US Bank 2009 Annual Report Download - page 103

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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 years ended December 31 for the retirement plans:
(Dollars in Millions) 2009 2008 2007 2009 2008 2007
Pension Plans Postretirement Welfare Plan
Components Of Net Periodic Benefit Cost
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 80 $ 76 $ 70 $ 6 $ 6 $ 6
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 152 141 126 11 12 14
Expected return on plan assets . . . . . . . . . . . . . . . . . . . (215) (224) (199) (5) (6) (6)
Prior service cost (credit) and transition obligation (asset)
amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6) (6) (6) – – –
Actuarial loss (gain) amortization . . . . . . . . . . . . . . . . . . 49 32 63 (7) (4) –
Net periodic benefit cost. . . . . . . . . . . . . . . . . . . . . . . . . . $ 60 $ 19 $ 54 $ 5 $ 8 $14
Other Changes In Plan Assets And Benefit
Obligations Recognized In Other Comprehensive
Income (Loss)
Current year actuarial gain (loss) . . . . . . . . . . . . . . . . . . $ 230 $(1,419) $ 258 $(11) $35 $37
Actuarial loss (gain) amortization . . . . . . . . . . . . . . . . . . 49 32 63 (7) (4) –
Current year prior service credit (cost) . . . . . . . . . . . . . . 35 – – – – –
Prior service cost (credit) and transition obligation (asset)
amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (6) (6) (6) – – –
Total recognized in other comprehensive income (loss) . . . . . $ 308 $(1,393) $ 315 $(18) $31 $37
Total recognized in net periodic benefit cost and other
comprehensive income (loss) (a)(b) . . . . . . . . . . . . . . . . $ 248 $(1,412) $ 261 $(23) $23 $23
(a) The pretax estimated net loss and prior service credit for the pension plans that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost in
2010 are $64 million and $12 million, respectively.
(b) The pretax estimated net gain for the postretirement welfare plan that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost in 2010 is
$5 million.
The following table sets forth weighted average assumptions used to determine the projected benefit obligations at
December 31:
(Dollars in Millions) 2009 2008 2009 2008
Pension Plans Postretirement Welfare Plan
Discount rate (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2% 6.4% 5.6% 6.3%
Rate of compensation increase (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.0 3.0 * *
Health care cost trend rate for the next year (c)
Prior to age 65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.0% 7.0%
After age 65 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.0 21.0
Effect on accumulated postretirement benefit obligation
One percent increase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8 $ 11
One percent decrease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8) (10)
(a) For 2009, the discount rates were developed using Towers Watson’s cash flow matching bond model with a modified duration for the qualified pension plans, non-qualified pension
plans and postretirement welfare plan of 13.4, 10.5 and 8.2 years, respectively. For 2008, the discount rates were developed using Towers Watson’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.
(b) Determined on a liability weighted basis.
(c) The pre-65 and post-65 rates are assumed to decrease gradually to 5.5 percent by 2017 and 6.0 percent by 2015, respectively, and remain at these levels thereafter.
* Not applicable
U.S. BANCORP 101