XML 36 R18.htm IDEA: XBRL DOCUMENT v3.24.2.u1
Pension and retirement plan
12 Months Ended
Jun. 29, 2024
Pension and retirement plan  
Pension and retirement plans

10. Pension and retirement plans

Pension Plan

The Company has a noncontributory defined benefit pension plan that covers substantially all current or former U.S. Employees (the “Plan”).

The Plan meets the definition of a defined benefit plan and, as a result, the Company applies ASC 715 pension accounting to the Plan. 

The following table outlines changes in benefit obligations, plan assets, and the funded status of the Plan as of the end of fiscal 2024 and 2023:

    

June 29,

    

July 1,

 

2024

2023

 

 

(Thousands)

Changes in benefit obligations:

Benefit obligations at beginning of year

$

471,401

$

614,359

Service cost

 

10,252

 

12,015

Interest cost

 

24,579

 

26,730

Actuarial loss (gain)

 

1,202

 

(43,407)

Benefits paid

 

(36,591)

 

(21,785)

Settlements paid

(116,511)

Benefit obligations at end of year

$

470,843

$

471,401

Changes in plan assets:

Fair value of plan assets at beginning of year

$

504,348

$

638,894

Actual return on plan assets

 

4,948

 

(4,250)

Benefits paid

 

(36,591)

 

(21,785)

Settlements paid

(116,511)

Contributions

 

8,000

 

8,000

Fair value of plan assets at end of year

$

480,705

$

504,348

Funded status of the plan recognized as a non-current asset

$

9,862

$

32,947

Amounts recognized in accumulated other comprehensive loss:

Unrecognized net actuarial losses

$

185,284

$

148,867

Unamortized prior service cost

 

20

 

23

$

185,304

$

148,890

Other changes in plan assets and benefit obligations recognized in other comprehensive income:

Net actuarial loss

$

36,195

$

9,702

Amortization of net actuarial losses

 

(222)

 

(2,469)

Amortization of prior service costs

 

(4)

 

(4)

Net loss recognized due to benefit obligation settlement

(37,350)

$

35,969

$

(30,121)

Included in “Accumulated other comprehensive loss” at June 29, 2024, is $185.3 million of net actuarial losses that have not yet been recognized in net periodic pension cost, of which $5.1 million is expected to be recognized as a component of net periodic pension cost during fiscal 2025.

Assumptions used to calculate actuarial present values of benefit obligations are as follows:

    

2024

    

2023

Discount rate

5.5

%  

5.4

%  

The discount rate selected by the Company for the Plan reflects the current rate at which the underlying liability could be settled at the measurement date as of June 29, 2024. The estimated discount rate in fiscal 2024 and fiscal 2023

was based on the spot yield curve approach, which applies the individual spot rates from a highly rated bond yield curve to each future year’s estimated cash flows.

The weighted-average assumptions used to determine net benefit costs are as follows:

    

2024

    

2023

Discount rate

5.4

%

4.6

%

Expected return on plan assets

7.0

%

7.0

%

Rate of compensation increase

3.5

%

3.5

%

Interest crediting rate

4.0

%

4.0

%

Components of net periodic pension cost for the Plan during the last three fiscal years are as follows:

Years Ended

  

June 29,

    

July 1,

    

July 2,

2024

2023

2022

(Thousands)

Service cost within selling, general and administrative expenses

$

10,252

$

12,015

$

15,007

Interest cost

 

24,579

 

26,730

 

15,787

Expected return on plan assets

 

(39,941)

 

(48,860)

 

(49,135)

Amortization of prior service cost

 

4

 

4

 

4

Recognized net actuarial loss

 

223

 

2,469

 

16,343

Net loss recognized due to benefit obligation settlement

37,350

Total net periodic pension (benefit) cost within other (expense) income, net

(15,135)

17,693

(17,001)

Net periodic pension (benefit) cost

$

(4,883)

$

29,708

$

(1,994)

The Company made $8.0 million of contributions in fiscal 2024 and fiscal 2023, and expects to make approximately $8.0 million of contributions in fiscal 2025.

Benefit payments are expected to be paid to Plan participants as follows for the next five fiscal years and the aggregate for the five years thereafter (in thousands):

2025

$

50,415

2026

 

39,238

2027

 

40,181

2028

 

42,244

2029

 

42,962

2030 through 2034

 

209,704

The Plan’s assets are held in trust and were invested as follows as of the measurement date at the end of fiscal 2024 and 2023:

    

2024

    

2023

Equity securities

 

69

67

Fixed income debt securities

 

29

30

Cash and cash equivalents

 

2

3

The general investment objectives of the Plan are to maximize returns through a diversified investment portfolio to earn annualized returns that exceed the long-term cost of funding the Plan’s pension obligations while maintaining reasonable and prudent levels of risk. The expected return on the Plan’s assets in fiscal 2025 is currently 7.5%, which is the average rate of earnings expected on the funds invested or to be invested to provide for the benefits included in the benefit obligation based upon the targeted investment allocations. In making this assumption, the Company evaluated expectations regarding future rates of return for the investment portfolio, along with the historical and expected distribution of investments by asset class and the historical rates of return for each of those asset classes. The mix of return seeking and fixed income investments is typically diversified. The Plan’s assets do not include any investments in Avnet common stock. As of June 29, 2024, the Company’s target allocation for the Plan’s investment portfolio is for return seeking investments to represent approximately 65% of the investment portfolio. The majority of the remaining investment portfolio is invested in fixed income investments, which typically have lower risks, but also lower returns.

The following table sets forth the fair value of the Plan’s investments as of June 29, 2024:

    

Level 1

    

Level 2

    

Level 3

    

Net Asset Value

    

Total

 

(Thousands)

 

Cash and cash equivalents

$

8,586

$

$

$

$

8,586

Return Seeking Investments:

Common stocks

 

 

 

 

151,936

 

151,936

Real estate

 

 

 

 

95,974

 

95,974

High yield credit and bonds

 

 

 

85,064

 

85,064

Fixed Income Investments:

 

U.S. government

 

 

 

 

102,542

 

102,542

Corporate

 

 

 

 

36,603

 

36,603

Total

$

8,586

$

$

$

472,119

$

480,705

Certain investments included in the table above are measured at fair value using the net asset value per share (or its equivalent) practical expedient and are not included in the three levels of the fair value hierarchy.

The following table sets forth the fair value of the Plan’s investments as of July 1, 2023:

    

Level 1

    

Level 2

    

Level 3

    

Net Asset Value

    

Total

 

(Thousands)

 

Cash and cash equivalents

$

15,389

$

$

$

$

15,389

Return Seeking Investments:

Common stocks

 

 

 

 

138,533

 

138,533

Real estate

 

 

 

 

108,936

 

108,936

High yield credit and bonds

90,767

90,767

Fixed Income Investments:

U.S. government

 

 

 

 

118,456

 

118,456

Corporate

 

 

 

32,267

 

32,267

Total

$

15,389

$

$

$

488,959

$

504,348

Each of these investments may be redeemed without restrictions in the normal course of business and there were no material unfunded commitments as of June 29, 2024.