Employee Retirement Plans

12 Months Ended

Dec. 28, 2019

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 former Chairman ("Chairman Plan"). The retirement benefits are based upon a percentage of the Chairman’s final base salary with no increase in compensation.

Non-U.S. Plans:

The company maintains a defined benefit plan for its employees at the Wrexham, the United Kingdom facility. Benefits are determined based upon retirement age and years of service with the company. This defined benefit plan was frozen on April 30, 2010 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, 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 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 2019						Fiscal 2018
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Net Periodic Pension Cost (Benefit):
Service cost	$	—		$	2,457		$	365		$	3,754
Interest cost	1,253			33,490			1,082			32,173
Expected return on assets	(868		)	(67,542		)	(967		)	(75,017		)
Amortization of net loss (gain)	664			721			(129		)	4,056
Amortization of prior service cost	—			2,560			—			437
Curtailment loss	—			865			—			906
Pension settlement gain	—			—			—			(655		)
	$	1,049		$	(27,449	)	$	351		$	(34,346	)

Change in Benefit Obligation:
Benefit obligation – beginning of year	$	31,559		$	1,377,575		$	31,908		$	1,615,244
Service cost	—			2,457			365			3,754
Prior service cost	—			—			—			53,586
Interest on benefit obligations	1,253			33,490			1,082			32,173
Member contributions	—			313			—			290
Actuarial loss (gain)	4,173			102,377			(850		)	(163,746		)
Pension settlement gain	—			—			—			(873		)
Net benefit payments	(1,590		)	(62,355		)	(946		)	(72,095		)
Curtailment loss	—			865			—			906
Exchange effect	—			46,894			—			(91,664		)
Benefit obligation – end of year	$	35,395		$	1,501,616		$	31,559		$	1,377,575

Change in Plan Assets:
Plan assets at fair value – beginning of year	$	14,634		$	1,141,381		$	16,102		$	1,296,539
Company contributions	1,191			5,934			877			4,889
Investment gain (loss)	2,509			107,368			(1,399		)	(12,600		)
Member contributions	—			313			—			290
Pension settlement loss	—			—			—			(161		)
Benefit payments and plan expenses	(1,590		)	(62,355		)	(946		)	(72,095		)
Exchange effect	—			38,540			—			(75,481		)
Plan assets at fair value – end of year	$	16,744		$	1,231,181		$	14,634		$	1,141,381

Funded Status:
Unfunded benefit obligation	$	(18,651	)	$	(270,435	)	$	(16,925	)	$	(236,194	)

Amounts recognized in balance sheet at year end:
Accrued pension benefits	$	(18,651	)	$	(270,435	)	$	(16,925	)	$	(236,194	)



	Fiscal 2019						Fiscal 2018
	U.S. Plans			Non-U.S. Plans			U.S. Plans			Non-U.S. Plans
Pre-tax components in accumulated other comprehensive income at period end:
Net actuarial loss	$	6,853		$	270,116		$	4,985		$	202,672

Pre-tax components recognized in other comprehensive income for the period:
Current year actuarial (gain) loss	$	2,532		$	69,228		$	1,516		$	(88,992	)
Actuarial gain (loss) recognized	(664		)	(798		)	129			(4,741		)
Prior service cost	—			—			—			53,586
Prior service cost recognized	—			(986		)	—			(437		)
Pension settlement gain	—			—			—			(713		)
Pension settlement gain recognized	—			—			—			654
Total amount recognized	$	1,868		$	67,444		$	1,645		$	(40,643	)

Accumulated Benefit Obligation	$	35,395		$	1,501,616		$	31,559		$	1,377,532

Salary growth rate	n/a			0.8		%	n/a			0.8		%
Assumed discount rate	3.0		%	2.0		%	4.1		%	2.7		%
Expected return on assets	6.0		%	6.2		%	6.0		%	6.2		%

On October 26, 2018, in Lloyds Banking Group Pensions Trustees Limited vs. Lloyds Bank plc and Others, the High Court of Justice in the United Kingdom issued a ruling ("Court Ruling") requiring Lloyds Bank plc to equalize benefits payable to men and women under its U.K. defined benefit pension plan. The Court Ruling noted that the formulas used to determine guaranteed minimum pension (GMP) benefits violated gender-pay equality laws due to differences in the way benefits were calculated for men and women. As a result of this ruling, the U.K. pension plan was required to amend its benefit formulas and account for the higher pension payments resulting from GMP equalization. In accordance with ASC 715, this Court Ruling represents a change to the company's U.K. pension plans resulting in a retroactive increase in benefit levels for plan participants and has been accounted for as a prior service cost deferred in other comprehensive income, to be amortized as a component of net periodic pension benefit in future periods. The U.K. pension plans projected benefit obligation increased $53.6 million as a result of the Court Ruling, subject to potential future adjustments as the calculations by participants are finalized.

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
			2019		2018
Equity	48	%	51	%	42	%
Fixed income	40		37		49
Money market	4		2		1
Other (real estate investment trusts & commodities contracts)	8		10		8
	100	%	100	%	100	%

Non-U.S. Plans:



	Target Allocation		Percentage of Plan Assets
			2019		2018
Equity	17	%	22	%	23	%
Fixed income	38		39		52
Alternatives/Other	32		22		9
Real Estate	13		13		14
Cash and cash equivalents	—		4		2
	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. In accordance with ASU 2015-04, "Practical Expedient for the Measurement Date of an Employer's Defined Benefit Obligation and Plan Assets", the company has elected to measure the pension plan assets and obligations as of the calendar month-end closest to the fiscal year end. The following tables summarize the basis used to measure the pension plans’ assets at fair value as of December 28, 2019and December 29, 2018 (in thousands):

U.S. Plans:



	Fiscal 2019						Fiscal 2018
Asset Category	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Net Asset Value		Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Net Asset Value

Short Term Investment Fund (a)	$	347	$	—	$	347	$	175	$	—	$	175

Equity Securities:
Large Cap	3,957		3,957		—		2,615		2,615		—
Mid Cap	417		417		—		329		329		—
Small Cap	418		418		—		326		326		—
International	3,657		3,657		—		2,937		2,937		—

Fixed Income:
Government/Corporate	4,992		4,992		—		5,994		5,994		—
High Yield	1,260		1,260		—		1,102		1,102		—

Alternative:
Global Real Estate Investment Trust	1,358		1,358		—		591		591		—
Commodities Contracts	338		338		—		565		565		—

Total	$	16,744	$	16,397	$	347	$	14,634	$	14,459	$	175


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

Non-U.S. Plans:



	Fiscal 2019
Asset Category	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Net Asset Value

Cash and cash equivalents	$	44,748	$	18,142	$	2,874	$	—	$	23,732

Equity Securities:
UK	101,922		88,830		—		—		13,092
International:
Developed	165,709		13,170		—		—		152,539
Emerging	11,653		650		—		—		11,003
Unquoted/Private Equity	123		—		—		—		123

Fixed Income:
Government/Corporate:
UK	189,513		14,245		2,867		—		172,401
International	86,208		—		—		—		86,208
Index Linked	189,463		2,085		—		—		187,378
Other	6,367		—		—		—		6,367
Convertible Bonds	177		—		—		—		177

Real Estate:
Direct	154,494		—		154,494		—		—
Indirect	8,155		137		7,603		—		415

Hedge Fund Strategy:
Equity Long/Short	21,683		—		—		—		21,683
Arbitrage & Event	29,284		—		—		—		29,284
Directional Trading & Fixed Income	9,361		—		—		—		9,361
Cash & Other	163,058		—		—		—		163,058
Direct Sourcing	2,269		—		—		—		2,269

Leveraged Loans	21,635		—		—		—		21,635

Alternative/Other	25,359		1		—		—		25,358

Total	$	1,231,181	$	137,260	$	167,838	$	—	$	926,083



	Fiscal 2018
Asset Category	Total			Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Net Asset Value

Cash and cash equivalents	$	28,434		$	4,325	$	2,656	$	—	$	21,453

Equity Securities:
UK	155,687			78,938		—		—		76,749
International:
Developed	99,872			14,497		—		—		85,375
Emerging	7,488			591		—		—		6,897
Unquoted/Private Equity	1,752			—		—		—		1,752

Fixed Income:
Government/Corporate:
UK	468,608			11,860		6,779		—		449,969
International	75,980			—		—		—		75,980
Index Linked	47,873			3,614		—		—		44,259
Other	650			—		—		—		650
Convertible Bonds	188			—		—		—		188

Real Estate:
Direct	148,551			—		148,551		—		—
Indirect	10,812			188		9,298		—		1,326

Hedge Fund Strategy:
Equity Long/Short	73,783			—		—		—		73,783
Arbitrage & Event	73,261			—		—		—		73,261
Directional Trading & Fixed Income	44,091			—		—		—		44,091
Cash & Other	21,719			—		—		—		21,719
Direct Sourcing	2,289			—		—		—		2,289

Leveraged Loans	18,295			—		—		—		18,295

Alternative/Other	(137,952		)	5		—		86		(138,043		)

Total	$	1,141,381		$	114,018	$	167,284	$	86	$	859,993

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
2020	$	1,738	$	63,856
2021	1,763		65,110
2022	1,776		66,177
2023	1,784		66,332
2024 through 2029	11,267		405,088

Expected contributions to the U.S. Plans and Non-U.S. Plans to be made in 2020 are $1.3 million and $5.8 million, respectively.


(b)	Defined Contribution Plans

As of December 28, 2019, the company maintained two separate defined contribution 401(k) 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 maintained defined contribution plans for its UK based employees.