U.K. PENSION PLAN:

Through its Freightliner subsidiary, the Company has a defined benefit pension plan for Freightliner's eligible U.K. employees through a standalone shared cost arrangement within the Railways Pension Scheme (Pension Program). The Pension Program is managed and administered by a professional pension administration company and is overseen by trustees with professional advice from independent actuaries and other advisers. The Pension Program is a shared cost arrangement with required contributions shared between Freightliner and its participating members, with Freightliner contributing 60% and the remaining 40% contributed by active employees. The Company engages independent actuaries to compute the amounts of liabilities and expenses relating to the Pension Program subject to the assumptions that the Company selects.

The following tables summarize the components of the Pension Program related to the net benefit costs recognized in labor and benefits and other income/(loss), net in the Company's consolidated statements of operations for the three months ended March 31, 2019 and 2018 (dollars in thousands):



		Three Months Ended
		March 31,
		2019			2018
Operating expense:
	Service cost^(a)	$	3,440		$	3,872
Nonoperating income, net:
	Interest cost	2,366			2,556
	Expected return on plan assets	(4,391		)	(4,905		)
	Amortization of prior year service cost	44			—
	Total nonoperating income, net^(b)	(1,981		)	(2,349		)
Net periodic benefit cost		$	1,459		$	1,523

(a) Included in labor and benefits within the Company’s consolidated statement of operations.

(b) Included in other income/(loss), net within the Company’s consolidated statement of operations.

During the three months ended March 31, 2019, the Company contributed £1.6 million (or $2.1 million at the exchange rate when the payments were made) to fund the Pension Program. The Company expects to contribute £5.4 million (or $7.0 million at the March 31, 2019 exchange rate) to the Pension Program for the remainder of 2019. The Pension Program's assets may undergo significant changes over time as a result of market conditions, and its assets and liabilities are formally valued on an independent actuarial basis every three years to assess the adequacy of funding levels. A key element of the valuation process is an assessment of the creditworthiness of the participating employer. In the event that the Pension Program's projected assets and liabilities reveal additional funding requirements, the shared cost arrangement generally means that the Company will be required to pay 60% of any additional contributions, with active members contributing the remaining 40%, in each case over an agreed recovery period. If the Pension Program was to be terminated and wound up, any deficit would fall entirely on the Company and could not be shared with active members. Currently, the Company has no intention of terminating the Pension Program.