Defined Benefit Pension Plans

We sponsor both funded and unfunded defined benefit pension plans for our international employees, primarily in Germany, France, Italy, Indonesia, Brazil, and Spain, offering death and disability, retirement, and special termination benefits. The defined benefit obligation is calculated annually by using the projected unit credit method. The measurement date for the pension plans was December 31, 2015.

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. We contributed $671,000 and $375,000 to the defined benefit pension plans for the years ended December 31, 2015 and 2014, respectively. The timing of when contributions are made can vary by plan and from year to year. For 2016, assuming that actual plan asset returns are consistent with our expected rate of return, and that interest rates remain constant, we expect to contribute approximately $403,000 to our defined benefit pension plans.

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



	Year Ended December 31,
	2015			2014
	(in thousands)
Change in benefit obligation:
Benefit obligation at January 1,	$	116,178		$	102,662
Service cost	4,572			3,559
Interest cost	2,380			3,476
Actuarial (gain) loss	(5,211		)	25,838
Benefits paid	(4,382		)	(5,519		)
Foreign currency exchange rate changes	(12,190		)	(13,921		)
Other⁽¹⁾	(2,580		)	83
Benefit obligation at December 31,	$	98,767		$	116,178

Change in plan assets:
Fair value of plan assets at January 1,	$	10,761		$	11,680
Actual return on plan assets	159			494
Company contributions	671			375
Benefits paid	(308		)	(433		)
Foreign currency exchange rate changes	(1,621		)	(1,355		)
Fair value of plan assets at December 31,	9,662			10,761
Net pension plan benefit liability at fair value	$	89,105		$	105,417


⁽¹⁾	Includes impact of curtailments driven by our restructuring activities.

Amounts recognized on the Consolidated Balance Sheets consist of:



	At December 31,
	2015		2014
	(in thousands)
Assets
Plan assets in other long-term assets	$	359	$	567

Liabilities
Current portion of pension plan liability in wages and benefits payable	3,493		4,122
Long-term portion of pension plan liability	85,971		101,862

Net pension plan benefit liability	$	89,105	$	105,417

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



	At December 31,
	2015		2014
	(in thousands)
Net actuarial loss	$	24,687	$	38,462
Net prior service cost	706		1,203
Amount included in accumulated other comprehensive income	$	25,393	$	39,665

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



	Year Ended December 31,
	2015			2014			2013
	(in thousands)
Net actuarial (gain) loss	$	(6,894	)	$	25,838		$	(5,881	)
Settlement/curtailment loss	(336		)	(55		)	(325		)
Plan asset loss	343			129			516
Amortization of net actuarial loss	(1,979		)	(572		)	(926		)
Amortization of prior service cost	(59		)	(138		)	(70		)
Other	(46		)	68			(658		)
Other comprehensive (income) loss	$	(8,971	)	$	25,270		$	(7,344	)

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 accumulated other comprehensive income into net periodic benefit cost during 2016 is $1.4 million.

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



	Year Ended December 31,
	2015			2014			2013
	(in thousands)
Service cost	$	4,572		$	3,559		$	4,205
Interest cost	2,380			3,476			3,355
Expected return on plan assets	(502		)	(619		)	(635		)
Amortization of prior service costs	59			138			70
Amortization of actuarial net loss	1,979			572			926
Settlements and other	420			55			(493		)
Net periodic benefit cost	$	8,908		$	7,181		$	7,428

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,
	2015		2014		2013
Actuarial assumptions used to determine benefit obligations at end of period:
Discount rate	2.59	%	2.36	%	3.76	%
Expected annual rate of compensation increase	3.60	%	3.37	%	3.33	%
Actuarial assumptions used to determine net periodic benefit cost for the period:
Discount rate	2.36	%	3.76	%	3.36	%
Expected rate of return on plan assets	5.45	%	5.40	%	3.63	%
Expected annual rate of compensation increase	3.37	%	3.33	%	3.41	%

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 1.50% and 2.25%. The weighted average discount rate used to measure our benefit obligations, increased by 23 basis points from December 31, 2014 to December 31, 2015, driving a $5.2 million actuarial gain during 2015, 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 $89.0 million and $104.1 million at December 31, 2015 and 2014, respectively.

We have one plan in which the fair value of plan assets exceeds the plan's accumulated benefit obligation.

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



	At December 31,
	2015		2014
	(in thousands)
Projected benefit obligation	$	95,814	$	114,150
Accumulated benefit obligation	86,534		102,146
Fair value of plan assets	6,502		8,166

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, 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

	December 31, 2014
Cash	$	726	$	726	$	—
Insurance funds	7,440		—		7,440
Other securities	2,595		—		2,595
Total fair value of plan assets	$	10,761	$	726	$	10,035

The following tables present a reconciliation of Level 3 assets held during the years ended December 31, 2015, and 2014.



	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



	Balance at January 1, 2014		Net Realized and Unrealized Gains		Net Purchases, Issuances, Settlements, and Other			Net Transfers Into Level 3		Effect of Foreign Currency			Balance at December 31, 2014
	(in thousands)
Insurance funds	$	8,260	$	133	$	25		$	—	$	(978	)	$	7,440
Other securities	2,574		320		(106		)	172		(365		)	2,595
Total	$	10,834	$	453	$	(81	)	$	172	$	(1,343	)	$	10,035

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

Annual benefit payments, 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)
2016	$	4,505
2017	3,257
2018	3,432
2019	3,491
2020	4,348
2021-2025	26,481