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EMPLOYEE BENEFIT PLANS
 9 Months Ended
Sep. 28, 2024
Retirement Benefits [Abstract]  
EMPLOYEE BENEFIT PLANS EMPLOYEE BENEFIT PLANS
OshKosh B’Gosh Pension Plan
During the second quarter of fiscal 2024, the Company announced the offering of a single-sum payment option to certain participants in the frozen OshKosh B’Gosh, Inc. Pension Plan (the “pension plan”), which commenced on June 1, 2024 and closed on July 15, 2024. In August 2024, the pension plan paid $6.9 million from pension plan assets to electing participants, thereby reducing its pension benefit obligations. The transaction had no cash impact on the Company but did result in a non-cash pre-tax partial pension settlement charge of $0.9 million, which is included in Other expense (income), net on the Company’s condensed consolidated statement of operations.
Additionally, the Board of Directors authorized the termination of the pension plan, with an anticipated effective date of November 30, 2024. The Company may be required to make a contribution to fully fund the plan for termination prior to the purchase of a group annuity contract to transfer its remaining liabilities under the pension plan. The contribution amount will depend upon the nature and timing of participant settlements and prevailing market conditions. The Company expects to
recognize a non-cash charge upon settlement of the pension plan’s obligations in the second half of fiscal 2025. The Company has the right to change the effective date of the termination date or revoke the decision to terminate, but it has no current intent to do so.
Funded Status
As a result of the single-sum payout, the Company remeasured the funded status of its pension plan as of August 31, 2024. The assumptions for net periodic pension cost includes a discount rate of 4.75% through the measurement date and 5.00% thereafter. We expect net periodic pension cost of $0.4 million for fiscal 2024, exclusive of the $0.9 million non-cash pre-tax partial pension settlement charge described above.
The expected rate of return on plan assets is 4.75% through the measurement date and 5.00% thereafter. The fair value of plan assets as of August 31, 2024 was $48.2 million. Plan assets are invested in fixed income securities, which include funds holding corporate bonds of companies from diverse industries and U.S. Treasuries.
The discount rate for determining the benefit obligation at the measurement date is 5.00%.
Presented below is the reconciliation of changes in the projected benefit obligation and plan assets as a result of this remeasurement and single-sum payment:
For the period ended
(dollars in thousands)August 31, 2024
Change in projected benefit obligation:
Projected benefit obligation at beginning of year$54,785 
Interest cost1,684 
Actuarial gain(2,345)
Benefits paid(1,981)
Effect of settlement(6,887)
Projected benefit obligation at end of period$45,256 
Change in plan assets:
Fair value of plan assets at beginning of year$55,959 
Actual return on plan assets1,064 
Benefits paid(1,981)
Effect of settlement(6,887)
Fair value of plan assets at end of period$48,155 
Funded status$2,899 
The accumulated benefit obligation is equal to the projected benefit obligation as of August 31, 2024 because the plan is frozen. The Company does not expect to make any contributions to the pension plan during fiscal 2024 as the plan’s funding exceeds the minimum funding requirements.
The actuarial gain for the period ended August 31, 2024 was attributable to increased discount rates and the removal of participants electing to receive a single-sum payment from the pension plan. The funded status asset is included in Other assets in the Company’s condensed consolidated balance sheets.