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Notes to Consolidated Financial Statements

 4     Benefit Plans


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 postretirement healthcare and life insurance benefits to qualifying domestic retirees. Postretirement benefit plans in foreign countries are not material.
    In November 2001, the Company made a $100 million cash contribution to the U.S. pension plan. The Company made an additional $100 million cash contribution to this plan in the first quarter of fiscal year 2003. The Company made these contributions because of the decline in the market value of pension assets during fiscal years 2002 and 2001.
    The change in benefit obligation, change in plan assets, funded status and amounts recognized in the consolidated balance sheets at September 30, 2002 and 2001 for these plans were as follows:

  Pension Plans Other Postretirement Benefits
 2002 2001 2002 2001
Change in benefit obligation:
Benefit obligation at beginning of year		 $ 707,392 $ 654,588 $ 200,011 $ 185,425
Service cost 35,702 33,121 2,609 2,418
Interest cost 49,095 46,344 14,419 13,841
Plan amendments 4,220 2,503 - (2,500)
Benefits paid (41,064) (51,660) (18,497) (16,031)
Actuarial loss 84,547 25,914 23,832 16,858
Settlement - (4,335) - -
Other, includes translation 13,030 917 - -
Benefit obligation at end of year $ 852,922 $ 707,392 $ 222,374 $ 200,011
 
Change in plan assets:
Fair value of plan assets at beginning of year		 $ 490,913 $ 592,835 $ - $ -
Actual return on plan assets (50,215) (62,126) - -
Employer contribution 110,325 14,697 - -
Benefits paid (41,064) (51,660) - -
Settlement - (4,335) - -
Other, includes translation 9,202 1,502 - -
Fair value of plan assets at end of year $ 519,161 $ 490,913 $ - $ -
 
Funded status:
Unfunded benefit obligation		 $ (333,761) $ (216,479) $ (222,374) $ (200,011)
Unrecognized net transition obligation 1,241 1,325 - -
Unrecognized prior service cost 2,992 (1,646) (37,919) (44,084)
Unrecognized net actuarial loss 307,067 119,662 61,904 39,495
Accrued benefit cost $ (22,461) $ (97,138) $ (198,389) $ (204,600)
 
Amounts recognized in the consolidated balance
sheets consisted of:
Prepaid benefit cost		 $ 13,258 $ 17,410 $ - $ -
Accrued benefit liability (168,907) (114,548) (198,389) (204,600)
Intangible asset 2,918 - - -
Accumulated other comprehensive income,
   before income taxes		 130,270 - - -
Net amount recognized $ (22,461)       $ (97,138)      $ (198,389)       $ (204,600)

    Foreign pension plan assets at fair value included in the preceding table were $134,300 and $125,568 at September 30, 2002 and 2001, respectively. The foreign pension plan projected benefit obligations were $189,066 and $147,283 at September 30, 2002 and 2001, 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 $771,060, $613,018, and $446,908, respectively as of September 30, 2002, and $35,257, $29,653, and $18,349, respectively as of September 30, 2001.
    Net pension and postretirement expense included the following components:

  Pension Plans             Other Postretirement Benefits
 2002 2001 2000 2002 2001 2000
Components of net pension and postretirement costs:
Service cost		 $ 35,702 $ 33,121 $ 32,743 $   2,609 $   2,418 $   2,237
Interest cost 49,095 46,344 43,213 14,419 13,841 13,505
Expected return on plan assets (52,560) (58,203) (58,880) - - -
Amortization of prior service cost (136) (282) (1,212) (6,233) (6,017) (6,017)
Amortization of (gain) loss 3,064 (268) (659) 1,626 363 694
Amortization of net obligation 12 22 (575) - - -
Curtailment gain - - (1,528) - - -
Special termination benefits - - 143 - - -
Net pension and postretirement costs $ 35,177 $ 20,734 $ 13,245         $ 12,421 $ 10,605 $ 10,419

    Net pension expense attributable to foreign plans included in the preceding table was $8,478, $7,189, and $8,580 in 2002, 2001, and 2000, respectively.
    The assumptions used in determining benefit obligations were as follows:

  Pension Plans            Other
Postretirement Benefits
 2002 2001   2002 2001
Discount rate:
U.S. plans		 6.75% 7.50%   6.75% 7.50%
Foreign plans (average) 5.18% 5.74% - -
Expected return on plan assets:(A)
U.S. plans		 8.00% 9.75% - -
Foreign plans (average) 7.15% 7.37% - -
Rate of compensation increase:
U.S. plans		 4.00% 4.25% 4.00% 4.25%
Foreign plans (average) 3.17% 3.51% - -

(A) Used in the determination of the subsequent year's net pension expense.

    At September 30, 2002, the healthcare trend rates were 10% pre- and post-age 65, decreasing to an ultimate rate of 5% beginning in 2008. At September 30, 2001, the corresponding healthcare trend rates were 7% pre-age 65, 6% post-age 65 and an ultimate rate of 6% beginning in 2003. A one percentage point increase in healthcare cost trend rates in each year would increase the accumulated postretirement benefit obligation as of September 30, 2002, by $10,455 and the aggregate of the service cost and interest cost components of 2002 annual expense by $710. A one percentage point decrease in the healthcare cost trend rates in each year would decrease the accumulated postretirement benefit obligation as of September 30, 2002, by $9,009 and the aggregate of the 2002 service cost and interest cost by $611.
    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 benefits. Such an approach recognizes that actuarial gains and losses may result from experience that differs from baseline assumptions. Postemployment benefit costs were $13,599, $15,107, and $22,364 in 2002, 2001, and 2000, respectively.

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