Document bBagqZDjJyd4qN3v5DzYD60z3

The components of pension (expense) income for the years ended December 31 follow (in millions): _____ __ _________ - 199-1 1993 1992 Service cost benefits earned during year Interest cost on projected benefit obligation Actual return on assets Net amortization and deferral *55) (94) 36 99 *14) *42) (97) 153 (17) $ (1) *39) (96) 203 (73) $ (S) As a result of the DCBU acquisition, pension expense increased by $7 million in 1994. The pension asset (liability), by funded status, recognized in the bal ance sheet at December 31 follows (in millions): 1994 1993 Over Under Over- Under funded funded funded funded 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 Unamortized Initial net (asset) obligation ' Net (gain) loss Prior service cost Adjustment to recognize minimum liability $ 950 62 1,012 135 1,147 1.370 $ 147 8 155 10 165 70 $ 979 53 1,032 143 1.175 1.371 $ 136 10 146 10 156 68 223 (95) 196 (88) (40) (125) 10 7 (48) (3) (116) 15 27 (12) 7 3 12 (12) $ 68 $ (88) $ 59 $ (78) Measurement of the projected benefit obligation was based on a discount rate of 8.50%, 7.25%. and 8.25% in-1994, 1993 and 1992, respectively. The expected compensation growth rate was 5.95%, 4.95%, and 5.95% in 1994,1993 and 1992, respectively. The expected long-term rate-of return on assets was 10% in all three years. Plan assets are invested in equity and fixed income securities and other instruments. Underfunded plans are associated principally with oper ations outside the United States. The change in the discount rate to 8.50% at the end of 1994 had the effect of decreasing the accumulated pension benefit obligation by $140 million with an offsetting increase in the unamortized net gain. This change will have an immaterial effect on future expense. POSTRETIREMENT BENEFIT PLANS OTHER THAN PENSIONS Generally, employees become eligible for postretirement benefits other than pensions, primarily health care and life insurance for retirees in the United States, when they retire. These benefits are payable for life, although the Company retains the right to modify or terminate the plans providing the benefits. The plans are contributory, with retiree contributions adjusted annually, and contain other cost sharing features, including deductibles and co-payments. During 1993, cenain plans were amended to limit the annual amount of the Company's future contributions towards employees' postretirement health care benefits. Company policy is to pay claims as they are incurred since, unlike pensions, there is no effective method to obtain a tax deduction for prefunding 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): 1994 2993 1992 Service cost - benefits earned during year Interest cost on projected benefit obligation Net amortization and deferral *13) (43) 5 *51) $ (7) (37) 9 *35) *12) (44) $(56) The liability for postretiremen! benefit plans other than pensions rec ognized in the balance sheets at December 31 follows (in millions): 2994 2993 Accumulated postretiremen! benefit obligation Retirees Eligible plan participants Non-eligible plan participants Unamottized Prior service cost Net loss $382 44 177 $368 38 120 67 (62) $608 91 (73) $544 As a result of the DCBU acquisition, the expense and the liability for postretiremen! benefits other than pensions increased by $6 million and $51 million, respectively. Measurement of the accumulated postretirement benefit obligation at December 31,1994, was based on an 11 % annual rate of increase in the per capita cost of covered health care benefits (12% for 1993). For 1994. the rate was assumed to decrease ratably to 7% through 1999 and decrease to 6.25% in 2000 and remain at that level there after (5% for 1993). The discount rate was 8.50% in 1994 and 7.25% for 1993. The changes in assumed rales had the effect of decreasing the accumulated postretiremen! benefit obligation (APBO) which off set increases in the APBO due to changes in plan provisions. These changes will have an immaterial effect on future expense. An increase of 1% in assumed health care cost trend rates would increase the accumulated postretirement benefit obligation as of December 31. 1994 by $39 million and the net periodic cost for 1994 by $3 million.