IBM 2007 Annual Report Download - page 109

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107
Notes to Consolidated Financial Statements
International Business Machines Corporation and Subsidiary Companies
Plan Financial Information
SUMMARY OF FINANCIAL INFORMATION
The following table presents a summary of the total retirement-related benefits net periodic cost recorded in the Consolidated Statement
of Earnings:
($ in millions)
U.S. PLANS NON-U.S. PLANS TOTAL
FOR THE YEAR ENDED DECEMBER 31: 2007 2006 2005 2007 2006 2005 2007 2006 2005
Significant defined benefit pension plans* $ 368 $ 456 $ 381 $ 620 $ 639 $ 729 $ 988 $1,095 $1,110
Other defined benefit pension plans** 105 93 125 202 85 136 307 178 261
SERP 23 20 9 — — — 23 20 9
Total defined benefit pension plans cost $ 496 $ 569 $ 515 $ 822 $ 724 $ 865 $1,318 $1,293 $1,380
IBM Savings Plan and Non-U.S. Plans $ 390 $ 358 $ 331 $ 478 $ 377 $ 337 $ 868 $ 735 $ 668
EDCP 12 11 10 — — — 12 11 10
Total defined contribution plans cost $ 402 $ 370 $ 341 $ 478 $ 377 $ 337 $ 880 $ 747 $ 678
Nonpension postretirement
benefit plans cost $ 342 $ 335 $ 332 $ 57 $ 53 $ 47 $ 399 $ 388 $ 379
Total retirement-related
benefits net periodic cost $1,240 $1,274 $1,188 $1,357 $1,154 $1,249 $2,597 $2,428 $2,437
* Significant defined benefit pension plans consist of the qualified portion of the PPP in the U.S. and the material non-U.S. Plans. See page 108 for a list of significant plans.
** Other defined benefit pension plans consist of the non-qualified portion of the PPP in the U.S. and the non-material non-U.S. plans.
Nonpension Postretirement Benefit Plan
U.S. Nonpension Postretirement Plan
The company sponsors a defined benefit nonpension postretirement
benefit plan that provides medical and dental benefits to eligible U.S.
retirees and eligible dependents, as well as life insurance for eligible
U.S. retirees. Effective July 1, 1999, the company established a Future
Health Account (FHA) for employees who were more than five years
away from retirement eligibility. Employees who were within five
years of retirement eligibility are covered under the company’s prior
retiree health benefits arrangements. Under either the FHA or the
prior retiree health benefit arrangements, there is a maximum cost to
the company for retiree health benefits.
Effective January 1, 2004, new hires, as of that date or later, are
not eligible for company subsidized postretirement benefits.
NON-U.S. PLANS
Most subsidiaries and branches outside the United States sponsor
defined benefit and/or defined contribution plans that cover substan-
tially all regular employees. The company deposits funds under various
fiduciary-type arrangements, purchases annuities under group
contracts or provides reserves for these plans. Benefits under the
defined benefit plans are typically based either on years of service and
the employee’s compensation (generally during a fixed number of
years immediately before retirement) or on annual credits. The range
of assumptions that are used for the non-U.S. defined benefit plans
reflects the different economic environments within various countries.
In addition, certain of the company’s non-U.S. subsidiaries sponsor
defined benefit nonpension postretirement benefit plans that provide
medical and dental benefits to eligible non-U.S. retirees and eligible
dependents, as well as life insurance for certain eligible non-U.S.
retirees. However, most of the non-U.S. retirees are covered by local
government sponsored and administered programs.