PNC Bank 2001 Annual Report Download - page 85

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83
The components of net periodic pension and post-retirement benefit cost were as follows:
Q
ualified and Non
q
ualified Pensions Post-retirement Benefits
Year ended December 31 – in millions 2001 2000 1999 2001 2000 1999
Service cost $32 $32 $24 $2 $2 $2
Interest cost 66 65 58 14 14 12
Expected return on plan assets (97) (93) (75)
Transition amount amortization (4) (5)
Curtailment gain (3)
Amortization of prior service cost (1) (1) (1) (6) (6) (6)
Recognized net actuarial loss 22
Losses due to settlements 7
Net
p
eriodic cos
t
$2 $6 $3 $7 $10 $8
Weighted-average assumptions were as follows:
Q
ualified and Non
q
ualified Pensions
Year ended December 31 2001 2000 1999
Discount rate 7.25% 7.50% 7.75%
Rate of compensation
increase 4.50 4.50 4.50
Expected return on plan
assets 9.50 9.50 9.50
Post-retirement Benefits
Year ended December 31 2001 2000 1999
Discount rate 7.25% 7.50% 7.75%
Expected health care cost
trend rate
Medical pre-65 7.00 7.00 7.00
Medical post-65 8.00 8.00 8.00
Denta
l
7.00 7.00 7.00
The health care cost trend rate declines until it stabilizes at
5.50% beginning in 2005. A one-percentage-point change
in assumed health care cost trend rates would have the
following effects:
Year ended December 31, 2001 – in millions Increase Decrease
Effect on total service and interest cost $1 $(1)
Effect on post-retirement benefit obligation 9(9)
INCENTIVE SAVINGS PLAN
The Corporation sponsors an incentive savings plan that
covers substantially all employees. Under this plan,
employee contributions up to 6% of biweekly
compensation as defined by the plan are matched, subject
to Internal Revenue Code limitations. Contributions to the
plan are matched primarily by shares of PNC common
stock held in treasury or by the Corporation’s employee
stock ownership plan (“ESOP”). The Corporation also
maintains a nonqualified supplemental savings plan for
certain employees.
The Corporation makes annual contributions to the
ESOP that are at least equal to the debt service
requirements on the ESOP’s borrowings less dividends
received by the ESOP. All dividends received by the ESOP
are used to pay debt service. Dividends used for debt
service totaled $8 million in 2001 and $9 million in 2000
and 1999. To satisfy additional debt service requirements,
PNC contributed $1 million in 2001 and $9 million in
1999. No contributions were made in 2000. As of
December 31, 2001 the ESOP’s borrowings have been
paid off or fully extinguished.
As the ESOP’s borrowings were repaid, shares were
allocated to employees who made contributions during the
year based on the proportion of annual debt service to total
debt service. The Corporation includes all ESOP shares as
common shares outstanding in the earnings per share
computation.