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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:
Weighted-average actuarial assumptions used to determine costs for the plans were as follows:
For the U.S. plans, we developed the discount rate by calculating the benefit payment streams by year to determine when
benefit payments will be due. We then matched the benefit payment streams by year to the AA corporate bond rates to match
the timing and amount of the expected benefit payments and discounted back to the measurement date to determine the
appropriate discount rate. For the non-U.S. plans, we used two approaches to develop the discount rate. In certain countries,
we used a model consisting of a theoretical bond portfolio for which the timing and amount of cash flows approximates the
estimated benefit payments of our pension plans. In other countries, we analyzed current market long-term bond rates and
matched the bond maturity with the average duration of the pension liabilities. We consider several factors in developing the
asset return assumptions for the U.S. and non-U.S. plans. We 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 long-term 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:
93
U.S. Pension
Non-
U.S. Pension
Postretirement
Benefits
Benefits
Medical Benefits
2008
2007
2008
2007
2008
2007
Discount rate
6.7
%
5.6
%
5.6
%
5.5
%
6.8
%
5.6
%
Rate of compensation increase
5.0
%
5.0
%
3.5
%
4.5
%
—
—
U.S. Pension
Non-
U.S. Pension
Postretirement
Benefits
Benefits
Medical Benefits
2008
2007
2008
2007
2008
2007
Discount rate
5.6
%
5.5
%
5.2
%
5.2
%
5.6
%
5.5
%
Expected return on plan assets
5.1
%
5.6
%
6.5
%
6.2
%
—
—
Rate of compensation increase
5.0
%
5.0
%
4.3
%
4.5
%
—
—
Non
-
U.S. Pension
Postretirement
U.S. Pension Benefits
Benefits
Medical Benefits
(In Millions)
2008
2007
2006
2008
2007
2006
2008
2007
2006
Service cost
$
14
$
$
4
$
64
$
$
$
12
$
6
$
12
Interest cost
16
42
12
11
10
Expected return on plan assets
(11
)
(10
)
(12
)
(39
)
(29
)
(15
)
—
—
—
Amortization of prior service cost
—
(
)
—
—
1
—
4
4
4
Recognized net actuarial loss
1
7
—
6
—
—
—
—
Recognized curtailment gains
1
—
—
—
(
4
)
—
—
—
—
—
Recognized settlement losses
1
—
—
—
17
—
—
—
—
—
Net periodic benefit cost
$
20
$
7
$
5
$
86
$
$
$
28
$
21
$
26
1
2008 curtailments and settlements were primarily related to the divestiture of our NOR flash memory business for
employees at our Israel and Philippines facilities.