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Employee Retirement Plans
12 Months Ended
Jan. 02, 2016
Compensation and Retirement Disclosure [Abstract]  
Employee Retirement Plans
EMPLOYEE RETIREMENT PLANS

(a)Pension Plans
    
U.S. Plans:

The company maintains a non-contributory defined benefit plan for its union employees at the Elgin, Illinois facility. Benefits are determined based upon retirement age and years of service with the company. This defined benefit plan was frozen on April 30, 2002, and no further benefits accrue to the participants beyond this date. Plan participants will receive or continue to receive payments for benefits earned on or prior to April 30, 2002 upon reaching retirement age.
 
The company maintains a non-contributory defined benefit plan for its employees at the Smithville, Tennessee facility, which was acquired as part of the Star acquisition. Benefits are determined based upon retirement age and years of service with the company. This defined benefit plan was frozen on April 1, 2008, and no further benefits accrue to the participants beyond this date. Plan participants will receive or continue to receive payments for benefits earned on or prior to April 1, 2008 upon reaching retirement age.
 
The company also maintains a retirement benefit agreement with its Chairman ("Chairman Plan"). The retirement benefits are based upon a percentage of the Chairman’s final base salary using a weighted average rate of increase in future compensation levels of 10.0%.

Non-U.S. Plans:

The company maintains a defined benefit plan for its employees at the Wrexham, the United Kingdom facility, which was acquired as part of the Lincat acquisition. Benefits are determined based upon retirement age and years of service with the company. This defined benefit plan was frozen on April 30, 2010 prior to Middleby’s acquisition of the company. No further benefits accrue to the participants beyond this date. Plan participants will receive or continue to receive payments for benefits earned on or prior to April 30, 2010 upon reaching retirement age.

The company maintains several pension plans related to AGA and its subsidiaries (collectively, the "AGA Group"), the most significant being the Aga Rangemaster Group Pension Scheme, which covers the majority of employees in the United Kingdom.  Membership in the plan on a defined benefit basis of pension provision was closed to new entrants in 2001.  The plan became open to new entrants on a defined contribution basis of pension provision in 2002, but was generally closed to new entrants on this basis during 2014. 

The other, much smaller, defined benefit pension plans operating within the AGA Group cover employees in France, Ireland and the United Kingdom.  All pension plan assets are held in separate trust funds although the net defined benefit pension obligations are included in the company's consolidated balance sheet.

 
















































A summary of the plans’ net periodic pension cost, benefit obligations, funded status, and net balance sheet position is as follows (dollars in thousands):
 
Fiscal 2015
 
Fiscal 2014
 
U.S. Plans
 
Non-U.S. Plans
 
U.S. Plans
 
Non-U.S. Plans
Net Periodic Pension Cost:
 

 
 

 
 

 
 

Service cost
$
505

 
$
1,216

 
$
447

 
$
—

Interest cost
1,286

 
12,992

 
1,289

 
639

Expected return on assets
(844
)
 
(20,547
)
 
(799
)
 
(996
)
Amortization of net loss (gain)
694

 
—

 
(46
)
 
—

Curtailment loss
—

 
3,202

 
—

 
—

Pension settlement
—

 
—

 
—

 
—

 
$
1,641

 
$
(3,137
)
 
$
891

 
$
(357
)
 
 
 
 
 
 
 
 
Change in Benefit Obligation:
 

 
 

 
 

 
 

Benefit obligation – beginning of year
$
33,907

 
$
16,114

 
$
27,748

 
$
15,745

Benefit obligation – acquisition
2,988

 
1,495,089

 
—

 
—

Service cost
505

 
1,216

 
447

 
—

Interest on benefit obligations
1,286

 
12,992

 
1,289

 
639

Employee contributions
—

 
182

 
—

 
—

Actuarial (gain) loss
(2,960
)
 
8,668

 
5,293

 
1,273

Pension settlement
—

 
—

 
—

 
—

Net benefit payments
(922
)
 
(24,179
)
 
(870
)
 
(634
)
Curtailment loss
—

 
3,202

 
—

 
—

Exchange effect
—

 
(36,914
)
 
—

 
(909
)
Benefit obligation – end of year
$
34,804

 
$
1,476,370

 
$
33,907

 
$
16,114

 
 
 
 
 
 
 
 
Change in Plan Assets:
 

 
 

 
 

 
 

Plan assets at fair value – beginning of year
$
13,575

 
$
15,306

 
$
13,324

 
$
15,172

Plan assets at fair value – acquisition
2,943

 
1,305,506

 
—

 
—

Company contributions
881

 
16,950

 
913

 
511

Investment (loss) gain
(590
)
 
6,173

 
208

 
1,133

Employee contributions
—

 
182

 
—

 
—

Benefit payments and plan expenses
(922
)
 
(24,179
)
 
(870
)
 
(634
)
Exchange effect
—

 
(32,215
)
 
—

 
(876
)
Plan assets at fair value – end of year
$
15,887

 
$
1,287,723

 
$
13,575

 
$
15,306

 
 
 
 
 
 
 
 
Funded Status:
 

 
 

 
 

 
 

Unfunded benefit obligation
$
(18,917
)
 
$
(188,647
)
 
$
(20,332
)
 
$
(808
)
 
 
 
 
 
 
 
 
Amounts recognized in balance sheet at year end:
 

 
 

 
 

 
 

Accrued pension benefits
$
(18,917
)
 
$
(188,647
)
 
$
(20,332
)
 
$
(808
)
 
 
 
 
 
 
 
 
Pre-tax components in accumulated other comprehensive income:
 

 
 

 
 

 
 

Net actuarial loss
$
5,811

 
$
20,457

 
$
8,030

 
$
2,188

Net prior service cost
—

 
—

 
—

 
—

Net transaction (asset) obligations
—

 
—

 
—

 
—

Total amount recognized
$
5,811

 
$
20,457

 
$
8,030

 
$
2,188

 
 
 
 
 
 
 
 
Accumulated Benefit Obligation
$
33,080

 
$
1,475,631

 
$
30,567

 
$
16,114

 
 
 
 
 
 
 
 
Salary growth rate
n/a

 
0.4
%
 
n/a

 
n/a

Assumed discount rate
4.1
%
 
3.7
%
 
3.8
%
 
3.6
%
Expected return on assets
5.6
%
 
6.2
%
 
6.0
%
 
6.3
%



The company has engaged non-affiliated third party professional investment advisors to assist the company to develop its investment policy and establish asset allocations. The company's overall investment objective is to provide a return, that along with company contributions, is expected to meet future benefit payments. Investment policy is established in consideration of anticipated future timing of benefit payments under the plans. The anticipated duration of the investment and the potential for investment losses during that period are carefully weighed against the potential for appreciation when making investment decisions. The company routinely monitors the performance of investments made under the plans and reviews investment policy in consideration of changes made to the plans or expected changes in the timing of future benefit payments.
 
The assets of the plans were invested in the following classes of securities (none of which were securities of the company):
 
U.S. Plans:
 
 
Target Allocation

 
Percentage of Plan Assets
 
 
 
 
2015

 
2014

Equity
45
%
 
43
%
 
48
%
Fixed income
45

 
46

 
36

Money market
3

 
4

 
4

Other (real estate investment trusts & commodities contracts)
7

 
7

 
12

 
 
 
 
 
 
 
100
%
 
100
%
 
100
%
 
Non-U.S. Plans:

 
Target Allocation

 
Percentage of Plan Assets
 
 
 
2015

 
2014

Equity
16
%
 
19
%
 
72
%
Fixed income
45

 
44

 
24

Alternatives/Other
28

 
20

 
—

Real Estate
11

 
12

 
—

Cash and cash equivalents
—

 
5

 
4

 
100
%
 
100
%
 
100
%
 

 
In accordance with ASC 820 “Fair Value Measurements and Disclosures”, the company has measured its defined benefit pension plans at fair value. The following tables summarize the basis used to measure the pension plans’ assets at fair value as of January 2, 2016 (in thousands):
     
U.S. Plans:
Asset Category
 
Total

 
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

 
Significant
Observable
Inputs
(Level 2)

 
Significant
Unobservable
Inputs
(Level 3)

 
 
 
 
 
 
 
 
 
Short Term Investment Fund (a)
 
$
1,371

 
$
—

 
$
1,371

 
$
—

 
 
 
 
 
 
 
 
 
Equity Securities:
 
 

 
 

 
 

 
 

Large Cap
 
3,402

 
3,149

 
253

 
—

Mid Cap
 
437

 
383

 
54

 
—

Small Cap
 
575

 
383

 
192

 
—

International
 
2,298

 
2,291

 
7

 
—

 
 
 
 
 
 
 
 
 
Fixed Income:
 
 

 
 

 
 

 
 

Government/Corporate
 
4,831

 
4,311

 
520

 
—

High Yield
 
819

 
778

 
41

 
—

 
 
 
 
 
 
 
 
 
Alternative:
 
 

 
 

 
 

 
 

Global Real Estate Investment Trust
 
1,773

 
771

 
1,002

 
—

Commodities Contracts
 
381

 
381

 
—

 
—

 
 
 
 
 
 
 
 
 
Total
 
$
15,887

 
$
12,447

 
$
3,440

 
$
—



(a)
Represents collective short term investment fund, composed of high-grade money market instruments with short maturities.

Non-U.S. Plans:
Asset Category
 
Total

 
Quoted Prices
in Active
Markets for
Identical
Assets
(Level 1)

 
Significant
Observable
Inputs
(Level 2)

 
Significant
Unobservable
Inputs
(Level 3)

Cash and cash equivalents
 
$
73,005

 
$
64,651

 
$
8,354

 
$
—

 
 
 
 
 
 
 
 
 
Equity Securities:
 
 

 
 

 
 

 
 

UK
 
91,269

 
91,075

 
194

 
—

International:
 
 
 
 
 
 
 
 
Developed
 
147,278

 
144,864

 
2,414

 
—

Emerging
 
6,375

 
6,375

 
—

 
—

Unquoted/Private Equity
 
759

 
759

 
—

 
—

 
 
 
 
 
 
 
 
 
Fixed Income:
 
 
 
 
 
 
 
 
Government/Corporate:
 
 
 
 
 
 
 
 
UK
 
168,708

 
118,332

 
50,376

 
—

International
 
126,735

 
67,217

 
59,518

 
—

Index Linked
 
258,502

 
258,502

 
—

 
—

Other
 
3,518

 
3,518

 
—

 
—

Convertible Bonds
 
1,471

 
1,471

 
—

 
—

 
 
 
 
 
 
 
 
 
Real Estate:
 
 
 
 
 
 
 
 
Direct
 
140,764

 
—

 
140,764

 
—

Indirect
 
13,617

 
177

 
13,440

 
—

 
 
 
 
 
 
 
 
 
Hedge Fund Strategy:
 
 
 
 
 
 
 
 
Equity Long/Short
 
80,230

 
—

 
80,230

 
—

Arbitrage & Event
 
92,635

 
—

 
92,635

 
—

Directional Trading & Fixed Income
 
55,424

 
3,584

 
51,840

 
—

Cash & Other
 
2,557

 
—

 
2,557

 
—

Direct Sourcing
 
1,655

 
—

 
1,655

 
—

 
 
 
 
 
 
 
 
 
Leveraged Loans
 
10,824

 
—

 
10,824

 
—

 
 
 
 
 
 
 
 
 
Alternative/Other
 
12,397

 
12,062

 
335

 
—

 
 
 
 
 
 
 
 
 
 
 
$
1,287,723

 
$
772,587

 
$
515,136

 
$
—


 


The fair value of the Level 1 assets is based on observable, quoted market prices of the identical underlying security in an active market. The fair value of the Level 2 assets is primarily based on market observable inputs to quoted market prices, benchmark yields and broker/dealer quotes. Level 3 inputs, as applicable, represent unobservable inputs that reflect assumptions developed by management to measure assets at fair value.
 
The expected return on assets is developed in consideration of the anticipated duration of investment period for assets held by the plan, the allocation of assets in the plan, and the historical returns for plan assets.
 
Estimated future benefit payments under the plans are as follows (dollars in thousands):
 
 
U.S.
Plans
 
Non-U.S.
Plans
2016
$
1,184

 
$
63,628

2017
1,203

 
65,323

2018
1,907

 
66,322

2019
1,909

 
68,185

2020 through 2025
11,913

 
427,101


 
Expected contributions to the U.S. Plans and Non-US Plans to be made in 2016 are $0.9 million and $18.7 million, respectively.
 
(b)
Defined Contribution Plans

As of January 2, 2016, the company maintained two separate defined contribution 401K savings plans covering all employees in the United States. These two plans separately cover the union employees at the Elgin, Illinois facility and all other remaining union and non-union employees in the United States. The company also maintains defined contribution plans for its U.K. based employees.