Avon 2015 Annual Report Download - page 119

election period ended during the second quarter of 2014 and the payments were made in June 2014 from our plan assets. As a result of the
lump-sum payments made, in the second quarter of 2014, we recorded a settlement charge of $23.5. Because the settlement threshold was
exceeded in the second quarter of 2014, settlement charges of $5.4 and $7.5 were also recorded in the third and fourth quarters of 2014,
respectively, as a result of additional payments from the PRA. These settlement charges were allocated between Global Expenses and
Discontinued Operations.
The amounts in AOCI that are expected to be recognized as components of net periodic benefit cost during 2016 are as follows:
Pension Benefits
U.S. Plans Non-U.S. Plans
Postretirement
Benefits
Net actuarial loss(3) $33.8 $6.9 $ 1.2
Prior service credit(3) (.5) (.1) (5.1)
(3) The table above reflects the amounts in AOCI that would be recognized as components of net periodic benefit cost during 2016 if Avon North America were
owned for the entire year. The estimated loss on sale includes approximately $260 of net actuarial losses, partially offset by approximately $1 of prior service
costs related to the U.S. pension plans and approximately $14 of net actuarial losses, more than offset by approximately $26 of prior service costs related to
U.S. postretirement benefit plans. Amounts associated with the pension and postretirement benefit plans in Canada and the postretirement benefit plan in
Puerto Rico, which are included in discontinued operations, have been excluded from all amounts in the table above. See Note 3, Discontinued Operations
and Divestitures.
Assumptions
Weighted-average assumptions used to determine benefit obligations recorded on the Consolidated Balance Sheets as of December 31 were
as follows:
Pension Benefits
U.S. Plans Non-U.S. Plans Postretirement Benefits
2015 2014 2015 2014 2015 2014
Discount rate 4.19% 3.83% 3.69% 3.27% 4.50% 4.20%
Rate of compensation increase 4.00% 4.00% 3.26% 3.20% N/A N/A
The discount rate used for determining the present value of future pension obligations for each individual defined benefit pension plan is
based on a review of bonds that receive a high-quality rating from a recognized rating agency. The discount rates for our more significant
plans, including the PRA, were based on the internal rates of return for a portfolio of high-quality bonds with maturities that are consistent
with the projected future benefit payment obligations of each plan. The weighted-average discount rate for U.S. and non-U.S. defined
benefit pension plans determined on this basis has increased to 3.92% at December 31, 2015, from 3.54% at December 31, 2014.
Amounts associated with the pension plan in Canada and postretirement benefit plans in Canada and Puerto Rico, which are associated
with discontinued operations, have been excluded from all amounts.
Weighted-average assumptions used to determine net benefit cost recorded in the Consolidated Statements of Operations for the years
ended December 31 were as follows:
Pension Benefits
U.S. Plans Non-U.S. Plans Postretirement Benefits
2015 2014 2013 2015 2014 2013 2015 2014 2013
Discount rate 3.83% 4.54% 3.55% 3.27% 4.59% 4.69% 4.20% 4.97% 4.00%
Rate of compensation increase 4.00% 4.00% 3.86% 3.20% 3.70% 3.95% N/A N/A N/A
Rate of return on assets 7.25% 7.50% 7.75% 6.55% 6.33% 6.64% N/A N/A N/A
In determining the long-term rates of return, we consider the nature of each plan’s investments, an expectation for each plan’s investment
strategies, historical rates of return and current economic forecasts, among other factors. We evaluate the expected rate of return on plan
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