Energizer 2006 Annual Report Download - page 37

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ENR 2006 ANNUAL REPORT 35
The following table presents pension and postretirement expense:
Pension Postretirement
SEPTEMBER 30, 2006 2005 2004 2006 2005 2004
Service cost $ 24.7 $ 27.4 $ 24.3 $ 0.3 $ 0.3 $ 0.2
Interest cost 37.6 37.3 32.3 3.3 3.2 3.1
Expected return on plan assets (49.0) (49.1) (48.1) (0.1) (0.1) (0.1)
Amortization of unrecognized prior service cost (0.1) (0.1) – (2.2) (2.5) (2.5)
Amortization of unrecognized transition asset 0.1 0.2 1.7 –––
Recognized net actuarial loss 6.1 3.6 0.4 0.1 ––
Net periodic benefit cost $ 19.4 $19.3 $ 10.6 $ 1.4 $ 0.9 $ 0.7
The following table presents assumptions, which reflect weighted-averages for the component plans, used in determining the above information:
Pension Postretirement
SEPTEMBER 30, 2006 2005 2006 2005
Discount rate 5.2% 5.2% 5.7% 5.5%
Expected long-term rate of return on plan assets 8.0% 8.0% ––
Compensation increase rate 3.8% 3.7% ––
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 5.1%.
The funded status presented in the previous table consists of the
following over and (under) funded plans:
SEPTEMBER 30, 2006 2005
U.S. Qualified Plan $ 78.1 $ 58.5
All other plans (161.4) (143.0)
Total $ (83.3) $ (84.5)
The Company expects to contribute $12.2 to its pension plans and
$3.1 to its other postretirement benefit plans in 2007. The Company’s
expected future benefit payments are as follows:
SEPTEMBER 30, PENSION POSTRETIREMENT
2007 $ 37.6 $ 3.1
2008 36.8 3.1
2009 38.5 3.1
2010 40.5 3.2
2011 43.0 3.2
2012 to 2016 268.2 16.1
The accumulated benefit obligation for defined benefit pension
plans was $678.1 and $660.3 at September 30, 2006 and 2005,
respectively. The information for pension plans with an accumulated
benefit obligation in excess of plan assets is as follows:
SEPTEMBER 30, 2006 2005
Projected benefit obligation $ 262.1 $ 234.5
Accumulated benefit obligation 217.9 19 8 . 0
Fair value of plan assets 104.5 93.5
Pension plan assets in the U.S. plan represent 81% 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 0.1 million and 0.6 million shares of ENR stock at
September 30, 2006 and 2005, respectively, with a market value of
$9.5 and $32.8, respectively. Investment objectives are similar for
non-U.S. pension arrangements, subject to local regulations.