Benefit Plans

9 Months Ended

Sep. 25, 2021

Retirement Benefits [Abstract]

Benefit Plans

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.

The Company recognizes interest cost, expected return on plan assets, and amortization of prior service, net within Other income, net in the Condensed Consolidated Statements of Net Income. The components of net periodic benefit cost for the three and nine months ended September 25, 2021 and September 26, 2020 were as follows: 

	For the Three Months Ended				For the Nine Months Ended
(in thousands)	September 25, 2021		September 26, 2020		September 25, 2021		September 26, 2020
Components of net periodic benefit cost:
Service cost	$	684	$	615	$	2,086	$	1,825
Interest cost	434		511		1,317		1,655
Expected return on plan assets	(361)		(422)		(1,099)		(1,551)
Amortization of prior service and net actuarial loss	327		279		992		688
Net periodic benefit cost	$	1,084	$	983	$	3,296	$	2,617

The Company expects to make approximately $2.2 million of contributions to the plans and pay $3.8 million of benefits directly in 2021.

The Company also sponsors certain post-employment plans in foreign countries and other statutory benefit plans. The Company recorded expense of $0.6 million and $0.5 million for the three months ended September 25, 2021 and September 26, 2020, respectively, and $1.6 million and $1.5 million expense for the nine months ended September 25, 2021 and September 26, 2020, respectively, in Cost of Sales and Other income, net within the Condensed Consolidated Statements of Net Income. For the three and nine months ended September 25, 2021, the pre-tax amounts recognized in other comprehensive income (loss) as components of net periodic benefit costs for these plans were $0.2 million and $0.5 million, respectively. For the three and nine months ended September 26, 2020, the pre-tax amounts recognized in other comprehensive income (loss) as components of net periodic benefit costs for these plans were $0.2 million and $0.5 million, respectively.

On April 7, 2020, the Company entered into a definitive agreement to purchase a group annuity contract, under which an insurance company will be required to directly pay and administer pension payments to certain of the Company’s U.K. pension plan participants, or their designated beneficiaries. The purchase of this group annuity contract will reduce the Company’s outstanding pension benefit obligation by approximately $55 million, representing approximately 37% of the total obligations of the Company’s qualified pension plans, and will be funded with pension plan assets and additional cash on hand. In connection with this transaction, the Company will record a one-time non-cash settlement charge currently estimated between $18 million and $22 million in the fourth quarter of 2021, reflecting the accelerated recognition of unamortized actuarial losses in the plan. The actual amount and timing of the settlement charge could differ from this estimate due to final data and plan wind-up expenses. Due to the signing of the group annuity contract being a significant change in the U.K. pension plan, the liabilities of the plan were remeasured as of April 6, 2020 resulting in an increase of $13.4 million (£10.9 million) to both the net pension liability and unamortized actuarial loss within other comprehensive income (loss) during the second quarter of 2020. Additionally, the Company made a cash contribution of $10.4 million (£8.4 million) under this agreement during the second quarter of 2020.