Proctor and Gamble 2006 Annual Report Download - page 58

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Millions of dollars except per share amounts or otherwise specified.
Notes to Consolidated Financial Statements
The Procter &Gamble Company and Subsidiaries
56
Obligation and Funded Status. We use a June 30 measurement date
for our defined benefit retirement plans and other retiree benefit
plans. The following provides a reconciliation of benefit obligations,
plan assets and funded status of these plans:
Pension Benefits(2) Other Retiree Benefits (3)
Years ended June 30 2006 2005 2006 2005
CHANGE IN BENEFIT
OBLIGATION
Benefit obligation at
beginning of year (1) $ 5,626 $4,616 $3,079 $2,400
Service cost 265 162 97 67
Interest cost 383 241 179 146
Participants’ contributions 19 18 35 33
Amendments 65 45 ——
Actuarial (gain) loss (754) 807 (466) 566
Acquisitions (divestitures) 3,744 (7) 506 —
Curtailments and settlements (9) ———
Special termination benefits ——12
Currency translation
and other 247 (35) 22 9
Benefit payments (342) (221) (167) (144)
BENEFIT OBLIGATION
AT END OF YEAR (1) 9,244 5,626 3,286 3,079
CHANGE IN PLAN ASSETS
Fair value of plan assets
at beginning of year $ 2,572 $2,263 $2,700 $2,843
Actual return on plan assets 481 201 234 (44)
Acquisitions 2,889 —288 —
Employer contributions 427 310 21 11
Participants’ contributions 19 18 35 33
Currency translation 157 1(1) 1
ESOP debt impacts(4) ——(19) —
Benefit payments (342) (221) (167) (144)
FAIR VALUE OF PLAN ASSETS
AT END OF YEAR 6,203 2,572 3,091 2,700
FUNDED STATUS (3,041) (3,054) (195) (379)
(1) For the pension benefit plans, the benefit obligation is the projected benefit obligation.
For other retiree benefit plans, the benefit obligation is the accumulated postretirement
benefit obligation.
(2) Primarily non-U.S.-based defined benefit retirement plans.
(3) Primarily U.S.-based other postretirement benefit plans.
(4) Represents increases in the ESOP’s debt, which is netted against plan assets for
Other Retiree Benefits.
Pension Benefits Other Retiree Benefits
Years ended June 30 2006 2005 2006 2005
CALCULATION OF NET
AMOUNT RECOGNIZED
Funded status at end of year $(3,041) $(3,054) $(195) $(379)
Unrecognized net
actuarial loss 672 1,641 275 606
Unrecognized transition
amount 79——
Unrecognized prior
service cost 146 81 (220) (242)
NET AMOUNT RECOGNIZED (2,216) (1,323) (140) (15)
CLASSIFICATION OF NET
AMOUNT RECOGNIZED
Prepaid benefit cost $ 386 $207 $ 255 $138
Accrued benefit cost (2,766) (2,180) (395) (153)
Intangible asset 74 123 ——
Accumulated other
comprehensive income 90 527 ——
NET AMOUNT RECOGNIZED (2,216) (1,323) (140) (15)
The underfunding of pension benefits is primarily a function of the
different funding incentives that exist outside of the U.S. In certain
countries where we have major operations, there are no legal
requirements or financial incentives provided to companies to pre-
fund pension obligations. In these instances, benefit payments are
typically paid directly from the Company‘s cash as they become due.
The accumulated benefit obligation for all defined benefit retirement
plans was $8,013 and $4,610 at June 30, 2006 and June 30, 2005,
respectively. Plans with accumulated benefit obligations in excess of
plan assets and plans with projected benefit obligations in excess of
plan assets consist of the following:
Accumulated Benefit Projected Benefit
Obligation Exceeds Fair Obligation Exceeds Fair
Value of Plan Assets Value of Plan Assets
Years ended June 30 2006 2005 2006 2005
Projected benefit obligation $5,597 $3,567 $7,695 $5,442
Accumulated benefit
obligation 4,912 3,018 6,544 4,441
Fair value of plan assets 2,684 876 4,498 2,382