Pension and Other Postretirement Benefit Plans

The Company has noncontributory defined benefit pension plans covering certain domestic employees and certain employees in foreign countries, principally Canada. The Company’s salaried pension plans provide benefits based on final average earnings formulas. The Company’s hourly pension plans provide benefits under flat benefit and cash balance formulas. The Company also has contractual arrangements with certain employees which provide for supplemental retirement benefits. In general, the Company’s policy is to fund its pension benefit obligation based on legal requirements, tax and liquidity considerations and local practices.

The Company has postretirement benefit plans covering certain domestic and Canadian employees. The Company’s postretirement benefit plans generally provide for the continuation of medical benefits for all eligible employees who complete a specified number of years of service and retire from the Company at age 55 or older. The Company does not fund its postretirement benefit obligation. Rather, payments are made as costs are incurred by covered retirees.

Obligations and Funded Status

A reconciliation of the change in benefit obligation and the change in plan assets for the years ended December 31, 2016 and 2015, is shown below (in millions):



	Pension												Other Postretirement
	December 31, 2016						December 31, 2015						December 31, 2016						December 31, 2015
	U.S.			Foreign			U.S.			Foreign			U.S.			Foreign			U.S.			Foreign
Change in benefit obligation:
Benefit obligation at beginning of period	$	686.6		$	427.4		$	717.8		$	493.0		$	78.9		$	36.5		$	83.3		$	46.8
Service cost	5.6			6.5			4.7			8.4			0.2			0.5			0.2			0.7
Interest cost	29.8			15.8			28.7			16.2			3.2			1.6			3.1			1.7
Actuarial (gain) loss	3.5			27.4			(42.5		)	(12.4		)	(12.8		)	0.8			(3.1		)	(1.2		)
Benefits paid	(22.4		)	(29.1		)	(22.1		)	(19.9		)	(4.8		)	(1.9		)	(4.6		)	(2.2		)
Lump sum payout ⁽¹⁾	(154.9		)	—			—			—			—			—			—			—
Curtailment	—			—			—			6.5			—			—			—			(2.8		)
Special termination benefits	—			—			—			—			—			0.3			—			0.8
Translation adjustment	—			(5.5		)	—			(64.4		)	—			1.0			—			(7.3		)
Benefit obligation at end of period	$	548.2		$	442.5		$	686.6		$	427.4		$	64.7		$	38.8		$	78.9		$	36.5



	Pension												Other Postretirement
	December 31, 2016						December 31, 2015						December 31, 2016						December 31, 2015
	U.S.			Foreign			U.S.			Foreign			U.S.			Foreign			U.S.			Foreign
Change in plan assets:
Fair value of plan assets at beginning of period	$	522.1		$	368.2		$	519.2		$	415.1		$	—		$	—		$	—		$	—
Actual return on plan assets	30.2			21.1			(3.7		)	19.5			—			—			—			—
Employer contributions	37.6			8.5			28.7			13.9			4.8			1.9			4.6			2.2
Benefits paid	(22.4		)	(29.1		)	(22.1		)	(19.9		)	(4.8		)	(1.9		)	(4.6		)	(2.2		)
Lump sum payout ⁽¹⁾	(154.9		)	—			—			—			—			—			—			—
Translation adjustment	—			(1.6		)	—			(60.4		)	—			—			—			—
Fair value of plan assets at end of period	$	412.6		$	367.1		$	522.1		$	368.2		$	—		$	—		$	—		$	—

Funded status	$	(135.6	)	$	(75.4	)	$	(164.5	)	$	(59.2	)	$	(64.7	)	$	(38.8	)	$	(78.9	)	$	(36.5	)


(1)	See Lump-Sum Payout below for further discussion



	Pension												Other Postretirement
	December 31, 2016						December 31, 2015						December 31, 2016						December 31, 2015
	U.S.			Foreign			U.S.			Foreign			U.S.			Foreign			U.S.			Foreign
Amounts recognized in the consolidated balance sheet:
Other long-term assets	$	—		$	40.3		$	—		$	43.7		$	—		$	—		$	—		$	—
Accrued liabilities	(2.2		)	(2.7		)	(2.5		)	(3.4		)	(4.2		)	(1.5		)	(5.1		)	(1.6		)
Other long-term liabilities	(133.4		)	(113.0		)	(162.0		)	(99.5		)	(60.5		)	(37.3		)	(73.8		)	(34.9		)

Accumulated Benefit Obligation

As of December 31, 2016 and 2015, the accumulated benefit obligation for all of the Company’s pension plans was $973.7 million and $1,099.2 million, respectively.

As of December 31, 2016 and 2015, the majority of the Company's pension plans had accumulated benefit obligations in excess of plan assets. Information related to pension plans with accumulated benefit obligations in excess of plan assets is shown below (in millions):



December 31,	2016		2015
Projected benefit obligation	$	747.3	$	874.4
Accumulated benefit obligation	730.4		859.5
Fair value of plan assets	496.0		607.0

Lump-Sum Payout

In 2016, the Company initiated a limited lump-sum payout offer ("Lump-Sum Payout") to certain terminated vested plan participants of its U.S. defined benefit pension plans. The offer provided participants with the flexibility to receive their pension benefits early and reduces the Company's future administrative costs and risks related to its U.S. defined benefit pension plans. Under this offer, eligible plan participants were able to voluntarily elect an early payout of their pension benefits, primarily in the form of a lump-sum payment equal to the present value of the participant’s pension benefits. In connection with the Lump-Sum Payout, payments of $154.9 million were distributed from existing defined benefit pension plan assets, and the Company recognized a $34.2 million non-cash settlement charge. Payments under the Lump-Sum Payout are reflected as benefits paid in the reconciliations of the change in benefit obligation and the change in plan assets for the year ended December 31, 2016.

Other Comprehensive Income (Loss) and Accumulated Other Comprehensive Loss

Pretax amounts recognized in other comprehensive income (loss) for the years ended December 31, 2016 and 2015, are shown below (in millions):



	Pension											Other Postretirement
	December 31, 2016						December 31, 2015					December 31, 2016						December 31, 2015
	U.S.			Foreign			U.S.			Foreign		U.S.			Foreign			U.S.			Foreign
Actuarial gains (losses) recognized:
Reclassification adjustments	$	2.7		$	3.1		$	2.6		$	4.1	$	(1.3	)	$	0.2		$	(1.2	)	$	0.5
Effect of settlement	33.2			0.4			—			—		—			—			—			—
Actuarial gain (loss) arising during the period	(10.1		)	(30.0		)	(0.4		)	7.3		12.8			(0.8		)	3.1			3.9
Prior service credit recognized:
Reclassification adjustments	—			—			—			—		—			(0.3		)	—			(0.4		)
Translation adjustment	—			(1.0		)	—			12.8		—			(0.1		)	—			1.2
	$	25.8		$	(27.5	)	$	2.2		$	24.2	$	11.5		$	(1.0	)	$	1.9		$	5.2

In addition, the Company recognized tax benefit (expense) in other comprehensive income (loss) related to its defined benefit plans of ($7.1) million, ($8.3) million and $56.5 million for the years ended December 31, 2016, 2015 and 2014, respectively.

Pretax amounts recorded in accumulated other comprehensive loss not yet recognized in net periodic benefit cost (credit) as of December 31, 2016 and 2015, are shown below (in millions):



	Pension												Other Postretirement
	December 31, 2016						December 31, 2015						December 31, 2016					December 31, 2015
	U.S.			Foreign			U.S.			Foreign			U.S.		Foreign			U.S.		Foreign
Net unrecognized actuarial gain (loss)	$	(110.1	)	$	(100.9	)	$	(135.9	)	$	(73.4	)	$	25.1	$	(6.1	)	$	13.6	$	(5.4	)
Prior service credit	—			—			—			—			—		0.9			—		1.2
	$	(110.1	)	$	(100.9	)	$	(135.9	)	$	(73.4	)	$	25.1	$	(5.2	)	$	13.6	$	(4.2	)

Pretax amounts recorded in accumulated other comprehensive loss as of December 31, 2016, that are expected to be recognized as components of net periodic benefit cost (credit) in the year ending December 31, 2017, are shown below (in millions):



	Pension						Other Postretirement
	U.S.			Foreign			U.S.		Foreign
Net unrecognized actuarial gain (loss)	$	(2.6	)	$	(5.1	)	$	2.6	$	(0.3	)
Prior service credit	—			—			—		0.3
	$	(2.6	)	$	(5.1	)	$	2.6	$	—

The Company uses the corridor approach when amortizing actuarial losses. Under the corridor approach, net unrecognized actuarial losses in excess of 10% of the greater of i) the projected benefit obligation or ii) the fair value of plan assets are amortized over future periods. For plans with little to no active participants, the amortization period is the remaining average life expectancy of the participants. For plans with active participants, the amortization period is the remaining average service period of the active participants. The amortization periods range from 5.9 years to 29 years for the Company's defined benefit pension plans and from 2.3 years to 19 years for the Company's other postretirement benefit plans.

Net Periodic Pension and Other Postretirement Benefit Cost (Credit)

The components of the Company’s net periodic pension benefit cost (credit) are shown below (in millions):



	Year Ended December 31,
	2016						2015						2014
Pension	U.S.			Foreign			U.S.			Foreign			U.S.			Foreign
Service cost	$	5.6		$	6.5		$	4.7		$	8.4		$	3.7		$	8.8
Interest cost	29.8			15.8			28.7			16.2			28.5			20.4
Expected return on plan assets	(38.1		)	(23.2		)	(39.4		)	(25.7		)	(38.1		)	(27.0		)
Amortization of actuarial (gain) loss	2.7			3.1			2.6			4.1			(0.3		)	1.3
Curtailment loss	—			—			—			7.7			—			—
Settlement loss	34.4			0.4			0.2			—			0.1			—
Net periodic benefit cost (credit)	$	34.4		$	2.6		$	(3.2	)	$	10.7		$	(6.1	)	$	3.5

The components of the Company’s net periodic other postretirement benefit cost are shown below (in millions):



	Year Ended December 31,
	2016						2015						2014
Other Postretirement	U.S.			Foreign			U.S.			Foreign			U.S.			Foreign
Service cost	$	0.2		$	0.5		$	0.2		$	0.7		$	0.2		$	0.9
Interest cost	3.2			1.6			3.1			1.7			4.0			2.0
Amortization of actuarial (gain) loss	(1.3		)	0.2			(1.2		)	0.5			(0.7		)	0.1
Amortization of prior service credit	—			(0.3		)	—			(0.4		)	—			(0.4		)
Special termination benefits	—			0.3			—			0.8			—			0.8
Net periodic benefit cost	$	2.1		$	2.3		$	2.1		$	3.3		$	3.5		$	3.4

For the year ended December 31, 2016, the Company recognized a pension settlement loss of $34.2 million related to its Lump-Sum Payout described above.

For the year ended December 31, 2015, the Company recognized a pension curtailment loss of $7.7 million related to its restructuring actions (Note 4, "Restructuring").

Assumptions

The weighted average actuarial assumptions used in determining the benefit obligations are shown below:



	Pension		Other Postretirement
December 31,	2016	2015	2016	2015
Discount rate:
Domestic plans	4.1%	4.4%	3.9%	4.2%
Foreign plans	3.3%	3.8%	3.9%	4.2%
Rate of compensation increase:
Foreign plans	3.3%	3.3%	N/A	N/A

The weighted average actuarial assumptions used in determining the net periodic benefit cost (credit) are shown below:



For the year ended December 31,	2016		2015		2014
Pension
Discount rate:
Domestic plans	4.4	%	4.1	%	5.0	%
Foreign plans	3.8	%	3.6	%	4.7	%
Expected return on plan assets:
Domestic plans	7.5	%	7.8	%	7.8	%
Foreign plans	6.3	%	6.5	%	6.7	%
Rate of compensation increase:
Foreign plans	3.3	%	3.1	%	3.4	%
Other postretirement
Discount rate:
Domestic plans	4.2	%	3.9	%	4.5	%
Foreign plans	4.2	%	4.0	%	5.0	%

The expected return on plan assets is determined based on several factors, including adjusted historical returns, historical risk premiums for various asset classes and target asset allocations within the portfolio. Adjustments made to the historical returns are based on recent return experience in the equity and fixed income markets and the belief that deviations from historical returns are likely over the relevant investment horizon.

Healthcare Trend Rate

Assumed healthcare cost trend rates have a significant effect on the amounts reported for the postretirement benefit plans. The sensitivity to a 100 basis point ("bp") change in the assumed healthcare cost trend rates is shown below (in millions):



	Postretirement Benefit Obligation			Net Periodic Postretirement Cost
100 bp increase in healthcare cost trend rates	$	14.2		$	0.8
100 bp decrease in healthcare cost trend rates	$	(11.6	)	$	(0.7	)

The assumed healthcare cost trend rates used to measure the postretirement benefit obligation as of December 31, 2016, are shown below:



	U.S. Plans	Foreign Plans
Initial healthcare cost trend rate	7.0%	5.3%
Ultimate healthcare cost trend rate	4.5%	4.5%
Year ultimate healthcare cost trend rate achieved	2021	2031

Plan Assets

Fair value measurements and the related valuation techniques and fair value hierarchy level for the Company’s pension plan assets measured at fair value on a recurring basis as of December 31, 2016 and 2015, are shown below (in millions):



	December 31, 2016
	Total		Level 1		Level 2		Level 3		Valuation Technique
U.S. Plans:
Equity securities -
Mutual funds	$	137.7	$	137.7	$	—	$	—	Market
Common stock	77.5		51.1		26.4		—		Market
Fixed income -
Mutual funds	86.5		86.5		—		—		Market
Corporate bonds	18.1		—		18.1		—		Market
Government obligations	29.9		—		29.9		—		Market
Preferred stock	1.4		0.9		0.5		—		Market
Cash and short-term investments	8.4		0.9		7.5		—		Market
Assets at fair value	359.5		$	277.1	$	82.4	$	—
Investments measured at net asset value -
Alternative investments	53.1
Assets at fair value	$	412.6
Foreign Plans:
Equity securities -
Equity funds	$	132.6	$	27.0	$	105.6	$	—	Market
Common stock	73.2		73.2		—		—		Market
Fixed income -
Fixed income funds	31.2		31.2		—		—		Market
Corporate bonds	37.1		—		37.1		—		Market
Government obligations	53.8		—		53.8		—		Market
Cash and short-term investments	6.0		3.2		2.8		—		Market
Assets at fair value	333.9		$	134.6	$	199.3	$	—
Investments measured at net asset value -
Alternative investments	33.2
Assets at fair value	$	367.1



	December 31, 2015
	Total		Level 1		Level 2		Level 3		Valuation Technique
U.S. Plans:
Equity securities -
Mutual funds	$	189.7	$	189.7	$	—	$	—	Market
Common stock	112.4		72.5		39.9		—		Market
Fixed income -
Mutual funds	87.8		87.8		—		—		Market
Corporate bonds	22.1		—		22.1		—		Market
Government obligations	18.8		—		18.8		—		Market
Preferred stock	2.2		1.4		0.8		—		Market
Cash and short-term investments	36.1		36.1		—		—		Market
Assets at fair value	469.1		$	387.5	$	81.6	$	—
Investments measured at net asset value -
Alternative investments	53.0
Assets at fair value	$	522.1
Foreign Plans:
Equity securities -
Equity funds	$	129.8	$	28.0	$	101.8	$	—	Market
Common stock	70.2		70.2		—		—		Market
Fixed income -
Fixed income funds	33.1		33.1		—		—		Market
Corporate bonds	40.2		—		40.2		—		Market
Government obligations	55.5		—		55.5		—		Market
Cash	5.4		2.8		2.6		—		Market
Assets at fair value	334.2		$	134.1	$	200.1	$	—
Investments measured at net asset value -
Alternative investments	34.0
Assets at fair value	$	368.2

For further information on the GAAP fair value hierarchy, see Note 13, "Financial Instruments." Pension plan assets for the foreign plans relate to the Company’s pension plans primarily in Canada and the United Kingdom.

In 2015, the Financial Accounting Standards Board ("FASB") issued ASU 2015-07, "Disclosures for Investments in Certain Entities that Calculate Net Asset Value Per Share (or its Equivalent)." ASU 2015-07 removes the requirement to categorize, within the fair value hierarchy, investments for which fair values are estimated using the net asset value ("NAV") as a practical expedient as provided by Accounting Standards Codification 820, "Fair Value Measurement." In 2016, the Company early adopted the provisions of this update with respect to its defined benefit pension plan assets and retroactively applied the new presentation requirements to all periods presented. Accordingly, the alternative investments of the U.S. defined benefit pension plans, for which fair values are estimated using the NAV as a practical expedient, are no longer categorized and presented within the fair value hierarchy. These assets are shown below the fair value hierarchy in order to present total pension plan assets at fair value.

The Company’s investment policies incorporate an asset allocation strategy that emphasizes the long-term growth of capital. The Company believes that this strategy is consistent with the long-term nature of plan liabilities and ultimate cash needs of the plans. For the domestic portfolio, the Company targets an equity allocation of 50% — 75% of plan assets, a fixed income allocation of 15% — 40%, an alternative investment allocation of 0% — 30% and a cash allocation of 0% — 10%. For the foreign portfolio, the Company targets an equity allocation of 45% — 65% of plan assets, a fixed income allocation of 25% — 45%, an alternative investment allocation of 0% — 25% and a cash allocation of 0% — 15%. Differences in the target allocations of the domestic and foreign portfolios are reflective of differences in the underlying plan liabilities. Diversification within the investment portfolios is pursued by asset class and investment management style. The investment portfolios are reviewed on a quarterly basis to maintain the desired asset allocations, given the market performance of the asset classes and investment management styles. Alternative investments are redeemable in the near term, generally with 60 days notice.

The Company utilizes investment management firms to manage these assets in accordance with the Company’s investment policies. Excluding alternative investments, mutual funds and ETFs, retained investment managers are provided investment guidelines which restrict the use of certain assets, including commodities contracts, futures contracts, options, venture capital, real estate, interest-only or principal-only strips and investments in the Company’s own debt or equity. Derivative instruments are also prohibited without the specific approval of the Company. Investment managers are limited in the maximum size of individual security holdings and the maximum exposure to any one industry relative to the total portfolio. Fixed income managers are provided further investment guidelines that indicate minimum credit ratings for debt securities and limitations on weighted average maturity and portfolio duration.

The Company evaluates investment manager performance against market indices which the Company believes are appropriate to the investment management style for which the investment manager has been retained. The Company’s investment policies incorporate an investment goal of aggregate portfolio returns which exceed the returns of the appropriate market indices by a reasonable spread over the relevant investment horizon.

Contributions

The Company's minimum required contributions to its domestic and foreign pension plans are expected to be approximately $10 million to $15 million in 2017. The Company may elect to make contributions in excess of minimum funding requirements in response to investment performance or changes in interest rates or when the Company believes that it is financially advantageous to do so and based on its other cash requirements. The Company’s minimum funding requirements after 2017 will depend on several factors, including investment performance and interest rates. The Company’s minimum funding requirements may also be affected by changes in applicable legal requirements.

Benefit Payments

As of December 31, 2016, the Company’s estimate of expected benefit payments, excluding expected settlements relating to its restructuring actions, in each of the five succeeding years and in the aggregate for the five years thereafter are shown below (in millions):



	Pension				Other Postretirement
Year	U.S.		Foreign		U.S.		Foreign
2017	$	25.8	$	22.8	$	4.3	$	1.5
2018	26.4		18.7		4.4		1.4
2019	27.3		19.0		4.5		1.5
2020	28.0		19.7		4.5		1.5
2021	28.7		19.7		4.5		1.6
Five years thereafter	148.4		124.2		21.8		9.5

Multi-Employer Pension Plans

The Company currently participates in two multi-employer pension plans, the U.A.W. Labor-Management Group Pension Plan and UNITE Here National Retirement Fund, for certain of its employees. Contributions to these plans are based on three collective bargaining agreements. One of the agreements expires on April 24, 2020, and two of the agreements expire on July 3, 2020. Detailed information related to these plans is shown below (amounts in millions):

Pension Protection Act

Zone Status

Contributions to Multiemployer Pension Plans

Employer Identification Number

December 31,

2016

Certification

December 31,

2015

Certification

FIP/RP

Pending or

Implemented

Surcharge

Year Ended December 31, 2016

Year Ended December 31, 2015

Year Ended December 31, 2014

516099782-001

Red

Green

Yes

0.6

0.5

0.6

13-6130178

Red

Yes

0.4

0.3

For its plan years 2016 and 2015, the Company's contributions to the U.A.W. Labor-Management Group Pension Plan represented more than 5% of the plan's total contributions.

Defined Contribution Plan

The Company also sponsors defined contribution plans and participates in government-sponsored programs in certain foreign countries. Contributions are determined as a percentage of each covered employee’s salary. For the years ended December 31, 2016, 2015 and 2014, the aggregate cost of the defined contribution plans was $14.4 million, $13.3 million and $12.0 million, respectively.

The Company also has a defined contribution retirement program for its salaried employees. Contributions to this program are determined as a percentage of each covered employee’s eligible compensation. For the years ended December 31, 2016, 2015 and 2014, the Company recorded expense of $21.2 million, $19.4 million and $17.8 million, respectively, related to this program.