Employee Benefit Plans, Deferred Compensation Plan and Retirement Benefit Plan

12 Months Ended

Jan. 03, 2022

Compensation And Retirement Disclosure [Abstract]

Employee Benefit Plans, Deferred Compensation Plan and Retirement Benefit Plan

(15) Employee Benefit Plans, Deferred Compensation Plan and Retirement Benefit Plan

As of January 3, 2022, the Company has several defined contribution plans. In North America, the Company has savings plans (the Savings Plans) in which eligible full-time employees can participate and contribute a percentage of compensation subject to the maximum allowed by the tax agencies. The Savings Plans provides for a partial match by the Company. In China, the Company contributes to either separate trust-administered funds or various government-sponsored pension plans on a mandatory basis. For all defined contribution plans, the Company has no further payment obligation once the required contributions have been made. The Company recorded contributions to defined contribution plans of $29,464, $23,146 and $31,253 during the years ended January 3, 2022, December 28, 2020 and December 30, 2019, respectively.

The Company also maintains a deferred compensation plan (the Compensation Plan). The Compensation Plan is an unfunded, nonqualified deferred compensation plan and is limited to selected employees, including the Company’s named executive officers and directors. The Compensation Plan allows participants to defer up to 100% of their annual bonus and between 5% and 100% of their annual director fees. Amounts deferred under the Compensation Plan will be credited to accounts maintained by the Company for each participant and will be credited or debited with the participant’s proportionate share of any gains or losses attributable to the performance of investment options selected by the participant.

Following the acquisition of Anaren on April 18, 2018, the Company has a noncontributory defined benefit pension plan covering eligible employees. Effective August 15, 2000, the plan was closed for new participants. Benefits under this plan generally are based on the employee’s years of service and compensation. Effective December 31, 2019, the plan is frozen as to further participation and to further benefit accruals.

As of January 3, 2022 and December 28, 2020, the funded status of the accumulated benefit obligation was 83%. The Company expects to fund a minimum required contribution of approximately $346 during fiscal year 2022.

The following tables set forth the changes in benefit obligation and the plan assets in the defined benefit plan described above for the years ended January 3, 2022, December 28, 2020 and December 30, 2019:

	For the Year Ended
Change in Benefit Obligations	January 3, 2022			December 28, 2020			December 30, 2019
	(In thousands)
Benefit obligation at beginning of year	$	(33,470	)	$	(30,600	)	$	(27,661	)
Service cost		—			—			(397	)
Interest cost		(722	)		(907	)		(1,109	)
Amendments/curtailments/special termination		—			—			1,636
Actuarial gain (loss)		1,304			(3,146	)		(4,174	)
Benefits paid		1,334			1,183			1,105
Benefit obligation at end of year	$	(31,554	)	$	(33,470	)	$	(30,600	)
Accumulated benefit obligation at end of year	$	31,554		$	33,470		$	30,600

	For the Year Ended
Change in Plan Assets	January 3, 2022			December 28, 2020			December 30, 2019
	(In thousands)
Fair value of plan assets at beginning of year	$	23,484		$	21,287		$	18,251
Actual return on plan assets		3,526			2,704			3,346
Employer contributions		602			676			795
Benefits paid		(1,334	)		(1,183	)		(1,105	)
Fair value of plan assets at end of year	$	26,278		$	23,484		$	21,287
Unfunded status	$	(5,276	)	$	(9,986	)	$	(9,313	)
Net amount recognized	$	(5,276	)	$	(9,986	)	$	(9,313	)

Amounts before income tax effect recognized in the consolidated balance sheets consists of the following:

	As of			As of
	January 3, 2022			December 28, 2020
	(In thousands)
Other long-term liabilities	$	(5,276	)	$	(9,986	)
Net amount recognized	$	(5,276	)	$	(9,986	)

Amounts before income tax effect included in accumulated other comprehensive loss as of January 3, 2022 and
December 28, 2020 are as follows:

	January 3, 2022			December 28, 2020
	(In thousands)
Net actuarial loss	$	(238	)	$	(3,811	)
Accumulated other comprehensive loss	$	(238	)	$	(3,811	)

The net actuarial loss during the year ended January 3, 2022 was primarily driven by a decrease in liabilities due to a higher assumed discount rate.

The components included in the net periodic benefit cost and the increase in minimum liability included in other comprehensive loss for the years ended January 3, 2022, December 28, 2020 and December 30, 2019 are as follows:

	January 3, 2022			December 28, 2020			December 30, 2019
	(In thousands)
Service cost	$	—		$	—		$	397
Interest cost		722			907			1,109
Expected return on plan assets		(1,279	)		(1,272	)		(1,228	)
Amortization of net actuarial loss		23			—			—
Net periodic benefit cost	$	(534	)	$	(365	)	$	278

The weighted-average assumptions used to determine benefit obligations for this plan as of January 3, 2022, December 28, 2020 and December 30, 2019 are as follows:

	January 3, 2022			December 28, 2020			December 30, 2019
Discount rate		2.60	%		2.20	%		3.02	%
Rate of compensation increase		—			—			3.20
Expected return on plan assets		5.50			5.50			6.00

The Company determines the discount rate assumption based on the internal rate of return for a portfolio of high quality bonds, with a minimum rating of Moody's AA Corporate and with maturities that are consistent with the projected future cash flow obligations.

The weighted-average assumptions used to determine net periodic benefit cost for the years ended January 3, 2022, December 28, 2020 and December 30, 2019 are as follows:

	For the Year Ended
	January 3, 2022			December 28, 2020			December 30, 2019
Discount rate		2.20	%		3.02	%		4.09	%
Rate of compensation increase		—			—			3.20
Expected return on plan assets		5.50			6.00			6.75

The Company determines the expected long-term rate of return on plan assets based upon recommendations from its pension plan's investment advisors and using an allocation approach that considers diversification and rebalancing for a portfolio of assets invested over a long-term time horizon. The approach relies on the historical returns of the plan's portfolio and relationships between equities and fixed income investments, consistent with the widely accepted capital market principle that a diversified portfolio with a larger allocation to equity investments can generate a greater return over the long run. Additionally, the Company monitors the mix of investments in its portfolio to ensure alignment with its expected long-term pension obligations. The Company reviews the expected long-term rate of return annually and revises it as appropriate.

Investments shall be made pursuant to the following objectives: 1) preserve the purchasing power of the plan’s assets adjusted for inflation; 2) provide long-term growth; and 3) avoid significant volatility. Asset allocation shall be determined based on a long-term target allocation having 29% of assets invested in large-cap stocks, 11% in mid-cap stocks, 11% in small-cap stocks, 11% in international stocks, 34% in the broad bond market, and 3% in the real estate market, with little or none invested in cash. Both the investment allocation and the plan performance are reviewed periodically.

The target allocation for 2022 and the plan asset allocation at the end of 2021 and 2020, in percentages, by asset category are as follows:

	Target Allocation 2022			January 3, 2022			December 28, 2020
Equity securities (1)		65	%		67	%		68	%
Debt securities (2)		34			32			30
Cash and cash equivalents (3)		1			1			2
Total		100	%		100	%		100	%

The following table summarizes plan assets measured at fair value as of January 3, 2022 and December 28, 2020:

	As of
	January 3, 2022
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Equity securities (1)	$	17,661	$	17,661	$	—	$	—
Debt securities (2)		8,290		8,290		—		—
Cash and cash equivalents (3)		327		327		—		—
Total	$	26,278	$	26,278	$	—	$	—
	As of
	December 28, 2020
	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Equity securities (1)	$	15,922	$	15,922	$	—	$	—
Debt securities (2)		7,015		7,015		—		—
Cash and cash equivalents (3)		547		547		—		—
Total	$	23,484	$	23,484	$	—	$	—

(1) Equity securities include U.S. and foreign exchange traded common and preferred stocks and mutual funds. Common and preferred shares issued by U.S. and non-U.S. corporations are traded actively on exchanges and price quotes for these shares are readily available. Holdings of corporate stock are categorized as Level 1 investments.

(2) Debt securities include the debt of the U.S. Treasury and U.S. and foreign corporate issuers. U.S. Treasury notes and bonds are actively traded and price quotes for these securities are readily available. Holdings of U.S. Treasury notes and bonds are categorized as Level 1 investments.

(3) Cash and cash equivalents include short-term U.S. government investment notes, short-term money market mutual funds, accrued income and cash held on account. Cash held on account and short- term U.S. government investment notes (including accrued income thereon) for which there is an active market and daily pricing for the security are categorized as Level 1 investments.

The Company seeks to maximize medium to long-term returns of the overall pension plan assets with reasonable levels of investment risk. One element of controlling the overall investment risk is through diversification of asset allocation, among domestic and international equity and debt instruments. The plan's equity investments include foreign and domestic exchange traded equities across a range of industries and countries, but primarily in the domestic markets. The plan's debt securities are primarily invested in government and corporate issuers primarily in the domestic market.

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid: 

	(In thousands)
2022	$	1,369
2023		1,451
2024		1,535
2025		1,600
2026		1,652
Years 2027 through 2031		8,709