Employee Benefit Plans

9 Months Ended

Sep. 29, 2024

Employee Benefit Plans

Employee Benefit Plans

13. Employee Benefit Plans

With the acquisition of Bradley on October 23, 2023, the Company acquired the defined benefit retirement plan (the “Pension Plan”) of Bradley. The Pension Plan was frozen effective September 30, 2011, and the Pension Plan pension benefit obligation (“PBO”) was close to fully funded prior to the acquisition date. The Company terminated the Pension Plan with an effective date of plan termination of December 31, 2023. As a result of the plan termination, and similar to the acquisition opening balance sheet liability, the December 31, 2023 balance sheet liability was calculated on a termination basis by valuing the PBO on a going concern basis using the Pension Plan cash flows and a spot curve as of December 31, 2023 conditions, for assumed lump sum election rates, lump sum cost, and insurer premium.

In September 2024, the Company settled its Pension Plan benefit obligations which included the following actions:

● Purchased a non-participating annuity contract for $50.0 million from an insurance company for all retirees and participants that chose annuities as a payment option under the Pension Plan and transferred the related Pension Plan assets and benefit obligations to the insurance company. The payment under the contract to the insurance company was considered an irrevocable action and the settlement was binding.

● Distributed lump sum payments of $14.5 million to participants that chose the lump sum payment option. The lump sum payments paid to participants represented the actuarial equivalent value of the participants’ remaining accrued benefits under the Pension Plan as of the distribution date, calculated in accordance with the terms of the plan and based on the participants’ ages on the distribution date.

The settlement resulted in a reduction to the projected benefit obligation and a corresponding decrease to plan assets. This transfer of the benefit obligation triggered settlement accounting which required immediate recognition of the cumulative actuarial gains of $0.9 million that were previously recorded in accumulated other comprehensive income, which were recognized in selling, general and administrative expenses for the quarter ended September 29, 2024. The associated deferred tax liability of $0.2 million that was previously recorded in accumulated other comprehensive income and recorded within long-term deferred tax liabilities was reversed in the quarter ended September 29, 2024. Pension Plan assets exceeded the benefit obligations at the date of settlement, which resulted in the Company recognizing a surplus asset and a non-cash settlement pre-tax gain of $7.8 million in the third quarter of 2024. The gain was included in selling, general and administrative expenses in the Company’s consolidated statement of operations. The surplus asset was recognized in prepaid expenses and other current assets and is expected to be settled in cash in the next twelve months after the requirements to distribute surplus assets are met in 2025.

The components of net periodic benefit cost are as follows:

	Nine Months Ended
	September 29, 2024
	(in millions)
Service cost	$	—
Interest costs		1.9
Expected return on assets		(1.9)
Settlement gain		(7.8)
Administrative expenses		—
Net periodic benefit cost	$	(7.8)