Retirement Plans

12 Months Ended

Dec. 31, 2023

Retirement Benefits [Abstract]

Retirement Plans

NOTE 7 — Retirement Plans

As of December 31, 2023, we have two active noncontributory defined benefit pension plans ("Pension Plans") covering less than 1% of our active employees. These Pension Plans consist of a U.S. supplemental retirement plan ("SERP") and a Taiwan pension plan. The SERP is comprised entirely of participants who are former employees of the Company.

We also provide post-retirement life insurance benefits for certain retired employees. Domestic employees who were hired prior to 1982 and certain former union employees are eligible for life insurance benefits upon retirement. We fund life insurance benefits through term life insurance policies and intend to continue funding all of the premiums on a pay-as-you-go basis.

We recognize the funded status of a benefit plan in our consolidated balance sheets. The funded status is measured as the difference between plan assets at fair value and the projected benefit obligation. We also recognize, as a component of other comprehensive earnings, net of tax, the gains or losses and prior service costs or credits that arise during the period but are not recognized as components of net periodic benefit/cost.

The measurement dates for the Pension Plans for our U.S. and non-U.S. locations and the post-retirement life insurance plan was December 31, 2023 and 2022.

In February 2020, our Board of Directors authorized management to explore termination of the U.S.-based pension plan ("Plan"), subject to certain conditions. On June 1, 2020, we entered into the fifth amendment to the Plan whereby we set an effective termination date for the Plan of July 31, 2020. In February 2021, we received a determination letter from the Internal Revenue Service that allowed us to proceed with the termination process for the Plan. During the second quarter of 2021, the Company offered the option of receiving a lump sum payment to eligible participants with vested qualified Plan benefits in lieu of receiving monthly annuity payments. Approximately 365 participants elected to receive the settlement, and lump sum payments of approximately $35,594 were made from Plan assets to these participants in June 2021.

As required under U.S. GAAP, the Company recognizes a settlement gain or loss when the aggregate amount of lump-sum distributions to participants equals or exceeds the sum of the service and interest cost components of the net periodic pension cost. The amount of settlement gain or loss recognized is the pro rata amount of the existing unrealized gain or loss immediately prior to the settlement. In general, both the projected benefit obligation and fair value of plan assets are required to be remeasured in order to determine the settlement gain or loss.

Upon the partial settlement of the pension liability due to the lump sum offering in the second quarter of 2021, the Company recognized a non-cash and non-operating settlement charge of $20,063 related to pension losses, reclassified from accumulated other comprehensive loss to other (income) expense in the Company's Condensed Consolidated Statements of Earnings (Loss).

On July 29, 2021, the Plan purchased a group annuity contract that transferred our benefit obligations for approximately 2,700 CTS participants and beneficiaries in the United States (“Transferred Participants”). As part of the purchase of the group annuity contract, Plan benefit obligations and related annuity administration services for Transferred Participants were irrevocably assumed and guaranteed by the insurance company effective as of August 3, 2021. There will be no change to pension benefits for Transferred Participants. The purchase of the group annuity contract was fully funded directly by Plan assets.

As a result of the final settlement of the pension liability with the purchase of annuities, we reclassified the remaining related unrecognized pension losses of $106,206 that were previously recorded in accumulated other comprehensive income (loss) to the Consolidated Statements of Earnings (Loss) in the third quarter of 2021.

In January 2022, we transferred approximately $17,500 of funds from Plan assets to a qualified replacement plan (QRP) managed by the Company. The QRP requires that these assets be used to fund future annual Company contributions to our U.S. 401(k) program. The remaining Plan assets were transferred to the Company in the third quarter of 2022 as part of the final termination process. As a result, approximately $34,016 was transferred to the Company, which resulted in $6,803 of excise tax being recorded in Other Expense in the Company's Condensed Consolidated Statements of Earnings (Loss). As a result of the termination of the Plan and final reversion activities in 2022, no assets remained in the Plan as of December 31, 2022.

The following table provides a reconciliation of the benefit obligation, plan assets, and the funded status of the pension plans for U.S. and non-U.S. locations at the measurement dates.

	U.S. Pension Plans						Non-U.S. Pension Plan
	2023			2022			2023			2022
Accumulated benefit obligation	$	788		$	814		$	1,083		$	1,771
Change in projected benefit obligation:
Projected benefit obligation at January 1	$	814		$	1,008		$	2,146		$	2,335
Service cost		—			—			22			20
Interest cost		38			18			37			13
Benefits paid		(103	)		(103	)		(387	)		(238	)
Actuarial (gain) loss		39			(109	)		(394	)		239
Foreign exchange impact		—			—			(2	)		(223	)
Projected benefit obligation at December 31	$	788		$	814		$	1,422		$	2,146
Change in plan assets:
Assets at fair value at January 1	$	—		$	49,382		$	1,376		$	1,421
Actual return on assets		—			2,134			28			116
Company contributions		103			103			184			213
Benefits paid		(103	)		(103	)		(387	)		(238	)
Qualified replacement plan transfer		—			(17,500	)		—			—
Asset reversion		—			(34,016	)		—			—
Foreign exchange impact		—			—			(2	)		(136	)
Assets at fair value at December 31	$	—		$	—		$	1,199		$	1,376
Funded status (plan assets less projected benefit obligations)	$	(788	)	$	(814	)	$	(223	)	$	(770	)

The following table provides a reconciliation of the benefit obligation, plan assets, and the funded status of the post-retirement life insurance plan at those measurement dates.

	Post-Retirement Life Insurance Plan
	2023			2022
Accumulated benefit obligation	$	4,145		$	4,018
Change in projected benefit obligation:
Projected benefit obligation at January 1	$	4,018		$	5,231
Service cost		1			1
Interest cost		192			102
Benefits paid		(146	)		(147	)
Actuarial (gain) loss		80			(1,169	)
Projected benefit obligation at December 31	$	4,145		$	4,018
Change in plan assets:
Assets at fair value at January 1	$	—		$	—
Company contributions		146			147
Benefits paid		(146	)		(147	)
Other		—			—
Assets at fair value at December 31	$	—		$	—
Funded status (plan assets less projected benefit obligations)	$	(4,145	)	$	(4,018	)

The components of the accrued cost of the domestic and foreign pension plans are classified in the following lines in the Consolidated Balance Sheets at December 31:

	U.S. Pension Plans						Non-U.S. Pension Plan
	2023			2022			2023			2022
Accrued expenses and other liabilities		(99	)		(99	)		—			—
Long-term pension obligations		(689	)		(715	)		(222	)		(770	)
Net accrued cost	$	(788	)	$	(814	)	$	(222	)	$	(770	)

The components of the accrued cost of the post-retirement life insurance plan are classified in the following lines in the Consolidated Balance Sheets at December 31:

	Post-Retirement Life Insurance Plan
	2023			2022
Accrued expenses and other liabilities	$	(478	)	$	(455	)
Long-term pension obligations		(3,667	)		(3,563	)
Total accrued cost	$	(4,145	)	$	(4,018	)

We have also recorded the following amounts to accumulated other comprehensive income (loss) for the U.S. and non-U.S. pension plans, net of tax:

	U.S. Pension Plans			Non-U.S. Pension Plan
	Unrecognized Loss			Unrecognized Loss
Balance at January 1, 2022	$	312		$	1,803
Amortization of retirement benefits, net of tax		—			(155	)
Net actuarial (loss) gain		(108	)		132
Foreign exchange impact		—			(172	)
Balance at January 1, 2023	$	204		$	1,608
Amortization of retirement benefits, net of tax		—			(134	)
Net actuarial gain (loss)		13			(396	)
Foreign exchange impact		—			77
Balance at December 31, 2023	$	217		$	1,155

We have recorded the following amounts to accumulated other comprehensive income (loss) for the post-retirement life insurance plan, net of tax:

	Unrecognized Gain
Balance at January 1, 2022	$	(109	)
Amortization of retirement benefits, net of tax		—
Net actuarial loss		(900	)
Balance at January 1, 2023	$	(1,009	)
Amortization of retirement benefits, net of tax		259
Net actuarial gain		61
Balance at December 31, 2023	$	(689	)

The accumulated actuarial gains and losses included in other comprehensive earnings are amortized in the following manner:

The component of unamortized net gains or losses related to our qualified pension plan is amortized based on the future life expectancy of the plan participants (estimated to be approximately 11 years at December 31, 2023), because substantially all of the participants in those plans are former employees who are now retired. The component of unamortized net gains or losses related to our post-retirement life insurance plan is amortized based on the estimated remaining future service period of the plan participants (estimated to be approximately three years at December 31, 2023). The Company uses a market-related approach to value plan assets, reflecting changes in the fair value of plan assets over a five-year period. The variance resulting from the difference between the expected and actual return on plan assets is included in the amortization calculation upon reflection in the market-related value of plan assets.

The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for those pension plans with accumulated benefit obligation in excess of the fair value of plan assets is shown below:

	As of December 31,
	2023		2022
Projected benefit obligation	$	2,210	$	2,961
Accumulated benefit obligation	$	1,871	$	2,585
Fair value of plan assets	$	1,199	$	1,377

Net pension expense includes the following components:

	Years Ended December 31,									Years Ended December 31,
	U.S. Pension Plans									Non-U.S. Pension Plan
	2023			2022			2021			2023			2022			2021
Service cost	$	—		$	—		$	—		$	22		$	20		$	26
Interest cost		38			18			2,861			37			13			17
Expected return on plan assets(1)		—			(2,134	)		(474	)		(13	)		(9	)		(17	)
Amortization of unrecognized loss		22			30			3,703			172			167			184
Settlement charges		—			—			126,269			—			—			—
Net expense	$	60		$	(2,086	)	$	132,359		$	218		$	191		$	210
Weighted-average actuarial assumptions(2)
Benefit obligation assumptions:
Discount rate		4.83	%		5.04	%		2.46	%		1.63	%		1.75	%		0.63	%
Rate of compensation increase	N/A			N/A			N/A				3.00	%		5.00	%		3.00	%
Pension income/expense assumptions:
Discount rate		5.04	%		2.46	%		2.10	%		1.75	%		0.63	%		0.63	%
Expected return on plan assets(1)	N/A			N/A				1.44	%		1.75	%		0.63	%		0.63	%
Rate of compensation increase	N/A			N/A			N/A				5.00	%		5.00	%		3.00	%

(1)Expected return on plan assets is net of expected investment expenses and certain administrative expenses.

(2)During the fourth quarter of each year, we review our actuarial assumptions in light of current economic factors to determine if the assumptions need to be adjusted.

Net post-retirement expense includes the following components:

	Post-Retirement Life Insurance Plan
	Years Ended December 31,
	2023			2022			2021
Service cost	$	1		$	1		$	1
Interest cost		192			102			80
Amortization of unrecognized gain		(336	)		—			—
Net expense	$	(143	)	$	103		$	81
Weighted-average actuarial assumptions(1)
Benefit obligation assumptions:
Discount rate		4.90	%		5.11	%		2.66	%
Rate of compensation increase	N/A			N/A			N/A
Pension income/post-retirement expense assumptions:
Discount rate		5.11	%		2.66	%		2.27	%
Rate of compensation increase	N/A			N/A			N/A

(1)During the fourth quarter of each year, we review our actuarial assumptions in light of current economic factors to determine if the assumptions need to be adjusted.

The fair value of assets in the non-U.S. pension plan are 100% categorized as cash and cash equivalents, which use Level 1 inputs in the fair value determination.

We expect to make $99 of contributions to the U.S. plans and $171 of contributions to the non-U.S. plan during 2024.

Expected benefit payments under the Pension Plans and the postretirement benefit plan, for the five years subsequent to 2023 (i.e., 2024-2028, inclusive), and in the aggregate for the five years thereafter (i.e., 2029-2033, inclusive) are as follows:

	U.S. Pension Plan		Non-U.S. Pension Plan		Post- Retirement Life Insurance Plan
2024	$	99	$	50	$	478
2025		94		56		439
2026		90		61		406
2027		85		96		377
2028		80		64		351
2029-2033		219		444		1,467
Total	$	667	$	771	$	3,518

Defined Contribution Plans

We sponsor a 401(k) plan that covers substantially all of our U.S. employees as well as offer similar defined contribution plans to employees at certain foreign locations. Contributions and costs were generally determined as a percentage of the covered employee's annual salary. During 2022, our investment committee, in consultation with the plan’s advisors, determined the 401(k) plan’s position in CTS common stock would be liquidated and the resulting funds would be reinvested in other investments. That process was completed in the fourth quarter of 2022.

Effective January 1, 2022, in connection with the U.S. Plan termination process, we amended our 401(k) plan and transitioned to a non-elective contribution for all U.S. employees that is also determined as a percentage of the covered employee's salary, provides for immediate vesting and is provided regardless of whether the individual employee contributes to the applicable plan. In addition, we began offering a Roth 401(k) option to employees.

Expenses related to defined contribution plans include the following:

	Years Ended December 31,
	2023		2022		2021
401(k) and other defined contribution plan expense	$	3,858	$	3,878	$	3,242