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Retirement Plans And Postretirement Benefits | 12 Months Ended
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Dec. 31, 2023
Retirement Benefits, Description [Abstract] |
Retirement Plans And Postretirement Benefits | Retirement Plans and Post-Employment Benefits Retirement Plans On February 26, 1991, we formed our own retirement plan covering substantially all our U.S. employees. Under our plan, covered employees earned benefit payments based primarily on their service credits and wages subsequent to February 26, 1991. Prior to that date, substantially all our U.S. employees were participants in the U.S. retirement plan of Union Carbide Corporation (“Union Carbide”). While service credit was frozen, covered employees continued to earn benefits under the Union Carbide plan based on their final average wages through February 26, 1991, adjusted for salary increases (not to exceed six percent per annum) through January 26, 1995, the date Union Carbide ceased to own a minimum 50% of the equity of GTI. The Union Carbide plan is responsible for paying retirement and death benefits earned as of February 26, 1991. Effective January 1, 2002, we established a defined contribution plan for U.S. employees. Certain employees had the option to remain in our defined benefit plan for an additional period of up to five years. Employees not covered by this option had their benefits under our defined benefit plan frozen as of December 31, 2001, and began participating in the defined contribution plan. Effective March 31, 2003, we curtailed our qualified benefit plan and the benefits were frozen as of that date for the U.S. employees who had the option to remain in our defined benefit plan. We also closed our non-qualified U.S. defined benefit plan for the participating salaried workforce. The employees began participating in the defined contribution plan as of April 1, 2003. Pension coverage for employees of foreign subsidiaries is provided, to the extent deemed appropriate, through separate plans. Obligations under such plans are systematically provided for by depositing funds with trustees, under insurance policies or by book reserves. The components of our consolidated net pension costs are set forth in the following table:
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
| U.S. |  | Foreign |  | U.S. |  | Foreign |  | U.S. |  | Foreign
| (Dollars in thousands)
Service cost | $ | 1,483 |  |  | $ | 1,053 |  |  | $ | 1,390 |  |  | $ | 1,220 |  |  | $ | 1,328 |  |  | $ | 1,349 |
Interest cost | 4,722 |  |  | 870 |  |  | 3,242 |  |  | 227 |  |  | 2,962 |  |  | 111 |
Expected return on assets | (4,353) |  |  | (1,145) |  |  | (3,960) |  |  | (640) |  |  | (4,213) |  |  | (545) |
Mark-to-market (gain) loss | (2,513) |  |  | 4,395 |  |  | (181) |  |  | (7,801) |  |  | (2,428) |  |  | (1,327) |
Net periodic benefit (credit) cost | $ | (661) |  |  | $ | 5,173 |  |  | $ | 491 |  |  | $ | (6,994) |  |  | $ | (2,351) |  |  | $ | (412) |
The mark-to-market loss in 2023 was the result of an unfavorable change in the discount rate on our foreign plans. The mark-to-market gain in 2022 was primarily the result of a favorable change in the discount rate, partially offset by a worse than expected return on plan assets. The mark-to-market gain in 2021 was the result of a favorable change in the discount rate and favorable foreign currency translation, as well as a better than expected return on plan assets, particularly for the U.S. plans. The reconciliation of the beginning and ending balances of our pension plans’ benefit obligations, fair value of assets, and funded status at December 31, 2023 and 2022 are shown below.
| December 31, 2023 |  | December 31, 2022
| U.S. |  | Foreign |  | U.S. |  | Foreign
| (Dollars in thousands)
Changes in Benefit Obligation: |  |  |  |  |  |  |
Net benefit obligation at beginning of period | $ | 99,993 |  |  | $ | 31,065 |  |  | $ | 129,906 |  |  | $ | 38,571 |
Service cost | 1,483 |  |  | 1,053 |  |  | 1,390 |  |  | 1,220 |
Interest cost | 4,722 |  |  | 870 |  |  | 3,242 |  |  | 227 |
Participant contributions | — |  |  | 501 |  |  | — |  |  | 557 |
Plan settlements | — |  |  | (1,609) |  |  | — |  |  | — |
Foreign currency exchange changes | — |  |  | 2,983 |  |  | — |  |  | (660) |
Actuarial loss (gain) | 1,516 |  |  | 3,694 |  |  | (24,202) |  |  | (7,293) |
Benefits paid | (10,392) |  |  | (1,076) |  |  | (10,343) |  |  | (1,557) |
Net benefit obligation at end of period | $ | 97,322 |  |  | $ | 37,481 |  |  | $ | 99,993 |  |  | $ | 31,065 |
Changes in Plan Assets: |  |  |  |  |  |  |
Fair value of plan assets at beginning of period | $ | 80,006 |  |  | $ | 27,708 |  |  | $ | 109,961 |  |  | $ | 26,913 |
Actual return on plan assets | 8,382 |  |  | 645 |  |  | (20,061) |  |  | 1,148 |
Foreign currency exchange rate changes | — |  |  | 2,609 |  |  | — |  |  | (325) |
Plan settlements | — |  |  | (1,609) |  |  | — |  |  | — |
Employer contributions | 400 |  |  | 1,203 |  |  | 449 |  |  | 972 |
Participant contributions | — |  |  | 501 |  |  | — |  |  | 557 |
Benefits paid | (10,392) |  |  | (1,076) |  |  | (10,343) |  |  | (1,557) |
Fair value of plan assets at end of period | $ | 78,396 |  |  | $ | 29,981 |  |  | $ | 80,006 |  |  | $ | 27,708 |
Funded status (underfunded): | $ | (18,926) |  |  | $ | (7,500) |  |  | $ | (19,987) |  |  | $ | (3,357) |
Amounts recognized in the statement of financial position: |  |  |  |  |  |  |
Other accrued liabilities | $ | (324) |  |  | $ | (34) |  |  | $ | (409) |  |  | $ | (167) |
Other long-term obligations | (18,602) |  |  | (7,466) |  |  | (19,578) |  |  | (3,190) |
Net amount recognized | $ | (18,926) |  |  | $ | (7,500) |  |  | $ | (19,987) |  |  | $ | (3,357) |
The accumulated benefit obligation for all defined benefit pension plans was $133.1 million and $129.5 million as of December 31, 2023 and 2022, respectively. Plan Assets The accounting guidance on fair value measurements specifies a hierarchy based on the observability of inputs used in valuation techniques (Level 1, 2 and 3). See Note 8, “Fair Value Measurements and Derivative Instruments" for a discussion of the fair value hierarchy. The following describes the methods and significant assumptions used to estimate the fair value of the investments: Cash and cash equivalents – Valued at cost. Cash equivalents are valued at net asset value as provided by the administrator of the fund. Foreign government bonds – Valued by the trustees using various pricing services of financial institutions. Fixed insurance contracts – Valued at the present value of the guaranteed payment streams. Collective trusts – Valued at the net asset value provided by the administrator of the fund (the practical expedient). The net asset value is primarily based on quoted market prices of the underlying securities for which quoted market prices of the underlying securities of the funds. Some of the underlying investments include securities for which quoted market prices are not available and are valued using data obtained by the trustee from the best available source or market value. This method may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although we believe its valuation method is appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine fair value of certain financial instruments could result in a different fair value measurement at the reporting date. The fair value of other plan assets by category is summarized below (dollars in thousands):
| December 31, 2023
Level 1 |  | Level 2 |  | Level 3 |  | Total
U.S. Plan Assets |  |  |  |  |  |  |
Cash and cash equivalents | $ | 710 |  |  | $ | — |  |  | $ | — |  |  | $ | 710 |
International Plan Assets |  |  |  |  |  |  |
Foreign government bonds | — |  |  | 961 |  |  | — |  |  | 961 |
Fixed insurance contracts | — |  |  | — |  |  | 29,020 |  |  | 29,020 |
Total international plan assets | $ | — |  |  | $ | 961 |  |  | $ | 29,020 |  |  | $ | 29,981 |
U.S. Plan - Investments measured at net asset value |  |  |  |  |  |  | $ | 77,686 |
Total | $ | 710 |  |  | $ | 961 |  |  | $ | 29,020 |  |  | $ | 108,377 |
| December 31, 2022
| Level 1 |  | Level 2 |  | Level 3 |  | Total
U.S. Plan Assets |  |  |  |  |  |  |
Cash and cash equivalents | $ | 706 |  |  | $ | — |  |  | $ | — |  |  | $ | 706 |
International Plan Assets |  |  |  |  |  |  |
Foreign government bonds | $ | — |  |  | $ | 1,023 |  |  | $ | — |  |  | $ | 1,023 |
Fixed insurance contracts | — |  |  | — |  |  | 26,685 |  |  | 26,685 |
Total international plan assets | $ | — |  |  | $ | 1,023 |  |  | $ | 26,685 |  |  | $ | 27,708 |
U.S. Plan - Investments measured at net asset value |  |  |  |  |  |  | $ | 79,300 |
Total | $ | 706 |  |  | $ | 1,023 |  |  | $ | 26,685 |  |  | $ | 107,714 |
The following table presents the changes for those financial instruments classified within Level 3 of the valuation hierarchy for international plan pension assets for the years ended December 31, 2023 and 2022 (dollars in thousands):
| Fixed Insurance Contracts
Balance at December 31, 2021 | $ | 26,003 |
Gain / contributions / currency impact | 864 |
Distributions | (182) |
Balance at December 31, 2022 | 26,685 |
Gain / contributions / currency impact | 2,489 |
Distributions | (154) |
Balance at December 31, 2023 | $ | 29,020 |
We annually re-evaluate assumptions and estimates used in projecting pension assets, liabilities and expenses. These assumptions and estimates may affect the carrying value of pension assets, liabilities and expenses in our Consolidated Financial Statements. Assumptions used to determine net pension costs and projected benefit obligations are:
Pension Benefit Obligations Key Assumptions | December 31,
| 2023 |  | 2022
Weighted average assumptions to determine benefit obligations: |  |  |
Discount rate | 3.93 | % |  | 4.43 | %
Rate of compensation increase | 1.70 | % |  | 1.71 | %
Pension Cost Key Assumptions |  |  |
Weighted average assumptions to determine net cost: |  |  |
Discount rate | 4.43 | % |  | 2.14 | %
Expected return on plan assets | 5.30 | % |  | 3.50 | %
Rate of compensation increase | 1.71 | % |  | 1.46 | %
We adjust our discount rate annually in relation to the rate at which the benefits could be effectively settled. Discount rates are set for each plan in reference to the yields available on AA-rated corporate bonds of appropriate currency and duration. The appropriate discount rate is derived by developing an AA-rated corporate bond yield curve in each currency. The discount rate for a given plan is the rate implied by the yield curve for the duration of that plan’s liabilities. In certain countries, where little public information is available on which to base discount rate assumptions, the discount rate is based on government bond yields or other indices and approximate adjustments to allow for the differences in weighted durations for the specific plans and/or allowance for assumed credit spreads between government and AA-rated corporate bonds. The expected return on assets assumption represents our best estimate of the long-term return on plan assets and generally was estimated by computing a weighted average return of the underlying long-term expected returns on the different asset classes, based on the target asset allocations. The expected return on assets assumption is a long-term assumption that is expected to remain the same from one year to the next unless there is a significant change in the target asset allocation, the fees and expenses paid by the plan or market conditions. The rate of compensation increase is based on the long-term inflation rate projection of the jurisdictions where we have active plans and on any incremental change due to merit or productivity. Plan Assets. The following table presents our retirement plan weighted average asset allocations at December 31, 2023, by asset category:
| Percentage of Plan Assets December 31, 2023
| U.S. |  | Foreign
Equity securities and return seeking assets | 20 | % |  | — | %
Fixed income, debt securities, or cash | 80 | % |  | 100 | %
Total | 100 | % |  | 100 | %
Investment Policy and Strategy. The investment policy and strategy of the U.S. plan is to invest approximately 20% in equities and return seeking assets and approximately 80% in fixed income securities. Rebalancing is undertaken monthly. To the extent we maintain plans in other countries, target asset allocation is 100% fixed income investments. For each plan, the investment policy is set within both asset return and local statutory requirements. Information for our pension plans with an accumulated benefit obligation in excess of plan assets at December 31, 2023 and 2022 follows:
| 2023 |  | 2022
| U.S. |  | Foreign |  | U.S. |  | Foreign
| (Dollars in thousands)
Accumulated benefit obligation | $ | 97,322 |  |  | $ | 35,772 |  |  | $ | 99,993 |  |  | $ | 1,884 |
Fair value of plan assets | 78,396 |  |  | 29,981 |  |  | 80,006 |  |  | — |
Information for our pension plans with a projected benefit obligation in excess of plan assets at December 31, 2023 and 2022 follows:
| 2023 |  | 2022
| U.S. |  | Foreign |  | U.S. |  | Foreign
| (Dollars in thousands)
Projected benefit obligation | $ | 97,322 |  |  | $ | 37,481 |  |  | $ | 99,993 |  |  | $ | 31,065 |
Fair value of plan assets | 78,396 |  |  | 29,981 |  |  | 80,006 |  |  | 27,708 |
Following is our projected future pension plan cash flow by year:
| U.S. |  | Foreign
| (Dollars in thousands)
Expected contributions in 2024: |  |  |
Expected employer contributions | $ | 4,709 |  |  | $ | 677 |
Expected employee contributions | — |  |  | — |
Estimated future benefit payments reflecting expected future service for the years ending December 31: |  |  |
2024 | $ | 9,021 |  |  | $ | 3,152 |
2025 | 8,912 |  |  | 1,411 |
2026 | 8,826 |  |  | 2,673 |
2027 | 8,596 |  |  | 2,177 |
2028 | 8,379 |  |  | 1,723 |
Next five years | 37,440 |  |  | 11,850 |
Post-Employment Benefit Plans We have legacy post-employment medical coverage and life insurance benefits for eligible retired employees in the U.S. and in certain foreign jurisdictions. Effective December 31, 2005, all U.S. post-employment medical coverage plans were frozen. The post-employment benefit plans are un-funded and our periodic contributions correspond to the amount of benefits paid in the period. Our funding contributions were $1.3 million and $1.2 million in 2023 and 2022, respectively. The estimated liability for post-employment benefit plans was $14.3 million and $13.5 million as of December 31, 2023 and 2022, respectively. The Company recognized expense of $2.0 million in 2023, income of $0.9 million in 2022 and expense of $0.5 million in 2021 in the Consolidated Statement of Operations for post-employment benefits. Included in post-employment benefit expense are mark-to-market losses of $1.1 million in 2023 and mark-to-market gains of $1.6 million and $0.1 million in 2022 and 2021, respectively. Savings Plan Our employee savings plan provides eligible employees the opportunity for long-term savings and investment. The plan allows employees to contribute up to 5% of pay as a basic contribution and an additional 45% of pay as supplemental contribution. The Company's contributions to our savings plan were $3.0 million in both 2023 and 2022 and $2.5 million in 2021.

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