Employee Benefits

12 Months Ended

Dec. 31, 2023

Retirement Benefits [Abstract]

Employee Benefits

M.EMPLOYEE BENEFITS

Severance Costs: The Company incurred severance expense in 2023, 2022 and 2021 of $.6, $.6 and $2.6, respectively.

Defined Benefit Pension Plans: The Company has several defined benefit pension plans, which cover a majority of its employees. The Company evaluates its actuarial assumptions on an annual basis and considers changes based upon market conditions and other factors.

The expected return on plan assets is determined by using a market-related value of assets, which is calculated based on an average of the previous five years of asset gains and losses.

Generally, accumulated unrecognized actuarial gains and losses are amortized using the 10% corridor approach. The corridor is defined as the greater of either 10% of the projected benefit obligation or the market-related value of plan assets. The amortization amount is the excess beyond the corridor divided by the average remaining estimated service life of participants on a straight-line basis.

The Company funds its pensions in accordance with applicable employee benefit and tax laws. The Company contributed $27.3 to its pension plans in 2023 and $39.1 in 2022. The Company expects to contribute in the range of $25 to $75 to its pension plans in 2024, of which $23.3 is estimated to satisfy minimum funding requirements. Annual benefits expected to be paid beginning January 1, 2024 are $135.6, $130.0, $134.9, $136.4, $147.3 and a total of $854.3 for the five years thereafter.

Plan assets are invested in global equity and debt securities through professional investment managers with the objective to achieve targeted risk adjusted returns and maintain liquidity sufficient to fund current benefit payments. Typically, each defined benefit plan has an investment policy that includes a target for asset mix, including maximum and minimum ranges for allocation percentages by investment category. The actual allocation of assets may vary at times based upon rebalancing policies and other factors. The Company periodically assesses the target asset mix by evaluating external sources of information regarding the long-term historical return, volatilities and expected future returns for each investment category. In addition, the long-term rates of return assumptions for pension accounting are reviewed annually to ensure they are appropriate. Target asset mix and forecast long-term returns by asset category are considered in determining the assumed long-term rates of return, although historical returns realized are given some consideration.

The fair value of mutual funds, common stocks and U.S. treasuries is determined using the market approach and is based on the quoted prices in active markets. These securities are categorized as Level 1. The fair value of debt securities is determined using the market approach and is based on the quoted market prices of the securities or other observable inputs. These securities are categorized as Level 2.

The fair value of commingled and pooled trust funds is determined using the market approach and is based on the unadjusted net asset value (NAV) per unit as determined by the sponsor of the fund based on the fair values of underlying investments. These assets are collective investment trusts and pooled funds, and substantially all of these investments have no redemption restrictions or unfunded commitments. Securities measured at NAV per unit as a practical expedient are not classified in the fair value hierarchy.

The following information details the allocation of plan assets by investment type. See Note Q for definitions of fair value levels.

		FAIR VALUE HIERARCHY
At December 31, 2023	TARGET	LEVEL 1		LEVEL 2		TOTAL		MEASURED AT NAV		TOTAL
Equities:
U.S. equities								$	1,004.4	$	1,004.4
Global equities									771.8		771.8
Total equities	45 - 65%								1,776.2		1,776.2
Fixed income:
U.S. fixed income		$	95.7	$	275.4	$	371.1	$	676.9	$	1,048.0
Non-U.S. fixed income					39.3		39.3		530.2		569.5
Total fixed income	35 - 55%		95.7		314.7		410.4		1,207.1		1,617.5
Cash and other			.4		99.4		99.8		.6		100.4
Total plan assets		$	96.1	$	414.1	$	510.2	$	2,983.9	$	3,494.1

		FAIR VALUE HIERARCHY
At December 31, 2022	TARGET	LEVEL 1		LEVEL 2		TOTAL		MEASURED AT NAV		TOTAL
Equities:
U.S. equities								$	830.9	$	830.9
Global equities									795.9		795.9
Total equities	45 - 65%								1,626.8		1,626.8
Fixed income:
U.S. fixed income		$	82.2	$	258.0	$	340.2	$	605.2	$	945.4
Non-U.S. fixed income					31.4		31.4		419.4		450.8
Total fixed income	35 - 55%		82.2		289.4		371.6		1,024.6		1,396.2
Cash and other			5.8		86.1		91.9		.3		92.2
Total plan assets		$	88.0	$	375.5	$	463.5	$	2,651.7	$	3,115.2

The following weighted-average assumptions relate to all pension plans of the Company:

At December 31,	2023			2022
Discount rate		4.8	%		5.0	%
Rate of increase in future compensation levels		3.9	%		3.9	%
Assumed long-term rate of return on plan assets		6.6	%		6.0	%

The components of the change in projected benefit obligation and change in plan assets are as follows:

At December 31,	2023			2022
Change in projected benefit obligation:
Benefit obligation at January 1	$	2,567.0		$	3,709.6
Service cost		94.0			148.5
Interest cost		127.5			84.9
Benefits paid		(110.1	)		(107.7	)
Actuarial loss (gain)		186.5			(1,190.4	)
Currency translation and other		37.8			(78.3	)
Participant contributions		.6			.4
Projected benefit obligation at December 31	$	2,903.3		$	2,567.0
Change in plan assets:
Fair value of plan assets at January 1	$	3,115.2		$	4,094.5
Employer contributions		27.3			39.1
Actual gain (loss) on plan assets		412.5			(809.6	)
Benefits paid		(110.1	)		(107.7	)
Currency translation and other		48.6			(101.5	)
Participant contributions		.6			.4
Fair value of plan assets at December 31	$	3,494.1		$	3,115.2
Funded status at December 31	$	590.8		$	548.2

At December 31,	2023		2022
Amounts recorded on Balance Sheets:
Other noncurrent assets	$	734.8	$	671.2
Accounts payable, accrued expenses and other		23.8		18.0
Other liabilities		120.2		105.0
Accumulated other comprehensive loss:
Actuarial loss		98.0		97.9
Prior service cost		12.3		13.0

Of the December 31, 2023 amounts in accumulated other comprehensive loss, $4.9 of unrecognized actuarial loss and $1.4 of unrecognized prior service cost are expected to be amortized into net pension expense in 2024.

The accumulated benefit obligation for all pension plans of the Company was $2,494.4 and $2,265.1 at December 31, 2023 and 2022, respectively.

Information for all plans with an accumulated benefit obligation in excess of plan assets is as follows:

At December 31,	2023		2022
Projected benefit obligation	$	138.7	$	126.7
Accumulated benefit obligation		124.1		113.7
Fair value of plan assets		7.1		6.8

The components of pension expense are as follows:

Year Ended December 31,		2023			2022			2021
Service cost	$	94.0		$	148.5		$	148.4
Interest on projected benefit obligation		127.5			84.9			65.3
Expected return on assets		(230.3	)		(215.1	)		(203.3	)
Amortization of prior service costs		1.4			.7			.8
Recognized actuarial loss		4.7			28.9			58.7
Net pension (gain) expense	$	(2.7	)	$	47.9		$	69.9

The components of net pension expense other than service cost are included in Interest and other expenses (income), net on the Consolidated Statements of Income.

Multi-employer Plans: The Company participates in multi-employer plans in the U.S. and Europe. These are typically under collective bargaining agreements and cover its union-represented employees. The Company’s participation in the following multi-employer plans for the years ended December 31 are as follows:

		PENSION PLAN		COMPANY CONTRIBUTIONS
PENSION PLAN	EIN	NUMBER	SURCHARGE		2023		2022		2021
Metal and Electrical Engineering Industry Pension Fund		135668	Yes	$	46.1	$	37.1	$	38.1
Western Metal Industry Pension Plan	91-6033499	001	Yes		4.5		4.0		4.0
Other plans					1.2		1.0		1.1
				$	51.8	$	42.1	$	43.2

The Company contributions shown in the table above approximate the multi-employer pension expense for each of the years ended December 31, 2023, 2022 and 2021, respectively.

Metal and Electrical Engineering Industry Pension Fund is a multi-employer union plan incorporating all DAF employees in the Netherlands and is covered by a collective bargaining agreement that will expire on May 31, 2024. The Company’s contributions were less than 5% of the total contributions to the plan for the last three reporting periods ending December 2023. The plan is required by law (the Netherlands Pension Act) to have a minimum coverage ratio in excess of 104.3% and a policy coverage ratio in excess of 113.3% (weighted coverage ratio of the last 12 months). Because the policy coverage ratio of 109.4% at December 31, 2023 is below the required threshold, a funding improvement plan remains in place. Based on the funding improvement plan, the required coverage of 113.3% should be reached by the end of 2032. The funding improvement plan includes a possible reduction in pension benefits and delays in future benefit increases.

The Western Metal Industry Pension Plan is located in the U.S. and is covered by a collective bargaining agreement that will expire on November 2, 2025. In accordance with the U.S. Pension Protection Act of 2006, the plan continued to be certified as critical (red) for the 2023 plan year and a rehabilitation plan has been implemented requiring additional contributions as long as the plan remains in critical status. Contributions by the Company were 27% and 25% of the total contributions to the plan for the years ended December 31, 2023 and 2022, respectively.

Other plans are principally located in the U.S. and the Company’s contributions to these plans for the years ended December 31, 2023 and 2022 were less than 5% of each plan’s total contributions. As of December 31, 2023, one of the other plans was under a funding rehabilitation plan requiring an increase to the mandated employer surcharge from 5% to 10%, which will be applicable for each succeeding year in which the plan remains in a critical status.

There were no significant changes for the multi-employer plans in the periods presented that affected comparability between periods.

Defined Contribution Plans: The Company maintains several defined contribution benefit plans whereby it contributes designated amounts on behalf of participant employees. The largest plan is for U.S. salaried employees where the Company matches a percentage of employee contributions up to an annual limit. The match was 5% of eligible pay in 2023, 2022 and 2021. Other plans are located in Australia, the Netherlands, Canada, United Kingdom and Germany. Expenses for these plans were $65.4, $56.3 and $50.0 in 2023, 2022 and 2021, respectively.