Jack In The Box 2014 Annual Report Download - page 70
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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 September 28, 2014, September 29, 2013 and September 30, 2012, respectively, we used the following
weighted-average assumptions:
Discount rate
4.60%
5.37%
4.34%
Rate of future pay increases
3.50%
3.50%
3.50%
Discount rate
4.36%
4.88%
4.34%
Rate of future pay increases
3.50%
3.50%
3.50%
Discount rate
4.43%
5.04%
4.34%
Discount rate
5.37%
4.34%
4.78%
Long-term rate of return on assets
7.25%
7.25%
7.25%
Rate of future pay increases
3.50%
3.50%
3.50%
Discount rate
4.88%
4.34%
5.60%
Rate of future pay increases
3.50%
3.50%
3.50%
Discount rate
5.04%
4.34%
5.60%
____________________________
(1) Determined as of end of year.
(2) During fiscal year 2012, the discount rate and long-term rate of return on plan assets used to determine net period benefit costs were updated as of June 30, 2012, in
connection with the VERP re-measurement from the rates determined at the beginning of the year of 5.60% and 7.75%, respectively.
(3) Determined as of beginning of year.
The assumed discount rates were 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 have decreased fiscal 2014 earnings before income
taxes by $2.1 million and $0.8 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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