Time Magazine 2010 Annual Report Download - page 107

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Components of Net Periodic Benefit Costs from Continuing Operations (millions)
2010 2009 2008
December 31,
Service cost .............................................. $ 52 $ 78 $ 104
Interest cost .............................................. 186 179 192
Expected return on plan assets ................................ (230) (173) (247)
Amortization of prior service cost .............................. — — 5
Amortization of net loss ..................................... 41 124 19
Settlements/curtailments ..................................... 2 5 —
Net periodic benefit costs .................................... $ 51 $ 213 $ 73
Certain domestic employees of the Company participate in multi-employer pension plans, not included in the net
periodic costs above, for which the expense was $38 million in 2010, $38 million in 2009 and $35 million in 2008.
Assumptions
Weighted-average assumptions used to determine benefit obligations and net periodic benefit costs for the years
ended December 31:
2010 2009 2008 2010 2009 2008
Benefit Obligations
Net Periodic Benefit
Costs
Discount rate ................................ 5.55% 5.80% 6.17% 5.80% 6.17% 5.98%
Rate of compensation increase ................... 4.76% 4.78% 4.57% 4.78% 4.57% 4.60%
Expected long-term return on plan assets ............ n/a n/a n/a 7.84% 7.76% 7.78%
The discount rates were determined by matching the plan’s liability cash flows to rates derived from high-
quality corporate bonds available at the measurement date. A decrease in the discount rate of 25 basis points, from
5.80% to 5.55%, while holding all other assumptions constant, would have resulted in an increase in the Company’s
pension expense of approximately $15 million in 2010.
In developing the expected long-term rate of return on plan assets, the Company considered long-term
historical rates of return, the Company’s plan asset allocations as well as the opinions and outlooks of investment
professionals and consulting firms. A decrease in the expected long-term rate of return of 25 basis points, from
7.84% to 7.59%, while holding all other assumptions constant, would have resulted in an increase in the Company’s
pension expense of approximately $7 million in 2010.
95
TIME WARNER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)