HP 2009 Annual Report Download - page 145

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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 16: Retirement and Post-Retirement Benefit Plans (Continued)
Pension and Post-Retirement Benefit Expense
HP’s net pension and post-retirement benefit cost (gain) recognized in the Consolidated
Statements of Earnings was as follows for the following fiscal years ended October 31:
U.S. Defined Non-U.S. Defined Post-Retirement
Benefit Plans Benefit Plans Benefit Plans
2009 2008 2007 2009 2008 2007 2009 2008 2007
In millions
Service cost ...................... $ 27 $ 63 $130 $312 $281 $261 $14 $29 $31
Interest cost ...................... 592 296 260 619 475 366 70 78 77
Expected return on plan assets ........ (533) (318) (355) (669) (713) (579) (32) (40) (38)
Amortization and deferrals:
Actuarial (gain) loss ............... (72) (36) (13) 71 1 87 6 19 26
Prior service benefit ............... — — — (9) (8) (7) (78) (55) (54)
Net periodic benefit cost ............. 14 5 22 324 36 128 (20) 31 42
Curtailment (gain) loss ............ — — (541) 5 — (13) (2) — (26)
Settlement (gain) loss ............. (1) (1) 8 12 (2) 4———
Special termination benefits ......... — — 307 55 4 4——60
Net benefit cost (gain) .............. $ 13 $ 4 $(204) $ 396 $ 38 $ 123 $(22) $ 31 $ 76
In fiscal 2009, HP recognized aggregate pension curtailment and settlement losses totaling
$5 million and $12 million, respectively, resulting from workforce rebalancing initiatives in several
non-U.S. countries. In the U.K., workforce rebalancing initiatives triggered pension termination benefits
totaling $55 million. In the U.S., a settlement gain of $1 million was recognized for payout activity
related to non-qualified plans. In Puerto Rico, a curtailment gain of $2 million was recognized for the
closure of the retiree medical plan.
The weighted-average assumptions used to calculate net benefit cost were as follows for the
following fiscal years ended October 31:
U.S. Defined Non-U.S. Defined Post-Retirement
Benefit Plans Benefit Plans Benefit Plans
2009 2008 2007 2009 2008 2007 2009 2008 2007
Discount rate ........................... 8.0% 6.4% 5.9% 6.0% 5.2% 4.4% 8.2% 6.2% 5.8%
Average increase in compensation levels ....... 2.0% 3.7% 4.0% 2.6% 3.3% 3.3% — — —
Expected long-term return on assets .......... 7.5% 6.7% 8.3% 6.9% 6.8% 6.7% 9.3% 8.7% 8.3%
The medical cost and related assumptions used to calculate the net post-retirement benefit cost for
the following fiscal years ended October 31 were as follows:
2009 2008 2007
Current medical cost trend rate .................................... 9.5% 7.5% 8.5%
Ultimate medical cost trend rate ................................... 5.5% 5.5% 5.5%
Year the medical cost rate reaches ultimate trend rate .................... 2013 2010 2010
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