Safeway 1999 Annual Report Download - page 37

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35
Note H: Employee Benefit Plans and Collective
Bargaining Agreements
Retirement Plans The Company maintains defined
benefit, non-contributory retirement plans for substantially
all of its employees not participating in multi-employer
pension plans.
In connection with the Randall’s Acquisition and
the Vons Merger, the Company assumed the obligations
of Randall’s and Vons’ retirement plans. The actuarial
assumptions for the existing Randall’s and Vons retirement
plans are comparable to the existing plans of the Company.
Randall’s and Vons’ retirement plans have been combined
with Safeway’s for financial statement presentation.
The following tables provide a reconciliation of the
changes in the retirement plans’ benefit obligation and fair
value of assets over the two-year period ending January 1,
2000 and a statement of the funded status as of year-end
1999 and 1998 (in millions):
199 9 1998
Change in benefit obligation:
Beginning balance $ 1,165.7 $1,056.8
Service cost 54.4 52.5
Interest cost 81.6 69.7
Plan amendments 17 .5 18.2
Actuarial (gain) loss (129.4) 65.1
Acquisition of Randall’s28 .1 –
Benefit payments (87.3) (79.8)
Change in assumption (23.4) (0.5)
Currency translation adjustment 12.5 (16.3)
■■■■■■■■■
Ending balance $ 1,1 19.7 $1,165.7
■■■■■■■■■
199 9 1998
Change in fair value of plan assets:
Beginning balance $ 1,766.1 $1,662.6
Actual return on plan assets 432.4 193.2
Acquisition of Randall’s27 .6 –
Employer contributions 0.9 6.8
Benefit payments (87.3) (79.8)
Currency translation adjustment 13.7 (16.7)
■■■■■■■■■
Ending balance $ 2,1 53.4 $1,766.1
■■■■■■■■■
199 9 1998
Funded status:
Fair value of plan assets $ 2,153.4 $ 1,766.1
Projected benefit obligation (1,119.7) (1,165.7)
■■■■■■■■■
Funded status 1,033.7 600.4
Adjustment for difference in book
and tax basis of assets (165.1) (165.1)
Unamortized prior service cost 97 .2 95.5
Unrecognized gain (560.2 ) (161.2)
■■■■■■■■■
Prepaid pension cost $ 405.6 $ 369.6
■■■■■■■■■
The following table provides the components of 1999,
1998 and 1997 net pension income for the retirement
plans (in millions):
199 9 1998 1997
Estimated return on assets $162.7 $141.5 $118.3
Service cost (54.4) (52.5) (42.5)
Interest cost (81.6) (69.7) (60.1)
Amortization of prior
service cost (15.4 ) (14.3) (11.6)
Amortization of
unrecognized gains 23 .8 13.3 –
■■■■■■■■■■ ■■■■■■■■■■
Net pension income $ 35 .1 $ 18.3 $ 4.1
■■■■■■■■■■ ■■■■■■■■■■
Prior service costs are amortized on a straight-line basis
over the average remaining service period of active partici-
pants. Actuarial gains and losses are amortized over the
average remaining service life of active participants when
the accumulation of such gains and losses exceeds 10% of
the greater of the projected benefit obligation and the fair
value of plan assets.
The actuarial assumptions used to determine year-end
plan status were as follows:
199 9 1998 1997
Discount rate used to
determine the projected
benefit obligation:
United States Plans 7.8% 6.5% 7.0%
Canadian Plan 7.5 6.3 6.3
Combined weighted
average rate 7.7 6.5 6.8
Expected return on plan assets:
United States Plan 9.0% 9.0% 9.0%
Canadian Plans 8.0 8.0 8.0
Rate of compensation increase:
United States Plan 5.0% 5.0% 5.0%
Canadian Plans 5.0 4.5 4.5