Verizon Wireless 2010 Annual Report Download - page 65

Download and view the complete annual report

Please find page 65 of the 2010 Verizon Wireless annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 80

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80

Notes to Consolidated Financial Statements continued
63
Net Periodic Cost
The following table summarizes the benefit (income) cost related to our
pension and postretirement health care and life insurance plans:
(dollars in millions)
Pension Health Care and Life
Years Ended December 31, 2010 2009 2008 2010 2009 2008
Service cost $ 353 $ 384 $ 382 $ 305 $ 311 $ 306
Amortization of prior service cost 109 112 62 375 401 395
Subtotal 462 496 444 680 712 701
Expected return on plan assets (2,176) (2,216) (3,444) (252) (205) (331)
Interest cost 1,797 1,924 1,966 1,639 1,766 1,663
Subtotal 83 204 (1,034) 2,067 2,273 2,033
Remeasurement (gain) loss, net (166) (515) 13,946 758 (901) 1,069
Net periodic benefit (income) cost (83) (311) 12,912 2,825 1,372 3,102
Curtailment and termination benefits 860 1,371 32 386 532 31
Total $ 777 $ 1,060 $ 12,944 $ 3,211 $ 1,904 $ 3,133
Other pre-tax changes in plan assets and benefit obligations recognized
in other comprehensive (income) loss are as follows:
(dollars in millions)
Pension Health Care and Life
At December 31, 2010 2009 2010 2009
Prior service cost $ (336) $ (51) $ (2,859) $ (167)
Reversal of amortization items
Prior service cost (109) (112) (375) (401)
Total recognized in other comprehensive (income) loss (pretax) $ (445) $ (163) $ (3,234) $ (568)
The estimated prior service cost for the defined benefit pension plans
that will be amortized from Accumulated other comprehensive income
into net periodic benefit cost over the next fiscal year is $0.1 billion. The
estimated prior service cost for the defined benefit postretirement plans
that will be amortized from Accumulated other comprehensive loss into
net periodic benefit cost over the next fiscal year is ($0.1 billion).
Assumptions
The weighted-average assumptions used in determining benefit obliga-
tions follow:
Pension Health Care and Life
At December 31, 2010 2009 2010 2009
Discount rate 5.75% 6.25% 5.75% 6.25%
Rate of compensation increases 3.00 4.00 N/A N/A
The weighted-average assumptions used in determining net periodic
cost follow:
Pension Health Care and Life
Years Ended December 31, 2010 2009 2008 2010 2009 2008
Discount rate 6.25% 6.75% 6.50% 6.25% 6.75% 6.50%
Expected return on plan assets 8.50 8.50 8.50 8.25 8.25 8.25
Rate of compensation increase 4.00 4.00 4.00 N/A N/A 4.00
In order to project the long-term target investment return for the total
portfolio, estimates are prepared for the total return of each major asset
class over the subsequent 10-year period, or longer. Those estimates are
based on a combination of factors including the current market interest
rates and valuation levels, consensus earnings expectations, historical
long-term risk premiums and value-added. To determine the aggregate
return for the pension trust, the projected return of each individual asset
class is then weighted according to the allocation to that investment area
in the trust’s long-term asset allocation policy.