CVS 2000 Annual Report Download - page 34

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Notes to Consolidated Financial Statements
32
CVS Corporation
Following is a reconciliation of the benefit obligation, fair value of plan assets and funded status of the Company’s defined benefit and
other postretirement benefit plans as of the respective balance sheet dates:
Defined Benefit Plans Other Postretirement Benefits
In millions 2000 1999 2000 1999
Change in benefit obligation:
Benefit obligation at beginning of year $ 254.8 $ 297.6 $ 14.0 $ 14.0
Service cost 0.9 0.7 ——
Interest cost 19.8 19.8 1.0 0.9
Actuarial loss (gain) 9.6 (40.3) (0.5) 1.1
Benefits paid (17.9) (23.0) (1.1) (2.0)
Benefit obligation at end of year $ 267.2 $ 254.8 $ 13.4 $ 14.0
Change in plan assets:
Fair value at beginning of year $ 248.8 $ 223.1 $— $—
Actual return on plan assets (3.3) 37.3 ——
Company contributions 7.1 11.4 1.1 2.0
Benefits paid (17.9) (23.0) (1.1) (2.0)
Fair value at end of year(1) $ 234.7 $ 248.8 $— $—
Funded status:
Funded status $ (32.5) $ (6.0) $ (13.4) $ (14.0)
Unrecognized prior service cost 1.0 1.1 (0.8) (0.9)
Unrecognized net (gain) loss (27.7) (60.6) (0.4) 0.8
Accrued pension costs $ (59.2) $ (65.5) $ (14.6) $ (14.1)
(1) Plan assets consist primarily of mutual funds, common stock and insurance contracts.
Following is a summary of the net periodic pension cost for the defined benefit and other postretirement benefit plans for the
respective years:
Defined Benefit Plans Other Postretirement Benefits
In millions 2000 1999 1998 2000 1999 1998
Service cost $ 0.9 $ 0.7 $ 0.5 $— $— $—
Interest cost on benefit obligation 19.8 19.8 19.5 1.0 0.9 1.0
Expected return on plan assets (18.6) (16.6) (16.4) ———
Amortization of net (gain) loss (0.1) 1.3 1.2 (0.2) — (0.2)
Amortization of prior service cost 0.1 0.1 0.1 (0.1) (0.1) (0.1)
Net periodic pension cost $ 2.1 $ 5.3 $ 4.9 $ 0.7 $ 0.8 $ 0.7
Weighted average assumptions:
Discount rate 7.75% 8.00% 6.75% 7.75% 7.75% 6.75%
Expected return on plan assets 9.25% 9.00% 9.00% ———
Rate of compensation increase 4.00% 4.00% 4.50% ———
For measurement purposes, future healthcare costs are assumed to increase at an annual rate of 8.0%, decreasing to an annual growth
rate of 5.0% in 2004 and thereafter. A one percent change in the assumed healthcare cost trend rate would change the accumulated
postretirement benefit obligation by $0.8 million and the total service and interest costs by $0.1 million.