Question
Analyzing and Interpreting Pension and Health Care Footnote Assume Xerox reports the following pension and retiree health care (Other) footnote as part of its 10-K
Analyzing and Interpreting Pension and Health Care Footnote
Assume Xerox reports the following pension and retiree health care ("Other") footnote as part of its 10-K report.
| Pension Benefits | Retiree Health | |||
|---|---|---|---|---|
| (in millions) | 2010 | 2009 | 2010 | 2009 |
| Change in Benefit Obligation | ||||
| Benefit obligation, January 1 | $ 10,467 | $ 10,302 | $ 1,592 | $ 1,653 |
| Service cost | 237 | 244 | 17 | 19 |
| Interest cost | 578 | 732 | 87 | 92 |
| Plan participants' contributions | 12 | 13 | 20 | 19 |
| Plan amendments | 11 | (234) | -- | 31 |
| Acturarialgain | (508) | (85) | (114) | (105) |
| Currency exchange rate changes | 331 | 564 | 21 | -- |
| Curtailments | (1) | (2) | -- | -- |
| Benefits paid/settlements | (671) | (1,067) | (190) | (117) |
| Benefit obligation, December 31 | $ 10,456 | $ 10,467 | $ 1,433 | $ 1,592 |
| Change in Plan Assets | ||||
| Fair value of plan assets, January 1 | $ 9,217 | $ 8,444 | $ -- | $ -- |
| Actual return on plan assets | 701 | 959 | -- | -- |
| Employer contribution | 298 | 355 | 170 | 98 |
| Plan participants' contributions | 12 | 13 | 20 | 19 |
| Currency exchange rate changes | 280 | 513 | -- | -- |
| Benefits paid/settlements | (671) | (1,067) | (190) | (117) |
| Fair value of plan assets, December 31 | $ 9,837 | $ 9,217 | $ -- | $ -- |
| Net funded status (including under-funded and non-funded plans) at December 31 | $ (619) | $ (1,250) | $ (1,433) | $ (1,592) |
| Pension Benefits | Retiree Health | |||||
|---|---|---|---|---|---|---|
| (in millions) | 2010 | 2009 | 2008 | 2010 | 2009 | 2008 |
| Components of Net Periodic Benefit Cost | ||||||
| Defined benefit plans | ||||||
| Service cost | $ 237 | $ 244 | $ 234 | $ 17 | $ 19 | $ 20 |
| Interest cost | 578 | 732 | 581 | 87 | 92 | 90 |
| Expected return on plan assets | (668) | (802) | (622) | -- | -- | -- |
| Recognized net acturial loss | 75 | 104 | 98 | 10 | 19 | 31 |
| Amortization of prior service credit | (20) | (18) | (3) | (12) | (13) | (24) |
| Recognized net transition obligation (asset) | -- | 2 | 1 | -- | -- | -- |
| Recognized curtailment/settlement loss | 33 | 93 | 54 | -- | -- | -- |
| Net periodic benefit cost | 235 | 355 | 343 | 102 | 117 | 117 |
| Defined contribution plans | 80 | 70 | 71 | -- | -- | -- |
| Total | $ 315 | $ 425 | $ 414 | $ 102 | $ 117 | $ 117 |
| Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income | ||||||
| Net acturarialloss (gain) | (499) | (114) | ||||
| Prior service cost (credit) | 5 | -- | ||||
| Amortization of net acturarial(loss) gain | (108) | (10) | ||||
| Amortizaion of prior service (cost) credit | 20 | 12 | ||||
| Total recognized in other comprehensive income | (582) | (112) | ||||
| Total Recognized in Net Periodic Benefit Cost and Other Comprehensive Income | $ (267) | $ (10) | ||||
(g) Show the computation of the 2010 funded status for the pension and health care plans.
Do not use negative signs with your answers. Pension : $9,837 million - ________ million = $_________million
Health care : $0 million - $________million = $_________million
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Financial Statement Analysis
Authors: K. R. Subramanyam, John Wild
11th edition
78110963, 978-0078110962
