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Pension and Other Postretirement Benefits | 12 Months Ended
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Dec. 31, 2023
Retirement Benefits [Abstract] |
Pension and Other Postretirement Benefits | Pension and Other Postretirement Benefits We sponsor defined benefit pension plans and defined contribution plans that cover substantially all employees in Canada, the Netherlands, Switzerland, the United Kingdom, the U.S., Belgium and certain employees in Germany. Certain defined benefit plans in the United Kingdom are frozen and additional benefits are not being earned by the participants. The U.S. defined benefit pension plan is closed to new entrants. Annual contributions to retirement plans equal or exceed the minimum funding requirements of applicable local regulations. The assets of the funded pension plans we sponsor are maintained in various trusts and are invested primarily in equity and fixed income securities. Benefits provided to employees under defined contribution plans include cash and stock contributions by the Company based on either hours worked by the employee or a percentage of the employee’s compensation. Defined contribution expense for 2023, 2022, and 2021 w as $14.0 million, $13.4 million, and $12.2 million, respectively. We sponsor unfunded postretirement medical and life insurance benefit plans for certain employees in Canada and the U.S. The medical benefit portion of the U.S. plan is only for employees who retired prior to 1989 as well as certain other employees who were near retirement and elected to receive certain benefits. The following tables provide a reconciliation of the changes in the plans’ benefit obligations and fair value of assets as well as a statement of the funded status and balance sheet reporting for these plans.
| Pension Benefits |  | Other Benefits
Years Ended December 31, | 2023 |  | 2022 |  | 2023 |  | 2022
|  |  | (In thousands) |  |
Change in benefit obligation: |  |  |  |  |  |  |
Benefit obligation, beginning of year | $ | (317,424) |  |  | $ | (471,834) |  |  | $ | (19,944) |  |  | $ | (27,625) |
Service cost | (2,632) |  |  | (3,491) |  |  | (11) |  |  | (24) |
Interest cost | (15,237) |  |  | (9,248) |  |  | (1,012) |  |  | (761) |
Participant contributions | (435) |  |  | (350) |  |  | (3) |  |  | (5) |
Actuarial gain (loss) | (16,231) |  |  | 123,851 |  |  | (1,179) |  |  | 5,690 |
Acquisitions and divestitures | — |  |  | (9,257) |  |  | — |  |  | — |
Settlements | 2,987 |  |  | 6,567 |  |  | — |  |  | — |
Other | — |  |  | — |  |  | — |  |  | (21) |
Foreign currency exchange rate changes | (12,427) |  |  | 33,316 |  |  | (491) |  |  | 1,409 |
Benefits paid | 18,640 |  |  | 13,022 |  |  | 1,329 |  |  | 1,393 |
Benefit obligation, end of year | $ | (342,759) |  |  | $ | (317,424) |  |  | $ | (21,311) |  |  | $ | (19,944) |
| Pension Benefits |  | Other Benefits
Years Ended December 31, | 2023 |  | 2022 |  | 2023 |  | 2022
|  |  | (In thousands) |  |
Change in plan assets: |  |  |  |  |  |  |
Fair value of plan assets, beginning of year | $ | 281,332 |  |  | $ | 394,026 |  |  | $ | — |  |  | $ | — |
Actual return on plan assets | 21,141 |  |  | (84,595) |  |  | — |  |  | — |
Employer contributions | 8,432 |  |  | 12,080 |  |  | 1,326 |  |  | 1,388 |
Plan participant contributions | 435 |  |  | 350 |  |  | 3 |  |  | 5 |
Acquisitions and divestitures | — |  |  | 6,772 |  |  | — |  |  | — |
Settlements | (2,987) |  |  | (6,567) |  |  | — |  |  | — |
Foreign currency exchange rate changes | 11,665 |  |  | (27,712) |  |  | — |  |  | — |
Benefits paid | (18,640) |  |  | (13,022) |  |  | (1,329) |  |  | (1,393) |
Fair value of plan assets, end of year | $ | 301,378 |  |  | $ | 281,332 |  |  | $ | — |  |  | $ | — |
Funded status, end of year | $ | (41,381) |  |  | $ | (36,092) |  |  | $ | (21,312) |  |  | $ | (19,944) |
Amounts recognized in the balance sheets: |  |  |  |  |  |  |
Prepaid benefit cost | $ | 16,358 |  |  | $ | 16,251 |  |  | $ | — |  |  | $ | — |
Accrued benefit liability, current | (3,051) |  |  | (3,106) |  |  | (1,427) |  |  | (1,353) |
Accrued benefit liability, noncurrent | (54,688) |  |  | (49,237) |  |  | (19,885) |  |  | (18,591) |
Net funded status | $ | (41,381) |  |  | $ | (36,092) |  |  | $ | (21,312) |  |  | $ | (19,944) |
The accumulated benefit obligation for all defined benefit pension plans was $360.7 million and $305.7 million at December 31, 2023 and 2022, respectively. The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the pension plans with a projected benefit obligation in excess of plan assets were $281.1 million, $278.4 million, and $224.0 million, respectively, as of December 31, 2023 and $262.7 million, $251.0 million, and $210.4 million, re spectively, as of December 31, 2022. The accumulated benefit obligation and fair value of plan assets for other postretirement benefit plans with an accumulated benefit obligation in excess of plan assets were $21.3 million and $0.0 million, respectively, as of December 31, 2023 and were $19.9 million and $0.0 million, respectively, as of December 31, 2022. The following table provides the components of net periodic benefit costs for the plans.
| Pension Benefits |  | Other Benefits
Years Ended December 31, | 2023 |  | 2022 |  | 2021 |  | 2023 |  | 2022 |  | 2021
|  |  |  |  | (In thousands) |  |  |  |
Components of net periodic benefit cost: |  |  |  |  |  |  |  |  |  |  |
Service cost | $ | 2,632 |  |  | $ | 3,491 |  |  | $ | 3,953 |  |  | $ | 11 |  |  | $ | 24 |  |  | $ | 33 |
Interest cost | 15,237 |  |  | 9,248 |  |  | 7,512 |  |  | 1,012 |  |  | 761 |  |  | 727 |
Expected return on plan assets | (16,512) |  |  | (16,023) |  |  | (16,337) |  |  | — |  |  | — |  |  | — |
Amortization of prior service cost | 176 |  |  | 174 |  |  | 110 |  |  | — |  |  | — |  |  | — |
Settlement loss (gain) | (101) |  |  | 1,189 |  |  | (18) |  |  | — |  |  | — |  |  | — |
Other adjustments | — |  |  | — |  |  | (191) |  |  | — |  |  | — |  |  | — |
Net loss (gain) recognition | (938) |  |  | 734 |  |  | 3,764 |  |  | (737) |  |  | (73) |  |  | (43) |
Net periodic benefit cost (income) | $ | 494 |  |  | $ | (1,187) |  |  | $ | (1,207) |  |  | $ | 286 |  |  | $ | 712 |  |  | $ | 717 |
We recorded settlement losses totaling $1.2 million during 2022. The settlement losses were the result of lump-sum payments to participants that exceeded the sum of the pension plan's respective annual service cost and interest cost amounts. The following table presents the assumptions used in determining the benefit obligations and the net periodic benefit cost amounts.
| Pension Benefits |  | Other Benefits
| Years Ended December 31, |  | Years Ended December 31,
| 2023 |  | 2022 |  | 2023 |  | 2022
Weighted average assumptions for benefit obligations at year end: |  |  |  |  |  |  |
Discount rate | 4.5 | % |  | 4.9 | % |  | 4.7 | % |  | 5.2 | %
Salary increase | 3.2 | % |  | 3.2 | % |  | N/A |  | N/A
Cash balance interest credit rate | 4.4 | % |  | 4.5 | % |  | N/A |  | N/A
Weighted average assumptions for net periodic cost for the year: |  |  |  |  |  |  |
Discount rate | 4.9 | % |  | 2.0 | % |  | 5.2 | % |  | 2.9 | %
Salary increase | 3.2 | % |  | 3.3 | % |  | N/A |  | N/A
Cash balance interest credit rate | 4.5 | % |  | 4.7 | % |  | N/A |  | N/A
Expected return on assets | 5.2 | % |  | 4.4 | % |  | N/A |  | N/A
Assumed health care cost trend rates: |  |  |  |  |  |  |
Health care cost trend rate assumed for next year | N/A |  | N/A |  | 5.2 | % |  | 5.3 | %
Rate that the cost trend rate gradually declines to | N/A |  | N/A |  | 4.6 | % |  | 5.0 | %
Year that the rate reaches the rate it is assumed to remain at | N/A |  | N/A |  | 2028 |  | 2023
During 2023, there was a ruling in the United Kingdom related to the validity of certain amendments to benefits in contracted-out salary-related defined benefit pension plans. The ruling is subject to an ongoing appeal. The ruling may potentially be applicable to certain defined benefit pension plans we have in the United Kingdom. While we do not believe the impact of this ruling will have a material impact to our projected benefit obligation, we will continue to monitor the appeals process. As of December 31, 2023, no specific adjustments for this matter have been included in estimating our projected benefit obligation and related net periodic benefit costs. Plan assets are invested using a total return investment approach whereby a mix of equity securities and fixed income securities are used to preserve asset values, diversify risk, and achieve our target investment return benchmark. Investment strategies and asset allocations are based on consideration of the plan liabilities, the plan’s funded status, and our financial condition. Investment performance and asset allocation are measured and monitored on an ongoing basis. Plan assets are managed in a balanced portfolio comprised of two major components: an asset growth portion and an asset protection portion. The expected role of asset growth investments is to maximize the long-term real growth of assets, while the role of asset protection investments is to generate current income, provide for more stable periodic returns, and provide some protection against a permanent loss of capital. Absent regulatory or statutory limitations, the target asset allocation for the investment of the assets for our ongoing pension plans is 45-60% in asset protection investments and 40-55% in asset growth investments and for our pension plans where the majority of the participants are in payment or terminated vested status is 80-90% in asset protection investments and 10-20% in asset growth investments. Asset growth investments include a diversified mix of U.S. and international equity, primarily invested through investment funds. Asset protection investments include government securities and investment grade corporate bonds, primarily invested through investment funds and group insurance contracts. We develop our expected long-term rate of return assumptions based on the historical rates of returns for securities and instruments of the type in which our plans invest. The expected long-term rate of return on plan assets reflects the average rate of earnings expected on the invested assets and future assets to be invested to provide for the benefits included in the projected benefit obligation. We use historic plan asset returns combined with current market conditions to estimate the rate of return. The expected rate of return on plan assets is a long-term assumption based on an analysis of historical and forward looking returns considering the plan’s actual and target asset mix. The following table presents the fair values of the pension plan assets by asset category.
| December 31, 2023 |  | December 31, 2022
| Fair Market Value at December 31, 2023 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Observable Inputs (Level 2) |  | Investments Measured at Net Asset Value |  |  | Fair Market Value at December 31, 2022 |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Observable Inputs (Level 2) |  | Investments Measured at Net Asset Value
| (In thousands) |  | (In thousands)
Asset Category: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Equity securities(a) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. equities fund | $ | 34,966 |  |  | $ | — |  |  | $ | — |  |  | $ | 34,966 |  |  |  | $ | 49,153 |  |  | $ | 4,384 |  |  | $ | — |  |  | $ | 44,769 |
Non-U.S. equities fund | 35,939 |  |  | — |  |  | — |  |  | 35,939 |  |  |  | 51,227 |  |  | 5,393 |  |  | — |  |  | 45,834 |
Debt securities(b) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Government bond fund | 77,480 |  |  | — |  |  | — |  |  | 77,480 |  |  |  | 56,318 |  |  | — |  |  | 2,011 |  |  | 54,307 |
Corporate bond fund | 62,456 |  |  | — |  |  | — |  |  | 62,456 |  |  |  | 67,406 |  |  | — |  |  | 7,175 |  |  | 60,231 |
Fixed income fund(c) | 22,673 |  |  | — |  |  | — |  |  | 22,673 |  |  |  | 22,680 |  |  | — |  |  | — |  |  | 22,680 |
Liability driven investment fund(d) | 51,412 |  |  | — |  |  | — |  |  | 51,412 |  |  |  | 14,629 |  |  | — |  |  | — |  |  | 14,629 |
Other investments(e) | 9,565 |  |  | — |  |  | — |  |  | 9,565 |  |  |  | 10,531 |  |  | — |  |  | — |  |  | 10,531 |
Cash and equivalents | 6,887 |  |  | 2,662 |  |  | — |  |  | 4,225 |  |  |  | 9,388 |  |  | 3,242 |  |  | — |  |  | 6,146 |
Total | $ | 301,378 |  |  | $ | 2,662 |  |  | $ | — |  |  | $ | 298,716 |  |  |  | $ | 281,332 |  |  | $ | 13,019 |  |  | $ | 9,186 |  |  | $ | 259,127 |
(a)This category includes investments in actively managed and indexed investment funds that invest in a diversified pool of equity securities of companies located in the U.S., Canada, Western Europe and other developed countries throughout the world. The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund. Equity securities held in separate accounts are valued based on observable quoted prices on active exchanges. (b)This category includes investments in investment funds that invest in U.S. treasuries; other national, state and local government bonds; and corporate bonds of highly rated companies from diversified industries. The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the fund. (c)This category includes guaranteed insurance contracts and annuity policies. (d)This category includes investments in funds that are designed to provide leveraged exposure to changes in interest rates. The fund purchases shares of funds that invest in government bonds, debt repurchase agreements, total return swaps and interest rate swaps. (e)This category includes investments in hedge funds that pursue multiple strategies in order to provide diversification and balance risk/return objectives, real estate funds, and private equity funds. The plans do not invest in individual securities. All investments are through well diversified investment funds. As a result, there are no significant concentrations of risk within the plan assets. The following table reflects the benefits as of December 31, 2023 expected to be paid in each of the next five years and in the aggregate for the five years thereafter from our pension and other postretirement plans. Because our other postretirement plans are unfunded, the anticipated benefits with respect to these plans will come from our own assets. Because our pension plans are primarily funded plans, the anticipated benefits with respect to these plans will come primarily from the trusts established for these plans.
| Pension Plans |  | Other Plans
| (In thousands)
2024 | $ | 22,915 |  |  | $ | 1,460 |
2025 | 20,919 |  |  | 1,466 |
2026 | 20,542 |  |  | 1,464 |
2027 | 21,908 |  |  | 1,467 |
2028 | 23,476 |  |  | 1,483 |
2029-2033 | 100,988 |  |  | 7,392 |
Total | $ | 210,748 |  |  | $ | 14,732 |
We anticipate contributing $12.3 million and $1.5 million to our pension and other postretirement plans, respectively, during 2024. The pre-tax amounts in accumulated other comprehensive loss that have not yet been recognized as components of net periodic benefit cost at December 31, 2023 and the changes in these amounts during the year ended December 31, 2023 are as follows.
| Pension Benefits |  | Other Benefits
| (In thousands)
Components of accumulated other comprehensive loss: |  |  |
Net actuarial loss (gain) | $ | 24,298 |  |  | $ | (5,322) |
Net prior service cost | 2,148 |  |  | — |
| $ | 26,446 |  |  | $ | (5,322) |
| Pension Benefits |  | Other Benefits
| (In thousands)
Changes in accumulated other comprehensive loss: |  |  |
Net actuarial loss (gain), beginning of year | $ | 11,695 |  |  | $ | (7,117) |
Amortization of actuarial gain | 938 |  |  | 737 |
Actuarial loss | 16,231 |  |  | 1,179 |
Asset gain | (4,629) |  |  | — |
Settlement loss recognized | 101 |  |  | — |
Currency impact | (38) |  |  | (121) |
Net actuarial loss (gain), end of year | $ | 24,298 |  |  | $ | (5,322) |
Prior service cost, beginning of year | $ | 2,197 |  |  | $ | — |
Amortization of prior service cost | (176) |  |  | — |
Currency impact | 127 |  |  | — |
Prior service cost, end of year | $ | 2,148 |  |  | $ | — |

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