Prudential 2001 Annual Report Download - page 137

Prudential Financial, Inc.
Notes to Consolidated Financial Statements
16. Employee Benefit Plans (continued)
Prepaid and accrued benefits costs are included in “Other assets” and “Other liabilities,” respectively, in the
Company’s Consolidated Statements of Financial Position. The status of these plans as of September 30, adjusted
for fourth-quarter activity, is summarized below:
Pension Benefits
Other
Postretirement
Benefits
2001 2000 2001 2000
(In Millions)
Change in benefit obligation
Benefit obligation at the beginning of period .............................................. $(5,461) $ (5,430) $(1,996) $(1,941)
Service cost ....................................................................... (167) (140) (18) (29)
Interest cost ....................................................................... (431) (427) (150) (151)
Plan participants’ contributions ........................................................ — — (8) (7)
Amendments ....................................................................... 6 112 — 221
Acquisitions ....................................................................... (765) — — —
Variable annuity purchase ............................................................ 232 — — —
Actuarial gains (losses) .............................................................. (510) 34 (77) (262)
Contractual termination benefits ....................................................... (1) (17) — —
Benefits paid ....................................................................... 462 407 152 172
Foreign currency changes ............................................................. 28 — 1 1
Benefit obligation at end of period ...................................................... $(6,607) $ (5,461) $(2,096) $(1,996)
Change in plan assets
Fair value of plan assets at beginning of period ............................................ $10,356 $ 9,468 $ 1,560 $ 1,548
Actual return on plan assets ........................................................... (1,114) 1,270 (82) 170
Variable annuity purchase ............................................................ (232) — — —
Employer contributions .............................................................. 81 25 9 7
Plan participants’ contributions ........................................................ — — 8 7
Benefits paid ....................................................................... (462) (407) (152) (172)
Fair value of plan assets at end of period ................................................. $ 8,629 $10,356 $ 1,343 $ 1,560
Funded status
Funded status at end of period ......................................................... $ 2,022 $ 4,895 $ (753) $ (436)
Unrecognized transition (asset) liability .................................................. (236) (342) 188 207
Unrecognized prior service costs ....................................................... 46 65 2 1
Unrecognized actuarial net gain ........................................................ (370) (2,956) (188) (498)
Effects of fourth quarter activity ....................................................... 7 9 1 2
Net amount recognized ............................................................... $ 1,469 $ 1,671 $ (750) $ (724)
Amounts recognized in the Statements of Financial Position
Prepaid benefit cost ................................................................. $ 2,570 $ 2,022 $ — $ —
Accrued benefit liability .............................................................. (1,177) (382) (750) (724)
Intangible asset ..................................................................... 6 7 — —
Accumulated other comprehensive income ............................................... 70 24 — —
Net amount recognized ............................................................... $ 1,469 $ 1,671 $ (750) $ (724)
The projected benefit obligations, accumulated benefit obligations and fair value of plan assets for the pension plans
with accumulated benefit obligations in excess of plan assets were $1,217 million, $1,080 million and $1 million,
respectively, at September 30, 2001 and $464 million, $384 million and $1 million, respectively, at September 30,
2000.
Pension plan assets consist primarily of equity securities, bonds, real estate and short-term investments, of which
$6,867 million and $7,381 million are included in Separate Account assets and liabilities at September 30, 2001 and
2000, respectively.
In 2001, the pension plan purchased a variable annuity contract for $232 million from Prudential Insurance. The
approximate future annual benefit payment for the variable annuity contract was $14 million.
Prudential Financial 2001 Annual Report 135