10. Employee Benefit Plans

Defined Contribution Plan. The Partnership has an employee Retirement Savings and Investment Plan (the “401(k) Plan”) covering most employees. Employer matching contributions relating to the 401(k) Plan are a percentage of the participating employees’ elective contributions. The percentage of the Partnership’s contributions are based on a sliding scale depending on the Partnership’s achievement of annual performance targets. These contributions totaled $1,359, $1,201 and $2,504 for fiscal 2012, 2011 and 2010, respectively.

Defined Pension and Retiree Health and Life Benefits Arrangements

Pension Benefits. The Partnership has a noncontributory defined benefit pension plan which was originally designed to cover all eligible employees of the Partnership who met certain requirements as to age and length of service. Effective January 1, 1998, the Partnership amended its defined benefit pension plan to provide benefits under a cash balance formula as compared to a final average pay formula which was in effect prior to January 1, 1998. Effective January 1, 2000, participation in the defined benefit pension plan was limited to eligible existing participants on that date with no new participants eligible to participate in the plan. On September 20, 2002, the Board of Supervisors approved an amendment to the defined benefit pension plan whereby, effective January 1, 2003, future service credits ceased and eligible employees receive interest credits only toward their ultimate retirement benefit.

Contributions, as needed, are made to a trust maintained by the Partnership. Contributions to the defined benefit pension plan are made by the Partnership in accordance with the Employee Retirement Income Security Act of 1974 minimum funding standards plus additional amounts made at the discretion of the Partnership, which may be determined from time to time. There were no minimum funding requirements for the defined benefit pension plan for fiscal 2012, 2011 or 2010. During the last decade, cash balance plans came under increased scrutiny which resulted in litigation pertaining to the cash balance feature and the Internal Revenue Service (“IRS”) issued additional regulations governing these types of plans. In fiscal 2010, the IRS completed its review of the Partnership’s defined benefit pension plan and issued a favorable determination letter pertaining to the cash balance formula. However, there can be no assurances that future legislative developments will not have an adverse effect on the Partnership’s results of operations or cash flows.

Retiree Health and Life Benefits. The Partnership provides postretirement health care and life insurance benefits for certain retired employees. Partnership employees hired prior to July 1993 are eligible for postretirement life insurance benefits if they reach a specified retirement age while working for the Partnership. Partnership employees hired prior to July 1993 and who retired prior to March 1998 are eligible for postretirement health care benefits if they reached a specified retirement age while working for the Partnership. Effective January 1, 2000, the Partnership terminated its postretirement health care benefit plan for all eligible employees retiring after March 1, 1998. All active employees who were eligible to receive health care benefits under the postretirement plan subsequent to March 1, 1998, were provided an increase to their accumulated benefits under the cash balance pension plan. The Partnership’s postretirement health care and life insurance benefit plans are unfunded. Effective January 1, 2006, the Partnership changed its postretirement health care plan from a self-insured program to one that is fully insured under which the Partnership pays a portion of the insurance premium on behalf of the eligible participants.

The Partnership recognizes the funded status of pension and other postretirement benefit plans as an asset or liability on the balance sheet and recognizes changes in the funded status in comprehensive income (loss) in the year the changes occur. The Partnership uses the date of its consolidated financial statements as the measurement date of plan assets and obligations.

Projected Benefit Obligation, Fair Value of Plan Assets and Funded Status. The following tables provide a reconciliation of the changes in the benefit obligations and the fair value of the plan assets for fiscal 2012 and 2011 and a statement of the funded status for both years. Under the Partnership’s cash balance defined benefit pension plan, the accumulated benefit obligation and the projected benefit obligation are the same.


	Pension Benefits						Retiree Health and Life Benefits
	2012			2011			2012			2011
Reconciliation of benefit obligations:
Benefit obligation at beginning of year	$	159,119		$	157,626		$	20,895		$	20,932
Service cost		—			—			7			7
Interest cost		6,311			6,822			802			855
Actuarial loss (gain)		14,089			9,165			(74	)		631
Lump sum benefits paid		(5,498	)		(6,365	)		—			—
Ordinary benefits paid		(8,115	)		(8,129	)		(1,398	)		(1,530	)

Benefit obligation at end of year	$	165,906		$	159,119		$	20,232		$	20,895

Reconciliation of fair value of plan assets:
Fair value of plan assets at beginning of year	$	132,898		$	139,889		$	—		$	—
Actual return on plan assets		14,588			7,503			—			—
Employer contributions		—			—			1,398			1,530
Lump sum benefits paid		(5,498	)		(6,365	)		—			—
Ordinary benefits paid		(8,115	)		(8,129	)		(1,398	)		(1,530	)

Fair value of plan assets at end of year	$	133,873		$	132,898		$	—		$	—

Funded status:
Funded status at end of year	$	(32,033	)	$	(26,221	)	$	(20,232	)	$	(20,895	)
Amounts recognized in consolidated balance sheets consist of:
Net amount recognized at end of year	$	(32,033	)	$	(26,221	)	$	(20,232	)	$	(20,895	)
Less: Current portion		—			—			1,427			1,669

Non-current benefit liability	$	(32,033	)	$	(26,221	)	$	(18,805	)	$	(19,226	)

Amounts not yet recognized in net periodic benefit cost and included in accumulated other comprehensive income (loss):
Actuarial net (loss) gain	$	(59,397	)	$	(59,502	)	$	1,899		$	1,825
Prior service credits		—			—			1,869			2,358

Net amount recognized in accumulated other comprehensive (loss) income	$	(59,397	)	$	(59,502	)	$	3,768		$	4,183

Amounts recognized in other comprehensive income included net actuarial losses arising during the period of $5,166 and $7,957 for pension benefits for fiscal 2012 and 2011, respectively, and net actuarial (gains) losses arising during the period of ($74) and $631 for other postretirement benefits for fiscal 2012 and 2011, respectively. The amounts in accumulated other comprehensive loss as of September 29, 2012 that are expected to be recognized as components of net periodic benefit costs during fiscal 2013 are expenses of $5,285 and credits of $(478) for pension and other postretirement benefits, respectively.

Plan Assets. The Partnership’s investment policies and strategies, as set forth in the Investment Management Policy and Guidelines, are monitored by a Benefits Committee comprised of five members of management. The Partnership employs a liability driven investment strategy, which seeks to increase the correlation of the plan’s assets and liabilities to reduce the volatility of the plan’s funded status. This strategy has resulted in an asset allocation that is largely comprised of investments in funds of fixed income securities. The target asset mix is as follows: (i) fixed income securities portion of the portfolio should range between 75% and 95%; and (ii) equity securities portion of the portfolio should range between 5% and 25%.

The following table presents the actual allocation of assets held in trust as of:


	September			September
	29, 2012			24, 2011
Fixed income securities		85	%		88	%
Equity securities		15	%		12	%

		100	%		100	%

In accordance with current accounting guidance, the Partnership’s valuations include the use of the funds’ reported net asset values for commingled fund investments and private investment funds. Commingled funds are valued at the net asset value for their underlying securities. The Partnership further corroborates the above valuations with observable market data using level 1 and 2 inputs within the fair value framework. The assets of the defined benefit pension plan have no significant concentration of risk and there are no restrictions on these investments.

The following table describes the measurement of the Partnership’s pension plan assets by asset category as of:


	September 29, 2012		September 24, 2011
Short term investments (1)	$	1,309	$	1,439

Equity securities: (1) (2)
Domestic		13,651		10,823
International		6,263		5,342
Fixed income securities (1) (3)		112,650		115,294

	$	133,873	$	132,898

(1)	Includes funds which are not publicly traded and are valued at the net asset value of the units provided by the fund issuer.

(2)	Includes funds which invest primarily in a diversified portfolio of publicly traded US and Non-US common stock.

(3)	Includes funds which invest primarily in publicly traded and non-publicly traded, investment grade corporate bonds, U.S. government bonds and asset-backed securities.

Projected Contributions and Benefit Payments. There are no projected minimum funding requirements under the Partnership’s defined benefit pension plan for fiscal 2013. Estimated future benefit payments for both pension and retiree health and life benefits are as follows:


Fiscal Year	Pension Benefits		Retiree Health and Life Benefits
2013	$	30,486	$	1,427
2014		13,702		1,369
2015		12,695		1,301
2016		12,384		1,224
2017		11,188		1,141
2018 through 2022		49,163		4,483

Estimated future pension benefit payments assumes that age 65 or older active and non-active eligible participants in the pension plan that had not received a benefit payment prior to fiscal 2013 will elect to receive a benefit payment in fiscal 2013. In addition, for all periods presented, estimated future pension benefit payments assumes that participants will elect a lump sum payment in the fiscal year that the participant becomes eligible to receive benefits.

Effect on Operations. The following table provides the components of net periodic benefit costs included in operating expenses for fiscal 2012, 2011 and 2010:


	Pension Benefits									Retiree Health and Life Benefits
	2012			2011			2010			2012			2011			2010
Service cost	$	—		$	—		$	—		$	7		$	7		$	7
Interest cost		6,311			6,822			7,503			802			855			1,013
Expected return on plan assets		(5,665	)		(6,295	)		(8,080	)		—			—			—
Amortization of prior service credit		—			—			—			(490	)		(490	)		(490	)
Settlement charge		—			—			2,818			—			—			—
Recognized net actuarial loss		5,271			4,721			5,374			—			(35	)		(65	)

Net periodic benefit costs	$	5,917		$	5,248		$	7,615		$	319		$	337		$	465

During fiscal 2012 and fiscal 2011, the amount of the pension benefit obligation settled through lump sum payments did not exceed the settlement threshold (combined service and interest costs of net periodic pension cost); therefore, a settlement charge was not required to be recognized in either of those fiscal years. During fiscal 2010, lump sum pension settlement payments to either terminated or retired individuals amounted to $7,889, which exceeded the settlement threshold of $7,503 for fiscal 2010, and as a result, the Partnership was required to recognize a non-cash settlement charge of $2,818 during fiscal 2010. The non-cash charge was required to accelerate recognition of a portion of cumulative unamortized losses in the defined benefit pension plan.

Actuarial Assumptions. The assumptions used in the measurement of the Partnership’s benefit obligations as of September 29, 2012 and September 24, 2011 are shown in the following table:


	Pension Benefits						Retiree Health and Life Benefits
	2012			2011			2012			2011
Weighted-average discount rate		3.500	%		4.375	%		3.000	%		4.000	%
Average rate of compensation increase		n/a			n/a			n/a			n/a
Health care cost trend		n/a			n/a			7.530	%		7.740	%

The assumptions used in the measurement of net periodic pension benefit and postretirement benefit costs for fiscal 2012, 2011 and 2010 are shown in the following table:


	Pension Benefits									Retiree Health and Life Benefits
	2012			2011			2010			2012			2011			2010
Weighted-average discount rate		4.375	%		4.750	%		5.125	%		4.000	%		4.250	%		5.000	%
Average rate of compensation increase		n/a			n/a			n/a			n/a			n/a			n/a
Weighted-average expected long- term rate of return on plan assets		4.800	%		5.000	%		6.250	%		n/a			n/a			n/a
Health care cost trend		n/a			n/a			n/a			7.740	%		7.950	%		8.150	%

The discount rate assumption takes into consideration current market expectations related to long-term interest rates and the projected duration of the Partnership’s pension obligations based on a benchmark index with similar characteristics as the expected cash flow requirements of the Partnership’s defined benefit pension plan over the long-term. The expected long-term rate of return on plan assets assumption reflects estimated future performance in the Partnership’s pension asset portfolio considering the investment mix of the pension asset portfolio and historical asset performance. The expected return on plan assets is determined based on the expected long-term rate of return on plan assets and the market-related value of plan assets. The market-related value of pension plan assets is the fair value of the assets. Unrecognized actuarial gains and losses in excess of 10% of the greater of the projected benefit obligation and the market-related value of plan assets are amortized over the expected average remaining service period of active employees expected to receive benefits under the plan.

The 7.53% increase in health care costs assumed at September 29, 2012 is assumed to decrease gradually to 4.48% in fiscal 2028 and to remain at that level thereafter. An increase or decrease of the assumed health care cost trend rates by 1.0% in each year would have no material impact to the Partnership’s benefit obligation as of September 29, 2012 nor the aggregate of service and interest components of net periodic postretirement benefit expense for fiscal 2012. The Partnership has concluded that the prescription drug benefits within the retiree medical plan do not entitle the Partnership to an available Medicare subsidy.