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2002 Annual Report 65
Notes to Consolidated Financial Statements
64
The company’s obligations and related expense for pension and postretirement health care plans are as follow:
Pension Benefits
US Foreign
Millions of dollars 2002 2001 2000 2002 2001 2000
Change in benefit obligation
Benefit obligation as of January 1 $ 1,269 $ 1,090 $ 1,044 $ 145 $ 193 $ 198
Service cost 56 53 38 7 8 10
Interest cost 95 88 86 11 13 15
Plan participants’ contributions ––––––
Amendments 29 48 11 (11) (3) –
Business combinations –––25 ––
Actuarial (gain) loss 124 55 44 12 (4) (6)
Settlements ––––(36) –
Benefits paid (70) (65) (165) (8) (11) (10)
Curtailments –––(13) (1) –
Special termination benefits ––32 –(3) –
Foreign currency exchange rate changes –––4 (11) (14)
Benefit obligation as of December 31 $ 1,503 $ 1,269 $ 1,090 $ 172 $ 145 $ 193
Change in plan assets:
Fair value of plan assets as of January 1 $ 1,460 $ 1,794 $ 2,050 $ 97 $ 147 $ 151
Actual return on plan assets (203) (275) (72) 1 6 15
Employer contributions 3 6 1 2 1 2
Settlements –––(11) (36) –
Plan participants’ contributions –––11–
401 (h) transfer ––(20) –––
Benefits paid (70) (65) (165) (8) (11) (10)
Foreign currency exchange rate changes –––(1) (11) (11)
Fair value of plan assets as of December 31 $ 1,190 $ 1,460 $ 1,794 $ 81 $ 97 $ 147
Pension Benefits (continued)
US Foreign
Millions of dollars 2002 2001 2000 2002 2001 2000
Reconciliation of prepaid (accrued)
cost and total amount recognized:
Funded status as of December 31 $ (313) $ 191 $ 704 $ (91) $ (48) $ (46)
Unrecognized actuarial loss (gain) 407 (118) (659) 17 (17) (42)
Unrecognized prior service cost 129 115 78 5 6 1
Unrecognized transition asset –(1) (3) 1 8 14
Prepaid (accrued) cost as of December 31 $ 223 $ 187 $ 120 $ (68) $ (51) $ (73)
Prepaid cost $ 43 $ 219 $ 155 $ –$5$5
Accrued benefit liability (188) (37) (43) (92) (63) (80)
Intangible asset 128 (5) (1) 5 5 2
Equity Charge and Other 240 10 9 19 2 –
Total recognized as of December 31 $ 223 $ 187 $ 120 $ (68) $ (51) $ (73)
Assumptions as of December 31
Discount rate 6.75% 7.50% 8.00% 5.5 - 11.3% 5.0 - 11.3% 5.0 - 11.3%
Expected return on assets 8.75% 10.00% 10.50% 5.5 - 11.3% 6.0 - 11.3% 6.0 - 11.3%
Rate of compensation increase 4.50% 5.00% 5.00% 2.5 - 8.0% 2.5 - 8.0% 1.0 - 8.0%
Components of net periodic
benefit cost (credit)
Service cost $ 56 $ 53 $ 38 $ 6 $ 8 $ 10
Interest cost 95 89 86 11 12 15
Expected return on plan assets (175) (177) (164) (7) (12) (14)
Recognized actuarial (gain) (22) (35) (37) (1) (1) (2)
Amortization of prior service cost 14 11 10 –––
Amortization of transition asset (1) (2) (4) 2 2 3
Net periodic benefit cost (credit) (33) (61) (71) 11 9 12
Curtailments –––(10) (1) –
Special termination benefits ––32 (2) 3 –
Settlements ––(71) (3) (20) –
Total pension cost (credit) $ (33) $ (61) $ (110) $ (4) $ (9) $ 12