Sara Lee 2013 Annual Report Download - page 57

The Hillshire Brands Company 55
The assets are managed by professional investment firms and
performance is evaluated against specific benchmarks. The responsi-
bility for the investment strategies typically lies with an investment
committee, which is composed of representatives appointed by
the company.
Pension assets at the 2013 and 2012 measurement dates do
not include any direct investment in the company’s debt or equity
securities. Substantially all pension benefit payments are made from
assets of the pension plans. It is anticipated that the future benefit
payments will be as follows: $71 million in 2014, $73 million in
2015, $76 million in 2016, $79 million in 2017, $82 million in 2018
and $454 million from 2019 to 2023. The company expects to
contribute approximately $5 million to its pension plans in 2014.
DEFINED CONTRIBUTION PLANS
The company sponsors defined contribution plans, which cover
certain salaried and hourly employees. The company’s cost is deter-
mined by the amount of contributions it makes to these plans.
The amounts charged to expense for contributions made to these
defined contribution plans related to continuing operations totaled
$25 million in 2013, $21 million in 2012 and $27 million in 2011.
MULTI-EMPLOYER PLANS
The company participates in a multi-employer plan that provides
defined benefits to certain employees covered by collective bargaining
agreements. Such plans are usually administered by a board of trustees
composed of the management of the participating companies and
labor representatives.
The company previously contributed to several multiemployer
defined benefit pension plans under the terms of collective-bargaining
agreements that covered various union-represented employees but
currently only contributes to one of these plans. The risks of partici-
pating in these multiemployer plans are different from single-employer
plans. Assets contributed to the multiemployer plan by one employer
may be used to provide benefits to employees of other participating
employers. If a participating employer stops contributing to the plan,
the unfunded obligation of the plan may be borne by the remaining
participating employers. If we stop participating in a plan, we may
be required to pay that plan an amount based on the underfunded
status of the plan, referred to as a withdrawal liability. None of the
contributions to the pension funds for continuing operations was in
excess of 5% or more of the total plan contributions for plan years
2013, 2012 and 2011. There are no contractually required minimum
contributions to the plans as of June 29, 2013.
The net pension cost of these plans is equal to the annual
contribution determined in accordance with the provisions of
negotiated labor contracts. The contributions for plans related to
continuing operations were $1 million in 2013, $2 million in 2012
and $3 million in 2011. Assets contributed to such plans are not
segregated or otherwise restricted to provide benefits only to the
employees of the company. The future cost of these plans is depend-
ent on a number of factors including the funded status of the plans
and the ability of the other participating companies to meet ongoing
funding obligations.
The company’s participation in these multiemployer plans for
fiscal 2013 is outlined below. The EIN/Pension Plan Number column
provides the Employer Identification Number (EIN) and the three
digit plan number, if applicable. Unless otherwise noted, the most
recent PPA zone status available in 2013 and 2012 is for the plan’s
year beginning January 1, 2013 and 2012, respectively. The zone
status is based on information that the company has received from
the plan and is certified by plans’ actuaries. Among other factors,
plans in the red zone are generally less than 65 percent funded. The
FIP/RP Status Pending/Implemented column indicates plans for
which a financial improvement plan (FIP) or rehabilitation plan (RP)
is either pending or has been implemented. The last column lists the
expiration date(s) of the collective-bargaining agreements to which
the plans are subject. There have been no significant changes that
affect the comparability of contributions from year to year.
In addition to regular contributions, the company could be obli-
gated to pay additional contributions (known as complete or partial
withdrawal liabilities) if a MEPP has unfunded vested benefits.
PPA Zone Status FIP/RP Status Contributions (in millions)
2013 Expiration Date
EIN/Pension Pending/ Surcharge of Collective
Plan Number 2013 2012 Implemented 2013 2012 2011 Imposed Bargaining Agreement
PENSION FUND PLAN NAME
Bakery and Confectionary Union
& Industry Intl Pension Fund 52-6118572/001 Red Red Nov 2012 $1 $2 $2 10% Oct 2014
All other plans – – 1 N/A N/A