Western Union 2006 Annual Report Download - page 85

Notes to Consolidated Financial Statements 83
The aggregate amount charged to expense in
connection with all of the above plans was $9.2 million,
$8.1 million, and $7.5 million during the years ended
December 31, 2006, 2005, and 2004, respectively.
Defined Benefit Plans
FFMC’s acquisition of WUFSI in November 1994 included
the assumption of $304.0 million of underfunded pension
obligations related to two frozen defined benefit pension
plans. Benefit accruals under these plans were frozen in
1988. First Data reduced these underfunded obligations
by contributing $35.6 million in 2004 to the plans. No
contributions were made by First Data or Western Union
in 2005 and 2006. As part of the Distribution, Western
Union is responsible for any remaining underfunded
pension obligations. Western Union does not currently
anticipate contributing to the plans in 2007. A September 30
measurement date is used for the Company’s plans.
On December 31, 2006, the Company adopted the
recognition and disclosure provisions of SFAS No. 158,
which requires the Company to recognize the funded status
of its pension plans in its Consolidated Balance Sheets as
of December 31, 2006 with a corresponding adjustment
to “Accumulated other comprehensive loss”, net of tax.
Due to the frozen status of the Company’s pension plans,
the Company’s funded status of its pension plans was
already reflected in its Consolidated Balance Sheets, and
therefore, no such adjustment was required to “Pension
obligations”, “Deferred tax liability, net” or “Accumulated
other comprehensive loss” on adoption of SFAS No. 158.
The following table provides a reconciliation of the changes in the pension plans’ benefit obligations and fair value
of assets for the plan years ended September 30, 2006 and 2005, and a statement of the funded status of the plans as
of September 30, 2006 and 2005 (in millions):
September 30, 2006 2005
CHANGE IN BENEFIT OBLIGATION
Projected benefit obligation at October 1, $494.1 $515.7
Interest costs 24.8 25.6
Actuarial (gain)/loss (13.5) 0.4
Benefits paid (46.4) (47.6)
Projected benefit obligation at September 30, 459.0 494.1
CHANGE IN PLAN ASSETS
Fair value of plan assets at October 1, 424.3 432.8
Actual return on plan assets 28.2 39.1
Benefits paid (46.4) (47.6)
Fair value of plan assets at September 30, 406.1 424.3
Funded status of the plan (52.9) (69.8)
Unrecognized amounts, principally unrecognized actuarial loss 98.1 114.2
Total recognized $ 45.2 $ 44.4
Accumulated benefit obligation 459.0 494.1
The pension obligations and changes in the value of
plan assets to meet those obligations are not recognized
as actuarial gains and losses of the plan as they occur but
are recognized systematically over subsequent periods.
These differences are treated as an unrecognized
net gain/loss and not an immediate recognized amount.
Included in “Accumulated other comprehensive loss” at
December 31, 2006 is $3.6 million ($2.3 million net of tax)
of unrecognized actuarial losses that are expected to be
recognized in net periodic pension cost during the year
ended December 31, 2007. No plan assets are expected
to be returned to the Company during the year ended
December 31, 2007.
The following table provides the amounts recognized in the Consolidated Balance Sheets (in millions):
December 31, 2006 2005
Accrued benefit liability $(52.9) $(69.8)
Accumulated other comprehensive income 98.1 114.2
Net amount recognized $ 45.2 $ 44.4
For the plan years ended September 30, 2006 and 2005, the projected benefit obligation was equal to the accumulated
benefit obligation.