Intel 2006 Annual Report Download - page 91

Download and view the complete annual report

Please find page 91 of the 2006 Intel annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 145

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145

Table of Contents
INTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Assumptions
Weighted-average actuarial assumptions used to determine benefit obligations for the plans were as follows:
For the postretirement medical benefit plan, an increase in the assumed healthcare cost trend rate of one percentage point each
year would not have a significant impact on the benefit obligation because the plan provides defined credits that the retiree can
use to pay all or a portion of the cost to purchase medical coverage.
Weighted-average actuarial assumptions used to determine costs for the plans were as follows:
For the U.S. plan, the discount rate was developed by calculating the benefit payment streams by year to determine when
benefit payments will be due. The benefit payment streams were then matched by year to U.S. Treasury zero coupon strips to
match the timing and amount of the expected benefit payments. The company adjusted the zero coupon rate by a historical
credit risk spread, and discounted it back to the measurement date to determine the appropriate discount rate. For the
non-U.S. plans, the discount rate was developed by analyzing long-term bond rates and matching the bond maturity with the
average duration of the pension liabilities. Several factors are considered in developing the asset return assumptions for the
U.S. and non-U.S. plans. The company analyzed rates of return relevant to the country where each plan is in effect and the
investments applicable to the plan; expectations of future returns; local actuarial projections; and the projected rates of return
from investment managers. The expected long-term rate of return shown for the non-U.S. plan assets is weighted to reflect
each country’s relative portion of the non-U.S. plan assets.
Net Periodic Benefit Cost
The net periodic benefit cost for the plans included the following components:
79
Post
-
Non
-
retirement
U.S. Pension
U.S. Pension
Medical
Benefits
Benefits
Benefits
2006
2005
2006
2005
2006
2005
Discount rate
5.5
%
5.4
%
5.3
%
5.4
%
5.5
%
5.6
%
Rate of compensation increase
5.0
%
5.0
%
4.6
%
4.0
%
—
—
Post
-
Non
-
retirement
U.S. Pension
U.S. Pension
Medical
Benefits
Benefits
Benefits
2006
2005
2006
2005
2006
2005
Discount rate
5.4
%
5.6
%
5.4
%
5.9
%
5.6
%
5.6
%
Expected return on plan assets
5.6
%
8.0
%
6.0
%
6.3
%
—
—
Rate of compensation increase
5.0
%
5.0
%
4.2
%
3.5
%
—
—
Non
-
U.S.
Pension
Postretirement
U.S. Pension Benefits
Benefits
Medical Benefits
(In Millions)
2006
2005
2004
2006
2005
2004
2006
2005
2004
Service cost
$
4
$
4
$
4
$
51
$
31
$
29
$
12
$
11
$
15
Interest cost
13
2
2
27
18
16
10
10
11
Expected return on plan assets
(12
)
(3
)
(2
)
(15
)
(18
)
(14
)
—
—
—
Amortization of prior service cost
—
—
1
—
—
—
4
4
4
Recognized net actuarial loss
—
—
—
—
—
—
—
—
1
Net periodic benefit cost
$
5
$
3
$
5
$
63
$
31
$
31
$
26
$
25
$
31