Note 16—Benefit Plans

We maintain three 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 of Cott Beverages Limited and Cooke Bros. Limited in the United Kingdom (“U.K. Plans”). 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. Plans 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. All plans are closed to new participants. The Cooke Bros. Limited Plan is frozen and was acquired as part of the Calypso Soft Drinks Acquisition. We use a December 28th measurement date for all 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 three plans as of December 28, 2013 and December 29, 2012:


(in millions of U.S. dollars)	December 28, 2013			December 29, 2012
Change in Benefit Obligation
Benefit obligation at beginning of year	$	41.8		$	39.3
Transfer in		17.8			—
Service cost		0.5			0.5
Interest cost		2.4			1.9
Plan participant contributions		0.1			0.1
Benefit payments		(1.5	)		(0.9	)
Actuarial losses (gains)		0.7			(0.6	)
Translation losses (gains)		0.7			1.5

Benefit obligation at end of year	$	62.5		$	41.8


Change in Plan Assets
Plan assets beginning of year	$	33.2		$	27.5
Transfer in		11.1			—
Employer contributions		3.0			2.0
Plan participant contributions		0.1			0.1
Benefit payments		(1.5	)		(0.9	)
Actual return on plan assets		3.1			3.5
Translation (gains) losses		0.6			1.0

Fair value at end of year	$	49.6		$	33.2


Funded Status of Plan
Projected benefit obligation	$	(62.5	)	$	(41.8	)
Fair value of plan assets		49.6			33.2

Unfunded status	$	(12.9	)	$	(8.6	)

The accumulated benefit obligation for the defined benefit pension plans equaled $59.1 million and $38.8 million at the end of 2013 and 2012, respectively.

Periodic Pension Costs

The components of net periodic pension cost were as follows:


	For the Years Ended
(in millions of U.S. dollars)	December 28, 2013			December 29, 2012			December 31, 2011
Service cost	$	0.5		$	0.5		$	0.5
Interest cost		2.4			1.9			1.9
Expected return on plan assets		(2.4	)		(1.7	)		(1.9	)
Amortization of prior service costs		0.1			0.1			0.1
Amortization of net loss		0.3			1.0			0.5

Net periodic pension cost	$	0.9		$	1.8		$	1.1

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 were as follows:


	For the Years Ended
(in millions of U.S. dollars)	December 28, 2013			December 29, 2012			December 31, 2011
Unamortized prior service cost	$	(0.2	)	$	(0.3	)	$	(0.4	)
Unrecognized net actuarial gain		5.7			5.3			8.5

Unamortized prior service benefit	$	5.5		$	5.0		$	8.1

Assumptions

Assumptions used to determine benefit obligations at year-end:


	December 28, 2013			December 29, 2012			December 31, 2011
Discount rate		4.5	%		4.5	%		4.5	%

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


	December 28, 2013			December 29, 2012			December 31, 2011
U.K. Plans
Discount rate		4.5	%		4.6	%		5.4	%
Expected long-term rate of return on plan assets		6.1	%		5.7	%		6.9	%
Inflation factor		2.3	%		3.3	%		3.7	%

U.S. Plan
Discount rate		4.4	%		3.5	%		4.1	%
Expected long-term rate of return on plan assets		7.0	%		7.0	%		7.0	%

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. Plans for 2012 and 2011 were 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 discount rate of the U.K. Plans for 2013 is based on the Annualized yield of the Aon Hewitt GBP Select AA Curve. The weighted average return for the plans for the year ended December 28, 2013 was 7.6%. The expected returns under the U.S. Plan and the U.K. Plans 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 were as follows:


	December 28, 2013			December 29, 2012
U.K. Plans
Equity securities		59.2	%		59.0	%
Debt securities		37.8	%		40.6	%
Cash		3.0	%		0.4	%

U.S. Plan
Equity securities		67.0	%		65.2	%
Debt securities		32.4	%		32.4	%
Cash		0.6	%		2.3	%

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 Cooke Bros. Limited Plan assets are 80% in equity securities and 20% in debt securities. The target allocation percentages for the Cott Beverages Limited Plan assets are 60% in equity securities and 40% 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 $3.1 million to the pension plans during the 2014 fiscal year.

The following benefit payments are expected to be paid:


(in millions of U.S. dollars)
Expected benefit payments
FY 2014	$	1.7
FY 2015		1.8
FY 2016		1.9
FY 2017		1.9
FY 2018		2.0
FY 2019 through FY 2021		10.2

Cott primarily maintains defined contribution retirement plans covering qualifying employees. The total expense with respect to these plans was $4.8 million for the year ended December 28, 2013 ($6.9 million—December 29, 2012; $6.4 million—December 31, 2011).

The fair values of the Company’s pension plan assets at December 28, 2013 were as follows:


	December 28, 2013
(in millions of U.S. dollars)	Level 1		Level 2		Level 3

Cash and cash equivalents:
Cash and cash equivalents	$	1.3	$	—	$	—
Equities:
International mutual funds		21.1		—		—
Index mutual funds		6.8		—		—
U.S. mutual funds		1.1		—		—
Property		0.1		—		—
Balanced		0.4		—		—
Other		0.3		—		—
Fixed income:
Mutual funds		15.6		—		—
Insurance contract		—		2.9		—

Total	$	46.7	$	2.9	$	—

The fair values of the Company’s pension plan assets at December 29, 2012 were as follows:


	December 29, 2012
(in millions of U.S. dollars)	Level 1		Level 2		Level 3

Cash and cash equivalents:
Cash and cash equivalents	$	0.1	$	0.2	$	—
Equities:
International mutual funds		12.6		—		—
Index mutual funds		5.6		—		—
U.S. mutual funds		0.9		—		—
Balanced		0.4		—		—
Other		0.3		—		—
Fixed income:
Mutual funds		12.9		—		—
Insurance contract		—		0.2		—

Total	$	32.8	$	0.4	$	—