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Pension and retirement plans | 12 Months Ended
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Jul. 02, 2011
Pension and retirement plans [Abstract] |
Pension and retirement plans | 10. Pension and retirement plans Pension Plan The Company’s noncontributory defined benefit pension plan (the “Plan”) covers substantially all domestic employees. Employees are eligible to participate in the Plan following the first year of service during which they worked at least 1,000 hours. The Plan provides defined benefits pursuant to a cash balance feature whereby a participant accumulates a benefit based upon a percentage of current salary, which varies with age, and interest credits. The Company uses June 30 as the measurement date for determining pension expense and benefit obligations for each fiscal year. Not included in the tabulations and discussions that follow are pension plans of certain non-U.S. subsidiaries, which are not material. The following tables outline changes in benefit obligations, plan assets and the funded status of the Plan as of the end of fiscal 2011 and 2010:
|  | July 2, |  |  | July 3, |
|  | 2011 |  |  | 2010 |
|  | (Thousands) |
Changes in benefit obligations: |  |  |  |  |  |  |  |
Benefit obligations at beginning of year |  | $ | 276,938 |  |  | $ | 263,324 |
Service cost |  |  | 23,874 |  |  |  | — |
Interest cost |  |  | 13,918 |  |  |  | 15,748 |
Plan amendments |  |  | — |  |  |  | 34,000 |
Actuarial loss |  |  | 5,168 |  |  |  | 19,591 |
Benefits paid |  |  | (22,371 | ) |  |  | (55,725 | )
Benefit obligations at end of year |  | $ | 297,527 |  |  | $ | 276,938 |
Change in plan assets: |  |  |  |  |  |  |  |
Fair value of plan assets at beginning of year |  | $ | 278,964 |  |  | $ | 258,931 |
Actual return on plan assets |  |  | 67,659 |  |  |  | 34,008 |
Benefits paid |  |  | (22,371 | ) |  |  | (55,725 | )
Contributions |  |  | 500 |  |  |  | 41,750 |
Fair value of plan assets at end of year |  | $ | 324,752 |  |  | $ | 278,964 |
Funded status of the plan recognized as a non-current asset |  | $ | 27,225 |  |  | $ | 2,026 |
Amounts recognized in accumulated other comprehensive income: |  |  |  |  |  |  |  |
Unrecognized net actuarial loss |  | $ | 147,311 |  |  | $ | 191,180 |
Unamortized prior service credit |  |  | (14,431 | ) |  |  | (16,306 | )
|  | $ | 132,880 |  |  | $ | 174,874 |
Other changes in plan assets and benefit obligations recognized in other comprehensive income: |  |  |  |  |  |  |  |
Net actuarial (gain) loss |  | $ | (34,931 | ) |  | $ | 15,720 |
Prior service cost |  |  | — |  |  |  | 34,000 |
Amortization of net actuarial loss |  |  | (8,938 | ) |  |  | (5,687 | )
Amortization of prior service credit |  |  | 1,875 |  |  |  | 4,884 |
|  | $ | (41,994 | ) |  | $ | 48,917 |
The Plan was amended effective July 1, 2010 to resume future accruals for compensation paid by the Company on or after July 1, 2010. The pension accrual formula was similar in structure to the formula that was frozen as of July 1, 2009. The Plan changes effected by this amendment were as follows:
| • |  | an age-related contribution crediting schedule ranging from 4% to 16% of pension-eligible compensation
| • |  | interest credits on post-July 1, 2010 pension accruals of 4% per year
| • |  | inclusion of overtime pay in pension-eligible compensation
| • |  | increase of the cap on pension-eligible compensation from $100,000 to the statutory limit
| • |  | change in the actuarial factor basis used to convert account balances to annuity payment forms.
In October 2009, the Company agreed to settle a pension litigation matter, which was approved by the court in April 2010. As a result, the Plan was amended to increase benefits to certain former employees. This amendment, effective May 21, 2010, increased the benefit obligation by $34,000,000 and results in a prior service cost base which will be amortized over 11 years. To fund this additional liability, the Company made a voluntary contribution of $34,000,000 in June 2010. The impacts of the amendment described above are reflected in the preceding table. Included in “accumulated other comprehensive income” at July 2, 2011 is a pre-tax charge of $147,311,000 of net actuarial losses which have not yet been recognized in net periodic pension cost, of which $9,680,000 is expected to be recognized as a component of net periodic benefit cost during fiscal 2012. Also included is a pre-tax credit of $14,431,000 of prior service credit which has not yet been recognized in net periodic pension costs, of which $1,875,000 is expected to be recognized as a component of net periodic benefit costs during fiscal 2012. Weighted average assumptions used to calculate actuarial present values of benefit obligations are as follows:
|  | 2011 |  | 2010
Discount rate |  |  | 5.25 | % |  |  | 5.25 | %
Weighted average assumptions used to determine net benefit costs are as follows:
|  | 2011 |  | 2010
Discount rate |  |  | 5.25 | % |  |  | 6.25 | %
Expected return on plan assets |  |  | 8.50 | % |  |  | 9.00 | %
The Company bases its discount rate on a hypothetical portfolio of bonds rated Aa by Moody’s Investor Services or AA by Standard & Poors. The bonds selected for this determination are based upon the estimated amount and timing of services of the pension plan. Components of net periodic pension costs during the last three fiscal years are as follows:
|  | Years Ended |
|  | July 2, |  |  | July 3, |  |  | June 27, |
|  | 2011 |  |  | 2010 |  |  | 2009 |
|  | (Thousands) |
Service cost |  | $ | 23,874 |  |  | $ | — |  |  | $ | 16,205 |
Interest cost |  |  | 13,918 |  |  |  | 15,748 |  |  |  | 18,175 |
Expected return on plan assets |  |  | (27,560 | ) |  |  | (30,137 | ) |  |  | (26,539 | )
Recognized net actuarial loss |  |  | 8,938 |  |  |  | 5,687 |  |  |  | 2,325 |
Amortization of prior service credit |  |  | (1,875 | ) |  |  | (4,884 | ) |  |  | — |
Net periodic pension cost |  | $ | 17,295 |  |  | $ | (13,586 | ) |  | $ | 10,166 |
The Company made contributions of $500,000 and $41,750,000 in fiscal 2011 and 2010, respectively. Benefit payments are expected to be paid to participants as follows for the next five fiscal years and the aggregate for the five years thereafter (in thousands):
2012 |  | $ | 26,463 |
2013 |  |  | 20,405 |
2014 |  |  | 20,619 |
2015 |  |  | 19,258 |
2016 |  |  | 20,625 |
2016 through 2021 |  |  | 112,041 |
The Plan’s assets are held in trust and were allocated as follows as of the June 30 measurement date for fiscal 2011 and 2010:
|  | 2011 |  | 2010
Equity securities |  |  | 76 | % |  |  | 74 | %
Debt securities |  |  | 24 |  |  |  | 25 |
Cash and receivables |  |  | — |  |  |  | 1 |
The general investment objectives of the Plan are to maximize returns through a diversified investment portfolio in order to earn annualized returns that meet the long-term cost of funding the Plan’s pension obligations while maintaining reasonable and prudent levels of risk. The target rate of return on Plan assets is currently 8.5%, which represents the average rate of earnings expected on the funds invested or to be invested to provide for the benefits included in the benefit obligation. This assumption has been determined by combining expectations regarding future rates of return for the investment portfolio along with the historical and expected distribution of investments by asset class and the historical rates of return for each of those asset classes. The mix of equity securities is typically diversified to obtain a blend of domestic and international investments covering multiple industries. The Plan assets do not include any material investments in Avnet common stock. The Plan’s investments in debt securities are also diversified across both public and private fixed income securities. The Company’s current target allocation for the investment portfolio is for equity securities, both domestic and international, to represent approximately 76% of the portfolio with a policy for minimum investment in equity securities of 60% of the portfolio and a maximum of 92%. The majority of the remaining portfolio of investments is to be invested in fixed income securities. As of June 30, 2011, the market value of plan assets by investment category was: U.S. Equity ($194.3 million); U.S. Bonds ($76.5 million); International Equity ($51.9 million) and cash and receivables ($2.0 million). Asset values are Level 1 for all asset categories as the fair values are based upon quoted market prices for identical assets. The pension assets were highly diversified to reduce the potential risk of significant concentrations of credit risk.

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- Definition The entire disclosure for pension and other postretirement benefits. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -URI http://asc.fasb.org/topic&trid=2235017 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 87 -Paragraph 264 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 158 -Paragraph 7, 21, 22 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 132R -Paragraph 5 -Subparagraph b -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. 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Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 132R -Paragraph 5 -Subparagraph q -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 106 -Paragraph 518 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. + Details
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