Occidental Petroleum 2008 Annual Report Download - page 76

The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for defined benefit pension plans with an
accumulated benefit obligation in excess of plan assets were $388 million, $363 million and $233 million, respectively, as of December 31,
2008, and $111 million, $104 million and zero, respectively, as of December 31, 2007. The projected benefit obligation, accumulated benefit
obligation and fair value of plan assets for defined benefit pension plans with plan assets in excess of the accumulated benefit obligation were
$154 million, $146 million and $167 million, respectively, as of December 31, 2008, and $415 million, $396 million and $566 million,
respectively, as of December 31, 2007.
Occidental has 401(h) accounts established within certain defined benefit pension plans. These plans allow Occidental to fund
postretirement medical benefits for employees at two of its operations. Contributions to these 401(h) accounts are made at Occidental's
discretion. All of Occidental's other postretirement benefit plans are unfunded.
Amounts recognized in the consolidated balance sheets consist of:
Pension Benefits Postretirement Benefits
Unfunded Plans Funded Plans
As of December 31, (in millions) 2008 2007 2008 2007 2008 2007
Other assets $21 $156 $ — $ — $ — $ —
Accrued liabilities (10) (3) (51) (49) — —
Deferred credits and other liabilities – other (153) (113) (717) (613) (36) (29)
$(142)$40 $(768)$(662)$(36)$(29)
At December 31, 2008 and 2007, AOCI included the following after-tax balances:
Pension
Benefits Postretirement Benefits
Unfunded Plans Funded Plans
As of December 31, (in millions) 2008 2007 2008 2007 2008 2007
Net loss $139 $19 $208 $149 $11 $ 8
Prior service cost 3 2 4 3 — —
$142 $21 $212 $152 $11 $ 8
Occidental does not expect any plan assets to be returned during 2009.
COMPONENTS OF NET PERIODIC BENEFIT COST AND OTHER AMOUNTS RECOGNIZED IN OCI
Pension Benefits Postretirement Benefits
Unfunded Plans Funded Plans
For the years ended December 31, (in millions) 2008 2007 2006 2008 2007 2006 2008 2007 2006
Net periodic benefit costs:
Service cost — benefits earned during the period $14 $ 9 $11 $13 $12 $10 $ — $1 $ —
Interest cost on benefit obligation 30 27 27 36 34 33 2 2 2
Expected return on plan assets (39) (38) (33) — — — — (1) —
Amortization of prior service cost — 1 1 1 1 1 — — —
Recognized actuarial loss 6 3 1 15 14 16 1 1 1
Settlement and special termination benefits
cost (a) — 3 — — — — — — —
Currency adjustments (12) 10 2 — — — — — —
Net periodic benefit cost $(1)$15 $ 9 $65 $61 $60 $ 3 $ 3 $ 3
(a) Settlement cost relates to benefit distributions made in 2007.
The estimated net loss and prior service cost for the defined benefit pension plans that will be amortized from AOCI into net periodic
benefit cost over the next fiscal year are $17 million and $1 million, respectively. The estimated net loss and prior service cost for the other
defined benefit postretirement plans that will be amortized from AOCI into net periodic benefit cost over the next fiscal year are $21 million
and $1 million, respectively.
ADDITIONAL INFORMATION
Occidental’s defined benefit pension and postretirement benefit plan obligations are determined based on various assumptions and
discount rates. Occidental uses the fair value of assets to determine expected return on plan assets in calculating pension expense.
Occidental funds and expenses negotiated pension increases for domestic union employees over the terms of the applicable collective
bargaining agreements.
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The following table sets forth the weighted-average assumptions used to determine Occidental's benefit obligation and net periodic