11. Postretirement Benefit Plans

Pension Plan

As a result of the Acquisition, the Company now fully funds a defined benefit pension scheme (“the Scheme”) maintained by Wolfson, for employees in the United Kingdom, which 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 to future accrual.

The Scheme is a trustee-administered fund that is legally separate from Wolfson, which holds the pension plan assets to meet long-term pension liabilities. The pension fund trustees comprise one employee and one employer representative and an independent chairman. 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 Wolfson and the Company, for setting certain policies (including the investment policies and strategies) of the fund.

Prior to the Acquisition, Wolfson paid deficit contributions of approximately $1.65 million in April 2014. As of March 28, 2015, the Company was obligated, and subsequently paid, approximately $1.4 million to the Scheme by April 30, 2015 and is obligated to pay approximately $0.6 million by April 30, 2016, which is recorded on the consolidated balance sheets in “Accrued salaries and benefits” and “Other long-term liabilities,” respectively. The Company expects to completely close the Scheme over the next ten years.

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



Change in benefit obligation:
Beginning balance at August 21, 2014	$	22,959
Expenses		16
Interest cost		544
Benefits paid and expenses		(255)
Actuarial loss		3,827
Total benefit obligation at March 28, 2015		27,091

Change in plan assets:
Beginning balance at August 21, 2014		25,021
Actual return on plan assets		1,969
Benefits paid and expenses		(255)
Fair value of plan assets at March 28, 2015		26,735

Funded status of Scheme at March 28, 2015	$	(356)

The assets and obligations of the Scheme are denominated in British Pounds. Based on an actuarial study performed as of March 28, 2015, the Scheme is underfunded and a long-term liability is reflected in the Company’s consolidated balance sheet under the caption “Other long-term liabilities”. The weighted-average discount rate assumption used to determine benefit obligations as of March 28, 2015 was 3.2%.

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



	Fiscal Years Ended
	March 28,		March 29,
	2015		2014
Expenses	$	16	$	-
Interest cost		544		-
Expected return on plan assets		(792)		-
	$	(232)	$	-

The following weighted-average assumptions were used to determine net periodic benefit costs for the year ended March 28, 2015:



Discount rate	4.00	%
Expected long-term return on plan assets	5.36	%

We report and measure the plan assets of our defined benefit pension at fair value. The Company’s pension plan assets consist of cash, equity securities, corporate debt securities, and diversified growth funds. The fair value of the pension plan assets is determined through an external actuarial valuation, following a similar process of obtaining inputs as described above. The expected long-term return on plan assets is comparable to the discount rate used to value plan liabilities.

The table below sets forth the fair value of our plan assets as of March 28, 2015, using the same three-level hierarchy of fair-value inputs described in Note 4 (in thousands).



	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
	Assets		Inputs		Inputs
	Level 1		Level 2		Level 3		Total
Plan Assets:
Cash	$	1,160	$	-	$	-	$	1,160
Pension funds		-		25,575		-		25,575
	$	1,160	$	25,575	$	-	$	26,735

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



		Fiscal Year
		2015
Net actuarial loss	$	(1,625)

Accumulated other comprehensive loss, before tax	$	(1,625)

The Company will amortize the actuarial loss over a period of twenty-five years based on actuarial assumptions, including life expectancy. The following table provides the estimated amount that will be amortized from accumulated other comprehensive loss into net periodic benefit cost in fiscal year 2016 (in thousands):



		Fiscal Year
		2016
Transition (asset) obligation	$	-
Prior service cost		-
Actuarial loss (gain)		65

The Company expects to contribute $1.4 million to the pension plan in fiscal year 2016 for deficit contributions discussed above.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid for the following fiscal years (in thousands):


		Benefit
		Payments
2016	$	384
2017		305
2018		314
2019		487
2020		570
Thereafter		2,865

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 is 33% equity securities, 42% corporate debt securities, 21% diversified growth funds and 4% cash. See the related fair value of the assets above.

The Scheme exposes 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.

The indicative impact on net periodic benefit cost based on defined sensitivities is as follows:



Change		Approximate impact on liabilities
Decrease discount rate by 0.1%, per year		2% increase
Increase inflation linked assumptions by 0.1%, per year		2% increase (of inflation-linked liabilities)
Increase life expectancy by 1 year		2% increase

401(k) Plan

We have a 401(k) Profit Sharing Plan (the “401(k) Plan”) covering all of our qualifying domestic employees. Under the 401(k) Plan, employees may elect to contribute any percentage of their annual compensation up to the annual IRS limitations. Beginning in the fourth quarter of fiscal year 2014, the Company matches 50 percent of the first 8 percent of the employees’ annual contribution; prior to that, the Company matched 50 percent of the first 6 percent of the employee’s annual contribution. We made matching employee contributions of $2.5 million, $1.8 million, and $1.5 million during fiscal years 2015, 2014, and 2013, respectively.