Texas Instruments 2007 Annual Report Download - page 33

TEXAS INSTRUMENTS 2007 ANNUAL REPORT 31
The estimated amounts of unrecognized prior service cost and actuarial net loss included in AOCI as of December 31, 2007, that are
expected to be amortized into net periodic benefit cost over the next fiscal year are: $1 million and $17 million for the U.S. defined
benefit plans; $2 million and $8 million for the U.S. retiree health care plan; and ($3) million and $5 million for the non-U.S. defined
benefit plans.
As of December 31, 2007, we do not expect to return any of the assets of the plans to TI during the next 12 months.
Assumptions and Investment Policies
Defined
Benefit Retiree Health Care
2007 2006 2007 2006
Weighted average assumptions used to determine benefit obligations:
U.S. assumed discount rate ......................................... 6.26% 5.75% 5.96% 5.75%
Non-U.S. assumed discount rate:
High ......................................................... 7.75% 5.00%
Low.......................................................... 2.41% 2.25%
U.S. average long-term pay progression................................ 3.50% 3.50%
Non-U.S. average long-term pay progression:
High ......................................................... 10.00% 5.00%
Low.......................................................... 3.00% 3.00%
Weighted average assumptions used to determine net periodic benefit cost:
U.S. assumed discount rate ......................................... 6.00% 5.94% 6.00% 6.00%
Non-U.S. assumed discount rate:
High ......................................................... 5.00% 5.00%
Low.......................................................... 2.25% 2.25%
U.S. assumed long-term rate of return on plan assets ..................... 7.00% 7.00% 7.00% 7.00%
Non-U.S. assumed long-term rate of return on plan assets:
High ......................................................... 6.00% 6.60%
Low.......................................................... 2.00% 2.00%
U.S. average long-term pay progression................................ 3.50% 4.00%
Non-U.S. average long-term pay progression:
High ......................................................... 5.00% 4.00%
Low.......................................................... 3.00% 3.00%
In order to select a discount rate for purposes of valuing the plan obligations and for fiscal-year-end disclosure, an analysis is performed
in which the projected cash flows from significant defined benefit and retiree health care plans are matched with a yield curve based on
an appropriate universe of high-quality corporate bonds that are available in each country. In this manner, a present value is developed.
The discount rate selected is the single equivalent rate that produces the same present value. This approach produces a discount rate
that recognizes each plan’s distinct liability characteristics.
The ranges of assumptions used for the non-U.S. defined benefit plans reflect the different economic environments within the various
countries.
Assumptions for expected long-term rate of return on plan assets are based upon future expectations for returns for each asset class
and the effect of periodic target asset allocation rebalancing. The results are adjusted for the payment of reasonable expenses of the
plan from plan assets. The historical long-term return on the plans’ assets has exceeded the selected rates, and we believe these
assumptions are appropriate based upon the mix of the investments and the long-term nature of the plans’ investments.