Retirement Plans | Retirement Plans We have a number of noncontributory defined benefit pension plans ("pension plans") covering approximately 5% of our active employees. Pension plans covering salaried employees provide pension benefits that are based on the employees´ years of service and compensation prior to retirement. Pension plans covering hourly employees generally provide benefits of stated amounts for each year of service. We also provide post-retirement life insurance benefits for certain retired employees. Domestic employees who were hired prior to 1982 and certain domestic union employees are eligible for life insurance benefits upon retirement. We fund life insurance benefits through term life insurance policies and intend to continue funding all of the premiums on a pay-as-you-go basis. We recognize the funded status of a benefit plan in our consolidated balance sheets. The funded status is measured as the difference between plan assets at fair value and the projected benefit obligation. We also recognize, as a component of other comprehensive income, net of tax, the gains or losses and prior service costs or credits that arise during the period but are not recognized as components of net periodic benefit/cost. The measurement dates for the pension plans for our U.S. and non-U.S. locations were December 31, 2017 , and 2016 . During 2017, we offered certain former vested employees in our U.S. pension plan a one-time option to receive a lump sum distribution of their benefits from pension plan assets. The pension plan made approximately $ 23,912 in lump sum payments to settle its obligation to these participants. These settlement payments decreased the projected benefit obligation and plan assets by $ 23,912 , and resulted in a non-cash settlement charge of $ 13,476 related to unrecognized net actuarial losses that were previously included in accumulated other comprehensive loss. The measurement date of this settlement was December 31, 2017 . During 2014, we approved a plan to terminate the U.K. Limited Retirement Benefits Scheme ("the U.K. Plan"). The pension liability was settled in a purchased annuity. We completed the termination of the pension plan by the end of 2015, and a loss on settlement of this pension in the amount of $8,280 was recorded in restructuring and impairment charges in 2015. The following table provides a reconciliation of benefit obligation, plan assets, and the funded status of the pension plans for U.S. and non-U.S. locations at the measurement dates. U.S. Pension Plans Non-U.S. Pension Plans 2017 2016 2017 2016 Accumulated benefit obligation $ 228,934 $ 247,276 $ 2,535 $ 2,295 Change in projected benefit obligation: Projected benefit obligation at January 1 $ 247,276 $ 256,924 $ 2,866 $ 2,796 Service cost — 87 48 51 Interest cost 8,273 11,024 34 46 Benefits paid (39,177 ) (20,537 ) (210 ) (289 ) Actuarial loss (gain) 12,562 (222 ) 164 229 Foreign exchange impact — — 238 33 Projected benefit obligation at December 31 $ 228,934 $ 247,276 $ 3,140 $ 2,866 Change in plan assets: Assets at fair value at January 1 $ 292,044 $ 289,315 $ 1,523 $ 1,480 Actual return on assets 31,559 23,163 17 11 Company contributions 336 103 319 303 Benefits paid (39,177 ) (20,537 ) (210 ) (289 ) Foreign exchange impact — — 128 18 Assets at fair value at December 31 $ 284,762 $ 292,044 $ 1,777 $ 1,523 Funded status (plan assets less projected benefit obligations) $ 55,828 $ 44,768 $ (1,363 ) $ (1,343 ) The measurement dates for the post-retirement life insurance plan were December 31, 2017 , and 2016 . The following table provides a reconciliation of benefit obligation, plan assets, and the funded status of the post-retirement life insurance plan at those measurement dates. Post-Retirement 2017 2016 Accumulated benefit obligation $ 5,134 $ 4,952 Change in projected benefit obligation: Projected benefit obligation at January 1 $ 4,952 $ 4,886 Service cost 2 3 Interest cost 161 207 Benefits paid (165 ) (165 ) Actuarial loss 184 21 Projected benefit obligation at December 31 $ 5,134 $ 4,952 Change in plan assets: Assets at fair value at January 1 $ — $ — Actual return on assets — — Company contributions 165 165 Benefits paid (165 ) (165 ) Other — — Assets at fair value at December 31 $ — $ — Funded status (plan assets less projected benefit obligations) $ (5,134 ) $ (4,952 ) The components of the prepaid (accrued) cost of the domestic and foreign pension plans are classified in the following lines in the Consolidated Balance Sheets at December 31: U.S.Pension Plans Non-U.S. Pension Plans 2017 2016 2017 2016 Prepaid pension asset $ 57,050 $ 46,183 $ — $ — Accrued expenses and other liabilities (100 ) (317 ) — — Long-term pension obligations (1,122 ) (1,098 ) (1,363 ) (1,343 ) Net prepaid (accrued) cost $ 55,828 $ 44,768 $ (1,363 ) $ (1,343 ) The components of the accrued cost of the post-retirement life insurance plan are classified in the following lines in the Consolidated Balance Sheets at December 31: Post-Retirement 2017 2016 Accrued expenses and other liabilities $ (418 ) $ (387 ) Long-term pension obligations (4,716 ) (4,565 ) Total accrued cost $ (5,134 ) $ (4,952 ) We have also recorded the following amounts to accumulated other comprehensive loss for the U.S. and non-U.S. pension plans, net of tax: U.S.Pension Plans Non-U.S. Pension Plans Unrecognized Prior Total Unrecognized Balance at January 1, 2016 $ 96,388 $ — $ 96,388 $ 1,639 Amortization of retirement benefits, net of tax (3,817 ) — (3,817 ) 85 Net actuarial (loss) gain (2,808 ) — (2,808 ) 12 Foreign exchange impact — — — 7 Balance at January 1, 2017 $ 89,763 $ — $ 89,763 $ 1,743 Amortization of retirement benefits, net of tax (3,685 ) — (3,685 ) 10 Settlements (8,585 ) — (8,585 ) — Net actuarial (loss) gain (1,753 ) — (1,753 ) 2 Foreign exchange impact — — — 143 Balance at December 31, 2017 $ 75,740 $ — $ 75,740 $ 1,898 We have recorded the following amounts to accumulated other comprehensive loss for the post-retirement life insurance plan, net of tax: Unrecognized Balance at January 1, 2016 $ (669 ) Amortization of retirement benefits, net of tax 95 Net actuarial gain 14 Balance at January 1, 2017 $ (560 ) Amortization of retirement benefits, net of tax 64 Net actuarial gain 117 Balance at December 31, 2017 $ (379 ) The accumulated actuarial gains and losses and prior service costs and credits included in other comprehensive income are amortized in the following manner: The component of unamortized net gains or losses related to our qualified pension plans is amortized based on the expected future life expectancy of the plan participants (estimated to be approximately 18 years at December 31, 2017 ), because substantially all of the participants in those plans are inactive. The component of unamortized net gains or losses related to our post-retirement life insurance plan is amortized based on the estimated remaining future service period of the plan participants (estimated to be approximately 3 years at December 31, 2017 ). The Company uses a market-related approach to value plan assets, reflecting changes in the fair value of plan assets over a five-year period. The variance resulting from the difference between the expected and actual return on plan assets is included in the amortization calculation upon reflection in the market-related value of plan assets. In 2018 , we expect to recognize approximately $5,888 of pre-tax losses included in accumulated other comprehensive loss related to our Pension Plans. We do not expect to recognize any significant such amounts related to the post-retirement life insurance plan in 2018 . The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for those Pension Plans with accumulated benefit obligation in excess of fair value of plan assets is shown below: As of December 31, 2017 2016 Projected benefit obligation $ 4,361 $ 4,281 Accumulated benefit obligation 3,757 3,710 Fair value of plan assets 1,776 1,523 Net pension (income) expense includes the following components: Years Ended Years Ended U.S. Pension Plans Non-U.S. Pension Plans 2017 2016 2015 2017 2016 2015 Service cost $ — $ 87 $ 171 $ 48 $ 51 $ 63 Interest cost 8,273 11,024 11,258 34 46 465 Expected return on plan assets (1) (16,243 ) (18,976 ) (20,272 ) (20 ) (26 ) (446 ) Amortization of unrecognized loss 5,785 5,994 6,339 155 140 7,492 Additional cost due to early retirement — — — — — 651 Settlement loss 13,476 — — — — — Net expense (income) $ 11,291 $ (1,871 ) $ (2,504 ) $ 217 $ 211 $ 8,225 Weighted-average actuarial assumptions (2) Benefit obligation assumptions: Discount rate 3.63 % 4.16 % 4.43 % 1.38 % 1.13 % 1.63 % Rate of compensation increase 0.00 % 0.00 % 0.00 % 2.00 % 2.00 % 2.00 % Pension income/expense assumptions: Discount rate 4.16 % 4.43 % 4.07 % 1.13 % 1.63 % 3.13 % Expected return on plan assets (1) 5.61 % 6.63 % 7.00 % 1.13 % 1.63 % 2.00 % Rate of compensation increase 0.00 % 0.00 % 0.00 % 2.00 % 2.00 % 0.48 % (1) Expected return on plan assets is net of expected investment expenses and certain administrative expenses. (2) During the fourth quarter of each year, we review our actuarial assumptions in light of current economic factors to determine if the assumptions need to be adjusted. Net post-retirement expense includes the following components: Post-Retirement Years Ended December 31, 2017 2016 2015 Service cost $ 2 $ 3 $ 5 Interest cost 161 207 204 Amortization of unrecognized gain (101 ) (149 ) (101 ) Net expense $ 62 $ 61 $ 108 Weighted-average actuarial assumptions (1) Benefit obligation assumptions: Discount rate 3.59 % 4.10 % 4.43 % Rate of compensation increase 0 % 0 % 0 % Pension income/post-retirement expense assumptions: Discount rate 4.10 % 4.43 % 4.07 % Rate of compensation increase 0 % 0 % 0 % (1) During the fourth quarter of each year, we review our actuarial assumptions in light of current economic factors to determine if the assumptions need to be adjusted. The discount rate utilized to estimate our pension and post-retirement obligations is based on market conditions at December 31, 2017 , and is determined using a model consisting of high quality bond portfolios that match cash flows of the plans' projected benefit payments based on the plan participants' service to date and their expected future compensation. Use of the rate produced by this model generates a projected benefit obligation that equals the current market value of a portfolio of high quality bonds whose maturity dates match the timing and amount of expected future benefit payments. The discount rate used to determine 2017 pension income and post-retirement expense for our pension and post-retirement plans is based on market conditions at December 31, 2016 , and is the interest rate used to estimate interest incurred on the outstanding projected benefit obligations during the period. We utilize a building block approach in determining the long-term rate of return for plan assets. Historical markets are reviewed and long-term relationships between equities and fixed-income are preserved consistent with the generally accepted capital market principle that assets with higher volatility generate a greater return over the long term. Current market factors such as inflation and interest rates are evaluated before long-term capital market assumptions are determined. The long-term portfolio return is established via a building block approach with proper consideration of diversification and rebalancing. Peer data and historical returns are reviewed to ensure for reasonableness and appropriateness. Our pension plan asset allocation at December 31, 2017 , and 2016 , and target allocation for 2018 by asset category are as follows: Target Allocations Percentage of Plan Assets Asset Category 2018 2017 2016 Equity securities (1) 13% 11% 25% Debt securities 83% 82% 59% Other 4% 7% 16% Total 100% 100% 100% (1) Equity securities include CTS common stock in the amount of $ 0 at December 31, 2017 and approximately $17,700 ( 6% of total plan assets) at December 31, 2016 . We employ a liability-driven investment strategy whereby a mix of equity and fixed-income investments are used to pursue a de-risking strategy which over time seeks to reduce interest rate mismatch risk and other risks while achieving a return that matches or exceeds the growth in projected pension plan liabilities. Risk tolerance is established through careful consideration of plan liabilities and funded status. The investment portfolio primarily contains a diversified mix of equity and fixed-income investments. Other assets such as private equity are used modestly to enhance long-term returns while improving portfolio diversification. Investment risk is measured and monitored on an ongoing basis through quarterly investment portfolio reviews, annual liability measurements, and asset/liability studies at regular intervals. The following table summarizes the fair values of our pension plan assets: As of December 31, 2017 2016 Equity securities - U.S. holdings (1) $ 19,487 $ 43,708 Equity securities - non-U.S. holdings (1) 1,131 819 Equity funds - U.S. holdings (1) 1,314 28,052 Bond funds - government (5) 3,126 22,237 Bond funds - other (6) 231,710 150,712 Real estate (7) 1,235 3,812 Cash and cash equivalents (2) 11,145 7,823 Partnerships (4) 10,787 12,862 International hedge funds (3) 6,604 23,542 Total fair value of plan assets $ 286,539 $ 293,567 The fair values at December 31, 2017 , are classified within the following categories in the fair value hierarchy: Quoted Prices Significant Significant Not Leveled Total Equity securities - U.S. holdings (1) $ 19,487 $ — $ — $ — $ 19,487 Equity securities - non-U.S. holdings (1) 1,131 — — — 1,131 Equity funds - U.S. holdings (1) — 1,314 — — 1,314 Bond funds - government (5) — 3,126 — — 3,126 Bond funds - other (6) — 231,710 — — 231,710 Real estate (7) (8) — — — 1,235 1,235 Cash and cash equivalents (2) 11,145 — — — 11,145 Partnerships (4) — — 10,787 — 10,787 International hedge funds (3) (8) — — — 6,604 6,604 Total $ 31,763 $ 236,150 $ 10,787 $ 7,839 $ 286,539 The fair values at December 31, 2016 , are classified within the following categories in the fair value hierarchy: Quoted Prices Significant Significant Not Leveled Total Equity securities - U.S. holdings (1) $ 43,708 $ — $ — $ — $ 43,708 Equity securities - non-U.S. holdings (1) 819 — — — 819 Equity funds - U.S.holdings (1) — 28,052 — — 28,052 Bond funds - government (5) — 22,237 — — 22,237 Bond funds - other (6) — 150,712 — — 150,712 Real estate (7) (8) — — — 3,812 3,812 Cash and cash equivalents (2) 7,823 — — — 7,823 Partnerships (4) — — 12,862 — 12,862 International hedge funds (3) (8) — — — 23,542 23,542 Total $ 52,350 $ 201,001 $ 12,862 $ 27,354 $ 293,567 (1) Comprised of common stocks of companies in various industries. The Pension Plan fund manager may shift investments from value to growth strategies or vice-versa, from small cap to large cap stocks or vice-versa, in order to meet the Pension Plan's investment objectives, which are to provide for a reasonable amount of long-term growth of capital without undue exposure to volatility, and protect the assets from erosion of purchasing power. (2) Comprised of investment grade short-term investment and money-market funds. (3) This fund allocates its capital across several direct hedge-fund organizations. This fund invests with hedge funds that employ "non-directional" strategies. These strategies do not require the direction of the markets to generate returns. The majority of these hedge funds generate returns by the occurrence of key events such as bankruptcies, mergers, spin-offs, etc. Investments can be redeemed at the Share Net Asset Value ("NAV") as of the last business day of each calendar quarter with at least a sixty-five day prior written notice to the administrator. (4) Comprised of partnerships that invest in various U.S. and international industries. (5) Comprised of long-term government bonds with a minimum maturity of 10 years and zero-coupon Treasury securities ("Treasury Strips") with maturities greater than 20 years. (6) Comprised predominately of investment grade U.S. corporate bonds with maturities greater than 10 years and U.S. high-yield corporate bonds; emerging market debt (local currency sovereign bonds, U.S. dollar-denominated sovereign bonds and U.S. dollar-denominated corporate bonds); and U.S. bank loans. (7) Comprised of investments in securities of U.S. and non-U.S. real estate investment trusts (REITs), real estate operating companies and other companies that are principally engaged in the real estate industry and of investments in global private direct commercial real estate. Investments can be redeemed immediately following the valuation date with a notice of at least fifteen business days before valuation. (8) Comprised of investments that are measured at fair value using the NAV per share practical expedient. In accordance with the provisions of ASC 820-10, these investments have not been classified in the fair value hierarchy. The fair value amount not leveled is presented to allow reconciliation of the fair value hierarchy to total fund pension plan assets. The pension plan assets recorded at fair value are measured and classified in a hierarchy for disclosure purposes consisting of three levels based on the observability of inputs available in the marketplace used to measure fair value as discussed below: • Level 1: Fair value measurements that are based on quoted prices (unadjusted) in active markets that the pension plan trustees have the ability to access for identical assets or liabilities. Market price data generally is obtained from exchange or dealer markets. • Level 2: Fair value measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset, either directly or indirectly. Level 2 inputs include quoted prices for similar assets in active or inactive markets, and inputs other than quoted prices that are observable for the asset, such as interest rates and yield curves that are observable at commonly quoted intervals. • Level 3: Fair value measurements based on valuation techniques that use significant inputs that are unobservable. The table below reconciles the Level 3 partnership assets within the fair value hierarchy: Amount Fair value of Level 3 partnership assets at January 1, 2016 $ 13,360 Capital contributions 1,419 Realized and unrealized gain 584 Capital distributions (2,501 ) Fair value of Level 3 partnership assets at December 31, 2016 12,862 Capital contributions 343 Realized and unrealized gain 2,107 Capital distributions (4,525 ) Fair value of Level 3 partnership assets at December 31, 2017 $ 10,787 The partnership fund manager uses a market approach in estimating the fair value of the plan's Level 3 asset. The market approach estimates fair value by first determining the entity's earnings before interest, taxes, depreciation and amortization and then multiplying that value by an estimated multiple. When establishing an appropriate multiple, the fund manager considers recent comparable private company transactions and multiples paid. The entity's net debt is then subtracted from the calculated amount to arrive at an estimated fair value for the entity. We expect to make $101 of contributions to the U.S. plans and $331 of contributions to the non-U.S. plans during 2018 . The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid: U.S. Non-U.S. Post-Retirement 2018 $ 15,693 $ 67 $ 418 2019 15,705 72 405 2020 15,673 242 392 2021 15,548 63 378 2022 15,361 69 363 2023-2026 72,669 532 1,610 Total $ 150,649 $ 1,045 $ 3,566 Defined Contribution Plans We sponsor a 401(k) plan that covers substantially all of our U.S. employees. Contributions and costs are generally determined as a percentage of the covered employee's annual salary. Expenses related to defined contribution plans include the following: Years Ended December 31, 2017 2016 2015 401(k) and other plan expense $ 3,141 $ 2,841 $ 3,352 |