Pension and Other Postretirement Benefits

The accounting standards related to employers’ accounting for defined benefit pension and other postretirement plans requires the Company to recognize the funded status of its defined benefit postretirement plans as assets or liabilities in the accompanying consolidated balance sheets and to recognize changes in the funded status of the plans in comprehensive income.

The Company has various defined contribution plans, the largest of which is its Retirement Savings Plan. Most U.S. salaried and non-union hourly employees are eligible to participate in this plan. See Note 17 for further discussion of the Retirement Savings Plan. The Company also maintains various other defined contribution plans which cover certain other employees. Company contributions under these plans are based primarily on the performance of the business units and employee compensation. Contribution expense under these other defined contribution plans was $5,347, $5,213 and $4,780 in 2015, 2014 and 2013, respectively.

Defined benefit pension plans in the U.S. cover a majority of the Company’s U.S. employees at the Associated Spring and Nitrogen Gas Products businesses of Industrial, the Company’s Corporate Office and certain former U.S. employees, including retirees. Plan benefits for salaried and non-union hourly employees are based on years of service and average salary. Plans covering union hourly employees provide benefits based on years of service. In 2012, the Company closed the U.S. salaried defined benefit pension plan (the "U.S. Salaried Plan") to employees hired on or after January 1, 2013, with no impact to the benefits of existing participants. Effective January 1, 2013, the Retirement Savings Plan was amended to provide certain salaried employees hired on or after January 1, 2013 with an additional annual retirement contribution of 4% of eligible earnings, in place of pensionable benefits under the closed U.S. Salaried Plan. The Company funds U.S. pension costs in accordance with the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Non-U.S. defined benefit pension plans cover certain employees of certain international locations in Europe and Canada.

The Company provides other medical, dental and life insurance postretirement benefits for certain of its retired employees in the U.S. and Canada. It is the Company’s practice to fund these benefits as incurred.

The accompanying balance sheets reflect the funded status of the Company’s defined benefit pension plans at December 31, 2015 and 2014, respectively. Reconciliations of the obligations and funded status of the plans follow:



	2015									2014
	U.S.			Non-U.S.			Total			U.S.			Non-U.S.			Total
Benefit obligation, January 1	$	433,079		$	80,305		$	513,384		$	374,740		$	78,982		$	453,722
Service cost	4,160			1,348			5,508			3,549			997			4,546
Interest cost	17,967			2,052			20,019			19,129			2,897			22,026
Amendments	—			(463		)	(463		)	—			—			—
Actuarial (gain) loss	(16,622		)	(2,288		)	(18,910		)	58,906			9,728			68,634
Benefits paid	(52,490		)	(4,244		)	(56,734		)	(23,960		)	(3,405		)	(27,365		)
Transfers in	—			3,951			3,951			—			1,929			1,929
Plan curtailments	(465		)	—			(465		)	—			—			—
Plan settlements	—			(375		)	(375		)	—			(4,949		)	(4,949		)
Special termination benefit	—			—			—			715			—			715
Participant contributions	—			368			368			—			906			906
Foreign exchange rate changes	—			(5,248		)	(5,248		)	—			(6,780		)	(6,780		)
Benefit obligation, December 31	385,629			75,406			461,035			433,079			80,305			513,384
Fair value of plan assets, January 1	380,937			71,750			452,687			379,059			74,519			453,578
Actual return on plan assets	(5,045		)	1,264			(3,781		)	20,436			6,349			26,785
Company contributions	3,427			1,100			4,527			5,402			2,219			7,621
Participant contributions	—			368			368			—			906			906
Benefits paid	(52,490		)	(4,244		)	(56,734		)	(23,960		)	(3,405		)	(27,365		)
Plan settlements	—			(376		)	(376		)	—			(4,949		)	(4,949		)
Transfers in	—			3,434			3,434			—			1,929			1,929
Foreign exchange rate changes	—			(4,743		)	(4,743		)	—			(5,818		)	(5,818		)
Fair value of plan assets, December 31	326,829			68,553			395,382			380,937			71,750			452,687
Funded/(underfunded) status, December 31	$	(58,800	)	$	(6,853	)	$	(65,653	)	$	(52,142	)	$	(8,555	)	$	(60,697	)

In September 2015, the Company announced a limited-time program offering (the "Program") to certain eligible, vested, terminated participants ("eligible participants") for a voluntary lump-sum pension payout or reduced annuity option (the "payout") that, if accepted, would settle the Company's pension obligation to them. The Program provides the eligible participants with a limited time opportunity of electing to receive a lump-sum settlement of their remaining pension benefit, or reduced annuity. The eligible participants notified the Company by November 20, 2015, the required deadline, to confirm whether they would opt for a lump-sum payout or reduced annuity. The scheduled payments of $27,986 were made in December 2015, and are included within the "Benefits Paid" of $52,490 above. The payouts were funded by the assets of the Company's pension plan and therefore the Program did not require significant cash outflows by the Company. The resultant pre-tax settlement charge of $9,856 represents accelerated amortization of actuarial losses and was reflected within costs of sales and selling and administrative expenses within the Consolidated Statements of Income.

Projected benefit obligations related to pension plans with benefit obligations in excess of plan assets follow:



	2015						2014
	U.S.		Non-U.S.		Total		U.S.		Non-U.S.		Total
Projected benefit obligation	$	271,459	$	31,613	$	303,072	$	297,067	$	29,971	$	327,038
Fair value of plan assets	204,270		20,199		224,469		234,305		17,660		251,965

Information related to pension plans with accumulated benefit obligations in excess of plan assets follows:



	2015						2014
	U.S.		Non-U.S.		Total		U.S.		Non-U.S.		Total
Projected benefit obligation	$	271,459	$	30,560	$	302,019	$	297,067	$	23,496	$	320,563
Accumulated benefit obligation	262,172		26,998		289,170		286,217		20,446		306,663
Fair value of plan assets	204,270		19,256		223,526		234,305		12,552		246,857

The accumulated benefit obligation for all defined benefit pension plans was $447,591 and $497,453 at December 31, 2015 and 2014, respectively.

Amounts related to pensions recognized in the accompanying balance sheets consist of:



	2015									2014
	U.S.			Non-U.S.			Total			U.S.			Non-U.S.			Total
Other assets	$	8,389		$	4,561		$	12,950		$	10,620		$	3,882		$	14,502
Accrued liabilities	2,806			379			3,185			2,810			376			3,186
Accrued retirement benefits	64,383			11,035			75,418			59,952			12,061			72,013
Accumulated other non-owner changes to equity, net	(83,014		)	(16,812		)	(99,826		)	(86,925		)	(20,689		)	(107,614		)

Amounts related to pensions recognized in accumulated other non-owner changes to equity, net of tax, at December 31, 2015 and 2014, respectively, consist of:



	2015									2014
	U.S.			Non-U.S.			Total			U.S.			Non-U.S.			Total
Net actuarial loss	$	(82,643	)	$	(16,999	)	$	(99,642	)	$	(86,399	)	$	(20,406	)	$	(106,805	)
Prior service costs	(371		)	187			(184		)	(526		)	(283		)	(809		)
	$	(83,014	)	$	(16,812	)	$	(99,826	)	$	(86,925	)	$	(20,689	)	$	(107,614	)

The accompanying balance sheets reflect the underfunded status of the Company’s other postretirement benefit plans at December 31, 2015 and 2014. Reconciliations of the obligations and underfunded status of the plans follow:



	2015			2014
Benefit obligation, January 1	$	46,814		$	46,243
Service cost	145			139
Interest cost	1,836			2,179
Actuarial (gain) loss	(2,521		)	3,049
Benefits paid	(6,970		)	(7,568		)
Curtailment gain	—			—
Participant contributions	2,486			2,833
Foreign exchange rate changes	(84		)	(61		)
Benefit obligation, December 31	41,706			46,814
Fair value of plan assets, January 1	—			—
Company contributions	4,484			4,735
Participant contributions	2,486			2,833
Benefits paid	(6,970		)	(7,568		)
Fair value of plan assets, December 31	—			—
Underfunded status, December 31	$	41,706		$	46,814

Amounts related to other postretirement benefits recognized in the accompanying balance sheets consist of:



	2015			2014
Accrued liabilities	$	5,259		$	5,047
Accrued retirement benefits	36,447			41,767
Accumulated other non-owner changes to equity, net	(5,877		)	(7,675		)

Amounts related to other postretirement benefits recognized in accumulated other non-owner changes to equity, net of tax, at December 31, 2015 and 2014 consist of:



	2015			2014
Net actuarial loss	$	(6,061	)	$	(8,212	)
Prior service credits	184			537
	$	(5,877	)	$	(7,675	)

The sources of changes in accumulated other non-owner changes to equity, net, during 2015 were:



	Pension			Other Postretirement Benefits
Prior service cost	$	379		$	—
Net (loss) gain	(10,493		)	1,557
Amortization of prior service costs (credits)	213			(354		)
Amortization of actuarial loss	16,007			627
Foreign exchange rate changes	1,682			(32		)
	$	7,788		$	1,798

Weighted-average assumptions used to determine benefit obligations at December 31, are:



	2015		2014
U.S. plans:
Discount rate	4.65	%	4.25	%
Increase in compensation	3.71	%	3.73	%
Non-U.S. plans:
Discount rate	2.80	%	2.74	%
Increase in compensation	2.71	%	2.72	%

The investment strategy of the plans is to generate a consistent total investment return sufficient to pay present and future plan benefits to retirees, while minimizing the long-term cost to the Company. Target allocations for asset categories are used to earn a reasonable rate of return, provide required liquidity and minimize the risk of large losses. Targets may be adjusted, as necessary, to reflect trends and developments within the overall investment environment. The weighted-average target investment allocations by asset category were as follows during 2014: 70% in equity securities, 20% in fixed income securities, 5% in real estate and 5% in other investments, including cash. During the fourth quarter of 2014, the Company approved a strategic shift that resulted in a change in the targeted mix of assets. The revised target mix reflects the following investment allocations by asset category: 65% in equity securities, 30% in fixed income securities and 5% in other investments, including cash.

The fair values of the Company’s pension plan assets at December 31, 2015 and 2014, by asset category are as follows:



			Fair Value Measurements Using
Asset Category	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2015
Cash and short-term investments	$	18,795	$	18,795	$	—	$	—
Equity securities:
U.S. large-cap	67,274		28,190		39,084		—
U.S. mid-cap	38,790		38,790		—		—
U.S. small-cap	38,248		38,248		—		—
International equities	91,563		—		91,563		—
Global equity	17,928		17,928		—		—
Fixed income securities:
U.S. bond funds	84,645		—		84,645		—
International bonds	36,282		—		36,282		—
Real estate securities	—		—		—		—
Other	1,857		—		—		1,857
	$	395,382	$	141,951	$	251,574	$	1,857
December 31, 2014
Cash and short-term investments	10,805		10,805		—		—
Equity securities:
U.S. large-cap	137,051		65,484		71,567		—
U.S. mid-cap	48,614		48,614		—		—
U.S. small-cap	47,972		47,972		—		—
International equities	71,451		—		71,451		—
Fixed income securities:
U.S. bond funds	79,810		—		79,810		—
International bonds	35,949		—		35,949		—
Real estate securities	18,915		—		18,915		—
Other	2,120		—		—		2,120
	$	452,687	$	172,875	$	277,692	$	2,120

The fair values of the Level 1 assets are based on quoted market prices from various financial exchanges. The fair values of the Level 2 assets are based primarily on quoted prices in active markets for similar assets or liabilities. The Level 2 assets are comprised primarily of commingled funds and fixed income securities. Commingled equity funds are valued at their net asset values based on quoted market prices of the underlying assets. Fixed income securities are valued using a market approach which considers observable market data for the underlying asset or securities. The Level 3 assets relate to the defined benefit pension plan at the Synventive business. These pension assets are fully insured and have been estimated based on accrued pension rights and actuarial rates. These pension assets are limited to fulfilling the Company's pension obligations.

The Company expects to contribute approximately $19,398 to the pension plans in 2016, including $15,000 of discretionary contributions to the U.S. Qualified pension plans.

The following are the estimated future net benefit payments, which include future service, over the next 10 years:



	Pensions		Other Postretirement Benefits
2015	$	29,147	$	4,467
2016	29,071		3,933
2017	28,980		3,540
2018	29,290		3,687
2019	29,051		3,468
Years 2020-2024	145,470		14,242
Total	$	291,009	$	33,337

Pension and other postretirement benefit expenses consist of the following:



	Pensions									Other Postretirement Benefits
	2015			2014			2013			2015			2014			2013
Service cost	$	5,508		$	4,546		$	6,181		$	145		$	139		$	233
Interest cost	20,019			22,026			20,112			1,836			2,179			2,061
Expected return on plan assets	(32,404		)	(34,232		)	(33,144		)	—			—			—
Amortization of prior service cost (credit)	305			648			752			(564		)	(871		)	(1,006		)
Recognized losses	15,004			8,617			16,365			1,011			1,017			1,004
Curtailment loss (gain)	—			219			199			—			4			(3,081		)
Settlement loss	9,939			871			637			—			—			—
Special termination benefits	—			715			1,016			—			—			—
Net periodic benefit cost	$	18,371		$	3,410		$	12,118		$	2,428		$	2,468		$	(789	)

The estimated net actuarial loss and prior service cost for the defined benefit pension plans that will be amortized from accumulated other non-owner changes to equity into net periodic benefit cost in 2016 are $10,218 and $207, respectively. The estimated net actuarial loss and prior service credit for other defined benefit postretirement plans that will be amortized from accumulated other non-owner changes to equity into net periodic benefit cost in 2016 are $704 and $(373), respectively.

Weighted-average assumptions used to determine net benefit expense for years ended December 31, are:



	2015		2014		2013
U.S. plans:
Discount rate	4.25	%	5.20	%	4.25	%
Long-term rate of return	8.25	%	9.00	%	9.00	%
Increase in compensation	3.71	%	3.72	%	3.71	%
Non-U.S. plans:
Discount rate	2.74	%	3.93	%	3.73	%
Long-term rate of return	5.00	%	5.07	%	5.33	%
Increase in compensation	2.72	%	2.76	%	2.69	%

The expected long-term rate of return is based on projected rates of return and the historical rates of return of published indices that are used to measure the plans’ target asset allocation. The historical rates are then discounted to consider fluctuations in the historical rates as well as potential changes in the investment environment.

The Company’s accumulated postretirement benefit obligations, exclusive of pensions, take into account certain cost-sharing provisions. The annual rate of increase in the cost of covered benefits (i.e., health care cost trend rate) is assumed to be 6.65% and 6.88% at December 31, 2015 and 2014, respectively, decreasing gradually to a rate of 4.50% by December 31, 2029. A one percentage point change in the assumed health care cost trend rate would have the following effects:



	One Percentage Point Increase		One Percentage Point Decrease
Effect on postretirement benefit obligation	$	391	$	(360	)
Effect on postretirement benefit cost	17		(15		)

The Company previously contributed to a multi-employer defined benefit pension plan under the terms of a collective bargaining agreement. This multi-employer plan provides pension benefits to certain former union-represented employees of the Edison, New Jersey facility at BDNA. The Company determined that a withdrawal from this multi-employer plan, following its entry into a definitive agreement to sell BDNA in February 2013, was probable. The Company estimated its assessment of a withdrawal liability, on a pre-tax discounted basis, and recorded a liability of $2,788 during the first quarter of 2013. The expense was recorded within discontinued operations. The Company completed the sale of BDNA and ceased making contributions into the multi-employer plan during the second quarter of 2013. The Company settled the withdrawal liability in the fourth quarter of 2013, with the agreed-upon settlement payment being made in January 2014.

The Company actively contributes to a Swedish pension plan that supplements the Swedish social insurance system. The pension plan guarantees employees a pension based on a percentage of their salary and represents a multi-employer pension plan, however the pension plan was not significant in any year presented. This pension plan is not underfunded.

Contributions related to the individually insignificant multi-employer plans, as disclosure is required pursuant to the applicable accounting standards, are as follows:



	Contributions by the Company
Pension Fund:	2015		2014		2013
Teamsters Local 641 Pension Fund (Edison, New Jersey)	$	—	$	—	$	23
Swedish Pension Plan (ITP2)	343		379		414
Total Contributions	$	343	$	379	$	437

The Company also contributed to a multi-employer other postretirement benefit plan under the terms of the collective bargaining agreement at the former Edison, New Jersey facility. This postretirement benefit plan was also settled in 2013 in conjunction with the defined benefit pension plan. This health and welfare postretirement plan provides medical, prescription, optical and other benefits to certain former union-represented active employees and retirees. Company contributions to the postretirement plan were $0, $0 and $40 in 2015, 2014 and 2013, respectively, as contributions ceased in 2013. There have been no significant changes that affect the comparability of 2015, 2014 or 2013 contributions, however contributions to the postretirement benefit plan ceased during the second quarter of 2013 following the sale of BDNA.