NOTE 8 RETIREMENT AND DEFERRED COMPENSATION PLANS

The Company has various noncontributory retirement plans covering certain of its domestic and foreign employees. Benefits under the Company’s retirement plans are based on participants’ years of service and annual compensation as defined by each plan. Annual cash contributions to fund pension costs accrued under the Company’s domestic plans are generally at least equal to the minimum funding amounts required by the Employee Retirement Income Security Act of 1974, as amended (ERISA). Certain pension commitments under its foreign plans are also funded according to local requirements or at the Company’s discretion.

The following table presents the changes in the benefit obligations and plan assets for the most recent two years for the Company’s domestic and foreign plans.


	Domestic Plans				Foreign Plans
	2017		2016		2017		2016
Change in benefit obligation:
Benefit obligation at beginning of year	$	175,879	$	160,995	$	93,178	$	84,807
Service cost		9,706		9,041		5,526		4,556
Interest cost		7,010		6,776		1,747		1,892
Prior service cost		—		—		1,419		655
Actuarial loss (gain)		21,085		4,278		(2,653)		6,663
Benefits paid		(15,230)		(5,211)		(3,489)		(2,244)
Foreign currency translation adjustment		—		—		13,302		(3,151)
Benefit obligation at end of year	$	198,450	$	175,879	$	109,030	$	93,178


	Domestic Plans				Foreign Plans
	2017		2016		2017		2016
Change in plan assets:
Fair value of plan assets at beginning of year	$	126,246	$	112,934	$	61,912	$	58,517
Actual return on plan assets		18,372		8,414		2,472		2,168
Employer contribution		40,212		10,109		3,824		5,209
Benefits paid		(15,230)		(5,211)		(3,489)		(2,244)
Foreign currency translation adjustment		—		—		8,665		(1,738)
Fair value of plan assets at end of year	$	169,600	$	126,246	$	73,384	$	61,912
Funded status at end of year	$	(28,850)	$	(49,633)	$	(35,646)	$	(31,266)

The following table presents the funded status amounts recognized in the Company’s Consolidated Balance Sheets as of December 31, 2017 and 2016.


	Domestic Plans				Foreign Plans
	2017		2016		2017		2016
Non-current assets	$	—	$	—	$	297	$	170
Current liabilities		(423)		(302)		(9)		—
Non-current liabilities		(28,427)		(49,331)		(35,934)		(31,436)
	$	(28,850)	$	(49,633)	$	(35,646)	$	(31,266)

The following table presents the amounts not recognized as components of periodic benefit cost that are recognized in accumulated other comprehensive loss as of December 31, 2017 and 2016.


	Domestic Plans				Foreign Plans
	2017		2016		2017		2016
Net actuarial loss	$	58,260	$	48,872	$	33,703	$	38,550
Net prior service cost		—		—		5,341		4,342
Tax effects		(20,057)		(18,327)		(12,651)		(13,661)
	$	38,203	$	30,545	$	26,393	$	29,231

Changes in benefit obligations and plan assets recognized in other comprehensive income in 2017, 2016 and 2015 are as follows:


	Domestic Plans
	2017		2016		2015
Current year actuarial (loss) gain	$	(12,593)	$	(4,335)	$	11,048
Amortization of net loss		3,205		3,283		5,404
	$	(9,388)	$	(1,052)	$	16,452


	Foreign Plans
	2017		2016		2015
Current year actuarial (loss) gain	$	2,952	$	(6,251)	$	568
Current year prior service cost		(1,399)		(656)		(821)
Amortization of net loss		1,895		1,540		1,812
Amortization of prior service cost		400		350		256
	$	3,848	$	(5,017)	$	1,815

The following table presents the amounts in accumulated other comprehensive loss as of December 31, 2017 expected to be recognized as components of periodic benefit cost in 2018.


	Domestic Plans		Foreign Plans
Amortization of net loss	$	4,657	$	1,744
Amortization of prior service cost		—		504
	$	4,657	$	2,248

Components of net periodic benefit cost:


	Domestic Plans
	2017		2016		2015
Service cost	$	9,706	$	9,041	$	10,016
Interest cost		7,010		6,776		6,355
Expected return on plan assets		(9,880)		(8,471)		(7,590)
Amortization of net loss		3,205		3,283		5,404
Net periodic benefit cost	$	10,041	$	10,629	$	14,185


	Foreign Plans
	2017		2016		2015
Service cost	$	5,526	$	4,556	$	4,570
Interest cost		1,747		1,892		1,654
Expected return on plan assets		(2,409)		(2,181)		(1,792)
Amortization of net loss		1,895		1,540		1,676
Amortization of prior service cost		400		350		256
Net periodic benefit cost	$	7,159	$	6,157	$	6,364
Settlement		—		—		136
Total Net periodic benefit cost	$	7,159	$	6,157	$	6,500

The accumulated benefit obligation (“ABO”) for the Company’s domestic defined benefit pension plans was $178.9 million and $159.4 million at December 31, 2017 and 2016, respectively. The ABO for the Company’s foreign defined benefit pension plans was $84.7 million and $71.6 million at December 31, 2017 and 2016, respectively.

The following table provides the projected benefit obligation (“PBO”), ABO, and fair value of plan assets for all pension plans with an ABO in excess of plan assets as of December 31, 2017 and 2016.


	Domestic Plans				Foreign Plans
	2017		2016		2017		2016
Projected benefit obligation	$	11,478	$	175,879	$	89,618	$	84,517
Accumulated benefit obligation		9,291		159,398		65,524		62,913
Fair value of plan assets		—		126,246		54,052		53,082

The following table provides the PBO, ABO, and fair value of plan assets for all pension plans with a PBO in excess of plan assets as of December 31, 2017 and 2016.


	Domestic Plans				Foreign Plans
	2017		2016		2017		2016
Projected benefit obligation	$	198,450	$	175,879	$	84,799	$	84,517
Accumulated benefit obligation		178,878		159,398		59,383		62,913
Fair value of plan assets		169,600		126,246		49,233		53,082

Assumptions:


	Domestic Plans						Foreign Plans
	2017		2016		2015		2017		2016		2015
Weighted-average assumptions used to determine benefit obligations at December 31:
Discount rate	3.55	%	4.05	%	4.24	%	1.62	%	1.65	%	2.10	%
Rate of compensation increase	4.00	%	4.00	%	4.00	%	3.02	%	3.00	%	3.00	%
Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31:
Discount rate	4.05	%	4.24	%	3.83	%	1.65	%	2.10	%	1.90	%
Expected long-term return on plan assets	7.00	%	7.00	%	7.00	%	3.66	%	3.66	%	3.54	%
Rate of compensation increase	4.00	%	4.00	%	4.00	%	3.00	%	3.00	%	3.00	%

The Company develops the expected long‑term rate of return assumptions based on historical experience and by evaluating input from the plans’ asset managers, including the managers’ review of asset class return expectations and benchmarks, economic indicators and long‑term inflation assumptions.

In order to determine the 2018 net periodic benefit cost, the Company expects to use the December 31, 2017 discount rates, December 31, 2017 rates of compensation increase assumptions and the same assumed long‑term returns on domestic and foreign plan assets used for the 2017 net periodic benefit cost.

The Company’s domestic and foreign pension plan weighted‑average asset allocations at December 31, 2017 and 2016 by asset category are as follows:

Plan Assets:


	Domestic Plans Assets				Foreign Plans Assets
	at December 31,				at December 31,
	2017		2016		2017		2016
Equity securities	42	%	48	%	4	%	4	%
Fixed income securities	25	%	28	%	1	%	1	%
Corporate debt securities	—		—		3	%	3	%
Infrastructure	6	%	7	%	—		—
Hedge funds	9	%	11	%	—		—
Money market	13	%	1	%	1	%	3	%
Investment Funds	—		—		91	%	89	%
Real estate	5	%	5	%	—		—
Total	100	%	100	%	100	%	100	%

The Company’s investment strategy for its domestic and foreign pension plans is to maximize the long‑term rate of return on plan assets within an acceptable level of risk. The investment policy strives to have assets sufficiently diversified so that adverse or unexpected results from one security type will not have an unduly detrimental impact on the entire portfolio and accordingly, establishes a target allocation for each asset category within the portfolio. The domestic plan asset allocation is reviewed on a quarterly basis and the foreign plan asset allocation is reviewed annually. Rebalancing occurs as needed to comply with the investment strategy. The domestic plan target allocation for 2018 is 60% equity securities and 40% fixed income securities and infrastructure. The foreign plan target allocation for 2018 is 100% investment funds.

Authoritative guidelines require the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities.

Level 2: Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.

Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.


	Domestic Fair Value Measurement								Foreign Fair Value Measurement
	at December 31, 2017								at December 31, 2017
(In Thousands $)	Total		(Level 1)		(Level 2)		(Level 3)		Total		(Level 1)		(Level 2)		(Level 3)
Cash and Short-term Securities (a)	$	21,644	$	21,644	$	—	$	—	$	432	$	432	$	—	$	—
USD		—		21,644		—		—		—		—		—		—
EUR		—		—		—		—		—		432		—		—
Equity Securities (a)	$	63,799	$	63,799		—		—	$	3,111	$	3,111		—		—
U.S. Large Cap Equities		—		37,456		—		—		—		—		—		—
U.S. Small Cap Equities		—		7,569		—		—		—		—		—		—
International Equities		—		18,774		—		—		—		3,111		—		—
Fixed Income (a&b)	$	27,904	$	27,904		—		—	$	779	$	779		—		—
Corporate debts securities		—		—		—		—	$	2,256	$	2,256		—		—
Euro Corporate Bonds (a)		—		—		—		—		—		2,256		—		—
Investment Funds		—		—		—		—	$	66,807	$	24,810	$	41,997		—
Mutual Funds in Equities (a)		—		—		—		—		—		4,356		—		—
Mutual Funds in Bonds (a)		—		—		—		—		—		19,639		—		—
Mutual Funds Diversified (a&b)		—		—		—		—		—		815		41,997		—
Total Investments in Fair Value Hierarchy	$	113,347	$	113,347	$	—	$	—	$	73,384	$	31,387	$	41,997	$	—
Investments at Net Asset Value per Share		56,253		—		—		—		—		—		—		—
Total Investments	$	169,600	$	113,347	$	—	$	—	$	73,384	$	31,387	$	41,997	$	—


	Domestic Fair Value Measurement								Foreign Fair Value Measurement
	at December 31, 2016								at December 31, 2016
(In Thousands $)	Total		(Level 1)		(Level 2)		(Level 3)		Total		(Level 1)		(Level 2)		(Level 3)
Cash and Short-term Securities (a)	$	821	$	821	$	—	$	—	$	1,585	$	1,585	$	—	$	—
USD		—		821		—		—		—		—		—		—
EUR		—		—		—		—		—		1,585		—		—
Equity Securities (a)	$	54,013	$	54,013		—		—	$	2,539	$	2,539		—		—
U.S. Large Cap Equities		—		32,672		—		—		—		—		—		—
U.S. Small Cap Equities		—		5,929		—		—		—		—		—		—
International Equities		—		15,412		—		—		—		2,539		—		—
Fixed Income (a&b)	$	22,944	$	22,944		—		—	$	680	$	680		—		—
Corporate debts securities		—		—		—		—	$	1,725	$	1,725		—		—
Euro Corporate Bonds (a)		—		—		—		—		—		1,725		—		—
Investment Funds		—		—		—		—	$	55,383	$	21,082	$	34,301		—
Mutual Funds in Equities (a)		—		—		—		—		—		3,393		—		—
Mutual Funds in Bonds (a)		—		—		—		—		—		17,027		—		—
Mutual Funds Diversified (a&b)		—		—		—		—		—		662		34,301		—
Total Investments in Fair Value Hierarchy	$	77,778	$	77,778	$	—	$	—	$	61,912	$	27,611	$	34,301	$	—
Investments at Net Asset Value per Share		48,468		—		—		—		—		—		—		—
Total Investments	$	126,246	$	77,778	$	—	$	—	$	61,912	$	27,611	$	34,301	$	—

(a)

Based on third party quotation from financial institution.

(b)

Based on observable market transactions.

CONTRIBUTIONS

Annual cash contributions to fund pension costs accrued under the Company’s domestic plans are generally at least equal to the minimum funding amounts required by ERISA. The Company contributed $40.2 million to its domestic defined benefit plans in 2017 and although the Company has no minimum funding requirement, we plan to contribute approximately $0.4 million to pay our ongoing SERP annuity contracts in 2018. Contributions to fund pension costs accrued under the Company’s foreign plans are made in accordance with local laws or at the Company’s discretion. The Company contributed approximately $3.8 million to its foreign defined benefit plan in 2017 and expects to contribute approximately $3.1 million in 2018.

ESTIMATED FUTURE BENEFIT PAYMENTS

As of December 31, 2017, the Company expects the plans to make the following estimated benefit payments relating to its defined benefit plans over the next ten years:


	Domestic Plans		Foreign Plans
2018	$	9,960	$	2,194
2019		9,922		3,344
2020		10,471		3,510
2021		11,037		3,455
2022		11,634		3,638
2023 - 2027		67,818		30,389

OTHER PLANS

The Company has a non‑qualified supplemental pension plan for domestic employees which provides for pension amounts that would have been payable from the Company’s principal domestic pension plan if it were not for limitations imposed by income tax regulations. The liability for this plan, which is not funded, was $11.5 million and $9.6 million at December 31, 2017 and 2016, respectively. This amount is included in the liability for domestic plans shown above.

The Company has a defined contribution 401(k) employee savings plan available to substantially all domestic employees. Company matching contributions are made in cash up to a maximum of 3% of the participating employee’s salary subject to income tax regulations. For each of the years ended December 31, 2017, 2016 and 2015, total contributions made by the Company to these plans were approximately $3.3 million, $3.1 million and $3.0 million, respectively.

The Company has several foreign defined contribution plans, which require the Company to contribute a percentage of the participating employee’s salary according to local regulations. For each of the years ended December 31, 2017, 2016 and 2015, total contributions made by the Company to these plans were approximately $2.2 million, $1.9 million and $2.1 million, respectively.

The Company has no additional postretirement or postemployment benefit plans.