NOTE 8:

EMPLOYEE BENEFIT PLANS

Pension plans. The Company has several non-contributory defined benefit retirement plans covering eligible employees. Plan assets are invested in a diversified portfolio of securities including stocks, bonds, real estate investment funds, cash equivalents, and alternative investments. Benefits payable under the plans are based on years of service, final average compensation, or both. The Company retains the right to amend, curtail or discontinue any aspect of the plans, subject to local regulations.

Postretirement plans. The Company maintains plans that provide postretirement benefits to eligible employees, principally health care, to substantially all U.S. retirees and their qualified dependents. These plans were established with the intention that they would continue indefinitely. However, the Company retains the right to amend, curtail or discontinue any aspect of the plans at any time. The plans are contributory and contain certain cost-sharing features, such as deductibles and coinsurance. The Company’s policy is to fund postretirement benefits as claims and premiums are paid.

The following tables summarize activity of the Company’s defined benefit pension plans and postretirement benefit plans:


	Pension Benefits						Postretirement Benefits
	2014			2013			2014			2013
	(Dollars in thousands)
Change in benefit obligation:
Benefit obligation at beginning of year	$	1,233,799		$	1,388,650		$	135,595		$	155,864
Service cost		8,397			8,707			255			376
Interest cost		54,958			51,984			5,199			4,957
Plan participants’ contribution		700			771			4,658			5,242
Actuarial loss (gain)⁽¹⁾		166,664			(114,441	)		6,455			(10,626	)
Net curtailment loss (gain)		2,093			(341	)		733			—
Impact of foreign currency changes		(12,532	)		1,219			—			—
Plan settlements⁽²⁾		(102,021	)		(7,909	)		—			—
Special termination benefits		35			74			—			—
Net benefits paid⁽³⁾		(62,756	)		(94,915	)		(18,811	)		(20,218	)

Benefit obligation at end of year		1,289,337			1,233,799			134,084			135,595

Change in plan assets:
Fair value of plan assets at beginning of year		903,033			894,362			—			—
Actual return on plan assets⁽⁴⁾		128,281			75,683			—			—
Employer contribution		20,046			35,064			14,153			14,976
Plan participants’ contributions		700			771			4,658			5,242
Plan settlements⁽²⁾		(102,021	)		(7,909	)		—			—
Impact of foreign currency changes		(8,460	)		(23	)		—			—
Net benefits paid⁽³⁾		(62,756	)		(94,915	)		(18,811	)		(20,218	)

Fair value of plan assets at end of year		878,823			903,033			—			—

Unfunded status at end of year	$	(410,514	)	$	(330,766	)	$	(134,084	)	$	(135,595	)

(1)

Actuarial losses in 2014 in the Company’s pension benefit plans resulted from changes in mortality rate assumptions, primarily for the Company’s U.S. plans. Actuarial gains in 2013 in the Company’s pension benefit plans resulted from changes in discount rate assumptions, primarily for the Company’s U.S. plans. Changes in financial markets during 2014 and 2013, including a decrease and increase, respectively, in corporate bond yield indices, resulted in an increase and decrease in benefit obligations, respectively.

(2)

The increase in pension plan settlements in 2014 was primarily due to a voluntary lump-sum, cash-out program offered to vested, terminated U.S. pension plan participants in the last half of 2014. The extent of the funding from the cash-out program exceeded the settlement accounting threshold, and as such in 2014, these activities have been categorized as settlements. Pension plan assets were utilized to settle pension obligations for deferred participants that elected to participate in the program.

(3)

The decrease in pension benefits paid in 2014 was primarily due the 2013 voluntary cash-out program offered to vested, terminated U.S. pension plan participants in the first half of 2013. The extent of the funding from the cash-out program was below the settlement accounting threshold, and as such in 2013, these activities were categorized as net benefit payments. Pension plan assets were utilized to settle pension obligations for deferred participants that elected to participate in the program.

(4)	The increase in return on plan assets in 2014 was primarily due to the better-than-expected asset performance caused by the decrease in interest rates which resulted in higher returns on fixed income securities.

Amounts recognized in the consolidated balance sheets as of November 30, 2014, and November 24, 2013, consist of the following:


	Pension Benefits						Postretirement Benefits
	2014			2013			2014			2013
	(Dollars in thousands)
Prepaid benefit cost	$	1,587		$	1,331		$	—		$	—
Accrued benefit liability – current portion		(8,926	)		(8,622	)		(11,871	)		(13,347	)
Accrued benefit liability – long-term portion		(403,175	)		(323,475	)		(122,213	)		(122,248	)

	$	(410,514	)	$	(330,766	)	$	(134,084	)	$	(135,595	)


Accumulated other comprehensive loss:
Net actuarial loss	$	(394,090	)	$	(343,148	)	$	(36,505	)	$	(34,248	)
Net prior service benefit		548			666			—			—

	$	(393,542	)	$	(342,482	)	$	(36,505	)	$	(34,248	)

The accumulated benefit obligation for all defined benefit plans was $1.3 billion and $1.2 billion at November 30, 2014, and November 24, 2013, respectively. Information for the Company’s defined benefit plans with an accumulated or projected benefit obligation in excess of plan assets is as follows:


	Pension Benefits
	2014		2013
	(Dollars in thousands)
Accumulated benefit obligations in excess of plan assets:
Aggregate accumulated benefit obligation	$	1,123,972	$	1,147,938
Aggregate fair value of plan assets		728,844		827,764

Projected benefit obligations in excess of plan assets:
Aggregate projected benefit obligation	$	1,202,714	$	1,195,923
Aggregate fair value of plan assets		790,614		863,826

The components of the Company’s net periodic benefit cost (income) were as follows:


	Pension Benefits									Postretirement Benefits
	2014			2013			2012			2014			2013			2012
	(Dollars in thousands)
Net periodic benefit cost (income):
Service cost	$	8,397		$	8,707		$	8,952		$	255		$	376		$	397
Interest cost		54,958			51,984			57,635			5,199			4,957			6,634
Expected return on plan assets		(55,521	)		(56,183	)		(52,029	)		—			—			—
Amortization of prior service benefit⁽¹⁾		(53	)		(80	)		(78	)		(5	)		(488	)		(16,356	)
Amortization of actuarial loss		10,932			16,311			12,612			4,201			6,765			5,157
Curtailment loss (gain)		2,614			(564	)		(2,391	)		733			—			—
Special termination benefit		35			98			159			—			—			—
Net settlement loss		30,558			517			383			—			—			—

Net periodic benefit cost (income)		51,920			20,790			25,243			10,383			11,610			(4,168	)

Changes in accumulated other comprehensive loss:
Actuarial loss (gain)		92,544			(134,378	)					6,453			(10,626	)
Amortization of prior service benefit⁽¹⁾		53			80						5			488
Amortization of actuarial loss		(10,932	)		(16,311	)					(4,201	)		(6,765	)
Curtailment gain		113			498						—			—
Net settlement loss		(30,712	)		(178	)					—			—

Total recognized in accumulated other comprehensive loss		51,066			(150,289	)					2,257			(16,903	)

Total recognized in net periodic benefit cost (income) and accumulated other comprehensive loss	$	102,986		$	(129,499	)				$	12,640		$	(5,293	)

(1)	Postretirement benefits amortization of prior service benefit recognized during 2012 relates primarily to the favorable impact of the February 2004 and August 2003 plan amendments, which concluded amortization in 2012.

The amounts that will be amortized from “Accumulated other comprehensive loss” into net periodic benefit cost in 2015 for the Company’s defined benefit pension and postretirement benefit plans are expected to be $12.7 million and $4.5 million, respectively.

Assumptions used in accounting for the Company’s benefit plans were as follows:


	Pension Benefits						Postretirement Benefits
	2014			2013			2014			2013

Weighted-average assumptions used to determine net periodic benefit cost:
Discount rate		4.6	%		3.8	%		4.2	%		3.3	%
Expected long-term rate of return on plan assets		6.3	%		6.4	%
Rate of compensation increase		3.7	%		3.5	%

Weighted-average assumptions used to determine benefit obligations:
Discount rate		3.8	%		4.6	%		3.6	%		4.2	%
Rate of compensation increase		3.4	%		3.7	%

Assumed health care cost trend rates were as follows:
Health care trend rate assumed for next year								7.0	%		7.2	%
Rate trend to which the cost trend is assumed to decline								4.5	%		4.5	%
Year that rate reaches the ultimate trend rate								2028			2028

For the Company’s U.S. benefit plans, the discount rate used to determine the present value of the future pension and postretirement plan obligations was based on a yield curve constructed from a portfolio of high quality corporate bonds with various maturities. Each year’s expected future benefit payments are discounted to their present value at the appropriate yield curve rate, thereby generating the overall discount rate. The Company utilized a variety of country-specific third-party bond indices to determine the appropriate discount rates to use for the benefit plans of its foreign subsidiaries.

The Company bases the overall expected long-term rate of return on assets on anticipated long-term returns of individual asset classes and each pension plans’ target asset allocation strategy based on current economic conditions. For the U.S. pension plan, the expected long-term returns for each asset class are determined through a mean-variance model to estimate 20-year returns for the plan.

Health care cost trend rate assumptions are a significant input in the calculation of the amounts reported for the Company’s postretirement benefits plans. A one percentage-point change in assumed health care cost trend rates would have no significant effect on the total service and interest cost components or on the postretirement benefit obligation.

Consolidated pension plan assets relate primarily to the U.S. pension plan. The Company utilizes the services of independent third-party investment managers to oversee the management of U.S. pension plan assets. The Company’s investment strategy is to invest plan assets in a diversified portfolio of domestic and international equity securities, fixed income securities and real estate and other alternative investments with the objective of generating long-term growth in plan assets at a reasonable level of risk. Prohibited investments for the U.S. pension plan include certain privately placed or other non-marketable debt instruments, letter stock, commodities or commodity contracts and derivatives of mortgage-backed securities, such as interest-only, principal-only or inverse floaters. The current target allocation percentages for the Company’s U.S. pension plan assets are 34-38% for equity securities, 54-58% for fixed income securities and 6-10% for other alternative investments, including real estate.

The fair value of the Company’s pension plan assets by asset class are as follows:


	Year Ended November 30, 2014
Asset Class	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in thousands)
Cash and cash equivalents	$	2,348	$	2,348	$	—	$	—
Equity securities⁽¹⁾
U.S. large cap		172,702		—		172,702		—
U.S. small cap		30,775		—		30,775		—
International		135,434		—		135,434		—
Fixed income securities⁽²⁾		464,685		—		464,685		—
Other alternative investments
Real estate⁽³⁾		58,215		—		58,215		—
Private equity⁽⁴⁾		2,471		—		—		2,471
Hedge fund⁽⁵⁾		7,273		—		7,273		—
Other⁽⁶⁾		4,921		—		4,921		—

Total investments at fair value	$	878,824	$	2,348	$	874,005	$	2,471


	Year Ended November 24, 2013
Asset Class	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in thousands)
Cash and cash equivalents	$	1,132	$	1,132	$	—	$	—
Equity securities⁽¹⁾
U.S. large cap		175,181		—		175,181		—
U.S. small cap		31,163		—		31,163		—
International		133,339		—		133,339		—
Fixed income securities⁽²⁾		490,701		—		490,701		—
Other alternative investments
Real estate⁽³⁾		55,082		—		55,082		—
Private equity⁽⁴⁾		3,041		—		—		3,041
Hedge fund⁽⁵⁾		7,090		—		7,090		—
Other⁽⁶⁾		6,304		—		6,304		—

Total investments at fair value	$	903,033	$	1,132	$	898,860	$	3,041

(1)	Primarily comprised of equity index funds that track various market indices.

(2)	Predominantly includes bond index funds that invest in long-term U.S. government and investment grade corporate bonds.

(3)	Primarily comprised of investments in U.S. Real Estate Investment Trusts.

(4)	Represents holdings in a diversified portfolio of private equity funds and direct investments in companies located primarily in North America. Fair values are determined by investment fund managers using primarily unobservable market data.

(5)	Primarily invested in a diversified portfolio of equities, bonds, alternatives and cash with a low tolerance for capital loss.

(6)	Primarily relates to accounts held and managed by a third-party insurance company for employee-participants in Belgium. Fair values are based on accumulated plan contributions plus a contractually-guaranteed return plus a share of any incremental investment fund profits.

The fair value of plan assets are composed of U.S. plan assets of $728.8 million and non-U.S. plan assets of $150.0 million. The fair values of the substantial majority of the equity, fixed income and real estate investments are based on the net asset value of comingled trust funds that passively track various market indices.

The Company’s estimated future benefit payments to participants, which reflect expected future service, as appropriate are anticipated to be paid as follows:


Fiscal year	Pension Benefits		Postretirement Benefits		Total
	(Dollars in thousands)
2015	$	65,054	$	14,256	$	79,310
2016		62,460		13,830		76,290
2017		63,601		13,332		76,933
2018		64,795		12,807		77,602
2019		64,898		12,378		77,276
2020-2023		346,869		56,777		403,646

At November 30, 2014, the Company’s contributions to its pension plans in 2015 were estimated to be approximately $33.5 million.