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Employee Benefits
 12 Months Ended
Sep. 28, 2012
Employee Benefits [Abstract]  
Employee Benefits

7EMPLOYEE BENEFITS

The Company has non-contributory defined benefit pension plans covering certain U.S. employees.    Retirement benefits are generally provided based on employees’ years of service and average earnings.    Normal retirement age is 65, with provisions for earlier retirement.  The Company elected to freeze its U.S. defined benefit pension plans as of September 30, 2009 and as a result, there are no benefit accruals related to service performed after that date.

The financial position of the Company’s non-contributory defined benefit plans as of fiscal year end 2012 and 2011 was as follows:

 

 

 

 

 

 

 

 

 

 

 

2012

2011

Projected benefit obligation:

 

 

 

 

Projected benefit obligation, beginning of year

$
21,032 

$
19,369 

Service cost

 

 -

 

 -

Interest cost

 
1,036 

 
1,003 

Actuarial loss

 
4,224 

 
1,446 

Benefits paid

 
(776)

 
(786)

Projected benefit obligation, end of year

 
25,516 

$
21,032 

Fair value of plan assets:

 

 

 

 

Fair value of plan assets, beginning of year

 
11,304 

 
11,817 

Actual gain (loss) on plan assets

 
2,259 

 
(91)

Company contributions

 
886 

 
364 

Benefits paid

 
(776)

 
(786)

Fair value of plan assets, end of year

 
13,673 

 
11,304 

Funded status of the plans

 
(11,843)

 
(9,728)

Amounts recognized in the Consolidated Balance Sheets consist of:

 

 

 

 

Current pension liabilities

 
191 

 
197 

Non-current pension liabilities

 
11,650 

 
9,531 

Accumulated other comprehensive loss

 
(10,207)

 
(7,636)

Components of accumulated other comprehensive loss:

 

 

 

 

Net actuarial loss

 
(10,207)

 
(7,636)

Accumulated other comprehensive loss

$
(10,207)

$
(7,636)

 

 

 

 

 

 

 

 

Net periodic benefit cost for the non-contributory defined benefit pension plans for the respective years included the following pre-tax amounts:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

2011

2010

Interest cost

$
1,036 

$
1,003 

$
993 

Expected return on plan assets

 
(942)

 
(962)

 
(972)

Amortization of unrecognized net actuarial loss

 
335 

 
177 

 
94 

Net periodic pension cost

 
429 

 
218 

 
115 

Other changes in benefit obligations recognized in other comprehensive income (loss), (OCI):

 

 

 

 

 

 

Net actuarial loss

 
2,571 

 
2,321 

 
497 

Total recognized in net periodic pension cost and OCI

$
3,000 

$
2,539 

$
612 

 

 

 

 

 

 

 

The Company expects to recognize $628 of unrecognized loss amortization as a component of net periodic benefit cost in 2013.  This amount is included in accumulated other comprehensive income as of September 28, 2012.

 

At September 28, 2012, the aggregate accumulated benefit obligation and aggregate fair value of plan assets for plans with benefit obligations in excess of plan assets was $25,516 and $13,673, respectively, and there were no plans with plan assets in excess of benefit obligations. At September 30, 2011, the aggregate accumulated benefit obligation and aggregate fair value of plan assets for plans with benefit obligations in excess of plan assets was $21,032 and $11,304, respectively, and there were no plans with plan assets in excess of benefit obligations.

 

The Company anticipates making contributions to the defined benefit pension plans of $1,140 through September 27, 2013.

 

Estimated benefit payments from the defined benefit plans to participants for the five years ending September 29, 2017 and five years thereafter are as follows:

 

 

 

 

 

 

2013

$
880 

2014

 
905 

2015

 
915 

2016

 
967 

2017

 
978 

Five years thereafter

 
5,553 

 

 

 

 

 

Actuarial assumptions used to determine the projected benefit obligation and net periodic pension cost as of the following fiscal years are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projected Benefit Obligation

 

Net Periodic Pension Cost

 

 
2012 
2011 
2010 

 
2012 
2011 
2010 

Discount rate

 
4.00% 
5.00% 
5.25% 

 
5.00% 
5.25% 
5.50% 

Long-term rate of return

 

N/A

N/A

N/A

 
7.50% 
7.50% 
8.00% 

Average salary increase rate

 

N/A

N/A

N/A

 

N/A

N/A

N/A

 

 

 

 

 

 

 

 

 

 

 

The impact of the change in discount rates resulted in an actuarial loss of approximately $3,617, $747 and $705 in 2012, 2011 and 2010, respectively. The remainder of the actuarial losses for each year results from adjustments to mortality tables, other modifications to actuarial assumptions and investment returns in excess of, or less than, estimates.

 

To determine the discount rate assumption used in the Company’s pension valuation, the Company identified a benefit payout stream based on the demographics of the pension plans and constructed a hypothetical bond portfolio using high-quality corporate bonds with cash flows that matched that benefit payout stream.  A yield curve was calculated based on this hypothetical portfolio which was used for the discount rate determination.

The Company determines the long-term rate of return assumption for plan assets by using the historical asset returns for various investment asset classes and adjusting them to reflect future expectations.  The expected asset class returns are weighted by the targeted asset allocations, resulting in a weighted average return which is rounded to the nearest quarter percent.

 

The Company uses measurement dates of October 1 to determine pension expenses for each year and the last day of the fiscal year to determine the fair value of the pension assets.

 

The Company’s pension plans’ weighted average asset allocations at September 28, 2012 and September 30, 2011, by asset category were as follows:

 

 

 

 

 

 

 

 

 

 
2012 
2011 

Equity securities

 
74% 
75% 

Fixed income securities

 
25% 
24% 

Other securities

 
1% 
1% 

 

 
100% 
100% 

 

 

 

 

 

The Company’s primary investment objective for the plans’ assets is to maximize the probability of meeting the plans’ actuarial target rate of return of 7.5%, with a secondary goal of returning 4% above the rate of inflation. These return objectives are targeted while simultaneously striving to minimize risk of loss to the plans’ assets. The investment horizon over which the investment objectives are expected to be met is a full market cycle or five years, whichever is greater.

 

The Company’s investment strategy for the plans is to invest in a diversified portfolio that will generate average long-term returns commensurate with the aforementioned objectives while minimizing risk.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following table summarizes the Company's pension plan assets measured at fair value as of September 28, 2012:

 

 

 

 

 

 

 

 

 

 

 

Level 1

 

Level 2

 

Level 3

 

Total

Description:

 

 

 

 

 

 

 

 

Mutual fund

$
13,290 

$

 -

$

 -

$
13,290 

Money market funds

 
52 

 

 -

 

 -

 
52 

Group annuity contract

 

 -

 

 -

 
331 

 
331 

Total

$
13,342 

$

 -

$
331 

$
13,673 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The following table summarizes the Company's pension plan assets measured at fair value as of September 30, 2011:

 

 

 

 

 

 

 

 

 

 

 

Level 1

 

Level 2

 

Level 3

 

Total

Description:

 

 

 

 

 

 

 

 

Mutual fund

$
10,854 

$

 -

$

 -

$
10,854 

Money market funds

 
3 

 

 -

 

 -

 
3 

Group annuity contract

 

 -

 

 -

 
447 

 
447 

Total

$
10,857 

$

 -

$
447 

$
11,304 

 

 

 

 

 

 

 

 

 

 

 

The tables below set forth a summary of changes in fair value of the Company’s Level 3 pension plan assets for the years ended September 28, 2012 and September 30, 2011:

 

 

 

 

 

 

 

 

 

 

 

2012

2011

Level 3 assets, beginning of year

$
447 

$
471 

Unrealized gain (loss)

 
(7)

 
16 

Purchases, sales, issuances and settlements, net

 
(109)

 
(40)

Level 3 assets, end of year

$
331 

$
447 

 

 

 

 

 

 

 

The fair values of the money market fund and mutual fund were derived from quoted market prices as substantially all of these instruments have active markets.  The fair value of the group annuity contract was derived using a discounted cash flow model with inputs based on current yields of similar instruments with comparable durations.  The asset allocation of the mutual fund is a U.S. large-cap blend based on a moderate allocation style, generally investing approximately 70% to 75% in equity securities and the remainder in fixed income securities.  The annuity contract consists of high quality bonds.

 

The Company also has a non-qualified deferred compensation plan that provides certain officers and employees the ability to defer a portion of their compensation until a later date.  The deferred amounts and earnings thereon are payable to participants, or designated beneficiaries, at specified future dates upon retirement, death or termination of employment from the Company.  The deferred compensation liability, which is classified as other liabilities on our accompanying Consolidated Balance Sheets, was approximately $7,310 and $5,405 as of September 28, 2012 and September 30, 2011, respectively.

 

A majority of the Company’s full-time employees are covered by defined contribution programs. Expense attributable to the defined contribution programs was approximately $882, $853 and $826 for 2012, 2011 and 2010, respectively.