Annual report pursuant to Section 13 and 15(d)

Employee Retirement Plan

v3.20.4
Employee Retirement Plan
 12 Months Ended
Dec. 31, 2020
Postemployment Benefits [Abstract]  
Employee Retirement Plan Employee Retirement Plans
Defined Contribution Plan
The Company has a 401(k) defined contribution retirement plan (the 401(k) Plan) covering all eligible employees. Participants may voluntarily contribute on a pre-tax basis an amount not to exceed a maximum contribution amount pursuant to Section 401(k) of the Internal Revenue Code. The Company is not required to contribute, nor has it contributed, to the 401(k) Plan for any of the periods presented.
Pension and Other Defined Benefit Retirement Obligations

In connection with the July 31, 2020 acquisition of the Wi-Fi and Broadband assets business (Note 3), the Company assumed an obligation of $7.9 million associated with certain defined benefit retirement plans, including a pension plan. The benefit is based on a formula applied to eligible employee earnings. Net periodic benefit costs were $0.2 million for the year ended December 31, 2020 and were recorded to research and development expenses in the consolidated statement of operations.

Benefit Obligation and Plan Assets for Pension Benefit Plans

The vested benefit obligation for a defined-benefit pension or other retirement plan is the actuarial present value of the vested benefits to which the employee is currently entitled based on the employee's expected date of separation or retirement.
December 31, 2020
(in thousands)
Changes in projected benefit obligation:
Projected benefit obligation, beginning of period $ — 
Projected benefit obligation assumed in acquisition 13,274 
Service cost 157 
Interest cost 59 
Actuarial (gain) loss (1,172)
Benefits paid (786)
Currency exchange rate changes 490 
Projected benefit obligation, end of period 12,022 
Changes in fair value of plan assets:
Fair value of plan assets, beginning of period — 
Plan assets transferred from acquisition 5,417 
Currency exchange rate changes 217 
Fair value of plan assets, end of period 5,634 
Net unfunded status $ 6,388 
Amounts recognized in the Consolidated Balance Sheets
Other long-term liabilities $ 6,388 
Accumulated other comprehensive (income) loss, before tax $ (1,172)

Changes in actuarial gains and losses in the projected benefit obligation are primarily driven by discount rate movement. The Company uses the corridor approach to amortize actuarial gains and losses. Under this approach, net actuarial gains or losses in excess of 10% of the larger of the projected benefit obligation or the fair value of plan assets are amortized on a straight-line basis.

As of December 31, 2020, all plans had accumulated benefit obligations and projected benefit obligations in excess of plan assets. As of December 31, 2020, the accumulated benefit obligations were $11.1 million for the pension plans.

December 31, 2020
(in thousands)
Plans with accumulated benefit obligation in excess of plan assets
Accumulated benefit obligation $ 11,127 
Plan assets $ 5,634 
Plans with projected benefit obligation in excess of plan assets
Projected benefit obligation $ 12,022 
Plan assets $ 5,634 
Assumptions for Pension Benefit Plans

December 31, 2020
(in thousands)
Weighted average actuarial assumptions used to determine benefit obligations
Discount rate
0.5% - 0.6%
Rate of compensation increase
2.6% - 3.8%
Weighted average actuarial assumptions used to determine costs
Discount rate
0.5% - 0.6%
Expected long-term rate of return on plan assets 0.79  %
Rate of compensation increase
2.6% - 3.8%

The Company establishes the discount rate for each pension plan by analyzing current market long-term bond rates and matching the bond maturity with the average duration of the pension liabilities. The Company establishes the long-term expected rate of return by developing a forward-looking, long-term return assumption for each pension fund asset class, taking into account factors such as the expected real return for the specific asset class and inflation. A single, long-term rate of return is then calculated as the weighted average of the target asset allocation percentages and the long-term return assumption for each asset class.

Pension Plan Assets

The plan assets are currently all in liquid cash and cash equivalents and an investment strategy is being developed to ensure that sufficient assets are available to pay pension benefits as they come due.

Estimated Future Benefit Payments for Pension Benefit Plans

The estimated benefit payments over the next five years and beyond are as follows:
Estimated Future Benefit Payments
(in thousands)
2021 $ — 
2022 — 
2023 20 
2024 48 
2025 48 
Thereafter 762 
879