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Notes to the Consolidated
Financial Statements
Dollars in millions, except per-share data and unless otherwise indicated.
88 Xerox 2010 Annual Report
Aggregate information for pension plans with an Accumulated benefit
obligation in excess of plan assets is presented below:
2010 2009
Projected benefit obligation $ 5,726 $ 5,134
Accumulated benefit obligation 5,533 4,864
Fair value of plan assets 3,883 3,697
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).
Benefit plans pre-tax amounts recognized in AOCL:
Pension Benefits Retiree Health
2010 2009 2010 2009
Net actuarial loss
(gain) $ 1,867 $ 1,834 $ 54 $ 40
Prior service (credit)
cost (167) (169) (200) (144)
Total Pre-tax Loss
(Gain) $ 1,700 $ 1,665 $ (146) $ (104)
The Accumulated benefit obligation for all defined benefit pension plans
was $9,256 and $8,337 at December 31, 2010 and 2009, respectively.
Pension Benefits Retiree Health
2010 2009 2008 2010 2009 2008
Components of Net Periodic Benefit Cost:
Service cost $ 178 $ 173 $ 209 $ 8 $ 7 $ 14
Interest cost(1) 575 508 (5) 54 60 84
Expected return on plan assets(2) (570) (523) (80) — — —
Recognized net actuarial loss 71 25 36 — — —
Amortization of prior service credit (22) (21) (20) (30) (41) (21)
Recognized settlement loss 72 70 34 — — —
Defined Benefit Plans 304 232 174 32 26 77
Defined contribution plans 51 38 80 — — —
Total Net Periodic Benefit Costs 355 270 254 32 26 77
Other Changes in Plan Assets and Benefit
Obligations Recognized in Other
Comprehensive Income:
Net actuarial loss (gain)(3) $ 198 $ 8 $ 1,062 $ 13 $ 126 $ (244)
Prior service cost (credit)(4) (19) — 1 (86) 1 (219)
Amortization of net actuarial (loss) gain (143) (95) (70) — — —
Amortization of prior service (cost) credit 22 21 20 30 41 21
Total Recognized in Other
Comprehensive Income 58 (66) 1,013 (43) 168 (442)
Total Recognized in Net Periodic Benefit Cost
and Other Comprehensive Income $ 413 $ 204 $ 1,267 $ (11) $ 194 $ (365)
(1) Interest cost includes interest expense on non-TRA obligations of $381, $390 and $408 and interest expense (income) directly allocated to TRA participant accounts of $194,
$118 and $(413) for the years ended December 31, 2010, 2009 and 2008, respectively.
(2) Expected return on plan assets includes expected investment income on non-TRA assets of $376, $405 and $493 and actual investment income (expense) on TRA assets of
$194, $118 and $(413) for the years ended December 31, 2010, 2009 and 2008, respectively.
(3) Includes adjustments as a result of the plan amendments as well as the actual valuation results based on January 1, 2010 plan census data for the U.S. and Canadian defined
benefit plans and the U.S. retiree medical plan. Refer to the “Plan Amendment” section for additional information.
(4) Refer to “Plan Amendments” for additional information.