Occidental Petroleum 2001 Annual Report Download - page 71

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59
The following table sets forth the reconciliation of the beginning and
ending balances of the fair value of plan assets for Occidental's defined
benefit pension plans (in millions):
Pension Benefits
-------------------------
2001 2000
======================================================================================= ========== ==========
CHANGES IN PLAN ASSETS:
Fair value of plan assets-- beginning of year $ 254 $ 254
Actual return on plan assets 14 10
Foreign currency exchange rate changes (1) (1)
Employer contribution 8 2
Benefits paid (20) (18)
Businesses acquired -- 21 (a)
Divestitures -- (14)(b)
---------- ----------
Fair value of plan assets-- end of year $ 255 $ 254
======================================================================================= ========== ==========
(a) Relates to Oxy Permian and THUMS.
(b) Primarily relates to Durez.
The projected benefit obligation, accumulated benefit obligation and fair
value of plan assets for defined benefit pension plans with accumulated benefit
obligation in excess of plan assets were $212 million, $193 million and $123
million, respectively, as of December 31, 2001 and $103 million, $84 million and
$41 million, respectively, as of December 31, 2000.
The weighted average discount rate used in determining the benefit
obligation was 7 percent and 7.75 percent, respectively as of December 31, 2001
and 2000. The weighted average rate of increase in future compensation levels
used in determining the benefit obligations was approximately 4.5 percent in
2001 and 2000. The expected long-term rate of return on assets was 9.0 percent
in 2001 and 2000.
The postretirement benefit obligation was determined by application of the
terms of medical and dental benefits and life insurance coverage, including the
effect of established maximums on covered costs, together with relevant
actuarial assumptions and health care cost trend rates projected at a Consumer
Price Index (CPI) increase of 3.0 percent as of December 31, 2001 and 2000
(participants other than certain union employees pay for all medical cost
increases in excess of increases in the CPI). For certain union employees, the
health care cost trend rates were projected at annual rates ranging ratably from
12 percent in 2001 to 6.0 percent through the year 2007 and level thereafter. A
1-percent increase or a 1-percent decrease in these assumed health care cost
trend rates would result in an increase of $19 million or a reduction of $17
million, respectively, in the postretirement benefit obligation as of December
31, 2001, and an increase or reduction of $1 million, in interest cost in 2001.
The annual service costs would not be materially affected by these changes.
The following table sets forth the funded status and amounts recognized in
Occidental's consolidated balance sheets for the defined benefit pension and
postretirement benefit plans at December 31, 2001 and 2000 (in millions):
Pension Benefits Postretirement Benefits
------------------------- -------------------------
Balance at December 31, 2001 2000 2001 2000
========================================================= ========== ========== ========== ==========
Unfunded obligation $ (83) $ (41) $ (465) $ (383)
Unrecognized net transition obligation 2 2 -- --
Unrecognized prior service cost 5 3 9 9
Unrecognized net (gain)loss 41 7 75 (20)
---------- ---------- ---------- ----------
Net amount recognized $ (35) $ (29) $ (381) $ (394)
========== ========== ========== ==========
Prepaid benefit cost $ 38 $ 36 $ -- $ --
Accrued benefit liability (83) (66) (381) (394)
Intangible assets 1 -- -- --
Accumulated other comprehensive income 9 1 -- --
---------- ---------- ---------- ----------
Net amount recognized $ (35) $ (29) $ (381) $ (394)
========================================================= ========== ========== ========== ==========