ADT 2002 Annual Report Download - page 117

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TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
21. Retirement Plans (continued)
The components of the accrued postretirement benefit obligation, all of which are generally
unfunded, are as follows ($ in millions):
September 30,
2002 2001
Change in benefit obligation
Benefit obligation at beginning of year ................................. $332.6 $ 167.6
Service cost ..................................................... 1.8 3.4
Interest cost .................................................... 22.5 22.7
Amendments .................................................... 0.7 (19.4)
Actuarial loss .................................................... 32.5 42.2
Acquisition ..................................................... (1.1) 145.6
Curtailment loss ................................................. — 0.4
Expected net benefits paid .......................................... (33.6) (29.6)
Currency translation adjustment ...................................... — (0.3)
Benefit obligation at end of year ...................................... $355.4 $ 332.6
Change in plan assets
Fair value of assets at beginning of year ................................ $ 5.2 $ —
Employer contributions ............................................ 33.5 —
Payment of benefits from plan assets ................................... (33.6) —
Actual return on plan assets ......................................... (0.4) 0.3
Acquisition ..................................................... — 4.9
Fair value of plan assets at end of year ................................. $ 4.7 $ 5.2
Funded status ................................................... $(350.7) $(327.4)
Unrecognized net loss ............................................. 47.5 14.2
Unrecognized prior service cost ...................................... (24.0) (28.2)
Accrued postretirement benefit cost ................................... $(327.2) $(341.4)
For measurement purposes, in fiscal 2002, a 7.05% composite annual rate of increase in the per
capita cost of covered health care benefits was assumed. The rate was assumed to decrease gradually to
5.00% by the year 2008 and remain at that level thereafter. At year-end, the composite annual rate of
increase in health care benefit costs was increased to 11.55%, decreasing to 5.00% by the year 2011. A
one-percentage-point change in assumed healthcare cost trend rates would have the following effects
($ in millions):
1-Percentage- 1-Percentage-
Point Increase Point Decrease
Effect on total of service and interest cost components ............... $ 1.3 $ (1.1)
Effect on postretirement benefit obligation ....................... 18.0 (15.8)
The combined weighted average discount rate used in determining the accumulated postretirement
benefit obligation was 6.75% at September 30, 2002 (7.50% at September 30, 2001).
22. Preference Shares
Tyco has authorized 125,000,000 preference shares, par value of $1 per share, at September 30,
2002 and September 30, 2001, of which one such share was issued and designated a special voting
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