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Pensions and Other Postretirement Benefits | 12 Months Ended
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Dec. 31, 2014
Compensation and Retirement Disclosure [Abstract] |
Pensions and Other Postretirement Benefits | Pensions and Other Post-retirement Benefits We maintain various defined benefit and defined contribution plans covering the majority of our employees. Our principal U.S. plan is funded in compliance with the Employee Retirement Income Security Act (ERISA). It is our general policy to fund current costs for the international plans, except in Germany and Mexico, where it is common practice and permissible under tax laws to accrue book reserves. We provide health care benefits and limited life insurance for certain retired employees who are covered by our principal U.S. defined benefit pension plan until they become Medicare-eligible. Information pertaining to defined benefit pension plans and other post-retirement benefits plans is provided in the following table:
| Pension Benefits |  | Other Benefits
(In thousands) | 2014 |  | 2013 |  | 2014 |  | 2013
Change in Benefit Obligations |  |  |  |  |  |  |
Benefit obligations at January 1 | $ | 440,359 |  |  | $ | 463,806 |  |  | $ | 26,732 |  |  | $ | 30,551 |
Service cost | 9,425 |  |  | 11,132 |  |  | 538 |  |  | 687 |
Interest cost | 19,340 |  |  | 17,934 |  |  | 1,107 |  |  | 1,050 |
Participant contributions | 130 |  |  | 136 |  |  | 259 |  |  | 144 |
Plan amendments | (302 | ) |  | (239 | ) |  | — |  |  | — |
Actuarial losses (gains) | 88,069 |  |  | (34,248 | ) |  | (200 | ) |  | (4,107 | )
Benefits paid | (19,193 | ) |  | (19,232 | ) |  | (1,585 | ) |  | (1,593 | )
Settlements | (717 | ) |  | (1,474 | ) |  | — |  |  | — |
Currency translation | (17,917 | ) |  | 2,544 |  |  | — |  |  | — |
Benefit obligations at December 31 | 519,194 |  |  | 440,359 |  |  | 26,851 |  |  | 26,732 |
Change in Plan Assets |  |  |  |  |  |  |
Fair value of plan assets at January 1 | 434,569 |  |  | 384,452 |  |  | — |  |  | — |
Actual return on plan assets | 30,209 |  |  | 67,391 |  |  | — |  |  | — |
Employer contributions | 4,077 |  |  | 4,053 |  |  | 1,326 |  |  | 1,449 |
Participant contributions | 130 |  |  | 136 |  |  | 259 |  |  | 144 |
Settlements | (717 | ) |  | (1,474 | ) |  | — |  |  | — |
Benefits paid | (16,507 | ) |  | (16,316 | ) |  | (1,585 | ) |  | (1,593 | )
Reimbursement of German benefits | (2,686 | ) |  | (2,916 | ) |  | — |  |  | — |
Currency translation | (3,776 | ) |  | (757 | ) |  | — |  |  | — |
Fair value of plan assets at December 31 | 445,299 |  |  | 434,569 |  |  | — |  |  | — |
Funded Status |  |  |  |  |  |  |
Funded status at December 31 | (73,895 | ) |  | (5,790 | ) |  | (26,851 | ) |  | (26,732 | )
Unrecognized transition losses | 16 |  |  | 21 |  |  | — |  |  | — |
Unrecognized prior service cost (credit) | 10 |  |  | 374 |  |  | (1,858 | ) |  | (2,193 | )
Unrecognized net actuarial losses | 192,692 |  |  | 116,945 |  |  | 6,450 |  |  | 6,832 |
Net amount recognized | 118,823 |  |  | 111,550 |  |  | (22,259 | ) |  | (22,093 | )
Amounts Recognized in the Balance Sheet |  |  |  |  |  |  |
Noncurrent assets | 75,017 |  |  | 121,054 |  |  | — |  |  | — |
Current liabilities | (5,380 | ) |  | (5,518 | ) |  | (1,457 | ) |  | (1,695 | )
Noncurrent liabilities | (143,532 | ) |  | (121,326 | ) |  | (25,394 | ) |  | (25,037 | )
Net amount recognized | (73,895 | ) |  | (5,790 | ) |  | (26,851 | ) |  | (26,732 | )
Amounts Recognized in Accumulated Other Comprehensive Loss |  |  |  |  |  |  |
Net actuarial losses | 192,692 |  |  | 116,945 |  |  | 6,450 |  |  | 6,832 |
Prior service cost (credit) | 10 |  |  | 374 |  |  | (1,858 | ) |  | (2,193 | )
Unrecognized net initial obligation | 16 |  |  | 21 |  |  | — |  |  | — |
Total (before tax effects) | 192,718 |  |  | 117,340 |  |  | 4,592 |  |  | 4,639 |
Accumulated Benefit Obligations for all Defined Benefit Plans | 479,764 |  |  | 403,682 |  |  | — |  |  | — |
| Pension Benefits |  | Other Benefits
(In thousands) | 2014 |  | 2013 |  | 2012 |  | 2014 |  | 2013 |  | 2012
Components of Net Periodic Benefit Cost |  |  |  |  |  |  |  |  |  |  |
Service cost | $ | 9,425 |  |  | $ | 11,132 |  |  | $ | 9,511 |  |  | $ | 538 |  |  | $ | 687 |  |  | $ | 694 |
Interest cost | 19,340 |  |  | 17,934 |  |  | 19,018 |  |  | 1,107 |  |  | 1,050 |  |  | 1,265 |
Expected return on plan assets | (32,944 | ) |  | (30,884 | ) |  | (32,328 | ) |  | — |  |  | — |  |  | — |
Amortization of transition amounts | 2 |  |  | 3 |  |  | 2 |  |  | — |  |  | — |  |  | — |
Amortization of prior service cost (credit) | 84 |  |  | 102 |  |  | 101 |  |  | (335 | ) |  | (424 | ) |  | (454 | )
Recognized net actuarial losses | 8,639 |  |  | 13,323 |  |  | 6,235 |  |  | 182 |  |  | 552 |  |  | 529 |
Settlement loss | 290 |  |  | 658 |  |  | 747 |  |  | — |  |  | — |  |  | — |
Termination benefits | — |  |  | — |  |  | 387 |  |  | — |  |  | — |  |  | — |
Net periodic benefit cost | 4,836 |  |  | 12,268 |  |  | 3,673 |  |  | 1,492 |  |  | 1,865 |  |  | 2,034 |
Amounts included in accumulated other comprehensive income expected to be recognized in 2015 net periodic benefit costs.
(In thousands) | Pension Benefits |  | Other Benefits
Loss recognition | $ | 15,937 |  |  | $ | 320 |
Prior service cost (credit) recognition | 66 |  |  | (335 | )
Transition obligation recognition | 2 |  |  | — |
| Pension Benefits |  | Other Benefits
| 2014 |  | 2013 |  | 2014 |  | 2013
Assumptions used to determine benefit obligations |  |  |  |  |  |  |
Average discount rate | 3.63 | % |  | 4.54 | % |  | 3.85 | % |  | 4.62 | %
Rate of compensation increase | 3.03 | % |  | 3.06 | % |  | — |  |  | — |
Assumptions used to determine net periodic benefit cost |  |  |  |  |  |  |
Average discount rate | 4.54 | % |  | 3.96 | % |  | 4.62 | % |  | 3.75 | %
Expected return on plan assets | 8.20 | % |  | 8.15 | % |  | — |  |  | — |
Rate of compensation increase | 3.06 | % |  | 3.81 | % |  | — |  |  | — |
Discount rates were determined using various corporate bond indexes as indicators of interest rate levels and movements and by matching our projected benefit obligation payment stream to current yields on high quality bonds. The expected return on assets for the 2014 net periodic pension cost was determined by multiplying the expected returns of each asset class (based on historical returns) by the expected percentage of the total portfolio invested in that asset class. A total return was determined by summing the expected returns over all asset classes.
| Pension Plan Assets at December 31,
| 2014 |  | 2013
Equity securities | 65 | % |  | 71 | %
Fixed income securities | 26 |  |  | 19 |
Pooled investment funds | 5 |  |  | 5 |
Insurance contracts | 3 |  |  | 3 |
Cash and cash equivalents | 1 |  |  | 2 |
Total | 100 | % |  | 100 | %
The overall objective of our pension investment strategy is to earn a rate of return over time to satisfy the benefit obligations of the pension plans and to maintain sufficient liquidity to pay benefits and meet other cash requirements of our pension funds. Investment policies for our primary U.S. pension plan are determined by the plan’s Investment Committee and set forth in the plan’s investment policy. Asset managers are granted discretion for determining sector mix, selecting securities and timing transactions, subject to the guidelines of the investment policy. An aggressive, flexible management of the portfolio is permitted and encouraged, with shifts of emphasis among equities, fixed income securities and cash equivalents at the discretion of each manager. No target asset allocations are set forth in the investment policy. For our non-U.S. pension plans, our investment objective is generally met through the use of pooled investment funds and insurance contracts. The following table summarizes our pension plan assets measured at fair value on a recurring basis by fair value hierarchy level (See Note 17):
| December 31, 2014
(In thousands) | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Total Fair Value
Equity securities | $ | 233,156 |  |  | $ | 54,614 |  |  | $ | 248 |  |  | $ | 288,018 |
Fixed income securities | 41,447 |  |  | 72,412 |  |  | 505 |  |  | 114,364 |
Pooled investment funds | — |  |  | 22,623 |  |  | — |  |  | 22,623 |
Insurance contracts | — |  |  | — |  |  | 15,069 |  |  | 15,069 |
Cash and cash equivalents | 5,225 |  |  | — |  |  | — |  |  | 5,225 |
Total | 279,828 |  |  | 149,649 |  |  | 15,822 |  |  | 445,299 |
| December 31, 2013
(In thousands) | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Total Fair Value
Equity securities | $ | 307,486 |  |  | $ | — |  |  | $ | 428 |  |  | $ | 307,914 |
Fixed income securities | 36,749 |  |  | 47,545 |  |  | — |  |  | 84,294 |
Pooled investment funds | — |  |  | 22,430 |  |  | — |  |  | 22,430 |
Insurance contracts | — |  |  | — |  |  | 13,512 |  |  | 13,512 |
Cash and cash equivalents | 6,067 |  |  | — |  |  | 352 |  |  | 6,419 |
Total | 350,302 |  |  | 69,975 |  |  | 14,292 |  |  | 434,569 |
Equity securities consist primarily of publicly traded U.S. and non-U.S. common stocks. Equities are valued at closing prices reported on the listing stock exchange. Fixed income securities consist primarily of U.S. government and agency bonds and U.S. corporate bonds. Fixed income securities are valued at closing prices reported in active markets or based on yields currently available on comparable securities of issuers with similar credit ratings. When quoted prices are not available for identical or similar bonds, the bond is valued under a discounted cash flow approach that maximizes observable inputs, such as current yields of similar instruments, and may include adjustments, for certain risks that may not be observable, such as credit and liquidity risks. Pooled investment funds consist of mutual and collective investment funds that invest primarily in publicly traded non-U.S. equity and fixed income securities. Pooled investment funds are valued at net asset values calculated by the fund manager based on fair value of the underlying securities. The underlying securities are generally valued at closing prices reported in active markets, quoted prices of similar securities, or discounted cash flows approach that maximizes observable inputs such as current value measurement at the reporting date. Insurance contracts are valued in accordance with the terms of the applicable collective pension contract. Cash equivalents consist primarily of money market and similar temporary investment funds. Cash equivalents are valued at closing prices reported in active markets. The preceding methods may produce fair value measurements that are not indicative of net realizable value or reflective of future fair values. Although we believe the valuation methods are appropriate and consistent with 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 table presents a reconciliation of Level 3 assets:
(In thousands) | Insurance Contracts |  | Other
Balance January 1, 2013 | $ | 12,254 |  |  | $ | — |
Net realized and unrealized gains included in earnings | 1,074 |  |  | — |
Net purchases, issuances and settlements | 173 |  |  | 428 |
Transfers into Level 3 | 11 |  |  | 352 |
Balance December 31, 2013 | 13,512 |  |  | 780 |
Net realized and unrealized gains included in earnings | 1,345 |  |  | (180 | )
Net purchases, issuances and settlements | 212 |  |  | 505 |
Transfers out of Level 3 | — |  |  | (352 | )
Balance December 31, 2014 | 15,069 |  |  | 753 |
We expect to make net contributions of $4.1 million to our pension plans in 2015. For the 2014 beginning of the year measurement purposes (net periodic benefit expense), 7.0% increase in the costs of covered health care benefits was assumed decreasing by 0.5% for each successive year to 4.5% in 2019 and thereafter. For the 2014 end of the year measurement purposes (benefit obligation), 7.0% increase in the costs of covered health care benefits was assumed decreasing by 0.5% for each successive year to 4.5% in 2020 and thereafter. A one-percentage-point change in assumed health care cost trend rates would have increased or decreased the other post-retirement benefit obligations and current year plan expense by approximately $1.6 million and $1.4 million, respectively. Expense for defined contribution pension plans was $6.5 million in 2014, $5.8 million in 2013 and $5.9 million in 2012. Estimated pension benefits to be paid under our defined benefit pension plans during the next five years are $20.6 million in 2015, $20.9 million in 2016, $21.8 million in 2017, $22.7 million in 2018, $23.2 million in 2019, and are expected to aggregate $134.3 million for the five years thereafter. Estimated other post-retirement benefits to be paid during the next 5 years are $1.5 million in 2015, $1.6 million in 2016, $1.8 million in 2017, $2.0 million in 2018, $2.1 million in 2019, and are expected to aggregate $10.3 million for the five years thereafter.

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