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The company has several noncontributory defined benefit plans and defined contribution plans covering most employees. Total costs associated with the company's defined contribution benefit plans in 2000, 1999 and 1998 were $11.5 million, $10.9 million and $9.9 million, respectively. Benefits for defined benefit pension plans covering hourly employees are provided based on stated amounts for each year of service while plan benefits covering salaried employees are based on final average compensation. The company's funding policy is to make annual contributions of not less than the minimum required by applicable regulations. The company provides medical and life insurance benefits to certain retired employees. Eligible employees who retired prior to January 1, 1987, remain on the medical plan in effect when they retired. The medical plan for eligible employees who retired after January 1, 1987, is automatically modified to incorporate plan benefit and plan provision changes whenever they are made to the active employee plan. Employees hired after January 1, 1990, are eligible for postretirement medical coverage but must pay the full cost of the coverage.
The following is a reconciliation of the beginning and ending balances of the benefit obligation and the fair value of plan assets:
Pension Benefits Other Benefits (In Thousands) 2000 1999 2000 1999 Change in benefit obligation: Benefit obligation at beginning of year $485,937 $492,614 $266,676 $274,205 Service cost 10,964 10,921 2,229 2,920 Interest cost 35,455 33,298 19,284 18,555 Actuarial loss (gain) 11,102 (17,712) 15,831 (10,137) Benefits paid (42,959) (33,184) (22,309) (18,867) Benefit obligation at end of year 500,499 485,937 281,711 266,676 Change in plan assets: Fair value of plan assets at beginning of year 571,241 566,216 Actual return on plan assets 14,530 35,684 Employer contributions 11,970 2,525 Benefits paid (42,959) (33,184) Fair value of plan assets at end of year 554,782 571,241 Funded status 54,283 85,304 (281,711) (266,676) Unrecognized net transition liability 2,144 2,947 Unrecognized actuarial (gain) loss (16,307) (66,406) 26,641 10,866 Unrecognized prior service cost 6,550 7,990 (2,382) (2,734) Benefit payments subsequent to measurement date 256 193 5,334 6,308 Net amount recognized $ 46,926 $ 30,028 $(252,118) $(252,236) |
As of the 2000 valuation date, plan assets included common stock of the company having a market value of $57.7 million. Dividends paid during the year on shares held by the plan were $1.2 million.
Amounts recognized in the consolidated balance sheets as of October 28, 2000, and October 30, 1999, were as follows:
Pension Benefits Other Benefits (In Thousands) 2000 1999 2000 1999 Prepaid benefit cost $80,265 $68,662 Accrued benefit liability (50,981) (44,263) $(257,452) $(258,544) Intangible asset 3,170 3,891 Accumulated other comprehensive loss 14,216 1,545 Benefit payments subsequent to measurement date 256 193 5,334 6,308 Net amount recognized $46,926 $30,028 $(252,118) $(252,236) |
The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the pension plans with accumulated benefit obligation in excess of plan assets were $55.0 million, $50.7 million and $0, respectively, as of October 28, 2000, and $49.5 million, $44.3 million and $0, respectively, as of October 30, 1999.
Weighted-average assumptions for pension and other benefits were as follows:
2000 1999 1998 Discount rate 7.50% 7.50% 7.00% Rate of future compensation increase 5.00% 5.00% 5.00% Expected long-term return on plan assets 9.50% 9.50% 9.50% |
For measurement purposes, a 5.9% annual rate of increase in the per capita cost of covered health care benefits was assumed for 2001. The rate was assumed to decrease to 5.5% for 2004 and remain at that level thereafter.
Net periodic cost of defined benefit plans included the following:
Pension Benefits (In Thousands) 2000 1999 1998 Service cost $10,964 $10,921 $ 9,567 Interest cost 35,455 33,298 32,628 Expected return on plan assets (52,724) (52,293) (50,137) Amortization of transition obligation 803 803 803 Amortization of prior service cost 1,440 1,153 1,153 Recognized actuarial (gain) loss (803) (878) (1,967) Net periodic benefit cost $(4,865) $(6,996) $(7,953) Other Benefits (In Thousands) 2000 1999 1998 Service cost $ 2,229 $ 2,920 $ 3,438 Interest cost 19,284 18,555 18,384 Amortization of prior service cost (352) (351) (351) Recognized actuarial (gain) loss 56 1,446 1,362 Net periodic benefit cost $21,217 $22,570 $22,833 |
Assumed health care cost trend rates have a significant impact on the amounts reported for the health care plan. A one-percentage-point change in assumed health care cost trend rates would have the following effects:
1-Percentage-Point (In Thousands) Increase Decrease Effect on total of service and interest cost components $ 797 $ (707) Effect on the postretirement benefit obligation 26,971 (15,362) |
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