Employee Benefit Plans

12 Months Ended

Dec. 31, 2020

Compensation And Retirement Disclosure [Abstract]

Employee Benefit Plans

14. Employee Benefit Plans

Defined Contribution Plans

The Company has defined contribution employee retirement savings plans in the U.S., the U.K. and Japan. The Company matches the contributions of participating employees on the basis of percentages specified in each plan. The Company’s matching contributions to the plans were $4.2 million, $4.4 million and $3.9 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Defined Benefit Plan

The Company maintains a frozen defined benefit pension plan in the U.K. (the “U.K. Plan”). The U.K. Plan was closed to new membership in 1997 and stopped accruing additional pension benefits for existing members in 2003. Benefits under the U.K. Plan were based on the participants’ years of service and compensation as of the date the plan was frozen in 2003, adjusted for inflation. The Company continues to fund the plan in accordance with the pension regulations in the U.K.

The net periodic pension cost is included in other income (expense) in the consolidated statements of operations and consisted of the following components (in thousands):

	Year Ended December 31,
	2020			2019			2018
Components of the net periodic pension cost:
Interest cost	$	736		$	971		$	939
Expected return on plan assets		(1,340	)		(1,671	)		(1,717	)
Amortization of actuarial losses		686			957			826
Amortization of prior service cost		29			29			—
Net periodic pension cost	$	111		$	286		$	48

The actuarial assumptions used to compute the net periodic pension cost for the years ended December 31, 2020, 2019 and 2018, respectively, were as follows:

	Year Ended December 31,
	2020			2019			2018
Weighted-average discount rate		1.9	%		2.7	%		2.4	%
Weighted-average long-term rate of return on plan assets		3.6	%		5.1	%		4.8	%

The actuarial assumptions used to compute the benefit obligations as of December 31, 2020 and 2019, respectively, were as follows:

	December 31,
	2020			2019
Weighted-average discount rate		1.2	%		1.9	%
Rate of inflation		2.6	%		2.5	%

 The discount rates used are derived from (AA) corporate bonds that have maturities approximating the terms of the pension obligations under the U.K. Plan. In estimating the expected return on plan assets, the Company considered the historical performance of the major asset classes held by the U.K. Plan and current forecasts of future rates of return for these asset classes.

The following table provides a reconciliation of benefit obligations and plan assets of the U.K. Plan (in thousands):

	December 31,
	2020			2019
Change in benefit obligation:
Projected benefit obligation at beginning of year	$	40,456		$	36,882
Interest cost		736			971
Actuarial (gains) losses (1)		5,410			3,005
Benefits paid		(1,111	)		(1,696	)
Foreign currency exchange rate changes		1,709			1,294
Projected benefit obligation at end of year	$	47,200		$	40,456
Accumulated benefit obligation at end of year	$	47,200		$	40,456
Change in plan assets:
Fair value of plan assets at beginning of year	$	38,983		$	33,124
Actual return on plan assets		5,170			5,410
Employer contributions		988			894
Benefits paid		(1,111	)		(1,696	)
Foreign currency exchange rate changes		1,659			1,251
Fair value of plan assets at end of year	$	45,689		$	38,983
Funded status at end of year	$	(1,511	)	$	(1,473	)
Amounts included in accumulated other comprehensive loss not yet recognized in net periodic pension cost:
Net actuarial losses at beginning of year	$	(9,706	)	$	(11,120	)
Net actuarial gains (losses) during the year		(1,580	)		734
Amounts reclassified from accumulated other comprehensive income to income before income taxes		715			986
Foreign currency exchange rate changes		(387	)		(306	)
Net actuarial losses	$	(10,958	)	$	(9,706	)

(1)     Fiscal year 2020 and 2019 actuarial losses in the U.K. Plan primarily resulted from changes in the discount rate assumptions.

The funded status of the U.K. Plan is included in other long term liabilities in the accompanying consolidated balance sheets.

The following table reflects the total expected benefit payments to plan participants for each of the next five years and the following five years in aggregate and have been estimated based on the same assumptions used to measure the Company’s benefit obligations as of December 31, 2020 (in thousands):

	Amount
2021	$	1,252
2022		1,109
2023		1,211
2024		1,588
2025		1,439
2026-2030		10,015
Total	$	16,614

 In the U.K., funding valuations are conducted every three years in order to determine the future level of contributions. Based on the results of the most recent valuation, the Company’s annual contributions will be approximately $1.0 million in 2021 and will increase by 2.9% per year thereafter.

Fair Value of Plan Assets

The trustee of the U.K. Plan has the fiduciary responsibilities to manage the plan assets in consultation with the Company. The overall objective is to invest plan assets in a portfolio of diversified assets, primarily through the use of institutional collective funds, to achieve balanced growth through a combination of investments in equities for long-term growth and investments in debt instruments that match a portion of the expected future benefit payments and to maintain adequate liquidity to make pension payments to pensioners.

The following table summarizes the fair values of Plan assets by asset category as of December 31, 2020 (in thousands):

Asset Category	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Not Subject to Leveling
Mutual Funds:
Balanced (1)	$	31,572	$	—	$	—	$	—	$	31,572
Fixed income (2)		13,251		—		—		—		13,251
Cash		866		866		—		—		—
Total	$	45,689	$	866	$	—	$	—	$	44,823

(1) This class comprises a diversified portfolio of global investments which seeks a balanced return between capital growth and fixed income and is allocated on a weighted average basis as follows: equities (35%), bonds (37%), other assets (19%) and cash (9%).  

(2) This class comprises a diversified portfolio of global investments which seeks fixed income growth and is allocated on a weighted average basis as follows: bonds (83%) and other assets (16%) and cash (1%).

The following table summarizes the fair values of Plan assets by asset category as of December 31, 2019 (in thousands):

Asset Category	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Other Unobservable Inputs (Level 3)		Not Subject to Leveling
Mutual Funds:
Balanced (1)	$	28,831	$	—	$	—	$	—	$	28,831
Fixed income (2)		10,042		—		—		—		10,042
Cash		110		110		—		—		—
Total	$	38,983	$	110	$	—	$	—	$	38,873

(1) This class comprises a diversified portfolio of global investments which seeks a balanced return between capital growth and fixed income and is allocated on a weighted average basis as follows: equities (32%), bonds (42%), other assets (19%) and cash (7%).

(2) This class comprises a diversified portfolio of global investments which seeks fixed income growth and is allocated on a weighted average basis as follows: bonds (92%), other assets (5%) and cash (3%).