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Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
There was no other activity within accumulated other comprehensive loss during 2006 associated with the Pension Plans. We expect that $4.7 million
of the total balance reclassified to accumulated other comprehensive loss will be recognized as a component of net periodic benefit cost in 2007. We do not
expect to receive any refunds from the Pension Plans in 2007.
The components of net periodic benefit credit of the Pension Plans are as follows (table in thousands):
2006
2005
2004
Interest cost $ 20,143 $ 19,033 $ 18,542
Expected return on plan assets (29,738) (28,240) (26,540)
Amortization of transition asset — (611) (853)
Recognized actuarial loss 8,207 6,412 5,615
Net periodic benefit credit $ (1,388) $ (3,406) $ (3,236)
The weighted-average assumptions used in the Pension Plans to determine benefit obligations at December 31 are as follows:
December 31,
2006
December 31,
2005
December 31,
2004
Discount rate 5.9% 5.7% 5.7%
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,
2006
December 31,
2005
December 31,
2004
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 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,
2006
December 31,
2005
Equity securities 71% 68%
Debt securities 26 27
Cash 3 5
Total 100% 100%
The target allocation of the assets in the Pension Plans at December 31, 2006 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):
2007 $ 12,026
2008 14,332
2009 13,534
2010 14,562
2011 15,972