Graco 2008 Annual Report Download - page 62

Newell Rubbermaid Inc. 2008 Annual Report
60
U.S. International
2008 2007 2008 2007
Weighted-average assumptions used to determine benefit obligation:
Discount rate 6.25% 6.25% 6.01% 5.53%
Long-term rate of compensation increase 4.00% 4.00% 3.94% 4.24%
Net pension cost includes the following components for the years ended December 31, (in millions):
U.S. International
2008 (1) 2007 (1) 2006 (1) 2008 (1) 2007 (1) 2006 (1)
Service cost-benefits earned during the year $ 4.5 $ 3.8 $ 2.8 $ 6.6 $ 7.3 $ 7.3
Interest cost on projected benefit obligation 52.2 51.2 51.4 29.2 27.7 24.5
Expected return on plan assets (57.7) (58.6) (59.5) (28.5) (27.4) (24.7)
Amortization of:
Prior service cost 1.3 1.1 1.0 — — —
Actuarial loss 7.1 7.6 7.8 3.6 4.5 4.9
Curtailment, settlement and special termination benefit costs — — 0.2 — (2.8) —
Net pension cost $ 7.4 $ 5.1 $ 3.7 $ 10.9 $ 9.3 $ 12.0
(1) For plans with September 30 measurement dates prior to January 1, 2008, the 2008 amount represents 12 months of net pension costs for the period January 1, 2008 to December 31, 2008,
while the 2007 and 2006 amounts represent 12 months of net pension costs for the periods October 1, 2006 to September 30, 2007 and October 1, 2005 to September 30, 2006, respectively.
Net pension cost activity for the 3 months ended December 31, 2007 is included in the SFAS 158 adjustment table above.
U.S. International
2008 2007 2006 2008 2007 2006
Weighted-average assumptions used to determine
net periodic benefit cost:
Discount rate 6.25% 6.00% 5.75% 5.52% 5.16% 4.90%
Long-term rate of return on plan assets 8.50% 8.50% 8.50% 6.77% 6.33% 6.91%
Long-term rate of compensation increase 4.00% 4.50% 4.50% 4.31% 3.85% 3.71%
The Company’s defined benefit pension plans weighted-average asset allocation at December 31, 2008 and 2007, by asset category, are as follows:
U.S. International
2008 2007 2008 2007
Equity securities 55.5% 69.1% 20.3% 21.8%
Debt securities 28.2% 20.5% 16.3% 52.5%
Real estate 7.3% 4.5% 2.4% 2.4%
Cash 0.6% 0.5% 38.9% 10.9%
Other 8.4% 5.4% 22.1% 12.4%
Total 100.0% 100.0% 100.0% 100.0%
The Company employs a total return investment approach whereby a mix of equities and fixed income investments is used to maximize the long-term
return of plan assets for a prudent level of risk. Risk tolerance is established through consideration of plan liabilities, plan funded status, and corporate financial
condition. The investment portfolio is comprised of a diversified blend of equity, real estate, fixed income investments, inflation and interest rate hedges, and
cash investments. Equity investments include large and small market capitalization stocks as well as growth, value and international stock positions.
The Company employs a building block approach in determining the long-term rate of return for plan assets. Historical markets are studied and
long-term historical relationships between equities and fixed-income are preserved consistent with the widely accepted capital market principle that assets
with higher volatility generate a greater return over the long run. Current market factors, such as inflation and interest rates, are evaluated before long-term
capital market assumptions are determined. The long-term portfolio return is established via a building block approach with proper consideration of
diversification and rebalancing. Peer data and historical returns are reviewed to check for reasonableness and appropriateness.
The Company expects to make cash contributions of approximately $76.4 million to its defined benefit pension plans in 2009.