OfficeMax 2007 Annual Report Download - page 82

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Assumptions
The assumptions used in accounting for the 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 the Company’s benefit obligations:
Pension Benefits Other Benefits
United States Canada
2007 2006 2005 2007 2006 2005 2007 2006 2005
Weighted average
assumptions as of year
end:
Discount rate ............ 6.30% 5.80% 5.60% 5.90% 5.60% 5.20% 5.50% 5.00% 5.10%
Rate of compensation
increase ............. —————————
The following table presents the assumptions used in the measurement of net periodic benefit
cost:
Pension Benefits Other Benefits
United States Canada
2007 2006 2005 2007 2006 2005 2007 2006 2005
Weighted average
assumptions:
Discount rate ............ 5.80% 5.60% 5.60% 5.60% 5.20% 5.48% 5.00% 5.10% 6.00%
Expected return on plan
assets ............... 8.00% 8.00% 8.00% ——————
Rate of compensation
increase ............. —————————
The Company bases its discount rate assumption on the rates of return available on
high-quality bonds with maturities approximating the expected period over which the pension
benefits will be paid.
The expected long-term rate of return on plan assets assumption is based on the weighted
average of expected returns for the major asset classes in which the plans’ assets are held. Asset-
class expected returns are based on long-term historical 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 on the Company’s investment strategy. The weighted-
average expected return on plan assets used in the calculation of net periodic pension benefit cost
for 2007 is 8.00%.
The following table presents the assumed healthcare cost trend rates used in measuring the
Company’s postretirement benefit obligations at December 29, 2007 and December 30, 2006:
United States Canada
2007 2006 2007 2006
Weighted average assumptions as of year-end:
Healthcare cost trend rate assumed for next year ........... — — 9.00% 9.50%
Rate to which the cost trend rate is assumed to decline (the
ultimate trend rate) ............................... — — 5.00% 5.00%
Year that the rate reaches the ultimate trend rate ........... — — 2015 2015
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