Southwest Airlines 2004 Annual Report Download - page 65

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SOUTHWEST AIRLINES CO.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Ì (Continued)
2004, the Company oÅered an early-out option to The Company's periodic postretirement beneÑt
substantially all Employees, primarily in an eÅort to cost for the years ended December 31, 2004, 2003, and
alleviate overstaÇng in certain areas of the Company. 2002, included the following:
As a result of the reduction in headcount associated with 2004 2003 2002
these events, the Company remeasured its beneÑt obli- (In millions)
gation, resulting in the 2004 gain. Service cost ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $10 $ 9 $6
Interest costÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 5 4 2
The assumed healthcare cost trend rates have a Amortization of prior service
signiÑcant eÅect on the amounts reported for the Com- cost ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2 2 1
pany's plan. A one-percent change in all healthcare cost Recognized actuarial lossÏÏÏÏÏÏ 1 1 Ì
trend rates used in measuring the APBO at Decem-
ber 31, 2004, would have the following eÅects: Net periodic postretirement
beneÑt cost ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $18 $16 $9
1% Increase 1% Decrease
(In millions)
Unrecognized prior service cost is expensed using a
Increase (decrease) in total straight-line amortization of the cost over the average
service and interest costs $1 $(1)
future service of Employees expected to receive beneÑts
Increase (decrease) in the under the plan. The Company used the following
APBO ÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $6 $(6) actuarial assumptions to account for its postretirement
beneÑt plans at December 31:
The Company's plans are unfunded, and beneÑts
2004 2003 2002
are paid as they become due. For the years ended
December 31, 2004 and 2003, both beneÑts paid and Wtd-average discount rate ÏÏ 6.25% 6.75% 7.25%
Company contributions to the plans were $1 million in Assumed healthcare cost
each year. Estimated future beneÑt payments expected trend rate(1)ÏÏÏÏÏÏÏÏÏÏ 10.00% 10.00% 9.00%
to be paid for each of the next Ñve years are $2 million
in 2005, $3 million in 2006, $5 million in 2007, (1) The assumed healthcare cost trend rate is assumed
$7 million in 2008, $9 million in 2009, and $78 million to decrease to 9.00% for 2005, then decline gradu-
for the next Ñve years thereafter. ally to 5% by 2013 and remain level thereafter.
The following table shows the calculation of the
accrued postretirement beneÑt cost recognized in
""Other deferred liabilities'' on the Company's Consoli-
dated Balance Sheet at December 31, 2004 and 2003:
2004 2003
(In millions)
Funded status ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $(80) $(77)
Unrecognized net actuarial loss ÏÏÏÏÏ 4 16
Unrecognized prior service cost ÏÏÏÏÏ 8 10
Cost recognized on Consolidated
Balance Sheet ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $(68) $(51)
47