Employee Benefit Plans

12 Months Ended

Dec. 31, 2019

efined Contribution Plans

We recorded the following contributions to the defined contribution plans (in millions):



	For the Years Ended December 31,
	2019		2018		2017
Contributions to defined contribution plans	$	19.1	$	18.8	$	18.1

Pension and Post-retirement Benefit Plans

Pension Settlement Activity in 2019

On April 3, 2019, we entered into an agreement with Pacific Life Insurance Company to purchase a group annuity contract and transfer $100.0 million of our pension plan assets and $105.6 million of related pension benefit obligations. In the second quarter of 2019, we recognized a $60.6 million pension settlement charge in the Statement of Operations and reclassified $5.6 million of pension benefit obligations to AOCL as a result of this transaction.

On October 15, 2019, we entered into an agreement with Pacific Life Insurance Company to purchase a group annuity contract and transfer $73.5 million of our pension plan assets and $77.9 million of related benefit obligations. In the fourth quarter of 2019, we recognized a $38.6 million pension settlement charge in the Statement of Operations and reclassified $4.4 million of pension benefit obligations to AOCL as a result of this transaction.

Benefit Obligations, Fair Value of Plan Assets, Funded Status, and Balance Sheet Position

The following tables set forth amounts recognized in our financial statements and the plans’ funded status for our pension and post-retirement benefit plans (dollars in millions):



	Pension Benefits
	2019			2018
Accumulated benefit obligation	$	237.3		$	368.0

Changes in projected benefit obligation:
Benefit obligation at beginning of year	$	371.9		$	405.5
Service cost	4.9			5.3
Interest cost	10.2			12.3
Other	—			0.3
Actuarial (gain) loss	38.9			(26.4		)
Effect of exchange rates	1.1			(2.7		)
Settlements	(173.5		)	(1.3		)
Benefits paid	(12.0		)	(21.1		)
Benefit obligation at end of year	$	241.5		$	371.9

Changes in plan assets:
Fair value of plan assets at beginning of year	$	291.0		$	318.6
Actual gain (loss) return on plan assets	45.7			(23.3		)
Employer contributions	1.8			20.6
Effect of exchange rates	1.3			(2.5		)
Plan settlements	(173.5		)	(1.3		)
Benefits paid	(12.0		)	(21.1		)
Fair value of plan assets at end of year	154.3			291.0
Funded status / net amount recognized	$	(87.2	)	$	(80.9	)

Net amount recognized consists of:
Non-current assets	$	3.5		$	3.3
Current liability	(3.3		)	(1.4		)
Non-current liability	(87.4		)	(82.8		)
Net amount recognized	$	(87.2	)	$	(80.9	)

Plans with Benefit Obligations in Excess of Plan Assets



	For the Years Ended December 31,
	2019		2018
Pension plans with a benefit obligation in excess of plan assets:
Projected benefit obligation	$	204.5	$	357.2
Accumulated benefit obligation	200.5		353.4
Fair value of plan assets	113.9		275.0

Net Periodic Benefit Cost

Our U.S.-based pension plans comprised approximately 81% of the projected benefit obligation and 74% of plan assets as of December 31, 2019.



	Pension Benefits
	2019			2018			2017
Components of net periodic benefit cost as of December 31:
Service cost	$	4.9		$	5.3		$	5.0
Interest cost	10.2			12.3			12.6
Expected return on plan assets	(13.4		)	(18.8		)	(21.3		)
Amortization of prior service costs	0.1			0.1			0.2
Recognized actuarial loss	5.6			9.2			8.1
Settlements	99.2			0.4			—
Other	(0.5		)	0.3			0.7
Net periodic benefit cost	$	106.1		$	8.8		$	5.3

Amounts recognized in AOCL and Other Comprehensive Income

The following table sets forth amounts recognized in AOCL and Other comprehensive income (loss) in our financial statements for 2019 and 2018 (in millions):



	Pension Benefits
	2019			2018
Amounts recognized in AOCL:
Prior service costs	$	(0.8	)	$	(0.9	)
Actuarial loss	(101.6		)	(199.4		)
Subtotal	(102.4		)	(200.3		)
Deferred taxes	24.7			49.5
Net amount recognized	$	(77.7	)	$	(150.8	)
Changes recognized in other comprehensive (loss) income:
Current year prior service costs	—			0.3
Current year actuarial (gain) loss	(5.1		)	15.7
Effect of exchange rates	0.5			(1.1		)
Amortization of prior service costs	(0.1		)	(0.1		)
Amortization of actuarial loss, including settlements	(93.1		)	(9.9		)
Total recognized in other comprehensive (loss) income	$	(97.8	)	$	4.9
Total recognized in net periodic benefit cost and other comprehensive income (loss)	$	8.3		$	13.7

The estimated prior service costs and actuarial losses for pension benefits that will be amortized from AOCL in 2020 are $0.2 million and $5.4 million, respectively.

Assumptions

The following tables set forth the weighted-average assumptions used to determine Benefit obligations and Net periodic benefit cost for the U.S.-based plans in 2019 and 2018:



	Pension Benefits
	2019		2018
Weighted-average assumptions used to determine benefit obligations as of December 31:
Discount rate	3.19	%	4.32	%
Rate of compensation increase	4.23	%	4.23	%



	Pension Benefits
	2019		2018		2017
Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31:
Discount rate - service cost	3.96	%	3.48	%	3.96	%
Discount rate - interest cost	3.67	%	3.22	%	3.51	%
Expected long-term return on plan assets	6.50	%	6.50	%	7.50	%
Rate of compensation increase	4.23	%	4.23	%	4.23	%

The following tables set forth the weighted-average assumptions used to determine Benefit obligations and Net periodic benefit cost for the non-U.S.-based plans in 2019 and 2018:



	Pension Benefits
	2019		2018
Weighted-average assumptions used to determine benefit obligations as of December 31:
Discount rate	2.15	%	2.93	%
Rate of compensation increase	3.20	%	3.77	%



	Pension Benefits
	2019		2018		2017
Weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31:
Discount rate - service cost	1.60	%	1.32	%	1.34	%
Discount rate - interest cost	2.98	%	2.67	%	2.75	%
Expected long-term return on plan assets	3.92	%	4.19	%	4.40	%
Rate of compensation increase	3.77	%	3.62	%	3.78	%

To develop the expected long-term rate of return on assets assumption for the U.S. plans, we considered the historical returns for each asset category, as well as the target asset allocation of the pension portfolio and the effect of periodic balancing. These results were adjusted for the payment of reasonable expenses of the plan from plan assets. This resulted in the selection of the 6.50% long-term rate of return on assets assumption. A similar process was followed for the non-U.S.-based plans.

To select a discount rate for the purpose of valuing the plan obligations for the U.S. plans, we performed an analysis in which the projected cash flows from defined benefit and retiree healthcare plans was matched with a yield curve based on the appropriate universe of high-quality corporate bonds that were available. We used the results of the yield curve analysis to select the discount rate for each plan. The analysis was completed separately for each U.S. pension and OPEB plan. A similar process was followed for the non-U.S.-based plans with sufficient corporate bond information. In other countries, the discount rate was selected based on the approximate duration of plan obligations.

Assumed health care cost trend rates have an effect on the amounts reported for our healthcare plan. The following table sets forth the healthcare trend rate assumptions used:



	2019		2018
Assumed health care cost trend rates as of December 31:
Health care cost trend rate assumed for next year	6.50	%	6.50	%
Rate to which the cost rate is assumed to decline (the ultimate trend rate)	5.00	%	5.00	%
Year that the rate reaches the ultimate trend rate	2022		2022

Expected future benefit payments are shown in the table below (in millions):



	For the Years Ended December 31,
	2020		2021		2022		2023		2024		2025-2029
Pension benefits	$	6.0	$	11.5	$	6.2	$	7.0	$	11.7	$	92.6

Composition of Pension Plan Assets

We believe asset returns can be optimized at an acceptable level of risk by adequately diversifying the plan assets between equity and fixed income. In the fourth quarter of 2019, we changed the targeted allocations for our plan assets. The targeted allocation for fixed income and cash investments was changed to 50%, and the targeted allocation for equity investments was changed to 50%. Our targeted exposure to International equity including emerging markets was changed to 6.0% of total assets and our exposure to domestic equity was changed to 44.0%. Our U.S. pension plan represents 74%, our Canadian pension plan 12%, and our United Kingdom (“U.K.”) pension plan 14% of the total fair value of our plan assets as of December 31, 2019.

Our U.S. pension plans’ weighted-average asset allocations as of December 31, 2019 and 2018, by asset category, were as follows:



	Plan Assets as of December 31,
Asset Category:	2019		2018
U.S. equity	44.6	%	24.6	%
International equity	7.3	%	15.5	%
Fixed income	48.0	%	57.2	%
Money market/cash	0.1	%	2.7	%
Total	100.0	%	100.0	%

Our U.S. pension plans’ assets were invested according to the following targets:



Asset Category:	Target
U.S. equity	44.0	%
International equity	6.0	%
Fixed income	50.0	%

Our Canadian pension plans were invested approximately 73% in Canadian bonds and 27% in international equities. Our U.K. pension plan was invested in fixed income securities, including corporate and government bonds.

The fair values of our pension plan assets, by asset category, were as follows (in millions):



	Fair Value Measurements as of December 31, 2019
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Asset Category:
Cash and cash equivalents	$	0.2	$	—	$	—	$	0.2
Commingled pools / Collective Trusts:
U.S. equity ⁽¹⁾	—		50.8		—		50.8
International equity⁽²⁾	—		8.3		—		8.3
Fixed income⁽³⁾	—		54.6		—		54.6
Balanced pension trust:⁽⁴⁾
International equity	—		4.8		—		4.8
Fixed income	—		13.6		—		13.6
Pension fund:
Fixed income⁽⁶⁾	—		22.0		—		22.0
Total	$	0.2	$	154.1	$	—	$	154.3



	Fair Value Measurements as of December 31, 2018
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Asset Category:
Cash and cash equivalents	$	7.2	$	—	$	—	$	7.2
Commingled pools / Collective Trusts:
U.S. equity ⁽¹⁾	—		62.7		—		62.7
International equity⁽²⁾	—		39.5		—		39.5
Fixed income⁽³⁾	—		146.2		—		146.2
Balanced pension trust:⁽⁴⁾
International equity	—		4.0		—		4.0
Fixed income	—		12.0		—		12.0
Pension fund:
International equity⁽⁵⁾	—		2.7		—		2.7
Fixed income⁽⁶⁾	—		8.9		—		8.9
Blend ⁽⁷⁾	—		7.8		—		7.8
Total	$	7.2	$	283.8	$	—	$	291.0

Additional information about assets measured at Net Asset Value (“NAV”) per share (in millions):



	As of December 31, 2019
	Fair Value		Redemption Frequency (if currently eligible)	Redemption Notice Period
Asset Category:
Commingled pools / Collective Trusts:
U.S. equity ⁽¹⁾	$	50.8	Daily	5 days
International equity⁽²⁾	8.3		Daily	5 days
Fixed income⁽³⁾	54.6		Daily	5-15 days
Balanced pension trust:⁽⁴⁾
International equity	4.8		Daily	3-5 days
Fixed income	13.6		Daily	3-5 days
Pension fund:
Fixed income⁽⁶⁾	22.0		Daily	1-3 days
Total	$	154.1



	As of December 31, 2018
	Fair Value		Redemption Frequency (if currently eligible)	Redemption Notice Period
Asset Category:
Commingled pools / Collective Trusts:
U.S. equity ⁽¹⁾	$	62.7	Daily	5 days
International equity⁽²⁾	39.5		Daily	5 days
Fixed income⁽³⁾	146.2		Daily	5-15 days
Balanced pension trust:⁽⁴⁾
International equity	4.0		Daily	3-5 days
Fixed income	12.0		Daily	3-5 days
Pension fund:
International equity⁽⁵⁾	2.7		Daily	1-3 days
Fixed income⁽⁶⁾	8.9		Daily	1-3 days
Blend ⁽⁷⁾	7.8		Daily	1-3 days
Total	$	283.8



⁽¹⁾	This category includes investments primarily in U.S. equity securities that include large, mid and small capitalization companies.
⁽²⁾	This category includes investments primarily in international equity securities that include large, mid and small capitalization companies in large developed markets as well as emerging markets equities.
⁽³⁾	This category includes investments in U.S. investment grade and high yield fixed income securities, international fixed income securities and emerging markets fixed income securities.
⁽⁴⁾	The investment objectives of the plan are to provide long-term capital growth and income by investing primarily in a well-diversified, balanced portfolio of Canadian common stocks, bonds and money market securities. The plan also holds a portion of its assets in international equities, a portion of which may be invested in U.S. securities.
⁽⁵⁾	This category includes investments in international equity securities, a portion of which may be invested in U.S. securities and aims to provide returns consistent with the markets in which it invests and provide broad exposure to countries around the world.
⁽⁶⁾	This category includes investments in U.K. government index-linked securities (index-linked gilts) that have maturity periods of 5 years or longer with a derivatives overlay and investment grade corporate bonds denominated in sterling.
⁽⁷⁾	This category includes investments in pooled funds where the fund manager has discretion for the asset allocation and can invest in a wide range of international and US asset classes including equity, credit markets, sovereign debt and alternative assets (including derivative-based strategies).

The majority of our commingled pool/collective trusts, mutual funds, balanced pension trusts and pension funds are managed by professional investment advisors. The NAVs per share are furnished in monthly and/or quarterly statements received from the investment advisors and reflect valuations based upon their pricing policies. We assessed the fair value classification of these investments as Level 2 for commingled pool/collective trusts, balanced pension trusts and pension funds based on an examination of their pricing policies and the related controls and procedures. The fair values we report are based on the pool, trust or fund’s NAV per share. The NAVs per share are calculated periodically (daily or no less than one time per month) as the aggregate value of each pool or trust’s underlying assets divided by the number of units owned. See Note 17 for information about our fair value hierarchies and valuation techniques.