Employee Retirement Plans

12 Months Ended

Dec. 28, 2013

Compensation and Retirement Disclosure [Abstract]

Employee Retirement Plans

EMPLOYEE RETIREMENT PLANS

(a)Pension 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 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 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. Additionally, the company had maintained a retirement plan for non-employee directors participating on the Board of Directors prior to 2004 (“Director Plan”). In November 2010, the Board of Directors approved a revision to the directors’ compensation program that resulted in the plan being frozen and benefits being distributed to vested plan participants. Benefit distributions were made in December 2010 and in January 2011 subsequent to the fiscal year end. As of December 28, 2013, there are no longer any participants in the retirement plan for non-employee directors. This plan is not available to any new non-employee directors.

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 Year 2013

	Elgin Plan			Smithville Plan			Wrexham Plan			Chairman Plan
Net Periodic Pension Cost:
Service cost	$	—		$	—		$	—		$	929
Interest cost	175			643			635			360
Expected return on assets	(209		)	(529		)	(819		)	—
Amortization of net loss (gain)	154			519			—			(145		)
Pension settlement	—			—			—			—
	$	120		$	633		$	(184	)	$	1,144
Change in Benefit Obligation:
Benefit obligation – beginning of year	$	4,862		$	16,070		$	15,462		$	8,993
Service cost	—			—			—			929
Interest on benefit obligations	175			643			635			360
Actuarial (gain)	(675		)	(1,282		)	(7		)	(1,467		)
Pension settlement	—			—			—			—
Net benefit payments	(228		)	(632		)	(716		)	—
Exchange effect	—			—			371			—
Benefit obligation – end of year	$	4,134		$	14,799		$	15,745		$	8,815
Change in Plan Assets:
Plan assets at fair value – beginning of year	$	3,503		$	8,781		$	12,997		$	—
Company contributions	128			649			526			—
Investment gain	319			804			2,054			—
Benefit payments and plan expenses	(228		)	(632		)	(716		)	—
Exchange effect	—			—			311			—
Plan assets at fair value – end of year	$	3,722		$	9,602		$	15,172		$	—
Funded Status:
Unfunded benefit obligation	$	(412	)	$	(5,197	)	$	(573	)	$	(8,815	)
Amounts recognized in balance sheet at year end:
Other noncurrent liabilities	$	(412	)	$	(5,197	)	$	(573	)	$	(8,815	)
Pre-tax components in accumulated other comprehensive income:
Net actuarial loss (gain)	$	918		$	4,125		$	1,116		$	(2,944	)
Net prior service cost	—			—			—			—
Net transaction (asset) obligations	—			—			—			—
Total amount recognized	$	918		$	4,125		$	1,116		$	(2,944	)
Accumulated Benefit Obligation	$	4,134		$	14,799		$	15,745		$	5,473
Salary growth rate	n/a			n/a			n/a			10.0		%
Assumed discount rate	4.7		%	4.7		%	4.4		%	4.7		%
Expected return on assets	6.0		%	6.0		%	7.0		%	n/a

Fiscal Year 2012

	Elgin Plan			Smithville Plan			Wrexham Plan			Chairman Plan
Net Periodic Pension Cost:
Service cost	$	—		$	—		$	—		$	1,625
Interest cost	198			642			654			553
Expected return on assets	(171		)	(546		)	(787		)	—
Amortization of net loss (gain)	218			537			—			(405		)
Pension settlement	—			—			—			—
	$	245		$	633		$	(133	)	$	1,773
Change in Benefit Obligation:
Benefit obligation – beginning of year	$	4,801		$	15,204		$	13,689		$	11,378
Service cost	—			—			—			1,625
Interest on benefit obligations	198			642			654			553
Actuarial loss (gain)	125			724			1,238			(4,563		)
Pension settlement	—			—			—			—
Net benefit payments	(262		)	(500		)	(706		)	—
Exchange effect	—			—			587			—
Benefit obligation – end of year	$	4,862		$	16,070		$	15,462		$	8,993
Change in Plan Assets:
Plan assets at fair value – beginning of year	$	3,188		$	7,820		$	11,518		$	—
Company contributions	255			638			499			—
Investment gain	322			823			1,191			—
Benefit payments and plan expenses	(262		)	(500		)	(706		)	—
Exchange effect	—			—			495			—
Plan assets at fair value – end of year	$	3,503		$	8,781		$	12,997		$	—
Funded Status:
Unfunded benefit obligation	$	(1,359	)	$	(7,289	)	$	(2,465	)	$	(8,993	)
Amounts recognized in balance sheet at year end:
Other noncurrent liabilities	$	(1,359	)	$	(7,289	)	$	(2,465	)	$	(8,993	)
Pre-tax components in accumulated other comprehensive income:
Net actuarial loss (gain)	$	1,857		$	6,201		$	2,303		$	(1,622	)
Net prior service cost	—			—			—			—
Net transaction (asset) obligations	—			—			—			—
Total amount recognized	$	1,857		$	6,201		$	2,303		$	(1,622	)
Accumulated Benefit Obligation	$	4,862		$	16,070		$	15,462		$	4,764
Salary growth rate	n/a			n/a			n/a			10.0		%
Assumed discount rate	4.0		%	4.0		%	4.1		%	4.0		%
Expected return on assets	5.5		%	7.0		%	6.2		%	n/a

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):

Elgin Plan

	Target Allocation		Percentage of Plan Assets
			2013		2012
Equity	48	%	62	%	52	%
Fixed income	40		33		36
Money market	4		2		6
Other (real estate & commodities)	8		3		6
	100	%	100	%	100	%

Smithville Plan

	Target Allocation		Percentage of Plan Assets
			2013		2012
Equity	48	%	61	%	52	%
Fixed income	40		32		37
Money market	4		4		5
Other (real estate & commodities)	8		3		6
	100	%	100	%	100	%

Wrexham Plan

	Target Allocation		Percentage of Plan Assets
			2013		2012
Equity	50	%	76	%	71	%
Fixed income	50		23		26
Money market	—		1		3
Other (real estate & commodities)	—		—		—
	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 December 28, 2013 (in thousands):

Elgin Plan

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)	$	67	$	—	$	67	$	—
Equity Securities:
Large Cap	934		934		—		—
Mid Cap	100		100		—		—
Small Cap	100		100		—		—
International	942		942		—		—
Fixed Income:
Government/Corporate	1,030		1,030		—		—
High Yield	184		184		—		—
Alternative:
Global Real Estate	224		224		—		—
Commodities	141		141		—		—
Total	$	3,722	$	3,655	$	67	$	—

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

Smithville Plan

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)	$	368	$	—	$	368	$	—
Equity Securities:
Large Cap	2,293		2,293		—		—
Mid Cap	254		254		—		—
Small Cap	255		255		—		—
International	2,394		2,394		—		—
Fixed Income:
Government/Corporate	2,647		2,647		—		—
High Yield	466		466		—		—
Alternative:
Global Real Estate	567		567		—		—
Commodities	358		358		—		—
Total	$	9,602	$	9,234	$	368	$	—

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

Wrexham Plan

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)	$	186	$	—	$	186	$	—
Equity Securities:
UK	5,461		5,461		—		—
International
Developed	4,688		4,688		—		—
Emerging	589		589		—		—
Global	733		733		—		—
Fixed Income:
Government/Corporate	2,038		2,038		—		—
Aggregate	393		393		—		—
Index Linked	1,084		1,084		—		—
Total	$	15,172	$	14,986	$	186	$	—

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

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):

	Elgin Plan		Smithville Plan		Wrexham Plan		Chairman Plan
2014	$	292	$	611	$	662	$	—
2015	285		622		695		—
2016	288		644		728		—
2017	282		660		761		—
2018 through 2023	1,643		4,302		5,293		4,616

Contributions to the Chairman plan are based upon actual retirement benefits at the Chairman's retirement. Contributions under the Smithville and Elgin plans are funded in accordance with provisions of The Employee Retirement Income Security Act of 1974. Expected contributions to the Smithville and Wrexham plans to be made in 2014 are $0.9 million and $0.5 million, respectively.

(b) 401K Savings Plans

As of December 28, 2013, 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.

In conjunction with the freeze on future benefits under the defined benefit plan for union employees at the Elgin, Illinois facility, the company established a 401K savings plan for this group of employees. The company makes contributions to this plan in accordance with its agreement with the union. These contributions amounted to less than $0.1 million for each of the years presented. There were no other profit sharing contributions to the 401K savings plans for 2013, 2012 and 2011.