Employee Retirement Plans and Postretirement Benefits

12 Months Ended

Dec. 31, 2019

Employee Retirement Plans and Postretirement Benefits

EMPLOYEE RETIREMENT PLANS AND POSTRETIREMENT BENEFITS

NOTE 17.           EMPLOYEE RETIREMENT PLANS AND POSTRETIREMENT BENEFITS

Defined Contribution Plans

We have a 401(k) profit-sharing and retirement savings plan covering substantially all full-time U.S. employees. Participants may defer up to the maximum amount allowed as determined by law. Participants are immediately vested in their contributions. Profit-sharing contributions to the plan, which are discretionary, are approved by the Board of Directors. Vesting in the profit-sharing contribution account is based on years of service, with most participants fully vested after four years of credited service. For the years ended December 31, 2019, 2018, and 2017 our contribution for participants in our 401(k) plan was based on matching 50% of contributions made by employees up to 6% of the employee’s compensation.

During the years ended December 31, 2019, 2018, and 2017 we recognized total defined contribution plan costs of $1.6 million, $1.4 million, and $1.1 million, respectively.

Defined Benefit Plan

We maintain defined benefit pension plans for certain of our non-U.S. employees in the U.K., Germany, and Philippines. Each plan is managed locally and in accordance with respective local laws and regulations.

In order to measure the expense and related benefit obligation, various assumptions are made including discount rates used to value the obligation, expected return on plan assets used to fund these expenses and estimated future inflation rates. These assumptions are based on historical experience as well as facts and circumstances. An actuarial analysis is used to measure the expense and liability associated with pension benefits.

In connection with the acquisition of Artesyn in September of 2019, the Company acquired certain pension plans and, as a result, started including the related balances in its Consolidated Balance Sheets at December 31, 2019 and the expenses attributable to these plans for the period from September 10, 2019 to December 31, 2019 in its Consolidated Statement of Operations. See Note 2. Business Acquisitions for more details on this transaction.

The information provided below includes one pension plan which is part of discontinued operations. As such, all related liabilities and expenses are reported in discontinued operations in the Company’s Consolidated Balance Sheets and Consolidated Statements of Operations for all periods presented.

The Company’s projected benefit obligation and plan assets for defined benefit pension plans at December 31, 2019 and 2018 and the related assumptions used to determine the related liabilities are as follows:

	Years Ended December 31,
	2019		2018
Projected benefit obligation, beginning of year	$	33,178	$	34,498
Acquisition		48,350		1,063
Service cost		272		841
Interest cost		1,211		802
Actuarial loss		(193)		(988)
Benefits paid		(1,779)		(1,113)
Translation adjustment		2,223		(1,925)
Projected benefit obligation, end of year	$	83,262	$	33,178
Fair value of plan assets, beginning of year	$	13,433	$	14,181
Acquisitions		102		981
Actual return on plan assets		380		675
Contributions		644		828
Benefits paid		(1,176)		(1,086)
Actuarial gain		1,064		(1,357)
Translation adjustment		456		(789)
Fair value of plan assets, end of year	$	14,903	$	13,433
Funded status of plan	$	(68,359)	$	(19,745)

The components of net periodic pension benefit cost recognized in our Consolidated Statements of Operations for the periods presented are as follows:

	Years Ended December 31,
	2019		2018		2017
Service cost	$	272	$	841	$	—
Interest cost		1,211		802		809
Expected return on plan assets		(615)		(665)		(597)
Amortization of actuarial gains and losses		411		478		503
Net periodic pension cost	$	1,279	$	1,456	$	715

Assumptions used in the determination of the net periodic pension cost are:

	Years Ended December 31,
	2019		2018		2017
Discount rate	2.7	%	2.8	%	2.6	%
Expected long-term return on plan assets	4.6	%	4.8	%	4.8	%

The fair value of the Company’s qualified pension plan assets by category for the years ended December 31, are as follows:

	December 31, 2019
	Level 1		Level 2		Level 3		Total
Multi-Asset Fund	$	—	$	4,825	$	—	$	4,825
Diversified Growth Fund		—		4,855		—		4,855
Index-Linked Gilts		—		1,934		—		1,934
Corporate Bonds		—		2,090		—		2,090
Insurance Contracts		—		—		1,045		1,045
Cash		154		—		—		154
Total	$	154	$	13,704	$	1,045	$	14,903

	December 31, 2018
	Level 1		Level 2		Level 3		Total
Multi-Asset Fund	$	—	$	4,570	$	—	$	4,570
Diversified Growth Fund		—		4,650		—		4,650
Index-Linked Gilts		—		2,044		—		2,044
Corporate Bonds		—		2,044		—		2,044
Insurance Contracts		—		—		72		72
Cash		53		—		—		53
Total	$	53	$	13,308	$	72	$	13,433

At December 31, 2019 our plan’s assets of $14.9 million were invested in five separate funds including a multi-asset fund (32.4%), a diversified growth fund (32.6%), an index-linked gilt (13.0%), corporate bonds (14.0%), and insurance contracts (7%). The asset and growth funds aim to generate an ‘equity-like’ return over an economic cycle with significantly reduced volatility relative to equity markets and have scope to use a diverse range of asset classes, including equities, bonds, cash and alternatives, e.g. property, infrastructure, high yield bonds, floating rate debt, private, equity, hedge funds and currency. The bond fund and gilt fund are invested in index-linked gilts and corporate bonds. These investments are intended to provide a degree of protection against changes in the value of our plan’s liabilities related to changes in long-term expectations for interest rates and inflation expectations.

Expected future payments under defined benefit pension plans, based on foreign exchange rates as of December 31, 2019, are as follows:

Expected Future Benefit Payments
2020	$	6,113
2021		7,039
2022		5,673
2023		5,716
2024		14,487
Thereafter		134,802