Jack In The Box 2011 Annual Report Download - page 71

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Table of Contents


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 7.70% 7.75%
Participants age 65 or older 7.00% 7.25%
Rate to which the cost trend rate is assumed to decline:
Participants under age 65 5.10% 4.50%
Participants age 65 or older 4.50% 4.50%
Year the rate reaches the ultimate trend rate:
Participants under age 65 2040 2028
Participants age 65 or older 2028 2028
The assumed health care cost trend rate represents our estimate of the annual rates of change in the costs of the health care benefits currently provided by
our postretirement plans. The health care cost trend rate implicitly considers estimates of health care inflation, changes in health care utilization and
delivery patterns, technological advances and changes in the health status of the plan participants. The health care cost trend rate assumption has a
significant effect on the amounts reported. For example, a 1.0% change in the assumed health care cost trend rate would have the following effect (in
thousands):




Total interest and service cost $230 $(194)
Postretirement benefit obligation $ 3,756 $ (3,192)
Plan assets — Our investment philosophy is to (1) protect the corpus of the fund; (2) establish investment objectives that will allow the market value to
exceed the present value of the vested and unvested liabilities over time; while (3) obtaining adequate investment returns to protect benefits promised to
the participants and their beneficiaries. Our asset allocation strategy utilizes multiple investment managers in order to maximize the plan’s return while
minimizing risk. We regularly monitor our asset allocation, and senior financial management and the Finance Committee of the Board of Directors
review performance results at least semi-annually. Our plan asset allocation at the end of fiscal 2011 and target allocations are as follows:
   
Large cap equity 24% 25% 15% 35%
Small cap equity 16 15 5 25
International equity 15 15 5 25
Core fixed funds 29 25 15 35
Real return bonds 7 5 0 10
Alternative investments 6 5 0 10
Real estate 3 10 0 10
100% 100%
F-27