DEFINED BENEFIT RETIREMENT PLAN

12 Months Ended

Dec. 31, 2022

Retirement Benefits [Abstract]

DEFINED BENEFIT RETIREMENT PLAN

(19) DEFINED BENEFIT RETIREMENT PLAN

Delta Ltd., a wholly-owned subsidiary of the Company, is the sponsor of the Delta Pension Plan ("Plan"). The Plan provides defined benefit retirement income to eligible employees in the United Kingdom. Pension retirement benefits to qualified employees are 1.67% of final salary per year of service upon reaching the age of 65 years. This Plan has no active employees as members at December 31, 2022.

Funded Status

The Company recognizes the overfunded or underfunded status of the pension plan as an asset or liability. The funded status represents the difference between the projected benefit obligation (“PBO”) and the fair value of the plan assets. The PBO is the present value of benefits earned to date by plan participants, including the effect of assumed future salary increases (if applicable) and inflation. Plan assets are measured at fair value. Because the pension plan is denominated in British pounds sterling, the Company used exchange rates of $1.209/£ and $1.356/£ to translate the net pension liability into U.S. dollars at December 31, 2022 and December 25, 2021, respectively. The PBO was $435,711 at December 31, 2022. The net funded status of $24,216 at December 31, 2022 is recorded as a noncurrent asset reflecting, in part, a significant actuarial gain for the period from December 25, 2021 to December 31, 2022 attributed to an increase in the discount rate.

Projected Benefit Obligation and Fair Value of Plan Assets—The accumulated benefit obligation (“ABO”) is the present value of benefits earned to date, assuming no future compensation growth.

As there are no active employees in the plan, the ABO is equal to the PBO for all years presented. The overfunded ABO represents the difference between the PBO and the fair value of plan assets.

(19) DEFINED BENEFIT RETIREMENT PLAN – CONTINUED

Changes in the PBO and fair value of plan assets for the pension plan for the period from December 26, 2020 to December 25, 2021 were as follows:

	Projected
	Benefit		Plan		Funded
	Obligation		Assets		status
Fair Value at December 26, 2020	$	860,173	$	741,650	$	(118,523)
Employer contributions		—		1,924
Interest cost		9,896		—
Actual return on plan assets		—		48,637
Benefits paid		(22,952)		(22,952)
Actuarial gain		(77,379)		—
Currency translation		(8,032)		(8,089)
Fair Value at December 25, 2021	$	761,706	$	761,170	$	(536)

Changes in the PBO and fair value of plan assets for the pension plan for the period from December 25, 2021 to December 31, 2022 were as follows:

	Projected
	Benefit		Plan		Funded
	Obligation		Assets		status
Fair Value at December 25, 2021	$	761,706	$	761,170	$	(536)
Employer contributions		—		17,155
Interest cost		12,551		—
Actual return on plan assets		—		(228,493)
Benefits paid		(20,175)		(20,175)
Actuarial gain		(248,252)		—
Currency translation		(70,119)		(69,730)
Fair Value at December 31, 2022	$	435,711	$	459,927	$	24,216

Actuarial gain decreased the projected benefit obligation resulted from an increase in the discount rate to 4.80% in 2022 versus 1.90%.

Pre-tax amounts recognized in accumulated other comprehensive income (loss) as of December 31, 2022 and December 25, 2021 consisted of actuarial gains (losses):

Balance December 26, 2020	$	(165,258)
Actuarial gain		102,529
Prior service costs amortization		550
Currency translation gain		1,239
Balance December 25, 2021		(60,940)
Actuarial loss		(2,915)
Prior service costs amortization		493
Currency translation gain		5,451
Balance December 31, 2022	$	(57,911)

Assumptions—The weighted-average actuarial assumptions used to determine the benefit obligation at December 31, 2022 and December 25, 2021 were as follows:

Percentages	2022		2021
Discount rate	4.80	%	1.90	%
Salary increase	N/A		N/A
CPI inflation	2.35	%	2.70	%
RPI inflation	3.25	%	3.30	%

(19) DEFINED BENEFIT RETIREMENT PLAN – CONTINUED

Expense/(Benefit)

Pension benefit is determined based upon the annual service cost of benefits (the actuarial cost of benefits earned during a period) and the interest cost on those liabilities, less the expected return on plan assets. The interest cost component is calculated using the full yield curve approach to estimate the interest cost by applying the specific spot rates along the yield curve used to determine the present value of the benefit plan obligations to relevant cash outflows for the corresponding year. The expected long-term rate of return on plan assets is applied to the fair value of plan assets. Differences in actual experience in relation to assumptions are not recognized in net earnings immediately, but are deferred and, if necessary, amortized as pension expense.

The components of the net periodic pension benefit for the fiscal years ended December 31, 2022 and December 25, 2021 were as follows:

Net periodic (benefit) expense:	2022		2021
Interest cost	$	12,551	$	9,896
Expected return on plan assets		(23,131)		(27,763)
Amortization of prior service cost		493		550
Amortization of actuarial loss		—		2,750
Net periodic benefit	$	(10,087)	$	(14,567)

Assumptions—The weighted-average actuarial assumptions used to determine expense are as follows for fiscal years 2022 and 2021:

Percentages	2022		2021
Discount rate for benefit obligations	1.90	%	1.40	%
Discount rate for interest cost	1.80	%	1.15	%
Expected return on plan assets	3.48	%	3.96	%
CPI Inflation	2.70	%	2.00	%
RPI Inflation	3.30	%	2.90	%

The discount rate is based on the yields of AA-rated corporate bonds with durational periods similar to that of the pension liabilities. The expected return on plan assets is based on the asset allocation mix and the historical return, taking into account current and expected market conditions. The expected return of plan assets decreased from 3.96% to 3.48% for 2022 as the investment composition has more liability matching versus return seeking assets. Inflation is based on expected changes in the consumer price index or the retail price index in the U.K. depending on the relevant plan provisions.

Cash Contributions

The Company completed negotiations with Plan trustees in 2022 regarding annual funding for the Plan. The annual contributions into the Plan are $16,000 (/£13,100) per annum as part of the Plan’s recovery plan, along with a contribution to cover the administrative costs of the Plan of approximately $1,600 (/£1,300) per annum. In December 2020, the Company made its required 2021 annual contribution in addition to the required 2020 annual contribution that was made earlier in fiscal 2020.

Benefit Payments

The following table details expected pension benefit payments for the years 2023 through 2032:

2023	$	20,432
2024		21,036
2025		21,641
2026		22,366
2027		22,970
Years 2028 - 2032		125,733

(19) DEFINED BENEFIT RETIREMENT PLAN – CONTINUED

Asset Allocation Strategy

The investment strategy for pension plan assets is to maintain a diversified portfolio consisting of

● Long-term fixed‑income securities that are investment grade or government‑backed in nature;

● Common stock mutual funds in U.K. and non-U.K. companies, and

● Diversified growth funds, which are invested in a number of investments, including common stock, fixed income funds, properties and commodities.

The Plan, as required by U.K. law, has an independent trustee that sets investment policy. The general strategy is to invest approximately 50% of the assets of the plan in common stock mutual funds and diversified growth funds, with the remainder of the investments in long-term fixed income securities, including corporate bonds and index-linked U.K. gilts. The trustees regularly consult with representatives of the plan sponsor and independent advisors on such matters.

The pension plan investments are held in a trust. The weighted‑average maturity of the corporate bond portfolio was 13 years at December 31, 2022.

Fair Value Measurements

The pension plan assets are valued at fair value. The following is a description of the valuation methodologies used for the investments measured at fair value, including the general classification of such instruments pursuant to the valuation hierarchy.

Leveraged Inflation-Linked Gilts (“LDIs”)—LDIs are a combination of U.K. government-backed securities (such as bonds or other fixed income securities issued directly by the U.K. Treasury) money market instruments, and derivatives combined to give leveraged exposure to changes in the U.K. long-term interest and inflation rates. These funds are expected to offset a proportion of the impact changes in the long-term interest and inflation rates in the U.K. have on the pension plan’s benefit plan obligation liability. The fair value recorded by the Plan is calculated using net asset value (“NAV”) for each investment.

Temporary Cash Investments—These investments consist of British pound sterling, reported in terms of U.S. dollars based on currency exchange rates readily available in active markets. These temporary cash investments are classified as Level 1 investments.

Corporate Bonds—Corporate bonds and debentures consist of fixed income securities issued by U.K. corporations. The fair value recorded by the Plan is calculated using NAV for each investment.

Corporate Stock—This investment category consists of common and preferred stock, including mutual funds, issued by U.K. and non-U.K. corporations. The fair value recorded by the Plan is calculated using NAV for each investment.

Secured Income Asset (“SIA”) Funds—This investment category consists of holdings which will have a high level of expected inflation linkage. Examples of underlying assets classes are rental streams and infrastructure debt. Due to the private nature of these investments, pricing inputs are not readily observable. Asset valuations are developed by the fund manager. These valuations are based on the application of public market multiples to private company cash flows, market transactions that provide valuation information for comparable companies, and other methods. The fair value recorded by the Plan is calculated using NAV.

(19) DEFINED BENEFIT RETIREMENT PLAN – CONTINUED

At December 31, 2022 and December 25, 2021, the pension plan assets measured at fair value on a recurring basis were as follows:

	Quoted Prices in		Significant Other		Significant
	Active Markets		Observable		Unobservable
	for Identical		Inputs		Inputs
December 31, 2022	Inputs (Level 1)		(Level 2)		(Level 3)		Total
Plan assets at fair value:
Temporary cash investments	$	5,916	$	—	$	—	$	5,916
Total plan net assets at fair value	$	5,916	$	—	$	—	$	5,916
Plan assets at NAV:
Leveraged inflation-linked gilt funds								206,555
Corporate bonds								63,953
Corporate stock								55,379
Secured income asset funds								128,124
Total plan assets at NAV								454,011
Total plan assets							$	459,927

	Quoted Prices in		Significant Other		Significant
	Active Markets		Observable		Unobservable
	for Identical		Inputs		Inputs
December 25, 2021	Inputs (Level 1)		(Level 2)			(Level 3)	Total
Plan assets at fair value:
Temporary cash investments	$	14,000	$	—	$	—	$	14,000
Total plan net assets at fair value	$	14,000	$	—	$	—	$	14,000
Plan assets at NAV:
Leveraged inflation-linked gilt funds								283,288
Corporate bonds								107,945
Corporate stock								212,730
Secured income asset funds								143,207
Total plan assets at NAV								747,170
Total plan assets							$	761,170