Retirement Plans and Postretirement Health Care and Life Insurance Benefits

12 Months Ended

Oct. 31, 2011

Retirement Plans and Postretirement Health Care and Life Insurance Benefits [Abstract]

RETIREMENT PLANS AND POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS

NOTE 13—RETIREMENT PLANS AND POSTRETIREMENT HEALTH CARE AND LIFE INSURANCE BENEFITS

Retirement Plans

The Company has certain non-contributory defined benefit pension plans in the United States, Canada, Germany, the Netherlands, South Africa and the United Kingdom. The Company uses a measurement date of October 31 for fair value purposes for its pension plans. The salaried plans’ benefits are based primarily on years of service and earnings. The hourly plans’ benefits are based primarily upon years of service. The Company contributes an amount that is not less than the minimum funding or more than the maximum tax-deductible amount to these plans. The plans’ assets consist of large cap, small cap and international equity securities, fixed income investments and not more than the allowable number of shares of the Company’s common stock, which was 247,504 Class A shares and 160,710 Class B shares at October 31, 2011 and 2010. The category “Other International” represents the noncontributory defined benefit pension plans in Canada, the Netherlands, and South Africa.

The components of net periodic pension cost include the following (Dollars in thousands):

For the year ended October 31, 2011	Consolidated			United States			Germany		United Kingdom			Other International
Service cost	$	12,625		$	8,957		$	450	$	2,121		$	1,097
Interest cost		29,636			16,651			1,406		7,008			4,571
Expected return on plan assets		(36,763	)		(19,712	)		—		(12,662	)		(4,389	)
Amortization of transition net asset		26			(48	)		—		—			74
Amortization of prior service cost		1,868			1,868			—		—			—
Recognized net actuarial (gain) loss		8,404			7,118			145		429			712
Net periodic pension cost	$	15,796		$	14,834		$	2,001	$	(3,104	)	$	2,065
For the year ended October 31, 2010	Consolidated			United States			Germany		United Kingdom			Other International
Service cost	$	12,670		$	9,171		$	366	$	2,326		$	807
Interest cost		29,213			15,990			1,387		6,958			4,878
Expected return on plan assets		(34,784	)		(18,097	)		—		(11,604	)		(5,083	)
Amortization of transition net asset		24			(48	)		—		—			72
Amortization of prior service cost		951			951			—		—			—
Recognized net actuarial (gain) loss		6,718			5,899			—		524			295
Net periodic pension cost	$	14,792		$	13,866		$	1,753	$	(1,796	)	$	969
For the year ended October 31, 2009	Consolidated			United States			Germany		United Kingdom			Other International
Service cost	$	10,224		$	7,366		$	345	$	1,838		$	675
Interest cost		31,440			16,572			1,505		6,792			6,571
Expected return on plan assets		(35,875	)		(17,593	)		—		(10,927	)		(7,355	)
Amortization of transition net asset		29			(48	)		—		—			77
Amortization of prior service cost		1,005			1,017			9		—			(21	)
Recognized net actuarial (gain) loss		(1,209	)		38			—		(1,268	)		21
Curtailment, settlement and other		497			147			—		350			—
Net periodic pension cost	$	6,111		$	7,499		$	1,859	$	(3,215	)	$	(32	)

The significant weighted average assumptions used in determining benefit obligations and net periodic pension costs were as follows:

For the year ended October 31, 2011	Consolidated			United States			Germany			United Kingdom			Other International
Discount rate		4.94	%		4.90	%		5.25	%		5.00	%		5.07	%
Expected return on plan assets(1)		7.20	%		8.25	%		0.00	%		7.50	%		4.55	%
Rate of compensation increase		3.13	%		3.00	%		2.75	%		4.00	%		2.31	%
For the year ended October 31, 2010
Discount rate		5.20	%		5.50	%		5.00	%		5.25	%		4.36	%
Expected return on plan assets(1)		7.50	%		8.25	%		0.00	%		7.50	%		6.06	%
Rate of compensation increase		3.11	%		3.00	%		2.75	%		4.00	%		2.32	%
For the year ended October 31, 2009
Discount rate		5.72	%		5.75	%		6.00	%		5.50	%		5.99	%
Expected return on plan assets(1)		7.69	%		8.25	%		0.00	%		7.50	%		6.73	%
Rate of compensation increase		3.25	%		3.00	%		2.75	%		4.00	%		3.01	%

(1) To develop the expected long-term rate of return on assets assumption, the Company uses a generally consistent approach wordwide. The approach considers various sources, primarily inputs from a range of advisors, inflation, bond yields, historical returns, and future expectations for returns for each asset class, as well as the target asset allocation of the pension portfolio. This rate is gross of any investment or administrative expenses.

The following table sets forth the plans’ change in benefit obligation, change in plan assets and amounts recognized in the consolidated financial statements (Dollars in thousands):

For the year ended October 31, 2011	Consolidated			USA			Germany			United Kingdom			Other International
Change in benefit obligation:
Benefit obligation at beginning of year	$	580,703		$	309,455		$	28,548		$	134,459		$	108,241
Service cost		12,625			8,957			450			2,121			1,097
Interest cost		29,636			16,651			1,406			7,008			4,571
Plan participant contributions		525			—			—			319			206
Amendments		(1,646	)		(622	)		—			(963	)		(61	)
Actuarial (gains) loss		24,973			24,780			(778	)		6,172			(5,201	)
Foreign currency effect		(2,947	)		—			(390	)		(1,314	)		(1,243	)
Benefits paid		(27,654	)		(13,696	)		(1,299	)		(5,740	)		(6,919	)
Benefit obligation at end of year	$	616,215		$	345,525		$	27,937		$	142,062		$	100,691
Change in plan assets:
Fair value of plan assets at beginning of year	$	514,728		$	228,302		$	—		$	178,486		$	107,940
Actual return on plan assets		21,444			20,969			—			2,802			(2,327	)
Expenses paid		(987	)		(926	)		—			—			(61	)
Plan participant contributions		525			—			—			319			206
Other		1,060			—			—			(722	)		1,782
Foreign currency effects		(3,183	)		—			—			(1,492	)		(1,691	)
Employer contributions		32,595			27,900			—			3,043			1,652
Benefits paid		(25,894	)		(13,235	)		—			(5,740	)		(6,919	)
Fair value of plan assets at end of year	$	540,288		$	263,010		$	—		$	176,696		$	100,582

For the year ended October 31, 2010	Consolidated			USA			Germany			United Kingdom			Other International
Change in benefit obligation:
Benefit obligation at beginning of year	$	541,791		$	284,680		$	25,287		$	133,669		$	98,155
Service cost		12,670			9,171			366			2,326			807
Interest cost		29,213			15,990			1,387			6,958			4,878
Plan participant contributions		500			—			—			312			188
Amendments		1,351			1,397			—			—			(46	)
Actuarial loss		34,275			10,734			4,393			1,694			17,454
Foreign currency effect		(12,452	)		—			(1,608	)		(4,259	)		(6,585	)
Benefits paid		(26,645	)		(12,517	)		(1,277	)		(6,241	)		(6,610	)
Benefit obligation at end of year	$	580,703		$	309,455		$	28,548		$	134,459		$	108,241
Change in plan assets:
Fair value of plan assets at beginning of year	$	463,158		$	194,470		$	—		$	166,250		$	102,438
Actual return on plan assets		65,495			27,358			—			20,449			17,688
Expenses paid		(46	)		—			—			—			(46	)
Plan participant contributions		500			—			—			312			188
Other		(625	)		(625	)		—			—			—
Foreign currency effects		(11,816	)		—			—			(5,291	)		(6,525	)
Employer contributions		22,983			19,169			—			3,007			807
Benefits paid		(24,921	)		(12,070	)		—			(6,241	)		(6,610	)
Fair value of plan assets at end of year	$	514,728		$	228,302		$	—		$	178,486		$	107,940

For the year ended October 31, 2011	Consolidated			USA			Germany			United Kingdom		Other International
Unrecognized net actuarial loss		153,441			119,475			3,899			11,462		18,605
Unrecognized prior service cost		4,675			4,675			—			—		—
Unrecognized initial net obligation		471			(28	)		—			—		499
Accumulated other comprehensive loss	$	158,587		$	124,122		$	3,899		$	11,462		19,104
Amounts recognized in the Consolidated Balance Sheets consist of:
Prepaid benefit cost	$	40,741		$	—		$	—		$	34,634	$	6,107
Accrued benefit liability		(115,044	)		(80,888	)		(27,937	)		—		(6,219	)
Accumulated other comprehensive loss		158,587			124,122			3,899			11,462		19,104
Net amount recognized	$	84,284		$	43,234		$	(24,038	)	$	46,096	$	18,992

For the year ended October 31, 2010	Consolidated			USA			Germany			United Kingdom			Other International
Unrecognized net actuarial (gain) loss		125,520			104,697			4,872			(3,609	)		19,560
Unrecognized prior service cost		6,239			6,239			—			—			—
Unrecognized initial net obligation		494			(76	)		—			—			570
Accumulated other comprehensive (income) loss	$	132,253		$	110,860		$	4,872		$	(3,609	)		20,130
Amounts recognized in the Consolidated Balance Sheets consist of:
Prepaid benefit cost	$	48,815		$	—		$	—		$	44,027		$	4,788
Accrued benefit liability		(114,790	)		(81,153	)		(28,548	)		—			(5,089	)
Accumulated other comprehensive (income) loss		132,253			110,860			4,872			(3,609	)		20,130
Net amount recognized	$	66,278		$	29,707		$	(23,676	)	$	40,418		$	19,829

Aggregated accumulated benefit obligations for all plans were $589.2 million and $556.6 million at October 31, 2011 and 2010, respectively. The $616.2 million projected benefit obligation consists of $345.5 million related to the United States pension and $270.7 million related to the non-United States pensions. The $540.3 million fair value of pension assets consists of $263.0 million related to the United States pension and $277.3 related to the non-United States pensions. The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the pension plans with accumulated benefit obligations in excess of plan assets were $388.8 million, $366.4 million and $273.7 million, respectively, as of October 31, 2011.

Pension plan contributions totaled $32.6 million, $23.0 million, and $15.9 million during 2011, 2010 and 2009, respectively. Contributions during 2012 are expected to be approximately $25.4 million. The Company expects to record an amortization loss of $11.3 million which is recorded in other comprehensive losses on the balance sheet.

The following table presents the fair value measurements for the pension assets:

As of October 31, 2011 (Dollars in thousands)

	Fair Value Measurement
Asset Category	Level 1		Level 2		Level 3		Total
Equity securities	$	83,854	$	144,255	$	—	$	228,109
Debt securities		74,438		106,288		—		180,726
Other		—		131,453		—		131,453
Total	$	158,292	$	381,996	$	—	$	540,288

As of October 31, 2010 (Dollars in thousands)

	Fair Value Measurement
Asset Category	Level 1		Level 2		Level 3		Total
Equity securities	$	154,190	$	134,057	$	—	$	288,247
Debt securities		—		87,504		—		87,504
Other		—		138,977				138,977
Total	$	154,190	$	360,538	$	—	$	514,728

The Company’s weighted average asset allocations at the measurement date and the target asset allocations by category are as follows:

Asset Category	2011 Actual			Target
Equity securities		42	%		41	%
Debt securities		34	%		35	%
Other		24	%		24	%
Total		100	%		100	%

The investment policy reflects the long-term nature of the plans’ funding obligations. The assets are invested to provide the opportunity for both income and growth of principal. This objective is pursued as a long-term goal designed to provide required benefits for participants without undue risk. It is expected that this objective can be achieved through a well-diversified asset portfolio. All equity investments are made within the guidelines of quality, marketability and diversification mandated by the Employee Retirement Income Security Act and other relevant statutes. Investment managers are directed to maintain equity portfolios at a risk level approximately equivalent to that of the specific benchmark established for that portfolio.

Future benefit payments, which reflect expected future service, as appropriate, during the next five years, and in the aggregate for the five years thereafter, are as follows (Dollars in thousands):

Year	Expected benefit payments
2012	$	27,744
2013	$	28,626
2014	$	30,202
2015	$	31,191
2016	$	31,892
2017-2021	$	183,863

The Company has several voluntary 401(k) savings plans that cover eligible employees. For certain plans, the Company matches a percentage of each employee’s contribution up to a maximum percentage of base salary. Company contributions to the 401(k) plans were $3.6 million in 2011, $2.9 million in 2010 and $1.7 million in 2009. For 2009 and in response to the current economic situation, contributions by the Company for employees accruing benefits in the 401(k) plans were suspended except for those participants not eligible to participate in the defined benefit pension plan or where contractually prohibited. New employees will continue to receive the Company contribution. For 2010 and 2011, the Company had reinstituted an employer match program.

Postretirement Health Care and Life Insurance Benefits

The Company has certain postretirement health and life insurance benefit plans in the United States and South Africa. The Company uses a measurement date of October 31 for its postretirement benefit plans.

In conjunction with a prior acquisition of the industrial containers business from Sonoco Products Company (“Sonoco”) in 1998, the Company assumed an obligation to reimburse Sonoco for its actual costs incurred in providing postretirement health care benefits to certain employees. Contributions by the Company are limited to an aggregate annual payment of $1.4 million for eligible employees at the date of purchase. Further, the Company is responsible for the cost of certain union hourly employees who were not eligible at the date of closing. The Company intends to fund these benefits from its operations.

The components of net periodic cost for the postretirement benefits include the following (Dollars in thousands):

For the years ended October 31,	2011		2010		2009
Service cost	$	22	$	19	$	21
Interest cost		1,228		1,565		1,896
Amortization of prior service cost		(1,656)		(1,329)		(1,308)
Recognized net actuarial loss (gain)		(71)		(58)		(195)
	$	(477)	$	197	$	414

The following table sets forth the plans’ change in benefit obligation, change in plan assets and amounts recognized in the consolidated financial statements (Dollars in thousands):

	October 31, 2011			October 31, 2010
Benefit obligation at beginning of year	$	21,555		$	25,396
Service cost		22			19
Interest cost		1,228			1,565
Actuarial loss		823			85
Foreign currency effect		(525	)		237
Plan amendments		—			(3,215	)
Benefits paid		(2,323	)		(2,532	)
Benefit obligation at end of year	$	20,780		$	21,555
Funded status	$	(20,780	)	$	(21,555	)
Unrecognized net actuarial loss		(1,106	)		(2,075	)
Unrecognized prior service credit		(12,419	)		(14,255	)
Net amount recognized	$	(34,305	)	$	(37,885	)

The accumulated postretirement health and life insurance benefit obligation and fair value of plan assets for the international plan were $4.1 million and $0, respectively, as of October 31, 2011 compared to $4.4 million and $0, respectively, as of October 31, 2010.

The measurements assume a discount rate of 4.9% in the United States and 8.25% in South Africa. The health care cost trend rates on gross eligible charges are as follows:

	Medical
Current trend rate		7.6	%
Ultimate trend rate		5.1	%
Year ultimate trend rate reached		2018

A one-percentage point change in assumed health care cost trend rates would have the following effects (Dollars in thousands):

	1-Percentage-Point Increase		1-Percentage-Point Decrease
Effect on total of service and interest cost components	$	62	$	(52	)
Effect on postretirement benefit obligation	$	708	$	(603	)

Future benefit payments, which reflect expected future service, as appropriate, during the next five years, and in the aggregate for the five years thereafter, are as follows (Dollars in thousands):

Year	Expected benefit payments
2012	$	2,765
2013	$	2,091
2014	$	1,982
2015	$	1,890
2016	$	1,795
2017-2021	$	7,741