Employee Benefit Plans

Pension and Profit-Sharing Benefits

The Company provides a defined contribution profit sharing plan for the benefit of substantially all the Company's domestic salaried and non-union hourly employees. The plan contains both contributory and noncontributory profit sharing arrangements, as defined. Aggregate charges included in the accompanying consolidated statement of operations under this plan were approximately $4.2 million, $3.8 million and $3.7 million in 2018, 2017 and 2016, respectively. Certain of the Company's non-U.S. and union hourly employees participate in defined benefit pension plans.

Plan Assets, Expenses and Obligations

Net periodic pension benefit expense recorded in the Company's consolidated statement of operations for defined benefit pension plans include the following components (dollars in thousands):



	Pension Benefit
	2018			2017			2016
Service cost	$	1,120		$	1,150		$	950
Interest cost	1,100			1,290			1,510
Expected return on plan assets	(1,520		)	(1,480		)	(1,610		)
Settlements and curtailments	2,620			—			1,330
Amortization of net loss	860			1,010			930
Net periodic benefit expense	$	4,180		$	1,970		$	3,110

The service cost component of net periodic benefit cost is recorded in cost of goods sold and selling, general and administrative expenses, while non-service cost components are recorded in other expense, net in the accompanying consolidated statement of operations.

During 2018, the Company recognized one-time settlement and curtailment charges of approximately $2.6 million, of which approximately $2.5 million was due to the purchase of an annuity contract to transfer certain U.S. retiree defined benefit obligations to an insurance company. The annuity contract was funded by plan assets.

During 2016, the Company recognized one-time settlement and curtailment charges of approximately $1.3 million primarily due to lump sum payments in the United States and the United Kingdom.

The estimated net actuarial loss and prior service cost for defined benefit pension plans that is expected to be amortized from AOCI into net periodic benefit expense in 2019 is approximately $0.6 million.

Actuarial valuations of the Company's defined benefit pension plans were prepared as of December 31, 2018, 2017 and 2016. Weighted average assumptions used in accounting for the U.S. defined benefit pension plans are as follows:



	Pension Benefit
	2018		2017		2016
Discount rate for obligations	4.50	%	3.76	%	4.35	%
Discount rate for benefit costs	4.37	%	4.35	%	4.62	%
Rate of increase in compensation levels	N/A		N/A		N/A
Expected long-term rate of return on plan assets	7.13	%	7.13	%	7.13	%

The Company utilizes a high-quality (Aa or greater) corporate bond yield curve as the basis for its domestic discount rate for its pension benefit plans. Management believes this yield curve removes the impact of including additional required corporate bond yields (potentially considered in the above-median curve) resulting from the uncertain economic climate that does not necessarily reflect the general trend in high-quality interest rates.

Weighted average assumptions used in accounting for the non-U.S. defined benefit pension plans are as follows:



	Pension Benefit
	2018		2017		2016
Discount rate for obligations	3.00	%	2.60	%	2.80	%
Discount rate for benefit costs	2.60	%	2.80	%	3.80	%
Rate of increase in compensation levels	3.30	%	3.30	%	3.90	%
Expected long-term rate of return on plan assets	4.60	%	4.60	%	4.90	%

The following provides a reconciliation of the changes in the Company's defined benefit pension plans' projected benefit obligations and fair value of assets for each of the years ended December 31, 2018 and 2017 and the funded status as of December 31, 2018 and 2017 (dollars in thousands):



	Pension Benefit
	2018			2017
Changes in Projected Benefit Obligations
Benefit obligations at January 1	$	(39,030	)	$	(37,640	)
Service cost	(1,120		)	(1,150		)
Interest cost	(1,100		)	(1,290		)
Participant contributions	(60		)	(60		)
Actuarial gain	3,020			990
Benefit payments	1,200			1,320
Annuity purchase	5,480			—
Settlements and curtailments	210			710
Change in foreign currency	1,100			(1,910		)
Projected benefit obligations at December 31	$	(30,300	)	$	(39,030	)
Changes in Plan Assets
Fair value of plan assets at January 1	$	31,760		$	26,260
Actual return on plan assets	(1,520		)	2,510
Employer contributions	2,440			3,170
Participant contributions	60			60
Benefit payments	(1,200		)	(1,320		)
Annuity purchase	(5,480		)	—
Settlements	(210		)	(710		)
Change in foreign currency	(1,200		)	1,790
Fair value of plan assets at December 31	$	24,650		$	31,760
Funded status at December 31	$	(5,650	)	$	(7,270	)



	Pension Benefit
	2018			2017
Amounts Recognized in Balance Sheet
Prepaid benefit cost	$	1,350		$	1,190
Current liabilities	(340		)	(340		)
Noncurrent liabilities	(6,660		)	(8,120		)
Net liability recognized at December 31	$	(5,650	)	$	(7,270	)



	Pension Benefit
	2018		2017
Amounts Recognized in Accumulated Other Comprehensive Loss
Unrecognized prior service cost	$	190	$	50
Unrecognized net loss	11,610		15,600
Total accumulated other comprehensive loss recognized at December 31	$	11,800	$	15,650



	Accumulated Benefit Obligations						Projected Benefit Obligations
	2018			2017			2018			2017
Benefit Obligations at December 31,
Total benefit obligations	$	(28,410	)	$	(36,720	)	$	(30,300	)	$	(39,030	)
Plans with benefit obligations exceeding plan assets
Benefit obligations	$	(12,050	)	$	(18,420	)	$	(12,080	)	$	(18,440	)
Plan assets	5,090			9,980			5,090			9,980

The assumptions regarding discount rates and expected return on plan assets can have a significant impact on amounts reported for benefit plans. A 25 basis point change in benefit obligation discount rates or 50 basis point change in expected return on plan assets would have the following effect (dollars in thousands):



	Pension Benefit
	December 31, 2018 Benefit Obligation			2018 Expense
Discount rate
25 basis point increase	$	(1,120	)	$	(90	)
25 basis point decrease	$	1,210		$	100
Expected return on assets
50 basis point increase	N/A			$	(130	)
50 basis point decrease	N/A			$	130

The Company expects to make contributions of approximately $1.9 million to fund its pension plans during 2019.

Plan Assets

The Company's overall investment goal is to provide for capital growth with a moderate level of volatility by investing assets in targeted allocation ranges. Specific long term investment goals include total investment return, diversity to reduce volatility and risk, and to achieve an asset allocation profile that reflects the general nature and sensitivity of the plans' liabilities. Investment goals are established after a comprehensive review of current and projected financial statement requirements, plan assets and liability structure, market returns and risks as well as special requirements of the plans. The Company reviews investment goals and actual results annually to determine whether stated objectives are still relevant and the continued feasibility of achieving the objectives.

The actual weighted average asset allocation of the Company's domestic and foreign pension plans' assets at December 31, 2018 and 2017 and target allocations by class, were as follows:



	Domestic Pension						Foreign Pension
			Actual						Actual
	Target		2018		2017		Target		2018		2017
Equity securities	60	%	58	%	63	%	33	%	29	%	30	%
Fixed income	36	%	39	%	36	%	45	%	47	%	46	%
Diversified growth^(a)	—	%	—	%	—	%	22	%	24	%	24	%
Cash and other	4	%	3	%	1	%	—		—	%	—	%
Total	100	%	100	%	100	%	100	%	100	%	100	%

________________________________________

^(a) Diversified growth funds invest in a broad range of asset classes including equities, investment grade and high yield bonds, commodities, property, private equity, infrastructure and currencies.

Actual allocations to each asset vary from target allocations due to periodic investment strategy changes, market value fluctuations and the timing of benefit payments and contributions. The expected long-term rate of return for both the domestic and foreign plans' total assets is based on the expected return of each of the above categories, weighted based on the target allocation for each class. Actual allocation is reviewed regularly and investments are rebalanced to their targeted allocation range when deemed appropriate.

In managing the plan assets, the Company reviews and manages risk associated with the funded status risk, interest rate risk, market risk, liquidity risk and operational risk. Investment policies reflect the unique circumstances of the respective plans and include requirements designed to mitigate these risks by including quality and diversification standards.

The following table summarizes the level under the fair value hierarchy (see Note 3, "Summary of Significant Accounting Policies") that the Company's pension plan assets are measured, on a recurring basis as of December 31, 2018 (dollars in thousands):



	Total		Level 1		Level 2		Level 3
Plan assets subject to leveling
Investment funds
Equity securities	$	2,960	$	2,960	$	—	$	—
Fixed income	1,970		1,970		—		—
Cash and cash equivalents	90		90		—		—
Plan assets measured at net asset value^(a)
Investment funds
Equity securities	5,590
Fixed income	9,400
Diversified growth	4,390
Cash and cash equivalents	250
Total	$	24,650	$	5,020	$	—	$	—

________________________________________

^(a) Certain investments that are measured at fair value using the net asset value per share as a practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amount presented in the fair value of plan assets.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid (dollars in thousands):



	Pension Benefit
December 31, 2019	$	990
December 31, 2020	1,110
December 31, 2021	1,090
December 31, 2022	1,190
December 31, 2023	1,290
Years 2024-2028	7,260