Jack In The Box 2011 Annual Report Download - page 70
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Table of Contents
Assumptions — We determine our actuarial assumptions on an annual basis. In determining the present values of our benefit obligations and net
periodic benefit costs as of and for the fiscal years ended October 2, 2011, October 3, 2010 and September 27, 2009, respectively, we used the
following weighted-average assumptions:
Discount rate 5.60% 5.82% 6.16%
Rate of future pay increases 3.50 3.50 3.50
Discount rate 5.60% 5.82% 6.16%
Rate of future pay increases 3.50 3.50 5.00
Discount rate 5.60% 5.82% 6.16%
Discount rate 5.82% 6.16% 7.30%
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 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%
(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 30 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 have decreased fiscal 2011 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.
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