Union Pacific 2005 Annual Report Download - page 65

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Amounts Recorded in Consolidated Statement of Financial Position – The net amounts represent the amount
previously accrued by us for pension and OPEB costs. The following table presents the amounts recognized in the
Consolidated Statements of Financial Position at December 31:
Pension OPEB
Millions of Dollars 2005 2004 2005 2004
Prepaid benefit cost ......................................... $ 122 $ 127 $ - $ -
Accrued benefit cost ........................................ (86) (80) (438) (464)
Additional minimum liability ................................. (369) (380) - -
Intangible assets ............................................ 31 38 - -
Accumulated other comprehensive income ...................... 337 342 - -
Net amounts recognized at end of year .......................... $ 35 $ 47 $(438) $(464)
At December 31, 2005 and 2004, $42 million and $43 million, respectively, of the total pension and other
postretirement liabilities were classified as current.
Underfunded Accumulated Benefit Obligation – The accumulated benefit obligation is the present value of benefits
earned to date, assuming no future salary growth. The underfunded accumulated benefit obligation represents the
difference between the accumulated benefit obligation and the fair value of plan assets. The projected benefit
obligation, accumulated benefit obligation, and fair value of plan assets for pension plans with accumulated
benefit obligations in excess of the fair value of the plan assets were as follows for the years ended December 31:
Millions of Dollars 2005 2004
Projected benefit obligation ................................................. $(2,044) $(2,042)
Accumulated benefit obligation .............................................. $(2,026) $(2,014)
Fair value of plan assets ..................................................... 1,685 1,674
Underfunded accumulated benefit obligation ................................... $ (341) $ (340)
The accumulated benefit obligation for all defined benefit pension plans was $2 billion at both December 31,
2005 and 2004.
Assumptions – The weighted-average actuarial assumptions used to determine benefit obligations at December 31:
Pension OPEB
Percentages 2005 2004 2003 2005 2004 2003
Discount rate ................................. 5.75% 6.0% 6.5% 5.75% 6.0% 6.5%
Salary increase ................................ 2.75 3.0 3.5 N/A N/A N/A
Healthcare cost trend rate:
Current ................................... N/A N/A N/A 10.0 11.0 9.0
Level in 2010 ............................... N/A N/A N/A 5.0 5.0 5.0
Expense
Both pension and OPEB expense are determined based upon the annual service cost of benefits (the actuarial cost
of benefits earned during a period) and the interest cost on those liabilities, less the expected return on plan assets.
The expected long-term rate of return on plan assets is applied to a calculated value of plan assets that recognizes
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