US Bank 2003 Annual Report Download - page 95

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The following table sets forth the components of net periodic benefit cost (income) for the retirement plans:
Pension Plans Post-Retirement Medical Plans
(Dollars in Millions) 2003 2002 2001 2003 2002 2001
Components of net periodic benefit cost (income)
Service cost***************************************** $ 56.5 $ 49.9 $ 50.5 $ 3.4 $ 3.3 $ 2.1
Interest cost***************************************** 107.7 115.1 118.7 18.5 19.1 17.9
Expected return on plan assets************************ (184.4) (214.1) (232.6) (1.2) (1.6) (1.0)
Net amortization and deferral************************** (6.7) (6.5) (10.7) (.2) (.1) .2
Recognized actuarial (gain) loss *********************** (.5) .8 (1.2) .5 — (.1)
Net periodic benefit cost (income)************************* (27.4) (54.8) (75.3) 21.0 20.7 19.1
Curtailment and settlement (gain) loss ***************** 3.5 (11.7) — — — —
Cost of special or contractual termination
benefits recognized ******************************* — 2.7 — — — —
Net periodic benefit cost (income) after curtailment and
settlement (gain) loss, and cost of special or contractual
termination benefits recognized************************ $ (23.9) $ (63.8) $ (75.3) $21.0 $20.7 $19.1
The following table sets forth the weighted-average plan assumptions and other data:
Company USBM Firstar
(Dollars in Millions) 2003 2002 2001 2001
Pension plan actuarial computations
Expected long-term return on plan assets (a) (b) ************************************ 8.9% 10.9% 11.0% 12.2%
Discount rate in determining benefit obligations (c) ********************************** 6.2 6.8 7.5 7.5
Rate of increase in future compensation ******************************************* 3.5 3.5 3.5 3.5
Post-retirement medical plan actuarial computations
Expected long-term return on plan assets ****************************************** 3.5% 5.0% 5.0% *%
Discount rate in determining benefit obligations ************************************* 6.2 6.8 7.5 7.5
Health care cost trend rate (d)
Prior to age 65 *************************************************************** 11.0% 12.0% 10.5% 10.5%
After age 65 ***************************************************************** 13.0 14.0 13.0 13.0
Effect of one percent increase in health care cost trend rate
Service and interest costs ******************************************************** $ 1.4 $ 1.3 $ 1.2 $ .4
Accumulated post-retirement benefit obligation ************************************** 22.5 19.7 13.1 6.0
Effect of one percent decrease in health care cost trend rate
Service and interest costs ******************************************************** $ (1.3) $ (1.2) $ (1.0) $ (.4)
Accumulated post-retirement benefit obligation ************************************** (20.0) (17.5) (13.6) (5.7)
(a) In connection with the Firstar/USBM merger, the asset management practices and investment strategies of the plan were conformed. At December 31, 2001, the investment asset
allocation was weighted toward equities and diversified by industry and companies with varying market capitalization levels.
(b) In light of the market performance and the results of the independent analysis, the Company made a decision to re-measure its pension plans effective in the third quarter of 2002
based on the current information at that time with respect to asset values, a reduction in the LTROR, discount rates, census data and other relevant factors. As a result of the
remeasurement, the LTROR was reduced to 9.9% for the last half of 2002.
(c) The discount rate at the measurement date approximated the Moody’s Aa corporate bond rating for projected benefit distributions with a duration of 12.2 and 11.6 years for 2003
and 2002, respectively.
(d) The pre-65 and post-65 rates are assumed to decrease gradually to 5.5% and 6.0% respectively by 2011 and remain at these levels thereafter.
The following table provides information for pension plans with benefit obligations in excess of plan assets:
(Dollars in Millions) 2003 2002
Benefit obligation****************************************************************************************** $188.7 $218.6
Accumulated benefit obligation****************************************************************************** 179.6 210.6
Fair value of plan assets *********************************************************************************** ——
U.S. Bancorp 93