Archer Daniels Midland 2009 Annual Report Download - page 76

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Archer Daniels Midland Company
Notes to Consolidated Financial Statements (Continued)
Note 14.
Employee Benefit Plans (Continued)
Included in accumulated other comprehensive income for pension benefits at June 30, 2009, are the following
amounts that have not yet been recognized in net periodic pension cost: unrecognized transition obligation of $4
million, unrecognized prior service costs of $32 million and unrecognized actuarial losses of $753 million. The
prior service cost and actuarial loss included in accumulated other comprehensive income and expected to be
recognized in net periodic pension cost during the fiscal year ended June 30, 2010, is $5 million and $31 million,
respectively.
Included in accumulated other comprehensive income for postretirement benefits at June 30, 2009, are the
following amounts that have not yet been recognized in net periodic pension cost: unrecognized prior service credit
of $7 million and unrecognized actuarial losses of $77 million. The prior service credit and actuarial loss included
in accumulated other comprehensive income and expected to be recognized in net periodic benefit costs during the
fiscal year ended June 30, 2010, is $1 million, and $5 million, respectively.
The following table sets forth the principal assumptions used in developing net periodic pension cost:
Pension Benefits
Postretirement Benefits
2009
2008
2009
2008
Discount rate
6.5%
5.6%
6.8%
6.0%
Expected return on plan assets
7.2%
7.6%
N/A
N/A
Rate of compensation increase
3.9%
4.1%
N/A
N/A
The following table sets forth the principal assumptions used in developing the year-end actuarial present value
of the projected benefit obligations:
Pension Benefits
Postretirement Benefits
2009
2008
2009
2008
Discount rate
6.1%
6.5%
6.8%
6.8%
Rate of compensation increase
3.8%
3.9%
N/A
N/A
The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for the pension
plans with projected benefit obligations in excess of plan assets were $1.9 billion, $1.7 billion, and $1.3 billion,
respectively, as of June 30, 2009, and $1.2 billion, $1.2 billion, and $1.0 billion, respectively, as of
June 30, 2008. The projected benefit obligation, accumulated benefit obligation, and fair value of plan assets for
the pension plans with accumulated benefit obligations in excess of plan assets were $1.6 billion, $1.5 billion,
and $1.1 billion, respectively, as of June 30, 2009, and $484 million, $474 million, and $282 million,
respectively, as of June 30, 2008. The accumulated benefit obligation for all pension plans as of June 30, 2009
and 2008, was $1.8 billion and $ 1.7 billion, respectively.
For postretirement benefit measurement purposes, an 8.5% annual rate of increase in the per capita cost of
covered health care benefits was assumed for 2009. The rate was assumed to decrease gradually to 5.0% for
2016 and remain at that level thereafter.
Assumed health care cost trend rates have a significant impact on the amounts reported for the health care plans.
A 1% change in assumed health care cost trend rates would have the following effect:
1% Increase
1% Decrease
(In millions)
Effect on combined service and interest cost components
$ 4
$ (3)
Effect on accumulated postretirement benefit obligations
$ 38
$ (31)