Employee Benefit Plans

12 Months Ended

Dec. 31, 2018

Employee Benefit Plans Disclosure [Abstract]

Employee Benefit Plans Disclosure [Text Block]

12. Employee Benefit Plans

The Company sponsors profit sharing retirement plans for its U.S. employees, which includes employee savings plans established under Section 401(k) of the U.S. Internal Revenue Code (the “401(k) Plans”). The 401(k) Plans cover substantially all full-time employees who meet certain eligibility requirements. Contributions to the 401(k) Plans are at the discretion of management. For the years ended December 31, 2018 and 2017, the Company contributed approximately $0.5 million and $0.6 million, respectively, to the 401(k) Plans.

The Company’s subsidiary in the United Kingdom, Biochrom Limited maintains contributory, defined benefit or defined contribution pension plans for substantially all of its employees. In 2014, these defined benefit pension plans were closed to new employees, as well as closed to the future accrual of benefits for existing employees. The provisions of FASB ASC 715-20 require that the funded status of the Company’s pension plans be recognized in its balance sheet. FASB ASC 715-20 does not change the measurement or income statement recognition of these plans, although it does require that plan assets and benefit obligations be measured as of the balance sheet date. The Company has historically measured the plan assets and benefit obligations as of the balance sheet date.

The components of the Company’s defined benefit pension expense were as follows:

	Year Ended December 31,
	2018		2017
		(in thousands)
Components of net periodic benefit cost:
Interest cost		502		524
Expected return on plan assets		(779)		(663)
Net amortization loss		222		362
Recognition of net gain/loss due to settlements		110		-
Net periodic benefit cost	$	55	$	223

The measurement date is December 31 for these plans. The funded status of the Company’s defined benefit pension plans and the amount recognized in the consolidated balance sheets at December 31, 2018 and 2017 is as follows:

		December 31,
		2018		2017
		(in thousands)
Change in benefit obligation:
Balance at beginning of year	$	21,126	$	19,214
Service cost		24		-
Interest cost		502		524
Actuarial (gain) loss		(1,056)		26
Settlements due to transfers paid		(267)		-
Benefits paid		(521)		(514)
Currency translation adjustment		(1,107)		1,876
Balance at end of year	$	18,701	$	21,126

		December 31,
		2018		2017
		(in thousands)
Change in fair value of plan assets:
Balance at beginning of year	$	19,972	$	16,252
Actual return on plan assets		(1,058)		1,871
Employer contributions		741		689
Settlement due to transfers paid		(263)		-
Benefits paid		(521)		(514)
Currency translation adjustment		(1,052)		1,674
Balance at end of year	$	17,819	$	19,972

		December 31,
		2018		2017
		(in thousands)
Change in benefit obligation:
Funded status	$	(882)	$	(1,154)
Unrecognized net loss		N/A		N/A
Net amount recognized	$	(882)	$	(1,154)

The accumulated benefit obligation for all defined benefit pension plans was $18.7 million and $21.1 million at December 31, 2018 and 2017, respectively.

The amounts recognized in the consolidated balance sheets consist of:

		December 31,
		2018		2017
		(in thousands)
Deferred income tax assets	$	150	$	196
Other long term liabilities		(882)		(1,154)
Net amount recognized	$	(732)	$	(958)

The amounts recognized in accumulated other comprehensive loss, net of tax consist of:

		December 31,
		2018		2017
		(in thousands)
Underfunded status of pension plans	$	(732)	$	(958)
Net amount recognized	$	(732)	$	(958)

The weighted average assumptions used in determining the net pension cost for these plans follows:

	Year Ended December 31,
	2018	2017

Discount rate	2.65%	2.43%
Expected return on assets	4.68%	3.86%

The discount rate assumptions used for pension accounting reflect the prevailing rates available on high-quality, fixed-income debt instruments with terms that match the average expected duration of the Company’s defined benefit pension plan obligations. The Company uses the iBoxx AA 15yr+ index, which matches the average duration of its pension plan liability of approximately 15 years. With the current base of assets in the pension plans, a one percent increase/decrease in the discount rate assumption would decrease/increase annual pension expense by approximately $9,000.

The Company’s mix of pension plan investments among asset classes also affects the long-term expected rate of return on plan assets. As of December 31, 2018, the Company’s actual asset mix approximated its target mix. Differences between actual and expected returns are recognized in the calculation of net periodic pension (income)/cost over the average remaining expected future working lifetime, which is approximately 15 years, of active plan participants. With the current base of assets, a one percent increase/decrease in the asset return assumption would decrease/increase annual pension expense by approximately $178,000.

The fair value and asset allocations of the Company’s pension benefits as of December 31, 2018 and 2017 measurement dates were as follows:

		December 31,
		2018			2017
		(in thousands)
Asset category:
Equity securities	$	9,134	51%	$	10,774	54%
Debt securities		3,274	18%		3,204	16%
Liability driven investment funds		4,341	24%		4,685	23%
Cash and cash equivalents		618	4%		856	4%
Other		452	3%		453	3%
Total	$	17,819	100%	$	19,972	100%

Financial reporting standards define a fair value hierarchy that consists of three levels. The fair values of the plan assets by fair value hierarchy level as of December 31, 2018 and 2017 is as follows:

		December 31,
		2018		2017
		(in thousands)
Quoted Prices in Active Markets for Identical Assets (Level 1)	$	618	$	856
Significant Other Observable Inputs (Level 2)		17,201		19,116
Significant Other Unobservable Inputs (Level 3)		-		-
Total	$	17,819	$	19,972

Level 1 assets consist of cash and cash equivalents held in the pension plans at December 31, 2018. The Level 2 assets primarily consist of investments in private investment funds that are valued using the net asset values provided by the trust or fund, including an insurance contract. Although these funds are not traded in an active market with quoted prices, the investments underlying the net asset value are based on quoted prices

The Company expects to contribute at least $0.7 million to its pension plans during 2019. These contributions are expected to increase in 2019 and beyond by an immaterial amount in order to accelerate the deficit recovery period.

The benefits expected to be paid from the pension plans are $0.6 million in 2019, $0.5 million in 2020, $0.5 million in 2021, $0.6 million in 2022 and $0.7 million in 2023. The expected benefits to be paid in the five years from 2024—2028 are $4.0 million. The expected benefits are based on the same assumptions used to measure the Company’s benefit obligation at December 31, 2018.