Texas Instruments 2006 Annual Report Download - page 29

TEXAS INSTRUMENTS 2006 ANNUAL REPORT 2727
U.S. Retirement Plans:
The principal retirement plans in the U.S include a qualified defined benefit pension plan (which is closed to new participants
hired after November 1997), a defined contribution plan and an enhanced defined contribution plan. Both defined contribution
plans offer an employer-matching savings option that allows employees to make pre-tax contributions to various investment
choices, including a TI common stock fund. Employees who remain in the qualified defined benefit pension plan may also
participate in the defined contribution plan, where employer-matching contributions are provided for up to 2 percent of the
employee’s annual eligible earnings. Employees who elected not to remain in the defined benefit pension plan, and new
employees hired after November 1997 and through December 31, 2003, may participate in the enhanced defined contribution
plan. This plan provides for a fixed employer contribution of 2 percent of the employee’s annual eligible earnings, plus
an employer-matching contribution of up to 4 percent of the employee’s annual eligible earnings. Employees hired after
December 31, 2003, may participate in the enhanced defined contribution plan, where employer-matching contributions are
provided for up to 4 percent of the employee’s annual eligible earnings.
At December 31, 2006 and 2005, in accordance with the election of employees, TI’s U.S. defined contribution plans held shares
of TI common stock totaling 43 million shares and 53 million shares valued at $1.23 billion and $1.70 billion. Dividends paid on
these shares for 2006 and 2005 totaled $6 million in 2006 and $6 million in 2005.
Our aggregate expense for U.S. employees under the defined contribution plans was $56 million in 2006 and $53 million in both
2005 and 2004.
The benefits under the qualified defined benefit pension plan are determined using a formula based upon years of service
and the highest five consecutive years of compensation. We intend to contribute amounts to this plan to meet the minimum
funding requirements of federal laws and regulations plus such additional amounts as we deem appropriate. During 2006,
we contributed $125 million to our defined benefit pension plans of which $114 million were cash contributions to the
qualified pension trust and $11 million were benefit payments related to our nonqualified defined benefit pension plans. The
nonqualified plans are unfunded and closed to new participants.
During 2006, the U.S. defined benefit plans made $124 million in total benefits payments, primarily for the qualified pension
plan. Of that amount, $119 million was accounted for as settlements and $5 million as benefits paid. For comparison purposes,
in 2005 the U.S. defined benefit plans made $62 million in benefit payments of which $12 million was accounted for as
settlements and $50 million as benefits paid.
U.S. Retiree Health Care Benefit Plan:
We offer access to group medical coverage during retirement to most of our U.S. employees. We make a contribution toward
the cost of those retiree medical benefits for certain retirees and their dependents. The contribution rates are based upon
various factors, the most important of which are an employee’s date of hire, date of retirement, years of service and eligibility
for Medicare benefits. The balance of the cost is borne by the participants in the plan. Employees hired after January 1, 2001,
are responsible for the full cost of their medical benefits during retirement. During 2006, we contributed $91 million to the
retiree health care plan.
Non-U.S. Retirement Plans:
Retirement coverage for non-U.S. employees is provided, to the extent deemed appropriate, through separate defined benefit
and defined contribution plans. Retirement benefits are generally based on an employee’s years of service and compensation.
Funding requirements are determined on an individual country and plan basis and subject to local country practices and
market circumstances. During 2006, we contributed $143 million to our non-U.S. retirement plans.
As of December 31, 2006 and 2005, in accordance with the election of employees, TI’s non-U.S. defined contribution plans held
shares of TI common stock totaling 0.7 million shares valued at $19 million in 2006 and $22 million in 2005. Dividends paid on
these shares for 2006 and 2005 totaled $88 thousand and $70 thousand.