Texas Instruments 2005 Annual Report Download - page 29

U.S. Retirement Plans
The principal retirement plans in the U.S include a qualified defined benefit pension plan (which is closed to new
participants hired after November 1997), a defined contribution plan and an enhanced defined contribution plan. Both
defined contribution plans offer an employer-matching savings option that allows employees to make pre-tax
contributions to various investment choices, including a TI common stock fund. Employees who remain in the qualified
defined benefit pension plan may also participate in the defined contribution plan, where employer-matching contributions
are provided for up to 2 percent of the employee’s annual eligible earnings. Employees who elected not to remain in the
defined benefit pension plan, and new employees hired after November 1997 and through December 31, 2003, may
participate in the enhanced defined contribution plan. This plan provides for a fixed employer contribution of 2 percent of
the employee’s annual eligible earnings, plus an employer-matching contribution of up to 4 percent of the employee’s
annual eligible earnings. Employees hired after December 31, 2003, may participate in the enhanced defined contribution
plan, where employer-matching contributions are provided for up to 4 percent of the employee’s annual eligible earnings.
At December 31, 2005 and 2004, in accordance with the election of employees, TI’s U.S. defined contribution plans held
shares of TI common stock totaling 53 million shares and 61 million shares valued at $1.70 billion and $1.51 billion.
Dividends paid on these shares for 2005 and 2004 totaled $6 million in each year.
Our aggregate expense for U.S. employees under the defined contribution plans was $55 million in 2005 and 2004 and
$50 million in 2003.
The benefits under the qualified defined benefit pension plan are determined using a formula based upon years
of service and the highest five consecutive years of compensation. We intend to contribute amounts to this plan to meet
the minimum funding requirements of federal laws and regulations plus such additional amounts as we deem appropriate.
During 2005, no contributions were made to the qualified defined benefit plan. We also sponsor a number of small
defined benefit plans including a non-qualified plan. These plans are closed to new participants and are unfunded.
U.S. Retiree Health Care Benefit Plan
We offer access to group medical coverage during retirement to most of our U.S. employees. We make a contribution
toward the cost of those retiree medical benefits for certain retirees and their dependents. The contribution rates are
based upon varying factors, the most important of which are an employee’s date of hire, date of retirement, years of
service and eligibility for Medicare benefits. The balance of the cost is borne by the participants in the plan. Employees
hired after January 1, 2001, are responsible for the full cost of their medical benefits during retirement.
Non-U.S. Retirement Plans
Retirement coverage for non-U.S. employees is provided, to the extent deemed appropriate, through separate defined
benefit and defined contribution plans. Retirement benefits are generally based on an employee’s years of service and
compensation. Funding requirements are determined on an individual country and plan basis and subject to local country
practices and market circumstances. During the fourth quarter of 2005, we contributed approximately $210 million into a
qualified contractual trust arrangement in Germany. The contribution was enough to fully fund the accumulated benefit
obligation of the primary Germany defined benefit plan at September 30, 2005. There are significantly smaller defined
benefit plans in Germany, which remain unfunded.
A substantial majority of the non-U.S. pension obligations and assets are associated with the defined benefit plan
in Japan. During the latter part of 2004, a retirement plan change was approved by the employees in Japan and
the Japanese Ministry of Health, Labour and Welfare. This change, implemented in 2005, resulted in a $64 million
reduction in the projected benefit obligation.
As of December 31, 2005 and 2004, in accordance with the election of employees, TI’s non-U.S. defined contribution plans
held shares of TI common stock totaling 0.7 million shares and 0.9 million shares valued at $22 million and $21 million.
Dividends paid on these shares for 2005 and 2004 totaled $70 thousand and $105 thousand.
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TEXAS INSTRUMENTS 2005 ANNUAL REPORT