Hess 2000 Annual Report Download - page 41

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39
10. Pension Plans
The Corporation has defined benefit pension plans for
substantially all of its employees. The following table
reconciles the benefit obligation and fair value of plan
assets and shows the funded status:
Millions of dollars 2000 1999
Reconciliation of pension benefit obligation
Benefit obligation at January 1 $501 $543
Service cost 18 22
Interest cost 37 34
Actuarial (gain) loss 34 (72)
Acquisition of business 25 —
Benefit payments (26) (26)
Pension benefit obligation at
December 31 589 501
Reconciliation of fair value of plan assets
Fair value of plan assets at January 1 534 477
Actual return on plan assets (13) 63
Employer contributions 14 20
Acquisition of business 34 —
Benefit payments (26) (26)
Fair value of plan assets at
December 31 543 534
Funded status at December 31
Funded status (46) 33
Unrecognized prior service cost 68
Unrecognized gain (5) (92)
Accrued pension liability $ (45) $ (51)
Pension expense consisted of the following:
Millions of dollars 2000 1999 1998
Service cost $18 $22 $19
Interest cost 37 34 33
Expected return on
plan assets (45) (41) (36)
Amortization of prior
service cost 211
Amortization of net gain (1) ——
Pension expense $11 $16 $17
Prior service costs and gains and losses in excess of 10%
of the greater of the benefit obligation and the market
value of assets are amortized over the average remaining
service period of active employees.
The weighted-average actuarial assumptions used by
the Corporation’s pension plans at December 31 were
as follows:
2000 1999
Discount rate 7.0% 7.3%
Expected long-term rate of return on
plan assets 8.7% 8.7%
Rate of compensation increases 4.5% 4.5%
The Corporation also has a nonqualified supplemental
pension plan covering certain employees. The supple-
mental pension plan provides for incremental pension
payments from the Corporation’s funds so that total pen-
sion payments equal amounts that would have been
payable from the Corporation’s principal pension plan
were it not for limitations imposed by income tax regula-
tions. The benefit obligation related to this unfunded plan
totaled $47 million at December 31, 2000 and $38 million
at December 31, 1999. Pension expense for the plan was
$7 million in 2000 and 1999 and $6 million in 1998. The
Corporation has accrued $35 million for this plan at
December 31, 2000 and $29 million at December 31, 1999.
The trust established to fund the supplemental plan held
assets valued at $19 million at December 31, 2000 and
$14 million at December 31, 1999.