Texas Instruments 2008 Annual Report Download - page 26

[ 24 ] TEXAS INSTRUMENTS 2008 ANNUAL REPORT
During 2008 and 2007, the U.S. defined benefit plans made $70 million and $45 million in total benefit payments, of which
$16 million in 2008 were accounted for as plan settlements. The majority of the settlements were attributed to the non-qualified plan.
During 2008 we made a $100 million contribution to the qualified pension plan. There were no contributions to this plan in 2007;
however, we did make payments from non-plan assets related to our non-qualified plans of $12 million in 2008 and $3 million in 2007.
U.S. retiree health care benefit plan:
We offer most of our U.S. employees access to group medical coverage during their retirement. 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 plan’s participants. Employees hired after January 1, 2001, are responsible for the full cost
of their medical benefits during retirement. During 2008 and 2007 we made contributions to the retiree health care related trusts of
$50 million, and $10 million. In addition, we made benefit payments each year of approximately $1 million from non-plan assets.
Non-U.S. retirement plans:
We provide retirement coverage for non-U.S. employees, to the extent we deem 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 are subject to local country practices and market
circumstances. During 2008 and 2007 we contributed $87 million and $77 million to our non-U.S. retirement plans.
As of December 31, 2008 and 2007, as a result of employees’ elections, TI’s non-U.S. defined contribution plans held 636,983 shares
of TI common stock valued at $10 million and 601,115 shares valued at $20 million. Dividends paid on these shares for 2008 and 2007
were not significant.
Effect on the statements of income and balance sheets
Expense related to defined benefit and retiree health care benefit plans was as follows:
U.S. Defined Benefit U.S. Retiree Health Care
Non-U.S.
Defined Benefit
2008 2007 2006 2008 2007 2006 2008 2007 2006
Service cost.................................. $25 $24 $26 $ 4 $ 4 $ 4 $49 $46 $44
Interest cost ................................. 49 43 45 28 25 25 60 52 46
Expected return on plan assets ................... (45)(47)(45)(27)(26)(21)(83)(73)(66)
Amortization of prior service cost ................. 1— — 22 2 (3)(3)(3)
Recognized net actuarial loss .................... 16 20 21 86 6 5913
Net periodic benefit cost ........................ 46 40 47 15 11 16 28 31 34
Settlement charges ............................ 7226 —— — —— —
Curtailment charges ........................... 1— — 11 1 — —— —
Special termination benefit charges................ 18 3 — —— — —— —
Total, including charges......................... $72 $45 $73 $26 $12 $16 $28 $31 $34
For the U.S. qualified pension and retiree health care plans, the expected return on plan assets component of net periodic benefit cost
is based upon a market-related value of assets. In accordance with U.S. GAAP, the market-related value of assets generally utilizes a
smoothing technique whereby certain gains and losses are phased in over a period of three years.