Baker Hughes 2007 Annual Report Download - page 144

2007 Form 10-K 61
Information for the plans with ABOs in excess of plan assets is as follows at December 31:
U.S. Pension Benefits Non-U.S. Pension Benefits Other Postretirement Benefits
2007 2006 2007 2006 2007 2006
Projected benefit obligation $ 18.1 $ 19.5 $ 41.9 $ 355.1 n/a n/a
Accumulated benefit obligation 18.0 19.2 34.3 348.4 $ 155.8 $ 156.9
Fair value of plan assets – – 2.0 268.1 n/a n/a
Weighted average assumptions used to determine benefit obligations for these plans are as follows for the years ended
December 31:
U.S. Pension Benefits Non-U.S. Pension Benefits Other Postretirement Benefits
2007 2006 2007 2006 2007 2006
Discount rate 6.3% 6.0% 5.7% 5.0% 6.3% 6.0%
Rate of compensation increase 4.0% 4.0% 4.1% 3.9% n/a n/a
The development of the discount rate for our U.S. plans was based on a bond matching model whereby a hypothetical bond
portfolio of high-quality, fixed-income securities is selected that will match the cash flows underlying the projected benefit obliga-
tion. The discount rate assumption for our non-U.S. plans reflects the market rate for high-quality, fixed-income securities.
Accumulated Other Comprehensive Loss
The amounts recognized in accumulated other comprehensive loss consist of the following as of December 31:
U.S. Pension Benefits Non-U.S. Pension Benefits Other Postretirement Benefits
2007 2006 2007 2006 2007 2006
Net loss (gain) $ (9.5) $ 38.8 $ 74.7 $ 123.4 $ 7.3 $ 11.5
Net prior service cost (credit) 4.6 6.4 0.2 0.2 5.4 6.4
Net transition obligation – – 0.1 0.1 – –
Total $ (4.9) $ 45.2 $ 75.0 $ 123.7 $ 12.7 $ 17.9
The estimated net loss and prior service cost 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 $1.9 million and $0.5 million, respectively. The
estimated prior service cost for the other postretirement benefits that will be amortized from accumulated other comprehensive
loss into net periodic benefit cost over the next fiscal year is $1.1 million.
Net Periodic Benefit Costs
The components of net periodic benefit cost are as follows for the years ended December 31:
U.S. Pension Benefits Non-U.S. Pension Benefits Other Postretirement Benefits
2007 2006 2005 2007 2006 2005 2007 2006 2005
Service cost $ 31.6 $ 26.2 $ 22.8 $ 3.0 $ 3.4 $ 2.2 $ 7.5 $ 7.4 $ 6.1
Interest cost 15.7 12.8 11.9 18.3 15.0 13.8 9.0 9.7 9.7
Expected return
on plan assets (34.3) (31.6) (25.9) (19.5) (16.0) (13.2) – – –
Amortization of
prior service cost 0.6 0.1 – – – – 1.0 0.8 0.6
Amortization of net loss 0.6 0.8 2.6 2.9 2.6 2.6 – 2.1 2.0
Special termination
benefit cost – – 0.7 – – – – – –
Settlement/
curtailments loss – – – – – 0.2 – – –
Net periodic benefit cost $ 14.2 $ 8.3 $ 12.1 $ 4.7 $ 5.0 $ 5.6 $ 17.5 $ 20.0 $ 18.4
Weighted average assumptions used to determine net periodic benefit costs for these plans are as follows for the years ended
December 31:
U.S. Pension Benefits Non-U.S. Pension Benefits Other Postretirement Benefits
2007 2006 2005 2007 2006 2005 2007 2006 2005
Discount rate 6.0% 5.5% 6.0% 5.0% 4.9% 5.7% 6.0% 5.5% 6.0%
Expected rate of return
on plan assets 8.5% 8.5% 8.5% 6.9% 6.9% 7.4% n/a n/a n/a
Rate of
compensation increase 4.0% 4.0% 3.5% 3.9% 3.5% 3.5% n/a n/a n/a