Morgan Stanley 1998 Annual Report Download - page 80

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The following tables present information for the
Company’s pension plans on an aggregate basis.
Pension expense includes the following components:
FISCAL fiscal fiscal
(dollars in millions) 1998 1997 1996
U.S. Plans:
Service cost, benefits earned
during the period $ 72 $ 54 $ 48
Interest cost on projected
benefit obligation 78 67 58
Return on plan assets (7) (170) (111)
Difference between actual and
expected return on assets (80) 104 53
Net amortization 1 1 2
Total U.S. plans 64 56 50
International plans 12 9 12
Total pension expense $ 76 $ 65 $ 62
The following table provides the assumptions used in determining
the projected benefit obligation for the U.S. Plans:
FISCAL fiscal
1998 1997
Weighted average discount rate 6.75)%7.25%
Rate of increase in future compensation levels 5.00)%5.00%
Expected long-term rate of return on plan assets 9.00)%9.00%
The following table sets forth the funded status of the U.S. Plans:
NOVEMBER 30, 1998 NOVEMBER 30, 1997
ACCUMULATED Accumulated
ASSETS EXCEED BENEFITS Assets Exceed Benefits
ACCUMULATED EXCEED Accumulated Exceed
(dollars in millions) BENEFITS ASSETS Benefits Assets
Actuarial present
value of vested
benefit obligation $(269) $(616) $ (735) $ (34)
Accumulated
benefit obligation $(314) $(693) $ (807) $ (71)
Effect of future
salary increases (114) (93) (181) (30)
Projected benefit
obligation (428) (786) (988) (101)
Plan assets at fair
value (primarily listed
stocks and bonds) 384 597 1,006 —
Projected benefit
obligation (in
excess of) or less
than plan assets (44) (189) 18 (101)
Unrecognized net
loss or (gain) 53 83 (4) 27
Unrecognized prior
service cost 1 28 31 (4)
Unrecognized net
transition obligation — 8 3 5
Prepaid (accrued)
pension cost at
fiscal year-end $ 10 $ (70) $ 48 $ (73)
Additional liability
for unfunded
accumulated
benefit obligation — (30) — —
Pension asset
(liability) $ 10 $(100) $ 48 $ (73)
The Company also maintains a separate defined con-
tribution pension plan which covers substantially all employees of
the Company’s U.K. subsidiaries (the “U.K. Plan”). Under the U.K.
Plan, benefits are determined by the purchasing power of the accu-
mulated value of contributions paid. In fiscal 1998 and 1997, the
Company’s expense related to the U.K. Plan was $17 million and
$15 million, respectively.
*EIGHTY
-FOUR *
MORGAN STANLEY DEAN WITTER *1998 ANNUAL REPORT