Texas Instruments 2009 Annual Report Download - page 24

TEXAS INSTRUMENTS 2009 ANNUAL REPORT
PAGE 22
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, do not receive the fixed employer contribution of 2 percent of the employee’s annual eligible earnings.
At December 31, 2009 and 2008, as a result of employees’ elections, TI’s U.S. defined contribution plans held shares of TI common
stock totaling 29 million shares and 32 million shares valued at $759 million and $494 million, respectively. Dividends paid on these
shares for 2009 and 2008 totaled $14 million each year.
Our aggregate expense for the U.S. defined contribution plans was $51 million in 2009 and $56 million in each of 2008 and 2007.
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 applicable local laws and regulations, plus such additional amounts as we deem appropriate. The non-qualified defined
benefit plans are unfunded and closed to new participants.
U.S. retiree health care benefit plan:
U.S. employees that meet eligibility requirements are offered medical coverage during retirement. We make a contribution toward the
cost of those retiree medical benefits for certain retirees and their dependents. The contribution rates are based upon various 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 plan’s participants. Employees hired after January 1, 2001, are responsible for the full cost of their
medical benefits during retirement.
Non-U.S. retirement plans:
We provide retirement coverage for non-U.S. employees, as required by local laws or to the extent we deem appropriate, through a
number of 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 are subject to local country
practices and market circumstances.
As of December 31, 2009 and 2008, as a result of employees’ elections, TI’s non-U.S. defined contribution plans held TI common
stock valued at $13 million and $10 million, respectively. Dividends paid on these shares of TI common stock for 2009 and 2008 were
not material.
Effect on the statements of income and balance sheets
Expense related to defined benefit and retiree health care benefit plans was as follows:
U.S. Defined Benefit U.S. Retiree Health Care Non-U.S. Defined Benefit
2009 2008 2007 2009 2008 2007 2009 2008 2007
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20 $25 $24 $ 4 $ 4 $ 4 $40 $49 $46
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 49 43 26 28 25 62 60 52
Expected return on plan assets . . . . . . . . . . . . . . . . . (49)(45)(47)(28)(27)(26)(69)(83)(73)
Amortization of prior service cost . . . . . . . . . . . . . . . . 11 — 22 2 (3)(3)(3)
Recognized net actuarial loss . . . . . . . . . . . . . . . . . . 18 16 20 88 6 34 5 9
Net periodic benefit cost . . . . . . . . . . . . . . . . . . . . . 39 46 40 12 15 11 64 28 31
Settlement charges . . . . . . . . . . . . . . . . . . . . . . . . 13 7 2 —— — 15 — —
Curtailment charges (credits) . . . . . . . . . . . . . . . . . . —1 — 211 1(9)— —
Special termination benefit charges . . . . . . . . . . . . . . 618 3—— — 3— —
Total, including charges . . . . . . . . . . . . . . . . . . . . . . $58 $72 $45 $14 $26 $12 $73 $28 $31
For the U.S. qualified pension and retiree health care plans, the expected return on plan assets component of net periodic benefit cost
is based upon a market-related value of assets. In accordance with U.S. GAAP, the market-related value of assets generally utilizes a
smoothing technique whereby certain gains and losses are phased in over a period of three years.