Employee Benefit Plans

12 Months Ended

Jun. 30, 2023

Pension Plan

The Company maintains a pension plan (the “Plan”) for its Swiss employees, which is administered by an independent pension fund. The Plan is mandated by Swiss law and meets the criteria for a defined benefit plan under ASC 715, Compensation—Retirement Benefits (“ASC 715”), since participants of the Plan are entitled to a defined rate of return on contributions made. The independent pension fund is a multi-employer plan with unrestricted joint liability for all participating companies for which the Plan’s overfunding or underfunding is allocated to each participating company based on an allocation key determined by the Plan.

The Company recognizes a net asset or liability for the Plan equal to the difference between the projected benefit obligation of the Plan and the fair value of the Plan’s assets as required by ASC 715. The funded status may vary from year to year due to changes in the fair value of the Plan’s assets and variations on the underlying assumptions of the projected benefit obligation of the Plan.

In fiscal 2021, the independent pension fund changed the conversion rate for accumulated retirement savings leading to a Plan amendment. The Company’s results contain the effects of this change in conversion rates by the independent pension fund as prior service costs. These prior service costs are amortized from AOCI to net periodic benefit costs over approximately nine years.

At June 30, 2023, the accumulated benefit obligation of the Plan equals the fair value of the Plan's assets. The Plan's funded status at June 30, 2023 and July 1, 2022 was a net liability of $4,151 and $4,660, respectively, which is recorded in other non-current liabilities on the Consolidated Balance Sheets. The Company recorded a net gain of $142 and $4,739 in AOCI during the fiscal years ended June 30, 2023 and July 1, 2022, respectively. Total employer contributions to the Plan were $1,158 during the year ended June 30, 2023, and the Company's total expected employer contributions to the Plan during fiscal 2024 are $1,122.

The following table reflects the total pension benefits expected to be paid from the Plan, which is funded from contributions by participants and the Company.


Fiscal Year	Total
2024	$	1,312
2025	1,367
2026	1,064
2027	1,433
2028	1,550
Thereafter (next 5 years)	8,905
Total	$	15,631

The following table outlines the components of net periodic benefit cost of the Plan for the fiscal years ended June 30, 2023 and July 1, 2022:


	Fiscal Years Ended
	June 30, 2023		July 1, 2022
Service cost	$	1,068	$	1,405
Interest cost	463		83
Expected return on assets	(379)		(272)
Amortization of prior service cost	(203)		(190)
Amortization net of loss	—		5
Settlement loss recognized	(509)		—
Net periodic benefit cost	$	440	$	1,031

The following table reflects the related actuarial assumptions used to determine net periodic benefit cost of the Plan for the fiscal years ended June 30, 2023 and July 1, 2022:


	Fiscal Years Ended
	June 30, 2023		July 1, 2022
Discount rate	1.95	%	1.70	%
Expected rate of return on Plan assets	1.95	%	1.70	%
Expected inflation	1.00	%	1.00	%
Rate of compensation increases	1.50	%	1.50	%

The calculation of the projected benefit obligation (“PBO”) utilized BVG 2020 Generational data for assumptions related to the mortality rates, disability rates, turnover rates, and early retirement ages.

The PBO represents the present value of Plan benefits earned through the end of the year, with an allowance for future salary and pension increases as well as turnover rates. The following table presents the change in projected benefit obligation for the periods presented:


	Fiscal Years Ended
	June 30, 2023		July 1, 2022
Projected benefit obligation, beginning	$	25,509	$	28,614
Service cost	1,068		1,405
Interest cost	463		83

Employee contributions	1,439		2,606
Actuarial gain	(516)		(4,720)
Benefits paid	(246)		(1,444)

Settlements	(4,770)		—
Foreign exchange gain (loss)	1,763		(1,035)
Projected benefit obligation at end of year	$	24,710	$	25,509

The following table presents the change in Plan assets for the periods presented:


	Fiscal Years Ended
	June 30, 2023		July 1, 2022
Fair value of Plan assets, beginning	$	20,849	$	18,807
Actual return on Plan assets	700		514
Company contributions	1,158		1,056

Employee contributions	1,439		2,606
Benefits paid	(246)		(1,444)
Settlements	(4,770)		—
Foreign exchange gain (loss)	1,429		(690)
Fair value of Plan assets at end of year	$	20,559	$	20,849

The following table presents the Company's reconciliation of funded status for the period presented:


	As of
	June 30, 2023		July 1, 2022
Projected benefit obligation at end of year	$	24,710	$	25,509
Fair value of plan assets at end of year	20,559		20,849
Funded status	$	(4,151)	$	(4,660)

The fair value of Plan assets were $20,559 at June 30, 2023. The Plan is denominated in a foreign currency, the Swiss Franc, which can have an impact on the fair value of Plan assets. The Plan was not subject to material fluctuations during the years ended June 30, 2023 or July 1, 2022. The Plan’s assets are administered by an independent pension fund foundation (the “foundation”). As of June 30, 2023, the foundation has invested the assets of the Plan in various investments vehicles, including cash, real estate, equity securities, and bonds. The investments are measured at fair value using a mix of Level 1, Level 2 and Level 3 inputs.

401(k) Plan

The Company maintains a qualified 401(k) plan (the “401(k) Plan”) for its U.S. employees. Effective in the first quarter of fiscal 2023, the Company increased the rate of its matching contributions from 3% to 6% of participants' eligible annual compensation and changed the form of these contributions from cash to Company stock. The Company may also make optional contributions to the plan for any plan year at its discretion. The Company had $2,705 of capitalized stock-based 401(k) matching compensation expense on the Consolidated Balance Sheet at June 30, 2023. Stock-based 401(k) matching compensation cost is measured based on the value of the matching amount and is recognized as expense as incurred. Expense recognized by the Company for matching contributions related to the 401(k) plan was $15,665, $7,603, and $7,876 during the fiscal years ended June 30, 2023, July 1, 2022, and July 2, 2021, respectively.