Pitney Bowes 2008 Annual Report Download - page 93

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PITNEY BOWES INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Tabular dollars in thousands, except per share data)
74
The components of the net periodic benefit cost for nonpension postretirement benefit plans are as follows:
2008 2007 2006
Service cost $ 3,613 $ 3,529 $ 3,347
Interest cost 14,410 13,904 13,352
Amortization of prior service benefit (2,471) (2,472) (1,856)
Recognized net actuarial loss 3,386 2,214 1,908
Net periodic benefit cost $ 18,938 $ 17,175 $ 16,751
Weighted average assumptions used to determine net
periodic costs during the years:
2008 2007 2006
Discount rate – U.S. 5.90% 5.85% 5.60%
Discount rate – Canada 5.25% 5.00% 5.00%
The estimated amounts that will be amortized from AOCI
into net periodic benefit cost in 2009 are as follows:
Net actuarial loss $ 2,892
Prior service credit (2,476)
Total $ 416
The assumed health care cost trend rate used in measuring the accumulated postretirement benefit obligations for the U.S. plan was
8.00% for 2008 and 7.00% for 2007. The assumed health care trend rate is 8.00% for 2009 and we assume it will gradually decline to
5.00% by the year 2015 and remain at that level thereafter.
Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A 1% change in the
assumed health care cost trend rates would have the following effects:
1% Increase 1% Decrease
Effect on total of service and interest cost components $ 682 $ (587)
Effect on postretirement benefit obligations $ 8,537 $ (7,525)