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Employee Benefits
 12 Months Ended
Sep. 27, 2013
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 2013 and 2012 was as follows:

 

 

 

 

 

 

 

 

 

 

 

2013

2012

Projected benefit obligation:

 

 

 

 

Projected benefit obligation, beginning of year

$
25,516 

$
21,032 

Interest cost

 
997 

 
1,036 

Actuarial (gain) loss

 
(3,649)

 
4,224 

Benefits paid

 
(813)

 
(776)

Projected benefit obligation, end of year

 
22,051 

 
25,516 

Fair value of plan assets:

 

 

 

 

Fair value of plan assets, beginning of year

 
13,673 

 
11,304 

Actual gain on plan assets

 
1,861 

 
2,259 

Company contributions

 
1,143 

 
886 

Benefits paid

 
(813)

 
(776)

Fair value of plan assets, end of year

 
15,864 

 
13,673 

Funded status of the plans

 
(6,187)

 
(11,843)

Amounts recognized in the Consolidated Balance Sheets consist of:

 

 

 

 

Current pension liabilities

 
191 

 
191 

Non-current pension liabilities

 
5,996 

 
11,650 

Accumulated other comprehensive loss

 
(5,008)

 
(10,207)

Components of accumulated other comprehensive loss:

 

 

 

 

Net actuarial loss

 
(5,008)

 
(10,207)

Accumulated other comprehensive loss

$
(5,008)

$
(10,207)

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2013

2012

2011

Interest cost

$
997 

$
1,036 

$
1,003 

Expected return on plan assets

 
(977)

 
(942)

 
(962)

Amortization of unrecognized net actuarial loss

 
666 

 
335 

 
177 

Net periodic pension cost

 
686 

 
429 

 
218 

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

 

 

 

 

 

 

Net actuarial (gain) loss

 
(5,199)

 
2,571 

 
2,321 

Total recognized in net periodic pension cost and OCI

$
(4,513)

$
3,000 

$
2,539 

 

 

 

 

 

 

 

The Company expects to recognize $333 of unrecognized loss amortization as a component of net periodic benefit cost in 2014.  This amount is included in accumulated other comprehensive income as of September 27, 2013.

 

At September 27, 2013, the aggregate accumulated benefit obligation and aggregate fair value of plan assets for plans with benefit obligations in excess of plan assets was $22,051 and $15,864, respectively, and there were no plans with plan assets in excess of benefit obligations. 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.

 

The Company anticipates making contributions to the defined benefit pension plans of $492 through October 3, 2014.

 

Estimated benefit payments from the defined benefit plans to participants for the five years ending September 30, 2018 and five years thereafter are as follows:

 

 

 

 

 

 

2014

$
900 

2015

 
912 

2016

 
967 

2017

 
978 

2018

 
1,032 

Five years thereafter

 
5,748 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Projected Benefit Obligation

 

Net Periodic Pension Cost

 

 
2013 
2012 
2011 

 
2013 
2012 
2011 

Discount rate

 
5.00% 
4.00% 
5.00% 

 
4.00% 
5.00% 
5.25% 

Long-term rate of return

 

N/A

N/A

N/A

 
7.50% 
7.50% 
7.50% 

Average salary increase rate

 

N/A

N/A

N/A

 

N/A

N/A

N/A

 

 

 

 

 

 

 

 

 

The change in discount rates in 2013 resulted in an actuarial gain of approximately $3,500.  The remainder of the actuarial gain for 2013 was related to adjustments to mortality tables, other modifications to actuarial assumptions and investment returns in excess of, or less than estimates.  In 2012 and 2011, the impact of the change in discount rates was actuarial losses of approximately $3,600 and $750, respectively. The remainder of the actuarial losses for each year resulted 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 27, 2013 and September 28, 2012, by asset category were as follows:

 

 

 

 

 

 

 

 

 

 
2013 
2012 

Equity securities

 
76% 
74% 

Fixed income securities

 
23% 
25% 

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 27, 2013:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Level 1

 

Level 2

 

Level 3

 

Total

Description:

 

 

 

 

 

 

 

 

Mutual fund

$
15,560 

$

 -

$

 -

$
15,560 

Money market funds

 
34 

 

 -

 

 -

 
34 

Group annuity contract

 

 -

 

 -

 
270 

 
270 

Total

$
15,594 

$

 -

$
270 

$
15,864 

 

 

 

 

 

 

 

 

 

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 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 27, 2013 and September 28, 2012:

 

 

 

 

 

 

 

 

 

 

 

2013

2012

Level 3 assets, beginning of year

$
331 

$
447 

Purchases

 
6 

 
8 

Unrealized gain (loss)

 
1 

 
(7)

Sales

 
(68)

 
(117)

Level 3 assets, end of year

$
270 

$
331 

 

 

 

 

 

 

 

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 $8,946 and $7,310 as of September 27, 2013 and September 28, 2012, 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 $931,  $882 and  $853 for 2013, 2012 and 2011, respectively.