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Pensions and Other Post-Employment Benefits | 12 Months Ended
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Dec. 31, 2022
Retirement Benefits [Abstract] |
Pensions and Other Post-Employment Benefits | Pensions and Other Post-Employment Benefits The obligation and funded status of the Company’s pension and other post-employment benefit plans are shown below. The Pension Benefits column aggregates defined benefit pension plans in the U.S., Germany, Liechtenstein, England, and the U.S. supplemental retirement plans. The Other Benefits column includes the domestic retiree medical and life insurance plan.
|  | Pension Benefits |  | Other Benefits
(Thousands) |  | 2022 |  | 2021 |  | 2022 |  | 2021
Change in benefit obligation |  |  |  |  |  |  |  |
Benefit obligation at beginning of year |  | $ | 235,779 |  |  | $ | 246,107 |  |  | $ | 7,514 |  |  | $ | 8,190 |
Service cost |  | 1,231 |  |  | 1,722 |  |  | 78 |  |  | 80 |
Interest cost |  | 4,874 |  |  | 4,186 |  |  | 156 |  |  | 116 |
Net pension curtailments and settlements |  | (3,104) |  |  | — |  |  | — |  |  | — |
Acquisition |  | — |  |  | — |  |  | — |  |  | — |
Plan amendments |  | — |  |  | — |  |  | — |  |  | — |
Actuarial (gain) loss |  | (61,819) |  |  | (8,448) |  |  | (1,800) |  |  | (112) |
Benefit payments |  | (5,821) |  |  | (4,927) |  |  | (443) |  |  | (742) |
Foreign currency exchange rate changes and other |  | (3,108) |  |  | (2,861) |  |  | — |  |  | (18) |
Benefit obligation at end of year |  | 168,032 |  |  | 235,779 |  |  | 5,505 |  |  | 7,514 |
Change in plan assets |  |  |  |  |  |  |  |
Fair value of plan assets at beginning of year |  | 227,340 |  |  | 226,176 |  |  | — |  |  | — |
Plan settlements |  | (3,104) |  |  | — |  |  | — |  |  | — |
Acquisition |  | — |  |  | — |  |  | — |  |  | — |
Actual return on plan assets |  | (53,283) |  |  | 5,769 |  |  | — |  |  | — |
Employer contributions |  | 831 |  |  | 955 |  |  | — |  |  | — |
Employee contributions |  | 786 |  |  | 878 |  |  | — |  |  | — |
Benefit payments from fund |  | (6,175) |  |  | (5,399) |  |  | — |  |  | — |
Foreign currency exchange rate changes and other |  | (1,799) |  |  | (1,039) |  |  | — |  |  | — |
Fair value of plan assets at end of year |  | 164,596 |  |  | 227,340 |  |  | — |  |  | — |
Funded status at end of year |  | $ | (3,436) |  |  | $ | (8,439) |  |  | $ | (5,505) |  |  | $ | (7,514) |
Amounts recognized in the Consolidated Balance Sheets consist of: |  |  |  |  |  |  |  |
Other assets |  | $ | 11,761 |  |  | $ | 18,566 |  |  | $ | — |  |  | $ | — |
Other liabilities and accrued items |  | (536) |  |  | (1,662) |  |  | (754) |  |  | (754) |
Retirement and post-employment benefits |  | (14,661) |  |  | (25,343) |  |  | (4,751) |  |  | (6,760) |
Net amount recognized |  | $ | (3,436) |  |  | $ | (8,439) |  |  | $ | (5,505) |  |  | $ | (7,514) |
The benefit obligation decreased in 2022 due to actuarial gains that were driven by increases in the discount rate. The following amounts are included within accumulated other comprehensive loss at December 31, 2022:
|  | Pension Benefits |  | Other Benefits
(Thousands) |  | 2022 |  | 2021 |  | 2022 |  | 2021
Amounts recognized in other comprehensive income (before tax) consist of: |  |  |  |  |  |  |  |
Net actuarial loss (gain) |  | $ | 43,039 |  |  | $ | 42,440 |  |  | $ | (5,573) |  |  | $ | (4,044) |
Net prior service cost (credit) |  | (617) |  |  | (695) |  |  | (556) |  |  | (2,054) |
Net transition obligation/(asset) |  | — |  |  | 637 |  |  | — |  |  | — |
Net amount recognized |  | $ | 42,422 |  |  | $ | 42,382 |  |  | $ | (6,129) |  |  | $ | (6,098) |
The following table provides information regarding the accumulated benefit obligation:
|  | Pension Benefits |  | Other Benefits
(Thousands) |  | 2022 |  | 2021 |  | 2022 |  | 2021
Additional information |  |  |  |  |  |  |  |
Accumulated benefit obligation for all defined benefit pension plans |  | $ | 167,366 |  |  | $ | 233,717 |  |  | $ | — |  |  | $ | — |
For defined benefit pension plans with benefit obligations in excess of plan assets: |  |  |  |  |  |  |  |
Aggregate benefit obligation |  | 18,490 |  |  | 58,052 |  |  | — |  |  | — |
Aggregate fair value of plan assets |  | 3,279 |  |  | 33,148 |  |  | — |  |  | — |
For defined benefit pension plans with accumulated benefit obligations in excess of plan assets: |  |  |  |  |  |  |  |
Aggregate accumulated benefit obligation |  | 17,833 |  |  | 56,043 |  |  | — |  |  | — |
Aggregate fair value of plan assets |  | 3,279 |  |  | 33,148 |  |  | — |  |  | — |
The following table summarizes components of net benefit cost:
|  | Pension Benefits |  | Other Benefits
(Thousands) |  | 2022 |  | 2021 |  | 2020 |  | 2022 |  | 2021 |  | 2020
Net benefit cost |  |  |  |  |  |  |  |  |  |  |  |
Service cost |  | $ | 1,231 |  |  | $ | 1,722 |  |  | $ | 1,403 |  |  | $ | 78 |  |  | $ | 80 |  |  | $ | 59 |
Interest cost |  | 4,874 |  |  | 4,186 |  |  | 5,234 |  |  | 156 |  |  | 116 |  |  | 213 |
Expected return on plan assets |  | (9,570) |  |  | (9,881) |  |  | (9,333) |  |  | — |  |  | — |  |  | — |
Amortization of prior service credit |  | (78) |  |  | (82) |  |  | — |  |  | (1,497) |  |  | (1,497) |  |  | (1,497) |
Recognized net actuarial loss (gain) |  | 1,701 |  |  | 2,344 |  |  | 1,678 |  |  | (272) |  |  | (275) |  |  | (332) |
Net periodic benefit (credit) cost |  | (1,842) |  |  | (1,711) |  |  | (1,018) |  |  | (1,535) |  |  | (1,576) |  |  | (1,557) |
Net pension curtailments and settlements |  | (551) |  |  | — |  |  | 94 |  |  | — |  |  | — |  |  | — |
Total net benefit (credit) cost |  | $ | (2,393) |  |  | $ | (1,711) |  |  | $ | (924) |  |  | $ | (1,535) |  |  | $ | (1,576) |  |  | $ | (1,557) |
Components of net periodic benefit cost, other than service cost, are included in Other non-operating (income) expense in the Consolidated Statements of Income. Additionally, Pension Benefit Guaranty Corporation premiums are reported within expected return on plan assets. The following table summarizes amounts recognized in other comprehensive income (OCI):
| Pension Benefits |  | Other Benefits
(Thousands) | 2022 |  | 2021 |  | 2020 |  | 2022 |  | 2021 |  | 2020
Change in other comprehensive income |  |  |  |  |  |  |  |  |  |  |
OCI at beginning of year | $ | 42,382 |  |  | $ | 48,673 |  |  | $ | 48,073 |  |  | $ | (6,098) |  |  | $ | (7,525) |  |  | $ | (9,578) |
Increase (decrease) in OCI: |  |  |  |  |  |  |  |  |  |  |
Recognized during year — prior service cost (credit) | 78 |  |  | 82 |  |  | — |  |  | 1,497 |  |  | 1,497 |  |  | 1,497 |
Recognized during year — net actuarial (losses) gains | (1,701) |  |  | (2,344) |  |  | (1,678) |  |  | 272 |  |  | 275 |  |  | 332 |
Occurring during year — prior service cost | — |  |  | — |  |  | (799) |  |  | — |  |  | — |  |  | — |
Occurring during year — net actuarial losses (gains) | 1,112 |  |  | (4,553) |  |  | 3,146 |  |  | (1,800) |  |  | (345) |  |  | 224 |
Other adjustments | 551 |  |  | — |  |  | (94) |  |  | — |  |  | — |  |  | — |
Foreign currency exchange rate changes |  |  | 524 |  |  | 25 |  |  | — |  |  | — |  |  | — |
OCI at end of year | $ | 42,422 |  |  | $ | 42,382 |  |  | $ | 48,673 |  |  | $ | (6,129) |  |  | $ | (6,098) |  |  | $ | (7,525) |
In determining the projected benefit obligation and the net benefit cost, as of a December 31 measurement date, the Company used the following assumptions:
|  | Pension Benefits |  | Other Benefits
|  | 2022 |  | 2021 |  | 2020 |  | 2022 |  | 2021 |  | 2020
Assumptions used to determine benefit obligations at fiscal year end |  |  |  |  |  |  |  |  |  |  |  |
Discount rate |  | 2.16% - 5.54% |  | 0.22% - 3.02% |  | 0.03% - 2.76% |  | 5.52 | % |  | 2.90 | % |  | 2.45 | %
Rate of compensation increase |  | 1.75% - 3.00% |  | 1.50% - 3.00% |  | 1.50% - 3.00% |  | 3.50 | % |  | 3.00 | % |  | 3.00 | %
Assumptions used to determine net cost for the fiscal year |  |  |  |  |  |  |  |  |  |  |  |
Discount rate |  | 0.22% - 3.02% |  | 0.03% - 2.76% |  | 0.21% - 3.48% |  | 2.90 | % |  | 2.45 | % |  | 3.20 | %
Expected long-term return on plan assets |  | 1.20% - 5.25% |  | 1.20% - 5.75% |  | 1.80% - 6.00% |  | N/A |  | N/A |  | N/A
Rate of compensation increase |  | 1.50% - 3.00% |  | 1.50% - 3.00% |  | 1.50% - 3.00% |  | 3.00 | % |  | 3.00 | % |  | 3.00 | %
Discount Rate. The discount rate used to determine the present value of the projected and accumulated benefit obligation at the end of each year is established based upon the available market rates for high quality, fixed income investments whose maturities match the plan’s projected cash flows. The Company uses a spot-rate approach to estimate the service and interest cost components of net periodic benefit cost for its defined benefit pension plans. The spot-rate approach applies separate discount rates for each projected benefit payment in the calculation. Expected Long-Term Return on Plan Assets. Management establishes the domestic expected long-term rate of return assumption by reviewing historical trends and analyzing the current and projected market conditions in relation to the plan’s asset allocation and risk management objectives. Consideration is given to both recent plan asset performance as well as plan asset performance over various long-term periods of time, with an emphasis on the assumption being a prospective, long-term rate of return. Management consults with and considers the opinions of its outside investment advisers and actuaries when establishing the rate and reviews assumptions with the Audit Committee of the Board of Directors. Rate of Compensation Increase. The rate of compensation increase assumption is no longer applicable for the domestic defined benefit due to the Company freezing the plan effective January 1, 2020. The rate of compensation assumption to determine the benefit obligation and net cost for the domestic retiree medical plan was 3.5% in 2022 and 3.0% in both 2022 and 2021. Assumptions for the defined benefit pension plans in Germany, Liechtenstein, and England are determined separately from the U.S. plan assumptions, based on historical trends and current and projected market conditions in each respective country. One plan in Germany is unfunded.
Assumed health care trend rates at fiscal year end |  | 2022 |  | 2021
Health care trend rate assumed for next year |  | 6.00% |  | 6.00%
Rate that the trend rate gradually declines to (ultimate trend rate) |  | 5.00% |  | 5.00%
Year that the rate reaches the ultimate trend rate |  | 2032 |  | 2028
Plan Assets The following tables present the fair values of the Company’s defined benefit pension plan assets as of December 31, 2022 and 2021 by asset category. The Company has some investments that are valued using net asset value (NAV) as the practical expedient and have not been classified in the fair value hierarchy. Refer to Note R for definitions of the fair value hierarchy.
|  | December 31, 2022
(Thousands) |  | Total |  | Level 1 |  | Level 2 |  | Level 3
Cash |  | $ | 1,058 |  |  | $ | 1,058 |  |  | $ | — |  |  | $ | — |
Equity securities (a) |  | 37,083 |  |  | 37,083 |  |  | — |  |  | — |
Fixed-income securities (b) |  | 13,314 |  |  | 13,314 |  |  | — |  |  | — |
Other types of investments: |  |  |  |  |  |  |  |
Real estate fund (c) |  | 3,115 |  |  | 3,115 |  |  | — |  |  | — |
Total |  | 54,570 |  |  | 54,570 |  |  | — |  |  | — |
Investments measured at NAV: (d) |  |  |  |  |  |  |  |
Pooled investment fund (e) |  | 103,142 |  |  |  |  |  |  |
Multi-strategy hedge funds (f) |  | 6,812 |  |  |  |  |  |  |
Private equity funds |  | 72 |  |  |  |  |  |  |
Total assets at fair value |  | $ | 164,596 |  |  |  |  |  |  |
|  | December 31, 2021
(Thousands) |  | Total |  | Level 1 |  | Level 2 |  | Level 3
Cash |  | $ | 4,777 |  |  | $ | 4,777 |  |  | $ | — |  |  | $ | — |
Equity securities (a) |  | 49,618 |  |  | 49,618 |  |  | — |  |  | — |
Fixed-income securities (b) |  | 14,344 |  |  | 14,344 |  |  | — |  |  | — |
Other types of investments: |  |  |  |  |  |  |  |
Real estate fund (c) |  | 3,258 |  |  | 3,258 |  |  | — |  |  | — |
Total |  | 71,997 |  |  | 71,997 |  |  | — |  |  | — |
Investments measured at NAV: (d) |  |  |  |  |  |  |  |
Pooled investment fund (e) |  | 147,832 |  |  |  |  |  |  |
Multi-strategy hedge funds (f) |  | 7,438 |  |  |  |  |  |  |
Private equity funds |  | 73 |  |  |  |  |  |  |
Total assets at fair value |  | $ | 227,340 |  |  |  |  |  |  |
(a)Equity securities are primarily comprised of corporate stock and mutual funds directly held by the plans. Equity securities are valued using the closing price reported on the active market on which the individual securities are traded. (b)Fixed income securities are primarily comprised of governmental and corporate bonds directly held by the plans. Governmental and corporate bonds are valued using both market observable inputs for similar assets that are traded on an active market and the closing price on the active market on which the individual securities are traded. (c)Includes a mutual fund that typically invests at least 80% of its assets in equity and debt securities of companies in the real estate industry or related industries or in companies which own significant real estate assets at the time of investment. (d)Certain assets that are measured at fair value using the NAV practical expedient have not been classified in the fair value hierarchy. (e)Pooled investment fund consists of various investment types including equity investments covering a range of geographies and including investment managers that hold long and short positions, property investments, and other multi-strategy funds which combine a range of different credit, equity, and macro-orientated ideas and dynamically allocate funds across asset classes. (f)Includes a fund that invests in a broad portfolio of hedge funds. The Company’s domestic defined benefit pension plan investment strategy, as approved by the Governance and Organization Committee of the Board of Directors, is to employ an allocation of investments that will generate returns equal to or better than the projected long-term growth of pension liabilities so that the plan will be self-funding. The return objective is to maximize investment return to achieve and maintain a 100% funded status over time, taking into consideration required cash contributions. The allocation of investments is designed to maximize the advantages of diversification while mitigating the risk and overall portfolio volatility to achieve the return objective. Risk is defined as the annual variability in value and is measured in terms of the standard deviation of investment return. Under the Company’s investment policies, allowable investments include domestic equities, international equities, fixed income securities, cash equivalents, and alternative securities (which include real estate, private venture capital investments, hedge funds, and tactical asset allocation). Ranges, in terms of a percentage of the total assets, are established for each allowable class of security. Derivatives may be used to hedge an existing security or as a risk reduction strategy. Current asset allocation guidelines are to invest 0% to 40% in equity securities, 60% to 90% in fixed income securities and cash, and up to 20% in alternative securities. Management reviews the asset allocation on a quarterly or more frequent basis and makes revisions as deemed necessary. None of the plan assets noted above are invested in the Company’s common stock. Cash Flows Employer Contributions. The Company does not expect to contribute to its domestic defined benefit pension plan in 2023. All plan participants with an accrued benefit may elect an immediate payout in lieu of their future monthly annuity if the lump sum amount does not exceed $100,000. Estimated Future Benefit Payments. The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:
|  | Other Benefits
(Thousands) |  | Pension Benefits |  | Gross Benefit Payment |  | Net of Medicare Part D Subsidy
2023 |  | 7,565 |  |  | 767 |  |  | 767 |
2024 |  | 8,174 |  |  | 679 |  |  | 679 |
2025 |  | 8,880 |  |  | 608 |  |  | 608 |
2026 |  | 9,773 |  |  | 518 |  |  | 518 |
2027 |  | 10,638 |  |  | 478 |  |  | 478 |
2028 through 2032 |  | 56,634 |  |  | 1,815 |  |  | 1,815 |
Other Benefit Plans In addition to the plans shown above, the Company also has certain foreign subsidiaries with accrued unfunded pension and other post-employment arrangements. The liability for these arrangements was $0.5 million at December 31, 2022 and $1.1 million at December 31, 2021, and was included in retirement and post-employment benefits on the Consolidated Balance Sheets. The Company also sponsors defined contribution plans available to substantially all U.S. employees. The Company’s annual defined contribution expense, including the expense for the enhanced defined contribution plan, was $13.1 million in 2022, $9.9 million in 2021, and $9.8 million in 2020.

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