NOTE 9

Postretirement benefits other than pensions

The company provides health care and life insurance benefits to certain retired employees who meet age and service requirements. Most of the company’s retirees contribute to the cost of these benefits and retiree contributions are increased as actual benefit costs increase. The cost of providing retiree health care and life insurance benefits is actuarially determined. The company’s policy is to fund benefits as claims and premiums are paid. The company eliminated postretirement medical and life insurance benefits for most U.S. employees under 50 years of age effective Jan. 1, 2006. The company uses a Dec. 31 measurement date for these plans.

Postretirement benefit cost for health care and life insurance included the following components:



In thousands of dollars
	2013			2012			2011
Service cost – benefits earned during the period	$	529		$	545		$	611
Interest cost on net benefit obligation	5,656			7,744			9,205
Amortization of prior service credit	(9,165		)	(19,190		)	(19,510		)
Amortization of actuarial loss	1,169			1,943			5,444
Net periodic postretirement benefit credit	$	(1,811	)	$	(8,958	)	$	(4,250	)

The table below provides a reconciliation of benefit obligations and funded status of the company’s postretirement benefit plans:



In thousands of dollars
	Dec. 29, 2013			Dec. 30, 2012
Change in benefit obligations
Net benefit obligations at beginning of year	$	169,592		$	184,131
Service cost	529			545
Interest cost	5,656			7,744
Plan participants’ contributions	9,629			10,362
Plan amendments	(496		)	—
Actuarial gain	(16,476		)	(5,877		)
Gross benefits paid	(28,022		)	(29,245		)
Federal subsidy on benefits paid	4,169			1,932
Acquisitions	2,228			—
Net benefit obligations at end of year	$	146,809		$	169,592
Change in plan assets
Fair value of plan assets at beginning of year	$	—		$	—
Employer contributions	18,393			18,883
Plan participants’ contributions	9,629			10,362
Gross benefits paid	(28,022		)	(29,245		)
Fair value of plan assets at end of year	$	—		$	—
Benefit obligation at end of year	$	146,809		$	169,592
Amounts recognized in Consolidated Balance Sheets
Accrued benefit cost—current	$	17,731		$	19,655
Accrued benefit cost—noncurrent	$	129,078		$	149,937

The following table summarizes the amounts recorded in accumulated other comprehensive income (loss) that have not yet been recognized as a component of net periodic postretirement benefit credit as of the dates presented (pre-tax):



In thousands of dollars
	Dec. 29, 2013			Dec. 30, 2012
Net actuarial losses	$	(6,087	)	$	(23,467	)
Prior service credit	16,204			24,874
Amounts in accumulated other comprehensive income (loss)	$	10,117		$	1,407

The actuarial loss and prior service credit estimated to be amortized from accumulated other comprehensive loss into net periodic benefit cost in 2014 are $0.6 million and $8.4 million, respectively.

Other changes in plan assets and benefit obligations recognized in other comprehensive (loss) consist of the following:



In thousands of dollars
	2013
Current year actuarial gain	$	16,210
Change in prior service cost	496
Amortization of actuarial loss	1,169
Amortization of prior service credit	(9,165		)
Total	$	8,710

Postretirement benefit costs: The following assumptions were used to determine postretirement benefit cost:



	2013		2012		2011
Discount rate	3.80	%	4.75	%	5.30	%
Health care cost trend rate assumed for next year	7.17	%	6.50	%	6.50	%
Ultimate trend rate	5.00	%	5.00	%	5.00	%
Year that ultimate trend rate is reached	2017		2016		2015

Benefit obligations and funded status: The following assumptions were used to determine the year-end benefit obligation:



	Dec. 29, 2013		Dec. 30, 2012
Discount rate	4.75	%	3.80	%
Health care cost trend rate assumed for next year	7.17	%	6.50	%
Ultimate trend rate	5.00	%	5.00	%
Year that ultimate trend rate is reached	2017		2016

Assumed health care cost trend rates have an effect on the amounts reported for the health care plans. The effect of a 1% change in the health care cost trend rate would result in a change of approximately $5.4 million in the 2013 postretirement benefit obligation and a $0.2 million change in the aggregate service and interest components of the 2013 expense.

Cash flows: The company expects to make the following benefit payments, which reflect expected future service, and to receive the following federal subsidy benefits as appropriate:



In thousands of dollars	Benefit Payments		Subsidy Benefits
2014	$	17,731	$	2,812
2015	$	16,857	$	2,738
2016	$	15,998	$	2,649
2017	$	15,123	$	2,580
2018	$	15,077	$	2,495
2019-2023	$	60,528	$	10,530

The amounts above exclude the participants’ share of the benefit cost. The company’s policy is to fund benefits as claims and premiums are paid.