Employee Benefit Plans

12 Months Ended

Oct. 03, 2020

Retirement Benefits [Abstract]

Employee Benefit Plans

EMPLOYEE BENEFIT PLANS

Retirement Savings Plan

We sponsor a defined contribution retirement savings plan for certain U.S. employees subject to the provisions of the Employee Retirement Income Security Act. These employees may contribute a portion of their eligible compensation to the plan on a pre-tax or after-tax basis. We match a portion of certain eligible employee contributions by contributing cash into the investment

options selected by the employees. The total amount contributed by us is determined by plan provisions for matching contributions, as well as at our discretion. Matching contributions were 75% of eligible compensation for fiscal years 2020, 2019 and 2018, up to a maximum of 6% of compensation subject to Internal Revenue Service (IRS) limitations. Employer matching and discretionary contributions were $4,921, $5,370 and $5,394 for fiscal years 2020, 2019 and 2018, respectively.

Defined Benefit Pension Plan

We sponsor a non-contributory, defined benefit pension plan for eligible employees of one of our German subsidiaries. This plan provides benefits based on the employee's years of service and compensation during the years immediately preceding retirement, termination, disability or death, as defined in the plan. We use a September 30 measurement date for this defined benefit pension plan.

We recognize the funded status of the defined benefit pension plan in our Consolidated Balance Sheets, recognize changes in the funded status in the year in which the changes occur through comprehensive income and measure the plan's assets and obligations that determine the plan's funded status as of the end of our fiscal year.

The portion of the pre-tax amount in AOCI as of September 28, 2019 that was recognized in earnings during fiscal year 2020 was $1,226. The portion of the pretax amount in AOCI as of October 3, 2020 that is expected to be recognized as a component of net periodic retirement cost during fiscal year 2021 is $1,093. The actuarial gain/(loss) in fiscal year 2020 of $2,993 was primarily a result of the change in the discount rate from 0.72% in fiscal year 2019 to 0.97% in fiscal year 2020. 

Changes in benefit obligations and plan assets are as follows:

	2020		2019
Change in benefit obligation
Projected benefit obligation, beginning of year	$	40,918	$	33,909
Service cost	1,676		1,271
Interest cost	299		612
Actuarial (gain) loss	(2,993)		8,304
Currency translation	3,119		(2,419)
Special termination benefits	137		—
Curtailments	(686)		—
Benefits paid	(800)		(759)
Projected benefit obligation, end of year	$	41,670	$	40,918
Change in plan assets
Fair value of plan assets, beginning of year	$	23,481	$	23,871
Actual return on plan assets	(805)		1,144
Employer contributions	800		759
Currency translation	1,827		(1,534)
Benefits paid	(800)		(759)
Fair value of plan assets, end of year	$	24,503	$	23,481

The funded status of the defined benefit pension plan and amounts included in our Consolidated Balance Sheets are as follows:

	2020		2019
Funded status
Funded status, end of year	$	(17,167)	$	(17,437)
Actuarial net loss in AOCI, pre-tax	14,945		16,546
Net amount recognized	$	(2,222)	$	(891)
Included in Consolidated Balance Sheets
Accrued payroll and related costs	$	(1,047)	$	(853)
Defined benefit pension plan obligation	(15,982)		(16,585)
Other long-term liabilities	(137)		—
Deferred income taxes	4,524		5,008
AOCI, net of tax	10,420		11,539
Net amount recognized	$	(2,222)	$	(891)

The weighted average assumptions used to determine the defined benefit pension plan obligation as of October 3, 2020 and September 28, 2019 in the Consolidated Balance Sheets and the net periodic benefit cost for fiscal year 2021 are as follows:

	2020		2019
Discount rate	0.97	%	0.72	%
Expected rate of return on plan assets	5.30	%	5.50	%
Expected rate of increase in future compensation levels	3.00	%	3.00	%

The discount rate is calculated based on zero-coupon bond yields published by the Deutsche Bundesbank for maturities that match the weighted average duration of the pension liability, adjusted for the average credit spread of corporate bond rates above the government bond yields. 

The expected rate of return on plan assets represents the weighted average of the expected returns on individual asset categories in the portfolio. We use investment advisors to assist with determining the overall expected rate of return on plan assets. Factors considered in our determination include historical long-term investment performance and estimates of future long-term returns by asset class.

The overall objective of our investment policy and strategy for the defined benefit pension plan is to maintain sufficient liquidity to pay benefits and minimize the volatility of returns while earning the highest possible rate of return over time to satisfy the benefit obligations. The plan fiduciaries assist us with setting our long-term strategic investment objectives for the defined benefit pension plan assets. The objectives include preserving the funded status of the trust and balancing risk and return. Investment performance and plan asset mix are reviewed periodically.

As of both October 3, 2020 and September 28, 2019, plan assets were invested in a single mutual fund, the underlying assets of which were allocated to fixed income and cash and cash equivalents categories as shown in the table below. Any decisions to change the asset allocation are made by the plan fiduciaries. The investment in equity and fixed income securities has a long-term targeted allocation of assets of 50% equity and 50% fixed income.

The actual defined benefit pension plan asset allocations within the balanced mutual fund are as follows:

	Percentage of Plan Assets
	2020		2019
Fixed income securities1	85.0	%	77.8	%
Cash and cash equivalents2	15.0	%	22.2	%
Total	100.0	%	100.0	%

1    Fixed income securities are comprised primarily of international government agency and international corporate bonds with investment grade ratings.

2     Cash and cash equivalents include deposit accounts holding cash in Euros and other currencies and term deposits primarily held as collateral for equity futures. The market values of the equity and futures are linked to the values of equity indices of developed country markets, including the U.S., Great Britain, Europe, Canada, Switzerland and Japan. 

The fair value of the defined benefit pension plan assets, which are subject to fair value measurement as described in Note 7, are as follows:

	October 3, 2020
	Level 1		Level 2		Level 3		Total
Mutual fund3	$	—	$	24,503	$	—	$	24,503

	September 28, 2019
	Level 1		Level 2		Level 3		Total
Mutual fund3	$	—	$	23,481	$	—	$	23,481

3    The fair value of the mutual fund is valued based on closing prices from national exchanges, if the underlying securities are traded on an active market, or fixed income pricing models that use observable market inputs.

Net periodic benefit cost for the defined benefit pension plan includes the following components:

	2020		2019		2018
Service cost	$	1,676	$	1,271	$	1,282
Interest cost	299		612		640
Expected return on plan assets	(1,325)		(1,271)		(1,270)
Net amortization and deferral	1,226		542		526
Net periodic benefit cost	$	1,876	$	1,154	$	1,178

The accumulated benefit obligation of our defined benefit pension plan as of October 3, 2020 and September 28, 2019 was $38,876 and $37,182, respectively.

Future pension benefit payments, which reflect expected future service for the next five fiscal years and the combined five fiscal years thereafter, are as follows:

Fiscal Year	Pension Benefit Payments
2021	$	1,048
2022	1,118
2023	1,144
2024	1,168
2025	1,217
2026 through 2028	7,034
Total	$	12,729

Other Retirement Plans

Certain of our international subsidiaries have non-contributory, unfunded post-retirement benefit plans that provide retirement benefits for eligible employees and managing directors. Generally, these post-retirement plans provide benefits that accumulate based on years of service and compensation levels. As of October 3, 2020 and September 28, 2019, the aggregate liabilities associated with these post-retirement benefit plans were $3,695 and $3,412, respectively.