Kodak 2006 Annual Report Download - page 113

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Other postretirement benefit cost for the Company’s U.S., United Kingdom, and Canada plans included:
(in millions) 2006 2005 2004
Components of net postretirement benefit cost
Service cost $ 11 $ 14 $ 15
Interest cost 166 170 189
Amortization of:
Prior service cost (46) (52) (59)
Actuarial loss 50 68 85
Other postretirement benefit cost before curtailment and
settlement gains 181 200 230
Curtailment gains (17) (28) (63)
Settlement gains — — (64)
Net other postretirement benefit cost from continuing operations $ 164 $ 172 $ 103
The estimated prior service credit and net actuarial loss that will be amortized from accumulated other comprehensive loss into net periodic benefit
cost over the next fiscal year is $44 million and $59 million, respectively.
During the quarter ended June 30, 2004, the Company adopted the provisions of FSP 106-2 with respect to its U.S. Other Postretirement Plan, which
resulted in a remeasurement of the Plan’s accumulated projected benefit obligation (APBO) as of April 1, 2004. This remeasurement takes into ac-
count the impact of the subsidy the Company will receive under the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the
Act) and certain actuarial assumption changes including: (1) changes in participation rates, (2) a decrease in the Company’s Medicare plan premiums,
and (3) a decrease in the discount rate from 6.00% to 5.75%. The actuarially determined impact of the subsidy reduced the APBO by approximately
$228 million. The effect of the subsidy on the measurement of the net periodic other postretirement benefit cost in 2004 was to reduce the cost by
approximately $52 million as follows:
12 months ended December 31, 2004
(in millions) Effect of Subsidy Effect of Assumption Changes Total
Service cost $ — $ 1 $ 1
Interest cost 13 13 26
Amortization of actuarial gain 17 8 25
$ 30 $ 22 $ 52
The effect of the subsidy has been included in the measurement of the net periodic other postretirement cost subsequent to 2004.
The U.S. plan represents approximately 97% of the total other postretirement net benefit obligation as of both December 31, 2006 and 2005 and,
therefore, the weighted-average assumptions used to compute the other postretirement benefit amounts approximate the U.S. assumptions.
The weighted-average assumptions used to determine the net benefit obligations were as follows:
2006 2005
Discount rate 5.73% 5.50%
Salary increase rate 4.22% 4.60%