PENSION BENEFIT PLANS

The Company has noncontributory defined benefit pension plans which cover certain of its U.S. employees. During 2012, all remaining benefit accruals under the U.S. plans ceased. The Company also has noncontributory defined benefit pension plans which cover certain of its non-U.S. employees, and under certain of these plans, benefit accruals continue. In general, the Company’s policy is to fund these plans based on considerations relating to legal requirements, underlying asset returns, the plan’s funded status, the anticipated deductibility of the contribution, local practices, market conditions, interest rates and other factors.

The following sets forth the funded status of the U.S. and non-U.S. plans as of the most recent actuarial valuations using measurement dates of December 31 ($ in millions):



	U.S. Pension Benefits						Non-U.S. Pension Benefits
	2014			2013			2014			2013
Change in pension benefit obligation:
Benefit obligation at beginning of year	$	2,281.2		$	2,506.2		$	1,251.0		$	1,209.6
Service cost	6.0			5.5			32.0			27.0
Interest cost	105.9			97.4			44.4			40.3
Employee contributions	—			—			9.6			6.7
Benefits paid and other	(180.7		)	(160.7		)	(48.1		)	(48.1		)
Acquisitions	—			—			84.8			30.4
Actuarial loss (gain)	273.8			(165.3		)	274.4			(22.7		)
Amendments, settlements and curtailments	(1.5		)	(1.9		)	45.3			(10.8		)
Foreign exchange rate impact	—			—			(147.8		)	18.6
Benefit obligation at end of year	2,484.7			2,281.2			1,545.6			1,251.0
Change in plan assets:
Fair value of plan assets at beginning of year	1,926.3			1,800.0			834.6			755.4
Actual return on plan assets	90.4			284.6			93.4			56.2
Employer contributions	51.8			4.3			61.6			53.2
Employee contributions	—			—			9.6			6.7
Amendments and settlements	(1.5		)	(1.9		)	39.1			(9.0		)
Benefits paid and other	(180.7		)	(160.7		)	(48.1		)	(48.1		)
Acquisitions	—			—			57.0			10.3
Foreign exchange rate impact	—			—			(85.0		)	9.9
Fair value of plan assets at end of year	1,886.3			1,926.3			962.2			834.6
Funded status	$	(598.4	)	$	(354.9	)	$	(583.4	)	$	(416.4	)

Weighted average assumptions used to determine benefit obligations at date of measurement:



	U.S. Plans				Non-U.S. Plans
	2014		2013		2014		2013
Discount rate	4.00	%	4.80	%	2.25	%	3.60	%
Rate of compensation increase	N/A		N/A		2.95	%	3.05	%

Components of net periodic pension cost:



	U.S. Pension Benefits						Non-U.S. Pension Benefits
($ in millions)	2014			2013			2014			2013
Service cost	$	6.0		$	5.5		$	32.0		$	27.0
Interest cost	105.9			97.4			44.4			40.3
Expected return on plan assets	(128.8		)	(125.1		)	(41.5		)	(34.3		)
Amortization of prior service credit	—			—			(0.1		)	(0.2		)
Amortization of net loss	18.4			31.4			6.8			7.4
Curtailment and settlement losses (gains) recognized	0.2			—			0.7			(1.2		)
Net periodic pension cost	$	1.7		$	9.2		$	42.3		$	39.0

Net periodic pension costs are included in cost of sales and selling, general and administrative expenses in the accompanying Consolidated Statements of Earnings.

Weighted average assumptions used to determine net periodic pension cost at date of measurement:



	U.S. Plans				Non-U.S. Plans
	2014		2013		2014		2013
Discount rate	4.80	%	3.90	%	3.60	%	3.45	%
Expected long-term return on plan assets	7.50	%	7.50	%	4.80	%	4.65	%
Rate of compensation increase	N/A		N/A		3.05	%	3.00	%

The discount rate reflects the market rate on December 31 for high-quality fixed-income investments with maturities corresponding to the Company’s benefit obligations and is subject to change each year. For non-U.S. plans, rates appropriate for each plan are determined based on investment grade instruments with maturities approximately equal to the average expected benefit payout under the plan. During 2014, the Company updated the mortality assumptions used to estimate the projected benefit obligation to reflect updated mortality tables which extend the life expectancy of the participants.

Included in accumulated other comprehensive loss as of December 31, 2014 are the following amounts that have not yet been recognized in net periodic pension cost: unrecognized prior service credits of $1 million ($1 million, net of tax) and unrecognized actuarial losses of approximately $1.1 billion ($720 million, net of tax). The unrecognized losses and prior service credits, net, is calculated as the difference between the actuarially determined projected benefit obligation and the value of the plan assets less accrued pension costs as of December 31, 2014. The prior service credits and actuarial losses included in accumulated comprehensive income and expected to be recognized in net periodic pension costs during the year ending December 31, 2015 is $0.2 million ($0.1 million, net of tax) and $43 million ($30 million, net of tax), respectively. No plan assets are expected to be returned to the Company during the year ending December 31, 2015.

Selection of Expected Rate of Return on Assets

For the years ended December 31, 2014, 2013 and 2012, the Company used an expected long-term rate of return assumption of 7.5% for its U.S. defined benefit pension plan. The Company intends to use an expected long-term rate of return assumption of 7.5% for 2015 for its U.S. plan. This expected rate of return reflects the asset allocation of the plan, and is based primarily on broad, publicly traded equity and fixed-income indices and forward-looking estimates of active portfolio and investment management. Long-term rate of return on asset assumptions for the non-U.S. plans were determined on a plan-by-plan basis based on the composition of assets and ranged from 1.25% to 7.10% and 1.25% to 6.70% in 2014 and 2013, respectively, with a weighted average rate of return assumption of 4.80% and 4.65% in 2014 and 2013, respectively.

Plan Assets

The U.S. plan’s goal is to maintain between 60% and 70% of its assets in equity portfolios, which are invested in individual equity securities or funds that are expected to mirror broad market returns for equity securities or in assets with characteristics similar to equity investments, such as venture capital funds and partnerships. Asset holdings are periodically rebalanced when equity holdings are outside this range. The balance of the U.S. plan asset portfolio is invested in bond funds. Non-U.S. plan assets are invested in various insurance contracts, equity and debt securities as determined by the administrator of each plan. The value of the plan assets directly affects the funded status of the Company’s pension plans recorded in the financial statements.

The fair values of the Company’s pension plan assets for both the U.S. and non-U.S. plans as of December 31, 2014, by asset category were as follows ($ in millions):



	Quoted Prices in Active Market (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Cash and equivalents	$	44.6	—		—		$	44.6
Equity securities:
Common stock	212.1		$	24.8	—		236.9
Preferred stock	—		—		—		—
Fixed income securities:
Corporate bonds	—		150.3		—		150.3
Government issued	—		58.3		—		58.3
Mutual funds	391.0		510.2		—		901.2
Common/collective trusts	—		852.9		—		852.9
Venture capital, partnerships and other private investments	—		—		$	495.1	495.1
Insurance contracts	—		109.2		—		109.2
Total	$	647.7	$	1,705.7	$	495.1	$	2,848.5

The fair values of the Company’s pension plan assets for both the U.S. and non-U.S. plans as of December 31, 2013, by asset category were as follows ($ in millions):



	Quoted Prices in Active Market (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Cash and equivalents	$	28.3	—		—		$	28.3
Equity securities:
Common stock	278.5		$	25.2	—		303.7
Preferred stock	15.9		—		—		15.9
Fixed income securities:
Corporate bonds	—		152.0		—		152.0
Government issued	—		23.5		—		23.5
Mutual funds	395.2		511.9		—		907.1
Common/collective trusts	—		792.6		—		792.6
Venture capital, partnerships and other private investments	—		—		$	427.2	427.2
Insurance contracts	—		110.6		—		110.6
Total	$	717.9	$	1,615.8	$	427.2	$	2,760.9

Preferred stock and certain common stock and mutual funds are valued at the quoted closing price reported on the active market on which the individual securities are traded. Common stock, corporate bonds, U.S. government securities and mutual funds that are not traded on an active market are valued at quoted prices reported by investment brokers and dealers based on the underlying terms of the security and comparison to similar securities traded on an active market.

Common/collective trusts are valued based on the plan’s interest, represented by investment units, in the underlying investments held within the trust that are traded in an active market by the trustee.

Venture capital, partnerships and other private investments are valued based on the information provided by the asset fund managers, which reflects the plan’s share of the fair value of the net assets of the investment. The investments are valued using a combination of either discounted cash flows, earnings and market multiples, third party appraisals or through reference to the quoted market prices of the underlying investments held by the venture, partnership or private entity where available. Valuation adjustments reflect changes in operating results, financial condition, or prospects of the applicable portfolio company.

The methods described above may produce a fair value estimate that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes the valuation methods are appropriate and consistent with the methods used by 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 is a rollforward of the fair value of the Company's Level 3 venture capital, partnerships and other private investments ($ in millions):



Balance, January 1, 2013	$	314.4
Actual return on plan assets:
Relating to assets sold during the year	(0.1		)
Relating to assets still held as of December 31, 2013	24.0
Purchases	150.1
Sales	(61.2		)
Balance, December 31, 2013	427.2
Actual return on plan assets:
Relating to assets sold during the year	7.0
Relating to assets still held as of December 31, 2014	15.2
Purchases	94.2
Sales	(48.5		)
Balance, December 31, 2014	$	495.1

Expected Contributions

During 2014, the Company contributed $52 million to its U.S. defined benefit pension plan and $62 million to its non-U.S. defined benefit pension plans. During 2015, the Company’s cash contribution requirements for its U.S. and its non-U.S. defined benefit pension plans are expected to be approximately $25 million and $55 million, respectively.

The following sets forth benefit payments, which reflect expected future service, as appropriate, expected to be paid by the plans in the periods indicated ($ in millions):



	U.S. Pension Plans		Non-U.S. Pension Plans		All Pension Plans
2015	$	149.2	$	47.8	$	197.0
2016	151.7		51.8		203.5
2017	156.0		50.6		206.6
2018	158.4		52.7		211.1
2019	157.8		53.8		211.6
2020 – 2024	796.4		304.2		1,100.6

Other Matters

Substantially all employees not covered by defined benefit plans are covered by defined contribution plans, which generally provide for Company funding based on a percentage of compensation.

A limited number of the Company’s subsidiaries participate in multiemployer defined benefit and contribution plans, primarily outside of the United States, that require the Company to periodically contribute funds to the plan. The risks of participating in a multiemployer plan differ from the risks of participating in a single-employer plan in the following respects: (1) assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers, (2) if a participating employer ceases contributing to the plan, the unfunded obligations of the plan may be required to be borne by the remaining participating employers and (3) if the Company elects to stop participating in the plan, the Company may be required to pay the plan an amount based on the unfunded status of the plan. None of the multiemployer plans in which the Company’s subsidiaries participate are considered to be quantitatively or qualitatively significant, either individually or in the aggregate. In addition, contributions made to these plans during 2014, 2013 and 2012 were not considered significant, either individually or in the aggregate.

Expense for all defined benefit and defined contribution pension plans amounted to $201 million, $185 million and $174 million for the years ended December 31, 2014, 2013 and 2012, respectively.