Analyzing and Interpreting Pension Disclosures Assume E.I. Du Pont De Nemours and Co.'s 10-K report has the following disclosures related to its retirement plans ($ millions). Pension Benefits ($ millions) 2010 2009 Change in benefit obligation Benefit obligation at beginning of year $ 22,849 $ 22,935 Service cost 383 388 Interest cost 1,228 1,192 Plan participants' contributions 13 9 Acturarial loss (gain) (728) (244) Benefits paid (1,544) (1,506) Amendments -- (1) Net effects of acquisitions/divestitures 5 76 Benefit obligation at end of year $ 22,206 $ 22,849 Change in plan assets Fair value of plan assets at beginning of year $ 22,249 $ 20,132 Actual gain on plan assets 1,927 3,306 Employer contributions 277 280 Plan participants' contributions 13 9 Benefits paid (1,544) (1,506) Net effects of acquisitions/divestitures -- 28 Fair value of plan assets at end of year $ 22,922 $ 22,249 Funded status U.S. plans with plan assets $ 2,365 $ 892 Non-U.S. plans with plan assets (90) (317) All other plans (1,559) (1,515) Total $ 716 $ (940) Pension Benefits (in millions) Components of net periodic benefit cost (credit) 2010 2009 2008 Net periodic benefit Service cost $ 383 $ 388 $ 349 Interest cost 1,228 1,192 1,160 Expected return on plan assets (1,799) (1,648) (1,416) Amortization of loss 117 227 303 Amortization of prior service cost 18 29 37 Curtailment/settlement (gain) loss -- 3 (1) Net periodic benefit cost $ (53) $ 191 $ 432 Weighted-avg. assumptions used for net periodic benefit cost for years ended Dec. 31 2010 2009 Discount Rate 5.56% 5.43% Expected return on plan assets 8.09% 8.18% Rate of compensation increase 4.32% 4.31% The following benefit payments, which reflect future service, as appropriate, are expected to be paid: ($ millions) Pension Benefits 2008 $ 1,525 2009 1,507 2010 1,493 2011 1,500 2012 1,500 Years 2013-2017 7,690 HINT: Do not use negative signs with your answers. (a) How much pension expense (revenue) does DuPont report in its 2010 income statement? DuPont reports pension Answer expense revenue of $Answer million. (b) DuPont reports a $1,799 million expected return on pension plan assets as an offset to 2010 pension expense. Estimate what the expected return would have been had DuPont not changed the assumption on the expected return in 2010. (Round your dollar answers to the nearest whole number.) $Answer million What is DuPont's actual gain or loss realized on its 2010 pension plan assets? Answer ($ million) Answer gain loss
Analyzing and Interpreting Pension Disclosures
Assume E.I. Du Pont De Nemours and Co.'s 10-K report has the following disclosures related to its retirement plans ($ millions).
|
Pension Benefits |
||
|
($ millions) |
2010 |
2009 |
|
Change in benefit obligation |
||
|
Benefit obligation at beginning of year |
$ 22,849 |
$ 22,935 |
|
Service cost |
383 |
388 |
|
Interest cost |
1,228 |
1,192 |
|
Plan participants' contributions |
13 |
9 |
|
Acturarial loss (gain) |
(728) |
(244) |
|
Benefits paid |
(1,544) |
(1,506) |
|
Amendments |
-- |
(1) |
|
Net effects of acquisitions/divestitures |
5 |
76 |
|
Benefit obligation at end of year |
$ 22,206 |
$ 22,849 |
|
Change in plan assets |
||
|
Fair value of plan assets at beginning of year |
$ 22,249 |
$ 20,132 |
|
Actual gain on plan assets |
1,927 |
3,306 |
|
Employer contributions |
277 |
280 |
|
Plan participants' contributions |
13 |
9 |
|
Benefits paid |
(1,544) |
(1,506) |
|
Net effects of acquisitions/divestitures |
-- |
28 |
|
Fair value of plan assets at end of year |
$ 22,922 |
$ 22,249 |
|
Funded status |
||
|
U.S. plans with plan assets |
$ 2,365 |
$ 892 |
|
Non-U.S. plans with plan assets |
(90) |
(317) |
|
All other plans |
(1,559) |
(1,515) |
|
Total |
$ 716 |
$ (940) |
|
Pension Benefits |
|||
|
Components of net periodic benefit cost (credit) |
2010 |
2009 |
2008 |
|
Net periodic benefit |
|||
|
Service cost |
$ 383 |
$ 388 |
$ 349 |
|
Interest cost |
1,228 |
1,192 |
1,160 |
|
Expected return on plan assets |
(1,799) |
(1,648) |
(1,416) |
|
Amortization of loss |
117 |
227 |
303 |
|
Amortization of prior service cost |
18 |
29 |
37 |
|
Curtailment/settlement (gain) loss |
-- |
3 |
(1) |
|
Net periodic benefit cost |
$ (53) |
$ 191 |
$ 432 |
|
Weighted-avg. assumptions used for net periodic benefit cost for years ended Dec. 31 |
2010 |
2009 |
|
Discount Rate |
5.56% |
5.43% |
|
Expected return on plan assets |
8.09% |
8.18% |
|
Rate of compensation increase |
4.32% |
4.31% |
The following benefit payments, which reflect future service, as appropriate, are expected to be paid:
|
($ millions) |
Pension Benefits |
|
2008 |
$ 1,525 |
|
2009 |
1,507 |
|
2010 |
1,493 |
|
2011 |
1,500 |
|
2012 |
1,500 |
|
Years 2013-2017 |
7,690 |
HINT: Do not use negative signs with your answers.
(a) How much pension expense (revenue) does DuPont report in its 2010 income statement?
DuPont reports pension Answer expense revenue
of $Answer million.
(b) DuPont reports a $1,799 million expected return on pension plan assets as an offset to 2010 pension expense. Estimate what the expected return would have been had DuPont not changed the assumption on the expected return in 2010. (Round your dollar answers to the nearest whole number.)
$Answer million
What is DuPont's actual gain or loss realized on its 2010 pension plan assets?
Answer ($ million) Answer gain loss
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