Discover 2009 Annual Report Download - page 133

Supplemental Plan. These amendments, which were communicated to employees on October 8, 2008 and were effective
December 31, 2008, were considered a curtailment and resulted in the acceleration of a deferred benefit that resulted
from a 2004 change in the Qualified Plan. As a result, the Company recognized a non-cash pretax credit of $38.9
million in the fourth quarter of 2008, which was recorded as a reduction to employee compensation and benefits
expense. In connection with these changes, the Company redesigned its 401(k) Plan with enhanced benefit features which
became effective in January 2009.
The following table presents the curtailment calculations, which reflect the freezing of benefit accruals under the
pension plan effective December 31, 2008, and its impact on the fair value of plan assets, funded status and accumulated
contributions in excess of net periodic costs as of November 30, 2008 (dollars in thousands):
Before
curtailment
Effect of
curtailment
After
curtailment
Accumulated benefit obligation..................................................................................................................... $(255,541) $ — $(255,541)
Projected benefit obligation .......................................................................................................................... $(269,438) $ 13,897 $(255,541)
Fair value of plan assets .............................................................................................................................. 324,637 — 324,637
Funded status............................................................................................................................................. 55,199 13,897 69,096
Unrecognized prior service costs ................................................................................................................... (38,608) 38,891 284
Unrecognized (gain)/loss ............................................................................................................................ 39,249 (13,897) 25,352
Accumulated contributions in excess of net periodic benefit cost ......................................................................... $ 55,840 $ 38,891 $ 94,732
Net Periodic Benefit Cost. Net periodic benefit cost expensed by the Company included the following components
(dollars in thousands):
Pension Postretirement
For the Years Ended
November 30,
For the Years Ended
November 30,
2009 2008 2007 2009 2008 2007
Service cost, benefits earned during the period.............................................................. $ 1,022 $ 16,825 $ 18,427 $ 777 $1,075 $1,097
Interest cost on projected benefit obligation .................................................................. 20,189 19,991 19,389 1,575 1,444 1,310
Expected return on plan assets.................................................................................... (24,107) (24,037) (22,665) — — —
Net amortization ...................................................................................................... 30 (2,239) 641 (150) (465) (552)
Net settlements and curtailments ................................................................................. 64 (38,891) 60 — — —
Net periodic benefit cost......................................................................................... $ (2,802) $(28,351) $ 15,852 $2,202 $2,054 $1,855
Accumulated Other Comprehensive Income. Pretax amounts recognized in accumulated other comprehensive income
that have not yet been recognized as components of net periodic benefit cost consist of (dollars in thousands):
Pension Postretirement
Prior service credit (cost)................................................................................................................................................ $ (275) $ 30
Net (loss) gain ............................................................................................................................................................. (148,933) 1,786
Total ....................................................................................................................................................................... $(149,208) $1,816
The estimated portion of the prior service credit and net loss above that is expected to be recognized as a component
of net periodic benefit cost in 2010 is shown below (dollars in thousands):
Pension Postretirement
Prior service credit (cost) ................................................................................................................................................... $ (13) $ (3)
Net (loss) gain................................................................................................................................................................. 1,612 —
Total........................................................................................................................................................................... $1,599 $ (3)
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