Graco 2007 Annual Report Download - page 64

Newell Rubbermaid Inc. 2007 Annual Report
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FOOTNOTE 13
Employee Benefit and Retirement Plans
Effective December 31, 2006, the Company adopted the recognition and disclosure provisions of SFAS No. 158, “Employers’ Accounting for Defined Benefit
Pension and Other Postretirement Plans
— an amendment of FASB Statements No. 87, 88, 106 and 132(R)” (“SFAS 158”). SFAS 158 required the Company
to recognize the funded status (i.e., the difference between the fair value of plan assets and the projected benefit obligations) of its pension plans in the
consolidated balance sheet, with a corresponding adjustment of $32.4 million to accumulated other comprehensive loss, net of tax. The adjustment to
accumulated other comprehensive loss at adoption represented the net unrecognized actuarial losses, unrecognized prior service costs, and unrecognized
transition obligation remaining from the initial adoption of SFAS No. 87, “Employers’ Accounting for Pensions” (SFAS 87). Further, actuarial gains and losses
in subsequent periods that are not recognized as net periodic pension cost will be recognized as a component of accumulated other comprehensive loss,
net of tax. Those amounts will be subsequently recognized as a component of net periodic pension cost on the same basis as the amounts recognized in
accumulated other comprehensive loss upon adoption of SFAS 158. SFAS 158 also requires the measurement of defined benefit plan assets and obligations
as of the date of the employer’s fiscal year end statement of financial position beginning December 31, 2008. The Company has historically measured
defined benefit plan assets and liabilities for the majority of its plans on September 30 and has adopted the measurement date provisions of SFAS 158
beginning January 1, 2008. The impact on the Consolidated Financial Statements of the adoption of the change in measurement date to December 31 will
result in an adjustment to beginning retained earnings that is not material.
Included in accumulated other comprehensive loss at December 31, 2007 is $314.3 million ($202.4 million net of tax) related to net unrecognized
actuarial losses and unrecognized prior service credit that have not yet been recognized in net periodic pension or benefit cost. The Company expects to
recognize $9.8 million ($6.4 million net of tax) of costs in 2008 associated with net actuarial losses and prior service credit.
Effective December 31, 2004, the Company froze its defined benefit pension plan for its entire non-union U.S. workforce. As a result of this curtailment,
the Company reduced its pension obligation by $50.3 million and recorded a curtailment gain related to negative prior service cost in 2005 of $15.8 million.
In conjunction with this action, the Company offered special termination benefits to certain employees who accepted early retirement. The Company
replaced the defined benefit pension plan with an additional defined contribution benefit, whereby the Company will make additional contributions to the
Company sponsored profit sharing plan. The new defined contribution plan has a three year cliff-vesting schedule, but allows credit for service rendered
prior to the inception of the defined contribution benefit arrangement. The Company recorded $19.9 million, $19.6 million and $21.4 million in expense
for the defined contribution benefit arrangement for the years ended December 31, 2007, 2006 and 2005, respectively. The liability associated with the
defined contribution benefit arrangement as of December 31, 2007 and 2006 is $19.9 million and $19.6 million, respectively, and is included in other
accrued liabilities on the Consolidated Balance Sheets.
As of December 31, 2007 and 2006, the Company maintained various non-qualified deferred compensation plans with varying terms. The total
liability associated with these plans was $77.8 million and $75.1 million as of December 31, 2007 and 2006, respectively. These liabilities are included in
other noncurrent liabilities in the Consolidated Balance Sheets. These plans are partially funded with asset balances of $44.1 million and $38.9 million
as of December 31, 2007 and 2006, respectively. These assets are included in other assets in the Consolidated Balance Sheets.
The Company has a Supplemental Executive Retirement Plan (“SERP”), which is a nonqualified defined benefit plan pursuant to which the
Company will pay supplemental pension benefits to certain key employees upon retirement based upon the employees’ years of service and compensation.
The SERP is partially funded through a trust agreement with the Northern Trust Company, as trustee, that owns life insurance policies on key employees.
At December 31, 2007 and 2006, the life insurance contracts had a cash surrender value of $78.8 million and $77.7 million, respectively. These assets are
included in other assets in the Consolidated Balance Sheets. The projected benefit obligation was $85.1 million and $78.2 million at December 31, 2007
and 2006, respectively. The SERP liabilities are included in the pension table below; however, the Company’s investment in the life insurance contracts is
excluded from the table as they do not qualify as plan assets under SFAS No. 87, “Employers’ Accounting for Pensions.”
The Company and its subsidiaries have noncontributory pension, profit sharing and contributory 401(k) plans covering substantially all of their foreign
and domestic employees. Plan benefits are generally based on years of service and/or compensation. The Company’s funding policy is to contribute not less
than the minimum amounts required by the Employee Retirement Income Security Act of 1974, as amended, the Internal Revenue Code of 1986, as amended,
or foreign statutes to assure that plan assets will be adequate to provide retirement benefits.
The Company’s matching contributions to the contributory 401(k) plans were $15.6 million, $15.9 million, and $15.4 million for the years ended
December 31, 2007, 2006 and 2005, respectively.