RETIREMENT BENEFITS

We sponsor a number of defined benefit and defined contribution pension plans which cover substantially all U.S. employees, other than union employees covered by multiemployer defined benefit pension plans under collective bargaining agreements. Pension benefits are provided based on either a career average, final pay or years of service formula. With respect to certain hourly employees, pension benefits are provided based on stated amounts for each year of service. Our U.S. salaried pension plans are closed to new employees.

We also sponsor other postretirement benefits plans, including unfunded defined benefit health care and life insurance plans, which provide postretirement benefits to certain employees. The plans are contributory, with retiree contributions adjusted annually, and contain cost sharing features including deductibles and coinsurance. Retiree health care benefits are paid as covered expenses are incurred.

The changes in benefit obligations and plan assets as well as the funded status of our retirement plans at December 31 were as follows:



	Pension Benefits						Other Postretirement Benefits
	2017			2016			2017			2016
	(Dollars in thousands)
Change in benefit obligation
Obligation at beginning of year	$	726,421		$	685,295		$	21,698		$	28,022
Service cost	13,372			12,895			104			222
Interest cost	25,501			25,781			692			891
Actuarial losses	54,562			34,705			630			641
Acquisition	19,225			—			—			—
Special termination benefits	—			2,837			—			—
Plan amendments	147			472			(2		)	(5,636		)
Benefits paid	(43,598		)	(33,492		)	(2,325		)	(3,007		)
Curtailment gain	—			—			—			(305		)
Participants’ contributions	—			—			142			870
Foreign currency exchange rate changes	12,519			(2,072		)	—			—
Obligation at end of year	808,149			726,421			20,939			21,698
Change in plan assets
Fair value of plan assets at beginning of year	759,551			704,779			—			—
Actual return on plan assets	108,154			87,132			—			—
Employer contributions	1,699			1,132			2,183			2,137
Participants’ contributions	—			—			142			870
Benefits paid	(43,598		)	(33,492		)	(2,325		)	(3,007		)
Fair value of plan assets at end of year	825,806			759,551			—			—
Funded status	$	17,657		$	33,130		$	(20,939	)	$	(21,698	)



	Pension Benefits						Other Postretirement Benefits
	2017			2016			2017			2016
	(Dollars in thousands)
Amounts recognized in the consolidated balance sheets
Non-current assets	$	118,892		$	104,089		$	—		$	—
Current liabilities	(2,227		)	(1,295		)	(2,083		)	(2,502		)
Non-current liabilities	(99,008		)	(69,664		)	(18,856		)	(19,196		)
Net amount recognized	$	17,657		$	33,130		$	(20,939	)	$	(21,698	)
Amounts recognized in accumulated other comprehensive loss (income)
Net actuarial loss (gain)	$	154,642		$	148,941		$	(5,561	)	$	(6,787	)
Prior service cost (credit)	938			1,105			(11,337		)	(14,753		)
Net amount recognized	$	155,580		$	150,046		$	(16,898	)	$	(21,540	)



	Pension Benefits		Other Postretirement Benefits
	(Dollars in thousands)
Items to be recognized in 2018 as a component of net periodic cost
Net actuarial loss (gain)	$	7,169	$	(474	)
Prior service cost (credit)	173		(2,602		)
Net periodic cost (credit) to be recorded in 2018	$	7,342	$	(3,076	)

Pension plans with projected benefit obligations in excess of plan assets at December 31, 2017 and 2016 consisted entirely of our international pension benefit plans which are not funded. The projected benefit obligation for our international pension benefit plans was $101.2 million and $71.0 million at December 31, 2017 and 2016, respectively.

The accumulated benefit obligation for all pension benefit plans at December 31, 2017 and 2016 was $779.1 million and $697.5 million, respectively. Pension plans with accumulated benefit obligations in excess of plan assets at December 31, 2017 and 2016 consisted entirely of our international pension benefit plans which are not funded. The accumulated benefit obligation for our international pension benefit plans was $96.2 million and $66.2 million at December 31, 2017 and 2016, respectively.

The benefits expected to be paid from our pension and other postretirement benefit plans, which reflect future years of service, are as follows (dollars in thousands):



	Pension Benefits		Other Postretirement Benefits
2018	$	39,502	$	2,083
2019	39,285		1,870
2020	40,842		1,545
2021	42,365		1,484
2022	43,434		1,427
2023-2027	231,373		6,373
	$	436,801	$	14,782

Our principal domestic pension and other postretirement benefit plans used the following weighted average actuarial assumptions to determine the benefit obligations at December 31:



	2017		2016
Discount rate	3.8	%	4.4	%
Expected return on plan assets	8.5	%	8.5	%
Rate of compensation increase	2.6	%	2.8	%
Health care cost trend rate:
Assumed for next year	6.2	%	6.4	%
Ultimate rate	4.9	%	4.5	%
Year that the ultimate rate is reached	2047		2047

Our expected return on plan assets is determined by current and expected asset allocation of plan assets, estimates of future long-term returns on those types of plan assets and historical long-term investment performance.

Our international pension benefit plans used a discount rate of 2.1 percent and 1.9 percent as of December 31, 2017 and 2016, respectively, and a rate of compensation increase of 3.3 percent and 3.5 percent to determine the benefit obligation as of December 31, 2017 and 2016, respectively.

The components of the net periodic benefit credit for each of the years ended December 31 were as follows:



	Pension Benefits									Other Postretirement Benefits
	2017			2016			2015			2017			2016			2015
	(Dollars in thousands)
Service cost	$	13,372		$	12,895		$	15,562		$	104		$	222		$	444
Interest cost	25,501			25,781			28,066			692			891			1,281
Expected return on plan assets	(63,010		)	(58,504		)	(62,726		)	—			—			—
Amortization of prior service cost (credit)	313			561			1,037			(3,418		)	(3,571		)	(3,057		)
Amortization of actuarial losses (gains)	7,077			8,573			5,556			(596		)	(599		)	(348		)
Special termination benefits	—			2,837			—			—			—			—
Curtailment loss (gain)	—			183			(522		)	—			(823		)	—
Net periodic benefit credit	$	(16,747	)	$	(7,674	)	$	(13,027	)	$	(3,218	)	$	(3,880	)	$	(1,680	)

In 2016, special termination benefits of $2.8 million and net curtailment gains of $0.6 million were recognized related to the shutdown of the LaPorte, Indiana manufacturing facility.

Our principal domestic pension and other postretirement benefit plans used the following weighted average actuarial assumptions to determine net periodic benefit credit for the years ended December 31:



	2017		2016		2015
Discount rate	4.4	%	4.7	%	4.1	%
Expected return on plan assets	8.5	%	8.5	%	8.5	%
Rate of compensation increase	2.8	%	3.1	%	3.0	%
Health care cost trend rate	6.4	%	6.6	%	6.7	%

Our international pension benefit plans used a discount rate of 1.9 percent, 2.6 percent and 2.0 percent for the years ended December 31, 2017, 2016 and 2015, respectively, and used a rate of compensation increase of 3.3 percent, 3.5 percent and 3.5 percent to determine net periodic benefit credit for the years ended December 31, 2017, 2016 and 2015, respectively.

The assumed health care cost trend rates affect the amounts reported for our health care plans. A one percentage point change in the assumed health care cost trend rates would not have a significant impact on our service cost, interest cost or postretirement benefit obligation.

MULTIEMPLOYER PENSION PLANS

We participate in four multiemployer pension plans which provide defined benefits to certain of our union employees. The aggregate amount contributed to these plans and charged to pension cost in 2017, 2016 and 2015 was $6.4 million, $6.5 million and $6.7 million, respectively.

The risks of participating in multiemployer plans are different from the risks of single-employer plans in the following respects: (i) assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other participating employers; (ii) if a participating employer ceases to contribute to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers; and (iii) if we cease to have an obligation to contribute to the multiemployer plan in which we had been a contributing employer, we may be required to pay to the plan an amount (referred to as a withdrawal liability) based on the underfunded status of the plan and on our historical participation in the plan prior to the cessation of our obligation to contribute.

Based on the latest information available, we participate in two multiemployer plans with a funded status less than 65 percent. Further information on these multiemployer plans for the years ended December 31, 2017, 2016 and 2015 is as follows:



Pension Fund	EIN/Pension Plan Number	Pension Protection Act Zone Status				FIP / RP Status Pending / Implemented	Contributions						Surcharge Imposed
Pension Fund	EIN/Pension Plan Number	2017		2016		FIP / RP Status Pending / Implemented	2017		2016		2015		Surcharge Imposed
							(Dollars in thousands)
Central States, Southeast & Southwest Areas Pension Fund⁽¹⁾	36-6044243/001	Red	⁽²⁾	Red	⁽²⁾	Implemented	$	1,873	$	1,979	$	1,996	No
United Food & Commercial Workers — Local 1 Pension Fund ⁽³⁾	16-6144007/001	Red		Red		Implemented	232		199		169		No
All Other							4,318		4,304		4,550
Total Contributions							$	6,423	$	6,482	$	6,715

______________________


⁽¹⁾	The applicable collective bargaining agreements related to this pension fund expire at various times in 2019.


⁽²⁾	Under the Multiemployer Pension Reform Act of 2014, the status of this pension fund for each of 2017 and 2016 was critical and declining, as defined under such Act.


⁽³⁾	The collective bargaining agreement related to this pension fund expires on March 31, 2018.

The “EIN/Pension Plan Number” column provides the Employer Identification Number and the three digit plan number assigned to a plan by the Internal Revenue Service. The most recent Pension Protection Act Zone Status available for 2017 and 2016 is for plan years that ended in each of those years. The zone status is based on information provided to us and other participating employers by each plan and is certified by the plan’s actuary. A plan in the “red” zone has been determined to be in “critical status,” based on criteria established under the Internal Revenue Code of 1986, as amended (the “Code”), and is generally less than 65 percent funded. The “FIP/RP Status Pending/Implemented” column indicates whether a rehabilitation plan, as required under the Code to be adopted by plans in the “red” zone, is pending or has been implemented as of the end of the 2017 plan year. The “Surcharge Imposed” column indicates whether our contribution rate for 2017 included an amount in addition to the contribution rate specified in the applicable collective bargaining agreement, as imposed by a plan in “critical status” in accordance with the requirements of the Code.

Our contributions to each of these respective plans were less than five percent of total contributions made by all employers to each of these respective plans, as reported by these plans for the year ended December 31, 2016, the most recent plan year available. We do not expect our contributions to these plans for the year ended December 31, 2018 to be significantly different from our contributions for the year ended December 31, 2017.

DEFINED CONTRIBUTION PLANS

We also sponsor defined contribution plans covering certain employees. Our contributions to these plans are based upon employee contributions and operating profitability. Contributions charged to expense for these plans for the years ended December 31, 2017, 2016 and 2015 were $11.8 million, $9.8 million and $9.5 million, respectively.

PLAN ASSETS

INVESTMENT STRATEGY

Our investment strategy is based on an expectation that equity securities will outperform debt securities over the long term. Accordingly, the composition of our plan assets is broadly characterized as a 58 percent/42 percent allocation between equity and debt securities. The equity securities allocation utilizes indexed U.S. equity securities (which constitutes approximately 85 percent of equity securities), with a lesser allocation to indexed international equity securities. The debt securities allocation primarily utilizes indexed investment grade U.S. debt securities. We attempt to mitigate investment risk by regularly rebalancing between equity and debt securities as contributions and benefit payments are made.

The weighted average asset allocation for our pension plans at December 31, 2017 and 2016 and target allocation for 2017 was as follows:



	Target Allocation		Actual Allocation
	Target Allocation		2017		2016
Equity securities—U.S.	49	%	47	%	47	%
Equity securities—International	9	%	10	%	10	%
Debt securities	42	%	42	%	42	%
Cash and cash equivalents	—		1	%	1	%
	100	%	100	%	100	%

FAIR VALUE MEASUREMENTS

Our plan assets are primarily invested in commingled funds holding equity and debt securities, which are valued using the Net Asset Value, or NAV, provided by the administrator of the fund. The NAV is based on the value of the underlying assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding. Commingled funds are classified within Level 2 (as described in Note 9) of the fair value hierarchy because the NAV’s are not publicly available. Plan excess cash balances are invested in short term investment funds which include investments in cash, bank notes, corporate notes, government bills and various short-term debt instruments. These typically are commingled funds valued using one dollar for the NAV. These short term funds are also classified within Level 2 of the valuation hierarchy.

The fair value of our plan assets by asset category consisted of the following at December 31:



	2017		2016
	(Dollars in thousands)
Equity securities—U.S.	$	391,527	$	357,789
Equity securities—International	82,571		76,189
Debt securities	347,612		321,597
Cash and cash equivalents	4,096		3,976
	$	825,806	$	759,551

CONCENTRATIONS OF CREDIT RISK

As of December 31, 2017, approximately 99 percent of our plan assets were under management by a single investment management company in six individual commingled equity and debt index funds. Of these six funds, four funds held assets individually in excess of ten percent of our total plan assets.

EXPECTED CONTRIBUTIONS

Based on current legislation, there are no significant minimum required contributions to our pension benefit plans in 2018. In addition, based on the current funded status of our domestic pension benefit plans we do not expect to make significant contributions to these plans in 2018. However, this estimate may change based on regulatory changes and actual plan asset returns.