Page 35 - 2019 Annual Report

NOTES TO FINANCIAL STATEMENTS (continued)

Note K: Retirement Plans, Postretirement and Postemployment Benefits
The Company sponsors defined benefit retirement plans that cover substantially all employees. Additionally, the Company
provides other postretirement benefits for certain employees, including medical benefits for retirees and their spouses and
retiree life insurance. Employees starting on or after January 1, 2002 are not eligible for postretirement welfare plans. The
Company also provides certain benefits, such as disability benefits, to former or inactive employees after employment but
before retirement.
The measurement date for the Company’s defined benefit plans, postretirement benefit plans and postemployment benefit
plans is December 31.
Defined Benefit Retirement Plans. Retirement plan assets are invested in listed stocks, bonds, hedge funds, real estate and
cash equivalents. Defined retirement benefits for salaried employees are based on each employee’s years of service and
average compensation for a specified period of time before retirement. Defined retirement benefits for hourly employees are
generally stated amounts for specified periods of service.
The Company sponsors a Supplemental Excess Retirement Plan (SERP) that generally provides for the payment of retirement
benefits in excess of allowable Internal Revenue Code limits. The SERP generally provides for a lump‐sum payment of vested
benefits. When these benefit payments exceed the sum of the service and interest costs for the SERP during a year, the
Company recognizes a pro rata portion of the SERP’s unrecognized actuarial loss as settlement expense.

The net periodic retirement benefit cost of defined benefit plans includes the following components:

years ended December 31
(in millions) 2019 2018 2017
Service cost $ 30.8 $ 31.7 $ 26.9
Interest cost 37.6 33.2 36.1
Expected return on assets (47.9 ) (46.0 ) (39.8 )
Amortization of:
Prior service cost — 0.1 0.3
Actuarial loss 16.0 12.8 14.1
Settlement charge — 2.9 —
Net periodic benefit cost $ 36.5 $ 34.7 $ 37.6

The components of net periodic benefit cost, other than service cost, are included in the line item Other nonoperating expenses
and (income), net, in the consolidated statements of earnings.

The expected return on assets is calculated by applying an annually selected expected rate of return assumption to the
estimated fair value of the plan assets, giving consideration to contributions and benefits paid.
The Company recognized the following amounts in consolidated comprehensive earnings:

years ended December 31
(in millions) 2019 2018 2017
Actuarial loss $ 11.7 $ 32.1 $ 13.3
Net prior service cost 6.4 — —
Amortization of:
Prior service cost — (0.1 ) (0.3 )
Actuarial loss (16.0 ) (12.8 ) (14.1 )
Settlement charge — (2.9 ) —
Total $ 2.1 $ 16.3 $ (1.1 )

Celebrating 25 Years as a Public Company Annual Report ♦ Page 33