Note

– Pensions and Other Postretirement Benefits

The Company sponsors a defined benefit pension plan (“Plan”) covering certain domestic employees. Benefits are based on each covered employee’s years of service and compensation. The Plan is funded in conformity with the funding requirements of applicable U.S. regulations. The Plan was closed to new participants effective

January

2008.

Employees hired after this date, in eligible locations, participate in an enhanced

401

(k) plan instead of the defined benefit pension plan. Employees hired prior to this date continue to accrue benefits.

Additionally, the Company sponsors defined contribution pension plans made available to all domestic and Canadian employees. Total contributions to the plans were

$2.3

million for

2019,

$2.2

million for

2018

and

$1.9

million for

2017.

The Company also sponsors a non-contributory defined benefit postretirement health care plan that provides health benefits to certain domestic and Canadian retirees and eligible spouses and dependent children. The Company funds the cost of these benefits as incurred. For measurement purposes, and based on maximum benefits as defined by the plan, a

annual rate of increase in the per capita cost of covered health care benefits for all retirees was assumed in estimating the projected postretirement benefit obligation at

December 31, 2019,

which is expected to remain constant going forward. A

zero

percent annual rate of increase was assumed in estimating the projected benefit obligation at

December 31, 2018

and in calculating

2019

periodic benefit cost.

The Company recognizes the obligations associated with its defined benefit pension plan and defined benefit postretirement health care plan in its Consolidated Financial Statements. The following table presents the plans’ funded status as of the measurement date,

December 31,

reconciled with amounts recognized in the Company’s Consolidated Balance Sheets:

	Pension Plan						Postretirement Plan
	201 9			201 8			201 9			201 8
Accumulated benefit obligation at end of year	$	66,900		$	56,408		$	26,055		$	23,679
Change in projected benefit obligation:
Benefit obligation at beginning of year	$	67,578		$	76,489		$	23,679		$	17,367
Service cost		2,204			2,408			1,083			775
Interest cost		2,454			2,552			941			561
Settlement		-			990			-			-
Benefits paid		(3,735	)		(8,504	)		(2,311	)		(2,536	)
Effect of foreign exchange		-			-			16			(42	)
Actuarial (gain) loss		12,824			(6,357	)		2,647			7,554
Benefit obligation at end of year	$	81,325		$	67,578		$	26,055		$	23,679

Change in plan assets:
Plan assets at beginning of year	$	72,395		$	80,802		$	-		$	-
Actual return on plan assets		11,625			(3,903	)		-			-
Employer contributions		-			4,000			2,311			2,536
Benefits paid		(3,735	)		(8,504	)		(2,311	)		(2,536	)
Plan assets at end of year		80,285			72,395			-			-
Funded status at end of year	$	(1,040	)	$	4,817		$	(26,055	)	$	(23,679	)

	Pension Plan						Postretirement Plan
	201 9			201 8			201 9			201 8
Amounts recognized in the Consolidated Balance Sheets consist of:
Noncurrent assets	$	-		$	4,817		$	-		$	-
Current liabilities		-			-			(1,602	)		(1,826	)
Noncurrent liabilities		(1,040	)		-			(24,453	)		(21,853	)
Total assets (liabilities)	$	(1,040	)	$	4,817		$	(26,055	)	$	(23,679	)

Amounts recognized in Accumulated other comprehensive loss consist of:
Net actuarial loss	$	26,192		$	23,158		$	5,205		$	2,596
Prior Service Cost		-			-			(4,383	)		(5,508	)
Deferred tax (benefit) expense		(6,499	)		(5,798	)		(132	)		732
After tax actuarial loss (gain)	$	19,693		$	17,360		$	690		$	(2,180	)

Components of net periodic benefit cost:
	201 9			2018			2017
Pension Plan
Service cost	$	2,204		$	2,408		$	2,727
Interest cost		2,454			2,552			2,537
Expected return on plan assets		(3,561	)		(4,481	)		(4,697	)
Recognized actuarial loss		1,726			1,577			1,770
Settlement loss		-			2,852			4,031
Net periodic benefit cost	$	2,823		$	4,908		$	6,368

Other changes in pension plan assets and benefit obligations recognized in other comprehensive loss:
Net loss (gain)	$	3,034		$	(1,413	)	$	(2,470	)
Total expense recognized in net periodic benefit cost and other comprehensive income	$	5,857		$	3,495		$	3,898

Postretirement Plan
Service cost	$	1,083		$	775		$	1,249
Interest cost		941			561			814
Prior service cost recognition		(1,129	)		(1,128	)		-
Recognized actuarial loss (gain)		27			(413	)		(677	)
Net periodic benefit (credit) cost	$	922		$	(205	)	$	1,386

Other changes in postretirement plan assets and benefit obligations recognized in other comprehensive loss:
Net loss (gain)	$	3,749		$	9,096		$	(4,105	)
Total expense (benefit) recognized in net periodic benefit cost and other comprehensive income	$	4,671		$	8,891		$	(2,719	)

The components of net periodic benefit cost other than the service cost component are included in Other income (expense), net in the Consolidated Statements of Income.

settlement loss was incurred in

2019.

During

2018

and

2017,

the Company recorded a settlement loss relating to retirees that received lump-sum distributions from the Company’s defined benefit pension plan totaling

$2.9

million and

$4.0

million, respectively. These charges were the result of lump-sum payments to retirees which exceeded the Plan’s actuarial service and interest cost thresholds.

The prior service cost is amortized on a straight-line basis over the average estimated remaining service period of active participants. The unrecognized actuarial gain or loss in excess of the greater of

10%

of the benefit obligation or the market value of plan assets is also amortized on a straight-line basis over the average estimated remaining service period of active participants.

	Pension Plan						Postretirement Plan
	201 9			201 8			201 9			201 8
Weighted-average assumptions used to determine benefit obligations at December 31:
Discount rate		2.83	%		3.94	%		3.08	%		4.13	%
Rate of compensation increase		3.50	%		3.50	%		–			–
Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31:
Discount rate		3.94	%		3.76	%		4.13	%		3.39	%
Expected long-term rate of return on plan assets		5.37	%		6.00	%		–			–
Rate of compensation increase		3.50	%		3.50	%		–			–

To enhance the Company’s efforts to mitigate the impact of the defined benefit pension plan on its financial statements, in

2014

the Company moved towards a liability driven investing model to more closely align assets with liabilities based on when the liabilities are expected to come due. Currently, based on

2019

funding levels, equities

may

comprise between

and

28%

of the Plan’s market value. Fixed income investments

may

comprise between

70%

and

90%

of the Plan’s market value. Alternative investments

may

comprise between

and

of the Plan’s market value. Cash and cash equivalents (including all senior debt securities with less than

one

year to maturity)

may

comprise between

and10%

of the Plan’s market value.

Financial instruments included in pension plan assets are categorized into a fair value hierarchy of

three

levels, based on the degree of subjectivity inherent in the valuation methodology. Level

assets are based on unadjusted quoted prices in active markets that are accessible to the reporting entity at the measurement date for identical assets. Level

assets are valued at inputs other than quoted prices in active markets for identical assets that are observable either directly or indirectly for substantially the full term of the assets. Level

assets are valued based on unobservable inputs for the asset (i.e., supported by little or

market activity). These inputs include management’s own assessments about the assumptions that market participants would use in pricing assets (including assumptions about risk). The level in the fair value hierarchy within which the fair value measurement is classified is determined based on the lowest level input that is significant to the fair value measure in its entirety.

The following tables set forth by asset class the Plan’s fair value of assets for the years ended

December 31, 2019

and

2018:

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Plan Assets at December 31, 2019
Equity	$	12,986	$	-	$	-	$	12,986
Fixed income		11,671		46,145		-		57,816
Mutual funds		1,992		-		-		1,992
Money funds and cash		3,103		4,388				7,491
Total fair value of Plan assets	$	29,752	$	50,533		-	$	80,285

	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservab l e Inputs (Level 3)		Plan Assets at December 31, 2018
Equity	$	10,144	$	-	$	3	$	10,147
Fixed income		9,768		44,333		-		54,101
Mutual funds		1,777		-		-		1,777
Money funds and cash		6,370		-		-		6,370
Total fair value of Plan assets	$	28,059	$	44,333	$	3	$	72,395

Contributions

The Company expects to contribute up to

million to its defined benefit pension plan in

2020.

Expected future benefit payments

The following benefit payments are expected to be paid as follows based on actuarial calculations:

	2020		2021		2022		2023		2024		Thereafter
Pension	$	12,283	$	5,146	$	5,662	$	5,125	$	5,881	$	27,567
Postretirement		1,627		1,515		1,478		1,509		1,544,		8,495

one

percentage point increase in the assumed health care trend rate would increase postretirement expense by approximately

$0.3

million, changing the benefit obligation by approximately

$2.3

million; while a

one

percentage point decrease in the assumed health care trend rate would decrease postretirement health care expense by approximately

$0.2

million, changing the benefit obligation by approximately

$2.1

million. For measurement purposes, and based on maximum benefits as defined by the plan, a

annual rate of increase in the per capita cost of covered health care benefits for all retirees was assumed as of

December 31, 2019,

which is expected to remain constant going forward. A

zero

percent annual rate of increase was assumed previously.

one

percentage point change in the assumed rate of return on the defined benefit pension plan assets is estimated to have an approximate

$0.7

million effect on net periodic benefit cost. Additionally, a

one

percentage point increase in the discount rate is estimated to have a

$1.3

million decrease in net periodic benefit cost, while a

one

percentage point decrease in the discount rate is estimated to have a

$1.5

million increase in net periodic benefit cost.