Safeway 2001 Annual Report Download - page 38

36
recognized for the remittance of such earnings to the United States
since it is the Company’s intention to utilize those earnings in the
foreign operations for an indefinite period of time, or to repatriate
such earnings only when tax efficient to do so. The determination
of the amount of deferred taxes on these earnings is not practicable
since the computation would depend on a number of factors that
cannot be known until a decision to repatriate the earnings is made.
Note I: 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 Genuardi’s and Randall’s Acquisitions,
and the Vons merger in 1997, the Company assumed the oblig-
ations of Genuardi’s, Randall’s and Vons retirement plans. The
actuarial assumptions for the existing Genuardi’s, Randall’s and
Vons retirement plans are comparable to those for the existing
plans of the Company. Genuardi’s, Randall’s and Vons retire-
ment 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 ended December 29, 2001 and a statement of
the funded status as of year-end 2001 and 2000 (in millions):
2001 2000
Change in benefit obligation:
Beginning balance $1,181.9 $1,119.7
Service cost 58.2 47.2
Interest cost 76.4 84.1
Plan amendments 19.0 17.8
Actuarial loss 51.3 28.3
Acquisition of Genuardi’s 22.7 –
Benefit payments (85.3) (85.1)
Transfer of plan liabilities (21.5) (20.0)
Curtailment –(2.3)
Currency translation adjustment (15.8) (7.8)
Ending balance $1,286.9 $1,181.9
2001 2000
Change in fair value of plan assets:
Beginning balance $ 1,956.7 $ 2,153.4
Actual loss on plan assets (56.1) (60.4)
Acquisition of Genuardi’s 24.4 –
Employer contributions 5.9 0.6
Benefit payments (85.3) (85.1)
Transfer of plan assets (46.9) (43.0)
Currency translation adjustment (15.9) (8.8)
Ending balance $ 1,782.8 $ 1,956.7
2001 2000
Funded status:
Fair value of plan assets $ 1,782.8 $ 1,956.7
Projected benefit obligation (1,286.9) (1,181.9)
Funded status 495.9 774.8
Adjustment for difference in book
and tax basis of assets (165.1) (165.1)
Unamortized prior service cost 99.0 94.3
Unrecognized loss (gain) 101.5 (212.5)
Prepaid pension cost $ 531.3 $ 491.5
The following table provides the components of 2001, 2000 and
1999 net pension income for the retirement plans (in millions):
2001 2000 1999
Estimated return on assets $ 158.9 $ 182.3 $ 162.7
Service cost (58.2) (47.7) (54.4)
Interest cost (76.4) (84.7) (81.6)
Amortization of prior service cost (14.0) (14.8) (15.4)
Amortization of unrecognized gains 17.0 42.2 23.8
Net pension income $ 27.3 $ 77.3 $ 35.1
Prior service costs are amortized on a straight-line basis over
the average remaining service period of active participants.
Actuarial gains and losses are amortized over the average remain-
ing service life of active participants when the accumulation of
such gains and losses exceeds 10% of the greater of the project-
ed benefit obligation and the fair value of plan assets.
In May 2000, Safeway entered into an agreement to have a
third party operate the Company’s Maryland distribution center.
Pursuant to the agreement, Safeway and the third party jointly
established a new multiple employer defined benefit pension plan
to provide benefits for the employees who were to be transferred
as a result of this agreement. The Company recorded settlement