DEFINED BENEFIT RETIREMENT PLAN

12 Months Ended

Dec. 30, 2023

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 (the "Plan"). The Plan provides defined benefit retirement income to eligible employees in the United Kingdom (“U.K.”). Pension retirement benefits to qualified employees are 1.67% of final salary per year of service upon reaching the age of 65 years. The Plan has no active employees as members as of December 30, 2023.

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 Plan is denominated in British pounds, the Company used exchange rates of $1.273/£ and $1.209/£ to translate the net pension asset into U.S. dollars as of December 30, 2023 and December 31, 2022, respectively. The PBO was $477,763 as of December 30, 2023. The net funded status of $15,404 as of December 30, 2023 is recorded as a non-current asset reflecting, in part, an actuarial loss for the period from December 31, 2022 to December 30, 2023 attributed to a slight decrease 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.

Changes in the PBO and fair value of plan assets for the Plan for the period from December 31, 2022 to December 30, 2023 were as follows:

	Projected
	Benefit		Plan		Funded
	Obligation		Assets		Status
Fair value as of December 31, 2022	$	435,711	$	459,927	$	24,216
Employer contributions		—		17,345
Interest cost		21,555		—
Actual return on plan assets		—		10,966
Benefits paid		(20,683)		(20,683)
Actuarial loss		17,692		—
Currency translation		23,488		25,612
Fair value as of December 30, 2023	$	477,763	$	493,167	$	15,404

The actuarial loss increased the projected benefit obligation and resulted primarily from a decrease in the discount rate from 4.80% in fiscal 2022 to 4.50% in fiscal 2023.

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

	Projected
	Benefit		Plan		Funded
	Obligation		Assets		Status
Fair value as of 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 as of December 31, 2022	$	435,711	$	459,927	$	24,216

The actuarial gain decreased the project benefit obligation and resulted from an increase in the discount rate from 1.90% in fiscal 2021 to 4.80% in fiscal 2022.

Pre-tax amounts recognized in accumulated other comprehensive income (loss) as of December 30, 2023 and December 31, 2022 consisted of actuarial losses, as follows:

Balance as of December 25, 2021	$	(60,940)
Actuarial loss		(2,915)
Amortization of prior service costs		493
Currency translation gain		5,451
Balance as of December 31, 2022		(57,911)
Actuarial loss		(28,071)
Amortization of prior service costs		498
Currency translation loss		(3,667)
Balance as of December 30, 2023	$	(89,151)

Assumptions—The weighted-average actuarial assumptions used to determine the benefit obligation as of December 30, 2023 and December 31, 2022 were as follows:

	December 30,		December 31,
	2023		2022
Discount rate	4.50	%	4.80	%
Salary increase	N/A		N/A
Consumer Price Index ("CPI") inflation	2.25	%	2.35	%
Retail Price Index ("RPI") inflation	3.05	%	3.25	%

Cost/(Benefit)

Pension cost (benefit) is determined based on 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 cost.

The components of the net periodic pension cost (benefit) for the fiscal years ended December 30, 2023 and December 31, 2022 were as follows:

	Fiscal Year Ended
	December 30,		December 31,
	2023		2022
Interest cost	$	21,555	$	12,551
Expected return on plan assets		(21,804)		(23,131)
Amortization of prior service costs		498		493
Net periodic pension cost (benefit)	$	249	$	(10,087)

Assumptions—The weighted-average actuarial assumptions used to determine the cost (benefit) were as follows for the fiscal years ended December 30, 2023 and December 31, 2022:

	December 30,		December 31,
	2023		2022
Discount rate for benefit obligations	4.80	%	1.90	%
Discount rate for interest cost	4.90	%	1.80	%
Expected return on plan assets	4.85	%	3.48	%
CPI inflation	2.35	%	2.70	%
RPI inflation	3.25	%	3.30	%

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 on plan assets increased from 3.48% to 4.85% for fiscal 2023 as the investment composition has more liability matching versus return-seeking assets. Inflation is based on expected changes in the CPI or the RPI in the U.K. depending on the relevant plan provisions.

Cash Contributions

The Company completed negotiations with Plan trustees in fiscal 2022 regarding annual funding for the Plan. The annual contributions into the Plan are approximately $16,700 (£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 $1,700 (£1,300) per annum. In the fourth quarter of fiscal 2020, the Company made its required fiscal 2021 annual contribution in addition to the required fiscal 2020 annual contribution that was made earlier in fiscal 2020.

Benefit Payments

The following table details expected pension benefit payments for the fiscal years 2024 through 2033:

2024	$	21,641
2025		22,278
2026		23,042
2027		23,678
2028		24,442
2029 - 2033		133,540

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 as of December 30, 2023.

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—These investments 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 pounds, 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 Funds—This investment category consists of holdings that have a high level of expected inflation linkage. Examples of underlying asset 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.

As of December 30, 2023 and December 31, 2022, the pension plan assets measured at fair value on a recurring basis were as follows:

	Fair Value Measurement Using:
December 30, 2023	Level 1		Level 2			Level 3	Total
Plan assets at fair value:
Temporary cash investments	$	7,077	$	—	$	—	$	7,077
Plan assets at NAV:
Leveraged inflation-linked gilt funds								216,405
Corporate bonds								74,440
Corporate stock								72,548
Secured income asset funds								122,697
Total plan assets at NAV								486,090
Total plan assets							$	493,167

	Fair Value Measurement Using:
December 31, 2022	Level 1		Level 2			Level 3	Total
Plan assets at fair value:
Temporary cash investments	$	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