NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Company provides health care benefits to certain retired employees from retirement age to when they become eligible for Medicare coverage. Employees become eligible for benefits after meeting certain age and service requirements. The cost of providing retiree health care benefits is actuarially determined and accrued over the service period of the active employee group.
The components of the net periodic post-retirement benefit cost are as follows:
| 2006 | 2005 | 2004 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (Amounts in thousands) | |||||||||||
| Service cost—benefits earned during the year | $ | 568 | $ | 445 | $ | 381 | |||||
| Interest cost on projected benefit obligation | 628 | 712 | 658 | ||||||||
| Recognized net actuarial loss | 975 | 1,103 | 738 | ||||||||
| Amortization of unrecognized prior service cost | (701 | ) | (1,515 | ) | (917 | ) | |||||
| Net periodic post-retirement benefit cost | $ | 1,470 | $ | 745 | $ | 860 | |||||
The changes in the benefit obligation and the unfunded status as of the measurement dates of April 30, 2006 and April 24, 2005 of the post-retirement benefit plan are as follows:
| 2006 | 2005 | ||||||
|---|---|---|---|---|---|---|---|
| (Amounts in thousands) | |||||||
| Change in projected post-retirement benefit obligation: Projected benefit obligation at beginning of year |
$ | 11,744 | $ | 11,721 | |||
| Service cost | 568 | 445 | |||||
| Interest cost | 628 | 712 | |||||
| Actuarial gain | (4,787 | ) | (1,034 | ) | |||
| Net benefits paid | (720 | ) | (391 | ) | |||
| Plan amendments | — | 291 | |||||
| Projected benefit obligation at end of year | $ | 7,433 | $ | 11,744 | |||
| Funded status | $ | 7,433 | $ | 11,744 | |||
| Unrecognized net actuarial loss | (3,864 | ) | (9,626 | ) | |||
| Unrecognized prior service cost | 2,186 | 2,886 | |||||
| Accrued post-retirement benefits | $ | 5,755 | $ | 5,004 | |||
The assumptions used to determine the amount of the benefit obligation were as follows: discount rate was 6.0 percent and
5.5 percent in fiscal years 2006 and 2005, respectively. The assumed health care cost trend rate begins at 9.0 percent and reduces over eight years to an ultimate level of 5.0 percent per year. A 1.0 percent increase in the assumed health care cost trend rate would increase the total service cost and interest cost by $107,000 and the accumulated post-retirement benefit obligation (APBO) by $518,000. A 1.0 percent decrease in the assumed health care cost trend rate would decrease the total service cost and interest cost by $97,000 and the APBO by $471,000.