Emerson 2006 Annual Report Download - page 52

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Notes to Consolidated Financial Statements

The Company sponsors unfunded postretirement benet plans (primarily health care) for U.S. retirees and their dependents. Net
postretirement plan expense for the years ended September 30 follows:
   2004 2005 2006
Service cost $ 5 6 5
Interest cost 25 27 26
Net amortization 19 21 32
Net postretirement plan expense $49 54 63
The reconciliations of the actuarial present value of accumulated postretirement benet obligations follow:
    2005 2006
Benefit obligation, beginning $ 444 502
Service cost 6 5
Interest cost 27 26
Actuarial loss 55 16
Benefits paid (43) (39)
Acquisitions/divestitures and other 13 6
Benefit obligation, ending 502 516
Unrecognized net loss (134) (102)
Unrecognized prior service benefit 7 6
Postretirement benefit liability recognized in the balance sheet $ 375 420
The assumed discount rates used in measuring the obligations as of September 30, 2006, 2005 and 2004, were 5.75 percent,
5.25 percent and 5.75 percent, respectively. The assumed health care cost trend rate for 2007 was 10.0 percent, declining to
5.0 percent in the year 2016. The assumed health care cost trend rate for 2006 was 9.5 percent, declining to 5.0 percent in the
year 2014. A one-percentage-point increase or decrease in the assumed health care cost trend rate for each year would increase or
decrease the obligation as of September 30, 2006 and the 2006 postretirement plan expense by less than 5 percent. The Company
estimates that future benet payments will be as follows: $44 in 2007, $45 in 2008, $46 in 2009, $47 in 2010, $53 in 2011 and $241 in
total over the ve years 2012 through 2016.

Emerson is a party to a number of pending legal proceedings and claims, including those involving general and product liability and
other matters, several of which claim substantial amounts of damages. The Company accrues for such liabilities when it is probable
that future costs (including legal fees and expenses) will be incurred and such costs can be reasonably estimated. Such accruals
are based on developments to date, management’s estimates of the outcomes of these matters, the Company’s experience in
contesting, litigating and settling other similar matters, and any related insurance coverage.