US Bank 2008 Annual Report Download - page 98

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The following table sets forth the components of net periodic benefit cost and other amounts recognized in accumulated other
comprehensive income (loss) for the retirement plans:
(Dollars in Millions) 2008 2007 2006 2008 2007 2006
Pension Plans Postretirement Welfare Plan
Components Of Net Periodic Benefit Cost
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 76 $ 70 $ 70 $ 6 $ 6 $ 5
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141 126 118 12 14 13
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . (224) (199) (191) (6) (6) (1)
Prior service (credit) cost and transition (asset) obligation
amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6) (6) (6) – – –
Actuarial (gain) loss amortization. . . . . . . . . . . . . . . . . . . . 32 63 90 (4) – –
Net periodic benefit cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 19 $ 54 $ 81 $ 8 $ 14 $ 17
Other Changes In Plan Assets And Benefit Obligations
Recognized In Accumulated Other Comprehensive
Income (Loss)
Current year actuarial (gain) loss. . . . . . . . . . . . . . . . . . . . $1,419 $(258) $(154) $(35) $(37) $(15)
Actuarial (gain) loss amortization. . . . . . . . . . . . . . . . . . . . (32) (63) (90) 4 – –
Prior service (credit) cost and transition (asset) obligation
amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 666–––
Total recognized in accumulated other comprehensive income
(loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,393 $(315) $(238) $(31) $(37) $(15)
Total recognized in net periodic benefit cost and accumulated
other comprehensive income (loss) (a)(b) . . . . . . . . . . . . . . $1,412 $(261) $(157) $(23) $(23) $ 2
(a) The estimated net loss and prior service credit for the defined benefit pension plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost
in 2009 are $49 million and $(6) million, respectively.
(b) The estimated net gain for the postretirement welfare plan that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost in 2009 is $7 million.
The following table sets forth weighted average assumptions used to determine end of year obligations:
(Dollars in Millions) 2008 2007 2008 2007
Pension Plans Postretirement Welfare Plan
Discount rate(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4% 6.3% 6.3% 6.1%
Rate of compensation increase, determined on a liability weighted basis. . . . . . . . . . . . . . . . 3.0 3.2 * *
Health care cost trend rate (b)
Prior to age 65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.0% 8.0%
After age 65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21.0 9.0
Effect on accumulated postretirement benefit obligation
One percent increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11 $ 12
One percent decrease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10) (11)
(a) For 2008, the discount rate was developed using Towers Perrin’s cash flow matching bond model with a modified duration for the pension plans and postretirement welfare plan of 12.5 and
8.1 years, respectively. For 2007, the discount rate was developed using Towers Perrin’s cash flow matching bond model with a modified duration for the pension plans and postretirement
welfare plan of 12.5 and 7.9 years, respectively.
(b) The pre-65 and post-65 rates are assumed to decrease gradually to 5.5 percent by 2011 and 6.0 percent by 2014, respectively, and remain at these levels thereafter.
*Not applicable
The following table sets forth weighted average assumptions used to determine net periodic benefit cost:
(Dollars in Millions) 2008 2007 2006 2008 2007 2006
Pension Plans Postretirement Welfare Plan
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3% 6.0% 5.7% 6.1% 6.0% 5.7%
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . . 8.9 8.9 8.9 3.5 3.5 3.5
Rate of compensation increase . . . . . . . . . . . . . . . . . . . . . . . . . 3.2 3.5 3.5 * * *
Health care cost trend rate (a)
Prior to age 65. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.0% 8.0% 9.0%
After age 65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.0 10.0 11.0
Effect on total of service cost and interest cost
One percent increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1 $ 1 $ 1
One percent decrease. . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1) (1) (1)
(a) The pre-65 and post-65 rates are assumed to decrease gradually to 5.5 percent by 2013 and 6.0 percent by 2014, respectively, and remain at these levels thereafter.
*Not applicable
96 U.S. BANCORP