CVS 2006 Annual Report Download - page 48

2006 Annual Report 45
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Following is a reconciliation of the benefit obligation, fair value of plan assets and funded status of the Company’s defined benefit and other
postretirement benefit plans as of the respective balance sheet dates:
Defined Benefit Plans Other Postretirement Benefits
In millions Dec. 30, 2006 Dec. 31, 2005 Dec. 30, 2006 Dec. 31, 2005
Change in benefit obligation:
Benefit obligation at beginning of year $ 421.2 $ 352.9 $ 10.7 $ 12.1
Service cost 1.7 0.7 – –
Interest cost 24.0 21.4 0.6 0.6
Actuarial (gain)/loss (8.5) 65.1 0.3 (0.7)
Benefits paid (19.4) (18.9) (1.4) (1.3)
Benefit obligation at end of year $ 419.0 $ 421.2 $ 10.2 $ 10.7
Change in plan assets:
Fair value at beginning of year $ 275.6 $ 255.2 $ – $ –
Actual return on plan assets 37.6 19.2 – –
Company contributions 19.8 20.1 1.5 1.3
Benefits paid (19.4) (18.9) (1.5) (1.3)
Fair value at end of year $ 313.6 $ 275.6 $ – $ –
Funded status:
Funded status $ (105.4) $ (145.6) $ (10.2) $ (10.7)
Unrecognized prior service cost N/A 0.3 N/A (0.3)
Unrecognized loss (gain) N/A 122.6 N/A (0.2)
Net liability recognized $ (105.4) $ (22.7) $ (10.2) $ (11.2)
Amounts recognized in the consolidated balance sheet:
Accrued benefit liability $ (105.4) $ (139.7) $ (10.2) $ (11.2)
Minimum pension liability – 117.0 – –
Net liability recognized $ (105.4) $ (22.7) $ (10.2) $ (11.2)
The changes in the balance sheet at December 30, 2006 arising from
the adoption of SFAS No. 158 are set out below:
Before After
Implementation Changes Implementation
of SFAS Due to SFAS of SFAS
In millions No. 158 No. 158 No. 158
Assets:
Non-current deferred
income taxes $ 87.6 $ 3.2 $ 90.8
Total Asset recognized $ 20,566.6 $ 3.2 $ 20,569.8
Liabilities and
Stockholders’ Equity:
Accrued expenses $ 1,949.9 $ 0.3 $ 1,950.2
Other long-term
liabilities 772.6 8.5 781.1
Accumulated other
comprehensive loss (67.0) (5.6) (72.6)
Total liabilities and
shareholders’ equity $ 20,566.6 $ 3.2 $ 20,569.8
The discount rate is determined by examining the current yields observed
on the measurement date of fixed-interest, high quality investments
expected to be available during the period to maturity of the related
benefits. The expected long-term rate of return is determined by using
the target allocation and historical returns for each asset class.
The Company utilized a measurement date of December 31 to determine
pension and other postretirement benefit measurements. The Company
included $3.5 million of accrued benefit liability in accrued expenses,
while the remaining benefit liability was recorded in other long-term
liabilities, as of December 30, 2006 and December 31, 2005. The
accumulated benefit obligation for the defined benefit pension plans
was $410.4 million and $415.3 million as of December 30, 2006
and December 31, 2005, respectively. The Company does not expect
to make a contribution to the pension plan during the upcoming year.
Estimated future benefit payments for the defined benefit plans and
other postretirement benefit plans, respectively, are $19.4 million
and $1.3 million in 2007, $20.4 million and $1.3 million in 2008,
$21.2 million and $1.2 million in 2009, $22.2 million and $1.2 million
in 2010, $23.0 million and $1.1 million in 2011 and $151.3 million and
$4.7 million in aggregate for the following five years.