EMPLOYEE BENEFIT PLANS. The Company has four qualified, noncontributory, defined-benefit pension plans covering certain employees who are participants in the plan. Benefits for the plans covering hourly employees are computed based on years of service, while the Company-wide Salaried Plan is based upon final average earnings, subject to certain service requirements. It is the Company’s policy to fund pension costs as required under the funding guidelines of the Employee Retirement Income Security Act of 1974 (‘‘ERISA’’). Pension contributions are paid to the plan custodians who manage the investments of the pension funds and pay benefits to retired employees. The assets of the plans are invested in group annuity contracts providing a guaranteed rate of return, in fixed income securities and in debt and equity investments. The Company also provides postretirement health care benefits for certain salaried and hourly employees. Employees become eligible for these benefits after they reach age 55 and have rendered 10 years of service. The following table reconciles the funded status of defined benefit plans to the amounts recognized in the consolidated balance sheet: Present value of funded defined benefit obligations $ 96,455 $ 85,117 $ — $ — Fair value of plan assets ; ; ; 68,011 50,610 — — Funded status ; ; ; ; ; 28,444 34,507 — — Present value of unfunded defined benefit obligations ; ; ; ; ; — — (22,363) (20,411) Unrecognized actuarial losses ; ; 14,990 17,198 3,519 2,879 Unrecognized prior service cost ; ; 2 111 (177) (65) Net asset (liability) on the balance sheet ; $ (13,452) $ (17,198) $ (19,021) $ (17,597) Pension and postretirement benefit expense is comprised of the following: Current service cost ; ; ; ; $ 3,007 $ 2,830 $ 902 $ 676 Interest expense on obligations ; ; 5,465 5,167 1,321 1,165 Expected return on plan assets ; ; (4,454) (5,069) — — Net actuarial losses recognized ; ; 611 — 25 — Past service cost ; ; ; ; 107 27 112 112 Total pension expense ; ; ; $ 4,736 $ 2,955 $ 2,360 $ 1,953 Actual return on plan assets ; ; ; $ 11,796 $ (8,232) $ — $ — The movements in the balance sheet were as follows: Net asset (liability) at beginning of year ; $ (17,198) $ (13,394) $ (17,597) $ (16,369) Net expense recognized in the operations statement (4,736) (2,955) (2,360) (1,953) Contributions and other ; ; ; 8,482 (849) 936 725 Net asset (liability) at end of year ; ; $ (13,452) $ (17,198) $ (19,021) $ (17,597) Assumptions used as of December 31, 2003 and 2002 were as follows: 20...
EMPLOYEE BENEFIT PLANS. KLA-Tencor has a profit sharing program for eligible employees, which distributes on a quarterly basis, a percentage of pre-tax profits. In addition, KLA-Tencor has an employee savings plan that qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. KLA-Tencor matches up to a maximum of $3,000 or 50% of the first $6,000 of an eligible employee’s contribution. The total charge to operations under the profit sharing and 401(k) programs aggregated $19.0 million, $17.0 million and $16.0 million in the fiscal years ended June 30, 2007, 2006 and 2005, respectively. KLA-Tencor has no defined benefit plans in the United States. In addition to the profit sharing plan and the United States employee saving plan, several of KLA-Tencor’s foreign subsidiaries have retirement plans for their full-time employees, several of which are defined benefit plans. Consistent with the requirements of local law, the Company deposits funds for certain of these plans with insurance companies, third-party trustees, or into government-managed accounts, and/or accrues for the unfunded portion of the obligation. The assumptions used in calculating the obligation for the foreign plans depend on the local economic environment. KLA- Tencor adopted SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans an amendment of FASB Statements No. 87, 88, 106, and 132(R), effective June 30, 2007. Upon adoption, SFAS 158 requires an employer to recognize the funded status of each of its defined pension and postretirement benefit plans as a net asset or liability in its statement of financial position with an offsetting amount in accumulated other comprehensive income. Additionally, SFAS 158 requires an employer to measure the funded status of each of its plans as of the date of its year-end statement of financial position. The benefit obligations and related assets under the Company’s plans have been measured as of June 30, 2007. Summary data relating to the KLA-Tencor’s foreign defined benefit pension plans, including key weighted-average assumptions used is provided in the following tables: Projected benefit obligation at beginning of fiscal year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $19,825 $20,731 Service cost, including plan participant contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,768 2,088 Interest cost . . . . . . . . . . . ....