Xerox 2009 Annual Report Download - page 75

73Xerox 2009 Annual Report
Notes to the Consolidated
Financial Statements
Dollars in millions, except per-share data and unless otherwise indicated.
Pension Benefits Retiree Health
Year Ended December 31,
2009 2008 2007 2009 2008 2007
Components of Net Periodic Benefit Cost:
Service cost $ 173 $ 209 $ 237 $ 7 $ 14 $ 17
Interest cost(1) 508 (5) 578 60 84 87
Expected return on plan assets(2) (523) (80) (668) — — —
Recognized net actuarial loss 25 36 75 — — 10
Amortization of prior service credit (21) (20) (20) (41) (21) (12)
Recognized curtailment/settlement loss 70 34 33 — — —
Net periodic defined benefit cost 232 174 235 26 77 102
Defined contribution plans 38 80 80 — — —
Total Net Periodic Benefit Costs $ 270 $ 254 $ 315 $ 26 $ 77 $ 102
Other Changes in Plan Assets and
Benefit Obligations Recognized in
Other Comprehensive Income:
Net actuarial loss (gain) $ 8 $ 1,062 $ (499) $ 126 $ (244) $ (114)
Prior service cost (credit) — 1 5 1 (219) —
Amortization of net actuarial (loss) gain (95) (70) (108) — — (10)
Amortization of prior service (cost) credit 21 20 20 41 21 12
Total Recognized in Other
Comprehensive Income(3) $ (66) $ 1,013 $ (582) $ 168 $ (442) $ (112)
Total Recognized in Net Periodic Benefit Cost
and Other Comprehensive Income $ 204 $ 1,267 $ (267) $ 194 $ (365) $ (10)
(1) Interest cost includes interest expense on non-TRA obligations of $390, $408 and $374 and interest expense (income) directly allocated to TRA participant accounts of
$118, $(413) and $204 for the years ended December 31, 2009, 2008 and 2007, respectively.
(2) Expected return on plan assets includes expected investment income on non-TRA assets of $405, $493 and $464 and actual investment income (expense) on TRA assets of
$118, $(413) and $204 for the years ended December 31, 2009, 2008 and 2007, 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, is included within the Consolidated Statements of Common Shareholders’ Equity. The net after-tax loss (gain) included in other comprehensive
(loss) income for the three years ended December 31, 2009 was $169, $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 $64 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 zero and
$(26), 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.
Plan Amendment
In December 2009, the U.K. Final Salary Pension Scheme was
amended to close the plan to future accrual effective January 1,
2014. Benefits earned up to January 1, 2014 will not be affected;
therefore, the amendment does not result in a material change
to the projected benefit obligation at the re-measurement date,
December 31, 2009. The amendment results in substantially all
participants becoming inactive; therefore, the amortization period
for actuarial gains and losses changes from the average remaining
service period of active members (approximately 10 years) to the
average remaining life expectancy of all members (approximately
27 years). As of December 31, 2009, the accumulated actuarial
losses for our U.K. plan amounted to $678.