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DEFINED BENEFIT RETIREMENT PLAN | 12 Months Ended
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Dec. 29, 2018
Defined Benefit Plan [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 29, 2018. 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 $1.349/£ and $1.269/£ to translate the net pension liability into U.S. dollars at December 30, 2017 and December 29, 2018, respectively. The net funded status of $143,904 at December 29, 2018 is recorded as a noncurrent liability. 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 underfunded ABO represents the difference between the PBO and the fair value of plan assets. On October 26, 2018, the High Court of Justice in the United Kingdom ruled that pension plans which offered guaranteed minimum pension ("GMP") benefits between 1990 and 1997 must ensure the benefit accrued between men and women were equal. The Company estimated the cost of GMP equalization at £9,500, which is being treated as a prior service cost at December 29, 2018. Changes in the PBO and fair value of plan assets for the pension plan for the period from December 31, 2016 to December 30, 2017 were as follows: (19) DEFINED BENEFIT RETIREMENT PLAN (Continued)
| Projected Benefit Obligation |  | Plan Assets |  | Funded status
Fair Value at December 31, 2016 | $ | 696,137 |  |  | $ | 486,667 |  |  | $ | (209,470 | )
Employer contributions | — |  |  | 40,245 |  |  |
Interest cost | 18,152 |  |  | — |  |  |
Actual return on plan assets | — |  |  | 40,842 |  |  |
Benefits paid | (22,172 | ) |  | (22,172 | ) |  |
Actuarial loss | 25,154 |  |  | — |  |  |
Currency translation | 66,030 |  |  | 48,167 |  |  |
Fair Value at December 31, 2017 | $ | 783,301 |  |  | $ | 593,749 |  |  | $ | (189,552 | )
Changes in the PBO and fair value of plan assets for the pension plan for the period from December 30, 2017 to December 29, 2018 were as follows:
| Projected Benefit Obligation |  | Plan Assets |  | Funded status
Fair Value at December 30, 2017 | $ | 783,301 |  |  | $ | 593,749 |  |  | $ | (189,552 | )
Employer contributions | — |  |  | 1,537 |  |  |
Interest cost | 17,878 |  |  | — |  |  |
Prior service costs - GMP equalization | 12,056 |  |  |  |  |
Actual return on plan assets | — |  |  | (32,120 | ) |  |
Benefits paid | (28,207 | ) |  | (28,207 | ) |  |
Actuarial gain | (95,480 | ) |  | — |  |  |
Currency translation | (42,108 | ) |  | (31,423 | ) |  |
Fair Value at December 29, 2018 | $ | 647,440 |  |  | $ | 503,536 |  |  | $ | (143,904 | )
Pre-tax amounts recognized in accumulated other comprehensive income (loss) as of December 29, 2018 and December 30, 2017 consisted of actuarial gains (losses):
Balance December 31, 2016 | $ | (156,878 | )
Actuarial loss | (1,789 | )
Currency translation loss | (9,583 | )
Balance December 30, 2017 | (168,250 | )
Actuarial gain | 44,760 |
Prior service costs - GMP equalization | (12,056 | )
Currency translation gain | 5,358 |
Balance December 29, 2018 | $ | (130,188 | )
The estimated amount to be amortized from accumulated other comprehensive income into net periodic benefit cost in 2019 is approximately $1,650. (19) DEFINED BENEFIT RETIREMENT PLAN (Continued) Assumptions—The weighted-average actuarial assumptions used to determine the benefit obligation at December 29, 2018 and December 30, 2017 were as follows:
Percentages | 2018 |  | 2017
Discount rate | 2.90 | % |  | 2.55 | %
Salary increase | N/A |  |  | N/A |
CPI inflation | 2.20 | % |  | 2.20 | %
RPI inflation | 3.30 | % |  | 3.30 | %
Expense Pension expense 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 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 expense for the fiscal years ended December 29, 2018 and December 30, 2017 were as follows:
|  | 2018 |  | 2017
Net Periodic Benefit Cost: |  |  |
Interest cost | 17,878 |  |  | 18,152 |
Expected return on plan assets | (23,175 | ) |  | (20,486 | )
Amortization of actuarial loss | 3,046 |  |  | 2,982 |
Net periodic benefit expense (benefit) | $ | (2,251 | ) |  | $ | 648 |
Assumptions—The weighted-average actuarial assumptions used to determine expense are as follows for fiscal 2018 and 2017:
Percentages |  | 2018 |  | 2017
Discount rate | 2.55 | % |  | 2.80 | %
Expected return on plan assets | 4.29 | % |  | 4.22 | %
CPI Inflation | 2.20 | % |  | 2.25 | %
RPI Inflation | 3.30 | % |  | 3.35 | %
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 our asset allocation mix and our historical return, taking into account current and expected market conditions. 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. (19) DEFINED BENEFIT RETIREMENT PLAN (Continued) Cash Contributions The Company completed negotiations with Plan trustees in 2016 regarding annual funding for the Plan. The annual contributions into the Plan are $12,690 (/£10,000) per annum as part of the Plan’s recovery plan, along with a contribution to cover the administrative costs of the Plan of approximately $1,396 (/£1,100) per annum. The Company deferred its 2016 recovery plan contribution payment of £10,000, placing it into a restricted cash account. The restriction released in March 2017, when the Company contributed £10,000 to the Plan. The Company also made its required £10,000 annual contribution in March 2017 and prepaid the 2018 £10,000 contribution in December 2017 to the Plan. Benefit Payments The following table details expected pension benefit payments for the years 2019 through 2028:
2019 | $ | 27,790 |
2020 | 28,680 |
2021 | 29,695 |
2022 | 30,585 |
2023 | 31,600 |
Years 2023 - 2028 | 173,470 |
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 29, 2018. 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 (19) DEFINED BENEFIT RETIREMENT PLAN (Continued) 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, except for one small holding that is actively traded (which is the level 1 investment). Diversified growth funds - This investment category consists of diversified investment funds, whose holdings include common stock, fixed income funds, properties and commodities of U.K. and non-U.K. securities. 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. At December 31, 2018 and December 31, 2017, the pension plan assets measured at fair value on a recurring basis were as follows:
December 31, 2018 | Quoted Prices in Active Markets for Identical Inputs (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Total
Plan assets at fair value: |  |  |  |  |  |  |
Temporary cash investments | $ | 61,040 |  |  | $ | — |  |  | $ | — |  |  | $ | 61,040 |
Corporate stock | 506 |  |  | — |  |  | — |  |  | 506 |
Total plan net assets at fair value | $ | 61,546 |  |  | $ | — |  |  | $ | — |  |  | $ | 61,546 |
Plan assets at NAV: |  |  |  |  |  |  |
Leveraged inflation-linked gilt funds |  |  |  |  |  |  |  |  | 122,711 |
Corporate bonds |  |  |  |  |  |  |  |  | 80,454 |
Corporate stock |  |  |  |  |  |  |  |  | 183,750 |
Secured income asset funds |  |  |  |  |  |  |  | 55,075 |
Total plan assets at NAV |  |  |  |  |  |  | 441,990 |
Total plan assets |  |  |  |  |  |  | $ | 503,536 |
(19) DEFINED BENEFIT RETIREMENT PLAN (Continued)
December 31, 2017 | Quoted Prices in Active Markets for Identical Inputs (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3) |  | Total
Plan assets at fair value: |  |  |  |  |  |  |
Temporary cash investments | $ | 17,915 |  |  | $ | — |  |  | $ | — |  |  | $ | 17,915 |
Corporate stock | 536 |  |  | — |  |  | — |  |  | 536 |
Total plan net assets at fair value | $ | 18,451 |  |  | $ | — |  |  | $ | — |  |  | $ | 18,451 |
Plan assets at NAV: |  |  |  |  |  |  |
Leveraged inflation-linked gilt funds |  |  |  |  |  |  |  | 158,011 |
Corporate bonds |  |  |  |  |  |  |  | 88,905 |
Corporate stock |  |  |  |  |  |  |  | 212,505 |
Diversified growth funds |  |  |  |  |  |  |  | 115,877 |
Total plan assets at NAV |  |  |  |  |  |  | 575,298 |
Total plan assets |  |  |  |  |  |  | $ | 593,749 |

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