Employee Benefit Plans

The Company maintains a number of defined benefit and defined contribution plans to provide retirement benefits for employees. These plans are maintained and contributions are made in accordance with the Employee Retirement Income Security Act of 1974 (“ERISA”), local

Note M—Employee Benefit Plans (Continued)

statutory law, or as determined by the Board of Directors. The plans generally provide benefits based upon years of service and compensation. Pension plans are funded except for a U.S. non-qualified pension plan for certain key employees and certain foreign plans. The Company uses a November 30 measurement date for its plans.

Prior to 2016, the Company used a single weighted-average discount rate approach to develop the interest and service cost components of the net periodic benefit costs for its U.S. benefit plans. This method represented the constant annual rate that would be required to discount all future benefit payments related to past service from the date of expected future payment to the measurement date such that the aggregate present value equals the obligation. Effective in 2016, the Company adopted certain amendments to alter the method previously used. The new method was used for determining 2016 benefit expense for its U.S. plans. The Company utilizes an approach that discounts the individual expected cash flows underlying interest and service costs using the applicable spot rates derived from the yield curve used to determine the benefit obligation to the relevant projected cash flows. The change in method resulted in a decrease in the service and interest components for benefit cost in 2016. The spot rates used to determine service and interest costs for 2016 expense ranged from 1.14% to 5.07%. The ultimate spot rate used to discount cash flows beyond 30 years was 4.68% for 2016. The spot rates used to determine service and interest costs for 2017 expense ranged from 1.35% to 5.07%. The ultimate spot rate used to discount cash flows beyond 30 years was 5.07% for 2017. The Company accounted for this action as a change in estimate and accordingly accounted for it on a prospective basis.

The use of disaggregated discount rates results in a different amount of Interest Cost compared to the traditional single weighted-average discount rate approach because of different weightings given to each subset of payments. The use of disaggregated discount rates affects the amount of Service Cost because the benefit payments associated with new service credits for active employees tend to be of longer duration than the overall benefit payments associated with the plan’s benefit obligation. As a result, the payments would be associated with longer-term spot rates on the yield curve, resulting in lower present values than the calculations using the traditional single weighted-average discount rate.

Defined Benefit Plans

The Company’s defined benefits plans generally provide benefits based on years of service and compensation for salaried employees and under negotiated non-wage based formulas for union-represented employees.

Changes in benefit obligations and plan assets are as follows:



	2016			2015
	(Dollars in millions)
Change in Benefit Obligation
Benefit obligation at beginning of year	$	282.5		$	333.8
Service cost	1.8			1.4
Interest cost	9.6			12.9
Curtailments	—			(.5		)
Actuarial loss (gain)	7.7			(34.7		)
Settlement	(.6		)	(.2		)
Benefits paid net of retiree contributions	(20.3		)	(28.2		)
Exchange rate changes	.1			(2.0		)
Benefit Obligation at End of Year	$	280.8		$	282.5

Change in Plan Assets
Fair value of plan assets at beginning of year	$	197.1		$	221.8
Actual return on assets	13.6			(2.2		)
Employer contributions	6.9			5.7
Settlement	(.2		)	—
Benefits and expenses paid net of retiree contributions	(20.3		)	(28.2		)
Fair Value of Plan Assets at End of Year	$	197.1		$	197.1
Funded Status at November 30	$	(83.7	)	$	(85.4	)
Amounts Recognized in the Consolidated Balance Sheets
Current liability	$	(1.4	)	$	(.5	)
Non-current liability	(82.3		)	(84.9		)
Net Amount Recognized	$	(83.7	)	$	(85.4	)

As of November 30, 2016 and 2015, the amounts included in Accumulated Other Comprehensive Loss that have not yet been recognized in net periodic benefit cost consist of:

Note M—Employee Benefit Plans (Continued)



	2016			2015
	(Dollars in millions)
Net actuarial loss	$	(141.5	)	$	(139.5	)
Prior service credits	$	.1		$	.1

The after-tax amount of unrecognized net actuarial loss at November 30, 2016 was $126.6 million. The estimated net loss for defined benefit plans that will be amortized from Accumulated Other Comprehensive Loss during 2017 is $4.9 million.

Net Periodic Benefit Cost



	2016			2015			2014
	(Dollars in millions)
Net Periodic Benefit Cost
Service costs for benefits earned	$	1.8		$	1.4		$	1.5
Interest costs on benefit obligation	9.6			12.9			13.1
Assumed return on plan assets	(15.3		)	(15.7		)	(14.9		)
Amortization of net loss	4.6			5.4			3.9
Curtailment (gain) loss	(0.1		)	(.4		)	—
Total	$	0.6		$	3.6		$	3.6

The Company made $6.2 million and $5.7 million in contributions to its plans during 2016 and 2015, respectively. The Company anticipates that it will be required to make a contribution to its pension plans of $7.4 million in 2017. The Company anticipates pension expense to be approximately $1.6 million in 2017.

Future service benefits are frozen for all participants under the Company's U.S. defined benefit plan. All benefits earned by affected employees through the effective dates of the freezes have become fully vested with the affected employees eligible to receive benefits upon retirement, as described in the Plan document.

Estimated future benefit payments to retirees from the Company's pension plans are as follows: 2017 - $17.7 million, 2018 - $16.9 million, 2019 - $17.3 million, 2020 - $17.7 million, 2021 - $17.6 million, and thereafter $91.1 million.

Information regarding pension plans with accumulated benefit obligations in excess of plan assets is as follows:



	2016		2015
	(Dollars in millions)
U.S. Pension Plans
Projected benefit obligation	$	270.0	$	271.2
Accumulated benefit obligation	$	270.0	$	271.2
Fair value of plan assets	$	196.4	$	196.1
Non-U.S. Pension Plans
Projected benefit obligation	$	10.8	$	11.3
Accumulated benefit obligation	$	7.5	$	8.1
Fair value of plan assets	$	.7	$	1.0

Assumptions

Weighted average assumptions used to measure the benefit obligation for the Company’s defined benefit plans as of November 30, 2016 and 2015 were as follows:



	Pension Plans
	2016		2015
Weighted Average Assumptions
Discount rate used for liability determination	4.12	%	4.29	%
Annual rates of salary increase (non-U.S. plans)	3.44	%	3.77	%

Weighted average assumptions used to measure the net periodic benefit cost for the Company’s defined benefit plans as of November 30, 2016, 2015, and 2014 were as follows:

Note M—Employee Benefit Plans (Continued)



	Pension Plans
	2016		2015		2014
Weighted Average Assumptions
Discount rate used for expense determination	4.29	%	4.01	%	4.74	%
Assumed long-term rate of return on plan assets	7.70	%	7.75	%	7.75	%
Annual rates of salary increase (non-U.S. plans)	3.77	%	3.67	%	3.56	%

The discount rate used for the liability measurement reflects the current rate at which the pension liabilities could be effectively settled at the end of the year. The discount rate used spot rates on a yield curve matching benefit payments to determine the weighted average discount rate that would be applied in determining the benefit obligation at November 30, 2016. The increase in the discount rate used in 2016 is due to higher yields on investments used in establishing the yield curve as compared to the prior year. The assumed long-term rate of return on plan assets

assumption is based on the weighted average expected return of the various asset classes in the plans’ portfolios. The asset class return is developed using historical asset return performance, as well as current market conditions, such as inflation, interest rates, and equity market performance. The rate of compensation increase is based on management's estimates using historical experience and expected increases in rates.

During 2016, the Company continued to use the Mercer modified version (MRP - 2007) of the Society of Actuaries’ (SOA) RP-2014 mortality table for the pre-retirement mortality base table. The Company also continued to use the Mercer Industry Longevity Experience Study (MILES) table for the Chemical, Oil & Gas and Utilities industry for Performance Chemical plan participants and the Consumer Goods and Food & Drink industry for Engineered Surfaces plan participants for the post-retirement morality base table. The Company chose to update the projection scale (used for both pre and post retirement) with an updated modified generational projection scale of MMP-2016. The MMP-2016 scale takes into account the historical grade-down of mortality improvements and relies on the Social Security Administration improvement data through 2013 (published in 2016) and reflects long-term rate of improvement based on historical experience and the Company’s view of those trends. Due to the change in the mortality projection scale in 2016, the Company recognized an actuarial gain of approximately $1.6 million and a decrease in its projected benefit obligation. Due to the change in the mortality tables in 2015, the Company recognized an actuarial gain of approximately $18.0 million and a decrease in its projected benefit obligation in 2015.

Pension Plans Assets

The Company’s defined benefit plans are funded primarily through asset trusts or through general assets of the Company. The Company employs a total return on investments approach for its U.S. defined benefit pension plan assets. A mix of equity securities, fixed income securities, and alternative investments are used to maximize the long-term rate of return on assets for the level of acceptable risk. Asset allocation at November 30, 2016, target allocation for 2016, and expected long-term rate of return by asset category are as follows:



Asset Category	Target Allocation		Percentage of Plan Assets At November 30,				Weighted-Average Expected Long-Term Rate Of Return
Asset Category	2016		2016		2015		Weighted-Average Expected Long-Term Rate Of Return
Equity securities	58	%	54	%	49	%	4.80	%
Fixed income securities	18	%	16	%	18	%	.90	%
Real estate investments	10	%	11	%	12	%	.80	%
Other	14	%	19	%	21	%	1.20	%
Total	100	%	100	%	100	%	7.70	%

Included in Other are hedge funds and short-term money market funds.

Note M—Employee Benefit Plans (Continued)

The following tables set forth, by level within the fair value hierarchy, the U.S. defined benefit plans’ assets at November 30, 2016 and November 30, 2015:



	Total		Level 1		Level 2		Level 3
2016			(Dollars in millions)
Money market funds	$	.1	$	.1	$	—	$	—
Registered investment companies:
Equity mutual funds	105.0		105.0		—		—
Fixed income mutual funds	30.9		30.9		—		—
Total registered investment companies	135.9		135.9		—		—
Real estate partnerships	0.3		—		—		0.3
	$	136.3	$	136.0	$	—	$	0.3
Collective trust funds:
Core property collective	21.8
Structured credit collective	26.9
Energy debt collective	11.4
Total collective trust funds measured at NAV	60.1
	$	196.4

2015
Money market funds	$	.1	$	.1	$	—	$	—
Registered investment companies:
Equity mutual funds	105.2		105.2		—		—
Fixed income mutual funds	34.2		34.2		—		—
Total registered investment companies	139.5		139.4		—		—
Real estate partnerships	1.5		—		—		1.5
	$	141.0	$	139.5	$	—	$	1.5
Collective trust funds:
Collateralized loan obligations	55.1
Total collective trust funds measured at NAV	55.1
	$	196.1

Money market funds are valued at a net asset value (NAV) of $1.00 per share held by the plan at year end, which approximates fair value.

Registered investment companies are valued at quoted market prices.

The fair value of the participation units owned by the Plan in the collective trust funds are based on the NAV of participating units held by the Plan.

Investments in real estate partnerships are valued at the fair value of the underlying assets based on comparable sales value for similar assets, discounted cash flow models, appraisals, and other valuation techniques.

The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

A reconciliation of the beginning and ending Level 3 measurements is as follows:



	Real Estate Partnerships

Beginning balance, December 1, 2014	$	4.5
Redemptions	(2.9		)
Unrealized net gains or losses included in funded status	(.1		)
Ending balance, November 30, 2015	$	1.5
Redemptions	(1.0		)
Unrealized net gains or losses included in funded status	(.2		)
Ending balance, November 30, 2016	$	0.3

Note M—Employee Benefit Plans (Continued)

For Level 3 investments in the Company's U.S. defined benefit plan, the Benefits Management Committee, which is comprised of certain executives of the Company, uses third party services as the primary basis for valuation of these investments. The third party services do not provide access to valuation models, inputs, and assumptions. Accordingly, the Benefits Management Committee conducts a review of a variety of factors including internal controls reports and financial statements of the investment, economic conditions, industry and market developments, and overall credit ratings, as well as utilizing a vendor review of the fund in assessing the propriety of the estimated fair value.

The following table summarizes the quantitative inputs and assumptions used for items categorized as recurring Level 3 assets not reported at a NAV as of November 30, 2016 and 2015.



Financial Assets	2016 Fair Value	2015 Fair Value	Valuation Techniques	Unobservable Inputs	Ranges
	(Dollars in Millions)
Real estate partnerships (not reported at NAV)	$.3	$1.6	Discounted cash flow analysis	Discount rate	6.75% - 13.0%
				Exit capitalization rate	6.43% - 10.0%
				DCF term (years)	10 - 12
	—	—	Appraisals	Comparable sales	N/A
	$.3	$1.6

The following table sets forth a summary of the Plan’s investments with a reported NAV, which is a practical expedient to estimating fair value, as of November 30, 2016 and 2015.



	November 30,
(dollars in millions)	2016 Fair Value		2015 Fair Value
SEI Structured Credit Collective Fund^(a)	$	26.9	$	22.2
Energy Debt Collective Investment Trust^(b)	$	11.4	$	9.7
Core Property Collective Investment Trust^(c)	$	21.8	$	23.1

(a)

The SEI Structured Credit Collective Fund seeks to provide high general returns by investing in collateralized debt obligations (“CDO’s”) and other structured credit instruments. The SEI Structured Credit Collective Fund requires a two-year non-redemption period after which investments can be redeemed at any time; however, a 90 day redemption notification period is required. The Plan has satisfied all funding obligations related to this investment and has surpassed the two-year non-redemption period.

(b)

The SEI Energy Debt Collective Funds seeks to generate high total returns by primarily investing in debt securities of U.S. and international energy companies denominated in U.S. dollars. The Fund will invest in investment grade bonds, below investment grade bonds, loans, rights issues, or equities of U.S. companies. Equity investments will be limited. In most cases, equity investments will be attached to a debt investment for extending credit or if received in a restructuring, though the Sub-Adviser is permitted to add-on to an existing equity position through a secondary market transaction.

(c)

The SEI Core Property Fund, (the "Fund") seeks both current income and long-term capital appreciation through investing in underlying funds that acquire, manage, and dispose of commercial real estate properties. The Fund expects to invest at least 85% of its assets in open-end core underlying funds focused on properties in the U.S. with "core" meaning high-quality, low-leveraged, income-generating office, industrial, retail, and multi-family properties, generally fully-leased to credit-worthy companies and governmental entities. Up to 5% of the Fund's net assets may be invested in liquid real estate strategies (publicly-traded REITs) for cash management purposes and the fund may have up to a 15% allocation to non-core sectors and strategies.

Defined Contribution Plans

The Company also sponsors a defined contribution 401(k) plan. Participation in this plan is available to substantially all U.S. salaried employees and to certain groups of U.S. hourly employees. Company contributions to this plan are based on either a percentage of employee contributions or on a specified amount per hour based on the provisions of the applicable collective bargaining agreement. Contribution expense to this plan was approximately $2.5 million in 2016, $2.4 million in 2015, and $2.8 million in 2014. The defined contribution 401(k) plan contained approximately 0.9 million shares at November 30, 2016 and 1.1 million shares at November 30, 2015 of the Company’s common stock.

Health Care Plans

The Company provides retiree medical plans for certain retired U.S. employees of which there were 64 retired participants as of November 30, 2016. The plan is frozen to all new participants. The plans generally provide for cost sharing in the form of retiree contributions, deductibles, and coinsurance between the Company and its retirees, and a fixed cost cap on the amount the Company pays annually to provide future retiree medical coverage. These post-retirement benefits are unfunded and are accrued by the date the employee becomes eligible for benefits. Retirees in certain other countries are provided similar benefits by plans sponsored by local governments.

Because the Company’s retiree health care benefits are capped, assumed health care cost trend rates have a minimal effect on the amounts reported for the retiree health care plans. A one-percentage point increase/decrease in assumed health care cost trend rates would not significantly increase or decrease the benefit obligation at November 30, 2016 and would have no effect on the aggregate of the service and interest components of the net periodic cost.

Note M—Employee Benefit Plans (Continued)

Changes in benefit obligations are as follows:



	2016			2015
	(Dollars in millions)
Change in Benefit Obligation
Benefit obligation at beginning of year	$	7.6		$	7.1
Interest cost	.2			.3
Actuarial (gain) loss	(.3		)	.8
Benefits paid net of retiree contributions	(.6		)	(.6		)
Benefit Obligation at End of Year	$	6.9		$	7.6
Change in Plan Assets
Fair value of plan assets at beginning of year	$	—		$	—
Employer contributions	.6			.6
Benefits and expenses paid, net of retiree contributions	(.6		)	(.6		)
Fair Value of Plan Assets at End of Year	$	—		$	—
Funded Status at November 30	$	(6.9	)	$	(7.6	)
Amounts Recognized in the Consolidated Balance Sheets
Current liability	$	(.6	)	$	(.7	)
Non-current liability	(6.3		)	(6.9		)
Net Amount Recognized	$	(6.9	)	$	(7.6	)

As of November 30, 2016 and 2015, the amounts included in Accumulated Other Comprehensive Income (Loss) that have not been recognized in net periodic benefit cost consist of:



	2016		2015
	(Dollars in millions)
Net actuarial gain	$	12.5	$	13.2
Prior service credit	$	—	$	—



Net Periodic Benefit Cost	2016			2015			2014
	(Dollars in millions)
Net Periodic Benefit Cost (Income)
Interest costs on benefit obligation		$.2			$.3		$	.3
Amortization of prior service credits	—			(.1		)	(.3		)
Amortization of net gain	(1.0		)	(1.2		)	(1.4		)
Total	$	(0.8	)	$	(1.0	)	$	(1.4	)

Estimated future benefit payments and Medicare Part D subsidies for the retiree health care plans are as follows:



	Benefit Payments

2017	$	.6
2018	.6
2019	.6
2020	.6
2021	.6
2022-2026	2.4

The Company expects to record non-cash retiree medical health care reduction of expenses of approximately $0.8 million in 2017.

The estimated net actuarial gain for retiree medical plans that will be amortized from Accumulated Other Comprehensive Loss during 2017 is $1.0 million.

Note M—Employee Benefit Plans (Continued)

Assumptions



	2016		2015		2014
Weighted Average Assumptions
Discount rate used for liability determination	4.00	%	4.15	%	3.85	%
Discount rate used for expense determination	4.15	%	3.85	%	4.39	%
Current trend rate for health care costs	8.00	%	8.50	%	7.40	%
Ultimate trend rate for health care costs	4.50	%	4.50	%	4.50	%
Year reached	2037		2037		2028

The discount rate reflects the current rate at which the retiree medical liabilities could be effectively settled at the end of the year. The discount rate used spot rates on a yield curve matching benefit payments to determine the weighted average discount rate that would be applied in determining the benefit obligation at November 30, 2016.