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EMPLOYEE BENEFIT PLANS
 12 Months Ended
Dec. 31, 2022
Retirement Benefits [Abstract]  
EMPLOYEE BENEFIT PLANS EMPLOYEE BENEFIT PLANS
Pension Plans
The Charles River Pension Plan (U.K. Pension Plan) is a defined contribution and defined benefit pension plan covering certain U.K. employees. Benefits are based on participants’ final pensionable salary and years of service. Participants’ rights vest immediately. The plan was previously amended to exclude new participants from joining the defined benefit section of the plan and a defined contribution section was established for new entrants. Contributions under the defined contribution plan are determined as a percentage of gross salary. Additionally, the U.K. Pension Plan was amended such that the members of the defined benefit section of the plan ceased to accrue additional benefits; however, their benefits continue to be adjusted for changes in their final pensionable salary or a specified inflation index, as applicable. During fiscal 2022, the Company made no contributions to the U.K. Pension Plan. As of fiscal 2022 year-end, this plan was in a funded status of $38.7 million.
During 2022, the Company terminated a non-contributory defined benefit plan that covered certain employees in Canada (Canada Pension Plan). As of the most recent plan valuation date (December 25, 2021) the Canada Pension Plan was underfunded with a projected benefit obligation of $15.3 million, plan assets of $11.7 million, and unrecognized losses of $4.1 million recorded in accumulated other comprehensive income. Upon settlement of the pension liability in fiscal year 2022, the Company recognized a $1.0 million loss related to the net periodic benefit cost recorded in Other expense in the consolidated statements of income.
During 2020, the Company settled all remaining benefits directly with vested participants of the Charles River Laboratories, Inc. Pension Plan (U.S. Pension Plan) through lump sum payouts and the purchase of a group annuity contract from a qualified insurance company to administer all future payments. Upon settlement of the pension liability, the Company recognized a non-cash settlement charge of $10.3 million related to pension losses, reclassified from accumulated other comprehensive loss on the consolidated balance sheet, to other expense in the consolidated statements of income.
In addition, the Company has several defined benefit plans in certain other countries in which it maintains an operating presence, including Canada, France, Germany, Italy, Netherlands, and Japan.
The net periodic benefit cost (income) associated with these plans for fiscal years 2022, 2021 and 2020 totaled $0.1 million, $0.5 million and $1.6 million, respectively.
Charles River Laboratories Deferred Compensation Plan and Executive Supplemental Life Insurance Retirement Plan
The Company maintains a non-qualified deferred compensation plan, known as the Charles River Laboratories Deferred Compensation Plan (DCP), which allows a select group of eligible employees to defer a portion of their compensation. At the present time, no contributions are credited to the DCP, except as set forth below. Participants must specify the distribution date for deferred amounts at the time of deferral, in accordance with applicable IRS regulations. Generally, amounts may be paid in lump sum or installments upon retirement or termination of employment, or later if the employee terminates employment after age 55 and before age 65. Amounts may also be distributed during employment, subject to a minimum deferral requirement of three years.
The Company provides certain active employees an annual contribution into their DCP account of 10% of the employee’s base salary plus the lesser of their target annual bonus or actual annual bonus.
In addition to the DCP, certain officers and key employees also participate, or in the past participated, in the Company’s Executive Supplemental Life Insurance Retirement Plan (ESLIRP), which is a non-funded, non-qualified arrangement. Annual benefits under this plan will equal a percentage of the highest five consecutive years of compensation, offset by amounts payable under the U.S. Pension Plan and Social Security. In connection with the establishment of the DCP, certain active ESLIRP participants, who agreed to convert their accrued ESLIRP benefit to a comparable deferred compensation benefit, discontinued their direct participation in the ESLIRP. Instead, the present values of the accrued benefits of ESLIRP participants were credited to their DCP accounts, and future accruals are converted to present values and credited to their DCP accounts annually. In fiscal year 2020, one executive officer, who converted their ESLIRP benefit into the DCP, retired resulting in lump sum payment of $8.1 million. Upon settlement of this pension liability, the Company recognized a non-cash settlement charge of $2.1 million related to pension losses, reclassified from accumulated other comprehensive loss on the consolidated balance sheet, to other expense in the consolidated statements of income.
The net periodic benefit cost associated with these plans for fiscal years 2022, 2021 and 2020 totaled $4.3 million, $4.3 million and $5.7 million, respectively.
The Company has invested in several corporate-owned key-person life insurance policies with the intention of using these investments to fund the ESLIRP and the DCP. Participants have no interest in any such investments. As of December 31, 2022 and December 25, 2021, the cash surrender value of these life insurance policies were $41.9 million and $51.0 million, respectively.
The following table provides a reconciliation of benefit obligations and plan assets of the Company’s pension, DCP and ESLIRP plans:
 December 31, 2022December 25, 2021
(in thousands)
Change in projected benefit obligations:  
Benefit obligation at beginning of year$372,599 $367,468 
Service cost3,213 3,455 
Interest cost6,140 5,492 
Benefit payments(6,469)(7,564)
Curtailment(2,477)— 
Settlements(11,939)(82)
Transfer out due to divestiture— (11,956)
Actuarial (gain) loss(134,923)18,107 
Effect of foreign exchange(20,593)(2,321)
Benefit obligation at end of year$205,551 $372,599 
Change in fair value of plan assets:
Fair value of plan assets at beginning of year$335,631 $324,752 
Actual return on plan assets(105,749)24,151 
Employer contributions4,558 11,221 
Settlements(11,939)(82)
Transfer out due to divestiture— (15,918)
Benefit payments(6,469)(7,564)
Administrative expenses paid— — 
Effect of foreign exchange(23,492)(929)
Fair value of plan assets at end of year$192,540 $335,631 
Net balance sheet liability$13,011 $36,968 
Amounts recognized in balance sheet:
Noncurrent assets$39,185 $39,621 
Current liabilities1,151 1,876 
Noncurrent liabilities51,045 74,713 
Actuarial gains and losses are driven by changes in economic assumptions, principally discount rates. Amounts recognized in accumulated other comprehensive loss related to the Company’s pension, DCP and ESLIRP plans are as follows:
Fiscal Year
 20222021
(in thousands)
Net actuarial loss$54,509 $82,746 
Net prior service cost (credit)(585)(1,091)
Net amount recognized$53,924 $81,655 
The accumulated benefit obligation and fair value of plan assets for the Company’s pension, DCP and ESLIRP plans with accumulated benefit obligations in excess of plan assets are as follows:
 December 31, 2022December 25, 2021
(in thousands)
Accumulated benefit obligation$48,414 $75,133 
Fair value of plan assets2,258 12,663 
The projected benefit obligation and fair value of plan assets for the Company’s pension, DCP and ESLIRP plans with projected benefit obligations in excess of plan assets are as follows:
 December 31, 2022December 25, 2021
(in thousands)
Projected benefit obligation$55,304 $96,089 
Fair value of plan assets3,108 19,500 
Components of total benefit cost for the Company’s pension, DCP and ESLIRP plans are as follows:
Fiscal Year
 202220212020
(in thousands)
Service cost$3,213 $3,455 $3,609 
Interest cost6,140 5,492 8,849 
Expected return on plan assets(7,322)(8,058)(11,348)
Amortization of prior service credit(506)(531)(489)
Amortization of net loss2,869 4,528 6,239 
Other — — 417 
Net periodic benefit cost4,394 4,886 7,277 
Settlement981 (2,320)12,385 
Total benefit cost$5,375 $2,566 $19,662 
Assumptions
Weighted-average assumptions used to determine projected benefit obligations are as follows:
 December 31, 2022December 25, 2021
Discount rate4.8 %1.8 %
Rate of compensation increase3.2 %3.7 %
The discount rate reflects the rate the Company would have to pay to purchase high-quality investments that would provide cash sufficient to settle its current pension obligations. A 25-basis point change across all discount rates changes the projected benefit obligation by approximately $7 million for all Company plans.
Weighted-average assumptions used to determine net periodic benefit cost are as follows:
 December 31, 2022December 25, 2021December 26, 2020
Discount rate1.8 %1.5 %2.1 %
Expected long-term return on plan assets2.4 %2.5 %3.4 %
Rate of compensation increase3.7 %3.0 %3.0 %
A 0.5% decrease in the expected rate of return would increase annual pension expense by $1.0 million.
In fiscal years 2022 and 2021, new mortality improvement scales were issued in the U.S. and the United Kingdom (U.K.) reflecting a decline in longevity projection from previous releases the Company adopted, which decreased the Company’s benefit obligations by $0.2 million and $0.5 million as of December 31, 2022 and December 25, 2021, respectively.
Plan Assets
The Company invests its pension assets with the objective of achieving a total long-term rate of return sufficient to fund future pension obligations and to minimize future pension contributions. The Company is willing to tolerate a commensurate level of risk to achieve this objective. The Company controls its risk by maintaining a diversified portfolio of asset classes. Plan assets did not include any of the Company’s common stock as of December 31, 2022 or December 25, 2021. The weighted-average target asset allocations are 6.1% to equity securities, 85.7% to fixed income securities and 8.2% to other securities.
The fair value of the Company’s pension plan assets by asset category are as follows:
 December 31, 2022December 25, 2021
Level 1 Level 2Level 3Total Level 1 Level 2Level 3Total
(in thousands)
Cash and cash equivalents$362 $5,153 $— $5,515 $8,142 $4,549 $— $12,691 
Equity securities (1)
— 9,308 — 9,308 — 60,872 — 60,872 
Debt securities (2)
— 123,638 — 123,638 — 140,082 — 140,082 
Mutual funds (3)
8,380 9,372 — 17,752 7,071 69,269 — 76,340 
Other (4)
— 36,268 59 36,327 — 44,568 1,078 45,646 
Total$8,742 $183,739 $59 $192,540 $15,213 $319,340 $1,078 $335,631 
(1) This category comprises equity investments and securities held by non-U.S. pension plans valued at the quoted closing price and translated into U.S. dollars using a foreign currency exchange rate at year end.
(2) This category comprises debt investments and securities held by non-U.S. pension plans valued at the quoted closing price and translated into U.S. dollars using a foreign currency exchange rate at year end. Holdings primarily include investment-grade corporate bonds and treasuries at various durations.
(3) This category comprises mutual funds valued at the net asset value of shares held by non-U.S. pension plans at year end and translated into U.S. dollars using a foreign currency exchange rate at year end.
(4) This category mainly comprises fixed income securities tied to various U.K. government bond yields held by non-US pension plans valued at the net asset value of shares held at year-end and translated into U.S. dollars using a foreign currency exchange rate at year end.
The activity within the Level 3 pension plan assets was not significant during the periods presented.
During fiscal year 2022, the Company contributed $2.9 million to the pension plans and does not expect to make contributions in fiscal year 2023. During fiscal year 2022, the Company paid $1.6 million directly to certain participants outside of plan assets.
Expected benefit payments are estimated using the same assumptions used in determining the Company’s benefit obligation as of 2022. Benefit payments will depend on future employment and compensation levels, among other factors, and changes in any of these factors could significantly affect these estimated future benefit payments. Estimated future benefit payments during the next five years and in the aggregate for fiscal years 2028 through 2032, are as follows.
Fiscal YearPension Plans
(in thousands)
2023$5,607 
20246,714 
20256,734 
202644,308 
20277,769 
2028-203248,718 
Charles River Laboratories Employee Savings Plan
The Charles River Laboratories Employee Savings Plan is a defined contribution plan in the form of a qualified 401(k) plan in which substantially all U.S. employees are eligible to participate upon employment. The plan contains a provision whereby the Company matches a percentage of employee contributions. During fiscal years 2022, 2021 and 2020, the costs associated with this defined contribution plan totaled $28.8 million, $24.0 million and $14.6 million, respectively.