Retirement Plans

6 Months Ended

Jun. 30, 2021

Compensation And Retirement Disclosure [Abstract]

Retirement Plans

NOTE 7 – Retirement Plans

Pension Plans

Net pension expense for our domestic and foreign plans included in other expense, net in the Condensed Consolidated Statements of Earnings is as follows:

	Three Months Ended				Six Months Ended
	June 30,		June 30,		June 30,		June 30,
	2021		2020		2021		2020
Net pension expense	$	21,823	$	666	$	23,780	$	1,330

The components of net pension expense for our domestic and foreign plans include the following:

	Domestic Pension Plans						Foreign Pension Plans
	Three Months Ended						Three Months Ended
	June 30,			June 30,			June 30,			June 30,
	2021			2020			2021			2020
Service cost	$	—		$	—		$	6		$	8
Interest cost		1,218			1,443			4			6
Expected return on plan assets(1)		(1,058	)		(2,454	)		(3	)		(3	)
Amortization of loss		1,550			1,622			43			44
Settlement charges		20,063			—			—			—
Total expense, net	$	21,773		$	611		$	50		$	55

(1) Expected return on plan assets is net of expected investment expenses and certain administrative expenses.

	Domestic Pension Plans						Foreign Pension Plans
	Six Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2021			2020			2021			2020
Service cost	$	—		$	—		$	12		$	15
Interest cost		2,471			2,886			8			13
Expected return on plan assets(1)		(2,171	)		(4,908	)		(6	)		(7	)
Amortization of loss		3,317			3,244			86			87
Settlement charges		20,063			—			—			—
Total expense, net	$	23,680		$	1,222		$	100		$	108

(1) Expected return on plan assets is net of expected investment expenses and certain administrative expenses.

In February 2020, the CTS Board of Directors authorized management to explore termination of the U.S.-based pension plan ("Plan"), subject to certain conditions. On June 1, 2020, we entered into the Fifth Amendment to the Plan whereby we set an effective termination date for the Plan of July 31, 2020. In February 2021, we received a determination letter from the Internal Revenue Service that allowed us to proceed with the termination process for the Plan. During the second quarter of 2021, the Company offered the option of receiving a lump sum payment to eligible participants with vested qualified Plan benefits in lieu of receiving monthly annuity payments. Approximately 365 participants elected to receive the settlement, and lump sum payments of approximately $35,594 were made from Plan assets to these participants in June 2021.

As required under US GAAP, the Company recognizes a settlement gain or loss when the aggregate amount of lump-sum distributions to participants equals or exceeds the sum of the service and interest cost components of the net periodic pension cost.  The amount of settlement gain or loss recognized is the pro rata amount of the existing unrealized gain or loss immediately prior to the settlement.  In general, both the projected benefit obligation and fair value of plan assets are required to be remeasured in order to determine the settlement gain or loss.

Upon the partial settlement of the pension liability due to the lump sum offering the Company recognized a non-cash and non-operating settlement charge of $20,063 related to pension losses, reclassified from accumulated other comprehensive loss to other (income) expense in the Company's Condensed Consolidated Statements of Earnings.

Upon final settlement of the pension liability with the purchase of annuities, expected to occur in the third quarter, we will reclassify the remaining related unrecognized pension losses, currently recorded in accumulated other comprehensive loss, to the Condensed Consolidated Statements of Earnings. Since the final amount of the settlement depends on a number of factors determined as of the liquidation date, including the annuity pricing interest rate environment and asset performance, the unrecognized losses value may fluctuate from June 30, 2021. As of June 30, 2021, we had gross unrecognized pension losses related to the Plan of $101,125.

We do not expect any cash contributions from the Company to the Plan as a result of this termination as Plan assets continue to significantly exceed estimated liabilities.

Other Post-retirement Benefit Plan

Net post-retirement expense for our other post-retirement plan includes the following components:

	Three Months Ended					Six Months Ended
	June 30,		June 30,			June 30,		June 30,
	2021		2020			2021		2020
Service cost	$	—	$	—		$	—	$	—
Interest cost		20		30			43		60
Amortization of gain		—		(21	)		—		(42	)
Total expense, net	$	20	$	9		$	43	$	18