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, 2017 and 2016 consisted of the following components (in thousands):



	2017			2016
Change in pension benefit obligation
Benefit obligation at beginning of year	$	306,731		$	295,825
Interest cost	8,622			10,320
Actuarial loss	2,058			67,329
Benefits paid	(13,709		)	(12,044		)
Foreign currency exchange rate changes	28,916			(54,699		)
Benefit obligation at end of year	332,618			306,731
Change in pension plan assets
Fair value of plan assets at beginning of year	257,236			263,555
Actual return on plan assets	22,899			47,728
Employer contributions	4,727			4,906
Benefits paid	(13,709		)	(12,044		)
Foreign currency exchange rate changes	24,815			(46,909		)
Fair value of plan assets at end of year	295,968			257,236
Funded status at end of year	$	(36,650	)	$	(49,495	)

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



	2017		2016
Unrecognized losses	$	102,054	$	102,943

The underfunded status of the UK Plan of $36.7 million and $49.5 million at December 31, 2017 and 2016, 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, 2018.

The weighted average assumptions used to determine benefit obligations as of December 31, 2017 and 2016 were as follows:



	2017		2016
Discount rate	2.5	%	2.7	%

The weighted average assumptions used to determine net periodic pension cost for the years ended December 31, 2017, 2016 and 2015 were as follows:



	2017		2016		2015
Discount rate	2.7	%	3.8	%	3.6	%
Annual rate of return on plan assets	5.3	%	6.2	%	6.3	%

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 rates of inflation of covered pension benefits assumed for 2017 and 2016 were 2.1% and 2.2%, respectively.

The components of net periodic pension cost of the UK Plan for the years ended December 31, 2017, 2016 and 2015 were as follows (in thousands):



	2017			2016			2015
Interest cost	$	8,622		$	10,320		$	11,603
Expected return on plan assets	(13,508		)	(14,227		)	(16,181		)
Amortization of unrecognized loss	2,942			2,047			2,526
Net periodic pension cost (income)	$	(1,944	)	$	(1,860	)	$	(2,052	)

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 2017 was 26 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, 2017, 2016 and 2015 was approximately $2.3 million, $1.7 million and $2.0 million, respectively, which was classified as a component of “Cost of sales” and “Selling, general and administrative expenses” in the Consolidated Statements of Operations. 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 $2.1 million, net of income taxes.

UK Plan Assets

The weighted average asset allocations and weighted average target allocations at December 31, 2017 and 2016 were as follows:



Asset Category	Target Asset Allocation		December 31, 2017		December 31, 2016
Equity securities	15.0	%	14.1	%	44.9	%
Debt securities	65.0	%	77.3	%	55.0	%
Cash	10.0	%	8.6	%	0.1	%
Property	10.0	%	—	%	—	%
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. During 2017, the UK Plan’s trustees revised the investment strategy of this plan, resulting in a change in the target asset allocation compared to the prior year.

The following tables set forth by level, within the fair value hierarchy discussed in Note 10 - Fair Value Measurements, the fair value of assets of the UK Plan as of December 31, 2017 and 2016 (in thousands):



	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



	Assets at Fair Value as of December 31, 2016
Asset Category	Level 1		Level 2		Level 3		Total
Equity and equity like investments	$	—	$	115,416	$	—	$	115,416
Corporate debt securities	—		103,912		—		103,912
Government bonds	—		37,473		—		37,473
Cash	435		—		—		435
Total	$	435	$	256,801	$	—	$	257,236

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 fund. The unit prices are not quoted and are not 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, 2017 (in thousands):



Corporate Debt Securities	2017
Start of year balance	$	—
Actual return on plan assets, relating to assets still held at reporting date	1,858
Purchases, sales and settlements, net	98,633
Change due to exchange rate changes	3,454
End of year balance	$	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.

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 $4.8 million to its UK Plan in 2018.

Estimated Future Benefit Payments

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



	Pension Benefits
2018	$	14,599
2019	$	15,031
2020	$	15,474
2021	$	15,930
2022	$	16,401
Succeeding five years	$	89,566

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, 2017 and 2016 (in thousands):



	2017		2016
Projected benefit obligation	$	332,618	$	306,731
Accumulated benefit obligation	$	332,618	$	306,731
Fair value of plan assets	$	295,968	$	257,236

We also sponsor two U.S. defined benefit plans in which participation by new individuals is frozen. The benefit obligation associated with these plans as of December 31, 2017 and 2016 was approximately $7.2 million and $7.0 million, respectively. The estimated fair value of the plan assets as of December 31, 2017 and 2016 was approximately $5.5 million and $5.0 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 pension liability balances as of December 31, 2017 and 2016 are classified as “Other long-term obligations” in the accompanying Consolidated Balance Sheets. The measurement date for these two plans is December 31 of each year. The major assumptions used in the actuarial valuations to determine benefit obligations as of December 31, 2017 and 2016 included discount rates of 3.50% for 2017 and 3.80% and 4.00% for 2016. Also, included was an expected rate of return of 7.00% for both 2017 and 2016. 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, 2017, 2016 and 2015, which was classified as a component of “Selling, general and administrative expenses” in the Consolidated Statements of Operations. 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 $0.4 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, 2017, 2016 and 2015.

The following table lists all domestic MEPPs to which our contributions exceeded $2.0 million in 2017. Additionally, this table also lists all domestic MEPPs to which we contributed in 2017 in excess of $0.5 million for MEPPs in the critical status, “red zone”, and $1.0 million 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	2017	2016	FIP/RP Status	2017		2016		2015			Expiration date of CBA
National Automatic Sprinkler Industry Pension Fund	52-6054620 001	Red	Red	Implemented	$	14,228	$	11,075	$	6,697	No	May 2018 to March 2021
Sheet Metal Workers National Pension Fund	52-6112463 001	Yellow	Yellow	Implemented	12,895		11,280		10,891		No	May 2018 to July 2020
Plumbers & Pipefitters National Pension Fund	52-6152779 001	Yellow	Yellow	Implemented	12,550		12,034		12,021		No	April 2018 to May 2023
National Electrical Benefit Fund	53-0181657 001	Green	Green	N/A	11,572		10,328		8,513		No	February 2018 to May 2022
Pension, Hospitalization & Benefit Plan of the Electrical Industry- Pension Trust Account	13-6123601 001	Green	Green	N/A	9,489		9,687		7,543		No	April 2019 to June 2020
Plumbers Pipefitters & Mechanical Equipment Service Local Union 392 Pension Plan	31-0655223 001	Red	Red	Implemented	6,084		5,202		5,554		Yes	June 2019
Central Pension Fund of the IUOE & Participating Employers	36-6052390 001	Green	Green	N/A	6,070		6,211		6,465		No	February 2018 to June 2020
Sheet Metal Workers Pension Plan of Northern California	51-6115939 001	Red	Red	Implemented	6,023		5,164		4,851		No	June 2018 to June 2019
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	5,537		5,518		5,759		No	June 2018



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	2017	2016	FIP/RP Status	2017		2016		2015			Expiration date of CBA
Electrical Workers Local No. 26 Pension Trust Fund	52-6117919 001	Green	Green	N/A	4,441		3,390		2,620		Yes	January 2018 to June 2019
Pipefitters Union Local 537 Pension Fund	51-6030859 001	Green	Green	N/A	4,057		3,970		3,939		Yes	Februray 2018 to August 2021
Southern California Pipe Trades Retirement Fund	51-6108443 001	Green	Green	N/A	3,907		4,371		2,743		No	June 2018 to August 2019
Eighth District Electrical Pension Fund	84-6100393 001	Green	Green	N/A	3,786		3,444		3,411		Yes	February 2018 to May 2022
Southern California IBEW-NECA Pension Trust Fund	95-6392774 001	Red	Red	Pending ⁽³⁾	3,669		3,289		2,894		No	June 2019 to May 2020
Sheet Metal Workers Pension Plan of Southern California, Arizona & Nevada	95-6052257 001	Yellow	Yellow	Implemented	3,268		2,946		2,310		No	June 2018 to June 2020
U.A. Plumbers Local 24 Pension Fund	22-6042823 001	Green	Green	N/A	3,092		3,147		2,431		Yes	April 2020
NECA-IBEW Pension Trust Fund	51-6029903 001	Green	Green	N/A	3,060		3,752		1,498		No	May 2018 to May 2020
Northern California Pipe Trades Pension Plan	94-3190386 001	Green	Green	N/A	2,963		6,495		3,544		Yes	June 2018
San Diego Electrical Pension Plan	95-6101801 001	Green	Green	N/A	2,862		2,216		2,109		Yes	May 2019 to May 2020
Heating, Piping & Refrigeration Pension Fund	52-1058013 001	Green	Green	N/A	2,437		2,402		1,948		No	July 2019
U.A. Local 38 Defined Benefit Pension Plan	94-1285319 001	Green	Yellow	N/A	2,097		1,521		1,526		No	June 2018 to June 2023
Plumbing & Pipe Fitting Local 219 Pension Fund	34-6682376 001	Red	Red	Implemented	1,335		838		1,262		Yes	May 2020
Boilermaker-Blacksmith National Pension Trust	48-6168020 001	Red	Yellow	Pending ⁽³⁾	1,083		1,710		1,367		No	May 2018 to September 2020
Steamfitters Local Union No. 420 Pension Plan	23-2004424 001	Red	Red	Implemented	687		709		845		No	May 2020
South Florida Electrical Workers Pension Plan and Trust	59-6230530 001	Red	Yellow	Implemented	503		263		116		No	August 2018
Other Multiemployer Pension Plans					50,720		45,622		43,834			Various
Total Contributions					$	179,216	$	167,297	$	147,056

_________________


(1)	The zone status represents the most recent available information for the respective MEPP, which may be 2016 or earlier for the 2017 year and 2015 or earlier for the 2016 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.


(3)	For these respective plans, a funding surcharge was in effect during 2017.

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 2015.

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, 2017 and $0.2 million for each of the years ended December 31, 2016 and 2015. The decrease in contributions during 2017 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 $130.9 million, $130.5 million and $108.1 million for the years ended December 31, 2017, 2016 and 2015, respectively. Our contributions to other post retirement benefit plans did not significantly increase as a result of acquisitions made since 2015. 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, 2017, 2016 and 2015 for these plans were $28.1 million, $26.8 million and $26.5 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, 2017, 2016 and 2015 were $5.5 million, $5.4 million and $4.8 million, respectively.

Our United Kingdom subsidiary has defined contribution retirement plans. The expense recognized for the years ended December 31, 2017, 2016 and 2015 was $3.9 million, $3.6 million and $4.0 million, respectively.