IBM 1997 Annual Report Download - page 76

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74
notes to consolidated financial statements
International Business Machines Corporation
and Subsidiary Companies
The table below provides information on the status of the U.S. plans:
Funded Status
(Dollars in millions) 1997 1996
Accumulated postretirement benefit obligation:
Retirees $(5,327) $(5,454)
Fully eligible active plan participants (518) (512)
Other active plan participants (539) (487)
________________ ________________
Total (6,384) (6,453)
Plan assets at fair value 120 559
________________ ________________
Accumulated postretirement benefit obligation in excess of plan assets (6,264) (5,894)
Unrecognized net loss 578 378
Unrecognized prior service cost (1,073) (902)
________________ ________________
Accrued postretirement benefit cost recognized in the
Consolidated Statement of Financial Position $(6,759) $(6,418)
Assumed discount rate 7.0% 7.75%
The accumulated postretirement benefit obligation was
determined by application of the terms of medical, dental
and life insurance plans, including the effects of
established maximums on covered costs, together
with relevant actuarial assumptions. These actuarial
assumptions included a projected healthcare cost trend
rate of 6 percent. In 1997, the accumulated postretirement
benefit obligation increased by $387 million from the
change, as required by SFAS 106, “Employers’ Accounting
for Postretirement Benefits Other Than Pensions,” in the
assumed discount rate. This increase was partially
offset by certain plan amendments, which reduced
the accumulated postretirement benefit obligation by
$300 million.
The effect of a 1 percent annual increase in the assumed
healthcare cost trend rate would increase the accumulated
postretirement benefit obligation at December 31, 1997,
by approximately $51 million; the 1997 annual costs would
not be materially affected.
The plan assets include various domestic short-term
fixed income securities. Once plan assets have been
depleted, the company intends to fund costs as they are
incurred. The accounting for the plan is based on the
written plan.