Intel 2004 Annual Report Download - page 73

Table of Contents
INTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Pension and Postretirement Benefit Plans
U.S. Pension Benefits. The company provides a tax-qualified defined-benefit pension plan for the benefit of eligible employees and
retirees in the U.S. The plan provides for a minimum pension benefit that is determined by a participant’s years of service and final average
compensation (taking into account the participant’s social security wage base), reduced by the participant’s balance in the Profit Sharing Plan.
If the pension benefit exceeds the participant’s balance in the Profit Sharing Plan, the participant will receive a combination of pension and
profit sharing amounts equal to the pension benefit. However, the participant will receive only the benefit from the Profit Sharing Plan if that
benefit is greater than the value of the pension benefit. The U.S. defined-benefit plan’s projected benefit obligation assumes future
contributions to the Profit Sharing Plan, and if the company does not continue to contribute to or significantly reduces contributions to the
Profit Sharing Plan, the U.S. defined-benefit plan projected benefit obligation could increase significantly. Historically, the company has
contributed 8% to 12.5% of participants’
eligible compensation to the Profit Sharing Plan on an annual basis. The benefit obligation and related
assets under this plan have been measured as of November 30, 2004.
Non-U.S. Pension Benefits. The company also provides defined-benefit pension plans in certain other countries. Consistent with the
requirements of local law, the company deposits funds for certain of these plans with insurance companies, third-party trustees, or into
government-managed accounts, and/or accrues for the unfunded portion of the obligation. The assumptions used in calculating the obligation
for the non-U.S. plans depend on the local economic environment. The benefit obligations and related assets under these plans have been
measured as of December 25, 2004.
Postretirement Medical Benefits. Upon retirement, eligible U.S. employees are credited with a defined dollar amount based on years of
service. These credits can be used to pay all or a portion of the cost to purchase coverage in an Intel-sponsored medical plan. If the available
credits are not sufficient to pay the entire cost of the coverage, the remaining cost is the responsibility of the retiree.
Funding Policy. The company’s practice is to fund the various pension plans in amounts at least sufficient to meet the minimum
requirements of U.S. federal laws and regulations or applicable local laws and regulations. The assets of the various plans are invested in
corporate equities, corporate debt securities, government securities and other institutional arrangements. The portfolio of each plan depends on
plan design and applicable local laws. Depending on the design of the plan, local custom and market circumstances, the minimum liabilities of
a plan may exceed qualified plan assets. The company accrues for all such liabilities.
Benefit Obligation and Plan Assets
The changes in the benefit obligations, plan assets and funded status for the plans described above were as follows:
66
U.S. Pension
Benefits
Non-U.S. Pension
Benefits
Postretirement
Medical Benefits
(In Millions)
2004
2003
2004 2003 2004 2003
Change in projected benefit obligation:
Beginning benefit obligation
$
49
$
28
$
306
$
242
$
178
$
132
Service cost
2
5
29
26
15
12
Interest cost
2
3
16
18
12
10
Plan participants
’
contributions
—
—
6
3
2
—
Actuarial (gain) loss
(10
)
14
(40
)
(15
)
(26
)
28
Currency exchange rate changes
—
—
17
37
—
—
Benefits paid to plan participants
(1
)
(1
)
(7
)
(5
)
(4
)
(4
)
Ending projected benefit obligation
$
42
$
49
$
327
$
306
$
177
$
178