Hormel Foods 2010 Annual Report Download - page 48

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Benefits expected to be paid over the next ten fiscal years are
as follows:
Post-
Pension retirement
(in thousands) Benefits Benefits
2011 $ 44,968 $ 25,889
2012 43,921 25,926
2013 45,433 25,919
2014 47,549 25,995
2015 49,345 25,955
2016 and later 293,460 124,517
The Company made discretionary contributions of $70.3 mil-
lion and $100.0 million to the Company’s defined benefit plans
in 2010 and 2009, respectively. Based on the October 31, 2010
measurement date, the Company anticipates making required
contributions of $22.1 million to fund the pension plans during
fiscal year 2011. The Company also expects to make contribu-
tions of $29.1 million during 2011 that represent benefit pay-
ments for unfunded plans.
Post-retirement benefits are net of expected federal subsidy receipts related to prescription drug benefits granted under the Medicare
Prescription Drug, Improvement and Modernization Act of 2003, which are estimated to be $2.9 million per year through 2020.
The fair values of the defined benefit pension plan investments as of October 31, 2010, by asset category and fair value hierarchy
level, are as follows:
Fair Value Measurements at October 31, 2010
Quoted Prices
in Active Significant Other Unobservable
Markets for Observable Inputs
Identical Assets Inputs Significant
(in thousands) Total Fair Value (Level 1) (Level 2) (Level 3)
Investments at Fair Value:
Cash equivalents $ 16,642 $ 16,642 $ – $ –
Large Capitalization Equity
Domestic(1) $ 247,748 $ 215,152 $ 32,596 $ –
Foreign(1) 18,023 18,023 – –
Total Large Capitalization Equity $ 265,771 $ 233,175 $ 32,596 $ –
Small Capitalization Equity
Domestic(1) $ 101,953 $ 101,953 $ – $ –
Foreign(1) 10,206 10,206 – –
Total Small Capitalization Equity $ 112,159 $ 112,159 $ – $ –
International Equity
Mutual fund(2) $ 40,301 $ – $ 40,301 $ –
Collective trust(3) 102,566 – 102,566 –
Total International Equity $ 142,867 $ – $ 142,867 $ –
Private Equity
Domestic(3) $ 6,951 $ – $ – $ 6,951
International(3) 2,377 – – 2,377
Total Private Equity $ 9,328 $ – $ – $ 9,328
Total Equity $ 530,125 $ 345,334 $ 175,463 $ 9,328
Fixed Income
US government issues(1) $ 106,987 $ 106,987 $ – $ –
Municipal issues(1) 1,931 1,931 – –
Corporate issues — domestic(1) 124,802 87,181 37,621 –
Corporate issues — foreign(1) 21,878 21,878 – –
Total Fixed Income $ 255,598 $ 217,977 $ 37,621 $ –
Other
Real Estate — mineral interest $ 3 $ – $ – $ 3
Total Other $ 3 $ – $ – $ 3
Total Investments at Fair Value $ 802,368 $ 579,953 $ 213,084 $ 9,331
The following is a description of the valuation methodologies used for instruments measured at fair value, including the general classification of such instruments pursuant to the valuation hierarchy:
(1) Common stocks, corporate bonds and notes, and government securities: Valued at the closing price reported on the active market in which the individual securities are traded.
(2) Mutual funds: Valued at the publicly available net asset value (NAV) of shares held by the pension plans at year-end.
(3) Collective trusts: The pension plans holds investments in various collective investment funds, which are managed by a third party, that invest in a well-diversified portfolio of
investment contracts from highly rated financial institutions and high-quality, fixed-income securities combined with equity securities. The fair value of the units for these
investments is based on the fair value of the underlying investments and the NAV can be calculated for these funds.