XML 42 R25.htm IDEA: XBRL DOCUMENT v3.20.4
Employee Benefit Plans
 12 Months Ended
Jan. 03, 2021
Retirement Benefits [Abstract]  
Employee Benefit Plans EMPLOYEE BENEFIT PLANS
 
Defined Contribution and Deferred Compensation Plans
 
The Company has a 401(k) retirement investment plan (“401(k) Plan”), which is open to all eligible U.S. employees with at least six months of service. The 401(k) Plan calls for Company matching contributions on a sliding scale based on the level of the employee’s contribution. The Company may, at its discretion, make additional contributions to the 401(k) Plan based on the attainment of certain performance targets by its subsidiaries. The Company’s matching contributions are funded bi-monthly and totaled approximately $1.6 million, $3.3 million, and $3.2 million for the years 2020, 2019, and 2018, respectively. No discretionary contributions were made in 2020, 2019, or 2018.

Under the Company’s nonqualified savings plans (“NSPs”), the Company provides eligible employees the opportunity to enter into agreements for the deferral of a specified percentage of their compensation, as defined in the NSPs. The NSPs call for Company matching contributions on a sliding scale based on the level of the employee’s contribution. The obligations of the Company under such agreements to pay the deferred compensation in the future in accordance with the terms of the NSPs are unsecured general obligations of the Company. Participants have no right, interest or claim in the assets of the Company, except as unsecured general creditors. The Company has established a rabbi trust to hold, invest and reinvest deferrals and contributions under the NSPs. If a change in control of the Company occurs, as defined in the NSPs, the Company will contribute an amount to the rabbi trust sufficient to pay the obligation owed to each participant. Deferred compensation in connection with the NSPs totaled $33.1 million and $31.9 million at January 3, 2021 and December 29, 2019, respectively. The Company invests the deferrals in insurance instruments with readily determinable cash surrender values. The value of the insurance instruments was $33.9 million and $30.1 million as of January 3, 2021 and December 29, 2019, respectively.
 
In 2020, the Company temporarily suspended its 401(k) and NSP matching contributions described above. These employer matching contributions were resumed in 2021.

Multiemployer Plan

As discussed below, on December 31, 2019, a plan amendment was executed to eliminate future service accruals in the Dutch defined benefit plan, resulting in a curtailment of the plan. This plan remains in existence and will continue to pay vested benefits. Active participants no longer accrue benefits after December 31, 2019, and instead participate in the Industry-Wide Pension Fund (the “IWPF”) multi-employer plan beginning in fiscal year 2020. During 2020, the Company recorded multi-employer pension expense related to multi-employer contributions of $2.5 million. The Company’s contributions into the IWPF are less than 5% of total plan contributions. The IWPF is more than 95% funded at the end of 2019, which is the latest date plan information is available. The IWPF multi-employer plan is not considered to be significant based on the funded status of the plan and our contributions.

Foreign Defined Benefit Plans
 
The Company has trusteed defined benefit retirement plans which cover many of its European employees. The benefits under these defined benefit retirement plans are generally based on years of service and the employee’s average monthly compensation. In connection with the nora acquisition on August 7, 2018, the Company acquired an additional defined benefit plan, which covers certain employees in Germany (the “nora Plan”). The nora plan has no plan assets. The Company uses a year-end measurement date for the plans, which is the closest practical date to the Company’s fiscal year end.
As described above, on December 31, 2019, a plan amendment was executed to eliminate future service accruals in the Dutch defined benefit plan. The Dutch plan will remain in existence and continue to pay vested benefits. The reduction in future benefit accruals resulted in a curtailment of the plan. Participants in the Dutch plan will no longer accrue benefits under the plan after December 31, 2019 and will participate in the IWPF beginning in fiscal year 2020. Although the Dutch plan is frozen to new participants, vested benefits prior to the curtailment will continue to be accounted for in accordance with applicable accounting standards for defined benefit plans. The Dutch plan is financed by assets held in an insurance contract. The guarantee provision included in the insurance contract, that existed to fund any shortfall between the fair value of plan investments and the benefit obligation, expired on December 31, 2019. The Company will fund the cost to guarantee vested benefits and this amount will be recorded as an obligation on the Company’s consolidated balance sheet.

The curtailment of the Dutch plan resulted in a decrease to the projected benefit obligation with an offsetting actuarial gain recognized in accumulated other comprehensive income of approximately $2.4 million in fiscal year 2019. The accumulated net actuarial loss for the Dutch plan, after the impact of the curtailment, was $16.7 million at December 29, 2019. This amount will be reclassified out of accumulated other comprehensive income and increase pension expense over the life expectancy of vested participants when the actuarial loss exceeds the 10% corridor. The curtailment also resulted in a $0.5 million reclassification of prior service cost from accumulated other comprehensive income, which was recognized as a reduction of pension expense in fiscal year 2019.

As discussed above, the Company still has an obligation to pay vested benefits in the frozen Dutch plan. As of January 3, 2021, the under-funded status of the Dutch plan of $6.8 million is recorded on the consolidated balance sheet in other long-term liabilities.

Pension expense was $2.5 million, $2.3 million, and $1.7 million for the years 2020, 2019 and 2018, respectively. Plan assets are primarily invested in insurance contracts and equity and fixed income securities. As of January 3, 2021, for the European plans, the Company had a net liability recorded of $60.9 million, an amount equal to their underfunded status, and had recorded in accumulated other comprehensive loss an amount equal to $58.3 million (net of taxes of approximately $18.7 million) related to the future amounts to be recorded in net periodic benefit costs. In the next fiscal year, approximately $1.5 million will be reclassified from accumulated other comprehensive loss into net periodic benefit cost.
 
The tables presented below set forth the funded status of the Company’s significant foreign defined benefit plans and required disclosures in accordance with applicable accounting standards:
 
 Fiscal Year
 20202019
 (in thousands)
Change in benefit obligation:  
Benefit obligation, beginning of year$314,841 $285,508 
Service cost1,070 1,589 
Interest cost4,038 5,676 
Benefits and expenses paid(12,041)(13,034)
Actuarial loss (gain)31,618 37,409 
Curtailment gain— (2,421)
Member contributions— 221 
Currency translation adjustment24,917 (107)
Benefit obligation, end of year$364,443 $314,841 
 
Change in plan assets:  
Plan assets, beginning of year$266,450 $249,313 
Actual return on assets25,239 24,999 
Company contributions4,451 3,954 
Benefits paid(12,041)(13,034)
Currency translation adjustment19,432 1,218 
Plan assets, end of year$303,531 $266,450 
 
Reconciliation to balance sheet  
Funded status benefit asset (liability)$(60,912)$(48,391)
 
Amounts recognized in accumulated other comprehensive income, after tax:  
Unrecognized actuarial loss$58,257 $47,561 
Unamortized prior service credits— — 
Total amount recognized$58,257 $47,561 
 
Accumulated benefit obligation$364,443 $314,841 

The January 3, 2021 pension liability above includes current liabilities of $1.1 million and non-current liabilities of $59.8 million and $48.4 million as of January 3, 2021 and December 29, 2019, respectively.

The above disclosure represents the aggregation of information related to the Company’s three defined benefit plans which cover many of its European employees. As of December 29, 2019, one of these plans, which primarily covers certain employees in the United Kingdom (the “UK Plan”), had assets in excess of the accumulated benefit obligation, but its assets were less than the accumulated benefit obligation as of January 3, 2021. The nora Plan is an unfunded defined benefit plan and the accumulated benefit obligation exceeded plan assets. The following table summarizes this information as of January 3, 2021 and December 29, 2019.
 
 End of Fiscal Year
 20202019
 (in thousands)
UK Plan  
Projected benefit obligation$198,215 $170,958 
Accumulated benefit obligation198,215 170,958 
Plan assets193,991 174,156 
 
Dutch Plan
  
Projected benefit obligation$116,379 $100,996 
Accumulated benefit obligation116,379 100,996 
Plan assets109,540 92,294 
 
nora Plan  
Projected benefit obligation$49,849 $42,887 
Accumulated benefit obligation49,849 42,887 
Plan assets— — 
 
 Fiscal Year
 202020192018
 (in thousands)
Components of net periodic benefit cost:   
Service cost$1,070 $1,589 $1,112 
Interest cost4,038 5,676 5,467 
Expected return on plan assets(4,256)(5,561)(6,234)
Amortization of prior service cost106 63 (27)
Amortization of net actuarial (gains) losses1,549 991 1,394 
Curtailment gain— (453)— 
Net periodic benefit cost$2,507 $2,305 $1,712 

In accordance with applicable accounting standards, the service cost component of net periodic benefit costs is presented within operating income in the consolidated statements of operations, while all other components of net periodic benefit costs are presented within other expense in the consolidated statements of operations.

During 2020, other comprehensive income was impacted after tax by approximately $7.4 million comprised of actuarial loss of approximately $8.6 million and amortization of $1.2 million. 
 
 Fiscal Year
 202020192018
Weighted average assumptions used to determine net periodic benefit cost:   
Discount rate1.0 %1.9 %1.9 %
Expected return on plan assets1.2 %2.1 %1.8 %
Rate of compensation— %1.75 %1.75 %
Weighted average assumptions used to determine benefit obligations:   
Discount rate1.0 %1.7 %2.5 %
Rate of compensation— %1.75 %1.75 %
 
The expected long-term rate of return on plan assets assumption is based on weighted average expected returns for each asset class. Expected returns reflect a combination of historical performance analysis and the forward-looking views of the financial markets, and include input from actuaries, investment service firms and investment managers.
 
The investment objectives of the foreign defined benefit plans are to maximize the return on the investments to ensure that the assets are sufficient to exceed minimum funding requirements, and to achieve a favorable return against performance expectations based on historical and projected rates of return over the short term. The goal is to optimize the long-term return on plan assets at a moderate level of risk, by balancing higher-returning assets, such as equity securities, with less volatile assets, such as fixed income securities. The assets are managed by professional investment firms and performance is evaluated periodically against specific benchmarks. The plans’ net assets did not include the Company’s own stock at January 3, 2021 or December 29, 2019.

Dutch Plan Assets and Indexation Benefit
 
As is common in Dutch pension plans, the Dutch plan includes a provision for discretionary benefit increases termed “indexation.” The indexation benefit is meant to adjust pension benefits for cost-of-living increases, similar to U.S. consumer price index-based cost-of-living adjustments for U.S. retirement plans. The indexation benefit is not guaranteed, and is only provided for and paid out if sufficient assets are available due to favorable asset returns.
 
Both the vested benefit amounts as well as amounts related to the discretionary indexation benefits under the Dutch plan are paid pursuant to an insurance contract with a private insurer (the “Contract”). The Plan itself is financed by investment assets held within the Contract. Prior to December 31, 2019, the Contract guaranteed payment of vested benefits, regardless of whether Plan assets held through the Contract were ultimately sufficient to pay vested amounts, and also provided for payment of the indexation amount on a contingent basis if the actual return on Dutch plan assets were sufficient to pay it. This type of insurance arrangement is common in The Netherlands, although not necessarily common in other jurisdictions. After the plan curtailment on December 31, 2019, as discussed above, any shortfall in plan assets to pay vested benefits will be funded by the Company. The assets under the Dutch plan, including any indexation benefit, are identified as Level 3 assets under the fair value hierarchy.
 
Under the express terms of the Contract, contract value is the greater of (i) the value of the discounted vested benefits of the Dutch plan and (ii) the fair value of the underlying investment assets held by the insurance company under the Contract. As between those two values, the former was the greater for 2020 and 2019 and this represents the plan assets as shown above for the Dutch plan. Because the Company will fund the cost to guarantee vested benefits, the Company has recorded a provision, which reduces the Dutch plan assets, that consists of the net present value of the expected future guarantee payments due to the insurance company pursuant to the Company’s guarantee.

As explained above, the Contract also will pay the indexation benefit if sufficient assets are available, which the Company believes not to be probable as of the end of 2020 based on recent returns. The indexation benefit for 2020 and 2019 is not significant.
 
The Company’s actual weighted average asset allocations for 2020 and 2019, and the targeted asset allocation for 2021, of the foreign defined benefit plans by asset category, are as follows:
 
 Fiscal Year
 202120202019
Asset CategoryTarget AllocationPercentage of Plan Assets at Year End
Equity securities1%—3%3%3%
Debt and debt securities50%—60%60%61%
Short-term investments1%—2%—%1%
Other investments35%—40%37%35%
 100%100%100%
The following table sets forth by level within the fair value hierarchy the foreign defined benefit plans’ assets at fair value, as of January 3, 2021 and December 29, 2019. The nora plan is currently unfunded. As required by accounting standards, assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. As noted above, the Dutch pension plan assets as represented by the insurance contract are classified as a Level 3 asset and included in the “Other” asset category.

 Pension Plan Assets by Category as of January 3, 2021
 Dutch PlanUK PlanTotal
 (in thousands)
Level 1$— $70,904 $70,904 
Level 2— 95,004 95,004 
Level 3109,540 28,083 137,623 
Total$109,540 $193,991 $303,531 
 
 Pension Plan Assets by Category as of December 29, 2019
 Dutch PlanUK PlanTotal
 (in thousands)
Level 1$— $64,151 $64,151 
Level 2— 87,047 87,047 
Level 392,294 22,958 115,252 
Total$92,294 $174,156 $266,450 

The tables below detail the foreign defined benefit plans’ assets by asset allocation and fair value hierarchy:
 
 End of Fiscal Year 2020
Asset CategoryLevel 1Level 2Level 3
 (in thousands) 
Equity securities$9,113 $— $— 
Debt and debt securities60,699 95,004 25,927 
Short-term investments (1)
1,092 — — 
Other investments (2)
— — 111,696 
 $70,904 $95,004 $137,623 
 
 End of Fiscal Year 2019
Asset CategoryLevel 1Level 2Level 3
 (in thousands)
Equity securities$8,143 $— $— 
Debt and debt securities54,686 87,047 19,996 
Short-term Investments (1)
1,322 — — 
Other Investments (2)
— — 95,256 
 $64,151 $87,047 $115,252 
 
(1) Short-term investments are generally invested in interest-bearing accounts.
(2) Other investments is comprised of insurance contracts.
 
Assets identified as level 2 above pertain to corporate bonds and other debt securities. The fair values of these assets are calculated based on quoted market prices for similar assets.
With the exception of the Dutch plan assets as discussed above, the assets identified as level 3 above in 2020 and 2019 relate to insured annuities and direct lending assets held by the UK Plan. The fair value of these assets was calculated using the present value of the future cash flows due under the insurance annuities and for the direct lending assets the value is based on the asset value from the latest available valuation with adjustments for any drawdowns and distribution payments made between the valuation date and the reporting date. The range of discount rates used in the fair value calculation of level 3 assets held by the Dutch plan and the UK Plan were 0.50% to 1.30% for 2020 and 1.0% to 2.10% for 2019. The weighted average discount rates were 0.52% and 1.02% for 2020 and 2019, respectively. These amounts are weighted based on the fair value of level 3 plan assets subject to fluctuations in the discount rate. Any changes in these variables will impact the fair value of level 3 assets.

The table below indicates the change in value related to these level 3 assets during 2020 and 2019:

Fiscal Year
 20202019
 (in thousands)
Balance of level 3 assets, beginning of year$115,252 $109,254 
Actual return on plan assets (1)
6,767 5,463 
Purchases, sales and settlements, net437 663 
Assets transferred into level 33,934 2,101 
Translation adjustment11,233 (2,229)
Balance of level 3 assets, end of year$137,623 $115,252 

(1) Includes $10.1 million and $6.2 million for 2020 and 2019, respectively, of unrealized gains recognized during the period in other comprehensive income (loss) for assets held at year end.
 
During 2021, the Company expects to contribute $5.2 million to the plans. It is anticipated that future benefit payments for the foreign defined benefit plans will be as follows:
 
Fiscal YearExpected Payments
 (in thousands)
2021$12,038 
202212,097 
202312,351 
202412,595 
202512,764 
2026-203066,169 

Domestic Defined Benefit Plan
 
The Company maintains a domestic non-qualified salary continuation plan (“SCP”), which is designed to induce selected officers of the Company to remain in the employ of the Company by providing them with retirement, disability and death benefits in addition to those which they may receive under the Company’s other retirement plans and benefit programs. The SCP entitles participants to: (i) retirement benefits upon normal retirement at age 65 (or early retirement as early as age 55) after completing at least 15 years of service with the Company (unless otherwise provided in the SCP), payable for the remainder of their lives (or, if elected by a participant, a reduced benefit is payable for the remainder of the participant’s life and any surviving spouse’s life) and in no event less than 10 years under the death benefit feature; (ii) disability benefits payable for the period of any total disability; and (iii) death benefits payable to the designated beneficiary of the participant for a period of up to 10 years. Benefits are determined according to one of three formulas contained in the SCP, and the SCP is administered by the Compensation Committee of the Company’s Board of Directors, which has full discretion in choosing participants and the benefit formula applicable to each. The Company’s obligations under the SCP are currently unfunded (although the Company uses insurance instruments to hedge its exposure thereunder). The Company is required to contribute the present value of its obligations thereunder to an irrevocable grantor trust in the event of a change in control as defined in the SCP. The Company uses a year-end measurement date for the domestic SCP.
 
The tables presented below set forth the required disclosures in accordance with applicable accounting standards, and amounts recognized in the consolidated financial statements related to the domestic SCP. There is no service cost component of the change in benefit obligation in 2020 and 2019 as there are no longer any active participants in the plan.
 
 Fiscal Year
 20202019
 (in thousands)
Change in benefit obligation:  
Benefit obligation, beginning of year$31,740 $29,142 
Interest cost938 1,154 
Benefits paid(2,030)(2,030)
Actuarial loss (gain)3,186 3,474 
Benefit obligation, end of year$33,834 $31,740 
 
The amounts recognized in the consolidated balance sheets are as follows:
 
End of Fiscal Year
 20202019
 (in thousands)
Current liabilities$2,030 $2,030 
Non-current liabilities31,804 29,710 
Total benefit obligation$33,834 $31,740 
  
The components of the amounts in accumulated other comprehensive income, after tax, are as follows:
 
Fiscal Year
 20202019
 (in thousands)
Unrecognized actuarial loss$11,031 $9,139 
 
The accumulated benefit obligation related to the SCP was $33.8 million and $31.7 million as of January 3, 2021 and December 29, 2019, respectively. The SCP is currently unfunded; as such, the benefit obligations disclosed are also the benefit obligations in excess of the plan assets. The Company uses insurance instruments to help limit its exposure under the SCP.
Fiscal Year
 202020192018
 (in thousands, except for assumptions)
Assumptions used to determine net periodic benefit cost:   
Discount rate3.05 %4.10 %3.50 %
Rate of compensation— — — 
 
Assumptions used to determine benefit obligations:   
Discount rate2.15 %3.05 %4.10 %
Rate of compensation— — — 
 
Components of net periodic benefit cost:   
Service cost$— $— $— 
Interest cost938 1,154 1,082 
Amortizations558 375 464 
Net periodic benefit cost$1,496 $1,529 $1,546 
 
The changes in other comprehensive income during 2020 related to the SCP as a result of plan activity and valuation were approximately $1.9 million, after tax, primarily comprised of a net loss during the period of $2.3 million and amortization of loss of $0.4 million.
 
During 2020, the Company contributed $2.0 million in the form of direct benefit payments for its domestic SCP. It is anticipated that future benefit payments for the SCP will be as follows:
 
Fiscal YearExpected Payments
 (in thousands)
2021$2,030 
20222,030 
20232,030 
20242,030 
20252,030 
2026-20309,447