Retiree Benefits

The Company and its subsidiaries have a defined contribution plan (401(k) plan) and defined benefit plans (pension and other postretirement benefit plans). Benefits from these plans are based on factors that include various combinations of years of service, fixed monetary amounts per year of service, employee compensation during the last years of employment, the recipient’s social security benefit and pension freeze dates. For our qualified and non-qualified pension plans and the postretirement benefit plans, we have historically used the last Friday in October as our measurement date, which coincides with our fiscal year end. However, in fiscal 2015, we early adopted ASU 2015-04, Practical Expedient for the Measurement Date of an Employer's Defined Benefit Obligation and Plan Assets, which allowed us to use a measurement date of October 31 on a prospective basis. This did not have a significant impact on our disclosures or amounts recorded in the financial statements.

Defined contribution plans

Substantially every U.S. employee of the Company is eligible to participate in the Company's 401(k) plan. Under the terms of the plan, for eligible employees, the Company matches 25% to 50% of participant salary deferral contributions up to the first 6% of the participant’s compensation. In addition, for eligible employees, the Company contributes a defined contribution of 2% to 5% of eligible employee compensation depending on the employee group. The Company also makes contributions for certain foreign government-mandated contribution retirement plans. The total defined contribution expense was $50.1 million, $57.9 million and $61.6 million for fiscal 2015, 2014 and 2013, respectively. The fiscal 2015, 2014 and 2013 defined contribution expense included $1.8 million, $11.6 million and $12.6 million, respectively, of costs associated with transitioning certain defined benefit plan participants to a defined contribution plan.

Defined benefit plans

We have both U.S. and non-U.S. pension plans. Our funding policy with respect to qualified pension plans is to contribute annually not less than the minimum required by applicable law and regulation nor more than the amount which can be deducted for income tax purposes. We also have an unfunded nonqualified supplemental pension plan that is based on credited years of service and compensation during the last years of employment.

Certain plans outside the United States which supplement or are coordinated with government plans, many of which require funding through mandatory government retirement or insurance company plans, have pension funds or balance sheet accruals which approximate the actuarially computed value of accumulated plan benefits as of October 30, 2015 and October 31, 2014.

Other postretirement benefit plans consist of welfare benefits plans. In 1993, our Board of Directors approved a general approach that culminated in the elimination of all Company contributions towards postretirement healthcare benefits. Increases in costs paid by the Company were capped for certain plans beginning in 1994 and extending through 1998, and Company contributions were eliminated as of January 11, 1999 for most employee groups, excluding certain Underground employees, certain early retirees and specific discontinued operation groups. For certain Underground employees, based on existing plan terms, future eligible retirees will participate in a premium cost-sharing arrangement which is based on age as of March 1, 1993 and position at the time of retirement. Active employees under age 45 as of March 1, 1993 and any new hires after April 1, 1993 will be required to pay 100% of the applicable premium.

As described in Note 2, Significant Accounting Policies, during the fourth quarter of 2015, we voluntarily changed our method of accounting for actuarial gains and losses and the calculation of expected return on plan assets for all of our pension and other postretirement benefit plans. All amounts presented have been adjusted to reflect this new policy.

Total pension expense (income) for all defined benefit plans is $38.6 million, $3.3 million and $(18.5) million for fiscal 2015, 2014 and 2013, respectively. Such amounts are prior to any impact of the costs on our recorded inventory balances.

The components of the net periodic benefit cost associated with our U.S. pension plans and pension plans of subsidiaries outside of the U.S. are as follows:



	U.S. Pension Plans									Non-U.S. Pension Plans
In thousands	October 30, 2015			October 31, 2014			October 25, 2013			October 30, 2015			October 31, 2014			October 25, 2013
				(As adjusted)			(As adjusted)						(As adjusted)			(As adjusted)
Components of net periodic benefit cost (income):
Service cost	$	2,379		$	2,891		$	3,794		$	1,531		$	3,314		$	7,492
Interest cost	49,446			52,756			48,453			26,087			30,420			29,216
Expected return on assets	(66,655		)	(64,243		)	(69,444		)	(38,512		)	(40,147		)	(38,685		)
Amortization of prior service cost	—			398			610			66			54			—
Year end mark to market adjustment	61,949			10,356			(42,532		)	(324		)	(607		)	42,602
Curtailment loss	—			7,838			—			—			279			—
Special termination benefits	2,627			—			—			—			—			—
Total net periodic benefit cost	$	49,746		$	9,996		$	(59,119	)	$	(11,152	)	$	(6,687	)	$	40,625

In fiscal 2015, the $61.9 million market to market adjustment on U.S. plans includes an approximate $35.0 million impact for the application of updated mortality tables, as discussed further in Note 2, Significant Accounting Policies. In addition, $15.2 million of previously reported settlement charges related to our U.K. pension schemes have been accordingly reversed upon the voluntary change in our method of accounting for actuarial gains and losses and the calculation of expected return on plan assets.

In fiscal 2014, we substantially completed negotiations with certain of our U.S. bargaining units to freeze their respective defined benefit plans at the end of the calendar year. These actions resulted in a $7.8 million non-cash pension curtailment charge during the year.

The components of the net periodic benefit cost associated with our other postretirement benefit plans, all of which relate to operations in the U.S., and prior to any related inventory adjustments for the annual mark to market adjustment, are as follows:



	Other Postretirement Benefit Plans
In thousands	October 30, 2015			October 31, 2014			October 25, 2013
				(As adjusted)			(As adjusted)
Components of net periodic benefit cost:
Service cost	$	817		$	952		$	1,083
Interest cost	1,162			1,279			1,168
Expected return on assets	(624		)	(554		)	(427		)
Amortization of prior service costs	132			132			69
Year end mark to market adjustment	1,678			30			(1,722		)
Total net periodic benefit cost of continuing operations	$	3,165		$	1,839		$	171

For other postretirement benefit obligation measurement purposes, the assumed annual rate of increase in the per capita cost of covered health care benefits is 7.00% for pre-65 medical insurance plans in fiscal 2015. The assumed annual rate of increase in per capita cost of covered health care benefits for pre-65 medical insurance plans is then assumed to decrease 0.25% per year to an ultimate rate of 5.0%. The assumed annual rate of increase in the per capita cost of covered health care benefits is 7.50% for post-65 medical insurance plans in fiscal 2015. The assumed annual rate of increase in per capita cost of covered health care benefits for post-65 medical insurance plans is then assumed to decrease 0.25% per year to an ultimate rate of 5.0%. The assumed annual rate of increase in the per capita cost of covered health care benefits is 6.00% for post-65 Medicare supplement plans in fiscal 2015. The assumed annual rate of increase in per capita cost of covered health care benefits for post-65 Medicare Supplement plans is then assumed to decrease 0.25% per year to an ultimate rate of 4.5%. The assumed annual rate of increase in the per capita cost of covered health care benefits is 5.00% for retiree drug subsidies in fiscal 2015 and all subsequent years.

The effect of one percentage point increase in the assumed health care cost trend rates each year would increase the accumulated postretirement benefit obligation as of October 30, 2015 by $0.9 million. The service cost and interest cost components of the net periodic postretirement benefit cost for the year would increase by less than $0.1 million. A one percentage point decrease in the assumed health care cost trend rates each year would decrease the accumulated postretirement benefit obligation as of October 30, 2015 by $0.8 million. The service cost and interest cost components of the net periodic postretirement benefit cost for the year would decrease by less than $0.1 million. Postretirement life insurance benefits have a minimal effect on the total benefit obligation.

The principal assumptions used in determining the funded status and net periodic benefit cost of our pension plans and other postretirement benefit plans are set forth in the following tables. The assumptions for non-U.S. plans were developed on a basis consistent with that for the U.S. plans, adjusted to reflect prevailing economic conditions and interest rate environments.

Significant assumptions used in determining net periodic benefit cost are as follows (in weighted averages):



	U.S. Pension Plans						Non-U.S. Pension Plans						Other Postretirement Benefit Plans
	2015		2014		2013		2015		2014		2013		2015		2014		2013
Discount rate*	4.40	%	4.85	%	3.95	%	4.09	%	4.25	%	4.28	%	4.00	%	4.25	%	3.60	%
Expected return on plan assets**	6.40	%	6.25	%	6.50	%	6.30	%	6.30	%	6.64	%	7.25	%	7.25	%	7.40	%
Rate of compensation increase	—		—		—		4.21	%	4.21	%	4.23	%	—		—		—

* Due to the mid-year settlement measurements, the fiscal 2015 weighted average discount rate ranged from 3.50% – 4.09% throughout the year for the non-U.S. pension plans. Due to the mid-year curtailment measurements, the fiscal 2014 weighted average discount rate ranged from 4.45% – 4.85% and 4.25% – 4.45% throughout the year for the U.S. pension plans and non-U.S. pension plans, respectively.

** Due to the mid-year settlement measurements, the fiscal 2015 weighted average expected return on plan assets ranged from 5.65% – 6.30% for the non-U.S. pension plans. Due to the mid-year curtailment measurements, the fiscal 2014 weighted average expected return on plan assets ranged from 6.25% – 6.35% for the U.S. pension plans.

The expected rate of return on pension plan assets for the U.S. pension plans is based on the investment policies adopted by our Pension and Investment Committee. We also use the results from a portfolio simulator as input into our decision. The simulator is based on U.S. capital market conditions as of the valuation date and projects returns based on the U.S. pension plans' current asset allocation. The simulation model calculates an expected rate of return for each asset class by forecasting a range of plausible economic conditions. The model starts with the capital market conditions prevailing at the start of the forecast period and trends the rates of return by asset class to its long-term average. A long-term average return is calculated using a blend of historical capital market data and future expectations.

The expected rate of return on non-U.S. pension plans is based on the plan’s current asset allocation policy. An average long-term rate of return is developed for each asset class and the portfolio return represents the weighted average return based on the current asset allocation.

Significant assumptions used in determining benefit obligations are as follows (in weighted averages):



	U.S. Pension Plans				Non-U.S. Pension Plans				Other Postretirement Benefit Plans
	October 30, 2015		October 31, 2014		October 30, 2015		October 31, 2014		October 30, 2015		October 31, 2014
Discount rate	4.45	%	4.40	%	3.83	%	4.09	%	4.10	%	4.00	%
Rate of compensation increase	—		—		3.72	%	4.21	%	—		—

Changes in the projected benefit obligations and pension plan assets relating to the Company’s defined benefit pension plans and other postretirement benefit plans, together with a summary of the amounts recognized in the Consolidated Balance Sheets, are set forth in the following tables:



	U.S. Pension Plans						Non -U.S. Pension Plans						Other Postretirement Benefit Plans
In thousands	October 30, 2015			October 31, 2014			October 30, 2015			October 31, 2014			October 30, 2015			October 31, 2014
Change in Benefit Obligations
Net benefit obligations at beginning of year	$	1,157,418		$	1,132,274		$	725,732		$	712,261		$	31,005		$	31,358
Service cost	2,379			2,891			1,531			3,314			817			952
Interest cost	49,446			52,756			26,087			30,420			1,162			1,279
Plan participants’ contributions	—			—			—			281			—			—
Plan amendments	—			6,256			—			1,733			—			—
Actuarial loss (gain)	20,085			55,793			5,297			32,087			1,088			100
Currency fluctuations	—			—			(33,492		)	(8,968		)	—			—
Acquisitions	—			—			4,772			—			—			—
Special termination benefits	2,627			—			—			—			—			—
Gross benefits paid	(66,169		)	(92,552		)	(76,520		)	(45,396		)	(2,700		)	(2,684		)
Net benefit obligations at end of year	$	1,165,786		$	1,157,418		$	653,407		$	725,732		$	31,372		$	31,005

Change in Plan Assets
Fair value of plan assets at beginning of year	$	1,073,023		$	1,052,654		$	662,141		$	638,590		$	9,293		$	8,401
Actual return on plan assets	24,791			109,680			44,789			72,807			34			624
Currency fluctuations	—			—			(30,800		)	(7,962		)	—			—
Employer contributions	2,898			3,241			10,236			3,821			3,128			2,952
Plan participants’ contributions	—			—			—			281			—			—
Acquisitions	—			—			1,010			—			—			—
Gross benefits paid	(66,169		)	(92,552		)	(76,520		)	(45,396		)	(2,700		)	(2,684		)
Fair value of plan assets at end of year	$	1,034,543		$	1,073,023		$	610,856		$	662,141		$	9,755		$	9,293

Funded Status
Net amount recognized at end of year	$	(131,243	)	$	(84,395	)	$	(42,551	)	$	(63,591	)	$	(21,617	)	$	(21,712	)

Amounts Recognized in the Consolidated Balance Sheets Consist of:
Non-current assets	—			—			5,554			—			—			—
Current liabilities	(2,991		)	(2,887		)	(658		)	(720		)	(2,078		)	(2,103		)
Non-current liabilities	(128,252		)	(81,508		)	(47,447		)	(62,871		)	(19,539		)	(19,609		)
Net amount recognized at end of year	$	(131,243	)	$	(84,395	)	$	(42,551	)	$	(63,591	)	$	(21,617	)	$	(21,712	)
Accumulated benefit obligation	$	1,165,786		$	1,157,418		$	644,486		$	702,845		$	—		$	—

The projected benefit obligations, accumulated benefit obligations and fair value of plan assets for underfunded and overfunded plans have been combined for disclosure purposes. The projected benefit obligations, accumulated benefit obligations and fair value of assets for pension plans with an accumulated benefit obligation in excess of plan assets are as follows:



	U.S. Pension Plans				Non U.S. Pension Plans
In thousands	October 30, 2015		October 31, 2014		October 30, 2015		October 31, 2014
Projected benefit obligation	$	1,165,786	$	1,157,418	$	595,337	$	660,144
Accumulated benefit obligation	1,165,786		1,157,418		588,460		641,400
Fair value of plan assets	1,034,543		1,073,023		548,478		595,170

Amounts recognized in accumulated other comprehensive (loss) income as of October 30, 2015 consist of:



	Pension Plans					Other Postretirement Benefit Plans
In thousands	U.S.		Non U.S.			Other Postretirement Benefit Plans
Prior service cost	—		(1,239		)	(471		)
Deferred tax	—		248			180
Total accumulated other comprehensive (loss) income	$	—	$	(991	)	$	(291	)

The estimated amounts that will be amortized from accumulated other comprehensive (loss) income into net periodic benefit cost during fiscal 2016 are as follows:



	Pension Plans			Other Postretirement Benefit Plans
In thousands	U.S.	Non U.S.		Other Postretirement Benefit Plans
Prior service cost	—	(67	)	(133	)

For fiscal 2016, we expect contributions to our employee pension plans to be approximately $10.0 million.

The defined benefit plans have the following target and actual asset allocations in fiscal 2015:



	U.S. Pension Plan				Non-U.S. Pension Plans
Asset Category	Target Allocation		Actual Allocation		Target Allocation		Actual Allocation
Equity securities	25	%	21	%	30	%	30	%
Debt securities	75	%	75	%	70	%	70	%
Other	—		4	%	—		—	%
Total	100	%	100	%	100	%	100	%

The U.S. plans' assets are invested to maintain funded ratios over the long-term, while managing the risk that funded ratios fall meaningfully below 100%. The Company has been focused on a plan and an objective to achieve an asset and liability duration match so that interim fluctuations in funded status should be limited by increasing the correlation between assets and liabilities. At this time, the plans' portfolio is significantly invested in duration-matched fixed income securities.

The Company's objectives with respect to its global pension plans are (1) to acquire suitable assets of appropriate liquidity, which will meet the cost of the current and future benefits which the plans provide; (2) to limit the risk of the assets failing to meet the liabilities over the long term; and (3) to minimize the long term costs of the plans by maximizing the correlation with plan liabilities. There is no assurance that these objectives will be met.

The accounting guidance on fair value measurements specifies a fair value hierarchy based on the observability of inputs used in valuation techniques (Level 1, 2 and 3). See Note 18, Fair Value Measurements, for a discussion of the fair value hierarchy.

Fair values are determined as follows:


•	Equity security values are primarily based on the closing price for identical instruments in active markets or at the bid price for identical instruments in instances in which the security has not traded on the valuation date;


•	Fixed income security values are primarily based on models that take into consideration such market-based factors as recent sales, risk-free yield curves and prices of similarly rated bonds; and


•	Cash and cash equivalents and other investments are based on the carrying amount, which approximates fair value.

The following tables summarize the fair value of our pension and other postretirement benefit plan assets by category as of October 30, 2015 and October 31, 2014:



In thousands	October 30, 2015
	Level 1			Level 2			Level 3		Total Assets at Fair Value
U.S. Pension Plans
Equity securities:
U.S. equities	$	—		$	107,733		$	—	$	107,733
Non-U.S. equities	—			110,155			—		110,155
Fixed income securities:
U.S. government bonds	—			324,909			—		324,909
Non-U.S. government bonds	—			12,653			—		12,653
U.S. corporate bonds	—			318,795			—		318,795
Non-U.S. corporate bonds	—			69,737			—		69,737
U.S. commercial mortgage backed securities	—			6,190			—		6,190
U.S. non-government backed collateralized mortgage obligations	—			19,460			887		20,347
U.S. asset backed securities	—			20,631			1,818		22,449
Other plan assets:
Cash and cash equivalents	52,333			—			—		52,333
Other investments	—			(11,086		)	328		(10,758		)
Total U.S. Pension Plans assets	$	52,333		$	979,177		$	3,033	$	1,034,543

Non-U.S. Pension Plans
Equity securities:
U.S. equities	$	46,414		$	2,306		$	—	$	48,720
Non-U.S. equities	114,568			19,350			33		133,951
Fixed income securities:
Non-U.S. government bonds	—			145,871			—		145,871
U.S. corporate bonds	—			24,293			—		24,293
Non-U.S. corporate bonds	—			181,377			—		181,377
Non-U.S. asset backed securities	—			495			—		495
Non-U.S. annuity insurance products	—			76,480			—		76,480
Other plan assets:
Cash and cash equivalents	(6,095		)	—			—		(6,095		)
Other investments	—			5,763			1		5,764
Total Non-U.S. Pension Plans assets	$	154,887		$	455,935		$	34	$	610,856

Other Postretirement Benefits Plans
Equity securities:
U.S. equities	$	4,772		$	—		$	—	$	4,772
Non-U.S. equities	1,621			—			—		1,621
Fixed income securities:
U.S. corporate bonds	—			3,284			—		3,284
Other plan assets:
Cash and cash equivalents	78			—			—		78
Total Other Postretirement Benefit Plans	$	6,471		$	3,284		$	—	$	9,755



In thousands	October 31, 2014
	Level 1		Level 2			Level 3		Total Assets at Fair Value
U.S. Pension Plans
Equity securities:
U.S. equities	$	—	$	136,830		$	—	$	136,830
Non-U.S. equities	—		131,601			—		131,601
Fixed income securities:
U.S. government bonds	—		318,475			—		318,475
Non-U.S. government bonds	—		17,565			—		17,565
U.S. corporate bonds	—		328,882			—		328,882
Non-U.S. corporate bonds	—		63,306			—		63,306
U.S. commercial mortgage backed securities	—		9,310			457		9,767
U.S. non-government backed collateralized mortgage obligations	—		15,519			1,934		17,453
U.S. asset backed securities	—		25,728			—		25,728
Other plan assets:
Cash and cash equivalents	25,213		—			—		25,213
Other investments	—		(1,797		)	—		(1,797		)
Total U.S. Pension Plans assets	$	25,213	$	1,045,419		$	2,391	$	1,073,023

Non-U.S. Pension Plans
Equity securities:
U.S. equities	$	47,505	$	2,644		$	31	$	50,180
Non-U.S. equities	119,062		9,084			84		128,230
Fixed income securities:
Non-U.S. government bonds	—		135,825			—		135,825
U.S. corporate bonds	—		26,131			—		26,131
Non-U.S. corporate bonds	—		218,052			—		218,052
Non-U.S. asset backed securities	—		1,130			—		1,130
Non-U.S. annuity insurance products	—		91,027			—		91,027
Other plan assets:
Cash and cash equivalents	1,260		—			—		1,260
Other investments	—		10,306			—		10,306
Total Non-U.S. Pension Plans assets	$	167,827	$	494,199		$	115	$	662,141

Other Postretirement Benefits Plans
Equity securities:
U.S. equities	$	4,568	$	—		$	—	$	4,568
Non-U.S. equities	1,351		—			—		1,351
Fixed income securities:
U.S. corporate bonds	—		3,161			—		3,161
Other plan assets:
Cash and cash equivalents	213		—			—		213
Total Other Postretirement Benefit Plans	$	6,132	$	3,161		$	—	$	9,293

Below are roll-forwards of assets measured at fair value using Level 3 inputs for the years ended October 30, 2015 and October 31, 2014:



In thousands
	Equities			Fixed Income			Other
U.S. Pension Plans
Balance as of October 25, 2013	$	—		$	—		$	—
Unrealized losses	—			(49		)	—
Sales and settlements	—			(108		)	—
Purchases	—			2,548			—
Balance as of October 31, 2014	$	—		$	2,391		$	—
Unrealized losses	—			57			—
Sales and settlements	—			(2,460		)	—
Purchases	—			2,741			329
Balance as of October 30, 2015	$	—		$	2,729		$	329

Non-U.S. Pension Plans
Balance as of October 25, 2013	$	258		$	—		$	—
Unrealized gains	69			—			—
Realized losses	(47		)	—			—
Sales and settlements	(274		)	—			—
Purchases	108			—			—
Balance as of October 31, 2014	$	114		$	—		$	—
Unrealized gains	(29		)	—			—
Realized losses	—			—			—
Sales and settlements	(110		)	—			—
Purchases	59			—			—
Balance as of October 30, 2015	$	34		$	—		$	—

The following pension and other postretirement benefit payments (which include expected future service) are expected to be paid in each of the following years:



	Pension Plan Payments				Other Postretirement Benefit Plan Payments
In thousands	U.S.		Non-U.S.		Prior to Medicare Part D		After Medicare Part D		Impact of Medicare Part D
2016	$	66,857	$	25,905	$	4,930	$	4,847	$	83
2017	69,633		26,245		4,666		4,589		77
2018	71,383		27,441		3,925		3,855		70
2019	73,232		28,146		2,966		2,902		64
2020	74,924		29,001		2,576		2,518		58
2021 - 2025	384,933		158,948		10,412		10,210		202

On December 8, 2003, the Medicare Prescription Drug Improvement and Modernization Act of 2003 became law. This Act introduced a prescription drug benefit under Medicare Part D, as well as a federal subsidy to sponsors of retiree health care benefit plans that provide a benefit that is at least actuarially equivalent to Medicare Part D. We currently sponsor two retiree welfare benefits plans that provide prescription drug benefits to our U.S. retirees.