Energizer 2005 Annual Report Download - page 36

34 ENR 2005 Annual Report
ENERGIZER HOLDINGS, INC.
Notes to Consolidated Financial Statements
(Dollars in millions, except per share and percentage data)
The following table presents pension and postretirement expense:
Pension Postretirement
SEPTEMBER 30, 2005 2004 2003 2005 2004 2003
Service cost $ 27.4 $24.3 $ 20.5 $0.3 $0.2 $ 0.2
Interest cost 37.3 32.3 29.0 3.2 3.1 3.1
Expected return on plan assets (49.1) (48.1) (45.5) (0.1) (0.1) –
Amortization of unrecognized prior service cost (0.1) – (0.1) (2.5) (2.5) (2.4)
Amortization of unrecognized transition asset 0.2 1.7 0.3 –––
Recognized net actuarial loss 3.6 0.4 2.0 –––
Net periodic benefit cost $ 19.3 $10.6 $ 6.2 $0.9 $0.7 $ 0.9
The following table presents assumptions, which reflect weighted-averages for the component plans, used in determining the above information:
Pension Postretirement
SEPTEMBER 30, 2005 2004 2005 2004
Discount rate 5.2% 5.8% 5.5% 6.0%
Expected long-termrate of returnon plan assets 8.0% 8.1% ––
Compensation increase rate 3.7% 4.1% ––
The expected returnon 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 5.3%.
The funded status presented above consists of the following over
and (under) funded plans:
SEPTEMBER 30, 2005 2004
U.S. Qualified Plan $58.5 $70.0
All other plans (143.0) (121.2)
Total $(84.5) $ (51.2)
The Company expects to contribute $13.5 to its pension plans and
$3.6 to its other postretirement benefit plans in 2006. The
Company’sexpected future benefit payments are as follows:
SEPTEMBER 30, PENSION POSTRETIREMENT
2006 $ 38.7 $ 3.6
2007 33.8 3.8
2008 36.1 3.9
2009 38.3 3.9
2010 40.4 4.0
2011 to 2015 241.1 19.9
The accumulated benefit obligation for defined benefit pension
plans was $660.3 and $579.4 at September 30, 2005 and 2004,
respectively. The information for pension plans with an accumulated
benefit obligation in excess of plan assets is as follows:
SEPTEMBER 30, 2005 2004
Projected benefit obligation $234.5 $151.7
Accumulated benefit obligation 198.0 121.3
Fair value of plan assets 93.5 39.9
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
avariety of asset classes to achieve that goal. The U.S. plan’sassets
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 0.6 million and 1.0 million shares of ENR stock
at September 30, 2005 and 2004, respectively,with a market value
$32.8 and $45.9, respectively. Investment objectives are similar for
non-U.S. pension arrangements, subject to local regulations.