Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2013 |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | ' |
Employee Benefit Plans | ' |
18. Employee Benefit Plans |
The Company has numerous employee retirement benefit plans, which cover substantially all eligible employees in the countries where the plans are offered either voluntarily or statutorily. Contributions are primarily discretionary, except in some countries where contributions are contractually required. |
Defined Contribution Plans |
Defined contribution or profit sharing style plans are offered in Austria, Belgium, Bulgaria, Canada, the Czech Republic, Denmark, Finland, France, Germany, Hungary, India, Ireland, Israel, Malaysia, the Netherlands, Poland, Slovakia, South Africa, Sweden, Switzerland, Thailand, the United States and the United Kingdom. In some cases these plans are required by local laws or regulations. |
In the United States, the Company has a 401(k) Plan under which the Company matches employee deferrals at varying percentages, set at the discretion of the Board. In 2013, 2012 and 2011, the Company expensed $26.1 million, $24.3 million and $19.9 million, respectively, related to matching contributions. |
Defined Benefit Plans |
Defined benefit plans are offered in Austria, France, Germany, India, Israel, Japan, Mexico, Philippines and the United Kingdom. The following table summarizes the components of pension expense related to these defined benefit plans (in thousands): |
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| | Year Ended December 31, | | | | | | | | | | | |
| | 2013 | | | 2012 | | | 2011 | | | | | | | | | | | |
Service cost | | $ | 13,227 | | | $ | 13,839 | | | $ | 11,939 | | | | | | | | | | | |
Interest cost | | | 3,684 | | | | 3,775 | | | | 3,762 | | | | | | | | | | | |
Expected return on plan assets | | | (3,442 | ) | | | (2,822 | ) | | | (3,048 | ) | | | | | | | | | | |
Amortization of prior service costs | | | 336 | | | | 411 | | | | 413 | | | | | | | | | | | |
Amortization of actuarial losses | | | 708 | | | | 758 | | | | 902 | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
| | $ | 14,513 | | | $ | 15,961 | | | $ | 13,968 | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
The Company expects to recognize approximately $78 and $670 in its pension expense in 2014 related to the amortization of prior service costs and net actuarial losses, respectively. |
The weighted average assumptions used in determining pension expense were as follows: |
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| | Year Ended December 31, | | | | | | | | | | | |
| | 2013 | | | 2012 | | | 2011 | | | | | | | | | | | |
Discount rate | | | 3.06 | % | | | 3.32 | % | | | 3.68 | % | | | | | | | | | | |
Rate of compensation increases | | | 4.74 | % | | | 4.96 | % | | | 4.96 | % | | | | | | | | | | |
Expected return on plan assets | | | 5.33 | % | | | 5.23 | % | | | 6.17 | % | | | | | | | | | | |
The following table summarizes financial information about the Company’s defined benefit plans as measured on December 31 (in thousands): |
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| | 2013 | | | 2012 | | | | | | | | | | | | | | | |
Projected benefit obligation January 1 | | $ | 130,323 | | | $ | 118,076 | | | | | | | | | | | | | | | |
Service costs | | | 13,227 | | | | 13,839 | | | | | | | | | | | | | | | |
Interest cost | | | 3,684 | | | | 3,775 | | | | | | | | | | | | | | | |
Expected return on plan assets | | | (3,442 | ) | | | (2,822 | ) | | | | | | | | | | | | | | |
Actuarial losses | | | 1,890 | | | | 9,469 | | | | | | | | | | | | | | | |
Benefits paid | | | (5,917 | ) | | | (7,132 | ) | | | | | | | | | | | | | | |
Foreign currency fluctuations and other | | | (4,655 | ) | | | (4,882 | ) | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Projected benefit obligation December 31 | | $ | 135,110 | | | $ | 130,323 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Plan assets at fair value, January 1 | | $ | 68,258 | | | $ | 55,590 | | | | | | | | | | | | | | | |
Actual return on plan assets | | | 5,928 | | | | 4,551 | | | | | | | | | | | | | | | |
Contributions | | | 8,620 | | | | 12,935 | | | | | | | | | | | | | | | |
Benefits paid | | | (5,917 | ) | | | (7,132 | ) | | | | | | | | | | | | | | |
Foreign currency fluctuations and other | | | 5,898 | | | | 2,314 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Plan assets at fair value, December 31 | | $ | 82,787 | | | $ | 68,258 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Unfunded balance | | $ | 52,323 | | | $ | 62,065 | | | | | | | | | | | | | | | |
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The accumulated benefit obligation for all defined benefit plans was approximately $118.4 million and $111.7 million as of December 31, 2013 and 2012, respectively. |
As of December 31, 2013, the projected benefit obligation and accumulated benefit obligation for the defined benefit plans with accumulated benefit obligations in excess of plan assets were $77.7 million and $63.6 million, respectively, and were primarily related to unfunded plans. As of December 31, 2012, the projected benefit obligation and accumulated benefit obligation for the defined benefit plans with accumulated benefit obligations in excess of plan assets were $71.0 million and $57.2 million, respectively, and were primarily related to unfunded plans. As of December 31, 2013 and 2012, the projected benefit obligation exceeded the fair value of the plan assets for each defined benefit plan except for the defined benefit plan in the United Kingdom and one plan in India. |
The following table summarizes the amounts recognized in the consolidated balance sheets related to the defined benefit plans as of December 31 (in thousands): |
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| | 2013 | | | 2012 | | | | | | | | | | | | | | | |
Deposits and other assets | | $ | 18,835 | | | $ | 10,523 | | | | | | | | | | | | | | | |
Accrued expenses | | | 8,622 | | | | 9,787 | | | | | | | | | | | | | | | |
Other long-term liabilities | | | 62,536 | | | | 62,801 | | | | | | | | | | | | | | | |
Accumulated other comprehensive income | | $ | (5,044 | ) | | $ | (8,235 | ) | | | | | | | | | | | | | | |
The following table summarizes the amounts recognized in accumulated other comprehensive income related to the defined benefit plans (in thousands): |
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| | Prior Service | | | Actuarial | | | Deferred | | | Total | | | | | | | |
Costs | Net (Gain) | Income | | | | | | |
| Loss | Taxes | | | | | | |
Balance as of December 31, 2011 | | $ | (854 | ) | | $ | (3,934 | ) | | $ | 2,216 | | | $ | (2,572 | ) | | | | | | |
Reclassification adjustments included in pension expense: | | | | | | | | | | | | | | | | | | | | | | |
Amortization | | | 411 | | | | 758 | | | | (446 | ) | | | 723 | | | | | | | |
Amounts arising during the period: | | | | | | | | | | | | | | | | | | | | | | |
Tax rate adjustments | | | — | | | | — | | | | (52 | ) | | | (52 | ) | | | | | | |
Actuarial changes in benefit obligation | | | — | | | | (4,616 | ) | | | 1,496 | | | | (3,120 | ) | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Balance as of December 31, 2012 | | | (443 | ) | | | (7,792 | ) | | | 3,214 | | | | (5,021 | ) | | | | | | |
Reclassification adjustments included in pension expense: | | | | | | | | | | | | | | | | | | | | | | |
Amortization | | | 336 | | | | 708 | | | | (389 | ) | | | 655 | | | | | | | |
Amounts arising during the period: | | | | | | | | | | | | | | | | | | | | | | |
Tax rate adjustments | | | — | | | | — | | | | (26 | ) | | | (26 | ) | | | | | | |
Actuarial changes in benefit obligation | | | — | | | | 2,147 | | | | 157 | | | | 2,304 | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Balance as of December 31, 2013 | | $ | (107 | ) | | $ | (4,937 | ) | | $ | 2,956 | | | $ | (2,088 | ) | | | | | | |
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The following table summarizes the weighted average assumptions used in determining the pension obligations as of December 31: |
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| | Year Ended December 31, | | | | | | | | | | | | | | | |
| | 2013 | | | 2012 | | | | | | | | | | | | | | | |
Discount rate | | | 3.01 | % | | | 3.06 | % | | | | | | | | | | | | | | |
Rate of compensation increases | | | 4.36 | % | | | 4.74 | % | | | | | | | | | | | | | | |
The discount rate represents the interest rate used to determine the present value of the future cash flows currently expected to be required to settle the Company’s defined benefit plan obligations. The discount rates are derived using weighted average yield curves on AA-rated corporate bonds. The cash flows from the Company’s expected benefit obligation payments are then matched to the yield curve to derive the discount rates. |
The Company’s assumption for the expected return on plan assets was determined by the weighted average of the long-term expected rate of return on each of the asset classes invested as of the balance sheet date. For plan assets invested in government bonds, the expected return was based on the yields on the relevant indices as of the balance sheet date. There is considerable uncertainty for the expected return on plan assets invested in equity and diversified growth funds. The expected return on these plan assets was based on the expected return on long-term fixed interest rate government bonds as of the balance sheet date with a premium of 3% to 4% added to reflect the expected long-term returns expected from these types of investments. |
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The Company’s investment objective for defined benefit plan assets is to meet the plan’s benefit obligations and maintaining adequate funding, while minimizing the potential for future required Company contributions. The defined benefit plans in the United Kingdom, India and Israel are funded. The plan assets of the defined benefit plans in India and Israel are held in a fund which holds debt investments, primarily government bonds in accordance with local laws and regulations. The plan assets of the defined benefit plan in the United Kingdom are primarily held in funds which hold investments in government bonds, equity investments and diversified growth funds. The equity investments are diversified to include domestic (United Kingdom) and global equity investments. A “horizon based” approach is used to determine the asset allocation. Funds intended to meet the plan’s benefit obligation payments in a horizon period are invested in low risk assets such as bond investments. Funds intended to meet the plan’s benefit obligation payments outside of the horizon period are invested in more volatile assets which are expected to provide a higher return such as equity investments and diversified growth funds. The Company’s target allocation percentage for 2014 is approximately 40-50% in bond investments, 35-45% in equity investments and 15-25% in diversified growth funds. However, the Company may reallocate the plan assets between equity investments and bond investments depending upon the actual investment performances. |
The Company’s plan assets have been identified within the fair value hierarchy as Level 2. Funds are valued using the net asset value reported by the managers of the funds. The following table summarizes the fair value of the Company’s defined benefit plans assets as of December 31, 2013 and 2012 (in thousands): |
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| | 2013 | | | 2012 | | | | | | | | | | | | | | | |
Funds that hold debt investments primarily government bonds | | $ | 19,826 | | | $ | 31,315 | | | | | | | | | | | | | | | |
Funds that hold United Kingdom equity investments | | | 8,393 | | | | 22,924 | | | | | | | | | | | | | | | |
Funds that hold global equity investments | | | 11,169 | | | | 9,730 | | | | | | | | | | | | | | | |
Diversified growth fund | | | 42,733 | | | | 3,238 | | | | | | | | | | | | | | | |
Other | | | 661 | | | | 1,051 | | | | | | | | | | | | | | | |
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Total | | $ | 82,782 | | | $ | 68,258 | | | | | | | | | | | | | | | |
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The Company estimates that it will make contributions totaling approximately $13.0 million to the defined benefit plans in 2014. |
The following table summarizes the Company’s expected benefit payments under the defined benefit plans for each of the next five years and the aggregate of the five years thereafter (in thousands): |
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2014 | | $ | 9,769 | | | | | | | | | | | | | | | | | | | |
2015 | | | 9,345 | | | | | | | | | | | | | | | | | | | |
2016 | | | 9,785 | | | | | | | | | | | | | | | | | | | |
2017 | | | 10,915 | | | | | | | | | | | | | | | | | | | |
2018 | | | 11,427 | | | | | | | | | | | | | | | | | | | |
Years 2019 through 2023 | | | 61,590 | | | | | | | | | | | | | | | | | | | |
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| | $ | 112,831 | | | | | | | | | | | | | | | | | | | |
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Stock Incentive Plans |
The 2013 Stock Incentive Plan provides incentives to eligible employees, officers and directors in the form of non-qualified stock options, incentive stock options, SARs, restricted stock, RSUs, performance shares, performance units, covered annual incentive awards, cash-based awards and other share-based awards, in each case subject to the terms of the 2013 Stock Incentive Plan. As of December 31, 2013, there were 8,659,733 shares available for future grants under the 2013 Stock Incentive Plan. |
The 2008 Stock Incentive Plan provides incentives to eligible employees, officers and directors in the form of non-qualified stock options, incentive stock options, SARs, restricted stock, RSUs, performance shares, performance units, covered annual incentive awards, cash-based awards and other share-based awards, in each case subject to the terms of the 2008 Stock Incentive Plan. As of December 31, 2013, there were 970,257 shares available for future grants under the 2008 Stock Incentive Plan. |
Stock Options |
The option price is determined by the Board at the date of grant and the options expire 10 years from the date of grant. Beginning in May 2013, options were granted to certain employees with a vesting schedule of 33% on the third anniversary of the date of grant and 67% on the fourth anniversary of the date of grant. Additionally, beginning in August 2012, options were granted to certain employees with a vesting schedule of 25% per year beginning on the first anniversary of the date of grant. Prior to August 2012, options were granted to certain employees with a vesting schedule of 20% per year beginning on the first anniversary of the date of grant. In addition, an option to acquire 38,580 shares of the Company’s common stock was granted to the Company’s Chief Executive Officer on May 31, 2012 which vests monthly over three years. |
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The Company’s stock option activity in 2013 is as follows: |
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| | Year Ended December 31, | | | | | | | | | | | |
| | Number of | | | Weighted | | | Aggregate | | | | | | | | | | | |
Options | Average | Intrinsic Value | | | | | | | | | | |
| Exercise Price | | | | | | | | | | | |
| | | | | | | | (in thousands) | | | | | | | | | | | |
Outstanding at December 31, 2012 | | | 11,054,690 | | | $ | 17.17 | | | $ | 142,626 | | | | | | | | | | | |
Granted | | | 2,363,500 | | | | 40.08 | | | | | | | | | | | | | | | |
Exercised | | | (916,620 | ) | | | 13.68 | | | | | | | | | | | | | | | |
Cash settled | | | (1,990,540 | ) | | | 13.74 | | | | | | | | | | | | | | | |
Canceled | | | (410,870 | ) | | | 29.95 | | | | | | | | | | | | | | | |
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Outstanding at December 31, 2013 | | | 10,100,160 | | | $ | 23 | | | $ | 235,729 | | | | | | | | | | | |
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The weighted average fair value per share of the options granted in 2013, 2012 and 2011 was $14.39, $6.34 and $6.73, respectively. The total intrinsic value of options exercised was approximately $27.1 million, $4.6 million and $1.5 million in 2013, 2012 and 2011, respectively. The Company received cash of approximately $12.5 million, $2.5 million and $1.1 million in 2013, 2012 and 2011, respectively, from options exercised. |
Under the Company’s equity repurchase program discussed further in Note 12, in 2013 the Company repurchased 1,990,540 vested in-the-money employee stock options with an intrinsic value of $59.1 million. |
Selected information regarding the Company’s stock options as of December 31, 2013 is as follows: |
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Options Outstanding | | | Options Exercisable | |
Number of Options | | | Exercise Price Range | | | Weighted Average | | | Weighted Average | | | Number of Options | | | Weighted Average | |
Exercise Price | Remaining Life | Exercise Price |
| (in Years) | |
| 1,845,650 | | | $ | 4.70 - $13.06 | | | $ | 11.2 | | | | 3.3 | | | | 1,771,650 | | | $ | 11.22 | |
| 1,646,900 | | | $ | 13.40 - $15.88 | | | $ | 15.28 | | | | 4.29 | | | | 1,466,700 | | | $ | 15.36 | |
| 1,692,755 | | | $ | 17.11 - $21.20 | | | $ | 19.27 | | | | 6.94 | | | | 788,595 | | | $ | 18.92 | |
| 2,675,855 | | | $ | 21.22 - $24.59 | | | $ | 24.25 | | | | 8.38 | | | | 581,258 | | | $ | 24.21 | |
| 128,500 | | | $ | 25.64 - $30.07 | | | $ | 28.23 | | | | 9 | | | | 13,375 | | | $ | 25.64 | |
| 2,110,500 | | | $ | 40.00 - $44.75 | | | $ | 40.44 | | | | 9.37 | | | | — | | | $ | — | |
The weighted average remaining contractual life of the options outstanding and exercisable as of December 31, 2013 is 6.76 years and 4.72 years, respectively. The total aggregate intrinsic value of the exercisable stock options and the stock options expected to vest as of December 31, 2013 was approximately $232.1 million. |
In connection with the November 2012 per share dividend discussed further in Note 12, the Board authorized a $2.09 per share reduction in the exercise price of certain non-vested and vested options outstanding on October 24, 2012. As such, the Company repriced 10,166,820 options previously granted to 228 employees and directors. The other terms, including the vesting schedules, remained unchanged. The aggregate incremental share-based compensation expense resulting from the modification of these outstanding stock options was approximately $11.4 million, of which approximately $9.2 million was recognized during the three months ended December 31, 2012, and the remaining $2.2 million is being recognized over the remaining vesting periods of the respective stock options. |
In connection with the February 2012 per share dividend discussed further in Note 12, the Board authorized a $2.82 per share reduction in the exercise price of all non-vested options and certain vested options outstanding on February 29, 2012. As such, the Company repriced 5,561,700 options previously granted to 222 employees and directors. The other terms, including the vesting schedules, remained unchanged. The aggregate incremental share-based compensation expense resulting from the modification of these outstanding stock options was approximately $7.1 million, of which approximately $4.5 million was recognized during the three months ended March 31, 2012, and the remaining $2.6 million is being recognized over the remaining vesting periods of the respective stock options. |
Stock Appreciation Rights |
The Company’s SARs require the Company to settle in cash an amount equal to the difference between the fair value of the Company’s common stock on the date of exercise and the grant price, multiplied by the number of SARs being exercised. These awards either (i) vest 25% per year or (ii) vest 33% on the third anniversary of the date of grant and 67% on the fourth anniversary of the date of grant. |
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The Company’s SAR activity in 2013 is as follows: |
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| | Year Ended December 31, | | | | | | | | | | | |
| | Number of | | | Weighted | | | Aggregate | | | | | | | | | | | |
SARs | Average | Intrinsic Value | | | | | | | | | | |
| Exercise Price | | | | | | | | | | | |
| | | | | | | | (in thousands) | | | | | | | | | | | |
Outstanding at December 31, 2012 | | | 94,250 | | | $ | 24.59 | | | $ | 516 | | | | | | | | | | | |
Granted | | | 172,600 | | | | 40.55 | | | | | | | | | | | | | | | |
Exercised | | | (4,225 | ) | | | 24.59 | | | | | | | | | | | | | | | |
Canceled | | | (4,600 | ) | | | 24.59 | | | | | | | | | | | | | | | |
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Outstanding at December 31, 2013 | | | 258,025 | | | $ | 35.26 | | | $ | 2,858 | | | | | | | | | | | |
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As of December 31, 2013 and 2012, the weighted average fair value per share of the SARs granted was $19.07 and $8.16, respectively. The Company paid approximately $83,000 to settle exercised SARs in 2013. There were no SARs exercised in 2012. |
The weighted average remaining contractual life of the SARs outstanding and exercisable as of December 31, 2013 is 9.1 years and 8.6 years, respectively. The total aggregate intrinsic value of the exercisable SARs and the SARs expected to vest as of December 31, 2013 was approximately $2.8 million. |
In connection with the November 2012 per share dividend discussed further in Note 12, the Company’s Board authorized a $2.09 per share reduction in the exercise price of all non-vested cash-settled SARs outstanding on October 24, 2012. |
Restricted Stock Units |
The Company’s RSUs will settle in shares of the Company’s common stock within 45 days of the applicable vesting date. One-third of the RSUs vest on the third anniversary of the date of grant and the remaining two-thirds of the RSUs vest on the fourth anniversary of the date of grant. |
The Company’s RSU activity in 2013 is as follows: |
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| | Year Ended December 31, | | | | | | | | | | | | | | | |
| | Number of | | | Weighted | | | | | | | | | | | | | | | |
RSUs | Average | | | | | | | | | | | | | | |
| Grant-Date | | | | | | | | | | | | | | |
| Fair Value | | | | | | | | | | | | | | |
Non-vested at December 31, 2012 | | | — | | | $ | — | | | | | | | | | | | | | | | |
Granted | | | 57,167 | | | | 44.62 | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
Non-vested at December 31, 2013 | | | 57,167 | | | $ | 44.62 | | | | | | | | | | | | | | | |
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As of December 31, 2013, there are 57,167 RSUs outstanding with an intrinsic value of approximately $2.6 million. |
Employee Stock Purchase Plan |
In November 2013, the Board approved an Employee Stock Purchase Plan (“ESPP”) which will allow eligible employees to authorize payroll deductions of up to 10% of their base salary to be applied toward the purchase of full shares of the Company’s common stock on the last day of the offering period. Offering periods under the ESPP will be six months in duration and will begin on each March 1 and September 1. The first offering period for the ESPP begins March 1, 2014. Shares will be purchased on the last day of each offering period at a discount of 15% of the closing price of the common stock on such date as reported on the NYSE. The aggregate number of shares of the Company’s common stock that may be issued under the ESPP may not exceed 2,500,000 shares and no one employee may purchase any shares under the ESPP having a collective fair market value greater than $25,000 in any one calendar year. The shares available for purchase under the ESPP will be drawn from authorized but unissued shares of common stock. |
Other |
The Company sponsors a supplemental non-qualified deferred compensation plan, covering certain management employees, and maintains other statutory indemnity plans as required by local laws or regulations. |
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During the fourth quarter of 2013, the Company recognized $14.1 million of severance expense associated with cost reduction programs (of which, $4.0 million is reflected in costs of revenue, service costs and $10.1 million is reflected in selling, general and administrative expenses). The Company recognizes obligations associated with severance related to contractual termination benefits at fair value on the date that it is probable that the affected employees will be entitled to the benefit and the amount can reasonably be estimated. The cost reduction programs will result in the reduction of approximately 270 positions, which is expected to lower operating costs and improve profitability by reducing excess capacities. These actions are expected to occur and be paid during 2014 and 2015. As of December 31, 2013, $14.1 million was included in accrued expenses on the consolidated balance sheet. No payments were made related to these cost reduction programs in 2013. The segment break down of the total severance expense related to these programs was $12.3 million in Product Development, $1.5 million in Integrated Healthcare Services and $0.3 million in unallocated corporate costs. |