Progress Energy 2004 Annual Report Download - page 90

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17. BENEFIT PLANS
A. Postretirement Benefits
The Company and some of its subsidiaries have a
noncontributory defined benefit retirement (pension) plan
for substantially all full-time employees. The Company also
has supplementary defined benefit pension plans that
provide benefits to higher-level employees. In addition to
pension benefits, the Company and some of its
subsidiaries provide contributory other postretirement
benefits (OPEB), including certain health care and life
insurance benefits, for retired employees who meet
specified criteria. The Company uses a measurement date
of December 31 for its pension and OPEB plans.
The components of net periodic benefit cost for the years
ended December 31 are:
88
Notes to Consolidated Financial Statements
The net periodic cost for other postretirement benefits
decreased during 2004 due to the implementation of
FASB Staff Position 106-2 (See Note 2). In addition to the
net periodic cost and benefit reflected above, in 2003 the
Company recorded curtailment and settlement effects
related to the disposition of NCNG, which are reflected
in income/(loss) from discontinued operations in the
Consolidated Statements of Income. These effects
included a pension-related loss of $13 million and an
OPEB-related gain of $1 million.
Prior service costs and benefits are amortized on a
straight-line basis over the average remaining service
period of active participants. Actuarial gains and losses
in excess of 10% of the greater of the projected benefit
obligation or the market-related value of assets are
amortized over the average remaining service period of
active participants.
To determine the market-related value of assets, the
Company uses a five-year averaging method for a portion
of its pension assets and fair value for the remaining
portion. The Company has historically used the five-year
averaging method. When the Company acquired Florida
Progress in 2000, it retained the Florida Progress
historical use of fair value to determine market-related
value for Florida Progress pension assets.
Reconciliations of the changes in the plans’ benefit
obligations and the plans’ funded status are:
Pension Benefits Other Postretirement Benefits
(in millions)
2004 2003 2002 2004 2003 2002
Service cost $54 $52 $45 $12 $15 $13
Interest cost 110 108 106 31 33 32
Expected return on plan assets (155) (144) (161) (5) (4) (5)
Amortization of actuarial (gain) loss 21 25 2 451
Other amortization, net ––– 144
Net periodic cost/(benefit) 30 41 (8) 43 53 45
Additional cost/(benefit) recognition (Note 17B) (16) (18) (7) 222
Net periodic cost/(benefit) recognized $14 $23 $(15) $45 $55 $47