Retirement Plans | RETIREMENT PLANS We sponsor programs that provide retirement benefits to our employees. These programs include defined contribution plans, defined benefit pension plans and postretirement healthcare plans. Defined contribution plans — We maintain a qualified savings plan pursuant to Section 401(k) of the Internal Revenue Code, which allows administrative and clerical employees who have satisfied the service requirements and reached age 21 to defer a percentage of their pay on a pre-tax basis. We match 50% of the first 4% of compensation deferred by the participant. Our contributions under this plan were $1.2 million in fiscal 2015 , and $1.0 million in 2014 and 2013 . We also maintain an unfunded, non-qualified deferred compensation plan for key executives and other members of management who are excluded from participation in the qualified savings plan. This plan allows participants to defer up to 50% of their salary and 85% of their bonus, on a pre-tax basis. We match 100% of the first 3% contributed by the participant. To compensate executives no longer eligible to participate in our supplemental defined benefit pension plan, we also contribute a supplemental amount equal to 4% of an eligible employee’s salary and bonus for a period of 10 years in such eligible position. Our contributions under the non-qualified deferred compensation plan were $1.3 million in fiscal 2015 and $1.1 million in fiscal 2014 and 2013 . In all plans, a participant’s right to Company contributions vests at a rate of 25% per year of service. Defined benefit pension plans — We sponsor two defined benefit pension plans, a “Qualified Plan” covering substantially all full-time employees hired prior to January 1, 2011, and an unfunded supplemental executive retirement plan (“SERP”) which provides certain employees additional pension benefits and was closed to new participants effective January 1, 2007 . In fiscal 2011, the Board of Directors approved changes to our Qualified Plan whereby participants will no longer accrue benefits effective December 31, 2015 . This change was accounted for as a plan “curtailment” in accordance with FASB authoritative guidance. Benefits under both plans are based on the employees’ years of service and compensation over defined periods of employment. Postretirement healthcare plans — We also sponsor two healthcare plans, closed to new participants, that provide postretirement medical benefits to certain employees who have met minimum age and service requirements. The plans are contributory; with retiree contributions adjusted annually, and contain other cost-sharing features such as deductibles and coinsurance. Obligations and funded status — The following table provides a reconciliation of the changes in benefit obligations, plan assets and funded status of our retirement plans as of September 27, 2015 and September 28, 2014 ( in thousands ): Qualified Plan SERP Postretirement Health Plans 2015 2014 2015 2014 2015 2014 Change in benefit obligation: Obligation at beginning of year $ 434,896 $ 382,068 $ 69,733 $ 64,717 $ 27,626 $ 33,243 Service cost 7,592 7,633 676 490 — — Interest cost 19,750 20,196 2,945 3,049 1,196 1,639 Participant contributions — — — — 114 123 Actuarial loss (gain) 16,757 59,661 6,447 5,652 1,008 (6,082 ) Benefits paid (10,261 ) (10,963 ) (4,455 ) (4,175 ) (1,184 ) (1,456 ) Settlements (26,470 ) (23,699 ) — — — — Other — — — — 151 159 Obligation at end of year $ 442,264 $ 434,896 $ 75,346 $ 69,733 $ 28,911 $ 27,626 Change in plan assets: Fair value at beginning of year $ 356,312 $ 336,425 $ — $ — $ — $ — Actual return on plan assets (6,924 ) 34,549 — — — — Participant contributions — — — — 114 123 Employer contributions 20,000 20,000 4,455 4,175 919 1,174 Benefits paid (10,261 ) (10,963 ) (4,455 ) (4,175 ) (1,184 ) (1,456 ) Settlements (26,470 ) (23,699 ) — — — — Other — — — — 151 159 Fair value at end of year $ 332,657 $ 356,312 $ — $ — $ — $ — Funded status at end of year $ (109,607 ) $ (78,584 ) $ (75,346 ) $ (69,733 ) $ (28,911 ) $ (27,626 ) Amounts recognized on the balance sheet: Current liabilities $ — $ — $ (4,477 ) $ (4,479 ) $ (1,294 ) $ (1,269 ) Noncurrent liabilities (109,607 ) (78,584 ) (70,869 ) (65,254 ) (27,617 ) (26,357 ) Total liability recognized $ (109,607 ) $ (78,584 ) $ (75,346 ) $ (69,733 ) $ (28,911 ) $ (27,626 ) Amounts in AOCI not yet reflected in net periodic benefit cost: Unamortized actuarial loss, net $ 153,156 $ 114,482 $ 31,738 $ 26,425 $ 3,226 $ 2,400 Unamortized prior service cost — — 811 1,080 — — Total $ 153,156 $ 114,482 $ 32,549 $ 27,505 $ 3,226 $ 2,400 Other changes in plan assets and benefit obligations recognized in OCI: Net actuarial loss (gain) $ 46,952 $ 49,603 $ 6,447 $ 5,652 $ 1,008 $ (6,082 ) Amortization of actuarial loss (8,278 ) (3,575 ) (1,134 ) (859 ) (182 ) (542 ) Amortization of prior service cost — — (269 ) (269 ) — — Total recognized in OCI 38,674 46,028 5,044 4,524 826 (6,624 ) Net periodic benefit cost and other losses 12,347 6,912 5,024 4,667 1,378 2,181 Total recognized in comprehensive income $ 51,021 $ 52,940 $ 10,068 $ 9,191 $ 2,204 $ (4,443 ) Amounts in AOCI expected to be amortized in fiscal 2016 net periodic benefit cost: Net actuarial loss $ 2,828 $ 1,259 $ 218 Prior service cost — 240 — Total $ 2,828 $ 1,499 $ 218 Additional year-end pension plan information — The projected benefit obligation (“PBO”) is the actuarial present value of benefits attributable to employee service rendered to date, including the effects of estimated future pay increases. The accumulated benefit obligation (“ABO”) also reflects the actuarial present value of benefits attributable to employee service rendered to date but does not include the effects of estimated future pay increases. Therefore, the ABO as compared to plan assets is an indication of the assets currently available to fund vested and nonvested benefits accrued through the end of the fiscal year. The funded status is measured as the difference between the fair value of a plan’s assets and its PBO. As of September 27, 2015 and September 28, 2014 , the Qualified Plan’s ABO exceeded the fair value of its plan assets. The SERP is an unfunded plan and, as such, had no plan assets as of September 27, 2015 and September 28, 2014 . The following sets forth the PBO, ABO and fair value of plan assets of our pension plans as of the measurement date in each fiscal year ( in thousands ): 2015 2014 Qualified Plan: Projected benefit obligation $ 442,264 $ 434,896 Accumulated benefit obligation $ 441,451 $ 433,010 Fair value of plan assets $ 332,657 $ 356,312 SERP: Projected benefit obligation $ 75,346 $ 69,733 Accumulated benefit obligation $ 74,388 $ 68,914 Fair value of plan assets $ — $ — Net periodic benefit cost — The components of the fiscal year net periodic benefit cost were as follows ( in thousands ): 2015 2014 2013 Qualified Plan: Service cost $ 7,592 $ 7,633 $ 10,210 Interest cost 19,750 20,196 19,964 Expected return on plan assets (23,273 ) (24,492 ) (22,715 ) Actuarial loss 8,278 3,575 15,665 Net periodic benefit cost $ 12,347 $ 6,912 $ 23,124 SERP: Service cost $ 676 $ 490 $ 543 Interest cost 2,945 3,049 2,664 Actuarial loss 1,134 859 2,170 Amortization of unrecognized prior service cost 269 269 269 Net periodic benefit cost $ 5,024 $ 4,667 $ 5,646 Postretirement health plans: Interest cost $ 1,196 $ 1,639 $ 1,586 Actuarial loss 182 542 791 Net periodic benefit cost $ 1,378 $ 2,181 $ 2,377 Prior service costs are amortized on a straight-line basis from date of participation to full eligibility. Unrecognized gains or losses are amortized using the “corridor approach” under which the net gain or loss in excess of 10% of the greater of the PBO or the market-related value of the assets, if applicable, is amortized. For fiscal years 2015, 2014 and 2013, actuarial losses were amortized on a straight-line basis over the expected remaining service period of plan participants expected to receive benefits for our Qualified Plan, the expected remaining future lifetime and expected future working lifetime for inactive and active participants, respectively, for our SERP and the expected remaining future lifetime of inactive participants expected to receive benefits for our postretirement health plans. Assumptions — We determine our actuarial assumptions on an annual basis. In determining the present values of our benefit obligations and net periodic benefit costs as of and for the fiscal years ended September 27, 2015 , September 28, 2014 and September 29, 2013 , we used the following weighted-average assumptions: 2015 2014 2013 Assumptions used to determine benefit obligations (1): Qualified Plan: Discount rate 4.79 % 4.60 % 5.37 % Rate of future pay increases 3.50 % 3.50 % 3.50 % SERP: Discount rate 4.45 % 4.36 % 4.88 % Rate of future pay increases 3.50 % 3.50 % 3.50 % Postretirement health plans: Discount rate 4.47 % 4.43 % 5.04 % Assumptions used to determine net periodic benefit cost (2): Qualified Plan: Discount rate 4.60 % 5.37 % 4.34 % Long-term rate of return on assets 6.50 % 7.25 % 7.25 % Rate of future pay increases 3.50 % 3.50 % 3.50 % SERP: Discount rate 4.36 % 4.88 % 4.34 % Rate of future pay increases 3.50 % 3.50 % 3.50 % Postretirement health plans: Discount rate 4.43 % 5.04 % 4.34 % ____________________________ (1) Determined as of end of year. (2) Determined as of beginning of year. The assumed discount rates were determined by considering the average of pension yield curves constructed of a population of high-quality bonds with a Moody’s or Standard and Poor’s rating of “AA” or better whose cash flow from coupons and maturities match the year-by-year projected benefit payments from the plans. As benefit payments typically extend beyond the date of the longest maturing bond, cash flows beyond 30 years were discounted back to the 30th year and then matched like any other payment. The assumed expected long-term rate of return on assets is the weighted average rate of earnings expected on the funds invested or to be invested to provide for the pension obligations. The long-term rate of return on assets was determined taking into consideration our projected asset allocation and economic forecasts prepared with the assistance of our actuarial consultants. The assumed discount rate and expected long-term rate of return on assets have a significant effect on amounts reported for our pension and postretirement plans. A quarter percentage point decrease in the discount rate and long-term rate of return used would have decreased fiscal 2015 earnings before income taxes by $2.4 million and $0.9 million , respectively. The assumed average rate of compensation increase is the average annual compensation increase expected over the remaining employment periods for the participating employees. For measurement purposes, the weighted-average assumed health care cost trend rates for our postretirement health plans were as follows for each fiscal year: 2015 2014 2013 Healthcare cost trend rate for next year: Participants under age 65 8.00 % 8.25 % 8.50 % Participants age 65 or older (1) 7.50 % 7.75 % 8.00 % Rate to which the cost trend rate is assumed to decline: Participants under age 65 (1) 4.50 % 4.50 % 4.80% / 4.90% Participants age 65 or older (1) 4.50 % 4.50 % 4.80% / 4.90% Year the rate reaches the ultimate trend rate: Participants under age 65 (1) 2030 2030 2038 / 2045 Participants age 65 or older (1) 2028 2028 2037 / 2045 ____________________________ (1) Where two rates and/or years are stated, these relate to the two post retirement health plans sponsored by the Company. Where one rate and/or year are stated, these were the same for both plans. The assumed healthcare cost trend rate represents our estimate of the annual rates of change in the costs of the healthcare benefits currently provided by our postretirement plans. The healthcare cost trend rate implicitly considers estimates of healthcare inflation, changes in healthcare utilization and delivery patterns, technological advances and changes in the health status of the plan participants. The healthcare cost trend rate assumption has a significant effect on the amounts reported. For example, a 1.0% change in the assumed healthcare cost trend rate would have the following effect on the 2015 net periodic benefit cost and end of year PBO ( in thousands ): 1% Point Increase 1% Point Decrease Total interest and service cost $ 143 $ (121 ) Postretirement benefit obligation $ 3,494 $ (2,972 ) Plan assets — Our investment philosophy is to (1) protect the corpus of the fund; (2) establish investment objectives that will allow the market value to exceed the present value of the vested and unvested liabilities over time; while (3) obtaining adequate investment returns to protect benefits promised to the participants and their beneficiaries. Our asset allocation strategy utilizes multiple investment managers in order to maximize the plan’s return while minimizing risk. We regularly monitor our asset allocation, and senior financial management and the Finance Committee of the Board of Directors review performance results at least semi-annually. We continually review our target asset allocation for our Qualified Plan and when changes are made, we reallocate our plan assets over a period of time, as deemed appropriate by senior financial management, to achieve our target asset allocation. Our plan asset allocation at the end of fiscal 2015 and target allocations were as follows: 2015 Target Minimum Maximum Domestic equity 25 % 25 % 15 % 35 % International equity 27 25 15 % 35 % Core fixed funds 27 25 20 % 30 % Real return bonds — 3 — % 10 % Alternative investments 4 5 — % 10 % Real estate 12 8 — % 10 % High yield 2 5 — % 10 % Commodities 3 4 — % 10 % 100 % 100 % The fair values of the Qualified Plan’s assets at September 27, 2015 and September 28, 2014 by asset category are as follows ( in thousands ): Total Quoted Prices in Active Markets for Identical (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Items Measured at Fair Value at September 27, 2015: Asset Category: Cash and cash equivalents (1 ) $ 3,629 $ 3,629 $ — $ — Equity: U.S (2 ) 15,812 15,812 — — Commingled (3 ) 169,701 169,701 — — Fixed income: Corporate bonds (4 ) 7,243 7,243 — — Other (6 ) 88,621 29,054 59,567 — Diversified funds (7 ) 10,684 10,684 — — Real estate (8 ) 36,967 — — 36,967 $ 332,657 $ 236,123 $ 59,567 $ 36,967 Items Measured at Fair Value at September 28, 2014: Asset Category: Cash and cash equivalents (1 ) $ 900 $ 900 $ — $ — Equity: U.S (2 ) 17,063 17,063 — — Commingled (3 ) 147,221 147,221 — — Fixed income: Corporate bonds (4 ) 13,122 13,122 — — Government and mortgage securities (5 ) 11,631 11,631 — — Other (6 ) 121,666 — 121,666 — Diversified funds (7 ) 12,116 12,116 — — Real estate (8 ) 32,593 — — 32,593 $ 356,312 $ 202,053 $ 121,666 $ 32,593 _________________________ (1) Cash and cash equivalents are comprised of commercial paper, short-term bills and notes, and short-term investment funds, which are valued at unadjusted quoted market prices. (2) U.S. equity securities are comprised of investments in common stock of U.S. companies for total return purposes. These investments are valued by the trustee at closing prices from national exchanges on the valuation date. (3) Commingled equity securities are comprised of investments in mutual funds, the fair value of which is determined by reference to the fund’s underlying assets, which are primarily marketable equity securities that are traded on national exchanges and valued at unadjusted quoted market prices. (4) Corporate bonds are comprised of mutual funds traded on national securities exchanges, valued at unadjusted quoted market prices, as well as securities traded in markets that are not considered active, which are valued based on quoted market prices, broker/dealer quotations. (5) Government and mortgage securities are comprised of government and municipal bonds, including treasury bills, notes and index linked bonds which are valued using an unadjusted quoted price in an active market or observable, market-based inputs. (6) Other fixed income securities are comprised of other commingled funds invested in registered securities which are valued at the unadjusted quoted price in an active market (level 1) or exchange and long-duration US government/credit funds which are valued based on observable inputs, which include quoted market prices in active markets for similar securities, valuations based on commonly quoted benchmark interest rates, maturities, ratings and/or securities indices (level 2) (7) Diversified funds are comprised of exchange-traded commodities futures and treasury bills, which are valued at unadjusted quoted market prices. (8) Real estate is investments in a real estate investment trust for purposes of total return. These investments are valued at unit values provided by the investment managers and their consultants. The following table presents the changes in Level 3 investments for the Qualified Plan during 2014 and 2015 ( in thousands ): Real Estate Balance at September 29, 2013 $ 29,352 Actual return on plan assets: Relating to assets still held at the reporting date 3,520 Relating to assets sold during the period 18 Purchases, sales and settlements (297 ) Balance at September 28, 2014 $ 32,593 Actual return on plan assets: Relating to assets still held at the reporting date $ 4,665 Relating to assets sold during the period 40 Purchases, sales and settlements (331 ) Balance at September 27, 2015 $ 36,967 Future cash flows — Our policy is to fund our plans at or above the minimum required by law. As of the date of our last actuarial funding valuation, there was no minimum requirement. Contributions expected to be paid in the next fiscal year and the projected benefit payments for each of the next five fiscal years and the total aggregate amount for the subsequent five fiscal years are as follows ( in thousands ): Pension Plans Postretirement Health Plans Estimated net contributions during fiscal 2016 $ 24,477 $ 1,320 Estimated future year benefit payments during fiscal years: 2016 $ 14,548 $ 1,324 2017 $ 14,831 $ 1,403 2018 $ 15,361 $ 1,470 2019 $ 16,147 $ 1,673 2020 $ 17,233 $ 1,711 2021-2025 $ 105,016 $ 9,208 We will continue to evaluate contributions to our Qualified Plan based on changes in pension assets as a result of asset performance in the current market and economic environment. Expected benefit payments are based on the same assumptions used to measure our benefit obligations at September 27, 2015 and include estimated future employee service. |