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Defined Benefit Plans | 6 Months Ended
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Jun. 28, 2015
Defined Benefit Plans |
Defined Benefit Plans | 12.Defined Benefit Plans For the majority of its U.S. employees, the Company sponsors a funded non-contributory defined benefit pension plan, the Watts Water Technologies, Inc. Pension Plan (the “Pension Plan”), and an unfunded non-contributory defined benefit pension plan, the Watts Water Technologies, Inc. Supplemental Employees Retirement Plan (the “SERP”). Benefits are based primarily on years of service and employees’ compensation. The funding policy of the Company for these plans is to contribute an annual amount that meets the Pension Plan’s minimum funding requirements and does not exceed the maximum amount that can be deducted for federal income tax purposes. On October 31, 2011, the Company’s Board of Directors voted to cease accruals effective December 31, 2011 under both the Company’s Pension Plan and the SERP. On April 28, 2014, the Company’s Board of Directors voted to terminate the Company’s Pension Plan and the SERP. The Board of Directors authorized the Company to make such contributions to the Pension Plan and SERP as may be necessary to make the plans sufficient to settle all plan liabilities. The Pension Plan was terminated effective July 31, 2014, and on June 4, 2015 the Company received the Internal Revenue Service (IRS) favorable determination letter for terminating the Pension Plan. The Pension Plan is now moving through the distribution phase of the plan termination process and the Company expects all plan assets to be fully distributed by the end of the third quarter of 2015. Except for retirees receiving payments under the Pension Plan (or “in pay status”), participants in the Pension Plan will have the choice of receiving either a single lump sum payment or an annuity. Retirees in pay status will continue to receive payments of their pension plan benefits pursuant to their current annuity elections. The Company will purchase annuity contracts from an insurance company for all retirees and participants that choose annuities as a payment option under the Pension Plan. The SERP was terminated effective May 15, 2014. The Company will settle all liabilities under the SERP in accordance with Section 409A of the Internal Revenue Code by paying lump sums to plan participants. The Company expects all payments to be made by the end of the third quarter of 2015. The components of net periodic benefit cost are as follows:
|  | Second Quarter Ended |  | Six Months Ended |
|  | June 28, 2015 |  | June 29, 2014 |  | June 28, 2015 |  | June 29, 2014 |
|  | (in millions) |
Service cost — administrative costs |  | $ | 0.4 |  | $ | 0.1 |  | $ | 0.8 |  | $ | 0.3 |
Interest costs on benefits obligation |  | 1.4 |  | 1.5 |  | 2.8 |  | 3.0 |
Expected return on assets |  | (1.2 | ) | (1.5 | ) | (2.4 | ) | (3.0 | )
Net actuarial loss amortization |  | 0.4 |  | 0.2 |  | 0.8 |  | 0.5 |
Net periodic benefit cost |  | $ | 1.0 |  | $ | 0.3 |  | $ | 2.0 |  | $ | 0.8 |
The information related to the Company’s pension funds cash flow is as follows:
|  | Six Months Ended |
|  | June 28, 2015 |  | June 29, 2014 |
|  | (in millions) |
Employer contributions |  | $ | 0.5 |  | $ | 0.4 |
The Company expects to contribute approximately $40 million to $45 million to its pension plans in the third quarter of 2015 to fully fund the terminations. The expected contribution is subject to change based on the fair value of the plan assets at distribution, market interest rates and annuity purchase rates at distribution, recent demographic experience and elected forms of payment. Upon liquidation of the plans, the accumulated other comprehensive loss related to the plans will be recognized in the Company’s Consolidated Statement of Operations and Consolidated Statement of Comprehensive Income. The accumulated other comprehensive loss related to the plans as of June 28, 2015 was $58.1 million or $35.7 million net of tax.

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