EMC 2002 Annual Report Download - page 70

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Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Employees may elect to invest their contributions in a variety of funds, including an EMC stock fund. The deferred compensation program limits an
employee's maximum investment allocation in the EMC stock fund to 30% of their total contribution. EMC's matching contribution mirrors the investment
allocation of the employee's contribution.
Defined Benefit Pension Plans
EMC has a noncontributory defined benefit pension plan which was assumed as part of the Data General acquisition, which covers substantially all
former Data General employees located in the U.S. EMC also had a supplemental retirement benefit plan, which covered certain former Data General
employees located in the U.S. In 2000, the supplemental retirement benefit plan was liquidated and all payments due under the plan had been made. In
addition, certain of the former Data General foreign subsidiaries also have retirement plans covering substantially all of their employees.
Benefits under these plans are generally based on either career average or final average salaries and creditable years of service as defined in the plans.
The annual cost for these plans is determined using the projected unit credit actuarial cost method that includes actuarial assumptions and estimates which are
subject to change. Prior service cost is amortized over the average remaining service period of employees expected to receive benefits under the plan. Funds
contributed to the plans are invested primarily in common stock, bonds and cash equivalent securities.
EMC's investment policy provides that no security, except issues of the U.S. Government, shall comprise more than 5% of total plan assets, measured at
market. At December 31, 2002, the Data General U.S. pension plan held $0.2 million of EMC Common Stock.
The Data General U.S. pension plan, U.S. supplemental retirement benefit plan and certain foreign retirement plans (the "Pension Plans") are
summarized in the following tables. Prior year amounts have been restated to exclude immaterial plans of former Data General foreign subsidiaries.
The components of the change in benefit obligation of the Pension Plans are as follows (table in thousands):
December 31,
2002
December 31,
2001
Benefit obligation at beginning of year $ 291,419 $ 267,148
Service cost 732 1,580
Interest cost 20,108 19,058
Participant contributions 254 457
Foreign exchange (gain) loss 5,406 (1,371)
Curtailment gain (3,812) —
Benefits paid (7,574) (6,976)
Settlement payments (398) (3,306)
Actuarial loss 20,618 14,829
Benefit obligation at end of year $ 326,753 $ 291,419
66