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Retirement and Other Employee Benefits
 12 Months Ended
Dec. 27, 2019
Retirement Benefits [Abstract]  
Retirement and Other Employee Benefits Retirement and Other Employee Benefits
 
We sponsor a number of defined benefit pension plans and post-retirement plans.  The most significant of these plans cover employees in the United States, United Kingdom, Costa Rica and Guatemala. These plans are accounted for consistent with the ASC guidance related to “Compensation – Retirement Benefits.”

The benefit obligation is the projected benefit obligation for defined benefit pension plans and the accumulated post-retirement benefit obligation for post-retirement benefit plans other than pensions.

U.S.-Based Defined Benefit Pension Plans
 
We sponsor a defined benefit pension plan, which covers a portion of our U.S.-based employees under a collective bargaining agreement. As a result of the accelerated closing of our Hawaii facility announced in 2006, the ILWU Local 42 collective bargaining agreement was not re-negotiated and expired in 2009 and as such the U.S.-based defined benefit pension plan has ceased accruing benefits. Our funding policy for this plan is to contribute amounts sufficient to meet the minimum funding requirements of the Employee Retirement Income Security Act of 1974, as amended, or such additional amounts as determined appropriate to assure that the assets of the plan would be adequate to provide benefits. Substantially all of the plan’s assets are invested in mutual funds.  

United Kingdom Defined Benefit Pension Plan
 
We sponsor a defined benefit pension plan, which covers a portion of our employees in the United Kingdom (the “U.K. plan”). The U.K. plan provides benefits based on the employees’ years of service and qualifying compensation and has ceased accruing benefits. Benefit payments are based on a final pay calculation as of November 30, 2005 and are adjusted for inflation annually.  Our funding policy for the U.K. plan is to contribute amounts into the plan in accordance with a recovery plan agreed by the Trustees and us in order to meet the statutory funding objectives of occupational trust-based arrangements of the United Kingdom or such additional amounts as determined appropriate to assure that assets of the U.K. plan are adequate to provide benefits. Substantially all of the U.K. plan’s assets are primarily invested in fixed income and equity funds.

Central American Plans

We provide retirement benefits to a portion of our employees of certain Costa Rican and Guatemalan subsidiaries (“Central American plans”). Generally, benefits under these programs are based on an employee’s length of service and level of compensation. These programs are commonly referred to as termination indemnities, which provide retirement benefits in accordance with regulations mandated by the respective governments. Funding generally occurs when employees cease active service.

14. Retirement and Other Employee Benefits (continued)

The following table sets forth a reconciliation of benefit obligations, plan assets and funded status for our defined benefit pension plans and post-retirement plans as of December 27, 2019 and December 28, 2018, which are also their measurement dates (U.S. dollars in millions):
 
 
Pension plans(1)
 
Post-retirement plans
 
December 27, 2019
 
December 28,
2018
 
December 27, 2019

 
December 28, 2018

 
U.S.
 
U.K.
 
U.S.
 
U.K.
 
Central America
 
Central America
Change in Benefit Obligation:
 
 
 
 
 
 
 
 
 
 
 
Beginning benefit obligation
$
15.2

 
$
58.4

 
$
16.7

 
$
64.6

 
$
61.2

 
$
67.1

Service cost
—

 
—

 
—

 
—

 
5.4

 
5.9

Interest cost
0.6

 
1.4

 
0.5

 
1.5

 
4.7

 
4.0

Actuarial (gain) loss
1.5

 
3.6

 
(0.7
)
 
(3.0
)
 
6.6

 
(6.6
)
Benefits paid
(1.3
)
 
(1.9
)
 
(1.3
)
 
(2.3
)
 
(8.1
)
 
(5.7
)
Exchange rate changes(2)
—

 
1.8

 
—

 
(3.8
)
 
1.3

 
(3.5
)
Settlement gain
—

 
(4.4
)
 
—

 
—

 
—

 
—

Plan amendment
—

 
—

 
—

 
1.4

 
—

 
—

Ending benefit obligation
16.0

 
58.9

 
15.2

 
58.4

 
71.1

 
61.2

 
 
 
 
 
 
 
 
 
 
 
 
Change in Plan Assets:
 

 
 

 
 

 
 

 
 

 
 

Beginning fair value
11.9

 
52.3

 
13.9

 
61.3

 
—

 
—

Actual return on plan assets
2.2

 
8.4

 
(0.9
)
 
(5.0
)
 
—

 
—

Company contributions
0.2

 
1.8

 
0.2

 
1.8

 
8.1

 
5.7

Effect of settlements
$
—

 
$
(4.4
)
 
$
—

 
$
—

 
$
—

 
$
—

Benefits paid
(1.3
)
 
(1.9
)
 
(1.3
)
 
(2.3
)
 
(8.1
)
 
(5.7
)
Exchange rate changes(2)
—

 
1.8

 
—

 
(3.5
)
 
—

 
—

Ending fair value
13.0

 
58.0

 
11.9

 
52.3

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
Amounts recognized in the Consolidated Balance Sheets:
 
 
 
 
 

 
 

 
 

 
 

Accounts payable and accrued expenses (current liability)
—

 
—

 
—

 
—

 
8.2

 
8.1

Retirement benefits liability (noncurrent liability)
3.0

 
0.9

 
3.2

 
6.0

 
62.9

 
53.1

Net amount recognized in the
 

 
 

 
 

 
 

 
 

 
 

Consolidated Balance Sheets
$
3.0

 
$
0.9

 
$
3.2

 
$
6.0

 
$
71.1

 
$
61.2

 
 
 
 
 
 
 
 
 
 
 
 
Amounts recognized in Accumulated other comprehensive loss:(3)
 
 

 
 

Net actuarial loss
(9.3
)
 
(4.6
)
 
(9.4
)
 
(7.7
)
 
(13.1
)
 
(6.4
)
Net amount recognized in accumulated other comprehensive loss
$
(9.3
)
 
$
(4.6
)
 
$
(9.4
)
 
$
(7.7
)
 
$
(13.1
)
 
$
(6.4
)
 
(1) 
The accumulated benefit obligation is the same as the projected benefit obligation.
(2) 
The exchange rate difference included in the reconciliation of the change in benefit obligation and the change in plan assets above results from currency fluctuations of the U.S. dollar relative to the British pound for the U.K. plan and the U.S. dollar versus Central American currencies such as the Costa Rican colon and Guatemalan quetzal for the Central American plans as of December 27, 2019 and December 28, 2018, when compared to the previous year.  
(3) 
We had accumulated other comprehensive income of $5.9 million as of December 27, 2019 and $5.1 million as of December 28, 2018 related to the tax effect of unamortized pension gains.
14. Retirement and Other Employee Benefits (continued)

The following table provides a roll forward of the accumulated other comprehensive (loss) income ("AOCI") balances (U.S. dollars in millions):
 
 
Pension plans
 
Post-retirement plans
 
Year ended
 
Year ended
 
December 27, 2019
 
December 28,
2018
 
December 27,
2019
 
December 28,
2018
Reconciliation of AOCI
U.S.
 
U.K.
 
U.S.
 
U.K.
 
Central America
 
Central America
AOCI (loss) at beginning of plan year
$
(9.4
)
 
$
(7.7
)
 
$
(8.7
)
 
$
(1.7
)
 
$
(6.4
)
 
$
(14.2
)
Amortization of net losses recognized during the year
0.4

 
0.1

 
0.4

 
(0.4
)
 
0.1

 
0.8

Net (losses) gains occurring during the year
(0.3
)
 
3.0

 
(1.1
)
 
(5.7
)
 
(6.6
)
 
6.6

Currency exchange rate changes
—

 
—

 
—

 
0.1

 
(0.2
)
 
0.4

AOCI (loss) at end of plan year
$
(9.3
)
 
$
(4.6
)
 
$
(9.4
)
 
$
(7.7
)
 
$
(13.1
)
 
$
(6.4
)
 

The amounts in AOCI expected to be amortized as a component of net period cost in the upcoming year are (U.S. dollars in millions):
 
 
Pension plans
 
Post-retirement
plans
 
U.S.
 
U.K.
 
Central America
2020 amortization of net losses
$
0.4

 
$
—

 
$
0.1

 

The following table sets forth the net periodic pension cost of our defined benefit pension and post-retirement benefit plans (U.S. dollars in millions):
 
 
Pension plans
 
Post-retirement plans
 
Year ended
 
Year ended
 
December 27, 2019
 
December 28, 2018
 
December 29, 2017
 
December 27, 2019
 
December 28, 2018
 
December 29, 2017
 
U.S.
 
U.K.
 
U.S.
 
U.K.
 
U.S.
 
U.K.
 
Central
America
 
Central America
 
Central
America
Service cost
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
5.4

 
$
5.9

 
$
5.6

Interest cost
0.6

 
1.4

 
0.5

 
1.5

 
0.6

 
1.5

 
4.7

 
4.0

 
4.4

Expected return on assets
(1.0
)
 
(2.0
)
 
(1.0
)
 
(2.5
)
 
(1.0
)
 
(2.4
)
 
—

 
—

 
—

Net amortization
0.4

 
0.1

 
0.4

 
(0.4
)
 
0.4

 
—

 
0.1

 
0.8

 
0.8

Settlement loss
—

 
0.4

 
—

 
—

 
—

 
—

 
—

 
—

 
—

Net periodic cost (income)
$
—

 
$
(0.1
)
 
$
(0.1
)
 
$
(1.4
)
 
$
—

 
$
(0.9
)
 
$
10.2

 
$
10.7

 
$
10.8

 

There are no amounts of plan assets expected to be refunded to us over the next 12 months. The expected return on assets is calculated using the fair value of plan assets for both the U.S. and U.K. plans.
 




14. Retirement and Other Employee Benefits (continued)

We have adopted ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost regarding the presentation of components of net periodic pension costs. Service costs are presented in the same line item in the Consolidated Statements of Operations as other compensation costs arising from services rendered by the employees during the period. With the exception of service cost, the other components of net periodic benefit costs (which include interest costs, expected return on assets, amortization of net actuarial losses) are recorded in the Consolidated Statements of Operations in other expense, net. Other net periodic benefit costs of $3.3 million for the year ended December 28, 2018 were reclassified from operating income and are included in other expense, net on the Consolidated Statements of Operations. We utilized the practical expedient provided in this ASU and did not reclassify the net periodic pension costs for the year ended December 29, 2017. The impact would have been $4.3 million for year ended December 29, 2017 of other net periodic benefit costs reclassified out of operating income and included in other expense, net in the Consolidated Statements of Operations. The reclassification of amounts related to other non-U.S.-based plans is immaterial for the year ended December 29, 2017.

Actuarial Assumptions

The assumptions used in the calculation of the benefit obligations of our U.S. and U.K. defined benefit pension plans and Central American plans consisted of the following:
 
 
December 27, 2019
 
 
 
December 28, 2018
 
  
 
December 29, 2017
 
Pension plans
 
Post-
retirement
plans
 
 
 
Pension plans
 
Post-
retirement
plans
 
  
 
Pension plans
 
Post-
retirement
plans
 
U.S.
 
U.K.
 
Central
America
 
 
 
U.S.
 
U.K.
 
Central
America
 
  
 
U.S.
 
U.K.
 
Central
America
Weighted average discount rate
3.00
%
 
2.00
%
 
6.27
%
 
 
 
4.10
%
 
2.80
%
 
8.06
%
 
(1) 
 
3.45
%
 
2.45
%
 
6.50
%
Rate of increase in compensation levels
—

 
—

 
4.71
%
 
 
 
—

 
—
%
 
4.75
%
 
 
 
—

 
2.40
%
 
4.75
%
 

The assumptions used in the calculation of the net periodic pension costs for our U.S. and U.K. defined benefit pension plans and Central American plans consisted of the following:
 
December 27, 2019
 
December 28, 2018
 
December 29, 2017
 
Pension plans
 
Post-
retirement
plans
 
Pension plans
 
Post-
retirement
plans
 
Pension plans
 
Post-
retirement
plans
 
U.S.
 
U.K.
 
Central
America
 
U.S.
 
U.K.
 
Central
America
 
U.S.
 
U.K.
 
Central America
Weighted average discount rate
4.10
%
 
2.80
%
 
8.12
%
 
3.45
%
 
2.45
%
 
6.51
%
(1) 
3.85
%
 
2.60
%
 
7.10
%
Rate of increase in compensation levels
—

 
—

 
4.71
%
 
—

 
—
%
 
4.75
%
 
—

 
2.50
%
 
4.75
%
Expected long-term rate of return on assets
7.50
%
 
4.22
%
 
—

 
7.50
%
 
4.22
%
 
—

 
7.50
%
 
4.50
%
 
—

 

(1) 
The increase or decrease in the weighted average discount rate assumption for the benefit obligation and net periodic pension costs increased due to an increase or decrease in inflation assumptions and country-specific investments.




14. Retirement and Other Employee Benefits (continued)

Effective December 27, 2017 we utilized updated mortality tables for our U.S. Plan. The change related to updated mortality tables caused a decrease of our projected benefit obligation for this plan by $0.2 million in 2017 and is included in accumulated other comprehensive income in our Consolidated Balance Sheets. This change is treated as a change in assumption, which affects the net actuarial loss and is amortized over the remaining service period of the plan participants. The annual amortization impacts net periodic cost.

Cash Flows
 
 
Pension plans
 
Post-retirement
plans
 
U.S.
 
U.K.
 
Central America
Expected benefit payments for:
 
 
 
 
 
2020
$
1.3

 
$
1.8

 
$
8.2

2021
1.3

 
1.9

 
6.9

2022
1.2

 
1.9

 
6.7

2023
1.2

 
2.1

 
6.7

2024
1.1

 
2.2

 
7.5

Next 5 years
5.0

 
12.4

 
32.3

Expected benefit payments over the next 10 years
$
11.1

 
$
22.3

 
$
68.3

 

For 2020, expected contributions are $0.7 million for the U.S. pension plans and $1.8 million for the U.K. pensions plans. Contributions for the U.S. and U.K. pension plans are actuarially determined based on funding regulations.
 
U.S.-Based Defined Benefit Pension Plans

Plan Assets
 
Our overall investment strategy is to achieve a mix of between 50%-70% equity securities for long-term growth and 30%-50% fixed income securities for near-term benefit payments.  Asset allocation targets promote optimal expected return and volatility characteristics given the long-term time horizon for fulfilling the obligations of the pension plans. Selection of the targeted asset allocation for U.S. plan assets was based upon a review of the expected return and risk characteristics of each asset class, as well as the correlation of returns among asset classes.

The fair values of our U.S. plan assets by asset category are as follows:
 
 
 
 
Fair Value Measurements at
December 27, 2019 (U.S. dollars in millions)
 
 
 
Quoted Prices in
Active Markets for
Identical Assets
 
Significant
Observable
Inputs
 
Significant
Unobservable
Inputs
Asset Category
Total
 
(Level 1)
 
(Level 2)
 
(Level 3)
Mutual Funds:
 
 
 
 
 
 
 
Fixed income securities
$
5.6

 
$
5.6

 
$
—

 
$
—

Value securities
2.9

 
2.9

 
—

 
—

Growth securities
4.5

 
4.5

 
—

 
—

Total
$
13.0

 
$
13.0

 
$
—

 
$
—

 
14. Retirement and Other Employee Benefits (continued)

The fair values of our U.S. plan assets by asset category are as follows:

 
 
 
Fair Value Measurements at
December 28, 2018 (U.S. dollars in millions)
 
 
 
Quoted Prices in
Active Markets for
Identical Assets
 
Significant
Observable
Inputs
 
Significant
Unobservable
Inputs
Asset Category
Total
 
(Level 1)
 
(Level 2)
 
(Level 3)
Mutual Funds:
 
 
 
 
 
 
 
Fixed income securities
$
5.4

 
$
5.4

 
$
—

 
$
—

Value securities
2.2

 
2.2

 
—

 
—

Growth securities
4.3

 
4.3

 
—

 
—

Total
$
11.9

 
$
11.9

 
$
—

 
$
—



Mutual Funds – This category includes investments in mutual funds that encompass both equity and fixed income securities that are designed to provide a diverse portfolio. The plan’s mutual funds are designed to track exchange indices, and invest in diverse industries. Some mutual funds are classified as regulated investment companies. Investment managers have the ability to shift investments from value to growth strategies, from small to large capitalization funds, and from U.S. to international investments. These investments are valued at the closing price reported on the active market on which the individual securities are traded. These investments are classified within Level 1 of the fair value hierarchy.

Investment managers agree to operate the plan's investments within certain criteria that determine eligible and ineligible securities, diversification requirements and credit quality standards, where applicable. Unless exceptions have been approved or are part of a permitted mutual fund strategy, investment managers are prohibited from buying or selling commodities, futures or option contracts, as well as from short selling of securities. Furthermore, investment managers agree to obtain written approval for deviations from stated investment style or guidelines. We considered historical returns and the future expectations for returns for each asset class as well as the target asset allocation of plan assets to develop the expected long-term rate of return on assets assumption.
 
The expected long-term rate of return assumption for U.S. plan assets is based upon the target asset allocation and is determined using forward-looking assumptions in the context of historical returns and volatilities for each asset class, as well as correlations among asset classes. We evaluate the rate of return assumption on an annual basis.

14. Retirement and Other Employee Benefits (continued)

United Kingdom Defined Benefit Pension Plan
 
Plan Assets

The fair values of our U.K. plan assets by asset category are as follows:
 
 
 
 
Fair Value Measurements at
December 27, 2019 (U.S. dollars in millions)
Asset Category
Total Fair
Value at
December 27, 2019
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant Observable
Inputs
(Level 2)
 
Significant Unobservable
Inputs
(Level 3)
Cash
$
0.5

 
$
0.5

 
$
—

 
$
—

Equity securities:
 

 
 
 
 

 
 

United Kingdom companies
—

 
—

 
—

 
—

Diversified growth funds
16.7

 
—

 
16.7

 
—

Other international companies
9.2

 
—

 
9.2

 
—

Fixed income securities:
 

 
 
 
 

 
 

United Kingdom government bonds
13.0

 
—

 
13.0

 
—

Liability-driven investments
18.6

 
—

 
18.6

 
—

Total
$
58.0

 
$
0.5

 
$
57.5

 
$
—


 
 
 
Fair Value Measurements at
December 28, 2018 (U.S. dollars in millions)
Asset Category
Total Fair
Value at
December 28, 2018
 
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1)
 
Significant Observable
Inputs
(Level 2)
 
Significant Unobservable
Inputs
(Level 3)
Cash
$
0.8

 
$
0.8

 
$
—

 
$
—

Equity securities:
 

 
 

 
 

 
 

United Kingdom companies
4.5

 
—

 
4.5

 
—

Diversified growth funds
17.5

 
—

 
17.5

 
—

Other international companies
15.0

 
—

 
15.0

 
—

Fixed income securities:
 

 
 

 
 

 
 

United Kingdom government bonds
6.1

 
—

 
6.1

 
—

Liability-driven investments
8.4

 
—

 
8.4

 
—

Total
$
52.3

 
$
0.8

 
$
51.5

 
$
—



Equity securities – This category includes pooled investments in global equities, emerging market equities and diversified growth funds. The investments are spread across a range of diverse industries including financials, information technology, consumer discretionary and consumer staples. The diversified growth funds seek to provide a long-term equity-like return, with a managed level of volatility. The diversified growth funds invest across a wide range of asset classes, both traditional and alternative.

Units of the pooled investment accounts are not traded on an exchange or in an active market; however, valuation is based on the underlying investments of the units and are classified as Level 2 investments of the fair value hierarchy.
14. Retirement and Other Employee Benefits (continued)

Fixed income securities –This category includes pooled investments in multi-asset credit and liability-driven investments. These investments are valued at the closing price reported on the active market on which the individual securities are traded. Units of the pooled investment accounts are not traded on an exchange or in an active market; however, valuation is based on the underlying investments of the units and are classified as Level 2 investments of the fair value hierarchy.

The expected long-term rate of return assumption for U.K. plan assets is adjusted based on asset allocation and is determined by reference to U.K. long dated government bond yields.

According to the plan’s investment policy, approximately 28% of the U.K. plan’s assets are invested in diversified growth funds, 7.5% in emerging market equities and 7.5% in global equities. Approximately 37% are invested in liability-driven investments and 20% of the U.K. plan’s assets are invested in multi-asset credit.

Fund managers have no discretion to make asset allocation decisions with the exception of the diversified growth fund. The trustees try to rebalance any discrepancies through selective allocations of future contributions. Performance benchmarks for each asset class are based on various indices. Investment performance is reviewed quarterly.

Plan Settlement

During 2019, the U.K. Plan undertook an Enhanced Transfer Value ("ETV") exercise where it paid $4.2 million (including $3.8 million of transfer values and $0.4 million of enhancements) to members electing to transfer out of the plan. We recorded $4.2 million in reduction to our projected benefit obligations, with a corresponding decrease in accumulated other comprehensive income. The UK Plan recognized $0.4 million in net periodic pension costs related to the ETV.

Plan Amendment

During 2018, The English High Court ruling in Lloyds Banking Group Pension Trustees Limited v. Lloyds Bank plc and others, held that UK pension schemes with Guaranteed Minimum Pensions (“GMP”) accrued from May 17, 1990, must equalize for different effects on GMP between male and female plan participants. Accordingly, the GMP equalization was treated as a plan amendment and included in our actuarial valuation. The estimated GMP equalization impact for the UK pension plan is an increase of approximately $1.4 million to our projected benefit obligations, with a corresponding increase in accumulated other comprehensive income.  The amount recognized under accumulated other comprehensive income will be amortized as prior service cost over the average life expectancy of the plan’s participants.

Other Employee Benefits

We also sponsor a defined contribution plan established pursuant to Section 401(k) of the Internal Revenue Code. Subject to certain dollar limits, employees may contribute a percentage of their salaries to the plan, and we will match a portion of each employee’s contribution. This plan is in effect for U.S.-based employees only. The expense pertaining to this plan was $1.3 million for 2019, $1.1 million for 2018 and $1.2 million for 2017.
 
On August 31, 1997, one of our subsidiaries ceased accruing benefits under its salary continuation plan covering certain of our Central American management personnel. At December 27, 2019 we had $3.7 million accrued for this plan, including $0.5 million in accumulated other comprehensive income (loss) related to unamortized pension gains. At December 28, 2018 we had $4.2 million accrued for this plan, including $0.7 million in accumulated other comprehensive loss related to unamortized pension gains. There were no net periodic pension costs for the year ended December 27, 2019, $0.1 million the year ended December 28, 2018 and $0.1 million for the year ended December 29, 2017. Expected benefit payments under the plan for 2020 through 2024 total $2.9 million. For 2025 through 2029 the expected benefit payments under the plan total $1.1 million.

We sponsor a service gratuity plan covering certain of our Kenyan personnel. At December 27, 2019 we had $8.6 million accrued for this plan, including a $2.6 million in accumulated other comprehensive loss related to unamortized pension losses. At December 28, 2018 we had $7.3 million accrued for this plan, including a $2.0 million in accumulated other comprehensive loss related to unamortized pension losses. Net periodic pension costs were $1.3 million for the year ended December 27, 2019, $1.2 million for the year ended December 28, 2018 and $1.2 million for the year ended December 29, 2017.
14. Retirement and Other Employee Benefits (continued)

Expected benefit payments under the plan from 2020 through 2024 total $5.0 million. Benefit payments under the plan from 2024 through 2028 are expected to total $5.9 million.

We provide retirement benefits to certain employees who are not U.S.-based. Generally, benefits under these programs are based on an employee’s length of service and level of compensation. Included in retirement benefits on our consolidated balance sheets is $18.0 million at December 27, 2019 and $16.8 million at December 28, 2018 related to these programs.

The unamortized pension losses related to other non-U.S.-based plans included in accumulated other comprehensive income (loss), a component of shareholders’ equity was $1.3 million for the year ending December 27, 2019 and $1.4 million for the year ending December 28, 2018. We also offer certain post-employment benefits to former executives and have $2.3 million at December 27, 2019 and $2.1 million at December 28, 2018 in retirement benefits on our consolidated balance sheets related to these benefits.