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Key uses a September 30 measurement date for its postretirement benefit plans. Changes in the accumulated postretirement benefit obligation (“APBO”) are summarized as follows: 

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Changes in the fair value of postretirement plan assets are summarized as follows: 

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The funded status of the postretirement plans at the September 30 measurement date, reconciled to the amounts recognized in the consolidated balance sheets at December 31, 2003 and 2002, is as follows: 

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The excess of the accumulated postretirement beneGLYPH<222>t obligation over the fair value of plan assets. 

To determine the accumulated postretirement benefit obligation at the September 30 measurement date, management assumed weighted- average discount rates of 6.00% at December 31, 2003, 6.50% at December 31, 2002, and 7.25% at December 31, 2001. 

To determine net postretirement benefit cost, management assumed the following weighted-average rates: 

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The realized net investment income for the postretirement healthcare plan VEBA is subject to federal income taxes. Consequently, the weighted- average expected return on plan assets shown in the preceding table reflects the effect of income taxes. Management assumptions regarding healthcare cost trend rates are as follows: 

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Increasing or decreasing the assumed healthcare cost trend rate by one percentage point each future year would not have a material impact on net postretirement benefit cost or obligations since the postretirement plans have cost-sharing provisions and benefit limitations. 

Key’s weighted-average asset allocations for its postretirement VEBAs at the September 30 measurement date are summarized as follows: 

<img src='content_image/79929.jpg'>

Management’s determination of expected returns on plan assets in the VEBAs is similar to the method Key employs for its pension funds. The primary investment objectives of the VEBAs are also similar. 

In accordance with Key’s current investment policies, weighted-average target allocation ranges for the VEBAs’ assets are as follows: 

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Although the investment policy permits the use of derivative contracts subject to certain limitations and restrictions, no such contracts have been entered into. There are no foreseeable plans to employ such contracts in the future. 

There are no regulatory provisions that require contributions to the VEBAs. Consequently, there is no minimum funding requirement. Discretionary contributions to the VEBAs are permitted, subject to certain IRS restrictions and limitations. Key anticipates making discretionary contributions into the VEBA trusts of approximately $10 million in 2004. 

