Employee Benefit Plans

12 Months Ended

Dec. 31, 2017

Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]

Employee Benefit Plans

15. Employee Benefit Plans

The Company offers defined contribution retirement plans which cover the majority of its U.S. employees, as well as employees in certain other countries. The Company’s expense relating to defined contribution plans was $41,919, $34,665 and $32,281 for the years ended December 31, 2017, 2016 and 2015, respectively.

The Company sponsors qualified defined benefit pension plans covering certain employees of the Company and its subsidiaries. The plans’ benefits are generally based on years of service and employee compensation. The Company also provides to certain management employees, through non-qualified plans, supplemental retirement benefits in excess of qualified plan limits imposed by federal tax law.

In July 2013, the Company announced that, after December 31, 2013, the U.S. qualified and non-qualified defined benefit plans would be closed to new employees. All pension-eligible employees as of December 31, 2013 will continue to earn a pension benefit through December 31, 2023 as long as they remain employed by an operating company participating in the impacted plans. The Company also announced that effective January 1, 2024, the plans would be frozen to any future benefit accruals.

The Company also maintains other post-retirement benefit plans which cover approximately 431 participants, approximately 411 of whom are eligible for medical benefits. These plans are closed to new entrants. The supplemental and other post-retirement benefit plans are supported by the general assets of the Company.

Obligations and Funded Status

The following tables summarize the Consolidated Balance Sheets impact, including the benefit obligations, assets and funded status associated with the Company's significant defined benefit and other post-retirement benefit plans at December 31, 2017 and 2016.

	Qualified Defined Benefits												Non-Qualified Supplemental Benefits						Other Post-Retirement Benefits
	U.S. Plan						Non-U.S. Plans
	2017			2016			2017			2016			2017			2016			2017			2016
Change in benefit obligation:
Benefit obligation at beginning of year	$	535,299		$	527,667		$	243,483		$	245,986		$	110,446		$	125,311		$	12,263		$	10,885
Service cost	12,083			13,913			5,688			5,590			2,473			2,959			68			52
Interest cost	21,718			23,046			5,263			5,593			4,076			5,268			783			403
Plan participants' contributions	—			—			1,237			1,223			—			—			—			102
Benefits paid	(38,490		)	(32,341		)	(8,528		)	(7,870		)	(11,576		)	(16,643		)	(917		)	(767		)
Actuarial loss (gain)	35,446			2,980			8,812			22,909			593			(6,449		)	946			(2,343		)
Business acquisitions (dispositions)	—			—			1,810			(4,420		)	—			—			—			4,367
Amendments	364			—			—			—			—			—			(4,646		)	—
Settlements and curtailments	(32		)	—			—			(3,262		)	—			—			—			—
Currency translation and other	1			34			20,423			(22,266		)	—			—			98			(436		)
Benefit obligation at end of year	566,389			535,299			278,188			243,483			106,012			110,446			8,595			12,263
Change in plan assets:
Fair value of plan assets at beginning of year	562,564			552,817			148,514			159,436			—			—			—			—
Actual return on plan assets	93,766			42,088			15,849			10,317			—			—			—			—
Company contributions	—			—			7,971			8,383			11,576			16,643			917			665
Plan participants' contributions	—			—			1,237			1,223			—			—			—			102
Benefits paid	(38,490		)	(32,341		)	(8,528		)	(7,870		)	(11,576		)	(16,643		)	(917		)	(767		)
Business dispositions	—			—			—			(3,967		)	—			—			—			—
Settlements and curtailments	—			—			—			(3,262		)	—			—			—			—
Currency translation	—			—			10,491			(15,746		)	—			—			—			—
Fair value of plan assets at end of year	617,840			562,564			175,534			148,514			—			—			—			—
Funded (Unfunded) status	$	51,451		$	27,265		$	(102,654	)	$	(94,969	)	$	(106,012	)	$	(110,446	)	$	(8,595	)	$	(12,263	)
Amounts recognized in the consolidated balance sheets consist of:
Assets and Liabilities:
Other assets and deferred charges	$	51,451		$	27,265		$	1,002		$	706		$	—		$	—		$	—		$	—
Accrued compensation and employee benefits	—			—			(1,484		)	(1,235		)	(17,450		)	(20,032		)	(706		)	(849		)
Other liabilities (deferred compensation)	—			—			(102,172		)	(94,440		)	(88,562		)	(90,414		)	(7,889		)	(11,414		)
Total assets and liabilities	51,451			27,265			(102,654		)	(94,969		)	(106,012		)	(110,446		)	(8,595		)	(12,263		)
Accumulated Other Comprehensive Loss (Earnings):
Net actuarial losses (gains)	79,288			103,410			69,490			73,023			(13,780		)	(15,565		)	(748		)	(1,921		)
Prior service cost (credit)	1,344			1,482			(3,500		)	(3,925		)	13,777			18,187			84			43
Net asset at transition, other	—			—			(60		)	(56		)	—			—			—			—
Deferred taxes	(30,777		)	(36,712		)	(14,982		)	(15,719		)	83			(920		)	322			598
Total accumulated other comprehensive loss (earnings), net of tax	49,855			68,180			50,948			53,323			80			1,702			(342		)	(1,280		)
Net amount recognized at December 31,	$	101,306		$	95,445		$	(51,706	)	$	(41,646	)	$	(105,932	)	$	(108,744	)	$	(8,937	)	$	(13,543	)
Accumulated benefit obligations	$	547,278		$	512,707		$	264,766		$	231,903		$	96,612		$	101,286

The Company’s net unfunded status at December 31, 2017 and 2016 includes net liabilities of $102,654 and $94,969, respectively, relating to the Company’s significant international plans, some in locations where it is not economically advantageous to pre-fund the plans due to local regulations. The majority of the international obligations relate to defined pension plans operated by the Company’s businesses in Germany, the United Kingdom and Switzerland.

The accumulated benefit obligation for all defined benefit pension plans was $908,656 and $845,896 at December 31, 2017 and 2016, respectively. Pension plans with accumulated benefit obligations in excess of plan assets consist of the following at December 31, 2017 and 2016:

	2017		2016
Projected benefit obligation (PBO)	$	372,559	$	346,710
Accumulated benefit obligation (ABO)	349,735		325,969
Fair value of plan assets	162,890		140,589

Net Periodic Benefit Cost

Components of the net periodic benefit cost were as follows: 

Defined Benefit Plans

	Qualified Defined Benefits																		Non-Qualified Supplemental Benefits
	U.S. Plan									Non-U.S. Plans
	2017			2016			2015			2017			2016			2015			2017			2016			2015
Service cost	$	12,083		$	13,913		$	15,661		$	5,688		$	5,590		$	6,613		$	2,473		$	2,959		$	3,739
Interest cost	21,718			23,046			23,163			5,263			5,593			5,885			4,076			5,268			5,063
Expected return on plan assets	(39,812		)	(38,793		)	(41,571		)	(7,417		)	(7,830		)	(7,990		)	—			—			—
Amortization of:
Prior service cost (credit)	427			733			897			(425		)	(397		)	89			4,411			6,266			6,927
Recognized actuarial loss (gain)	5,582			6,437			12,620			3,506			2,658			2,647			(1,192		)	(560		)	286
Transition obligation	—			—			—			4			4			4			—			—			—
Settlement and curtailment loss (gain)	76			—			810			678			1,103			(184		)	—			—			—
Other	—			35			—			—			—			—			—			—			—
Net periodic benefit expense	$	74		$	5,371		$	11,580		$	7,297		$	6,721		$	7,064		$	9,768		$	13,933		$	16,015

Other Post-Retirement Benefits

	2017			2016		2015
Service cost	$	68		$	52	$	163
Interest cost	783			403		512
Amortization of:
Prior service cost (credit)	7			7		(372		)
Recognized actuarial (gain) loss	(161		)	5		(30		)
Settlement and curtailment gain	(4,598		)	—		—
Other	—			—		(679		)
Net periodic (benefit) expense	$	(3,901	)	$	467	$	(406	)

The one-time benefit of $679 in 2015 relates to the shutdown of certain plant locations, as well as changes to future benefits for certain retirees. The curtailment gain in 2017 relates primarily to the impact of an amendment to the post-retirement plan in Brazil.

Amounts expected to be amortized from Accumulated other comprehensive earnings (loss) into net periodic benefit cost during 2018 are as follows:

	Qualified Defined Benefits					Non-Qualified Supplemental Benefits			Other Post-Retirement Benefits
	U.S. Plan		Non-U.S. Plans
Amortization of:
Prior service cost (credit)	$	346	$	(441	)	$	3,852		$	13
Recognized actuarial loss (gain)	7,725		3,094			(1,020		)	(30		)
Transition obligation	—		4			—			—
Total	$	8,071	$	2,657		$	2,832		$	(17	)

Assumptions

The Company determines actuarial assumptions on an annual basis. The weighted average assumptions used in determining the benefit obligations were as follows: 

	Qualified Defined Benefits								Non-Qualified Supplemental Benefits				Other Post-Retirement Benefits
	U.S. Plan				Non-U.S. Plans
	2017		2016		2017		2016		2017		2016		2017				2016
Discount rate	3.65	%	4.10	%	1.94	%	2.06	%	3.57	%	3.90	%	3.50	%	(1	)	6.49	%
Average wage increase	4.00	%	4.00	%	2.33	%	2.34	%	4.50	%	4.50	%	na				na
Ultimate medical trend rate	na		na		na		na		na		na		2.33	%			5.00	%

(1) In 2017, the medical plan in Brazil was amended which resulted in elimination of the benefit obligation. Thus, the 2017 post-retirement benefit discount rate does not reflect the plan in Brazil which had a higher discount rate than other plans.

The weighted average assumptions used in determining the net periodic benefit cost were as follows:

	Qualified Defined Benefits												Non- Qualified Supplemental Benefits						Other Post-Retirement Benefits
	U.S. Plan						Non-U.S. Plans
	2017		2016		2015		2017		2016		2015		2017		2016		2015		2017		2016		2015
Discount rate	4.10	%	4.40	%	4.05	%	2.06	%	2.32	%	2.31	%	3.97	%	4.18	%	3.96	%	6.49	%	4.00	%	3.75	%
Average wage increase	4.00	%	4.00	%	4.00	%	2.34	%	2.25	%	2.50	%	4.50	%	4.50	%	4.50	%	na		na		na
Expected return on plan assets	7.25	%	7.25	%	7.75	%	4.73	%	4.95	%	4.85	%	na		na		na		na		na		na

The Company’s discount rate assumption is determined by developing a yield curve based on high quality corporate bonds with maturities matching the plans’ expected benefit payment streams. The plans’ expected cash flows are then discounted by the resulting year-by-year spot rates.

For other post-retirement benefit measurement purposes, a 3.50% annual rate of increase in the per capita cost of covered benefits (i.e., health care cost trend rates) was assumed for 2018. The rate was assumed to decrease gradually to 2.30% by the year 2027 and remain at that level thereafter. The health care cost trend rate assumption can have an effect on the amounts reported. For example, increasing (decreasing) the assumed health care cost trend rates by one percentage point in each year would increase (decrease) the accumulated other post-retirement benefit obligation as of December 31, 2017 by $105 and $(105), respectively, and would have a negligible impact on the net post-retirement benefit cost for 2017.

Plan Assets

The primary financial objective of the plans is to secure participant retirement benefits. Accordingly, the key objective in the plans’ financial management is to promote stability and, to the extent appropriate, growth in the funded status. Related and supporting financial objectives are established in conjunction with a review of current and projected plan financial requirements.

As it relates to the funded defined benefit pension plans, the Company’s funding policy is consistent with the funding requirements of the Employment Retirement Income Security Act ("ERISA") and applicable international laws. The Company is responsible for overseeing the management of the investments of the plans’ assets and otherwise ensuring that the plans’ investment programs are in compliance with ERISA, other relevant legislation and related plan documents. Where relevant, the Company has retained professional investment managers to manage the plans’ assets and implement the investment process. The investment managers, in implementing their investment processes, have the authority and responsibility to select appropriate investments in the asset classes specified by the terms of their applicable prospectus or investment manager agreements with the plans.

The assets of the plans are invested to achieve an appropriate return for the plans consistent with a prudent level of risk. The asset return objective is to achieve, as a minimum over time, the passively managed return earned by market index funds, weighted in the proportions outlined by the asset class exposures identified in the plans’ strategic allocation. The expected return on assets assumption used for pension expense is developed through analysis of historical market returns, statistical analysis, current market conditions and the past experience of plan asset investments. Overall, it is projected that the investment of plan assets within Dover’s U.S. defined benefit plan will achieve a net return over time from the asset allocation strategy of 7.25%.

The Company’s actual and target weighted average asset allocation for our U.S. Corporate Pension Plan was as follows:

	2017		2016		Current Target
Equity securities	57	%	57	%	58	%
Fixed income	33	%	35	%	35	%
Real estate and other	10	%	8	%	7	%
Total	100	%	100	%	100	%

While the non-U.S. investment policies are different for each country, the long-term objectives are generally the same as for the U.S. pension assets. The Company's non-U.S. plans were expected to achieve rates of return on invested assets of 4.73% in 2017, 4.95% in 2016 and 4.85% in 2015.

The fair values of both U.S. and non-U.S. pension plan assets by asset category within the fair value hierarchy (as defined in Note 11 — Financial Instruments) were as follows:

	U.S. Qualified Defined Benefits Plan
	December 31, 2017						December 31, 2016
	Level 1		Level 2		Total Fair Value		Level 1		Level 2		Total Fair Value**
Common stocks	$	—	$	—	$	—	$	161,426	$	—	$	161,426
Mutual funds	—		—		—		43,272		—		43,272
Fixed income investments:
Corporate bonds	—		74,509		74,509		—		60,638		60,638
Government securities	2,766		130,774		133,540		5,901		109,888		115,789
Interest-bearing cash and short-term investments	1,222		—		1,222		1,248		—		1,248
Total investments at fair value	3,988		205,283		209,271		211,847		170,526		382,373
Investments measured at net asset value*
Collective funds	—		—		352,481		—		—		124,456
Real estate investments	—		—		48,294		—		—		45,494
Short-term investment funds	—		—		7,794		—		—		10,241
Total investments	$	3,988	$	205,283	$	617,840	$	211,847	$	170,526	$	562,564

* In accordance with Fair Value Measurement Topic 820 (Subtopic 820-10), certain investments that are measured at fair value using the net asset value per share (or its equivalent) as a practical expedient were not classified in the fair value hierarchy. These are included to permit reconciliation of the fair value hierarchy to the aggregate pension plan assets.

** Revisions were made to the fair value leveling hierarchies in the above tables as of December 31, 2016. The non-U.S. changes were from

(i): level 3 to levels 2 and 1 and (ii): level 2 to level 1 and investments measured at net asset value. The U.S. change was from level 1 to investments measured at net asset value. The valuation techniques were unchanged and the amounts revised were not material to the prior annual period.

The Company had no level 3 U.S. Plan assets at December 31, 2017 and 2016.

	Non-U.S. Plans
	December 31, 2017								December 31, 2016
	Level 1		Level 2		Level 3		Total Fair Value		Level 1		Level 2		Level 3		Total Fair Value**
Common stocks	$	28,761	$	—	$	—	$	28,761	$	34,139	$	—	$	—	$	34,139
Fixed income investments	—		29,612		—		29,612		—		15,628		—		15,628
Mutual funds	34,075		4,642		—		38,717		31,203		3,972		—		35,175
Cash and cash equivalents	4,633		—		—		4,633		3,465		—		—		3,465
Other	—		3,088		4,592		7,680		—		2,370		4,354		6,724
Total investments at fair value	$	67,469	$	37,342	$	4,592	$	109,403	$	68,807	$	21,970	$	4,354	$	95,131
Investments measured at net asset value*
Collective funds	—		—		—		61,648		—		—		—		49,357
Other	—		—		—		4,483		—		—		—		4,026
Total	$	67,469	$	37,342	$	4,592	$	175,534	$	68,807	$	21,970	$	4,354	$	148,514

Common stocks represent investments in domestic and foreign equities, which are publicly traded on active exchanges and are valued based on quoted market prices.

Fixed income investments include U.S. Treasury bonds and notes, which are valued based on quoted market prices, as well as investments in other government and municipal securities and corporate bonds, which are valued based on yields currently available on comparable securities of issuers with similar credit ratings.

Mutual funds are categorized as either Level 1, 2 or Net Asset Value (the "NAV") as a practical expedient depending on the nature of the observable inputs. Collective trusts and real estate investment funds are valued using NAV as a practical expedient as of the last business day of the year. The NAV is based on the underlying value of the assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding. The value of the underlying assets is based on quoted prices in active markets.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The availability of observable data is monitored by plan management to assess appropriate classification of financial instruments within the fair value hierarchy. Depending upon the availability of such inputs, specific securities may transfer between levels. In such instances, the transfer is reported at the end of the reporting period.

The fair value measurement of plan assets using significant unobservable inputs (Level 3) changed during 2016 and 2017, due to the following:

	Level 3**
Balance at January 1, 2016	$	—
Business acquisition	4,354
Balance at December 31, 2016	4,354
Actual return on plan assets:
Relating to assets sold during the period	28
Relating to assets still held at December 31, 2017	280
Sales	(456		)
Foreign currency translation	386
Balance at December 31, 2017	$	4,592

Future Estimates

Benefit Payments

Estimated future benefit payments to retirees, which reflect expected future service, are as follows: 

	Qualified Defined Benefits				Non-Qualified Supplemental Benefits		Other Post-Retirement Benefits
	U.S. Plan		Non-U.S. Plans
2018	$	38,772	$	7,719	$	17,760	$	719
2019	38,243		7,584		8,055		704
2020	41,251		8,287		6,417		689
2021	41,666		9,372		15,189		663
2022	40,844		9,984		11,038		649
2023 - 2027	189,701		54,987		26,452		2,882

Contributions

In 2018, the Company expects to contribute approximately $3.5 million to its non-U.S. plans and currently does not expect to contribute to its U.S. plans.