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Table of Contents
INTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Assumptions
Weighted-average actuarial assumptions used to determine benefit obligations for the plans were as follows:
For the postretirement medical benefit plan, an increase in the assumed healthcare cost trend rate of one percentage point each year would
not have a significant impact on the benefit obligation because the plan provides defined credits that the retiree can use to pay all or a portion of
the cost to purchase medical coverage.
Weighted-average actuarial assumptions used to determine costs for the plans were as follows:
Several factors are considered in developing the asset return assumptions for the U.S. and non-
U.S. plans. The company analyzed rates of
return relevant to the country where each plan is in effect and the investments applicable to the plan. Additional analysis was performed in
order to reflect expectations of future returns. For the U.S. plan, the company analyzed the historical and projected rates of return of the
Standard & Poor’s 500 Index*. For the non-U.S. plans, the company analyzed local actuarial projections as well as the projected rates of return
from investment managers. In addition, the expected long-term rate of return shown for the non-U.S. plan assets is weighted to reflect each
country’s relative portion of the non-U.S. plan assets.
Net Periodic Benefit Cost
The net periodic benefit cost for the plans included the following components:
68
U.S. Pension
Benefits
Non-U.S. Pension
Benefits
Postretirement
Medical Benefits
2004
2003
2004
2003
2004
2003
Discount rate
5.6
%
6.0
%
5.9
%
5.5
%
5.6
%
6.0
%
Expected return on plan assets
8.0
%
8.0
%
6.3
%
6.7
%
—
—
Rate of compensation increase
5.0
%
5.0
%
3.5
%
3.5
%
—
—
Future profit sharing contributions
8.0
%
6.0
%
—
—
—
—
U.S. Pension
Benefits
Non-U.S. Pension
Benefits
Postretirement
Medical Benefits
2004
2003
2004
2003
2004
2003
Discount rate
6.0
%
7.0
%
5.9
%
5.5
%
6.0
%
7.0
%
Expected return on plan assets
8.0
%
8.0
%
6.3
%
6.7
%
—
—
Rate of compensation increase
5.0
%
5.0
%
3.5
%
3.5
%
—
—
Future profit sharing contributions
8.0
%
6.0
%
—
—
—
—
U.S. Pension
Benefits
Non-U.S. Pension
Benefits
Postretirement
Medical Benefits
(In Millions)
2004
2003
2002
2004
2003
2002
2004
2003
2002
Service cost
$
4
$
7
$
6
$
29
$
27
$
22
$
15
$
12
$
10
Interest cost
2
2
2
16
18
14
11
10
8
Expected return on plan assets
(2
)
(2
)
(1
)
(14
)
(1
)
(12
)
—
—
—
Amortization of prior service cost
1
1
—
—
—
—
4
4
4
Recognized net actuarial loss
—
1
—
—
1
—
1
—
—
Net periodic benefit cost
$
5
$
9
$
7
$
31
$
45
$
24
$
31
$
26
$
22