ADT 2008 Annual Report Download - page 253

TYCO INTERNATIONAL LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. Retirement Plans (Continued)
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:
U.S. Plans Non-U.S. Plans
2008 2007 2008 2007
Asset Category:
Equity securities ............................ 57% 60% 48% 50%
Debt securities ............................. 42% 40% 46% 44%
Real estate ................................ — — 3% 3%
Cash and cash equivalents ..................... 1% — 3% 3%
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 2009 of $5 million for the U.S. plans and $58 million for non-U.S. plans.
Benefit payments, including those amounts to be paid out of corporate assets and reflecting future
expected service as appropriate, are expected to be paid as follows ($ in millions):
U.S. Plans Non-U.S. Plans
2009 ............................................... $ 43 $ 49
2010 ............................................... 44 50
2011 ............................................... 46 56
2012 ............................................... 48 63
2013 ............................................... 50 69
2014–2018 ........................................... 272 419
The Company also participates in a number of multi-employer defined benefit plans on behalf of
certain employees. Pension expense related to multi-employer plans was $1 million, $3 million and
$3 million in 2008, 2007 and 2006, respectively.
Executive Retirement Arrangements Messrs. Kozlowski and Swartz participated in individual
Executive Retirement Arrangements maintained by Tyco (the ‘‘ERA’’). Under the ERA,
Messrs. Kozlowski and Swartz would have fixed lifetime benefits commencing at their normal
retirement age of 65. The Company’s accrued benefit obligations for Messrs. Kozlowski and Swartz as
of September 26, 2008 were $76 million and $39 million, respectively. The Company’s accrued benefit
150 2008 Financials