Annual report pursuant to Section 13 and 15(d)

Postretirement Benefits (Tables)

v3.19.3.a.u2
Postretirement Benefits (Tables)
 12 Months Ended
Dec. 31, 2019
Defined Benefit Plan [Abstract]  
Schedule of Net Pension and Other Benefit Costs
Costs. Pension and other postretirement benefit costs included the following components for 2019, 2018 and 2017:
 
Pension Benefits
 
Other Postretirement Benefits
(in millions)
2019
 
2018
 
2017
 
2019
 
2018
 
2017
Interest cost
$
6.0

 
$
22.6

 
$
28.4

 
$
1.3

 
$
1.1

 
$
1.2

Expected return on plan assets
(7.4
)
 
(24.8
)
 
(33.5
)
 
—

 
—

 
—

Amortization of prior service credits
—

 
—

 
—

 
(0.7
)
 
(0.7
)
 
(0.7
)
Amortization of net actuarial losses
5.8

 
9.9

 
14.4

 
—

 
—

 
—

Settlement charges
292.8

 
—

 
96.6

 
—

 
—

 
—

Net pension and other benefit costs
$
297.2

 
$
7.7

 
$
105.9

 
$
0.6

 
$
0.4

 
$
0.5


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, 2019, and a statement of the funded status at December 31 for these years for the Company's pension and other postretirement benefit plans follow:
 
Pension Benefits
 
Other Postretirement Benefits
(in millions)
2019

2018

2019

2018
Reconciliation of benefit obligation:







Benefit obligation at previous December 31
$
652.8

 
$
716.9

 
$
34.3

 
$
38.7

Interest cost
6.0

 
22.6

 
1.3

 
1.1

Participant contributions
—

 
—

 
—

 
0.2

Actuarial losses (gains)
77.3

 
(42.9
)
 
0.2

 
(2.5
)
Benefit payments
(34.1
)
 
(43.8
)
 
(2.8
)
 
(3.2
)
Settlement payments
(673.9
)
 
—

 
—

 
—

Benefit obligation at December 31
28.1

 
652.8


33.0


34.3













Reconciliation of fair value of plan assets:











Fair value of plan assets at previous December 31
642.0

 
546.1

 
—

 
—

Actual return on plan assets
70.8

 
(24.1
)
 
—

 
—

Employer contributions
7.9

 
163.8

 
2.8

 
3.0

Participant contributions
—

 
—

 
—

 
0.2

Benefit payments
(34.1
)
 
(43.8
)
 
(2.8
)
 
(3.2
)
Settlement payments
(673.9
)
 
—

 
—

 
—

    Adjustments
(2.1
)
 
—

 
—

 
—

Fair value of plan assets at December 31
10.6


642.0


—


—













Funded status at December 31
$
(17.5
)

$
(10.8
)

$
(33.0
)

$
(34.3
)
Funded percentage (A)
38
%

98
%

NA


NA



(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, 2018, the plan assets for the Company's Salaried and Bargaining plans were in excess of the projected and accumulated benefit obligations
Schedule of Amounts Recognized in Consolidated Balance Sheet
The amounts included in the Company's Consolidated Balance Sheets as of December 31, 2019 and 2018, were as follows:
 
Pension Benefits
 
Other Postretirement Benefits
(in millions)
2019
 
2018
 
2019
 
2018
Prepaid expenses and other
$
—

 
$
14.8

 
$
—

 
$
—

Accounts and notes receivable
10.6

 
3.6

 
—

 
—

Assets recognized
$
10.6

 
$
18.4

 
$
—

 
$
—

 
 
 
 
 
 
 
 
Accrued expenses
$
3.5

 
$
3.7

 
$
3.6

 
$
3.6

Postretirement benefit liabilities
24.6

 
25.5

 
29.4

 
30.7

Liabilities recognized
$
28.1

 
$
29.2

 
$
33.0

 
$
34.3



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:
 
Pension Benefits
 
Other Postretirement Benefits
(in millions)
2019
 
2018
 
2019
 
2018
Prior service credits
 
 
 
 
 
 
 
Beginning balance
$
—

 
$
—

 
$
(8.8
)
 
$
(9.5
)
Amount recognized as component of net benefit costs
—

 
—

 
0.7

 
0.7

Ending balance
—

 
—

 
(8.1
)
 
(8.8
)
 
 
 
 
 
 
 
 
Net actuarial losses
 
 
 
 
 
 
 
Beginning balance
298.3

 
302.1

 
(1.5
)
 
1.0

Actuarial (gains) losses arising during the period
12.3

 
6.1

 
0.1

 
(2.5
)
Amount recognized as component of net benefit costs
(298.6
)
 
(9.9
)
 
—

 
—

Ending balance
12.0

 
298.3

 
(1.4
)
 
(1.5
)
 
 
 
 
 
 
 
 
Total
$
12.0

 
$
298.3

 
$
(9.5
)
 
$
(10.3
)

Schedule of Health Care Cost Trend Rates [Table Text Block] The assumed health care cost trend rate for other postretirement benefits for pre-age 65 benefits as of December 31 was as follows:
 
Pre-age 65 Benefits
 
2019
 
2018
Health care cost trend rate for next year
5.4
%
 
5.5
%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
4.5
%
 
4.5
%
Year rate reaches the ultimate trend rate
2037

 
2037


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, 2019 would not have a material impact on the accumulated postretirement benefit obligation.

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:
 
Pension Benefits
 
Other Postretirement Benefits
 
2019
 
2018
 
2019
 
2018
Discount rate
2.96
%
 
4.13
%
 
3.07
%
 
4.20
%


Weighted average assumptions used to determine net pension and other postretirement benefit costs for the years ended December 31 were as follows:
 
2019
 
2018
 
2017
Discount rate for pension benefits (A) (B)
4.13%
 
3.27%
 
3.40%
Discount rate for other postretirement benefits (A) (B)
3.85%
 
3.08%
 
3.17%
Long-term rate of return on plan assets (C)
NA
 
4.25%
 
4.75%


(A) The Company utilizes a yield curve analysis to calculate the discount rates used to determine pension and other postretirement benefit obligations. The yield curve analysis matches the cash flows of the Company's benefit obligations. The yield curve consisted of spot interest rates at half year increments for each of the next 30 years and was developed based on pricing and yield information for high quality corporate bonds rated Aa by either Moody's or Standard & Poor's, private placement bonds that are traded in reliance with Rule 144A and are at least two years from date of issuance, bonds with make-whole provisions and bonds issued by foreign corporations that are denominated in U.S. dollars, excluding callable bonds and bonds less than a minimum size and other filtering criteria. Additionally, the Company's yield curve methodology includes bonds having a yield that is greater than the regression mean yield curve as the Company believes this methodology represents an appropriate estimate of the rates at which the Company could effectively settle its pension obligations. For the Company's Salaried and Bargaining plans which were terminated during 2018, the discount rate was a blend of the December 31, 2018 yield curve rate associated with those participants electing annuity contracts to cover future benefit payments, and a lump-sum segment rate for those participants electing lump-sum benefit payments.
(B) The Company uses a "spot rate approach" in the calculation of pension and postretirement interest costs to provide a more accurate measurement of interest costs. The spot rate approach applies separate discount rates for each projected benefit payment in the calculation of pension and postretirement interest costs.
(C) The Company evaluates its assumption regarding the estimated long-term rate of return on plan assets based on historical experience, future expectations of investment returns, asset allocations, investment strategies and views of investment professionals.
Schedule of Allocation of Plan Assets
The fair values of the Trust's pension assets at December 31, 2018, by asset class were as follows:
 
Fair Value Measurements at December 31, 2018 (A)
(in millions)
Quoted Prices in Active Markets for Identical Assets
 
Significant Observable Inputs
 
 
Investments at fair value
(Level 1)
 
(Level 2)
 
Total
Cash and cash equivalents
$
6.1

 
$
—

 
$
6.1

Fixed-income securities:
 
 
 
 
 
Government securities (C)
—

 
126.2

 
126.2

Corporate securities (D)
—

 
356.2

 
356.2

Other investments (F)
—

 
7.2

 
7.2

Total investments at fair value
$
6.1

 
$
489.6

 
$
495.7

Investments at net asset value
 
 
 
 
 
Short-term investments
 
 
 
 
102.3

Equity securities: (B)
 
 
 
 
 
United States
 
 
 
 
2.0

Fixed-income securities:
 
 
 
 
 
Commingled funds (E)
 
 
 
 
63.3

Total investments at net asset value
 
 
 
 
167.6

Other liabilities (G)
 
 
 
 
(21.3
)
Total pension plan net assets
 
 
 
 
$
642.0


(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 and Level 2 in 2018.
(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, 2018.
(C)
Government securities are comprised of U.S. Treasury bonds and other government securities.
(D)
Corporate securities consist primarily of a diversified portfolio of investment grade bonds issued by companies.
(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.
(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.
(G)
This class includes interest receivable and receivables/payables for securities sold/purchased.

Schedule of Expected Cash Flows
Expected Cash Flows. The expected cash flows for the Company's pension and other postretirement benefit plan are presented as follows:
(in millions)
Pension Benefits
Other Postretirement Benefits
Company contributions expected to be made in 2020
$
3.5

$
3.2

Expected benefit payments:
 
 
2020
3.5

3.2

2021
3.0

3.0

2022
2.8

2.9

2023
2.7

2.7

2024
2.3

2.6

2025-2029
9.7

10.8