Xerox 2008 Annual Report Download - page 79

Notes to the Consolidated
Financial Statements
(in millions, except per share data and
unless otherwise indicated)
The accumulated benefit obligation for all defined benefit pension
plans was $7,902 and $9,748 at December 31, 2008 and 2007,
respectively.
Information for pension plans with an accumulated benefit
obligation in excess of plan assets is presented below:
2008 2007
Aggregate projected benefit obligation $5,374 $1,193
Aggregate accumulated benefit obligation 5,051 1,109
Aggregate fair value of plan assets 3,821 399
Our domestic retirement defined benefit plans provide employees
a benefit, depending on eligibility, at the greater of (i) the benefit
calculated under a highest average pay and years of service
formula, (ii) the benefit calculated under a formula that provides
for the accumulation of salary and interest credits during an
employee’s work life, or (iii) the individual account balance from
the Company’s prior defined contribution plan (Transitional
Retirement Account or TRA).
Pension Benefits Retiree Health
2008 2007 2006 2008 2007 2006
Components of Net Periodic Benefit Cost
Service cost $ 209 $ 237 $ 244 $ 14 $ 17 $ 19
Interest cost(1) (5) 578 732 84 87 92
Expected return on plan assets(2) (80) (668) (802) ———
Recognized net actuarial loss 36 75 104 —10 19
Amortization of prior service credit (20) (20) (16) (21) (12) (13)
Recognized curtailment/settlement loss 34 33 93 ———
Net periodic defined benefit cost 174 235 355 77 102 117
Defined contribution plans 80 80 70 ———
Total Net Periodic Benefit Costs $ 254 $ 315 $ 425 $ 77 $ 102 $117
Other Changes in Plan Assets and Benefit Obligations
Recognized in Other Comprehensive Income:
Net actuarial loss (gain) 1,062 (499) (244) (114)
Prior service cost (credit) 15(219) —
Amortization of net actuarial (loss) gain (70) (108) —(10)
Amortization of prior service (cost) credit 20 20 21 12
Total recognized in other comprehensive income(3) 1,013 (582) (442) (112)
Total Recognized in Net Periodic Benefit Cost and Other
Comprehensive Income $1,267 $(267) $(365) $ (10)
(1) Interest cost includes interest expense on non-TRA obligations of $408, $374, and $340 and interest expense (income) directly allocated to TRA participant accounts of $(413), $204, and $392
for the years ended December 31, 2008, 2007 and 2006, respectively.
(2) Expected return on plan assets includes expected investment income on non-TRA assets of $493, $464, and $410 and actual investment income (expense) on TRA assets of $(413), $204, and
$392 for the years ended December 31, 2008, 2007 and 2006, respectively.
(3) Amount represents the pre-tax effect included within other comprehensive income. The net of tax amount and effect of translation adjustments as well as our share of Fuji Xerox benefit plan
changes are included within the Consolidated Statements of Common Shareholders’ Equity. The net after-tax loss (gain) included in other comprehensive (loss) income for the two years ended
December 31, 2008 was $286 and $(382), respectively.
The net actuarial loss and prior service credit for the defined
benefit pension plans that will be amortized from Accumulated
other comprehensive loss into net periodic benefit cost over the
next fiscal year are $20 and $(20), respectively. The net actuarial
loss and prior service credit for the retiree health benefit plans that
will be amortized from accumulated other comprehensive loss into
net periodic benefit cost over the next fiscal year are less than $1
and $(42) respectively.
Pension plan assets consist of both defined benefit plan assets and
assets legally restricted to the TRA accounts. The combined
investment results for these plans, along with the results for our
other defined benefit plans, are shown above in the actual return
on plan assets caption. To the extent that investment results relate
to TRA, such results are charged directly to these accounts as a
component of interest cost.
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