LensCrafters 2007 Annual Report Download - page 154
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NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS | 153 <
service cost for the SERP plans that will be amortized from accumulated other comprehensive income
into net periodic benefit cost over the next fiscal year are Euro 0.3 million and 0.0, respectively.
In the past, the Company has used a flat rate assumption for its rate of compensation increases.
Based on a study of historical experience performed by the Company’s actuary, the Company has
moved to an assumption for salary increases based on a graduated approach as opposed to the
flat rate assumption used in the past. This study reviewed plan experience for the three years
preceding the January 1, 2006 actuarial valuation. The Company’s experience shows salary
increases that typically vary by age. Therefore, the 2007 assumption related to salary increases was
changed to better match historical experience and reflects an increase of 4%, 5% or 6% depending
on the age of the participant.
For 2007, the Company’s long-term rate of return assumption on the pension plans’ assets was
8.25%. In developing this assumption, the Company considered input from its third-party pension
asset managers, investment consultants and plan actuaries, including their review of asset class
return expectations and long-term inflation assumptions. The Company also considered the
pension plans’ historical average return over various periods of time (through December 31, 2006).
The resulting assumption was also benchmarked against the assumptions used by other U.S.
corporations as reflected in several surveys to determine consensus thinking at that time on this
assumption.
Plan Assets. The Pension Plan’s target and actual asset allocations at September 30, 2007 and
2006, by asset category are as follows:
Assumptions Pension Plans SERP
2007 2006 2007 2006
(Euro/000)
Weighted-average assumption used to determine benefit obligations
Discount rate 6.50% 6.00% 6.50% 6.00%
Rate of compensation increase 6%/5%/4% 4.50% 6%/5%/4% 4.50%
Weighted-average assumption used to determine net periodic benefit cost for years ended December 31,
2007 and 2006
Discount rate 6.00% 5.75% 6.00% 5.75%
Expected long-term return on plan assets 8.25% 8.25% n.a. n.a.
Rate of compensation increase 4.50% 4.25% 4.50% 4.25%
Mortality table RP-2000 RP-2000 RP-2000 RP-2000
Asset Plan assets Plan assets
allocation target at at
September 30, 2007 September 30, 2006
Asset category U.S. Cole U.S. Cole
associates plan associates plan
plan plan
Equity securities 65% 63% 72% 64% 67%
Debt securities 35% 35% 27% 34% 29%
Other - 2% 1% 2% 4%
Total 100% 100% 100% 100% 100%