Pizza Hut 2004 Annual Report Download - page 66

฀ ฀ Postretirement฀
฀ Pension฀Benefits฀ Medical฀Benefits
฀2004฀ 2003฀ 2004฀ 2003
Amounts฀recognized฀in฀the฀฀
฀ statement฀of฀financial฀฀
฀ position฀consist฀of:
฀ Accrued฀benefit฀liability฀ $฀(111)฀ $฀(125)฀ $฀(58)฀ $฀(53)
฀ Intangible฀asset฀ ฀ 11฀ ฀ 14฀ ฀ —฀ ฀ —
฀ Accumulated฀other฀฀
฀ ฀ comprehensive฀loss฀ ฀ 153฀ ฀ 162฀ ฀ —฀ ฀ —
฀฀฀฀ $฀ 53฀ $฀ 51฀ $฀(58)฀ $฀(53)
Additional฀information
Other฀comprehensive฀฀฀
฀ (income)฀loss฀attributable฀to฀฀
฀ change฀in฀additional฀฀
฀ minimum฀liability฀recognition฀ $฀ (9)฀ $฀ 48
Additional฀year-end฀information฀฀
฀ for฀pension฀plans฀with฀฀
฀ accumulated฀benefit฀obligations฀฀
฀ in฀excess฀of฀plan฀assets
฀ Projected฀benefit฀obligation฀ $฀ 700฀ $฀ 629
฀ Accumulated฀benefit฀obligation฀ ฀ 629฀ ฀ 563
฀ Fair฀value฀of฀plan฀assets฀ ฀ 518฀ ฀ 438
While฀we฀are฀not฀required฀to฀make฀contributions฀to฀the฀Plan฀in฀
2005,฀we฀may฀make฀discretionary฀contributions฀during฀the฀year฀
based฀on฀our฀estimate฀of฀the฀Plan’s฀expected฀September฀30,฀
2005฀funded฀status.
Components฀of฀Net฀Periodic฀Benefit฀Cost
฀ Pension฀Benefits
฀2004฀ 2003฀ 2002
Service฀cost฀ $฀ 32฀ $฀ 26฀ $฀ 22
Interest฀cost฀ ฀ 39฀ ฀ 34฀ ฀ 31
Amortization฀of฀prior฀service฀cost฀ ฀ 3฀ ฀ 4฀ ฀ 1
Expected฀return฀on฀plan฀assets฀ ฀(40)฀ ฀(30)฀ ฀(28)
Recognized฀actuarial฀loss฀ ฀ 19฀ ฀ 6฀ ฀ 1
Net฀periodic฀benefit฀cost฀ $฀ 53฀ $฀ 40฀ $฀ 27
Additional฀loss฀recognized฀due฀to:
฀Curtailment฀ $฀ —฀ $฀ —฀ $฀ 1
฀ Postretirement฀Medical฀Benefits
฀2004฀ 2003฀ 2002
Service฀cost฀ $฀ 2฀ $฀ 2฀ $฀ 2
Interest฀cost฀ ฀ 5฀ ฀ 5฀ ฀ 4
Amortization฀of฀prior฀service฀cost฀ ฀ —฀ ฀ —฀ ฀ —
Recognized฀actuarial฀loss฀ ฀ 1฀ ฀ 1฀ ฀ 1
Net฀periodic฀benefit฀cost฀ $฀ 8฀ $฀ 8฀ $฀ 7
Prior฀service฀costs฀are฀amortized฀on฀a฀straight-line฀basis฀over฀
the฀average฀remaining฀service฀period฀of฀employees฀expected฀
to฀receive฀benefits.฀Curtailment฀gains฀and฀losses฀have฀been฀
recognized฀in฀facility฀actions฀as฀they฀have฀resulted฀primarily฀
from฀refranchising฀and฀closure฀activities.
Weighted-Average฀Assumptions฀Used฀to฀Determine฀Benefit฀
Obligations฀at฀September฀30:
฀ ฀ Postretirement฀
฀ Pension฀Benefits฀ Medical฀Benefits
฀2004฀ 2003฀ 2004฀ 2003
Discount฀rate฀ 6.15%฀ 6.25%฀ 6.15%฀ 6.25%
Rate฀of฀compensation฀increase฀ 3.75%฀ 3.75%฀ 3.75%฀ 3.75%
Weighted-Average฀Assumptions฀Used฀to฀Determine฀the฀Net฀
Periodic฀Benefit฀Cost฀for฀Fiscal฀Years:
฀ ฀ Postretirement฀
฀ Pension฀Benefits฀ Medical฀Benefits
฀2004฀ 2003฀ 2002฀ 2004฀ 2003฀ 2002
Discount฀rate฀ 6.25%฀ 6.85%฀ 7.60%฀ 6.25%฀ 6.85%฀ 7.58%
Long-term฀rate฀
฀ of฀return฀on฀฀
฀ plan฀assets฀ 8.50%฀ 8.50%฀10.00%฀ —฀ —฀ —
Rate฀of฀compen-฀
฀ sation฀increase฀ 3.75%฀ 3.85%฀ 4.60%฀ 3.75%฀ 3.85%฀ 4.60%
Our฀estimated฀long-term฀rate฀of฀return฀on฀plan฀assets฀repre-
sents฀the฀weighted฀average฀of฀expected฀future฀returns฀on฀
the฀asset฀categories฀included฀in฀our฀target฀investment฀alloca-
tion฀based฀primarily฀on฀the฀historical฀returns฀for฀each฀asset฀
category,฀ adjusted฀ for฀ an฀ assessment฀ of฀ current฀ market฀
conditions.
Assumed฀Health฀Care฀Cost฀Trend฀Rates฀at฀September฀30:
฀ ฀ Postretirement฀
฀ ฀ Medical฀Benefits
฀฀฀2004฀ 2003
Health฀care฀cost฀trend฀rate฀assumed฀for฀next฀year฀ 11%฀ 12%
Rate฀to฀which฀the฀cost฀trend฀rate฀is฀assumed฀to฀฀
฀ decline฀(the฀ultimate฀trend฀rate)฀ 5.5%฀ 5.5%
Year฀that฀the฀rate฀reaches฀the฀ultimate฀trend฀rate฀ 2012฀ 2012
There฀is฀a฀cap฀on฀our฀medical฀liability฀for฀certain฀retirees.฀
The฀cap฀for฀Medicare฀eligible฀retirees฀was฀reached฀in฀2000฀
and฀the฀cap฀for฀non-Medicare฀eligible฀retirees฀is฀expected฀to฀
be฀reached฀between฀the฀years฀2007-2008;฀once฀the฀cap฀is฀
reached,฀our฀annual฀cost฀per฀retiree฀will฀not฀increase.
Assumed฀health฀care฀cost฀trend฀rates฀have฀a฀significant฀
effect฀on฀the฀amounts฀reported฀for฀our฀postretirement฀health฀
care฀plans.฀A฀one-percentage-point฀change฀in฀assumed฀health฀
care฀cost฀trend฀rates฀would฀have฀the฀following฀effects:
฀ 1-Percentage-฀ 1-Percentage-฀
฀ Point฀฀ Point฀฀
฀ Increase฀ Decrease
Effect฀on฀total฀of฀service฀and฀interest฀cost฀ $฀—฀ $฀—
Effect฀on฀postretirement฀benefit฀obligation฀ $฀ 2฀ $฀ (2)
64