Progress Energy 2007 Annual Report Download - page 109

Download and view the complete annual report

Please find page 109 of the 2007 Progress Energy annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 140

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140

Progress Energy Annual Report 2007
107
The components of the net periodic benefit cost for the
years ended December 31 were:
In addition to the net periodic cost reflected above, in 2005,
we recorded costs for special termination benefits related
to a voluntary enhanced retirement program of $123 million
for pension benefits and $19 million for other postretirement
benefits.
We adopted 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 No. 158) as of December 31, 2006. SFAS No.
158 amended prior accounting requirements for pension
and OPEB plans. Prior to the implementation of SFAS No.
158, other comprehensive income (OCI) reflected minimum
pension adjustments related to our pension plans. Our
pre-tax minimum pension adjustments recognized as a
component of OCI for the years ended December 31, 2006
and 2005 were net actuarial gains (losses) of $78 million
and $(41) million, respectively. No amounts related to our
OPEB plans were recognized as a component of OCI for the
years ended December 31, 2006 and 2005.The table to the
right provides a summary of amounts recognized in other
comprehensive income for 2007 and other comprehensive
income reclassification adjustments for amounts included
in net income for 2007. The table also includes comparable
items that affected regulatory assets of PEC and PEF.
The following weighted-average actuarial assumptions
were used by Progress Energy in the calculation of its
net periodic cost:
The expected long-term rates of return on plan assets
were determined by considering long-term historical
returns for the plans and long-term projected returns
based on the plans’ target asset allocation. For all
pension plan assets and a substantial portion of OPEB
plans assets, those benchmarks support an expected
long-term rate of return between 9.0% and 9.5%. We
used an expected long-term rate of 9.0%, the low end of
the range, for 2007, 2006 and 2005.
Pension Benefits Other Postretirement Benefits
(in millions) 2007 2006 2005 2007 2006 2005
Service cost $46 $45 $47 $7 $9 $9
Interest cost 123 117 117 32 33 33
Expected return on plan assets (155) (148) (147) (6) (6) (5)
Amortization of actuarial loss(a) 15 18 21 24 6
Other amortization, net (a) 2– – 55 5
Net periodic cost $31 $32 $38 $40 $45 $48
(a) Adjusted to reflect PEF’s rate treatment (See Note 16B).
Pension Benefits Other Postretirement Benefits
2007 2006 2005 2007 2006 2005
Discount rate 5.95% 5.65% 5.70% 5.95% 5.65% 5.70%
Rate of increase in future compensation
Bargaining 4.25% 3.50% 3.50% –– –
Supplementary plans 5.25% 5.25% 5.25% –– –
Expected long-term rate of return on plan assets 9.00% 9.00% 9.00% 7.70% 8.30% 8.25%
(in millions)
Pension
Benefits
Other
Postretirement
Benefits
Other comprehensive income (loss)
Recognized for the year
Net actuarial gain $24 $16
Other, net (1) –
Reclassification adjustments
Net actuarial loss 2 –
Other, net 1 –
Regulatory asset (increase) decrease
Recognized for the year
Net actuarial gain 66 82
Other, net (8) –
Amortized to income
Net actuarial loss 13 2
Other, net 1 4