Huntington National Bank 2005 Annual Report Download - page 127

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NOTES TOCONSOLIDATED FINANCIAL STATEMENTS HUNTINGTON BANCSHARES INCORPORATED
The following table shows the components of net periodic benefit cost recognized in the three years ended December 31, 2005:
Pension Benefits Post-Retirement Benefits
(in thousands of dollars) 2005 2004 2003 2005 2004 2003
Service cost $ 14,186 $ 12,159 $ 9,817 $1,378 $1,302 $1,121
Interest cost 19,016 17,482 16,647 2,903 3,209 3,479
Expected return on plan assets (25,979) (21,530) (25,138) ———
Amortization of transition asset (4) 1 (251) 1,104 1,104 1,104
Amortization of prior service cost 11—379 583 605
Amortization of gain ———(126) ——
Settlements 3,642 3,151 4,354 ———
Recognized net actuarial loss 10,689 7,936 1,774 ———
Benefit cost $ 21,551 $ 19,200 $ 7,203 $5,638 $6,198 $6,309
Service costs presented in the above table included $0.3 million of plan expenses that were recognized in each of the three years
ended December 31, 2005. It is Huntington’s policy to recognize settlement gains and losses as incurred. Management expects net
periodic pension cost to approximate $23.9 million and net periodic post-retirement benefits cost to approximate $4.3 million for
2006.
In December 2003, a law was enacted that expands Medicare benefits, primarily adding a prescription drug benefit for Medicare-
eligible retirees beginning in 2006. The law also provides a federal subsidy to companies that sponsor post-retirement benefit
plans providing prescription drug coverage. Huntington has registered for the Medicare subsidy and a $15.5 million reduction in
the post-retirement obligation is being recognized over a 10-year period beginning October 1, 2005.
At September 30, 2005 and 2004, The Huntington National Bank, as trustee, held all Plan assets. The Plan assets consisted of
investments in a variety of Huntington mutual funds and Huntington common stock as follows:
2005 2004
(in thousands of dollars) Balance % Balance %
Cash $——% $ 300 —%
Huntington funds — money market 164 — 500 —
Huntington funds — equity funds 300,080 68 240,456 68
Huntington funds — fixed income funds 125,971 29 95,837 27
Huntington common stock 14,572 3 16,129 5
Fair value of plan assets (September 30) $ 440,787 100% $353,222 100%
The number of shares of Huntington common stock held by the Plan was 642,364 at December 31, 2005 and 2004. The Plan has
acquired and held Huntington common stock in compliance at all times with Section 407 of the Employee Retirement Income
Security Act of 1978.
Dividends and interest received by the Plan during 2005 and 2004 were $18.9 million and $11.0 million, respectively.
At December 31, 2005, the following table shows when benefit payments, which include expected future service, as appropriate,
were expected to be paid:
Pension Post-Retirement
(in thousands of dollars) Benefits Benefits
2006 $ 19,204 $ 4,088
2007 21,704 4,211
2008 23,763 4,295
2009 25,374 4,387
2010 27,593 4,500
2011 through 2015 162,219 23,802
Although not legally required, Huntington made a discretionary contribution to the Plan of $63.6 million in April 2005. There is
no expected minimum contribution for 2006 to the Plan. However, Huntington may choose to make a contribution to the Plan
125