Pension and Postretirement Benefits

12 Months Ended

May 29, 2011

Pension and Postretirement Benefits [Abstract]

PENSION AND POSTRETIREMENT BENEFITS

20.  PENSION AND POSTRETIREMENT BENEFITS

The Company and its subsidiaries have defined benefit retirement plans (“plans”) for eligible salaried and hourly employees. Benefits are based on years of credited service and average compensation or stated amounts for each year of service. We also sponsor postretirement plans which provide certain medical and dental benefits (“other benefits”) to qualifying U.S. employees.

We recognize the funded status of our plans in the consolidated balance sheets. We also recognize as a component of accumulated other comprehensive loss, the net of tax results of the gains or losses and prior service costs or credits that arise during the period but are not recognized in net periodic benefit cost. These amounts will be adjusted out of accumulated other comprehensive income (loss) as they are subsequently recognized as components of net periodic benefit cost.

The changes in benefit obligations and plan assets at May 29, 2011 and May 30, 2010 are presented in the following table.

	Pension Benefits						Other Benefits
	2011			2010			2011			2010
Change in Benefit Obligation
Benefit obligation at beginning of year	$	2,614.1		$	2,220.4		$	324.9		$	288.6
Service cost		59.7			49.8			0.6			0.5
Interest cost		147.5			148.1			16.3			18.3
Plan participants’ contributions		—			—			6.9			7.6
Amendments		1.5			3.0			(9.0	)		6.2
Actuarial loss		190.9			331.1			19.4			42.0
Special termination benefits		1.3			—			—			—
Benefits paid		(133.6	)		(138.3	)		(36.5	)		(38.3	)
Benefit obligation at end of year	$	2,881.4		$	2,614.1		$	322.6		$	324.9
Change in Plan Assets
Fair value of plan assets at beginning of year	$	2,144.6		$	1,903.2		$	4.0		$	8.1
Actual return on plan assets		418.3			268.3			—			—
Employer contributions		129.4			122.6			25.7			26.6
Plan participants’ contributions		—			—			6.9			7.6
Investment and administrative expenses		(14.8	)		(11.2	)		—			—
Benefits paid		(133.6	)		(138.3	)		(36.5	)		(38.3	)
Fair value of plan assets at end of year	$	2,543.9		$	2,144.6		$	0.1		$	4.0

The funded status and amounts recognized in our consolidated balance sheets at May 29, 2011 and May 30, 2010 were:

	Pension Benefits						Other Benefits
	2011			2010			2011			2010
Funded status	$	(337.5	)	$	(469.5	)	$	(322.5	)	$	(320.9	)
Amounts Recognized in Consolidated Balance Sheets
Other assets	$	14.7		$	0.1		$	—		$	—
Other accrued liabilities		(8.7	)		(8.5	)		(27.5	)		(31.1	)
Other noncurrent liabilities		(343.5	)		(461.1	)		(295.0	)		(289.8	)
Net amount recognized	$	(337.5	)	$	(469.5	)	$	(322.5	)	$	(320.9	)
Amounts Recognized in Accumulated Other Comprehensive (Income) Loss (Pre-tax)
Actuarial net loss	$	417.6		$	473.5		$	75.6		$	61.3
Net prior service cost (benefit)		15.7			17.4			(12.2	)		(12.7	)
Total	$	433.3		$	490.9		$	63.4		$	48.6
Weighted-Average Actuarial Assumptions Used to Determine Benefit Obligations At May 29, 2011 and May 30, 2010
Discount rate		5.30	%		5.80	%		4.90	%		5.40	%
Long-term rate of compensation increase		4.25	%		4.25	%		N/A			N/A

The accumulated benefit obligation for all defined benefit pension plans was $2.8 billion and $2.5 billion at May 29, 2011 and May 30, 2010, respectively.

The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets at May 29, 2011 and May 30, 2010 were:

	2011		2010
Projected benefit obligation	$	2,505.6	$	2,611.9
Accumulated benefit obligation		2,436.1		2,530.9
Fair value of plan assets		2,153.4		2,142.3

Components of pension benefit and other postretirement benefit costs were:

	Pension Benefits									Other Benefits
	2011			2010			2009			2011			2010			2009
Service cost	$	59.7		$	49.8		$	50.7		$	0.6		$	0.5		$	0.8
Interest cost		147.5			148.1			141.2			16.3			18.3			20.6
Expected return on plan assets		(173.0	)		(161.2	)		(158.7	)		(0.1	)		(0.3	)		(0.2	)
Amortization of prior service cost (benefit)		3.2			3.2			3.0			(9.6	)		(9.4	)		(11.2	)
Settlement loss		—			1.9			—			—			—			—
Special termination benefits		1.3			—			—			—			—			—
Recognized net actuarial (gain) loss		16.4			3.9			2.1			4.6			(0.1	)		4.8
Curtailment loss		—			0.9			—			—			—			—
Benefit cost—Company plans		55.1			46.6			38.3			11.8			9.0			14.8
Pension benefit cost—multi-employer plans		9.2			9.7			8.6			—			—			—
Total benefit cost	$	64.3		$	56.3		$	46.9		$	11.8		$	9.0		$	14.8

Other changes in plan assets and benefit obligations recognized in other comprehensive (income) loss were:

	Pension Benefits						Other Benefits
	2011			2010			2011			2010
Net actuarial (gain) loss	$	(39.5	)	$	235.2		$	18.9		$	41.9
Prior service cost (benefit)		1.5			3.0			(9.1	)		6.2
Amortization of prior service (cost) benefit		(3.2	)		(4.1	)		9.6			9.4
Recognized net actuarial gain (loss) and settlement loss		(16.4	)		(5.8	)		(4.6	)		0.1
Net amount recognized	$	(57.6	)	$	228.3		$	14.8		$	57.6

Weighted-Average Actuarial Assumptions
Used to Determine Net Expense

	Pension Benefits									Other Benefits
	2011			2010			2009			2011			2010			2009
Discount rate		5.80	%		6.90	%		6.60	%		5.40	%		6.60	%		6.40	%
Long-term rate of return on plan assets		7.75	%		7.75	%		7.75	%		3.50	%		4.50	%		4.50	%
Long-term rate of compensation increase		4.25	%		4.25	%		4.25	%		N/A			N/A			N/A

We amortize prior service cost and amortizable gains and losses in equal annual amounts over the average expected future period of vested service. For plans with no active participants, average life expectancy is used instead of average expected useful service.

The amounts in accumulated other comprehensive income (loss) expected to be recognized as components of net expense during the next year are as follows:

	Pension Benefits		Other Benefits
Prior service cost (benefit)	$	3.1	$	(8.7	)
Net actuarial loss		38.2		6.0

Plan Assets

The fair value of Plan assets, summarized by level within the fair value hierarchy described in Note 21, as of May 29, 2011, are as follows:

	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	2.7	$	121.5	$	—	$	124.2
Equity securities:
U.S. equity securities		625.7		7.7		—		633.4
International equity securities		473.1		131.5		—		604.6
Fixed income securities:
Government bonds		53.4		155.1		—		208.5
Corporate bonds		103.5		169.5		—		273.0
Mortgage-backed bonds		31.5		58.9		—		90.4
Real Estate		7.8		—		70.3		78.1
Multi-strategy hedge funds		—		—		346.0		346.0
Private equity		—		—		56.0		56.0
Master limited partnerships		125.2		—		—		125.2
Net receivables for unsettled transactions		4.5		—		—		4.5
Total assets	$	1,427.4	$	644.2	$	472.3	$	2,543.9

The fair value of Plan assets, summarized by level within the fair value hierarchy described in Note 21, as of May 30, 2010, are as follows:

	Level 1		Level 2		Level 3		Total
Cash and cash equivalents	$	5.0	$	275.5	$	—	$	280.5
Equity securities:
U.S. equity securities		537.2		42.1		—		579.3
International equity securities		366.9		40.3		—		407.2
Fixed income securities:
Government bonds		160.4		160.2		—		320.6
Corporate bonds		38.4		207.3		—		245.7
Mortgage-backed bonds		32.3		67.6		—		99.9
Real Estate		3.0		—		61.4		64.4
Multi-strategy hedge funds		—		—		22.1		22.1
Private equity		—		—		39.1		39.1
Master limited partnerships		49.2		—		—		49.2
Contracts with insurance companies		—		—		31.2		31.2
Net receivables for unsettled transactions		5.4		—		—		5.4
Total assets	$	1,197.8	$	793.0	$	153.8	$	2,144.6

Level 1 assets are valued based on quoted prices in active markets for identical securities. The majority of the Level 1 assets listed above include the common stock of both U.S. and international companies, master limited partnership units, and real estate investment trusts, all of which are actively traded and priced in the market. Level 2 assets are valued based on other significant observable inputs including quoted prices for similar securities, yield curves, indices, etc. The Level 2 assets listed above consist primarily of commingled equity investments where values are based on the net asset value of the underlying investments held, individual fixed income securities where values are based on quoted prices of similar securities and observable market data, and commingled fixed income investments where values are based on the net asset value of the underlying investments held. Level 3 assets are those where the fair value is determined based on unobservable inputs. The Level 3 assets listed above consist of alternative investments where active market pricing is not readily available and, as such, we use net asset values as an estimate of fair value as a practical expedient. For Real Estate, the value is based on the net asset value provided by the investment manager who uses market data and independent third party appraisals to determine fair market value. For the Multi-Strategy Hedge Funds, the value is based on the net asset values provided by a third party administrator. For Private Equity, the investment manager provides the valuation using, among other things, comparable transactions, comparable public company data, discounted cash flow analysis, and market conditions. The valuations on the contracts with insurance companies are provided by third party administrators who use the terms of the contract along with available market data to determine the fair market value.

Level 3 investments are generally considered long-term in nature with varying redemption availability. Certain of our Level 3 investments, with a fair value of approximately $407.8 million as of May 29, 2011, have imposed customary redemption gates which may further restrict or limit the redemption of invested funds therein.

As of May 29, 2011, we have unfunded commitments for additional investments in the Private Equity funds totaling approximately $37 million. We expect unfunded commitments to be funded from plan assets rather than the general assets of the Company.

To develop the expected long-term rate of return on plan assets assumption for the pension plans, we consider the current asset allocation strategy, the historical investment performance, and the expectations for future returns of each asset class.

Our pension plan weighted-average asset allocations and our target asset allocations at May 29, 2011 and May 30, 2010, by asset category were as follows:

	May 29,			May 30,			Target
	2011			2010			Allocation
Equity Securities		49	%		46	%		42	%
Debt Securities		22	%		31	%		28	%
Real Estate		3	%		3	%		8	%
Multi-strategy Hedge Funds		14	%		1	%		5	%
Private Equity		2	%		2	%		10	%
Other		10	%		17	%		7	%
Total		100	%		100	%

The Company’s investment strategy reflects the expectation that equity securities will outperform debt securities over the long term. Assets are invested in a prudent manner to maintain the security of funds while maximizing returns within the Company’s Investment Policy guidelines. The strategy is implemented utilizing indexed and actively managed assets from the categories listed.

The investment goals are to provide a total return that, over the long term, increases the ratio of plan assets to liabilities subject to an acceptable level of risk. This is accomplished through diversification of assets in accordance with the Investment Policy guidelines. Investment risk is mitigated by periodic rebalancing between asset classes as necessitated by changes in market conditions within the Investment Policy guidelines.

Other investments are primarily made up of cash, hedge funds, private equity, master limited partnerships, and contracts with insurance companies.

Level 3 Gains and Losses

The change in the fair value of the Plan’s Level 3 assets is summarized as follows:

			Net Realized			Net,
	Fair Value May 30,		and Unrealized			Purchases			Fair Value May 29,
	2010		Gains (Losses)			and Sales			2011
Real Estate	$	61.4	$	7.5		$	1.4		$	70.3
Multi-strategy hedge funds		22.1		34.1			289.8			346.0
Private equity		39.1		8.1			8.8			56.0
Contracts with insurance companies		31.2		(2.4	)		(28.8	)		—
Total	$	153.8	$	47.3		$	271.2		$	472.3

			Net Realized			Net,
	Fair Value May 31,		And Unrealized			Purchases			Fair Value May 30,
	2009		Gains (Losses)			and Sales			2010
Real Estate	$	77.1	$	(17.0	)	$	1.3		$	61.4
Multi-strategy hedge funds		68.9		2.4			(49.2	)		22.1
Private equity		28.5		3.9			6.7			39.1
Contracts with insurance companies		28.9		4.1			(1.8	)		31.2
Total	$	203.4	$	(6.6	)	$	(43.0	)	$	153.8

Assumed health care cost trend rates have a significant effect on the benefit obligation of the postretirement plans.

	May 29,			May 30,
Assumed Health Care Cost Trend Rates at:	2011			2010
Initial health care cost trend rate		7.5	%		8.0	%
Ultimate health care cost trend rate		5.0	%		5.0	%
Year that the rate reaches the ultimate trend rate		2016			2016

A one percentage point change in assumed health care cost rates would have the following effect:

	One Percent		One Percent
	Increase		Decrease
Effect on total service and interest cost	$	1.3	$	(1.1	)
Effect on postretirement benefit obligation		24.1		(21.7	)

We currently anticipate making contributions of approximately $80.4 million to our company-sponsored pension plans in fiscal 2012. This estimate is based on current tax laws, plan asset performance, and liability assumptions, which are subject to change. We anticipate making contributions of $32.5 million to the postretirement plan in fiscal 2012.

The following table presents estimated future gross benefit payments and Medicare Part D subsidy receipts for our plans:

			Health Care and Life Insurance
	Pension		Benefit		Subsidy
	Benefits		Payments		Receipts
2012	$	148.2	$	32.6	$	(4.3	)
2013		151.9		33.7		(4.5	)
2014		156.2		33.3		(4.5	)
2015		160.8		32.7		(4.6	)
2016		165.7		31.8		(4.6	)
Succeeding 5 years		915.7		139.8		(21.2	)

Certain of our employees are covered under defined contribution plans. The expense related to these plans was $21.2 million, $22.8 million, and $23.2 million in fiscal 2011, 2010, and 2009, respectively.