Kontoor Brands Inc

NOTE 12 —ACCRUED LIABILITIES AND OTHER LIABILITIES

The following table presents components of "accrued liabilities" recorded as current liabilities in the Company's balance sheets:

The following table presents components of "other liabilities" recorded as noncurrent liabilities in the Company's balance sheets:

NOTE 13 —RETIREMENT AND SAVINGS BENEFIT PLANS

Pension Plan

The Company sponsors a defined benefit plan for certain international employees. The Company uses a December 31 measurement date for the pension plan. Net pension costs and obligations are developed from actuarial valuations. Inherent in these valuations are key assumptions, including discount rates, salary growth, long-term return on plan assets, retirement rates, mortality rates and other factors. The Company's selection of assumptions is based on historical trends and known economic and market conditions at the time of valuation, as well as independent studies of trends performed by actuaries. However, actual results may differ substantially from the estimates that were based on the critical assumptions.

66 Kontoor Brands, Inc. 2023 Form 10-K

The following tables present key components of pension costs, amounts recorded in the balance sheets and related key assumptions:

Net pension costs are reflected in the Company's statements of operations primarily within "selling, general and administrative expenses." The Company also recognized a $2.6 million pension curtailment gain within "other expense, net" in the Company's statements of operations for the year ended December 2022 attributable to employee restructuring in Europe as discussed in Note 22 to the Company's financial statements. Plan assets are invested in group insurance contracts, the fair values of which are provided by the insurance companies (Level 2). Refer to Note 14 to the Company's financial statements for a description of the three levels of the fair value hierarchy.

Other Retirement and Savings Plans

The Company sponsors a nonqualified retirement savings plan for employees whose contributions to a 401(k) plan would be limited by provisions of the Internal Revenue Code. This plan allows participants to defer a portion of their compensation and to receive matching contributions for a portion of the deferred amounts. Participants earn a return on their deferred compensation based on their selection of a hypothetical portfolio of publicly traded mutual funds. Changes in the fair value of the participants’ hypothetical investments are recorded as an adjustment to deferred compensation liabilities. Deferred compensation, including accumulated earnings, is distributable in cash at participant-specified dates upon retirement, death, disability or termination of employment. At December 2023, the liability to the Company’s participants was $46.3 million, of which $6.3 million was current and recorded in "accrued liabilities" (Note 12) and $40.0 million was noncurrent and recorded in "other liabilities" (Note 12). At December 2022, the liability to the Company’s participants was $43.1 million, of which $5.4 million was current and recorded in "accrued liabilities" (Note 12) and $37.7 million was noncurrent and recorded in "other liabilities" (Note 12). The Company also sponsors a similar nonqualified plan that permits nonemployee members of the Board of Directors to defer their Board compensation. At December 2023 and December 2022, the Company's liability for this plan was $2.9 million and $1.5 million, respectively, all of which was noncurrent and recorded in "other liabilities" (Note 12).

The Company has purchased publicly traded mutual funds in the same amounts as the participant-directed hypothetical investments underlying the employee deferred compensation liabilities. These investment securities and earnings thereon are intended to provide a source of funds to meet the deferred compensation obligations, and serve as an economic hedge of the financial impact of changes in deferred compensation liabilities. They are held in an irrevocable trust but are subject to claims of creditors in the event of the Company's insolvency. Accordingly, at December 2023, the fair value of these investments was $46.3 million, of which $6.3 million was recorded in "prepaid expenses and other current assets" and $40.0 million was recorded in "other assets" (Note 9). At December 2022, the fair value of these investments was $43.1 million, of which $5.4 million was recorded in "prepaid expenses and other current assets" and $37.7 million was recorded in "other assets" (Note 9).

Kontoor Brands, Inc. 2023 Form 10-K 67

The Company sponsors 401(k) plans as well as other foreign retirement and savings plans. The Company’s expense under these plans was $9.8 million in 2023, $9.3 million in 2022 and $8.6 million in 2021.