HP 2012 Annual Report Download - page 147
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HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 16: Retirement and Post-Retirement Benefit Plans (Continued)
no longer discretionary, but equal to 100% of an employee’s contributions, up to a maximum of 4% of
eligible compensation.
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 $10 million, $8 million and $7 million in dividends for the HP common shares held by
the HP Stock Fund in fiscal 2012, 2011 and 2010, respectively. HP records the dividends as a reduction
of retained earnings in the Consolidated Statements of Stockholders’ Equity. The HP Stock Fund held
approximately 20 million shares of HP common stock at October 31, 2012.
Pension and Post-Retirement Benefit Expense
HP’s net pension and post-retirement benefit cost (credit) 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
2012 2011 2010 2012 2011 2010 2012 2011 2010
In millions
Service cost ................ $ 1 $ 1 $ 1 $294 $343 $319 $ 7 $ 9 $12
Interest cost ............... 566 594 578 690 694 657 35 35 47
Expected return on plan assets . . (793) (744) (662) (816) (890) (756) (38) (37) (32)
Amortization and deferrals:
Actuarial loss (gain) ........ 43 33 27 235 235 214 (3) 3 14
Prior service benefit ........———(24)(14)(11)(79)(83)(87)
Net periodic benefit (credit) cost (183) (116) (56) 379 368 423 (78) (73) (46)
Curtailment loss (gain) ......——— 4—(6)(30)—(13)
Settlement loss (gain) ....... 11 3 7 (18) 9 7 — — —
Special termination benefits . . 833——171629227——
Net benefit cost (credit) ....... $661 $(113) $ (49) $ 382 $ 393 $ 453 $119 $(73) $(59)
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
2012 2011 2010 2012 2011 2010 2012 2011 2010
Discount rate .................... 4.8% 5.6% 5.9% 4.5% 4.4% 5.0% 4.4% 4.4% 5.4%
Average increase in compensation levels . 2.0% 2.0% 2.0% 2.5% 2.5% 2.5% — — —
Expected long-term return on assets .... 7.6% 8.0% 8.0% 6.4% 6.8% 7.0% 10.0% 10.5% 9.5%
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