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, 2014.

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 $375,000 and $436,000 to the defined benefit pension plans for the years ended December 31, 2014 and 2013, respectively. The timing of when contributions are made can vary by plan and from year to year. For 2015, 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 $426,000 to our defined benefit pension plans.

The following tables summarize the benefit obligation, plan assets, funded status of the defined benefit plans, amounts recognized in the Consolidated Balance Sheets and amounts recognized in accumulated other comprehensive income (AOCI) at December 31, 2014 and 2013:



	Year Ended December 31,
	2014			2013
	(in thousands)
Change in benefit obligation:
Benefit obligation at January 1,	$	102,662		$	101,766
Service cost	3,559			4,205
Interest cost	3,476			3,355
Actuarial (gain) loss	25,838			(6,160		)
Benefits paid	(5,519		)	(5,369		)
Foreign currency exchange rate changes	(13,921		)	2,698
Other	83			2,167
Benefit obligation at December 31,	$	116,178		$	102,662

Change in plan assets:
Fair value of plan assets at January 1,	$	11,680		$	8,561
Actual return on plan assets	494			119
Company contributions	375			436
Benefits paid	(433		)	(537		)
Foreign currency exchange rate changes	(1,355		)	(267		)
Other	—			3,368
Fair value of plan assets at December 31,	10,761			11,680
Net pension plan benefit liability at fair value	$	105,417		$	90,982

The weighted average discount rate used to measure our benefit obligations, which is based on published bond indexes, decreased by 140 basis points from December 31, 2013 to December 31, 2014, driving a $25.8 million actuarial loss during 2014, which is recognized in OCI. The significant actuarial weighted average assumptions are discussed in greater detail below.

Our defined benefit pension plans are denominated in the functional currencies of the respective countries in which the plans are sponsored; therefore, the balances increase or decrease, with a corresponding change in OCI, due to changes in foreign currency exchange rates. Amounts recognized on the Consolidated Balance Sheets consist of:



	At December 31,
	2014		2013
	(in thousands)
Assets
Plan assets in other long-term assets	$	567	$	1,426

Liabilities
Current portion of pension plan liability in wages and benefits payable	4,552		3,721
Long-term portion of pension plan liability	101,432		88,687

Net pension plan benefit liability	$	105,417	$	90,982

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,
	2014		2013
	(in thousands)
Net actuarial loss	$	38,462	$	13,262
Net prior service cost	1,203		1,133
Amount included in accumulated other comprehensive income	$	39,665	$	14,395

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



	Year Ended December 31,
	2014			2013			2012
	(in thousands)
Net actuarial (gain) loss	$	25,838		$	(5,881	)	$	24,492
Settlement/curtailment loss	(55		)	(325		)	(13		)
Plan asset (gain) loss	129			516			108
Amortization of net actuarial gain (loss)	(572		)	(926		)	(161		)
Amortization of prior service cost	(138		)	(70		)	(68		)
Other	68			(658		)	—
Other comprehensive (income) loss	$	25,270		$	(7,344	)	$	24,358

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 2015 is $2.2 million.

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



	Year Ended December 31,
	2014			2013			2012
	(in thousands)
Service cost	$	3,559		$	4,205		$	2,700
Interest cost	3,476			3,355			3,625
Expected return on plan assets	(619		)	(635		)	(331		)
Amortization of prior service costs	138			70			68
Amortization of actuarial net (gain) loss	572			926			161
Settlements and other	55			(493		)	97
Net periodic benefit cost	$	7,181		$	7,428		$	6,320

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,
	2014		2013		2012
Actuarial assumptions used to determine benefit obligations at end of period:
Discount rate	2.36	%	3.76	%	3.36	%
Expected annual rate of compensation increase	3.37	%	3.33	%	3.41	%
Actuarial assumptions used to determine net periodic benefit cost for the period:
Discount rate	3.76	%	3.36	%	5.51	%
Expected rate of return on plan assets	5.40	%	3.63	%	4.08	%
Expected annual rate of compensation increase	3.33	%	3.41	%	3.38	%

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 2.00%. As a result of the 140 basis point decrease in the weighted average discount rate used to measure our benefit obligations, the actuarial loss, which is recognized in OCI, was $25.8 million in 2014.

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 $104.1 million and $93.3 million at December 31, 2014 and 2013, 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,
	2014		2013
	(in thousands)
Projected benefit obligation	$	114,150	$	99,694
Accumulated benefit obligation	102,146		90,803
Fair value of plan assets	8,166		7,286

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 as of December 31, 2014, and 2013 are as follows:



	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Unobservable Inputs (Level 3)
	(in thousands)
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

2013
Cash	$	846	$	846	$	—
Insurance funds	8,260		—		8,260
Other securities	$	2,574	$	—	$	2,574
Total fair value of plan assets	$	11,680	$	846	$	10,834

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

The following tables present a reconciliation of Level 3 assets held during the years ended December 31, 2014 and 2013.



	Balance at January 1, 2014		Net Realized and Unrealized Gains/(Losses)		Net Purchases, Issuances, Settlements, and Other			Net Transfers Into/(Out of) 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



	Balance at January 1, 2013		Net Realized and Unrealized Gains/(Losses)			Net Purchases, Issuances, Settlements, and Other		Net Transfers Into/(Out of) Level 3		Effect of Foreign Currency			Balance at December 31, 2013
	(in thousands)
Insurance funds	$	7,658	$	178		$	105	$	—	$	319		$	8,260
Other securities	—		(70		)	3,050		—		(406		)	2,574
Total	$	7,658	$	108		$	3,155	$	—	$	(87	)	$	10,834

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)
2015	$	4,603
2016	3,285
2017	3,754
2018	3,960
2019	4,122
2020 - 2024	27,180