Document JrJMMNwQbG7VwEjZ6z0V7QQp6

PENSION PLANS The Company has non-contributory defined benefit pension plans cov ering the majority of employees. Plans covering salaried and certain hourly employees provide benefits that are generally based on years of service and final average compensation. Benefits for other hourly em ployees are generally based on years of service. Company policy is to fund at least the minimum amount required by applicable regulations. In the event of a change in control of the Company, excess pension plan assets of North American operations may be dedicated to funding of health and welfare benefits for employees and retirees. The components of pension expense for the years ended December 31 follow (in millions): Service cost - benefits earned during year Interest cost on projected benefit obligation Actual return on assets Net amortization and deferral 1995 1994 1993 $ (51) (104) 347 (208) $ (16) $ (55) (94) 36 99 $04) $(42) (97) 155 07) * (1) As a result of the DCBU acquisition, pension expense increased by $7 million in 1994. The pension asset (liability), by funded status of the plan, recognized in the balance sheet at December 31 follows (in millions): was_______________________ ___________ 1884 Overfunded Underfunded Overfunded Underfunded Accumulated pension benefit obligation Vested Nonvested Value of future salary projections Total projected pension benefit obligation Fair value of plan assets Plan assets in excess of or (less than) projected benefit obligation llnamortized Initial net (asset) obligation Net gain Prior service cost Adjustment to recognize minimum liability $1,059 64 1,123 132 1.255 1,535 280 (34) (180) n $ 77 $ 218 29 247 " 10 257 146 (mi 10 (6) 18 (12) $ (101) $ 950 62 1.012 135 1,147 1,370 223 (40) (125) 10 $ 68 $ 147 8 155 10 165 70 (95) 7 (3) 15 ('21 $ (88) Actuarial assumptions used in the calculation of the pension asset (liability) are as follows: Oiscount rate Compensation growth rate Long-term rate of return on plan assets 1995 1994 1993 7.25% 4.70% 9.50% 8.50% 5.95% 10% 7.25% 4.95% 10% Plan assets are invested in equity and fixed income securities and other instalments. Underfunded plans are associated principally with operations outside the United States. The change in the discount rate to 7.25% at the end of 1995 had the effect of increasing the accumulated pension benefit obligation by $127 million with an offsetting increase in the unamortized net gain. This change will not have a material effect on future expense. POSTRETIREMENT BENEFIT PLANS OTHER THAN PENSIONS Generally, United States employees become eligible for postretirement benefits other than pensions, primarily health care and life insurance, upon retirement. These benefits are payable for life, although the Company re tains the right to modify or terminate the plans providing these benefits. The plans are contributory, with retiree contributions adjusted annually, and contain other cost-sharing features, including deductibles and co payments. Certain plans limit the annual amount of the Company's future contributions towards employees' postretirement health care benefits. Company policy Is to pay daims as they are incurred since, unlike pen sions, there is no effective method to obtain a tax deduction for prefund ing of these benefits under existing United States income tax regulations. Expense for postretirement benefits other than pensions for the years ended December 31 follows (in millions): Service cost - benefits earned during year Interest cost on projected benefit obligation Net amortization and deferral 1895 1884 1893 $(12) (49) 8 $(53) $(13) (43) S $(51) $ (7) (37) 9 $(35) As a result of the DCBU acquisition, the expense for postretirement benefits other than pensions increased by $6 million in 1994. The liability for postretirement benefit plans other than pensions rec ognized in the balance sheet at December 31 follows (in millions): Accumulated postretirement benefit obligation Retirees Eligible plan participants Non-eligibie plan participants Unamortized Pnor service cost Net loss 1995 1994 $442 55 180 $382 44 177 61 (125) $613 67 (62) $608 TT