6. Retirement Plans

The Company provides benefits under defined contribution plans including a savings plan and an employee stock ownership plan (“ESOP”). The savings plan covers substantially all domestic salaried and certain non-union hourly employees and provides for matching contributions up to 4% of each employee’s salary. The ESOP covers substantially all domestic employees and provides for contributions based on a percentage of each employee’s compensation as determined by the Company’s Board of Directors. Total expense for the Company’s defined contribution plans was $6.0 million in 2017, $6.7 million in 2016, and $5.4 million in 2015.

Although the Company intends for these defined contribution plans to be the primary retirement benefit for most employees, the Company also has several defined benefit plans. The funded status of the defined benefit plans was as follows at December 31:

(in thousands)	2017			2016

Benefit obligation at beginning of year	$	41,691		$	46,359
Service cost		1,939			2,091
Interest cost		1,222			1,669
Foreign currency exchange rate changes		1,607			(2,306	)
Benefits paid		(9,633	)		(8,280	)
Actuarial loss		931			1,906
Other		-			252
Benefit obligation at end of year		37,757			41,691
Plan assets at beginning of year		36,141			36,236
Company contributions		1,195			6,947
Foreign currency exchange rate changes		2,318			(3,714	)
Benefits paid		(9,633	)		(8,280	)
Actual gain on plan assets		1,747			4,952
Plan assets at end of year		31,768			36,141
Funded status	$	(5,989	)	$	(5,550	)
Accumulated benefit obligation	$	36,951		$	40,743

Amounts recognized in the Consolidated Balance Sheets at December 31:

(in thousands)	2017			2016

Accrued employee and retiree benefits	$	(13,304	)	$	(14,510	)
Other accrued expenses		(2,731	)		(765	)
Other assets		10,046			9,725
Net liability	$	(5,989	)	$	(5,550	)

Components of annual benefit cost:

(In thousands)	2017			2016			2015

Service cost	$	1,939		$	2,091		$	2,692
Interest cost		1,222			1,669			1,803
Expected return on plan assets		(892	)		(1,141	)		(1,210	)
Recognized actuarial (gain) loss		(187	)		193			228
Settlement expense		3,796			543			1,119
Curtailment gain		-			-			(104	)
Defined benefit expense	$	5,878		$	3,355		$	4,528

Weighted average liability assumptions as of December 31:

	2017			2016
Discount rate		3.16	%		3.48	%
Expected return on plan assets		3.03	%		2.85	%
Rate of compensation increase		0.33	%		0.43	%

Weighted average cost assumptions for the year ended December 31:

	2017			2016
Discount rate		3.48	%		3.94	%
Expected return on plan assets		2.85	%		3.40	%
Rate of compensation increase		0.43	%		0.35	%

In 2017, one of the Company’s defined benefit plans was terminated. The plan was associated with two facilities which were closed under the Company’s 2014 Restructuring Plan. As a result, the pension benefit obligation was settled by making lump-sum cash payments to certain participants and also purchasing nonparticipating annuity contracts to cover the remaining vested benefits. As a result of the plan’s termination, the Company recognized $3.8 million of settlement expense in 2017, which has been recorded in the Company’s restructuring and other costs.

The aggregate amounts of benefits expected to be paid from defined benefit plans in each of the next five years subsequent to December 31, 2017, which include employees’ expected future service, are as follows: 2018, $3.7 million; 2019, $1.7 million; 2020, $1.8 million; 2021, $1.8 million; 2022, $4.1 million; and $14.4 million in total for the years 2023 through 2027.

The Company expects to contribute $3.0 million to defined benefit plans in 2018.

Amounts in accumulated other comprehensive income at December 31 were as follows:

(In thousands)		2017				2016
Unrecognized net actuarial loss		$	1,112			$	3,384

The pension adjustments, net of tax, recognized in OCI, were as follows:

(In thousands)	2017			2016			2015

Net actuarial gain (loss) arising during the period		$	921		$	1,312		$	(140	)
Amortization of actuarial loss, included in defined benefit expense			1,307			544			917
Pension adjustment, net of tax		$	2,228		$	1,856		$	777

The estimated actuarial loss for the defined benefit plans that will be amortized from accumulated other comprehensive loss into periodic benefit cost during 2018 is $0.1 million.

The investment objectives and target allocations for the Company’s pension plans related to the assets of the plans are reviewed on a regular basis. The investment objectives for the pension assets are to maximize the return on assets while maintaining an overall level of risk appropriate for a retirement fund and ensuring the availability of funds for the payment of retirement benefits. The levels of risk assumed by the pension plans are determined by market conditions, the rate of return expectations, and the liquidity requirements of each pension plan. The actual asset allocations of each pension plan are reviewed on a regular basis to ensure that they are in line with the target allocations.

The following table presents the Company’s pension plan assets by asset category as of December 31, 2017 and 2016:

	Fair Value as of December 31,		Fair Value Measurements at December 31, 2017 Using Fair Value Hierarchy						Fair Value as of December 31,		Fair Value Measurements at December 31, 2016 Using Fair Value Hierarchy
(in thousands)	2017		Level 1		Level 2		Level 3		2016		Level 1		Level 2		Level 3
Equity Funds
Domestic	$	6,226	$	6,226	$	—	$	—	$	5,830	$	5,830	$	—	$	—
International		101		—		101		—		254		106		148		—
International Fixed Income Funds		25,340		934		24,406		—		23,156		851		22,305		—
Other investments		101		44		57		—		6,901		45		6,856		—
Total assets at fair value	$	31,768	$	7,204	$	24,564	$	—	$	36,141	$	6,832	$	29,309	$	—

The Company is required to categorize pension plan assets based on the following fair value hierarchy:

Level 1:

Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2:

Inputs other than quoted prices included in Level 1 that are observable for the asset or liability through corroboration with observable market data.

Level 3:

Unobservable inputs that reflect the reporting entity’s own assumptions.