HP 2015 Annual Report Download - page 118

Table of Contents
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

HP's net pension and post-retirement benefit (credit) cost recognized in the Consolidated Statements of Earnings was as follows:
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In January 2015, HP offered certain terminated vested participants of the U.S. HP Pension Plan the option of receiving their pension benefit in a one-time
voluntary lump sum within a specified window. Approximately 50% of the eligible participants elected to receive their benefits and as a result the pension
plan trust paid $826 million in lump sum payments to these participants in fiscal 2015. As a result of the lump sum program, HP recognized a settlement
expense of approximately $96 million and a remeasurement of the U.S. HP Pension Plan was required. The remeasurement also resulted in an additional net
periodic benefit cost of $45 million for fiscal 2015 which was recognized in the Consolidated Statements of Earnings along with the settlement expense.
During fiscal 2015, certain events, primarily the Separation and settlement as a result of the lump sum program, required multiple pension plans to be
remeasured during the year. Thus, the assumptions used to calculate the net benefit (credit) cost for the remaining portion of the fiscal year after
remeasurement were re-determined based on then current market conditions.
The weighted-average assumptions used to calculate net benefit (credit) cost were as follows:
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           
 

 

 

 
   
Service cost $ 1 $ 1 $ 1 $ 326 $ 308 $ 337 $ 5 $ 5 $ 6
Interest cost 566 569 560 622 737 676 29 32 31
Expected return on plan assets (818) (811) (845) (1,166) (1,140) (1,007) (39) (34) (34)
Amortization and deferrals:
Actuarial loss (gain) 54 15 77 441 318 341 (11) (10) 2
Prior service benefit — — — (21) (23) (27) (20) (41) (67)
Net periodic benefit (credit) cost (197) (226) (207) 202 200 320 (36) (48) (62)
Curtailment gain — — — — (7) (3) — — (7)
Settlement loss 114 1 12 4 12 18 — — —
Special termination benefits — — — 25 50 31 1 32 (5)
Net benefit (credit) cost $ (83) $ (225) $ (195) $ 231 $ 255 $ 366 $ (35) $ (16) $ (74)
 
           
 

 

 

 
Discount rate 4.4% 4.9% 4.1% 3.0% 3.9% 3.8% 3.6% 3.9% 3.0%
Expected increase in compensation levels 2.0% 2.0% 2.0% 2.4% 2.4% 2.4% — — —
Expected long-term return on plan assets 7.2% 7.7% 7.8% 6.9% 7.0% 7.2% 9.0% 8.9% 9.0%
Source: HP INC, 10-K, December 16, 2015 Powered by Morningstar® Document Research℠
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