HP 2008 Annual Report Download - page 140

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 15: Retirement and Post-Retirement Benefit Plans (Continued)
by country, but the most significant is years of service and earnings. The projected unit credit cost
method is used for actuarial purposes. Plan assets and plan obligations associated with the EDS defined
benefit pension plans are included as of the acquisition date and through October 31, 2008. On a
global basis, EDS plan assets totaled $7.8 billion and plan obligations totaled $10.1 billion as of
August 26, 2008. The U.S. portion of global assets and obligations totaled $4.1 billion and $5.0 billion
respectively. Following the acquisition of EDS, HP announced that it was modifying the EDS U.S.
qualified and non-qualified plans for employees accruing benefits under the programs. Effective
January 1, 2009, EDS employees in the U.S. will cease accruing pension benefits. The final pension
benefit amount will be calculated based on pay and service through December 31, 2008.
Defined Benefit Plans
HP sponsors a number of defined benefit pension plans worldwide, of which the most significant
are in the United States. The HP Retirement Plan (the ‘‘Retirement Plan’’) is a defined benefit pension
plan for U.S. employees hired on or before December 31, 2002. Benefits under the Retirement Plan
generally are based on pay and years of service, except for eligible pre-acquisition Compaq employees,
who do not receive credit for years of service prior to January 1, 2003. Effective December 31, 2005,
participants whose combination of age plus years of service was less than 62 ceased accruing benefits
under the Retirement Plan. For U.S employees hired or rehired on or after January 1, 2003, HP
sponsors the Hewlett-Packard Company Cash Account Pension Plan (the ‘‘Cash Account Pension
Plan’’), under which benefits accrue pursuant to a cash accumulation account formula based upon a
percentage of pay plus interest. Effective December 31, 2005, the Cash Account Pension Plan was
closed to new participants, and participants whose combination of age plus years of service was less
than 62 ceased accruing benefits.
Effective November 30, 2005, HP merged the Cash Account Pension Plan into the Retirement
Plan; the merged plan is treated as one plan for certain legal and financial purposes, including funding
requirements. The merger has no impact on the separate benefit structures of the plans.
On February 20, 2007, HP announced it was modifying its U.S. defined benefit pension plans for
the remaining number of U.S. employees still accruing benefits under the program. Effective January 1,
2008, these employees ceased accruing pension benefits, and HP calculated the final pension benefit
amount on pay and service through December 31, 2007.
HP reduces the benefit payable to a U.S. employee under the Retirement Plan for service before
1993, if any, by any amounts due to the employee under HP’s frozen defined contribution Deferred
Profit-Sharing Plan (the ‘‘DPSP’’). HP closed the DPSP to new participants in 1993. The DPSP plan
obligations are equal to the plan assets and are recognized as an offset to the Retirement Plan when
HP calculates its defined benefit pension cost and obligations. The fair value of plan assets and
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