AMD 2006 Annual Report Download - page 306

Spansion Inc.
Notes to Consolidated Financial Statements—(Continued)
The projected benefit obligation, accumulated benefit obligation and fair value of plan assets for pension plans with a projected benefit obligation in excess
of plan assets as of December 31, 2006 and December 25, 2005 were as follows:
Dec. 31,
2006
Dec. 25,
2005
(in thousands)
Projected benefit obligation in excess of plan assets
Projected benefit obligation, end of year 80,056 76,024
Accumulated benefit obligation, end of year 79,534 76,004
Fair value of plan assets, end of year 77,264 63,705
The below table summarizes the weighted average assumptions used for purposes of calculating the benefit obligations as of December 31, 2006 and
December 25, 2005:
Dec. 31,
2006
Dec. 25,
2005
Discount rate 2.00% 2.00%
Average rate of compensation increase 2.70% 2.70%
Cash balance interest crediting rate 2.00% 2.00%
The Company uses Japanese government bonds for setting the discount rate. Japanese government 20-year bonds currently yield in the 2.0 percent range.
Due to the current yield on the Japanese government 20-year bonds, the Company believes that a discount rate of 2.0 percent is appropriate as of December 31,
2006.
The below table summarizes the components of the net periodic pension expense:
Dec 31,
2006
Period from
Sept 1, 2005 to
Dec 25, 2005
(in thousands)
Service cost $ 5,123 $ 1,612
Interest cost 1,517 376
Expected return on plan assets (2,818) (488)
Amortization of prior service cost 741 243
Total net periodic pension expense $ 4,563 $ 1,743
Prior to September 1, 2005, the plan was not accounted for under single employer plan accounting; therefore, no prior calculation of net period pension
expense was completed. However, in prior years, pension expense was recognized equal to cash contributions for the year of approximately $5.7 million and $7.5
million for the years ended December 25, 2005 and December 26, 2004, respectively.
The estimated amount of prior service cost that will be amortized from accumulated other comprehensive income into net periodic benefit cost in 2007 is
$724,000.
Source: ADVANCED MICRO DEVIC, 10-K, March 01, 2007