Parker-Hannifin Corporation - Page 9

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                     Year Ended                Amount1                                
                    June 30, 1988            $2,474,363                               
                    June 30, 1989            797,211                                  
                    June 30, 1990             243,086                                 
                    Total                    $3,514,660                               
                         1These amounts have been rounded to the                      
                    nearest whole dollar.  Also, because the VEBA                     
                    Trust reimbursed Provident for these                              
                    payments, there is a slight timing difference                     
                    resulting from these disbursements.                               
          Petitioner commingled its $3,210,991 VEBA contribution for union            
          medical benefits with all other VEBA assets.                                
          Long-Term Disability                                                        
               Reserve Computation                                                    
               William H. Mercer (Mercer) was an employee benefit                     
          compensation and actuarial consulting firm.  In 1986, petitioner            
          asked Terrence McManamon (McManamon), a principal with the                  
          Cleveland office of Mercer, to perform calculations to quantify             
          the disabled life reserve for long-term disability coverage for             
          salaried and nonunion hourly employees.  Using source information           
          from petitioner, McManamon was able to determine the net monthly            
          and annual benefits payable to petitioner’s then currently                  
          disabled employees.  McManamon then took into account offsets for           
          Social Security and workers’ compensation and offsets received by           
          any other employer-sponsored program or State disability                    
          programs.  McManamon’s calculations assumed that all currently              
          disabled employees included in the calculation would continue to            
          receive benefits until age 65.  The calculation did not take into           





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