Postretirement Benefits (Tables)
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12 Months Ended |
Dec. 31, 2016 |
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| Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract] |
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| Schedule of Net Pension and Other Benefit Costs |
Costs. Pension and other postretirement benefit costs included the following components for 2016, 2015 and 2014:
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Pension Benefits |
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Other Postretirement Benefits |
(in millions) |
2016 |
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2015 |
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2014 |
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2016 |
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2015 |
|
2014 |
Interest cost |
$ |
35.8 |
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$ |
47.9 |
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$ |
58.6 |
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$ |
1.4 |
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$ |
1.8 |
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$ |
2.0 |
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Expected return on plan assets |
(38.5 |
) |
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(55.7 |
) |
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(58.8 |
) |
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— |
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— |
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— |
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Amortization of prior service credits |
— |
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— |
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— |
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(0.7 |
) |
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(0.7 |
) |
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(0.9 |
) |
Amortization of net actuarial losses |
17.4 |
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19.5 |
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15.0 |
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— |
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1.3 |
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— |
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Settlement charges |
55.1 |
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82.3 |
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27.9 |
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— |
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— |
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— |
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Net pension and other benefit costs |
$ |
69.8 |
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$ |
94.0 |
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$ |
42.7 |
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$ |
0.7 |
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$ |
2.4 |
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$ |
1.1 |
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| Reconciliation of the Changes in Plans Benefit Obligations, Fair Value of Plan Assets, and Statement of Funded Status |
Benefit Obligations and Funded Status. A reconciliation of the changes in the benefit obligations and fair value of assets over the two-year period ending December 31, 2016, and a statement of the funded status at December 31 for these years for the Company's pension and other postretirement benefit plans follow:
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Pension Benefits |
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Other Postretirement Benefits |
(in millions) |
2016 |
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2015 |
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2016 |
|
2015 |
Reconciliation of benefit obligation: |
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Benefit obligation at previous December 31 |
$ |
1,035.5 |
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$ |
1,315.4 |
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$ |
43.5 |
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$ |
49.5 |
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Interest cost |
35.8 |
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47.9 |
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1.4 |
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|
1.8 |
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Participant contributions |
— |
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— |
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0.5 |
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0.7 |
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Actuarial (gains) losses |
49.0 |
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(56.8 |
) |
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(0.9 |
) |
|
(4.1 |
) |
Benefit payments |
(73.6 |
) |
|
(79.2 |
) |
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(3.9 |
) |
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(4.4 |
) |
Settlement payments |
(125.2 |
) |
|
(191.8 |
) |
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— |
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— |
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Benefit obligation at December 31 |
921.5 |
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1,035.5 |
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40.6 |
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43.5 |
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Reconciliation of fair value of plan assets: |
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Fair value of plan assets at previous December 31 |
736.4 |
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965.9 |
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— |
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— |
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Actual return on plan assets |
75.7 |
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(32.1 |
) |
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— |
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— |
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Employer contributions |
74.6 |
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73.6 |
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3.4 |
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3.7 |
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Participant contributions |
— |
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— |
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0.5 |
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0.7 |
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Benefit payments |
(73.6 |
) |
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(79.2 |
) |
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(3.9 |
) |
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(4.4 |
) |
Settlement payments |
(125.2 |
) |
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(191.8 |
) |
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— |
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— |
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Fair value of plan assets at December 31 |
687.9 |
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|
736.4 |
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— |
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— |
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Funded status at December 31 |
$ |
(233.6 |
) |
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$ |
(299.1 |
) |
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$ |
(40.6 |
) |
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$ |
(43.5 |
) |
Funded percentage (A)
|
75 |
% |
|
71 |
% |
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NA |
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NA |
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(A) As all of the Company's plans are frozen, the projected benefit obligation and the accumulated benefit obligation are equal. As of December 31, 2016 and 2015, the projected and accumulated benefit obligations for all of the Company's pension plans were in excess of plan assets.
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| Schedule of Amounts Recognized in Consolidated Balance Sheet |
The amounts included in the Company's Consolidated Balance Sheets as of December 31, 2016 and 2015, were as follows:
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Pension Benefits |
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Other Postretirement Benefits |
(in millions) |
2016 |
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2015 |
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2016 |
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2015 |
Accrued expenses |
$ |
10.5 |
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$ |
3.8 |
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$ |
4.1 |
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$ |
4.4 |
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Postretirement benefit liabilities |
223.1 |
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295.3 |
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36.5 |
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|
39.1 |
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Net amount recognized |
$ |
233.6 |
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$ |
299.1 |
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$ |
40.6 |
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$ |
43.5 |
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| Activity Recorded in Accumulated Other Comprehensive Income or Loss |
Accumulated Other Comprehensive Loss. The following pretax activity related to pensions and other postretirement benefits was recorded in Accumulated other comprehensive loss as of December 31:
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Pension Benefits |
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Other Postretirement Benefits |
(in millions) |
2016 |
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2015 |
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2016 |
|
2015 |
Prior service credits |
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Beginning balance |
$ |
— |
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$ |
— |
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$ |
(10.9 |
) |
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$ |
(11.6 |
) |
Amount recognized as component of net benefit costs |
— |
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— |
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0.7 |
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0.7 |
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Ending balance |
— |
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— |
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(10.2 |
) |
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(10.9 |
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Net actuarial losses |
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Beginning balance |
457.8 |
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528.6 |
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1.9 |
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7.3 |
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Actuarial (gains) losses arising during the period |
11.8 |
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31.0 |
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(0.9 |
) |
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(4.1 |
) |
Amount recognized as component of net benefit costs |
(72.5 |
) |
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(101.8 |
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— |
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(1.3 |
) |
Ending balance |
397.1 |
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457.8 |
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1.0 |
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1.9 |
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Total |
$ |
397.1 |
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$ |
457.8 |
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$ |
(9.2 |
) |
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$ |
(9.0 |
) |
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| Assumed Health Care Cost Trend Rates |
The assumed health care cost trend rate for other postretirement benefits for pre-age 65 benefits as of December 31 was as follows:
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Pre-age 65 Benefits |
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2016 |
|
2015 |
Health care cost trend rate for next year |
5.7 |
% |
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5.8 |
% |
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) |
4.5 |
% |
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4.5 |
% |
Year rate reaches the ultimate trend rate |
2037 |
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2037 |
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| Effect of One-Percentage-Point Change in Assumed Health Care Cost Trend Rates |
A one percent change in the assumed health care trend rate at December 31, 2016 would not have a material impact on the accumulated postretirement benefit obligation.
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| Weighted-Average Assumptions Used to Determine Benefit Obligations and Net Pension and Other Postretirement Benefit Costs |
Weighted average assumptions used to determine pension and other postretirement benefit obligations at December 31 were as follows:
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Pension Benefits |
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Other Postretirement Benefits |
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2016 |
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2015 |
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2016 |
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2015 |
Discount rate |
4.00 |
% |
|
4.40 |
% |
|
3.93 |
% |
|
4.23 |
% |
Weighted average assumptions used to determine net pension and other postretirement benefit costs for the years ended December 31 were as follows:
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2016 |
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2015 |
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2014 |
Discount rate for pension benefits |
3.58% |
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3.95% |
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4.85% |
Discount rate for other postretirement benefits |
3.30% |
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3.75% |
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4.40% |
Long-term rate of return on plan assets |
5.25% |
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6.00% |
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6.25% |
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| Schedule of Allocation of Plan Assets |
The Trust asset allocation at December 31, 2016 and 2015, and target allocation for 2017 are as follows:
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2016 |
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2015 |
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Target
Allocation for 2017
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Equity securities: |
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United States |
19% |
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17% |
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17% |
International |
3% |
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3% |
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3% |
Fixed-income securities |
75% |
|
77% |
|
80% |
Short-term investments |
3% |
|
3% |
|
— |
Total |
100% |
|
100% |
|
100% |
The fair values of the Trust's pension assets at December 31, 2016, by asset class were as follows:
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Fair Value Measurements at December 31, 2016 (A)
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(in millions) |
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Quoted Prices in Active Markets for Identical Assets |
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Significant Observable Inputs |
Investments at fair value |
Total |
|
(Level 1) |
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(Level 2) |
Short-term investments |
$ |
1.9 |
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$ |
1.9 |
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$ |
— |
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Fixed-income securities: |
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Government securities (C)
|
141.5 |
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— |
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141.5 |
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Corporate securities (D)
|
382.1 |
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— |
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|
382.1 |
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Other investments (F)
|
8.5 |
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(0.4 |
) |
|
8.9 |
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Total investments at fair value |
$ |
534.0 |
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$ |
1.5 |
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$ |
532.5 |
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Investments at net asset value |
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Short-term investments |
46.8 |
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Equity securities (B)
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United States |
132.8 |
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International |
17.6 |
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Fixed-income securities: |
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Commingled funds (E)
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15.3 |
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Total investments at net asset value |
212.5 |
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Other liabilities (G)
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(58.6 |
) |
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Total pension plan net assets |
$ |
687.9 |
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(A) |
See Note 7 – Fair Value Measurements for a description of levels within the fair value hierarchy. The level in the fair value hierarchy within which the fair value measurement is classified is determined based on the lowest level input that is significant to the fair value measurement in its entirety. A description of the valuation methodologies is provided following these tables. There were no transfers in and/or out of Level 1, Level 2 and Level 3 in 2016.
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(B) |
The equity assets are invested in two indexed funds based on the Russell 3000 Index (U.S.) and the MSCI EAFE Equity Index (International). The Trust did not directly own any of the Company's common stock as of December 31, 2016.
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(C) |
Government securities are comprised of U.S. Treasury bonds and other government securities. |
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(D) |
Corporate securities consist primarily of a diversified portfolio of investment grade bonds issued by companies. |
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(E) |
This class includes commingled funds that primarily invest in investment grade corporate securities and government-related securities. This class also includes investments in non-agency collateralized mortgage obligations and mortgage-backed securities, futures and options. |
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(F) |
Other investments consist primarily of interest rate swaps used to manage the average duration of the fixed income portfolio and credit default swaps to manage credit risk exposure. |
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(G) |
This class includes interest receivable and receivables/payables for securities sold/purchased. |
The fair values of the Trust's pension assets at December 31, 2015, by asset class were as follows:
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Fair Value Measurements at December 31, 2015 (A)
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(in millions) |
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Quoted Prices in Active Markets for Identical Assets |
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Significant Observable Inputs |
Investments at fair value |
Total |
|
(Level 1) |
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(Level 2) |
Short-term investments |
$ |
0.5 |
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$ |
0.5 |
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$ |
— |
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Fixed-income securities: |
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Government securities (C)
|
124.8 |
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— |
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124.8 |
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Corporate securities (D)
|
415.8 |
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— |
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|
415.8 |
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Other investments (F)
|
(1.0 |
) |
|
— |
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(1.0 |
) |
Total investments at fair value |
$ |
540.1 |
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$ |
0.5 |
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$ |
539.6 |
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Investments at net asset value |
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Short-term investments |
26.2 |
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Equity securities (B)
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United States |
129.1 |
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International |
21.0 |
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Fixed-income securities: |
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Commingled funds (E)
|
37.3 |
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Total investments at net asset value |
213.6 |
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Other liabilities (G)
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(17.3 |
) |
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Total pension plan net assets |
$ |
736.4 |
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(A) |
See Note 7 – Fair Value Measurements for a description of levels within the fair value hierarchy. The level in the fair value hierarchy within which the fair value measurement is classified is determined based on the lowest level input that is significant to the fair value measurement in its entirety. A description of the valuation methodologies is provided following these tables. There were no transfers in and/or out of Level 1, Level 2 and Level 3 in 2015.
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(B) |
The equity assets are invested in two indexed funds based on the Russell 3000 Index (U.S.) and the MSCI EAFE Equity Index (International). The Trust did not directly own any of the Company's common stock as of December 31, 2015.
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(C) |
Government securities are comprised of U.S. Treasury bonds and other government securities. |
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(D) |
Corporate securities consist primarily of a diversified portfolio of investment grade bonds issued by companies. |
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(E) |
This class includes commingled funds that primarily invest in investment grade corporate securities and government-related securities. This class also includes investments in non-agency collateralized mortgage obligations and mortgage-backed securities, futures and options. |
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(F) |
Other investments consist primarily of interest rate swaps used to manage the average duration of the fixed income portfolio. |
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(G) |
This class includes interest receivable and receivables/payables for securities sold/purchased. |
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| Schedule of Expected Cash Flows |
Expected Cash Flows. The expected cash flows for the Company's pension and other postretirement benefit plans follow:
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(in millions) |
Pension Benefits |
|
Other Postretirement Benefits |
Company contributions expected to be made in 2017 (A)
|
$ |
73.8 |
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$ |
4.1 |
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Expected benefit payments: |
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2017 (B)
|
158.7 |
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|
4.1 |
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2018 |
56.8 |
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|
3.9 |
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2019 |
56.9 |
|
|
3.7 |
|
2020 |
56.6 |
|
|
3.4 |
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2021 |
56.0 |
|
|
3.1 |
|
2022-2026 |
270.0 |
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13.2 |
|
(A) The Company anticipates contributing approximately $70.0 million to fund the qualified pension plans and approximately $3.8 million to cover benefit payments in the unfunded, nonqualified pension plan in 2017. Company contributions are subject to change based on market conditions or Company discretion.
(B) Expected benefit payments in 2017 include payments in connection with the Hourly Plan and Muskegon Plan terminations.
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