TUP » Topics » Pensions

These excerpts taken from the TUP 10-K filed Feb 25, 2009.

Pensions

The Company accounts for its defined benefit pension plans in accordance with Statement of Financial Accounting Standards (SFAS) No. 87, Employers’ Accounting for Pensions (SFAS 87) as amended by SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statement No. 87, 88, 106 and 132(R) (SFAS 158), which requires that amounts recognized in the financial statements be determined on an actuarial basis. The measurement of the retirement obligations and costs of providing benefits under the Company’s pension plans involves various facts, including several assumptions. The Company believes the most critical of these assumptions are the discount rate and the expected long-term rate of return on plan assets.

The Company determines the discount rate primarily by reference to rates of high-quality, long-term corporate and government bonds that mature in a pattern similar to the expected payments to be made under the plans. The discount rate assumptions used to determine pension expense for the Company’s U.S. and foreign plans was as follows:

 

Discount rate

   2008     2007     2006  

U.S. Plans

   6.0 %   5.8 %   5.5 %

Foreign Plans

   4.7     4.7     4.3  

The Company has established strategic asset allocation percentage targets for significant asset classes with the aim of achieving an appropriate balance between risk and return. The Company periodically revises asset allocations, where appropriate, in an effort to improve return and manage risk. The estimated rate of return is based on long-term expectations given current investment objectives and historical results. The expected rate of return assumption used by the Company for its U.S. and foreign plans was as follows:

 

Expected rate of return

   2008     2007     2006  

U.S. Plans

   8.5 %   8.5 %   8.5 %

Foreign Plans

   4.5     5.0     5.0  

The following table highlights the potential impact on the Company’s pre-tax earnings due to changes in certain key assumptions with respect to the Company’s pension plans, based on assets and liabilities at December 27, 2008:

 

(in millions)    Impact on 2009
Pension Expense

Discount rate change by 50 basis points

   $ 1.5

Expected rate of return on plan assets change by 50 basis points

     0.5

 

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The Company’s actual return experience for the year ended December 27, 2008 was a loss of approximately 24 percent for its U.S. Plans and 17 percent for its foreign plans compared to the assumed return of those assets noted above. The losses are expected to negatively impact the Company’s 2009 pension costs by approximately $1.3 million. In addition, declines in the value of plan assets during 2008 resulted in an increase to the plans’ unfunded status and a decrease to shareholders’ equity upon actuarial revaluation of the plans on December 27, 2008, and reduced benefit plan assets may increase the amount and accelerate the timing of required future funding contributions. The 2009 contributions for the Company’s pension plan are expected to be approximately $13.2 million compared with the 2008 contributions of $11.7 million. Due to the economic conditions impacting plan assets in 2008 and therefore 2009 contributions, the Company made a decision to decrease the targeted funding level for the funded U.S. plan from 90 percent in 2008 to 80 percent in 2009; however, the Company’s funding of the U.S. plan is, and will be within the legal requirements.

Pensions

The Company accounts
for its defined benefit pension plans in accordance with Statement of Financial Accounting Standards (SFAS) No. 87, Employers’ Accounting for Pensions (SFAS 87) as amended by SFAS No. 158, Employers’
Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statement No. 87, 88, 106 and 132(R)
(SFAS 158), which requires that amounts recognized in the financial statements be determined on an actuarial
basis. The measurement of the retirement obligations and costs of providing benefits under the Company’s pension plans involves various facts, including several assumptions. The Company believes the most critical of these assumptions are the
discount rate and the expected long-term rate of return on plan assets.

The Company determines the discount rate primarily by reference to
rates of high-quality, long-term corporate and government bonds that mature in a pattern similar to the expected payments to be made under the plans. The discount rate assumptions used to determine pension expense for the Company’s U.S. and
foreign plans was as follows:

 
















































Discount rate

  2008  2007  2006 

U.S. Plans

  6.0% 5.8% 5.5%

Foreign Plans

  4.7  4.7  4.3 

The Company has established strategic asset allocation percentage targets for significant asset
classes with the aim of achieving an appropriate balance between risk and return. The Company periodically revises asset allocations, where appropriate, in an effort to improve return and manage risk. The estimated rate of return is based on
long-term expectations given current investment objectives and historical results. The expected rate of return assumption used by the Company for its U.S. and foreign plans was as follows:

STYLE="font-size:12px;margin-top:0px;margin-bottom:0px"> 
















































Expected rate of return

  2008  2007  2006 

U.S. Plans

  8.5% 8.5% 8.5%

Foreign Plans

  4.5  5.0  5.0 

The following table highlights the potential impact on the Company’s pre-tax earnings due to
changes in certain key assumptions with respect to the Company’s pension plans, based on assets and liabilities at December 27, 2008:

 























(in millions)  Impact on 2009
Pension Expense

Discount rate change by 50 basis points

  $1.5

Expected rate of return on plan assets change by 50 basis points

   0.5

 


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Table of Contents


The Company’s actual return experience for the year ended December 27, 2008 was a loss of
approximately 24 percent for its U.S. Plans and 17 percent for its foreign plans compared to the assumed return of those assets noted above. The losses are expected to negatively impact the Company’s 2009 pension costs by approximately $1.3
million. In addition, declines in the value of plan assets during 2008 resulted in an increase to the plans’ unfunded status and a decrease to shareholders’ equity upon actuarial revaluation of the plans on December 27, 2008, and
reduced benefit plan assets may increase the amount and accelerate the timing of required future funding contributions. The 2009 contributions for the Company’s pension plan are expected to be approximately $13.2 million compared with the 2008
contributions of $11.7 million. Due to the economic conditions impacting plan assets in 2008 and therefore 2009 contributions, the Company made a decision to decrease the targeted funding level for the funded U.S. plan from 90 percent in 2008 to 80
percent in 2009; however, the Company’s funding of the U.S. plan is, and will be within the legal requirements.

EXCERPTS ON THIS PAGE:

10-K (2 sections)
Feb 25, 2009
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