Employee Benefit Plans

12 Months Ended

Dec. 31, 2016

Employee Benefit Plans Disclosure [Abstract]

Employee Benefit Plans Disclosure [Text Block]

17. 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 profit sharing retirement plans are at the discretion of management. For the years ended December 31, 2016, 2015 and 2014, the Company contributed approximately $0.6 million, $0.5 million and $0.5 million, respectively, to the 401(k) Plans.

Certain of the Company’s subsidiaries in the United Kingdom, Harvard Apparatus Limited and Biochrom, maintain contributory, defined benefit or defined contribution pension plans for substantially all of their employees. As of December 31, 2014, the principal employer of the Harvard Apparatus Limited pension plan was changed from Harvard Apparatus Limited to Biochrom. As of December 31, 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,
	2016		2015		2014
		(in thousands)
Components of net periodic benefit cost:
Interest cost		632		711		893
Expected return on plan assets		(683)		(668)		(649)
Net amortization loss		304		306		259
Net periodic benefit cost	$	253	$	349	$	503

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, 2016 and 2015 is as follows:

		December 31,
		2016		2015
		(in thousands)
Change in benefit obligation:
Balance at beginning of year	$	18,582	$	21,170
Interest cost		632		711
Actuarial loss (gain)		4,636		(1,360)
Benefits paid		(982)		(1,021)
Currency translation adjustment		(3,654)		(918)
Balance at end of year	$	19,214	$	18,582

		December 31,
		2016		2015
		(in thousands)
Change in fair value of plan assets:
Balance at beginning of year	$	15,767	$	16,724
Actual return on plan assets		3,868		70
Employer contributions		694		752
Benefits paid		(982)		(1,021)
Currency translation adjustment		(3,095)		(758)
Balance at end of year	$	16,252	$	15,767

		December 31,
		2016		2015
		(in thousands)
Change in benefit obligation:
Funded status	$	(2,962)	$	(2,815)
Unrecognized net loss		N/A		N/A
Net amount recognized	$	(2,962)	$	(2,815)

The accumulated benefit obligation for all defined benefit pension plans was $19.2 million and $18.6 million at December 31, 2016 and 2015, respectively.

The amounts recognized in the consolidated balance sheets consist of:

		December 31,
		2016		2015
		(in thousands)
Deferred income tax assets	$	504	$	535
Other long term liabilities		(2,962)		(2,815)
Net amount recognized	$	(2,458)	$	(2,280)

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

		December 31,
		2016		2015
		(in thousands)
Underfunded status of pension plans	$	(2,458)	$	(2,280)
Net amount recognized	$	(2,458)	$	(2,280)

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

	Year Ended December 31,
	2016	2015	2014

Discount rate	2.62%	3.57%	4.43%
Expected return on assets	4.68%	4.43%	4.15%

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 $30,000.

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, 2016, 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 $163,000.

The fair value and asset allocations of the Company’s pension benefits as of December 31, 2016 and 2015 measurement dates were as follows:

		December 31,
		2016			2015
		(in thousands)
Asset category:
Equity securities	$	8,577	53%	$	8,506	54%
Debt securities		7,447	46%		7,103	45%
Cash and cash equivalents		228	1%		158	1%
Total	$	16,252	100%	$	15,767	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, 2016 and 2015 is as follows:

		December 31,
		2016		2015
		(in thousands)
Quoted Prices in Active Markets for Identical Assets (Level 1)	$	228	$	158
Significant Other Observable Inputs (Level 2)		16,024		15,609
Significant Other Unobservable Inputs (Level 3)		-		-
Total	$	16,252	$	15,767

Level 1 assets consist of cash and cash equivalents held in the pension plans at December 31, 2016. 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. Included in Level 3 assets is an investment in a longevity fund which invests in a portfolio of physical life insurance settlements that are valued using the net asset values provided by the fund. Since June 2011, the fund has been closed to all activity. Due to the illiquidity and inactivity of the fund, during the year ended December 31, 2014, the Company wrote down its Level 3 investment to $0.

The Company expects to contribute approximately $0.7 million to its pension plans during 2017.

The benefits expected to be paid from the pension plans are $0.5 million in 2017, $0.4 million in 2018, $0.6 million in 2019, $0.5 million in 2020 and $0.5 million in 2021. The expected benefits to be paid in the five years from 2021—2025 are $3.6 million. The expected benefits are based on the same assumptions used to measure the Company’s benefit obligation at December 31, 2016.