Notes to Consolidated Financial Statements

(Continued)

Note 16.
Benefit Plans:

Altria Group, Inc. sponsors noncontributory defined benefit pension plans covering substantially all U.S. employees. Pension coverage for employees of ALG’s non-U.S. subsidiaries is provided, to the extent deemed appropriate, through separate plans, many of which are governed by local statutory requirements. In addition, ALG and its U.S. and Canadian subsidiaries provide health care and other benefits to substantially all retired employees. Health care benefits for retirees outside the United States and Canada are generally covered through local government plans.

The plan assets and benefit obligations of Altria Group, Inc.’s U.S. and Canadian pension plans are measured at December 31 of each year, and all other non-U.S. pension plans are measured at September 30 of each year. The benefit obligations of Altria Group, Inc.’s postretirement plans are measured at December 31 of each year.

Pension Plans

Obligations and Funded Status

The benefit obligations, plan assets and funded status of Altria Group, Inc.’s pension plans at December 31, 2005 and 2004, were as follows:


                                                                  

The combined U.S. and non-U.S. pension plans resulted in a net prepaid pension asset of $3.9 billion and $3.4 billion at December 31, 2005 and 2004, respectively. These amounts were recognized in Altria Group, Inc.’s consolidated balance sheets at December 31, 2005 and 2004, as other assets of $5.7 billion and $5.2 billion, respectively, for those plans in which plan assets exceeded their accumulated benefit obligations, and as other liabilities of $1.8 billion at December 31, 2005 and 2004 for those plans in which the accumulated benefit obligations exceeded their plan assets.

For U.S. and non-U.S. pension plans, the change in the additional minimum liability in 2005 and 2004 was as follows:


                                                                 

The accumulated benefit obligation, which represents benefits earned to date, for the U.S. pension plans was $10.1 billion and $9.5 billion at December 31, 2005 and 2004, respectively. The accumulated benefit obligation for non-U.S. pension plans was $6.1 billion and $5.5 billion at December 31, 2005 and 2004, respectively.

For U.S. plans with accumulated benefit obligations in excess of plan assets, the projected benefit obligation, accumulated benefit obligation and fair value of plan assets were $488 million, $384 million and $18 million, respectively, as of December 31, 2005, and $584 million, $415 million and $15 million, respectively, as of December 31, 2004. At December 31, 2005, the majority of these relate to plans for salaried employees that cannot be funded under I.R.S. regulations. For non-U.S. plans with accumulated benefit obligations in excess of plan assets, the projected benefit obligation, accumulated benefit obligation and fair value of plan assets were $4,583 million, $4,052 million and $2,956 million, respectively, as of December 31, 2005, and $3,689 million, $3,247 million and $2,013 million, respectively, as of December 31, 2004.

The following weighted-average assumptions were used to determine Altria Group, Inc.’s benefit obligations under the plans at December 31:


                                                                

Altria Group, Inc.’s 2005 year-end U.S. and Canadian plans discount rates were developed from a model portfolio of high-quality, fixed-income debt instruments with durations that match the expected future cash flows of the benefit obligations. The 2005 year-end discount rates for Altria Group, Inc.’s non-U.S. plans were developed from local bond indices that match local benefit obligations as closely as possible.