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 non-contributory defined benefit pension plan, which covers a portion of our U.S.-based employees under a collective bargaining agreement. This plan provides benefits based on the employees’ years of service and qualifying compensation. 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. As a result of the accelerated closing of our Hawaii facility announced in 2006, the ILWU Local 42 collective bargaining agreement (the “CBA”) was not re-negotiated and expired in 2009 and as such the U.S.-based defined benefit pension plan has ceased accruing benefits.

U.S.-Based Post-Retirement Healthcare Plan

The expiration of the CBA resulted in the cessation of benefits provided to retirees by the retiree medical and life insurance plans. The U.S.-based post-retirement plan provided contributory healthcare benefits to certain of our U.S. retirees and their dependents. We funded claims under the plan as they were incurred, and accordingly, the plan had no assets. Effective May 1, 2009, we were no longer providing medical or life insurance benefits to the remaining Hawaii retirees previously covered under the collective bargaining agreement in the U.S.-Based post-retirement plan. Retirees wishing to continue coverage were required to purchase individual insurance policies and pay the entire premium. Post-retirement healthcare benefits had been previously eliminated for all other active and retired employees. As such, we were relieved of all obligations and risk effective May 1, 2009 and the plan was effectively settled. During 2009, we recognized a settlement gain of $3.2 million of which $0.4 million related to the recognition of deferred actuarial gains in accumulated other comprehensive income as a result of the expiration of the CBA, which is included as a reduction to asset impairment and other charges in the Consolidated Statements of Income.

For the year ended January 1, 2010, pension gains of $3.4 million, was recognized in earnings as a reduction to asset impairment and other charges primarily as a result of exiting all activities in Hawaii in 2006 related to the U.S.-based post-retirement healthcare plan.

United Kingdom Defined Benefit Pension Plan

We sponsor a contributory defined benefit pension plan, which covers a portion of our employees in the United Kingdom (the “UK plan”). The UK 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 UK plan is to contribute amounts into the plan in accordance with a recovery plan agreed by the Trustees and the Company 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 UK plan are adequate to provide benefits. Substantially all of the UK plan’s assets are primarily invested in fixed income and equity funds.

Central American Plans

We provide retirement benefits to 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 Costa Rican and Guatemalan 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 30, 2011 and December 31, 2010, which are also their measurement dates (U.S. dollars in millions):



	Pension plans ⁽¹⁾												Post-retirement plans
	December 30, 2011						December 31, 2010						December 30, 2011			December 31, 2010
	U.S.			U.K.			U.S.			U.K.			Central America			Central America
Change in Benefit Obligation:
Beginning benefit obligation	$	17.2		$	56.4		$	16.2		$	58.3		$	36.8		$	32.9
Service cost	—			—			—			—			3.6			3.3
Interest cost	0.9			3.0			0.9			3.1			3.0			3.6
Actuarial loss (gain)	1.6			(5.4		)	1.5			(1.6		)	0.7			(0.1		)
Benefits paid	(1.4		)	(1.8		)	(1.4		)	(1.4		)	(3.3		)	(5.0		)
Exchange rate changes ⁽²⁾	—			(0.2		)	—			(2.0		)	0.6			2.1
Ending benefit obligation	18.3			52.0			17.2			56.4			41.4			36.8

Change in Plan Assets:
Beginning fair value	12.1			40.4			11.7			35.6			—			—
Actual return on plan assets	(0.2		)	(1.9		)	1.6			4.7			—			—
Company contributions	1.7			2.7			0.2			2.6			3.3			5.0
Benefits paid	(1.4		)	(1.8		)	(1.4		)	(1.4		)	(3.3		)	(5.0		)
Exchange rate changes ⁽²⁾	—			(0.1		)	—			(1.1		)	—			—
Ending fair value	12.2			39.3			12.1			40.4			—			—

Amounts recognized in the Consolidated Balance Sheets:
Accounts payable and accrued expenses (current liability)	—			—			—			—			4.9			4.1
Retirement benefits liability (noncurrent liability)	6.1			12.7			5.1			16.0			36.5			32.7
Net amount recognized in the
Consolidated Balance Sheets	$	6.1		$	12.7		$	5.1		$	16.0		$	41.4		$	36.8

Amounts recognized in Accumulated other comprehensive income (loss)⁽³⁾:
Net actuarial (loss) gain	(9.0		)	5.9			(6.4		)	5.2			(13.8		)	(14.2		)
Net amount recognized in
Accumulated other comprehensive income (loss)	$	(9.0	)	$	5.9		$	(6.4	)	$	5.2		$	(13.8	)	$	(14.2	)


⁽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 the strengthening of the U.S. dollar relative to the British pound for the U.K. plan and the weakening of the U.S. dollar vs. Central American currencies such as the Costa Rican colon and Guatemalan quetzal for the Central American plans as of December 30, 2011 and December 31, 2010 when compared to the previous year.


⁽³⁾	As of December 30, 2011 and December 31, 2010, we had accumulated other comprehensive income of $4.5 million and $3.9 million, respectively, related to tax effect of unamortized pension gains.

14. Retirement and Other Employee Benefits (continued)

The following table provides a roll forward of the AOCI balances (U.S. dollars in millions):



	Pension plans										Post-retirement plans
	Year ended										Year ended
	December 30, 2011					December 31, 2010					December 30, 2011			December 31, 2010
Reconciliation of AOCI	U.S			U.K		U.S			U.K		Central America			Central America
AOCI (loss) gain at beginning of plan year	$	(6.4	)	$	5.2	$	(5.6	)	$	1.3	$	(14.2	)	$	(14.4	)
Net losses (gains) recognized during the year	0.2			—		0.1			—		1.2			0.9
Net (losses) gains occurring during the year	(2.8		)	0.7		(0.9		)	3.9		(0.8		)	0.1
Currency exchange rate changes	—			—		—			—		—			(0.8		)
AOCI gain (loss) at end of plan year	$	(9.0	)	$	5.9	$	(6.4	)	$	5.2	$	(13.8	)	$	(14.2	)

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
2012 Amortization of net losses (gains)	$	0.3	$	(0.1	)	$	1.1

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 30, 2011						December 31, 2010						January 1, 2010						December 30, 2011		December 31, 2010		January 1, 2010
	U.S			U.K			U.S			U.K			U.S			U.K			Central America		Central America		U.S			Central America
Service cost	$	—		$	—		$	—		$	—		$	—		$	0.1		$	3.6	$	3.3	$	—		$	1.6
Interest cost	0.9			3.0			0.9			3.1			0.9			3.0			3.0		3.6		0.2			2.8
Expected return on assets	(1.0		)	(2.8		)	(0.9		)	(2.4		)	(0.7		)	(1.7		)	—		—		—			—
Settlement (gain) loss	—			—			—			—			—			—			—		—		(3.2		)	1.0
Net amortization	0.2			—			0.1			—			0.1			(0.1		)	1.2		1.0		(0.4		)	0.4
Net periodic cost (income)	$	0.1		$	0.2		$	0.1		$	0.7		$	0.3		$	1.3		$	7.8	$	7.9	$	(3.4	)	$	5.8

There are no amounts of plan assets expected to be returned to us over the next 12 months.

14. Retirement and Other Employee Benefits (continued)

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 30, 2011							December 31, 2010							January 1, 2010
	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	4.50	%	4.70	%	7.73	%	⁽¹⁾	5.30	%	5.40	%	8.54	%	⁽¹⁾	5.85	%	5.70	%	10.90	%
Rate of increase in compensation levels	—	%	2.90	%	5.04	%		—	%	3.50	%	5.29	%	⁽²⁾	—	%	3.60	%	8.19	%

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 30, 2011							December 31, 2010							January 1, 2010
	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	5.30	%	5.40	%	8.54	%	⁽¹⁾	5.85	%	5.70	%	10.90	%	⁽³⁾	6.25	%	6.50	%	14.64	%
Rate of increase in compensation levels	—	%	3.50	%	5.29	%	⁽²⁾	—	%	3.60	%	8.19	%		—	%	3.20	%	8.86	%
Expected long-term rate of return on assets	7.50	%	6.80	%	—	%		7.50	%	7.20	%	—	%		4.75	%	5.80	%	—	%


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


⁽²⁾	The decrease in the rate of increase in compensation levels is due to a decrease in inflation assumptions.


⁽³⁾	The decrease in the weighted average discount rate assumption used in the calculation of the benefit obligation from 2009 to 2010 for the Central American plans was due to the fact that country-specific investments decreased significantly in 2009.

Effective December 30, 2011, we changed the method of calculating the discount rate and rate of increase in compensation levels for the U.K. Plan. The change related to using the Consumer Prices Index rather than the Retail Prices Index as the inflation measure for pension plans in order to align the expected return on investments with the expected benefit payment stream. The impact to the ending benefit obligation as a result of this change was $6.3 million, which resulted in a decrease in the retirement benefits liability and an increase in the amounts recognized in accumulated other comprehensive income in our Consolidated Balance Sheets. The change in method of calculating the discount rate is treated as a change in assumption, which affects the net actuarial (loss) gain and is amortized over the remaining service period of the plan participants. The annual amortization will begin to impact net periodic cost in 2012.

14. Retirement and Other Employee Benefits (continued)

Cash Flows



	Pension plans				Post-retirement plans
	U.S		U.K		Central America
Expected benefit payments for:
2012	$	1.4	$	1.7	$	4.9
2013	1.3		1.7		4.6
2014	1.3		1.8		4.7
2015	1.2		1.9		4.6
2016	1.2		1.9		4.8
Next 5 years	5.4		11.8		21.7
Expected benefit payments over next 10 years	$	11.8	$	20.8	$	45.3

Expected contributions for the U.S. and U.K pension plans for 2012 are $0.8 million and $2.7 million, respectively. 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 at December 30, 2011 by asset category are as follows:



			Fair Value Measurements at December 30, 2011 (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	$	3.6	$	3.6	$	—	$	—
Bond securities	1.0		1.0		—		—
Value securities	3.2		3.2		—		—
Growth securities	4.4		4.4		—		—
Total	$	12.2	$	12.2	$	—	$	—

14. Retirement and Other Employee Benefits (continued)

The fair values of our U.S. plan assets at December 31, 2010 by asset category are as follows:



			Fair Value Measurements at December 31, 2010 (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	$	2.6	$	2.6	$	—	$	—
Bond securities	2.1		2.1		—		—
Value securities	2.0		2.0		—		—
Growth securities	5.4		5.4		—		—
Total	$	12.1	$	12.1	$	—	$	—

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, 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 at December 30, 2011 by asset category are as follows:



			Fair Value Measurements at December 30, 2011 (U.S. dollars in millions)
Asset Category	Total Fair Value at December 30, 2011		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	16.5		16.5		—		—
United States companies	5.0		5.0		—		—
Other international companies	8.8		8.8		—		—
Fixed income securities:
United Kingdom government bonds	5.1		5.1		—		—
United Kingdom corporate bonds	3.4		3.4		—		—
Total	$	39.3	$	39.3	$	—	$	—

The fair values of our U.K. plan assets at December 31, 2010 by asset category are as follows:



			Fair Value Measurements at December 31, 2010 (U.S. dollars in millions)
Asset Category	Total Fair Value at December 31, 2010		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash	$	0.4	$	0.4	$	—	$	—
Equity securities:
United Kingdom companies	8.9		8.9		—		—
United States companies	5.6		5.6		—		—
Other international companies	19.0		19.0		—		—
Fixed income securities
United Kingdom government bonds	4.6		4.6		—		—
United Kingdom corporate bonds	1.9		1.9		—		—
Total	$	40.4	$	40.4	$	—	$	—

Equity securities – This category includes stocks in various U.S., U.K. and other international companies over diverse industries. The portfolio of stocks is invested in diverse industries and includes a concentration of 23% in financial institutions, 16% in oil and gas, 13% in basic materials, 12% in consumer goods, 11% in industrial and the remaining 25% in various other industries. The expected return on equities is determined by the yield on U.K. government bonds based on the Financial Times Stock Exchange (“FTSE”) U.K. 20-year index plus an allowance for an equity risk premium.

14. Retirement and Other Employee Benefits (continued)

These investments are valued at the closing price reported on the active market on which the individual securities are traded. These investments are classified in Level 1 of the fair value hierarchy.

Fixed income securities –This category includes investment in U.K. government bonds and U.K. corporate bonds. These investments are valued at the closing price reported on the active market on which the individual securities are traded. These investments are classified in Level 1 of the fair value hierarchy. The expected return on U.K. government bonds is as measured by the FTSE U.K. 20-year index. The expected return on U.K. corporate bonds is measured by the yield on the iBoxx over 15 year AA Corporate Index.

According to the plan’s investment policy, approximately 40% of the U.K. plan’s assets are invested in equity securities of companies of the United Kingdom, 28% in U.S. and European equities and 12% are invested in other international equities. Approximately 20% of the U.K. plan’s assets are invested in high-grade, fixed-income securities with maturities of up to 15 years. Fund managers have no discretion to make asset allocation decisions, but are required to rebalance the portfolios in accordance with the above benchmarks. Performance benchmarks for each asset class are based on various FTSE indices. Investment performance is evaluated annually. The actual return on plan assets for the U.K. plan was a negative return of approximately 5% a positive return of 13% for the years ended December 30, 2011 and December 31, 2010, respectively.

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 $1.0 million for 2011 and $0.9 million for 2010 and 2009, respectively.

On August 31, 1997, one of our subsidiaries ceased accruing benefits under its salary continuation plan covering Central American management personnel. At December 30, 2011 and December 31, 2010, we had $7.2 million and $7.1 million, respectively, accrued for this plan including $0.6 million and $0.9 million in accumulated other comprehensive income (loss) related to unamortized pension gains for December 30, 2011 and December 31, 2010, respectively. We expect to recognized no unamortized pension gains related to this plan in the Consolidated Statements of Income during 2012. Net periodic pension costs were, $0.3 million for each of the years ended December 30, 2011, December 31, 2010 and January 1, 2010. We expect to contribute approximately $0.7 million to the salary continuation plan in 2012 and for each of the next five years. Benefit payments under the plan for the next five years from 2017 onward are expected to total $3.8 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. These programs are immaterial to our consolidated financial statements. 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 $1.0 million for each of the years ending December 30, 2011 and December 31, 2010.