Energizer 2004 Annual Report Download - page 37

ENR 2004 Annual Report 35
The funded status presented above consists of the following over and
(under) funded plans:
SEPTEMBER 30, 2004 2003
U.S. Qualified Plan $ 70.0 $ 81.6
All other plans (114.6) (90.4)
Total $ (44.6) $ (8.8)
The Company expects to contribute $8.2 to its pension plans and $2.9
to its other postretirement benefit plans in 2005. The Company’s
expected future benefit payments are as follows:
SEPTEMBER 30, Pension Postretirement
2005 $ 32.1 $ 3.1
2006 33.9 3.2
2007 38.2 3.3
2008 41.7 3.4
2009 46.2 3.5
2010 to 2014 301.2 18.2
The accumulated benefit obligation for defined benefit pension plans
was $572.7 and $503.9 at September 30, 2004 and 2003, respec-
tively. The information for pension plans with an accumulated benefit
obligation in excess of plan assets is as follows:
SEPTEMBER 30, 2004 2003
Projected benefit obligation $ 151.7 $ 137.9
Accumulated benefit obligation 121.3 117.7
Fair value of plan assets 39.9 48.9
Pension plan assets in the U.S. plan represent 84% of assets in all of the
Company’s defined benefit pension plans. Investment policy for the U.S.
plan includes a mandate to diversify assets and invest in a variety of asset
classes to achieve that goal. The U.S. plan’s assets are currently invested
in several funds representing most standard equity and debt security classes.
The broad target allocations are: (a) equities, including U.S. and foreign,
65%, (b) debt securities, including higher-quality and lower-quality U.S.
bonds: 35% and (c) other: < 1%. The U.S. plan held 1.0 million and 1.5
million shares of ENR stock at September 30, 2004 and 2003, respectively,
with a market value $45.9 and $55.0, respectively. Investment objectives
are similar for non-U.S. pension arrangements, subject to local regulations.
The following table presents pension and postretirement expense:
Pension Postretirement
SEPTEMBER 30, 2004 2003 2002 2004 2003 2002
Service cost $ 24.3 $ 20.5 $ 16.7 $ 0.2 $ 0.2 $ 0.1
Interest cost 32.3 29.0 26.9 3.1 3.1 3.6
Expected return on plan assets (48.1) (45.5) (48.9) (0.1) – –
Amortization of unrecognized prior service cost –(0.1) – (2.5) (2.4) (2.4)
Amortization of unrecognized transition asset 1.7 0.3 0.3 –– –
Recognized net actuarial (gain)/loss 0.4 2.0 (1.3) –––
Net periodic benefit cost/(income) $ 10.6 $ 6.2 $ (6.3) $ 0.7 $ 0.9 $ 1.3
The following table presents assumptions, which reflect weighted-averages for the component plans, used in determining the above information:
Pension Postretirement
SEPTEMBER 30, 2004 2003 2004 2003
Discount rate 5.8% 5.8% 6.0% 6.1%
Expected long-term rate of return on plan assets 8.1% 8.1% ––
Compensation increase rate 4.1% 4.4% ––
The expected return on plan assets was determined based on historical and expected future returns of the various asset classes, using the target
allocations described below. Specifically, the expected return on equities (U.S. and foreign combined) is 9.6%, and the expected return on debt securities
(including higher-quality and lower-quality bonds) is 5.7%.