UPS 2005 Annual Report Download - page 77

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Benefit Obligations and Funded Status
The following table provides a reconciliation of the changes in the plans’ benefit obligations and funded
status as of our measurement date on September 30 (in millions):
Pension Benefits
Postretirement
Medical Benefits
2005 2004 2005 2004
Net benefit obligation at October 1, prior year ....................... $ 9,280 $8,287 $2,648 $2,592
Servicecost .................................................. 388 344 92 91
Interest cost .................................................. 628 533 170 164
Plan participants contributions ................................... 1 1 10 9
Planamendments.............................................. 13 3 (21) (115)
Acquired businesses ........................................... 1,476 — 119 —
Actuarial (gain) loss ........................................... 1,260 299 58 36
Foreign currency exchange rate changes ........................... (16) 18 — —
Curtailments and settlements .................................... (6) — — —
Gross benefits paid ............................................ (249) (205) (149) (129)
Net benefit obligation at September 30 ............................. $12,775 $9,280 $2,927 $2,648
Pension Benefits
Postretirement
Medical Benefits
2005 2004 2005 2004
Fair value of plan assets at September 30 ........................ $13,209 $10,094 $ 509 $ 455
Benefit obligation at September 30 ............................. (12,775) (9,280) (2,927) (2,648)
Funded status at September 30 ................................ 434 814 (2,418) (2,193)
Amounts not yet recognized:
Unrecognized net actuarial loss ............................... 2,613 1,996 817 810
Unrecognized prior service cost ............................... 274 298 (118) (104)
Unrecognized net transition obligation .......................... 15 18 — —
Employercontributions...................................... 8 6 15 17
Net asset (liability) recorded at December 31 ..................... $ 3,344 $ 3,132 $(1,704) $(1,470)
Prepaidpensioncost ........................................ $ 3,932 $ 3,222 $ — $ —
Accrued benefit cost ........................................ (750) (221) (1,704) (1,470)
Intangible asset ............................................ 13 4 — —
Accumulated other comprehensive income (pre-tax) ............... 149 127 — —
Net asset (liability) recorded at December 31 ..................... $ 3,344 $ 3,132 $(1,704) $(1,470)
The accumulated benefit obligation for our pension plans as of September 30, 2005 and 2004 was $11.485
and $8.307 billion, respectively. In general, we use a measurement date of September 30 for our pension and
postretirement benefit plans.
For our U.S. and international pension plans in which the accumulated benefit obligation exceeds the assets,
we have recorded a minimum pension liability of $312 and $221 million at December 31, 2005 and 2004,
respectively. This liability is included in accrued pension costs, as detailed in Note 9. As of December 31, 2005
and 2004, the Company has recorded an intangible asset of $13 and $4 million, respectively, representing the net
unrecognized prior service cost for our unfunded plans. A total of $149 and $127 million at December 31, 2005
F-21