Intel 2007 Annual Report Download - page 90

Table of Contents
INTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Note 18: Retirement Benefit Plans
Profit Sharing Plans
We provide tax-qualified profit sharing retirement plans for the benefit of eligible employees, former employees, and retirees
in the U.S. and certain other countries. The plans are designed to provide employees with an accumulation of funds for
retirement on a tax-deferred basis and provide for annual discretionary employer contributions. Our Chief Executive Officer
determines the amounts to be contributed to the U.S. Profit Sharing Plan under delegation of authority from our Board of
Directors, pursuant to the terms of the Profit Sharing Plan. As of December 29, 2007, 80% of our U.S. Profit Sharing Fund
was invested in equities and 20% was invested in fixed-income instruments. All assets are managed by external investment
managers.
For the benefit of eligible U.S. employees, we also provide a non-tax-qualified supplemental deferred compensation plan for
certain highly compensated employees. This plan is designed to permit certain discretionary employer contributions and to
permit employee deferral of a portion of salaries in excess of certain tax limits and deferral of bonuses. This plan is unfunded.
We expensed $302 million for the qualified and non-qualified U.S. profit sharing retirement plans in 2007 ($313 million in
2006 and $355 million in 2005). In the first quarter of 2008, we funded $296 million for the 2007 contribution to the U.S.
qualified Profit Sharing Plan and $9 million for the supplemental deferred compensation plan for certain highly compensated
employees.
Contributions that we make to the U.S. Profit Sharing Plan on behalf of our employees vest based on the employee’s years of
service. As of December 29, 2007, employees vested after three years of service in 20% annual increments until the employee
was 100% vested after seven years, or earlier if the employee reached age 60. We amended the U.S. Profit Sharing Plan
vesting schedule to comply with the Pension Protection Act of 2006 (PPA), which requires employers to fully vest employees
after six years of service. As a result, as of the beginning of 2008, vesting occurs after two years of service in 20% annual
increments until the employee is 100% vested after six years, or earlier if the employee reaches age 60. We also implemented
this change in the U.S. defined-benefit plan.
Pension and Postretirement Benefit Plans
Effective at the end of fiscal year 2006, we adopted the provisions of SFAS No. 158. SFAS No. 158 requires that the funded
status of defined-
benefit postretirement plans be recognized on our consolidated balance sheets, and that changes in the funded
status be reflected in other comprehensive income. SFAS No. 158 also requires that the measurement date of the plan’
s funded
status be the same as our fiscal year-end. Prior to adopting the provisions of SFAS No. 158, the measurement date for all
non-U.S. plans was our fiscal year-end, and the measurement date for the U.S. plan was November. Therefore, the change in
measurement date had an insignificant impact on the projected benefit obligation and accumulated other comprehensive
income (loss). Upon adoption of SFAS No. 158 in 2006, we recorded an adjustment, net of tax, of $210 million to
accumulated other comprehensive income (loss).
U.S. Pension Benefits. We provide a tax-qualified defined-benefit pension plan for the benefit of eligible employees and
retirees in the U.S. The plan provides for a minimum pension benefit that is determined by a participant’s years of service and
final average compensation (taking into account the participant’s social security wage base), reduced by the participant’s
balance in the U.S. Profit Sharing Plan. If the pension benefit exceeds the participant’
s balance in the U.S. Profit Sharing Plan,
the participant will receive a combination of pension and profit sharing amounts equal to the pension benefit. However, the
participant will receive only the benefit from the Profit Sharing Plan if that benefit is greater than the value of the pension
benefit. If we do not continue to contribute to, or significantly reduce contributions to, the U.S. Profit Sharing Plan, the U.S.
defined-benefit plan projected benefit obligation could increase significantly. In 2007, we amended the U.S. Defined Benefit
Plan lump sum conversion rates, mortality tables, and minimum funding targets to comply with the PPA.
Non
-U.S. Pension Benefits. We also provide defined-benefit pension plans in certain other countries. Consistent with the
requirements of local law, we deposit funds for certain plans with insurance companies, third-party trustees, or into
government-managed accounts, and/or accrue for the unfunded portion of the obligation. The assumptions used in calculating
the obligation for the non-U.S. plans depend on the local economic environment.
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