Avery Dennison Corp., Glendale, Calif., will terminate its U.S. defined benefit plan, the company disclosed in an 8-K filing with the SEC on Tuesday.
The company's board of directors at its meeting on Monday approved the termination of the Avery Dennison Pension Plan and also approved a $200 million contribution to the plan before Aug. 15 to enable a deduction on its 2017 U.S. income tax return. According to the filing, the plan is about $240 million underfunded.
Upon termination, the company will "settle a long-term liability currently estimated to be approximately $950 million (calculated on a plan termination basis) through a combination of (i) lump-sum payments in 2018 to eligible participants who elect to receive them and (ii) the purchase of a group annuity contract with one or more highly rated insurance companies in the first half of 2019," according to the filing.
As of Dec. 31, U.S. defined benefit plan assets totaled $740.2 million, while projected benefit obligations totaled $1.082 billion for a funding ratio of 68.4%, according to Avery Dennison's most recent 10-K filing. Non-U.S. pension assets as of that date totaled $683.7 million, while the PBO totaled $836.7 million, for a funding ratio of 81.7%.
