(8) Retirement Plans

The Company's domestic employees are participants in defined benefit pension plans and/or defined contribution plans. The majority of the Company's defined benefit pension plans covering the Company's domestic employees have been closed to new employees and frozen for existing employees. Most foreign employees are covered by government sponsored plans in the countries in which they are employed. The domestic employee plans include defined contribution plans and defined benefit pension plans. The defined contribution plans provide for Company contributions based, depending on the plan, upon one or more of participant contributions, service and profits. Company contributions to domestic defined contribution plans totaled $8.8 million, $9.1 million, and $9.8 million in 2014, 2013 and 2012, respectively. Company contributions to non-U.S. defined contribution plans were $12.6 million, $12.4 million and $12.0 million in 2014, 2013, and 2012, respectively.

Benefits provided under defined benefit pension plans are based, depending on the plan, on employees' average earnings and years of credited service, or a benefit multiplier times years of service. Funding of these qualified defined benefit pension plans is in accordance with federal laws and regulations. The actuarial valuation measurement date for pension plans is as of fiscal year end for all periods.

The Company's target allocation, target return and actual weighted-average asset allocation by asset category are as follows:



	Target				Actual Allocation
	Allocation		Return		2014		2013
Equity investments	76	%	6.7 - 8.4 %		71	%	69	%
Fixed income	19	%	3.7 - 4.4%		24	%	23	%
Other	5	%	7.0	%	5	%	8	%
Total	100	%	7.5	%	100	%	100	%

The Company's investment strategy for its defined benefit pension plans is to achieve moderately aggressive growth, earning a long-term rate of return sufficient to allow the plans to reach fully funded status. Accordingly, allocation targets have been established to fit this strategy, with a heavier long-term weighting of investments in equity securities. The long-term rate of return assumptions consider historic returns and volatilities adjusted for changes in overall economic conditions that may affect future returns and a weighting of each investment class.

The following table presents a reconciliation of the funded status of the defined benefit pension plans (in millions):



	2014			2013
Change in projected benefit obligation:
Obligation at beginning of period	$	170.8		$	181.2
Service cost	2.5			2.9
Interest cost	8.3			7.6
Actuarial (gain) loss	27.2			(13.5		)
Less: Benefits paid	13.3			7.4
Foreign currency translation	(1.2		)	—
Obligation at end of period:	$	194.3		$	170.8
Change in fair value of plan assets:
Fair value of plan assets at beginning of period	128.6			109.5
Actual return on plan assets	8.8			21.0
Employer contributions	3.1			5.5
Less: Benefits paid	13.3			7.4
Foreign currency translation	(0.6		)	—
Fair value of plan assets at end of period	$	126.6		$	128.6
Funded status	$	(67.7	)	$	(42.2	)

Pension Assets

The Company classifies the pension plan investments into Level 1, which refers to securities valued using quoted prices from active markets for identical assets, Level 2, which refers to securities not traded on an active market but for which observable market inputs are readily available, and Level 3, which refers to securities valued based on significant unobservable inputs. Common stocks and mutual funds are valued at the unadjusted quoted market prices for the securities. Real estate fund values are determined using model-based techniques that include relative value analysis and discounted cash flow techniques. Common collective trust funds and limited partnership interests are valued based on the net asset value ("NAV") as provided by the administrator of the fund as a practical expedient to estimate fair value. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding. Investments in units of collective trust funds and short-term investment funds, comprised of cash and money market funds, are valued at their respective NAVs as reported by the funds daily.

Pension assets by type and level are as follows (in millions):



	January 3, 2015
	Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	3.1	$	3.1	$	—	$	—
Common stocks:
Domestic equities	20.6		20.6		—		—
International equities	8.0		8.0		—		—
Common collective trust funds:
Fixed income funds	9.5		—		9.5		—
U.S. equity funds	23.9		—		23.9		—
Mutual funds:
U.S. equity funds	16.8		16.8		—		—
Balanced funds	6.1		6.1		—		—
International equity funds	13.8		13.8		—		—
Fixed income funds	12.3		12.3		—		—
Other	1.0		1.0		—		—
Real estate fund	6.2		—		—		6.2
Global emerging markets fund limited partnership	5.3		—		—		5.3
Total	$	126.6	$	81.7	$	33.4	$	11.5



	December 28, 2013
	Total		Level 1		Level 2		Level 3
Cash and cash equivalents	$	2.0	$	2.0	$	—	$	—
Common stocks:
Domestic equities	22.1		22.1		—		—
International equities	7.6		—		7.6		—
Common collective trust funds:
Fixed income funds	12.0		—		12.0		—
U.S. equity funds	28.0		—		28.0		—
International equity funds	3.5		—		3.5		—
Other	1.6		—		1.6		—
Mutual funds:
U.S. equity funds	15.5		15.5		—		—
Balanced funds	12.0		12.0		—
International equity funds	14.2		14.2		—
Real estate fund	5.5		—		—		5.5
Global emerging markets fund limited partnership	4.6		—		—		4.6
Total	$	128.6	$	65.8	52.7		$	10.1

The Level 3 assets noted below represent investments in a real estate fund managed by a major U.S. insurance company and a global emerging markets fund limited partnership. Estimated values provided by fund management approximate the cost of the investments. In determining the reasonableness of the methodology used to value the Level 3 investments, the Company evaluates a variety of factors including reviews of economic conditions, industry and market developments, and overall credit ratings.

The limited partnership interest is an investment in the Vontobel Global Emerging Markets Fund, which seeks to provide capital appreciation by investing in a diversified portfolio consisting primarily of equity based securities. The common collective trust funds are investments in the Northern Trust Collective S&P 500 Index Fund and the Northern Trust Collective Aggregate Bond Index Fund. The Northern Trust Collective S&P 500 Index Fund seeks to provide investment results that approximate the overall performance of the common stocks in that index. The Northern Trust Collective Aggregate Bond Index Fund seeks to provide investment results that approximate the overall performance of the Barclays Capital U.S. Aggregate Index by investing primarily, but not exclusively, in securities that comprise that index. The common collective trust funds are available for immediate redemption.

The real estate fund can be redeemed on a quarterly basis and paid within two weeks of the request for redemption. The limited partnership interest can be redeemed on a monthly basis with immediate payment.

The table below sets forth a summary of changes in the Company's Level 3 assets in its pension plan investments as of January 3, 2015 and December 28, 2013 (in millions).



	January 3, 2015		December 28, 2013
Beginning balance	$	10.1	$	9.2
Net purchases	0.7		0.7
Net gains	0.7		0.2
Ending balance	$	11.5	$	10.1

The following table sets forth a summary of quantitative information about the significant unobservable inputs used in the fair value measurement of the Level 3 real estate fund for the year ended January 3, 2015 (in millions).



Fair Value		Significant Unobservable Inputs
$	6.2	Exit Capitalization Rate	5.3% to 7.5%
		Discount Rate	6.8% to 9.5%



Fair Value		Significant Unobservable Inputs
$	5.5	Exit Capitalization Rate	5.4% to 7.6%
		Discount Rate	6.9% to 9.7%

The Company recognized the funded status of its defined benefit pension plans on the balance sheet as follows (in millions):



	2014		2013
Accrued compensation and employee benefits	$	2.7	$	2.5
Pension and other post retirement benefits	65.0		39.7
	$	67.7	$	42.2

Amounts recognized in Accumulated Other Comprehensive Loss
Net actuarial loss	$	61.5	36.0
Prior service cost	1.4		1.6
	$	62.9	$	37.6

The accumulated benefit obligation for all defined benefit pension plans was $182.3 million and $160.1 million at January 3, 2015 and December 28, 2013, respectively.

The accumulated plan benefit obligation exceeded plan assets for all pension plans as of January 3, 2015. The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the Company's pension plans in which the accumulated benefit obligation exceeded the value of plan assets as of December 28, 2013 were $50.4 million, $43.0 million and $9.1 million, respectively.

The following weighted average assumptions were used to determine the projected benefit obligation at January 3, 2015 and December 28, 2013, respectively.



	2014	2013
Discount rate	4.2%	5.0%
Expected long-term rate of return on assets	7.5%	8.0%

The objective of the discount rate assumption is to reflect the rate at which the pension benefits could be effectively settled. In making the determination, the Company takes into account the timing and amount of benefits that would be available under the plans. The methodology for selecting the discount rate was to match the plan's cash flows to that of a theoretical bond portfolio yield curve.

Certain of the Company's defined benefit pension plan obligations are based on years of service rather than on projected compensation percentage increases. For those plans that use compensation increases in the calculation of benefit obligations and net periodic pension cost, the Company used an assumed rate of compensation increase of 3.0% for the years ended January 3, 2015 and December 28, 2013.

Net periodic pension benefit costs and the net actuarial loss and prior service cost recognized in other comprehensive income (“OCI”) for the defined benefit pension plans were as follows (in millions):



	2014			2013			2012
Service cost	$	2.5		$	2.9		$	2.5
Interest cost	8.3			7.6			7.9
Expected return on plan assets	(9.2		)	(8.7		)	(8.0		)
Amortization of net actuarial loss	2.3			4.1			3.6
Amortization of prior service cost	0.2			0.2			0.2
Net periodic benefit cost	$	4.1		$	6.1		$	6.2

Change in benefit obligations recognized in OCI, net of tax
Prior service cost	$	0.1		$	0.1		$	(0.3	)
Net actuarial loss	1.3			2.5			3.6
Total recognized in OCI	$	1.4		$	2.6		$	3.3

The estimated prior service cost and net actuarial loss for the defined benefit pension plans that will be amortized from Accumulated Other Comprehensive Income ("AOCI") into net periodic benefit cost during the 2015 fiscal year are $0.2 million and $4.6 million, respectively.

As permitted under relevant accounting guidance, the amortization of any prior service cost is determined using a straight-line amortization of the cost over the average remaining service period of employees expected to receive benefits under the plans.

The following weighted average assumptions were used to determine net periodic pension cost for fiscal years 2014, 2013 and 2012, respectively.



	2014	2013	2012
Discount rate	5.0%	4.2%	5.0%
Expected long-term rate of return on assets	8.0%	8.0%	8.3%

The Company made contributions to its defined benefit plan of $3.1 million and $5.5 million for the fiscal years ended January 3, 2015 and December 28, 2013, respectively.

The Company estimates that in 2015 it will make contributions in the amount of $3.3 million to fund its defined benefit pension plans.

The following pension benefit payments, which reflect expected future service, as appropriate, are expected to be paid (in millions):



	Expected Payments
Year	Expected Payments
2015	$	9.0
2016	9.3
2017	9.9
2018	10.5
2019	11.3
2020 - 2024	61.4