Postretirement Benefit Plans

Defined Benefit Pension Plan

As a result of our acquisition of Wolfson in fiscal year 2015, the Company now fully funds a defined benefit pension scheme (“the Scheme”), for some of the employees in the United Kingdom. The Scheme was closed to new participants as of July 2, 2002. As of April 30, 2011, the participants in the Scheme no longer accrue benefits and therefore the Company will not be required to pay contributions in respect of future accrual.

The Scheme is a trustee-administered fund that is legally separate from the Company, which holds the pension plan assets to meet long-term pension liabilities. The pension fund trustees were comprised of one employee and one employer representative and an independent chairman until November 1, 2017, when an independent corporate trustee was appointed sole trustee. The trustees are required by law to act in the best interests of the Scheme’s beneficiaries and the trustees are responsible, in consultation with the Company, for setting certain policies (including the investment policies and strategies) of the fund.

The Company initiated an Enhanced Transfer Value (ETV) offer to 49 Scheme participants in fiscal year 2017. The ETV offer expired on December 23, 2016, and 9 participants accepted. As a result, the Company paid the required ETV contribution of $0.5 million and recorded the associated pension expense of $0.4 million.

During fiscal year 2018, the Company authorized the termination of the Scheme under which 60 participants had accrued benefits. On March 16, 2018, the Scheme completed a buy-in transaction whereby the assets of the Scheme, together with a final contribution from the Company of $11.0 million, were invested in a bulk purchase annuity contract that fully insures the benefits payable to the members of the Scheme. As the buy-in transaction has resulted in the defined benefit obligations being fully insured, the Company has no further material contributions to make.

The bulk purchase annuity contract is structured to enable the Scheme to move to full buy-out (following which the insurance company would become directly responsible for the pension payments) and the intention is to proceed on this basis. When the buy-out is complete, a settlement loss will be recognized which will include any unamortized loss currently recorded within Other Comprehensive Income.

The following tables set forth the benefit obligation, the fair value of plan assets, and the funded status of the Scheme (in thousands):



	March 31, 2018			March 25, 2017
Change in benefit obligation:
Beginning balance	$	21,123		$	23,968
Interest cost	651			759
Plan settlements	—			(4,517		)
Benefits paid and expenses	(312		)	(264		)
Change in foreign currency exchange rate	2,869			(2,763		)
Actuarial (gain) / loss	16,270			3,940
Total benefit obligation ending balance	40,601			21,123
Change in plan assets:
Beginning balance	22,143			25,688
Actual return on plan assets	2,700			3,933
Employer contributions	12,877			990
Plan settlements	—			(5,243		)
Change in foreign currency exchange rate	3,193			(2,961		)
Benefits paid and expenses	(312		)	(264		)
Fair value of plan assets ending balance	40,601			22,143
Funded status of Scheme at end of year	$	—		$	1,020

The assets and obligations of the Scheme are denominated in British Pound Sterling. Following the purchase of the bulk purchase annuity contract as of March 31, 2018, the Scheme is fully insured and the net funded status is zero as reflected in the Company’s Consolidated Balance Sheet under the caption “Other assets”. The Company’s plan assets and obligations are measured as of the fiscal year-end. As of March 31, 2018, the plan assets and obligations were measured with reference to the price of the bulk purchase annuity contract. The weighted-average discount rate assumption used to determine benefit obligations as of March 25, 2017 and March 26, 2016 was 2.7%, and 3.6%, respectively.

The components of the Company’s net periodic pension expense (income) are as follows (in thousands):



	Fiscal Years Ended
	March 31, 2018			March 25, 2017			March 26, 2016
Expenses	$	—		$	—		$	15
Interest cost	651			759			821
Expected return on plan assets	(1,159		)	(1,126		)	(1,212		)
Settlement (gain) loss	—			1,063			—
Amortization of actuarial (gain) loss	—			(89		)	49
	$	(508	)	$	607		$	(327	)

The following weighted-average assumptions were used to determine net periodic benefit costs for the year ended March 31, 2018, March 25, 2017 and March 26, 2016:



	2018		2017		2016
Discount rate	2.70	%	3.60	%	3.20	%
Expected long-term return on plan assets	4.23	%	4.93	%	4.65	%

We report and measure the plan assets of our defined benefit pension at fair value. The Company’s pension plan assets consist of insurance contracts, cash, equity securities, corporate debt securities, and diversified growth funds. The fair value of the pension plan assets as of March 31, 2018 is based on the price of the bulk purchase annuity contract. In previous years, the fair value of the pension plan assets was determined through an external actuarial valuation, following a similar process of obtaining inputs as described above.

The table below sets forth the fair value of our plan assets as of March 31, 2018, using the same three-level hierarchy of fair-value inputs described in Note 4 (in thousands):



	Quoted Prices in Active Markets for Identical Assets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3		Total
Plan Assets:
Insurance contracts	$	—	$	40,601	$	—	$	40,601

The table below sets forth the fair value of our plan assets as of March 25, 2017, (in thousands):



	Quoted Prices in Active Markets for Identical Assets Level 1		Significant Other Observable Inputs Level 2		Significant Unobservable Inputs Level 3		Total
Plan Assets:
Cash	$	160	$	—	$	—	$	160
Pension funds	—		21,983		—		21,983
	$	160	$	21,983	$	—	$	22,143

Amounts recognized in accumulated other comprehensive loss for the period that have not yet been recognized as components of net periodic benefit cost consist of (in thousands):



	Fiscal Year
	2018
Net actuarial loss	$	(14,729	)
Accumulated other comprehensive loss, before tax	$	(14,729	)

When the buy-out described above is complete, the settlement loss recognized will include the net unamortized loss of $11.2 million currently recorded within Other Comprehensive Income as of March 31, 2018.

The Company contributed $12.9 million to the pension plan in fiscal year 2018. No benefit payments, reflecting expected future service, are expected to be paid in the future by the Company due to the buy-out discussed above.

The expected long-term return on plan assets is based on historical actual return experience and estimates of future long-term performance with consideration to the expected investment mix of the plan assets. It is the policy of the Trustees and the Company to review the investment strategy periodically. The Trustees’ investment objectives and the processes undertaken to measure and manage the risks inherent in the Scheme investment strategy are illustrated by the current asset allocation. The current mix of the assets is as follows:



	Actual Allocation
	2018		2017
Equity securities	—	%	33	%
Corporate bonds	—	%	48	%
Diversified growth	—	%	19	%
Insurance contracts	100	%	—	%
Total	100	%	100	%

See the related fair value of the assets above.

The Scheme previously exposed the Company to actuarial risks such as investment (market) risk, interest rate risk, mortality risk, longevity risk and currency risk. A decrease in corporate bond yields, a rise in inflation or an increase in life expectancy would result in an increase to the Scheme liabilities and may give rise to increased benefit expenses in future periods. Caps on inflationary increases are currently in place to protect the Scheme against extreme inflation, however. Following the purchase of the bulk purchase annuity contract, the Scheme is fully insured and not exposed to these risks.

Defined Contribution Plans

We have Defined Contribution Plans (“the Plans”) covering all of our qualifying employees. Under the Plans, employees may elect to contribute any percentage of their annual compensation up to the annual regulatory limits. The Company made matching employee contributions of $6.7 million, $5.5 million, and $4.3 million during fiscal years 2018, 2017, and 2016, respectively.