Texas Instruments 2015 Annual Report Download - page 56

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FORM 10-K
U.S. retiree health care benefit plan
U.S. employees who meet eligibility requirements are offered medical coverage during 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.
Non-U.S. retirement plans
We provide retirement coverage for non-U.S. employees, as required by local laws or to the extent we deem appropriate, through a
number of 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.
As of December 31, 2014 and 2013, as a result of employees’ elections, TI’s non-U.S. defined contribution plans held TI common
stock valued at $17 million and $15 million, respectively. Dividends paid on these shares of TI common stock for 2014 and 2013 were
not material.
Effects on the Consolidated 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
2014 2013 2012 2014 2013 2012 2014 2013 2012
Service cost . . . . . . . . . . . . . . . . . . . . . $ 21 $ 26 $ 24 $ 4 $ 5 $ 5 $ 39 $ 41 $ 45
Interest cost . . . . . . . . . . . . . . . . . . . . . 45 45 44 22 20 25 68 61 75
Expected return on plan assets . . . . . . . . . . . . (42) (48) (50) (20) (24) (23) (80) (67) (78)
Amortization of prior service cost (credit) . . . . . . . —1 1 44 3 (2) (3) (4)
Recognized net actuarial loss . . . . . . . . . . . . . 26 21 16 711 13 24 31 41
Net periodic benefit costs . . . . . . . . . . . . . . 50 45 35 17 16 23 49 63 79
Settlement losses (a) (b) . . . . . . . . . . . . . . . 541 — —— — 14 193
Curtailment gain . . . . . . . . . . . . . . . . . . . —— — —— (1) (2) (7) —
Special termination benefit gains (b) . . . . . . . . . —— (1) —— — —— (337)
Total, including other postretirement
losses (gains) . . . . . . . . . . . . . . . . . . $ 55 $ 86 $ 34 $ 17 $ 16 $ 22 $ 48 $ 60 $ (65)
(a) Includes non-restructuring and restructuring-related settlement losses.
(b) Transfer of Japan substitutional pension in 2012: In Japan, we maintain employee pension fund plans (EPFs) pursuant to the Japanese
Welfare Pension Insurance Law (JWPIL). An EPF consists of two portions: a substitutional portion based on JWPIL-determined
minimum old-age pension benefits similar to Social Security benefits in the United States and a corporate portion established at the
discretion of each employer. Employers and employees are exempt from contributing to the Japanese Pension Insurance (JPI) if the
substitutional portion is funded by an EPF.
The JWPIL was amended to permit each EPF to separate the substitutional portion and transfer those obligations and related assets
to the government of Japan. After such a transfer, the employer is required to contribute periodically to JPI, and the government of
Japan is responsible for future benefit payments relating to the substitutional portion.
During the third quarter of 2012, our EPF received final approval for such a separation and transferred the obligations and assets
of its substitutional portion to the government of Japan. On a pre-tax basis, this resulted in a net gain of $144 million recorded in
Restructuring charges/other on our Consolidated Statements of Income and included in Other, as shown in Note 4. This net gain of
$144 million consisted of two parts – a gain of $337 million, representing the difference between the fair values of the obligations
settled of $533 million and the assets transferred from the pension trust to the government of Japan of $196 million, offset by a
settlement loss of $193 million related to the recognition of previously unrecognized actuarial losses included in AOCI.
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 is the fair value adjusted
by a smoothing technique whereby certain gains and losses are phased in over a period of three years.