E-Z-GO 1998 Annual Report Download - page 55

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The projected benefit obligation, accumulated benefit obligation, and fair value of plan
assets for the pension plan with accumulated benefit obligations in excess of plan assets
were $267 million, $231 million, and $78 million, respectively, as of year-end 1998, and
$213 million, $178 million, and $61 million, respectively, as of year-end 1997.
The following summarizes the net periodic benefit cost for the pension benefits and
postretirement benefits plans:
Postretirement Benefits
Pension Benefits Other than Pensions
January 2, January 3, December 28, January 2, January 3, December 28,
(In millions) 1999,1998,1996,1999,1998,1996,
Components of
net periodic
benefit cost
Service cost $83 $71 $69 $ 6 $5 $5
Interest cost 235 223 207 45 46 51
Expected return
on plan assets (323) (298) (276) –––
Amortization of
unrecognized
transition asset (17) (17) (17) –––
Recognized actuarial
(gain) loss 11–(9) (9) (7)
Recognized prior
service cost 14 15 12 (4) (4) (5)
Net periodic
benefit cost $ (7) $ (5) $ (5) $38 $38 $44
Major actuarial assumptions used in accounting for defined benefit pension plans are
presented below.
January 2, January 3, December 28, December 30,
1999,1998,1996,1995,
Weighted average assumptions
at year-end
Discount rate 6.75% 7.25% 7.50% 7.25%
Expected return on plan assets 9.25 9.00 9.00 9.00
Rate of compensation increase 4.80 5.00 5.00 5.00
Postretirement benefit plan discount rates are the same as those used by Textron’s
defined benefit pension plans.
The 1998 health care cost trend rate, which is the weighted average annual assumed rate
of increase in the per capita cost of covered benefits, was 6.0% for retirees age 65 and over
and 6.5% for retirees under age 65. Both rates are assumed to decrease gradually to 5.5% by
2001 and 2003, respectively, and then remain at that level. A one-percentage-point change in
assumed health care cost trend rates would have the following effects:
(In millions)
1% Increase 1% Decrease
Effect on total of service and interest cost components $ 6 $ (5)
Effect on postretirement benefit obligation 64 (52)
1998 TEXTRON ANNUAL REPORT 51