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79
Assumptions
The assumptions used in accounting forthe Company’s plans are estimates of factors including,
among other things, the amount and timing of future benefit payments. The following table presents
the key assumptions used in the measurement of theCompany’s benefit obligations:
Pension Benefits Other Benefits
United States Canada
2006 2005 2004 2006 2005 2004 2006 2005 2004
Weighted average assumptions as
of year end:
Discount rate.................. 5.80% 5.60% 5.60% 5.60% 5.20% 5.60% 5.00 % 5.10 % 6.00%
Rate of compensation increase... — — — — — — — — —
The following table presentsthe assumptions used inthe measurement ofnet periodic benefit
cost:
Pension Benefits Other Benefits
United States Canada
2006 2005 2004 2006 2005 2004 2006 2005 2004
Weighted average assumptions:
Discount rate................ 5.60%5.60% 5.75% 5.20% 5.48% 5.75% 5.10 % 6.00% 6.25%
Expected return on plan assets .8.00%8.00%8.25% — — — — — —
Rate of compensation increase. — — 4.25% — — — — — —
For the period from January 1through October 28, 2004, the discount rate assumption used in
the measurementof net periodic pension benefit cost was 6.25%. As a result of the Sale, the pension
and postretirement benefit obligations for those individuals who became employees of Boise
Cascade, L.L.C.were settled.The settlement triggered anew measurement of the discount rate and,
as a result, on October 29, 2004, the Company changed the discount rate assumption to 5.75%. The
revised rate was used to measure net periodic benefit cost for the period fromOctober 29 through
December 31,2004.
The Company bases its discount rate assumption on the rates ofreturn available onhigh-quality
bonds with maturities approximatingthe expected period over which the pension benefits will be paid.
The expected long-term rate of return on plan assets assumption is based onthe weighted
average of expected returns for the major asset classes inwhich the plans’ assetsare held.
Asset-class expected returns are based on long-termhistorical returns,inflation expectations,
forecasted gross domestic product and earnings growth, as well as other economic factors. The
weights assigned to each asset class are based onthe Company’s investment strategy. The
weighted-average expected return on plan assetsused in the calculation of net periodic pension
benefit cost for 2006 is 8.00%.
The following table presentsthe assumed healthcare cost trend rates used in measuring the
Company’s postretirement benefit obligations at December 30, 2006 and December 31, 2005:
UnitedStatesCanada
2006 2005 2006 2005
Weighted average assumptions as of year-end:
Healthcare cost trend rate assumedfor next year. ........... —8.00%9.50% 10.00%
Rate to which thecost trend rate is assumed to decline (the
ultimate trend rate) .................................... — 5.00%5.00 % 5.00%
Year that the rate reaches theultimate trend rate ............ —2009 2015 2015