Harris Teeter 2011 Annual Report Download - page 47

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SERP 2011 2010 2009
Service cost $ 813 $ 754 $ 664
Interest cost 1,955 2,201 2,119
Amortization of prior service cost 248 247 247
Recognized net actuarial loss 1,521 1,376 -
Net periodic pension expense $4,537 $4,578 $3,030
Net periodic pension expense for the Company’s defined benefit pension plans is determined using assumptions as of the
beginning of each year and the market-related value of plan assets that recognizes changes in fair value in a systematic and
rational manner over five years. The projected benefit obligation and related funded status are determined using assumptions
as of the end of each year. The following table summarizes the assumptions utilized:
2011 2010 2009
Weighted Average Discount Rate – Pension Plan 5.50% 5.05% 5.75%
Weighted Average Discount Rate – SERP 5.40% 4.65% 5.60%
Rate of Increase in Future Payroll Costs:
Pension Plan 3.0% - 8.0%* 3.0% - 8.0%* 3.0% - 8.0%*
SERP 6.0% 6.0% 6.0%
Assumed Long-Term Rate of Return on Assets (Pension Plan only) 8.00% 8.00% 8.00%
* Rate varies by age, with higher rates associated with lower aged participants.
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.
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 a directed trust. 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 2, 2011:
Cash and Cash Equivalents $ 4,794 $ 4,794 $ - $ -
Common Collective Trust Funds 87,926 - 87,926 -
Corporate Bonds 45,077 45,077 - -
Municipal Bonds 11,262 11,262 - -
U.S. Government Securities 4,047 4,047 - -
Other Fixed Income Securities 5,639 5,639 - -
Asset-Backed Securities 10,882 - 10,882 -
Equities 25,603 25,603 - -
Hedge Funds 37,319 - - 37,319
Mutual Funds 41,631 41,631 - -
Group Annuity Contract 2,194 - 2,194 -
Total Assets $276,374 $138,053 $101,002 $37,319
Transfers of $37,319,000 into Level 3 during 2011 included the Hedge Funds investment due to changes in the observability
of significant inputs.
RUDDICK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
43