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DEFINED BENEFIT RETIREMENT PLAN | 12 Months Ended
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Dec. 25, 2021
Retirement Benefits [Abstract] |
DEFINED BENEFIT RETIREMENT PLAN | 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 25, 2021. 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 $1.356/£ and $1.308/£ to translate the net pension liability into U.S. dollars at December 25, 2021 and December 26, 2020, respectively. The PBO was $761,706 at December 25, 2021. The net funded status of $536 at December 25, 2021 is recorded as a noncurrent liability reflecting, in part, a significant actuarial gain for the period from December 26, 2020 to December 25, 2021 attributed to an increase 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 underfunded 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 pension plan for the period from December 28, 2019 to December 26, 2020 were as follows:
|  | Projected Benefit Obligation |  | Plan Assets |  | Funded status
Fair Value at December 28, 2019 | $ | 744,403 |  |  | $ | 604,396 |  |  | $ | (140,007) |
Employer contributions | — |  |  | 35,399 |  |  |
Interest cost | 12,954 |  |  | — |  |  |
Prior service costs - GMP equalization | 949 |  |  | — |  |  |
Actual return on plan assets | — |  |  | 89,988 |  |  |
Benefits paid | (18,212) |  |  | (18,212) |  |  |
Actuarial (gain) loss | 87,855 |  |  | — |  |  |
Currency translation | 32,224 |  |  | 30,079 |  |  |
Fair Value at December 26, 2020 | $ | 860,173 |  |  | $ | 741,650 |  |  | $ | (118,523) |
Changes in the PBO and fair value of plan assets for the pension plan for the period from December 26, 2020 to December 25, 2021 were as follows:
|  | Projected Benefit Obligation |  | Plan Assets |  | Funded status
Fair Value at December 26, 2020 | $ | 860,173 |  |  | $ | 741,650 |  |  | $ | (118,523) |
Employer contributions | — |  |  | 1,924 |  |  |
Interest cost | 9,896 |  |  | — |  |  |
Actual return on plan assets | — |  |  | 48,637 |  |  |
Benefits paid | (22,952) |  |  | (22,952) |  |  |
Actuarial (gain) | (77,379) |  |  | — |  |  |
Currency translation | (8,032) |  |  | (8,089) |  |  |
Fair Value at December 25, 2021 | $ | 761,706 |  |  | $ | 761,170 |  |  | $ | (536) |
Actuarial gain decreased the projected benefit obligation resulted from an increase in the discount rate to 1.90% in 2021 versus 1.40%. Pre-tax amounts recognized in accumulated other comprehensive income (loss) as of December 25, 2021 and December 26, 2020 consisted of actuarial gains (losses):
Balance December 28, 2019 | $ | (143,726) |
Actuarial gain (loss) | (16,731) |
Prior service costs - GMP equalization | (814) |
Currency translation gain (loss) | (3,987) |
Balance December 26, 2020 | (165,258) |
Actuarial gain | 102,529 |
Prior service costs amortization | 550 |
Currency translation gain | 1,239 |
Balance December 25, 2021 | $ | (60,940) |
Assumptions—The weighted-average actuarial assumptions used to determine the benefit obligation at December 25, 2021 and December 26, 2020 were as follows:
Percentages | 2021 |  | 2020
Discount rate | 1.90 | % |  | 1.40 | %
Salary increase | N/A |  | N/A
CPI inflation | 2.70 | % |  | 2.00 | %
RPI inflation | 3.30 | % |  | 2.90 | %
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 25, 2021 and December 26, 2020 were as follows:
Net Periodic Benefit Cost: |  | 2021 |  | 2020
Interest cost | $ | 9,896 |  |  | $ | 12,954 |
Expected return on plan assets | (27,763) |  |  | (23,215) |
Amortization of prior service cost | 550 |  |  | 513 |
Amortization of actuarial loss | 2,750 |  |  | 2,437 |
Net periodic benefit expense (benefit) | $ | (14,567) |  |  | $ | (7,311) |
Assumptions—The weighted-average actuarial assumptions used to determine expense are as follows for fiscal 2021 and 2020:
Percentages |  | 2021 |  | 2020
Discount rate | 1.15 | % |  | 2.05 | %
Expected return on plan assets | 3.96 | % |  | 4.18 | %
CPI Inflation | 2.00 | % |  | 2.15 | %
RPI Inflation | 2.90 | % |  | 3.05 | %
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. The expected return of plan assets decreased from 3.96% to 3.48% for 2022 as the projected returns on the corporate bond plan assets is expected to decrease. 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. Cash Contributions The Company completed negotiations with Plan trustees in 2019 regarding annual funding for the Plan. The annual contributions into the Plan are $17,765 (/£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 $1,763 (/£1,300) per annum. In December 2020, the Company made its required 2021 annual contribution in addition to the required 2020 annual contribution that was made earlier in fiscal 2020. Benefit Payments The following table details expected pension benefit payments for the years 2022 through 2031:
2022 | $ | 23,045 |
2023 | 23,850 |
2024 | 24,650 |
2025 | 25,455 |
2026 | 26,260 |
Years 2027 - 2031 | 144,400 |
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 25, 2021. 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 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. 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 25, 2021 and December 26, 2020, the pension plan assets measured at fair value on a recurring basis were as follows:
December 31, 2021 | 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 | $ | 14,000 |  |  | $ | — |  |  | $ | — |  |  | $ | 14,000 |
Total plan net assets at fair value | $ | 14,000 |  |  | $ | — |  |  | $ | — |  |  | $ | 14,000 |
Plan assets at NAV: |  |  |  |  |  |  |
Leveraged inflation-linked gilt funds |  |  |  |  |  |  | 283,288 |
Corporate bonds |  |  |  |  |  |  | 107,945 |
Corporate stock |  |  |  |  |  |  | 212,730 |
Secured income asset funds |  |  |  |  |  |  | 143,207 |
Total plan assets at NAV |  |  |  |  |  |  | 747,170 |
Total plan assets |  |  |  |  |  |  | $ | 761,170 |
December 31, 2020 | 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 | $ | 31,935 |  |  | $ | — |  |  | $ | — |  |  | $ | 31,935 |
Total plan net assets at fair value | $ | 31,935 |  |  | $ | — |  |  | $ | — |  |  | $ | 31,935 |
Plan assets at NAV: |  |  |  |  |  |  |
Leveraged inflation-linked gilt funds |  |  |  |  |  |  | 171,013 |
Corporate bonds |  |  |  |  |  |  | 115,577 |
Corporate stock |  |  |  |  |  |  | 309,987 |
Secured income asset funds |  |  |  |  |  |  | 113,138 |
Total plan assets at NAV |  |  |  |  |  |  | 709,715 |
Total plan assets |  |  |  |  |  |  | $ | 741,650 |

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