RETIREMENT PLANS

Defined Benefit Plans

Our United Kingdom subsidiary has a defined benefit pension plan covering all eligible employees (the “UK Plan”); however, no individual joining the company after October 31, 2001 may participate in the plan. On May 31, 2010, we curtailed the future accrual of benefits for active employees under this plan.

We account for our UK Plan and other defined benefit plans in accordance with ASC 715, “Compensation-Retirement Benefits” (“ASC 715”). ASC 715 requires that (a) the funded status, which is measured as the difference between the fair value of plan assets and the projected benefit obligations, be recorded in our balance sheet with a corresponding adjustment to accumulated other comprehensive income (loss) and (b) gains and losses for the differences between actuarial assumptions and actual results, and unrecognized service costs, be recognized through accumulated other comprehensive income (loss). These amounts will be subsequently recognized as net periodic pension cost.

The change in benefit obligations and assets of the UK Plan for the years ended December 31, 2018 and 2017 consisted of the following components (in thousands):



	2018			2017
Change in pension benefit obligation
Benefit obligation at beginning of year	$	332,618		$	306,731
Interest cost	8,085			8,622
Actuarial (gain) loss	(27,755		)	2,058
Benefits paid	(14,318		)	(13,709		)
Foreign currency exchange rate changes	(16,854		)	28,916
Benefit obligation at end of year	281,776			332,618
Change in pension plan assets
Fair value of plan assets at beginning of year	295,968			257,236
Actual return on plan assets	(6,489		)	22,899
Employer contributions	4,742			4,727
Benefits paid	(14,318		)	(13,709		)
Foreign currency exchange rate changes	(15,709		)	24,815
Fair value of plan assets at end of year	264,194			295,968
Funded status at end of year	$	(17,582	)	$	(36,650	)

Amounts not yet reflected in net periodic pension cost and included in accumulated other comprehensive loss were as follows (in thousands):



	2018		2017
Unrecognized losses	$	86,768	$	102,054

The underfunded status of the UK Plan of $17.6 million and $36.7 million at December 31, 2018 and 2017, respectively, is included in “Other long-term obligations” in the accompanying Consolidated Balance Sheets. No plan assets are expected to be returned to us during the year ending December 31, 2019.

The weighted average assumptions used to determine benefit obligations as of December 31, 2018 and 2017 were as follows:



	2018		2017
Discount rate	2.9	%	2.5	%

The weighted average assumptions used to determine net periodic pension cost for the years ended December 31, 2018, 2017 and 2016 were as follows:



	2018		2017		2016
Discount rate	2.5	%	2.7	%	3.8	%
Annual rate of return on plan assets	5.0	%	5.3	%	6.2	%

The annual rate of return on plan assets has been determined by modeling possible returns using the actuary’s portfolio return calculator and the fair value of plan assets. This models the long term expected returns of the various asset classes held in the portfolio and takes into account the additional benefits of holding a diversified portfolio. For measurement purposes of the liability, the annual rate of inflation of covered pension benefits assumed for 2018 and 2017 was 2.1%.

The components of net periodic pension cost of the UK Plan for the years ended December 31, 2018, 2017 and 2016 were as follows (in thousands):



	2018			2017			2016
Interest cost	$	8,085		$	8,622		$	10,320
Expected return on plan assets	(13,797		)	(13,508		)	(14,227		)
Amortization of unrecognized loss	2,630			2,942			2,047
Net periodic pension cost (income)	$	(3,082	)	$	(1,944	)	$	(1,860	)

Actuarial gains and losses are amortized using a corridor approach whereby cumulative gains and losses in excess of the greater of 10% of the pension benefit obligation or the fair value of plan assets are amortized over the average life expectancy of plan participants. The amortization period for 2018 was 25 years.

The reclassification adjustment, net of income taxes, for the UK Plan from accumulated other comprehensive loss into net periodic pension cost for the years ended December 31, 2018, 2017 and 2016 was approximately $2.1 million, $2.3 million and $1.7 million, respectively. The estimated unrecognized loss for the UK Plan that will be amortized from accumulated other comprehensive loss into net periodic pension cost over the next year is approximately $1.9 million, net of income taxes.

UK Plan Assets

The weighted average asset allocations and weighted average target allocations at December 31, 2018 and 2017 were as follows:



Asset Category	Target Asset Allocation		December 31, 2018		December 31, 2017
Equity securities	15.0	%	13.4	%	14.1	%
Debt securities	65.0	%	71.2	%	77.3	%
Cash	10.0	%	6.1	%	8.6	%
Real estate	10.0	%	9.3	%	—	%
Total	100.0	%	100.0	%	100.0	%

Plan assets of our UK Plan are invested through fund managers. Debt securities include United Kingdom government debt and United States, United Kingdom, European and emerging market corporate debt. Equity securities include marketable equity and equity like instruments across developed global equity markets. Real estate assets represent investments in trusts which invest directly or indirectly in various properties throughout the United Kingdom.

The following tables set forth by level, within the fair value hierarchy discussed in Note 11 - Fair Value Measurements, the fair value of assets of the UK Plan as of December 31, 2018 and 2017 (in thousands):



	Assets at Fair Value as of December 31, 2018
Asset Category	Level 1		Level 2		Level 3		Total
Equity and equity like investments	$	—	$	35,425	$	—	$	35,425
Corporate debt securities	—		37,703		98,077		135,780
Government bonds	—		52,445		—		52,445
Cash	16,097		—		—		16,097
Real estate	—		—		24,447		24,447
Total	$	16,097	$	125,573	$	122,524	$	264,194



	Assets at Fair Value as of December 31, 2017
Asset Category	Level 1		Level 2		Level 3		Total
Equity and equity like investments	$	—	$	41,684	$	—	$	41,684
Corporate debt securities	—		69,630		103,945		173,575
Government bonds	—		55,207		—		55,207
Cash	25,502		—		—		25,502
Total	$	25,502	$	166,521	$	103,945	$	295,968

In regards to the plan assets of our UK Plan, investment amounts have been allocated within the fair value hierarchy based on the nature of the investment. The characteristics of the assets that sit within each level are summarized as follows:

Level 1-This asset represents cash.

Level 2-These assets are a combination of the following:


(a)	Assets that are not exchange traded but have a unit price that is based on the net asset value of the fund. The unit prices are not quoted but the underlying assets held by the fund are either:


(i)	held in a variety of listed investments; or


(ii)	held in UK treasury bonds or corporate bonds with the asset value being based on fixed income streams. Some of the underlying bonds are also listed on regulated markets.

It is the value of the underlying assets that have been used to calculate the unit price of the fund.


(b)	Assets that are not exchange traded but have a unit price that is based on the net asset value of the fund. The unit prices are quoted. The underlying assets within these funds comprise cash or assets that are listed on a regulated market (i.e., the values are based on observable market data) and it is these values that are used to calculate the unit price of the fund.

Level 3-Assets that are not exchange traded but have a unit price that is based on the net asset value of the investment or for which fair value is determined by third party appraisals or valuations. Such fair values are not quoted or available on any market.

The table below sets forth a summary of changes in the fair value of the UK Plan’s Level 3 assets for the year ended December 31, 2018 (in thousands):



Level 3 Assets	2018			2017
Start of year balance	$	103,945		$	—
Actual return on plan assets, relating to assets still held at reporting date	(71		)	1,858
Actual return on plan assets, relating to assets sold during the period	216			—
Purchases, sales and settlements, net	25,523			98,633
Change due to exchange rate changes	(7,089		)	3,454
End of year balance	$	122,524		$	103,945

Level 3 debt securities are valued based on the credit rating and performance of the underlying debt portfolio, which includes benchmarking of risk and return relative to the investment plan. Level 3 real estate investments are valued at fair market value based on third party appraisals or valuations.

The investment policies and strategies for the plan assets are established by the plan trustees (who are independent of the Company) to achieve a reasonable balance between risk, likely return and administration expense, as well as to maintain funds at a level to meet minimum funding requirements. In order to ensure that an appropriate investment strategy is in place, an analysis of the UK Plan’s assets and liabilities is completed periodically.

Cash Flows:

Contributions

Our United Kingdom subsidiary expects to contribute approximately $4.5 million to the UK Plan in 2019.

Estimated Future Benefit Payments

The following estimated benefit payments are expected to be paid in the following years (in thousands):



	Pension Benefits
2019	$	14,007
2020	$	14,425
2021	$	14,857
2022	$	15,301
2023	$	15,757
Succeeding five years	$	86,141

The following table shows certain information for the UK Plan where the accumulated benefit obligation is in excess of plan assets as of December 31, 2018 and 2017 (in thousands):



	2018		2017
Projected benefit obligation	$	281,776	$	332,618
Accumulated benefit obligation	$	281,776	$	332,618
Fair value of plan assets	$	264,194	$	295,968

We also sponsor three domestic retirement plans in which participation by new individuals is frozen. The benefit obligation associated with these plans as of December 31, 2018 and 2017 was approximately $8.5 million and $9.3 million, respectively. The estimated fair value of the plan assets as of December 31, 2018 and 2017 was approximately $4.9 million and $5.5 million, respectively. The plan assets are considered Level 1 assets within the fair value hierarchy and are predominantly invested in cash, equities, and equity and bond funds. The liability balances as of December 31, 2018 and 2017 are classified as “Other long-term obligations” in the accompanying Consolidated Balance Sheets. The measurement date for these plans is December 31 of each year. The major assumptions used in the actuarial valuations to determine benefit obligations as of December 31, 2018 and 2017 included discount rates of 4.00% to 4.25% for 2018 and 3.50% to 4.00% for 2017. Also, included was an expected rate of return of 7.00% for both 2018 and 2017. The reclassification adjustment, net of income taxes, from accumulated other comprehensive loss into net periodic pension cost was approximately $0.2 million for each of the years ended December 31, 2018, 2017 and 2016. The estimated loss for these plans that will be amortized from accumulated other comprehensive loss into net periodic pension cost over the next year is approximately $0.2 million, net of income taxes. The future estimated benefit payments expected to be paid from the plans for the next ten years is approximately $0.5 million per year.

Multiemployer Plans

We participate in approximately 200 multiemployer pension plans (“MEPPs”) that provide retirement benefits to certain union employees in accordance with various collective bargaining agreements (“CBAs”). As one of many participating employers in an MEPP, we are potentially liable with the other participating employers for such plan's underfunding either through an increase in our required contributions, or in the case of our withdrawal from the plan, a payment based upon our proportionate share of the plan's unfunded benefits, in each case, as described below. Our contributions to a particular MEPP are established by the applicable CBAs; however, our required contributions may increase based on the funded status of an MEPP and legal requirements of the Pension Protection Act of 2006 (the “PPA”), which requires substantially underfunded MEPPs to implement a funding improvement plan (“FIP”) or a rehabilitation plan (“RP”) to improve their funded status. Factors that could impact the funded status of an MEPP include, without limitation, investment performance, changes in the participant demographics, decline in the number of contributing employers, changes in actuarial assumptions and the utilization of extended amortization provisions.

An FIP or RP requires a particular MEPP to adopt measures to correct its underfunding status. These measures may include, but are not limited to: (a) an increase in our contribution rate as a signatory to the applicable CBA, (b) a reallocation of the contributions already being made by participating employers for various benefits to individuals participating in the MEPP and/or (c) a reduction in the benefits to be paid to future and/or current retirees. In addition, the PPA requires that a 5% surcharge be levied on employer contributions for the first year commencing after the date the employer receives notice that the MEPP is in critical status and a 10% surcharge on each succeeding year until a CBA is in place with terms and conditions consistent with the RP.

We could also be obligated to make payments to MEPPs if we either cease to have an obligation to contribute to the MEPP or significantly reduce our contributions to the MEPP because we reduce our number of employees who are covered by the relevant MEPP for various reasons, including, but not limited to, layoffs or closure of a subsidiary assuming the MEPP has unfunded vested benefits. The amount of such payments (known as a complete or partial withdrawal liability) would equal our proportionate share of the MEPPs’ unfunded vested benefits. We believe that certain of the MEPPs in which we participate may have unfunded vested benefits. Due to uncertainty regarding future factors that could trigger withdrawal liability, as well as the absence of specific information regarding the MEPP’s current financial situation, we are unable to determine (a) the amount and timing of any future withdrawal liability, if any, and (b) whether our participation in these MEPPs could have a material adverse impact on our financial position, results of operations or liquidity. We did not record any withdrawal liability for the years ended December 31, 2018, 2017 and 2016.

The following table lists all domestic MEPPs to which our contributions exceeded $2.0 million in 2018. Additionally, this table also lists all domestic MEPPs to which we contributed in 2018 in excess of $0.5 million for MEPPs in the critical status, “red zone”, and $1.0 million for MEPPs in the endangered status, “orange or yellow zones”, as defined by the PPA (in thousands):



Pension Fund	EIN/Pension Plan Number		PPA Zone Status ⁽¹⁾		FIP/RP Status	Contributions						Contributions greater than 5% of total plan contributions ⁽²⁾	Expiration date of CBA
Pension Fund	EIN/Pension Plan Number		2018	2017	FIP/RP Status	2018		2017		2016			Expiration date of CBA
National Automatic Sprinkler Industry Pension Fund	52-6054620	001	Red	Red	Implemented	$	14,888	$	14,228	$	11,075	No	March 2019 to June 2022
Plumbers & Pipefitters National Pension Fund	52-6152779	001	Yellow	Yellow	Implemented	11,868		12,550		12,034		No	January 2019 to August 2026
Sheet Metal Workers National Pension Fund	52-6112463	001	Yellow	Yellow	Implemented	10,895		12,895		11,280		No	April 2019 to May 2023
National Electrical Benefit Fund	53-0181657	001	Green	Green	N/A	10,700		11,572		10,328		No	February 2019 to May 2022
Pension, Hospitalization & Benefit Plan of the Electrical Industry-Pension Trust Account	13-6123601	001	Green	Green	N/A	10,469		9,489		9,687		No	April 2019 to November 2021
Central Pension Fund of the IUOE & Participating Employers	36-6052390	001	Green	Green	N/A	6,384		6,070		6,211		No	January 2019 to September 2023
Plumbers Pipefitters & Mechanical Equipment Service Local Union 392 Pension Plan	31-0655223	001	Red	Red	Implemented	6,047		6,084		5,202		Yes	June 2019
Pipefitters Union Local 537 Pension Fund	51-6030859	001	Green	Green	N/A	6,038		4,057		3,970		No	September 2020 to August 2021
Southern California IBEW-NECA Pension Trust Fund	95-6392774	001	Yellow	Red	Implemented	5,754		3,669		3,289		No	June 2019 to May 2020
Sheet Metal Workers Pension Plan of Northern California	51-6115939	001	Red	Red	Implemented	5,488		6,023		5,164		No	June 2019 to June 2021
Electrical Workers Local No. 26 Pension Trust Fund	52-6117919	001	Green	Green	N/A	5,485		4,441		3,390		Yes	May 2019 to July 2021
Electrical Contractors Association of the City of Chicago Local Union 134, IBEW Joint Pension Trust of Chicago Pension Plan 2	51-6030753	002	Green	Green	N/A	4,308		5,537		5,518		No	June 2019



Pension Fund	EIN/Pension Plan Number		PPA Zone Status ⁽¹⁾		FIP/RP Status	Contributions						Contributions greater than 5% of total plan contributions ⁽²⁾	Expiration date of CBA
Pension Fund	EIN/Pension Plan Number		2018	2017	FIP/RP Status	2018		2017		2016			Expiration date of CBA
U.A. Local 393 Pension Trust Fund Defined Benefit	94-6359772	002	Green	Green	N/A	4,298		1,540		2,490		Yes	June 2019 to June 2021
Eighth District Electrical Pension Fund	84-6100393	001	Green	Green	N/A	3,486		3,786		3,444		Yes	February 2019 to May 2022
U.A. Plumbers Local 24 Pension Fund	22-6042823	001	Green	Green	N/A	3,461		3,092		3,147		Yes	April 2020
Edison Pension Plan	93-6061681	001	Green	Green	N/A	3,140		1,628		1,400		No	December 2020
Northern California Pipe Trades Pension Plan	94-3190386	001	Green	Green	N/A	3,104		2,963		6,495		No	June 2019 to June 2021
Southern California Pipe Trades Retirement Fund	51-6108443	001	Green	Green	N/A	3,095		3,907		4,371		No	June 2019 to August 2026
San Diego Electrical Pension Plan	95-6101801	001	Green	Green	N/A	3,008		2,862		2,216		Yes	May 2019 to May 2020
Plumbers & Steamfitters Local 486 Pension Fund	52-6124449	001	Green	Green	N/A	2,720		1,830		1,155		Yes	March 2019 to December 2019
NECA-IBEW Pension Trust Fund	51-6029903	001	Green	Green	N/A	2,650		3,060		3,752		Yes	March 2019 to May 2020
Arizona Pipe Trades Pension Trust Fund	86-6025734	001	Green	Green	N/A	2,640		1,662		681		No	June 2020
Heating, Piping & Refrigeration Pension Fund	52-1058013	001	Green	Green	N/A	2,619		2,437		2,402		No	July 2019
Plumbing & Pipe Fitting Local 219 Pension Fund	34-6682376	001	Red	Red	Implemented	2,197		1,335		838		Yes	May 2019
Connecticut Plumbers & Pipefitters Pension Fund	06-6050353	001	Green	Green	N/A	2,104		1,988		1,631		Yes	June 2021
Sheet Metal Workers Pension Plan of Southern California, Arizona & Nevada	95-6052257	001	Yellow	Yellow	Implemented	1,934		3,268		2,946		No	June 2019 to June 2021
Boilermaker-Blacksmith National Pension Trust	48-6168020	001	Red	Red	Implemented	1,446		1,083		1,710		No	April 2019 to September 2021
Plumbers & Pipefitters Local 162 Pension Fund	31-6125999	001	Yellow	Yellow	Implemented	1,273		801		781		Yes	May 2019
Plumbers & Pipefitters Local Union No. 502 & 633 Pension Fund	61-6078145	001	Yellow	Yellow	Implemented	1,167		801		713		No	July 2019
South Florida Electrical Workers Pension Plan and Trust	59-6230530	001	Red	Red	Implemented	821		503		263		Yes	February 2019 to August 2021
Steamfitters Local Union No. 420 Pension Plan	23-2004424	001	Red	Red	Implemented	706		687		709		No	May 2020
Other Multiemployer Pension Plans						46,036		43,368		39,005			Various
Total Contributions						$	190,229	$	179,216	$	167,297

_________________


(1)	The zone status represents the most recent available information for the respective MEPP, which may be 2017 or earlier for the 2018 year and 2016 or earlier for the 2017 year.

(2)

This information was obtained from the respective plan’s Form 5500 (“Forms”) for the most current available filing. These dates may not correspond with our fiscal year contributions. The above noted percentages of contributions are based upon disclosures contained in the plans’ Forms. Those Forms, among other things, disclose the names of individual participating employers whose annual contributions account for more than 5% of the aggregate annual amount contributed by all participating employers for a plan year. Accordingly, if the annual contribution of two or more of our subsidiaries each accounted for less than 5% of such contributions, but in the aggregate accounted for in excess of 5% of such contributions, that greater percentage is not available and accordingly is not disclosed.

The nature and diversity of our business may result in volatility in the amount of our contributions to a particular MEPP for any given period. That is because, in any given market, we could be working on a significant project and/or projects, which could result in an increase in our direct labor force and a corresponding increase in our contributions to the MEPP(s) dictated by the applicable CBA. When that particular project(s) finishes and is not replaced, the number of participants in the MEPP(s) who are employed by us would also decrease, as would our level of contributions to the particular MEPP(s). Additionally, the amount of contributions to a particular MEPP could also be affected by the terms of the CBA, which could require at a particular time, an increase in the contribution rate and/or surcharges. Our contributions to various MEPPs did not significantly increase as a result of acquisitions made since 2016.

We also participated in two MEPPs that are located within the United Kingdom for which we have contributed less than $0.1 million for the year ended December 31, 2018, less than $0.1 million for the year ended December 31, 2017 and approximately $0.2 million for the year ended December 31, 2016. The decrease in contributions since 2016 was due to the closure of one of these plans. The information that we have obtained relating to these plans is not as readily available and/or as comparable as the information that has been ascertained in the United States. Based upon the most recently available information, the remaining plan is 100% funded.

Additionally, we contribute to certain multiemployer plans that provide post retirement benefits such as health and welfare benefits and/or defined contribution/annuity plans, among others. Our contributions to these plans approximated $135.9 million, $130.9 million and $130.5 million for the years ended December 31, 2018, 2017 and 2016, respectively. Our contributions to other post retirement benefit plans did not significantly increase as a result of acquisitions made since 2016. The amount of contributions to these plans is also subject for the most part to the factors discussed above in conjunction with the MEPPs.

Defined Contribution Plans

We have defined contribution retirement and savings plans that cover eligible employees in the United States. Contributions to these plans are based on a percentage of the employee’s base compensation. The expenses recognized for the years ended December 31, 2018, 2017 and 2016 for these plans were approximately $29.8 million, $28.1 million and $26.8 million, respectively. At our discretion and subject to applicable plan documents, we may make additional supplemental matching contributions to one of our defined contribution retirement and savings plans. The expenses recognized related to additional supplemental matching for the years ended December 31, 2018, 2017 and 2016 were approximately $6.1 million, $5.5 million and $5.4 million, respectively.

Our United Kingdom subsidiary has defined contribution retirement plans. The expense recognized for the years ended December 31, 2018, 2017 and 2016 was approximately $4.9 million, $3.9 million and $3.6 million, respectively.