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Postretirement and Other Benefits | 12 Months Ended
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Dec. 31, 2016
Compensation and Retirement Disclosure [Abstract] |
Postretirement and Other Benefits | Postretirement and Other Benefits North American Pension and Postretirement Healthcare and Life Insurance Benefits The U.S. operations have defined benefit retirement plans that cover certain full-time employees. Retirement benefits are based on either a cash balance benefit formula or a final average pay formula for certain employees who were "grandfathered" and retained retirement benefits under the terms of the plan prior to its amendment to include a cash balance benefit formula. Benefits related to the U.S. defined benefit and pension plan are frozen for all employees. The U.S. operations also have unfunded healthcare and life insurance benefit plans, or OPEB plans, which cover certain of its retirees through age 65. Some employees who retained benefits under the terms of the Company's plans prior to certain past amendments receive retiree healthcare coverage at rates subsidized by the Company. For other eligible employees, retiree healthcare coverage access is offered at full cost to the retiree. The postretirement healthcare plans include a limit on the Company's share of costs for current and future retirees. The U.S. operations' retiree life insurance plans are noncontributory. The Company's Canadian postretirement benefits liability is immaterial and therefore is not included in these disclosures. French Pension Benefits In France, employees are covered under a government-administered program. In addition, the Company's French operations sponsor retirement indemnity plans, which pay a lump sum retirement benefit to all of its permanent employees who retire. In addition, the Company's French operations sponsor a supplemental executive pension plan. Plan assets are principally invested in the general asset portfolio of a French insurance company. U.S. and French Pension and U.S. Other Postretirement Benefit Disclosures The U.S. pension and OPEB plans and French pension plans accounted for the majority of the Company's total plan assets and total Accumulated Benefit Obligations (ABO) at December 31, 2016 for the Company and all of its consolidated subsidiaries. The Company uses a measurement date of December 31 for its pension plans in the United States and France and other postretirement healthcare and life insurance benefit plans in the United States. The funded status of these plans as of December 31, 2016 and 2015 was as follows ($ in millions):
| Pension Benefits |  | OPEB Benefits
| United States |  | France |  | United States
| 2016 |  | 2015 |  | 2016 |  | 2015 |  | 2016 |  | 2015
Change in Projected Benefit Obligation, or PBO: |  |  |  |  |  |  |  |  |  |  |
PBO at beginning of year | $ | 123.4 |  |  | $ | 132.4 |  |  | $ | 32.2 |  |  | $ | 37.3 |  |  | $ | 1.7 |  |  | $ | 1.8 |
Service cost | — |  |  | — |  |  | 1.0 |  |  | 1.3 |  |  | — |  |  | — |
Interest cost | 5.2 |  |  | 5.0 |  |  | 0.4 |  |  | 0.4 |  |  | 0.1 |  |  | 0.1 |
Actuarial (gain) loss | 2.4 |  |  | (6.5 | ) |  | 2.1 |  |  | (0.6 | ) |  | — |  |  | 0.4 |
Participant contributions | — |  |  | — |  |  | — |  |  | — |  |  | 0.1 |  |  | 0.1 |
Plan amendment | — |  |  | — |  |  | — |  |  | (0.7 | ) |  | — |  |  | — |
Gross benefits paid | (7.8 | ) |  | (7.5 | ) |  | (3.0 | ) |  | (2.5 | ) |  | (0.5 | ) |  | (0.7 | )
Currency translation effect | — |  |  | — |  |  | (0.3 | ) |  | (3.0 | ) |  | — |  |  | — |
PBO at end of year | $ | 123.2 |  |  | $ | 123.4 |  |  | $ | 32.4 |  |  | $ | 32.2 |  |  | $ | 1.4 |  |  | $ | 1.7 |
Change in Plan Assets: |  |  |  |  |  |  |  |  |  |  |
Fair value of plan assets at beginning of year | 116.7 |  |  | 128.9 |  |  | 8.4 |  |  | 10.2 |  |  | — |  |  | — |
Actual return on plan assets | 10.0 |  |  | (4.7 | ) |  | 0.1 |  |  | 0.5 |  |  | — |  |  | — |
Employer contributions | — |  |  | — |  |  | 0.7 |  |  | 1.3 |  |  | 0.4 |  |  | 0.6 |
Participant contributions | — |  |  | — |  |  | — |  |  | — |  |  | 0.1 |  |  | 0.1 |
Plan amendment | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Gross benefits paid | (7.8 | ) |  | (7.5 | ) |  | (2.9 | ) |  | (2.6 | ) |  | (0.5 | ) |  | (0.7 | )
Currency translation effect | — |  |  | — |  |  | (0.2 | ) |  | (1.0 | ) |  | — |  |  | — |
Fair value of plan assets at end of year | $ | 118.9 |  |  | $ | 116.7 |  |  | $ | 6.1 |  |  | $ | 8.4 |  |  | $ | — |  |  | $ | — |
Funded status at end of year | $ | (4.3 | ) |  | $ | (6.7 | ) |  | $ | (26.3 | ) |  | $ | (23.8 | ) |  | $ | (1.4 | ) |  | $ | (1.7 | )
The PBO and ABO exceeded the fair value of pension plan assets for the Company's French defined benefit pension plans as of December 31, 2016 and 2015 and U.S. defined benefit plan as of December 31, 2016 as follows ($ in millions):
| United States |  | France
| 2016 |  | 2015 |  | 2016 |  | 2015
PBO | $ | 123.2 |  |  | $ | 123.4 |  |  | $ | 32.4 |  |  | $ | 32.2 |
ABO | 123.2 |  |  | 123.4 |  |  | 28.2 |  |  | 28.3 |
Fair value of plan assets | 118.9 |  |  | 116.7 |  |  | 6.1 |  |  | 8.4 |
As of December 31, 2016, the pre-tax amounts in accumulated other comprehensive income that have not been recognized as components of net periodic benefit cost for the U.S. and French pension plans and other postretirement benefit plans in the United States are as follows ($ in millions):
| Pension Benefits |  | OPEB Benefits
| United States |  | France |  | United States
Accumulated loss | $ | 37.5 |  |  | $ | 16.9 |  |  | $ | 0.7 |
Prior service credit | — |  |  | (3.3 | ) |  | (0.3 | )
Accumulated other comprehensive loss | $ | 37.5 |  |  | $ | 13.6 |  |  | $ | 0.4 |
The amounts in accumulated other comprehensive loss at December 31, 2016, which are expected to be recognized as components of U.S. and French net periodic benefit cost in 2017 are as follows ($ in millions):
| Pension Benefits |  | OPEB Benefits
| United States |  | France |  | United States
Amortization of accumulated loss | $ | (3.7 | ) |  | $ | (1.4 | ) |  | $ | (0.2 | )
Amortization of prior service credit | — |  |  | 0.3 |  |  | 0.1 |
Total | $ | (3.7 | ) |  | $ | (1.1 | ) |  | $ | (0.1 | )
Actuarial assumptions are used to determine the Company's benefit obligations. The discount rate represents the interest rate used to determine the present value of future cash flows currently expected to be required to settle pension obligations. The discount rate fluctuates from year to year based on current market interest rates for high-quality, fixed-income investments. The Company also evaluates the expected average duration of its pension obligations in determining its discount rate. An assumed long-term rate of compensation increase is also used to determine the PBO. The weighted average assumptions used to determine benefit obligations as of December 31, 2016 and 2015 were as follows:
| Pension Benefits |  | OPEB Benefits
| United States |  | France |  | United States
| 2016 |  | 2015 |  | 2016 |  | 2015 |  | 2016 |  | 2015
Discount rate | 4.11 | % |  | 4.40 | % |  | 1.12 | % |  | 1.43 | % |  | 4.09 | % |  | 4.29 | %
Rate of compensation increase | — | % |  | — | % |  | 1.90 | % |  | 1.90 | % |  | 3.50 | % |  | 3.50 | %
The U.S. postretirement healthcare plan provides for benefits to be limited to a cost ceiling which has already been reached. Therefore, no increases in the health care cost trend rates are included in the measurement of the plan's benefit obligation. The components of net pension and OPEB benefit costs for U.S. employees and net pension benefit costs for French employees during the years ended December 31, 2016, 2015 and 2014 were as follows ($ in millions):
| U.S. Pension Benefits |  | French Pension Benefits |  | U.S. OPEB Benefits
| 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014
Service cost | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1.0 |  |  | $ | 1.3 |  |  | $ | 1.3 |  |  | $ | — |  |  | $ | — |  |  | $ | — |
Interest cost | 5.2 |  |  | 5.0 |  |  | 5.6 |  |  | 0.4 |  |  | 0.4 |  |  | 0.8 |  |  | 0.1 |  |  | 0.1 |  |  | 0.1 |
Expected return on plan assets | (6.8 | ) |  | (7.0 | ) |  | (7.4 | ) |  | (0.2 | ) |  | (0.3 | ) |  | (0.4 | ) |  | — |  |  | — |  |  | — |
Amortizations and other | 3.8 |  |  | 5.1 |  |  | 4.2 |  |  | 1.1 |  |  | 0.2 |  |  | 0.7 |  |  | 0.2 |  |  | (0.2 | ) |  | (0.5 | )
Curtailment benefit | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | (2.7 | )
Net periodic benefit cost | $ | 2.2 |  |  | $ | 3.1 |  |  | $ | 2.4 |  |  | $ | 2.3 |  |  | $ | 1.6 |  |  | $ | 2.4 |  |  | $ | 0.3 |  |  | $ | (0.1 | ) |  | $ | (3.1 | )
Assumptions are used to determine net periodic benefit costs. In addition to the discount rate and rate of compensation increase, which are used to determine benefit obligations, an expected long-term rate of return on plan assets is also used to determine net periodic pension benefit costs. The weighted average assumptions used to determine net periodic benefit costs for the years ended December 31, 2016, 2015 and 2014 were as follows:
| Pension Benefits |  | OPEB Benefits
| United States |  | France |  | United States
| 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014 |  | 2016 |  | 2015 |  | 2014
Discount rate | 4.40 | % |  | 3.94 | % |  | 4.78 | % |  | 1.12 | % |  | 1.43 | % |  | 1.17 | % |  | 4.29 | % |  | 3.82 | % |  | 4.02 | %
Expected long-term rate of return on plan assets | 5.83 | % |  | 6.06 | % |  | 6.48 | % |  | 3.00 | % |  | 3.00 | % |  | 3.00 | % |  | — | % |  | — | % |  | — | %
Rate of compensation increase | — |  |  | — |  |  | — |  |  | 1.90 | % |  | 1.90 | % |  | 1.90 | % |  | 3.50 | % |  | 3.50 | % |  | 3.50 | %
The Company's investment strategy with respect to its U.S. pension plan assets is to maximize the return on investment of plan assets at an acceptable level of risk and to assure the plans' fiscal health. The target asset allocation varies based on the funded status of the plan in an effort to match the duration of the plan's liabilities to investments in long duration fixed income assets over time. The Company's investments under the French pension plans are primarily invested as directed by governmental authorities, their contracted providers or the participants without direction from the Company. The primary goal of the Company's pension plans is to maintain the highest probability of assuring future benefit payments to participants while providing growth of capital in real terms. To achieve this goal, the investment philosophy is to protect plan assets from large investment losses, particularly over time, while steadily growing the assets in a prudent manner. While there cannot be complete assurance that the objectives will be realized, the Company believes that the likelihood of realizing the objectives are reasonable based upon this investment philosophy. The Company has an investment committee that meets on a periodic basis to review the portfolio returns and to determine asset mix targets. The U.S. and French pension plans' asset target allocations by asset category for 2017 and actual allocations by asset category at December 31, 2016 and 2015 were as follows:
| United States |  | France
| 2017 Target |  | 2016 |  | 2015 |  | 2016 |  | 2015
Asset Category |  |  |  |  |  |  |  |  |
Cash and cash equivalents | 1 | % |  | 1 | % |  | 1 | % |  | 24 | % |  | 12 | %
Equity securities* |  |  |  |  |  |  |  |  |
Domestic large cap | 7 |  |  | 7 |  |  | 7 |  |  | 20 |  |  | 20 |
Domestic small cap | 4 |  |  | 5 |  |  | 4 |  |  | — |  |  | — |
International | 20 |  |  | 20 |  |  | 19 |  |  | — |  |  | — |
Fixed income securities | 68 |  |  | 67 |  |  | 69 |  |  | 54 |  |  | 66 |
Alternative investments** | — |  |  | — |  |  | — |  |  | 2 |  |  | 2 |
Total | 100 | % |  | 100 | % |  | 100 | % |  | 100 | % |  | 100 | %
* | None of the Company's pension plan assets are targeted for investment in SWM stock, except that it is possible that one or more mutual funds held by the plan could hold shares of SWM.
** | Investments in this category under the U.S. pension plan only may include hedge funds, and may include real estate under the French pension plan.
The Company's pension assets are classified according to an established fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurements). A financial instrument's level within the hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The three levels of the fair value hierarchy are described below:
Level 1 | Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2 | Quoted prices in markets that are not considered to be active or financial instruments for which all significant inputs are observable, either directly or indirectly;
Level 3 | Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
The following table sets forth by level, within the fair value hierarchy, the U.S. and French pension plans' assets at fair value as of December 31, 2016 ($ in millions):
| United States |  | France
Plan Asset Category | Total |  | Other* |  | Level 1 |  | Level 2 |  | Level 3 |  | Total |  | Level 1 |  | Level 2
Cash equivalents | $ | 1.2 |  |  | $ | — |  |  | $ | 1.2 |  |  | $ | — |  |  | $ | — |  |  | $ | 1.5 |  |  | $ | 1.5 |  |  | $ | — |
Equity securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Domestic large cap | 8.3 |  |  | 8.3 |  |  | — |  |  | — |  |  | — |  |  | 1.2 |  |  | 1.2 |  |  | — |
Domestic small cap | 5.7 |  |  | 5.7 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
International | 23.7 |  |  | 23.7 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Fixed income securities | 79.9 |  |  | 79.9 |  |  | — |  |  | — |  |  | — |  |  | 3.2 |  |  | — |  |  | 3.2 |
Alternative investments* | 0.1 |  |  | — |  |  | — |  |  | — |  |  | 0.1 |  |  | 0.2 |  |  | — |  |  | 0.2 |
Total | $ | 118.9 |  |  | $ | 117.6 |  |  | $ | 1.2 |  |  | $ | — |  |  | $ | 0.1 |  |  | $ | 6.1 |  |  | $ | 2.7 |  |  | $ | 3.4 |
The following table sets forth by level, within the fair value hierarchy, the U.S. and French pension plans' assets at fair value as of December 31, 2015 ($ in millions):
| United States |  | France
Plan Asset Category | Total |  | Other* |  | Level 1 |  | Level 2 |  | Level 3 |  | Total |  | Level 1 |  | Level 2
Cash equivalents | $ | 1.2 |  |  | $ | — |  |  | $ | 1.2 |  |  | $ | — |  |  | $ | — |  |  | $ | 1.0 |  |  | $ | 1.0 |  |  | $ | — |
Equity securities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Domestic large cap | 8.0 |  |  | 8.0 |  |  | — |  |  | — |  |  | — |  |  | 1.7 |  |  | 1.7 |  |  | — |
Domestic small cap | 5.3 |  |  | 5.3 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
International | 21.6 |  |  | 21.6 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Fixed income securities | 80.3 |  |  | 80.3 |  |  | — |  |  | — |  |  | — |  |  | 5.5 |  |  | — |  |  | 5.5 |
Alternative investments** | 0.3 |  |  | — |  |  | — |  |  | — |  |  | 0.3 |  |  | 0.2 |  |  | — |  |  | 0.2 |
Total | $ | 116.7 |  |  | $ | 115.2 |  |  | $ | 1.2 |  |  | $ | — |  |  | $ | 0.3 |  |  | $ | 8.4 |  |  | $ | 2.7 |  |  | $ | 5.7 |
* | Assets are measured at NAV as a practical expedient and not subject to hierarchy level classification disclosure. Amounts presented for December 31, 2015 have been retrospectively reclassified pursuant to the implementation of ASU 2015-07. For further information see Note 2. Summary of Significant Accounting Policies.
** Alternative investments include ownership interests in shares of registered investment companies. Values for Level 3 assets may be determined through appraisals and models for illiquid assets. The following table shows the changes in Level 3 asset values ($ in millions):
U.S. Level 3 Asset Reconciliation | Alternative Investments Total
Beginning balance, January 1, 2015 | $ | 6.8 |
Realized and unrealized gains | 0.1 |
Purchases | 0.5 |
Sales | (7.1 | )
Ending balance, December 31, 2015 | $ | 0.3 |
Realized and unrealized gains | — |
Purchases | — |
Sales | (0.2 | )
Ending balance, December 31, 2016 | $ | 0.1 |
The Company expects the following estimated undiscounted future pension benefit payments for the United States and France and future postretirement healthcare and life insurance benefit payments for the United States, which are to be made from pension plan and employer assets, net of amounts that will be funded from retiree contributions, and which reflect expected future service, as appropriate ($ in millions):
| United States |  | France
| Pension Benefits |  | Healthcare and Life Insurance Benefits |  | Pension Benefits
2017 | $ | 8.2 |  |  | $ | 0.2 |  |  | $ | 4.6 |
2018 | 8.4 |  |  | 0.1 |  |  | 1.4 |
2019 | 8.4 |  |  | 0.1 |  |  | 2.7 |
2020 | 8.4 |  |  | 0.1 |  |  | 1.2 |
2021 | 8.4 |  |  | 0.1 |  |  | 1.1 |
2022 - 2026 | 40.5 |  |  | 0.3 |  |  | 6.6 |
The Company is not required to contribute during 2017 to its U.S. pension plans although, it may make discretionary contributions dependent on market conditions to remain aligned with its investment policy statement. The Company is required to make a contribution of $1.2 million during 2017 to its French pension plan. Other Foreign Pension Benefits In Brazil, Poland and the United Kingdom, employees are covered under government-administered programs. In Canada, the employee pension benefits are not significant and therefore are not included in the above disclosures. Other Benefits We sponsor a qualified defined contribution plan covering substantially all U.S. employees. Under the plan, the Company matches a portion of employee contributions. The Company's cost under the plan was $2.5 million, $2.5 million and $2.0 million for the years ended December 31, 2016, 2015 and 2014, respectively. The Company provides U.S. executives, certain other key personnel and its directors the opportunity to participate in deferred compensation plans. Participating employees can elect to defer a portion of their salaries and certain other compensation. Participating directors can elect to defer their meeting fees, as a cash deferral, as well as their quarterly retainer fees, as deferred stock unit credits. The Company's liability balance under these deferred compensation plans totaled $15.4 million and $13.3 million at December 31, 2016 and 2015, respectively, which were included in the Consolidated Balance Sheets in other liabilities. In connection with these plans, the Company has a grantor trust into which it has contributed funds toward its future obligations under the various plans (See Note 10. Other Assets). The balance of grantor trust assets totaled $10.3 million and $9.6 million at December 31, 2016 and 2015, respectively, which were included in Other assets in the Consolidated Balance Sheets. These assets are restricted from Company use until all obligations are satisfied. In accordance with French law, certain salaried employees in France may accumulate unused regular vacation and supplemental hours of paid leave that can be credited to an individual's Compte Epargne Temps, or CET. The CET account may grow over an individual's career and the hours accumulated may be withdrawn upon retirement or under other special circumstances at the individual's then current rate of pay. The balance of the Company's liability for this program reflected in the accompanying Consolidated Balance Sheets in Other liabilities was $5.3 million and $6.2 million at December 31, 2016 and 2015, respectively.

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