Albertsons 2004 Annual Report Download - page 81

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SUPERVALU INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Pension Benefits Post Retirement Benefits
2004 2003 2002 2004 2003 2002
(In thousands)
NET BENEFIT COSTS FOR THE FISCAL
YEAR
Service cost $ 18,242 $ 18,333 $ 17,487 $ 1,350 $ 1,790 $1,902
Interest cost 35,003 33,228 31,163 7,457 7,336 6,031
Expected return on plan assets (40,970) (40,323) (41,386) — — —
Amortization of:
Unrecognized net loss 7,898 2,085 — 3,305 2,744 715
Unrecognized prior service cost 1,107 (158) (159) (1,200) (1,200) (736)
Net benefit costs for the fiscal year $ 21,280 $ 13,165 $ 7,105 $10,912 $10,670 $7,912
In March 2002, the company amended its pension plan by adopting the Economic Growth and Tax Relief
Reconciliation Act of 2001. The amendments included increasing the maximum plan benefit from $140,000 to
$160,000 and the compensation limit from $170,000 to $200,000 and resulted in an increase to the plan’s benefit
obligation of approximately $10.1 million in fiscal 2003. In March 2003 and 2004, the company amended its post
retirement medical health care benefit plan, primarily making changes to benefit coverage. This amendment
resulted in a decrease in the plan’s benefit obligation of approximately $4.5 million in fiscal 2004.
SFAS No. 87, “Employers’ Accounting for Pension”, requires the balance sheet to reflect a prepaid pension
asset or minimum pension liability based on the current market value of plan assets and the accumulated benefit
obligation of the plan. Based on both performance of the pension plan assets and plan assumption changes, the
company recorded a net after-tax adjustment of $26.4 million in fiscal 2004 and $72.3 million in fiscal 2003 to
reflect a minimum pension liability of $98.7 million after-tax as of February 28, 2004. The $43.5 million pre-tax
adjustment for fiscal 2004 includes $43.1 million for the pension plan and $0.4 million for the non-contributory,
unfunded pension plans, discussed below. For fiscal 2003, the $119.4 million pre-tax adjustment includes $112.5
million for the pension plan and $6.9 million for the non-contributory, unfunded pension plans.
The company utilized the following assumptions in the calculations for pension and the non-contributory
unfunded pension plans:
2004 2003 2002
Weighted-average assumptions used to determine benefit
obligations:
Discount rate 6.25% 7.00% 7.25%
Rate of compensation increase 3.00% 3.25% 3.50%
Weighted-average assumptions used to determine net periodic
benefit cost:
Discount rate 7.00% 7.25% 7.75%
Rate of Compensation Increase 3.25% 3.50% 4.00%
Expected return on plan assets 9.00% 9.25% 10.00%
The assumed health care cost trend rate used in measuring the accumulated post retirement benefit
obligation was 8.0 percent in fiscal 2004. The assumed health care cost trend rate will decrease by one percent
each year for the next three years until it reaches the ultimate trend rate of 5.0 percent. The health care cost trend
rate assumption has a significant impact on the amounts reported. For example, a one percent increase in the
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