NOTE 8. RETIREMENT BENEFITS


Del Monte sponsors three non-contributory defined benefit pension plans and several unfunded defined benefit postretirement plans providing certain medical, dental and life insurance benefits to eligible retired, salaried, non-union hourly and union employees.

		Pension Benefits June 30,				Other Benefits June 30,
			2000		1999		2000		1999
Change in benefit obligation:
	Benefit obligation at beginning of year	$	279.0	$	291.4	$	75.0	$	107.7
	Service cost		3.5		3.5		1.0		1.3
	Interest cost		19.9		19.5		5.4		7.3
	Amendments		—		—		—		(23.5)
	Acquisitions		—		—		0.4		—
	Plan participants’ contributions		—		—		3.5		2.7
	Contadina acquisition		—		—		—		—
	Actuarial (gains) losses		(7.5)		(9.4)		1.8		(11.4)
	Benefits paid		(25.9)		(26.0)		(9.7)		(9.1)
	Benefit obligation at end of year	$	269.0	$	279.0	$	77.4	$	75.0
Change in plan assets:
	Fair value of plan assets at beginning of year	$	297.4	$	298.8	$	—	$	—
	Actual return on plan assets		47.7		14.6		—		—
	Employer contributions		8.5		10.0		6.2		6.4
	Plan participants’ contributions		—		—		3.5		2.7
	Benefits paid		(25.9)		(26.0)		(9.7)		(9.1)
	Fair value of plan assets at end of year	$	327.7	$	297.4	$	—	$	—
	Funded status	$	58.7	$	18.4	$	(77.4)	$	(75.0)
	Unrecognized net actuarial gain		(57.1)		(28.1)		(37.7)		(43.2)
	Unrecognized prior service cost		(0.7)		(1.0)		(27.9)		(31.1)
	Net amount recognized	$	0.9	$	(10.7)	$	(143.0)	$	(149.3)
		Pension Benefits June 30,				Other Benefits June 30,
Weighted average assumptions as of June 30,			2000		1999		2000		1999
Discount rate used in determining projected benefit obligation			8.00%		7.50%		8.00%		7.50%
Rate of increase in compensation levels			5.00		5.00		—		—
Long-term rate of return on assets			9.00		9.00		—		—

The components of net periodic pension cost for all defined benefit plans and other benefit plans are as follows:

		Pension Benefits June 30,						Other Benefits June 30,
			2000		1999		1998		2000		1999		1998
Components of net periodic benefit cost
	Service cost for benefits earned during period	$	3.5	$	3.4	$	3.1	$	1.0	$	1.3	$	1.2
	Interest cost on projected benefit obligation		19.9		19.5		20.5		5.4		7.3		7.8
	Expected return on plan assets		(26.0)		(26.2)		(23.9)		—		—		—
	Amortization of prior service cost		—		—		—		(3.2)		(1.0)		(1.0)
	Recognized net actuarial (gain) loss		(0.5)		(0.8)		(1.1)		(3.6)		(2.8)		(3.1)
	Benefit cost (credit)	$	(3.1)	$	(4.1)	$	(1.4)	$	(0.4)	$	4.8	$	4.9

For measurement purposes, an 8.00% annual rate of increase in the per capita cost of covered health care benefits was assumed for fiscal 2000. The rate was assumed to decrease gradually to 5.00% in the year 2005 and remain at that level thereafter.

It has been Del Monte’s policy to fund Del Monte’s retirement plans in an amount consistent with the funding requirements of federal law and regulations and not to exceed an amount that would be deductible for federal income tax purposes. Contributions are intended to provide not only for benefits attributed to service to date but also for those benefits expected to be earned in the future. Del Monte’s defined benefit retirement plans were previously determined to be underfunded under federal ERISA guidelines. Del Monte entered into an agreement with the Pension Benefit Guaranty Corporation, dated April 7, 1997, whereby Del Monte will contribute a total of $55.0 to its defined benefit pension plans through calendar 2001, of which $43.5 had been contributed by June 30, 2000. The contributions remaining to be made in calendar 2000 and 2001 are secured by a $14.0 letter of credit. This letter of credit is subject to periodic reduction as contributions are made in accordance with the agreement.

The health care cost trend rate assumption has a significant effect on the amounts reported. An increase in the assumed health care cost trend by 1% in each year would increase the postretirement benefit obligation as of June 30, 2000 by $7.7 and the aggregate of the service and interest cost components of net periodic postretirement benefit cost for the period then ended by $0.8. A decrease in the assumed health care cost trend by 1% in each year would decrease the postretirement benefit obligation as of June 30, 2000 by $(5.3) and the aggregate of the service and interest cost components of net periodic postretirement benefit cost for the period then ended by $(0.6).

In addition, Del Monte participates in several multi-employer pension plans, which provide defined benefits to certain of its union employees. The contributions to multi-employer plans for the years ended June 30, 2000, 1999 and 1998 were $7.7, $7.2 and $6.3, respectively. Del Monte also sponsors defined contribution plans covering substantially all employees. Company contributions to the plans are based on employee contributions or compensation. Contributions under such plans totaled $1.7, $1.6 and $1.5 for the years ended June 30, 2000, 1999 and 1998.