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Benefit Plans
 12 Months Ended
Dec. 28, 2019
Retirement Benefits [Abstract]  
Benefit Plans Benefit Plans

Pension and Other Postretirement Plans

The Company sponsors several qualified and nonqualified pension plans and other postretirement benefit plans for certain employees.  The following tables provide a reconciliation of the changes in the plans’ benefit obligations and the fair value of the plans’ assets for 2019 and 2018, and a statement of the plans’ aggregate funded status:

 
 
Pension Benefits
 
Other Benefits
(In thousands)
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
Change in benefit obligation:
 
 
 
 
 
 
 
 
Obligation at beginning of year
 
$
166,739

 
$
186,766

 
$
14,382

 
$
16,407

Service cost
 
—

 
88

 
260

 
235

Interest cost
 
5,972

 
5,745

 
609

 
447

Actuarial loss (gain)
 
17,061

 
(10,637
)
 
(1,860
)
 
(1,185
)
Benefit payments
 
(9,883
)
 
(10,368
)
 
(832
)
 
(892
)
Settlement charge
 
—

 
—

 
(198
)
 
(171
)
Foreign currency translation adjustment
 
2,275

 
(4,855
)
 
292

 
(459
)
 
 
 
 
 
 
 
 
 
Obligation at end of year
 
182,164

 
166,739

 
12,653

 
14,382

 
 
 
 
 
 
 
 
 
Change in fair value of plan assets:
 
 

 
 

 
 

 
 

Fair value of plan assets at beginning of year
 
164,603

 
186,336

 
—

 
—

Actual return on plan assets
 
26,734

 
(8,282
)
 
—

 
—

Employer contributions
 
—

 
999

 
832

 
892

Benefit payments
 
(9,883
)
 
(10,368
)
 
(832
)
 
(892
)
Foreign currency translation adjustment
 
2,032

 
(4,082
)
 
—

 
—

 
 
 
 
 
 
 
 
 
Fair value of plan assets at end of year
 
183,486

 
164,603

 
—

 
—

 
 
 
 
 
 
 
 
 
Funded (underfunded) status at end of year
 
$
1,322

 
$
(2,136
)
 
$
(12,653
)
 
$
(14,382
)


The following represents amounts recognized in AOCI (before the effect of income taxes):

 
 
Pension Benefits
 
Other Benefits
(In thousands)
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
Unrecognized net actuarial loss
 
$
36,195

 
$
39,101

 
$
(1,609
)
 
$
170

Unrecognized prior service credit
 
—

 
—

 
(5,485
)
 
(6,387
)

 
The Company sponsors one pension plan in the U.K. which comprised 43 and 45 percent of the above benefit obligation at December 28, 2019 and December 29, 2018, respectively, and 39 and 37 percent of the above plan assets at December 28, 2019 and December 29, 2018, respectively.

As of December 28, 2019, $1.6 million of the actuarial net loss and $0.9 million of the prior service credit will, through amortization, be recognized as components of net periodic benefit cost in 2020.
 
The aggregate status of all overfunded plans is recognized as an asset and the aggregate status of all underfunded plans is recognized as a liability in the Consolidated Balance Sheets.  The amounts recognized as a liability are classified as current or long-term on a plan-by-plan basis.  Liabilities are classified as current to the extent the actuarial present value of benefits payable within the next 12 months exceeds the fair value of plan assets, with all remaining amounts classified as long-term.  

As of December 28, 2019 and December 29, 2018, the total funded status of the plans recognized in the Consolidated Balance Sheets was as follows:

 
 
Pension Benefits
 
Other Benefits
  (In thousands)
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
Long-term asset
 
$
8,592

 
$
10,580

 
$
—

 
$
—

Current liability
 
—

 
—

 
(1,013
)
 
(1,080
)
Long-term liability
 
(7,270
)
 
(12,716
)
 
(11,640
)
 
(13,302
)
 
 
 
 
 
 
 
 
 
Total funded (underfunded) status
 
$
1,322

 
$
(2,136
)
 
$
(12,653
)
 
$
(14,382
)


The components of net periodic benefit cost (income) are as follows:

(In thousands)
 
2019
 
2018
 
2017
Pension benefits:
 
 
 
 
 
 
Service cost
 
$
—

 
$
88

 
$
128

Interest cost
 
5,972

 
5,745

 
6,344

Expected return on plan assets
 
(8,103
)
 
(9,522
)
 
(9,374
)
Amortization of net loss
 
1,950

 
1,151

 
2,206

 
 
 
 
 
 
 
Net periodic benefit income
 
$
(181
)
 
$
(2,538
)
 
$
(696
)
 
 
 
 
 
 
 
Other benefits:
 
 

 
 

 
 

Service cost
 
$
260

 
$
235

 
$
235

Interest cost
 
609

 
447

 
599

Amortization of prior service credit
 
(902
)
 
(902
)
 
(901
)
Amortization of net (gain) loss
 
(88
)
 
92

 
(42
)
Settlement charge
 
(2
)
 
38

 
17

 
 
 
 
 
 
 
Net periodic benefit income
 
$
(123
)
 
$
(90
)
 
$
(92
)


The components of net periodic benefit cost (income) other than the service cost component are included in other income, net in the Consolidated Statements of Income.
 
The weighted average assumptions used in the measurement of the Company’s benefit obligations are as follows:

 
 
Pension Benefits
 
Other Benefits
 
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
Discount rate
 
1.93
%
 
3.72
%
 
3.70
%
 
4.56
%
Expected long-term return on plan assets
 
3.84
%
 
5.05
%
 
N/A

 
N/A

Rate of compensation increases
 
N/A

 
N/A

 
5.00
%
 
5.00
%
Rate of inflation
 
3.20
%
 
3.40
%
 
N/A

 
N/A


The weighted average assumptions used in the measurement of the Company’s net periodic benefit cost are as follows:

 
 
Pension Benefits
 
Other Benefits
 
 
2019
 
2018
 
2017
 
2019
 
2018
 
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
Discount rate
 
3.72
%
 
3.22
%
 
3.61
%
 
4.56
%
 
3.89
%
 
4.21
%
Expected long-term return on plan assets
 
5.05
%
 
5.27
%
 
5.56
%
 
N/A

 
N/A

 
N/A

Rate of compensation increases
 
N/A

 
N/A

 
N/A

 
5.00
%
 
5.00
%
 
5.00
%
Rate of inflation
 
3.40
%
 
3.30
%
 
3.30
%
 
N/A

 
N/A

 
N/A



The Company’s Mexican postretirement plans use the rate of compensation increase in the benefit formulas.  Past service in the U.K. pension plan will be adjusted for the effects of inflation.  All other pension and postretirement plans use benefit formulas based on length of service.

The annual assumed rate of increase in the per capita cost of covered benefits (i.e., health care cost trend rate) is assumed to range from 4.0 to 7.0 percent for 2020, gradually decrease to 4.1 percent through 2040, and remain at that level thereafter.  The health care cost trend rate assumption does not have a significant effect on the amounts reported.

Pension Assets

The weighted average asset allocation of the Company’s pension fund assets are as follows:

 
 
Pension Plan Assets
Asset category
 
2019
 
2018
 
 
 
 
 
Fixed income securities (includes fixed income mutual funds)
 
55
%
 
54
%
Equity securities (includes equity mutual funds)
 
25

 
35

Multi-asset securities
 
9

 
—

Cash and equivalents (includes money market funds)
 
7

 
8

Alternative investments
 
4

 
3

 
 
 
 
 
Total
 
100
%
 
100
%


At December 28, 2019, the long-term target allocation, by asset category, of assets of the Company’s defined benefit pension plans was: (i) fixed income securities – at least 60 percent; (ii) equity securities, including equity index funds – not more than 30 percent; and (iii) alternative investments – not more than 5 percent.

The pension plan obligations are long-term and, accordingly, the plan assets are invested for the long-term.  Plan assets are monitored periodically.  Based upon results, investment managers and/or asset classes are redeployed when considered necessary.  None of the plans’ assets are expected to be returned to the Company during the next fiscal year.  The assets of the plans do not include investments in securities issued by the Company.  

The estimated rates of return on plan assets are the expected future long-term rates of earnings on plan assets and are forward-looking assumptions that materially affect pension cost.  Establishing the expected future rates of return on pension assets is a judgmental matter.  The Company reviews the expected long-term rates of return on an annual basis and revises as appropriate.  The expected long-term rate of return on plan assets was 3.84 percent for 2019 and 5.05 percent in 2018.

The Company’s investments for its pension plans are reported at fair value.  The following methods and assumptions were used to estimate the fair value of the Company’s plan asset investments:

Cash and money market funds – Valued at cost, which approximates fair value.

Mutual funds – Valued at the net asset value of shares held by the plans at December 28, 2019 and December 29, 2018, respectively, based upon quoted market prices.

Limited partnerships – Limited partnerships include investments in various Cayman Island multi-strategy hedge funds.  The plans’ investments in limited partnerships are valued at the estimated fair value of the class shares owned by the plans based upon the equity in the estimated fair value of those shares.  The estimated fair values of the limited partnerships are determined by the investment managers.  In determining fair value, the investment managers of the limited partnerships utilize the estimated net asset valuations of the underlying investment entities.  The underlying investment entities value securities and other financial instruments on a mark-to-market or estimated fair value basis.  The estimated fair value is determined by the investment managers based upon, among other things, the type of investments, purchase price, marketability, current financial condition, operating results, and other information.  The estimated fair values of substantially all of the investments of the underlying investment entities, which may include securities for which prices are not readily available, are determined by the investment managers or management of the respective underlying investment entities and may not reflect amounts that could be realized upon immediate sale.  Accordingly, the estimated fair values may differ significantly from the values that would have been used had a ready market existed for these investments.

The following table sets forth by level, within the fair value hierarchy, the assets of the plans at fair value:

 
 
Fair Value Measurements at December 28, 2019
  (In thousands)
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
 
 
 
 
 
 
 
Cash and money market funds
 
$
12,318

 
$
—

 
$
—

 
$
12,318

Mutual funds (1)
 
—

 
163,253

 
—

 
163,253

Limited partnerships
 
—

 
—

 
7,915

 
7,915

 
 
 
 
 
 
 
 
 
Total
 
$
12,318

 
$
163,253

 
$
7,915

 
$
183,486

 
 
 
Fair Value Measurements at December 29, 2018
  (In thousands)
 
Level 1
 
Level 2
 
Level 3
 
Total
 
 
 
 
 
 
 
 
 
Cash and money market funds
 
$
12,984

 
$
—

 
$
—

 
$
12,984

Mutual funds (2)
 
—

 
146,591

 
—

 
146,591

Limited partnerships
 
—

 
—

 
5,028

 
5,028

 
 
 
 
 
 
 
 
 
Total
 
$
12,984

 
$
146,591

 
$
5,028

 
$
164,603


(1) 
Approximately 80 percent of mutual funds are actively managed funds and approximately 20 percent of mutual funds are index funds.  Additionally, 10 percent of the mutual funds’ assets are invested in non-U.S. multi-asset securities, 28 percent in non-U.S. equities, and 62 percent in U.S. fixed income securities.

(2) 
Approximately 61 percent of mutual funds are actively managed funds and approximately 39 percent of mutual funds are index funds.  Additionally, 5 percent of the mutual funds’ assets are invested in U.S. equities, 35 percent in non-U.S. equities, 59 percent in U.S. fixed income securities, and 1 percent in non-U.S. fixed income securities.

The table below reflects the changes in the assets of the plan measured at fair value on a recurring basis using significant unobservable inputs (level 3 of fair value hierarchy) during the year ended December 28, 2019:

  (In thousands)
 
Limited Partnerships
 
 
 
Balance, December 29, 2018
 
$
5,028

Redemptions
 
(3,825
)
Subscriptions
 
6,846

Net appreciation in fair value
 
(134
)
 
 
 

Balance, December 28, 2019
 
$
7,915



Contributions and Benefit Payments

The Company does not expect to contribute to its pension plans, other than to reimburse expenses, and expects to contribute $1.0 million to its other postretirement benefit plans in 2020.  In November 2019, the Company’s Board of Directors approved the termination of the Mueller Pension Plan effective January 2020. The termination is expected to be complete by the end of 2020. The Company expects future benefits to be paid from the plans as follows:

(In thousands)
 
Pension Benefits
 
Other Benefits
 
 
 
 
 
2020
 
$
107,864

 
$
1,014

2021
 
2,815

 
959

2022
 
2,905

 
953

2023
 
2,998

 
1,053

2024
 
3,094

 
1,062

2025-2029
 
17,020

 
4,944

 
 
 
 
 
Total
 
$
136,696

 
$
9,985



Multiemployer Plan

The Company contributes to the IAM National Pension Fund, National Pension Plan (IAM Plan), a multiemployer defined benefit plan.  Participation in the IAM Plan was negotiated under the terms of two collective bargaining agreements in Port Huron, Michigan, the Local 218 IAM and Local 44 UAW that expire on May 7, 2023 and June 26, 2022, respectively.  The Employer Identification Number for this plan is 51-6031295.

The risks of participating in multiemployer plans are different from single-employer plans in the following aspects:  (i) assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers; (ii) if a participating employer stops contributing to the plan, the underfunded obligations of the plan may be borne by the remaining participating employers; (iii) if the Company chooses to stop participating in the plan, the Company may be required to pay the plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

The Company makes contributions to the IAM Plan trusts that cover certain union employees; contributions by employees are not permitted.  Contributions to the IAM Plan were approximately $1.2 million in 2019, $1.3 million in 2018, and $1.1 million in 2017.  The Company’s contributions are less than five percent of total employer contributions made to the IAM Plan indicated in the most recently filed Form 5500.

Under the Pension Protection Act of 2006, the IAM Plan’s actuary must certify the plan’s zone status annually.  Plans in the red zone are generally less than 65 percent funded, plans in the yellow zone are less than 80 percent funded, and plans in the green zone are at least 80 percent funded.  If a plan is determined to be in endangered status, red zone or yellow zone, the plan’s trustees must develop a formal plan of corrective action, a Financial Improvement Plan and/or a Rehabilitation Plan.  While the IAM Plan remains well-funded at 89 percent, for 2019, it has been certified in the yellow zone due to a declining credit balance. However, as a result of a challenging investment environment and the decline of the IAM Plan’s credit balance, the IAM National Pension Plan Board of Trustees has voluntarily elected to place the IAM Plan in the red zone for 2019. The action was taken to protect the IAM Plan’s participants’ core retirement benefits and strengthen the IAM Plan’s financial health over the long term. For 2018, the IAM Plan was determined to have green zone status.

401(k) Plans

The Company sponsors voluntary employee savings plans that qualify under Section 401(k) of the Internal Revenue Code of 1986.  Compensation expense for the Company’s matching contribution to the 401(k) plans was $5.4 million in 2019, $5.1 million in 2018, and $5.1 million in 2017.  The Company match is a cash contribution.  Participants direct the investment of their account balances by allocating among a range of asset classes including mutual funds (equity, fixed income, and balanced funds) and money market funds.  The plans do not allow direct investment in securities issued by the Company.

UMWA Benefit Plans

In October 1992, the Coal Industry Retiree Health Benefit Act of 1992 (1992 Act) was enacted.  The 1992 Act mandates a method of providing for postretirement benefits to the United Mine Workers of America (UMWA) current and retired employees, including some retirees who were never employed by the Company.  In October 1993, beneficiaries were assigned to the Company and the Company began its mandated contributions to the UMWA Combined Benefit Fund, a multiemployer trust.  Beginning in 1994, the Company was required to make contributions for assigned beneficiaries under an additional multiemployer trust created by the 1992 Act, the UMWA 1992 Benefit Plan.  The ultimate amount of the Company’s liability under the 1992 Act will vary due to factors which include, among other things, the validity, interpretation, and regulation of the 1992 Act, its joint and several obligation, the number of valid beneficiaries assigned, and the extent to which funding for this obligation will be satisfied by transfers of excess assets from the 1950 UMWA pension plan and transfers from the Abandoned Mine Reclamation Fund.  Contributions to the plan were $223 thousand, $153 thousand, and $182 thousand for the years ended 2019, 2018, and 2017, respectively.