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EMPLOYEE BENEFIT PLANS
 12 Months Ended
Dec. 28, 2024
Retirement Benefits [Abstract]  
EMPLOYEE BENEFIT PLANS EMPLOYEE BENEFIT PLANS
The Company maintains defined contribution plans, a deferred compensation plan, and two defined benefit plans. The two defined benefit plans include the OshKosh B’Gosh pension plan and a post-retirement life and medical plan.
OshKosh B’Gosh Pension Plan
Partial Termination
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 consolidated statement of operations.
Additionally, the Board of Directors authorized the termination of the pension plan, with an 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
The retirement benefits under the pension plan were frozen as of December 31, 2005. A reconciliation of changes in the projected pension benefit obligation and plan assets is as follows:
Fiscal year ended
(dollars in thousands)December 28, 2024December 30, 2023
Change in projected benefit obligation:
Projected benefit obligation at beginning of year$54,785 $53,847 
Interest cost2,401 2,617 
Actuarial (gain) loss(4,202)1,376 
Benefits paid(3,021)(3,055)
Effect of settlement(6,886)— 
Projected benefit obligation at end of year $43,077 $54,785 
Change in plan assets:
Fair value of plan assets at beginning of year$55,959 $55,245 
Actual return on plan assets(503)3,769 
Benefits paid(3,021)(3,055)
Effect of settlement(6,886)— 
Fair value of plan assets at end of year$45,549 $55,959 
Funded status$2,472 $1,174 
The accumulated benefit obligation is equal to the projected benefit obligation as of December 28, 2024 and December 30, 2023 because the plan is frozen. The Company does not expect to make any contributions to the pension plan during fiscal 2025 as the plan’s funding exceeds the minimum funding requirements.
The actuarial gain in fiscal 2024 was primarily attributable to increased discount rates and the removal of participants electing to receive a single-sum payment from the pension plan. The actuarial loss in fiscal 2023 was primarily attributable to decreased discount rates. The funded status asset is included in Other assets in the Company’s consolidated balance sheet.
Net Periodic Pension Cost and Changes Recognized in Other Comprehensive Income
The components of net periodic pension cost recognized in the statement of operations and changes recognized in other comprehensive income were as follows:
Fiscal year ended
(dollars in thousands)December 28, 2024December 30, 2023December 31, 2022
Recognized in the statement of operations:
Interest cost$2,401 $2,617 $1,909 
Expected return on plan assets(2,176)(2,372)(3,432)
Amortization of net loss(*)
148 189 217 
Partial pension plan settlement charge(*)
949 — — 
Net periodic pension cost (benefit)$1,322 $434 $(1,306)
Changes recognized in other comprehensive income:
Net gain arising during the fiscal year$(1,523)$(21)$(2,062)
Amortization of net loss(*)
(148)(189)(217)
Partial pension plan settlement charge(*)
(949)— — 
Total changes recognized in other comprehensive income$(2,620)$(210)$(2,279)
Total net periodic pension cost (benefit) and changes recognized in other comprehensive income$(1,298)$224 $(3,585)
(*)Represents pre-tax amounts reclassified from accumulated other comprehensive loss.
Assumptions
The actuarial assumptions used in determining the benefit obligation and net periodic pension cost for our pension plan is presented in the following table:
Benefit obligation20242023
Discount rate5.50%4.75%
Net periodic pension cost202420232022
Discount rate4.75%5.00%2.75%
Expected long-term rate of return on plan assets4.75%5.00%5.50%
The discount rates used at December 28, 2024, December 30, 2023, and December 31, 2022 were determined with consideration given to the FTSE Pension Liability Index and the Bloomberg US Aggregate AA Bond Index, adjusted for the timing of expected plan distributions. The Company believes these indexes reflect a risk-free rate consistent with a portfolio of high quality debt instruments with maturities that are comparable to the timing of the expected payments under the plan. The expected long-term rate of return assumption is equal to the assumed discount rate. Refer to “Plan Assets” below in Note 17, Employee Benefit Plans for further discussion.
The increased discount rate assumption at December 28, 2024 resulted in an decrease in the amount of the pension plan’s projected benefit obligation of approximately $3.1 million. A 0.25% change in the assumed discount rate as of December 28, 2024 would result in an increase or decrease in the amount of the pension plan's projected benefit obligation of approximately $1.0 million.
The Company currently expects benefit payments for its defined benefit pension plan as follows for the next ten fiscal years:
(dollars in thousands)
2025$3,300 
2026$3,300 
2027$3,460 
2028$3,420 
2029$3,420 
2030-2034$17,120 
Plan Assets
The Company conducts periodic asset-liability studies for our defined benefit pension plan to develop a policy glide path which adjusts the asset allocation with funded status. During fiscal 2022, the plan became fully funded, and the Company allocated its investments to fixed income securities as a result. These fixed income securities include funds holding corporate bonds of companies from diverse industries and U.S. Treasuries. The expected long-term rate of return on plan assets is 5.50%.
The fair value of the Company’s pension plan assets at December 28, 2024 and December 30, 2023, by asset category, were as follows:
(dollars in thousands)December 28, 2024December 30, 2023
Asset categoryTotalLevel 1
Level 2
Total
Level 1
Level 2
Fixed income securities:
Corporate bonds(*)
$45,549 $45,549 $— $55,959 $55,959 $— 
(*)This category invests in both U.S. Treasuries and corporate debt from U.S. issuers from diverse industries.
Post-retirement Life and Medical Plan
Under a defined benefit plan frozen in 1991, the Company offers a comprehensive post-retirement medical plan to current and certain future retirees and their spouses. The Company also offers life insurance to current and certain future retirees. Employee contributions are required as a condition of participation for both medical benefits and life insurance and the Company’s liabilities are net of these expected employee contributions.
Accumulated Post-Retirement Benefit Obligation
The following is a reconciliation of the accumulated post-retirement benefit obligation (“APBO”) under this plan:
Fiscal year ended
(dollars in thousands)December 28, 2024December 30, 2023
APBO at beginning of fiscal year$1,637 $1,745 
Service cost7 6 
Interest cost73 78 
Actuarial (gain) loss(51)3 
Benefits paid(172)(195)
APBO at end of fiscal year$1,494 $1,637 
Approximately $1.3 million and $1.4 million of the APBO at the end of fiscal 2024 and 2023, respectively, were classified as Other long term liabilities in the Company’s consolidated balance sheets.
Net Periodic Post-Retirement Benefit Cost and Changes Recognized in Other Comprehensive Income
The components of net periodic post-retirement benefit cost recognized in the statement of operations and changes recognized in other comprehensive income were as follows:
Fiscal year ended
(dollars in thousands)December 28, 2024December 30, 2023December 31, 2022
Recognized in the statement of operations:
Service cost
$7 $6 $14 
Interest cost
73 78 63 
Amortization of net gain(*)
(405)(428)(320)
Net periodic post-retirement benefit (income) cost$(325)$(344)$(243)
Changes recognized in other comprehensive income:
Net (gain) loss arising during the fiscal year$(51)$3 $(763)
Amortization of net gain(*)
405 428 320 
Total changes recognized in other comprehensive income$354 $431 $(443)
Total net periodic post-retirement benefit cost (income) and changes recognized in other comprehensive income$29 $87 $(686)
(*)Represents pre-tax amounts reclassified from accumulated other comprehensive loss.
Assumptions
The actuarial computations utilized the following assumptions, using year-end measurement dates:
Post-retirement benefit obligation20242023
Discount rate5.25%4.75%
Net periodic post-retirement benefit cost202420232022
Discount rate4.75%4.75%2.50%
The discount rates used at December 28, 2024, December 30, 2023, and December 31, 2022, were determined with primary consideration given to the FTSE Pension Discount Curve and Liability Index adjusted for the timing of expected plan distributions. The Company believes this index reflects a risk-free rate with maturities that are comparable to the timing of the expected payments under the plan.
The effects on the Company’s plan of all future increases in health care costs are borne primarily by employees; accordingly, increasing medical costs are not expected to have any material effect on the Company’s future financial results.
The Company’s contribution for these post-retirement benefit obligations was $0.2 million for fiscal years 2024, 2023, and 2022. The Company expects that its contribution and benefit payments for post-retirement benefit obligations will be approximately $0.2 million for fiscal years 2025, 2026, 2027, 2028, and 2029. For the five years subsequent to fiscal 2029, the aggregate contributions and benefit payments for post-retirement benefit obligations is expected to be approximately $0.6 million. The Company does not pre-fund this plan and as a result there are no plan assets.
Deferred Compensation Plan
The Company maintains a deferred compensation plan allowing voluntary salary and incentive compensation deferrals for qualifying employees as permitted by the Internal Revenue Code. Participant deferrals earn investment returns based on a select number of investment options, including equity, debt, and real estate mutual funds. Deferred compensation plan liabilities are recognized in Other long term liabilities on the Company’s consolidated balance sheets. Changes in the balance, excluding those related to contributions or payments, are included in Other expense (income), net on the Company’s consolidated statement of operations. The Company invests comparable amounts in marketable securities to approximate the participant’s return on selected investment options.
Defined Contribution Plan
The Company also sponsors defined contribution savings plans in the United States and Canada. The U.S. plan covers employees who are at least 21 years of age and have completed one calendar month of service and, if part-time, work a minimum of one thousand hours of service within the one-year period following the commencement of employment or during any subsequent calendar year. The plan provides for a discretionary employer match of employee contributions. The Company’s expense for the U.S. defined contribution savings plan totaled $8.6 million, $8.1 million, and $8.2 million for the fiscal years ended December 28, 2024, December 30, 2023, and December 31, 2022, respectively.