ADT 2007 Annual Report Download - page 240

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. Retirement Plans (Continued)
The aggregate benefit obligation and fair value of plan assets for non-U.S. pension plans with
benefit obligations in excess of plan assets were $1,519 million and $1,175 million, respectively, at
September 28, 2007, and $1,492 million and $989 million, respectively, at September 29, 2006.
In determining the expected return on plan assets, the Company considers the relative weighting of
plan assets by class and individual asset class performance expectations as provided by its external
advisors.
The Company’s investment strategy for its pension plans is to manage the plans on a going-
concern basis. Current investment policy is to achieve a superior return on assets, subject to a prudent
level of portfolio risk, for the purpose of enhancing the security of benefits for participants. For U.S.
pension plans, this policy targets a 60% allocation to equity securities and a 40% allocation to debt
securities. Various asset allocation strategies are in place for non-U.S. pension plans, with a weighted-
average target allocation of 52% to equity securities, 43% to debt securities and 5% to other asset
classes, including real estate and cash equivalents.
Pension plans have the following weighted-average asset allocations:
Non-U.S.
U.S. Plans Plans
2007 2006 2007 2006
Asset Category:
Equity securities ................................ 60% 60% 50% 57%
Debt securities ................................. 40% 40% 44% 36%
Real estate .................................... — — 3% 3%
Cash and cash equivalents ......................... — — 3% 4%
Total ....................................... 100%100%100%100%
Although the Company does not buy or sell any of its own stock as a direct investment for its
pension funds, due to external investment management of the funds, the plans may indirectly hold Tyco
stock. The aggregate amount of the shares would not be considered material relative to the total fund
assets.
The Company’s funding policy is to make contributions in accordance with the laws and customs of
the various countries in which it operates as well as to make discretionary voluntary contributions from
time-to-time. The Company anticipates that it will contribute at least the minimum required to its
pension plans in 2008 of $5 million for the U.S. plans and $64 million for non-U.S. plans.
Benefit payments, including those amounts to be paid out of corporate assets and reflecting future
expected service as appropriate, are expected to be paid as follows ($ in millions):
U.S. Plans Non-U.S. Plans
2008 ............................................... $ 41 $ 52
2009 ............................................... 42 54
2010 ............................................... 44 59
2011 ............................................... 46 64
2012 ............................................... 49 70
2013-2017 ........................................... 269 425
148 2007 Financials