Jack In The Box 2010 Annual Report Download - page 64

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Table of Contents


September 27, 2009 and September 28, 2008, respectively, we used the following weighted-average assumptions:
  
 

Discount rate 5.82% 6.16% 7.30%
Rate of future pay increases 3.50 3.50 3.50

Discount rate 5.82% 6.16% 7.30%
Rate of future pay increases 3.50 5.00 5.00

Discount rate 5.82% 6.16% 7.30%
 

Discount rate 6.16% 7.30% 6.50%
Long-term rate of return on assets 7.75 7.75 7.75
Rate of future pay increases 3.50 3.50 3.50

Discount rate 6.16% 7.30% 6.50%
Rate of future pay increases 5.00 5.00 5.00

Discount rate 6.16% 7.30% 6.50%
(1) Determined as of end of year.
(2) Determined as of beginning of year.
The assumed discount rate was determined by considering the average of pension yield curves constructed of a population of high-
quality bonds with a Moody’s or Standard and Poor’s rating of “AA” or better whose cash flow from coupons and maturities match
the year-by year projected benefit payments from the plans. Since benefit payments typically extend beyond the date of the longest
maturing bond, cash flows beyond 30 years were discounted back to the 30th year and then matched like any other payment.
The assumed expected long-term rate of return on assets is the weighted average rate of earnings expected on the funds invested or to
be invested to provide for the pension obligations. The long-term rate of return on assets was determined taking into consideration
our projected asset allocation and economic forecasts prepared with the assistance of our actuarial consultants.
The assumed discount rate and expected long-term rate of return on assets have a significant effect on amounts reported for our
pension and postretirement plans. A quarter percentage point decrease in the discount rate and long-term rate of return used would
decrease earnings before income taxes by $2.7 million and $0.7 million, respectively.
The assumed average rate of compensation increase is the average annual compensation increase expected over the remaining
employment periods for the participating employees.
For measurement purposes, the weighted-average assumed health care cost trend rates for our postretirement health plans were as
follows for each fiscal year:
 
Health care cost trend rate for next year:
Participants under age 65 7.75% 8.00%
Participants age 65 or older 7.25% 7.50%
Rate to which the cost trend rate is assumed to decline 4.50% 5.00%
Year the rate reaches the ultimate trend rate 2028 2021
F-24