Defined Benefit Pension Plans

We sponsor both funded and unfunded defined benefit pension plans offering death and disability, retirement, and special termination benefits for our international employees, primarily in Germany, France, Italy, Indonesia, Brazil, and Spain. The defined benefit obligation is calculated annually by using the projected unit credit method. The measurement date for the pension plans was December 31, 2016.

Our general funding policy for these qualified pension plans is to contribute amounts sufficient to satisfy regulatory funding standards of the respective countries for each plan. Our contributions for both funded and unfunded plans are paid from cash flows from our operations. The timing of when contributions are made can vary by plan and from year to year.

The following tables set forth the components of the changes in benefit obligations and fair value of plan assets:



	Year Ended December 31,
	2016			2015
	(in thousands)
Change in benefit obligation:
Benefit obligation at January 1,	$	98,767		$	116,178
Service cost	3,472			4,572
Interest cost	2,573			2,380
Actuarial (gain) loss	7,733			(5,211		)
Benefits paid	(9,481		)	(4,382		)
Foreign currency exchange rate changes	(4,386		)	(12,190		)
Curtailment	14			(1,683		)
Settlement	(1,431		)	—
Other	—			(897		)
Benefit obligation at December 31,	$	97,261		$	98,767

Change in plan assets:
Fair value of plan assets at January 1,	$	9,662		$	10,761
Actual return on plan assets	604			159
Company contributions	348			671
Benefits paid	(370		)	(308		)
Foreign currency exchange rate changes	(29		)	(1,621		)
Fair value of plan assets at December 31,	10,215			9,662
Net pension benefit obligation at fair value	$	87,046		$	89,105

Amounts recognized on the Consolidated Balance Sheets consist of:



	At December 31,
	2016		2015
	(in thousands)
Assets
Plan assets in other long-term assets	$	654	$	359

Liabilities
Current portion of pension benefit obligation in wages and benefits payable	3,202		3,493
Long-term portion of pension benefit obligation	84,498		85,971

Pension benefit obligation, net	$	87,046	$	89,105

Amounts in AOCI (pre-tax) that have not yet been recognized as components of net periodic benefit costs consist of:



	At December 31,
	2016		2015
	(in thousands)
Net actuarial loss	$	26,767	$	24,687
Net prior service cost	619		706
Amount included in AOCI	$	27,386	$	25,393

Amounts recognized in OCI (pre-tax) are as follows:



	Year Ended December 31,
	2016			2015			2014
	(in thousands)
Net actuarial (gain) loss	$	6,316		$	(6,894	)	$	25,838
Settlement/curtailment loss	(1,343		)	(336		)	(55		)
Plan asset (gain) loss	(64		)	343			129
Amortization of net actuarial loss	(1,351		)	(1,979		)	(572		)
Amortization of prior service cost	(58		)	(59		)	(138		)
Other	4			(46		)	68
Other comprehensive (income) loss	$	3,504		$	(8,971	)	$	25,270

If actuarial gains and losses exceed ten percent of the greater of plan assets or plan liabilities, we amortize them over the employees' average future service period. The estimated net actuarial loss and prior service cost that will be amortized from AOCI into net periodic benefit cost during 2017 is $1.6 million.

Net periodic pension benefit costs for our plans include the following components:



	Year Ended December 31,
	2016			2015			2014
	(in thousands)
Service cost	$	3,472		$	4,572		$	3,559
Interest cost	2,573			2,380			3,476
Expected return on plan assets	(540		)	(502		)	(619		)
Amortization of prior service costs	58			59			138
Amortization of actuarial net loss	1,351			1,979			572
Settlements and other	1,340			420			55
Net periodic pension benefit costs	$	8,254		$	8,908		$	7,181

The significant actuarial weighted average assumptions used in determining the benefit obligations and net periodic benefit cost for our benefit plans are as follows:



	At and For The Year Ended December 31,
	2016		2015		2014
Actuarial assumptions used to determine benefit obligations at end of period:
Discount rate	2.18	%	2.59	%	2.36	%
Expected annual rate of compensation increase	3.65	%	3.60	%	3.37	%
Actuarial assumptions used to determine net periodic benefit cost for the period:
Discount rate	2.59	%	2.36	%	3.76	%
Expected rate of return on plan assets	5.29	%	5.45	%	5.40	%
Expected annual rate of compensation increase	3.60	%	3.37	%	3.33	%

We determine a discount rate for our plans based on the estimated duration of each plan’s liabilities. For our euro denominated defined benefit pension plans, which represent 94% of our benefit obligation, we use two discount rates, with consideration of the duration of the plans, using a hypothetical yield curve developed from euro-denominated AA-rated corporate bond issues, partially weighted for market value, with minimum amounts outstanding of €500 million for bonds with less than 10 years to maturity and €50 million for bonds with 10 or more years to maturity, and excluding the highest and lowest yielding 10% of bonds within each maturity group. The discount rates used, depending on the duration of the plans, were 0.75% and 1.75%. The weighted average discount rate used to measure our benefit obligations, increased by 41 basis points from December 31, 2015 to December 31, 2016, driving a $7.7 million actuarial gain during 2016, which is recognized in OCI.

Our expected rate of return on plan assets is derived from a study of actual historic returns achieved and anticipated future long-term performance of plan assets, specific to plan investment asset category. While the study primarily gives consideration to recent insurers’ performance and historical returns, the assumption represents a long-term prospective return.

The total accumulated benefit obligation for our defined benefit pension plans was $87.2 million and $89.0 million at December 31, 2016 and 2015, respectively.

The total obligations and fair value of plan assets for plans with projected benefit obligations and accumulated benefit obligations exceeding the fair value of plan assets are as follows:



	At December 31,
	2016		2015
	(in thousands)
Projected benefit obligation	$	94,110	$	95,814
Accumulated benefit obligation	84,448		86,534
Fair value of plan assets	6,410		6,502

Our asset investment strategy focuses on maintaining a portfolio using primarily insurance funds, which are accounted for as investments and measured at fair value, in order to achieve our long-term investment objectives on a risk adjusted basis. Our general funding policy for these qualified pension plans is to contribute amounts sufficient to satisfy regulatory funding standards of the respective countries for each plan.

The fair values of our plan investments by asset category are as follows:



	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Unobservable Inputs (Level 3)
	(in thousands)
	December 31, 2016
Cash	$	783	$	783	$	—
Insurance funds	7,011		—		7,011
Other securities	2,421		—		2,421
Total fair value of plan assets	$	10,215	$	783	$	9,432

	December 31, 2015
Cash	$	795	$	795	$	—
Insurance funds	7,089		—		7,089
Other securities	1,778		—		1,778
Total fair value of plan assets	$	9,662	$	795	$	8,867

The following tables present a reconciliation of Level 3 assets held during the years ended December 31, 2016 and 2015.



	Balance at January 1, 2016		Net Realized and Unrealized Gains		Net Purchases, Issuances, Settlements, and Other			Net Transfers Into Level 3		Effect of Foreign Currency			Balance at December 31, 2016
	(in thousands)
Insurance funds	$	7,089	$	235	$	54		$	—	$	(367	)	$	7,011
Other securities	1,778		405		(84		)	—		322			2,421
Total	$	8,867	$	640	$	(30	)	$	—	$	(45	)	$	9,432



	Balance at January 1, 2015		Net Realized and Unrealized Gains		Net Purchases, Issuances, Settlements, and Other			Net Transfers Into Level 3		Effect of Foreign Currency			Balance at December 31, 2015
	(in thousands)
Insurance funds	$	7,440	$	49	$	372		$	—	$	(772	)	$	7,089
Other securities	2,595		44		(82		)	—		(779		)	1,778
Total	$	10,035	$	93	$	290		$	—	$	(1,551	)	$	8,867

As the plan assets and contributions are not significant to our total company assets, no further breakdown is provided.

Annual benefit payments for the next 10 years, including amounts to be paid from our assets for unfunded plans, and reflecting expected future service, as appropriate, are expected to be paid as follows:



Year Ending December 31,	Estimated Annual Benefit Payments
Year Ending December 31,	Estimated Annual Benefit Payments
	(in thousands)
2017	$	3,655
2018	2,662
2019	2,737
2020	3,285
2021	3,918
2022-2026	22,929