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Employee Benefit Plans
 12 Months Ended
Jun. 28, 2014
Employee Benefit Plans  
Employee Benefit Plans

 

Note 15. Employee Benefit Plans

Employee 401(k) Plans

        The Company sponsors the JDS Uniphase Corporation Employee 401(k) Retirement Plan (the "401(k) Plan"), a Defined Contribution Plan under ERISA, which provides retirement benefits for its eligible employees through tax deferred salary deductions. The 401(k) Plan allows employees to contribute up to 50% of their annual compensation, with contributions limited to $17,500 in calendar year 2014 as set by the Internal Revenue Service.

        For all eligible participants who have completed 180 days of service with JDSU, the 401(k) Plan provided for a 100% match of employees' contributions up to the first 3% of annual compensation and 50% match on the next 2% of compensation. All matching contributions are made in cash and vest immediately. The Company's matching contributions to the 401(k) Plan were $7.5 million, $7.4 million, and $7.1 million in fiscal 2014, 2013 and 2012, respectively.

Deferred Compensation Plan

        The Company also provides for the benefit of certain eligible employees in the U.S. a non-qualified retirement plan. This plan is designed to permit employee deferral of a portion of salaries in excess of certain tax limits and deferral of bonuses. This plan's assets are designated as trading securities in the Company's Consolidated Balance Sheets. Refer to "Note 7. Investments and Fair Value Measurements" for more information. Effective January 1, 2011, the Company suspended all employee contribution into the plan.

Employee Defined Benefit Plans

        The Company sponsors significant qualified and non-qualified pension plans for certain past and present employees in the U.K., Switzerland and Germany. The Company also is responsible for the non-pension post-retirement benefit obligation assumed from a past acquisition. Most of the plans have been closed to new participants and no additional service costs are being accrued, except for certain plans in Germany and Switzerland, assumed in connection with acquisitions during fiscal 2010 and the third quarter of fiscal 2014. Benefits are generally based upon years of service and compensation or stated amounts for each year of service. As of June 28, 2014, the U.K. and Switzerland plans were partially funded while the other plans were unfunded. The Company's policy for funded plans is to make contributions equal to or greater than the requirements prescribed by law or regulation. For unfunded plans, the Company pays the post-retirement benefits when due. Future estimated benefit payments are summarized below. No other required contributions to defined benefit plans are expected in fiscal 2014, but the Company, at its discretion, can make contributions to one or more of the defined benefit plans.

        The Company accounts for its obligations under these pension plans in accordance with the authoritative guidance which requires the Company to record its obligation to the participants, as well as the corresponding net periodic cost. The Company determines its obligation to the participants and its net periodic cost principally using actuarial valuations provided by third-party actuaries. The obligation the Company records in its Consolidated Balance Sheets is reflective of the total PBO and the fair value of plan assets.

        The following table presents the components of the net periodic cost for the pension and benefits plans (in millions):

 
   Pension Benefit Plans  
 
   2014   2013   2012  

Service cost

   $ 0.5   $ 0.3   $ 0.2  

Interest cost

     4.5     4.4     5.5  

Expected return on plan assets

     (1.4 )   (1.2 )   (1.4 )

Recognized actuarial losses (gains)

     0.1     —     (0.4 )
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net periodic benefit cost

   $ 3.7   $ 3.5   $ 3.9  
               
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
               

        The Company's accumulated other comprehensive income includes unrealized net actuarial (gains)/losses. The amount expected to be recognized in net periodic benefit cost during fiscal 2015 is $0.5 million.

        The changes in the benefit obligations and plan assets of the pension and benefits plans were (in millions):

 
   Pension Benefit
Plans		  
 
   2014   2013  

Change in benefit obligation:

              

Benefit obligation at beginning of year

   $ 121.0   $ 111.9  

Service cost

     0.5     0.3  

Interest cost

     4.5     4.4  

Plan participants' contributions

     0.1     —  

Actuarial (gains)/losses

     10.9     6.2  

Acquisitions

     3.8     —  

Benefits paid

     (4.9 )   (4.9 )

Foreign exchange impact

     8.0     3.1  
           
​ ​ ​ ​ ​ ​ ​ ​

Benefit obligation at end of year

   $ 143.9   $ 121.0  
           
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
           

Change in plan assets:

              

Fair value of plan assets at beginning of year

   $ 25.6   $ 23.5  

Actual return on plan assets

     2.0     2.7  

Acquisitions

     2.7     —  

Employer contributions

     5.1     4.8  

Plan participants' contributions

     0.1     —  

Benefits paid

     (4.9 )   (4.9 )

Foreign exchange impact

     2.9     (0.5 )
           
​ ​ ​ ​ ​ ​ ​ ​

Fair value of plan assets at end of year

   $ 33.5   $ 25.6  
           
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
           

Funded status

   $ (110.4 ) $ (95.4 )
           
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
           

Accumulated benefit obligation

   $ 142.2   $ 120.2  
           
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
           


 

 
   Pension Benefit
Plans		  
 
   2014   2013  

Amount recognized in the Consolidated Balance Sheets at end of year:

              

Current liabilities

   $ 4.2   $ 4.3  

Non-current liabilities

     106.2     91.1  
           
​ ​ ​ ​ ​ ​ ​ ​

Net amount recognized at end of year

   $ 110.4   $ 95.4  
           
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
           

Amount recognized in Accumulated other comprehensive income at end of year:

              

Actuarial losses, net of tax

   $ (12.3 ) $ (4.7 )
           
​ ​ ​ ​ ​ ​ ​ ​

Net amount recognized at end of year

   $ (12.3 ) $ (4.7 )
           
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
           

Other changes in plan assets and benefit obligations recognized in Other comprehensive (loss) income:

              

Net actuarial losses

   $ (7.7 ) $ (4.4 )

Amortization of accumulated net actuarial losses

     0.1     —  
           
​ ​ ​ ​ ​ ​ ​ ​

Total recognized in other comprehensive income (loss)

   $ (7.6 ) $ (4.4 )
           
​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​
           

        As of June 28, 2014 and June 29, 2013, the liability related to the post retirement benefit plan was $1.1 million and $0.9 million respectively. The balances were included in Other non-current liabilities on the Consolidated Balance Sheets.

        During fiscal 2014 and fiscal 2013, the Company contributed GBP 0.5 million or approximately $0.7 million in each fiscal year to its U.K. pension plan. These contributions allowed the Company to comply with regulatory funding requirements.

Assumptions

        Underlying both the calculation of the PBO and net periodic cost are actuarial valuations. These valuations use participant-specific information such as salary, age, years of service, and assumptions about interest rates, compensation increases and other factors. At a minimum, the Company evaluates these assumptions annually and makes changes as necessary.

        The discount rate reflects the estimated rate at which the pension benefits could be effectively settled. In developing the discount rate, the Company considered the yield available on an appropriate AA corporate bond index, adjusted to reflect the term of the scheme's liabilities as well as a yield curve model developed by the Company's actuaries.

        The expected return on assets was estimated by using the weighted average of the real expected long term return (net of inflation) on the relevant classes of assets based on the target asset mix and adding the chosen inflation assumption.

        The following table summarizes the weighted average assumptions used to determine net periodic cost and benefit obligation for the Company's U.K., Switzerland and German pension plans:

 
   Pension Benefit
Plans		  
 
   2014   2013   2012  

Weighted-average assumptions used to determine net periodic cost:

                    

Discount rate

     3.6 %   4.0 %   5.4 %

Expected long-term return on plan assets

     5.2     5.2     6.0  

Rate of pension increase

     2.2     2.0     1.8  

Weighted-average assumptions used to determine benefit obligation at end of year:

    
 		    
 		    
 		  

Discount rate

     2.9 %   3.7 %   4.0 %

Rate of pension increase

     2.1     2.2     2.0  

Investment Policies and Strategies

        The Company's investment objectives for its funded pension plan are to ensure that there are sufficient assets available to pay out members' benefits as and when they arise and that should the plan be discontinued at any point in time there would be sufficient assets to meet the discontinuance liabilities.

        To achieve the objectives, the trustees of the U.K. pension plan are responsible for regularly monitoring the funding position and managing the risk by investing in assets expected to outperform the increase in value of the liabilities in the long term and by investing in a diversified portfolio of assets in order to minimize volatility in the funding position. The trustees invest in a range of frequently traded funds ("pooled funds") rather than direct holdings in individual securities to maintain liquidity, achieve diversification and reduce the potential for risk concentration. The funded plan assets are managed by professional third-party investment managers.

        The Swiss pension plan assets are managed by a professional third-party service provider which provides management service in compliance with Swiss regulations. This service provider manages the plan assets of its affiliated companies as a pool and invests in a diversified portfolio of funds to maintain liquidity and reduce risk.

Fair Value Measurement of Plan Assets

        The following table sets forth the U.K. and Swiss plans' assets at fair value and the percentage of assets allocations as of June 28, 2014 (in millions, except percentage data). The fair value of U.K. and Swiss pension assets was approximately $30.5 million and $3.0 million, respectively, as of June 28, 2014.

 
    
    
    
   Fair value measurement as of
June 28, 2014		  
 
   Target Allocation   Total   Percentage of
Plan Assets		   Quoted Prices in
Active Markets
for Identical Assets
(Level 1)		   Significant Other
Observable
Inputs
(Level 2)		  

Assets:

                              

Global equity

   39%   $ 13.0     38.8 % $ —   $ 13.0  

Fixed income

   40         13.3     39.7     —     13.3  

Other

   21         7.0     20.9     —     7.0  

Cash

         0.2     0.6     0.2     —  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total assets

       $ 33.5     100.0 % $ 0.2   $ 33.3  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                       

        The following table sets forth the plan's assets at fair value and the percentage of assets allocations as of June 29, 2013 (in millions, except percentage data).

 
    
    
    
   Fair value measurement as of
June 29, 2013		  
 
   Target Allocation   Total   Percentage of
Plan Assets		   Quoted Prices in
Active markets
for Identical Assets
(Level 1)		   Significant Other
Observable
Inputs
(Level 2)		  

Assets:

                              

Global equity

   36 - 44%   $ 10.7     42.0 % $ —   $ 10.7  

Fixed income

   45 - 55         12.1     47.0     —     12.1  

Other

     8 - 12         2.7     11.0     —     2.7  

Cash

         0.1     —     0.1     —  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Total assets

       $ 25.6     100.0 % $ 0.1   $ 25.5  
                       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
                       

        The Company's pension assets consist of multiple institutional funds ("pension funds") of which the fair values are based on the quoted prices of the underlying funds. Pension funds are classified as Level 2 assets since such funds are not directly traded in active markets.

        Global equity consists of several index funds that invest primarily in U.K. equities, Switzerland equities and other overseas equities.

        Fixed income consists of several funds that invest primarily in index-linked Gilts (over 5 year), sterling-denominated investment grade corporate bonds and overseas government bonds.

        Other consists of several funds that primarily invest in global equities, bonds, private equity, global real estate and infrastructure funds.

Future Benefit Payments

        The following table reflects the total expected benefit payments to defined benefit pension plan participants. These payments have been estimated based on the same assumptions used to measure the Company's PBO at year end and include benefits attributable to estimated future compensation increases.

(in millions)
  Pension
Benefit Plans		  

2015

   $ 5.2  

2016

     6.0  

2017

     6.8  

2018

     7.1  

2019

     7.1  

2020 - 2024

     37.8  

Thereafter

     40.4  
       
​ ​ ​ ​ ​

Total

   $ 110.4  
       
​ ​ ​ ​ ​
​ ​ ​ ​ ​