Pensions

The Company maintains defined benefit pension plans covering employees located in the United States as well as certain international locations. The majority of these plans are frozen, and all are closed to new employees. Benefits generally are based on compensation, length of service and age for salaried employees and on length of service for hourly employees. The Company’s policy is to fund pension plans such that sufficient assets will be available to meet future benefit requirements.

The Company also sponsors voluntary defined contribution plans for certain salaried and hourly U.S. employees of the Company. The Company matches contributions of participants, up to various limits based on its profitability, in substantially all plans. The Company also sponsors a retirement plan that includes Company non-elective contributions. Non-elective and matching contributions under these plans totaled $16,581, $16,296 and $14,489 for the years ended December 31, 2016, 2015 and 2014, respectively.

The following tables disclose information related to the Company’s defined benefit pension plans:



	Year Ended December 31,
	2016						2015
	U.S.			Non-U.S.			U.S.			Non-U.S.
Change in projected benefit obligation:
Projected benefit obligations at beginning of period	$	306,760		$	179,896		$	322,330		$	210,720
Service cost	807			3,346			926			3,489
Interest cost	12,580			5,041			12,334			5,084
Actuarial (gain) loss	3,633			17,582			(12,227		)	(4,940		)
Benefits paid	(20,334		)	(7,735		)	(16,603		)	(7,315		)
Foreign currency exchange rate effect	—			(5,085		)	—			(24,548		)
Settlements	—			(1,950		)	—			(2,919		)
Other	—			89			—			325
Projected benefit obligations at end of period	$	303,446		$	191,184		$	306,760		$	179,896

Change in plan assets:
Fair value of plan assets at beginning of period	$	248,387		$	64,940		$	268,862		$	74,660
Actual return on plan assets	18,109			2,560			(10,136		)	1,929
Employer contributions	7,321			6,969			6,264			8,534
Benefits paid	(20,334		)	(7,735		)	(16,603		)	(7,315		)
Foreign currency exchange rate effect	—			(1,753		)	—			(9,949		)
Settlements	—			(1,761		)	—			(2,919		)
Fair value of plan assets at end of period	$	253,483		$	63,220		$	248,387		$	64,940

Funded status of the plans	$	(49,963	)	$	(127,964	)	$	(58,373	)	$	(114,956	)



	Year Ended December 31,
	2016						2015
	U.S.			Non-U.S.			U.S.			Non-U.S.
Amounts recognized in the balance sheets:
Accrued liabilities (current)	$	(1,030	)	$	(3,947	)	$	(924	)	$	(3,914	)
Pension benefits (long term)	(48,933		)	(124,017		)	(57,449		)	(119,076		)
Other assets	—			—			—			8,034
Net amounts recognized as of December 31	$	(49,963	)	$	(127,964	)	$	(58,373	)	$	(114,956	)

Included in accumulated other comprehensive loss as of December 31, 2016 are amounts that have not yet been recognized in net periodic benefit cost, including unrecognized prior service costs of $1,429 ($1,418 net of tax) and unrecognized actuarial losses of $128,414 ($111,377 net of tax). The amounts included in accumulated other comprehensive loss and expected to be recognized in net periodic benefit cost during the fiscal year ended December 31, 2017 are $231 and $4,440, respectively. The Company uses the corridor approach when amortizing actuarial gains or losses. Under the corridor approach, net unrecognized actuarial losses in excess of 10% of the greater of i) the projected benefit obligation or ii) the fair value of plan assets are amortized over future periods.

The accumulated benefit obligation for all domestic and international defined benefit pension plans was $303,446 and $179,854 as of December 31, 2016 and $306,760 and $170,430 as of December 31, 2015, respectively. As of December 31, 2016, fair value of plan assets did not exceed the projected benefit obligation of any of the Company’s defined benefit plans. As of December 31, 2015, the fair value of plan assets for two of the Company’s defined benefit plans exceeded the projected benefit obligation of $31,226 by $8,034.

The following table provides the components of net periodic benefit (income) cost for the plans:



	Year Ended December 31,
	2016						2015						2014
	U.S.			Non-U.S.			U.S.			Non-U.S.			U.S.			Non-U.S.
Service cost	$	807		$	3,346		$	926		$	3,489		$	850		$	3,367
Interest cost	12,580			5,041			12,334			5,084			13,479			7,069
Expected return on plan assets	(15,835		)	(3,133		)	(17,685		)	(3,373		)	(19,055		)	(3,828		)
Amortization of prior service cost and actuarial loss	1,714			2,186			1,110			2,666			67			894
Settlements	—			538			—			132			3,637			444
Other	—			—			—			221			—			(1		)
Net periodic benefit (income) cost	$	(734	)	$	7,978		$	(3,315	)	$	8,219		$	(1,022	)	$	7,945

During 2016, the Company undertook an initiative to de-risk pension obligations in the U.K. by purchasing a bulk annuity policy designed to match the liabilities of the plan, and subsequently entered into a wind-up process. Further, as part of the wind-up process, participants with pension benefit values below a certain level were offered wind-up lump sums, election of which completely extinguishes a participant’s benefit entitlement. This action resulted in nominal settlement charges during the year ended December 31, 2016. It is anticipated that the wind-up process will be completed in 2017.

In September 2014, the Company announced a one-time voluntary program allowing eligible deferred vested U.S. pension participants the ability to elect to receive the value of their pension benefit, either as a lump sum payment or a monthly annuity payment. Such election settled the Company’s obligation to the electing participants. The voluntary program resulted in lump sum payments of $16,287. In addition, lump sum payments made outside of this program to certain vested U.S. participants totaled $2,813. The total of $19,100 lump sum payments was paid from plan assets. As a result of these lump sum payments, the Company recorded settlement losses of $3,637 during the year ended December 31, 2014, reflecting the accelerated recognition of unamortized losses in the plans proportionate to the obligation that was settled.

Plan Assumptions

Weighted average assumptions used to determine benefit obligations as of December 31, 2016 and 2015:



	2016				2015
	U.S.		Non-U.S.		U.S.		Non-U.S.
Discount rate	3.99	%	2.23	%	4.24	%	2.80	%
Rate of compensation increase	N/A		3.15	%	N/A		3.15	%

The following table provides weighted average assumptions used to determine net periodic benefit costs for the years ended December 31, 2016, 2015 and 2014:



	2016				2015				2014
	U.S.		Non-U.S.		U.S.		Non-U.S.		U.S.		Non-U.S.
Discount rate	4.24	%	2.80	%	3.94	%	2.66	%	4.68	%	3.72	%
Expected return on plan assets	6.60	%	4.39	%	6.70	%	4.80	%	7.15	%	5.63	%
Rate of compensation increase	N/A		3.15	%	N/A		3.11	%	N/A		3.69	%

To develop the expected return on assets assumption, the Company considered the historical returns and the future expectations for returns for each asset class, as well as the target asset allocation of the pension portfolio. As the U.S. plans are frozen, the rate of compensation increase was not applicable in determining net periodic benefit cost.

Plan Assets

The goals and investment objectives of the asset strategy are to ensure that there is an adequate level of assets to meet benefit obligations to participants and retirees over the life of the participants and maintain liquidity in the plan assets sufficient to cover monthly benefit obligations. Risk is managed by investing in a broad range of investment vehicles, e.g., equity mutual funds, bond mutual funds, real estate mutual funds, hedge funds, etc. There are no equity securities of the Company in the equity asset category.

Investments in equity securities and debt securities are valued at fair value using a market approach and observable inputs, such as quoted market prices in active markets (Level 1). Investments in balanced funds are valued at fair value using a market approach and inputs that are primarily directly or indirectly observable (Level 2). Investments in equity securities and balanced funds in which the Company holds participation units in a fund, the net asset value of which is based on the underlying assets and liabilities of the respective fund, are considered an unobservable input (Level 3). Investments in real estate funds are primarily valued at net asset value depending on the investment.

The following table sets forth the fair value of the Company’s pension plan assets by category using the three-level hierarchy (see Note 20. “Fair Value Measurements and Financial Instruments”) as of December 31, 2016 and 2015:



2016	Level 1		Level 2		Level 3		Total
Equity funds	$	36,710	$	18,531	$	—	$	55,241
Equity funds measured at net asset value ⁽¹⁾	—		—		—		76,961
Bond funds	35,339		28,070		—		63,409
Bond funds measured at net asset value ⁽¹⁾	—		—		—		47,123
Real estate measured at net asset value⁽¹⁾	—		—		—		14,472
Hedge funds	339		—		341		680
Hedge funds measured at net asset value ⁽¹⁾	—		—		—		30,676
Insurance contracts	—		—		16,113		16,113
Cash and cash equivalents	12,028		—		—		12,028
Total	$	84,416	$	46,601	$	16,454	$	316,703



2015	Level 1		Level 2		Level 3		Total
Equity funds	$	48,167	$	17,284	$	4,381	$	69,832
Equity funds measured at net asset value ⁽¹⁾	—		—		—		44,033
Bond funds	52,750		27,666		—		80,416
Bond funds measured at net asset value ⁽¹⁾	—		—		—		61,856
Real estate measured at net asset value ⁽¹⁾	—		—		—		12,959
Hedge funds	325		—		328		653
Hedge funds measured at net asset value ⁽¹⁾	—		—		—		29,861
Cash and cash equivalents	13,717		—		—		13,717
Total	$	114,959	$	44,950	$	4,709	$	313,327

⁽¹⁾In accordance with ASC 820, investments measured at fair value using the net asset value (“NAV”) practical expedient are excluded from the fair value hierarchy. These fair value amounts are presented in this table to allow for reconciliation to the fair value of plan assets presented within the statement of financial position. Prior period amounts have been adjusted to conform to current year presentation.

The following is a reconciliation for which Level 3 inputs were used in determining fair value:



Beginning balance of assets classified as Level 3 as of January 1, 2015	$	13,824
Purchases, sales and settlements, net	(5,222		)
Total losses	(1,999		)
Transfers out of Level 3	(1,894		)
Ending balance of assets classified as Level 3 as of December 31, 2015	$	4,709
Purchases, sales and settlements, net	(4,380		)
Total gain	12
Transfers into (out of) Level 3	16,113
Ending balance of assets classified as Level 3 as of December 31, 2016	$	16,454

Expected Future Benefit Payments

The Company estimates its benefit payments for its domestic and foreign pension plans during the next ten years to be as follows:



Years Ending December 31,	U.S		Non-U.S		Total
2017	$	20,917	$	6,290	$	27,207
2018	18,575		7,205		25,780
2019	18,821		7,703		26,524
2020	19,016		7,328		26,344
2021	19,108		8,247		27,355
2022-2026	95,845		49,923		145,768

Contributions

The Company estimates it will make funding cash contributions of approximately $5,200 to its non-U.S. pension plans in 2017. The Company expects to make no contributions to its U.S. pension plans in 2017.