XML 132 R21.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Pension and Other Postretirement Benefits
 12 Months Ended
Dec. 31, 2019
Retirement Benefits [Abstract]  
Pension and Other Postretirement Benefits Pension and Other Postretirement Benefits
 
The accounting standards related to employers’ accounting for defined benefit pension and other postretirement plans requires the Company to recognize the funded status of its defined benefit postretirement plans as assets or liabilities in the accompanying consolidated balance sheets and to recognize changes in the funded status of the plans in comprehensive income.

The Company has various defined contribution plans, the largest of which is its Retirement Savings Plan. Most U.S. salaried and non-union hourly employees are eligible to participate in this plan. See Note 18 for further discussion of the Retirement Savings Plan. The Company also maintains various other defined contribution plans which cover certain other employees. Company contributions under certain of these plans are based on the performance of the business units and employee compensation. Contribution expense under these other defined contribution plans was $6,874, $6,921 and $6,644 in 2019, 2018 and 2017, respectively.

Defined benefit pension plans in the U.S. cover a majority of the Company’s U.S. employees at the Associated Spring and Force & Motion Control (formerly "Nitrogen Gas Products") businesses of Industrial, the Company’s Corporate Office and certain former U.S. employees, including retirees. Employees at certain international businesses within Industrial are also covered by defined benefit pension plans. Plan benefits for salaried and non-union hourly employees are based on years of service and average salary. Plans covering union hourly employees provide benefits based on years of service. In 2012, the Company closed the U.S. Salaried defined benefit pension plan ("U.S. Salaried Plan") to employees hired on or after January 1, 2013, with no impact to the benefits of existing participants. Effective January 1, 2013, the Retirement Savings Plan was amended to provide certain salaried employees hired on or after January 1, 2013 with an additional annual retirement contribution of 4% of eligible earnings, in place of pensionable benefits under the closed U.S. Salaried Plan. The Company funds U.S. pension costs in accordance with the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Non-U.S. defined benefit pension plans cover certain employees of certain international locations in Europe and Canada.
 
The Company provides other medical, dental and life insurance postretirement benefits for certain of its retired employees in the U.S. and Canada. It is the Company’s practice to fund these benefits as incurred.
 
The accompanying balance sheets reflect the funded status of the Company’s defined benefit pension plans at December 31, 2019 and 2018, respectively. Reconciliations of the obligations and funded status of the plans follow:
 
 
 
2019
 
2018
 
 
U.S.
 
Non-U.S.
 
Total
 
U.S.
 
Non-U.S.
 
Total
Benefit obligation, January 1
 
$
388,334

 
$
79,307

 
$
467,641

 
$
415,369

 
$
82,741

 
$
498,110

Service cost
 
3,715

 
1,710

 
5,425

 
4,290

 
1,671

 
5,961

Interest cost
 
16,628

 
1,611

 
18,239

 
15,875

 
1,508

 
17,383

Amendments
 
240

 
(934
)
 
(694
)
 
—

 
826

 
826

Actuarial loss (gain)
 
46,662

 
11,843

 
58,505

 
(22,193
)
 
(2,256
)
 
(24,449
)
Benefits paid
 
(24,954
)
 
(4,026
)
 
(28,980
)
 
(25,007
)
 
(6,607
)
 
(31,614
)
Transfers in
 
—

 
2,165

 
2,165

 
—

 
3,462

 
3,462

Plan settlements
 
—

 
(1,582
)
 
(1,582
)
 
—

 
—

 
—

Participant contributions
 
—

 
1,131

 
1,131

 
—

 
1,120

 
1,120

Foreign exchange rate changes
 
—

 
1,975

 
1,975

 
—

 
(3,158
)
 
(3,158
)
Reclassified to liabilities held for sale (see Note 3)
 
—

 
(6,169
)
 
(6,169
)
 
—

 
—

 
—

Benefit obligation, December 31
 
430,625

 
87,031

 
517,656

 
388,334

 
79,307

 
467,641

Fair value of plan assets, January 1
 
322,615

 
73,607

 
396,222

 
375,378

 
79,060

 
454,438

Actual return on plan assets
 
64,681

 
6,992

 
71,673

 
(30,681
)
 
(1,928
)
 
(32,609
)
Company contributions
 
17,900

 
1,808

 
19,708

 
2,925

 
1,807

 
4,732

Participant contributions
 
—

 
1,131

 
1,131

 
—

 
1,120

 
1,120

Benefits paid
 
(24,954
)
 
(4,026
)
 
(28,980
)
 
(25,007
)
 
(6,607
)
 
(31,614
)
Plan settlements
 
—

 
(1,582
)
 
(1,582
)
 
—

 
—

 
—

Transfers in
 
—

 
2,165

 
2,165

 
—

 
3,462

 
3,462

Foreign exchange rate changes
 
—

 
2,170

 
2,170

 
—

 
(3,307
)
 
(3,307
)
Fair value of plan assets, December 31
 
380,242

 
82,265

 
462,507

 
322,615

 
73,607

 
396,222

Underfunded status, December 31
 
$
(50,383
)
 
$
(4,766
)
 
$
(55,149
)
 
$
(65,719
)
 
$
(5,700
)
 
$
(71,419
)


Projected benefit obligations related to pension plans with benefit obligations in excess of plan assets follow:
 
 
2019
 
2018
 
 
U.S.
 
Non-U.S.
 
Total
 
U.S.
 
Non-U.S.
 
Total
Projected benefit obligation
 
$
334,808

 
$
46,256

 
$
381,064

 
$
388,334

 
$
42,000

 
$
430,334

Fair value of plan assets
 
282,213

 
31,248

 
313,461

 
322,615

 
28,595

 
351,210


 
Information related to pension plans with accumulated benefit obligations in excess of plan assets follows:
 
 
2019
 
2018
 
 
U.S.
 
Non-U.S.
 
Total
 
U.S.
 
Non-U.S.
 
Total
Projected benefit obligation
 
$
334,808

 
$
46,256

 
$
381,064

 
$
388,334

 
$
42,000

 
$
430,334

Accumulated benefit obligation
 
322,999

 
52,202

 
375,201

 
378,285

 
41,946

 
420,231

Fair value of plan assets
 
282,213

 
31,248

 
313,461

 
322,615

 
28,595

 
351,210


 
The accumulated benefit obligation for all defined benefit pension plans was $511,977 and $457,539 at December 31, 2019 and 2018, respectively.
 








Amounts related to pensions recognized in the accompanying balance sheets consist of:
 
 
2019
 
2018
 
 
U.S.
 
Non-U.S.
 
Total
 
U.S.
 
Non-U.S.
 
Total
Other assets
 
$
2,212

 
$
10,242

 
$
12,454

 
$
—

 
$
7,705

 
$
7,705

Accrued liabilities
 
2,977

 
—

 
2,977

 
2,826

 
378

 
3,204

Accrued retirement benefits
 
49,618

 
15,008

 
64,626

 
62,893

 
13,027

 
75,920

Accumulated other non-owner changes to equity, net
 
(122,109
)
 
(18,859
)
 
(140,968
)
 
(121,927
)
 
(14,047
)
 
(135,974
)

 
Amounts related to pensions recognized in accumulated other non-owner changes to equity, net of tax, at December 31, 2019 and 2018, respectively, consist of:

 
 
2019
 
2018
 
 
U.S.
 
Non-U.S.
 
Total
 
U.S.
 
Non-U.S.
 
Total
Net actuarial loss
 
$
(119,908
)
 
$
(19,190
)
 
$
(139,098
)
 
$
(119,601
)
 
$
(13,637
)
 
$
(133,238
)
Prior service costs
 
(2,201
)
 
331

 
(1,870
)
 
(2,326
)
 
(410
)
 
(2,736
)
 
 
$
(122,109
)
 
$
(18,859
)
 
$
(140,968
)
 
$
(121,927
)
 
$
(14,047
)
 
$
(135,974
)

 
The accompanying balance sheets reflect the underfunded status of the Company’s other postretirement benefit plans at December 31, 2019 and 2018. Reconciliations of the obligations and underfunded status of the plans follow:
 
 
 
2019
 
2018
Benefit obligation, January 1
 
$
33,076

 
$
37,570

Service cost
 
70

 
85

Interest cost
 
1,345

 
1,358

Actuarial loss (gain)
 
380

 
(3,791
)
Benefits paid
 
(2,917
)
 
(3,435
)
Participant contributions
 
1,246

 
1,280

Foreign exchange rate changes
 
39

 
9

Benefit obligation, December 31
 
33,239

 
33,076

Fair value of plan assets, January 1
 
—

 
—

Company contributions
 
1,671

 
2,155

Participant contributions
 
1,246

 
1,280

Benefits paid
 
(2,917
)
 
(3,435
)
Fair value of plan assets, December 31
 
—

 
—

Underfunded status, December 31
 
$
33,239

 
$
33,076


 
Amounts related to other postretirement benefits recognized in the accompanying balance sheets consist of:
 
 
 
2019
 
2018
Accrued liabilities
 
$
5,067

 
$
5,414

Accrued retirement benefits
 
28,172

 
27,662

Accumulated other non-owner changes to equity, net
 
(3,079
)
 
(2,716
)

 





Amounts related to other postretirement benefits recognized in accumulated other non-owner changes to equity, net of tax, at December 31, 2019 and 2018 consist of:
 
 
 
2019
 
2018
Net actuarial loss
 
$
(2,981
)
 
$
(2,618
)
Prior service loss
 
(98
)
 
(98
)
 
 
$
(3,079
)
 
$
(2,716
)

 
The sources of changes in accumulated other non-owner changes to equity, net, during 2019 were: 
 
 
 
Pension
 
Other
Postretirement
Benefits
Prior service cost
 
$
560

 
$
—

Net loss
 
(12,607
)
 
(289
)
Amortization of prior service costs
 
308

 
19

Amortization of actuarial loss
 
7,050

 
9

Foreign exchange rate changes
 
(305
)
 
(102
)
 
 
$
(4,994
)
 
$
(363
)


Weighted-average assumptions used to determine benefit obligations as of December 31, are:
 
 
2019
 
2018
U.S. plans:
 
 
 
 
Discount rate
 
3.40
%
 
4.40
%
Increase in compensation
 
2.56
%
 
2.56
%
Non-U.S. plans:
 
 
 
 
Discount rate
 
1.26
%
 
2.07
%
Increase in compensation
 
2.72
%
 
2.72
%


The investment strategy of the plans is to generate a consistent total investment return sufficient to pay present and future plan benefits to retirees, while minimizing the long-term cost to the Company. Target allocations for asset categories are used to earn a reasonable rate of return, provide required liquidity and minimize the risk of large losses. Targets may be adjusted, as necessary, to reflect trends and developments within the overall investment environment. The weighted-average target investment allocations by asset category were as follows during 2019: 65% in equity securities and 35% in fixed income securities, including cash.

















The fair values of the Company’s pension plan assets at December 31, 2019 and 2018, by asset category are as follows:
 
 
 
 
 
Fair Value Measurements Using
Asset Category
 
Total
 
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
 
Significant Other
Observable Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
December 31, 2019
 
 
 
 
 
 
 
 
Cash and short-term investments
 
$
3,737

 
$
3,737

 
$
—

 
$
—

Equity securities:
 
 
 
 
 
 
 
 
U.S. large-cap
 
40,538

 
—

 
40,538

 
—

U.S. mid-cap
 
17,744

 
17,744

 
—

 
—

U.S. small-cap
 
16,116

 
16,116

 
—

 
—

International equities
 
146,013

 
—

 
146,013

 
—

Global equity
 
51,037

 
51,037

 
—

 
—

Fixed income securities:
 
 
 
 
 
 
 
 
U.S. bond funds
 
124,429

 
—

 
124,429

 
—

International bonds
 
60,050

 
—

 
60,050

 
—

Other
 
2,843

 
—

 
—

 
2,843

 
 
$
462,507

 
$
88,634

 
$
371,030

 
$
2,843

December 31, 2018
 
 
 
 
 
 
 
 
Cash and short-term investments
 
3,750

 
3,750

 
—

 
—

Equity securities:
 
 
 
 
 
 
 
 
U.S. large-cap
 
36,821

 
—

 
36,821

 
—

U.S. mid-cap
 
13,337

 
13,337

 
—

 
—

U.S. small-cap
 
13,244

 
13,244

 
—

 
—

International equities
 
123,084

 
—

 
123,084

 
—

Global equity
 
43,337

 
43,337

 
—

 
—

Fixed income securities:
 
 
 
 
 
 
 
 
U.S. bond funds
 
117,249

 
—

 
117,249

 
—

       International bonds
 
42,920

 
—

 
42,920

 
—

Other
 
2,480

 
—

 
—

 
2,480

 
 
$
396,222

 
$
73,668

 
$
320,074

 
$
2,480


 
The fair values of the Level 1 assets are based on quoted market prices from various financial exchanges. The fair values of the Level 2 assets are based primarily on quoted prices in active markets for similar assets or liabilities. The Level 2 assets are comprised primarily of commingled funds and fixed income securities. Commingled equity funds are valued at their net asset values based on quoted market prices of the underlying assets. Fixed income securities are valued using a market approach which considers observable market data for the underlying asset or securities. The Level 3 assets relate to the defined benefit pension plan at the Synventive business. These pension assets are fully insured and have been estimated based on accrued pension rights and actuarial rates. These pension assets are limited to fulfilling the Company's pension obligations.
 
The Company expects to contribute approximately $4,399 to the pension plans in 2020. No contributions to the U.S. Qualified pension plans, specifically, are required, and the Company does not currently plan to make any discretionary contributions to such plans in 2020.
 






The following are the estimated future net benefit payments, which include future service, over the next 10 years:
 
 
 
Pensions
 
Other
Postretirement
Benefits
2020
 
$
29,543

 
$
3,336

2021
 
29,523

 
3,154

2022
 
29,558

 
2,918

2023
 
29,123

 
2,704

2024
 
29,382

 
2,520

Years 2025-2029
 
145,516

 
10,336

Total
 
$
292,645

 
$
24,968


 
Pension and other postretirement benefit costs consist of the following:
 
 
 
Pensions
 
Other
Postretirement Benefits
 
 
2019
 
2018
 
2017
 
2019
 
2018
 
2017
Service cost
 
$
5,425

 
$
5,961

 
$
6,055

 
$
70

 
$
85

 
$
83

Interest cost
 
18,239

 
17,383

 
18,819

 
1,345

 
1,358

 
1,561

Expected return on plan assets
 
(29,425
)
 
(29,900
)
 
(28,082
)
 
—

 
—

 
—

Amortization of prior service cost (credit)
 
404

 
560

 
446

 
25

 
20

 
(68
)
Recognized losses
 
8,889

 
11,628

 
10,557

 
13

 
561

 
276

Curtailment gain
 
—

 
—

 
(7,217
)
 
—

 
—

 
—

Settlement loss (gain)
 
340

 
—

 
(119
)
 
—

 
—

 
—

Net periodic benefit cost
 
$
3,872

 
$
5,632

 
$
459

 
$
1,453

 
$
2,024

 
$
1,852


 
The Closure of the Company's FOBOHA facility located in Muri, Switzerland resulted in a pre-tax curtailment gain of $7,217 during the 2017 period. See Note 10.

The components of net periodic benefit cost other than the service cost component are included in Other Expense (Income) on the Consolidated Statements of Income. See Note 1 for the accounting guidance related to the presentation of net periodic pension and other postretirement benefit cost.
The estimated net actuarial loss and prior service cost for the defined benefit pension plans that will be amortized from accumulated other non-owner changes to equity into net periodic benefit cost in 2020 are $13,712 and $307, respectively. The estimated net actuarial loss and prior service cost for other defined benefit postretirement plans that will be amortized from accumulated other non-owner changes to equity into net periodic benefit cost in 2020 are $27 and $88, respectively.
 
Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31, are:
 
 
 
2019
 
2018
 
2017
U.S. plans:
 
 
 
 
 
 
Discount rate
 
4.40
%
 
3.90
%
 
4.50
%
Long-term rate of return
 
7.75
%
 
7.75
%
 
7.75
%
Increase in compensation
 
2.56
%
 
2.56
%
 
2.56
%
Non-U.S. plans:
 
 
 
 
 
 
Discount rate
 
2.07
%
 
1.90
%
 
1.60
%
Long-term rate of return
 
3.90
%
 
4.09
%
 
3.59
%
Increase in compensation
 
2.72
%
 
2.17
%
 
2.29
%

 
The expected long-term rate of return is based on consideration of projected rates of return and the historical rates of return of published indices that reflect the plans’ target asset allocation.
 
The Company’s accumulated postretirement benefit obligations, exclusive of pensions, take into account certain cost-sharing provisions. The annual rate of increase in the cost of covered benefits (i.e., health care cost trend rate) is assumed to be 6.78% and 7.30% at December 31, 2019 and 2018, respectively, decreasing gradually to a rate of 4.50% by December 31, 2038. A one percentage point change in the assumed health care cost trend rate would have the following effects:

 
 
One Percentage
Point Increase
 
One Percentage
Point Decrease
Effect on postretirement benefit obligation
 
$
171

 
$
(160
)
Effect on postretirement benefit cost
 
7

 
(7
)
 
         
The Company actively contributes to a Swedish pension plan that supplements the Swedish social insurance system. The pension plan guarantees employees a pension based on a percentage of their salary and represents a multi-employer pension plan, however the pension plan was not significant in any year presented. This pension plan is not underfunded.

Contributions related to the individually insignificant multi-employer plans, as disclosure is required pursuant to the applicable accounting standards, are as follows:

 
Contributions by the Company
Pension Fund:
2019
 
2018
 
2017
Swedish Pension Plan
754

 
$
792

 
$
739

Total Contributions
$
754

 
$
792

 
$
739