Harris Teeter 2012 Annual Report Download - page 46
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A minimum pension liability adjustment is required when the projected benefit obligation exceeds the fair value of plan
assets and accrued pension liabilities. This adjustment also requires the elimination of any previously recorded pension assets.
The minimum liability adjustment, net of tax benefit, is reported as a component of other comprehensive income and included
in the Statements of Consolidated Shareholders’ Equity and Comprehensive Income.
Net periodic pension expense for the Company’s defined benefit pension plans for fiscal 2012, 2011 and 2010 included
the following components (in thousands):
Pension Plan 2012 2011 2010
Service cost $ 2,957 $ 2,645 $ 1,730
Interest cost 16,129 18,163 18,523
Expected return on plan assets (19,195) (22,636) (19,479)
Amortization of prior service cost 29 85 133
Recognized net actuarial loss 10,526 12,627 9,443
Net periodic pension expense 10,446 10,884 10,350
Settlement / Curtailment expense 27,739 - -
Total Expense $ 38,185 $ 10,884 $ 10,350
SERP 2012 2011 2010
Service cost $ 787 $ 814 $ 754
Interest cost 2,412 1,955 2,201
Amortization of prior service cost 179 247 247
Recognized net actuarial loss 1,212 1,521 1,376
Net periodic pension expense 4,590 4,537 4,578
Curtailment cost 453 - -
Special termination benefit cost 1,300 - -
Total expense $6,343 $4,537 $4,578
Net periodic pension expense for the Company’s defined benefit pension plans is determined using assumptions as of the
beginning of each year and the market-related value of plan assets that recognizes changes in fair value in a systematic and
rational manner over five years. The projected benefit obligation and related funded status are determined using assumptions
as of the end of each year. The following table summarizes the assumptions utilized:
2012 2011 2010
Weighted Average Discount Rate – Pension Plan 4.45% 5.50% 5.05%
Weighted Average Discount Rate – SERP 4.20% 5.40% 4.65%
Rate of Increase in Future Payroll Costs:
Pension Plan 3.0% - 8.0%* 3.0% - 8.0%* 3.0% - 8.0%*
SERP 6.0% 6.0% 6.0%
Assumed Long-Term Rate of Return on Assets (Pension Plan only) 7.40% 8.00% 8.00%
* Rate varies by age, with higher rates associated with lower aged participants.
Discount rates are based on the expected timing and amounts of the expected employer paid benefits and are established
by reference to a representative yield curve of non-callable bonds with a credit rating of Aa and above with durations similar
to the pension liabilities.
Expected long-term return on plan assets is estimated by asset class and is generally based on historical returns, volatilities
and risk premiums. Based upon the plan’s asset allocation, composite return percentiles are developed upon which the plan’s
expected long-term rate of return is based.
HARRIS TEETER SUPERMARKETS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (CONTINUED)
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