EMC 2003 Annual Report Download - page 59

Amortization of transition asset (853) (839) (829)
Recognized actuarial loss 7,804 3,089 735
Curtailment, net of settlements (1,165) 401 138
Net periodic benefit cost (credit) $ 1,745 $ 3,024 $ (287)
The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for the Pension Plans with accumulated benefit obligations
in excess of plan assets were $326.8 million, $326.8 million and $201.7 million, respectively, measured as of December 31, 2002.
The weighted-average assumptions used in the Pension Plans to determine benefit obligations at December 31 are as follows:
December 31,
2003
December 31,
2002
December 31,
2001
Discount rate 6.1% 6.4% 7.0%
Expected long-term rate of return on plan assets 8.2% 8.4% 8.6%
Rate of compensation increase N/A N/A 3.8%
The weighted-average assumptions used in the Pension Plans to determine periodic benefit cost for the years ended December 31 are as follows:
December 31,
2003
December 31,
2002
December 31,
2001
Discount rate 6.5% 7.0% 7.2%
Expected long-term rate of return on plan assets 8.2% 8.4% 8.6%
Rate of compensation increase N/A N/A N/A
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EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The expected long-term rate of return on plan assets considers the current level of expected returns on risk free investments (primarily government
bonds), the historical level of the risk premium associated with the other asset classes in which the portfolio is invested and the expectations for future returns
of each asset class. The expected return for each asset class was weighted based on the target asset allocation to develop the expected long-term rate of return
on assets. The weighted average asset allocations are as follows:
December 31,
2003
December 31,
2002
Equity securities 75% 70%
Debt securities 25 29
Other – 1
Total 100% 100%
The target allocation of the assets in the Pension Plans at December 31, 2003 consisted of equity securities of 72%, debt securities of 27% and other
investments of 1%.
Our Pension Plan assets are managed by outside investment managers. Our investment strategy with respect to pension assets is to maximize returns
while preserving principal.
The benefit payments are expected to be paid in the following years (table in thousands):
2004 $ 8,511
2005 9,027
2006 9,615
2007 10,458
2008 11,305
Years 2009 - 2013 77,472
Post Retirement Medical and Life Insurance Plan
Our post-retirement benefit plan, which was assumed in connection with the acquisition of Data General, provides certain medical and life insurance
benefits for retired former Data General employees. With the exception of certain participants who retired prior to 1986, the medical benefit plan requires
monthly contributions by retired participants in an amount equal to insured equivalent costs less a fixed EMC contribution which is dependent on the
participant's length of service and Medicare eligibility. Benefits are continued to dependents of eligible retiree participants for 39 weeks after the death of the
retiree. The life insurance benefit plan is noncontributory. Funds contributed to the plan are invested primarily in common stocks, mutual funds and cash
equivalent securities. The measurement date for the plan is December 31.
The components of the change in benefit obligation are as follows (table in thousands):
December 31,
2003
December 31,
2002
Benefit obligation at beginning of year $ 6,102 $ 5,521
Interest cost 303 416