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Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The weighted-average assumptions used in the Pension Plans to determine benefit obligations at December 31 are as follows:
December 31,
2005
December 31,
2004
December 31,
2003
Discount rate 5.7% 5.7% 6.1%
Expected long-term rate of return on plan assets 8.25% 8.25% 8.25%
Rate of compensation increase N/A N/A N/A
The weighted-average assumptions used in the Pension Plans to determine periodic benefit cost for the years ended December 31 are as follows:
December 31,
2005
December 31,
2004
December 31,
2003
Discount rate 5.7% 6.1% 6.5%
Expected long-term rate of return on plan assets 8.25% 8.25% 8.25%
Rate of compensation increase N/A N/A N/A
The expected long-term rate of return on plan assets considers the current level of expected returns on risk free investments (primarily government
bonds), the historical level of the risk premium associated with the other asset classes in which the portfolio is invested and the expectations for future returns
of each asset class. The expected return for each asset class was weighted based on the target asset allocation to develop the expected long-term rate of return
on assets. The weighted average asset allocations are as follows:
December 31,
2005
December 31,
2004
Equity securities 68% 71%
Debt securities 27 29
Cash 5 —
Total 100% 100%
The target allocation of the assets in the Pension Plans at December 31, 2005 consisted of equity securities of 70% and debt securities of 30%.
Our Pension Plan assets are managed by outside investment managers. Our investment strategy with respect to pension assets is to maximize returns
while preserving principal.
The benefit payments are expected to be paid in the following years (table in thousands):
2006 $10,618
2007 11,316
2008 12,011
2009 12,973
2010 13,959
Years 2011 – 2015 94,142
Post Retirement Medical and Life Insurance Plan
Our post retirement benefit plan, which was assumed in connection with the acquisition of Data General, provides certain medical and life insurance
benefits for retired former Data General employees. With the exception of certain participants who retired prior to 1986, the medical benefit plan requires
monthly contributions by retired participants in an amount equal to insured equivalent costs less a fixed EMC contribution which is dependent on the
participant's length of service and Medicare eligibility. Benefits are continued to dependents of eligible retiree participants for 39 weeks after the death of the
retiree. The life insurance benefit plan is noncontributory. The measurement date for the plan is December 31.
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