Hess 1999 Annual Report Download - page 41

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Pension expense consisted of the following:
Thousands of dollars 1999 1998 1997
Service cost $ 21,639 $ 19,280 $ 19,109
Interest cost 34,333 32,841 33,162
Expected return on
plan assets (41,072) (36,221) (32,390)
Amortization of transition
asset (obligation) 255 (72) (3,052)
Amortization of prior
service cost 1,280 1,280 1,280
Amortization of net gain
—
(22) (1,692)
Pension expense $ 16,435 $ 17,086 $ 16,417
Prior service costs and gains and losses in excess of 10% of
the greater of the benefit obligation and the market value of
assets are amortized over the average remaining service period
of active employees.
The weighted-average actuarial assumptions used by the
Corporation’s pension plans at December 31 were as follows:
1999 1998
Discount rate 7.3% 6.4%
Expected long-term rate of return on
plan assets 8.7% 8.3%
Rate of compensation increases 4.5% 4.9%
The Corporation also has a nonqualified supplemental
pension plan covering certain employees. The supplemental
pension plan provides for incremental pension payments
from the Corporation’s funds so that total pension payments
equal amounts that would have been payable from the Corpo-
ration’s principal pension plan were it not for limitations
imposed by income tax regulations. The benefit obligation
related to this unfunded plan totaled $38,358,000 at Decem-
ber 31, 1999 and $41,802,000 at December 31, 1998. Pension
expense for the plan was $6,743,000 in 1999, $6,271,000
in 1998 and $5,098,000 in 1997. The Corporation has
accrued $29,310,000 for this plan at December 31, 1999 and
$25,205,000 at December 31, 1998. The trust established to
fund the supplemental plan held assets valued at $13,586,000
at December 31, 1999 and $6,209,000 at December 31, 1998.
11. Provision for Income Taxes
The provision (benefit) for income taxes consisted of:
Thousands of dollars 1999 1998 1997
United States Federal
Current $ 6,093 $ 9,510 $ 16,210
Deferred 81,657 (68,203) (27,254)
State 6,483 1,702 1,418
94,233 (56,991) (9,626)
Foreign
Current 189,198 71,492 181,665(b)
Deferred (15,058) (66,310) (41,599)
174,140 5,182 140,066
Adjustment of deferred tax
liability for foreign
income tax rate change (4,180) (3,409) (11,355)
Total $264,193(a) $(55,218) $119,085
(a) Includes a benefit of $54,600 representing actions taken in 1999 to realize the United
States tax impact of certain prior year exploration activities and capital losses.
(b) Includes income tax refund of $38,180.
Income (loss) before income taxes consisted of the
following:
Thousands of dollars 1999 1998 1997
United States $397,237 $(205,522) $ 3,533
Foreign*304,572 (308,589) 123,052
Total $701,809 $(514,111) $126,585
*Foreign income includes the Corporation’s Virgin Islands, shipping and other
operations located outside of the United States.
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