EMC 2005 Annual Report Download - page 84

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Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The assumed health care cost trend rate for the plan is as follows:
December 31,
2005
December 31,
2004
Health care cost trend rate assumed for next year 10.0% 11.0%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) 5.0% 5.0%
Year that the rate reaches the ultimate trend rate 2013 2013
The effects of a one percent change in the assumed health care cost trend rates are as follows (table in thousands):
1% increase
1% decrease
Effect on total service and interest cost components for 2005 $ 7 $ (7)
Effect on year-end post retirement obligation 140 (131)
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 actual 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 plan as of December 31, 2005 was 70% equity securities and 30% debt securities.
The plan assets are managed by outside investment managers. Our investment strategy with respect to the plan is to maximize returns while preserving
principal.
The benefit payments are expected to be paid in the following years (table in thousands):
2006 $1,084
2007 1,099
2008 961
2009 818
2010 644
2011 - 2015 2,046
M. Commitments and Contingencies
Operating Lease Commitments
We lease office and warehouse facilities and equipment under various operating leases. Facility leases generally include renewal options. Rent expense
for 2005, 2004 and 2003 was as follows (table in thousands):
2005
2004
2003
Rent expense $ 214,303 $ 207,111 $ 207,357
Sublease proceeds (7,940) (7,195) (4,088)
Net rent expense $ 206,363 $ 199,916 $ 203,269