Pfizer 2005 Annual Report Download - page 58

Download and view the complete annual report

Please find page 58 of the 2005 Pfizer annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 75

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75

The decline in the 2005 U.S. qualified pension plans projected
benefit obligations (PBO) funded status was primarily the result
of the 0.2 percentage-point decline in the discount rate and the
adoption of updated mortality assumptions.
The unrecognized actuarial losses primarily represent the
cumulative difference between the actuarial assumptions and
actual return on plan assets, changes in discount rates and plan
experience. These actuarial losses are largely deferred and a
portion of this loss is currently being amortized for all U.S. and
international plans’ net periodic benefit cost over an average
period of 14 years. The 2005 increase in the unrecognized actuarial
losses in the U.S. qualified pension plans and the postretirement
plans was driven by the 0.2 percentage-point decline in the
discount rate, the adoption of updated mortality assumptions and
plan experience.
The U.S. supplemental (non-qualified) pension plans are not
generally funded as no tax or other incentives exist and these
obligations are paid from cash generated from operations, which
is substantially greater than the annual cash outlay for these
liabilities. Company contributions to U.S. supplemental (non-
qualified) pension plans amounted to $135 million in 2005 and
$141 million in 2004, which were used for settlement and benefit
payments. The PBO for the U.S. supplemental (non-qualified)
pension plans were $1.1 billion in both 2005 and 2004. The net
liability for U.S. supplemental (non-qualified) pension plans was
$393 million in 2005 and $385 million in 2004. The unrecognized
actuarial losses in the U.S. supplemental (non-qualified) pension
plans amounted to $775 million in 2005 and $666 million in 2004.
For U.S. supplemental (non-qualified) pension plans the
unrecognized actuarial losses represent the cumulative difference
between actuarial assumptions and actual results primarily related
to changes in discount rates and plan experience.
2005 Financial Report 57
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 2005 and 2004 in the benefit obligations, the plan assets and the funded
status of our U.S. qualified and international pension plans and our postretirement plans:
PENSION PLANS
U.S. QUALIFIED INTERNATIONAL POSTRETIREMENT
(MILLIONS OF DOLLARS) 2005 2004 2005 2004 2005 2004
Change in benefit obligation:
Benefit obligation at beginning of year(a) $7,108 $6,492 $6,969 $5,681 $1,920 $2,053
Service cost 318 277 293 264 38 39
Interest cost 410 391 309 288 113 113
Employee contributions ——23 22 28 22
Plan amendments (82) —15 (80) 5—
Increases/(decreases) arising primarily from changes in
actuarial assumptions 671 490 459 488 332 (136)
Foreign exchange impact ——(793) 621 —1
Acquisitions ——18 23 —1
Divestitures ———(36) ——
Curtailments ——(3) (19) ——
Settlements (33) (27) (56) (35) ——
Special termination benefits 5—29 21 2—
Benefits paid (414) (515) (295) (269) (186) (173)
Benefit obligation at end of year(a) $7,983 $7,108 $6,968 $6,969 $2,252 $1,920(b)
Change in plan assets:
Fair value of plan assets at beginning of year $6,820 $6,593 $4,277 $3,410 $253 $225
Actual gain on plan assets 625 688 687 339 23 28
Company contributions 52 81 439 428 158 152
Employee contributions ——23 22 28 22
Foreign exchange impact ——(490) 384 (1) (1)
Acquisitions ——10 8——
Divestitures ———(10) ——
Settlements (33) (27) (56) (35) ——
Benefits paid (414) (515) (295) (269) (186) (173)
Fair value of plan assets at end of year $7,050 $6,820 $4,595 $4,277 $275 $253
Funded status (plan assets less than benefit obligation) $(933) $(288) $(2,373) $(2,692) $(1,977) $(1,667)
Unrecognized:
Net transition obligation ——3422
Actuarial losses 2,364 1,837 1,715 1,958 525 212
Prior service costs/(benefits) 54 146 (6) (30) 73
Net asset/(liability) recorded in consolidated balance sheet $1,485 $1,695 $(661) $(760) $(1,443) $(1,450)
(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 projected benefit obligation.
(b) Includes a credit of $157 million relating to the adoption of FSP 106-2 in 2004.