HP 2008 Annual Report Download - page 142

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 15: Retirement and Post-Retirement Benefit Plans (Continued)
During fiscal 2008, HP matched employee contributions to the HP 401(k) Plan with cash
contributions up to a maximum of 6% of eligible compensation for U.S. employees hired prior to
August 1, 2008. For U.S. employees hired on or after August 1, 2008 HP will match employee
contributions up to a maximum of 4% of eligible compensation.
The employer match for the EDS plan is 25% of the employee contribution based on a maximum
contribution of 6% of the employee’s salary. Effective January 1, 2009, U.S. employees participating in
the EDS 401(k) plan will be eligible for a 4% HP matching contribution on eligible compensation.
Similar to the HP 401(k) plan, contributions are invested at the direction of the employee in various
funds, although the EDS 401(k) plan does not offer an HP stock fund. Since the acquisition date,
employer matching contributions for EDS employees have totaled $6 million.
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 may receive dividends in cash or may reinvest such dividends into the HP Stock Fund. HP paid
approximately $9 million, $9 million and $10 million in dividends for the HP common shares held by
the HP Stock Fund in fiscal 2008, 2007 and 2006, respectively. HP records the dividends as a reduction
of retained earnings in the Consolidated Statements of Stockholders’ Equity. The HP Stock Fund held
approximately 27 million shares of HP common stock at October 31, 2008.
Pension and Post-Retirement Benefit Expense
HP’s net pension and post-retirement benefit cost (gain) recognized in the Consolidated
Statements of Earnings was 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
2008 2007 2006 2008 2007 2006 2008 2007 2006
In millions
Service cost ...................... $ 63 $130 $177 $281 $261 $299 $29 $31 $32
Interest cost ...................... 296 260 276 475 366 325 78 77 84
Expected return on plan assets ........ (318) (355) (361) (713) (579) (495) (40) (38) (34)
Amortization and deferrals:
Actuarial (gain) loss .............. (36) (13) (14) 1 87 136 19 26 39
Prior service cost (benefit) .......... — — 1 (8) (7) (3) (55) (54) (55)
Net periodic benefit cost ............. 5 22 79 36 128 262 31 42 66
Curtailment (gain) loss ............ — (541) — — (13) 1 — (26) (24)
Settlement (gain) loss ............. (1) 8 (46) (2) 4 2 — — —
Special termination benefits ......... — 307 — 4 4 12 — 60 —
Net benefit cost (gain) .............. $ 4 $(204) $ 33 $ 38 $ 123 $ 277 $ 31 $ 76 $ 42
In fiscal 2008, HP recognized settlement gains of $1 million for the U.S. Excess Benefit Plan and
$2 million for the Canadian defined benefit plan. Special termination benefit expense of $4 million was
incurred associated with the early retirement of employees in the U.K.
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