Benefit Plans

12 Months Ended

Dec. 31, 2022

Retirement Benefits [Abstract]

Benefit Plans

Benefit Plans

Pension and Other Postretirement Plans

The Company sponsors several qualified and nonqualified pension plans and other postretirement benefit plans for certain employees.  The information disclosed below does not include the pension plan in South Korea, as it it immaterial to the Company’s Consolidated Financial Statements. The following tables provide a reconciliation of the changes in the most significant plans’ benefit obligations and the fair value of the plans’ assets for 2022 and 2021, and a statement of the plans’ aggregate funded status:

	Pension Benefits				Other Benefits
(In thousands)	2022		2021		2022		2021
Change in benefit obligation:
Obligation at beginning of year	$	84,283	$	90,809	$	11,825	$	12,782
Service cost	—		—		291		258
Interest cost	1,450		1,272		346		281
Actuarial gain	(24,154)		(4,062)		(2,604)		(812)
Benefit payments	(2,512)		(2,832)		(547)		(634)
Foreign currency translation adjustment	(8,306)		(904)		(71)		(50)
Obligation at end of year	50,761		84,283		9,240		11,825
Change in fair value of plan assets:
Fair value of plan assets at beginning of year	79,478		78,480		—		—
Actual return on plan assets	(6,371)		4,791		—		—
Employer contributions	—		—		547		634
Benefit payments	(2,512)		(2,832)		(547)		(634)
Foreign currency translation adjustment	(8,297)		(961)		—		—
Fair value of plan assets at end of year	62,298		79,478		—		—
Funded (underfunded) status at end of year	$	11,537	$	(4,805)	$	(9,240)	$	(11,825)

The following represents amounts recognized in AOCI (before the effect of income taxes):

	Pension Benefits				Other Benefits
(In thousands)	2022		2021		2022		2021
Unrecognized net actuarial loss (gain)	$	2,870	$	19,629	$	(4,149)	$	(1,893)
Unrecognized prior service credit	—		—		(19)		(1,930)

As of December 31, 2022, $0.5 million of the actuarial net loss and the remainder of the prior service credit will, through amortization, be recognized as components of net periodic benefit cost in 2023.

The aggregate status of all overfunded plans is recognized as an asset and the aggregate status of all underfunded plans is recognized as a liability in the Consolidated Balance Sheets.  The amounts recognized as a liability are classified as current or long-term on a plan-by-plan basis.  Liabilities are classified as current to the extent the actuarial present value of benefits payable within the next 12 months exceeds the fair value of plan assets, with all remaining amounts classified as long-term.  

As of December 31, 2022 and December 25, 2021, the total funded status of the plans recognized in the Consolidated Balance Sheets was as follows:

	Pension Benefits				Other Benefits
(In thousands)	2022		2021		2022		2021
Long-term asset	$	11,537	$	—	$	—	$	—
Current liability	$	—	$	—	$	(1,068)	$	(962)
Long-term liability	—		(4,805)		(8,172)		(10,863)
Total (underfunded) funded status	$	11,537	$	(4,805)	$	(9,240)	$	(11,825)

The components of net periodic benefit cost (income) are as follows:

(In thousands)	2022		2021		2020
Pension benefits:
Interest cost	$	1,450	$	1,272	$	3,260
Expected return on plan assets	(3,568)		(3,671)		(5,704)
Amortization of net loss	897		1,536		2,305
Settlement charge	—		—		11,642
Net periodic benefit (income) cost	$	(1,221)	$	(863)	$	11,503
Other benefits:
Service cost	$	291	$	258	$	212
Interest cost	346		281		430
Amortization of prior service credit	(198)		(470)		(519)
Amortization of net gain	(220)		(103)		(193)
Curtailment gain	(1,756)		—		(2,591)
Net periodic benefit income	$	(1,537)	$	(34)	$	(2,661)

During 2022 and 2020, the Company recognized curtailment gains of $1.8 million and $2.6 million, respectively, related to one of its postretirement benefit plans.

The components of net periodic benefit cost (income) other than the service cost component are included in other income, net in the Consolidated Statements of Income.

The weighted average assumptions used in the measurement of the Company’s benefit obligations are as follows:

	Pension Benefits				Other Benefits
	2022		2021		2022		2021
Discount rate	4.80	%	1.90	%	6.08	%	3.73	%
Expected long-term return on plan assets	5.51	%	4.96	%	N/A		N/A
Rate of compensation increases	N/A		N/A		5.00	%	5.00	%
Rate of inflation	3.30	%	3.70	%	N/A		N/A

The weighted average assumptions used in the measurement of the Company’s net periodic benefit cost are as follows:

	Pension Benefits						Other Benefits
	2022		2021		2020		2022		2021		2020
Discount rate	1.90	%	1.40	%	1.93	%	3.73	%	2.92	%	3.70	%
Expected long-term return on plan assets	4.96	%	4.69	%	3.84	%	N/A		N/A		N/A
Rate of compensation increases	N/A		N/A		N/A		5.00	%	5.00	%	5.00	%
Rate of inflation	3.70	%	3.20	%	3.20	%	N/A		N/A		N/A

The Company’s Mexican postretirement plans use the rate of compensation increase in the benefit formulas.  Past service in the U.K. pension plan will be adjusted for the effects of inflation.  All other pension and postretirement plans use benefit formulas based on length of service.

The annual assumed rate of increase in the per capita cost of covered benefits (i.e., health care cost trend rate) is assumed to range from 4.7 to 7.2 percent for 2023, gradually decrease to 4.1 percent through 2040, and remain at that level thereafter.  The health care cost trend rate assumption does not have a significant effect on the amounts reported.

Pension Assets

The weighted average asset allocation of the Company’s pension fund assets are as follows:

	Pension Plan Assets
Asset category	2022		2021
Equity securities (includes equity mutual funds)	67	%	66	%
Multi-asset securities	22		24
Cash and equivalents (includes money market funds)	1		—
Alternative investments	10		10
Total	100	%	100	%

At December 31, 2022, the long-term target allocation, by asset category, of assets of the Company’s defined benefit pension plans was: (i) equity securities and multi-asset securities, including equity index funds – not less than 70 percent; and (ii) alternative investments – not more than 10 percent.

The pension plan obligations are long-term and, accordingly, the plan assets are invested for the long-term.  Plan assets are monitored periodically.  Based upon results, investment managers and/or asset classes are redeployed when considered necessary.  None of the plans’ assets are expected to be returned to the Company during the next fiscal year.  The assets of the plans do not include investments in securities issued by the Company.  

The estimated rates of return on plan assets are the expected future long-term rates of earnings on plan assets and are forward-looking assumptions that materially affect pension cost.  Establishing the expected future rates of return on pension assets is a judgmental matter.  The Company reviews the expected long-term rates of return on an annual basis and revises as appropriate.  The expected long-term rate of return on plan assets was 5.51 percent for 2022 and 4.96 percent in 2021.

The Company’s investments for its pension plans are reported at fair value.  The following methods and assumptions were used to estimate the fair value of the Company’s plan asset investments:

Cash and money market funds – Valued at cost, which approximates fair value.

Mutual funds – Valued at the net asset value of shares held by the plans at December 31, 2022 and December 25, 2021, respectively, based upon quoted market prices.

Limited partnerships – Limited partnerships comprise a diversified portfolio of real estate investments which are classified as Level 3 due to a lack of observable inputs existing at the measurement date. Accordingly, the estimated fair values may differ significantly from the values that would have been used had a ready market existed for these investments. Limited partnership investments are recorded at estimated fair value based on financial information received from the investment manager. The investment manager determines fair value based upon, among other things, property valuations received from valuation specialists at regular intervals.

The following table sets forth by level, within the fair value hierarchy, the assets of the plans at fair value:

	Fair Value Measurements at December 31, 2022
(In thousands)	Level 1		Level 2		Level 3		Total
Cash and money market funds	$	829	$	—	$	—	$	829
Mutual funds (1)	—		55,441		—		55,441
Limited partnerships	—		—		6,028		6,028
Total	$	829	$	55,441	$	6,028	$	62,298

	Fair Value Measurements at December 25, 2021
(In thousands)	Level 1		Level 2		Level 3		Total
Cash and money market funds	$	292	$	—	$	—	$	292
Mutual funds (2)	—		71,465		—		71,465
Limited partnerships	—		—		7,721		7,721
Total	$	292	$	71,465	$	7,721	$	79,478

(1)Approximately 78 percent of mutual funds are actively managed funds and approximately 22 percent of mutual funds are index funds.  Additionally, 24 percent of the mutual funds’ assets are invested in non-U.S. multi-asset securities and 76 percent in non-U.S. equities.

(2)Approximately 78 percent of mutual funds are actively managed funds and approximately 22 percent of mutual funds are index funds.  Additionally, 27 percent of the mutual funds’ assets are invested in non-U.S. multi-asset securities and 73 percent in non-U.S. equities.

The table below reflects the changes in the assets of the plan measured at fair value on a recurring basis using significant unobservable inputs (level 3 of fair value hierarchy) during the year ended December 31, 2022:

(In thousands)	Limited Partnerships
Balance, December 25, 2021	$	7,721
Net depreciation in fair value	(1,693)
Balance, December 31, 2022	$	6,028

Contributions and Benefit Payments

The Company does not expect to contribute to the U.K. pension plan, other than to reimburse expenses, and expects to contribute $1.1 million to its other postretirement benefit plans in 2023. The Company expects future benefits to be paid from the plans as follows:

(In thousands)	Pension Benefits		Other Benefits
2023	$	2,525	$	1,067
2024	2,616		862
2025	2,710		1,001
2026	2,807		1,014
2027	2,908		834
2028-2032	16,180		4,097
Total	$	29,746	$	8,875

Multiemployer Plan

The Company contributes to the IAM National Pension Fund, National Pension Plan (IAM Plan), a multiemployer defined benefit plan.  Participation in the IAM Plan was negotiated under the terms of two collective bargaining agreements in Port Huron, Michigan, the Local 218 IAM and Local 44 UAW that expire on May 3, 2026 and May 4, 2025, respectively.  The Employer Identification Number for this plan is 51-6031295.

The risks of participating in multiemployer plans are different from single-employer plans in the following aspects:  (i) assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers; (ii) if a participating employer stops contributing to the plan, the underfunded obligations of the plan may be borne by the remaining participating employers; (iii) if the Company chooses to stop participating in the plan, the Company may be required to pay the plan an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

The Company makes contributions to the IAM Plan trusts that cover certain union employees; contributions by employees are not permitted.  Contributions to the IAM Plan were approximately $1.4 million in 2022, $1.3 million in 2021, and $1.2 million in 2020.  The Company’s contributions are less than five percent of total employer contributions made to the IAM Plan indicated in the most recently filed Form 5500.

Under the Pension Protection Act of 2006, the IAM Plan’s actuary must certify the plan’s zone status annually.  Plans in the red zone are generally less than 65 percent funded, plans in the yellow zone are less than 80 percent funded, and plans in the green zone are at least 80 percent funded.  If a plan is determined to be in endangered status, red zone or yellow zone, the plan’s trustees must develop a formal plan of corrective action, a Financial Improvement Plan and/or a Rehabilitation Plan.  For 2022 and 2021 the IAM Plan was well funded over 80 percent; but remained in the red zone due to the trustees’ election to voluntarily place the fund in critical status in 2019 to strengthen its funding position. The fund has remained in critical status since that election and is not projected to emerge from critical status in the upcoming year. The plan seeks to strengthen its financial health by reducing and eliminating most adjustable benefits as allowed by federal law.

As of December 31, 2022, the Company withdrew from the IAM Plan and recognized $13.1 million in related expenses, which represents the Company’s best estimate of probable loss for the related withdrawal liability.

401(k) Plans

The Company sponsors voluntary employee savings plans that qualify under Section 401(k) of the Internal Revenue Code of 1986.  Compensation expense for the Company’s matching contribution to the 401(k) plans was $4.9 million in 2022, $4.5 million in 2021, and $4.0 million in 2020.  The Company match is a cash contribution.  Participants direct the investment of their account balances by allocating among a range of asset classes including mutual funds (equity, fixed income, and balanced funds) and money market funds.  The plans do not allow direct investment in securities issued by the Company.