XML 50 R19.htm IDEA: XBRL DOCUMENT
v3.19.3.a.u2

EMPLOYEE BENEFIT PLANS | 12 Months Ended
--- | ---
Dec. 28, 2019
Retirement Benefits [Abstract] |
EMPLOYEE BENEFIT PLANS | EMPLOYEE BENEFIT PLANS Pension Plans The Charles River Laboratories, Inc. Pension Plan (U.S. Pension Plan) is a qualified, non-contributory defined benefit plan covering certain U.S. employees. Effective 2002, the U.S. Pension Plan was amended to exclude new participants from joining and in 2008 the accrual of benefits was frozen. On January 31, 2019, the Company commenced the process to terminate the U.S. Pension Plan and expects to complete the termination process during fiscal year 2020. As part of the planned termination, the Company re-balanced assets to a target asset allocation (primarily fixed income investments) to better match our assets to the characteristics of the liabilities. At December 28, 2019, the U.S Pension Plan has a benefit obligation of $94.4 million and plan assets of $91.2 million. The benefit obligation has been valued at the amount expected to be required to settle the obligations. Assumptions utilized considered the portion of obligations expected to be settled through participant acceptance of lump sum payments or annuities and the cost to purchase annuities, which are subject to change upon actual plan settlement. Increasing the U.S Pension Plan’s obligations to reflect the expected settlement value resulted in an actuarial loss of approximately $6 million, which was recorded to Other comprehensive income as part of the annual revaluation for fiscal year 2019. In the event that approvals are received and we proceed with effecting termination of this plan, settlement of the obligation is expected to occur in the second half of 2020. Upon settlement of the benefit obligation, the Company will reclassify the related pension losses, currently recorded within Accumulated other comprehensive loss on the consolidated balance sheet, to Other expense, net in the consolidated statements of income. As of December 28, 2019, the Company had unrecognized losses related to the U.S. Pension Plan of approximately $14 million. The Charles River Pension Plan (U.K. Pension Plan) is a defined contribution and defined benefit pension plan covering certain U.K. employees. Benefits are based on participants’ final pensionable salary and years of service. Participants’ rights vest immediately. Effective December 31, 2002, the plan was amended to exclude new participants from joining the defined benefit section of the plan and a defined contribution section was established for new entrants. Contributions under the defined contribution plan are determined as a percentage of gross salary. In the fourth quarter of 2015, the U.K. Pension Plan was amended such that the members of the defined benefit section of the plan ceased to accrue additional benefits; however, their benefits continue to be adjusted for changes in their final pensionable salary or a specified inflation index, as applicable. In addition, the Company has several defined benefit plans in certain other countries in which it maintains an operating presence, including Canada, France, Germany, Japan, Italy, and the Netherlands. The net periodic benefit cost (income) associated with these plans for fiscal years 2019, 2018 and 2017 totaled $1.5 million, $(1.5) million and $1.6 million, respectively. Charles River Laboratories Deferred Compensation Plan and Executive Supplemental Life Insurance Retirement Plan The Company maintains a non-qualified deferred compensation plan, known as the Charles River Laboratories Deferred Compensation Plan (DCP), which allows a select group of eligible employees to defer a portion of their compensation. At the present time, no contributions are credited to the DCP, except as set forth below. Participants must specify the distribution date for deferred amounts at the time of deferral, in accordance with applicable IRS regulations. Generally, amounts may be paid in lump sum or installments upon retirement or termination of employment, or later if the employee terminates employment after age 55 and before age 65. Amounts may also be distributed during employment, subject to a minimum deferral requirement of three years. The Company provides certain active employees an annual contribution into their DCP account of 10% of the employee’s base salary plus the lesser of their target annual bonus or actual annual bonus. In addition to the DCP, certain officers and key employees also participate, or in the past participated, in the Company’s Executive Supplemental Life Insurance Retirement Plan (ESLIRP), which is a non-funded, non-qualified arrangement. Annual benefits under this plan will equal a percentage of the highest five consecutive years of compensation, offset by amounts payable under the U.S. Pension Plan and Social Security. In connection with the establishment of the DCP, certain active ESLIRP participants, who agreed to convert their accrued ESLIRP benefit to a comparable deferred compensation benefit, discontinued their direct participation in the ESLIRP. Instead, the present values of the accrued benefits of ESLIRP participants were credited to their DCP accounts, and future accruals are converted to present values and credited to their DCP accounts annually. In fiscal year 2019, one executive officer, who converted their ESLIRP benefit into the DCP, announced their intention to retire in May 2020 and therefore the DCP liability reflects the expected departure. The net periodic benefit cost associated with these plans for fiscal years 2019, 2018 and 2017 totaled $2.5 million, $2.9 million and $2.3 million, respectively. The Company has invested in several corporate-owned key-person life insurance policies with the intention of using these investments to fund the ESLIRP and the DCP. Participants have no interest in any such investments. As of December 28, 2019 and December 29, 2018, the cash surrender value of these life insurance policies were $38.2 million and $32.3 million, respectively. The following table provides a reconciliation of benefit obligations and plan assets of the Company’s pension, DCP and ESLIRP plans:
| December 28, 2019 |  | December 29, 2018
| (in thousands)
Change in projected benefit obligations: |  |  |  |  |
Benefit obligation at beginning of year | $ | 362,805 |  |  | $ | 392,964 |
Service cost | 2,833 |  |  | 2,612 |
Interest cost | 11,583 |  |  | 10,850 |
Other | 850 |  |  | 1,499 |
Benefit payments | (11,062 | ) |  | (8,886 | )
Settlements | (74 | ) |  | — |
Special/Contractual Termination Benefits | 166 |  |  | — |
Plan amendments | — |  |  | 104 |
Transfer in from acquisition | 6,818 |  |  | — |
Actuarial loss (gain) | 66,432 |  |  | (21,168 | )
Administrative expenses paid | (470 | ) |  | (195 | )
Effect of foreign exchange | 7,528 |  |  | (14,975 | )
Benefit obligation at end of year | $ | 447,409 |  |  | $ | 362,805 |
Change in fair value of plan assets: |  |  |
Fair value of plan assets at beginning of year | $ | 305,709 |  |  | $ | 304,325 |
Actual return on plan assets | 53,741 |  |  | (7,419 | )
Employer contributions | 2,105 |  |  | 31,174 |
Settlements | (74 | ) |  | — |
Transfer in from acquisition | 119 |  |  | — |
Benefit payments | (11,062 | ) |  | (8,886 | )
Administrative expenses paid | (470 | ) |  | (195 | )
Effect of foreign exchange | 7,113 |  |  | (13,290 | )
Fair value of plan assets at end of year | $ | 357,181 |  |  | $ | 305,709 |
Net balance sheet liability | $ | 90,228 |  |  | $ | 57,096 |
Amounts recognized in balance sheet: |  |  |
Noncurrent assets | $ | 1,742 |  |  | $ | 3,280 |
Current liabilities | 12,788 |  |  | 1,095 |
Noncurrent liabilities | 79,182 |  |  | 59,281 |
Amounts recognized in accumulated other comprehensive loss related to the Company’s pension, DCP and ESLIRP plans are as follows:
| Fiscal Year
| 2019 |  | 2018
| (in thousands)
Net actuarial loss | $ | 116,930 |  |  | $ | 93,483 |
Net prior service cost (credit) | (2,096 | ) |  | (2,585 | )
Net amount recognized | $ | 114,834 |  |  | $ | 90,898 |
The accumulated benefit obligation and fair value of plan assets for the Company’s pension, DCP and ESLIRP plans with accumulated benefit obligations in excess of plan assets are as follows:
| December 28, 2019 |  | December 29, 2018
| (in thousands)
Accumulated benefit obligation | $ | 410,243 |  |  | $ | 254,138 |
Fair value of plan assets | 337,344 |  |  | 207,538 |
The projected benefit obligation and fair value of plan assets for the Company’s pension, DCP and ESLIRP plans with projected benefit obligations in excess of plan assets are as follows:
| December 28, 2019 |  | December 29, 2018
| (in thousands)
Projected benefit obligation | $ | 435,638 |  |  | $ | 273,625 |
Fair value of plan assets | 343,688 |  |  | 213,249 |
The amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year are as follows:
| December 28, 2019
| (in thousands)
Amortization of net actuarial loss | $ | 6,344 |
Amortization of net prior service credit | (501 | )
Components of net periodic benefit cost for the Company’s pension, DCP and ESLIRP plans are as follows:
| Fiscal Year
| 2019 |  | 2018 |  | 2017
| (in thousands)
Service cost | $ | 2,833 |  |  | $ | 2,612 |  |  | $ | 3,110 |
Interest cost | 11,583 |  |  | 10,850 |  |  | 11,642 |
Expected return on plan assets | (13,005 | ) |  | (15,516 | ) |  | (14,249 | )
Amortization of prior service credit | (489 | ) |  | (514 | ) |  | (496 | )
Amortization of net loss | 2,250 |  |  | 2,990 |  |  | 3,845 |
Other | 850 |  |  | 910 |  |  | — |
Net periodic cost (benefit) | $ | 4,022 |  |  | $ | 1,332 |  |  | $ | 3,852 |
Assumptions Weighted-average assumptions used to determine projected benefit obligations are as follows:
| December 28, 2019 |  | December 29, 2018
Discount rate | 2.14 | % |  | 3.21 | %
Rate of compensation increase | 2.99 | % |  | 3.23 | %
The discount rate reflects the rate the Company would have to pay to purchase high-quality investments that would provide cash sufficient to settle its current pension obligations. Specifically for the expected termination of the U.S. Pension Plan, estimated costs of lump sum payments and annuity purchases are reflected in the discount rate. A 25 basis point change across all discount rates changes the projected benefit obligation by approximately $20 million for all Company plans. Weighted-average assumptions used to determine net periodic benefit cost are as follows:
| December 28, 2019 |  | December 29, 2018 |  | December 30, 2017
Discount rate | 3.21 | % |  | 2.82 | % |  | 3.01 | %
Expected long-term return on plan assets | 4.28 | % |  | 5.18 | % |  | 5.41 | %
Rate of compensation increase | 3.23 | % |  | 3.16 | % |  | 3.25 | %
A 0.5% decrease in the expected rate of return would increase annual pension expense by $1.8 million. In fiscal years 2019 and 2018, new mortality improvement scales were issued in the U.S. and the United Kingdom (U.K.) reflecting a decline in longevity projection from previous releases the Company adopted, which decreased the Company’s benefit obligations by $2.8 million and $1.7 million as of December 28, 2019 and December 29, 2018, respectively. Plan Assets The Company invests its pension assets with the objective of achieving a total long-term rate of return sufficient to fund future pension obligations and to minimize future pension contributions. The Company is willing to tolerate a commensurate level of risk to achieve this objective. The Company controls its risk by maintaining a diversified portfolio of asset classes. Plan assets did not include any of the Company’s common stock as of December 28, 2019 or December 29, 2018. The weighted-average target asset allocations are 24.0% to equity securities, 24.6% to fixed income securities and 51.4% to other securities. The fair value of the Company’s pension plan assets by asset category are as follows:
| December 28, 2019 |  | December 29, 2018
| Level 1 |  | Level 2 |  | Level 3 |  | Total |  | Level 1 |  | Level 2 |  | Level 3 |  | Total
| (in thousands)
Cash and cash equivalents | $ | 2,388 |  |  | $ | 1,022 |  |  | $ | — |  |  | $ | 3,410 |  |  | $ | 7,317 |  |  | $ | — |  |  | $ | — |  |  | $ | 7,317 |
Equity securities (1) | 7,621 |  |  | 84,377 |  |  | — |  |  | 91,998 |  |  | 72,237 |  |  | — |  |  | — |  |  | 72,237 |
Debt securities (2) | 40,281 |  |  | 89,684 |  |  | — |  |  | 129,965 |  |  | 17,147 |  |  | 4,100 |  |  | — |  |  | 21,247 |
Mutual funds (3) | 6,324 |  |  | 68,632 |  |  | — |  |  | 74,956 |  |  | 86,282 |  |  | 59,984 |  |  | — |  |  | 146,266 |
Other (4) | 551 |  |  | 54,787 |  |  | 1,514 |  |  | 56,852 |  |  | 718 |  |  | 56,283 |  |  | 1,641 |  |  | 58,642 |
Total | $ | 57,165 |  |  | $ | 298,502 |  |  | $ | 1,514 |  |  | $ | 357,181 |  |  | $ | 183,701 |  |  | $ | 120,367 |  |  | $ | 1,641 |  |  | $ | 305,709 |
(1) This category comprises equity investments and securities held by non-U.S. pension plans valued at the quoted closing price, and translated into U.S. dollars using a foreign currency exchange rate at year end.
(2) This category comprises debt investments and securities held by U.S. and non-U.S. pension plans valued at the quoted closing price. For non-U.S. pension plans, the quoted closing price is translated into U.S. dollars using a foreign currency exchange rate at year end. Holdings primarily include investment-grade corporate bonds and U.S. treasuries at various durations.
(3) This category comprises non-U.S. mutual funds valued at the net asset value of shares held at year end and translated into U.S. dollars using a foreign currency exchange rate at year end.
(4) This category mainly comprises fixed income securities tied to various U.K. government bond yields held by non-US pension plans valued at the net asset value of shares held at year-end, and translated into U.S. dollars using a foreign currency exchange rate at year end.
The activity within the Level 3 pension plan assets was non-significant during the periods presented. During fiscal year 2019, the Company contributed $0.8 million to the pension plans and expects to contribute approximately $11.9 million in fiscal year 2020. During fiscal year 2019, the Company contributed $1.3 million directly to certain participants outside of plan assets. Expected benefit payments are estimated using the same assumptions used in determining the Company’s benefit obligation as of December 28, 2019. Benefit payments will depend on future employment and compensation levels, among other factors, and changes in any of these factors could significantly affect these estimated future benefit payments. Estimated future benefit payments during the next five years and in the aggregate for fiscal years 2025 through 2029, are as follows. Payments in fiscal year 2020 reflect the estimated payments of approximately $94 million to participants in connection with the U.S. Pension Plan termination and $8 million to an executive officer expected to retire:
Fiscal Year |  | Pension Plans
|  | (in thousands)
2020 |  | $ | 111,848 |
2021 |  | 9,420 |
2022 |  | 10,344 |
2023 |  | 40,911 |
2024 |  | 10,814 |
2025-2029 |  | 59,646 |
Post-Retirement Health and Life Insurance Plans The Company’s Canadian location offers post-retirement life insurance benefits to its employees and post-retirement medical and dental insurance coverage to certain executives. The plan is non-contributory and unfunded. As of December 28, 2019 and December 29, 2018, the accumulated benefit obligation related to the plan was $1.1 million and $1.5 million, respectively. The amounts included in other accumulated comprehensive income as well as expenses related to the plan were non-significant for fiscal years 2019, 2018 and 2017. Charles River Laboratories Employee Savings Plan The Charles River Laboratories Employee Savings Plan is a defined contribution plan in the form of a qualified 401(k) plan in which substantially all U.S. employees are eligible to participate upon employment. The plan contains a provision whereby the Company matches a percentage of employee contributions. During fiscal years 2019, 2018 and 2017, the costs associated with this defined contribution plan totaled $19.1 million, $13.4 million and $11.6 million, respectively.

X
- References No definition available. + Details
Name: | us-gaap_CompensationAndRetirementDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for pension and other postretirement benefits. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -URI http://asc.fasb.org/topic&trid=2235017 + Details
Name: | us-gaap_PensionAndOtherPostretirementBenefitsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration