Square D Company and Subsidiaries - Page 11

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               Petitioner calculated the amount of the 1987 contribution              
          based on an actuarial valuation by Wyatt.  Wyatt ascertained, as            
          of November 30, 1987, that the maximum deductible combined                  
          contribution for 1987 for postretirement medical benefits was               
          $22,476,975.  Of that amount, $13,243,405 was attributable to               
          employees and retirees not covered by collectively bargained                
          agreements.  In its report dated December 9, 1987, Wyatt stated:            
               The maximum tax deductible contribution for 1987 is                    
               equal to $22,476,975 plus the any [sic] contributions                  
               for postretirement medical paid but not previously                     
               deducted.  This subtotal must further be reduced by any                
               assets attributable to the postretirement medical plan                 
               remaining in the trust at the end of the plan year.                    
          Wyatt offered no explanation as to why the associated                       
          administration expenses were not included.                                  
               The lump-sum present values, as of December 1, 1987, of                
          future retiree medical benefits for current pensioners and for              
          current active employees not covered by a collectively bargained            
          agreement, were $10,732,153 and $23,766,492, respectively.                  
               Pursuant to the VEBA Trust agreement, the VEBA Trust's                 
          assets, including the December 29, 1987, contribution, additional           
          contributions made during 1988, and the trust's investment                  
          earnings, were used to pay the cost of providing welfare benefits           
          under the Plan to petitioner's employees and retirees as those              
          benefits (and costs) arose during the VEBA Trust's 1988 year.               
          The VEBA Trust's balance on November 30, 1988, was $1,525,484.              
          During the 1988 calendar year, the VEBA Trust paid benefit claims           





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