Graco 2007 Annual Report Download - page 66

Newell Rubbermaid Inc. 2007 Annual Report
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U.S. International
2007 2006 2007 2006
Weighted-average assumptions used to determine benefit obligation:
Discount rate 6.25% 6.00% 5.53% 5.11%
Long-term rate of return on plan assets 8.50% 8.50% 5.89% 6.69%
Long-term rate of compensation increase 4.00% 4.50% 4.24% 3.90%
Net pension cost (benefit) includes the following components for the years ended December 31, (in millions):
U.S. International
2007 2006 2005 2007 2006 2005
Service cost-benefits earned during the year $ 3.8 $ 2.8 $ 2.2 $ 7.3 $ 7.3 $ 7.8
Interest cost on projected benefit obligation 51.2 51.4 51.7 27.7 24.5 23.5
Expected return on plan assets (58.6) (59.5) (64.6) (27.4) (24.7) (21.0)
Amortization of:
Prior service cost 1.1 1.0 1.1
— — —
Actuarial loss 7.6 7.8 4.9 4.5 4.9 3.9
Curtailment, settlement and special
termination benefit costs
— 0.2 (16.5) (2.8) — (0.8)
Net pension cost (benefit) $ 5.1 $ 3.7 $(21.2) $ 9.3 $ 12.0 $ 13.4
U.S. International
2007 2006 2007 2006
Weighted-average assumptions used to determine net periodic benefit cost:
Discount rate 6.00% 5.75% 5.16% 4.90%
Long-term rate of return on plan assets 8.50% 8.50% 6.33% 6.91%
Long-term rate of compensation increase 4.50% 4.50% 3.85% 3.71%
The Company’s defined benefit pension plan weighted-average asset allocation at December 31, 2007 and 2006, by asset category, are as follows:
U.S. International
2007 2006 2007 2006
Equity securities 69.1% 65.6% 21.8% 51.5%
Debt securities 20.5% 22.9% 52.5% 40.4%
Real estate 4.5% 4.5% 2.4% 2.0%
Cash and other 5.9% 7.0% 23.3% 6.1%
Total 100.0% 100.0% 100.0% 100.0%
The Company employs a total return investment approach whereby a mix of equities and fixed income investments is used to maximize the long-term
return of plan assets for a prudent level of risk. Risk tolerance is established through careful consideration of plan liabilities, plan funded status, and
corporate financial condition. The investment portfolio is comprised of a diversified blend of equity, real estate, fixed income investments, and cash
investments. Equity investments include large and small market capitalization stocks as well as growth, value and international stock positions.
The Company employs a building block approach in determining the long-term rate of return for plan assets. Historical markets are studied and long-
term historical relationships between equities and fixed-income are preserved consistent with the widely accepted capital market principle that assets with
higher volatility generate a greater return over the long run. Current market factors, such as inflation and interest rates, are evaluated before long-term
capital market assumptions are determined. The long-term portfolio return is established via a building block approach with proper consideration of
diversification and rebalancing. Peer data and historical returns are reviewed to check for reasonableness and appropriateness.
The Company expects to make cash contributions of approximately $23.8 million to its defined benefit pension plans in 2008.