Aflac 2008 Annual Report Download - page 94

90 Aflac Incorporated Annual Report for 2008
yen. Profits repatriated by Aflac Japan to Aflac U.S. were as
follows for the years ended December 31:
In Dollars In Yen
(In millions of dollars and billions of yen) 2008 2007 2006 2008 2007 2006
Profit repatriation $ 598 $ 567 $ 442 ¥ 64.1 ¥ 67.8 ¥ 50.0
12. BENEFIT PLANS
Our basic employee defined-benefit pension plans cover
substantially all of our full-time employees in the United States
and Japan.
On December 31, 2006, we adopted the recognition and
disclosure provisions and early adopted the measurement
date provisions of SFAS 158. This pronouncement
requires the recognition of the funded status (i.e., the
difference between the fair value of plan assets and the
projected benefit obligations) of our benefit plans in our
financial statements, with a corresponding adjustment to
accumulated other comprehensive income, net of tax. The
adjustment to accumulated other comprehensive income at
adoption represents the net unrecognized actuarial losses,
unrecognized prior service costs or credits, as applicable,
and the unrecognized transition asset remaining from the
initial adoption of SFAS 87, all of which were previously
netted against the plan’s funded status in the past under the
provisions of SFAS 87. These amounts will be subsequently
recognized as net periodic pension cost over future periods
consistent with our historical accounting policy for amortizing
such amounts. Further, the components of the benefit
obligations that arise in subsequent periods and are not
recognized as net periodic pension cost in the same periods
are recognized as a component of other comprehensive
income. Those amounts will also be subsequently recognized
as a component of net periodic pension cost as previously
described. The adoption of SFAS 158 had no effect on our net
earnings for any period presented, and it will not affect our
operating results in future periods.
The following table summarizes the amounts included in
accumulated other comprehensive income as of December 31.
2008 2007
(In millions) Japan U.S. Japan U.S.
Net loss $ 64 $ 102 $ 36 $ 47
Prior service cost (credit) (5) 1 (4) 1
Transition obligation 2 – 2 –
Total $ 61 $ 103 $ 34 $ 48
No prior service costs or credits arose during 2008 and the
amounts of prior service costs and credits as well as transition
obligation amortized to expense were immaterial for the years
ended December 31, 2008, 2007 and 2006. Amortization
of actuarial losses to expense in 2009 is estimated to be $3
million for the Japanese plan and $4 million for the U.S. plan,
while the amortization of prior service costs and credits and
transition obligation are expected to be negligible.
The following table summarizes the amounts recognized
in other comprehensive loss (income) for the years ended
December 31.
2008 2007
(In millions) Japan U.S. Japan U.S.
Net loss (gain) $ 17 $ 57 $ 2 $ (11)
Amortization of net loss (2) (2) (1) (4)
Total $ 15 $ 55 $ 1 $ (15)
Reconciliations of the funded status of the basic employee
defined-benefit pension plans with amounts recognized in
the consolidated balance sheets as of December 31 were as
follows:
2008 2007
(In millions) Japan U.S. Japan U.S.
Projected benefit obligation:
Benefit obligation, beginning of year $ 125 $ 186 $ 110 $ 184
Service cost 11 10 9 10
Interest cost 3 11 3 10
Actuarial loss (gain) (1) (2) – (14)
Benefits paid (2) (4) (2) (4)
Effect of foreign exchange rate changes 33 – 5 –
Benefit obligation, end of year 169 201 125 186
Plan assets:
Fair value of plan assets, beginning of year 79 150 66 126
Actual return on plan assets (16) (48) – 8
Employer contribution 14 30 11 20
Benefits paid (2) (4) (2) (4)
Effect of foreign exchange rate changes 19 – 4 –
Fair value of plan assets, end of year 94 128 79 150
Funded status $ (75) $ (73) $ (46) $ (36)
Accumulated benefit obligation $ 146 $ 151 $ 106 $ 139
At December 31, 2008, other liabilities included a liability for
both plans in the amount of $148 million, compared with
$82 million a year ago. In December 2008, we pre-funded
$10 million to the U.S. plan that we had originally planned
to contribute in 2009. We accelerated the timing of this
contribution to improve the funded status of the plan in light
of the effect that recent market volatility has had on plan asset
fair values. We plan to make contributions of $10 million to
the U.S. plan and $16 million to the Japanese plan in 2009.