US Airways 2003 Annual Report Download - page 83

Table of Contents
Financial Accounting Standards No. 88, "Employers' Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for
Termination Benefits." In 2002, US Airways recognized a curtailment related to the furlough of certain employees.
The accumulated benefit obligation for defined benefit pension plans was $2.53 billion and $4.74 billion as of September 30, 2003 and 2002.
The following table presents the weighted average assumptions used to determine benefit obligations:
Defined Benefit Pension Plans Other Postretirement Benefits
Nine
Months
Ended
Dec. 31,
2003
Three
Months
Ended
Mar. 31,
2003
Twelve
Months
Ended
Dec. 31,
2002
Nine
Months
Ended
Dec. 31,
2003
Three
Months
Ended
Mar. 31,
2003
Twelve
Months
Ended
Dec. 31,
2002
Discount rate 6.00% 6.50% 6.75% 6.00% 6.50% 6.75%
Rate of compensation increase 3.73% 3.73% 5.43% — — 5.37%
The assumed health care cost trend rates are 9% in 2004 and 2005, decreasing to 5% in 2009, and thereafter. This compares to a health care cost trend
rate of 10% in 2003 decreasing to 5% in 2008 and thereafter. The assumed health care cost trend rates have a significant effect on amounts reported for retiree
health care plans. A one-percentage point change in the health care cost trend rates would have the following effects on Other Postretirement Benefits as of
September 30, 2003 (in millions):
1% Increase 1% Decrease
Effect on total service and interest costs $ 27 $ (21)
Effect on postretirement benefit obligation $ 258 $ (203)
Weighted average assumptions used to determine net periodic benefit cost were as follows:
Defined Benefit Pension Plans Other Postretirement Benefits
Nine
Months
Ended
Dec. 31,
2003
Three
Months
Ended
Mar. 31,
2003
Twelve
Months
Ended
Dec. 31,
2002
Nine
Months
Ended
Dec. 31,
2003
Three
Months
Ended
Mar. 31,
2003
Twelve
Months
Ended
Dec. 31,
2002
Discount rate 6.50% 6.75% 7.50% 6.50% 6.75% 7.50%
Expected return on plan assets 8.00% 8.75% 9.50% — — —
Rate of compensation increase 3.73% 5.41% 6.42% — — 5.86%
Components of the net and total periodic cost for Pension Benefits (in millions):
Successor
Company Predecessor Company
Nine
Months Ended
Dec. 31, 2003
Three
Months Ended
Mar. 31, 2003
Twelve
Months Ended
Dec. 31, 2002
Twelve
Months Ended
Dec. 31, 2001
Service cost $ 27 $ 27 $ 191 $ 160
Interest cost 113 89 417 344
Expected return on plan assets (89) (69) (330) (317)
Amortization of:
Transition asset — — (4) (5)
Prior service cost — 1 10 10
Actuarial loss — 1 39 4
Net periodic cost 51 49 323 196
Fresh start charge — 1,004 — —
Curtailment/settlement — (1,391) 42 2