Red Lobster 2014 Annual Report Download - page 46

Notes to Consolidated Financial Statements
Darden
44 Darden Restaurants, Inc.
NOTE 17
RETIREMENT PLANS
DEFINED BENEFIT PLANS AND POSTRETIREMENT BENEFIT PLAN
Certain of our employees are eligible to participate in a retirement plan. We sponsor non-contributory defined benefit pension plans, which have been frozen,
for a group of salaried employees in the United States, in which benefits are based on various formulas that include years of service and compensation factors;
and for a group of hourly employees in the United States, in which a fixed level of benefits is provided. Pension plan assets are primarily invested in U.S. and
International equities as well as long-duration bonds and real estate investments. Our policy is to fund, at a minimum, the amount necessary on an actuarial
basis to provide for benefits in accordance with the requirements of the Employee Retirement Income Security Act of 1974, as amended and the Internal
Revenue Code (IRC), as amended by the Pension Protection Act of 2006. We also sponsor a contributory postretirement benefit plan that provides health care
benefits to our salaried retirees. Fundings related to the defined benefit pension plans and postretirement benefit plans, which are funded on a pay-as-you-go
basis, were as follows:
Fiscal Year
(in millions) 2014 2013 2012
Defined benefit pension plans funding $0.4 $2.4 $22.2
Postretirement benefit plan funding 0.9 0.8 0.5
We expect to contribute approximately $0.4 million to our defined benefit pension plans and approximately $1.1 million to our postretirement benefit plan
during fiscal 2015.
We are required to recognize the over-or-under-funded status of the plans as an asset or liability as measured by the difference between the fair value
of the plan assets and the benefit obligation and any unrecognized prior service costs and actuarial gains and losses as a component of accumulated other
comprehensive income (loss), net of tax.
During fiscal 2014, we amended our defined benefit pension plan to freeze all plan benefits as of December 31, 2014 and to provide an additional year of
benefit service for all final average pay participants accruing benefits and employed as of the effective date of the freeze. However, interest credits will continue
for cash balance participants. As a result of these changes, we recorded a $6.4 million curtailment gain into unrecognized loss and recognized a $0.6 million
net prior service credit into net periodic benefit cost.
The following provides a reconciliation of the changes in the plan benefit obligation, fair value of plan assets and the funded status of the plans as of
May 25, 2014 and May 26, 2013:
Defined Benefit Plans Postretirement Benefit Plan
(in millions) 2014 2013 2014 2013
Change in Benefit Obligation:
Benefit obligation at beginning of period $276.8 $274.4 $ 29.9 $ 29.6
Service cost 4.4 4.7 0.7 0.8
Interest cost 10.2 9.9 1.4 1.3
Plan amendments (0.6) – – –
Plan curtailments (6.4) – (4.8) –
Participant contributions – – 0.5 0.4
Benefits paid (13.3) (11.2) (1.4) (1.2)
Actuarial loss (gain) 12.8 (1.0) 12.2 (1.0)
Benefit obligation at end of period $283.9 $276.8 $ 38.5 $ 29.9
Change in Plan Assets:
Fair value at beginning of period $234.1 $203.5 $ – $ –
Actual return on plan assets 22.7 39.4 – –
Employer contributions 0.4 2.4 0.9 0.8
Participant contributions – – 0.5 0.4
Benefits paid (13.3) (11.2) (1.4) (1.2)
Fair value at end of period $243.9 $234.1 $ – $ –
Reconciliation of the Plans’ Funded Status:
Unfunded status at end of period $ (40.0) $ (42.7) $(38.5) $(29.9)