Employee Retirement And Profit Sharing Plans

12 Months Ended

Dec. 31, 2011

Employee Retirement And Profit Sharing Plans [Abstract]

Employee Retirement And Profit Sharing Plans

14. EMPLOYEE RETIREMENT AND PROFIT SHARING PLANS

We sponsor various defined benefit and defined contribution retirement plans, including various employee savings and profit sharing plans, and contribute to various multiemployer pension plans on behalf of our employees. Substantially all full-time union and non-union employees who have completed one or more years of service and have met other requirements pursuant to the plans are eligible to participate in one or more of these plans. On July 2, 2009, we acquired Alpro, including its defined benefit pension plans. During 2011, 2010 and 2009, our retirement and profit sharing plan expenses were as follows:

	Year Ended December 31
	2011		2010		2009
	(In thousands)
Defined benefit plans	$	13,849	$	12,975	$	21,053
Defined contribution plans		25,728		27,182		28,300
Multiemployer pension and certain union plans		29,615		28,768		29,604
Total	$	69,192	$	68,925	$	78,957

Defined Benefit Plans — The benefits under our defined benefit plans are based on years of service and employee compensation. Our funding policy is to contribute annually the minimum amount required under ERISA regulations plus additional amounts as we deem appropriate.

Included in accumulated other comprehensive income at December 31, 2011 and 2010 are the following amounts that have not yet been recognized in net periodic pension cost: unrecognized transition obligation of $112,000 ($69,000 net of tax) and $225,000 ($138,000 net of tax), unrecognized prior service costs of $5.2 million ($3.2 million net of tax) and $5.6 million ($3.5 million net of tax) and unrecognized actuarial losses of $152.0 million ($93.5 million net of tax) and $124.1 million ($76.0 million net of tax). The transition obligation, prior service costs, and actuarial losses included in accumulated other comprehensive income and expected to be recognized in net periodic pension cost during the year ended December 31, 2012 are $112,000 ($69,000 net of tax), $776,000 ($477,000 net of tax), and $11.7 million ($7.2 million net of tax), respectively.

The reconciliation of the beginning and ending balances of the projected benefit obligation and the fair value of plan assets for the years ended December 31, 2011 and 2010, and the funded status of the plans at December 31, 2011 and 2010 is as follows:

	December 31
	2011		2010
	(In thousands)
Change in benefit obligation:
Benefit obligation at beginning of year	$	307,531	$	294,569
Service cost		4,151		3,699
Interest cost		15,735		16,941
Plan participants' contributions		68		66
Actuarial (gain) loss		33,071		16,619
Benefits paid		(25,677)		(20,822)
Plan settlements		(1,730)		(2,914)
Exchange rate changes		(401)		(627)
Benefit obligation at end of year		332,748		307,531
Change in plan assets:
Fair value of plan assets at beginning of year		231,822		223,369
Actual return on plan assets		11,714		22,240
Employer contribution		18,073		10,277
Plan participants' contributions		68		66
Benefits paid		(25,677)		(20,822)
Plan settlements		(1,730)		(2,914)
Exchange rate changes		(275)		(394)
Fair value of plan assets at end of year		233,995		231,822
Funded status at end of year	$	(98,753)	$	(75,709)

The underfunded status of the plans of $98.8 million at December 31, 2011 is recognized in our Consolidated Balance Sheet and includes $0.8 million classified as a current accrued pension liability. We do not expect any plan assets to be returned to us during the year ended December 31, 2012. We expect to contribute $22.1 million to the pension plans in 2012.

A summary of our key actuarial assumptions used to determine benefit obligations as of December 31, 2011 and 2010 follows:

	December 31
	2011		2010
Weighted average discount rate(1)		4.50%		5.28%
Rate of compensation increase(1)		4.00%		4.00%

(1) Assumptions in this table represent the assumptions utilized for our domestic pension plans as they represented more than 95% of our total benefit obligation as of December 31, 2011 and 2010.

A summary of our key actuarial assumptions used to determine net periodic benefit cost for 2011, 2010 and 2009 follows:

	Year Ended December 31
	2011		2010		2009
Weighted average discount rate(1)		5.28%		6.00%		6.32%
Expected return on plan assets(1)		7.67%		7.70%		7.70%
Rate of compensation increase(1)		4.00%		4.00%		4.00%

(1) Assumptions in this table represent the assumptions utilized for our domestic pension plans as they represented more than 85% of our total net periodic benefit cost during the years ended December 31, 2011, 2010 and 2009.

	Year Ended December 31
	2011		2010		2009
	(In thousands)
Components of net periodic benefit cost:
Service cost	$	4,151	$	3,699	$	3,147
Interest cost		15,735		16,941		16,947
Expected return on plan assets		(17,105)		(16,584)		(14,017)
Amortizations:
Unrecognized transition obligation		130		112		112
Prior service cost		770		716		921
Unrecognized net loss		9,060		5,594		12,093
Effect of curtailment		—		790		945
Effect of settlement		969		1,707		905
Other		139		—		—
Net periodic benefit cost	$	13,849	$	12,975	$	21,053

The overall expected long-term rate of return on plan assets is a weighted-average expectation based on the targeted and expected portfolio composition. We consider historical performance and current benchmarks to arrive at expected long-term rates of return in each asset category.

The amortization of unrecognized net loss represents the amortization of investment losses incurred. In 2010, we closed a plant in South Carolina and also carried out a broad-based workforce reduction plan within our Fresh Dairy Direct segment. The effect of curtailment cost in 2010 represents the recognition of net periodic pension service costs associated with these activities. In 2009, we closed a plant in Michigan. The effect of curtailment cost in 2009 represents the recognition of net periodic pension service costs associated with the closure of that plant. The effect of settlement costs in 2011, 2010 and 2009 represents the recognition of net periodic benefit cost related to pension settlements reached as a result of plant closures.

Pension plans with an accumulated benefit obligation in excess of plan assets follows:

	December 31
	2011		2010
	(In millions)
Projected benefit obligation	$	323.0	$	299.6
Accumulated benefit obligation		313.1		290.2
Fair value of plan assets		227.0		226.3

The accumulated benefit obligation for all defined benefit plans was $319.2 million and $295.0 million at December 31, 2011 and 2010, respectively.

Almost 90% of our defined benefit plan obligations are frozen as to future participation or increases in projected benefit obligation. Many of these obligations were acquired in prior strategic transactions. As an alternative to defined benefit plans, we offer defined contribution plans for eligible employees.

The weighted average discount rate reflects the rate at which our defined benefit plan obligations could be effectively settled. The rate, which is updated annually with the assistance of an independent actuary, uses a model that reflects a bond yield curve. The weighted average discount rate was decreased from 5.28% at December 31, 2010 to 4.50% at December 31, 2011, which will increase the net periodic benefit cost in 2012.

Substantially all of our qualified pension plans are consolidated into one master trust. The investments held in the master trust are managed by an established Investment Committee with assistance from independent investment advisors. On July 1, 2009, the Investment Committee adopted a new long-term investment policy for the master trust that targets investments in equity securities at 59% of the portfolio, fixed income at 37%, cash equivalents at 3% and other investments of 1%. Policy objectives include maximizing long-term return at acceptable risk levels, diversifying among asset classes, if appropriate, and among investment managers, as well as establishing relevant risk parameters within each asset class. The investment policies permit variances from the targets within certain parameters. The investment policy prohibits investments in non-marketable or exotic securities, such as short-sale contracts; letter stock; commodities and private placements, without the Investment Committee's prior approval. At December 31, 2011, our master trust was invested as follows: investments in equity securities were at 59%; investments in fixed income were at 38%; cash equivalents were at 2% and other investments were at 1%. Equity securities of the plan did not include any investment in our common stock at December 31, 2011 or 2010.

Estimated pension plan benefit payments to participants for the next ten years are as follows:

2012	$	20.3 million
2013		19.9 million
2014		20.3 million
2015		19.9 million
2016		20.4 million
Next five years		108.7 million

Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering assumptions, we follow a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value of our defined benefit plans' consolidated assets as follows:

• Level 1 — Quoted prices for identical instruments in active markets.

• Level 2 — Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations, in which all significant inputs are observable in active markets.

• Level 3 — Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The fair values by category of inputs as of December 31, 2011 were as follows (in thousands):

	Fair Value as of December 31, 2011		Level 1		Level 2		Level 3
Equity Securities:
Common Stock	$	94	$	94	$	—	$	—
Index Funds:
U.S. Equities(a)		107,247		—		107,247		—
International Equities(b)		18,986		—		18,986		—
Equity Funds(c)		6,644		—		6,644		—
Total Equity Securities		132,971		94		132,877		—
Fixed Income:
Bond Funds(d)		82,192		—		82,192		—
Diversified Funds(e)		4,537		—		—		4,537
Total Fixed Income		86,729		—		82,192		4,537
Cash Equivalents:
Short-term Investment Funds(f)		4,608		—		4,608		—
Total Cash Equivalents		4,608		—		4,608		—
Other Investments:
Insurance Contracts(g)		7,710		—		—		7,710
Partnerships/Joint Ventures(h)		1,580		—		—		1,580
Insurance Reserves		397		—		—		397
Total Other Investments		9,687		—		—		9,687
Total	$	233,995	$	94	$	219,677	$	14,224

(a) Represents a pooled/separate account that tracks the Dow Jones U.S. Total Stock Market Index.

(b) Represents a pooled/separate account that tracks the MSCI EAFE Index.

(c) Represents a pooled/separate account comprised of approximately 90% U.S. large-cap stocks and 10% in international stocks.

(d) Represents a pooled/separate account which tracks the overall performance of the Barclays Capital Long Term Government/Credit Index.

(e) Represents a pooled/separate account investment in the General Investment Accounts of two investment managers. The accounts primarily invest in fixed income debt securities, such as high grade corporate bonds, government bonds and asset-backed securities.

(f) Investment is comprised of high grade money market instruments with short-term maturities and high liquidity.

(g) Approximately 90% of the insurance contracts are financed by employer premiums with the insurer managing the reserves as calculated using an actuarial model. The remaining 10% of the insurance contracts are financed by employer and employee contributions with the insurer managing the reserves collectively with other pension plans.

(h) The majority of the total partnership balance is a partnership comprised of a portfolio of two limited partnership funds that invest in public and private equity.

The fair values by category of inputs as of December 31, 2010 were as follows (in thousands):

	Fair Value as of December 31, 2010		Level 1		Level 2		Level 3
Equity Securities:
Common Stock	$	17	$	17	$	—	$	—
Index Funds:
U.S. Equities(a)		114,232		—		114,232		—
International Equities(b)		22,933		—		22,933		—
Equity Funds(c)		5,722		—		5,722		—
Total Equity Securities		142,904		17		142,887		—
Fixed Income:
Bond Funds(d)		74,322		—		74,322		—
Diversified Funds(e)		4,353		—		—		4,353
Total Fixed Income		78,675		—		74,322		4,353
Cash Equivalents:
Short-term Investment Funds(f)		1,783		—		1,783		—
Total Cash Equivalents		1,783		—		1,783		—
Other Investments:
Insurance Contracts(g)		6,169		—		—		6,169
Partnerships/Joint Ventures(h)		1,913		—		—		1,913
Insurance Reserves		378		—		—		378
Total Other Investments		8,460		—		—		8,460
Total	$	231,822	$	17	$	218,992	$	12,813

(a) Represents a pooled/separate account that tracks the Dow Jones U.S. Total Stock Market Index.

(b) Represents a pooled/separate account that tracks the MSCI EAFE Index.

(c) Represents a pooled/separate account comprised of approximately 90% U.S. large-cap stocks and 10% in international stocks.

(d) Represents a pooled/separate account which tracks the overall performance of the Barclays Capital Long Term Government/Credit Index.

(e) Represents a pooled/separate account investment in the General Investment Accounts of two investment managers. The accounts primarily invest in fixed income debt securities, such as high grade corporate bonds, government bonds and asset-backed securities.

(f) Investment is comprised of high grade money market instruments with short-term maturities and high liquidity.

(g) Approximately 90% of the insurance contracts are financed by employer premiums with the insurer managing the reserves as calculated using an actuarial model. The remaining 10% of the insurance contracts are financed by employer and employee contributions with the insurer managing the reserves collectively with other pension plans.

(h) The majority of the total partnership balance is a partnership comprised of a portfolio of two limited partnership funds that invest in public and private equity.

A reconciliation of the change in the fair value measurement of the defined benefit plans' consolidated assets using significant unobservable inputs (Level 3) during the years ended December 31, 2011 and 2010 is as follows (in thousands):

	Diversified Funds		Insurance Contracts		Partnerships/ Joint Ventures		Insurance Reserves		Total
Balance at January 1, 2010	$	4,674	$	5,197	$	2,092	$	360	$	12,323
Actual return on plan assets:
Relating to instruments still held at reporting date		226		284		(179)		18		349
Purchases, sales and settlements (net)		(3,410)		688		—		—		(2,722)
Transfers in and/or out of Level 3		2,863		—		—		—		2,863
Balance at December 31, 2010	$	4,353	$	6,169	$	1,913	$	378	$	12,813
Actual return on plan assets:
Relating to instruments still held at reporting date		215		370		28		19		632
Purchases, sales and settlements (net)		(2,201)		1,171		(361)		—		(1,391)
Transfers in and/or out of Level 3		2,170		—		—		—		2,170
Balance at December 31, 2011	$	4,537	$	7,710	$	1,580	$	397	$	14,224

Defined Contribution Plans — Certain of our non-union personnel may elect to participate in savings and profit sharing plans sponsored by us. These plans generally provide for salary reduction contributions to the plans on behalf of the participants of between 1% and 20% of a participant's annual compensation and provide for employer matching and profit sharing contributions as determined by our Board of Directors. In addition, certain union hourly employees are participants in company-sponsored defined contribution plans, which provide for employer contributions in various amounts ranging from $24 to $91 per pay period per participant.

Multiemployer Pension Plans — Certain of our subsidiaries contribute to various multiemployer pension and other postretirement benefit plans which cover a majority of our full-time union employees and certain of our part-time union employees. Such plans are usually administered by a board of trustees composed of labor representatives and the management of the participating companies. The risks of participating in these multiemployer plans are different from single-employer plans in the following aspects:

• Assets contributed to a multiemployer plan by one employer may be used to provide benefits to employees of other participating employers;

• If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers; and

• If we choose to stop participating in one or more of our multiemployer plans, we may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

At this time, we have not established any significant liabilities because withdrawal from these plans is not probable or reasonably possible.

Our participation in these multiemployer plans for the year ended December 31, 2011 is outlined in the table below. Unless otherwise noted, the most recent Pension Protection Act ("PPA") Zone Status available in 2011 and 2010 is for the plans' year-end at December 31, 2010 and December 31, 2009, respectively. The zone status is based on information that we obtained from each plan's Form 5500, which is available in the public domain and is certified by the plan's actuary. Among other factors, plans in the red zone are generally less than 65% funded, plans in the yellow zone are less than 80% funded, and plans in the green zone are at least 80% funded. The "FIP/RP Status Pending/Implemented" column indicates plans for which a funding improvement plan ("FIP") or a rehabilitation plan ("RP") is either pending or has been implemented. Federal law requires that plans classified in the yellow zone or red zone adopt a funding improvement plan or rehabilitation plan, respectively, in order to improve the financial health of the plan. The "Extended Amortization Provisions" column indicates plans which have elected to utilize the special 30-year amortization rules provided by the Pension Relief Act of 2010 to amortize its losses from 2008 as a result of turmoil in the financial markets. The last column in the table lists the expiration date(s) of the collective-bargaining agreement(s) to which the plans are subject.

Pension Fund	Employer Identification Number	Pension Plan Number	PPA Zone Status		FIP /RP  Status Pending/ Implemented	Extended Amortization Provisions	Expiration Date of Associated Collective- Bargaining Agreement(s)
			2011	2010
Western Conference of Teamsters Pension Plan (1)	91-6145047	001	Green	Green	N/A	No	February 28, 2012 – May 31, 2016
Central States, Southeast and Southwest Areas Pension Plan (2)	36-6044243	001	Red	Red	Implemented	No	April 30, 2012– July 30, 2016
New York State Teamsters Conference Pension Plan	16-6063585	074	Red	Red	Implemented	No	October 26, 2014
Retail, Wholesale & Department Store International Union and Industry Pension Fund (3)	63-0708442	001	Green	Yellow	N/A	Yes	June 3, 2012– September 10, 2016
Dairy Industry – Union Pension Plan for Philadelphia Vicinity (4)	23-6283288	001	Red	Yellow	Implemented	No	September 30, 2012 – October 1, 2014

(1) We are party to approximately 30 collective bargaining agreements that require contributions to this plan. These agreements cover a large number of employee participants and expire on various dates between 2012 and 2016. We do not believe that any one agreement is substantially more significant than another as none of these agreements individually represent greater than 15% of the total employee participants covered under this plan.

(2) There are approximately 20 collective bargaining agreements that govern our participation in this plan. The agreements expire on various dates between 2012 and 2016. The four agreements expiring in 2012 represent approximately 30% of our total employee participants in this plan. The remaining agreements have a wide variety of expiration dates between 2013 and 2016 and do not individually represent a significant percentage of our overall participants to this plan.

(3) We are subject to approximately 10 collective bargaining agreements with respect to this plan. Approximately 55% and 40% of our employee participants in this plan are covered by the agreements expiring in 2012 and 2014, respectively.

(4) We are party to three collective bargaining agreements with respect to this plan. The agreement expiring in September 2012 is the most significant as more than 85% of our employee participants in this plan are covered by that agreement.

Information regarding our contributions to our multiemployer pension plans is shown in the table below. There are no changes which materially affected the comparability of our contributions to each of these plans during the years ended December 31, 2011, 2010 and 2009.

			Dean Foods Company Contributions (in millions)
Pension Fund	Employer Identification Number	Pension Plan Number	2011	2010	2009	Surcharge Imposed (3)
Western Conference of Teamsters Pension Plan	91-6145047	001	$16.3	$16.1	$15.6	No
Central States, Southeast and Southwest Areas Pension Plan	36-6044243	001	8.6	8.5	7.9	No
New York State Teamsters Conference Pension Plan	16-6063585	074	0.8	0.7	0.6	Yes
Retail, Wholesale & Department Store International Union and Industry Pension Fund (1)	63-0708442	001	1.2	1.3	1.2	No
Dairy Industry – Union Pension Plan for Philadelphia Vicinity (1)	23-6283288	001	1.5	1.5	1.5	Yes
Other Funds (2)			1.2	0.7	2.8
	Total Contributions		$29.6	$28.8	$29.6

(1) During the 2009 and 2010 plan years, our contributions to these plans exceeded 5% of total plan contributions. At the date of filing of this Annual Report on Form 10-K, Forms 5500 were not available for the plan years ending in 2011.

(2) Amounts shown represent our contributions to all other multiemployer pension and other postretirement benefit plans, which are immaterial both individually and in the aggregate to our Consolidated Financial Statements.

(3) Federal law requires that contributing employers to a plan in Critical status pay to the plan a surcharge to help correct the plan's financial situation. The amount of the surcharge is equal to a percentage of the amount we would otherwise be required to contribute to the plan and ceases once our related collective bargaining agreements are amended to comply with the provisions of the rehabilitation plan.