Kroger 2013 Annual Report Download - page 144

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A-71
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
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. If investment results fail to meet expectations, the Company could be
responsible for the shortfall. 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 its multi-employer pension 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 $228 in 2013, $492 in 2012 and $946 in 2011. 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.
c. If the Company stops participating in some of its multi-employer pension plans, the Company may
be required to pay those plans an amount based on its allocable share of the underfunded status of
the plan, referred to as a withdrawal liability.
The Company’s participation in these plans is outlined in the following tables. The EIN / Pension Plan
Number column provides the Employer Identification Number (“EIN”) and the three-digit pension plan
number. The most recent Pension Protection Act Zone Status available in 2013 and 2012 is for the plan’s
year-end at December 31, 2012 and December 31, 2011, respectively. Among other factors, generally, plans in
the red zone are less than 65 percent funded, plans in the yellow zone are less than 80 percent funded and
plans in the green zone are at least 80 percent funded. The FIP/RP Status Pending / Implemented Column
indicates plans for which a funding improvement plan (“FIP”) or a rehabilitation plan (“RP”) is either pending
or has been implemented. Unless otherwise noted, the information for these tables was obtained from the
Forms 5500 filed for each plan’s year-end at December 31, 2012 and December 31, 2011. The multi-employer
contributions listed in the table below are the Company’s multi-employer contributions made in fiscal years
2013, 2012 and 2011.