EXHIBIT 14-16 Components of Expense (Income)

 

Yew Ended 31 December

 

2008

2007

2006

Components of expense/(income)

 

 

 

Service cost

$908

$910

$831

Interest cost

2,497

2,457

2,378

Expected return on plan assets

(3,455)

(3,515)

(3,378)

Amortization of prior service costs

188

185

180

Recognized net actuarial loss/(gain)

912

1,266

440

Net periodic benefit coat

$1,050

$I,303

$451

EXHIBIT 14-17 Funded Status of Plan

At 31 December ($ millions)

2008

2007

Change in benefit obligation

 

 

Beginning balance

$45,183

$42,781

Service cost

908

910

Interest cost

2,497

2,457

Plan participants” contributions

9

12

Amendments

156

270

Actuarial (gain)/losses

(925)

2,778

Settlement/curtailment/acquisitions/dispositions, net

85

(1,774)

Benefit paid

(2,331)

(2,251)

Ending balance

$45,582

$45,183

Change in plan assets

 

 

Beginning at fair value

$43,484

$38,977

Actual return on plan assets

4,239

5,460

Company contribution

526

2,604

Plan participants” contributions

9

12

Settlement/curtailment/acquisitions/dispositions, net

216

(1,393)

Benefit paid

(2,286)

(2,208)

Exchange rate adjustment.(

15

32

Ending balance at fair value

$46,203

$43,484

EXHIBIT 14-18 Volatility Assumptions Used to Value Stock Option Grants

Grant year

Weighted average expected volatility

2008 valuation

 

2004-2008

21.50%

2008 valuation

 

2003-2007

23.00%

Passaic Industries is based in the United States and offers its employees both a defined-benefit pension plan and stock options. Several of the disclosures related to these plans are presented in Exhibits 14-16, 14-17, and 14-18.

The pension expense reported on the Passaic Industries income statement for the year ending 31 December 2008 is closest to

a. $908 million.

b. $1,050 million.

c. $2,331 million.