Employee Benefit Plans | 14. Employee Benefit Plans The Company offers defined contribution retirement plans which cover the majority of its U.S. employees, as well as employees in certain other countries. The Company’s expense relating to defined contribution plans was $34,665 , $32,281 and $34,263 for the years ended December 31, 2016 , 2015 and 2014 , respectively. The Company sponsors qualified defined benefit pension plans covering certain employees of the Company and its subsidiaries. The plans’ benefits are generally based on years of service and employee compensation. The Company also provides to certain management employees, through non-qualified plans, supplemental retirement benefits in excess of qualified plan limits imposed by federal tax law. In July 2013, the Company announced that, after December 31, 2013, the U.S. qualified and non-qualified defined benefit plans will be closed to new employees. All pension-eligible employees as of December 31, 2013 will continue to earn a pension benefit through December 31, 2023 as long as they remain employed by an operating company participating in the plan. The Company also announced that effective January 1, 2024, the plan would be frozen to any future benefit accruals. In connection with the separation of Knowles in 2014, the Company offered one-time lump sum payments to Knowles employees that participated in Dover's qualified defined benefit pension plan. In 2014, the Company made total lump sum payments to participants in this plan of $49,338 . Based on the total of the lump sum payments made to both Knowles and other participants in the plan during the year, the Company recorded a settlement charge of $10,279 in 2014. The Company also maintains other post-retirement benefit plans which cover approximately 445 participants, approximately 421 of whom are eligible for medical benefits. These plans are closed to new entrants. The supplemental and other post retirement benefit plans are supported by the general assets of the Company. Obligations and Funded Status The following tables summarize the consolidated balance sheets impact, including the benefit obligations, assets and funded status associated with the Company's significant defined benefit and other post-retirement benefit plans at December 31, 2016 and 2015 . Qualified Defined Benefits Non-Qualified Supplemental Benefits Other Post-Retirement Benefits U.S. Plan Non-U.S. Plans 2016 2015 2016 2015 2016 2015 2016 2015 Change in benefit obligation: Benefit obligation at beginning of year $ 527,667 $ 575,576 $ 245,986 $ 265,023 $ 125,311 $ 137,999 $ 10,885 $ 13,943 Service cost 13,913 15,661 5,590 6,613 2,959 3,739 52 163 Interest cost 23,046 23,163 5,593 5,885 5,268 5,063 403 512 Plan participants' contributions — — 1,223 1,555 — — 102 417 Benefits paid (32,341 ) (51,126 ) (7,870 ) (8,399 ) (16,643 ) (12,845 ) (767 ) (1,148 ) Actuarial loss (gain) 2,980 (33,199 ) 22,909 (5,018 ) (6,449 ) (8,645 ) (2,343 ) (785 ) Business (dispositions) acquisitions — — (4,420 ) (106 ) — — 4,367 — Amendments — — — (5,063 ) — — — (1,049 ) Settlements and curtailments — (2,942 ) (3,262 ) (2,753 ) — — — (1,168 ) Currency translation and other 34 534 (22,266 ) (11,751 ) — — (436 ) — Benefit obligation at end of year 535,299 527,667 243,483 245,986 110,446 125,311 12,263 10,885 Change in plan assets: Fair value of plan assets at beginning of year 552,817 601,376 159,436 163,510 — — — — Actual return on plan assets 42,088 2,567 10,317 2,369 — — — — Company contributions — — 8,383 8,366 16,643 12,845 665 731 Plan participants' contributions — — 1,223 1,555 — — 102 417 Benefits paid (32,341 ) (51,126 ) (7,870 ) (8,399 ) (16,643 ) (12,845 ) (767 ) (1,148 ) Business (dispositions) acquisitions — — (3,967 ) — — — — — Settlements and curtailments — — (3,262 ) (2,753 ) — — — — Currency translation — — (15,746 ) (5,212 ) — — — — Fair value of plan assets at end of year 562,564 552,817 148,514 159,436 — — — — Funded (Unfunded) status $ 27,265 $ 25,150 $ (94,969 ) $ (86,550 ) $ (110,446 ) $ (125,311 ) $ (12,263 ) $ (10,885 ) Amounts recognized in the consolidated balance sheets consist of: Assets and Liabilities: Other assets and deferred charges $ 27,265 $ 25,150 $ 706 $ 2,064 $ — $ — $ — $ — Accrued compensation and employee benefits — — (1,235 ) (1,433 ) (20,032 ) (27,361 ) (849 ) (921 ) Other liabilities (deferred compensation) — — (94,440 ) (87,181 ) (90,414 ) (97,950 ) (11,414 ) (9,964 ) Total assets and liabilities 27,265 25,150 (94,969 ) (86,550 ) (110,446 ) (125,311 ) (12,263 ) (10,885 ) Accumulated Other Comprehensive Loss (Earnings): Net actuarial losses (gains) 103,410 110,163 73,023 59,953 (15,565 ) (9,678 ) (1,921 ) (1,347 ) Prior service cost (credit) 1,482 2,215 (3,925 ) (4,095 ) 18,187 24,454 43 (999 ) Net asset at transition, other — — (56 ) (52 ) — — — — Deferred taxes (36,712 ) (39,333 ) (15,719 ) (13,569 ) (920 ) (5,173 ) 598 762 Total accumulated other comprehensive loss (earnings), net of tax 68,180 73,045 53,323 42,237 1,702 9,603 (1,280 ) (1,584 ) Net amount recognized at December 31, $ 95,445 $ 98,195 $ (41,646 ) $ (44,313 ) $ (108,744 ) $ (115,708 ) $ (13,543 ) $ (12,469 ) Accumulated benefit obligations $ 512,707 $ 498,899 $ 231,903 $ 232,924 $ 101,286 $ 114,817 The Company’s net unfunded status at December 31, 2016 and 2015 includes net liabilities of $94,969 and $86,550 , respectively, relating to the Company’s significant international plans, some in locations where it is not economically advantageous to pre-fund the plans due to local regulations. The majority of the international obligations relate to defined pension plans operated by the Company’s businesses in Germany, the United Kingdom and Switzerland. The accumulated benefit obligation for all defined benefit pension plans was $845,896 and $846,640 at December 31, 2016 and 2015 , respectively. Pension plans with accumulated benefit obligations in excess of plan assets consist of the following at December 31, 2016 and 2015 : 2016 2015 Projected benefit obligation (PBO) $ 346,710 $ 333,994 Accumulated benefit obligation (ABO) 325,969 311,300 Fair value of plan assets 140,589 120,069 Net Periodic Benefit Cost Components of the net periodic benefit cost were as follows: Defined Benefit Plans Qualified Defined Benefits Non-Qualified Supplemental Benefits U.S. Plan Non-U.S. Plans (1) 2016 2015 2014 2016 2015 2014 2016 2015 2014 Service cost $ 13,913 $ 15,661 $ 13,801 $ 5,590 $ 6,613 $ 6,027 $ 2,959 $ 3,739 $ 3,320 Interest cost 23,046 23,163 25,204 5,593 5,885 8,222 5,268 5,063 6,148 Expected return on plan assets (38,793 ) (41,571 ) (41,594 ) (7,830 ) (7,990 ) (8,498 ) — — — Amortization of: Prior service cost (credit) 733 897 1,083 (397 ) 89 107 6,266 6,927 7,775 Recognized actuarial loss (gain) 6,437 12,620 8,289 2,658 2,647 903 (560 ) 286 (428 ) Transition obligation — — — 4 4 4 — — — Settlement and curtailment loss (gain) (2) — 810 10,279 1,103 (184 ) (45 ) — — — Other 35 — — — — 6 — — — Total net periodic benefit cost $ 5,371 $ 11,580 $ 17,062 $ 6,721 $ 7,064 $ 6,726 $ 13,933 $ 16,015 $ 16,815 (1) Net periodic benefit cost for non-U.S. plans includes $55 of expense for the year ended December 31, 2014, relating to plans sponsored by Knowles that were distributed as part of the separation on February 28, 2014. (2) The $6,675 of the 2014 settlement loss on the U.S. Plan is attributable to Knowles participants in the Dover Defined Benefit Plan and has therefore, been reflected in the results of discontinued operations. The remaining $3,604 of this settlement loss has been reflected in the results of continuing operations. Other Post-Retirement Benefits 2016 2015 2014 Service cost $ 52 $ 163 $ 249 Interest cost 403 512 627 Amortization of: Prior service cost (credit) 7 (372 ) (409 ) Recognized actuarial loss (gain) 5 (30 ) 54 Other — (679 ) 233 Total net periodic cost (benefit) $ 467 $ (406 ) $ 754 The one-time benefit of $679 in 2015 relates to the shutdown of certain plant locations, as well as changes to future benefits for certain retirees. Amounts expected to be amortized from accumulated other comprehensive earnings (loss) into net periodic benefit cost during 2017 are as follows: Qualified Defined Benefits Non-Qualified Supplemental Benefits Other Post-Retirement Benefits U.S. Plan Non-U.S. Plans Amortization of: Prior service cost (credit) $ 427 $ (408 ) $ 4,411 $ 7 Recognized actuarial loss (gain) 5,582 3,303 (1,192 ) (161 ) Transition obligation — 4 — — Total $ 6,009 $ 2,899 $ 3,219 $ (154 ) Assumptions The Company determines actuarial assumptions on an annual basis. The weighted average assumptions used in determining the benefit obligations were as follows: Qualified Defined Benefits Non-Qualified Supplemental Benefits Other Post-Retirement Benefits U.S. Plan Non-U.S. Plans 2016 2015 2016 2015 2016 2015 2016 2015 Discount rate 4.10 % 4.40 % 2.06 % 2.32 % 3.90 % 3.90 % 6.49 % (1) 4.00 % Average wage increase 4.00 % 4.00 % 2.34 % 2.25 % 4.50 % 4.50 % na na Ultimate medical trend rate na na na na na na 5.00 % 5.00 % (1) The 2016 post-retirement benefit discount rate reflects the acquisition of a plan in Brazil. The weighted average assumptions used in determining the net periodic benefit cost were as follows: Qualified Defined Benefits Non- Qualified Supplemental Benefits Other Post-Retirement Benefits U.S. Plan Non-U.S. Plans 2016 2015 2014 2016 2015 2014 2016 2015 2014 2016 2015 2014 Discount rate 4.40 % 4.05 % 4.90 % 2.32 % 2.31 % 3.53 % 4.18 % 3.96 % 4.77 % 4.00 % 3.75 % 4.45 % Average wage increase 4.00 % 4.00 % 4.00 % 2.25 % 2.50 % 2.86 % 4.50 % 4.50 % 4.50 % na na na Expected return on plan assets 7.25 % 7.75 % 7.75 % 4.95 % 4.85 % 5.35 % na na na na na na The Company’s discount rate assumption is determined by developing a yield curve based on high quality corporate bonds with maturities matching the plans’ expected benefit payment streams. The plans’ expected cash flows are then discounted by the resulting year-by-year spot rates. For other post-retirement benefit measurement purposes, a 9.2% annual rate of increase in the per capita cost of covered benefits (i.e., health care cost trend rates) was assumed for 2017 . The rate was assumed to decrease gradually to 5.4% by the year 2027 and remain at that level thereafter. The health care cost trend rate assumption can have an effect on the amounts reported. For example, increasing (decreasing) the assumed health care cost trend rates by one percentage point in each year would increase (decrease) the accumulated other post-retirement benefit obligation as of December 31, 2016 by $658 and $(554) , respectively, and would have a negligible impact on the net post-retirement benefit cost for 2016 . Plan Assets The primary financial objective of the plans is to secure participant retirement benefits. Accordingly, the key objective in the plans’ financial management is to promote stability and, to the extent appropriate, growth in the funded status. Related and supporting financial objectives are established in conjunction with a review of current and projected plan financial requirements. As it relates to the funded defined benefit pension plans, the Company’s funding policy is consistent with the funding requirements of the Employment Retirement Income Security Act ("ERISA") and applicable international laws. The Company is responsible for overseeing the management of the investments of the plans’ assets and otherwise ensuring that the plans’ investment programs are in compliance with ERISA, other relevant legislation and related plan documents. Where relevant, the Company has retained professional investment managers to manage the plans’ assets and implement the investment process. The investment managers, in implementing their investment processes, have the authority and responsibility to select appropriate investments in the asset classes specified by the terms of their applicable prospectus or investment manager agreements with the plans. The assets of the plans are invested to achieve an appropriate return for the plans consistent with a prudent level of risk. The asset return objective is to achieve, as a minimum over time, the passively managed return earned by market index funds, weighted in the proportions outlined by the asset class exposures identified in the plans’ strategic allocation. The expected return on assets assumption used for pension expense is developed through analysis of historical market returns, statistical analysis, current market conditions and the past experience of plan asset investments. Overall, it is projected that the investment of plan assets within Dover’s U.S. defined benefit plan will achieve a net return over time from the asset allocation strategy of 7.25% . The Company’s actual and target weighted average asset allocation for our U.S. Corporate Pension Plan was as follows: 2016 2015 Current Target Equity securities 57 % 57 % 58 % Fixed income 35 % 33 % 35 % Real estate and other 8 % 10 % 7 % Total 100 % 100 % 100 % While the non-U.S. investment policies are different for each country, the long-term objectives are generally the same as for the U.S. pension assets. The Company's non-U.S. plans were expected to achieve rates of return on invested assets of 4.95% in 2016 , 4.85% in 2015 and 5.35% in 2014 . The fair values of both U.S. and non-U.S. pension plan assets by asset category within the fair value hierarchy (as defined in Note 10 — Financial Instruments ) were as follows: U.S. Plan December 31, 2016 December 31, 2015 Level 1 Level 2 Total Fair Value Level 1 Level 2 Total Fair Value Common stocks $ 161,426 $ — $ 161,426 $ 157,796 $ — $ 157,796 Mutual funds 43,272 — 43,272 39,159 — 39,159 Fixed income investments: Corporate bonds — 60,638 60,638 — 59,964 59,964 Government securities 5,901 109,888 115,789 47,426 74,953 122,379 Interest-bearing cash and short-term investments 11,200 — 11,200 6,751 — 6,751 Total investments at fair value 221,799 170,526 392,325 251,132 134,917 386,049 Investments measured at net asset value* Collective trusts — — 124,456 — — 124,128 Real estate investments — — 45,494 — — 42,391 Cash and cash equivalents — — 289 — — 249 Total investments $ 221,799 $ 170,526 $ 562,564 $ 251,132 $ 134,917 $ 552,817 * In accordance with Fair Value Measurement Topic 820 (Subtopic 820-10), certain investments that are measured at fair value using the net asset value per share (or its equivalent) were not classified in the fair value hierarchy. The Company had no level 3 U.S. Plan assets at December 31, 2016 and 2015 . Non-U.S. Plans December 31, 2016 December 31, 2015 Level 1 Level 2 Level 3 Total Fair Value Level 1 Level 2 Level 3 Total Fair Value Common stocks $ 25,037 $ — $ — $ 25,037 $ 23,113 $ — $ — $ 23,113 Fixed income investments — 53,210 — 53,210 — 48,523 — 48,523 Common stock funds — 46,565 — 46,565 — 45,058 — 45,058 Collective funds — — — — — 23,978 — 23,978 Real estate funds — — 8,626 8,626 — — 8,904 8,904 Cash and cash equivalents 104 — — 104 829 — — 829 Other — 4,599 10,373 14,972 — 9,031 — 9,031 Total $ 25,141 $ 104,374 $ 18,999 $ 148,514 $ 23,942 $ 126,590 $ 8,904 $ 159,436 Common stocks represent investments in domestic and foreign equities which are publicly traded on active exchanges and are valued based on quoted market prices. Fixed income investments include U.S. treasury bonds and notes, which are valued based on quoted market prices, as well as investments in other government and municipal securities and corporate bonds, which are valued based on yields currently available on comparable securities of issuers with similar credit ratings. Common stock funds consist of mutual funds and collective trusts. Mutual funds are valued by obtaining quoted prices from nationally recognized securities exchanges. Collective trusts are valued using Net Asset Value (the "NAV") as of the last business day of the year. The NAV is based on the underlying value of the assets owned by the fund minus its liabilities, and then divided by the number of shares outstanding. The value of the underlying assets is based on quoted prices in active markets. The real estate funds are valued on an annual basis using third-party appraisals, with adjustments estimated on a quarterly basis using discounted cash flow models which consider such inputs as revenue and expense growth rates, terminal capitalization rates and discount rates. The Company believes this is an appropriate methodology to obtain the fair value of these assets. The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date. The fair value measurement of plan assets using significant unobservable inputs (Level 3) changed during 2015 and 2016 due to the following: Level 3 Balance at January 1, 2015 $ 9,976 Actual return on plan assets: Relating to assets still held at December 31, 2015 116 Purchases 5,629 Sales (6,817 ) Balance at December 31, 2015 8,904 Actual return on plan assets: Relating to assets sold during the period 16 Relating to assets still held at December 31, 2016 238 Business acquisition 4,941 Purchases 6,490 Sales (1,590 ) Balance at December 31, 2016 $ 18,999 There were no significant transfers between Level 1 and Level 2 investments during 2016 or 2015 . Future Estimates Benefit Payments Estimated future benefit payments to retirees, which reflect expected future service, are as follows: Qualified Defined Benefits Non-Qualified Supplemental Benefits Other Post-Retirement Benefits U.S. Plan Non-U.S. Plans 2017 $ 35,717 $ 6,445 $ 20,428 $ 873 2018 37,748 6,478 6,762 890 2019 37,233 6,673 9,401 909 2020 40,553 6,759 7,054 935 2021 41,433 7,563 14,671 934 2022 - 2026 194,653 42,412 30,670 4,955 Contributions In 2017 , the Company expects to contribute approximately $6.5 million to its non-U.S. plans and currently does not expect to contribute to its U.S. plans. In 2017 , the Company expects to fund benefit payments of approximately $5.6 million to plan participants of its unfunded, non-qualified, supplemental benefit plans. Multiemployer Pension Plans The Company, through its subsidiaries, participates in a few multiemployer pension plans covering approximately 100 employees working under U.S. collective bargaining agreements. None of these plans are considered individually significant to the Company. Contributions to multiemployer plans totaled less than $2.0 million in each of the last three years. |