Retirement Benefits

The Company sponsors pension and other postretirement benefit plans for certain employees. Most of the Company’s employees are accumulating retirement income benefits through defined contribution plans. However, the Company sponsors frozen pension plans for certain salaried participants and ongoing pension benefits for certain employees represented by collective bargaining. These plans provide for monthly pension payments to eligible employees upon retirement. Pension benefits for salaried employees generally are based on years of frozen credited service and average earnings. Pension benefits for hourly employees generally are based on specified benefit amounts and years of service. The Company’s policy is to fund its pension obligations in conformity with the funding requirements under applicable laws and governmental regulations. Other postretirement benefits consist of retiree medical plans that cover a portion of employees in the United States that meet certain age and service requirements.

Net periodic benefit costs recorded on a quarterly basis are primarily comprised of service and interest cost, amortization of unrecognized prior service cost and the expected return on plan assets. The service cost component of net periodic benefit cost is presented within Cost of sales and Selling, general and administrative expenses in the statements of operations while the other components of net periodic benefit cost are presented within Other expense (income), net.

The Company recognizes the net actuarial gains or losses in excess of the corridor in operating results during the fourth quarter of each fiscal year (or upon any required re-measurement event). The corridor is 10% of the greater of the projected benefit obligation or the fair value of the plan assets. In connection with this accounting policy, the Company recognized a non-cash actuarial gains of $0.4 million, $3.3 million, and $2.6 million, during the fiscal years ended March 31, 2019, 2018 and 2017, respectively. These gains are recorded within Other expense (income), net in the consolidated statements of operations.

During the fourth quarter of fiscal 2019, the Company offered participants in the Cambridge defined benefit plan the opportunity to receive a lump sum settlement as part of the termination process for that plan. Acceptance of the offer by a participant was completely voluntary, and if accepted, participants could elect to receive the settlement in the form of a single lump sum payment or monthly annuity beginning in first quarter of fiscal 2020. The election period for this voluntary offer closed on March 15, 2019. During the first quarter of 2020, the Company will perform an off-cycle re-measurement of the Cambridge plan assets and benefit obligations that will result in the immediate recognition in that quarter of unrecognized non-cash actuarial gains/losses associated with the plan. The Company expects the Cambridge plan to be closed by the end of fiscal 2020.

As of December 31, 2017, the Company merged three of its U.S. defined benefit plans into a single plan, thereby also merging all of the plans' assets. The merger of the three plans was a non-substantive change with no changes to the benefit formulas, vesting provisions, or employees covered by the plans. Accordingly, the Company determined an off-cycle remeasurement of the plans assets and benefit obligations was not required.

The components of net periodic benefit cost reported in the consolidated statements of operations are as follows (in millions):



	Year Ended
	March 31, 2019			March 31, 2018			March 31, 2017
Pension Benefits:
Service cost	$	0.5		$	1.0		$	1.8
Interest cost	23.6			24.3			25.6
Expected return on plan assets	(24.8		)	(26.7		)	(27.1		)
Amortization of:
Prior service cost	—			—			0.1
Benefit cost (income) associated with special events:
Curtailment (1)	—			(0.3		)	(1.4		)
Contractual termination benefits (2)	—			—			2.2
Settlement (3)	0.6			—			—
Recognition of actuarial losses (gains)	0.7			(1.1		)	—
Net periodic benefit cost (income)	$	0.6		$	(2.8	)	$	1.2
Other Postretirement Benefits:
Service cost	$	—		$	—		$	0.1
Interest cost	0.8			1.0			1.1
Amortization:
Prior service credit	(1.5		)	(1.9		)	(2.0		)
Benefit cost associated with special events:
Curtailment (1)	—			—			0.4
Recognition of actuarial gains	(1.7		)	(1.9		)	(1.6		)
Net periodic benefit income	$	(2.4	)	$	(2.8	)	$	(2.0	)

______________________

(1)

During fiscal 2018 and 2017, certain active participants of a foreign pension plan were transferred out of the pension plan and placed into a defined contribution plan, resulting in a curtailment gain of $0.3 million and $1.4 million, respectively. In addition, during fiscal 2017 the Company also recognized a curtailment loss of $0.4 million associated with a postretirement benefit plan resulting from the closure of a U.S. manufacturing facility. The recognition of the non-cash net curtailment gain of $0.3 million and $1.0 million is recorded within Other expense (income), net in the consolidated statements of operations for the fiscal years ended March 31, 2018 and 2017, respectively.

(2)

(During fiscal 2017, the Company recognized incremental expense of $2.2 million of termination benefits associated with incremental benefits participants of the Company’s domestic union defined benefit plans will receive following the Company’s decision to close one of its U.S. manufacturing facilities. The contractual termination benefit is recorded within Restructuring and other similar charges in the fiscal 2017 consolidated statements of operations.

(3)

During the fourth quarter of fiscal 2019, the Company settled the benefits of a Canadian defined benefit pension plan through either a lump-sum transfer or the purchase of an annuity from an insurance company. As a result of the settlement, the Company performed a re-measurement of the plan assets and benefit obligations for the pension plan as at March 31, 2019, which resulted in the immediate recognition of a $0.6 million non-cash actuarial loss, which is recorded within Other expense (income), net in the fiscal 2019 consolidated statements of operations. There will be no impact from this event in fiscal periods following March 31, 2019.

In fiscal 2019, the recognition of $0.4 million of non-cash actuarial gains was primarily due to the foreign plan settlement described above, offset by improved demographic and claims experience associated with the Company’s other postretirement benefit plans. In fiscal 2018, the recognition of $3.3 million of non-cash actuarial gains was primarily due to the foreign pension plan change described above, as well as improved demographic and claims experience associated with the Company’s other postretirement benefit plans. In fiscal 2017, the recognition of $2.6 million of non-cash actuarial gains was primarily associated with the net curtailment gain described above and improved demographic and claims experience associated with the Company’s other postretirement benefit plans.

The Company made contributions to its U.S. qualified pension plan trusts of $1.3 million, $2.9 million, and $4.9 million during the years ended March 31, 2019, 2018 and 2017, respectively.

The status of the plans is summarized as follows (in millions):



	Pension Benefits						Other Postretirement Benefits
	Year Ended March 31, 2019			Year Ended March 31, 2018			Year Ended March 31, 2019			Year Ended March 31, 2018
Benefit obligation at beginning of period	$	(652.5	)	$	(659.3	)	$	(21.5	)	$	(25.7	)
Service cost	(0.5		)	(1.0		)	—			—
Interest cost	(23.6		)	(24.3		)	(0.8		)	(1.0		)
Actuarial gains	1.7			7.1			2.5			2.8
Benefits paid	40.7			40.8			1.9			3.0
Plan participant contributions	—			(0.1		)	(0.5		)	(0.6		)
Acquisitions (1)	—			(6.3		)	—			—
Curtailments	—			0.3			—			—
Settlements	3.2			—			—			—
Translation and other adjustments	7.2			(9.7		)	1.5			—
Benefit obligation at end of period	$	(623.8	)	$	(652.5	)	$	(16.9	)	$	(21.5	)
Plan assets at the beginning of the period	$	507.4		$	513.0		$	—		$	—
Actual return on plan assets	15.8			23.6			—			—
Contributions	4.0			5.5			2.5			3.0
Benefits paid	(40.7		)	(40.8		)	(2.5		)	(3.0		)
Acquisitions (1)	—			2.3			—			—
Settlements	(3.4		)	—			—			—
Translation adjustment	(2.9		)	3.8			—			—
Plan assets at end of period	$	480.2		$	507.4		$	—		$	—
Funded status of plans	$	(143.6	)	$	(145.1	)	$	(16.9	)	$	(21.5	)
Net amount on Consolidated Balance Sheets consists of:
Non-current assets	$	0.8		$	0.6		$	—		$	—
Current liabilities	(1.7		)	(1.9		)	(1.6		)	(2.1		)
Long-term liabilities	(142.7		)	(143.8		)	(15.3		)	(19.4		)
Total net funded status	$	(143.6	)	$	(145.1	)	$	(16.9	)	$	(21.5	)

______________________


(1)	Includes the acquisition of Centa during fiscal 2018. See Note 3, Acquisitions for additional information.

As of March 31, 2019, the Company had pension plans with a combined projected benefit obligation of $623.8 million compared to plan assets of $480.2 million, resulting in an under-funded status of $143.6 million compared to an under-funded status of $145.1 million at March 31, 2018. The Company’s funded status has improved year over year primarily due to increased funding coupled with actuarial gains resulting from a shorter life expectancy assumption, partially offset by actuarial losses due to lower interest rates and less favorable asset return. Any further changes in the assumptions underlying the Company’s pension values, including those that arise as a result of declines in equity markets and changes in interest rates, could result in increased pension obligation and pension cost which could negatively affect the Company’s consolidated financial position and results of operations in future periods.

Amounts included in accumulated other comprehensive loss (income), net of tax, related to defined benefit plans at March 31, 2019 and 2018 consist of the following (in millions):



	As of March 31, 2019
	Pension Benefits			Postretirement Benefits			Total
Unrecognized prior service credit	$	(0.1	)	$	(1.4	)	$	(1.5	)
Unrecognized actuarial loss (gain)	52.6			(1.7		)	50.9
Accumulated other comprehensive loss (income), gross	52.5			(3.1		)	49.4
Deferred income tax (benefit) provision	(12.9		)	0.8			(12.1		)
Accumulated other comprehensive loss (income), net	$	39.6		$	(2.3	)	$	37.3



	As of March 31, 2018
	Pension Benefits			Postretirement Benefits			Total
Unrecognized prior service credit	$	(0.2	)	$	(1.2	)	$	(1.4	)
Unrecognized actuarial loss (gain)	46.2			(1.7		)	44.5
Accumulated other comprehensive loss (income), gross	46.0			(2.9		)	43.1
Deferred income tax (benefit) provision	(15.9		)	1.0			(14.9		)
Accumulated other comprehensive loss (income), net	$	30.1		$	(1.9	)	$	28.2

The Company expects to recognize zero and $(0.3) million of prior service costs (credits) included in accumulated other comprehensive (loss) income for pension benefits and other postretirement benefits, respectively, as components of net periodic benefit cost during the next fiscal year.

The following table presents significant assumptions used to determine benefit obligations and net periodic benefit cost (income) in weighted-average percentages:



	Pension Benefits						Other Postretirement Benefits
	March 31, 2019		March 31, 2018		March 31, 2017		March 31, 2019		March 31, 2018		March 31, 2017
Benefit Obligations:
Discount rate	3.7	%	3.7	%	3.9	%	3.9	%	4.0	%	4.0	%
Rate of compensation increase	2.9	%	2.9	%	3.0	%	n/a		n/a		n/a
Net Periodic Benefit Cost:
Discount rate	3.7	%	3.9	%	3.8	%	4.0	%	4.0	%	3.9	%
Rate of compensation increase	2.9	%	3.0	%	3.0	%	n/a		n/a		n/a
Expected return on plan assets	5.1	%	5.3	%	5.3	%	n/a		n/a		n/a

In evaluating the expected return on plan assets, consideration was given to historical long-term rates of return on plan assets and input from the Company’s pension fund consultant on asset class return expectations, long-term inflation and current market conditions. The following table presents the Company’s target investment allocations for the year ended March 31, 2019 and actual investment allocations at March 31, 2019 and 2018.



	Plan Assets
	2019			2018
	Investment Policy (1)	Target Allocation (2)	Actual Allocation	Actual Allocation
Equity securities	20% - 30%	28%	26%	28%
Debt securities (including cash and cash equivalents)	55% - 80%	64%	64%	65%
Other	0% - 10%	9%	10%	7%

______________________


(1)	The investment policy allocation represents the guidelines of the Company's pension plans based on the changes in the plans funded status.


(2)	The target allocations represent the weighted average target allocations for the Company's pension plans.

The Company's defined benefit pension utilizes a dynamic liability driven investment ("LDI") strategy. The objective is to more closely align the pension plan assets with its liabilities in terms of how both respond to interest rate changes. The plan assets are allocated into two investment categories: (i) LDI, comprised of high quality, investment grade fixed income securities and (ii) return seeking, comprised of traditional securities and alternative asset classes. All assets are managed externally according to guidelines established individually with investment managers and the Company's investment consultant. The Company periodically undertakes asset and liability modeling studies to determine the appropriateness of the investments. The Company intends to continuously reduce the assets allocated to the return seeking category, thereby increasing the assets allocated to the LDI category based on the overall improvement in the plan funded status. No equity securities of the Company are held in the portfolio.

The fair values of the Company’s pension plan assets for both the U.S and non-U.S. plans at March 31, 2019 and 2018, by asset category are included in the table below (in millions). For additional information on the fair value hierarchy and the inputs used to measure fair value, see Note 13, Fair Value Measurements.



	As of March 31, 2019
	Quoted Prices in Active Market (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Assets measured at net asset value (1)		Total
Cash and cash equivalents	$	20.2	$	—	$	—	$	—	$	20.2
Investment funds
Fixed income funds (2)	—		—		—		304.6		304.6
U.S. equity funds (3)	—		—		—		54.3		54.3
International equity funds (3)	—		—		—		33.4		33.4
Balanced funds (3)	—		—		—		6.4		6.4
Alternative investment funds (4)	—		—		—		31.4		31.4
Insurance contracts	—		—		29.9		—		29.9
Total	$	20.2	$	—	$	29.9	$	430.1	$	480.2



	As of March 31, 2018
	Quoted Prices in Active Market (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Assets measured at net asset value (1)		Total
Cash and cash equivalents	$	2.2	$	—	$	—	$	3.7	$	5.9
Investment funds
Fixed income funds (2)	10.7		—		—		317.3		328.0
U.S. equity funds (3)	2.3		—		—		59.6		61.9
International equity funds (3)	0.3		—		—		35.6		35.9
Balanced funds (3)	—		—		—		9.5		9.5
Alternative investment funds (4)	—		—		—		36.0		36.0
Insurance contracts	—		—		30.2		—		30.2
Total	$	15.5	$	—	$	30.2	$	461.7	$	507.4

______________________


(1)	Certain investments that are measured at fair value using the net asset value per share (or its equivalent) have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position.

(2)

The Company's fixed income mutual and commingled funds primarily include investments in U.S. government securities and corporate bonds. The commingled funds also include an insignificant portion of investments in asset-backed securities or partnerships. The mutual and commingled funds are primarily valued using the net asset value, which reflects the plan's share of the fair value of the investments.


(3)	The Company's equity mutual and commingled funds primarily include investments in U.S. and international common stock. The balanced mutual and commingled funds invest in a combination of fixed income and equity securities. The mutual and commingled funds are primarily valued using the net asset value, which reflects the plan's share of the fair value of the investments.


(4)	The Company's alternative investments include venture capital and partnership investments. Alternative investments are valued using the net asset value, which reflects the plan's share of the fair value of the investments. The Company is generally able to redeem investments at periodic times during the year with notice provided to the general partner.

The table below sets forth a summary of changes in the fair value of the Level 3 investments for the years ended March 31, 2019 and 2018 (in millions):



	Insurance Contracts
Ending balance, March 31, 2017	$	23.9
Actual return on assets:
Related to assets held at reporting date	3.9
Related to assets sold during the period	—
Related to assets acquired by acquisition (1)	2.4
Purchases, sales, issuances and settlements	—
Ending balance, March 31, 2018	30.2
Actual return on assets:
Related to assets held at reporting date	(0.3		)
Related to assets sold during the period	—
Purchases, sales, issuances and settlements	—
Ending balance, March 31, 2019	$	29.9

______________________


(1)	Relates to the assets acquired in connection with the Company's acquisition of Centa during fiscal 2018. See Note 3, Acquisitions for additional information.

Expected benefit payments to be paid in each of the next five fiscal years and in the aggregate for the five fiscal years thereafter are as follows (in millions):



Years Ending March 31:	Pension Benefits		Other Postretirement Benefits
2020	$	45.1	$	1.7
2021	39.8		1.6
2022	39.7		1.5
2023	39.5		1.4
2024	39.8		1.4
2025 - 2029	190.2		5.8

Pension Plans That Are Not Fully Funded

At March 31, 2019, the projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the pension plans with accumulated benefit obligations in excess of the fair value of plan assets were $591.0 million, $586.5 million and $446.8 million, respectively.

At March 31, 2018, the projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the pension plans with accumulated benefit obligations in excess of the fair value of plan assets were $618.6 million, $613.6 million and $472.8 million, respectively.