PWC fas 132

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human resource servicesCreating Value for your Business through People

Understanding the FASBs New Pension/OPEB Disclosure Rules

OVERVIEW

On December 23, 2003, the Financial Accounting Standards Board (FASB) issued Statement

of Financial Accounting Standards No. 132 (revised 2003), Employers Disclosures about Pensions

and Other Postretirement Benefits, an amendment of FASB Statements No. 87, 88, and 106, and a

revision of FASB Statement No. 132 (FAS 132 (revised 2003)). This Statement revises employers

disclosures about pension plans and other postretirement benefit plans. It does not change the

measurement or recognition of those plans required by FASB Statements No. 87, Employers

Accounting for Pensions, No. 88, Employers Accounting for Settlements and Curtailments of Defined

Benefit Pension Plans and for Termination Benefits, and No. 106, Employers Accounting forPostretirement Benefits Other Than Pensions . The new rules require additional disclosures about the

assets, obligations, cash flows, and net periodic benefit cost of defined benefit pension plans and

other postretirement benefit plans. The required information should be provided separately for

pension plans and for other postretirement benefit plans. The new disclosures are generally effective

for 2003 calendar year-end financial statements of public companies, with a delayed effective date for

certain disclosures, for foreign plans, and for non-public entities.

Observation: FAS 132 (revised 2003) does not eliminate any of the disclosures currently required

by FAS 132. Until FAS 132 (revised 2003) is fully adopted, companies are required to provide all of

the current FAS 132 disclosures for all plans, foreign and domestic.

This HRS Insight summarizes the new disclosures required by FAS 132 (revised 2003) and

provides a comparison to previous authoritative guidance in Exhibit A. Note that amounts relatedto the employers statement of financial position, unless otherwise stated, shall be disclosed as of

the measurement date for each statement of financial position presented with the exception of

estimated future benefit payments and contributions to fund the plans, which should coincide with

the date of the plan sponsors latest statement of financial position.

Observation: For public companies, the majority of the new disclosures contained in FAS 132

(revised 2003) are required for fiscal years ending after December 15, 2003; therefore calendar

year-end public company employers will need to present the new disclosure information in 2003

year-end financial statements. Accordingly, public clients should become familiar with the new

standard immediately and coordinate implementation with their actuaries.

NEW DISCLOSURE REQUIREMENTS

Plan Assets

Disclose the following information about

plan assets:

a. For each major category of plan assets,

which shall include at a minimum, equity

securities, debt securities, real estate, and

all other assets, the percentage of the fair

value of total plan assets held as of themeasurement date used for each

statement of financial position presented.

Disclosure of additional asset categories

and additional information about specific

assets within a category is encouraged if

that information is expected to be useful in

understanding the risks associated with

each asset category and the overall

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HRS Insight 04/02 January 12, 20042

expected long-term rate of return on

assets.

Observation: Companies are not required

to present information about maturities of

their debt securities. The Board believed

that information would help users to assessthe degree to which investment cash flows

are aligned with benefit payments and

proposed such a disclosure in the exposure

draft of FAS 132 (revised 2003). The Board

subsequently decided that the disclosure did

not pass a cost/benefit test, given that debt

securities typically comprise a small portion

of the plan assets of most companies.

Accordingly, companies are not required to

provide information about the maturities of

their debt securities.

b. A narrative description of investmentpolicies and strategies, including target

allocation percentages or range of

percentages for each major category of

plan assets presented on a weighted

average basis as of the measurement

date of the latest statement of financial

position presented (if used), and other

pertinent factors such as investment

goals, risk management practices,

allowable and prohibited investment types

including the use of derivatives,

diversification, and the relationship

between plan assets and benefit

obligations.

Observation: The last example above of a

pertinent factor, the relationship between plan

assets and benefit obligations, is intended to

convey how assets mature or are scheduled to

turn over according to the investment policy in

order to meet maturing obligations under the

plan. If a company has different investment

strategies for different pension or post-

retirement benefit plans, it may need to

include more than one narrative descriptiondepending on how significant the differences

are. If a company does not use a target

allocation as part of its investment strategy, it

is not required to create one in order to meet

this disclosure requirement.

c. A narrative description of the basis used to

determine the overall expected long-term

rate of return on assets assumption, such

as the general approach used, the extent

to which the overall rate of return

assumption was based on historical

returns and the extent to which

adjustments were made to those historical

returns and how those adjustments were

determined.

Accumulated Benefit Obligation

For defined benefit pension plans, disclose

the accumulated benefit obligation (ABO).

Observation: Under FAS 87, the ABO is

used to determine whether an additional

minimum liability should be recorded at the

measurement date. That determination is

made on a plan-by-plan basis. However,

the ABO to be disclosed under FAS 132

(revised 2003) represents a combined ABOamount for all of the employers plans.

Therefore, for employers with more than one

plan, the disclosed ABO compared to the

disclosed total fair value of all plan assets

will not be indicative of the need to record an

additional minimum liability.

Estimated Future Benefit Payments

Disclose the benefits (as of the date of the

latest statement of financial position

presented) expected to be paid in each of

the next five fiscal years, and in the

aggregate for the succeeding five fiscal

years. The expected benefits should be

estimated based on the same assumptions

used to measure the companys benefit

obligation at the end of the year and should

include estimated future employee service.

Observation: Because this estimate should

include benefits attributable to both past

service and estimated future service of

current employees, it will go beyond the

projected benefit obligation that companiescalculate today under FAS 87. As noted

below, this disclosure is first effective for

fiscal years ending after June 15, 2004.

Accordingly, companies are not required to

provide this disclosure in their 2003 year-

end financial statements and have additional

time in which to gather the information

needed to make the disclosure. Because

actuarial valuation systems will likely capture

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expected benefit payments on a

measurement date to measurement date

year, estimates of benefit payments on a

fiscal-year basis will be required. In some

cases, however, we expect that benefits

based on a measurement date year will not

be materially different from a fiscal yearbasis; so separate fiscal year estimates may

not be needed.

Employers Contributions Expected To

Be Paid During the Next Fiscal Year

Disclose the employers best estimate, as

soon as it is reasonably determinable, of

contributions expected to be paid to the plan

during the next fiscal year beginning after

the date of the latest statement of financial

position. Estimated contributions may be

presented in the aggregate combining (1)contributions required by funding regulations

or laws, (2) discretionary contributions, and

(3) noncash contributions.

Observation: For funded plans, companies

will need to request their actuaries to estimate

the minimum funding requirements for the next

fiscal year. Those estimates may differ from

the actuarial valuations developed for funding

purposes, which relate to the plan year and

may be performed subsequent to the time

when year-end disclosures are prepared. In

addition, this information should be reviewed

quarterly and management should assess any

planned contributions on an annual and

interim basis to meet the new interim

disclosure requirement (discussed below).

For unfunded plans (e.g., for retiree health

benefits), we believe that the employers

disclosure of expected contributions for the

next fiscal year should reflect an amount that

is equal to the amount of expected benefit

payments less participant contributions

(similar to actual amounts reported in the

reconciliation of assets under FAS 132).Employers with a measurement date before

their fiscal year-end should discuss with their

actuaries the need for expected contribution

information to be disclosed in 2003 annual

reports. For a calendar year-end employer,

this will involve contributions expected to be

made in calendar year 2004, regardless of the

plans measurement date or plan year-end for

funding purposes.

Assumptions

Disclose, on a weighted-average basis, the

following assumptions used in accounting

for the plans: assumed discount rates, rates

of compensation increase (for pay-related

plans), and expected long-term rates ofreturn on plan assets specifying, in a tabular

format, the assumptions used to determine

the benefit obligation and the assumptions

used to determine net benefit cost.

Observation: The new rules require that

the assumptions used to measure expense

be presented separately from the

assumptions used to determine the benefit

obligation. Accordingly, the information

should not be combined in the disclosure. In

addition, the requirement to present the

information in a tabular format means thatemployers that previously disclosed

assumptions in a narrative format will need

to change to the new prescribed format.

Measurement Date

Disclose the measurement date(s) used to

determine pension and other postretirement

benefit measurements for the pension plans

and other postretirement benefit plans that

make up at least the majority of plan assets

and benefit obligations.

Interim Disclosure Requirements

Public entities shall disclose the following

information in their interim financial statements

that include a statement of income:

a. The amount of net periodic benefit cost

recognized for each period in which a

statement of income is presented,

showing separately the service cost

component, the interest cost component,

the expected return on plan assets for theperiod, the amortization of the

unrecognized transition obligation or

transition asset, the amount of recognized

gains and losses, the amount of prior

service cost recognized, and the amount

of gain or loss recognized due to a

settlement or curtailment.

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b. The total amount of employers

contribution paid, and expected to be

paid, during the current fiscal year, if

significantly different from amounts

previously disclosed.

Observation: Nonpublic companies arerequired to disclose the information in b

above in interim periods for which a

complete set of financial statements is

presented. Accordingly, all companies,

public and nonpublic, will need to monitor

contributions each quarter to identify

whether there will be a significant difference

between contribution amounts disclosed at

year-end and contributions in the current

quarter.

Effective Date and Transition

The provisions of FAS 132 remain in effect

until the provisions of FAS 132 (revised 2003)are adopted. Except as noted in FAS 132

(revised 2003), the statement is effective for

financial statements with fiscal years ending

after December 15, 2003. The interim period

disclosures are effective for interim periods

beginning after December 15, 2003. The

effective dates are summarized below:

Effective Date (years ending after/quarters beginning after)

Disclosure Domestic Plans

Foreign Plans /

Nonpublic Entities

Plan Assets 12/15/2003 6/15/2004

ABO 12/15/2003 6/15/2004

Estimated future benefit

payments

6/15/2004 6/15/2004

Estimated contributions 12/15/2003 6/15/2004

Assumptions 12/15/2003 12/15/2003

Measurement date(s) 12/15/2003 6/15/2004

Interim period disclosures Interim periods beginning

after 12/15/2003

Interim periods beginning

after 12/15/2003

Observation: For purposes of applying the

effective date provisions of the statement,

we understand that the FASB Staff believes

that the Boards intent is for the term foreign

plans to connote plans that are outside of

the domicile of the company. For example,

a U.S. company would treat its UK plan as a

foreign plan and its U.S. plan as a domesticplan. Likewise, a UK company would treat

its U.S. plan as a foreign plan and its UK

plan as a domestic plan.

In transitioning to the new standard,

companies are required to restate their

disclosures for earlier annual periods and

include in those disclosures the percentage

of each major category of plan assets held,

the ABO, and the assumptions used in the

accounting for the plans. The disclosures

for earlier interim periods also need to be

restated to include disclosure of the

components of net benefit cost. If getting

this information for the earlier periods is not

practicable, the disclosures should include

whatever information is available andidentify the information that is not available.

Exhibit A provides a comparison of the

disclosures required by FAS 132 (revised

2003) to previous authoritative guidance and

includes additional PwC observations.

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Exhibit A: Comparison of Original FAS 87/88/106 Disclosures, FAS 132 Disclosures andFAS 132 (revised 2003) Required Disclosures

FAS 87/88/106 FAS 132 FAS 132 (Revised 2003) Observations

Not required. Reconciliation ofobligations and planassets from one year tothe next including changes

due to amendments,acquisitions, divestitures,actuarial gains and losses

and benefits paid.

No change from FAS132.

No change fromcurrently requireddisclosures.

Funded status of theplan (obligation less

assets) reconciled toamounts reported inthe balance sheet,

with separatedisclosure ofoverfunded and

underfunded plansand U.S. and non-U.S. plans.

Funded status reconciledto amounts reported in

the balance sheet for allplans combined; forunderfunded plans with

the accumulated benefitobligation in excess ofplan assets under FAS

87, the aggregateobligations and fair valueof plan assets; non-U.S.

plans may be combinedwith U.S. plans unlessbenefit obligations

outside the U.S. aresignificant.

No significant changefrom FAS 132; continue

to show projected benefitobligation and/oraccumulated

postretirement benefitobligation, unamortizedprior service cost,

unrecognized gain/loss,unamortized transitionobligation/asset, net

prepaid asset/liability,intangible assets and theamount in other

comprehensive income.

No change fromcurrently required

disclosures.

No requirement. No requirement. Table of plan asset

allocation by assetcategory (equitysecurities, debt securities,

real estate and otherassets) showing thepercentage of the fair

value to total plan assets,a narrative description ofinvestment policies and

strategies, including thetarget allocationpercentages (if used by

the employer), and a

narrative description ofthe basis used to

determine the overallexpected long-term rateof return on assets.

Gathering the

information necessaryfor these disclosuresmay be challenging,

especially for entitieswith multiple plans,non-US plans, and

multiple serviceproviders. Employersshould communicate

with their serviceproviders to ensurethat they can obtain

necessary information

on a timely basis.

Alternative measuresof the pension benefitobligation, including

No longer required. Accumulated benefitobligation (ABO) underFAS 87 for all plans

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the vested benefitobligation and theaccumulated benefit

obligation; the

portions of OPEBobligation attributable

to retirees, fullyeligible employees,and other active

employees.

combined. Employersthat aggregatedisclosures about

pension plans with assets

in excess of the ABO andpension plans with assets

less than the ABO arerequired to separatelydisclose the aggregate

ABO and aggregate fairvalue of plan assets forpension plans with ABOs

in excess of plan assets.

No requirement. No requirement. The gross expectedbenefit payments (i.e.,

benefits attributable topast and estimated futureservice of current plan

participants) for each ofthe next five fiscal yearsand in the aggregate for

the five fiscal yearsthereafter based on thesame assumptions used

to measure theemployers benefitobligation at the end of

the year.

Gathering theinformation

necessary for thisdisclosure may bedifficult, as most

actuarial reports donot present grossexpected benefit

payments.

No requirement. No requirement. Employers best estimate,

as soon as it can bereasonably determined,of contributions expectedto be paid to the plan

during the next fiscalyear.

Companies will need

to request theiractuaries to estimatethe minimum fundingrequirement for the

next fiscal year (i.e.,not the next year thatbegins with the date

after the latestregular annualmeasurement date

and ends with thenext regular annualmeasurement date).

Such estimates maybe different than theactuarial valuations

developed for fundingpurposes, whichrelate to the plan year

and may beperformedsubsequent to the

time when year-end

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disclosures areprepared. Employerswith multiple plans

and multiple service

providers should begathering this

information now fordisclosure in 2003financial statements.

In addition, thisinformation shouldbe reviewed quarterly

and managementshould assess anyplanned contributions

on an annual andinterim basis to meetthe new interim

disclosurerequirement(discussed below).

Components ofexpense (servicecost, interest cost,

actual return on planassets, netamortization of

deferred amounts).

Same, except showexpected return on planassets instead of actual

return on plan assets,show amortizationamounts separately, and

show any gain/lossresulting from asettlement or curtailment.



No requirement. Amount of additionalminimum liability underFAS 87 recognized as an

intangible asset, othercomprehensive income,and accumulated other

comprehensive income.



Principal actuarialassumptions:

weighted-averagediscount rate, salary

increases, expectedlong-term rate ofreturn on planassets, and health

care cost trend rates(initial, ultimate andnumber of years to

ultimate rate).

Same. Same, but identifyassumptions used for

expense measurementand for year-end

obligation measurement,and present in tabularformat

This information isrequired to be

presented in a table,with the assumptions

used for measuringexpense and thoseused for measuringthe obligation

separately disclosed.

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No provision. No provision. Measurement dates usedto measure the pensionand other postretirement

benefit amounts.

All employers mustdisclose theirmeasurement dates,

even if the date

coincides with theirfiscal year-end.

The effect of a one-percentage-pointincrease in the

assumed health carecost trend rate onthe aggregate of the

service and interestcost components ofthe net periodic

postretirementbenefit cost and theaccumulated

postretirementbenefit obligation.

The effects of a one-percentage-pointincrease and decrease

in the assumed healthcare cost trend rate onthe aggregate of the

service and interest costcomponents of the netperiodic postretirement

benefit cost and theaccumulatedpostretirement benefit

obligation.



Amounts and types

of securities of theemployer andrelated parties

included in planassets.

Amounts and types of

securities of the employerand related partiesincluded in plan assets,

approximate amount offuture benefits covered byinsurance contracts

issued by the employer orrelated parties, and any

significant transactionsbetween the plan and theemployer or relatedparties during the period.

No change from FAS

132.

No change from

currently requireddisclosures.

Any alternativeamortization methodused to amortize

prior serviceamounts orunrecognized

actuarial gains orlosses.

Same. No change from FAS132.


Any substantive

commitment used asthe basis foraccounting.

Same. No change from FAS

132.

No change from


The gain or lossrecognized for asettlement or

Same. No change from FAS132.


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curtailment, and thecost of providingspecial or contractual

termination benefits,

and a description ofthe nature of the

event.

Cost related todefined contribution

plans.

Same, plus a descriptionof the nature and effect of

any significant changesduring the periodaffecting comparability.


No change fromcurrently required

disclosures.

Separate disclosuresof cost related topension and post-

retirement benefitmultiemployer plans.

Aggregate contributionsto multiemployer plans.



Description of the

plan includinggroups covered,type of benefit

formula, fundingpolicy, types ofassets held,

significant non-benefit liabilities, andsignificant matters

affecting

comparability.

No longer required. No change from FAS

132.

No change from


No provision. No provision. Quarterly disclosure of

the expense for thequarter and thecomponents of expense,

and any significantchanges to the prior year-end disclosures regarding

expected contributions.

Additional efforts may

be required to gatherthe necessaryinformation to meet

these interimdisclosurerequirements. These

efforts may begreater for thoseentities with multiple

plans, multiple

service providers,and foreign plans.

Because quarterlypension andpostretirement benefit

cost will now bedisclosed,fluctuations in

reported expense

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may result whenestimates of expensereported in previous

quarters of the year

must be trued-up forthe results of

actuarial valuationscompleted after thefirst quarter of the

year. In addition,consideration ofcontributions to be

made, both requiredand discretionary,should be assessed

quarterly.

Exhibit B is a copy of a sample disclosure as

presented in Appendix C of FAS 132

(revised 2003).

Observation: The illustration taken from

FAS 132 (revised 2003) shows two years of

information for the components of net

periodic benefit cost and the weighted-

average assumptions used to determine net

periodic benefit cost for the years ended

December 31. However, paragraph 5 of

FAS 132 (revised 2003) requires that

amounts related to the employers results of

operations be disclosed for each period for

which an income statement is presented.

Because public companies present income

statements for three years, we believe that

the tables showing components of cost and

related assumptions should be presented

with three years of information.

Exhibit B: Disclosures about Pension and Other Postretirement Benefit Plans in the

Annual Financial Statements of a Publicly Traded Entity (Copied from FAS 132(revised 2003))

Illustration 1Disclosures about Pension and Other Postretirement Benefit Plans in the Annual FinancialStatements of a Publicly Traded Entity (Copied from FAS 132 (revised 2003))

C2. The following illustrates the fiscal 20X3 financial statement disclosures for an employer (Company A) withmultiple defined benefit pension plans and other postretirement benefit plans. Narrative descriptions of the basisused to determine the overall expected long-term rate-of-return-on-assets assumption (paragraph 5(d)(3)) andinvestment policies and strategies for plan assets (paragraph 5(d)(2)) are not included in this illustration. Thesenarrative descriptions are meant to be entity-specific and should reflect an entitys basis for selecting the expectedlong-term rate-of-return-on assets assumption and the most important investment policies and strategies.

C3. During 20X3, Company A acquired FV Industries and amended its plans. For one of the defined benefitpension plans, the accumulated benefit obligation exceeds the fair value of plan assets, and Company Arecognized an additional minimum liability in accordance with the provisions of paragraphs 36 and 37 ofStatement 87.

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Notes to Financial Statements

Pension and Other Postretirement Benefit Plans

Company A has both funded and unfunded noncontributory defined benefit pension plans that together coversubstantially all of its employees. The plans provide defined benefits based on years of service and final averagesalary.

Company A also has other postretirement benefit plans covering substantially all of its employees. The healthcare plans are contributory with participants contributions adjusted annually; the life insurance plans arenoncontributory. The accounting for the health care plans anticipates future cost-sharing changes to the writtenplans that are consistent with the companys expressed intent to increase retiree contributions eachyear by 50 percent of health care cost increases in excess of 6 percent. The postretirement health care plansinclude a limit on the companys share of costs for recent and future retirees.

Company A acquired FV Industries on December 27, 20X3, including its pension plans and other postretirementbenefit plans. Amendments made at the end of 20X3 to Company As plans increased the pension benefitobligations by $70 and reduced the other postretirement benefit obligations by $75.

Company A uses a December 31 measurement date for the majority of its plans.

Obligations and Funded Status

At December 31Pension Benefits Other Benefits

20X3 20X2 20X3 20X2Change in benefit obligation

Benefit obligation at beginning of year $1,246 $1,200 $ 742 $ 712Service cost 76 72 36 32Interest cost 90 88 55 55Plan participants contributions 20 13Amendments 70 (75)Actuarial loss 20 25Acquisition 900 600

Benefits paid (125) (114) (90) (70)Benefit obligation at end of year 2,277 1,246 1,313 742

Change in plan assetsFair value of plan assets at beginning of year 1,068 894 206 87Actual return on plan assets 29 188 5 24Acquisition 1,000 25Employer contribution 75 100 137 152Plan participants contributions 20 13Benefits paid (125) (114) (90) (70)Fair value of plan assets at end of year 2,047 1,068 303 206Funded status (230) (178) (1,010) (536)Unrecognized net actuarial loss (gain) 94 18 (11) (48)Unrecognized prior service cost (benefit) 210 160 (92) (22)

Net amount recognized $ 74 $ 0 $(1,113) $ (606)

Note: Nonpublic entities are not required to provide information in the above tables; they are required todisclose the employers contributions, participants contributions, benefit payments, funded status, and

the net amount recognized.

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Amounts recognized in the statement of financial position consist of:

Pension Benefits Other Benefits

20X3 20X2 20X3 20X2Prepaid benefit cost $ 227 $ 127 $ 0 $ 0Accrued benefit cost (236) (180) (1,113) (606)Intangible assets 50 53 0 0

Accumulated other comprehensive income 33 0 0 0Net amount recognized $ 74 $ 0 $(1,113) $(606)

The accumulated benefit obligation for all defined benefit pension plans was $1,300 and $850 at December 31,20X3, and 20X2, respectively.

Information for pension plans with an accumulated benefit obligation in excess of plan assets

December 31

20X3 20X2

Projected benefit obligation $263 $247Accumulated benefit obligation 237 222Fair value of plan assets 84 95

Components of Net Periodic Benefit CostPension Benefits Other Benefits

20X3 20X2 20X3 20X2

Service cost $ 76 $ 72 $ 36 $32Interest cost 90 88 55 55Expected return on plan assets (85) (76) (17) (8)Amortization of prior service cost 20 16 (5) (5)Amortization of net (gain) loss 0 0 0 0Net periodic benefit cost $101 $100 $ 69 $74

Note: Nonpublic entities are not required to separately disclose components of net periodic benefit cost.

Additional Information Pension Benefits Other Benefits

20X3 20X2 20X3 20X2

Increase in minimum liability included inother comprehensive income $33 $0 N/A N/A

Assumptions

Weighted-average assumptions used

to determine benefit obligations at

December 31Pension Benefits Other Benefits

20X3 20X2 20X3 20X2Discount rate 6.75% 7.25% 7.00% 7.50%

Rate of compensation increase 4.25 4.50

Weighted-average assumptions used

to determine net periodic benefit costfor years ended December 31

Pension Benefits Other Benefits20X3 20X2 20X3 20X2

Discount rate 7.25% 7.50% 7.50% 7.75%Expected long-term return on plan assets 8.00 8.50 8.10 8.75Rate of compensation increase 4.50 4.75

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(Entity-specific narrative description of the basis used to determine the overall expected long-term rate of returnon assets, as described in paragraph 5(d)(3) would be included here.)

Assumed health care cost trend rates at

December 3120X3 20X2

Health care cost trend rate assumed for next year 12% 12.5%Rate to which the cost trend rate is assumed todecline (the ultimate trend rate) 6% 5%Year that the rate reaches the ultimate trend rate 20X9 20X9

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans.A one-percentage-point change in assumed health care cost trend rates would have the following effects:

1-Percentage- 1-Percentage-

Point Increase Point DecreaseEffect on total of service and interest cost $ 22 $ (20)Effect on postretirement benefit obligation 173 (156)

Note: Nonpublic entities are not required to provide the above information about the impact of a one-

percentage-point increase and one-percentage-point decrease in the assumed health care cost trend rates.

Plan Assets

Company As pension plan weighted-average asset allocations at December 31, 20X3, and 20X2, by assetcategory are as follows:

Plan Assetsat December 31

20X3 20X2Asset Category

Equity securities 50% 48%Debt securities 30 31Real estate 10 12Other 10 9Total 100% 100%

(Entity specific narrative description of investment policies and strategies for plan assets, including weighted-average target asset allocations [if used as part of those policies and strategies] as described in paragraph 5(d)(2)would be included here.)

Equity securities include Company A common stock in the amounts of $80 million (4 percent of total planassets) and $64 million (6 percent of total plan assets) at December 31, 20X3, and 20X2, respectively.

Company As other postretirement benefit plan weighted-average asset allocations at December 31, 20X3, and20X2, by asset category are as follows:

Plan Assets

at December 3120X3 20X2

Asset Category

Equity securities 60% 52%Debt securities 30 27Real estate 5 13Other 5 8Total 100% 100%

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Equity securities include Company A common stock in the amounts of $12 million (4 percent of total planassets) and $8 million (4 percent of total plan assets) at December 31, 20X3, and 20X2, respectively.

Cash Flows

Contributions

Company A expects to contribute $125 million to its pension plan and $150 million to its other postretirementbenefit plan in 20X4.

Estimated Future Benefit Payments

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:

Pension OtherBenefits Benefits

20X4 $ 200 $15020X5 208 15520X6 215 16020X7 225 16520X8 235 170

Years 20X9-20Y3 1,352 984

How We Can Help

PricewaterhouseCoopers can help youconsider the effects of the new FASBdisclosure rules, including helping you

assess the impact of the final standard onyour actuarial valuation process anddisclosure requirements. PwC has

considerable experience helping clients

with FAS 87 and FAS 106 accounting, andrelated actuarial and measurement issues.We encourage companies to quickly

determine the additional information thatmay result from the issuance of FAS 132(revised 2003).

For more in fo rmat ion on the top ic d iscussed in th is HRS Ins i gh t or to changeyour address , con tac t your loca l Pr i cewaterhouseCoopers p ro fess iona l .

Atlanta, GA Ann OConnellBoston, MA Ed DonovanChicago, IL Lou JosephCleveland, OH Lynn FordColumbus, OH Jeffrey LuedkeDallas, TX Duncan HarwoodDetroit, MI Theresa GeeHouston, TX Duncan Harwood

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