v3.24.1
Note 13 - Pension and Postretirement Benefits
 9 Months Ended
Feb. 25, 2024
Notes to Financial Statements  
Retirement Benefits [Text Block]

13. PENSION AND POSTRETIREMENT BENEFITS

 

We have defined benefit retirement plans ("pension plans") for eligible salaried and hourly employees. Benefits are based on years of credited service and average compensation or stated amounts for each year of service. We also sponsor postretirement plans which provide certain medical and dental benefits to qualifying U.S. employees.

 

During the second quarter of fiscal 2024, the Company provided a voluntary lump-sum settlement offer to certain vested participants in the salaried and hourly pension plans in order to reduce a portion of the pension obligation. During the third quarter of fiscal 2024, approximately $135 million was distributed from the pension plan assets in connection with this offer. The lump-sum settlement did exceed our service and interest cost for our hourly pension plans, which required a remeasurement in the third quarter of fiscal 2024. In connection with the remeasurement, we updated the effective discount rate assumption for the impacted pension plan obligations from 5.52% to 5.20%, as of December 31, 2023. The settlement and related remeasurement resulted in the recognition of an immaterial settlement loss, reflected in pension and postretirement non-service expense (income), as well as a loss in other comprehensive income (loss) totaling $6.8 million in the third quarter of fiscal 2024. 

 

Components of pension and postretirement plan costs (benefits) are:

 

  

Pension Plans

 
  

Thirteen Weeks Ended

  

Thirty-Nine Weeks Ended

 
  

February 25, 2024

  

February 26, 2023

  

February 25, 2024

  

February 26, 2023

 

Service cost

 $1.5  $1.6  $4.4  $4.9 

Interest cost

  36.1   31.0   109.5   93.0 

Expected return on plan assets

  (35.3)  (36.5)  (106.9)  (109.4)

Amortization of prior service cost

  0.4   0.4   1.2   1.1 

Settlement loss

  1.1   —   1.1   — 

Pension cost (benefit) — Company plans

  3.8   (3.5)  9.3   (10.4)

Pension cost (benefit) — multi-employer plans

  2.1   2.0   6.9   7.0 

Total pension cost (benefit)

 $5.9  $(1.5) $16.2  $(3.4)

 

  

Postretirement Plans

 
  

Thirteen Weeks Ended

  

Thirty-Nine Weeks Ended

 
  

February 25, 2024

  

February 26, 2023

  

February 25, 2024

  

February 26, 2023

 

Service cost

 $—  $—  $0.1  $0.1 

Interest cost

  0.7   0.6   2.0   1.7 

Amortization of prior service cost (benefit)

  (0.4)  (0.4)  (1.2)  (1.3)

Recognized net actuarial gain

  (1.2)  (1.1)  (3.6)  (3.3)

Total postretirement cost (benefit)

 $(0.9) $(0.9) $(2.7) $(2.8)

 

The Company uses a split discount rate (spot-rate approach) for the U.S. plans and certain foreign plans. The spot-rate approach applies separate discount rates for each projected benefit payment in the calculation of pension service and interest cost.

 

The weighted-average discount rates for service and interest costs under the spot-rate approach used for pension cost as of May 29, 2023 were 5.64% and 5.44%, respectively. The weighted-average discount rates for service and interest costs subsequent to December 31, 2023 were 5.60% and 5.41%, respectively. 

 

During the third quarter and first three quarters of fiscal 2024, we contributed $3.2 million and $9.2 million, respectively, to our pension plans and contributed $1.7 million and $4.7 million, respectively, to our postretirement plans. Based upon the current funded status of the plans and the current interest rate environment, we anticipate making further contributions of approximately $2.9 million to our pension plans during the remainder of fiscal 2024. We anticipate making further contributions of approximately $2.5 million to our postretirement plans during the remainder of fiscal 2024. These estimates are based on ERISA guidelines, current tax laws, plan asset performance, and liability assumptions, which are subject to change.