NOTE 13 – PENSIONS AND OTHER POSTRETIREMENT BENEFITS

Savings and Retirement Plan: We sponsor a Savings and Retirement Plan for substantially all of our U.S. employees. Under the Plan, we match employee contributions up to a maximum of 3% of employees' compensation. In addition to matching employees' contributions throughout the year, there is a year-end contribution that can range from 4% to 13% of eligible employees' pay as defined in the Plan. U.S. employees who are not eligible for the Savings and Retirement Plan have the option to participate in a separate 401(k) Employee Stock Ownership Plan. We match employee contributions made by participants in that plan up to a maximum of 3% of employees' compensation. In addition to matching employees' contributions throughout the year, there is a discretionary year-end matching contribution that can range from 0 - 3%. Contributions to the Plan totaled $27,629, $31,060 and $33,273 for 2012, 2011 and 2010, respectively.

Executive Retirement Plans: We have Supplemental Executive Retirement Plans (SERPs) to provide retirement, death and disability benefits to a limited number of former employees. Annual benefits under the SERPs are based on years of service and individual compensation near retirement.

Pension and Post-Retirement Medical Plans: We also sponsor several defined benefit pension plans for certain hourly and salaried employees. The benefits for most of these plans are generally based on stated amounts for each year of service. We fund the plans in amounts consistent with the limits of allowable tax deductions. During fiscal year 2012, we made contributions of approximately $16,095 to our pension plans. We also sponsor a post-retirement medical plan that provides subsidized medical benefits for eligible retired employees and their eligible dependents. The plan changed on January 1, 2009 to eliminate the subsidy for future retirees with the exception of a small group of employees near retirement that will still be eligible for the subsidized coverage at retirement. A 1% increase in the medical trend rates would not have a material effect on post-retirement medical expense or the post-retirement benefit obligation. For the fiscal year ending October 25, 2013, we expect our total contributions to our funded pension plans, unfunded pension, non-qualified plans and post-retirement medical plans to be at least $5,453.

The cost of pension and post-retirement medical benefits is as follows:


	Pension
Net Periodic Benefit Cost	2012			2011			2010
Service cost	$	4,185		$	4,496		$	3,272
Interest cost		14,077			14,691			12,863
Expected return on plan assets		(19,379	)		(17,625	)		(16,250	)
Amortization of prior service cost		435			397			472
Recognized actuarial loss		6,865			6,055			4,932
Settlement gain		(35	)		(16	)		—
Curtailment		—			—			(172	)
Net Periodic Benefit Cost	$	6,148		$	7,998		$	5,117


	Post-Retirement Medical
Net Periodic Benefit Cost	2012			2011			2010
Service cost	$	124		$	188		$	211
Interest cost		448			510			476
Expected return on plan assets		N/A			N/A			N/A
Amortization of prior service cost		(128	)		(128	)		(2,871	)
Recognized actuarial loss		471			304			2,629
Net Periodic Benefit Cost	$	915		$	874		$	445

The plans' funded status is shown below, along with a description of how the status changed during the past two years. The benefit obligation is the projected benefit obligation—the actuarial present value, as of a date, of all benefits attributed by the pension benefit formula to employee service rendered prior to that date. In certain countries outside the U.S., fully funding pension plans is not a common practice, as funding provides no economic benefit.


	Pension						Post-Retirement Medical
Change in Benefit Obligation	2012			2011			2012			2011
Benefit obligation beginning of year	$	278,152		$	268,266		$	9,467		$	9,780
Service cost		4,185			4,496			124			188
Interest cost		14,077			14,691			448			510
Plan participants' contributions		735			737			—			—
Plan amendments		223			676			—			—
Actuarial loss		43,055			4,074			816			1,641
Benefits paid		(14,385	)		(14,376	)		(1,311	)		(2,652	)
Expenses paid from assets		(290	)		(211	)		—			—
Currency impact		1,226			(201	)		—			—
Other		881			—			—			—
Benefit Obligation at End of Year	$	327,859		$	278,152		$	9,544		$	9,467


	Pension						Post-Retirement Medical
Change in Plan Assets	2012			2011			2012			2011
Fair value of plan assets at beginning of year	$	237,658		$	212,822		$	—		$	—
Actual return on plan assets		36,543			7,970			—			—
Employer contributions		16,095			30,961			1,311			2,652
Plan participants' contributions		735			737			—			—
Benefit payments		(14,385	)		(14,376	)		(1,311	)		(2,652	)
Expenses paid from assets		(290	)		(211	)		—			—
Currency impact		2,001			(245	)		—			—
Other		881			—			—			—
Fair Value of Assets at End of Year	$	279,238		$	237,658		$	—		$	—


	Pension						Post-Retirement Medical
Funded Status	2012			2011			2012			2011
Projected benefit obligation	$	(327,859	)	$	(278,152	)	$	(9,544	)	$	(9,467	)
Plan assets at fair value		279,238			237,658			—			—
Net Funded Status – Over / (Under)	$	(48,621	)	$	(40,494	)	$	(9,544	)	$	(9,467	)
Funded status – overfunded plans	$	686		$	352		$	—		$	—
Funded status – underfunded plans		(49,307	)		(40,846	)		(9,544	)		(9,467	)


	Pension						Post-Retirement Medical
Amounts Recognized in Balance Sheet	2012			2011			2012			2011
Noncurrent assets	$	686		$	352		$	—		$	—
Current liabilities		(455	)		(477	)		(1,058	)		(994	)
Noncurrent liabilities		(48,852	)		(40,369	)		(8,486	)		(8,473	)


	Pension				Post-Retirement Medical
Amounts in Accumulated Other Comprehensive Income	2012		2011		2012			2011
Net (gain) loss	$	144,613	$	125,245	$	5,372		$	5,027
Net prior service cost (credit)		4,779		5,005		(567	)		(695	)
Other Comprehensive (Income) Loss – Total	$	149,392	$	130,250	$	4,805		$	4,332


Amortization Expense Expected to Be Recognized During Next Fiscal Year	Pension				Post-Retirement Medical
		2012		2011		2012			2011
Prior service cost (credits)	$	448	$	436	$	(128	)	$	(128	)
Net loss		9,828		6,863		469			472

Our pension and post-retirement medical plans with accumulated benefit obligations in excess of plan assets were as follows:

Pension

Post-Retirement Medical

2012

2011

2012

2011

Projected / accumulated post-retirement benefit obligation

265,706

226,158

9,544

9,467

Accumulated benefit obligation

256,936

219,328

N/A

N/A

Fair value of plan assets

219,245

186,329

N/A

N/A

Our pension and post-retirement medical plans with projected benefit obligations in excess of plan assets were as follows:

Pension

Post-Retirement Medical

2012

2011

2012

2011

Projected / accumulated post-retirement benefit obligation

314,414

265,134

N/A

N/A

Accumulated benefit obligation

301,706

255,298

N/A

N/A

Fair value of plan assets

265,107

224,288

N/A

N/A

Our pension plans with projected benefit obligations less than plan assets were as follows:

Pension

Post-Retirement Medical

2012

2011

2012

2011

Projected benefit obligation

13,445

13,018

N/A

N/A

Accumulated benefit obligation

12,421

12,222

N/A

N/A

Fair value of plan assets

14,131

13,370

N/A

N/A

Actuarial Assumptions: We determine our actuarial assumptions on an annual basis. These assumptions are weighted to reflect each country having requirements that may impact the cost of providing retirement benefits. We employ a total return investment approach for the domestic and foreign pension plan assets. A mix of equities and fixed income investments are used to maximize the long-term return on plan assets for a prudent level of risk. In determining the expected long-term rate of return, management considers the historical rates of return, the nature of investments and an expectation of future investment strategies.

Pension

Post-Retirement Medical

Assumption ranges used in net periodic benefit cost

2012

2011

2012

2011

Discount rate

4.25% – 5.50

4.75% – 5.75

5.00

5.50

Expected long-term return on plan assets

5.50% – 8.00

4.75% – 8.00

N/A

N/A

Average increase in compensation

2.25% – 4.00

2.25% – 4.00

N/A

N/A

Initial medical trend rate

N/A

N/A

8.50

9.00

Ultimate medical trend rate

N/A

N/A

5.00

5.00

Years to ultimate rate

N/A

N/A

7 Years

8 Years

Assumption ranges used to determine benefit obligation:

Pension

Post-Retirement Medical

2012

2011

2012

2011

Discount rate

3.00% – 4.75

4.25% – 5.50

4.00

5.00

Rate of compensation increase

2.25% – 3.75

2.25% – 4.00

N/A

N/A

Initial medical trend rate

N/A

N/A

8.00

8.50

Ultimate medical trend rate

N/A

N/A

5.00

5.00

Years to ultimate rate

N/A

N/A

6 Years

7 Years

Investment Strategy: We have a master trust that holds the assets for all our U.S. pension plans. For investment purposes, the plans are managed in an identical way, as their objectives are similar. The Benefit Funds Investment Committee, along with assistance from external consultants, sets investment guidelines and makes asset allocation decisions. These are established based on market conditions, risk tolerance, funding requirements and expected benefit payments. The Committee also oversees the selection of investment managers and monitors asset performance. As pension liabilities are long-term in nature, the Committee employs a long-term rate of return on plan assets approach for a prudent level of risk. Historical returns are considered as well as advice from investment experts. Annually, the Committee and the consultants review the risk versus the return of the investment portfolio to assess the long-term rate of return assumption.

The U.S. investment portfolio contains a diversified portfolio of investment categories, including domestic and international equities and short and long-term fixed income securities. Among the equity investments there is also diversity of style, growth versus value. Plan assets did not include investments in our stock as of the reported dates. The Committee believes with prudent risk tolerance and asset diversification, the plans should be able to meet their pension obligations in the future.

The weighted average asset allocations for the past two fiscal years by asset category are as follows:


	Pension Plans
Asset Allocation	2012			2011			Target Allocation
Equity securities		56	%		56	%		50– 60	%
Debt securities		38	%		39	%		40– 50	%
Other		6	%		5	%		0	%
Total		100	%		100	%		100	%

The following tables provide information on the fair value of pension plan assets. See Note 18 for more information on fair value measurements.


	Fair Value at October 26, 2012		Fair Value Measurements Using Inputs Considered as
	Fair Value at October 26, 2012		Level 1		Level 2		Level 3
Domestic Equity Securities
Corporate Stocks	$	25,050	$	25,050	$	—	$	—
Commingled Trust		66,692		—		66,692		—
International Equity Securities
Mutual Funds		65,578		—		65,578		—
Total Equity Securities		157,320		25,050		132,270		—
Domestic Fixed Income
Mutual Funds		83,467		—		83,467		—
International Fixed Income
Debt Securities		4,211		—		4,211		—
Mutual Funds		18,110		—		18,110		—
Total Fixed Income		105,788		—		105,788		—
Other Investments
Insurance Contracts		12,385		—		—		12,385
Cash		1,988		1,988		—		—
Real Estate		1,757		—		1,172		585
Total Other Investments		16,130		1,988		1,172		12,970
Total	$	279,238	$	27,038	$	239,230	$	12,970


	Fair Value at October 28, 2011		Fair Value Measurements Using Inputs Considered as
	Fair Value at October 28, 2011			Level 1		Level 2		Level 3
Domestic Equity Securities
Corporate Stocks	$	24,041	$	24,041	$	—	$	—
Commingled Trust		53,273		—		53,273		—
Mutual Funds		3,437		—		3,437		—
International Equity Securities
Mutual Funds		48,385		—		48,385		—
Total Equity Securities		129,136		24,041		105,095		—
Domestic Fixed Income
Debt Securities		1,466		—		1,466		—
Mutual Funds		73,243		—		73,243		—
International Fixed Income
Debt Securities		2,532		—		2,532		—
Mutual Funds		20,809		—		20,809		—
Total Fixed Income		98,050		—		98,050		—
Other Investments
Insurance Contracts		7,216		—		—		7,216
Cash		1,969		1,969		—		—
Real Estate		1,287		—		787		500
Total Other Investments		10,472		1,969		787		7,716
Total	$	237,658	$	26,010	$	203,932	$	7,716

Pension plan investments in corporate stocks are classified as Level 1 investments within the fair value hierarchy, as determined by quoted market prices.

Pension plan investments in mutual funds and commingled trusts, and certain other investments are classified as Level 2 investments within the fair value hierarchy. These investments are valued at net asset value based on the underlying securities, as determined by the sponsor. Level 3 investments are primarily related to insurance contracts required in certain foreign-based plans. The fair value is determined based on the expected benefits to be paid under the contract, discounted at a rate consistent with the related benefit obligation.

Investment securities, in general, are exposed to various risks such as interest rate, credit and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported. The valuation methods previously described above may produce a fair value calculation that may not be indicative of net realized value or reflective of future fair values.

The following table provides a reconciliation of the beginning and ending balances of pension assets measured at fair value that used significant unobservable inputs (Level 3):


	Total			U.S.		Non-U.S.
Balance, October 29, 2010	$	7,022		$	495	$	6,527
Actual return on plan assets
Relating to assets still held at reporting date		(328	)		5		(333	)
Purchases		1,168			—		1,168
Settlements		(66	)		—		(66	)
Transfers in and/or out of Level 3		—			—		—
Currency impact		(80	)		—		(80	)
Balance, October 28, 2011	$	7,716		$	500	$	7,216
Actual return on plan assets
Relating to assets still held at reporting date		3,474			85		3,389
Purchases		2,279			—		2,279
Settlements		(82	)		—		(82	)
Transfers in and/or out of Level 3		—			—		—
Currency impact		(417	)		—		(417	)
Balance, October 26, 2012	$	12,970		$	585	$	12,385

Estimated Future Benefits: The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid as follows:


	Pension		Post-retirement Medical
2013	$	15,277	$	1,079
2014		15,051		1,102
2015		15,225		981
2016		15,367		860
2017		16,117		770
2018 – 2022		86,474		2,588
Total	$	163,511	$	7,380