HP 2006 Annual Report Download - page 124
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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 15: Retirement and Post-Retirement Benefit Plans (Continued)
may receive dividends in cash or may reinvest such dividends into the HP Stock Fund. HP paid
approximately $10 million, $12 million and $13 million in dividends for the HP common shares held by
the HP Stock Fund in fiscal 2006, 2005 and 2004, respectively. HP records the dividends as a reduction
of retained earnings in the Consolidated Statements of Stockholders’ Equity. The HP Stock Fund held
approximately 31 million shares of HP common stock at October 31, 2006.
Pension and Post-Retirement Benefit Expense
HP’s net pension and post-retirement benefit costs were as follows for the following fiscal years
ended October 31:
U.S. Defined Non-U.S. Defined Post-Retirement
Benefit Plans Benefit Plans Benefit Plans
2006 2005 2004 2006 2005 2004 2006 2005 2004
In millions
Service cost ......................... $177 $338 $320 $299 $236 $213 $32 $ 63 $ 55
Interest cost ........................ 276 275 266 325 304 265 84 98 103
Expected return on plan assets ........... (361) (290) (247) (495) (412) (346) (34) (32) (30)
Amortization and deferrals:
Actuarial (gain) / loss ................ (14) 38 29 136 104 93 39 35 25
Prior service cost (benefit) ............123(3)(1)(2)(55)(18)(9)
Net periodic benefit cost ............... 79 363 371 262 231 223 66 146 144
Curtailment loss / (gain) .............. — (199) — 1 — — (24) — —
Settlement loss / (gain) ............... (46) — — 2 1 (3) — — —
Special termination benefits ........... — 352 — 12 3 11 — 55 —
Net benefit cost ...................... $ 33 $516 $371 $277 $235 $231 $42 $201 $144
The weighted average assumptions used to calculate net benefit cost were as follows for the
following fiscal years ended October 31:
U.S. Defined Non-U.S. Defined Post-Retirement
Benefit Plans Benefit Plans Benefit Plans
2006 2005 2004 2006 2005 2004 2006 2005 2004
Discount rate ........................ 5.9% 5.7% 6.5% 4.2% 4.9% 5.0% 5.8% 5.6% 6.5%
Average increase in compensation levels .... 4.0% 4.0% 4.0% 3.7% 3.7% 3.6% — — —
Expected long-term return on assets ....... 8.3% 8.3% 8.5% 6.7% 6.7% 6.9% 8.3% 8.3% 8.5%
As a result of the restructuring plans implemented in fiscal 2005, HP re-measured its U.S. defined
benefit plan and post-retirement benefit plan obligations during fiscal 2006. The 2006 discount rates
outlined in the table above are those rates used by HP in conducting each of the respective plan
re-measurements and reflect the weighted average rate across all measurement periods.
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