This excerpt taken from the GENZ 10-K filed Mar 1, 2007.
In September 2006, the FASB issued FAS 158, Employers Accounting for Defined Benefit Pension and Other Postretirement Plansan amendment of FASB Statements No. 87, 88, 106 and 132(R). FAS 158 requires us to recognize the overfunded or underfunded status of any pension or other postretirement plans we may have as a net asset or a net liability on our statement of financial position and to recognize changes in that funded status in the year in which the changes occur as an adjustment to accumulated other comprehensive income in stockholders equity. Currently, we have defined benefit pension plans for certain of our foreign subsidiaries and a defined benefit postretirement plan for one of our U.S. subsidiaries, which has been frozen since 1995 and is not significant. Under FAS 158, actuarial gains and losses, prior service costs or credits, and any remaining transition assets or obligations that have not been recognized for our defined benefit pension plans under previous accounting standards must be recognized in accumulated other comprehensive income, net of tax effects, until they are amortized as a component of net periodic benefit cost. In addition, FAS 158 requires that the measurement date, which is the date at which the benefit obligation and plan assets are measured, be as of our fiscal year end, which is December 31. FAS 158 is effective for our current fiscal year ending December 31, 2006, except for the measurement date provisions, which are effective for us for our fiscal year ending December 31, 2008.
GENZYME CORPORATION AND SUBSIDIARIES
NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accordingly, we have recognized the underfunded status of our defined benefit pension plans in our consolidated balance sheets as of December 31, 2006, including $12.6 million of additional minimum pension liabilities and $3.8 million of related deferred tax assets offset by an $8.8 million charge, net of tax, to accumulated other comprehensive income in stockholders equity.
FAS 87 continues to require management make certain assumptions relating to the following:
· long-term rate of return on plan assets;
· discount rates used to measure future obligations and interest expense;
· salary scale inflation rates; and
· other assumptions based on the terms of each individual plan.
We obtained actuarial reports to compute the amounts of liabilities and expenses relating to the majority of our plans subject to the assumptions that management selects as of the beginning of the plan year. Management reviews the long-term rate of return, discount, and salary scale inflation on an annual basis and makes modifications to the assumptions based on current rates and trends as appropriate. We have also provided the disclosures required under FAS 158 as of December 31, 2006 and by FAS 87 as of December 31, 2006 and 2005, in Note P., Benefit Plans.