EMC 2006 Annual Report Download - page 87

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Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
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.
The components of the change in benefit obligation are as follows (table in thousands):
December 31,
2006
December 31,
2005
Benefit obligation, at beginning of year $ 7,437 $ 4,496
Interest cost 339 390
Benefits paid (694) (504)
Recognized actuarial (gain) loss (1,349) 3,055
Benefit obligation, at end of year $ 5,733 $ 7,437
The reconciliation of the beginning and ending balances of the fair value of plan assets is as follows (table in thousands):
December 31,
2006
December 31,
2005
Fair value of plan assets, at beginning of year $ 408 $ 391
Actual return on plan assets 58 17
Employer contributions 694 504
Benefits paid (694) (504)
Fair value of plan assets, at end of year $ 466 $ 408
We expect to contribute $1.0 million to the plan in 2007.
The net funded status of the plan at December 31, 2006 and 2005 were net liabilities of $5.3 million and $7.0 million, respectively. At December 31,
2006 and 2005, we recognized $5.3 million and $6.2 million, respectively in the balance sheet as an accrued benefit liability in connection with the plan.
Prior to our adoption of FAS No. 158, the accrued benefit liability consisted of both the net funded status and the accumulated actuarial loss and prior
service credit of the plan. The value of these components as of December 31, 2005 was as follows (table in thousands):
December 31,
2005
Funded status $ (7,029)
Accumulated actuarial loss 1,830
Prior service credit (1,048)
Accrued benefit liability $ (6,247)
Upon adoption of FAS No. 158, we reclassified the accumulated actuarial loss and prior service credit associated with the plan to accumulated other
comprehensive loss. The reclassification consisted of the following items (table in thousands):
December 31,
2006
Accumulated actuarial loss $ (438)
Prior service credit 947
Taxes 191
Net amount reclassified $ 318