BIC - 2020 Universal Registration Document

FINANCIAL STATEMENTS

Consolidated financial statements

NOTE 18

PENSION ANDOTHER EMPLOYEE BENEFITS

Accounting policies Payments to defined contribution retirement benefit plans are charged as an expense as they fall due. Payments made to ● state-managed retirement benefit plans are dealt with as payments to defined contribution plans where the Group’s obligation under these plans are equivalent to those arising in defined contribution retirement benefit plans. For defined benefit retirement plans, the amount of provision is determined using the Projected Unit Credit Method, with actuarial ● valuations being carried out at each balance sheet date. All actuarial differences are recognized in other comprehensive income in the period in which they occur. Past service costs are recognized for their full amount as a component of cost of services (in the income statement), whether benefits are vested definitively to their beneficiaries or are being acquired. The retirement benefit obligation recognized in the balance sheet represents the present value of the defined benefit obligation ● reduced by the fair value of plan assets. Any net asset resulting from this calculation is limited to the present value of available refunds and reduction in future contributions to the plan. Turnover rate is calculated by taking the number of departures including contractual terminations and dismissals during the year ● divided by the headcount as of January 1.

18-1

Plan characteristics

15 years of service, 7.5% for at least 15 but less than 20 years of service and 8% for 20 or more years of service, which are accumulated with guaranteed interest equal to 30-year Treasury rates, to retirement. Participation in this plan is closed for BIC Graphic employees hired after January 1, 2011. The Plan is subject to minimum funding requirements under U.S. law. On July 29, 2020, the Company announced a change to the salaried pension benefit for active team members hired prior to January 1, 2007. The BIC Corporation Salaried Pension Plan Final Average Earnings Formula (FAE) will be frozen on December 31, 2020 and future pension benefits for these team members will be accrued under the BIC Corporation Salaried Pension Plan Cash Balance Formula (same formula used for teammembers who joined BIC after January 1, 2007). The long-term objective of the Plan’s investment policy is to provide sufficient funding to cover expected benefit obligations, while assuming a prudent level of portfolio risk relative to the Plan’s liability. The Plan’s assets are invested in the BIC Corporation Master Trust – with a target asset allocation of 18% U.S. equity, 4% global low volatility equity, 18% non-U.S. equity, and 60% fixed income. Local 134L Pension Plan b) For beneficiaries hired before December 4, 2007, benefits under the Plan are based on a participant’s years of service multiplied by a fixed set amount (45.50 U.S. dollars per month for 2018, 46.25 U.S. dollars per month for 2019 and 47.00 U.S. dollars per month from December 31, 2019 and 47.25 U.S. dollars per month from January 1, 2021). Employees hired after December 4, 2007 accrue benefits under a Cash Balance Arrangement. These participants receive annual credits equal to 3.00% of pay through November 30, 2012, 3.75% of pay from December 1, 2012 through November 30, 2017, 4.75% of pay beginning on December 1, 2017 and 5% of pay beginning on December 1, 2020, which are accumulated with interest, equal to 30-year Treasury rates, to retirement.

Types of post-employment benefits and other long-term benefits Pursuant to the laws and practices in force in the countries where it operates, the Group has obligations in terms of employee benefits, in particular post-employment benefits: In the U.S. ● Two pension plans (“Salaried Pension Plan” and “Local 134L Pension Plan”) are effective (depending on the site) and are funded by their respective pension funds. In addition to these plans, medical and life insurance plans exist (“Salaried Retiree Medical and Life Insurance Plan” and “Local 134L Retiree Medical and Life Insurance Plan” depending on the site): Salaried Pension Plan a) Beneficiaries hired prior to 2007 accrue retirement benefits under an average reference salary formula that reflects years of service and includes Social Security retirement benefits. The formula provides for a life annuity, payable at normal retirement age (65), equal to 1.1% of the Social Security ceiling plus 1.5% of average pay in excess of the Social Security ceiling, multiplied by the number of years of service, which may not exceed 35 years, plus 1.4% of average pay per year of service in excess of 35 years. (Average pay is based on the highest three consecutive years within the last 10 years.) In addition, the Plan provides reduced early retirement benefits for beneficiaries who retire prior to age 65 (or age 62 if they retire at or after age 55 with 10 or more years of service). Eligible beneficiaries who retire after January 1, 2015 are eligible for a lump sum payment from the plan. Employees hired after 2006 accrue benefits under a Cash Balance Arrangement. These participants receive annual credits of 5% of their year’s pay for plan years before January 1, 2013, and for plan years after December 31, 2012, eligible beneficiaries receive annual credits of 5% per year for less than five years of service, 6% per year for at least five but less than 10 years of service, 7% per year for at least 10 but less than

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• BIC GROUP - 2020 UNIVERSAL REGISTRATION DOCUMENT •