Retirement Benefits

The Company sponsors several qualified and nonqualified pension plans and other postretirement plans for its employees. The Company uses a measurement date of December 31 for its defined benefit pension plans and post retirement medical plans. The Company employs the measurement date provisions of ASC 715, Compensation-Retirement Benefits, which require the measurement date of plan assets and liabilities to coincide with the sponsor’s year end.

During 2016, the Company offered a voluntary lump-sum pension payment opportunity to certain terminated vested U.S. pension plan participants. Total lump-sum payments of $11.0 million were made for those participants electing to receive lump sums using pension plan assets. The Company recognized pretax settlement losses of $3.5 million in the fourth quarter of 2016 for those plans where the settlement payment exceeded the sum of the plans’ service and interest costs.

The following table provides a reconciliation of the changes in the benefit obligations and fair value of plan assets over the two-year period ended December 31, 2018 and a statement of the funded status at December 31 for both years.



	Pension Benefits												Other Benefits
	2018						2017						2018			2017
	U.S.			Non-U.S.			U.S.			Non-U.S.
	(In thousands)
CHANGE IN BENEFIT OBLIGATION
Obligation at January 1	$	91,335		$	97,451		$	90,256		$	87,764		$	26,068		$	24,636
Service cost	886			2,105			976			1,975			668			610
Interest cost	2,634			1,389			2,677			1,283			810			818
Plan amendments	—			52			—			—						—
Benefits paid	(5,171		)	(2,791		)	(6,258		)	(1,942		)	(847		)	(738		)
Actuarial loss (gain)	(4,497		)	(3,378		)	3,684			(15		)	(3,930		)	592
Currency translation	—			(3,335		)	—			9,323			(176		)	150
Settlements	(12		)	(2,313		)	—			(2,452		)				—
Acquisition/Divestiture	—			—			—			(482		)				—
Other	—			609			—			1,997						—
Obligation at December 31	$	85,175		$	89,789		$	91,335		$	97,451		$	22,593		$	26,068
CHANGE IN PLAN ASSETS
Fair value of plan assets at January 1	$	76,041		$	36,316		$	73,688		$	32,586		$	—		$	—
Actual return on plan assets	2,070			496			5,046			1,792			—			—
Employer contributions	10,652			2,345			3,565			2,702			847			738
Benefits paid	(5,171		)	(2,791		)	(6,258		)	(1,942		)	(847		)	(738		)
Currency translation				(1,130		)	—			2,446			—			—
Settlements				(2,313		)	—			(2,452		)	—			—
Acquisition/Divestiture							—			—			—			—
Other	(12		)	609			—			1,184			—			—
Fair value of plan assets at December 31	$	83,580		$	33,532		$	76,041		$	36,316		$	—		$	—
Funded status at December 31	$	(1,595	)	$	(56,257	)	$	(15,294	)	$	(61,135	)	$	(22,593	)	$	(26,068	)
COMPONENTS ON THE CONSOLIDATED BALANCE SHEETS
Other noncurrent assets	$	3,058		$	—		$	—		$	—		$	—		$	—
Current liabilities	$	(556	)	$	(1,174	)	$	(658	)	$	(1,159	)	$	(1,116	)	$	(1,034	)
Other noncurrent liabilities	(4,097		)	(55,083		)	(14,636		)	(59,976		)	(21,477		)	(25,034		)
Net liability at December 31	$	(1,595	)	$	(56,257	)	$	(15,294	)	$	(61,135	)	$	(22,593	)	$	(26,068	)

The accumulated benefit obligation (“ABO”) for all defined benefit pension plans was $169.5 million and $182.7 million at December 31, 2018 and 2017, respectively.

The weighted average assumptions used in the measurement of the Company’s benefit obligation at December 31, 2018 and 2017 were as follows:



	U.S. Plans				Non-U.S. Plans				Other Benefits
	2018		2017		2018		2017		2018		2017
Discount rate	4.10	%	3.46	%	2.07	%	1.82	%	4.11	%	3.50	%
Rate of compensation increase	4.00	%	4.00	%	2.13	%	2.37	%	4.00	%	4.00	%

The pretax amounts recognized in Accumulated other comprehensive income (loss) on the Consolidated Balance Sheets as of December 31, 2018 and 2017 were as follows:



	Pension Benefits								Other Benefits
	2018				2017				2018			2017
	U.S.		Non-U.S.		U.S.		Non-U.S.
	(In thousands)
Prior service cost (credit)	$	62	$	64	$	86	$	18	$	(117	)	$	(483	)
Net loss	22,478		12,955		27,789		17,986		(6,386		)	(2,866		)
Total	$	22,540	$	13,019	$	27,875	$	18,004	$	(6,503	)	$	(3,349	)

The amounts in Accumulated other comprehensive income (loss) on the Consolidated Balance Sheet as of December 31, 2018 that are expected to be recognized as components of net periodic benefit cost during 2019 are as follows:



	U.S. Pension Benefit Plans		Non-U.S. Pension Benefit Plans		Other Benefit Plans			Total
	(In thousands)
Prior service cost (credit)	$	15	$	6	$	(70	)	$	(49	)
Net loss	1,931		1,131		(564		)	2,498
Total	$	1,946	$	1,137	$	(634	)	$	2,449

The components of, and the weighted average assumptions used to determine, the net periodic benefit cost for the plans in 2018, 2017 and 2016 are as follows:



	Pension Benefits
	2018						2017						2016
	U.S.			Non-U.S.			U.S.			Non-U.S.			U.S.			Non-U.S.
	(In thousands)
Service cost	$	886		$	2,105		$	976		$	1,975		$	1,016		$	1,627
Interest cost	2,634			1,389			2,677			1,283			3,043			1,429
Expected return on plan assets	(3,943		)	(1,120		)	(3,832		)	(1,088		)	(4,777		)	(993		)
Settlement loss recognized	(1		)	(307		)	—			234			3,339			215
Net amortization	2,712			1,271			2,566			1,809			3,226			1,008
Net periodic benefit cost	$	2,288		$	3,338		$	2,387		$	4,213		$	5,847		$	3,286



	Other Benefits
	2018			2017			2016
	(In thousands)
Service cost	$	668		$	610		$	601
Interest cost	810			818			811
Net amortization	(737		)	(795		)	(705		)
Net periodic benefit cost	$	741		$	633		$	707



	U.S. Plans						Non-U.S. Plans
	2018		2017		2016		2018		2017		2016
Discount rate	3.46	%	3.91	%	4.12	%	1.82	%	1.76	%	2.99	%
Expected return on plan assets	5.50	%	5.50	%	6.50	%	3.09	%	3.20	%	4.58	%
Rate of compensation increase	4.00	%	4.00	%	4.00	%	2.37	%	2.29	%	2.98	%



	Other Benefits
	2018		2017		2016
Discount rate	3.50	%	3.94	%	4.10	%
Expected return on plan assets	—	%	—	%	—	%
Rate of compensation increase	4.00	%	4.00	%	4.00	%

The pretax change recognized in Accumulated other comprehensive income (loss) on the Consolidated Balance Sheet in 2018 is as follows:



	Pension Benefits					Other Benefits
	U.S.		Non-U.S.
	(In thousands)
Net gain (loss) in current year	$	2,624	$	2,754		$	3,930
Prior service cost	—		(52		)	—
Amortization of prior service cost (credit)	24		3			(366		)
Amortization of net loss (gain)	2,687		961			(371		)
Exchange rate effect on amounts in OCI	—		746			(39		)
Total	$	5,335	$	4,412		$	3,154

The discount rates for our plans are derived by matching the plan’s cash flows to a yield curve that provides the equivalent yields on zero-coupon bonds for each maturity. The discount rate selected is the rate that produces the same present value of cash flows.

In selecting the expected rate of return on plan assets, the Company considers the historical returns and expected returns on plan assets. The expected returns are evaluated using asset return class, variance and correlation assumptions based on the plan’s target asset allocation and current market conditions.

Prior service costs are amortized on a straight-line basis over the average remaining service period of active participants. Gains and losses in excess of 10% of the greater of the benefit obligation or the market value of assets are amortized over the average remaining service period of active participants.

Costs of defined contribution plans were $12.2 million, $10.2 million and $10.1 million for 2018, 2017 and 2016, respectively.

The Company, through its subsidiaries, participates in certain multi-employer pension plans covering approximately 343 participants under U.S. collective bargaining agreements. None of these plans are considered individually significant to the Company as contributions to these plans totaled $1.1 million, $1.0 million, and $1.3 million for 2018, 2017 and 2016, respectively.

For measurement purposes, a 6.04% weighted average annual rate of increase in the per capita cost of covered health care benefits was assumed for 2018. The rate was assumed to decrease gradually each year to a rate of 4.50% for 2038, and remain at that level thereafter. Assumed health care cost trend rates have an effect on the amounts reported for the health care plans. A 1% increase in the assumed health care cost trend rates would increase the service and interest cost components of the net periodic benefit cost by $0.2 million and the health care component of the accumulated postretirement benefit obligation by $1.9 million. A 1% decrease in the assumed health care cost trend rate would decrease the service and interest cost components of the net periodic benefit cost by $0.1 million and the health care component of the accumulated postretirement benefit obligation by $1.6 million.

Plan Assets

The Company’s pension plan weighted average asset allocations at December 31, 2018 and 2017, by asset category, were as follows:



	U.S. Plans				Non-U.S. Plans
	2018		2017		2018		2017
Equity securities	9	%	47	%	13	%	14	%
Fixed income securities	90	%	51	%	31	%	30	%
Cash/Commingled Funds/Other ⁽¹⁾	1	%	2	%	56	%	56	%
Total	100	%	100	%	100	%	100	%

The basis used to measure the defined benefit plans’ assets at fair value at December 31, 2018 and 2017 is summarized as follows:



	Basis of Fair Value Measurement
	Outstanding Balances		Level 1		Level 2		Level 3
As of December 31, 2018	(In thousands)
Equity
U.S. Large Cap	$	3,759	$	3,759	$	—	$	—
U.S. Small / Mid Cap	770		—		770		—
International	7,532		4,445		3,087		—
Fixed Income
U.S. Intermediate	581		—		581		—
U.S. Long Term	75,096		—		75,096		—
U.S. High Yield	1,098		—		1,098		—
International	8,604		244		8,360		—
Other Commingled Funds ⁽¹⁾	15,555		—		—		15,555
Cash and Equivalents	1,944		1,074		870		—
Other	2,173		—		2,173		—
	$	117,112	$	9,522	$	92,035	$	15,555


(1)	Other commingled funds represent pooled institutional investments in non-U.S. plans.



	Basis of Fair Value Measurement
	Outstanding Balances		Level 1		Level 2		Level 3
As of December 31, 2017	(In thousands)
Equity
U.S. Large Cap	$	16,402	$	16,402	$	—	$	—
U.S. Small / Mid Cap	7,966		7,051		915		—
International	16,844		13,205		3,639		—
Fixed Income
U.S. Intermediate	13,568		13,483		85		—
U.S. Short Duration	13,362		13,362		—		—
U.S. High Yield	9,529		8,462		1,067		—
International	13,311		3,767		9,544		—
Other Commingled Funds ⁽¹⁾	16,059		—		—		16,059
Cash and Equivalents	2,613		1,346		1,267		—
Other	2,851		—		2,851		—
	$	112,505	$	77,078	$	19,368	$	16,059


(1)	Other commingled funds represent pooled institutional investments in non-U.S. plans.

Equities that are valued using quoted prices are valued at the published market prices. Equities in a common collective trust or a registered investment company that are valued using significant other observable inputs are valued at the net asset value (“NAV”) provided by the fund administrator. The NAV is based on the value of the underlying assets owned by the fund minus its liabilities. Fixed income securities that are valued using significant other observable inputs are valued at prices obtained from independent financial service industry-recognized vendors.

Investment Policies and Strategies

The investment objective of the U.S. plan, consistent with prudent standards for preservation of capital and maintenance of liquidity, is to earn the highest possible total rate of return consistent with the plan’s tolerance for risk. The general asset allocation guidelines for plan assets are that “equities” will constitute 10% and “fixed income” obligations, including cash, will constitute from 90% of the market value of total fund assets. The investment objective of the UK plan, consistent with prudent standards for preservation of capital and maintenance of liquidity, is to earn a target return of UK Gilts plus 2% per year. The general asset allocation guidelines for plan assets are that “equities” will constitute from 40% to 50% of the market value of total fund assets with a target of 40%, and “fixed income” obligations, including cash, will constitute from 50% to 60% with a target of 60%. The term “equities” includes common stock, while the term “fixed income” includes obligations with contractual payments and a specific maturity date. The Company, through the use of a professional independent advisor, will monitor the asset allocation daily and maintain an asset allocation that closely replicates the designated targets. Diversification of assets is employed to ensure that adverse performance of one security or security class does not have an undue detrimental impact on the portfolio as a whole. Diversification is interpreted to include diversification by type, characteristic and number of investments as well as by investment style of designated investment fund managers. No restrictions are placed on the selection of individual investments by the investment fund managers. The total fund performance and the performance of the investment fund managers is reviewed on a regular basis using an appointed professional independent advisor. As of December 31, 2018, there were no shares of the Company’s stock held in plan assets.

Cash Flows

The Company expects to contribute approximately $0.6 million to its defined benefit plans and $1.1 million to its other postretirement benefit plans in 2019. The Company also expects to contribute approximately $12.0 million to its defined contribution plan and $9.7 million to its 401(k) savings plan in 2019.

Estimated Future Benefit Payments

The future estimated benefit payments for the next five years and the five years thereafter are as follows: 2019 — $11.4 million; 2020 — $11.5 million; 2021 — $11.3 million; 2022 — $11.0 million; 2023 — $10.9 million; 2024 to 2028 — $54.3 million.