Retirement Plans

12 Months Ended

Dec. 31, 2019

RETIREMENT PLANS

Defined Benefit Plans

Our United Kingdom subsidiary has a defined benefit pension plan covering all eligible employees (the “UK Plan”); however, no individual joining the company after October 31, 2001 may participate in the UK Plan. On May 31, 2010, we curtailed the future accrual of benefits for active employees under this plan.

We account for the UK Plan and other defined benefit plans in accordance with Accounting Standards Codification Topic 715, “Compensation-Retirement Benefits” (“ASC 715”). ASC 715 requires that (a) the funded status, which is measured as the difference between the fair value of plan assets and the projected benefit obligations, be recorded in our balance sheet with a corresponding adjustment to accumulated other comprehensive income (loss) and (b) gains and losses for the differences between actuarial assumptions and actual results, and unrecognized service costs, be recognized through accumulated other comprehensive income (loss). These amounts will be subsequently recognized as net periodic pension cost.

The change in benefit obligations and assets of the UK Plan for the years ended December 31, 2019 and 2018 consisted of the following components (in thousands):



	2019			2018
Change in pension benefit obligation
Benefit obligation at beginning of year	$	281,776		$	332,618
Interest cost	7,961			8,085
Actuarial loss (gain)	32,866			(27,755		)
Benefits paid	(12,059		)	(14,318		)
Foreign currency exchange rate changes	12,222			(16,854		)
Benefit obligation at end of year	322,766			281,776
Change in pension plan assets
Fair value of plan assets at beginning of year	264,194			295,968
Actual return on plan assets	38,808			(6,489		)
Employer contributions	4,428			4,742
Benefits paid	(12,059		)	(14,318		)
Foreign currency exchange rate changes	11,630			(15,709		)
Fair value of plan assets at end of year	307,001			264,194
Funded status at end of year	$	(15,765	)	$	(17,582	)

Amounts not yet reflected in net periodic pension cost and included in accumulated other comprehensive loss were as follows (in thousands):



	2019		2018
Unrecognized losses	$	94,211	$	86,768

The underfunded status of the UK Plan of $15.8 million and $17.6 million at December 31, 2019 and 2018, respectively, is included in “Other long-term obligations” in the accompanying Consolidated Balance Sheets. No plan assets are expected to be returned to us during the year ending December 31, 2020.

The weighted average assumptions used to determine benefit obligations as of December 31, 2019 and 2018 were as follows:



	2019		2018
Discount rate	2.1	%	2.9	%

The weighted average assumptions used to determine net periodic pension cost for the years ended December 31, 2019, 2018, and 2017 were as follows:



	2019		2018		2017
Discount rate	2.9	%	2.5	%	2.7	%
Annual rate of return on plan assets	4.9	%	5.0	%	5.3	%

The annual rate of return on plan assets has been determined by modeling possible returns using the actuary’s portfolio return calculator and the fair value of plan assets. This models the long term expected returns of the various asset classes held in the portfolio and takes into account the additional benefits of holding a diversified portfolio. For measurement purposes of the liability, the annual rates of inflation of covered pension benefits assumed for 2019 and 2018 were 2.0% and 2.1%, respectively.

The components of net periodic pension cost (income) of the UK Plan for the years ended December 31, 2019, 2018, and 2017 were as follows (in thousands):



	2019			2018			2017
Interest cost	$	7,961		$	8,085		$	8,622
Expected return on plan assets	(12,165		)	(13,797		)	(13,508		)
Amortization of unrecognized loss	2,342			2,630			2,942
Net periodic pension cost (income)	$	(1,862	)	$	(3,082	)	$	(1,944	)

Actuarial gains and losses are amortized using a corridor approach whereby cumulative gains and losses in excess of the greater of 10% of the pension benefit obligation or the fair value of plan assets are amortized over the average life expectancy of plan participants. The amortization period for 2019 was 25 years.

The reclassification adjustment, net of income taxes, for the UK Plan from accumulated other comprehensive loss into net periodic pension cost for the years ended December 31, 2019, 2018, and 2017 was approximately $1.9 million, $2.1 million, and $2.3 million, respectively. The estimated unrecognized loss for the UK Plan that will be amortized from accumulated other comprehensive loss into net periodic pension cost over the next year is approximately $2.0 million, net of income taxes.

UK Plan Assets

The investment policies and strategies for the assets of the UK Plan are established by its trustees (who are independent of the Company) to achieve a reasonable balance between risk, likely return, and administration expense, as well as to maintain funds at a level to meet minimum funding requirements. In order to ensure that an appropriate investment strategy is in place, an analysis of the UK Plan’s assets and liabilities is completed periodically. Target allocation percentages vary over time depending on the perceived risk and return potential of various asset classes and market conditions. The weighted average asset allocations and weighted average target allocations at December 31, 2019 and 2018 were as follows:



Asset Category	Target Asset Allocation		December 31, 2019		December 31, 2018
Debt	65.0	%	70.6	%	71.2	%
Equity	15.0	%	10.5	%	13.4	%
Cash	10.0	%	10.5	%	6.1	%
Real estate	10.0	%	8.4	%	9.3	%
Total	100.0	%	100.0	%	100.0	%

Plan assets of our UK Plan are invested through third-party fund managers in various investments with underlying holdings which consist of: (a) debt securities, which include United Kingdom government debt and United States, United Kingdom, European and emerging market corporate debt, (b) equity securities, which include marketable equity and equity like instruments across developed global equity markets, and (c) real estate assets, which represent trusts which invest directly or indirectly in various properties throughout the United Kingdom.

Assets of the UK Plan are allocated within the fair value hierarchy discussed in Note 11 - Fair Value Measurements, based on the nature of the investment. Level 1 assets represent cash. Level 2 assets consist of corporate debt funds, government bond funds, and equity funds whose underlying investments are valued using observable marketplace inputs. The fair value of the level 2 assets are generally determined under a market approach using valuation models that incorporate observable inputs such as interest rates, bond yields, and quoted prices.

Investments valued using net asset value (“NAV”) as a practical expedient are excluded from the fair value hierarchy. These investments include: (a) funds which invest predominantly in senior secured debt instruments, targeting diversity across regions and sectors, as well as funds which invest in diversified credit vehicles that seek higher returns than traditional fixed income, primarily through investments in U.S. corporate debt, global credit, and structured debt, and (b) funds which aim to provide long-term income through investment in UK property assets. These investments are redeemable at NAV on a monthly or quarterly basis and have redemption notice periods of up to 90 days. In addition, certain of these investments are subject to a lockup period of up to 24 months.

The methods described above may produce fair values that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes the valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The following tables set forth the fair value of assets of the UK Plan as of December 31, 2019 and 2018 (in thousands):



	Assets at Fair Value as of December 31, 2019
Asset Category	Level 1		Level 2		Level 3		Total
Corporate debt funds	$	—	$	64,314	$	—	$	64,314
Government bond funds	—		49,164		—		49,164
Equity funds	—		32,356		—		32,356
Cash	32,240		—		—		32,240
Total plan assets in fair value hierarchy	$	32,240	$	145,834	$	—	178,074
Plan assets measured using NAV as a practical expedient: ⁽¹⁾
Debt funds							103,188
Real estate funds							25,739
Total plan assets at fair value							$	307,001



	Assets at Fair Value as of December 31, 2018
Asset Category	Level 1		Level 2		Level 3		Total
Corporate debt funds	$	—	$	37,703	$	—	$	37,703
Government bond funds	—		52,445		—		52,445
Equity funds	—		35,425		—		35,425
Cash	16,097		—		—		16,097
Total plan assets in fair value hierarchy	$	16,097	$	125,573	$	—	141,670
Plan assets measured using NAV as a practical expedient: ⁽¹⁾
Debt funds							98,077
Real estate funds							24,447
Total plan assets at fair value							$	264,194

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(1)	Certain investments measured using NAV as a practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in the table are intended to permit reconciliation of the fair value hierarchy to the total fair value of plan assets.

Cash Flows:

Contributions

Our United Kingdom subsidiary expects to contribute approximately $4.8 million to the UK Plan in 2020.

Estimated Future Benefit Payments

The following estimated benefit payments are expected to be paid in the following years (in thousands):



	Pension Benefit Payments
2020	$	12,887
2021	$	13,240
2022	$	13,603
2023	$	13,976
2024	$	14,358
Succeeding five years	$	77,912

The following table shows certain information for the UK Plan where the accumulated benefit obligation is in excess of plan assets as of December 31, 2019 and 2018 (in thousands):



	2019		2018
Projected benefit obligation	$	322,766	$	281,776
Accumulated benefit obligation	$	322,766	$	281,776
Fair value of plan assets	$	307,001	$	264,194

We also sponsor three domestic retirement plans in which participation by new individuals is frozen. The benefit obligation associated with these plans as of December 31, 2019 and 2018 was approximately $9.2 million and $8.5 million, respectively. The estimated fair value of the plan assets as of December 31, 2019 and 2018 was approximately $5.7 million and $4.9 million, respectively. The plan assets are considered Level 1 assets within the fair value hierarchy and are predominantly invested in cash, equities, and equity and bond funds. The liability balances as of December 31, 2019 and 2018 are classified as “Other long-term obligations” in the accompanying Consolidated Balance Sheets. The measurement date for these plans is December 31 of each year. The major assumptions used in the actuarial valuations to determine benefit obligations as of December 31, 2019 and 2018 included discount rates of 3.00% to 4.00% for 2019 and 4.00% to 4.25% for 2018. Also, included was an expected rate of return of 7.00% for both 2019 and 2018. The net periodic pension cost associated with the domestic plans was approximately $0.3 million for each of the years ended December 31, 2019 and 2018. The reclassification adjustment, net of income taxes, from accumulated other comprehensive loss into net periodic pension cost was approximately $0.2 million for each of the years ended December 31, 2019, 2018, and 2017. The estimated loss for these plans that will be amortized from accumulated other comprehensive loss into net periodic pension cost over the next year is approximately $0.3 million, net of income taxes. The future estimated benefit payments expected to be paid from the plans for the next ten years is approximately $0.6 million per year.

Multiemployer Plans

We participate in approximately 200 multiemployer pension plans (“MEPPs”) that provide retirement benefits to certain union employees in accordance with various collective bargaining agreements (“CBAs”). As one of many participating employers in an MEPP, we are potentially liable with the other participating employers for such plan's underfunding either through an increase in our required contributions, or in the case of our withdrawal from the plan, a payment based upon our proportionate share of the plan's unfunded benefits, in each case, as described below. Our contributions to a particular MEPP are established by the applicable CBAs; however, our required contributions may increase based on the funded status of an MEPP and legal requirements of the Pension Protection Act of 2006 (the “PPA”), which requires substantially underfunded MEPPs to implement a funding improvement plan (“FIP”) or a rehabilitation plan (“RP”) to improve their funded status. Factors that could impact the funded status of an MEPP include, without limitation, investment performance, changes in the participant demographics, decline in the number of contributing employers, changes in actuarial assumptions and the utilization of extended amortization provisions.

An FIP or RP requires a particular MEPP to adopt measures to correct its underfunding status. These measures may include, but are not limited to: (a) an increase in our contribution rate as a signatory to the applicable CBA, (b) a reallocation of the contributions already being made by participating employers for various benefits to individuals participating in the MEPP, and/or (c) a reduction in the benefits to be paid to future and/or current retirees. In addition, the PPA requires that a 5% surcharge be levied on employer contributions for the first year commencing after the date the employer receives notice that the MEPP is in critical status and a 10% surcharge on each succeeding year until a CBA is in place with terms and conditions consistent with the RP.

We could also be obligated to make payments to MEPPs if we either cease to have an obligation to contribute to the MEPP or significantly reduce our contributions to the MEPP because we reduce our number of employees who are covered by the relevant MEPP for various reasons, including, but not limited to, layoffs or closure of a subsidiary assuming the MEPP has unfunded vested benefits. The amount of such payments (known as a complete or partial withdrawal liability) would equal our proportionate share of the MEPPs’ unfunded vested benefits. We believe that certain of the MEPPs in which we participate may have unfunded vested benefits. Due to uncertainty regarding future factors that could trigger withdrawal liability, as well as the absence of specific information regarding the MEPP’s current financial situation, we are unable to determine (a) the amount and timing of a future withdrawal liability, if any, and (b) whether our participation in these MEPPs could have a material adverse impact on our financial position, results of operations or liquidity. We did not record any withdrawal liability for the years ended December 31, 2019, 2018, and 2017.

The following table lists all domestic MEPPs to which our contributions exceeded $2.0 million in 2019. Additionally, this table also lists all domestic MEPPs to which we contributed in 2019 in excess of $0.5 million for MEPPs in the critical status, “red zone,” and $1.0 million for MEPPs in the endangered status, “orange or yellow zones,” as defined by the PPA (in thousands):



Pension Fund	EIN/Pension Plan Number		PPA Zone Status ⁽¹⁾		FIP/RP Status	Contributions						Contributions greater than 5% of total plan contributions ⁽²⁾	Expiration date or range of expiration dates of CBA(s)
Pension Fund	EIN/Pension Plan Number		2019	2018	FIP/RP Status	2019		2018		2017			Expiration date or range of expiration dates of CBA(s)
National Electrical Benefit Fund	53-0181657	001	Green	Green	NA	$	16,901	$	10,700	$	11,572	No	January 2020 to November 2022
National Automatic Sprinkler Industry Pension Fund	52-6054620	001	Red	Red	Implemented	15,924		14,888		14,228		No	June 2020 to June 2022
Plumbers & Pipefitters National Pension Fund	52-6152779	001	Yellow	Yellow	Implemented	13,821		11,868		12,550		No	February 2020 to August 2026
Sheet Metal Workers National Pension Fund	52-6112463	001	Yellow	Yellow	Implemented	11,713		10,895		12,895		No	April 2020 to June 2024
Pension, Hospitalization & Benefit Plan of the Electrical Industry-Pension Trust Account	13-6123601	001	Green	Green	NA	10,075		10,469		9,489		No	April 2020 to April 2022
Electrical Workers Local No. 26 Pension Trust Fund	52-6117919	001	Green	Green	NA	8,434		5,485		4,441		Yes	January 2020 to July 2021
Plumbers Pipefitters & Mechanical Equipment Service Local Union 392 Pension Plan	31-0655223	001	Red	Red	Implemented	6,412		6,047		6,084		Yes	June 2022
Southern California IBEW-NECA Pension Trust Fund	95-6392774	001	Yellow	Yellow	Implemented	6,277		5,754		3,669		No	May 2020 to November 2022
Central Pension Fund of the IUOE & Participating Employers	36-6052390	001	Green	Green	NA	6,253		6,384		6,070		No	February 2020 to December 2023
Sheet Metal Workers Pension Plan of Northern California	51-6115939	001	Red	Red	Implemented	6,233		5,488		6,023		No	June 2020 to June 2026
Arizona Pipe Trades Pension Trust Fund	86-6025734	001	Green	Green	NA	6,071		2,640		1,662		Yes	June 2020
Edison Pension Plan	93-6061681	001	Green	Green	NA	5,361		3,140		1,628		Yes	December 2020
Pipefitters Union Local 537 Pension Fund	51-6030859	001	Green	Green	NA	4,754		6,038		4,057		Yes	September 2020 to August 2021



Pension Fund	EIN/Pension Plan Number		PPA Zone Status ⁽¹⁾		FIP/RP Status	Contributions						Contributions greater than 5% of total plan contributions ⁽²⁾	Expiration date or range of expiration dates of CBA(s)
Pension Fund	EIN/Pension Plan Number		2019	2018	FIP/RP Status	2019		2018		2017			Expiration date or range of expiration dates of CBA(s)
Heating, Piping & Refrigeration Pension Fund	52-1058013	001	Green	Green	NA	4,185		2,619		2,437		No	June 2020 to July 2021
U.A. Local 393 Pension Trust Fund Defined Benefit	94-6359772	002	Green	Green	NA	3,858		4,298		1,540		Yes	June 2020 to June 2021
San Diego Electrical Pension Plan	95-6101801	001	Green	Green	NA	3,843		3,008		2,862		Yes	May 2020 to May 2022
Eighth District Electrical Pension Fund	84-6100393	001	Green	Green	NA	3,590		3,486		3,786		Yes	May 2020 to May 2022
Southern California Pipe Trades Retirement Fund	51-6108443	001	Green	Green	NA	3,274		3,095		3,907		No	June 2020 to August 2026
Electrical Contractors Association and Local Union 134, IBEW Joint Pension Trust of Chicago Pension Plan 2	51-6030753	002	Green	Green	NA	3,204		4,308		5,537		No	May 2020
Northern California Pipe Trades Pension Plan	94-3190386	001	Green	Green	NA	3,077		3,104		2,963		No	June 2020 to June 2021
NECA-IBEW Pension Trust Fund	51-6029903	001	Green	Green	NA	2,528		2,650		3,060		No	May 2020 to December 2020
U.A. Plumbers Local 24 Pension Fund	22-6042823	001	Green	Green	NA	2,460		3,461		3,092		Yes	April 2020
Sheet Metal Workers Pension Plan of Southern California, Arizona & Nevada	95-6052257	001	Yellow	Yellow	Implemented	2,423		1,934		3,268		No	June 2020 to June 2024
Connecticut Plumbers & Pipefitters Pension Fund	06-6050353	001	Green	Green	NA	2,231		2,104		1,988		Yes	June 2021
U.A. Local 38 Defined Benefit Pension Plan	94-1285319	001	Green	Green	NA	2,030		1,551		2,097		No	June 2020 to June 2023
Plumbing & Pipe Fitting Local 219 Pension Fund	34-6682376	001	Red	Red	Implemented	1,937		2,197		1,335		Yes	May 2020
Boilermaker-Blacksmith National Pension Trust	48-6168020	001	Red	Red	Implemented	1,681		1,446		1,083		No	September 2020 to April 2022
Plumbers & Pipefitters Local Union No. 502 & 633 Pension Fund	61-6078145	001	Yellow	Yellow	Implemented	1,596		1,167		801		No	May 2020 to July 2022
Plumbers & Pipefitters Local 162 Pension Fund	31-6125999	001	Yellow	Yellow	Implemented	1,124		1,273		801		Yes	May 2020 to May 2022
Steamfitters Local Union No. 420 Pension Plan	23-2004424	001	Red	Red	Implemented	641		706		687		No	May 2020
Other Multiemployer Pension Plans						53,567		48,026		43,604			Various
Total Contributions						$	215,478	$	190,229	$	179,216

_________________


(1)	The zone status represents the most recent available information for the respective MEPP, which may be 2018 or earlier for the 2019 year and 2017 or earlier for the 2018 year.

(2)

This information was obtained from the respective plan’s Form 5500 (“Forms”) for the most current available filing. These dates may not correspond with our fiscal year contributions. The above noted percentages of contributions are based upon disclosures contained in the plans’ Forms. Those Forms, among other things, disclose the names of individual participating employers whose annual contributions account for more than 5% of the aggregate annual amount contributed by all participating employers for a plan year. Accordingly, if the annual contribution of two or more of our subsidiaries each accounted for less than 5% of such contributions, but in the aggregate accounted for in excess of 5% of such contributions, that greater percentage is not available and accordingly is not disclosed.

The nature and diversity of our operations may result in volatility in the amount of our contributions to a particular MEPP for any given period. That is because, in any given market, a change in the mix, volume of, or size of our projects could result in a change in our direct labor force and a corresponding change in our contributions to the MEPP(s) dictated by the applicable CBA. Additionally, the amount of contributions to a particular MEPP could also be affected by the terms of the CBA, which could require at a particular time, an increase in the contribution rate and/or surcharges. Our contributions to various MEPPs increased by approximately $4.8 million as a result of acquisitions made by us since 2017.

We also participated in an MEPP that is located within the United Kingdom for which we have contributed less than $0.1 million for each of the years ended December 31, 2019, 2018, and 2017. The information that we have obtained relating to this plan is not as readily available and/or as comparable as the information that has been ascertained in the United States. Based upon the most recently available information, the plan is 100% funded. This plan closed to future contributions and participants during 2019.

Additionally, we contribute to certain multiemployer plans that provide post retirement benefits such as health and welfare benefits and/or defined contribution/annuity plans, among others. Our contributions to these plans were approximately $153.5 million, $135.9 million, and $130.9 million for the years ended December 31, 2019, 2018, and 2017, respectively. Our contributions to other post retirement benefit plans increased by approximately $11.0 million as a result of acquisitions made by us since 2017. The amount of contributions to these plans is also subject for the most part to the factors discussed above in conjunction with the MEPPs.

Defined Contribution Plans

We have defined contribution retirement and savings plans that cover eligible employees in the United States. Contributions to these plans are based on a percentage of the employee’s base compensation. The expenses recognized for the years ended December 31, 2019, 2018, and 2017 for these plans were approximately $32.4 million, $29.8 million, and $28.1 million, respectively. At our discretion and subject to applicable plan documents, we may make additional supplemental matching contributions to one of our defined contribution retirement and savings plans. The expenses recognized related to additional supplemental matching contributions for the years ended December 31, 2019, 2018, and 2017 were approximately $6.8 million, $6.1 million, and $5.5 million, respectively.

Our United Kingdom subsidiary also has defined contribution retirement plans. The expense recognized for the years ended December 31, 2019, 2018, and 2017 was approximately $6.1 million, $4.9 million, and $3.9 million, respectively.