Employee Benefit Plans

Pension Plans

The Company sponsored a qualified defined-benefit pension plan and a post-retirement benefit plan (collectively, “the Pension Plans”). The Pension Plans were frozen on September 30, 1986 and since then there have been no new entrants to the Pension Plans.

On September 14, 2016, the Board of Directors approved a motion to terminate the Company’s qualified defined-benefit pension plan. The Company expects its pension liabilities will be settled through either lump sum payments or purchased annuities by December 31, 2017. At settlement, the Company expects to recognize a non-cash charge related to unrecognized actuarial losses in AOCI estimated between $17.0 million and $19.0 million. The Company expects to make additional cash contributions of approximately $4.0 million to $6.0 million to settle its pension obligations in 2017. Settling the plan will eliminate cash contributions, lower future expenses and eliminate the risk of rising Pension Benefit Guaranty Corporation (“PBGC”) premiums.

The Company’s defined-benefit pension plan is subject to the Employee Retirement Income Security Act of 1974 (“ERISA”). Under ERISA, the PBGC has the authority to terminate an underfunded pension plan under limited circumstances. In the event the Company’s pension plan is terminated for any reason while it is underfunded, the Company would incur a liability to the PBGC that may be equal to the entire amount of the underfunding. The Company’s post-retirement benefit plan is not subject to ERISA. As a result, the post-retirement benefit plan is not required to be pre-funded, and, accordingly, has no plan assets.

Pension costs and other post-retirement benefit costs charged to operations are estimated on the basis of annual valuations with the assistance of an independent actuary. Adjustments arising from plan amendments, changes in assumptions and experience gains and losses, are amortized over the average future life expectancy of inactive participants for the defined-benefit plan, and the average remaining future service of active employees expected to receive benefits for the post-retirement benefit plan.

The following tables provide a reconciliation of the changes in the Pension Plans’ benefit obligation and fair value of assets, the funded status of the plans and the amounts recognized in the consolidated balance sheets and AOCI as of December 31, 2016 and 2015 (in millions):



	Pension Benefits						Other Post-retirement Benefits
	December 31, 2016			December 31, 2015			December 31, 2016			December 31, 2015
Change in Benefit Obligation:
Obligation at beginning of year	$	37.0		$	43.6		$	3.0		$	3.0
Interest cost	1.2			1.7			0.2			0.1
Actuarial loss (gain)	1.7			(2.0		)	(0.5		)	0.1
Benefit payments	(2.4		)	(2.8		)	(0.1		)	(0.2		)
Group annuity contract discontinuance	—			(1.3		)	—			—
Settlement of accumulated benefits	(2.7		)	(2.2		)	—			—
Benefit obligation at end of year	$	34.8		$	37.0		$	2.6		$	3.0

Change in Plan Assets:
Fair value of plan assets at beginning of year	$	32.3		$	40.4		$	—		$	—
Actual return on plan assets	1.4			(1.8		)	—			—
Employer contributions	1.9			—			0.1			0.2
Benefit payments	(2.4		)	(2.8		)	(0.1		)	(0.2		)
Group annuity contract discontinuance	—			(1.3		)	—			—
Settlement of accumulated benefits	(2.7		)	(2.2		)	—			—
Fair value of plan assets at end of year	$	30.5		$	32.3		$	—		$	—

Funded status at end of year	$	(4.3	)	$	(4.7	)	$	(2.6	)	$	(3.0	)

Amounts recognized in the balance sheet consist of:
Current liabilities	$	(4.3	)	$	—		$	(0.2	)	$	(0.2	)
Non-current liabilities	—			(4.7		)	(2.4		)	(2.8		)
Total liabilities	$	(4.3	)	$	(4.7	)	$	(2.6	)	$	(3.0	)

Amounts recognized in AOCI consist of:
Net actuarial loss (gain)	$	17.7		$	17.5		$	(0.7	)	$	(0.2	)
Total	$	17.7		$	17.5		$	(0.7	)	$	(0.2	)

Additional Information:
Accumulated benefit obligation	$	34.8		$	37.0

During 2016, the underfunded status of the defined-benefit pension plan decreased $0.4 million to $4.3 million, due primarily to a contribution of $1.9 million made to the plan during 2016, return on plan assets of $1.4 million, offset by interest costs of $1.2 million and an actuarial loss of $1.7 million. The actuarial loss of $1.7 million for the year ended December 31, 2016 includes an increase in the plan's Projected Benefit Obligation of $2.0 million pursuant to the Company's decision to terminate the plan, offset by $0.3 million related to favorable demographic experience since the prior year end. The Company offers certain plan participants the option to receive a lump sum payment in lieu of future annuity pension benefits. During 2016, the Company settled accumulated benefits of $2.7 million (pre-tax) for participants who received lump sum payments. The Company incurred settlement charges of $1.3 million during 2016 due to lump sum payments.

The following table provides components of net periodic benefit cost and other changes in plan assets and benefit obligations recognized in other comprehensive income (in millions):



	Pension Benefits									Other Post-retirement Benefits
	December 31,									December 31,
	2016			2015			2014			2016			2015		2014
Net Periodic Benefit Cost:
Interest cost	$	1.2		$	1.7		$	1.8		$	0.2		$	0.1	$	0.1
Expected return on plan assets	(1.8		)	(2.1		)	(2.5		)	—			—		—
Amortization of net actuarial loss (gain)	0.6			0.6			0.4			—			—		(0.1		)
Settlement charge	1.3			1.6			—			—			—		—
Net periodic benefit cost (income)	$	1.3		$	1.8		$	(0.3	)	$	0.2		$	0.1	$	—

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income:
Net actuarial loss (gain)	$	2.1		$	1.9		$	5.2		$	(0.5	)	$	0.2	$	(0.4	)
Settlement charge	(1.3		)	(1.6		)	—			—			—		—
Amortization of actuarial (loss) gain	(0.6		)	(0.6		)	(0.4		)	—			—		0.1
Total net loss (gain) recognized in
other comprehensive income	$	0.2		$	(0.3	)	$	4.8		$	(0.5	)	$	0.2	$	(0.3	)

For both the pension and other post-retirement benefit plans, prior service costs are amortized on a straight-line basis over the average remaining future service of active employees expected to receive benefits under the plans. For the pension benefit plan, gains and losses in excess of 10% of the greater of the benefit obligation and market-related value of assets are amortized over the average future life expectancy of inactive participants. For the post-retirement benefit plan, gains and losses in excess of 10% of the greater of the benefit obligation and market-related value of assets are amortized over the average remaining future service of active employees expected to receive benefits under the plan. The Company uses its fiscal year-end date as the measurement date for the plans. The Company estimated that average future life expectancy is 20.4 years for the pension benefits plan and remaining service life of active participants is 4.6 years for the post-retirement benefits plan.

Assumptions Used:

The following table shows the weighted-average assumptions used in the measurement of:



	Pension Benefits						Other Post-retirement Benefits
	December 31,						December 31,
	2016		2015		2014		2016		2015		2014
Benefit Obligations:
Discount rate	3.30	%	4.32	%	4.00	%	3.98	%	4.32	%	3.99	%
Expected return on assets	3.25	%	6.00	%	5.50	%	N/A		N/A		N/A

Net Periodic Benefit Costs:
Discount rate	4.13	%	4.05	%	4.60	%	4.29	%	3.99	%	4.6	%
Expected return on assets	3.57	%	5.95	%	6.55	%	3.47	%	N/A		N/A

The weighted-average discount rates used to determine the Pension Plans’ obligations and expenses are based on a yield curve methodology, which matches the expected benefits at each duration to the available high quality yields at that duration and calculating an equivalent yield. The net periodic benefit cost was re-measured at September 30, 2016 and December 31, 2016 to reflect settlement accounting due to lump sum payments. During 2016, a discount rate of 4.32% was used from January 1 to September 30, a discount rate of 3.57% was used from October 1 to December 31, and a discount rate of 3.98% was used at December 31. The decrease in discount rate in 2016 compared to 2015 was due to a decrease in bond yields during 2016 and the plan valuation shifting from an ongoing to termination liability basis. The decrease in the expected long-term return on assets assumption in 2016 compared to 2015 was due to shifting to a more conservative asset allocation in 2016.

Assumed health care cost trend rates have an effect on the amounts reported for the post-retirement health care plans. The health care cost trend rates assumed for the end of year benefit obligation for the post-retirement benefit plans are as follows:



	December 31, 2016	December 31, 2015
Assumed current trend rate for next year for participants under 65	6.62%	6.80%
Assumed current trend rate for next year for participants 65 and over	7.73%	7.85%
Ultimate year trend rate	4.50%	5.00%
Year that ultimate trend rate is reached for participants under 65	2025	2024
Year that ultimate trend rate is reached for participants 65 and over	2025	2023

A one percent point change in assumed health care cost trend rates would have the following effects (in millions):



	1% Increase		1% Decrease
Effect on total of service and interest cost components of net periodic post-retirement
health care benefit cost	$	—	$	—
Effect on the health care component of the accumulated post-retirement benefit
obligation	$	0.2	$	0.3

Plan Assets:

During 2016, the Company shifted the target asset allocation to 100% fixed income assets as a result of the Company's decision to terminate the qualified defined-benefit pension plan. The Company’s current target allocations are: 0% cash, 0% equity and 100% fixed income. The Company’s investment target also sets forth the requirement for diversification within asset class, types and classes for investments prohibited and permitted, specific indices to be used for benchmark in investment decisions and criteria for individual securities. The Group Trust is valued at the net asset value provided by the administrator of the fund. The net asset fair value is based on the value of the underlying assets owned by the fund, minus its liabilities, divided by the number of units outstanding. Certain investments that are valued using the net asset value per share have not been classified in the fair value hierarchy and are included in the below tables to permit reconciliation of the fair value hierarchy to the aggregate plan assets.

The fair value measurements of the Pension Plans’ assets by asset category at December 31, 2016 are as follows (in millions):



Asset Category	Total		Investments Measured at Net Asset Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and cash equivalents	$	1.6	$	—	$	1.6	$	—	$	—
Group trust	28.9		28.9		—		—		—
Total	$	30.5	$	28.9	$	1.6	$	—	$	—

The fair value measurements of the Pension Plans’ assets by asset category at December 31, 2015 are as follows (in millions):



Asset Category	Total		Investments Measured at Net Asset Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash and cash equivalents	$	1.0	$	—	$	1.0	$	—	$	—
Group trust	31.3		31.3		—		—		—
Total	$	32.3	$	31.3	$	1.0	$	—	$	—

The Company adopted ASU 2015-07 in 2016 and applied its provisions on a retrospective basis.

During 2015, the Company discontinued its group annuity contract which consisted primarily of investment grade fixed income securities. The Company settled the contract liability for $1.3 million and the excess assets were transferred to the Group Trust, comprised of diversified portfolio of investments across various asset classes, including U.S. and foreign equities and U.S. high yield and investment grade corporate bonds.

Estimated Future Contributions and Benefit Payments

In conjunction with the termination of the Company’s qualified defined-benefit pension plan, the Company expects to make additional cash contributions of approximately $4.0 million to $6.0 million to settle its pension obligations in 2017 and to contribute a minimum of $0.2 million to its other post-retirements benefits plan.

Estimated future benefit payments reflecting future service are as follows (in millions):



Year ending December 31,	Pension Benefits		Other Post-retirement Benefits
2017	$	35.8	$	0.2
2018	—		0.2
2019	—		0.2
2020	—		0.2
2021	—		0.2
2021 through 2025	—		0.9

Expected amortization from AOCI into net periodic benefit cost for the year ending December 31, 2017 (in millions):



	Pension Benefits		Other Post-retirement Benefits
Expected amortization of net actuarial loss	$	0.7	$	(0.1	)

At settlement, the Company expects to recognize a non-cash charge related to unrecognized actuarial losses in accumulated other comprehensive income estimated between $17.0 million and $19.0 million.

Multi-employer Defined Benefit Plan

The Company contributed $0.5 million in the year ended December 31, 2016, $0.4 million in the year ended December 31, 2015, and $0.4 million in the year ended December 31, 2014, respectively, to multi-employer defined benefit plans under the terms of a collective-bargaining agreement that covers its union represented employees.

Savings Plans

The Company maintains defined-contribution plans in the U.S., subject to Section 401(k) of the Internal Revenue Code, and in Canada, subject to the Income Tax Act. For the year ended December 31, 2016, eligible U.S. employees could elect to contribute, on a tax-deferred basis, from 1% to 75% of their compensation to a maximum of $18,000. Eligible U.S. employees over 50 years of age could also contribute an additional $6,000 on a tax-deferred basis. In Canada, employees can elect to contribute up to a maximum of $25,370 Canadian dollars. As of December 31, 2016, the Company matches 50% of U.S. and Canada employee contributions up to 6% of base salary for a total maximum company contribution of 3%. Effective January 1, 2017, the maximum contribution available to employees in Canada increased to $26,010. For the years ended December 31, 2016, 2015 and 2014, the Company made matching payments of $3.9 million, $3.1 million and $3.0 million, respectively.