Employee Benefit Plans

12 Months Ended

Mar. 31, 2019

Defined Benefit Plans

The Company has defined benefit pension plans that cover certain French and German employees. Most of these defined pension plans, which were acquired in the Atmel and Microsemi acquisitions, are unfunded. Plan benefits are provided in accordance with local statutory requirements. Benefits are based on years of service and employee compensation levels. Pension liabilities and charges are based upon various assumptions, updated annually, including discount rates, future salary increases, employee turnover, and mortality rates. The Company’s French pension plan provides for termination benefits paid to covered French employees only at retirement, and consists of approximately one to five months of salary. The Company's German pension plan provides for defined benefit payouts for covered German employees following retirement.

The aggregate net pension expense relating to these two plans is as follows (in millions):



	Year Ended March 31,
	2019		2018		2017
Service costs	$	1.5	$	2.2	$	1.4
Interest costs	1.1		1.0		1.0
Amortization of actuarial loss	0.4		0.8		—
Settlements	—		—		0.5
Net pension period cost	$	3.0	$	4.0	$	2.9

Interest costs and amortization of actuarial losses are recorded in the other (loss) income, net line item in the statements of income.

The change in projected benefit obligation and the accumulated benefit obligation, were as follows (in millions):



	Year Ended March 31,
	2019			2018
Projected benefit obligation at the beginning of the year	$	61.0		$	50.4
Additions due to acquisition of Microsemi	9.8			—
Service cost	1.5			2.2
Interest cost	1.1			1.0
Actuarial losses	6.0			0.7
Benefits paid	(0.9		)	(0.8		)
Foreign currency exchange rate changes	(5.8		)	7.5
Projected benefit obligation at the end of the year	$	72.7		$	61.0
Accumulated benefit obligation at the end of the year	$	66.7		$	55.5
Weighted average assumptions
Discount rate	1.41		%	1.73		%
Rate of compensation increase	2.79		%	2.91		%

The Company's pension liability represents the present value of estimated future benefits to be paid. The discount rate is based on the quarterly average yield for Euros treasuries with a duration of 30 years, plus a supplement for corporate bonds

(Euros, AA rating). Net actuarial losses, which are included in accumulated other comprehensive loss in the Company's consolidated balance sheets, will be recognized as a component of net periodic cost over the average remaining service period.

As the defined benefit plans are unfunded, the liability recognized on the Company's consolidated balance sheet as of March 31, 2019 was $72.7 million of which $1.3 million is included in accrued liabilities and $71.4 million is included in other long-term liabilities. The liability recognized on the Company's consolidated balance sheet as of March 31, 2018 was $61.0 million of which $0.9 million is included in accrued liabilities and $60.1 million is included in other long-term liabilities.

Future estimated expected benefit payments for fiscal year 2020 through 2029 are as follows (in millions):



Fiscal Year Ending March 31,	Expected Benefit Payments
2020	$	1.3
2021	1.5
2022	1.9
2023	1.8
2024	2.3
2025 through 2029	11.9
Total	$	20.7

The Company's net periodic pension cost for fiscal 2020 is expected to be approximately $3.3 million.

In connection with the acquisition of SMSC in August 2012, the Company assumed an unfunded Supplemental Executive Retirement Plan ("SERP"), which provides former SMSC senior management with retirement, disability and death benefits. An amendment to the SERP was executed on November 3, 2009, freezing the benefit level for existing participants as of February 28, 2010 and closing the SERP to new participants. As of March 31, 2019, the projected benefit obligation is $3.7 million. Annual benefit payments and contributions under this plan are expected to be approximately $0.4 million in fiscal 2020 and approximately $4.1 million cumulatively in fiscal 2021 through fiscal 2029.

Defined Contribution Plans

The Company maintains a contributory profit-sharing plan for its domestic employees meeting certain eligibility and service requirements. The plan qualifies under Section 401(k) of the Internal Revenue Code of 1986, as amended, and allows employees to contribute up to 60% of their base salary, subject to maximum annual limitations prescribed by the IRS. The Company has a discretionary matching contribution program. All matches are provided on a quarterly basis and require the participant to be an active employee at the end of the applicable quarter. During fiscal 2019, 2018 and 2017, the Company's matching contributions to the plan totaled $8.6 million, $8.8 million and $8.2 million, respectively.

The Company's 2001 Employee Stock Purchase Plan (the 2001 Purchase Plan) became effective on March 1, 2002. Under the 2001 Purchase Plan, eligible employees of the Company may purchase shares of common stock at semi-annual intervals through periodic payroll deductions. The purchase price in general will be 85% of the lower of the fair market value of the common stock on the first day of the participant's entry date into the offering period or of the fair market value on the semi-annual purchase date. Depending upon a participant's entry date into the 2001 Purchase Plan, purchase periods under the 2001 Purchase Plan consist of overlapping periods of either 24, 18, 12 or 6 months in duration. In May 2003 and August 2003, the Company's Board and stockholders, respectively, each approved an annual automatic increase in the number of shares reserved under the 2001 Purchase Plan. The automatic increase took effect on January 1, 2005, and on each January 1 thereafter during the term of the plan, and is equal to the lesser of (i) 1,500,000, (ii) one half of one percent (0.5%) of the then outstanding shares of the Company's common stock, or (iii) such lesser amount as is approved by Board of Directors. On January 1, 2019, under the automatic increase provision, an additional 1,184,815 shares of Common Stock were reserved for sale under the 2001 Purchase Plan in future offering periods. Upon the approval of the Board of Directors, there were no shares added under the 2001 Purchase Plan on January 1, 2018 based on the automatic increase provision. On January 1, 2017, an additional 1,077,150 shares were reserved under the 2001 Purchase Plan based on the automatic increase. Since the inception of the 2001 Purchase Plan, 14,557,319 shares of common stock have been reserved for issuance and 8,293,815 shares have been issued under this purchase plan.

During fiscal 1995, a purchase plan was adopted for employees in non-U.S. locations. Such plan provided for the purchase price per share to be 100% of the lower of the fair market value of the common stock at the beginning or end of the semi-annual purchase plan period. Effective May 1, 2006, the Company's Board of Directors approved a purchase price per share equal to 85% of the lower of the fair market value of the common stock at the beginning or end of the semi-annual purchase plan period. On May 1, 2006, the Company's Board of Directors approved an annual automatic increase in the number of shares reserved under the plan. The automatic increase took effect on January 1, 2007, and on each January 1 thereafter during the term of the plan, and is equal to one tenth of one percent (0.1%) of the then outstanding shares of the Company's common stock. On January 1, 2019, under the automatic increase provision, an additional 236,963 shares of Common Stock were reserved for sale under the International Purchase Plan in future offering periods. Upon the approval of the Board of Directors, there were no shares added under the plan on January 1, 2018 based on the automatic increase provision. On January 1, 2017, an additional 215,430 shares were reserved under the plan based on the automatic increase. Since the inception of this purchase plan, 2,156,176 shares of common stock have been reserved for issuance and 1,524,674 shares have been issued under this purchase plan.

Effective January 1, 1997, the Company adopted a non-qualified deferred compensation arrangement. This plan is unfunded and is maintained primarily for the purpose of providing deferred compensation for a select group of highly compensated employees as defined in ERISA Sections 201, 301 and 401. There are no Company matching contributions made under this plan.

The Company has management incentive compensation plans which provide for bonus payments, based on a percentage of base salary, from an incentive pool created from operating profits of the Company, at the discretion of the Board of Directors. During fiscal 2019, 2018 and 2017, $18.7 million, $48.1 million and $41.5 million were charged against operations for these plans, respectively.

The Company also has a plan that, at the discretion of the Board of Directors, provides a cash bonus to all employees of the Company based on the operating profits of the Company. During fiscal 2019, 2018 and 2017, $16.4 million, $36.3 million and $28.2 million, respectively, were charged against operations for this plan.