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109
Notes to Consolidated Financial Statements
International Business Machines Corporation and Subsidiary Companies
The following table presents the components of net periodic cost of the significant retirement-related benefit plans recognized in Consoli-
dated Statement of Earnings:
($ in millions)
NONPENSION POSTRETIREMENT
SIGNIFICANT DEFINED BENEFIT PENSION PLANS BENEFIT PLAN
U.S. PLAN NON-U.S. PLANS U.S. PLAN
FOR THE YEAR ENDED DECEMBER 31: 2007 2006 2005 2007 2006 2005 2007 2006 2005
Service cost $ 746 $ 769 $ 682 $ 570 $ 596 $ 694 $ 69 $ 62 $ 45
Interest cost 2,585 2,454 2,463 1,767 1,585 1,635 311 306 324
Expected return on plan assets (3,703) (3,613) (3,672) (2,500) (2,298) (2,245) — — —
Amortization of transition assets — — — (3) (6) (6) — — —
Amortization of prior service costs/(credits) 61 61 61 (125) (108) 8 (62) (62) (62)
Recognized actuarial losses 679 785 567 911 870 578 24 29 25
Plan amendments/curtailments/settlements — — 280 — — 65 — — —
Total net periodic cost $ 368 $ 456 $ 381 $ 620 $ 639 $ 729 $342 $335 $332
The following table presents the changes in benefit obligations and plan assets of the significant retirement-related benefit plans:
($ in millions)
NONPENSION POSTRETIREMENT
SIGNIFICANT DEFINED BENEFIT PENSION PLANS BENEFIT PLAN
U.S. PLAN NON-U.S. PLANS U.S. PLAN
2007 2006 2007 2006 2007 2006
Change in benefit obligation:
Benefit obligation at beginning of year $46,498 $46,405 $39,454 $36,643 $ 5,773 $ 5,892
Service cost 746 769 570 596 69 62
Interest cost 2,585 2,454 1,767 1,585 311 306
Plan participants’ contributions — — 66 57 — —
Acquisitions/divestitures, net 5 — 85 10 — —
Actuarial losses/(gains) (465) (283) (2,324) (600) (203) 8
Benefits paid from trust (3,046) (2,847) (1,616) (1,454) — —
Direct benefit payments — — (367) (311) (442) (486)
Foreign exchange impact — — 3,177 3,616 — —
Medicare subsidy — — — — (36) (9)
Plan amendments/curtailments/settlements — — 3 (688) — —
Benefit obligation at end of year $46,323 $46,498 $40,815 $39,454 $ 5,472 $ 5,773
Change in plan assets:
Fair value of plan assets at
beginning of year $52,913 $48,542 $37,632 $31,148 $ 47 $ 66
Actual return on plan assets 7,324 7,218 1,468 3,016 15 3
Employer contributions — — 447 1,769 893 438
Acquisitions/divestitures, net — — 52 (78) — —
Plan participants’ contributions — — 66 57 199 185
Benefits paid from trust (3,046) (2,847) (1,616) (1,454) (650) (645)
Foreign exchange impact — — 3,021 3,174 — —
Fair value of plan assets at end of year $57,191 $52,913 $41,070 $37,632 $ 504 $ 47
Funded status at end of year $10,868 $ 6,415 $ 255 $ (1,822) $(4,968) $(5,726)
Accumulated benefit obligation $46,323 $46,421 $39,396 $38,088 N/A N/A
N/A — Not applicable