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Note 8 - Employee Benefit Plans
 12 Months Ended
Dec. 31, 2022
Notes to Financial Statements  
Retirement Benefits [Text Block]
 

8.

Employee Benefit Plans

 

Employee Retirement Savings Plans

 

The Company sponsors various qualified employee retirement savings plans and makes discretionary contributions to match a certain portion of employee contributions. For the years ended December 31, 2022 and 2021, the Company contributed $1.1 million and $1.0 million, respectively, to these plans.

 

Employee Pension Plans

 

The Company’s subsidiary in the United Kingdom, Biochrom Limited maintains contributory, defined benefit pension plans for 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 ASC 715-20 require that the funded status of the pension plans be recognized in Company’s balance sheet. 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 Company records net period benefit expense (credit) as a component of other expense in the Consolidated Statement of Operations.

 

The components of the Company’s net period benefit (credit) expense were as follows:

 

  

Year Ended December 31,

 

(in thousands)

 

2022

  

2021

 

Interest cost

 $371  $358 

Expected return on plan assets

  (818)  (675)

Net amortization loss

  27   551 

Recognition of net loss due to settlements

  -   115 

Net periodic benefit (credit) cost

 $(420) $349 

 

The following provides a reconciliation of the changes in the plans’ benefit obligations and fair value of assets for the years ended December 31, 2022 and 2021, and a statement of the funded status as of December 31, 2022 and 2021:

 

  

December 31,

 

(in thousands)

 

2022

  

2021

 

Change in benefit obligation:

        

Balance at beginning of year

 $22,562  $25,519 

Interest cost

  371   358 

Actuarial (gain) loss

  (6,912)  (2,440)

Settlements due to transfers paid

  -   (198)

Benefits paid

  (592)  (498)

Currency translation adjustment

  (2,166)  (179)

Balance at end of year

 $13,263  $22,562 

 

Changes in the actuarial gain disclosed above are primarily the result of changes in the discount rate and inflation assumptions due to underlying market conditions.

 

  

December 31,

 

(in thousands)

 

2022

  

2021

 

Change in fair value of plan assets:

        

Balance at beginning of year

 $27,252  $23,926 

Actual return on plan assets

  (9,098)  3,354 

Employer contributions

  619   1,042 

Settlement due to transfers paid

  -   (270)

Benefits paid

  (592)  (498)

Currency translation adjustment

  (2,605)  (302)

Balance at end of year

 $15,576  $27,252 

 

  

December 31,

 

(in thousands)

 

2022

  

2021

 

Benefit obligation

 $13,263  $22,562 

Fair value of plan assets

  15,576   27,252 

Net funded status

 $2,313  $4,690 

 

The amounts recognized in the consolidated balance sheets consist of:

 

  

December 31,

 

(in thousands)

 

2022

  

2021

 

Other long-term assets

 $2,313  $4,690 

Deferred income tax liabilities

  (579)  (891)

Recognized in accumulated other comprehensive loss

 $1,734  $3,799 

 

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

 

  

Year Ended December 31,

 
  

2022

  

2021

 

Discount rate

  5.0%  1.8%

Expected return on assets

  5.0%  2.8%

 

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’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, 2022, 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 cost over the average remaining expected future working lifetime, which is approximately 8 years of active plan participants.

 

The fair value and asset allocations of the Company’s pension benefits as of December 31, 2022 and 2021 measurement dates were as follows:

 

  

December 31,

 

(in thousands)

 

2022

  

2021

 

Asset category:

                

Equity securities

 $3,507   23% $14,295   52%

Debt securities

  11,714   75%  4,720   17%

Liability driven investment funds

  -   -   5,722   21%

Cash and cash equivalents

  185   1%  1,907   7%

Other

  170   1%  608   2%

Total

 $15,576   100% $27,252   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, 2022 and 2021, is as follows:

 

  

December 31,

 

(in thousands)

 

2022

  

2021

 

Quoted Prices in Active Markets for Identical Assets (Level 1)

 $185  $1,907 

Significant Other Observable Inputs (Level 2)

  15,391   25,345 

Significant Other Unobservable Inputs (Level 3)

  -   - 

Total

 $15,576  $27,252 

 

Level 1 assets consist of cash and cash equivalents held in the pension plans. 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 approximately $0.6 million to its pension plans during 2023. The benefits expected to be paid from the pension plans are $0.7 million in 2023, $0.7 million in 2024, $0.8 million in 2025, $0.9 million in 2026 and $0.7 million in 2027. The expected benefits to be paid in the five years from 2028 to 2032 are $4.5 million. The expected benefits are based on the same assumptions used to measure the Company’s benefit obligations at December 31, 2022.