Retirement and Welfare

12 Months Ended

Apr. 28, 2012

Retirement and Welfare

Note 9: Retirement and Welfare

Voluntary 401(k) retirement plans are offered to eligible employees within certain U.S. operating units. For most operating units, we make matching contributions based on specific formulas. This portion of the plan was suspended during the third quarter of fiscal 2009 and re-instated during the third quarter of fiscal 2010.

We also maintain an Executive Qualified Deferred Compensation plan for eligible highly compensated employees.  An element of this plan allows contributions for eligible highly compensated employees.  As of April 28, 2012, and April 30, 2011, we had $8.3 million and $8.4 million, respectively, of obligations for this plan included in other long-term liabilities. We had life insurance contracts and mutual funds at April 28, 2012, and at April 30, 2011, with combined cash surrender and market values of $8.3 million and $8.4 million, respectively, included in other long-term assets related to this plan.

We maintain a non-qualified defined benefit retirement plan for certain former salaried employees. Included in other long-term liabilities were plan obligations of $16.3 million and $15.0 million at April 28, 2012, and April 30, 2011, respectively, which represented the unfunded projected benefit obligation of this plan. During fiscal 2012, the interest cost recognized for this plan was $0.8 million, the actuarial loss recognized in accumulated other comprehensive loss was $1.6 million and the benefit payments during the year were $1.1 million.  Benefit payments are expected to be approximately $1.1 million annually for the next ten years. The discount rate used to determine the obligations under this plan was 4.3% for fiscal 2012. During fiscal 2011, the interest cost recognized for this plan was $0.8 million, the actuarial loss recognized in accumulated other comprehensive loss was $0.6 million and the benefit payments during the year were $1.1 million.  The discount rate used to determine the obligations under this plan was 5.3% for fiscal 2011. This plan is not funded and is excluded from the obligation charts and disclosures that follow. We hold available-for-sale marketable securities to fund future obligations of this plan in a Rabbi trust (see Notes 5 and 18).  We are not required to make any contributions to the non-qualified defined benefit plan in fiscal year 2013; however, we have the discretion to make contributions.

We also maintain a defined benefit pension plan for eligible factory hourly employees at some operating units.  Active participants at some operating units continue to earn service cost.  The measurement dates for the pension plan assets and benefit obligations were April 28, 2012, April 30, 2011, and April 24, 2010, in the years presented.

The changes in plan assets and benefit obligations were recognized in accumulated other comprehensive loss as follows (pre-tax) (for the fiscal years ended):

(Amounts in thousands)	4/28/2012			4/30/2011
Beginning of year net actuarial loss	$	27,118		$	28,320
Net current year actuarial loss		19,787			571
Amortization of actuarial loss		(1,635	)		(1,773	)
End of year net actuarial loss	$	45,270		$	27,118

In fiscal 2013, we expect to amortize $3.0 million of unrecognized actuarial losses as a component of pension expense.

The combined net periodic pension cost and retirement costs for retirement plans were as follows (for the fiscal years ended):

(Amounts in thousands)	4/28/2012			4/30/2011			4/24/2010
Service cost	$	1,110		$	1,187		$	1,043
Interest cost		5,565			5,531			5,600
Expected return on plan assets		(6,820	)		(6,027	)		(4,825	)
Net amortization and deferral		1,635			1,773			2,109
Net periodic pension cost (hourly plan)		1,490			2,464			3,927
401(k)*		2,476			2,578			831
Other*		107			342			340
Total retirement costs (excluding unfunded salaried plan)	$	4,073		$	5,384		$	5,098

*Not determined by an actuary

The funded status of the defined benefit pension plan for eligible factory hourly employees was as follows:

(Amounts in thousands)	4/28/2012			4/30/2011
Change in benefit obligation
Benefit obligation at beginning of year	$	101,602		$	95,967
Service cost		1,110			1,187
Interest cost		5,565			5,531
Actuarial loss		15,314			3,935
Benefits paid		(5,244	)		(5,018	)
Benefit obligation at end of year		118,347			101,602
Change in plan assets
Fair value of plan assets at beginning of year		86,100			77,232
Actual return on plan assets		2,659			9,742
Employer contributions		5,798			4,495
Other expenses		(311	)		(351	)
Benefits paid		(5,244	)		(5,018	)
Fair value of plan assets at end of year	$	89,002		$	86,100
Funded status	$	(29,345	)	$	(15,502	)

Amounts included in the consolidated balance sheet related to the defined benefit pension plan for eligible factory hourly employees consist of:

(Amounts in thousands)	4/28/2012			4/30/2011
Other long-term liabilities	$	(29,345	)	$	(15,202	)

The actuarial assumptions for the defined benefit pension plan for eligible factory hourly employees were as follows (for the fiscal years ended):

	4/28/2012			4/30/2011			4/24/2010
Discount rate used to determine benefit obligations		4.6	%		5.6	%		5.9	%
Discount rate used to determine net benefit cost		5.6	%		5.9	%		7.2	%
Long-term rate of return		7.8	%		8.0	%		8.0	%

The discount rate is calculated by matching a pool of high quality bond payments to the plan’s expected future benefit payments as determined by our actuary. The long-term rate of return was determined based on the average rate of earnings expected on the funds invested or to be invested to provide the benefits of these plans. This included considering the trust’s asset allocation, investment strategy, and the expected returns likely to be earned over the life of the plans. This is based on our goal of earning the highest rate of return while maintaining acceptable levels of risk. We strive to have assets within the plan that are diversified so that unexpected or adverse results from one asset class will not have a significant negative impact on the entire portfolio. This basis is consistent with prior years.

The strategic asset allocation targets are 65% equities and 35% fixed income within a range of 5% of the target. The weighted average asset allocations at year end for the defined benefit pension plan for eligible factory hourly employees were as follows:

	4/28/2012			4/30/2011
Equity securities		67	%		65	%
Fixed income		31	%		32	%
Cash and equivalents		2	%		3	%
Total		100	%		100	%

The long-term stated investment objective of our defined benefit pension plan for eligible factory hourly employees includes the following objectives: 

· maximize the investment return with the least amount of risk through a combination of capital appreciation and income;

· diversify the portfolio among various asset classes with the goal of reducing volatility of return and reducing principal risk; and

· maintain liquidity sufficient to meet our defined benefit pension plan obligations.

Although it is the intent to achieve a long-term above-average return, that intent does not include taking extraordinary risks or engaging in investment practices not commonly considered prudent.

Risks of investing are managed through our asset allocation and diversification. We monitor and re-assess all investments on a quarterly basis. In order to control risk through portfolio diversification, we have placed portfolio market limits, which were discussed above as being within 5% of our target allocations. Investments are reviewed at least quarterly and rebalanced as needed. The overall expected long-term rate of return is determined by using long-term historical returns for equity and debt securities in proportion to their weight in the investment portfolio.

The following table presents the fair value of the assets in our defined benefit pension plan for eligible factory hourly employees at April 28, 2012, and April 30, 2011.

Fiscal 2012
(Amounts in thousands)	Level 1 (a)		Level 2 (a)		Level 3
Cash and equivalents	$	1,736	$	—	$	—
Equity funds		44,725		15,071		—
Debt funds		—		27,470		—
Total	$	46,461	$	42,541	$	—

(a) There were no transfers between Level 1 and Level 2 during fiscal 2012.

Fiscal 2011
(Amounts in thousands)	Level 1 (b)		Level 2 (b)		Level 3
Cash and equivalents	$	2,913	$	—	$	—
Equity funds		41,984		13,695		—
Debt funds		—		27,508		—
Total	$	44,897	$	41,203	$	—

(b) There were no transfers between Level 1 and Level 2 during fiscal 2011. Fiscal 2011 amounts have been revised to reflect the reclassification of $14.8 million of debt funds from Level 1 to Level 2 and the reclassification of $2.8 million of cash and other investments from Level 2 to Level 1.

Level 1 retirement plan assets include U.S. currency held by a designated trustee, cash and equivalents of commingled funds generally valued using observable market data, and equity funds of common and preferred securities issued by U.S. and non-U.S. corporations. These equity funds are traded actively on exchanges and price quotes for these shares are readily available.

Equity funds categorized as Level 2 include common trust funds which are composed of shares or units in open ended funds with active issuances and redemptions. The value of these funds is determined based on the net asset value of the funds, the underlying assets of which are publicly traded on exchanges. Price quotes for the assets held by these funds are readily available. Debt funds categorized as Level 2 consist of corporate fixed income securities issued by U.S. and non-U.S. corporations and fixed income securities issued directly by the U.S. Treasury or by government-sponsored enterprises which are valued using a bid evaluation process with bid data provided by independent pricing sources using observable market data.

Our funding policy is to contribute to our defined benefit pension plan amounts sufficient to meet the minimum funding requirement as defined by employee benefit and tax laws, plus additional amounts which we determine to be appropriate. During fiscal 2012 we contributed $5.8 million to our defined benefit pension plan. We expect to contribute approximately $4.8 million to our defined benefit pension plan during fiscal 2013.

The expected benefit payments by our defined benefit pension plan for eligible factory hourly employees for each of the next five fiscal years and for periods thereafter are presented in the following table:

(Amounts in thousands)	Benefit Payments
2013	$	5,126
2014		5,202
2015		5,310
2016		5,433
2017		5,622
2018 to 2023		31,184
	$	57,877