v3.24.0.1

Defined Benefit Plans Defined Benefit Plans | 12 Months Ended
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Dec. 31, 2023
Retirement Benefits [Abstract] |
Defined Benefit Plans | Defined Benefit Plans The Company sponsors various defined benefit plans and defined contribution plans for certain eligible employees or former employees. Since the Separation, all of the Company’s defined benefit plans are based outside of the U.S and the Company does not sponsor any other post-retirement benefit plans. The Company uses December 31 st as the measurement date for all of its employee benefit plans. As part of the Separation, all plans sponsored by ESAB and certain U.S. defined benefit and other post-retirement plans, formerly sponsored by the Company, were transferred to ESAB as of March 21, 2022. The impact of transferring the plans to ESAB is shown as Divestitures in the tables below. The following tables include all defined benefit plans historically sponsored by the Company prior to the transfer to ESAB. See Note 4, “Discontinued Operations” for further information. The following table summarizes the total changes in the Company’s pension benefits and plan assets and includes a statement of the plans’ funded status. The amounts presented as of January 1, 2022 and the changes in benefit obligation and plan assets in 2022 include three months of activity of the ESAB plans prior to the Separation.
| Total Pension Benefits |  | Foreign Pension Benefits
| Year Ended December 31, |  | Year Ended December 31,
| 2023 |  | 2022 |  | 2022
| (In thousands)
Change in benefit obligation: |  |  |  |  |
Projected benefit obligation, beginning of year | $ | 95,075 |  |  | $ | 455,067 |  |  | $ | 252,739 |
Service cost | 3,709 |  |  | 4,703 |  |  | 4,703 |
Interest cost | 2,122 |  |  | 1,821 |  |  | 897 |
Actuarial loss (gain)(1) | 11,465 |  |  | (21,586) |  |  | (21,586) |
Foreign exchange effect | 10,946 |  |  | (4,844) |  |  | (4,844) |
Transfers in (benefits paid), net(2) | 6,407 |  |  | (5,724) |  |  | (1,854) |
Divestitures(3) | — |  |  | (337,045) |  |  | (137,663) |
Settlements | (8,655) |  |  | — |  |  | — |
Other | 1,274 |  |  | 2,683 |  |  | 2,683 |
Projected benefit obligation, end of year | $ | 122,343 |  |  | $ | 95,075 |  |  | $ | 95,075 |
Accumulated benefit obligation, end of year | $ | 116,767 |  |  | $ | 91,527 |  |  | $ | 91,527 |
Change in plan assets: |  |  |  |  |
Fair value of plan assets, beginning of year | $ | 77,696 |  |  | $ | 366,820 |  |  | $ | 165,561 |
Actual return on plan assets | 4,173 |  |  | (4,193) |  |  | (6,557) |
Employer contribution | 3,632 |  |  | 3,416 |  |  | 3,378 |
Foreign exchange effect | 8,696 |  |  | (2,599) |  |  | (2,599) |
Transfers in (benefits paid), net(2) | 6,407 |  |  | (5,724) |  |  | (1,854) |
Divestitures(3) | — |  |  | (282,534) |  |  | (82,743) |
Settlements | (8,655) |  |  | — |  |  | — |
Other | 2,723 |  |  | 2,510 |  |  | 2,510 |
Fair value of plan assets, end of year | $ | 94,672 |  |  | $ | 77,696 |  |  | $ | 77,696 |
Funded status, end of year | $ | (27,671) |  |  | $ | (17,379) |  |  | $ | (17,379) |
Amounts recognized on the Consolidated Balance Sheet at December 31: |  |  |  |  |
Current liabilities | $ | (214) |  |  | $ | (174) |  |  | $ | (174) |
Non-current liabilities | (27,457) |  |  | (17,205) |  |  | (17,205) |
Total | $ | (27,671) |  |  | $ | (17,379) |  |  | $ | (17,379) |
(1) The actuarial loss for 2023 is primarily due to the decrease in discount rate in the Swiss market and the gain for 2022 is primarily due to the increases in discount rates in most markets. (2) Transfers in (benefits paid), net are positive for 2023 due to transfers in for new members. (3) Divestitures are related to the Separation. As of December 31, 2023 and 2022, all Enovis plans had projected benefit obligations in excess of the fair value of plan assets. The projected benefit obligation increased by $27.3 million in the year ended December 31, 2023 compared to a decrease of $360.0 million in the December 31, 2022. In the year ended December 31, 2023, the increase was mainly driven by two key factors: an actuarial loss of $11.5 million and the exchange rate effect of $10.9 million (as a result of the U.S. currency weakening relative to other currencies). In the year ended December 31, 2022, the single largest driver was a decrease of $337.0 million due to the divestiture of ESAB. In addition, there was an actuarial gain of $21.6 million. Expected contributions to the Company’s pension plans for the year ending December 31, 2024 are $3.5 million. The following benefit payments are expected to be paid during each respective fiscal year:
| All Plans |  |  |  |
| (In thousands)
2024 | $ | 4,863 |  |  |  |  |
2025 | 5,192 |  |  |  |  |
2026 | 6,333 |  |  |  |  |
2027 | 5,399 |  |  |  |  |
2028 | 5,309 |  |  |  |  |
2029 - 2032 | 31,653 |  |  |  |  |
The Company’s primary investment objective for its pension plan assets is to provide a source of retirement income for the plans’ participants and beneficiaries. The assets are invested with the goal of preserving principal while providing a reasonable real rate of return over the long term. Diversification of assets is achieved through strategic allocations to various asset classes. Actual allocations to each asset class vary due to periodic investment strategy changes, market value fluctuations, the length of time it takes to fully implement investment allocation positions, and the timing of benefit payments and contributions. The asset allocation is monitored and rebalanced as required, as frequently as on a quarterly basis in some instances. The following are the actual and target allocation percentages for the Company’s pension plan assets:
| Actual Asset Allocation December 31, |  | Target
| 2023 |  | 2022 |  | Allocation
Equity securities | 35 | % |  | 35 | % |  | 25% - 43%
Fixed income securities | 28 | % |  | 27 | % |  | 24% - 43%
Cash and cash equivalents | 3 | % |  | 2 | % |  | 0% - 10%
Other | 35 | % |  | 36 | % |  | 25% - 45%
A summary of the Company’s pension plan assets for each fair value hierarchy level for the periods presented follows (see Note 17, “Financial Instruments and Fair Value Measurements”, for further description of the levels within the fair value hierarchy):
| December 31, 2023
| Measured at Net Asset Value(1) |  | Level One |  | Level Two |  | Level Three |  | Total
| (In thousands)
Cash and cash equivalents | $ | — |  |  | $ | 2,406 |  |  | $ | — |  |  | $ | — |  |  | $ | 2,406 |
Equity securities | — |  |  | 33,091 |  |  | — |  |  | — |  |  | 33,091 |
Non-U.S. government and corporate bonds | — |  |  | 26,376 |  |  | — |  |  | — |  |  | 26,376 |
Other(1) | — |  |  | — |  |  | 32,799 |  |  | — |  |  | 32,799 |
| $ | — |  |  | $ | 61,873 |  |  | $ | 32,799 |  |  | $ | — |  |  | $ | 94,672 |
(1) Represents diversified portfolio funds, reinsurance contracts and money market funds.
| December 31, 2022
| Measured at Net Asset Value(1) |  | Level One |  | Level Two |  | Level Three |  | Total
| (In thousands)
Cash and cash equivalents | $ | — |  |  | $ | 1,250 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,250 |
Equity securities | — |  |  | 27,074 |  |  | — |  |  | — |  |  | 27,074 |
Non-U.S. government and corporate bonds | — |  |  | 21,224 |  |  | — |  |  | — |  |  | 21,224 |
Other(1) | — |  |  | — |  |  | 28,148 |  |  | — |  |  | 28,148 |
| $ | — |  |  | $ | 49,548 |  |  | $ | 28,148 |  |  | $ | — |  |  | $ | 77,696 |
(1) Represents diversified portfolio funds, reinsurance contracts and money market funds. The following table sets forth the components of Net periodic benefit cost (income) and Other comprehensive (gain) loss of the Company’s defined benefit pension plans and other post-retirement employee benefit plans:
| Pension Benefits
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
| (In thousands)
Components of Net Periodic Benefit (Income) Cost: |  |  |  |  |
Service cost | $ | 3,709 |  |  | $ | 4,703 |  |  | $ | 3,719 |
Interest cost | 2,122 |  |  | 1,821 |  |  | 4,642 |
Amortization | (1,759) |  |  | 1,187 |  |  | 5,953 |
Settlement gain | (578) |  |  | — |  |  | (11,157) |
Other | — |  |  | (20) |  |  | 2 |
Expected return on plan assets | (3,032) |  |  | (4,789) |  |  | (12,819) |
Net periodic benefit cost (income) | $ | 462 |  |  | $ | 2,902 |  |  | $ | (9,660) |
Change in Plan Assets and Benefit Obligations Recognized in Other Comprehensive (Gain) Loss: |  |  |  |  |
Current year net actuarial (gain) loss | $ | 9,478 |  |  | $ | (14,728) |  |  | $ | (27,385) |
Current year prior service cost | (1,448) |  |  | 221 |  |  | — |
Less amounts included in net periodic benefit (income) cost: |  |  |  |  |
Amortization of net (gain) loss | 1,839 |  |  | (1,135) |  |  | (5,899) |
Settlement/divestiture/other gain | 578 |  |  | — |  |  | (51) |
Amortization of prior service cost | (80) |  |  | (52) |  |  | (65) |
Total recognized in Other comprehensive (gain) loss | $ | 10,367 |  |  | $ | (15,694) |  |  | $ | (33,400) |
Net periodic benefit cost (income) of $0.3 million and $(9.9) million for the years ended December 31, 2022 and 2021, respectively are included in Income from discontinued operations. The following table sets forth the components of Net periodic benefit cost (income) and Other comprehensive (gain) loss of the foreign defined benefit pension plans for the years ended December 31, 2022 and 2021 included in the table above:
| Foreign Pension Benefits
| Year Ended December 31,
| 2022 |  | 2021
| (In thousands)
Components of Net Periodic Benefit (Income) Cost: |  |  |
Service cost | $ | 4,703 |  |  | $ | 3,719 |
Interest cost | 897 |  |  | 1,741 |
Amortization | 273 |  |  | 1,223 |
Settlement gain | — |  |  | (11,157) |
Other | (20) |  |  | 2 |
Expected return on plan assets | (2,425) |  |  | (3,015) |
Net periodic benefit cost (income) | $ | 3,428 |  |  | $ | (7,487) |
Change in Plan Assets and Benefit Obligations Recognized in Other Comprehensive (Gain) Loss: |  |  |
Current year net actuarial (gain) loss | $ | (14,728) |  |  | $ | (7,577) |
Current year prior service cost | 221 |  |  | — |
Less amounts included in net periodic benefit (income) cost: |  |  |
Amortization of net (gain) loss | (221) |  |  | (1,169) |
Settlement/divestiture/other gain | — |  |  | (51) |
Amortization of prior service cost | (52) |  |  | (65) |
Total recognized in Other comprehensive (gain) loss | $ | (14,780) |  |  | $ | (8,862) |
The components of net unrecognized pension benefit cost included in Accumulated other comprehensive income (loss) in the Consolidated Balance Sheets that have not been recognized as a component of Net periodic benefit (income) cost are as follows:
| December 31,
| 2023 |  | 2022
| (In thousands)
Net actuarial gain | $ | (4,681) |  |  | $ | (16,620) |
Prior service (income) cost | (1,084) |  |  | 488 |
Total | $ | (5,765) |  |  | $ | (16,132) |
The key economic assumptions used in the measurement of the Company’s pension benefit obligations are as follows:
| December 31,
| 2023 |  | 2022
Weighted-average discount rate for all plans | 1.5 | % |  | 2.2 | %
Weighted-average rate of increase in compensation levels for active plans | 1.5 | % |  | 1.5 | %
The key economic assumptions used in the computation of Net periodic benefit (income) cost are as follows:
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Weighted-average discount rate: |  |  |  |  |
All plans | 2.1 | % |  | 1.7 | % |  | 1.7 | %
Foreign plans |  |  | 1.2 | % |  | 1.4 | %
Weighted-average expected return on plan assets: |  |  |  |  |
All plans | 3.5 | % |  | 4.3 | % |  | 5.2 | %
Foreign plans |  |  | 2.8 | % |  | 3.6 | %
Weighted-average rate of increase in compensation levels for active plans | 1.5 | % |  | 1.7 | % |  | 0.6 | %
In determining discount rates, the Company utilizes the single discount rate equivalent to discounting the expected future cash flows from each plan using the yields at each duration from a published yield curve as of the measurement date. The expected long-term rate of return on plan assets was based on the Company’s investment policy target allocation of the asset portfolio between various asset classes and the expected real returns of each asset class over various periods of time that are consistent with the long-term nature of the underlying obligations of these plans. The Company maintains defined contribution plans for its employees. The Company’s expense in continuing operations for the years ended December 31, 2023, 2022 and 2021 was $8.1 million, $6.6 million and $5.4 million, respectively. Prior to the Separation, the Company sponsored other post-retirement benefit plans with unfunded liabilities of $11.9 million at the time of the Separation with annual costs of approximately $0.1 million. See prior filings for expanded disclosures related to these plans transferred to ESAB as part of the Separation.

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