Bemis Company 2007 Annual Report - IR Solutions

U.S. Pension Plans Non-U.S. Pension Plans
2008 Percentage 2008 Percentage
Target of Plan Assets Target of Plan Assets
Asset Category Allocation 2007 2006 Allocation 2007 2006
Equity Securities 70% 76% 79% 42% 43% 47%
Debt Securities 30% 20% 20% 25% 23% 25%
Other 4% 1% 33% 34% 28%
Total 100% 100% 100% 100% 100% 100%
The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:
(in thousands) U.S. Pension Plans Non-U.S. Pension Plans
2008 $24,460 $1,185
2009 26,887 1,932
2010 28,767 3,633
2011 35,885 3,509
2012 32,786 1,720
Years 2013-2017 176,702 27,598
As of January 1, 2008, we have assumed that the expected long-term rate of return on plan assets will be 8.50 percent. This is a
decrease from the 8.75 percent level assumed for 2007. To develop the expected long-term rate of return on assets assumption, we
considered historical returns and future expectations. Using historical long-term investment periods of 10, 15, and 20 years, our pension
plan assets have earned compound annual rates of return of 6.3 percent, 9.0 percent, and 9.8 percent, respectively. Using our target asset
allocation for plan assets of 70 percent equity securities and 30 percent fixed income securities, our outside actuaries have used their
independent economic model to calculate a range of expected long-term rates of return and have determined our assumptions to be
reasonable.
At the end of each year, we determine the discount rate to be used to calculate the present value of pension plan liabilities. This
discount rate is an estimate of the current interest rate at which pension liabilities could be effectively settled at the end of the year. In
estimating this rate, we look to rates of return on high quality, fixed income investments that receive one of the two highest ratings given
by a recognized ratings agency. For the years ended December 31, 2007 and 2006, we determined this rate to be 6.25 percent and 5.75
percent, respectively.
For our non-U.S. pension plans we follow similar methodologies in determining the appropriate expected rates of return on
assets and discount rates, to be used in our actuarial calculations for the pension plans offered in each individual country. We tailor each
of these assumptions in accordance with the historical market performance and prevailing market expectations for each respective
country. As a result, each pension plan contains unique assumptions, which reflect the general market environment within each
respective country, and are often quite different from the corresponding assumptions applied to our U.S. pension plans.
Note 7 - POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
The Company sponsors several defined postretirement benefit plans that cover a majority of salaried and a portion of nonunion
hourly employees. These plans provide health care benefits and, in some instances, provide life insurance benefits. Except for one
closed-group plan, which is noncontributory, postretirement health care plans are contributory, with retiree contributions adjusted
annually. Life insurance plans are noncontributory.
Net periodic postretirement benefit costs included the following components for the years ended December 31, 2007, 2006, and
2005.
(in thousands) 2007 2006 2005
Service cost - benefits earned during the year $ 904 $1,107 $ 658
Interest cost on accumulated postretirement benefit obligation 1,178 1,569 1,157
Amortization of prior service cost 215 691 (51)
Recognized actuarial net (gain) or loss (62) 16 37
Net periodic postretirement benefit cost $2,235 $3,383 $1,801
follows:
Changes in benefit obligation and plan assets, and a reconciliation of the funded status at December 31, 2007 and 2006, are as
(in thousands) 2007 2006
Change in Benefit Obligation
Benefit obligation at the beginning of the year $21,054 $29,299
Service cost 904 1,107
Interest cost 1,178 1,569
Participant contributions 439 1,439
Plan amendments (5,888) (3,950)
Actuarial (gain) or loss (4,759) (5,956)
Medicare subsidies received 80
Benefits paid (1,418) (2,534)
Benefit obligation at the end of the year $11,510 $21,054
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