EMPLOYEE BENEFIT PLANS

12 Months Ended

Dec. 31, 2011

EMPLOYEE BENEFIT PLANS [Abstract]

EMPLOYEE BENEFIT PLANS

NOTE 8 – EMPLOYEE BENEFIT PLANS:

Under a defined benefit plan frozen in 1991, we offer a comprehensive post-retirement medical plan to current and certain future retirees and their spouses until they become eligible for Medicare or a Medicare Supplement Plan.  We also offer life insurance to current and certain future retirees.  Employee contributions are required as a condition of participation for both medical benefits and life insurance.

The following is a reconciliation of the Accumulated Post-Retirement Benefit Obligation (“APBO”) under this plan:

	For the fiscal years ended
(dollars in thousands)	December 31, 2011			January 1, 2011
Benefit Obligation (APBO) at beginning of period	$	7,405		$	8,045
Service cost		130			73
Interest cost		390			426
Actuarial loss (gain)		49			(607	)
Plan participants’ contribution		43			--
Benefits paid		(682	)		(532	)
APBO at end of period	$	7,335		$	7,405

Our contribution for these post-retirement benefit obligations was $639,000 in fiscal 2011, $532,000 in fiscal 2010, and $484,000 in fiscal 2009.  We expect that our contribution and benefit payments for post-retirement benefit obligations each year from fiscal 2012 through fiscal 2016 will be approximately $600,000.  We do not pre-fund this plan and as a result there are no plan assets.  The measurement date used to determine the post-retirement benefit obligations is as of the end of the fiscal year.

Post-retirement benefit obligations under the plan are measured on a discounted basis at an assumed discount rate.  The discount rate used at December 31, 2011 was determined with primary consideration given to the Citigroup Pension Discount and Liability index adjusted for the timing of expected plan distributions.  We believe this index reflects a risk-free rate with maturities that are comparable to the timing of the expected payments under the plan.  The discount rate used at January 1, 2011 was determined with consideration given to the Citigroup Pension Discount and Liability index, as well as the Moody’s Aa Corporate Bond rate, and the Barclay Capital Aggregate Bond index, adjusted for the timing of expected plan distributions.  The discount rates used in determining the APBO were as follows:

	December 31, 2011			January 1, 2011
Discount rates		4.0	%		5.5	%

In conjunction with the closure of our Barnesville, Georgia distribution facility (as discussed in Note 16), the Company experienced a partial plan curtailment in fiscal 2009 for its post-retirement medical plan for future retirees working in the facility prior to the plan becoming frozen in 1991.  In conjunction with this partial curtailment, a curtailment gain of $0.6 million has been recognized as income in the fiscal year ended January 2, 2010.

The components of post-retirement benefit expense charged to operations are as follows:

	For the fiscal years ended
(dollars in thousands)	December 31, 2011			January 1, 2011			January 2, 2010
Service cost – benefits attributed to service during the period	$	130		$	73		$	91
Interest cost on accumulated post-retirement benefit obligation		390			426			452
Amortization of net actuarial gain		(49	)		(22	)		(27	)
Curtailment gain		--			--			(579	)
Total net periodic post-retirement benefit cost (gain)	$	471		$	477		$	(63	)

The discount rates used in determining the net periodic post-retirement benefit costs were as follows:

	For the fiscal years ended
	December 31, 2011			January 1, 2011			January 2, 2010
Discount rates		5.5	%		5.5	%		5.5	%

The effects on our plan of all future increases in health care costs are borne primarily by employees; accordingly, increasing medical costs are not expected to have any material effect on our future financial results.

We have an obligation under a defined benefit plan covering certain former officers and their spouses.  At December 31, 2011 and January 1, 2011, the present value of the estimated remaining payments under this plan was approximately $0.6 million and is included in other current and long-term liabilities in the accompanying audited consolidated balance sheets.

The retirement benefits under the OshKosh B’Gosh pension plan were frozen as of December 31, 2005.  The Company’s investment strategy is to invest in a well diversified portfolio consisting of 12-14 mutual funds or group annuity contracts that minimize concentration of risks by utilizing a variety of asset types, fund strategies, and fund managers.  The target allocation for plan assets is 50% equity securities, 42% intermediate term debt securities, and 8% real estate investments.

Equity securities primarily include funds invested in large-cap and mid-cap companies, primarily located in the United States, with up to 5% of the plan assets invested in international equities.  Fixed income securities include funds holding corporate bonds of companies from diverse industries, and U.S. Treasuries.  Real estate funds include investments in actively managed commercial real estate projects located in the United States.

The fair value hierarchy for disclosure of fair value measurements is as follows:

Level 1	-  Quoted prices in active markets for identical assets or liabilities
Level 2	-  Quoted prices for similar assets and liabilities in active markets or inputs that are observable
Level 3	-  Inputs that are unobservable (for example, cash flow modeling inputs based on assumptions)

The fair value of the Company’s pension plan assets at December 31, 2011 and January 1, 2011 by asset category were as follows:

	December 31, 2011						January 1, 2011
(dollars in thousands) Asset Category	Total		Quoted prices in active markets for identical assets (level 1)		Significant observable inputs (level 2)		Total		Quoted prices in active markets for identical assets (level 1)		Significant observable inputs (level 2)
Cash and cash equivalents	$	97	$	--	$	97	$	90	$	--	$	90
Equity Securities:
U.S. Large-Cap (a)		9,752		4,889		4,863		11,217		7,485		3,732
U.S. Large-Cap growth		4,883		4,883		--		3,748		3,748		--
U.S. Mid-Cap blend		2,265		--		2,265		2,306		--		2,306
U.S. Small-Cap blend		2,247		2,247		--		2,280		2,280		--
International blend		2,114		2,114		--		2,161		2,161		--
Fixed income securities:
Corporate bonds (b)		17,548		17,548		--		17,684		17,684		--
Real estate (c)		3,564		3,564		--		3,632		1,164		2,468
	$	42,470	$	35,245	$	7,225	$	43,118	$	34,522	$	8,596

(a)This category comprises low-cost equity index funds not actively managed that track the S&P 500.

(b)This category invests in both U.S. Treasuries and mid-term corporate debt from U.S. issuers from diverse industries.

(c)This category invests in active management of U.S. commercial real estate projects.

During fiscal 2011 and 2010, the Company reinvested approximately $2.6 million and $10.2 million, respectively, of Level 2 investments into Level 1 mutual funds to further diversify its investment portfolio and limit its investment in group annuity contracts.

Pension liabilities are measured on a discounted basis at an assumed discount rate.  The discount rate used at and December 31, 2011 and January 1, 2011 was determined with consideration given to Citigroup Pension Discount and Liability index, the Barclay Capital Aggregate Bond index, and the Moody’s Aa Corporate Bond rate, adjusted for the timing of expected plan distributions.  We believe these indexes reflect a risk-free rate with maturities that are comparable to the timing of the expected payments under the plan.  The expected long-term rate of return assumption considers historic returns adjusted for changes in overall economic conditions that may affect future returns and a weighting of each investment class.  The actuarial computations utilized the following assumptions, using year-end measurement dates:

Benefit obligation	2011			2010
Discount rate		4.5	%		5.5	%
Net periodic pension cost		2011			2010		2009
Discount rate		5.5	%		5.5	%	5.5	%
Expected long-term rate of return on assets		7.5	%		7.5	%	8.0	%

The net periodic pension (benefit) cost included in the statement of operations was comprised of:

	For the fiscal years ended
(dollars in thousands)	December 31, 2011			January 1, 2011			January 2, 2010
Interest cost	$	2,454		$	2,392		$	2,270
Expected return on plan assets		(3,112	)		(2,875	)		(2,612	)
Recognized actuarial loss (gain)		1			135			411
Net periodic pension (benefit) cost	$	(657	)	$	(348	)	$	69

A reconciliation of changes in the projected pension benefit obligation and plan assets is as follows:

	For the fiscal years ended
(dollars in thousands)	December 31, 2011			January 1, 2011
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	45,367		$	44,109
Interest cost		2,454			2,392
Actuarial loss		7,656			299
Benefits paid		(1,549	)		(1,433	)
Projected benefit obligation at end of year	$	53,928		$	45,367
Change in plan assets:
Fair value of plan assets at beginning of year	$	43,118		$	39,754
Actual return on plan assets		901			4,797
Benefits paid		(1,549	)		(1,433	)
Fair value of plan assets at end of year	$	42,470		$	43,118
Unfunded status:
Accrued benefit cost	$	(11,458	)	$	(2,249	)

A pension liability of approximately $11.5 million and $2.2 million is included in other long-term liabilities in the accompanying audited consolidated balance sheet for fiscal 2011 and 2010, respectively.  We do not expect to make any contributions to the OshKosh defined benefit plan during fiscal 2012 as the plan's funding exceeds the minimum funding requirements.

The Company currently expects benefit payments for its defined benefit pension plans as follows for the next ten fiscal years.

(dollars in thousands) Fiscal Year
2012	$	1,740
2013	$	1,540
2014	$	1,450
2015	$	1,720
2016	$	1,910
2017-2021	$	12,990

We also sponsor a defined contribution plan within the United States.  This plan covers employees who are at least 21 years of age and have completed three months of service, during which at least 250 hours were served.  The plan provides for a discretionary employer match.  Prior to April 2009, the plan provided for an employer match amounting to 100% on the first 3% employee contribution and 50% on the next 2% employee contribution.  The Company’s expense for the defined contribution plan totaled approximately $4.6 million for the fiscal year ended December 31, 2011, $4.3 million for the fiscal year ended January 1, 2011, and $1.8 million for the fiscal year ended January 2, 2010.