Employee Benefit Plans

12 Months Ended

Dec. 31, 2013

Employee Benefit Plans

Employee Benefit Plans

Note 13—Employee Benefit Plans

Defined Benefit Plans

        Substantially all of the Company's employees in Switzerland, France and Japan, as well as certain employees in Germany, are covered by Company-sponsored defined benefit pension plans. Retirement benefits are generally earned based on years of service and compensation during active employment. Eligibility is generally determined in accordance with local statutory requirements, however, the level of benefits and terms of vesting varies among plans.

Net Periodic Pension Cost

        The components of net periodic benefit costs for the years ended December 31, 2013, 2012 and 2011 were as follows:

	2013			2012			2011
Components of net periodic benefit costs:
Service cost	$	5.5		$	4.6		$	5.5
Interest cost		4.1			4.8			4.9
Expected return on plan assets		(3.8	)		(4.0	)		(4.1	)
Amortization of net loss		2.2			1.1			1.3
Net periodic benefit costs	$	8.0		$	6.5		$	7.6

        The Company measures its benefit obligation and the fair value of plan assets as of December 31st each year. The changes in benefit obligations and plan assets under the defined benefit pension plans, projected benefit obligation and funded status of the plans were as follows at December 31, (in millions):

	2013			2012
Change in benefit obligation:
Benefit obligation at beginning of year	$	185.5		$	153.5
Service cost		5.5			4.6
Interest cost		4.1			4.8
Plan participant contributions		3.7			3.4
Plan curtailments		(0.5	)		—
Benefits paid		(6.6	)		(5.0	)
Actuarial loss (gain)		(13.1	)		20.4
Impact of foreign currency exchange rates		4.5			3.8
Benefit obligation at end of year		183.1			185.5
Change in plan assets:
Fair value of plan assets at beginning of year		123.9			112.9
Return on plan assets		10.8			4.4
Plan participant and employer contributions		8.9			8.7
Benefits paid		(6.6	)		(5.0	)
Impact of foreign currency exchange rates		4.0			2.9
Fair value of plan assets at end of year		141.0			123.9
Net funded status	$	(42.1	)	$	(61.6	)

        The accumulated benefit obligation for the defined benefit pension plans is $174.8 million and $176.5 million at December 31, 2013 and 2012, respectively. All defined benefit pension plans have an accumulated benefit obligation and projected benefit obligation in excess of plan assets at December 31, 2013 and 2012.

        The following amounts were recognized in the accompanying consolidated balance sheets for the Company's defined benefit plans at December 31, (in millions):

	2013			2012
Current liabilities	$	(1.6	)	$	(1.6	)
Non-current liabilities		(40.5	)		(60.0	)
Net benefit obligation	$	(42.1	)	$	(61.6	)

        The following pre-tax amounts were recognized in accumulated other comprehensive income for the Company's defined benefit plans at December 31, (in millions):

	2013			2012
Reconciliation of amounts recognized in the consolidated balance sheets:
Net actuarial loss	$	(20.3	)	$	(41.1	)
Accumulated other comprehensive loss		(20.3	)		(41.1	)
Accumulated contributions in excess of net periodic benefit cost		(21.8	)		(20.5	)
Net amount recognized	$	(42.1	)	$	(61.6	)

        The amount in accumulated other comprehensive income at December 31, 2013 expected to be recognized as amortization of net loss within net periodic benefit cost in 2014 is $0.1 million.

        The range of assumptions used for defined benefit pension plans reflects the different economic environments within the various countries. The range of assumptions used to determine the projected benefit obligations for the years ended December 31, are as follows:

	2013	2012	2011
Discount rate	0.7%-3.8%	0.8%-4.1%	1.1%-5.5%
Expected return on plan assets	3.0%	3.5%	3.4%-4.0%
Expected rate of compensation increase	1.0%-3.0%	1.0%-3.8%	1.0%-3.8%

        To determine the expected long-term rate of return on pension plan assets, the Company considers current asset allocations, as well as historical and expected returns on various asset categories of plan assets. For the principal pension plans, the Company applies the expected rate of return to a market-related value of assets, which stabilizes variability in assets to which the expected return is applied.

Asset Allocations by Asset Category

        The fair value of the Company's pension plan assets at December 31, 2013 and 2012, by asset category and by level in the fair value hierarchy, is as follows (in millions):

December 31, 2013	Total		Quoted Prices in Active Markets Available (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Plan Assets:
Cash and cash equivalents (a)	$	19.4	$	19.4	$	—	$	—
Debt securities:
U.S. Corporate (b)		1.4		1.4		—		—
Foreign corporations (c)		51.1		51.1		—		—
Foreign governments (c)		8.3		8.3		—		—
		60.8		60.8		—		—
Equity Securities:
Foreign corporations (d)		35.1		35.1		—		—
U.S. corporations (d)		5.3		5.3		—		—
		40.4		40.4		—		—
Real estate (e)		14.4		14.4		—		—
Mortgage and other asset-backed securities (f)		6.0		—		6.0		—
Total plan assets	$	141.0	$	135.0	$	6.0	$	—

December 31, 2012	Total		Quoted Prices in Active Markets Available (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Plan Assets:
Cash and cash equivalents (a)	$	12.1	$	12.1	$	—	$	—
Debt securities:
U.S. Corporate (b)		1.3		1.3		—		—
Foreign corporations (c)		43.3		43.3		—		—
Foreign governments (c)		7.5		7.5		—		—
		52.1		52.1		—		—
Equity Securities:
Foreign corporations (d)		31.4		31.4		—		—
U.S. corporations (d)		6.4		6.4		—		—
		37.8		37.8		—		—
Real estate (e)		15.0		15.0		—		—
Mortgage and other asset-backed securities (f)		6.9		—		6.9		—
Total plan assets	$	123.9	$	117.0	$	6.9	$	—

(a)

Cash and cash equivalents consist primarily of highly liquid investments, including cash on hand.

(b)

Our U.S. Corporate bond investments had an average rating of AA.

(c)

Our Foreign Corporate and Government bond investments had an average rating of AA.

(d)

U.S. and International equites primarily include investments in large market capitalization stocks.

(e)

Real estate includes Swiss public real estate funds which generate returns in line with the Swiss property market by investing in residential and commerical properties throughout Switzerland.

(f)

Mortgage and other asset-backed securities pool together various cash-flow producing financial assets typically collateralized by residential mortgages, commercial mortgages and other assets.

        A Board of Trustees comprised of employer and employee representatives of the subsidiaries are responsible for setting the policy that serves as the framework for allocating plan assets within the guidelines provided by the respective government. The policy defines an investment strategy, including the asset allocation ranges, which is designed to ensure that the benefit obligations of the plans can be met when they are due. The investment strategy also is targeted at optimizing the return on investment within the risk constraints of the plans. The Board of Trustees appoint the plan administrators and investment managers, who oversee the investment allocation process, setting long-term strategic targets and monitoring asset allocations. The target allocations are 55% bonds, including cash, 30% equity investments and 15% real estate and mortgages. Target allocation ranges are guidelines, not limitations, and occasionally the Board of Trustees will approve allocations above or below a target range based on a number of factors, including market conditions.

Contributions and Estimated Future Benefit Payments

        During 2014, the Company expects contributions to be consistent with 2013. The estimated future benefit payments are based on the same assumptions used to measure the Company's benefit obligation at December 31, 2013. The following benefit payments reflect future employee service as appropriate (in millions):

2014	$	3.8
2015		4.0
2016		4.6
2017		4.8
2018		5.3
2019-2023		34.0

Other Benefit Plans

        The Company sponsors various defined contribution plans that cover certain domestic and international employees. The Company may make contributions to these plans at its discretion. The Company contributed $5.3 million, $4.6 million and $3.7 million to such plans in the years ended December 31, 2013, 2012 and 2011, respectively.