Graco 2005 Annual Report Download - page 62

corporate Ñnancial condition. The investment portfolio is comprised of a diversiÑed blend of equity, real
estate and Ñxed income investments. Equity investments include large and small market capitalization
stocks as well as growth, value and international stock positions. The Company's common stock comprised
zero and $41.1 million of noncontributory pension plan assets at December 31, 2005 and 2004,
respectively.
The Company employs a building block approach in determining the long-term rate of return for plan
assets. Historical markets are studied and long-term historical relationships between equities and Ñxed-
income are preserved consistent with the widely accepted capital market principle that assets with higher
volatility generate a greater return over the long run. Current market factors, such as inÖation and interest
rates, are evaluated before long-term capital market assumptions are determined. The long-term portfolio
return is established via a building block approach with proper consideration of diversiÑcation and
rebalancing. Peer data and historical returns are reviewed to check for reasonableness and appropriateness.
In 2005, the Company made a voluntary $25.0 million cash contribution to its foreign pension plans,
primarily in the United Kingdom. In 2004, the Company made a voluntary $50.0 million cash contribution
to its U.S. deÑned beneÑt plan.
Estimated future beneÑt payments under the Company's deÑned beneÑt pension plans and other post-
retirement beneÑt plans are as follows as of December 31, 2005 (in millions):
2006 2007 2008 2009 2010 2011-2015
Pension BeneÑts ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $69.4 $69.4 $70.2 $71.2 $72.6 $404.5
Other Postretirement BeneÑts ÏÏÏÏÏÏÏÏÏÏÏ 18.5 17.2 15.9 14.3 13.5 63.7
The other postretirement beneÑt payments are net of the annual Medicare Part D subsidy of
approximately $2.0 million per year beginning in Ñscal 2006.
EÅective December 31, 2004, the Company froze its deÑned beneÑt pension plan for its entire non-
union U.S. workforce. As a result of this curtailment, the Company reduced its pension obligation by
$50.3 million and recorded a curtailment gain related to negative prior service cost in 2005 of
$15.8 million. In conjunction with this action, the Company oÅered special termination beneÑts to certain
employees who accepted early retirement. The Company replaced the deÑned beneÑt pension plan with an
additional deÑned contribution plan, whereby the Company will make additional contributions to the
Company sponsored employee's proÑt sharing plan. The new deÑned contribution plan has a Ñve-year cliÅ-
vesting schedule, but allows credit for service rendered prior to the inception of the deÑned contribution
plan. For 2005, the Company recorded $21.4 million in expense for the deÑned contribution plan. The
liability associated with this plan as of December 31, 2005 is $21.4 million and is included in other
accrued liabilities on the Consolidated Balance Sheet.
FOOTNOTE 14
Earnings per Share
The calculation of basic and diluted earnings per share for the years ended December 31, is shown
below (in millions, except per share data):
2005 2004 2003
Numerator:
Income from continuing operationsÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 356.4 $ 70.6 $ 217.9
Loss from discontinued operations ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (105.1) (186.7) (264.5)
Net income (loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ $ 251.3 $(116.1) $ (46.6)
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