PENSION AND OTHER POSTRETIREMENT BENEFITS

The Company has two domestic defined benefit pension plans and two plans providing for other postretirement benefits, including medical and life insurance coverage. One of the pension plans and one of the other postretirement benefit plans cover eligible U.S. nonunion employees while the other pension plan and other postretirement benefits plan cover eligible U.S. union employees. The Company uses a December 31 measurement date for both of these plans.

Both the pension plans and the other postretirement benefit plans were modified during the year ended December 31, 2011. Participants who had 70 or more points (age plus completed years of service) could elect to stay in the pension and accrue additional benefits or receive the Company's 401K match which was reinstated as of January 1, 2012. Those with less than 70 points were phased-out from the pension plan and do not accrue any additional benefits after December 31, 2011. However, these individuals may receive the Company's 401K matching contributions. The Company's other postretirement benefit plans are in the process of being eliminated.

During 2014, the Company offered a one-time lump sum payment option to terminated vested participants in exchange for the right to receive future pension payments. As a result, the Company settled $30.2 million of benefit obligations and recorded a $6.1 million settlement charge during the year ended December 31, 2014.

17. PENSION AND OTHER POSTRETIREMENT BENEFITS (continued)

The following table sets forth a reconciliation of the related benefit obligation and plan assets related to the benefits provided by the Company (in thousands):



	Pension Benefits						Other Benefits
	2014			2013			2014			2013
Change in projected benefit obligation:
Projected benefit obligation at beginning of the period	$	261,714		$	278,416		$	10,063		$	11,146
Service cost	6,937			8,009			23			37
Interest cost	13,341			12,066			385			325
Participant contributions	—			—			326			275
Actuarial (gain) loss	58,922			(31,585		)	(362		)	(583		)
Benefits paid	(36,476		)	(5,192		)	(1,324		)	(1,137		)
Liability loss related to curtailment	—			—			693			—
Liability gain related to settlement	(8,022		)	—			—			—
Projected benefit obligation at end of the period	$	296,416		$	261,714		$	9,804		$	10,063
Accumulated benefit obligation at end of the period	$	290,933		$	256,002		$	—		$	—
Change in plan assets:
Fair value of plan assets at beginning of the period	$	244,302		$	193,389		$	—		$	—
Actual return on plan assets	18,036			35,460			—			—
Employer contributions	—			20,645			998			862
Participant contributions	—			—			326			275
Benefits paid	(6,270		)	(5,192		)	(1,324		)	(1,137		)
Benefits paid related to settlement	(30,206		)	—			—			—
Fair value of plan assets at the end of period	$	225,862		$	244,302		$	—		$	—
Funded status	$	(70,554	)	$	(17,412	)	$	(9,804	)	$	(10,063	)

Assumptions used in computing the benefit obligation as of December 31, 2014 and 2013 were as follows:



	Pension Benefits				Other Benefits
	2014		2013		2014	2013
Discount rate	4.20 - 4.27%		5.10 - 5.18%		3.03 - 4.20%	2.97 - 5.05%
Expected return on plan assets	7.10	%	7.10	%	N/A	N/A
Rate of compensation increase	2.50	%	2.50	%	N/A	N/A

17. PENSION AND OTHER POSTRETIREMENT BENEFITS (continued)

The following table presents the fair value of the Company's pension plan investments as of December 31, 2014 and 2013 (in thousands):



	Level 1		Level 2		Level 3		Total
Equity Securities
U.S. equity securities	$	115,102	$	—	$	—	$	115,102
Non-U.S. equity securities	22,081		—		—		22,081
Debt Securities
Fixed income funds and cash investment funds	88,679		—		—		88,679
December 31, 2014	$	225,862	$	—	$	—	$	225,862
Equity Securities
U.S. equity securities	$	128,766	$	—	$	—	$	128,766
Non-U.S. equity securities	25,461		—		—		25,461
Debt Securities
Fixed income funds and cash investment funds	90,075		—		—		90,075
December 31, 2013	$	244,302	$	—	$	—	$	244,302

See Note 2 of the consolidated financial statements for the description of the levels of the fair value hierarchy.



	Pension Benefits						Other Benefits
	2014			2013			2014			2013
	(in thousands)
Amounts recognized in the consolidated balance sheets consist of:
Current liabilities	$	—		$	(12,260	)	$	(1,039	)	$	(1,155	)
Noncurrent liabilities	(70,554		)	(5,152		)	(8,765		)	(8,908		)
Net amount recognized	$	(70,554	)	$	(17,412	)	$	(9,804	)	$	(10,063	)
Amounts recognized in accumulated other comprehensive income before taxes:
Net actuarial loss	$	58,780		$	18,239		$	1,018		$	1,913
Prior service cost (credit)	—			11			(2,768		)	(5,040		)
Net amount recognized	$	58,780		$	18,250		$	(1,750	)	$	(3,127	)

17. PENSION AND OTHER POSTRETIREMENT BENEFITS (continued)

The following table sets forth other changes in the benefit obligation recognized in other comprehensive income for the Company's pension and other postretirement benefits plans (in thousands):



	Pension Benefits						Other Benefits
	2014			2013			2014			2013
Net actuarial loss (gain)	$	48,606		$	(53,134	)	$	330		$	(583	)
Amortization of:
Prior service (credit) cost	(10		)	(14		)	2,029			3,378
Actuarial (gain)	(2,006		)	(8,623		)	(534		)	(767		)
Loss recognized related to settlement	(6,060		)	—			—			—
Loss recognized related to curtailment	—			—			(449		)	—
Total recognized in OCI	$	40,530		$	(61,771	)	$	1,376		$	2,028

The net actuarial loss of $48.6 million in 2014 was mainly due to lower discount rates as compared to 2013 and the change in the mortality tables from the RP-2000 mortality tables to the RP-2014 mortality tables. The net actuarial gain of $53.1 million in 2013 was mainly due to higher discount rates as compared to 2012 and a gain on plan assets held during the year.

The estimated net actuarial loss for the defined benefit pension plans included in accumulated other comprehensive income and expected to be recognized in net periodic pension cost during the fiscal year ended December 31, 2015 are $8.7 million.

The following table sets forth the components of the net periodic benefit cost for the Company's pension and other postretirement benefit plans (in thousands):



	Pension Benefits									Other Benefits
	2014			2013			2012			2014			2013			2012
Service cost	$	6,937		$	8,009		$	7,209		$	23		$	37		$	50
Interest cost	13,341			12,066			11,819			385			325			457
Expected return on plan assets	(15,743		)	(13,912		)	(12,523		)	—			—			—
Amortization of prior service cost (credit)	10			14			14			(2,029		)	(3,378		)	(3,375		)
Recognized actuarial loss	2,006			8,623			4,108			534			767			983
Settlement and curtailment related expense	6,060			—			—			449			—			—
Net periodic benefit cost	$	12,611		$	14,800		$	10,627		$	(638	)	$	(2,249	)	$	(1,885	)

For the year ended December 31, 2014, $7.3 million of pension expense was recorded in cost of sales and $5.3 million was recorded in selling general, and administrative expenses.

Assumptions used to determine net periodic benefit cost for the years ended December 31, 2014, 2013, and 2012 were as follows:



	Pension Benefits						Other Benefits
	2014		2013		2012		2014	2013	2012
Discount rate	5.10 - 5.18%		4.30 - 4.40%		5.10 - 5.15%		2.69 - 5.05%	2.25 - 4.25%	3.40 - 5.05%
Expected return on plan assets	7.10	%	7.10	%	7.10	%	N/A	N/A	N/A
Rate of compensation increase	2.50	%	2.50	%	2.50	%	N/A	N/A	N/A

17. PENSION AND OTHER POSTRETIREMENT BENEFITS (continued)

The expected long-term rate of return on assets is based on management's expectations of long-term average rates of return to be earned on the investment portfolio. In establishing this assumption, management considers historical and expected returns for the asset classes in which the plan assets are invested.

For purposes of measuring the benefit obligation associated with the Company's other postretirement benefit plans as of December 31, 2014, as well as the assumed rate for 2015, an annual rate increase of 7.75% to 8.25% in the per capita cost of covered health care benefits was assumed and a 7.0% annual rate of increase in the per capita cost of covered prescription drug benefits was assumed. The rates were then assumed to decrease to an ultimate rate of 5.0% for 2022 and thereafter. For purposes of measuring the net periodic benefit cost for 2014 associated with the Company's other postretirement benefits plans, an 8.0% to 8.5% annual rate of increase in the per capita cost of covered medical benefits was assumed and a 7.25% annual rate of increase in the per capita cost of covered presciption drug benefits was assumed. The rate was then assumed to decrease to an ultimate rate of 5.0% for 2022 for both the medical plan and prescription drug plan and thereafter. Increasing the assumed health care cost trend rate by 1.0% would increase the benefit obligation as of December 31, 2014 by $343,000 and increase the aggregate of the service and interest cost components of net periodic benefit cost for 2014 by $11,000. Decreasing the assumed health care cost trend rate by 1.0% would decrease the benefit obligation as of December 31, 2014 by $336,000 and decrease the aggregate of the service and interest cost components of net periodic benefit cost for 2014 by $10,000.

The Company's pension plans' weighted-average asset allocations as of December 31, 2014 and 2013, by asset category were as follows:



	Plan Assets at December 31,
	2014		2013
Asset Category:
Temporary investment funds	4	%	4	%
Equity investment funds	61		63
Fixed income funds	35		33
Total	100	%	100	%

The Company's pension plans' investment policy includes an asset mix based on the Company's risk posture. The investment policy states a target allocation of 60% equity funds and 40% fixed income funds. Inclusion of the fixed income funds is to provide growth through income and these funds should primarily invest in fixed income instruments of the U.S. Treasury and government agencies and investment-grade corporate bonds. The equity fund investments can consist of a broadly diversified domestic equity fund, an actively managed domestic equity fund and an actively managed international equity fund. The purpose of these funds is to provide the opportunity for capital appreciation, income, and the ability to diversify investments outside the U.S. equity market. Mutual funds are used as the plans' investment vehicle since they have clearly stated investment objectives and guidelines, offer a high degree of investment flexibility, offer competitive long-term results, and are cost effective for small asset balances.

The Company does not expect to contribute to its pension plans in 2015. The Company expects to contribute approximately $1.0 million to its other postretirement benefit plans in 2015. Estimated future benefit payments under the pension and other postretirement plans are as follows (in thousands):



	Pension Benefits		Other Benefits
2015	$	7,699	$	1,038
2016	8,958		1,023
2017	10,342		940
2018	11,678		851
2019	12,978		823
2020 - 2024	84,889		3,332

17. PENSION AND OTHER POSTRETIREMENT BENEFITS (continued)

The Company also sponsors 401K retirement savings plans for all U.S. associates who do not participate in the Company's pension plans. Under the 401K retirement savings plans, participants may defer a portion of their earnings up to the annual contribution limits established by the Internal Revenue Service. The Company's total expense under the 401K plans for U.S. employees was $2.5 million for 2014, $2.0 million for 2013 and $3.0 million for 2012. Employees of the Canadian, Belgium and United Kingdom operations also participate in defined contribution pension plans sponsored by the Company. The Company's expense related to these plans for 2014, 2013, and 2012 was $1.2 million, $1.2 million, and $1.3 million, respectively.