Employee Retirement Plans

12 Months Ended

Dec. 29, 2012

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 employees participating in the defined benefit plan were enrolled in a newly established 401K savings plan on July 1, 2002, further described below.

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. The retirement benefits are based upon a percentage of the Chairman’s final base salary. Additionally, the company maintains a retirement plan for non-employee directors participating on the Board of Directors prior to 2004 (together with the Chairman’s agreement the “Director Plans”). 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 29, 2012, 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 2012

	Elgin Plan			Smithville Plan			Wrexham Plan			Director Plans
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
Benefit obligations – acquisitions	—			—			—			—
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		$	—
Plan assets at fair value – acquisitions	—			—			—			—
Company contributions	255			638			499			—
Investment (loss) 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

Fiscal Year 2011

	Elgin Plan			Smithville Plan			Wrexham Plan			Director Plans
Net Periodic Pension Cost:
Service cost	$	—		$	—		$	—		$	1,123
Interest cost	226			669			415			472
Expected return on assets	(178		)	(571		)	(480		)	—
Amortization of net loss (gain)	125			203			—			507
Pension settlement	—			—			—			13
	$	173		$	301		$	(65	)	$	2,115
Change in Benefit Obligation:
Benefit obligation – beginning of year	$	4,142		$	11,958		$	—		$	7,028
Benefit obligations – acquisitions	—			—			13,328			—
Service cost	—			—			—			1,123
Interest on benefit obligations	226			669			415			472
Actuarial losses	695			2,978			192			3,043
Pension settlement	—			—			—			12
Net benefit payments	(262		)	(401		)	(246		)	(300		)
Benefit obligation – end of year	$	4,801		$	15,204		$	13,689		$	11,378
Change in Plan Assets:
Plan assets at fair value – beginning of year	$	3,342		$	8,253		$	—		$	—
Plan assets at fair value – acquisitions	—			—			11,798			—
Company contributions	156			225			465			300
Investment (loss) gain	(49		)	(257		)	(499		)	—
Benefit payments and plan expenses	(261		)	(401		)	(246		)	(300		)
Plan assets at fair value – end of year	$	3,188		$	7,820		$	11,518		$	—
Funded Status:
Unfunded benefit obligation	$	(1,613	)	$	(7,384	)	$	(2,171	)	$	(11,378	)
Amounts recognized in balance sheet at year end:
Other noncurrent liabilities	$	(1,613	)	$	(7,384	)	$	(2,171	)	$	(11,378	)
Pre-tax components in accumulated other comprehensive income:
Net actuarial loss (gain)	$	2,102		$	6,291		$	1,409		$	2,536
Net prior service cost	—			—			—			—
Net transaction (asset) obligations	—			—			—			—
Total amount recognized	$	2,102		$	6,291		$	1,409		$	2,536
Accumulated Benefit Obligation	$	4,801		$	15,204		$	13,689		$	3,999
Salary growth rate	n/a			n/a			n/a			10.0		%
Assumed discount rate	4.3		%	4.3		%	4.7		%	4.3		%
Expected return on assets	5.5		%	7.0		%	6.6		%	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
			2012		2011
Equity	48	%	52	%	49	%
Fixed income	40		36		37
Money market	4		6		5
Other (real estate & commodities)	8		6		9
	100	%	100	%	100	%

Smithville Plan

	Target Allocation		Percentage of Plan Assets
			2012		2011
Equity	48	%	52	%	51	%
Fixed income	40		37		37
Money market	4		5		4
Other (real estate & commodities)	8		6		8
	100	%	100	%	100	%

Wrexham Plan

	Target Allocation		Percentage of Plan Assets
			2012		2011
Equity	50	%	71	%	66	%
Fixed income	50		26		27
Money market	—		3		7
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 29, 2012 (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)	$	205	$	—	$	205	$	—
Equity Securities:
Large Cap	752		752		—		—
Mid Cap	86		86		—		—
Small Cap	84		84		—		—
International	778		778		—		—
Fixed Income:
Government/Corporate	1,119		1,119		—		—
High Yield	141		141		—		—
Alternative:
Global Real Estate	139		139		—		—
Commodities	199		199		—		—
Total	$	3,503	$	3,298	$	205	$	—

(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)	$	402	$	—	$	402	$	—
Equity Securities:
Large Cap	1,920		1,920		—		—
Mid Cap	223		223		—		—
Small Cap	212		212		—		—
International	1,958		1,958		—		—
Fixed Income:					—		—
Government/Corporate	2,861		2,861		—		—
High Yield	353		353		—		—
Alternative:
Global Real Estate	355		355		—		—
Commodities	497		497		—		—
Total	$	8,781	$	8,379	$	402	$	—

(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)	$	328	$	—	$	328	$	—
Equity Securities:
UK	4,430		4,430		—		—
International
Developed	3,663		3,663		—		—
Emerging	548		548		—		—
Global	636		636		—		—
Fixed Income:					—		—
Government/Corporate	1,965		1,965		—		—
Aggregate	373		373		—		—
Index Linked	1,054		1,054		—		—
Total	$	12,997	$	12,669	$	328	$	—

(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		Director Plans
2013	$	311	$	470	$	646	$	—
2014	304		501		679		—
2015	299		522		711		—
2016	308		568		743		—
2017 through 2022	1,806		4,195		5,170		4,943

Contributions to the directors plans are based upon actual retirement benefits for directors as they retire. 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 Elgin, Smithville and Wrexham plans to be made in 2013 are $0.3 million, $0.6 million and $0.5 million, respectively.

(b) 401K Savings Plans

As of December 29, 2012, 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 2012, 2011 and 2010.