Notes to Consolidated Financial Statements

The Company has defined benefit pension plans covering substantially all of its employees in the United States and certain foreign locations. The Company also provides certain post-retirement healthcare and life insurance benefits to qualifying domestic retirees. Postretirement healthcare and life insurance benefit plans in foreign countries are not material. The measurement date used for the Company’s employee benefit plans is September 30.

     Net pension and other postretirement cost included the following components:

	Pension Plans									Other Postretirement Benefits
	2005			2004			2003			2005			2004			2003
Service cost	$	61,836		$	57,013		$	44,798		$	3,657		$	3,510		$	3,159
Interest cost		66,837			62,825			54,072			15,321			14,492			14,484
Expected return on plan assets		(59,372	)		(51,923	)		(47,190	)		—			—			—
Amortization of prior service cost		211			180			85			(6,233	)		(6,233	)		(6,233	)
Amortization of loss		22,951			17,586			13,121			6,164			4,116			3,342
Amortization of net obligation		134			132			11			—			—			—
Net curtailment gain		—			(300	)		(147	)		—			—			—
Net pension and postretirement costs	$	92,597		$	85,513		$	64,750		$	18,909		$	15,885		$	14,752

     Net pension cost attributable to foreign plans included in the preceding table was $16,772, $16,053 and $13,302 in 2005, 2004 and 2003, respectively.

     The change in benefit obligation, change in plan assets, funded status and amounts recognized in the Consolidated Balance Sheets for these plans were as follows:

	Pension Plans						Other Postretirement Benefits
	2005			2004			2005			2004
Change in benefit obligation:
Benefit obligation at October 1	$	1,185,394		$	1,058,645		$	263,678		$	255,106
Service cost		61,836			57,013			3,657			3,510
Interest cost		66,837			62,825			15,321			14,492
Plan amendments		195			761			—			—
Benefits paid		(57,818	)		(55,401	)		(22,279	)		(18,282	)
Actuarial loss		164,161			46,726			20,820			35,261
Other, includes translation		(7,513	)		14,825			—			(26,409	)(A)
Benefit obligation at September 30	$	1,413,092		$	1,185,394		$	281,197		$	263,678
Change in plan assets:
Fair value of plan assets at October 1	$	735,167		$	685,585		$	—		$	—
Actual return on plan assets		109,778			56,018			—			—
Employer contribution		151,439			37,468			—			—
Benefits paid		(57,818	)		(55,401	)		—			—
Other, includes translation		(4,646	)		11,497			—			—
Fair value of plan assets at September 30	$	933,920		$	735,167		$	—		$	—
Funded status at September 30:
Unfunded benefit obligation	$	(479,172	)	$	(450,227	)	$	(281,197	)	$	(263,678	)
Unrecognized net transition obligation		(904	)		1,150			—			—
Unrecognized prior service cost		6,154			4,321			(19,153	)		(25,386	)
Unrecognized net actuarial loss		509,765			420,678			106,811			93,033
Prepaid (accrued) benefit cost	$	35,843		$	(24,078	)	$	(193,539)		$	(196,031	)
Amounts recognized in the Consolidated Balance Sheets at September 30 are as follows:
Prepaid benefit cost	$	39,005		$	25,857		$	—		$	—
Intangible asset		1,327			1,168			—			—
Accrued benefit liability		(148,403	)		(201,650	)		(193,539	)		(196,031	)
Accumulated other comprehensive loss
before income taxes		143,914			150,547			—			—
Net amount recognized	$	35,843		$	(24,078	)	$	(193,539	)	$	(196,031	)

     Foreign pension plan assets at fair value included in the preceding table were $261,841 and $207,765 at September 30, 2005 and 2004, respectively. The foreign pension plan projected benefit obligations were $339,466 and $279,029 at September 30, 2005 and 2004, respectively.

     The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the pension plans with accumulated benefit obligations in excess of plan assets were $1,149,504, $840,405 and $695,635, respectively as of September 30, 2005 and $1,034,223, $796,256 and $597,155, respectively as of September 30, 2004.

     The assumptions used in determining pension plan information were as follows:

	2005			2004			2003
Net Cost Discount rate:     U.S. plans(A)		6.00	%		6.25	%		6.75	%
Foreign plans (average)		4.95			4.90			5.18
Expected return on plan assets:     U.S. plans		8.00			8.00			8.00
Foreign plans (average)		6.60			6.72			7.15
Rate of compensation increase:     U.S. plans(A)		4.25			4.25			4.00
Foreign plans (average)		2.98			2.92			3.17
Benefit Obligation Discount rate:     U.S. plans(A)		5.50			6.00			6.25
Foreign plans (average)		4.19			4.95			4.90
Rate of compensation increase:     U.S. plans(A)		4.25			4.25			4.25
Foreign plans (average)		2.92			2.98			2.92

     At September 30, 2005 the assumed healthcare trend rates were 10% pre and post age 65, gradually decreasing to an ultimate rate of 5% beginning in 2011. At September 30, 2004 the corresponding assumed healthcare trend rates were 10% pre and post age 65, gradually decreasing to an ultimate rate of 5% beginning in 2010. A one percentage point increase in assumed healthcare cost trend rates in each year would increase the accumulated postretirement benefit obligation as of September 30, 2005 by $14,404 and the aggregate of the service cost and interest cost components of 2005 annual expense by $821. A one percentage point decrease in the assumed healthcare cost trend rates in each year would decrease the accumulated postretirement benefit obligation as of September 30, 2005 by $12,802 and the aggregate of the 2005 service cost and interest cost by $713.

Expected Funding
The Company’s funding policy for its defined benefit pension plans is to contribute amounts sufficient to meet legal funding requirements, plus any additional amounts that may be appropriate considering the funded status of the plans, tax consequences, the cash flow generated by the Company and other factors. While the Company will not be required to fund any of its pension plans in 2006, the Company made a discretionary contribution to its U.S. pension plan in October 2005 of $150 million.

     Expected benefit payments are as follows:

	Pension Plans	Other    Postretirement Benefits
2006	$  67,230	$  21,652
2007	61,005	21,983
2008	66,919	22,316
2009	76,686	22,593
2010	83,315	22,848
2011 – 2015	562,418	113,917

     Expected receipts of the subsidy under the Act, as discussed in Note 2, which are not reflected in the expected other postretirement benefit payments included in the preceding table, are as follows: 2006, $2,378; 2007, $2,275; 2008, $2,296; 2009, $2,287; 2010, $2,245; 2011–2015, $10,272.

     The Company’s asset allocation for its defined benefit pension plans at September 30 were as follows:

	2005		2004
Equity securities	63.0	%	66.9	%
Debt securities	34.1		30.1
Other	2.9		3.0
Total	100.0	%	100.0	%

Investment Strategy

The Company’s investment objective is to achieve superior returns on plan assets, subject to a prudent level of portfolio risk, for the purpose of enhancing the security of benefits for participants. The Company’s investments include a broad range of equity and fixed income securities. These investments are diversified in terms of domestic and international equity securities, short-term and long-term securities, growth and value styles, as well as small and large capitalization stocks. The Company’s target allocation percentages are as follows: equity securities (58%–69%); fixed-income securities (31%–39%); and cash (0%–3%). Equity securities are held for their expected high return and excess return over inflation. Fixed-income securities are held for diversification relative to equities. The plans may also hold cash to meet liquidity requirements. Due to short-term fluctuations in market conditions, allocation percentages may temporarily deviate from these target allocation percentages before a rebalancing occurs. Investment risks and returns are measured and monitored on an on-going basis through annual liability measurements and quarterly investment portfolio reviews to determine whether the asset allocation targets continue to represent an appropriate balance of expected risk and reward.

     The expected rate of return on plan assets is based upon expectations of long-term average rates of return to be achieved by the underlying investment portfolios. In establishing this assumption, the Company considers historical and expected rates of return for the asset classes in which the plan’s assets are invested, as well as current economic and capital market conditions.

     The Company utilizes a service-based approach in applying the provisions of SFAS No. 112, “Employers’ Accounting for Postemployment Benefits,” for most of its postemployment ben-efits. This approach recognizes that actuarial gains and losses may result from experience that differs from baseline assumptions. Postemployment benefit costs were $22,680, $17,295 and $11,561 in 2005, 2004 and 2003, respectively.