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Defined Benefit Pension Plans
 12 Months Ended
Dec. 31, 2018
Defined Benefit Plan [Abstract]  
Defined Benefit Pension Plans Defined Benefit Pension Plans

We sponsor both funded and unfunded defined benefit pension plans offering death and disability, retirement, and special termination benefits for certain of our international employees, primarily in Germany, France, Italy, Indonesia, Brazil, and Spain. The defined benefit obligation is calculated annually by using the projected unit credit method. The measurement date for the pension plans was December 31, 2018.

The following tables set forth the components of the changes in benefit obligations and fair value of plan assets:
 
Year Ended December 31,
 
2018
 
2017
 
 
 
 
 
(in thousands)
Change in benefit obligation:
 
 
 
Benefit obligation at January 1,
$
110,820

 
$
97,261

Service cost
4,034

 
3,968

Interest cost
2,324

 
2,264

Actuarial (gain) loss
(2,497
)
 
(2,351
)
Benefits paid
(3,018
)
 
(3,136
)
Foreign currency exchange rate changes
(5,110
)
 
13,014

Curtailment
(694
)
 
(858
)
Settlement
(413
)
 
(175
)
Other
124

 
833

Benefit obligation at December 31,
$
105,570

 
$
110,820

 
 
 
 
Change in plan assets:
 
 
 
Fair value of plan assets at January 1,
$
12,834

 
$
10,215

Actual return on plan assets
(54
)
 
786

Company contributions
465

 
399

Benefits paid
(392
)
 
(383
)
Foreign currency exchange rate changes
(963
)
 
984

Other
—

 
833

Fair value of plan assets at December 31,
11,890

 
12,834

Net pension benefit obligation at fair value
$
93,680

 
$
97,986



Amounts recognized on the Consolidated Balance Sheets consist of:
 
At December 31,
 
2018
 
2017
 
 
 
 
 
(in thousands)
Assets
 
 
 
Plan assets in other long-term assets
$
572

 
$
991

 
 
 
 
Liabilities
 
 
 
Current portion of pension benefit obligation in wages and benefits payable
2,730

 
3,260

Long-term portion of pension benefit obligation
91,522

 
95,717

 
 
 
 
Pension benefit obligation, net
$
93,680

 
$
97,986



Amounts recognized in OCI (pre-tax) are as follows:
 
Year Ended December 31,
 
2018
 
2017
 
2016
 
 
 
 
 
 
 
(in thousands)
Net actuarial (gain) loss
$
(3,191
)
 
$
(3,209
)
 
$
6,316

Settlement (gain) loss
(1
)
 
2

 
(1,343
)
Curtailment (gain) loss
(1
)
 
586

 
—

Plan asset (gain) loss
724

 
(192
)
 
(64
)
Amortization of net actuarial loss
(1,533
)
 
(2,308
)
 
(1,351
)
Amortization of prior service cost
(61
)
 
(62
)
 
(58
)
Other
124

 
—

 
4

Other comprehensive (income) loss
$
(3,939
)
 
$
(5,183
)
 
$
3,504



If actuarial gains and losses exceed ten percent of the greater of plan assets or plan liabilities, we amortize them over the employees' average future service period. The estimated net actuarial loss and prior service cost that will be amortized from AOCI into net periodic benefit cost during 2019 is $1.4 million.

Net periodic pension benefit costs for our plans include the following components:
 
Year Ended December 31,
 
2018
 
2017
 
2016
 
 
 
 
 
 
 
(in thousands)
Service cost
$
4,034

 
$
3,968

 
$
3,472

Interest cost
2,324

 
2,264

 
2,573

Expected return on plan assets
(670
)
 
(594
)
 
(540
)
Amortization of prior service costs
61

 
62

 
58

Amortization of actuarial net loss
1,533

 
2,308

 
1,351

Settlement
1

 
(2
)
 
1,343

Curtailment
1

 
(586
)
 
—

Other
—

 
—

 
(3
)
Net periodic benefit cost
$
7,284

 
$
7,420

 
$
8,254



The significant actuarial weighted average assumptions used in determining the benefit obligations and net periodic benefit cost for our benefit plans are as follows:
 
At and For The Year Ended December 31,
 
2018
 
2017
 
2016
Actuarial assumptions used to determine benefit obligations at end of period:
 
 
 
 
 
Discount rate
2.24
%
 
2.21
%
 
2.18
%
Expected annual rate of compensation increase
3.60
%
 
3.64
%
 
3.65
%
Actuarial assumptions used to determine net periodic benefit cost for the period:
 
 
 
 
 
Discount rate
2.21
%
 
2.18
%
 
2.59
%
Expected rate of return on plan assets
5.58
%
 
5.58
%
 
5.29
%
Expected annual rate of compensation increase
3.64
%
 
3.65
%
 
3.60
%


We determine a discount rate for our plans based on the estimated duration of each plan's liabilities. For our euro denominated defined benefit pension plans, which represent 94% of our benefit obligation, we use two discount rates with consideration of the duration of the plans, using a hypothetical yield curve developed from euro-denominated AA-rated corporate bond issues. These bond issues are partially weighted for market value, with minimum amounts outstanding of €500 million for bonds with less than 10 years to maturity and €50 million for bonds with 10 or more years to maturity, and excluding the highest and lowest yielding 10% of bonds within each maturity group. The discount rates used, depending on the duration of the plans, were 1.00% and 1.75%.

Our expected rate of return on plan assets is derived from a study of actual historic returns achieved and anticipated future long-term performance of plan assets, specific to plan investment asset category. While the study primarily gives consideration to recent insurers' performance and historical returns, the assumption represents a long-term prospective return.

The total accumulated benefit obligation for our defined benefit pension plans was $97.3 million and $101.4 million at December 31, 2018 and 2017, respectively.

The total obligations and fair value of plan assets for plans with projected benefit obligations and accumulated benefit obligations exceeding the fair value of plan assets are as follows:
 
At December 31,
2018
 
2017
 
 
 
 
 
(in thousands)
Projected benefit obligation
$
103,059

 
$
106,486

Accumulated benefit obligation
94,831

 
97,546

Fair value of plan assets
8,807

 
7,509



Our asset investment strategy focuses on maintaining a portfolio using primarily insurance funds, which are accounted for as investments and measured at fair value, in order to achieve our long-term investment objectives on a risk adjusted basis. Our general funding policy for these qualified pension plans is to contribute amounts sufficient to satisfy regulatory funding standards of the respective countries for each plan.

The fair values of our plan investments by asset category are as follows:
 
Total
 
Quoted Prices in Active Markets for Identical Assets
(Level 1)
 
Significant Unobservable Inputs
(Level 3)
 
 
 
 
 
 
 
(in thousands)
 
December 31, 2018
Cash
$
787

 
$
787

 
$
—

Insurance funds
8,020

 
—

 
8,020

Other securities
3,083

 
—

 
3,083

Total fair value of plan assets
$
11,890

 
$
787

 
$
11,103

 
 
 
 
 
 
 
December 31, 2017
Cash
$
789

 
$
789

 
$
—

Insurance funds
8,384

 
—

 
8,384

Other securities
3,661

 
—

 
3,661

Total fair value of plan assets
$
12,834

 
$
789

 
$
12,045



The following tables present a reconciliation of Level 3 assets held during the years ended December 31, 2018 and 2017.
 
Balance at January 1, 2018
 
Net Realized and Unrealized Gains
 
Net Purchases, Issuances, Settlements, and Other
 
Net Transfers Into Level 3
 
Effect of Foreign Currency
 
Balance at December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
Insurance funds
$
8,384

 
$
(158
)
 
$
141

 
$
—

 
$
(347
)
 
$
8,020

Other securities
3,661

 
123

 
(141
)
 
—

 
(560
)
 
3,083

Total
$
12,045

 
$
(35
)
 
$
—

 
$
—

 
$
(907
)
 
$
11,103


 
Balance at January 1, 2017
 
Net Realized and Unrealized Gains
 
Net Purchases, Issuances, Settlements, and Other
 
Net Transfers Into Level 3
 
Effect of Foreign Currency
 
Balance at December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands)
Insurance funds
$
7,011

 
$
257

 
$
102

 
$
—

 
$
1,014

 
$
8,384

Other securities
2,421

 
523

 
(93
)
 
833

 
(23
)
 
3,661

Total
$
9,432

 
$
780

 
$
9

 
$
833

 
$
991

 
$
12,045



As the plan assets and contributions are not significant to our total company assets, no further disclosures are considered material.

Annual benefit payments for the next 10 years, including amounts to be paid from our assets for unfunded plans and reflecting expected future service, as appropriate, are expected to be paid as follows:
 
Year Ending December 31,
 
Estimated Annual Benefit Payments
 
 
 
 
(in thousands)
 
2019
 
$
3,522

 
2020
 
3,412

 
2021
 
3,574

 
2022
 
4,051

 
2023
 
4,439

 
2024-2028
 
27,604