Pfizer 2006 Annual Report Download - page 60

58 2006 Financial Report
Notes to Consolidated Financial Statements
Pfizer Inc and Subsidiary Companies
D. Obligations and Funded Status
The following table presents an analysis of the changes in 2006 and 2005 in the benefit obligations, the plan assets and the funded
status of our U.S. qualified, U.S. supplemental (non-qualified) and international pension plans, and our postretirement plans:
PENSION PLANS
U.S. SUPPLEMENTAL POSTRETIREMENT
U.S. QUALIFIED (NON-QUALIFIED) INTERNATIONAL PLANS
(MILLIONS OF DOLLARS) 2006 2005 2006 2005 2006 2005 2006 2005
Change in benefit obligation:
Benefit obligation at beginning of year
(a)
$7,983 $7,108 $ 1,133 $ 1,066 $ 6,968 $ 6,969 $ 2,252 $ 1,920
Service cost 368 318 43 37 303 293 47 38
Interest cost 444 410 60 59 307 309 127 113
Employee contributions — — — — 22 23 34 28
Plan amendments — (82) — (49) 10 15 1 5
Increases/(decreases) arising primarily from
changes in actuarial assumptions (137) 671 (77) 156 150 459 152 332
Foreign exchange impact — — — — 769 (793) (1) —
Acquisitions — — — — 11 18 — —
Curtailments
(b)
(180) — (25) — (42) (3) 9 —
Settlements
(b)
(418) (33) (13) (15) (85) (56) (23) —
Special termination benefits 17 5 — — 14 29 12 2
Benefits paid (285) (414) (76) (121) (283) (295) (194) (186)
Benefit obligation at end of year
(a)
$7,792 $7,983 $ 1,045 $ 1,133 $ 8,144 $ 6,968 $ 2,416 $ 2,252
Change in plan assets:
Fair value of plan assets at beginning of year $7,050 $6,820 $—$—$ 4,595 $ 4,277 $ 275 $ 253
Actual gain on plan assets 1,034 625 — 1 552 687 31 23
Company contributions 453 52 80 135 533 439 250 158
Employee contributions — — — — 22 23 34 28
Foreign exchange impact — — — — 525 (490) — (1)
Acquisitions — — — — 1 10 — —
Settlements
(b)
(436) (33) (4) (15) (65) (56) — —
Benefits paid (285) (414) (76) (121) (283) (295) (194) (186)
Fair value of plan assets at end of year $7,816 $7,050 $—$—$ 5,880 $ 4,595 $ 396 $ 275
Funded status (plan assets greater than
(less than) benefit obligation) $24$ (933) $(1,045) $(1,133) $(2,264) $(2,373) $(2,020) $(1,977)
Unrecognized:
Actuarial losses 2,364 775 1,715 525
Prior service costs/(credits) 54 (35) (6) 7
Net transition obligation — — 3 2
Net asset/(liability) recorded in consolidated
balance sheet $1,485 $ (393) $ (661) $(1,443)
(a)
For the U.S. and international pension plans, the benefit obligation is the projected benefit obligation. For the postretirement plans, the
benefit obligation is the accumulated postretirement benefit obligation.
(b)
For 2006, includes curtailments and settlements associated with the transfer of benefit obligations as part of the sale of our Consumer
Healthcare business.
The favorable change in our U.S. qualified plans projected benefit
obligations funded status from underfunded in the aggregate
as of December 31, 2005, to overfunded in the aggregate as
of December 31, 2006, was largely driven by our 2006
actual investment return of 15.2%, our voluntary contribution
of $450 million and the 0.1 percentage-point increase in the
discount rate.
The accumulated benefit obligations (ABO) for our U.S. qualified
pension plans were $6.8 billion in 2006 and $6.4 billion in 2005.
The ABO for our U.S. supplemental (non-qualified) pension plans
were $883 million in 2006 and $843 million in 2005. The ABO for
our international pension plans were $7.1 billion in 2006 and $6.0
billion in 2005.
The U.S. supplemental (non-qualified) pension plans are not
generally funded, as there are no tax or other incentives that exist,
and these obligations, which are substantially greater than the
annual cash outlay for these liabilities, are paid from cash
generated from operations.