SAFE RETIREMENT BENEFITS SAFEWAY INC. AND SUBSIDIARIES* Notes to Consolidated Financial...

SAFE RETIREMENT BENEFITS

SAFEWAY INC. AND SUBSIDIARIES*

Notes to Consolidated Financial Statements (In Part)

Note K: Employee Benefit Plans and Collective Bargaining Agreements (In part)

Pension Plans

The Company maintains defined benefit, non-contributory retirement plans for substantially all of its employees not participating in multi-employer pension plans. Safeway recognizes the funded status of its retirement plans on its consolidated balance sheet.

Other Post-Retirement Benefits

In addition to the Companys pension plans, the Company sponsors plans that provide postretirement medical and life insurance benefits to certain employees. Retirees share a portion of the cost of the postretirement medical plans. Safeway pays all the costs of the life insurance plans. The Company also sponsors a Retirement Restoration Plan that provides death benefits and supplemental income payments for senior executives after retirement. All of these Other Post-Retirement Benefit Plans are unfunded. The following table provides a reconciliation of the changes in the retirement plans benefit obligation and fair value of assets over the two-year period ended January 1, 2011 and a statement of the funded status as of year-end 2010 and year-end 2009. Activity for 2009 includes the removal of the Canadian money purchase plan which had been previously presented within the table but has since been determined to be a defined contribution plan (in millions):

	Pension		Other post retirement benefits
	2010	2009	2010	2009
Change in projected benefit obligation:
Beginning balance	$2,095.5	$2,009.0	$121.7	$111.0
Service cost	$36.1	$39.4	$2.3	$1.5
Interest cost	$125.8	$116.0	$7.2	$6.6
Plan amendments		($15.1)
Acturial loss	$108.6	$157.1	$6.8	$4.7
Plan participant contributions			$1.8	$2.3
Benefit payments	($129.5)	($121.4)	($9.3)	($10.0)
Reclassification of money purchase
plan component		($138.1)
Currency translation adjustment	$20.7	$48.6	$2.3	$5.6
Ending balance	$2,257.20	$2,095.50	$132.80	$121.70
	Pension		Other post retirement benefits
	2010	2009	2010	2009
Change in fair value of plan assets:
Beginning balance	$1,572.1	$1,512.7
Actual return on plan assets	$183.6	$252.8
Employer contributions	$10.2	$16.7	$7.5	$7.7
Plan participant contributions			$1.8	$2.3
Benefit payments	($129.5)	($121.4)	($9.3)	($10.0)
Reclassification of money purchase
Plan component		($129.6)
Currency translation adjustment	$15.8	$40.9
Ending balance	$1,652.2	$1,572.1
Components of net amount recognized
in financial position:
Other accrued liabilities (current liability)	($1.5)	($1.4)	($8.4)	$8.3
Pension and postretirement benefit
Obligations (non-current liability)	($603.5)	($522.0)	($124.4)	($113.4)
Funded status	($605.0)	($523.4)	($132.8)	($121.7)

.

Amounts recognized in accumulated other comprehensive income consist of the following (in millions):

	Pension		Other post retirement benefits
	2010	2009	2010	2009
Net actuarial loss	$583.5	$592.4	$26.1	$21.9
Prior service cost (credit)	$47.1	$64.4	($1.5)	($1.6)
$630.60	$656.8	$24.6	$20.3

Safeway expects approximately $62.2 million of the net actuarial pension loss and $15.9 million of the prior service cost to be recognized as a component of net periodic benefit cost in 2011

Information for Safeways pension plans, all of which have an accumulated benefit obligation in excess of plan assets as of year-end 2010 and 2009, is shown below (in millions):

	2010	2009
Projected benefit obligation	$2,257.2	$2,095.5
Accumulated benefit obligation	$2,171.9	$2,028.4
Fair value of plan assets	$1,652.2	$1,572.1

Required

a. 1. Determine the projected benefit obligation at the end of 2010 and 2009 (pension and other post-retirement benefits).

2. Determine the fair value of plan assets at the end of 2010 and 2009 (pension and other post-retirement benefits).

3. Determine the funded status at the end of 2010 and 2009 (pension and other postretirement benefits).

4. Why is the funded status of the other post-retirement benefits equal to the projected benefit obligation?

5. Do all of the pension plans have an accumulated benefit obligation in excess of plan assets?

b. Comment on the trend in projected benefit obligation and the funded status (pension and other post-retirement benefits).