Graco 2005 Annual Report Download - page 58

FOOTNOTE 13
Employee BeneÑt and Retirement Plans
As of December 31, 2005, the Company maintained various non-qualiÑed deferred compensation
plans with varying terms. The total liability associated with these plans was $68.1 million and $64.9 million
as of December 31, 2005 and 2004, respectively. These liabilities are included in Other Noncurrent
Liabilities in the Consolidated Balance Sheets. These plans are partially funded with asset balances of
$32.8 million and $35.3 million as of December 31, 2005 and 2004, 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 nonqualiÑed
deÑned beneÑt plan pursuant to which the Company will pay supplemental pension beneÑts 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, 2005 and 2004, the life insurance contracts had a
cash surrender value of $76.0 million and $68.9 million, respectively. These assets are included in Other
Assets in the Consolidated Balance Sheets. The projected beneÑt obligation was $79.6 million and
$78.2 million at December 31, 2005 and 2004, respectively. The SERP liabilities are included in the
pension table below; however, the Company's investment in the life insurance contracts are 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, proÑt sharing and contributory
401(k) plans covering substantially all of their foreign and domestic employees. Plan beneÑts 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 beneÑts.
The Company's matching contributions to the contributory 401(k) plans were $15.4 million,
$18.7 million and $21.1 million for the years ended December 31, 2005, 2004 and 2003, respectively.
The Company uses a September 30th measurement date for the majority of its plans. The following
provides a reconciliation of beneÑt obligations, plan assets and funded status of the Company's
noncontributory deÑned beneÑt pension plans, including the SERP, as of December 31, (in millions,
except percentages):
United States International
2005 2004 2005 2004
Change in beneÑt obligation:
BeneÑt obligation at January 1ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 878.8 $ 860.2 $ 447.6 $ 379.2
Service costÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 2.2 40.9 7.8 9.4
Interest cost ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 51.7 54.5 23.5 24.0
AmendmentsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.2 Ì Ì 0.6
Actuarial loss (gain) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 72.1 (22.8) 70.4 (1.8)
Acquisitions and otherÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (0.6) 6.8 8.4 24.2
Currency translationÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì (55.1) 33.4
BeneÑts paid from plan assets ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (57.7) (53.2) (19.5) (21.2)
Curtailments, settlement costs ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (50.3) (7.6) (0.6) (0.2)
BeneÑt obligation at December 31ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 896.4 $ 878.8 $ 482.5 $ 447.6
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