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Employee Benefit Plans, Deferred Compensation Plan and Retirement Benefit Plan | 12 Months Ended
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Dec. 28, 2020
Compensation And Retirement Disclosure [Abstract] |
Employee Benefit Plans, Deferred Compensation Plan and Retirement Benefit Plan |
(1 5) | Employee Benefit Plans, Deferred Compensation Plan and Retirement Benefit Plan
As of December 28, 2020, the Company has several defined contribution plans. In North America, the Company has savings plans (the Savings Plans) in which eligible full-time employees can participate and contribute a percentage of compensation subject to the maximum allowed by the tax agencies. The Savings Plans provides for a partial match by the Company. In China, the Company contributes to either separate trust-administered funds or various government-sponsored pension plans on a mandatory basis. For all defined contribution plans, the Company has no further payment obligation once the required contributions have been made. The Company recorded contributions to defined contribution plans of $23,146, $31,253 and $33,106 during the years ended December 28, 2020, December 30, 2019 and December 31, 2018, respectively. The Company also maintains a deferred compensation plan (the Compensation Plan). The Compensation Plan is an unfunded, nonqualified deferred compensation plan and is limited to selected employees, including the Company’s named executive officers and directors. The Compensation Plan allows participants to defer up to 100% of their annual bonus and between 5% and 100% of their annual director fees. Amounts deferred under the Compensation Plan will be credited to accounts maintained by the Company for each participant and will be credited or debited with the participant’s proportionate share of any gains or losses attributable to the performance of investment options selected by the participant. Following the acquisition of Anaren on April 18, 2018, the Company has a noncontributory defined benefit pension plan covering eligible employees. Effective August 15, 2000, the plan was closed for new participants. Benefits under this plan generally are based on the employee’s years of service and compensation. Effective December 31, 2019, the plan is frozen as to further participation and to further benefit accruals. As of December 28, 2020 and December 30, 2019, the funded status of the accumulated benefit obligation was 70%. The Company expects to fund a minimum required contribution of approximately $567 during fiscal year 2021. The following tables set forth the changes in benefit obligation and the plan assets in the defined benefit plan described above for the years ended December 28, 2020, December 30, 2019 and December 31, 2018:
|  | For the Year Ended |
Change in Benefit Obligations |  | December 28, 2020 |  |  | December 30, 2019 |  |  | December 31, 2018 |
|  | (In thousands) |
Benefit obligation at beginning of year |  | $ | (30,600 | ) |  | $ | (27,661 | ) |  | $ | (27,525 | )
Service cost |  |  | — |  |  |  | (397 | ) |  |  | (292 | )
Interest cost |  |  | (907 | ) |  |  | (1,109 | ) |  |  | (758 | )
Amendments/curtailments/special termination |  |  | — |  |  |  | 1,636 |  |  |  | — |
Actuarial (loss) gain |  |  | (3,146 | ) |  |  | (4,174 | ) |  |  | 264 |
Benefits paid |  |  | 1,183 |  |  |  | 1,105 |  |  |  | 650 |
Benefit obligation at end of year |  | $ | (33,470 | ) |  | $ | (30,600 | ) |  | $ | (27,661 | )
Accumulated benefit obligation at end of year |  | $ | 33,470 |  |  | $ | 30,600 |  |  | $ | 26,191 |
|  | For the Year Ended |
Change in Plan Assets |  | December 28, 2020 |  |  | December 30, 2019 |  |  | December 31, 2018 |
|  | (In thousands) |
Fair value of plan assets at beginning of year |  | $ | 21,287 |  |  | $ | 18,251 |  |  | $ | 19,643 |
Actual return on plan assets |  |  | 2,704 |  |  |  | 3,346 |  |  |  | (1,021 | )
Employer contributions |  |  | 676 |  |  |  | 795 |  |  |  | 279 |
Benefits paid |  |  | (1,183 | ) |  |  | (1,105 | ) |  |  | (650 | )
Fair value of plan assets at end of year |  | $ | 23,484 |  |  | $ | 21,287 |  |  | $ | 18,251 |
Unfunded status |  | $ | (9,986 | ) |  | $ | (9,313 | ) |  | $ | (9,410 | )
Net amount recognized |  | $ | (9,986 | ) |  | $ | (9,313 | ) |  | $ | (9,410 | )
Amounts before income tax effect recognized in the consolidated balance sheets consists of the following:
|  | As of |  |  | As of |  |
|  | December 28, 2020 |  |  | December 30, 2019 |  |
|  | (In thousands) |  |
Other long-term liabilities |  | $ | (9,986 | ) |  | $ | (9,313 | ) |
Net amount recognized |  | $ | (9,986 | ) |  | $ | (9,313 | ) |
Amounts before income tax effect included in accumulated other comprehensive loss as of December 28, 2020 and December 30, 2019 are as follows:
|  | December 28, 2020 |  |  | December 30, 2019 |  |
|  | (In thousands) |  |
Net actuarial loss |  | $ | (3,811 | ) |  | $ | (2,097 | ) |
Accumulated other comprehensive loss |  | $ | (3,811 | ) |  | $ | (2,097 | ) |
The net actuarial loss during the year ended December 28, 2020 was primarily driven by an increase in liabilities due to a lower assumed discount rate. The components included in the net periodic benefit cost and the increase in minimum liability included in other comprehensive loss for the years ended December 28, 2020, December 30, 2019 and December 31, 2018 are as follows:
|  | December 28, 2020 |  |  | December 30, 2019 |  |  | December 31, 2018 |  |
|  | (In thousands) |  |
Service cost |  | $ | — |  |  | $ | 397 |  |  | $ | 292 |  |
Interest cost |  |  | 907 |  |  |  | 1,109 |  |  |  | 758 |  |
Expected return on plan assets |  |  | (1,272 | ) |  |  | (1,228 | ) |  |  | (920 | ) |
Net periodic benefit cost |  | $ | (365 | ) |  | $ | 278 |  |  | $ | 130 |  |
The weighted-average assumptions used to determine benefit obligations for this plan as of December 28, 2020, December 30, 2019 and December 31, 2018 are as follows:
|  | December 28, 2020 |  |  | December 30, 2019 |  |  | December 31, 2018 |  |
Discount rate |  |  | 2.20 |  | % |  | 3.02 |  | % |  | 4.09 |  | %
Rate of compensation increase |  |  | — |  |  |  | 3.20 |  |  |  | 3.20 |  |
Expected return on plan assets |  |  | 5.50 |  |  |  | 6.00 |  |  |  | 6.75 |  |
The Company determines the discount rate assumption based on the internal rate of return for a portfolio of high quality bonds, with a minimum rating of Moody's AA Corporate and with maturities that are consistent with the projected future cash flow obligations. The weighted-average assumptions used to determine net periodic benefit cost for the years ended December 28, 2020, December 30, 2019 and December 31, 2018 are as follows:
|  | For the Year Ended |  |
|  | December 28, 2020 |  |  | December 30, 2019 |  |  | December 31, 2018 |  |
Discount rate |  |  | 3.02 |  | % |  | 4.09 |  | % |  | 3.96 |  | %
Rate of compensation increase |  |  | — |  |  |  | 3.20 |  |  |  | 3.20 |  |
Expected return on plan assets |  |  | 6.00 |  |  |  | 6.75 |  |  |  | 6.75 |  |
The Company determines the expected long-term rate of return on plan assets based upon recommendations from its pension plan's investment advisors and using an allocation approach that considers diversification and rebalancing for a portfolio of assets invested over a long-term time horizon. The approach relies on the historical returns of the plan's portfolio and relationships between equities and fixed income investments, consistent with the widely accepted capital market principle that a diversified portfolio with a larger allocation to equity investments can generate a greater return over the long run. Additionally, the Company monitors the mix of investments in its portfolio to ensure alignment with its expected long-term pension obligations. The Company reviews the expected long-term rate of return annually and revises it as appropriate. Investments shall be made pursuant to the following objectives: 1) preserve the purchasing power of the plan’s assets adjusted for inflation; 2) provide long-term growth; 3) avoid significant volatility. Asset allocation shall be determined based on a long-term target allocation having 29% of assets invested in large-cap stocks, 11% in mid-cap stocks, 11% in small-cap stocks, 11% in international stocks, 34% in the broad bond market, and 3% in the real estate market, with little or none invested in cash. Both the investment allocation and the plan performance are reviewed periodically. The target allocation for 2021 and the plan asset allocation at the end of 2020 and 2019, in percentages, by asset category are as follows:
|  | Target Allocation 2021 |  |  |  | December 28, 2020 |  |  |  | December 30, 2019 |  |
Equity securities (1) |  |  | 67 |  | % |  |  | 68 |  | % |  |  | 66 |  | %
Debt securities (2) |  |  | 30 |  |  |  |  | 30 |  |  |  |  | 31 |  |
Cash and cash equivalents (3) |  |  | 3 |  |  |  |  | 2 |  |  |  |  | 3 |  |
Total |  |  | 100 |  | % |  |  | 100 |  | % |  |  | 100 |  | %
The following table summarizes plan assets measured at fair value as of December 28, 2020 and December 30, 2019:
|  | As of |
|  | December 28, 2020 |
|  | Total |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
|  | (In thousands) |
Equity securities (1) |  | $ | 15,922 |  |  | $ | 15,922 |  |  | $ | — |  |  | $ | — |
Debt securities (2) |  |  | 7,015 |  |  |  | 7,015 |  |  |  | — |  |  |  | — |
Cash and cash equivalents (3) |  |  | 547 |  |  |  | 547 |  |  |  | — |  |  |  | — |
Total |  | $ | 23,484 |  |  | $ | 23,484 |  |  | $ | — |  |  | $ | — |
|  | As of |
|  | December 30, 2019 |
|  | Total |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
|  | (In thousands) |
Equity securities (1) |  | $ | 14,131 |  |  | $ | 14,131 |  |  | $ | — |  |  | $ | — |
Debt securities (2) |  |  | 6,488 |  |  |  | 6,488 |  |  |  | — |  |  |  | — |
Cash and cash equivalents (3) |  |  | 668 |  |  |  | 668 |  |  |  | — |  |  |  | — |
Total |  | $ | 21,287 |  |  | $ | 21,287 |  |  | $ | — |  |  | $ | — |
(1) | Equity securities include U.S. and foreign exchange traded common and preferred stocks and mutual funds. Common and preferred shares issued by U.S. and non-U.S. corporations are traded actively on exchanges and price quotes for these shares are readily available. Holdings of corporate stock are categorized as Level 1 investments.
(2) | Debt securities include the debt of the U.S. Treasury and U.S. and foreign corporate issuers. U.S. Treasury notes and bonds are actively traded and price quotes for these securities are readily available. Holdings of U.S. Treasury notes and bonds are categorized as Level 1 investments.
(3) | Cash and cash equivalents include short-term U.S. government investment notes, short-term money market mutual funds, accrued income and cash held on account. Cash held on account and short- term U.S. government investment notes (including accrued income thereon) for which there is an active market and daily pricing for the security are categorized as Level 1 investments.
The Company seeks to maximize medium to long-term returns of the overall pension plan assets with reasonable levels of investment risk. One element of controlling the overall investment risk is through diversification of asset allocation, among domestic and international equity and debt instruments. The plan's equity investments include foreign and domestic exchange traded equities across a range of industries and countries, but primarily in the domestic markets. The plan's debt securities are primarily invested in government and corporate issuers primarily in the domestic market. The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:
|  | (In thousands) |
2021 |  | $ | 1,294 |
2022 |  |  | 1,335 |
2023 |  |  | 1,421 |
2024 |  |  | 1,514 |
2025 |  |  | 1,572 |
Years 2026 through 2030 |  |  | 8,513 |

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