Benefit Plans

The Company has Company-sponsored defined benefit pension plans covering employees in the U.K., Germany, the Philippines, China, Japan, Mexico, Italy and France. The amount of the retirement benefits provided under the plans is based on years of service and final average pay.

IXYS Acquisition

During 2018, as a result of the IXYS acquisition, pension liabilities were assumed by the Company in Germany, Philippines, and U.K.

Benefit plan related information is as follows for the years 2018 and 2017:



(in thousands)	2018			2017
Change in benefit obligation:
Benefit obligation at beginning of year	$	67,268		$	55,606
Service cost	2,266			2,037
Interest cost	3,104			1,887
Net actuarial gain	(7,321		)	(433		)
Benefits paid from the trust	(2,479		)	(1,405		)
Benefits paid directly by the Company	(1,802		)	(1,098		)
Settlements	(1,291		)	(31		)
Acquisitions	48,358			—
Effect of exchange rate movements	(6,918		)	5,477
Other	1,648			5,228
Benefit obligation at end of year	$	102,833		$	67,268

Change in plan assets at fair value:
Fair value of plan assets at beginning of year	$	48,123		$	42,208
Actual return on plan assets	(2,847		)	2,962
Employer contributions	2,341			264
Benefits paid	(2,479		)	(1,405		)
Settlements	(1,291		)	—
Acquisitions	31,954			—
Effect of exchange rate movements	(5,125		)	4,094
Fair value of plan assets at end of year	70,676			48,123
Net amount recognized/(unfunded status)	$	(32,157	)	$	(19,145	)

Amounts recognized in the Consolidated Balance Sheets as of December 29, 2018 and December 30, 2017 consist of the following:



(in thousands)	2018			2017
Amounts recognized in the Consolidated Balance Sheets consist of:
Noncurrent assets	$	811		$	78
Current benefit liability	(1,094		)	(481		)
Noncurrent benefit liability	(31,874		)	(18,742		)
Net liability recognized	$	(32,157	)	$	(19,145	)

The amounts included in accumulated other comprehensive loss in the Consolidated Balance Sheets, excluding tax effects, that have not yet been recognized as components of net period cost as of December 29, 2018 and December 30, 2017 were as following:



(in thousands)	2018		2017
Net actuarial loss	$	9,777	$	12,261
Prior service cost	1,607		—
Total	$	11,384	$	12,261

The estimated net actuarial loss which will be amortized from accumulated other comprehensive income (loss) into benefit cost in 2019 is approximately $0.2 million.

The pre-tax amounts recognized in other comprehensive income loss in 2018 as components of net periodic benefit costs were as follows:




(in thousands)	2018
Amortization of:
Prior service cost	$	291
Amount arising during the period:
Net actuarial loss	(396		)
Settlement loss	238
Foreign currency adjustments	744
Total	$	877

The components of pension expense for the fiscal years 2018, 2017, and 2016 are as follows:




(in thousands)	2018			2017			2016
Components of net periodic benefit cost:
Service cost	$	2,266		$	2,037		$	1,509
Interest cost	3,104			1,887			1,662
Expected return on plan assets	(3,222		)	(1,990		)	(1,935		)
Amortization of prior service	291			337			306
Net periodic benefit cost	2,439			2,271			1,542
Settlement loss / curtailment (gain)	238			(25		)	(36		)
Total expense for the year	$	2,677		$	2,246		$	1,506

Weighted average assumptions used to determine net periodic benefit cost for the fiscal years 2018, 2017, and 2016 are as follows:




	2018		2017		2016
Discount rate	2.8	%	3.0	%	3.7	%
Expected return on plan assets	4.2	%	4.5	%	4.9	%
Compensation increase rate	5.0	%	4.5	%	5.3	%

The accumulated benefit obligation for the foreign plans was $99.6 million and $60.5 million at December 29, 2018 and December 30, 2017, respectively.

The following table provides a summary of under-funded or unfunded pension benefit plans with projected benefit obligations in excess of plan assets as of December 29, 2018 and December 30, 2017:



(in thousands)	2018		2017
Projected benefit obligation	$	70,579	$	28,515
Fair value of plan assets	37,611		9,292

The following table provides a summary of under-funded or unfunded pension benefit plans with accumulated benefit obligations in excess of plan assets as of December 29, 2018 and December 30, 2017:



(in thousands)	2018		2017
Accumulated benefit obligation	$	66,049	$	18,990
Fair value of plan assets	36,003		6,003

Weighted average assumptions used to determine benefit obligations as of December 29, 2018, December 30, 2017 and December 31, 2016 are as follows:



	2018		2017		2016
Discount rate	3.1	%	3.1	%	2.6	%
Compensation increase rate	4.6	%	5.0	%	4.5	%

Expected benefit payments to be paid to participants for the fiscal year ending are as follows:



(in thousands)	Expected Benefit Payments
2019	$	4,210
2020	4,243
2021	4,691
2022	4,547
2023	4,884
2024-2028	27,047

The Company expects to make approximately $2.3 million of contributions to the plans in 2019.

Defined Benefit Plan Assets

Based upon analysis of the target asset allocation and historical returns by type of investment, the Company has assumed that the expected long-term rate of return will be 4.5% on plan assets. Assets are invested to maximize long-term return taking into consideration timing of settlement of the retirement liabilities and liquidity needs for benefits payments. Pension plan assets were invested as follows, and were not materially different from the target asset allocation:



	Asset Allocation
	2018		2017
Equity securities	30	%	35	%
Debt securities	66	%	64	%
Cash and cash equivalents, and other	4	%	1	%
	100	%	100	%

The Company segregated its plan assets by the following major categories and level for determining their fair value as of December 29, 2018 and December 30, 2017. All plan assets that are valued using the net asset value per share (“NAV”) practical expedient have not been included within the fair value hierarchy but are separately disclosed.

Cash and cash equivalents – Carrying value approximates fair value. As such, these assets were classified as Level 1. The Company also invests in certain short-term investments which are valued using the amortized cost method and at NAV.

Equity – The values of individual equity securities were based on quoted prices in active markets. As such, these assets are classified as Level 1. Additionally, the Company invests in certain equity funds that are valued at calculated NAV.

Fixed income – Fixed income securities are typically priced based on a last trade basis and are exchange-traded. Accordingly, the Company classified fixed income securities as Level 1. The Company also invests in certain fixed income funds which are valued at NAV.

Insurance Contracts and other – This category includes insurance contracts that are valued by the re-insurer with the valuation inputs being not highly observable and traded on an open market. Accordingly, insurance contracts was categorized as Level 3. Additionally, this category includes other assets and liabilities including futures or swaps valued at NAV.

For any Level 2 and Level 3 plan assets, management reviews significant investments on a periodic basis including investigation of unusual fluctuations in price or returns and obtaining an understanding of the pricing methodology to assess the reliability of third-party pricing estimates.

The valuation methodologies described above may generate a fair value calculation that may not be indicative of net realizable value or future fair values. While the Company believes the valuation methodologies used are appropriate, the use of different methodologies or assumptions in calculating fair value could result in different amounts. The Company invests in various assets in which valuation is determined by NAV. The Company believes that the NAV is representative of fair value at the reporting date, as there are no significant restrictions on redemption of these investments or other reasons to indicate that the investment would be redeemed at an amount different than the NAV.

The following table presents the Company’s pension plan assets measured at fair value by classification within the fair value hierarchy as of December 29, 2018:



	Fair Value Measurements Using
(in thousands)	Level 1		Level 2		Level 3		NAV		Total
Equities	$	1,361	$	—	$	—	$	19,528	$	20,889
Fixed income	3,336		—		—		43,134		46,470
Insurance contracts and other	—		—		632		1,161		1,793
Cash and cash equivalents	702		—		—		823		1,525
Total pension plan assets	$	5,399	$	—	$	632	$	64,645	$	70,676

The following table presents the Company’s pension plan assets measured at fair value by classification within the fair value hierarchy as of December 30, 2017:



	Fair Value Measurements Using
(in thousands)	Level 1		Level 2		Level 3		NAV		Total
Equities	$	1,031	$	—	$	—	$	16,032	$	17,063
Fixed income	8,088		—		—		22,568		30,656
Cash and cash equivalents	173		—		—		231		404
Total pension plan assets	$	9,292	$	—	$	—	$	38,831	$	48,123

Defined Contribution Plan

The Company also maintains a 401(k) savings plan covering substantially all U.S. employees. The Company matches 100% of the employee’s annual contributions for the first 4% of the employee’s eligible compensation. The Company may provide an additional discretionary match to participants and made discretionary matches of 2% of the employee’s eligible compensation for each of the years ended December 29, 2018, December 30, 2017 and December 31, 2016. Employees are immediately vested in their contributions plus actual earnings thereon, as well as the Company contributions. Company matching contributions amounted to $4.5 million, $3.5 million, and $3.2 million in 2018, 2017, and 2016, respectively.

Non-qualified Supplemental Retirement and Savings Plan

The Company has a non-qualified Supplemental Retirement and Savings Plan which provides additional retirement benefits for certain management employees and named executive officers by allowing participants to defer a portion of their annual compensation. The Company maintains accounts for participants through which participants make investment elections. The investments are subject to the claims of the Company’s creditors and the Company is responsible for the payment of all benefits under the plan from its general assets. As of December 29, 2018, there was $9.1 million of marketable securities related to the plan included in Other assets and $9.1 million of accrued compensation benefits included in Other long-term liabilities. The marketable securities are classified as Level 1 under the fair value hierarchy as they are maintained in mutual funds with readily determinable fair value. The Company made matching contributions to the plan of $0.4 million in 2018.