RETIREMENT BENEFITS

We sponsor a number of defined benefit and defined contribution pension plans which cover substantially all U.S. employees, other than union employees covered by multiemployer defined benefit pension plans under collective bargaining agreements. Pension benefits are provided based on either a career average, final pay or years of service formula. With respect to certain hourly employees, pension benefits are provided based on stated amounts for each year of service. Our U.S. salaried pension plans are closed to new employees.

We also sponsor other postretirement benefits plans, including unfunded defined benefit health care and life insurance plans, which provide postretirement benefits to certain employees. The plans are contributory, with retiree contributions adjusted annually, and contain cost sharing features including deductibles and coinsurance. Retiree health care benefits are paid as covered expenses are incurred.

The changes in benefit obligations and plan assets as well as the funded status of our retirement plans at December 31 were as follows:



	Pension Benefits						Other Postretirement Benefits
	2018			2017			2018			2017
	(Dollars in thousands)
Change in benefit obligation
Obligation at beginning of year	$	808,149		$	726,421		$	20,939		$	21,698
Service cost	14,238			13,372			99			104
Interest cost	25,316			25,501			640			692
Actuarial (gains) losses	(53,044		)	54,562			(2,031		)	630
Acquisition	—			19,225			—			—
Plan amendments	—			147			1,210			(2		)
Benefits paid	(38,335		)	(43,598		)	(1,764		)	(2,325		)
Participants’ contributions	—			—			93			142
Foreign currency exchange rate changes	(4,699		)	12,519			—			—
Obligation at end of year	751,625			808,149			19,186			20,939
Change in plan assets
Fair value of plan assets at beginning of year	825,806			759,551			—			—
Actual return on plan assets	(57,082		)	108,154			—			—
Employer contributions	2,113			1,699			1,671			2,183
Participants’ contributions	—			—			93			142
Benefits paid	(38,335		)	(43,598		)	(1,764		)	(2,325		)
Fair value of plan assets at end of year	732,502			825,806			—			—
Funded status	$	(19,123	)	$	17,657		$	(19,186	)	$	(20,939	)

Actuarial (gains) losses related to pension benefits were primarily the result of changes in discount rates used to calculate projected benefit obligations.



	Pension Benefits						Other Postretirement Benefits
	2018			2017			2018			2017
	(Dollars in thousands)
Amounts recognized in the consolidated balance sheets
Non-current assets	$	76,443		$	118,892		$	—		$	—
Current liabilities	(2,174		)	(2,227		)	(1,924		)	(2,083		)
Non-current liabilities	(93,392		)	(99,008		)	(17,262		)	(18,856		)
Net amount recognized	$	(19,123	)	$	17,657		$	(19,186	)	$	(20,939	)
Amounts recognized in accumulated other comprehensive loss (income)
Net actuarial loss (gain)	$	218,867		$	154,642		$	(7,087	)	$	(5,561	)
Prior service cost (credit)	765			938			(8,735		)	(11,337		)
Net amount recognized	$	219,632		$	155,580		$	(15,822	)	$	(16,898	)

The fair value of plan assets for our domestic pension plans was 112 percent and 117 percent of their projected benefit obligations at December 31, 2018 and 2017, respectively. Pension plans with projected benefit obligations in excess of plan assets at December 31, 2018 and 2017 consisted entirely of our international pension benefit plans which are not funded. The projected benefit obligation for our international pension benefit plans was $95.6 million and $101.2 million at December 31, 2018 and 2017, respectively.

The accumulated benefit obligation for all pension benefit plans at December 31, 2018 and 2017 was $728.7 million and $779.1 million, respectively. Pension plans with accumulated benefit obligations in excess of plan assets at December 31, 2018 and 2017 consisted entirely of our international pension benefit plans which are not funded. The accumulated benefit obligation for our international pension benefit plans was $93.1 million and $96.2 million at December 31, 2018 and 2017, respectively.

The benefits expected to be paid from our pension and other postretirement benefit plans, which reflect future years of service, are as follows (dollars in thousands):



	Pension Benefits		Other Postretirement Benefits
2019	$	41,211	$	1,924
2020	40,842		1,702
2021	42,339		1,545
2022	43,469		1,486
2023	44,516		1,463
2024-2028	233,796		6,468
	$	446,173	$	14,588

Our principal domestic pension and other postretirement benefit plans used the following weighted average actuarial assumptions to determine the benefit obligations at December 31:



	2018		2017
Discount rate	4.5	%	3.8	%
Expected return on plan assets	8.5	%	8.5	%
Rate of compensation increase	2.6	%	2.6	%
Health care cost trend rate:
Assumed for next year	6.4	%	6.2	%
Ultimate rate	4.3	%	4.9	%
Year that the ultimate rate is reached	2035		2047

Our expected return on plan assets is determined by current and expected asset allocation of plan assets, estimates of future long-term returns on those types of plan assets and historical long-term investment performance.

Our international pension benefit plans used a discount rate of 2.2 percent and 2.1 percent as of December 31, 2018 and 2017, respectively, and a rate of compensation increase of 3.3 percent to determine the benefit obligation as of each of December 31, 2018 and 2017.

The components of the net periodic benefit credit for each of the years ended December 31 were as follows:



	Pension Benefits									Other Postretirement Benefits
	2018			2017			2016			2018			2017			2016
	(Dollars in thousands)
Service cost	$	14,238		$	13,372		$	12,895		$	99		$	104		$	222
Interest cost	25,316			25,501			25,781			640			692			891
Expected return on plan assets	(68,575		)	(63,010		)	(58,504		)	—			—			—
Amortization of prior service cost (credit)	173			313			561			(1,392		)	(3,418		)	(3,571		)
Amortization of actuarial losses (gains)	7,378			7,077			8,573			(506		)	(596		)	(599		)
Special termination benefits	—			—			2,837			—			—			—
Curtailment loss (gain)	—			—			183			—			—			(823		)
Net periodic benefit credit	$	(21,470	)	$	(16,747	)	$	(7,674	)	$	(1,159	)	$	(3,218	)	$	(3,880	)

In 2016, special termination benefits of $2.8 million and net curtailment gains of $0.6 million related to the shutdown of the LaPorte, Indiana manufacturing facility were recognized as rationalization charges in the Consolidated Statements of Income.

Our principal domestic pension and other postretirement benefit plans used the following weighted average actuarial assumptions to determine net periodic benefit credit for the years ended December 31:



	2018		2017		2016
Discount rate	3.8	%	4.4	%	4.7	%
Expected return on plan assets	8.5	%	8.5	%	8.5	%
Rate of compensation increase	2.6	%	2.8	%	3.1	%
Health care cost trend rate	6.2	%	6.4	%	6.6	%

Our international pension benefit plans used a discount rate of 2.1 percent, 1.9 percent and 2.6 percent for the years ended December 31, 2018, 2017 and 2016, respectively, and used a rate of compensation increase of 3.3 percent, 3.3 percent and 3.5 percent to determine net periodic benefit credit for the years ended December 31, 2018, 2017 and 2016, respectively.

MULTIEMPLOYER PENSION PLANS

We participate in four multiemployer pension plans which provide defined benefits to certain of our union employees. The aggregate amount contributed to these plans and charged to pension cost in 2018, 2017 and 2016 was $5.3 million, $6.4 million and $6.5 million, respectively.

The risks of participating in multiemployer plans are different from the risks of single-employer plans in the following respects: (i) assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other participating employers; (ii) if a participating employer ceases to contribute to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers; and (iii) if we cease to have an obligation to contribute to the multiemployer plan in which we had been a contributing employer, we may be required to pay to the plan an amount (referred to as a withdrawal liability) based on the underfunded status of the plan and on our historical participation in the plan prior to the cessation of our obligation to contribute.

Based on the latest information available, we participate in two multiemployer plans with a funded status less than 65 percent. Further information on these multiemployer plans for the years ended December 31, 2018, 2017 and 2016 is as follows:



Pension Fund	EIN/Pension Plan Number	Pension Protection Act Zone Status				FIP / RP Status Pending / Implemented	Contributions						Surcharge Imposed
Pension Fund	EIN/Pension Plan Number	2018		2017		FIP / RP Status Pending / Implemented	2018		2017		2016		Surcharge Imposed
							(Dollars in thousands)
Central States, Southeast & Southwest Areas Pension Fund⁽¹⁾	36-6044243/001	Red	⁽²⁾	Red	⁽²⁾	Implemented	$	1,797	$	1,873	$	1,979	No
United Food & Commercial Workers — Local 1 Pension Fund ⁽³⁾	16-6144007/001	Red		Red		Implemented	237		232		199		No
All Other							3,258		4,318		4,304
Total Contributions							$	5,292	$	6,423	$	6,482

______________________


⁽¹⁾	The applicable collective bargaining agreements related to this pension fund expire at various times in 2019.


⁽²⁾	Under the Multiemployer Pension Reform Act of 2014, the status of this pension fund for each of 2018 and 2017 was critical and declining, as defined under such Act.


⁽³⁾	The collective bargaining agreement related to this pension fund expires on December 31, 2020.

The “EIN/Pension Plan Number” column provides the Employer Identification Number and the three digit plan number assigned to a plan by the Internal Revenue Service. The most recent Pension Protection Act Zone Status available for 2018 and 2017 is for plan years that ended in each of those years. The zone status is based on information provided to us and other participating employers by each plan and is certified by the plan’s actuary. A plan in the “red” zone has been determined to be in “critical status,” based on criteria established under the Internal Revenue Code of 1986, as amended (the “Code”), and is generally less than 65 percent funded. The “FIP/RP Status Pending/Implemented” column indicates whether a rehabilitation plan, as required under the Code to be adopted by plans in the “red” zone, is pending or has been implemented as of the end of the 2018 plan year. The “Surcharge Imposed” column indicates whether our contribution rate for 2018 included an amount in addition to the contribution rate specified in the applicable collective bargaining agreement, as imposed by a plan in “critical status” in accordance with the requirements of the Code.

Our contributions to each of these respective plans were less than five percent of total contributions made by all employers to each of these respective plans, as reported by these plans for the year ended December 31, 2017, the most recent plan year available. We do not expect our contributions to these plans for the year ended December 31, 2019 to be significantly different from our contributions for the year ended December 31, 2018.

DEFINED CONTRIBUTION PLANS

We also sponsor defined contribution plans covering certain employees. Our contributions to these plans are based upon employee contributions and operating profitability. Contributions charged to expense for these plans for the years ended December 31, 2018, 2017 and 2016 were $12.0 million, $11.8 million and $9.8 million, respectively.

PLAN ASSETS

INVESTMENT STRATEGY

Our investment strategy is based on an expectation that equity securities will outperform debt securities over the long term. Accordingly, the composition of our plan assets is broadly characterized as a 58 percent/42 percent allocation between equity and debt securities. The equity securities allocation utilizes indexed U.S. equity securities (which constitutes approximately 85 percent of equity securities), with a lesser allocation to indexed international equity securities. The debt securities allocation primarily utilizes indexed investment grade U.S. debt securities. We attempt to mitigate investment risk by regularly rebalancing between equity and debt securities as contributions and benefit payments are made.

The weighted average asset allocation for our pension plans at December 31, 2018 and 2017 and target allocation for 2018 was as follows:



	Target Allocation		Actual Allocation
	Target Allocation		2018		2017
Equity securities—U.S.	49	%	47	%	47	%
Equity securities—International	9	%	10	%	10	%
Debt securities	42	%	42	%	42	%
Cash and cash equivalents	—		1	%	1	%
	100	%	100	%	100	%

FAIR VALUE MEASUREMENTS

Our plan assets are primarily invested in commingled funds holding equity and debt securities, which are valued using the Net Asset Value, or NAV, provided by the administrator of the fund. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding. Commingled funds are classified within Level 2 (as described in Note 10) of the fair value hierarchy because the NAV’s are not publicly available. Plan excess cash balances are invested in short term investment funds which include investments in cash, bank notes, corporate notes, government bills and various short-term debt instruments. These typically are commingled funds valued using one dollar for the NAV. These short term funds are also classified within Level 2 of the valuation hierarchy.

The fair value of our plan assets by asset category consisted of the following at December 31:



	2018		2017
	(Dollars in thousands)
Equity securities—U.S.	$	350,728	$	391,527
Equity securities—International	73,415		82,571
Debt securities	304,128		347,612
Cash and cash equivalents	4,231		4,096
	$	732,502	$	825,806

CONCENTRATIONS OF CREDIT RISK

As of December 31, 2018, approximately 99 percent of our plan assets were under management by a single investment management company in six individual commingled equity and debt index funds. Of these six funds, four funds held assets individually in excess of ten percent of our total plan assets.

EXPECTED CONTRIBUTIONS

Based on current legislation, there are no significant minimum required contributions to our pension benefit plans in 2019. In addition, based on the current funded status of our domestic pension benefit plans we do not expect to make significant contributions to these plans in 2019. However, this estimate may change based on regulatory changes and actual plan asset returns.