Benefit Plans

3 Months Ended

Mar. 28, 2020

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 expense (income), net in the Condensed Consolidated Statements of Net Income. The components of net periodic benefit cost for the three months ended March 28, 2020 and March 30, 2019 were as follows:



	For the Three Months Ended
(in thousands)	March 28, 2020			March 30, 2019
Components of net periodic benefit cost:
Service cost	$	618		$	500
Interest cost	658			784
Expected return on plan assets	(727		)	(790		)
Amortization of prior service and net actuarial loss	145			62
Net periodic benefit cost	$	694		$	556

The Company expects to make approximately $2.3 million of cash contributions to its pension plans in 2020.

The Company also sponsors certain post-employment plans in foreign countries and other statutory benefit plans. For the three months ended March 28, 2020 and March 30, 2019, the Company recorded $0.5 million and $0.2 million expense, respectively, in Cost of Sales and Other expense (income), net within the Condensed Consolidated Statements of Net Income. For three months ended March 28, 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.

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 pay and administer pension payments to certain of the Company’s UK pension plan participants, or their designated beneficiaries, who have been receiving pension payments. The purchase of this group annuity contract will reduce the Company’s outstanding pension benefit obligation by approximately $36 million, representing approximately 30% 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 in the second half of 2021 currently estimated between $18 million and $22 million, reflecting the accelerated recognition of a portion of unamortized actuarial losses in the plan. The actual settlement charge could differ from this estimate due to final data and plan wind-up expenses.