Pensions and Other Post-retirement Benefits

We maintain various defined benefit and defined contribution plans covering the majority of our employees. Our principal U.S. plan is funded in compliance with the Employee Retirement Income Security Act (ERISA). It is our general policy to fund current costs for the international plans, except in Germany and Mexico, where it is common practice and permissible under tax laws to accrue book reserves.

We provide health care benefits and limited life insurance for certain retired employees who are covered by our principal U.S. defined benefit pension plan until they become Medicare-eligible.

Information pertaining to defined benefit pension plans and other post-retirement benefits plans is provided in the following table:



	Pension Benefits						Other Benefits
(In thousands)	2015			2014			2015			2014
Change in Benefit Obligations
Benefit obligations at January 1	$	519,194		$	440,359		$	26,851		$	26,732
Service cost	11,517			9,425			444			538
Interest cost	18,314			19,340			863			1,107
Participant contributions	105			130			255			259
Plan amendments	604			(302		)	—			—
Actuarial (gains) losses	(21,073		)	88,069			(3,998		)	(200		)
Benefits paid	(19,261		)	(19,193		)	(1,441		)	(1,585		)
Settlements	(2,094		)	(717		)	—			—
Currency translation	(16,126		)	(17,917		)	—			—
Benefit obligations at December 31	491,180			519,194			22,974			26,851
Change in Plan Assets
Fair value of plan assets at January 1	445,299			434,569			—			—
Actual return on plan assets	(4,754		)	30,209			—			—
Employer contributions	4,058			4,077			1,186			1,326
Participant contributions	105			130			255			259
Settlements	(2,094		)	(717		)	—			—
Benefits paid	(16,979		)	(16,507		)	(1,441		)	(1,585		)
Reimbursement of German benefits	(2,282		)	(2,686		)	—			—
Administrative Expenses Paid	6			—			—			—
Currency translation	(4,271		)	(3,776		)	—			—
Fair value of plan assets at December 31	419,088			445,299			—			—
Funded Status
Funded status at December 31	(72,092		)	(73,895		)	(22,974		)	(26,851		)
Unrecognized transition losses	12			16			—			—
Unrecognized prior service cost (credit)	525			10			(1,524		)	(1,858		)
Unrecognized net actuarial losses	188,531			192,692			2,117			6,450
Net amount recognized	116,976			118,823			(22,381		)	(22,259		)
Amounts Recognized in the Balance Sheet
Noncurrent assets	62,072			75,017			—			—
Current liabilities	(5,033		)	(5,380		)	(1,382		)	(1,457		)
Noncurrent liabilities	(129,131		)	(143,532		)	(21,592		)	(25,394		)
Net amount recognized	(72,092		)	(73,895		)	(22,974		)	(26,851		)
Amounts Recognized in Accumulated Other Comprehensive Loss
Net actuarial losses	188,531			192,692			2,425			6,450
Prior service cost (credit)	525			10			(1,523		)	(1,858		)
Unrecognized net initial obligation	12			16			—			—
Total (before tax effects)	189,068			192,718			902			4,592
Accumulated Benefit Obligations for all Defined Benefit Plans	453,382			479,764			—			—



	Pension Benefits									Other Benefits
(In thousands)	2015			2014			2013			2015			2014			2013
Components of Net Periodic Benefit Cost
Service cost	$	11,517		$	9,425		$	11,132		$	444		$	538		$	687
Interest cost	18,314			19,340			17,934			863			1,107			1,050
Expected return on plan assets	(34,130		)	(32,944		)	(30,884		)	—			—			—
Amortization of transition amounts	2			2			3			—			—			—
Amortization of prior service cost (credit)	66			84			102			(335		)	(335		)	(424		)
Recognized net actuarial losses	15,545			8,639			13,323			27			182			552
Settlement loss	641			290			658			—			—			—
Termination benefits	—			—			—			—			—			—
Net periodic benefit cost	11,955			4,836			12,268			999			1,492			1,865

Actuarial gains and losses are amortized over the average future working lifetime of the active population in the plan using the projected unit credit method. This approximates 10 years.

Amounts included in accumulated other comprehensive income expected to be recognized in 2016 net periodic benefit costs.



(In thousands)	Pension Benefits		Other Benefits
Loss recognition	$	12,254	$	11
Prior service cost (credit) recognition	61		(335		)
Transition obligation recognition	2		—



	Pension Benefits				Other Benefits
	2015		2014		2015		2014
Assumptions used to determine benefit obligations
Average discount rate	3.92	%	3.63	%	4.20	%	3.85	%
Rate of compensation increase	3.06	%	3.03	%	—		—
Assumptions used to determine net periodic benefit cost
Average discount rate	3.63	%	4.54	%	3.85	%	4.62	%
Expected return on plan assets	8.17	%	8.20	%	—		—
Rate of compensation increase	3.03	%	3.06	%	—		—

Discount rates were determined using various corporate bond indexes as indicators of interest rate levels and movements and by matching our projected benefit obligation payment stream to current yields on high quality bonds.

The expected return on assets for the 2015 net periodic pension cost was determined by multiplying the expected returns of each asset class (based on historical returns) by the expected percentage of the total portfolio invested in that asset class. A total return was determined by summing the expected returns over all asset classes.



	Pension Plan Assets at December 31,
	2015		2014
Equity securities	67	%	65	%
Fixed income securities	24		26
Pooled investment funds	5		5
Insurance contracts	3		3
Cash and cash equivalents	1		1
Total	100	%	100	%

The overall objective of our pension investment strategy is to earn a rate of return over time to satisfy the benefit obligations of the pension plans and to maintain sufficient liquidity to pay benefits and meet other cash requirements of our pension funds. Investment policies for our primary U.S. pension plan are determined by the plan’s Investment Committee and set forth in the plan’s investment policy. Asset managers are granted discretion for determining sector mix, selecting securities and timing transactions, subject to the guidelines of the investment policy. An aggressive, flexible management of the portfolio is permitted and encouraged, with shifts of emphasis among equities, fixed income securities and cash equivalents at the discretion of each manager. No target asset allocations are set forth in the investment policy. For our non-U.S. pension plans, our investment objective is generally met through the use of pooled investment funds and insurance contracts.

The following table summarizes our pension plan assets measured at fair value on a recurring basis by fair value hierarchy level (See Note 17):



	December 31, 2015
(In thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Equity securities	$	225,191	$	55,428	$	—	$	280,619
Fixed income securities	29,903		70,164		—		100,067
Pooled investment funds	—		19,345		—		19,345
Insurance contracts	—		—		13,681		13,681
Cash and cash equivalents	5,376		—		—		5,376
Total	260,470		144,937		13,681		419,088



	December 31, 2014
(In thousands)	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value
Equity securities	$	233,156	$	54,614	$	248	$	288,018
Fixed income securities	41,447		72,412		505		114,364
Pooled investment funds	—		22,623		—		22,623
Insurance contracts	—		—		15,069		15,069
Cash and cash equivalents	5,225		—		—		5,225
Total	279,828		149,649		15,822		445,299

Equity securities consist primarily of publicly traded U.S. and non-U.S. common stocks. Equities are valued at closing prices reported on the listing stock exchange.

Fixed income securities consist primarily of U.S. government and agency bonds and U.S. corporate bonds. Fixed income securities are valued at closing prices reported in active markets or based on yields currently available on comparable securities of issuers with similar credit ratings. When quoted prices are not available for identical or similar bonds, the bond is valued under a discounted cash flow approach that maximizes observable inputs, such as current yields of similar instruments, and may include adjustments, for certain risks that may not be observable, such as credit and liquidity risks.

Pooled investment funds consist of mutual and collective investment funds that invest primarily in publicly traded non-U.S. equity and fixed income securities. Pooled investment funds are valued at net asset values calculated by the fund manager based on fair value of the underlying securities. The underlying securities are generally valued at closing prices reported in active markets, quoted prices of similar securities, or discounted cash flows approach that maximizes observable inputs such as current value measurement at the reporting date.

Insurance contracts are valued in accordance with the terms of the applicable collective pension contract. The fair value of the plan assets equals the discounted value of the expected cash flows of the accrued pensions which are guaranteed by the counterparty insurer.

Cash equivalents consist primarily of money market and similar temporary investment funds. Cash equivalents are valued at closing prices reported in active markets.

The preceding methods may produce fair value measurements that are not indicative of net realizable value or reflective of future fair values. Although we believe the valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The following table presents a reconciliation of Level 3 assets:



(In thousands)	Insurance Contracts			Other
Balance January 1, 2014	$	13,512		$	780
Net realized and unrealized gains included in earnings	1,345			(180		)
Net purchases, issuances and settlements	212			505
Transfers into Level 3	—			(352		)
Balance December 31, 2014	15,069			753
Net realized and unrealized gains included in earnings	(1,526		)	(64		)
Net purchases, issuances and settlements	138			(184		)
Transfers out of Level 3	—			(505		)
Balance December 31, 2015	13,681			—

We expect to make net contributions of $6.2 million to our pension plans in 2016 which are primarily associated with our European and International segments.

For the 2015 beginning of the year measurement purposes (net periodic benefit expense), 6.5% increase in the costs of covered health care benefits was assumed decreasing by 0.5% for each successive year to 4.5% in 2019 and thereafter. For the 2015 end of the year measurement purposes (benefit obligation), 6.5% increase in the costs of covered health care benefits was assumed decreasing by 0.5% for each successive year to 4.5% in 2020 and thereafter. A one-percentage-point change in assumed health care cost trend rates would have increased or decreased the other post-retirement benefit obligations and current year plan expense by approximately $1.1 million and $1.0 million, respectively.

Expense for defined contribution pension plans was $6.8 million in 2015, $6.5 million in 2014 and $5.8 million in 2013.

Estimated pension benefits to be paid under our defined benefit pension plans during the next five years are $20.2 million in 2016, $21.0 million in 2017, $22.0 million in 2018, $22.7 million in 2019, $24.3 million in 2020, and are expected to aggregate $139.2 million for the five years thereafter. Estimated other post-retirement benefits to be paid during the next 5 years are $1.4 million in 2016, $1.5 million in 2017, $1.7 million in 2018, $1.8 million in 2019, $1.8 million in 2020, and are expected to aggregate $8.5 million for the five years thereafter.