CHS 2011 Annual Report Download - page 48

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2011 CHS 47
The assumption change for the fiscal year ended August 31, 2010, related to reductions in the discount rate for
both CHS and NCRA qualified pension plans. The reduction in the discount rate was due to the reduction in the
yield curves for investment-grade corporate bonds that CHS and NCRA have historically used.
For measurement purposes, an 8% annual rate of increase in the per capita cost of covered health care benefits was
assumed for the year ended August 31, 2011. The rate was assumed to decrease gradually to 5% by 2017 and remain
at that level thereafter. Components of net periodic benefit costs for the years ended August 31, 2011, 2010 and
2009 are as follows:
(DOLLARS IN THOUSANDS) 2011 2010 2009 2011 2010 2009 2011 2010 2009
QUALIFIED
PENSION BENEFITS
NON-QUALIFIED
PENSION BENEFITS OTHER BENEFITS
Components of net periodic benefit costs:
Service cost $ 25,232 $ 20,774 $ 16,318 $1,246 $1,220 $1,200 $1,771 $1,385 $1,101
Interest cost 22,257 23,034 22,837 1,933 2,235 2,399 2,194 2,153 2,771
Expected return on assets (41,770) (36,875) (31,258)
Settlement of retiree obligations 4,735
Special agreements 1,722 283
Prior service cost (credit) amortization 2,327 2,193 2,115 141 419 546 (122) (186) 347
Actuarial loss (gain) amortization 16,090 10,578 5,046 967 617 667 513 12 (215)
Transition amount amortization 935 936 936
Net periodic benefit cost $ 24,136 $ 19,704 $ 15,058 $9,022 $4,491 $4,812 $5,291 $6,022 $5,223
Adjustment to retained earnings for
measurement date change $ 1,593 $ 763 $ 294
Weighted-average assumptions to determine
the net periodic benefit cost:
Discount rate 4.75% 5.75% 6.05% 4.75% 5.75% 6.05% 4.75% 5.75% 6.05%
Expected return on plan assets 7.75% 8.25% 8.25% N/A N/A N/A N/A N/A N/A
Rate of compensation increase 4.50% 4.50% 4.50% 4.75% 4.50% 4.50% 4.50% 4.50% 4.50%
Weighted-average assumptions to determine
the benefit obligations:
Discount rate 5.00% 4.75% 5.75% 5.00% 4.75% 5.75% 4.75% 4.75% 5.75%
Rate of compensation increase 4.50% 4.50% 4.50% 4.50% 4.50% 4.50% 4.50% 4.50% 4.50%
The estimated amortization in fiscal 2012 from accumu-
lated other comprehensive income into net periodic ben-
efit cost is as follows:
(DOLLARS IN THOUSANDS)
QUALIFIED
PENSION
BENEFITS
NON-
QUALIFIED
PENSION
BENEFITS
OTHER
BENEFITS
Amortization of transition
obligation $ 936
Amortization of prior service
cost (benefit) $ 1,831 $ 85 (105)
Amortization of net actuarial
loss 14,927 518 841
Noncontrolling interests (1,303) (1) (263)
Assumed health care cost trend rates have a significant
effect on the amounts reported for the health care plans.
A one-percentage point change in the assumed health
care cost trend rates would have the following effects:
(DOLLARS IN THOUSANDS) 1% INCREASE 1% DECREASE
Effect on total of service and
interest cost components $ 479 $ (405)
Effect on postretirement benefit
obligation 5,554 (4,842)
The Company provides defined life insurance and
health care benefits for certain retired employees and
Board of Directors’ participants. The plan is contribu-
tory based on years of service and family status, with
retiree contributions adjusted annually.