US Bank 2005 Annual Report Download - page 90

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In December 2003, the Medicare Prescription Drug, $40 million, and net periodic cost for 2004 by $2 million.
Improvement and Modernization Act of 2003 (the Act) was Based on final regulations issued during 2005, the expected
enacted. The Act established a prescription drug benefit benefit impact of the Medicare subsidy increased and the
under Medicare, known as ‘‘Medicare Part D’’, and a federal accumulated postretirement benefit obligation was reduced by
subsidy to sponsors of retiree health care benefit plans that an additional $10 million as of September 30, 2005. The net
provide a benefit that is at least actuarially equivalent to periodic cost for 2005 was reduced by $5 million. The
Medicare Part D. The Company recognized the estimated Company does not expect a significant reduction in future
expected benefit prospectively from July 1, 2004. The participation in the postretirement medical plan as a result of
expected subsidy reduced the accumulated postretirement the Act.
benefit obligation (APBO) at September 30, 2004, by
The Company uses a measurement date of September 30 for its retirement plans. The following table summarizes benefit
obligation and plan asset activity for the retirement plans:
Post-Retirement
Pension Plans Medical Plans
(Dollars in Millions) 2005 2004 2005 2004
Projected benefit obligation
Benefit obligation at beginning of measurement period ************************ $1,951 $1,801 $ 281 $ 320
Service cost ************************************************************* 63 59 5 4
Interest cost ************************************************************* 112 109 16 18
Plan participants’ contributions ********************************************* — — 17 16
Actuarial (gain) loss ******************************************************* 145 150 (38) (40)
Benefit payments********************************************************* (88) (86) (36) (37)
Curtailments ************************************************************* ————
Settlements************************************************************** (36) (82) — —
Amendments ************************************************************ ————
Benefit obligation at end of measurement period (a)(b)************************* $2,147 $1,951 $ 245 $ 281
Fair value of plan assets
Fair value at beginning of measurement period ******************************* $2,127 $1,976 $ 39 $ 39
Actual return on plan assets *********************************************** 398 298 1 —
Employer contributions **************************************************** 18 21 18 21
Plan participants’ contributions ********************************************* — — 17 16
Settlements************************************************************** (36) (82) — —
Benefit payments********************************************************* (88) (86) (36) (37)
Fair value at end of measurement period ************************************ $2,419 $2,127 $ 39 $ 39
Funded status
Funded status at end of measurement period ******************************** $ 272 $ 176 $(206) $(242)
Unrecognized transition (asset) obligation ************************************ ——5 6
Unrecognized prior service cost ******************************************** (39) (45) (5) (6)
Unrecognized net (gain) loss *********************************************** 724 841 — 38
Fourth quarter contribution ************************************************ 11 4 155 4
Net amount recognized *************************************************** $ 968 $ 976 $ (51) $(200)
Components of statement of financial position
Prepaid benefit cost ****************************************************** $1,146 $1,155 $ — $ —
Accrued benefit liability **************************************************** (178) (179) (51) (200)
Additional minimum liability ************************************************ (47) — — —
Intangible asset ********************************************************** 9———
Accumulated other comprehensive income*********************************** 38 — — —
Net amount recognized *************************************************** $ 968 $ 976 $ (51) $(200)
(a) At December 31, 2005 and 2004, the accumulated benefit obligation for all qualified pension plans was $1.8 billion and $1.7 billion, respectively.
(b) U.S. Bancorp retained the qualified pension plan obligation for the inactive participants, relating to employees of the Piper Jaffray Companies. Therefore, all liabilities and plan assets related
to inactive participants in the qualified pension plan associated with the Piper Jaffray Companies are included in the pension plans benefit obligation.
88 U.S. BANCORP