EMPLOYEE BENEFIT PLANS

12 Months Ended

Dec. 31, 2019

Pension plans

The Company has three frozen defined benefit pension plans covering certain employees or former employees of three U.S. subsidiaries. The Company also has pension plans covering certain employees of several foreign subsidiaries. The Company’s policy is to fund pension costs as required by law, which is consistent with the funding requirements of federal laws and regulations. Certain foreign subsidiaries maintain unfunded pension plans consistent with local practices and requirements.

The Company’s recorded liability for pensions is based on a number of assumptions, including discount rates, rates of return on investments, mortality rates, and other factors. Certain of these assumptions are determined by the Company with the assistance of outside actuaries. Assumptions are based on past experience and anticipated future trends. These assumptions are reviewed on a regular basis and revised when appropriate.

The following table provides the change in benefit obligation, change in plan assets, funded status, and amounts recognized in the Consolidated Balance Sheet of the defined benefit pension plans as of December 31, 2019 and 2018 (amounts in thousands):



Change in benefit obligation:	2019			2018
Benefit obligation at beginning of year	$	108,513		$	119,736
Plan amendments	(1,087		)	—
Service cost	765			626
Interest cost	4,385			4,330
Actuarial (gain) loss	9,114			(5,404		)
Benefits paid	(8,516		)	(9,376		)
Foreign currency translation	385			(1,399		)
Benefit obligation at end of year	$	113,559		$	108,513
Change in plan assets:
Fair value of plan assets at beginning of year	$	72,496		$	83,036
Actual return on plan assets	15,446			(5,669		)
Employer contributions	1,943			4,634
Benefits paid	(8,516		)	(9,376		)
Foreign currency translation	6			(129		)
Fair value of plan assets at end of year	$	81,375		$	72,496
Unfunded status at end of year	$	(32,184	)	$	(36,017	)
Amounts recognized in Consolidated Balance Sheet:
Noncurrent assets	$	1,016		$	930
Current liabilities	(2,120		)	(1,885		)
Noncurrent liabilities	(31,080		)	(35,062		)
Net amount recognized in the Consolidated Balance Sheet	$	(32,184	)	$	(36,017	)

The pension benefit obligation included $93.2 million of pension benefit obligation for the three frozen plans in the U.S. and $20.4 million of pension benefit obligation for plans at foreign subsidiaries. The fair value of plan assets included $79.8 million of plan assets for the three frozen plans in the U.S. and $1.6 million of plan assets for foreign plans.



Amounts recognized in accumulated other comprehensive loss:
	2019			2018
Unrecognized prior service cost	$	1,087		$	(71	)
Unrecognized net loss	(38,183		)	(43,458		)
Deferred tax effect of unrecognized items	10,952			15,752
Net amount recognized in accumulated other comprehensive loss	$	(26,144	)	$	(27,777	)



The weighted-average assumptions used in the actuarial computation that derived the benefit obligations at December 31 were as follows:	2019		2018
Discount rate	3.2	%	4.3	%
Expected long-term return on plan assets	6.9	%	6.9	%

The following table provides the components of net periodic pension cost for the plans, settlement cost, and the assumptions used in the measurement of the Company’s benefit obligation for the years ended December 31, 2019, 2018, and 2017 (amounts in thousands):



Components of net periodic benefit cost and other amounts recognized in other comprehensive income (loss)
Net periodic benefit cost:	2019			2018			2017
Service cost	$	765		$	626		$	598
Interest cost	4,385			4,330			4,672
Assumed return on assets	(4,737		)	(5,959		)	(5,472		)
Amortization of unrecognized prior service cost	49			137			137
Amortization of net unrecognized loss	3,238			2,784			2,696
Net periodic pension cost	$	3,700		$	1,918		$	2,631

Service cost is recorded as cost of sales in the Consolidated Statement of Operations while all other components are recorded in other income. The estimated net loss and prior service cost that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next fiscal year are $2.9 million and $(0.1) million, respectively.

The weighted-average assumptions used in the actuarial computation that derived net periodic pension cost for the years ended December 31, 2019, 2018, and 2017 were as follows:



	2019		2018		2017
Discount rate	5.0	%	5.3	%	5.8	%
Expected long-term return on plan assets	6.9	%	7.4	%	7.4	%

The allocation of the fair value of plan assets was as follows:



	Percentage of Plan Assets at December 31,				Target Allocation
Asset Category	2019		2018		2019
U.S. equities (a)	62	%	60	%	40% - 80%
Fixed income	22	%	30	%	20% - 50%
Cash and cash equivalents	7	%	6	%	0% - 20%
International equities (a)	7	%	4	%	0% - 16%
REITs	2	%	—	%
	100	%	100	%


(a)	Total equities may not exceed 80% of total plan assets.

The majority of the Company's foreign plans do not have plan assets. The foreign plans which have plan assets holds these plan assets in an insurance or money market fund.

The fair value of the plan assets by asset categories consisted of the following as of the dates set forth below (amounts in thousands):



	Fair Value Measurements as of December 31, 2019
	Total		Level 1		Level 2		Level 3
Money market funds	$	5,453	$	5,453	$	—	$	—
Common stock	33,675		33,675		—		—
Bonds and securities	4,592		4,592		—		—
Mutual and insurance funds	37,655		36,656		999		—
Totals	$	81,375	$	80,376	$	999	$	—
Assets measured at net asset value (a)	—
	$	81,375



	Fair Value Measurements as of December 31, 2018
	Total		Level 1		Level 2		Level 3
Money market funds	$	4,725	$	4,725	$	—	$	—
Common stock	28,581		28,581		—		—
Bonds and securities	5,958		5,958		—		—
Mutual and insurance funds	1,871		773		1,098		—
Totals	$	41,135	$	40,037	$	1,098	$	—
Assets measured at net asset value (a)	31,361
	$	72,496


(a)	Assets measured at net asset value consist of common / collective trusts.

The Company invests in a diversified portfolio consisting of an array of asset classes in an attempt to maximize returns while minimizing risk. These asset classes include U.S. equities, fixed income, cash and cash equivalents, international equities and REITs. The investment objectives are to provide for the growth and preservation of plan assets on a long-term basis through investments in: investment grade securities that provide investment returns that meet or exceed the Standard & Poor’s 500 Index and investment grade fixed income securities that provide investment returns that meet or exceed the Barclays Capital Aggregate Bond Index. The U.S. equities asset category included the Company’s common stock in the amount of $0.6 million (approximately one percent of total plan assets) at December 31, 2019, and $0.8 million (approximately one percent of total plan assets) at December 31, 2018.

The fair value of money market funds, stock, bonds, U.S. government securities and mutual funds is determined based on valuation for identical instruments in active markets.

The long-term rate of return for plan assets is determined using a weighted-average of long-term historical approximate returns on cash and cash equivalents, fixed income securities, and equity securities considering the anticipated investment allocation within the plans. The expected return on plan assets is anticipated to be 6.9% over the long-term. This rate assumes long-term historical returns of approximately 8.5% for equities and approximately 4.0% for fixed income securities using the plans’ target allocation percentages. Professional investment firms, none of which are Titan employees, manage the plan assets.

Although the 2020 minimum pension funding calculations are not finalized, the Company estimates those funding requirements will be approximately $4.8 million.

Projected benefit payments from the plans as of December 31, 2019, are estimated as follows (amounts in thousands):



2020	$	9,118
2021	8,510
2022	7,930
2023	7,968
2024	7,768
2025-2029	34,647

401(k)/Defined contribution plans

The Company sponsors two 401(k) retirement savings plans in the U.S. and a number of defined contribution plans at foreign subsidiaries. One U.S. plan is for the benefit of substantially all employees who are not covered by a collective bargaining arrangement. Titan provides a 50% matching contribution in the form of the Company’s common stock on the first 6% of the employee’s contribution in this plan. The Company issued 266,121 shares, 54,517 shares and 49,242 shares of treasury stock in connection with this 401(k) plan during 2019, 2018, and 2017, respectively. Expenses to the Company related to this common stock matching contribution were $1.2 million, $0.6 million, and $0.5 million for 2019, 2018, and 2017, respectively. The other U.S. 401(k) plan is for employees covered by collective bargaining agreements and does not include a Company matching contribution. Expenses related to foreign defined contribution plans were $3.9 million, $4.1 million, and $3.8 million for 2019, 2018, and 2017, respectively.