Kroger 2012 Annual Report Download - page 125

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A-67
NO T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S , CO N T I N U E D
The Company contributed and expensed $140, $130 and $119 to employee 401(k) retirement savings
accounts in 2012, 2011 and 2010, respectively. The 401(k) retirement savings account plan provides to eligible
employees both matching contributions and automatic contributions from the Company based on participant
contributions, compensation as defined by the plan, and length of service.
The Company also administers other defined contribution plans for eligible employees. The cost of these
plans was $7, $6 and $7 for 2012, 2011 and 2010, respectively.
14 . M U L T I - E M P L O Y E R P E N S I O N P L A N S
The Company contributes to various multi-employer pension plans based on obligations arising from
collective bargaining agreements. These plans provide retirement benefits to participants based on their
service to contributing employers. The benefits are paid from assets held in trust for that purpose. Trustees are
appointed in equal number by employers and unions. The trustees typically are responsible for determining
the level of benefits to be provided to participants as well as for such matters as the investment of the assets
and the administration of the plans.
In the fourth quarter of 2011, the Company entered into a memorandum of understanding (“MOU”) with
14 locals of the UFCW that participated in four multi-employer pension funds. The MOU established a process
that amended each of the collective bargaining agreements between the Company and the UFCW locals under
which the Company made contributions to these funds and consolidated the four multi-employer pension
funds into one multi-employer pension fund.
Under the terms of the MOU, the locals of the UFCW agreed to a future pension benefit formula through
2021. The Company was designated as the named fiduciary of the new consolidated pension plan with sole
investment authority over the assets. The Company committed to contribute sufficient funds to cover the
actuarial cost of current accruals and to fund the pre-consolidation Unfunded Actuarial Accrued Liability
(“UAAL”) that existed as of December 31, 2011, in a series of installments on or before March 31, 2018.
At January 1, 2012, the UAAL was estimated to be $911 (pre-tax). In accordance with GAAP, the Company
expensed $911 in 2011 related to the UAAL. The expense was based on a preliminary estimate of the contractual
commitment. In 2012, the Company finalized the UAAL contractual commitment and recorded an adjustment
that reduced the 2011 estimated commitment by $53 (pre-tax). The final UAAL contractual commitment,
at January 1, 2012, was $858 (pre-tax). In the fourth quarter of 2011, the Company contributed $650 to the
consolidated multi-employer pension plan of which $600 was allocated to the UAAL and $50 was allocated to
service and interest costs and expensed in 2011. In the fourth quarter of 2012, the Company contributed $258
to the consolidated multi-employer pension plan to fully fund the Company’s UAAL contractual commitment.
Future contributions will be dependent, among other things, on the investment performance of assets in the
plan. The funding commitments under the MOU replace the prior commitments under the four existing funds
to pay an agreed upon amount per hour worked by eligible employees.
The Company recognizes expense in connection with these plans as contributions are funded, or in the
case of the UFCW consolidated pension plan, when commitments are made. The Company made contributions
to these funds of $492 in 2012, $946 in 2011 and $262 in 2010. The cash contributions for 2012 and 2011
include the Company’s $258 and $650 contributions described above, respectively, to the UFCW consolidated
pension plan in the fourth quarter of each year.
The risks of participating in multi-employer pension plans are different from the risks of participating in
single-employer pension plans in the following respects:
a. Assets contributed to the multi-employer plan by one employer may be used to provide benefits to
employees of other participating employers.
b. If a participating employer stops contributing to the plan, the unfunded obligations of the plan
allocable to such withdrawing employer may be borne by the remaining participating employers.