Harris Teeter 2010 Annual Report Download - page 59

Discount rates are based on the expected timing and amounts of the expected employer paid benefits and
are established by reference to a representative yield curve of non-callable bonds with a credit rating of Aa and
above with durations similar to the pension liabilities. The weighted average discount rate utilized at the end of
fiscal 2010 of 5.05% for the Pension Plan represented a decrease of 70 basis points over fiscal 2009 and increased
the recorded pension liabilities, under-funded status and unrecognized net actuarial loss as of the end of fiscal 2010.
Expected long-term return on plan assets is estimated by asset class and is generally based on historical returns,
volatilities and risk premiums. Based upon the plan’s asset allocation, composite return percentiles are developed
upon which the plan’s expected long-term rate of return is based.
The SERP is unfunded, with benefit payments being made from the Company’s general assets. Assets of the
Pension Plan are invested in directed trusts. The following table sets forth by level, within the fair value hierarchy,
the Pension Plan’s assets at fair value as of the fiscal year end:
Fair Value
Quoted Prices
in Active
Markets for
Identical
Instruments
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Fair Value Measurement at October 3, 2010:
Cash and Cash Equivalents .................... $ 4,013 $ 4,013 $ — $—
Common Collective Trust Funds ................ 95,829 — 95,829 —
Fixed Income Securities ....................... 44,259 44,259 — —
Asset-Backed Securities ....................... 11,461 — 11,461 —
Equities .................................... 19,546 19,546 — —
Hedge Funds ................................ 29,866 — 29,866 —
Mutual Funds ............................... 25,080 25,080 — —
Group Annuity Contract ....................... 1,958 — 1,958 —
Total Assets ................................. $232,012 $92,898 $139,114 $—
Fair Value Measurement at September 27, 2009:
Cash and Cash Equivalents .................... $ 3,354 $ 3,354 $ — $—
Common Collective Trust Funds ................ 90,009 — 90,009 —
Fixed Income Securities ....................... 28,047 28,047 — —
Asset-Backed Securities ....................... 17,958 — 17,958 —
Equities .................................... 12,111 12,111 — —
Hedge Funds ................................ 28,882 — 28,882 —
Mutual Funds ............................... 16,985 16,985 — —
Group Annuity Contract ....................... 1,959 — 1,959 —
Total Assets ................................. $199,305 $60,497 $138,808 $—
Following is a description of the valuation methodologies used for pension assets measured at fair value.
Cash and Cash Equivalents – Fair values of cash equivalents are largely provided by independent pricing
services.
Common Collective Trust Funds – These investments are public investment vehicles valued using the Net
Asset Value (“NAV”) provided by the administrator of the fund. The NAV is based on the value of the underlying
assets owned by the fund, minus its liabilities, and then divided by the number of shares outstanding. The investment
is classified within level 2 of the valuation hierarchy because the NAV’s unit price is quoted on a private market
that is not active; however, the unit price is based on underlying investments which are traded on an active market.
Fixed Income Securities and Equities – These investments are valued at the closing price reported on the active
market on which the individual securities are traded.
RUDDICK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
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