DEFINED BENEFIT RETIREMENT PLAN

12 Months Ended

Dec. 28, 2024

Retirement Benefits [Abstract]

DEFINED BENEFIT RETIREMENT PLAN

3

(18) DEFINED BENEFIT RETIREMENT PLAN

Delta Ltd., a wholly-owned subsidiary of the Company, sponsors the Delta Pension Plan (the “Plan”), which provides defined benefit retirement income to eligible employees in the United Kingdom (“U.K.”). Qualified employees are entitled to pension retirement benefits amounting to 1.67% of final salary for each year of service upon reaching the age of 65. There have been no active employees participating in the Plan for over five years.

Funded Status

The Company recognizes the pension plan’s funded status as either an asset or liability. This status reflects the difference between the projected benefit obligation (“PBO”) and the fair value of the plan’s assets. The PBO represents the present value of benefits earned by participants to date, factoring in assumed future salary increases and inflation. Plan assets are measured at fair value, and because the Plan is denominated in British pounds, the Company translates the net pension asset into U.S. dollars using exchange rates of $1.257/£ and $1.273/£ as of December 28, 2024 and December 30, 2023, respectively. As of December 28, 2024, the PBO was $414,657, and the net funded status was $46,520 recorded as a non-current asset, reflecting an actuarial gain attributed to an increase in the discount rate from the prior year.

The accumulated benefit obligation (“ABO”), representing the present value of benefits earned to date without assuming future compensation growth, is equal to the PBO due to the absence of active employees in the plan. The overfunded ABO represents the difference between the PBO and the fair value of the plan assets.

Changes in the PBO and fair value of plan assets for the period from December 30, 2023 to December 28, 2024 were as follows:

	Projected
	Benefit		Plan		Funded
	Obligation		Assets		Status
Fair value as of December 30, 2023	$	477,763	$	493,167	$	15,404
Employer contributions		—		19,599
Interest cost		21,136		—
Actual return on plan assets		—		(24,723)
Benefits paid		(21,264)		(21,264)
Actuarial gain		(58,156)		—
Currency translation loss		(4,822)		(5,602)
Fair value as of December 28, 2024	$	414,657	$	461,177	$	46,520

The actuarial gain decreased the PBO and resulted primarily from an increase in the discount rate from 4.50% in fiscal 2023 to 5.50% in fiscal 2024.

Changes in the PBO and fair value of plan assets 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 gain		23,488		25,612
Fair value as of December 30, 2023	$	477,763	$	493,167	$	15,404

The actuarial loss contributed to an increase in the PBO, primarily due to a decrease in the discount rate from 4.80% in fiscal 2022 to 4.50% in fiscal 2023.

The pre-tax amounts recognized in AOCI as of December 28, 2024 and December 30, 2023 included actuarial losses, as follows:

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)
Actuarial gain		10,888
Amortization of prior service costs		512
Amortization of net actuarial loss		1,537
Currency translation gain		862
Balance as of December 28, 2024	$	(75,352)

The weighted-average actuarial assumptions used to determine the benefit obligation as of December 28, 2024 and December 30, 2023 were as follows:

	December 28,		December 30,
	2024		2023
Discount rate	5.50	%	4.50	%
Consumer Price Index ("CPI") inflation	2.40	%	2.25	%
Retail Price Index ("RPI") inflation	3.20	%	3.05	%

Cost (Benefit)

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

The components of the net periodic pension cost for the fiscal years ended December 28, 2024 and December 30, 2023 were as follows:

	Fiscal Year Ended
	December 28,		December 30,
	2024		2023
Interest cost	$	21,136	$	21,555
Expected return on plan assets		(22,545)		(21,804)
Amortization of prior service costs		512		498
Amortization of net actuarial loss		1,537		—
Net periodic pension cost	$	640	$	249

For the fiscal years ended December 28, 2024 and December 30, 2023, the weighted-average actuarial assumptions used to determine the net periodic pension cost were:

	December 28,		December 30,
	2024		2023
Discount rate for benefit obligations	4.50	%	4.80	%
Discount rate for interest cost	4.50	%	4.90	%
Expected return on plan assets	5.05	%	4.85	%
CPI inflation	2.25	%	2.35	%
RPI inflation	3.05	%	3.25	%

The discount rate is based on the yields of AA-rated corporate bonds with maturities similar to the pension liabilities. The expected return on plan assets considers the asset allocation mix and historical returns, factoring in current and anticipated market conditions. The expected return increased from 4.85% to 5.05% for fiscal 2024, reflecting the continued shift toward more liability-matching assets. Inflation estimates are based on expected changes in the U.K.’s CPI or RPI, depending on the relevant plan provisions.

Cash Contributions

In fiscal 2022, the Company completed negotiations with Plan trustees regarding annual funding. The annual contributions to the Plan are approximately £13,100 ($16,700) as part of the Plan’s recovery plan, plus approximately £1,900 ($2,500) annually for administrative costs.

Benefit Payments

The expected pension benefit payments for the fiscal years 2025 through 2034 are as follows:

2025	$	21,626
2026		22,254
2027		22,883
2028		23,637
2029		24,266
2030 - 2034		133,022

Asset Allocation Strategy

The investment strategy for the pension plan assets is to maintain a diversified portfolio that includes:

● Long-term fixed-income securities that are either investment grade or government‑backed,

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

● Diversified growth funds that invest across various asset classes, including common stock, fixed income, real estate, and commodities.

As required by U.K. law, the Plan has an independent trustee responsible for setting the investment policy. The general strategy is to allocate approximately 50% of the Plan’s assets in common stock mutual funds and diversified growth funds, with the remaining assets 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 these matters. The pension plan investments are held in a trust, and as of December 28, 2024, the weighted-average maturity of the corporate bond portfolio was 12 years.

On March 26, 2024, the Trustees of the Plan entered into an agreement with a large U.K. insurance company to purchase a bulk annuity insurance policy (“arrangement”) as an investment asset. Such arrangement is commonly referred to as a “pension buy-in” and provides the Plan with a monthly contractual payment stream to satisfy pension obligations payable to approximately 15% of total plan participants. The arrangement does not relieve the Plan or the Company (as plan sponsor) of the primary responsibility for the pension obligations. The Plan purchased the arrangement for £70,865 ($90,800) and recorded it at fair value.

Fair Value Measurements

The pension plan assets are valued at fair value. Below is a description of the valuation methodologies used for investments measured at fair value, categorized according to the valuation hierarchy:

● Temporary Cash Investments: Comprising British pounds, these investments are reported in U.S. dollars based on readily available currency exchange rates and are classified as Level 1 investments.

● Bulk Annuity Insurance Policy: The initial value of the bulk annuity insurance policy is equal to the premium paid to secure it. This value is adjusted each reporting period based on changes in interest rates, discount rates, and benefits paid. Since the valuation of this asset involves significant judgment and lacks observable market inputs, the buy-in contract is classified as Level 3 in the fair value hierarchy.

● Leveraged Inflation-Linked Gilt Funds: These investments combine U.K. government-backed securities, money market instruments, and derivatives to provide leveraged exposure to changes in long-term interest and inflation rates. Their fair value is calculated using net asset value (“NAV”).

● Corporate Bonds: Fixed-income securities issued by U.K. corporations, valued at NAV.

● Corporate Stock: Common and preferred stocks, including mutual funds, from both U.K. and non-U.K. corporations, valued at NAV.

● Secured Income Asset Funds: Investments with a high expected inflation linkage, relying on asset valuations developed by fund managers using market multiples, market transactions of comparable companies, and other methods. The fair value is calculated using NAV.

As of December 28, 2024 and December 30, 2023, the pension plan assets measured at fair value on a recurring basis were as follows:

	Fair Value Measurement Using:
December 28, 2024	Level 1		Level 2		Level 3		Total
Plan assets at fair value:
Temporary cash investments	$	8,927	$	—	$	—	$	8,927
Bulk annuity insurance policy		—		—		82,856		82,856
Total plan net assets at fair value	$	8,927	$	—	$	82,856	$	91,783
Plan assets at NAV:
Leveraged inflation-linked gilt funds								146,601
Corporate bonds								33,318
Corporate stock								73,426
Secured income asset funds								116,049
Total plan assets at NAV								369,394
Total plan assets							$	461,177

	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

Changes in the Company’s Level 3 plan assets, which were recorded in other comprehensive income (loss), included:

	December 30, 2023		Net Realized and Unrealized Gains (Losses)		Net Purchases, Issuances, and Settlements			Net Transfers Into (Out of) Level 3		Currency Impact	December 28, 2024
Bulk annuity insurance policy	$	—	$	(3,074)	$	87,445	$	—	$	(1,515)	$	82,856
Total Level 3 investments	$	—	$	(3,074)	$	87,445	$	—	$	(1,515)	$	82,856