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entitled 'Retiree Health Benefits: Examples of Employer-Reported 
Obligations in Selected Industries' which was released on April 29, 
2002. 

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GAO-02-639R: 

United States General Accounting Office: 
Washington, DC 20548: 

April 29, 2002: 

The Honorable Sam Johnson: 
Chairman: 
Subcommittee on Employer-Employee Relations: 
Committee on Education and the Workforce: 
House of Representatives: 

Subject: Retiree Health Benefits: Examples of Employer-Reported 
Obligations in Selected Industries: 

Dear Mr. Chairman: 

As a follow-up to our November 2001 testimony before the subcommittee 
on trends in retiree health benefits,[Footnote 1] you requested 
additional information on the obligations employers face related to 
retiree health benefits. Specifically, you asked us to provide 
examples, based on readily available data, of employers' estimates of 
their future financial obligations for retiree health benefits, 
particularly in industries that have reported high obligations for 
these benefits such as airlines, automotive manufacturing, and 
steel/metal. To obtain this information, we reviewed publicly
available electronic copies of the annual reports that selected large 
airline, automotive, and steel/metal companies filed with the 
Securities and Exchange Commission (SEC). We performed our work in 
April 2002 in accordance with generally accepted government auditing 
standards. 

The annual reports to SEC, which must be filed within 90 days after 
the end of the company's fiscal year, provide an overview of the 
company's business and include information on employers' estimated 
obligations for postemployment benefits, including retiree health 
benefits. However, since factors and assumptions used in estimating 
obligations for postemployment benefits may vary considerably across 
companies, they are not comparable. Within guidelines established by 
the Financial Accounting Standards Board, employers have latitude in 
how they calculate their postemployment benefit obligations. For 
example, companies consider factors unique to them, such as employee 
demographics, retirement rates, health care cost trends, and 
investment return rates to calculate their postemployment benefit 
liability. Further, changes in companies' benefit offerings or 
financial stability would likely alter companies' obligations for 
retiree health benefits. Nearly all employers reserve the right to 
modify or terminate retiree health benefits. Reasons that may 
influence employers to subsequently curtail such benefits include 
their health care costs rising faster than expected or their economic 
condition weakening. 

Table 1 provides information that 14 employers in the airline, 
automotive, and steel/metal industries reported to the SEC regarding 
their financial obligations for other postemployment benefits (OPEB) 
in 2001, 2000, and 1999. OPEB represents retirement benefits, 
including retiree health benefits, but excluding pension benefits that 
are separately reported. As specified for each company in the table, 
some companies may provide a dental or vision benefit for retirees 
separate from their retiree health benefits. In addition, some 
companies may offer life insurance as a benefit to retirees. Companies 
include the costs of these additional benefits in their reporting of 
OPEB obligations. 

Table 1: OPEB Obligations (Including Retiree Health Benefits) Reported 
by Selected Airline, Automotive, and Steel/Metal Companies: 

OPEB obligations (in millions of U.S. dollars or otherwise specified 
currency): 

Company: Airline companies: American Airlines, Inc.[A]; 
December 31, 2001: $2,759; 
December 31, 2000: $1,708; 
December 31, 1999: $1,306. 

Company: Airline companies: Delta Air Lines, Inc.[B]; 
December 31, 2001: $2,100; 
December 31, 2000: $1,780; 
December 31, 1999: $1,612[E]. 

Company: Airline companies: Northwest Airlines Corporation[D]; 
December 31, 2001: $647; 
December 31, 2000: $531; 
December 31, 1999: $391. 

Company: Airline companies: UAL Corporation (United)[A]; 
December 31, 2001: $2,359; 
December 31, 2000: $1,706; 
December 31, 1999: $1,465. 

Company: Airline companies: US Airways Group, Inc.[E]; 
December 31, 2001: $1,440[F]; 
December 31, 2000: $1,241[F]; 
December 31, 1999: $1,162[F]. 

Company: Automotive companies: Daimler-Chrysler AG[G,H]; 
December 31, 2001: 15,095 Euros; 
December 31, 2000: 12,857 Euros; 
December 31, 1999: 10,527 Euros. 

Company: Automotive companies: Ford Motor Company[G]; 
December 31, 2001: $25,433; 
December 31, 2000: $23,374; 
December 31, 1999: $19,885. 

Company: Automotive companies: General Motors Corporation[I]; 
December 31, 2001: $52,489; 
December 31, 2000: $49,889; 
December 31, 1999: $44,683. 

Company: Steel/metal companies: Alcoa, Inc.[A]; 
December 31, 2001: $3,177; 
December 31, 2000: $2,924; 
December 31, 1999: $1,687. 

Company: Steel/metal companies: Bethlehem Steel Corporation[A]; 
December 31, 2001: $2,047; 
December 31, 2000: $1,955; 
December 31, 1999: $1,820. 

Company: Steel/metal companies: The LTV Corporation[J]; 
December 31, 2001: Late filing-no information for 2001[K]; 
December 31, 2000: $1,524; 
December 31, 1999: $1,500. 
				
Company: Steel/metal companies: National Steel Corporation[A]; 
December 31, 2001: $993[F]; 
December 31, 2000: $817[F]; 
December 31, 1999: $751[F]. 

Company: Steel/metal companies: United States Steel Corporation[A,L]; 
December 31, 2001: $2,555; 
December 31, 2000: $2,149; 
December 31, 1999: $1,896. 

Company: Steel/metal companies: Weirton Steel Corporation[A]; 
December 31, 2001: $389; 
December 31, 2000: $321; 
December 31, 1999: $309. 

Notes: Postemployment benefit obligations across companies are not 
comparable because companies have wide latitude in the assumptions 
they use to calculate these obligations. 

[A] OPEB obligations include health and life insurance. 

[B] OPEB obligations include dental and medical benefits. 

[C] Data are for obligations as of June 30, 1999. 

[D] OPEB obligations include medical and dental benefits for certain 
employees who retired prior to 1987, and life insurance benefits for 
certain retirees. 

[E] OPEB obligations include postretirement benefits, which were not 
specified by the employer in the SEC filing. 

[F] Data are for obligations as of September 30 of the respective year. 

[G] OPEB obligations include health and life insurance for eligible 
U.S. and Canadian retirees. 

[H] The SEC filing did not provide information about the exchange rate 
between Euros and U.S. dollars used to prepare the consolidated 
financial statements. 

[I] OPEB obligations include medical, dental, life, and vision 
benefits. 

[J] OPEB obligations are for health care, life insurance, and other 
insurance benefits. 

[K] On December 29, 2000, the LTV Corporation filed for Chapter 11 
bankruptcy. On December 7, 2001, the U.S. Bankruptcy Court issued an 
order that authorized the implementation of an asset protection plan 
for the shutdown and sale of all integrated steel assets. 

[L] As of December 31, 2001, United States Steel Corporation 
reorganized. United States Steel LLC, a former subsidiary of USX, 
became United States Steel Corporation. USX Corporation was renamed 
Marathon Oil Corporation. Prior to this time USX was comprised of two 
groups: U.S. Steel and Marathon. 

Sources: Reported in companies' filings with the Securities and 
Exchange Commission Company available on line at [hyperlink, 
http://www.sec.gov]. (10-K and 10-K405 filings for American Airlines, 
U.S. Airways Group, Alcoa, and Bethlehem Steel; 10-KT405 and 10-K 
filings for Delta Air Lines; 10-K and 10-K (amended) filings for 
Northwest Airlines, UAL Corporation, and United States Steel 
Corporation; 10-K filings for Ford Motor, General Motors, LTV 
Corporation, National Steel Corporation, and Weirton-Steel 
Corporation; and 20-F (for foreign-based companies) filings for 
Daimler-Chrysler AG). 

[End of table] 

As agreed with your office, unless you publicly announce its contents 
earlier, we will not distribute this correspondence until 30 days 
after its date. Then we will make copies available upon request. This 
letter will also be available on GAO's home page at [hyperlink, 
http://www.gao.gov]. Please call me at (202) 512-7118 or John Dicken 
at (202) 512-7043 if you have any questions. Other contributors to 
this correspondence include Susan Anthony and Sari Bloom. 

Sincerely yours, 

Signed by: 

Kathryn G. Allen: 
Director, Health CareóMedicaid and Private Health Insurance Issues: 

[End of section] 

Footnote: 

[1] U.S. General Accounting Office, Retiree Health Insurance: Gaps in 
Coverage and Availability, [hyperlink, 
http://www.gao.gov/products/GAO-02-178T] (Washington, D.C.: Nov. 1, 
2001). 

[End of section]