HP 2006 Annual Report Download - page 123

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 15: Retirement and Post-Retirement Benefit Plans (Continued)
obligations are equal to the plan assets and are recognized as an offset to the Retirement Plan when
HP calculates its defined benefit pension cost and obligations. The fair value of plan assets and
projected benefit obligations for the U.S. defined benefit plans combined with the DPSP as of the
September 30 measurement date is as follows for the following fiscal years ended October 31:
2006 2005
Projected Projected
Plan Benefit Plan Benefit
Assets Obligation Assets Obligation
In millions
U.S. defined benefit plans ........................... $4,325 $4,688 $4,775 $5,296
DPSP .......................................... 1,095 1,095 1,295 1,295
Total ......................................... $5,420 $5,783 $6,070 $6,591
Post-Retirement Benefit Plans
Through fiscal 2005, substantially all of HP’s U.S. employees at December 31, 2002 could become
eligible for partially subsidized retiree medical benefits and retiree life insurance benefits under the
Pre-2003 HP Retiree Medical Program (the ‘‘Pre-2003 Program’’) and certain other retiree medical
programs. Plan participants in the Pre-2003 Program make contributions based on their choice of
medical option and length of service. U.S. employees hired or rehired on or after January 1, 2003 may
be eligible to participate in a post-retirement medical plan, the HP Retiree Medical Program but must
bear the full cost of their participation. Effective January 1, 2006, employees whose combination of age
and years of service was less than 62 no longer will be eligible for the subsidized Pre-2003 Program, but
instead will be eligible for the HP Retiree Medical Program. Employees no longer eligible for the
Pre-2003 Program, as well as employees hired on or after January 1, 2003, are eligible for certain
credits under the HP Retirement Medical Savings Account Plan (‘‘RMSA Plan’’) upon attaining age 45.
Upon retirement, former employees may use credits under the RMSA Plan for the reimbursement of
certain eligible medical expenses, including premiums required for participation in the HP Retiree
Medical Program.
Defined Contribution Plans
HP offers various defined contribution plans for U.S. and non-U.S. employees. Total defined
contribution expense was $430 million in fiscal 2006, $422 million in fiscal 2005 and $405 million in
fiscal 2004. U.S. employees are automatically enrolled in the Hewlett-Packard Company 401(k) Plan
(the ‘‘HP 401(k) Plan’’) when they meet eligibility requirements, unless they decline participation. On
May 3, 2002, HP assumed sponsorship of the Compaq Computer Corporation 401(k) Investment Plan
(the ‘‘Compaq 401(k) Plan’’). Effective January 1, 2004, HP merged the Compaq 401(k) Plan into the
HP 401(k) Plan.
During fiscal 2006, HP matched employee contributions to the HP 401(k) Plan with cash
contributions up to a maximum of 6% of eligible compensation. Effective January 1, 2006 newly-hired
employees, rehired employees and employees who are no longer eligible to participate in defined
benefit plans were eligible for a 6% HP matching contribution.
Effective January 31, 2004, HP designated the HP Stock Fund, an investment option under the HP
401(k) Plan, as an Employee Stock Ownership Plan and, as a result, participants in the HP Stock Fund
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