PENSION AND OTHER RETIREMENT PLANS

12 Months Ended

May 01, 2011

Notes to Consolidated Financial Statements [Abstract]

PENSION AND OTHER RETIREMENT PLANS

NOTE 12:    PENSION AND OTHER RETIREMENT PLANS

We provide the majority of our U.S. employees with pension benefits. Salaried employees are provided benefits based on years of service and average salary levels. Hourly employees are provided benefits of stated amounts for each year of service.

The following table presents a reconciliation of the pension benefit obligation, plan assets and the funded status of these pension plans.

	May 1, 2011			May 2, 2010
	(in millions)
Change in benefit obligation:
Benefit obligation at beginning of year	$	1,283.9		$	926.4
Service cost	37.0			22.6
Interest cost	74.9			73.7
Benefits paid	(69.3		)	(64.2		)
Actuarial loss	1.0			325.4
Other	2.4			—
Benefit obligation at end of year	1,329.9			1,283.9
Change in plan assets: (1)
Fair value of plan assets at beginning of year	788.7			586.2
Actual return on plan assets	125.8			192.6
Employer contributions	95.1			62.6
Benefits paid	(56.2		)	(52.7		)
Other	3.0			—
Fair value of plan assets at end of year	956.4			788.7
Funded status	$	(373.5	)	$	(495.2	)
Amounts recognized in the consolidated balance sheet:
Net long-term pension liability	$	(369.6	)	$	(482.5	)
Accrued expenses and other current liabilities	(4.5		)	(12.7		)
Other assets	0.6			—
Net amount recognized at end of year	$	(373.5	)	$	(495.2	)

——————————————

(1) Excludes the assets and related activity of our non-qualified defined benefit pension plans. The fair value of assets related to our non-qualified plans was $117.7 million and $49.2 million as of May 1, 2011 and May 2, 2010 , respectively. We made cash contributions of $33.4 million and $11.3 million in fiscal 2011 and fiscal 2010. In fiscal 2011, we also contributed company-owned life insurance policies with cash surrender values totaling $29.4 million on the date of contribution. Benefits paid for our non-qualified plans were $13.1 million and $11.5 million for fiscal 2011 and fiscal 2010, respectively.

The accumulated benefit obligation for all defined benefit pension plans was $1.3 billion and $1.2 billion as of May 1, 2011 and May 2, 2010, respectively. The accumulated benefit obligation for all of our defined benefit pension plans exceeded the fair value of plan assets for both periods presented.

The following table shows the pre-tax unrecognized items included as components of accumulated other comprehensive loss related to our defined benefit pension plans for the periods indicated. 

	May 1, 2011			May 2, 2010
	(in millions)
Unrecognized actuarial loss	$	(365.3	)	$	(460.5	)
Unrecognized prior service credit	7.2			7.6

We expect to recognize $23.2 million of the actuarial loss and prior service cost as net periodic pension cost in fiscal 2012.

The following table presents the components of the net periodic pension costs for the periods indicated: 

	Fiscal Years
	2011			2010			2009
	(in millions)
Service cost	$	37.0		$	22.6		$	25.5
Interest cost	74.9			73.7			68.6
Expected return on plan assets	(63.9		)	(49.3		)	(69.7		)
Net amortization	34.0			20.3			6.4
Net periodic pension cost	$	82.0		$	67.3		$	30.8

The following table shows our weighted-average assumptions for the periods indicated. 

	Fiscal Years
	2011		2010		2009
Discount rate to determine net periodic benefit cost	6.00	%	8.25	%	6.90	%
Discount rate to determine benefit obligation	5.85		6.00		8.25
Expected long-term rate of return on plan assets	8.00		8.25		8.25
Rate of compensation increase	4.00		4.00		4.00

We use an independent third-party actuary to assist in the determination of assumptions used and the measurement of our pension obligation and related costs. We review and select the discount rate to be used in connection with our pension obligation annually. In determining the discount rate, we use the yield on corporate bonds (rated AA or better) that coincides with the cash flows of the plans’ estimated benefit payouts. The model uses a yield curve approach to discount each cash flow of the liability stream at an interest rate specifically applicable to the timing of each respective cash flow. Using imputed interest rates, the model sums the present value of each cash flow stream to calculate an equivalent weighted average discount rate. We use this resulting weighted average discount rate to determine our final discount rate. 

To determine the expected long-term return on plan assets, we consider the current and anticipated asset allocations, as well as historical and estimated returns on various categories of plan assets.  Long-term trends are evaluated relative to market factors such as inflation, interest rates and fiscal and monetary polices in order to assess the capital market assumptions. Over the 5-year period ended May 1, 2011 and May 2, 2010, the average rate of return on plan assets was approximately 3.87% and 2.87%percent, respectively. Actual results that differ from our assumptions are accumulated and amortized over future periods and, therefore, affect expense in future periods.

Pension plan assets may be invested in cash and cash equivalents, equities, debt securities, insurance contracts and real estate. Our investment policy for the pension plans is to balance risk and return through a diversified portfolio of high-quality equity and fixed income securities. Equity targets for the pension plans are as indicated in the following table. Maturity for fixed income securities is managed such that sufficient liquidity exists to meet near-term benefit payment obligations. The plans retain outside investment advisors to manage plan investments within parameters established by our plan trustees. 

The following table presents the fair value of our qualified pension plan assets by major asset category as of May 1, 2011 and May 2, 2010. The allocation of our pension plan assets is based on the target range presented in the following table. 

	May 1, 2011		May 2, 2010		Target Range
Asset category:	(in millions)
Cash and cash equivalents, net of payables for unsettled transactions	$	83.9	$	86.2	0-4%
Equity securities	570.5		421.9		45-65
Debt securities	266.6		249.6		18-38
Alternative assets	35.4		31.0		2-10
Total	$	956.4	$	788.7

See Note 15—Fair Value Measurements for additional information about the fair value of our pension assets.

As of May 1, 2011 and May 2, 2010, the amount of our common stock included in plan assets was 4,757,066 and 3,850,837 shares, respectively, with market values of $112.1 million and $72.2 million, respectively. 

We generally contribute the minimum amount required under government regulations to our qualified pension plans, plus amounts necessary to maintain an 80% funded status in order to avoid benefit restrictions under the Pension Protection Act. Minimum employer contributions to our qualified pension plans are expected to be $61.8 million for fiscal 2012.

Expected future benefit payments for our defined benefit pension plans are as follows: 

Fiscal Year	(in millions)
2012	$	66.9
2013	67.8
2014	70.9
2015	74.4
2016	78.4
2017-2021	457.9

We sponsor defined contribution pension plans (401(k) plans) covering substantially all U.S. employees. Our contributions vary depending on the plan but are based primarily on each participant’s level of contribution and cannot exceed the maximum allowable for tax purposes. Total contributions were $13.9 million, $13.9 million and $13.7 million for fiscal 2011, 2010 and 2009, respectively. 

We also provide health care and life insurance benefits for certain retired employees. These plans are unfunded and generally pay covered costs reduced by retiree premium contributions, co-payments and deductibles. We retain the right to modify or eliminate these benefits. We consider disclosures related to these plans immaterial to the consolidated financial statements and related notes.