Employee Benefit Plans

12 Months Ended

Sep. 28, 2013

Employee Benefit Plans [Abstract]

Retirement Benefit Plans

9. Employee Benefit Plans:

Retirement Savings Plan

The Company offers a contributory retirement savings plan that has two components: (1) a 401(k) component with a Company match and (2) a fiscal year Company contribution.

The 401(k) component of the retirement savings plan allows eligible U.S. employees to contribute a portion of their pre-tax income to the plan each pay period. The Company matches 50% of employees’ pre-tax contributions (excluding “catch-up” contributions that employees age 50 or older may make to the plan), up to 6% of compensation, subject to limitations imposed by federal law. The Company’s matching contributions were $2.4 million, $2.2 million, and $2.0 million in fiscal years 2013, 2012, and 2011, respectively. Employees may also contribute a percentage of their salary to the plan on an after-tax basis.

The Company also provides an annual fiscal year contribution to the retirement plan for eligible U.S. employees. Employees who are active as of the end of the fiscal year and whom have been paid for 1,000 hours or more of service during a plan year are eligible for a fiscal year contribution. After three years as a participant, employees have a vested interest equal to 100% of the total Company’s fiscal year contributions. The plan provides for a minimum fiscal year contribution of 3% of participant compensation below the Social Security taxable wage base and 6% of participant compensation in excess of the Social Security taxable wage base, up to the maximum contribution allowed by federal law. The Company’s Board of Directors approves any changes to the contribution levels under the plan. The Company's fiscal year contributions under the plan totaled $3.0 million, $2.7 million, and $2.5 million in fiscal years 2013, 2012, and 2011, respectively.

Defined Benefit Pension Plan

One of the Company's German subsidiaries has a non-contributory, defined benefit retirement plan for eligible employees. 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. The Company uses a September 30 measurement date for this defined benefit retirement plan.

The Company recognizes the funded status of the defined benefit pension in its statement of financial position, recognizes changes in that funded status in the year in which the changes occur through comprehensive income, and measures the plan’s assets and its obligations that determine its funded status as of the end of the Company’s fiscal year.

The pretax amount recognized in Accumulated Other Comprehensive Income as of September 28, 2013 and September 29, 2012 consists of the following:

		2013		2012
		(expressed in thousands)
Actuarial net loss	$	7,819	$	7,770

The portion of the pretax amount in Accumulated Other Comprehensive Income at September 29, 2012 that was recognized in earnings during the fiscal year ended September 28, 2013 was $0.5 million. The portion of the pretax amount in Accumulated Other Comprehensive Income at September 28, 2013 that is expected to be recognized as a component of net periodic retirement cost during the next fiscal year is $0.5 million.

The following is a summary of the changes in benefit obligations and plan assets during the fiscal years ended September 28, 2013 and September 29, 2012:

		2013		2012
	(expressed in thousands)
Change in benefit obligation:
Projected benefit obligation, beginning of year	$	21,397	$	15,922
Service cost		690		412
Interest cost		768		835
Actuarial loss		269		5,504
Exchange rate change		1,130		(752)
Benefits paid		(563)		(524)
Projected benefit obligation, end of year	$	23,691	$	21,397
Change in plan assets:
Fair value of plan assets, beginning of year	$	13,058	$	12,676
Actual return on plan assets		775		931
Employer contributions		4,575		524
Exchange rate change		744		(549)
Benefits paid		(563)		(524)
Fair value of plan assets, end of year	$	18,589	$	13,058

The following is a summary of the funded status of the defined benefit retirement plan and amounts recognized in the Company’s Consolidated Balance Sheets at September 28, 2013 and September 29, 2012:

		2013		2012
	(expressed in thousands)
Funded status:
Funded status, end of year	$	(5,102)	$	(8,339)
Accumulated other comprehensive loss		7,819		7,770
Net amount recognized	$	2,717	$	(569)
Amounts recognized in consolidated balance sheets:
Accrued payroll and related costs	$	(668)	$	(578)
Pension benefit plan obligation		(4,434)		(7,761)
Deferred income taxes		2,360		2,345
Accumulated other comprehensive income, net of tax		5,459		5,425
Net amount recognized	$	2,717	$	(569)

The weighted average assumptions used to determine the defined benefit retirement plan obligation at September 28, 2013 and September 29, 2012, and also the net periodic benefit cost for the following fiscal year, were as follows:

	2013		2012
Discount rate	3.6	%	3.6	%
Expected rate of return on plan assets	5.5	%	5.2	%
Expected rate of increase in future compensation levels	2.8	%	3.0	%

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. The Company uses investment services to assist with determining the overall expected rate of return on pension plan assets. Factors considered in the Company’s determination include historical long-term investment performance and estimates of future long-term returns by asset class.

The overall objective of the Company’s investment policy and strategy for the defined benefit retirement 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 the Company with setting the long-term strategic investment objectives for the defined benefit retirement 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.

At both September 28, 2013 and September 29, 2012, plan assets were invested in a single mutual fund, the underlying assets of which are allocated to fixed income, equity, and cash and cash equivalents categories (see table below). During the fourth quarter of fiscal year 2013, in an effort to increase the long-term expected return, the plan assets were transferred from one single mutual fund to another through a sale and simultaneous purchase, respectively. The new mutual fund targets a higher exposure to equity markets and is able to generate a higher overall return on a long-term basis. Any decisions to change the asset allocation are made by the plan fiduciaries. However, investment into equity and fixed income securities is limited to a maximum of 65% of total plan assets with a targeted allocation of assets of 50% equity and 50% fixed income.  

The actual defined benefit retirement plan asset allocations within the balanced mutual fund at September 28, 2013 and September 29, 2012 are as follows:

	Percentage of Plan Assets
	2013		2012
Fixed income securities(1)	53.0	%	73.0	%
Equity securities(2)	-	%	20.0	%
Cash and cash equivalents(3)	47.0	%	2.0	%
Other(4)	-	%	5.0	%
	100.0	%	100.0	%

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

(2)  Equity securities consist of an international mutual fund that invests solely in international stocks that are actively traded on international exchanges.

(3)  At September 28, 2013, 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 indexes of developed country markets, including U.S., Great Britain, Europe, Canada, Switzerland and Japan. At September 29, 2012, cash and cash equivalents include deposit accounts holding cash in Euros.

(4)  Other asset holdings are comprised primarily of international bond futures and a derivatives-based mutual fund that invests in various assets.

As of September 28, 2013 and September 29, 2012, the fair value of the defined benefit retirement plan assets, which are subject to fair value measurements as described in Note 6 to the Consolidated Financial Statements, are as follows:

	September 28, 2013
		Level 1		Level 2		Level 3		Total
	(expressed in thousands)
Mutual fund(1)	$	-	$	18,589	$	-	$	18,589

	September 29, 2012
		Level 1		Level 2		Level 3		Total
	(expressed in thousands)
Mutual fund(1)	$	-	$	13,058	$	-	$	13,058

(1) The fair value of the mutual fund is generally 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 Company’s defined benefit retirement plan for the fiscal years ended September 28, 2013,  September 29, 2012, and October 1, 2011 included the following components:

		2013		2012		2011
	(expressed in thousands)
Service cost	$	690	$	412	$	481
Interest cost		768		835		795
Expected return on plan assets		(690)		(660)		(704)
Net amortization and deferral		520		77		152
Net periodic benefit cost	$	1,288	$	664	$	724

The accumulated benefit obligation of the Company’s defined benefit retirement plan as of September 28, 2013 and September 29,  2012 was $21.7 million and $19.5 million, respectively.

The 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:

		Pension
Fiscal Year		Benefits
	(expressed in
	thousands)
2014	$	668
2015		747
2016		824
2017		895
2018		937
2019 through 2023		5,645
	$	9,716

Other Retirement Plans

Certain of the Company’s international subsidiaries have non-contributory, unfunded postretirement benefit plans that provide retirement benefits for eligible employees and managing directors. Generally, these postretirement plans provide benefits that accumulate based on years of service and compensation levels. At September 28, 2013 and September 29, 2012, the aggregate liabilities associated with these postretirement benefit plans was $4.4 million and $3.2 million, respectively.