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Retirement Plans
 12 Months Ended
Dec. 31, 2014
Retirement Plans [Abstract]  
Retirement Plans

14  Retirement Plans

 

U.S. employees are eligible to participate in the Waters Employee Investment Plan, a 401(k) defined contribution plan, immediately upon hire. Employees may contribute from 1% to 60% of eligible pay on a pre-tax basis and the Company makes matching contributions of 100% for contributions up to 6% of eligible pay. Employees are 100% vested in employee and Company matching contributions. For the years ended December 31, 2014, 2013 and 2012, the Company's matching contributions amounted to $13 million, $13 million and $12 million, respectively.

The Company maintains two defined benefit plans in the U.S. for which the pay credit accruals have been frozen, the Waters Retirement Plan and the Waters Retirement Restoration Plan (collectively, the “U.S. Pension Plans”). The Company also sponsors other employee benefit plans in the U.S., including a retiree healthcare plan, which provides reimbursement for medical expenses and is contributory. There are various employee benefit plans outside the United States (both defined benefit and defined contribution plans). Certain non-U.S. defined benefit plans (“Non-U.S. Pension Plans”) are included in the disclosures below, which are required under the accounting standards for retirement benefits. The Company made one-time contributions totaling $21 million to certain of these Non-U.S. Pension Plans during 2014.

 

The Company contributed $11 million, $12 million and $11 million in the years ended December 31, 2014, 2013 and 2012, respectively, to the non-U.S. plans (primarily defined contribution plans) which are currently outside of the scope of the required disclosures. The eligibility and vesting of non-U.S. plans are generally consistent with local laws and regulations.

The net periodic pension cost is made up of several components that reflect different aspects of the Company's financial arrangements as well as the cost of benefits earned by employees. These components are determined using the projected unit credit actuarial cost method and are based on certain actuarial assumptions. The Company's accounting policy is to reflect in the projected benefit obligation all benefit changes to which the Company is committed as of the current valuation date; use a market-related value of assets to determine pension expense; amortize increases in prior service costs on a straight-line basis over the expected future service of active participants as of the date such costs are first recognized; and amortize cumulative actuarial gains and losses in excess of 10% of the larger of the market-related value of plan assets and the projected benefit obligation over the expected future service of active participants.

 

Summary data for the U.S. Pension Plans, U.S. retiree healthcare plan and Non-U.S. Pension Plans are presented in the following tables, using the measurement dates of December 31, 2014 and 2013, respectively.

The reconciliation of the projected benefit obligations at December 31, 2014 and 2013 is as follows (in thousands):

     2014 2013
     U.S. U.S. Retiree Non-U.S. U.S. U.S. Retiree Non-U.S.
     Pension Healthcare Pension Pension Healthcare Pension
     Plans Plan Plans Plans Plan Plans
Projected benefit obligation, January 1 $ 134,593 $ 11,020 $ 69,116 $ 145,047 $ 10,788 $ 64,857
 Service cost   -   1,623   5,171   -   1,733   5,079
 Interest cost   6,417   463   2,195   5,505   333   1,966
 Actuarial losses (gains)   18,270   1,253   17,967   (13,328)   (1,292)   (925)
 Benefits paid   (3,587)   (847)   (1,195)   (2,631)   (542)   (1,743)
 Plan amendments   -   -   796   -   -   232
 Plan settlements   -   -   (2,766)   -   -   -
 Other plans   -   -   -   -   -   227
 Currency impact   -   -   (9,278)   -   -   (577)
Projected benefit obligation, December 31 $ 155,693 $ 13,512 $ 82,006 $ 134,593 $ 11,020 $ 69,116

The accumulated benefit obligations at December 31, 2014 and 2013 are as follows (in thousands):

    2014 2013
    U.S. U.S. Retiree Non-U.S. U.S. U.S. Retiree Non-U.S.
    Pension Healthcare Pension Pension Healthcare Pension
    Plans Plan Plans Plans Plan Plans
Accumulated benefit obligation $ 155,693  ** $ 69,664 $ 134,592  ** $ 58,471
                     
                     
**Not applicable.

The reconciliation of the fair value of the plan assets at December 31, 2014 and 2013 is as follows (in thousands):

     2014 2013
     U.S. U.S. Retiree Non-U.S. U.S. U.S. Retiree Non-U.S.
     Pension Healthcare Pension Pension Healthcare Pension
     Plans Plan Plans Plans Plan Plans
Fair value of plan assets, January 1 $ 128,516 $ 6,616 $ 40,820 $ 106,572 $ 5,357 $ 35,859
 Actual return on plan assets   7,366   533   4,170   19,755   693   1,948
 Company contributions   3,592   392   24,216   4,820   290   4,104
 Employee contributions   -   832   592   -   818   612
 Plan settlements   -   -   (2,766)   -   -   -
 Benefits paid   (3,587)   (847)   (1,195)   (2,631)   (542)   (1,743)
 Currency impact   -   -   (6,269)   -   -   40
Fair value of plan assets, December 31 $ 135,887 $ 7,526 $ 59,568 $ 128,516 $ 6,616 $ 40,820

The summary of the funded status of the plans at December 31, 2014 and 2013 is as follows (in thousands):

    2014 2013
    U.S. U.S. Retiree Non-U.S. U.S. U.S. Retiree Non-U.S.
    Pension Healthcare Pension Pension Healthcare Pension
    Plans Plan Plans Plans Plan Plans
Projected benefit obligation $ (155,693) $ (13,512) $ (82,006) $ (134,593) $ (11,020) $ (69,116)
Fair value of plan assets   135,887   7,526   59,568   128,516   6,616   40,820
Projected benefit obligation in                  
 excess of fair value of plan assets $ (19,806) $ (5,986) $ (22,438) $ (6,077) $ (4,404) $ (28,296)

The summary of the amounts recognized in the consolidated balance sheets for the plans at December 31, 2014 and 2013 is as follows (in thousands):

    2014 2013
    U.S. U.S. Retiree Non-U.S. U.S. U.S. Retiree Non-U.S.
    Pension Healthcare Pension Pension Healthcare Pension
    Plans Plan Plans Plans Plan Plans
Long-term assets $ - $ - $ 838 $ - $ - $ 1,370
Current liabilities   (193)   (351)   -   -   (262)   (193)
Long-term liabilities   (19,613)   (5,635)   (23,276)   (6,077)   (4,142)   (29,473)
Net amount recognized at December 31 $ (19,806) $ (5,986) $ (22,438) $ (6,077) $ (4,404) $ (28,296)

The summary of the components of net periodic pension costs for the plans for the years ended December 31, 2014, 2013 and 2012 is as follows (in thousands):

    2014 2013 2012
    U.S. U.S. Retiree Non-U.S. U.S. U.S. Retiree Non-U.S. U.S. U.S. Retiree Non-U.S.
    Pension Healthcare Pension Pension Healthcare Pension Pension Healthcare Pension
    Plans Plan Plans Plans Plan Plans Plans Plan Plans
Service cost $ - $ 791 $ 4,579 $ - $ 915 $ 4,467 $ 9 $ 720 $ 3,752
Interest cost   6,417   463   2,195   5,505   333   1,966   5,806   350   1,988
Expected return on plan                           
 assets   (9,060)   (435)   (1,520)   (8,034)   (355)   (901)   (7,619)   (287)   (838)
Settlement loss   -   -   557   -   -   -   -   -   -
Net amortization:                           
 Prior service credit   -   (51)   (176)   -   (54)   (216)   -   (54)   (267)
 Net actuarial loss (gain)   2,216   (35)   375   3,432   -   516   3,009   -   367
Net periodic pension (benefit) cost $ (427) $ 733 $ 6,010 $ 903 $ 839 $ 5,832 $ 1,205 $ 729 $ 5,002

The summary of the changes in plan assets and benefit obligations recognized in other comprehensive (loss) income for the years ended December 31, 2014, 2013 and 2012 is as follows (in thousands):

    2014 2013 2012
    U.S. U.S. Retiree Non-U.S. U.S. U.S. Retiree Non-U.S. U.S. U.S. Retiree Non-U.S.
    Pension Healthcare Pension Pension Healthcare Pension Pension Healthcare Pension
    Plans Plan Plans Plans Plan Plans Plans Plan Plans
Prior service cost $ - $ - $ (796) $ - $ - $ (232) $ - $ - $ -
Net (loss) gain arising                           
 during the year   (19,965)   (1,155)   (15,168)   25,048   1,629   1,940   (2,042)   (96)   (5,622)
Amortization:                           
 Prior service credit   -   (51)   (176)   -   (54)   (216)   -   (54)   (267)
 Net loss (gain)   2,216   (35)   932   3,432   -   516   3,009   -   367
Other Plans   -   -   -   -   -   -   -   -   (5,970)
Currency impact   -   -   2,287   -   -   (497)   -   -   (424)
Total recognized in other                           
 comprehensive (loss) income $ (17,749) $ (1,241) $ (12,921) $ 28,480 $ 1,575 $ 1,511 $ 967 $ (150) $ (11,916)

The summary of the amounts included in accumulated other comprehensive (loss) income in stockholders' equity for the plans at December 31, 2014 and 2013 is as follows (in thousands):

    2014 2013
    U.S. U.S. Retiree Non-U.S. U.S. U.S. Retiree Non-U.S.
    Pension Healthcare Pension Pension Healthcare Pension
    Plans Plan Plans Plans Plan Plans
Net actuarial (loss) gain $ (45,749) $ 44 $ (23,327) $ (27,999) $ 1,233 $ (11,190)
Prior service credit   -   -   719   -   52   1,933
Total $ (45,749) $ 44 $ (22,608) $ (27,999) $ 1,285 $ (9,257)

The summary of the amounts included in accumulated other comprehensive (loss) income expected to be included in next year's net periodic benefit cost for the plans at December 31, 2014 is as follows (in thousands):

  2014
  U.S. U.S. Retiree Non-U.S.
  Pension Healthcare Pension
  Plans Plan Plans
Net actuarial loss $ (2,717) $ - $ (1,091)
Prior service credit   -   -   121
Total $ (2,717) $ - $ (970)

The plans' investment asset mix is as follows at December 31, 2014 and 2013:

    2014 2013
    U.S. U.S. Retiree Non-U.S. U.S. U.S. Retiree Non-U.S.
    Pension Healthcare Pension Pension Healthcare Pension
    Plans Plan Plans Plans Plan Plans
Equity securities 75% 68% 4% 75% 59% 0%
Debt securities 24% 30% 12% 24% 25% 0%
Cash and cash equivalents 1% 2% 19% 1% 16% 16%
Insurance contracts and other 0% 0% 65% 0% 0% 84%
Total 100% 100% 100% 100% 100% 100%

The plans' investment policies include the following asset allocation guidelines:

  U.S. Pension and U.S. Retiree Non-U.S.
  Healthcare Plans Pension Plans
  Policy Target Range Policy Target
Equity securities 60% 40%-80% 5%
Debt securities 25% 20%-60% 10%
Cash and cash equivalents 5% 0%-20% 20%
Insurance contracts and other 10% 0%-20% 65%

The asset allocation policy for the U.S. Pension Plans and U.S. retiree healthcare plan was developed in consideration of the following long-term investment objectives: achieving a return on assets consistent with the investment policy, achieving portfolio returns which exceed the average return for similarly invested funds and maximizing portfolio returns with at least a return of 2.5% above the one-year constant maturity Treasury bond yield over reasonable measurement periods and based on reasonable market cycles.

 

Within the equity portfolio of the U.S. retirement plans, investments are diversified among market capitalization and investment strategy. The Company targets a 20% allocation of its U.S. retirement plans' equity portfolio to be invested in financial markets outside of the United States. The Company does not invest in its own stock within the U.S. retirement plans' assets.

The fair value of the Company's retirement plan assets are as follows at December 31, 2014 (in thousands):

        Quoted Prices      
        in Active Significant   
        Markets Other Significant
     Total at for Identical Observable Unobservable
     December 31,  Assets Inputs Inputs
     2014 (Level 1) (Level 2) (Level 3)
U.S. Pension Plans:            
 Mutual funds(a) $ 124,405 $ 124,405 $ - $ -
 Common stocks(b)   3,438   3,438   -   -
 Cash equivalents(c)   710   -   710   -
 Hedge funds(d)   7,334   -   -   7,334
  Total U.S. Pension Plans   135,887   127,843   710   7,334
U.S. Retiree Healthcare Plan:            
 Mutual funds(e)   7,371   7,371   -   -
 Cash equivalents(c)   155   -   155   -
  Total U.S. Retiree Healthcare Plan   7,526   7,371   155   -
Non-U.S. Pension Plans:            
 Cash equivalents(c)   11,367   11,367   -   -
 Mutual funds(f)   9,258   9,258   -   -
 Bank and insurance investment contracts(g)   38,943   -   -   38,943
  Total Non-U.S. Pension Plans   59,568   20,625   -   38,943
   Total fair value of retirement plan assets $ 202,981 $ 155,839 $ 865 $ 46,277

The fair value of the Company's retirement plan assets are as follows at December 31, 2013 (in thousands):

        Quoted Prices      
        in Active Significant   
        Markets Other Significant
     Total at for Identical Observable Unobservable
     December 31,  Assets Inputs Inputs
     2013 (Level 1) (Level 2) (Level 3)
U.S. Pension Plans:            
 Mutual funds(h) $ 117,718 $ 117,718 $ - $ -
 Common stocks(b)   3,123   3,123   -   -
 Cash equivalents(c)   650   -   650   -
 Hedge funds(d)   7,025   -   -   7,025
  Total U.S. Pension Plans   128,516   120,841   650   7,025
U.S. Retiree Healthcare Plan:            
 Mutual funds(i)   5,589   5,589   -   -
 Cash equivalents(c)   1,027   -   1,027   -
  Total U.S. Retiree Healthcare Plan   6,616   5,589   1,027   -
Non-U.S. Pension Plans:            
 Cash equivalents(c)   6,400   6,400   -   -
 Bank and insurance investment contracts(g)   34,420   -   -   34,420
  Total Non-U.S. Pension Plans   40,820   6,400   -   34,420
   Total fair value of retirement plan assets $ 175,952 $ 132,830 $ 1,677 $ 41,445

  • The mutual fund balance in the U.S. Pension Plans are invested in the following categories: 43% in the common stock of large-cap U.S. companies, 31% in the common stock of international growth companies, and 26% in fixed income bonds issued by U.S. companies and by the U.S. government and its agencies.
  • Represents primarily amounts invested in common stock of technology, healthcare, financial, energy and consumer staples and discretionary U.S. companies.
  • Primarily represents money market funds held with various financial institutions.
  • Hedge fund invests in both short and long term U.S. common stocks. Management of the hedge funds has the ability to shift investments from value to growth strategies, from large to small capitalization stocks and from a net long position to a net short position.
  • The mutual fund balance in the U.S. Retiree Healthcare Plan is invested in the following categories: 52% in the common stock of large-cap U.S. companies, 20% in the common stock of international growth companies and 28% in fixed income bonds of U.S. companies and U.S. government.
  • The mutual fund balance in the Non-U.S. Pension Plans is invested in the following categories: 74% in international bonds and 26% in the common stock of international companies.
  • Amount represents bank and insurance guaranteed investment contracts.
  • The mutual fund balance in the U.S. Pension Plans are invested in the following categories: 41% in the common stock of large-cap U.S. companies, 33% in the common stock of international growth companies, and 26% in fixed income bonds issued by U.S. companies and by the U.S. government and its agencies.
  • The mutual fund balance in the U.S. Retiree Healthcare Plan is invested in the following categories: 58% in the common stock of large-cap U.S. companies, 12% in the common stock of international growth companies and 30% in fixed income bonds of U.S. companies and U.S. government.

The following table summarizes the changes in fair value of the Level 3 retirement plan assets for the years ended December 31, 2014 and 2013 (in thousands):

          Insurance
          Guaranteed
       Hedge Investment
    Total Funds Contracts
Fair value of assets, December 31, 2012 $ 35,963 $ 6,266 $ 29,697
 Net purchases (sales) and appreciation (depreciation)   5,482   759   4,723
Fair value of assets, December 31, 2013   41,445   7,025   34,420
 Net purchases (sales) and appreciation (depreciation)   4,832   309   4,523
Fair value of assets, December 31, 2014 $ 46,277 $ 7,334 $ 38,943

The weighted-average assumptions used to determine the benefit obligation in the consolidated balance sheets at December 31, 2014, 2013 and 2012 are as follows:

   2014 2013 2012
   U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S.
Discount rate 3.92% 1.98% 4.82% 3.29% 3.90% 3.10%
Increases in compensation levels ** 2.58% ** 2.54% ** 2.59%
              
              
** Not applicable

The weighted-average assumptions used to determine the net periodic pension cost at December 31, 2014, 2013 and 2012 are as follows:

   2014 2013 2012
   U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S.
Discount rate 4.64% 3.25% 3.61% 3.10% 4.26% 3.29%
Return on plan assets 6.95% 2.84% 6.94% 2.40% 7.12% 1.88%
Increases in compensation levels ** 2.58% ** 2.59% ** 2.91%
              
              
** Not applicable

To develop the expected long-term rate of return on assets assumption, the Company considered historical returns and future expectations for returns for each asset class, as well as the target asset allocation of the pension portfolio and historical expenses paid by the plan. A one-quarter percentage point increase in the assumed long-term rate of return on assets would decrease the Company's net periodic benefit cost for the Waters Retirement Plan by less than $1 million. A one-quarter percentage point increase in the discount rate would decrease the Company's net periodic benefit cost for the Waters Retirement Plan by less than $1 million.

During fiscal year 2015, the Company expects to contribute a total of approximately $4 million to $11 million to the Company's defined benefit plans. Estimated future benefit payments as of December 31, 2014 are as follows (in thousands):

         
  U.S. Pension and Non-U.S.  
  Retiree Healthcare Pension  
  Plans Plans Total
2015 $ 7,878 $ 1,057 $ 8,935
2016   7,833   1,132   8,965
2017   8,165   2,334   10,499
2018   8,810   2,045   10,855
2019   9,879   1,763   11,642
2020 - 2024   58,524   15,363   73,887