Employee Benefits

12 Months Ended

Aug. 31, 2011

Employee Benefits [Abstract]

Employee Benefits

Employee Benefits

The Company and certain of its subsidiaries have qualified and nonqualified retirement plans covering substantially all employees of these companies. These plans include a defined benefit pension plan, a supplemental executive retirement benefit plan (“SERBP”), multiemployer pension plans and defined contribution plans.

Defined Benefit Pension Plan and Supplemental Executive Retirement Benefit Plan

The Company maintains a qualified defined benefit pension plan for certain nonunion employees. Effective June 30, 2006, the Company froze this plan and ceased accruing further benefits. The Company reflects the funded status of the defined benefit pension plan as a net asset in its Consolidated Balance Sheets. Changes in its funded status are recognized in comprehensive income. Net periodic pension benefit cost was not material for the years ended August 31, 2011, 2010 and 2009. The fair value of the plan assets was $17 million and $15 million as of August 31, 2011 and 2010, respectively and the projected benefit obligation was $15 million and $15 million as of August 31, 2011 and 2010, respectively. The plan was fully funded with plan assets exceeding the projected benefit obligation by $2 million and less than $1 million as of August 31, 2011 and 2010, respectively. Plan assets were comprised of $16 million and $14 million of Level 1 investments and $1 million and $1 million of Level 2 investments as of August 31, 2011 and August 31, 2010, respectively. Level 1 assets are valued based on quoted market price of identical securities in the principal market. Level 2 investments are valued at the net asset value of the fund which is provided by the fund’s manager and independent administrator. No contributions are expected to be made to the defined benefit pension plan in the future; however, changes in the discount rate or actual investment returns that are lower than the long-term expected return on plan assets could result in the need for the Company to make additional contributions. The assumed discount rate used to calculate the projected benefit obligations was 4.97% and 4.87% as of August 31, 2011 and 2010, respectively. The Company estimates future annual benefit payments to be between $1 million and $3 million per year.

The Company also has a nonqualified SERBP for certain executives. A restricted trust fund has been established with assets invested in life insurance policies that can be used for plan benefits, although the fund is subject to claims of the Company’s general creditors. The trust fund is included in other assets and the pension liability is included in other long-term liabilities in the Company’s Consolidated Balance Sheets. The trust fund is valued at $2 million as of August 31, 2011 and 2010. The trust fund assets’ gains and losses are included in other income (expense) in the Company’s Consolidated Statements of Operations. The benefit obligation and the unfunded amount were $3 million as of August 31, 2011 and 2010, respectively.

Because the defined benefit pension plan and the SERBP are not material to the Consolidated Financial Statements other disclosures required by U.S. GAAP have been omitted.

Multiemployer Pension Plans

The Company contributes to 13 multiemployer pension plans in accordance with its collective bargaining agreements. Multiemployer pension plans are defined benefit plans sponsored by multiple employers in accordance with one or more collective bargaining agreements. The plans are jointly managed by trustees that include representatives from both management and labor unions. Contributions to the plans are made based upon a fixed rate per hour worked and are agreed to by contributing employers and the unions in collective bargaining. Benefit levels are set by a joint board of trustees based on the advice of an independent actuary regarding the level of benefits that agreed-upon contributions can be expected to support. To the extent that the pension obligation of other participating employers is unfunded, the Company may be required to make additional contributions in the future to fund these obligations.

One of the multiemployer plans that the Company contributes to is the Steelworkers Western Independent Shops Pension Plan (EIN 90-0169564, Plan No. 001) benefiting the union employees of SMB. The collective bargaining agreement associated with this plan expires on March 31, 2012. This plan had a certified zone status, as required by the Pension Protection Act of 2006, of Red as of August 31, 2011 and 2010 for the plan’s year-end at September 30, 2010 and 2009, respectively. The zone status is based on information the Company received from the plan’s administrator and is certified by the plan’s actuary. Although the plan is 81.4% funded, the plan is considered to be in Red Zone because there was a projected deficiency in the funding standard account within one year. The plan did not utilize any extended amortization provisions in its calculation of zone status. As a result of being in Red Zone Status, the plan has adopted a rehabilitation plan which requires annual contribution rate increases of 6%. The rehabilitation plan was adopted by all contributing employers. The Company was not required to pay a surcharge to the Plan. The Company contributed $2 million to the plan in each of the years ended August 31, 2011, 2010 and 2009. These contributions represented more than 5% of total contributions to the plan for each year.

Company contributions to all of the multiemployer plans were $3 million for the years ended August 31, 2011, 2010 and 2009.

Defined Contribution Plans

The Company has several defined contribution plans covering certain employees. Company contributions to the defined contribution plans totaled $3 million, $1 million and $4 million for the years ended August 31, 2011, 2010 and 2009, respectively.