. Benefit Plans

The company has company-sponsored defined benefit pension plans covering employees in the U.K., Germany, the Philippines, China, Japan, and France. The amount of the retirement benefits provided under the plans is based on years of service and final average pay.

PolySwitch Acquisition

During

2016,

as a result of the PolySwitch acquisition, past service liabilities were assumed by the company in China, France, Germany, Japan, Mexico, and Taiwan, together with a small amount of plan assets in Taiwan.

Littelfuse Inc. Retirement Plan Termination

The company received approval from the IRS on

April

14,

2015

on its Application for Determination for Terminating Plan to terminate the U.S. defined benefit pension plan, the Littelfuse Inc. Retirement Plan, effective

July

30,

2014.

All plan liabilities were settled (either via lump sum payout or purchase of a group annuity contract) in the

third

quarter of

2015.

A cash contribution of

$9.1

million was made to the U.S. defined benefit plan’s trust in the

third

quarter of

2015

to fully fund the plan on a buyout basis, and the eventual settlement of the plan’s liabilities triggered a settlement charge of

$30.2

million in the

third

quarter of

2015.

In the

fourth

quarter of

2015

there was an adjustment to the price of the annuity contract which resulted in a refund of premium to the company of

$0.3

million. This refund of premium, effectively a re-measurement gain, was recognized in the

fourth

quarter of

2015

as a dollar-for-dollar adjustment to the

$30.2

million earnings charge recognized in the

third

quarter of

2015,

resulting in a final settlement loss of

$29.9

million for the fiscal year ended

January

2016.

During

2016,

there were

two

further adjustments to the price of the annuity contract. Their combined effect resulted in a further refund of premium to the company of

$0.3

million. This refund of premium was considered additional actual return on the assets during

2016,

followed by a negative employer contribution of that same amount in the asset reconciliation table below.

Total pension expense was

$1.5

million,

$32.4

million, and

$0.3

million in

2016,

2015,

and

2014,

respectively. The changes in pension expense primarily resulted from the termination and settlement of the U.S. plan, together with the effect of the PolySwitch acquisition.

Benefit plan related information is as follows:

	2016									2015
(in thousands )	U.S.			Foreign			Total			U.S.			Foreign			Total
Change in benefit obligation:
Benefit obligation at beginning of year	$	—		$	50,282		$	50,282		$	105,759		$	52,740		$	158,499
Service cost		—			1,509			1,509			750			824			1,574
Interest cost		—			1,662			1,662			3,093			1,735			4,828
Net actuarial loss (gain)		—			10,190			10,190			(9,127	)		648			(8,479	)
Benefits paid from the trust		—			(2,329	)		(2,329	)		(100,475	)		(1,732	)		(102,207	)
Benefits paid directly by company		—			250			250			—			(410	)		(410	)
Curtailments and settlements		—			(427	)		(427	)		—			(294	)		(294	)
Acquisitions		—			2,023			2,023			—			—			—
Effect of exchange rate movements		—			(7,554	)		(7,554	)		—			(3,229	)		(3,229	)
Benefit obligation at end of year	$	—		$	55,606		$	55,606		$	—		$	50,282		$	50,282

Change in plan assets at fair value:
Fair value of plan assets at beginning of year	$	—		$	44,629		$	44,629		$	93,991		$	47,593		$	141,584
Actual return on plan assets		341			6,588			6,929			(2,375	)		389			(1,986	)
Employer contributions		(341	)		215			(126	)		8,859			1,072			9,931
Benefits paid		—			(2,329	)		(2,329	)		(100,475	)		(1,732	)		(102,207	)
Acquisitions		—			24			24			—			—			—
Effect of exchange rate movements		—			(6,919	)		(6,919	)		—			(2,693	)		(2,693	)
Fair value of plan assets at end of year		—			42,208			42,208			—			44,629			44,629
Net amount recognized/(unfunded status)	$	—		$	(13,398	)	$	(13,398	)	$	—		$	(5,653	)	$	(5,653	)

Amounts recognized in the Consolidated Balance Sheet consist of:
Current portion of accrued benefit liability	$	—		$	—		$	—		$	—		$	—		$	—
Accrued benefit liability		—			(13,398	)		(13,398	)		—			(5,653	)		(5,653	)
Total liability recognized		—			(13,398	)		(13,398	)		—			(5,653	)		(5,653	)
Accumulated other comprehensive loss	$	—		$	13,107		$	13,107		$	—		$	9,383		$	9,383

Amounts recognized in accumulated other comprehensive income (loss), pre-tax consist of:

	2016						2015
(in thousands )	U.S.		Foreign		Total		U.S.		Foreign		Total
Net actuarial loss	$	—	$	13,107	$	13,107	$	—	$	9,383	$	9,383
Prior service (cost)		—		—		—		—		—		—
Net amount recognized /occurring, pre-tax	$	—	$	13,107	$	13,107	$	—	$	9,383	$	9,383

The estimated net actuarial loss (gain) which will be amortized from accumulated other comprehensive income (loss) into benefit cost in

2017

approximately

$0.3

million.

The components of total pension expense (income) for the years

2016,

2015,

and

2014

are as follows:

	U.S.								Foreign
(in thousands )	2016		2015			2014			2016			2015			2014
Components of net periodic benefit cost:
Service cost	$	—	$	750		$	600		$	1,509		$	824		$	925
Interest cost		—		3,093			3,884			1,662			1,735			2,060
Expected return on plan assets		—		(2,749	)		(5,646	)		(1,935	)		(2,346	)		(2,292	)
Amortization of prior service (credit)		—		—			—			—			—			—
Amortization of losses		—		870			549			306			221			216
Total cost (credit) of the plan for the year		—		1,964			(613	)		1,542			434			909
Expected plan participants’ contributions		—		—			—			—			—			—
Net periodic benefit cost (credit)		—		1,964			(613	)		1,542			434			909
Curtailment/Settlement loss (gain)		—		29,928			—			(36	)		—			—
Total expense (income) for the year	$	—	$	31,892		$	(613	)	$	1,506		$	434		$	909

Weighted average assumptions used to determine net periodic benefit cost for the years

2016,

2015,

and

2014

are as follows:

	U.S.								Foreign
	2016		2015			2014			2016			2015			2014
Discount rate		—		3.9	%		4.8	%		3.7	%		3.7	%		3.7	%
Expected return on plan assets		—		6.8	%		6.8	%		4.9	%		5.1	%		4.9	%
Compensation increase rate		—		—			—			5.3	%		5.3	%		3.8	%
Measurement dates		—		12/31/14			12/31/13			12/31/15			12/31/14			12/31/13

The accumulated benefit obligation for the foreign plans was

$51.3

million and

$46.2

million at

December

31,

2016

and

January

2016,

respectively.

Weighted average assumptions used to determine benefit obligations at year-end

2016,

2015

and

2014

are as follows:

	U.S.								Foreign
	2016		2015			2014			2016			2015			2014
Discount rate		—		3.9	%		3.9	%		2.6	%		3.8	%		3.7	%
Compensation increase rate		—		—			—			4.5	%		6.2	%		5.3	%
Measurement dates		—		9/30/15			12/31/14			12/31/16			12/31/15			12/31/14

Expected benefit payments to be paid to participants for the fiscal year ending are as follows:

(in thousands )	Expected Benefit Payments (Foreign)
2017	$	1,906
2018		1,961
2019		2,040
2020		2,165
2021		2,207
2022-2026		12,789

Defined Benefit Plan Assets

Based upon analysis of the target asset allocation and historical returns by type of investment, the company has assumed that the expected long-term rate of return will be

4.9%

on foreign plan assets. Assets are invested to maximize long-term return taking into consideration timing of settlement of the retirement liabilities and liquidity needs for benefits payments. Pension plan assets were invested as follows, and were not materially different from the target asset allocation:

	Foreign Asset Allocation
	2016			2015
Equity securities		32	%		30	%
Debt securities		65	%		65	%
Cash		3	%		5	%
		100	%		100	%

The following table presents the company’s pension plan assets measured at fair value by classification within the fair value hierarchy as of

December

31,

2016:

	Fair Value Measurements Using
(in thousands )	Quoted Prices i n Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Equities:
Global Equity 50:50 Index Fund	$	—	$	6,321	$	—	$	6,321
Global Equity 50:50 GBP Hedged Fund		—		6,406		—		6,406
Philippine Stock		906		—		—		906
Fixed income:
Investment Grade Corporate Bond Funds		5,372		—		—		5,372
Over 15y Gilts Index Fund		—		3,265		—		3,265
Active Corp Bond – Over 10 Yr Fund		—		5,902		—		5,902
Over 5y Index-Linked Gilts Fund		—		10,724		—		10,724
Philippine Long Government Securities		1,133		—		—		1,133
Philippine Long Corporate Bonds		751		—		—		751
Cash and equivalents		476		952		—		1,428
Total pension plan assets	$	8,638	$	33,570	$	—	$	42,208

The following table presents the company’s pension plan assets measured at fair value by classification within the fair value hierarchy as of

January

2016:

	Fair Value Measurements Using
(in thousands )	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Equities:
Global Equity 50:50 Index Fund	$	—	$	12,801	$	—	$	12,801
Philippine Stock		836		—		—		836
Fixed income:
Investment Grade Corporate Bond Funds		6,807		—		—		6,807
Over 15y Gilts Index Fund		—		3,428		—		3,428
Active Corp Bond – Over 10 Year Fund		—		6,440		—		6,440
Over 5y Index-Linked Gilts Fund		—		10,248		—		10,248
Philippine Long Government Securities		1,227		—		—		1,227
Philippine Long Corporate Bonds		781		—		—		781
Cash and equivalents		2,061		—		—		2,061
Total pension plan assets	$	11,712	$	32,917	$	—	$	44,629

Defined Contribution Plans

The company also maintains a

401(k)

savings plan covering substantially all U.S. employees. The company matches

100%

of the employee’s annual contributions for the

first

of the employee’s eligible compensation. Employees are immediately vested in their contributions plus actual earnings thereon, as well as the company contributions. Company matching contributions amounted to

$3.2

million,

$2.8

million, and

$2.1

million in

2016,

2015,

and

2014,

respectively.

The company has a non-qualified Supplemental Retirement and Savings Plan. The company provides additional retirement benefits for certain management employees and named executive officers by allowing participants to contribute up to

90%

of their annual compensation with matching contributions of

of the participant’s annual compensation in excess of the IRS compensation limits.