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Benefit Plans
 12 Months Ended
Jan. 01, 2022
Retirement Benefits [Abstract]  
Benefit Plans Benefit Plans
 
The Company has Company-sponsored and mandatory defined benefit pension plans covering employees in the United Kingdom ("U.K."), Germany, the Philippines, China, Japan, Mexico, Italy and France. The amount of the retirement benefits provided under the plans is generally based on years of service and final average pay.

On April 7, 2020, the Company entered into a definitive agreement to purchase a group annuity contract, under which an insurance company is required to directly pay and administer pension payments to certain of the Company’s U.K. pension plan participants, or their designated beneficiaries. Due to the signing of the group annuity contract being a significant change in one of the U.K. pension plans, the liabilities of the plan were remeasured as of April 6, 2020 resulting in an increase of $13.4 million (£10.9 million) to both the net pension liability to bring the pension benefit obligation to the purchase price of the group annuity contract, and unamortized actuarial loss within other comprehensive income (loss) during the second quarter of 2020. Additionally, the Company made a cash contribution of $10.4 million (£8.4 million) under this agreement during the second quarter of 2020. The Company completed the buy-out of this U.K. pension plan during the fourth quarter of 2021 and as a result recorded a non-cash pension settlement charge of $19.9 million (£14.9 million), inclusive of the accelerated recognition of prior service cost of $0.5 million (£0.4 million). The purchase of this group annuity contract reduced the Company’s outstanding pension benefit obligation by $47.1 million, representing 35% of the total obligations of the Company’s qualified pension plans.
 
Benefit plan related information is as follows for the years 2021 and 2020:
 
(in thousands)
20212020
Change in benefit obligation:  
Benefit obligation at beginning of year$148,992 $116,921 
Service cost2,785 2,462 
Interest cost1,761 2,173 
Net actuarial (gain) loss(11,016)25,306 
Benefits paid from the plan assets(3,121)(2,808)
Benefits paid directly by the Company(2,692)(2,302)
(Settlements) and Curtailments(48,927)102 
Acquisitions1,797 — 
Effect of exchange rate movements(3,218)7,462 
Plan amendment and other209 (324)
Benefit obligation at end of year$86,570 $148,992 
Change in plan assets at fair value:
Fair value of plan assets at beginning of year$100,478 $78,502 
Actual (loss) return on plan assets(2,824)7,053 
Employer contributions2,150 12,918 
Benefits paid from the plan assets(3,121)(2,808)
Settlements(47,111)— 
Effect of exchange rate movements(1,247)4,813 
Fair value of plan assets at end of year48,325 100,478 
Net amount unfunded status$(38,245)$(48,514)
 

Amounts recognized in the Consolidated Balance Sheets as of January 1, 2022 and December 26, 2020 consist of the following:
 
(in thousands)
20212020
Amounts recognized in the Consolidated Balance Sheets consist of:  
Noncurrent assets$40 $39 
Current benefit liability(1,248)(2,751)
Noncurrent benefit liability(37,037)(45,802)
Net liability recognized$(38,245)$(48,514)

The amounts included in accumulated other comprehensive loss in the Consolidated Balance Sheets, excluding tax effects, that have not yet been recognized as components of net periodic benefit costs as of January 1, 2022 and December 26, 2020 were as following:
(in thousands)
20212020
Net actuarial loss$9,221 $37,285 
Prior service cost3,340 3,937 
Total$12,561 $41,222 
 
The pre-tax amounts recognized in other comprehensive income (loss) in 2021 were as follows:
  
(in thousands)
2021
Amortization of: 
Prior service cost$179 
Net actuarial loss1,136 
Amount arising during the period:
Prior service cost(209)
Net actuarial loss6,734 
Net settlement loss and accelerated prior service costs19,855 
Foreign currency adjustments966 
Total$28,661 

In the fourth quarter of 2021, the Company recorded a non-cash pension settlement charge of $19.9 million (£14.9 million), inclusive of the accelerated recognition of prior service cost of $0.5 million (£0.4 million). In addition, the net actuarial loss and change in benefit obligation arising during 2021 as compared to 2020 were also impacted by higher discount rates in 2021 as compared to 2020.

The components of net periodic benefits costs for the fiscal years 2021, 2020, and 2019 are as follows: 
 
   
(in thousands)
202120202019
Components of net periodic benefit cost:   
Service cost$2,785 $2,462 $2,040 
Interest cost1,761 2,173 3,169 
Expected return on plan assets(1,458)(1,972)(3,187)
Amortization of prior service and net actuarial loss1,315 963 243 
Net periodic benefit cost4,403 3,626 2,265 
Net settlement loss19,855 236 260 
Total expense for the year$24,258 $3,862 $2,525 
 
Weighted average assumptions used to determine net periodic benefit cost for the fiscal years 2021, 2020, and 2019 are as follows:

 202120202019
Discount rate1.2 %2.3 %3.1 %
Expected return on plan assets1.4 %3.7 %4.5 %
Compensation increase rate4.9 %4.7 %4.6 %
 
The accumulated benefit obligation for the plans was $75.7 million and $137.7 million as of January 1, 2022 and December 26, 2020, respectively.
 
The following table provides a summary of under-funded or unfunded pension benefit plans with projected benefit obligations in excess of plan assets as of January 1, 2022 and December 26, 2020:
 
(in thousands)
20212020
Projected benefit obligation$86,228 $148,992 
Fair value of plan assets47,942 100,439 
 
The following table provides a summary of under-funded or unfunded pension benefit plans with accumulated benefit obligations in excess of plan assets as of January 1, 2022 and December 26, 2020:
 
(in thousands)
20212020
Accumulated benefit obligation$68,643 $130,453 
Fair value of plan assets39,060 92,248 
 
Weighted average assumptions used to determine benefit obligations as of January 1, 2022, December 26, 2020 and December 28, 2019 are as follows:
 
 202120202019
Discount rate3.1 %1.2 %2.3 %
Compensation increase rate4.8 %4.9 %4.7 %
 
Expected benefit payments to be paid to participants for the fiscal year ending are as follows:
(in thousands)Expected Benefit Payments
2022$3,514 
20233,652 
20243,561 
20254,068 
20264,320 
2027-2031 and thereafter26,449 
 
The Company expects to make approximately $2.6 million of contributions to the plans and pay $1.8 million of benefits directly in 2022.
 
The Company also sponsors certain post-employment plans in foreign countries and other statutory benefit plans. For the fiscal year ended January 1, 2022, December 26, 2020, and December 28, 2019, the Company recorded $2.1 million, $2.0 million, $1.4 million expense, respectively, in Cost of Sales and Other expense (income), net within the Consolidated Statements of Net Income. As of January 1, 2022 and December 26, 2020, the Company reported benefit liabilities of $4.1 million and $3.5 million for these plans, of which $1.5 million and $1.2 million was recorded in Accrued liabilities and $2.6 million and $2.3 million was recorded in Other long-term liabilities on the Consolidated Balance Sheets, respectively. For the fiscal year ended January 1, 2022 and December 26, 2020, the pre-tax amounts recognized in other comprehensive income (loss) for these plans
were $0.3 million and $0.1 million, respectively. For the fiscal year ended January 1, 2022 and December 26, 2020, the amount reclassified from accumulated other comprehensive income (loss) were $0.7 million and $0.7 million, respectively.

Defined Benefit Plan Assets
 
Based upon analysis of the target asset allocation and historical returns by type of investment, the Company has assumed that the expected long-term rate of return will be 1.4% on plan assets. Assets are invested to maximize long-term return taking into consideration timing of settlement of the retirement liabilities and liquidity needs for benefits payments. Pension plan assets were invested as follows, and were not materially different from the target asset allocation:
 
 Asset Allocation
 20212020
Cash and cash equivalents, and other15 %7 %
Equity securities19 %9 %
Fixed income securities66 %31 %
Bulk annuity contract— %53 %
 100 %100 %

The Company segregated its plan assets by the following major categories and level for determining their fair value as of January 1, 2022 and December 26, 2020. All plan assets that are valued using the net asset value per share (“NAV”) practical expedient have not been included within the fair value hierarchy but are separately disclosed.

Cash and cash equivalents – Carrying value approximates fair value. As such, these assets were classified as Level 1. The Company also invests in certain short-term investments which are valued using the amortized cost method. Lastly, the Company has certain pooled pension funds that have short-term investments with third party mutual funds that are valued at unit value per share at measurement date. As such, these assets were classified as Level 2.

Equity – The values of individual equity securities were based on quoted prices in active markets. As such, these assets are classified as Level 1. The Company has certain pooled pension funds which have mutual funds with underlying investments in certain equity securities that are not quoted on active markets; therefore, they were classified as Level 2.

Fixed income – Fixed income securities are typically priced based on a last trade basis and are exchange-traded. Accordingly, the Company classified fixed income securities as Level 1. The Company has certain pooled pension funds which have mutual funds with underlying investments in fixed income securities and funds priced based on a valuation model rather than a last trade basis and are not exchange-traded. As such, they were classified as Level 2. The Company also invests in certain fixed income funds which are valued at NAV.

Insurance Contracts and other – This category includes pooled pension funds which have mutual funds with underlying investments in other assets and liabilities including alternatives priced based on a valuation model and are not exchange-traded. These were classified as Level 2. This category includes also insurance contracts that are valued by the re-insurer with the valuation inputs being not highly observable or traded on an open market. Accordingly, insurance contracts were categorized as Level 3. Lastly, this category includes other assets and liabilities including futures or swaps.

Bulk Annuity Contract – Bulk annuity contract includes a U.K insurance policy issued by an authorized U.K. life insurer. This bulk annuity contract is valued by the re-insurer with the valuation inputs being not highly observable or traded on an open market. Accordingly, this contract was categorized as Level 3. The Company has no bulk annuity contract pension assets as of January 1, 2022.

For any Level 2 and Level 3 plan assets, management reviews significant investments on a periodic basis including investigation of unusual fluctuations in price or returns and obtaining an understanding of the pricing methodology to assess the reliability of third-party pricing estimates.

The valuation methodologies described above may generate a fair value calculation that may not be indicative of net realizable value or future fair values. While the Company believes the valuation methodologies used are appropriate, the use of different methodologies or assumptions in calculating fair value could result in different amounts. The Company invests in assets in which valuation is determined by NAV. The Company believes that the NAV is representative of fair value at the reporting
date, as there are no significant restrictions on redemption of these investments or other reasons to indicate that the investment would be redeemed at an amount different than the NAV.

The following table presents the Company’s pension plan assets measured at fair value by classification within the fair value hierarchy as of January 1, 2022:
 Fair Value Measurements Using  
(in thousands)
Level 1Level 2Level 3NAVTotal
Insurance contracts and other$— $1,917 $343 $— $2,260 
Cash and cash equivalents384 4,632 — — 5,016 
Equities2,559 6,604 — — 9,163 
Fixed income5,999 20,280 — 5,607 31,886 
Total pension plan assets$8,942 $33,433 $343 $5,607 $48,325 
 
The following table presents the Company’s pension plan assets measured at fair value by classification within the fair value hierarchy as of December 26, 2020:
 
 Fair Value Measurements Using  
(in thousands)
Level 1Level 2Level 3NAVTotal
Insurance contracts and other$— $1,880 $685 $— $2,565 
Cash and cash equivalents654 3,868 — — 4,522 
Equities1,719 6,904 — — 8,623 
Fixed income6,164 19,433 — 6,078 31,675 
Bulk annuity contract53,093 53,093 
Total pension plan assets$8,537 $32,085 $53,778 $6,078 $100,478 

The fair value measurement of plan assets using significant unobservable inputs (Level 3) changed during 2021 due to the following:
(in thousands)
Level 3
Balance at December 26, 2020$53,778 
Level 3 assets transferred in from Level 1 and 2 assets valued at NAV:
Settlements(47,111)
Actual loss on plan assets(4,943)
Benefits paid from the plan assets(1,238)
Foreign currency adjustments(143)
Balance at January 1, 2022$343 

Defined Contribution Plan
 
The Company also maintains a 401(k) savings plan covering substantially all U.S. employees. The Company matches 100% of the employee’s annual contributions for the first 4% of the employee’s eligible compensation. The Company may provide an additional discretionary match to participants and made discretionary matches of 2% of the employee’s eligible compensation for each of the fiscal year ended January 1, 2022, December 26, 2020 and December 28, 2019. Employees are immediately vested in their contributions plus actual earnings thereon, as well as the Company contributions. Company matching contributions amounted to $5.0 million, $4.6 million, and $5.6 million in 2021, 2020, and 2019, respectively.
 
Non-qualified Supplemental Retirement and Savings Plan
 
The Company has a non-qualified Supplemental Retirement and Savings Plan which provides additional retirement benefits for certain management employees and named executive officers by allowing participants to defer a portion of their annual compensation. The Company maintains accounts for participants through which participants make investment elections. The investments are subject to the claims of the Company’s creditors and the Company is responsible for the payment of all benefits
under the plan from its general assets. As of January 1, 2022, there was $15.0 million of marketable securities related to the plan included in Other assets and $15.0 million of accrued compensation benefits included in Other long-term liabilities. The marketable securities are classified as Level 1 under the fair value hierarchy as they are maintained in mutual funds with readily determinable fair value. The Company made matching contributions to the plan of $0.2 million, $0.5 million, and $0.4 million in 2021, 2020, and 2019, respectively.