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EMPLOYEE BENEFIT PLANS
 12 Months Ended
Dec. 26, 2020
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. In January 2019, the Company commenced the process to terminate this plan and received regulatory approval in April 2020. In October 2020, the Company settled all remaining benefits directly with vested participants through either lump sum payouts or the purchase of a group annuity contract from a qualified insurance company to administer all future payments. Prior to the settlement, the U.S. Pension Plan was underfunded with a benefit obligation of $93.8 million and plan assets of $93.0 million. In the fourth quarter of fiscal year 2020, the Company made a contribution of $0.8 million to fully fund this plan to cover the lump sum payments, purchase the group annuity contract, and settle remaining termination costs. Upon settlement of the pension liability, the Company recognized a non-cash settlement charge of $10.3 million related to pension losses, reclassified from accumulated other comprehensive loss on the consolidated balance sheet, to other expense in the consolidated statements of income.
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. During fiscal 2020, the Company made contributions of $23.0 million to the U.K. Pension Plan. As of fiscal 2020 year-end, this plan was in a funded status of $28.9 million.
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 2020, 2019 and 2018 totaled $1.6 million, $1.5 million and $(1.5) 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 2020, one executive officer, who converted their ESLIRP benefit into the DCP, retired resulting in lump sum payment of $8.1 million. Upon settlement of this pension liability, the Company recognized a non-cash settlement charge of $2.1 million related to pension losses, reclassified from accumulated other comprehensive loss on the consolidated balance sheet, to other expense in the consolidated statements of income.
The net periodic benefit cost associated with these plans for fiscal years 2020, 2019 and 2018 totaled $5.7 million, $2.5 million and $2.9 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 26, 2020 and December 28, 2019, the cash surrender value of these life insurance policies were $43.8 million and $38.2 million, respectively.
The following table provides a reconciliation of benefit obligations and plan assets of the Company’s pension, DCP and ESLIRP plans:
 December 26, 2020December 28, 2019
(in thousands)
Change in projected benefit obligations:  
Benefit obligation at beginning of year$447,409 $362,805 
Service cost3,609 2,833 
Interest cost8,849 11,583 
Other429 850 
Benefit payments(8,913)(11,062)
Settlements(101,979)(74)
Special/Contractual Termination Benefits— 166 
Transfer in from acquisition— 6,818 
Actuarial loss9,816 66,432 
Administrative expenses paid(808)(470)
Effect of foreign exchange9,056 7,528 
Benefit obligation at end of year$367,468 $447,409 
Change in fair value of plan assets:
Fair value of plan assets at beginning of year$357,181 $305,709 
Actual return on plan assets36,551 53,741 
Employer contributions34,092 2,105 
Settlements(101,979)(74)
Transfer in from acquisition— 119 
Benefit payments(8,913)(11,062)
Administrative expenses paid(808)(470)
Effect of foreign exchange8,628 7,113 
Fair value of plan assets at end of year$324,752 $357,181 
Net balance sheet liability$42,716 $90,228 
Amounts recognized in balance sheet:
Noncurrent assets$31,916 $1,742 
Current liabilities1,713 12,788 
Noncurrent liabilities72,919 79,182 
Actuarial losses are driven mainly by liability losses as a result of changes in economic assumptions, in particular lower discount rates, offset by liability gains due to changes in the mortality assumptions and plan experience.
Amounts recognized in accumulated other comprehensive loss related to the Company’s pension, DCP and ESLIRP plans are as follows:
Fiscal Year
 20202019
(in thousands)
Net actuarial loss$82,914 $116,930 
Net prior service cost (credit)(1,593)(2,096)
Net amount recognized$81,321 $114,834 
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 26, 2020December 28, 2019
(in thousands)
Accumulated benefit obligation$72,940 $410,243 
Fair value of plan assets11,543 337,344 
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 26, 2020December 28, 2019
(in thousands)
Projected benefit obligation$93,192 $435,638 
Fair value of plan assets18,560 343,688 
Components of total benefit cost for the Company’s pension, DCP and ESLIRP plans are as follows:
Fiscal Year
 202020192018
(in thousands)
Service cost$3,609 $2,833 $2,612 
Interest cost8,849 11,583 10,850 
Expected return on plan assets(11,348)(13,005)(15,516)
Amortization of prior service credit(489)(489)(514)
Amortization of net loss6,239 2,250 2,990 
Other 417 850 910 
Net periodic benefit cost$7,277 $4,022 $1,332 
Settlement12,385 — — 
Total benefit cost$19,662 $4,022 $1,332 
Assumptions
Weighted-average assumptions used to determine projected benefit obligations are as follows:
 December 26, 2020December 28, 2019
Discount rate1.48 %2.14 %
Rate of compensation increase2.98 %2.99 %
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 termination of the U.S. Pension Plan in fiscal 2020, estimated costs of lump sum payments and annuity purchases were reflected in the discount rate for fiscal 2019. A 25-basis point change across all discount rates changes the projected benefit obligation by approximately $17 million for all Company plans.
Weighted-average assumptions used to determine net periodic benefit cost are as follows:
 December 26, 2020December 28, 2019December 29, 2018
Discount rate2.14 %3.21 %2.82 %
Expected long-term return on plan assets3.35 %4.28 %5.18 %
Rate of compensation increase2.99 %3.23 %3.16 %
A 0.5% decrease in the expected rate of return would increase annual pension expense by $1.6 million.
In fiscal years 2020 and 2019, 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 $7.8 million and $2.8 million as of December 26, 2020 and December 28, 2019, 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 26, 2020 or December 28, 2019. The weighted-average target asset allocations are 22.1% to equity securities, 15.3% to fixed income securities and 62.6% to other securities.
The fair value of the Company’s pension plan assets by asset category are as follows:
 December 26, 2020December 28, 2019
Level 1 Level 2Level 3Total Level 1 Level 2Level 3Total
(in thousands)
Cash and cash equivalents$20,163 $1,466 $— $21,629 $2,388 $1,022 $— $3,410 
Equity securities (1)
8,633 54,832 — 63,465 7,621 84,377 — 91,998 
Debt securities (2)
— 99,188 — 99,188 40,281 89,684 — 129,965 
Mutual funds (3)
7,018 65,189 — 72,207 6,324 68,632 — 74,956 
Other (4)
508 66,439 1,316 68,263 551 54,787 1,514 56,852 
Total$36,322 $287,114 $1,316 $324,752 $57,165 $298,502 $1,514 $357,181 
(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 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. Holdings primarily include investment-grade corporate bonds and treasuries at various durations.
(3) This category comprises mutual funds valued at the net asset value of shares held by non-U.S. pension plans 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 not significant during the periods presented.
During fiscal year 2020, the Company contributed $24.6 million to the pension plans and expects to contribute approximately $0.9 million in fiscal year 2021. During fiscal year 2020, the Company paid $9.5 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 26, 2020. 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 2026 through 2030, are as follows.
Fiscal YearPension Plans
(in thousands)
2021$6,457 
20226,890 
202341,395 
20247,595 
20257,847 
2026-203042,617 
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 26, 2020 and December 28, 2019, the accumulated benefit obligation related to the plan was $1.3 million and $1.1 million, respectively. The amounts included in other accumulated comprehensive income as well as expenses related to the plan were not significant for fiscal years 2020, 2019 and 2018.
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 2020, 2019 and 2018, the costs associated with this defined contribution plan totaled $14.6 million, $19.1 million and $13.4 million, respectively.