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Employee Benefits
 12 Months Ended
Dec. 31, 2011
Employee Benefits [Abstract]  
Employee Benefits

8. Employee Benefits

Defined Benefit Pension Plans

Most of our hourly employees participate in noncontributory defined benefit pension plans, which include a plan that is administered solely by us (the “hourly pension plan”) and union-administered multiemployer plans. Our funding policy for the hourly pension plan is based on actuarial calculations and the applicable requirements of federal law. We met our required contribution to the hourly pension plan in fiscal 2011. We believe that each multiemployer pension plan is immaterial to our financial statements and that we represent an immaterial portion of the total contributions and future obligations of these plans. Contributions to multiemployer plans are generally based on negotiated labor contracts. We contributed $1.2 million, $1.1 million, and $1.0 million to union administered multiemployer pension plans for fiscal 2011, fiscal 2010, and fiscal 2009, respectively. Benefits under the majority of plans for hourly employees (including multiemployer plans) are primarily related to years of service.

 

The following tables set forth the change in projected benefit obligation and the change in plan assets for the hourly pension plan:

 

      September 30,       September 30,  
    December 31,
2011		     January 1,
2011		  
    (In thousands)  

Change in projected benefit obligation:

                

Projected benefit obligation at beginning of period

   $ 87,510     $ 79,500  

Service cost

     2,091       1,992  

Interest cost

     4,609       4,744  

Actuarial loss

     9,029       4,868  

Curtailment

     —         —    

Benefits paid

     (3,814 )      (3,594 ) 
   

 

 

    

 

 

  

Projected benefit obligation at end of period

     99,425       87,510  
   

 

 

    

 

 

  

Change in plan assets:

                

Fair value of assets at beginning of period

     68,725       61,563  

Actual (loss) return on plan assets

     (1,015 )      8,290  

Employer contributions

     —         2,466  

Benefits paid

     (3,814 )      (3,594 ) 
   

 

 

    

 

 

  

Fair value of assets at end of period

     63,896       68,725  
   

 

 

    

 

 

  

Unfunded Status of Plan

   $ (35,529 )    $ (18,785 ) 
   

 

 

    

 

 

  

We recognize the unfunded status (i.e., the difference between the fair value of plan assets and the projected benefit obligations) of our pension plan in our Consolidated Balance Sheets, with a corresponding adjustment to accumulated other comprehensive loss, net of tax, offset by a valuation allowance. On December 31, 2011, we measured the fair value of our plan assets and benefit obligations. As of December 31, 2011 and January 1, 2011, the net unfunded status of our benefit plan was $35.5 million and $18.8 million, respectively. These amounts were included in “Other non-current liabilities” on our Consolidated Balance Sheets. The net adjustment to other comprehensive loss for fiscal 2011, fiscal 2010, and fiscal 2009 was $15.0 million loss ($15.0 million loss, net of tax, offset by a valuation allowance), $1.0 million loss ($0.6 million loss, net of tax), and $1.5 million gain ($0.9 million gain, net of tax), respectively, which represents the net unrecognized actuarial (loss) gain and unrecognized prior service cost.

The unfunded status and the amounts recognized on our Consolidated Balance Sheets for the hourly pension plan are set forth in the following table:

 

      September 30,       September 30,  
    December 31,
2011		     January 1,
2011		  
    (In thousands)  

Unfunded status

   $ (35,529 )    $ (18,785 ) 

Unrecognized prior service cost

     3       3  

Unrecognized actuarial loss

     29,213       14,244  
   

 

 

    

 

 

  

Net amount recognized

   $ (6,313 )    $ (4,538 ) 
   

 

 

    

 

 

  

Amounts recognized on the balance sheet consist of:

                

Accrued pension liability

     (35,529 )      (18,785 ) 

Accumulated other comprehensive loss (pre-tax)

     29,216       14,247  
   

 

 

    

 

 

  

Net amount recognized

   $ (6,313 )    $ (4,538 ) 
   

 

 

    

 

 

  

The portion of estimated net loss for the hourly pension plan that is expected to be amortized from accumulated other comprehensive loss into net periodic cost over the next fiscal year is $2.1 million. The expected amortization of prior service cost recognized into net periodic cost over the next fiscal year is nominal.

The accumulated benefit obligation for the hourly pension plan was $96.8 million and $85.2 million at December 31, 2011 and January 1, 2011, respectively.

Net periodic pension cost for our pension plans included the following:

 

      September 30,       September 30,       September 30,  
    Fiscal Year  Ended
December 31,
2011		     Fiscal Year Ended
January  1,
2011		     Fiscal Year Ended
January  2,
2010		  
    (In thousands)  

Service cost

   $ 2,091     $ 1,992     $ 1,808  

Interest cost on projected benefit obligation

     4,609       4,744       4,511  

Expected return on plan assets

     (5,505 )      (4,926 )      (4,531 ) 

Amortization of unrecognized loss

     579       494       723  

Amortization of unrecognized prior service cost

     —         —         —    
   

 

 

    

 

 

    

 

 

  

Net periodic pension cost

   $ 1,774     $ 2,304     $ 2,511  
   

 

 

    

 

 

    

 

 

  

 

The following assumptions were used to determine the projected benefit obligation at the measurement date and the net periodic pension cost:

 

      September 30,       September 30,  
    December 31,
2011		     January 1,
2011		  

Projected benefit obligation:

                

Discount rate

     5.02 %      5.39 % 

Average rate of increase in future compensation levels

     3.00 %      4.00 % 

Net periodic pension cost

                

Discount rate

     5.39 %      6.11 % 

Average rate of increase in future compensation levels

     4.00 %      4.00 % 

Expected long-term rate of return on plan assets

     8.25 %      8.25 % 

Our estimates of the amount and timing of our future funding obligations for our defined benefit pension plans are based upon various assumptions specified above. These assumptions include, but are not limited to, the discount rate, projected return on plan assets, compensation increase rates, mortality rates, retirement patterns, and turnover rates.

Determination of expected long-term rate of return

In developing expected return assumptions for our pension plan, the most influential decision affecting long-term portfolio performance is the determination of overall asset allocation. An asset class is a group of securities that exhibit similar characteristics and behave similarly in the marketplace. The three main asset classes are equities, fixed income, and cash equivalents.

Upon calculation of the historical risk premium for each asset class, an expected rate of return can be established based on assumed 90-day Treasury bill rates. Based on the normal asset allocation structure of the portfolio (65% equities, 30% fixed income, and 5% other) with historical compound annualized risk free rate of 4.40%, the expected overall portfolio return is 8.35% offset by 0.5% expense estimate resulting in a 7.85% net long term rate of return as of December 31, 2011.

Our percentage of fair value of total assets by asset category as of our measurement date is as follows:

 

      September 30,       September 30,  

Asset Category

   December 31,
2011		     January 1,
2011		  

Equity securities — domestic

     47 %      45 % 

Equity securities — international

     5 %      15 % 

Fixed income

     45 %      32 % 

Other

     3 %      8 % 
   

 

 

    

 

 

  

Total

     100 %      100 % 
   

 

 

    

 

 

  

The fair value of our plan assets by asset category as of December 31, 2011 was as follows (in thousands):

 

      September 30,  

Asset Category

   Level 1  

Equity securities — domestic

   $ 30,179  

Equity securities — international

     2,843  

Fixed income

     28,975  

Other

     1,899  
   

 

 

  

Total

   $ 63,896  
   

 

 

  

The fair value of our plan assets by asset category as of January 1, 2011 was as follows (in thousands):

 

      September 30,  

Asset Category

   Level 1  

Equity securities — domestic

   $ 30,891  

Equity securities — international

     10,389  

Fixed income

     22,248  

Other

     5,197  
   

 

 

  

Total

   $ 68,725  
   

 

 

  

 

The plan assets are valued using quoted market prices in active markets and we consider the investments to be Level 1 in the fair value hierarchy. See Note 13 for a discussion of the levels of inputs to determine fair value.

Investment policy and strategy

Plan assets are managed as a balanced portfolio comprised of two major components: an equity portion and a fixed income portion. The expected role of plan equity investments will be to maximize the long-term real growth of fund assets, while the role of fixed income investments will be to generate current income, provide for more stable periodic returns, and provide some downside protection against the possibility of a prolonged decline in the market value of equity investments. We review this investment policy statement at least once per year. In addition, the portfolio will be reviewed quarterly to determine the deviation from target weightings and will be rebalanced as necessary. Target allocations for fiscal 2012 are 50% domestic and 15% international equity investments, 30% fixed income investments, and 5% cash. The expected long-term rate of return for the plan’s total assets is based on the expected return of each of the above categories, weighted based on the target allocation for each class.

Our estimated future benefit payments reflecting expected future service are as follows (in thousands):

 

      September 30,  

Fiscal Year Ending

   (In thousands)  

December 29, 2012

   $ 1,167  

December 28, 2013

     4,295  

January 3, 2015

     4,762  

January 2, 2016

     4,972  

December 31, 2016

     5,288  

Thereafter

     31,171  

The Company’s required cash contribution to the pension plan in 2012 is approximately $4.1 million. This contribution is comprised of approximately $1.2 million related to our 2011 minimum required contribution and approximately $2.9 million related to our 2012 minimum required contribution. The Company’s minimum required contribution for plan year 2012 is $5.4 million. The Company will fund the $1.2 million related to its 2011 minimum required contribution with cash in 2012. However, in an effort to preserve additional cash for operations, we intend to seek a waiver from the IRS for our 2012 minimum required contribution. If we are granted the requested waiver, our contributions for 2012 will be deferred and amortized over the following five years, increasing our future minimum required contributions.

Defined Contribution Plans

Our employees also participate in several defined contribution plans. Contributions to the plans are based on employee contributions and compensation. Contributions to the hourly defined contribution plan totaled $0.1 million, $0.1 million, and $0.1 million for fiscal 2011, fiscal 2010, and fiscal 2009, respectively. During fiscal 2009, we suspended the Company matching contributions to our defined salaried contribution plan as part of our cost reduction initiatives. The Company match will be reinstated beginning on January 1, 2012.