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The components of postretirement benefit expense in 2004, 2003 and 2002 were as follows: 

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(a) Excludes $1.0 million, $5.3 million and $1.2 million of curtailment gains in 2004, 2003 and 2002, respectively, and $1.0 million and $1.3 million of special termination benefits in 2004 and 2003, respectively, related to cost reduction programs and facility rationalizations that were recorded in Restructuring and other charges in the consolidated statement of operations. Also excludes $1 million of curtailment gains in 2002 related to the divestitures of Masonite, Flexible Packaging, Decorative Products and other smaller businesses that were recorded in Net losses (gains) on sales and impairments of businesses held for sale in the consolidated statement of operations. 

International Paper evaluates its actuarial assumptions annually as of December 31 (the measurement date) and considers changes in these long-term factors based upon market conditions and the requirements of SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions.” 

The discount rate assumptions used to determine net cost for the years ended December 31, 2004, 2003 and 2002 were as follows: 

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The weighted average assumptions used to determine the benefit obligation at December 31, 2004 and 2003 were as follows: 

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A 1% increase in the assumed annual health care cost trend rate would have increased the accumulated postretirement benefit obligation at December 31, 2004 by approximately $54 million. A 1% decrease in the annual trend rate would have decreased the accumulated postretirement benefit obligation at December 31, 2004 by approximately $50 million. The effect on net postretirement benefit cost from a 1% increase or decrease would be approximately $4 million. 

The plan is only funded in an amount equal to benefits paid. The following table presents the changes in benefit obligation and plan assets for 2004 and 2003: 

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Change in plan assets: 

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At December 31, 2004, estimated total future postretirement benefit payments, net of participant contributions, and estimated future Medicare Part D subsidy receipts are as follows: 

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