.

The funded status of our U.S. defined benefit pension plan is presented in the table below.

	December 31,
	2015			2016
	(In millions)
Change in PBO:
Benefit obligations at beginning of the year	$	19.8		$	18.6
Interest cost		.8			.8
Actuarial gains		(1.0	)		(.6	)
Benefits paid		(1.0	)		(1.0	)
Benefit obligations at end of the year		18.6			17.8

Change in plan assets:
Fair value of plan assets at beginning of the year		15.5			13.9
Actual return (loss) on plan assets		(.7	)		.5
Employer contributions		.1			.2
Benefits paid		(1.0	)		(1.0	)
Fair value of plan assets at end of year		13.9			13.6
Funded status	$	(4.7	)	$	(4.2	)

Amounts recognized in the balance sheet:
Accrued pension costs:
Current	$	(.1	)	$	(.1	)
Noncurrent		(4.6	)		(4.1	)
Total	$	(4.7	)	$	(4.2	)

Accumulated other comprehensive loss - actuarial losses	$	11.6		$	11.0

ABO	$	18.6		$	17.8

The components of our net periodic defined benefit pension cost for our U.S. defined benefit pension plan is presented in the table below. The amounts shown below for recognized actuarial losses for 2014, 2015 and 2016 were recognized as components of our accumulated other comprehensive income (loss) at December 31, 2013, 2014 and 2015 respectively, net of deferred income taxes.

	Years ended December 31,
	2014			2015			2016
	(In millions)
Net periodic pension cost (income):
Interest cost on PBO	$	.8		$	.8		$	.8
Expected return on plan assets		(1.2	)		(1.1	)		(1.0	)
Recognized actuarial losses		.3			.5			.5
Total	$	(.1	)	$	.2		$	.3

The discount rate assumptions used in determining the actuarial present value of the benefit obligation for our U.S. defined benefit pension plan as of December 31, 2015 and 2016 are 4.1% and 3.9%, respectively. The impact of assumed increases in future compensation levels does not have an effect on the benefit obligation as the plan is frozen with regards to compensation.

The weighted-average rate assumptions used in determining the net periodic pension cost for our U.S. defined benefit pension plan for 2014, 2015 and 2016 are presented in the table below. The impact of assumed increases in future compensation levels also does not have an effect on the periodic pension cost as the plan is frozen with regards to compensation.

	Years ended December 31,
Rate	2014			2015			2016
Discount rate		4.5	%		3.8	%		4.1	%
Long-term return on plan assets		7.5	%		7.5	%		7.5	%

Variances from actuarially assumed rates will result in increases or decreases in accumulated pension obligations, pension expense and funding requirements in future periods.

The amounts shown in the above tables for actuarial losses and prior service cost at December 31, 2015 and 2016 have not yet been recognized as components of our periodic defined benefit pension cost as of those dates. These amounts will be recognized as components of our periodic defined benefit cost in future years and are recognized, net of deferred income taxes, in our accumulated other comprehensive income (loss) at December 2015 and 2016. We expect approximately $12.8 million and $.2 million of the unrecognized actuarial losses and prior service costs, respectively, will be recognized as components of our consolidated net periodic defined benefit pension cost in 2017.

The table below details the changes in our consolidated other comprehensive income (loss) during 2014, 2015 and 2016.

	Years ended December 31,
	2014			2015		2016
	(In millions)
Changes in plan assets and benefit obligations recognized in other comprehensive income (loss):
Current year:
Net actuarial gain (loss)	$	(103.9	)	$	2.7	$	(38.0	)
Settlements		(.3	)		-		-
Amortization of unrecognized:
Net actuarial losses		10.3			14.1		11.8
Prior service cost		.5			.4		.2
Net transition obligations		.1			-		-
Total	$	(93.3	)	$	17.2	$	(26.0	)

At December 31, 2015 and 2016, substantially all of the assets attributable to our U.S. plan were invested in the Combined Master Retirement Trust (CMRT), a collective investment trust sponsored by Contran to permit the collective investment by certain master trusts that fund certain employee benefits plans sponsored by Contran and certain of its affiliates. For 2014, 2015 and 2016, the long-term rate of return assumption for plan assets invested in the CMRT was 7.5%, based on the long-term asset mix of the assets of the CMRT and the expected long-term rates of return for such asset components as well as advice from Contran’s actuaries.

The CMRT unit value is determined semi-monthly, and the plans have the ability to redeem all or any portion of their investment in the CMRT at any time based on the most recent semi-monthly valuation. However, the plans do not have the right to individual assets held by the CMRT and the CMRT has the sole discretion in determining how to meet any redemption request. For purposes of our plan asset disclosure, we consider the investment in the CMRT as a Level 2 input because (i) the CMRT value is established semi-monthly and the plans have the right to redeem their investment in the CMRT, in part or in whole, at any time based on the most recent value and (ii) observable inputs from Level 1 or Level 2 (or assets not subject to classification in the fair value hierarchy) were used to value approximately 91% and 92% of the assets of the CMRT at December 31, 2015 and 2016, respectively, as noted below. CMRT assets not subject to classification in the fair value hierarchy consist principally of certain investments measured at net asset value per share in accordance with ASC 820-10. The aggregate fair value of all of the CMRT assets, including funds of Contran and its other affiliates that also invest in the CMRT, and supplemental asset mix details of the CMRT are as follows:

	December 31,
	2015			2016
	(In millions)
CMRT asset value	$	648.8		$	637.8
CMRT assets comprised of:
Assets not subject to fair value hierarchy		30	%		30	%
Assets subject to fair value hierarchy:
Level 1		54			54
Level 2		7			8
Level 3		9			8
		100	%		100	%
CMRT asset mix:
Domestic equities, principally publicly traded		29	%		31	%
International equities, principally publicly traded		22			22
Fixed income securities, principally publicly traded		38			36
Privately managed limited partnerships		5			5
Hedge funds		5			5
Other, primarily cash		1			1
		100	%		100	%

In determining the expected long-term rate of return on non-U.S. plan asset assumptions, we consider the long-term asset mix (e.g. equity vs. fixed income) for the assets for each of our plans and the expected long-term rates of return for such asset components. In addition, we receive third-party advice about appropriate long-term rates of return. Such assumed asset mixes are summarized below:

•

In Germany, the composition of our plan assets is established to satisfy the requirements of the German insurance commissioner. Our German pension plan assets represent an investment in a large collective investment fund established and maintained by Bayer AG in which several pension plans, including our German pension plan and Bayer’s pension plans, have invested. Our plan assets represent a very nominal portion of the total collective investment fund maintained by Bayer. These plan assets are a Level 3 input because there is not an active market that approximates the value of our investment in the Bayer investment fund. We determine the fair value of the Bayer plan assets based on periodic reports we receive from the managers of the Bayer plan. These periodic reports are subject to audit by the German pension regulator.

•

In Canada, we currently have a plan asset target allocation of 35% to equity securities and 65% to fixed income securities. We expect the long-term rate of return for such investments to average approximately 125 basis points above the applicable equity or fixed income index. The Canadian assets are Level 1 inputs because they are traded in active markets.

•

In Norway, we currently have a plan asset target allocation of 11% to equity securities, 79% to fixed income securities, 7% to real estate and the remainder primarily to other investments and liquid investments such as money markets. The expected long-term rate of return for such investments is approximately 7%, 3%, 5% and 7%, respectively. The majority of Norwegian plan assets are Level 1 inputs because they are traded in active markets; however approximately 11% of our Norwegian plan assets are invested in real estate and other investments not actively traded and are therefore a Level 3 input.

•

We also have plan assets in Belgium and the United Kingdom. The Belgian plan assets are invested in certain individualized fixed income insurance contracts for the benefit of each plan participant as required by the local regulators and are therefore a Level 3 input. The United Kingdom plan assets consist of marketable securities which are Level 1 inputs because they trade in active markets.

We regularly review our actual asset allocation for each plan, and will periodically rebalance the investments in each plan to more accurately reflect the targeted allocation and/or maximize the overall long-term return when considered appropriate.

The composition of our December 31, 2015 and 2016 pension plan assets by asset category and fair value level is shown in the table below.

	Fair Value Measurements at December 31, 2015
	Total		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
	(In millions)
Germany	$	223.1	$	-	$	-	$	223.1
Canada:
Local currency equities		9.6		9.6		-		-
Non local currency equities		23.3		23.3		-		-
Local currency fixed income		50.6		50.6		-		-
Global mutual fund		6.8		6.8		-		-
Cash and other		.5		.5		-		-
Norway:
Local currency equities		2.0		2.0		-		-
Non local currency equities		3.6		3.6		-		-
Local currency fixed income		24.5		24.5		-		-
Non local currency fixed income		4.7		4.7		-		-
Real estate		4.2		-		-		4.2
Cash and other		7.9		6.7		-		1.2
U.S.
CMRT		13.9		-		13.9		-
Other		11.2		3.5		-		7.7
Total	$	385.9	$	135.8	$	13.9	$	236.2

	Fair Value Measurements at December 31, 2016
	Total		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
	(In millions)
Germany	$	217.0	$	-	$	-	$	217.0
Canada:
Local currency equities		14.8		14.8		-		-
Non local currency equities		19.7		19.7		-		-
Local currency fixed income		59.5		59.5		-		-
Cash and other		.4		.4		-		-
Norway:
Local currency equities		1.6		1.6		-		-
Non local currency equities		4.1		4.1		-		-
Local currency fixed income		23.2		23.2		-		-
Non local currency fixed income		5.4		5.4		-		-
Real estate		4.2		-		-		4.2
Cash and other		9.9		8.8		-		1.1
U.S.
CMRT		13.7		-		13.7		-
Other		11.7		3.5		-		8.2
Total	$	385.2	$	141.0	$	13.7	$	230.5

A rollforward of the change in fair value of Level 3 assets follows.

	December 31,
	2015			2016
	(In millions)
Fair value at beginning of year	$	254.1		$	236.2
Gain on assets held at end of year		6.5			4.1
Gain on assets sold during the year		.3			-
Assets purchased		13.7			13.1
Assets sold		(12.4	)		(13.4	)
Currency exchange rate fluctuations		(26.0	)		(9.5	)
Fair value at end of year	$	236.2		$	230.5

Postretirement benefits other than pensions (OPEB) – We provide certain health care and life insurance benefits for eligible Canadian and U.S. retired employees. Certain of our Canadian employees may become eligible for such postretirement health care and life insurance benefits if they reach retirement age while working for us. In the U.S., employees who retired after 1998 are not entitled to any such benefits. The majority of all retirees are required to contribute a portion of the cost of their benefits and certain current and future retirees are eligible for reduced health care benefits at age 65. We have no OPEB plan assets, rather, we fund medical claims as they are paid. Contributions to our OPEB plans to cover benefit payments are expected to be the equivalent of:

Years ending December 31,	Amount
	(In millions)
2017	$	.4
2018		.4
2019		.4
2020		.4
2021		.4
Next 5 years		2.2

The funded status of our OPEB plans is presented in the table below:

	December 31,
	2015			2016
	(In millions)
Change in accumulated OPEB obligations:
Obligations at beginning of the year	$	8.5		$	7.0
Service cost		.1			.1
Interest cost		.3			.3
Actuarial gains		(.2	)		(.1	)
Change in currency exchange rates		(1.3	)		.2
Benefits paid from employer contributions		(.4	)		(.3	)
Obligations at end of the year		7.0			7.2
Fair value of plan assets		-			-
Funded status	$	(7.0	)	$	(7.2	)

Amounts recognized in the balance sheet:
Current accrued OPEB costs	$	(.3	)	$	(.3	)
Noncurrent accrued OPEB costs		(6.7	)		(6.9	)
Total	$	(7.0	)	$	(7.2	)

Accumulated other comprehensive income:
Net actuarial losses	$	3.1		$	2.9
Prior service credit		(6.2	)		(5.5	)
Total	$	(3.1	)	$	(2.6	)

The amounts shown in the table above for net actuarial losses and prior service credit at December 31, 2015 and 2016 have not yet been recognized as components of our periodic OPEB cost as of those dates. These amounts will be recognized as components of our periodic OPEB cost in future years and are recognized, net of deferred income taxes, in our accumulated other comprehensive income (loss). We expect to recognize approximately $.2 million of unrecognized actuarial losses and $.6 million of prior service credit as components of our periodic OPEB cost in 2017.

At December 31, 2016, the accumulated OPEB obligations for all OPEB plans comprised $.5 million related to U.S. plans and $6.7 million related to our Canadian plan (in 2015 the amounts were $.6 million and $6.4 million, respectively).

The components of our periodic OPEB costs are presented in the table below. The amounts shown below for amortization of prior service credit and recognized actuarial losses for 2014, 2015 and 2016 were recognized as components of our accumulated other comprehensive income (loss) at December 31, 2013, 2014 and 2015, respectively, net of deferred income taxes.

	Years ended December 31,
	2014			2015			2016
	(In millions)
Net periodic OPEB cost (benefit):
Service cost	$	.1		$	.1		$	.1
Interest cost		.4			.3			.3
Amortization of prior service credit		(.9	)		(.8	)		(.8	)
Recognized actuarial losses		.2			.3			.2
Total	$	(.2	)	$	(.1	)	$	(.2	)

The table below details the changes in benefit obligations recognized in accumulated other comprehensive income (loss) during 2014, 2015 and 2016.

	Years ended December 31,
	2014			2015			2016
	(In millions)
Changes in benefit obligations recognized in other comprehensive income (loss):
Current year:
Net actuarial gain (loss)	$	(.8	)	$	.2		$	.1
Amortization of unrecognized:
Net actuarial loss		.2			.3			.2
Prior service cost		(.9	)		(.8	)		(.8	)
Total	$	(1.5	)	$	(.3	)	$	(.5	)

A summary of our key actuarial assumptions used to determine the net benefit obligation as of December 31, 2015 and 2016 are presented in the table below. The weighted average discount rate was determined using the projected benefit obligation as of such dates. The impact of assumed increases in future compensation levels does not have a material effect on the actuarial present value of the benefit obligation as substantially all of such benefits relate solely to eligible retirees, for which compensation is not applicable.

	2015			2016
Healthcare inflation:
Initial rate		7.0	%	7.0	%
Ultimate rate		5.0	%	5.0	%
Year of ultimate rate achievement		2021		2021
Weighted average discount rate		3.9	%	3.5	%

Assumed health care cost trend rates affect the amounts we report for health care plans. A one percent change in assumed health care trend rates would not have a material effect on the net periodic OPEB cost for 2016 or on the accumulated OPEB obligation at December 31, 2016.

The weighted average discount rate used in determining the net periodic OPEB cost for 2016 was 3.9% (2015 – 3.7%; 2014 – 4.6%). Such weighted average rate was determined using the projected benefit obligation as of the beginning of each year. The impact of assumed increases in future compensation levels does not have a material effect on the net periodic OPEB cost as substantially all of such benefits relate solely to eligible retirees, for which compensation is not applicable. The impact of the assumed rate of return on plan assets also does not have a material effect on the net periodic OPEB cost as there were no plan assets as of December 31, 2015 or 2016.

Variances from actuarially-assumed rates will result in additional increases or decreases in accumulated OPEB obligations, net periodic OPEB cost and funding requirements in future periods.