Note 16—Benefit Plans

We maintain two defined benefit plans resulting from prior acquisitions that cover certain employees at one plant in the United States under a collective bargaining agreement ("U.S. Plan") and certain employees in the United Kingdom ("U.K. Plan"). Retirement benefits for employees covered by the U.S. Plan are based on years of service multiplied by a monthly benefit factor. The monthly benefit for employees under the U.K. Plan is based on years of service multiplied by a monthly benefit factor. Pension costs are funded in accordance with the provisions of the applicable law. Both plans are closed to new participants. We use a December 31^st measurement date for both of our plans.

Obligations and Funded Status

The following table summarizes the change in the benefit obligation, change in plan assets and unfunded status of the two plans as of December 31, 2011 and January 1, 2011:


	December 31,			January 1,
(in millions of U.S. dollars)	2011			2011
Change in Benefit Obligation
Benefit obligation at beginning of year	$	34.5		$	32.3
Service cost		0.5			0.4
Interest cost		1.8			1.8
Plan participant contributions		0.1			0.1
Benefit payments		(0.9	)		(0.6	)
Actuarial losses		3.4			1.6
Translation losses		(0.1	)		(1.1	)

Benefit obligation at end of year	$	39.3		$	34.5

Change in Plan Assets
Plan assets beginning of year	$	26.4		$	23.1
Employer contributions		1.8			1.7
Plan participant contributions		0.1			0.1
Benefit payments		(0.9	)		(0.6	)
Actual return on plan assets		0.2			2.9
Translation losses		(0.1	)		(0.8	)

Fair value at end of year	$	27.5		$	26.4

Funded Status of Plan
Projected benefit obligation	$	(39.3	)	$	(34.5	)
Fair value of plan assets		27.5			26.4

Unfunded status	$	(11.8	)	$	(8.1	)

The accumulated benefit obligation for both defined benefit pension plans equaled the projected benefit obligations of $39.3 million and $34.5 million at the end of 2011 and 2010, respectively.

Periodic Pension Costs

The components of net periodic pension cost are as follows:


	For the Years Ended
	December 31,			January 1,			January 2,
(in millions of U.S. dollars)	2011			2011			2010
Service cost	$	0.5		$	0.4		$	0.3
Interest cost		1.9			1.8			1.7
Expected return on plan assets		(1.9	)		(1.7	)		(1.2	)
Amortization of prior service costs		0.1			0.1			0.1
Amortization of net loss		0.5			0.5			0.6

Net periodic pension cost	$	1.1		$	1.1		$	1.5

Accumulated Other Comprehensive Income (Loss)

Amounts included in accumulated other comprehensive income, net of tax, at year-end which have not yet been recognized in net periodic benefit cost are as follows:


	For the Years Ended
	December 31,			January 1,			January 2,
(in millions of U.S. dollars)	2011			2011			2010
Unamortized prior service benefit	$	(0.4	)	$	(0.5	)	$	(0.6	)
Unrecognized net actuarial gain (loss)		8.5			5.8			(6.9	)

Unamortized prior service benefit (actuarial loss)	$	8.1		$	5.3		$	(7.5	)

Assumptions

Assumptions used to determine benefit obligations at year-end:

December 31,

January 1,

January 2,

2011

2010

Discount rate

6.2

6.2

6.3

Assumptions used to determine net periodic benefit cost at year-end:


	December 31,			January 1,			January 2,
	2011			2011			2010
U.K. Plan
Discount rate		4.6	%		5.4	%		5.8	%
Expected long-term rate of return on plan assets		5.7	%		6.9	%		7.2	%
U.S. Plan
Discount rate		4.1	%		5.7	%		6.2	%
Expected long-term rate of return on plan assets		7.0	%		7.0	%		7.0	%
Inflation factor		3.3	%		3.7	%		3.7	%

The discount rate for the U.S. Plan is based on a model portfolio of AA rated bonds with a maturity matched to the estimated payouts of future pension benefits for this type of plan. The discount rate of the U.K. Plan is based on a model portfolio of AA rated bonds, using the redemption yields on the constituent stocks of the Merrill Lynch index with a maturity matched to the estimated future pension benefits. The weighted average return for both plans for the year ended December 31, 2011 was 1.4%. The expected return under the U.S. Plan and the U.K. Plan on plan assets are based on our expectation of the long-term average rate of return on assets in the pension funds, which is based on the allocation of assets.

Asset Mix

Our pension plan weighted-average asset allocations by asset category are as follows:


	December 31,			January 1,
	2011			2011
U.K. Plan
Equity securities		58.3	%		65.9	%
Debt securities		41.7	%		34.1	%
U.S. Plan
Equity securities		66.9	%		65.3	%
Debt securities		33.1	%		34.7	%

Plan Assets

Our investment policy is that plan assets will be managed utilizing an investment philosophy and approach characterized by all of the following, but listed in priority order: (1) emphasis on total return, (2) emphasis on high-quality securities, (3) sufficient income and stability of income, (4) safety of principal with limited volatility of capital through proper diversification and (5) sufficient liquidity. (The target allocation percentages for the U.K. Plan assets are 65% in equity securities and 35% in debt securities. The target allocation percentages for the U.S. Plan assets are 50% in equity securities and 50% in debt securities. None of our equity or debt securities are included in plan assets.)

Cash Flows

We expect to contribute $2.0 million to the pension plans during the 2012 fiscal year.

The following benefit payments are expected to be paid:


(in millions of U.S. dollars)
Expected benefit payments
FY 2012	$	0.9
FY 2013		1.0
FY 2014		1.0
FY 2015		1.0
FY 2016		1.1
FY 2017 through FY 2020		7.2

Cott primarily maintains defined contribution retirement plans covering qualifying employees. The total expense with respect to these plans was $6.4 million for the year ended December 31, 2011 ($3.9 million—January 1, 2011; $4.1 million—January 2, 2010).

The fair values of the Company's pension plan assets at December 31, 2011 were as follows:


(in millions of U.S. dollars)	December 31, 2011
(in millions of U.S. dollars)	Level 1		Level 2		Level 3
Cash and cash equivalents:
Cash and cash equivalents	$	0.1	$	0.1	$	—
Equities:
International mutual funds		14.8		—		—
Index mutual funds		3.1		—		—
U.S. mutual funds		1.5		—		—
Fixed income:
Mutual funds		7.9		—		—

Total	$	27.4	$	0.1	$	—

The fair values of the Company's pension plan assets at January 1, 2011 were as follows:


(in millions of U.S. dollars)	January 1, 2011
(in millions of U.S. dollars)	Level 1		Level 2		Level 3
Cash and cash equivalents:
Cash and cash equivalents	$	0.1	$	0.1	$	—
Equities:
International mutual funds		15.9		—		—
Index mutual funds		2.5		—		—
U.S. mutual funds		1.4		—		—
Fixed income:
Mutual funds		6.4		—		—

Total	$	26.3	$	0.1	$	—