arca_ex2


Exhibit 2: Balance Sheet Impact of Cash Balance Conversion
The Widget Co. had a noncontributory defined benefit pension plan that covered most of its employees in the United States. Effective January 1, 1999, the company converted the plan to a noncontributory cash balance plan for all active employees. Participants were credited with an initial account balance equal to the present value of their accrued benefits under the plan in effect on December 31, 1998. Participants received pay credits equal to 5% of annual compensation and their accounts were credited with annual interest based on 30-year Treasury bond rates equal to 6% in 1999. As a result of the conversion, the company experienced a reduction of approximately $1.8 million in pension expense and a reduction in its benefits obligation of $8.6 million.

The table below illustrates the changes in the benefits obligation, funded status of the plan and pension costs as a result of the conversion from the traditional to a cash balance formula. (Amounts at December 31, 1999, under the traditional defined benefit plan formula are shaded gray and included for illustrative purposes only. Such amounts would not be presented in the disclosures required under FASB Statement no. 132.)

SPONSORED REPORT

CPEOs provide peace of mind around payroll services

The creation of these new IRS-certified service providers for small businesses clarifies some issues around traditional professional employer organizations.

QUIZ

8 sentences to help you master subject-verb agreement

When professionals prepare written material for readers inside their organization or outside, they should make sure that no errors distract from the message they need to convey. Take this short quiz for practice in subject-verb agreement.