XML 29 R16.htm IDEA: XBRL DOCUMENT v3.20.2
EMPLOYEE BENEFITS
 12 Months Ended
Oct. 02, 2020
Retirement Benefits [Abstract]  
EMPLOYEE BENEFITS EMPLOYEE BENEFITS
The Company has non-contributory defined benefit pension plans covering certain U.S. employees.  Retirement benefits are generally provided based on the employees’ years of service and average earnings.  Normal retirement age is 65, with provisions for earlier retirement.  The Company elected to freeze its U.S. defined benefit pension plans as of September 30, 2009 and, as a result, there are no benefit accruals related to service performed after that date.

The Company has elected the practical expedient pursuant to ASU 2015-04, Compensation-retirement benefits (Topic 715) and has selected the measurement date of September 30, the calendar month end closest to the Company's fiscal year end. The financial position of the Company’s non-contributory defined benefit plans as of fiscal year end 2020 and 2019 was as follows:
 
 20202019
Projected benefit obligation:  
Projected benefit obligation, beginning of year$30,248 $26,831 
Service cost— — 
Interest cost931 1,103 
Actuarial (gain) loss2,588 3,358 
Benefits paid(1,136)(1,044)
Projected benefit obligation, end of year32,631 30,248 
Fair value of plan assets:  
Fair value of plan assets, beginning of year30,356 25,971 
Actual gain on plan assets3,526 5,250 
Company contributions177 179 
Benefits paid(1,136)(1,044)
Fair value of plan assets, end of year32,923 30,356 
Funded status of the plans292 108 
Amounts recognized in the Consolidated Balance Sheets consist of:  
Current pension liabilities171 172 
Non-current pension liabilities— — 
Non-current pension assets462 280 
Accumulated other comprehensive loss(3,129)(3,964)
Components of accumulated other comprehensive loss:  
Net actuarial loss(3,129)(3,964)
Accumulated other comprehensive loss$(3,129)$(3,964)

Net periodic benefit cost for the non-contributory defined benefit pension plans for the respective years included the following pre-tax amounts:
 
 202020192018
Interest cost$931 $1,103 $1,058 
Expected return on plan assets(641)(855)(763)
Amortization of unrecognized net actuarial loss537 328 553 
Net periodic pension cost827 576 848 
Other changes in benefit obligations recognized in other comprehensive income ("OCI"):   
Net actuarial gain(835)(1,365)(2,470)
Total recognized in net periodic pension cost and OCI$(8)$(789)$(1,622)
 
The Company expects to recognize $85 of unrecognized loss amortization as a component of net periodic benefit cost in 2020.  This amount is included in accumulated other comprehensive income as of October 2, 2020.

At October 2, 2020, the aggregate accumulated benefit obligation and aggregate fair value of plan assets for plans with plan assets in excess of benefit obligations was $31,446 and $32,923, respectively, and the aggregate accumulated benefit obligation and aggregate fair value of plan assets for plans with benefit obligations in excess of plan assets was $1,185 and $0, respectively. At September 27, 2019, the aggregate accumulated benefit obligation and aggregate fair value of plan assets for plans with plan assets in excess of benefit obligations was $29,018 and $30,356, respectively, and the aggregate accumulated benefit obligation and aggregate fair value of plan assets for plans with benefit obligations in excess of plan assets was $1,230 and $0, respectively.

The Company anticipates making contributions to the defined benefit pension plans of $171 through fiscal year 2021.

Estimated benefit payments from the Company’s defined benefit plans to participants for each of the next five years and the five years thereafter are as follows:
2021$1,231 
20221,252 
20231,290 
20241,355 
20251,404 
Five years thereafter7,566 
 
Actuarial assumptions used to determine the projected benefit obligation and net periodic pension cost as of the following fiscal years were as follows:
 Projected Benefit ObligationNet Periodic Pension Cost
 202020192018202020192018
Discount rate2.60 %3.13 %4.22 %3.13 %4.22 %3.79 %
Long-term rate of returnN/AN/AN/A2.50 %3.45 %3.45 %
Average salary increase rateN/AN/AN/AN/AN/AN/A

The change in discount rates in 2020, 2019 and 2018 resulted in an actuarial loss during the year of approximately $2,358, and actuarial gains of $4,320, and $1,633, respectively.   The remainder of the actuarial gains or losses for each of the three years was related to adjustments to mortality tables and other modifications to actuarial assumptions.

To determine the discount rate assumption used in the Company’s pension valuation, the Company identified a benefit payout stream based on the demographics of the pension plans and constructed a hypothetical bond portfolio using high-quality corporate bonds with cash flows that matched that benefit payout stream.  A yield curve was calculated based on this hypothetical portfolio which was used for the discount rate determination.

The Company determines the long-term rate of return assumption for plan assets by using the historical asset returns for various investment asset classes and adjusting them to reflect future expectations.  The expected asset class returns are weighted by the targeted asset allocations, resulting in a weighted average return which is rounded to the nearest quarter percent.

The Company uses measurement dates of October 1 to determine pension expenses for each year and the last day of the fiscal year to determine the fair value of the pension assets.

The Company’s pension plans’ weighted average asset allocations at October 2, 2020 and September 27, 2019, by asset category were as follows:
 20202019
Equity securities5 %4 %
Fixed income securities92 %94 %
Other securities3 %2 %
 100 %100 %

The Company elected to make additional contributions to its defined benefit plans in fiscal 2018, continuing its strategy to de-risk the plans. As a result of the improved funded status, the Company changed its investment strategy for the plans, allocating the majority of its assets, 95%, into fixed income securities designed to minimize the pension plans' exposure to changes in interest rates. The remaining 5% of assets are allocated to global equities.

The following table summarizes the Company’s pension plan assets measured at fair value as of October 2, 2020:
 Level 1Level 2Level 3Total
Description:    
Fixed income$5,657 $24,734 $— $30,391 
Mutual funds1,468 — — 1,468 
Money market funds— 1,056 — 1,056 
Group annuity contract— — 8 8 
Total$7,125 $25,790 $8 $32,923 
 
The following table summarizes the Company’s pension plan assets measured at fair value as of September 27, 2019:
 
 Level 1Level 2Level 3Total
Description:    
Fixed income$4,066 $24,553 $— $28,619 
Mutual funds1,304 — — 1,304 
Money market funds— 402 — 402 
Group annuity contract— — 31 31 
Total$5,370 $24,955 $31 $30,356 

The tables below set forth a summary of changes in fair value of the Company’s Level 3 pension plan assets for the years ended October 2, 2020 and September 27, 2019:
 20202019
Level 3 assets, beginning of year$31 $52 
Unrealized gain (loss) (1)2 
Sales(22)(23)
Level 3 assets, end of year$8 $31 

The fair values of the treasury fixed income and mutual fund assets were derived from quoted market prices as substantially all of these instruments have active markets.  The fair values of agency and corporate bond fixed income and money market assets are derived from other observable market inputs or independent pricing services. The fair value of the group annuity contract was derived using a discounted cash flow model with inputs based on current yields of similar instruments with comparable durations.  The annuity contract consists of high quality bonds.

The Company also has a non-qualified deferred compensation plan that provides certain officers and employees the ability to defer a portion of their compensation until a later date.  The deferred amounts and earnings thereon are payable to participants, or designated beneficiaries, at specified future dates upon retirement, death or termination of employment from the Company.  The deferred compensation liability, which is reported at fair value equal to the related rabbi trust assets, and is classified as “Deferred compensation liability” on our accompanying Consolidated Balance Sheets, was approximately $21,585 and $19,092 as of October 2, 2020 and September 27, 2019, respectively.  See “Note 4 Fair Value” for additional information.

A majority of the Company’s full-time employees are covered by defined contribution programs. Expenses attributable to the defined contribution programs were approximately $1,592, $1,422 and $1,321 for 2020, 2019 and 2018, respectively.