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Employee Benefit and Pension Plans
 12 Months Ended
Dec. 28, 2019
Retirement Benefits [Abstract]  
Employee Benefit and Pension Plans Employee Benefit and Pension Plans
Defined Contribution Plans
The Company has established a savings plan under Section 401(k) of the Internal Revenue Code (the “401(k) Plan”). As allowed under Section 401(k) of the Internal Revenue Code, the 401(k) Plan provides tax-deferred salary contributions for eligible U.S. employees. Employee contributions are limited to a maximum annual amount as set periodically by the Internal Revenue Code. The Company made voluntary cash contributions and matched a portion of employee contributions of $2.7 million, $2.3 million and $2.2 million for 2019, 2018 and 2017, respectively. Expenses related to the 401(k) Plan were insignificant for each of the years 2019, 2018 and 2017.
In connection with the Company's acquisition of Transmode during the third quarter of 2015, the Company has an ITP pension plan covering its Swedish employees. Commitments for old-age and survivors' pension for salaried employees in Sweden are vested through an insurance policy. Expenses related to the ITP pension plan were $2.6 million for 2019, $2.8 million for 2018 and $3.3 million for 2017.
The Company also provides defined contribution plans in certain foreign countries where required by local statute or at the Company's discretion. For the year ended December 28, 2019, the Company had $3.9 million related to post-retirement costs.
Pension Plans
Pension and Post-Retirement Benefit Plans
As a result of the Acquisition during the fourth quarter of 2018, the Company acquired a number of post-employment plans in Germany, as well as a number of smaller post-employment plans in other countries, including both defined contribution and defined benefit plans. The defined benefit plans expose the Company to actuarial risks such as, investment risk, interest rate risk, life expectancy risk and salary risk. The characteristics of the defined benefit plans and the risks associated with them vary depending on legal, fiscal, and economic requirements.
Obligations and Funded Status
The following table sets forth the changes in benefits obligations and the fair value of plan assets of the Company's benefit plans (in thousands):
 
December 28,
2019
 
December 29,
2018
Benefit obligation at beginning of year
$
104,624

 
$
106,474

Service cost
2,061

 
466

Interest cost
2,075

 
512

Benefits paid
(1,925
)
 
(194
)
Actuarial loss
9,134

 
236

Foreign currency exchange rate changes
(2,735
)
 
(2,870
)
Benefit obligation at end of year(1)
$
113,234

 
$
104,624

Fair value of plan assets at beginning of year
$
63,064

 
$
69,614

Actual return on plan assets
2,371

 
653

Payments
(1,397
)
 
—

Employee contributions
715

 
—

Employer contributions
53

 
—

Actuarial gain/(loss)
6,672

 
(5,319
)
Foreign currency exchange rate changes
(1,701
)
 
(1,884
)
Fair value of plan assets at end of year
$
69,777

 
$
63,064

Net liability recognized
$
43,457

 
$
41,560

(1) 
The Company's accumulated benefit obligation was $110.8 million and $100.2 million at December 28, 2019 and December 29, 2018, respectively.
The net liability is included in the line item other long-term liabilities in the Company's consolidated balance sheets.
The following table presents net amounts of non-current assets and current and non-current liabilities for the Company's pension and other post-retirement benefit plans recognized on its consolidated balance sheet (in thousands):
 
December 29,
2018
 
December 29,
2018
Other non-current assets
$
69,777

 
$
63,064

Current liabilities
—

 
(901
)
Other long-term liabilities
(113,234
)
 
(103,723
)
Net liability recognized
$
(43,457
)
 
$
(41,560
)

Components of Net Periodic Benefit Cost
Net periodic benefit cost for the Company's pension and other post-retirement benefit plans consisted of the following (in thousands):
 
Years ended
 
December 28, 2019
 
December 29, 2018 (1)
Service cost
$
2,061

 
$
466

Interest cost
2,075

 
512

Expected return on plan assets
(2,371
)
 
(653
)
Amortization of actuarial loss
1,638

 
234

Total net periodic benefit cost
$
3,403

 
$
559


(1) Acquisition date through December 29, 2018.
Actuarial gains and losses are amortized using a corridor approach. The gain/loss corridor is equal to 10% of the greater of the pension benefit obligation and the market-related value of assets. Gains and losses in excess of the corridor are generally amortized over the average future working lifetime of the pension plan participants. All components of net periodic benefit cost are recorded in operating expense of the Company's consolidated statements of operations as the impact of the amounts to be recorded in other income and expense is immaterial.
The following table sets forth the changes in accumulated other comprehensive income for the Company's benefit plans (pre-tax) (in thousands):
 
December 28,
2019
 
December 29,
2018
Beginning balance
$
(5,313
)
 
$
—

Net actuarial loss arising in current year
(1,680
)
 
(5,562
)
Amortization of net actuarial loss(1)
1,638

 
234

Foreign currency translation gain/(loss)
(12
)
 
15

Ending balance
$
(5,367
)
 
$
(5,313
)
(1) 
The actuarial loss for the year ended December 29, 2018 was caused primarily by the change in the discount rate. Amounts in accumulated other comprehensive income expected to be recognized as components of net periodic pension cost during fiscal year 2020 is $1.6 million (pre-tax).
Assumptions
Certain weighted-average assumptions used in computing the benefit obligations are as follows:
 
December 28,
2019
 
December 29,
2018
Discount rate
1.35
%
 
2.07
%
Salary growth rate
2.25
%
 
2.25
%
Pension growth rate
2.00
%
 
2.00
%

Assumptions regarding future mortality are set based on actuarial advice in accordance with published German statistics and experience. These assumptions translate into an average remaining life expectancy in years for a pensioner retiring at age 65:
 
2020 Life Expectancy
Retiring at the end of the reporting period
20.5
Male
20.0
Female
23.6

Investment Policy
The financial position of the Company’s funded status is the difference between the fair value of plan assets and projected benefit obligations. Volatility in funded status occurs when asset values change differently from liability values and can result in fluctuations in costs in financial reporting. The Company’s investment policies and strategies are designed to increase the rate of assets to plan liabilities at an appropriate level of funded status volatility. Asset allocation decisions are recommended by the trustees for the specific plan and agreed to by the Company's management. Investment objectives are designed to generate returns that will enable the plan to meet its future obligations. The Company's management reviews the investment strategy and performance semi-annually and discuss alternatives to manage volatility.    
Basis for Expected Long-Term Rate of Return on Plan Assets
The expected long-term rate of return on plan assets reflects the expected returns for each major asset class in which the plan invests and the weight of each asset class in the target mix. Expected asset returns reflect the current yield on government bonds, risk premiums for each asset class and expected real returns which considers each country’s specific inflation outlook. The expected return is set using a low to medium risk profile and to meet the market expectations over a longer period of time to meet the obligations in the future.
Fair Value of Plan Assets
The following tables present the fair value of plan assets for pension and other benefit plans by major asset category (in thousands):
 
As of December 28, 2019
 
Fair Value Measured Using
 
Level 1
 
Level 2
 
Total
Cash
$
895

 
$
—

 
$
895

Equity fund
—

 
43,540

 
43,540

Insurance contracts
—

 
15,149

 
15,149

Mixed fund
—

 
615

 
615

Pension fund
—

 
9,578

 
9,578

Total plan assets at fair value
$
895

 
$
68,882

 
$
69,777



 
As of December 29, 2018
 
Fair Value Measured Using
 
Level 1
 
Level 2
 
Total
Cash
$
686

 
$
—

 
$
686

Equity fund
—

 
32,513

 
32,513

Insurance contracts
—

 
24,852

 
24,852

Mixed fund
—

 
4,114

 
4,114

Pension fund
—

 
899

 
899

Total plan assets at fair value
$
686

 
$
62,378

 
$
63,064


Valuation Techniques
The following describes the valuation techniques used to measure the fair value of the assets shown in the table above. Equity funds are invested in traded securities and are recorded at market value as of the balance sheet date. Insurance contracts are recorded at cash surrender value of the policies. Mixed fund and pension fund are valued at the amounts as provided by the insurance companies who manage the funds and represent fair market value at the date of the balance sheet.
Transfers Between Levels
Any transfers between levels in the fair value hierarchy are recognized as of the end of the reporting period. No material transfers between levels occurred during the year ended December 28, 2019.
Future Contributions
In fiscal 2020, the Company expects to make contributions of $3.5 million to cover benefit payments to plan participants.
Cash Flows
Estimated future benefit payments under the Company's pension plans as of December 28, 2019 are as follows (in thousands):
2020
$
3,485

2021
$
3,982

2022
$
3,995

2023
$
3,435

2024
$
3,605

2025 to 2029
$
20,060