

	2017			2016			2015
Components of net periodic benefit cost:
Service cost	$	0.1		$	0.3		$	0.4
Interest cost	9.1			11.0			10.9
Expected return on plan assets	(5.6		)	(6.3		)	(7.3		)
Amortization of prior service (credit) cost	(1.0		)	1.0			0.8
Recognition of net actuarial (gains) losses	(4.0		)	4.5			1.0
Curtailment	—			0.1			—
Net periodic benefit cost	$	(1.4	)	$	10.6		$	5.8

The Company recognized actuarial gains of $4.0 million during 2017 primarily due to a number of participants opting out of coverage from the plans in response to a financial incentive program offered to eligible participants of the Company's retiree health and life insurance plans. In addition, the Company adopted the MP-2017 scales as its best estimate of future mortality improvements for defined benefit postretirement obligations. The Company recognized actuarial gains of $14.4 million as a result of the impact of the opt-out program, $5.0 million as a result of changes in mortality tables and higher than expected returns on plan assets of $3.7 million. These actuarial gains were partially offset by the impact of experience losses and other changes in valuation assumptions of $12.2 million and the impact of a 40 basis point reduction in the discount rate used to measure its defined benefit postretirement obligations of $6.9 million.

The Company recognized actuarial losses of $4.5 million during 2016 primarily due to the impact of a 42 basis point reduction in the discount rate used to measure its defined benefit postretirement obligations of $8.2 million and lower than expected returns on plan assets of $0.2 million, partially offset by the impact of experience gains and other changes in valuation assumptions of $3.9 million.

The Company recognized actuarial losses of $1.0 million during 2015 primarily due to lower than expected returns on plan assets of $8.6 million and the impact of experience losses and other changes in valuation assumptions of $1.7 million, partially offset by the impact of a 44 basis point increase in the discount rate used to measure its defined benefit postretirement obligations of $9.3 million.

The discount rate assumption is based on current rates of high-quality long-term corporate bonds over the same period that benefit payments will be required to be made. The expected rate of return on plan assets assumption is based on the weighted-average expected return on the various asset classes in the plans’ portfolio. The asset class return is developed using historical asset return performance as well as current market conditions such as inflation, interest rates and equity market performance.

For expense purposes in 2017, the Company applied a discount rate of 3.97% to its other postretirement benefit plans. For expense purposes in 2018, the Company will apply a discount rate of 3.57% to its other postretirement benefit plans.

For expense purposes in 2017, the Company applied an expected rate of return of 6.00% to the VEBA trust assets. For expense purposes in 2018, the Company will apply an expected rate of return of 4.50% to the VEBA trust assets.

The following tables set forth the change in benefit obligation, change in plan assets, funded status and amounts recognized on the Consolidated Balance Sheets of the other postretirement benefit plans as of December 31, 2017 and 2016:



	2017			2016
Change in benefit obligation:
Benefit obligation at beginning of year	$	241.4		$	262.7
Service cost	0.1			0.3
Interest cost	9.1			11.0
Plan amendments	1.2			(11.4		)
Actuarial (gains) losses	(0.3		)	4.3
Benefits paid	(31.7		)	(25.5		)
Benefit obligation at end of year	$	219.8		$	241.4



Change in plan assets:
Fair value of plan assets at beginning of year	$	102.4		$	112.1
Company contributions / payments	12.4			9.7
Return on plan assets	9.3			6.1
Benefits paid	(31.7		)	(25.5		)
Fair value of plan assets at end of year	92.4			102.4
Funded status at end of year	$	(127.4	)	$	(139.0	)



Amounts recognized on the Consolidated Balance Sheets:
Current liabilities	$	(4.8	)	$	(7.5	)
Non-current liabilities	(122.6		)	(131.5		)
	$	(127.4	)	$	(139.0	)



Amounts recognized in accumulated other comprehensive income:
Net prior service cost	$	(8.1	)	$	(10.3	)
Accumulated other comprehensive income	$	(8.1	)	$	(10.3	)



Changes to prior service cost recognized in accumulated other comprehensive (income) loss:
Accumulated other comprehensive income (loss) at beginning of year	$	(10.3	)	$	2.2
Prior service cost (credit)	1.2			(11.4		)
Recognized prior service credit (cost)	1.0			(1.0		)
Loss recognized due to curtailment	—			(0.1		)
Total recognized in accumulated other comprehensive income at December 31	$	(8.1	)	$	(10.3	)

In 2016, the Company amended one of its other postretirement benefit plans to no longer offer Company-subsidized postretirement medical benefits to certain eligible employees that retire after December 31, 2016. This amendment reduced the accumulated benefit obligation by $11.4 million in 2016. This amount will be amortized over the remaining service period of the employees affected by this amendment.

The current portion of accrued postretirement benefit cost, which was included in salaries, wages and benefits on the Consolidated Balance Sheets, was $4.8 million and $7.5 million at December 31, 2017 and 2016, respectively. In 2017, the current portion of accrued postretirement benefit cost related to unfunded plans and represented the actuarial present value of expected payments related to the plans to be made over the next 12 months.

The estimated prior service cost for the postretirement plans that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is a credit of $1.7 million.

For measurement purposes, the Company assumed a weighted-average annual rate of increase in the per capita cost (health care cost trend rate) for medical benefits of 6.25% for 2018, declining gradually to 5.0% in 2023 and thereafter; and 6.25% for 2018, declining gradually to 5.0% in 2023 and thereafter for prescription drug benefits; and 8.25% for 2018, declining gradually to 5.0% in 2031 and thereafter for HMO benefits. Most of the Company's postretirement plans include caps that limit the amount of the benefit provided by the Company to participants each year, which lessens the impact of health care inflation costs to the Company.

The assumed health care cost trend rate may have a significant effect on the amounts reported. A one percentage point increase in the assumed health care cost trend rate would have increased the 2017 total service and interest cost components by $0.2 million and would have increased the postretirement benefit obligation by $4.4 million. A one percentage point decrease would provide corresponding reductions of $0.2 million and $3.9 million, respectively.

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the "Medicare Act") provides for prescription drug benefits under Medicare Part D and contains a subsidy to plan sponsors who provide “actuarially equivalent” prescription plans. The Company’s actuary determined that the prescription drug benefit provided by the Company’s postretirement plan is considered to be actuarially equivalent to the benefit provided under the Medicare Act. In accordance with ASC Topic 715, “Compensation – Retirement Benefits,” all measures of the accumulated postretirement benefit obligation or net periodic postretirement benefit cost in the financial statements or accompanying notes reflect the effects of the Medicare Act on the plan for the entire fiscal year. The 2017 expected subsidy was $1.7 million, of which $0.9 million was received prior to December 31, 2017.



	Current Target Allocation			Percentage of VEBA Assets at December 31,
Asset Category				2017	2016
Equity securities	14%	to	20%	17%	30%
Fixed income securities	80%	to	86%	83%	70%
Total				100%	100%

Preservation of capital is important; however, the Company also recognizes that appropriate levels of risk are necessary to allow its investment managers to achieve satisfactory long-term results consistent with the objectives and the fiduciary character of the postretirement funds. Asset allocations are established in a manner consistent with projected plan liabilities, benefit payments and expected rates of return for various asset classes. The expected rate of return for the investment portfolio is based on expected rates of return for various asset classes, as well as historical asset class and fund performance.



	2017		2016
Assets:
Cash and cash equivalents	$	13.0	$	2.1
Common collective fund - U.S. equities	9.5		18.5
Common collective fund - international equities	6.7		12.3
Common collective fund - fixed income	63.2		69.5
Total Assets	$	92.4	$	102.4

Cash and cash equivalents are valued at redemption value. Common collective funds are valued based on a net asset value per share, which is used as a practical expedient to fair value. When such prices are unavailable, the plan trustee determines a valuation from the market maker dealing in the particular security.



	Gross		Expected Medicare Subsidies		Net Including Medicare Subsidies
2018	$	24.9	$	1.2	$	23.7
2019	23.4		1.2		22.2
2020	22.0		1.3		20.7
2021	20.8		1.3		19.5
2022	19.6		1.3		18.3
2023-2027	80.9		6.3		74.6