Emerson 2006 Annual Report Download - page 51

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  u.s.plansnon-u.s.plans
  2004 2005 2006 2004 2005 2006
Weighted-average assumptions used to
determine net pension expense:
Discount rate 6.00% 6.25% 5.25% 5.2% 5.4% 4.7%
Expected return on plan assets 8.50% 8.50% 8.00% 7.2% 7.4% 7.2%
Rate of compensation increase 3.25% 3.25% 3.00% 3.3% 3.1% 3.0%
Weighted-average assumptions used to
determine benefit obligations as of June 30:
Discount rate 6.25% 5.25% 6.50% 5.4% 4.7% 4.9%
Rate of compensation increase 3.25% 3.00% 3.25% 3.1% 3.0% 3.1%
At September 30, 2006 and 2005, the pension assets recognized in the balance sheet were $1,037 and $925, and the pension liabili-
ties recognized in the balance sheet were $208 and $276, respectively; in addition, $89 and $282 were included in accumulated other
comprehensive income at September 30, 2006 and 2005, respectively. As of the plans’ June 30 measurement date, the projected
benet obligation, accumulated benet obligation, and fair value of plan assets for the retirement plans with accumulated benet
obligations in excess of plan assets were $623, $570 and $360, respectively, for 2006, and $1,006, $938 and $656, respectively,
for 2005.
Effective for 2007, the discount rate for the U.S. retirement plans was adjusted to 6.5 percent based on the changes in market interest
rates. Dened benet pension plan expense is expected to decrease approximately $20 in 2007. In September 2006, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards No. 158 (FAS 158). The Company is analyzing the
impact of adopting FAS 158 and estimates that if the provisions of FAS 158 were applied as of September 30, 2006, an after-tax
charge to equity of approximately $500 ($800 pretax) would have been reported.
The primary objective for the investment of plan assets is to secure participant retirement benets, while earning a reasonable rate
of return. Plan assets are invested consistent with the provisions of prudence and diversication rules of ERISA and with a long-term
investment horizon. The expected return on plan assets assumption is determined by reviewing the investment return of the plans
for the past ten years and the historical return (since 1926) of an asset mix approximating Emerson’s current asset allocation targets
and evaluating these returns in relation to expectations of various investment organizations to determine whether long-term future
returns are expected to differ signicantly from the past. The Company’s pension plan asset allocations at June 30, 2006 and 2005,
and target weighted-average allocations are as follows:
   u.s.plans  non-u.s.plans
  2005 2006target 2005 2006target
Asset category
Equity securities 69% 68% 66 - 70% 56% 55% 50 - 60%
Debt securities 27% 28% 26 - 32% 37% 36% 30 - 40%
Other 4% 4% 2 - 5% 7% 9% 5 - 10%
100% 100% 100% 100% 100% 100%
The Company estimates that future benet payments for the U.S. plans will be as follows: $126 in 2007, $132 in 2008, $138 in 2009,
$145 in 2010, $152 in 2011 and $881 in total over the ve years 2012 through 2016. Using foreign exchange rates as of September 30,
2006, the Company estimates that future benet payments for the non-U.S. plans will be as follows: $24 in 2007, $26 in 2008, $27 in
2009, $29 in 2010, $31 in 2011 and $190 in total over the ve years 2012 through 2016. In 2007, the Company expects to contribute
approximately $100 to $150 to the retirement plans.