Company Owned Life Insurance

9 Months Ended

Nov. 22, 2013

Company-Owned Life Insurance [Abstract]

Company-Owned Life Insurance

COMPANY-OWNED LIFE INSURANCE

Our investments in company-owned life insurance (“COLI”) policies are recorded at their net cash surrender value.

Prior to Q3 2014, our investments in whole life COLI policies were intended to be utilized as a long-term funding source for post-retirement medical benefits, deferred compensation and supplemental retirement plan obligations, and our investments in variable life COLI policies were primarily considered a source of corporate liquidity.

During Q3 2014, we reduced the variable life COLI balances by withdrawing basis of $74.5 (tax-free) and invested the cash proceeds in short-term investments. The remaining investments in whole life and variable life COLI policies are intended to be utilized as a long-term funding source for post-retirement medical benefits, deferred compensation and supplemental retirement plan obligations, which as of November 22, 2013 aggregated approximately $147, with a related deferred tax asset of approximately $56. The designations of our COLI investments as funding sources for our benefit obligations does not result in these investments representing a committed funding source for these obligations. They are subject to claims from creditors, and we can designate them to another purpose at any time.

The costs associated with the long-term benefit obligations that the investments are intended to fund are recorded in Operating expenses on the Condensed Consolidated Statements of Income. As these costs exceed the net returns in cash surrender value, normal insurance expenses and any death benefit gains (“COLI income”) related to our investments in COLI policies, we began recording all COLI income in Operating expenses on the Condensed Consolidated Statements of Income during Q3 2014.

The balances of our COLI investments as of November 22, 2013 and February 22, 2013 were as follows:

Type	Ability to Choose Investments	Net Return	Target Asset Allocation as of November 22, 2013	Net Cash Surrender Value
				November 22, 2013		February 22, 2013
Whole life COLI policies	No ability	A rate of return set periodically by the insurance companies	Not applicable	$	112.7	$	109.6
Variable life COLI policies	Can allocate across a set of choices provided by the insurance companies	Fluctuates depending on performance of underlying investments	50% fixed income; 50% equity	39.4		116.2
				$	152.1	$	225.8

Following is a summary of the allocation of COLI income for the nine months endedNovember 22, 2013 and November 23, 2012:

COLI Income	Whole Life Policies		Variable Life Policies			Total
Nine months ended November 22, 2013
Cost of sales	$	0.6	$	—		$	0.6
Operating expenses	2.5		—			2.5
Operating income	3.1		—			3.1
Investment income (loss)	—		(1.8		)	(1.8		)
Income before income tax expense	$	3.1	$	(1.8	)	$	1.3
Nine months ended November 23, 2012
Cost of sales	$	0.8	$	—		$	0.8
Operating expenses	3.2		—			3.2
Operating income	4.0		—			4.0
Investment income	—		3.0			3.0
Income before income tax expense	$	4.0	$	3.0		$	7.0