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)	2016			2015			2016			2015
Change in Benefit Obligations
Benefit obligations at January 1	$	491,180		$	519,194		$	22,974		$	26,851
Service cost	10,417			11,517			426			444
Interest cost	18,752			18,314			946			863
Participant contributions	100			105			222			255
Plan amendments	(1,092		)	604			(400		)	—
Actuarial (gains) losses	9,123			(21,073		)	1,285			(3,998		)
Benefits paid	(19,550		)	(19,261		)	(1,773		)	(1,441		)
Curtailments	(163		)	—			—			—
Settlements	(381		)	(2,094		)	—			—
Currency translation	(4,389		)	(16,126		)	—			—
Benefit obligations at December 31	503,997			491,180			23,680			22,974
Change in Plan Assets
Fair value of plan assets at January 1	419,088			445,299			—			—
Actual return on plan assets	31,418			(4,754		)	—			—
Employer contributions	3,878			4,058			1,551			1,186
Participant contributions	100			105			222			255
Settlements	(381		)	(2,094		)	—			—
Benefits paid	(19,550		)	(16,979		)	(1,773		)	(1,441		)
Reimbursement of German benefits	—			(2,282		)	—			—
Administrative Expenses Paid	—			6			—			—
Currency translation	(1,291		)	(4,271		)	—			—
Fair value of plan assets at December 31	433,262			419,088			—			—
Funded Status
Funded status at December 31	(70,735		)	(72,092		)	(23,680		)	(22,974		)
Unrecognized transition losses	8			12			—			—
Unrecognized prior service (credit) cost	(646		)	525			(1,505		)	(1,524		)
Unrecognized net actuarial losses	187,738			188,531			3,643			2,117
Net amount recognized	116,365			116,976			(21,542		)	(22,381		)
Amounts Recognized in the Balance Sheet
Noncurrent assets	62,916			62,072			—			—
Current liabilities	(4,620		)	(5,033		)	(1,638		)	(1,382		)
Noncurrent liabilities	(129,031		)	(129,131		)	(22,042		)	(21,592		)
Net amount recognized	(70,735		)	(72,092		)	(23,680		)	(22,974		)
Amounts Recognized in Accumulated Other Comprehensive Loss
Net actuarial losses	187,738			188,531			3,643			2,425
Prior service (credit) cost	(646		)	525			(1,505		)	(1,523		)
Unrecognized net initial obligation	8			12			—			—
Total (before tax effects)	187,100			189,068			2,138			902
Accumulated Benefit Obligations for all Defined Benefit Plans	465,448			453,382			—			—



	Pension Benefits									Other Benefits
(In thousands)	2016			2015			2014			2016			2015			2014
Components of Net Periodic Benefit Cost
Service cost	$	10,417		$	11,517		$	9,425		$	426		$	444		$	538
Interest cost	18,752			18,314			19,340			946			863			1,107
Expected return on plan assets	(34,751		)	(34,130		)	(32,944		)	—			—			—
Amortization of transition amounts	2			2			2			—			—			—
Amortization of prior service (credit) cost	(14		)	66			84			(419		)	(335		)	(335		)
Recognized net actuarial losses	11,921			15,545			8,639			68			27			182
Settlement loss	5			641			290			—			—			—
Termination benefits	—			—			—			—			—			—
Net periodic benefit cost	$	6,332		$	11,955		$	4,836		$	1,021		$	999		$	1,492

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 11 years.

Amounts included in accumulated other comprehensive income expected to be recognized in 2017 net periodic benefit costs.



(In thousands)	Pension Benefits			Other Benefits
Loss recognition	$	12,255		$	103
Prior service credit recognition	(15		)	(288		)
Transition obligation recognition	1			—

Information for pension plans with an accumulated benefit obligation in excess of plan assets.



(In thousands)	2016		2015
Aggregate accumulated benefit obligations (ABO)	$	147,531	$	147,864
Aggregate projected benefit obligations (PBO)	160,543		161,009
Aggregate fair value of plan assets	26,986		26,844



	Pension Benefits				Other Benefits
	2016		2015		2016		2015
Assumptions used to determine benefit obligations
Average discount rate	3.67	%	3.92	%	4.05	%	4.20	%
Rate of compensation increase	2.99	%	3.06	%	—		—
Assumptions used to determine net periodic benefit cost
Average discount rate	3.92	%	3.63	%	4.20	%	3.85	%
Expected return on plan assets	8.18	%	8.17	%	—		—
Rate of compensation increase	3.06	%	3.03	%	—		—

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 2016 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,
	2016		2015
Equity securities	70	%	67	%
Fixed income securities	20		24
Pooled investment funds	5		5
Insurance contracts	4		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 18):



	December 31, 2016
(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	$	242,161	$	62,299	$	—	$	304,460
Fixed income securities	25,109		62,667		—		87,776
Pooled investment funds	—		20,156		—		20,156
Insurance contracts	—		—		14,948		14,948
Cash and cash equivalents	5,922		—		—		5,922
Total	$	273,192	$	145,122	$	14,948	$	433,262



	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

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, 2015	$	15,069		$	753
Net realized and unrealized losses 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			—
Net realized and unrealized gains included in earnings	975			—
Net purchases, issuances and settlements	292			—
Transfers out of Level 3	—			—
Balance December 31, 2016	$	14,948		$	—

We expect to make net contributions of $5.9 million to our pension plans in 2017 which are primarily associated with our International segment.

For the 2016 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 2020 and thereafter. For the 2016 end of the year measurement purposes (benefit obligation), 6.0% increase in the costs of covered health care benefits was assumed decreasing by 0.5% for each successive year to 4.5% in 2021 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 $810 thousand and $55 thousand, respectively.

Expense for defined contribution pension plans was $5.1 million in 2016, $6.8 million in 2015 and $6.5 million in 2014 .

Estimated pension benefits to be paid under our defined benefit pension plans during the next five years are $20.9 million in 2017, $21.6 million in 2018, $22.2 million in 2019, $23.7 million in 2020, $24.6 million in 2021, and are expected to aggregate $138.5 million for the five years thereafter. Estimated other post-retirement benefits to be paid during the next five years are $1.7 million in 2017, $1.7 million in 2018, $1.9 million in 2019, $1.8 million in 2020, $1.9 million in 2021, and are expected to aggregate $8.1 million for the five years thereafter.