Graco 2012 Annual Report Download - page 84

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78
maintains assets to offset the impact of the market gains and losses associated with the deferred compensation liabilities, and the
values of these assets were $51.8 million and $52.0 million as of December 31, 2012 and 2011, respectively. These assets are
included in other assets in the Consolidated Balance Sheets.
The Company has a Supplemental Executive Retirement Plan (“SERP”), which is a nonqualified defined benefit plan pursuant to
which the Company will pay supplemental pension benefits to certain key employees upon retirement based upon the employees’
years of service and compensation. The SERP is partially funded through a trust agreement with the Northern Trust Company, as
trustee, that owns life insurance policies on approximately 400 active and former key employees with aggregate net death benefits
of $300.7 million. At December 31, 2012 and 2011, the life insurance contracts were accounted for using the investment method
and had a cash surrender value of $106.7 million and $102.3 million, respectively. All premiums paid and proceeds received
associated with the life insurance policies are included in accrued liabilities and other in the Consolidated Statements of Cash
Flows. The SERP is also partially funded through cash and mutual fund investments, which had a combined value of $9.2 million
and $12.6 million at December 31, 2012 and 2011, respectively. These assets, as well as the cash surrender value of the life
insurance contracts, are included in other assets in the Consolidated Balance Sheets. The projected benefit obligation was $130.5
million and $119.9 million at December 31, 2012 and 2011, respectively. The SERP liabilities are included in the pension table
below; however, the value of the Company’s investments in the life insurance contracts, cash and mutual funds are excluded from
the table, as they do not qualify as plan assets.
The Company’s matching contributions to the contributory 401(k) plan were $14.2 million, $14.9 million and $12.9 million for
2012, 2011 and 2010, respectively.
Defined Benefit Pension Plans
The following provides a reconciliation of benefit obligations, plan assets and funded status of the Company’s noncontributory
defined benefit pension plans, including the SERP, as of December 31, (in millions, except percentages):
U.S. International
2012 2011 2012 2011
Change in benefit obligation:
Benefit obligation at beginning of year $ 1,054.9 $ 969.6 $ 536.3 $ 482.6
Service cost 3.0 4.3 7.9 6.0
Interest cost 45.9 49.4 25.2 26.6
Actuarial loss 135.0 88.6 38.0 46.1
Currency translation — — 21.6 (2.0)
Benefits paid (69.3)(57.3)(32.3)(22.1)
Curtailments, settlement costs and other 1.0 0.3 5.9 (0.9)
Benefit obligation at end of year $ 1,170.5 $ 1,054.9 $ 602.6 $ 536.3