Twenty-First Century Fox 2014 Annual Report Download - page 74

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The key assumptions used in developing the Company’s fiscal 2014, 2013 and 2012 net periodic pension
expense for its plans consist of the following:
2014 2013 2012
(in millions, except %)
Discount rate used to determine net periodic benefit cost .......................... 5.2 % 4.3 % 5.7 %
Assets:
Expected rate of return ................................................................................ 7.0 % 7.0 % 7.0 %
Expected return(a) ........................................................................................ $ 113 $ 110 $ 185
Actual return (a) ........................................................................................... 197 116  68
Gain/(Loss) ................................................................................................. $ 84 $ 6 $ (117)
One year actual return ................................................................................. 12.6 % 7.8 % 2.5 %
Five year actual return ................................................................................ 9.1 % 4.4 % 2.6 %
(a) Due to the Separation in fiscal 2013, information presented for fiscal 2014 and 2013 does not have any
expected returns or actual returns related to discontinued operations. Fiscal 2012 includes expected returns and
actual returns from discontinued operations of $82 million and $39 million, respectively.
The weighted average discount rate is volatile from year to year because it is determined based upon the
prevailing rates in the U.S. and Europe as of the measurement date. The Company will utilize a weighted average
discount rate of 4.5% in calculating the fiscal 2015 net periodic pension expense for its plans. The Company will use
a weighted average long-term rate of return of 7.0% for fiscal 2015 based principally on a combination of asset mix
and historical experience of actual plan returns. The accumulated net pre-tax losses on the Company’s pension plans
at June 30, 2014 were $794 million which increased from approximately $625 million at June 30, 2013. This
increase of $169 million was primarily due to the change in the discount rate partially offset by higher asset
performance. The accumulated pre-tax net losses at June 30, 2014 were primarily the result of changes in discount
rates and deferred asset losses. Lower discount rates increase present values of benefit obligations and increase the
Company’s deferred losses and also increase subsequent-year pension expense. Higher discount rates decrease the
present values of benefit obligations and reduce the Company’s accumulated net loss and also decrease subsequent-
year pension expense. These deferred losses are being systematically recognized in future net periodic pension
expense in accordance with ASC 715, “Compensation—Retirement Benefits.” Unrecognized losses in excess of
10% of the greater of the market-related value of plan assets or the plans’ projected benefit obligation (“PBO”) are
recognized over the average future service of the plan participants or average future life of the plan participants.
The Company made contributions of $100 million, $95 million, and $255 million to its pension plans in fiscal
2014, 2013, and 2012, respectively of which $100 million, $95 million, and $207 million related to continuing
operations, respectively. The majority of these contributions were voluntarily made to improve the funding status of
the plans which were impacted by the economic conditions noted above. Future plan contributions are dependent
upon actual plan asset returns, statutory requirements and interest rate movements. Assuming that actual plan returns
are consistent with the Company’s expected plan returns in fiscal 2015 and beyond, and that interest rates remain
constant, the Company would not be required to make any material statutory contributions to its primary U.S.
pension plans for the immediate future. The Company will continue to make voluntary contributions as necessary to
improve funded status.