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Retirement Plans
 12 Months Ended
Dec. 31, 2019
Retirement Benefits [Abstract]  
Retirement Plans
17    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 up to 60% of eligible pay on a
pre-tax
or
post-tax
basis and the Company makes matching contributions of 100% for contributions up to 6% of eligible pay. The Company also sponsors a 401(k) Restoration Plan, which is a nonqualified defined contribution plan. Employees are 100% vested in employee and Company matching contributions for both plans. For the years ended December 31, 2019, 2018 and 2017, the Company’s matching contributions amounted to $17 million, $17 million and $16 million, respectively.
The Company adopted new accounting guidance which requires that an employer disaggregate the service cost component from other components of net benefit cost. As a result of the adoption of this standard, the components of net periodic benefit cost other than the service cost component are included in other income in the consolidated statements of operations and all previous periods have been adjusted accordingly.
In May 2018, the Company’s board of directors approved the termination of two defined benefit pension 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”). In December 2018, the Company settled the Waters Retirement Plan obligation by making
lump-sum
cash payments and purchasing annuity contracts for participants to permanently extinguish the pension plan’s obligations. As a result, the Company recorded a $46 million charge to other expense, which consisted of a $6 million cash contribution to the plan and a $40 million
non-cash
charge related to the reversal of unrecognized actuarial losses recorded in accumulated other comprehensive income in the stockholders’ equity. The $46 million
pre-tax
charge reduced net income per diluted share by $0.39. The termination of the Waters Retirement Restoration Plan
was
 completed in 2019.
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 contributed $15 million, $13 million and $12 million in the years ended December 31, 2019, 2018 and 2017, 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 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.
 
Net actuarial (gains) losses that arose during the year were due to changes in the discount rate as well as differences between expected and actual return on plan assets.
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, 2019 and 2018, respectively.
The reconciliation of the projected benefit obligations for the plans at December 31, 2019 and 2018 is as follows (in thousands):
                                                 
  
2019
   
2018
 
  
U.S.
Pension
Plans
 
  
U.S. 
Retiree
Healthcare
Plan
 
  
Non-U.S.

Pension
Plans
 
  
U.S.
Pension
Plans
 
  
U.S. 
Retiree
Healthcare
Plan
 
  
Non-U.S.

Pension
Plans
 
Projected benefit obligation, January 1
  $
972
    $
17,724
    $
93,722
    $
168,064
    $
17,121
    $
96,378
 
Service cost
   
—
     
499
     
4,339
     
568
     
566
     
5,368
 
Employee contributions
   
—  
      
1,214
     
499
     
—  
      
1,159
     
622
 
Interest cost
   
29
     
777
     
1,735
     
6,491
     
636
     
1,707
 
Actuarial (gains) losses
   
(32
)     
2,081
      
13,385
      
6,415
     
(621
)     
(2,274
 )
Benefits paid
   
—
      
(1,109
 )    
(3,281
 )    
(3,416
 )    
(1,007
 )    
(3,277
 )
Plan amendments
   
—  
      
—
      
—
      
—  
      
(130
)
    
(44
) 
Plan settlements
   
(969
 )    
—  
      
(7,407
 )    
(177,150
 )    
—  
      
(2,791
 )
Other plans
   
—  
      
—  
      
1,598
     
—  
      
—  
      
1,063
 
Currency impact
   
—  
      
—  
      
(1,224
 )    
—  
      
—  
      
(3,030
) 
                                                 
Projected benefit obligation, December 31
  $
—
    $
21,186
    $
103,366
    $
972
    $
17,724
    $
93,722
 
                                                 
The accumulated benefit obligations for the plans at December 31, 2019 and 2018 are as follows (in thousands):
 
2019
   
2018
 
  
U.S.
Pension
Plans
 
  
U.S. 
Retiree
Healthcare
Plan
 
  
Non-U.S.

Pension
Plans
 
  
U.S.
Pension
Plans
 
  
U.S. 
Retiree
Healthcare
Plan
 
  
Non-U.S.

Pension
Plans
 
Accumulated benefit obligation
  $
—
     
**   $
88,105
    $
972
     
**   $
82,026
 
 
**
Not applicable.
The reconciliation of the fair value of the plan assets at December 31, 2019 and 2018 is as follows (in thousands):
 
2019
   
2018
 
  
U.S.
Pension
Plans
 
  
U.S. 
Retiree
Healthcare
Plan
 
  
Non-U.S.

Pension
Plans
 
  
U.S.
Pension
Plans
 
  
U.S. 
Retiree
Healthcare
Plan
 
  
Non-U.S.

Pension
Plans
 
Fair value of plan assets, January 1
  $
—
    $
11,080
    $
81,587
    $
171,373
    $
11,125
    $
74,990
 
Actual return on plan assets
   
—
     
2,140
      
6,237
     
2,555
     
(584
)     
1,070
 
Company contributions
   
969
     
448
     
6,103
     
6,625
     
387
     
10,778
 
Employee contributions
   
—  
      
1,214
     
499
     
—  
      
1,159
     
622
 
Plan settlements
   
(969
 )    
—  
      
(7,044
)
    
(177,137
 )    
—  
      
—
  
Benefits paid
   
—
      
(1,109
 )    
(3,281
 )    
(3,416
 )    
(1,007
 )    
(3,277
 )
Other plans
   
—  
      
—  
      
82
      
—  
      
—  
      
—
  
Currency impact
   
—  
      
—  
      
(1,172
 )    
—  
      
—  
      
(2,596
) 
                                                 
Fair value of plan assets, December 31
  $
—  
     $
13,773
    $
83,011
    $
—
    $
11,080
    $
81,587
 
                                                 
The summary of the funded status for the plans at December 31, 2019 and 2018 is as follows (in thousands):
 
2019
   
2018
 
  
U.S.
Pension
Plans
 
  
U.S. 
Retiree
Healthcare
Plan
 
  
Non-U.S.

Pension
Plans
 
  
U.S.
Pension
Plans
 
  
U.S. 
Retiree
Healthcare
Plan
 
  
Non-U.S.

Pension
Plans
 
Projected benefit obligation
  $
—
     $
(21,186
 )   $
(103,366
 )   $
(972
 )   $
(17,724
 )   $
(93,722
 )
Fair value of plan assets
   
—  
      
13,773
     
83,011
     
—
     
11,080
     
81,587
 
                                                 
Funded status
  $
—
     $
(7,413
 )   $
(20,355
 )   $
(972
)    $
(6,644
 )   $
(12,135
 )
                                                 
The summary of the amounts recognized in the consolidated balance sheets for the plans at December 31, 2019 and 2018 is as follows (in thousands):
 
2019
   
2018
 
  
U.S.
Pension
Plans
 
  
U.S. 
Retiree
Healthcare
Plan
 
  
Non-U.S.

Pension
Plans
 
  
U.S.
Pension
Plans
 
  
U.S. 
Retiree
Healthcare
Plan
 
  
Non-U.S.

Pension
Plans
 
Long-term assets
  $
—  
     $
—  
     $
1,466
    $
—
    $
—  
     $
3,284
 
Current liabilities
   
—
      
(448
 )    
(4
 )    
(972
 )    
(387
 )    
(1
)
Long-term liabilities
   
—  
      
(6,965
 )    
(21,817
 )    
—
      
(6,257
 )    
(15,418
 )
                                                 
Net amount recognized at December 31
  $
—
     $
(7,413
 )   $
(20,355
 )   $
(972
)    $
(6,644
 )   $
(12,135
 )
                                                 
For the
Non-U.S.
Pension Plans, all of the plans where the projected benefit obligation is in excess of plan assets also have an accumulated benefit obligation that is in excess of plan assets, with the exception of a defined benefit plan in Belgium which has a projected benefit obligation of $11 million, an accumulated benefit obligation of $6 million, and plan assets of $10 million at December 31, 2019. The summary of the
Non-U.S.
Pension Plans that have projected benefit obligations and accumulated benefit obligations in excess of plan assets at December 31, 2019 and 2018 is as follows (in thousands):
 
2019
 
  
2018
 
Projected benefit obligation
  $
81,566
    $
60,359
 
Accumulated benefit obligations
  $
73,644
    $
56,029
 
Fair value of plan assets
  $
60,832
    $
44,940
 
The summary of the components of net periodic pension costs for the plans for the years ended December 31, 2019, 2018 and 2017 is as follows (in thousands):
 
2019
   
2018
   
2017
 
  
U.S.
Pension
Plans
 
  
U.S. 
Retiree
Healthcare
Plan
 
  
Non-U.S.

Pension
Plans
 
  
U.S.
Pension
Plans
 
  
U.S. 
Retiree
Healthcare
Plan
 
  
Non-U.S.

Pension
Plans
 
  
U.S.
Pension
Plans
 
  
U.S. 
Retiree
Healthcare
Plan
 
  
Non-U.S.

Pension
Plans
 
Service cost
  $
—
    $
499
    $
4,339
    $
568
    $
566
    $
5,368
    $
450
    $
546
    $
5,082
 
Interest cost
   
29
     
777
     
1,735
     
6,491
     
636
     
1,707
     
6,829
     
618
     
1,518
 
Expected return on plan assets
   
—
      
(706
 )    
(2,154
 )    
(6,833
 )    
(706
 )    
(1,974
 )    
(10,298
 )    
(587
 )    
(1,688
 )
Settlement loss
   
27
     
—  
      
1,548
      
45,157
     
—  
      
—
     
155
      
—  
      
232
  
Net amortization:
   
     
     
     
     
     
     
     
     
 
Prior service credit
   
—  
      
(19
 )    
(108
 )    
—  
      
(19
)
    
(108
 )    
—  
      
—  
      
(168
 )
Net actuarial loss
   
—
     
—  
      
531
     
3,082
     
—  
      
680
     
2,770
     
—  
      
959
 
                                                                         
Net periodic pension cost (benefit)
  $
56
    $
551
    $
5,891
    $
48,465
     $
477
    $
5,673
    $
(94
)   $
577
    $
5,935
 
                                                                         
The summary of the changes in amounts recognized in other comprehensive income (loss) for the plans for the years ended December 31, 2019, 2018 and 2017 is as follows (in thousands):
 
2019
   
2018
   
2017
 
  
U.S.
Pension
Plans
 
  
U.S. 
Retiree
Healthcare
Plan
 
  
Non-U.S.

Pension
Plans
 
  
U.S.
Pension
Plans
 
  
U.S. 
Retiree
Healthcare
Plan
 
  
Non-U.S.

Pension
Plans
 
  
U.S.
Pension
Plans
 
  
U.S. 
Retiree
Healthcare
Plan
 
  
Non-U.S.

Pension
Plans
 
Prior service (cost) credit
  $
—  
     $
—
    $
—
    $
—  
     $
130
     $
44
     $
—  
     $
—  
     $
(636
)
Net gain (loss) arising during the year
   
32
      
(648
 )    
(8,940
)    
(10,616
)     
(670
)    
4,088
     
8,879
      
13
      
1,609
  
Amortization:
   
     
     
     
     
     
     
     
     
 
Prior service credit
   
—  
      
(19
 )    
(108
 )    
—  
      
(19
)
    
(35
 )    
—  
      
—  
      
(168
 )
Net loss
   
27
     
—  
      
2,079
     
48,239
     
—  
      
680
     
2,925
     
—  
      
1,191
 
Other Plans
   
—  
      
—  
      
18
      
—  
      
—  
      
(354
)
    
—  
      
—  
      
—
  
Currency impact
   
—  
      
—  
      
178
     
—  
      
—  
      
583
      
—  
      
—  
      
(2,033
)
                                                                         
Total recognized in other comprehensive (loss) income
  $
59
    $
(667
 )   $
(6,773
)    $
37,623
    $
(559
)    $
5,006
     $
11,804
     $
13
     $
(37
 )
                                                                         
The summary of the amounts included in
accumulated
other comprehensive loss in stockholders’ (deficit) equity for the plans at December 31, 2019 and 2018 is as
follows (in thousands):
 
2019
   
2018
 
  
U.S.
Pension
Plans
 
  
U.S. 
Retiree
Healthcare
Plan
 
  
Non-U.S.

Pension
Plans
 
  
U.S.
Pension
Plans
 
  
U.S. 
Retiree
Healthcare
Plan
 
  
Non-U.S.

Pension
Plans
 
Net actuarial loss
   $
—
     $
(731
 )   $
(20,600
 )   $
(59
 )   $
(83
)   $
(13,987
 )
Prior service credit
   
—  
      
93
     
506
     
—  
      
112
      
666
 
                                                 
Total
  $
—
     $
(638
)   $
(20,094
 )   $
(59
 )   $
29
    $
(13,321
 )
                                                 
The summary of the amounts included in accumulated other comprehensive loss expected to be included in next year’s net periodic benefit cost for the plans at December 31, 2019 is as follows (in thousands):
 
2019
 
  
U.S.
Pension
Plans
 
  
U.S. 
Retiree
Healthcare
Plan
 
  
Non-U.S.

Pension
Plans
 
Net actuarial loss
  $
—  
     $
—  
     $
(1,541
 )
Prior service credit
   
—  
      
19
     
158
 
                         
Total
  $
—  
     $
19
    $
(1,383
 )
                         
The plans’ investment asset mix is as follows at December 31, 2019 and 2018:
 
2019
   
2018
 
  
U.S. 
Retiree
Healthcare
Plan
 
  
Non-U.S.

Pension
Plans
 
  
U.S. 
Retiree
Healthcare
Plan
 
  
Non-U.S.

Pension
Plans
 
Equity securities
   
64
 %    
6
 %    
61
 %    
7
 %
Debt securities
   
36
 %    
21
 %    
39
 %    
18
 %
Cash and cash equivalents
   
0
 %    
1
 %    
0
 %    
5
 %
Insurance contracts and other
   
0
 %    
72
 %    
0
 %    
70
 %
                                 
Total
   
100
 %    
100
 %    
100
 %    
100
 %
                                 
The plans’ investment policies include the following asset allocation guidelines:
 
U.S. Retiree Healthcare Plan
   
Non-U.S.

Pension Plans
Policy Target
 
  
Policy Target
 
  
Range
 
Equity securities
   
60
 %    
30%
 -
 
 90%
      
5
 %
Debt securities
   
35
 %    
20% -
 
50%
     
20
 %
Cash and cash equivalents
   
0
 %    
0% -
 
10%
     
10
 %
Insurance contracts and other
   
5
 %    
0% -
 
10%
     
65
 %
The asset allocation policy for the 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 compare favorably with those of other similar plans, professionally managed portfolios and of appropriate market indexes and maintaining sufficient liquidity to meet the obligations of the plan. Within the equity portfolio of the U.S. Retiree Healthcare Plan,
investments are diversified among market capitalization and investment strategy, and targets a 45% allocation of the 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. Retiree Healthcare Plan’s assets.
Plan assets are measured at fair value using the following valuation techniques and inputs:
Level 1:
 
The fair value of these types of investments is based on market and observable sources from daily quoted prices on nationally recognized securities exchanges.
     
Level 2:
 
The fair value of these types of investments utilizes data points other than quoted prices in active markets that are observable either directly or indirectly.
     
Level 3:
 
These bank and insurance investment contracts are issued by well-known, highly-rated companies. The fair value disclosed represents the present value of future cash flows under the terms of the respective contracts. Significant assumptions used to determine the fair value of these contracts include the amount and timing of future cash flows and counterparty credit risk.
There have been no changes in the above valuation techniques associated with determining the value of the plans’ assets during the years ended December 31, 2019 and 2018.
The fair value of the Company’s retirement plan assets are as follows at December 31, 2019 (in thousands):
 
Total at
December 31,
2019
 
  
Quoted Prices
in Active
Markets for
 
 
Identical
Assets
(Level 1)
 
  
Significant
Other
Observable
Inputs
(Level 2)
 
  
Significant
Unobservable
Inputs
(Level 3)
 
U.S. Retiree Healthcare Plan:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mutual funds
(a)
    
13,773
     
13,773
     
—  
      
—  
  
                                 
Total U.S. Retiree Healthcare Plan
   
13,773
     
13,773
     
—  
      
—  
  
Non-U.S. Pension Plans:
   
     
     
     
 
Cash equivalents
(b)
    
690
     
690
     
—  
      
—  
  
Mutual funds
(c)
    
22,202
     
22,202
     
—  
      
—  
  
Bank and insurance investment contracts
(d)
    
60,119
     
—  
      
—  
      
60,119
 
                                 
Total Non-U.S. Pension Plans
   
83,011
     
22,892
     
—  
      
60,119
 
                                 
Total fair value of retirement plan assets
   $
96,784
    $
36,665
    $
—  
     $
60,119
 
                                 
The fair value of the Company’s retirement plan assets are as follows at December 31, 2018 (in thousands):
 
Total at
December 31,
2018
 
  
Quoted Prices
in Active
Markets for 
Identical
 
Assets
(Level 1)
 
  
Significant
Other
Observable
Inputs
(Level 2)
 
  
Significant
Unobservable
Inputs
(Level 3)
 
U.S. Retiree Healthcare Plan:
   
     
     
     
 
Mutual funds
(
e
)
    
11,080
     
11,080
     
—  
      
—  
  
                                 
Total U.S. Retiree Healthcare Plan
   
11,080
     
11,080
     
—  
      
—  
  
Non-U.S.
Pension Plans:
    
     
     
     
 
Cash equivalents
(b)
    
4,439
     
4,439
     
—  
      
—  
  
Mutual funds
(
f
)
    
20,430
     
20,430
     
—  
      
—  
  
Bank and insurance investment contracts
(d)
    
56,718
     
—  
      
—  
      
56,718
 
                                 
Total
Non-U.S.
Pension Plans
    
81,587
     
24,869
     
—  
      
56,718
 
                                 
Total fair value of retirement plan assets
 
$
92,667
    $
35,949
    $
—  
     $
56,718
 
                                 
                                 
(a) The mutual fund balance in the U.S. Retiree Healthcare Plan is invested in the following categories: 35% in the common stock of
large-cap
U.S. companies, 29% in the common stock of international growth companies and 36% in fixed income bonds of U.S. companies and
the
U.S. government.
(b) Primarily represents deposit account funds held with various financial institutions.
(c) The mutual fund balance in the
Non-U.S.
Pension Plans is primarily invested in the following categories: 57% in international bonds, 23% in the common stock of international companies and 20% in various other global investments.
(d) Amount represents bank and insurance guaranteed investment contracts.
(e) The mutual fund balance in the U.S.
Retiree Healthcare Plan is
 invested in the following categories: 40% in the common stock of
large-cap
U.S. companies, 21% in the common stock of international growth companies and 39% in fixed income bonds 
of
U.S. companies and
the
U.S. government.
(f) The mutual fund balance in the
Non-
U.S. 
Pension Plans
is invested in the following categories: 56% in
international bonds,
 24% in the common stock of international companies and 20% 
in
various other global investments.
The following table summarizes the changes in fair value of the Level 
3
retirement plan assets for the years ended December 
31
,
2019
and
2018
(in thousands):
  
Insurance
Guaranteed
Investment
Contracts
 
Fair value of assets, December 31, 2017
  $
51,963
 
Net purchases (sales) and appreciation (depreciation)
   
4,755
 
         
Fair value of assets, December 31, 2018
   
56,718
 
Net purchases (sales) and appreciation (depreciation)
   
3,401
 
         
Fair value of assets, December 31, 2019
  $
60,119
 
         
The weighted-average assumptions used to determine the benefit obligation in the consolidated balance sheets at December 31, 2019, 2018 and 2017 are as follows:
 
2019
   
2018
   
2017
 
  
U.S.
 
  
Non-U.S.
 
  
U.S.
 
  
Non-U.S.
 
  
U.S.
 
  
Non-U.S.
 
Discount rate
   
3.42
 %    
1.38
 %    
4.40
 %    
1.95
 %    
3.94
 %    
1.79
 %
Increases in compensation levels
   
 
**
 
    
2.83
 %
 
    
 
**
 
 		    
2.66
 %
 
    
 
**
 
    
2.43
 %
 
** Not applicable
The weighted-average assumptions used to determine the net periodic pension cost for the years ended December 31, 2019, 2018 and 2017 are as follows:
 
2019
   
2018
   
2017
 
  
U.S.
 
  
Non-U.S.
 
  
U.S.
 
  
Non-U.S.
 
  
U.S.
 
  
Non-U.S.
 
Discount rate
   
4.41
 %    
2.25
 %    
3.96
 %    
1.93
 %    
4.28
 %    
1.80
 %
Return on plan assets
   
6.25
 %    
3.11
 %    
4.35
 %    
2.75
 %    
6.53
 %    
2.64
 %
Increases in compensation levels
   
 
**
 
    
3.20
 %
 
    
 
**
 
    
2.70
 %
 
    
 
**
 
    
2.63
 %
 
** 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 by
 
less than $1 million
.
A
one-quarter
percentage point increase in the discount rate would decrease the Company’s net periodic benefit cost by
less than $1 million
.
During fiscal year 2020, the Company expects to contribute a total of approximately $3 million to $6 million to the Company’s defined benefit plans. Estimated future benefit payments from the plans as of December 31, 2019 are as follows (in thousands):
 
U.S.
Retiree Healthcare
Plans
 
  
Non-U.S.

Pension
Plans
 
  
Total
 
2020
  $
1,123
    $
2,723
    $
3,846
 
2021
   
1,209
     
4,746
     
5,955
 
2022
   
1,281
     
3,238
     
4,519
 
2023
   
1,376
     
2,749
     
4,125
 
2024
   
1,437
     
2,884
     
4,321
 
2025 - 2029
   
7,420
     
20,691
     
28,111