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2006 Annual Report 73
The accumulated benet obligations under these plans were $199 million as of July 29, 2006 and represent the total benets earned by
active and retired employees discounted at an assumed interest rate. Earned benets for active employees are based on their current pay
and service. The accumulated post-retirement benet obligations of the Retiree Medical and Life Plans were $12 million as of July 29, 2006
and are unfunded. Signicant weighted-average actuarial assumptions for each plan were as follows:
Pension Plans
Restoration
Plan SERPs
Retiree Medical
and Life Plans
Discount rate 5.9% 5.9% 6.4% 6.2%
Rate of compensation increase 5.0% 5.0% 5.0% N/A
The Company’s expected return on plan assets for the Pension Plans is 8.0%. To determine the expected long-term rate of return on the
assets for the Pension Plans, the Company considered the historical and expected returns on the plan assets, as well as the current and
expected allocation of the plan assets. Plan assets are invested in publicly traded equity securities, xed income securities, and cash and
cash equivalents. The equity portfolio is diversied between domestic growth, value and index components, and an international investment
component. The xed income portfolio is managed by utilizing intermediate-term instruments of high credit quality. The Company’s periodic
pension cost related to the dened benet pension plans and post retirement benets was not material for scal 2006. The Company was not
required to make any contributions to these plans during scal 2006. The Company also assumed deferred compensation plans for certain
employees and directors of Scientic-Atlanta. As of July 29, 2006, the deferred compensation liability under these plans was approximately
$100 million and was recorded in other long-term liabilities.
11. Income Taxes
The provision for income taxes consists of the following (in millions):
Years Ended July 29, 2006 July 30, 2005 July 31, 2004
Federal:
Current $ 1,877 $ 1,340 $ 968
Deferred (292) 497 469
1,585 1,837 1,437
State:
Current 215 496 230
Deferred (20) (292) (19)
195 204 211
Foreign:
Current 304 404 274
Deferred (31) (150) 102
273 254 376
Total $ 2,053 $ 2,295 $ 2,024
The Company paid income taxes of $1.642 billion, $1.266 billion, and $644 million in scal 2006, 2005, and 2004, respectively. Income
before provision for income taxes consists of the following (in millions):
Years Ended July 29, 2006 July 30, 2005 July 31, 2004
United States $ 2,685 $ 7,028 $ 2,743
International 4,948 1,008 4,249
Total $ 7,633 $ 8,036 $ 6,992
Notes to Consolidated Financial Statements