CHS 2011 Annual Report Download - page 49

48 2011 CHS
NOTE 10
Benefit Plans, continued
The Company has other contributory defined contribution
plans covering substantially all employees. Total contri-
butions by the Company to these plans were $18.6 million,
$17.3 million and $14.9 million, for the years ended
August 31, 2011, 2010 and 2009, respectively.
The Company contributed $35.0 million to qualified
pension plans in fiscal 2011. Based on the funded status
of the qualified pension plans as of August 31, 2011, the
Company does not expect to contribute to these plans in
fiscal 2012. The Company expects to pay $6.3 million to
participants of the non-qualified pension and postre-
tirement benefit plans during fiscal 2012.
The Company’s retiree benefit payments which reflect
expected future service are anticipated to be paid as follows:
(DOLLARS IN
THOUSANDS)
QUALIFIED
PENSION
BENEFITS
NON-
QUALIFIED
PENSION
BENEFITS GROSS MEDICARE D
OTHER BENEFITS
2012 $ 30,489 $ 3,205 $ 3,111 $100
2013 32,115 1,773 3,345 100
2014 34,127 1,294 3,565 100
2015 38,053 1,428 3,802 100
2016 39,911 1,567 4,121 100
2017-2021 238,203 15,157 26,030 500
The Company has trusts that hold the assets for the
defined benefit plans. The Company and NCRA have
qualified plan committees that set investment guidelines
with the assistance of external consultants. Investment
objectives for the Company’s plan assets are as follows:
•optimization of the long-term returns on plan assets
at an acceptable level of risk
•maintenance of a broad diversification across asset
classes and among investment managers
•focus on long-term return objectives
Asset allocation targets promote optimal expected return
and volatility characteristics given the long-term time
horizon for fulfilling the obligations of the pension plans.
The plans’ target allocation percentages are 35% in fixed
income securities and 65% in equity securities. An annual
analysis of the risk versus the return of the investment
portfolio is conducted to justify the expected long-term
rate of return assumption. The Company generally uses
long-term historical return information for the targeted
asset mix identified in asset and liability studies. Adjust-
ments are made to the expected long-term rate of return
assumption, when deemed necessary, based upon
revised expectations of future investment performance
of the overall investment markets.
The discount rate reflects the rate at which the associated
benefits could be effectively settled as of the measure-
ment date. In estimating this rate, the Company looks at
rates of return on fixed-income investments of similar
duration to the liabilities in the plans that receive high,
investment-grade ratings by recognized ratings agencies.
The investment portfolio contains a diversified portfolio
of investment categories, including domestic and inter-
national equities, fixed-income securities and real estate.
Securities are also diversified in terms of domestic and
international securities, short and long-term securities,
growth and value equities, large and small cap stocks, as
well as active and passive management styles.
The committees believe that with prudent risk tolerance
and asset diversification, the plans should be able to
meet pension obligations in the future.
The Company’s pension plans’ fair value measurements
at August 31, 2011 and 2010 are as follows:
(DOLLARS IN THOUSANDS) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
2011
Cash and cash equivalents $ 3,073 $ 22,325 $ 25,398
Equities:
Mutual funds 100,508 198,828 299,336
Fixed income securities:
Mutual funds 66,124 135,251 201,375
Real estate funds $14,522 14,522
Hedge funds 191 191
Total $169,705 $356,404 $14,713 $540,822
(DOLLARS IN THOUSANDS) LEVEL 1 LEVEL 2 LEVEL 3 TOTAL
2010
Cash and cash equivalents $ 73,704 $ 7,158 $ 80,862
Equities:
Mutual funds 95,185 150,654 245,839
Fixed income securities:
Mutual funds 45,548 93,775 139,323
Real estate funds $ 9,407 9,407
Hedge funds 2,705 2,705
Total $214,437 $251,587 $12,112 $478,136
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS