Occidental Petroleum 2006 Annual Report Download - page 77
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At December 31, 2006, AOCI included the following after-tax balances:
Occidental does not expect any plan assets to be returned during 2007.
Components of Net Periodic Benefit Cost and Other Amounts Recognized in OCI
The estimated net loss and prior service cost for the defined benefit pension plans that will be amortized from AOCI into net periodic benefit cost
over the next fiscal year are both $1 million. The estimated net loss and prior service cost for the other defined benefit postretirement plans that will
be amortized from AOCI into net periodic benefit cost over the next fiscal year are $13 million and $1 million, respectively.
Additional Information
Occidental’s defined benefit pension and postretirement defined benefit plan obligations are determined based on various assumptions and
discount rates. Occidental uses the fair value of assets to determine expected return on plan assets in calculating pension expense. Occidental
funds and expenses negotiated pension increases for domestic union employees over the terms of the applicable collective bargaining
agreements.
The following table sets forth the weighted average assumptions used to determine Occidental's benefit obligation and net periodic benefit cost
for domestic plans:
For domestic pension plans, Occidental bases the discount rate on the average yield provided by the Moody’s Aaa Corporate Bond Index. The
weighted average rate of increase in future compensation levels is consistent with Occidental’s past and anticipated future compensation
increases for employees participating in retirement plans that determine benefits using compensation. The assumed long-term rate of return on
assets is estimated with regard to current market factors but within the context of historical returns. Historical returns and correlation of equities
and fixed income securities are studied. Current market factors such as inflation and interest rates are also evaluated.
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