Honeywell 2006 Annual Report Download - page 123

HONEYWELL INTERNATIONAL INC.
NOTES TO FINANCIAL STATEMENTS—(Continued)
(Dollars in millions, except per share amounts)
Our U.S. pension plans assets were $12.8 and $12.0 billion and our non-U.S. pension plans assets were $3.8 and $2.6 billion at
December 31, 2006 and 2005, respectively. Our asset allocation and target allocation for our pension plans assets are as follows:
Percentage of Plans
Assets at
December 31,
Long-term
Target
Allocation
Asset Category 2006 2005
Equity securities 63% 63% 40-65%
Debt securities, including cash 29 31 25-45
Real estate 5 4 2-8
Other 3 2 2-6
100% 100%
Our asset investment strategy focuses on maintaining a diversified portfolio using various asset classes in order to achieve our
long-term investment objectives on a risk adjusted basis. Our actual invested positions in various securities change over time based on
short and longer-term investment opportunities. To achieve our objectives, our U.S. investment policy requires that our U.S. Master
Retirement Trust be invested as follows: (a) no less than 25 percent be invested in fixed income securities; (b) no more than 10 percent
in high-yield securities; (c) no more than 10 percent in private real estate investments; and (d) no more than 6 percent in other
investment alternatives involving limited partnerships of various types. There is no stated limit on investments in publically-held U.S.
and international equity securities. Our non-U.S. investment policies are different for each country, but the long-term investment
objectives remain the same.
Our general funding policy for qualified pension plans is to contribute amounts at least sufficient to satisfy regulatory funding
standards. In 2006 and 2004, we made voluntary contributions of $68 and $40 million, respectively, to our U.S. defined benefit
pension plans primarily for government contracting purposes. Assuming that actual plan asset returns are consistent with our expected
rate of 9 percent in 2007 and beyond, and that interest rates remain constant, we would not be required to make any contributions to
our U.S. pension plans for the foreseeable future. We expect to make voluntary contributions of approximately $52 million in cash in
2007 to certain of our U.S. plans for government contracting purposes. We also expect to contribute approximately $155 million in
cash in 2007 to our non-U.S. defined benefit pension plans to satisfy regulatory funding standards. These contributions do not reflect
benefits to be paid directly from Company assets.
Benefit payments, including amounts to be paid from Company assets, and reflecting expected future service, as appropriate, are
expected to be paid as follows:
2007 $1,074
2008 1,083
2009 1,092
2010 1,100
2011 1,111
2012-2016 6,327
Other Postretirement Benefits
Effective December 31, 2004, we adopted FASB Staff Position No. 106-2 “Accounting and Disclosure Requirements Related to
the Medicare Prescription Drug, Improvement and Modernization Act of 2003” (FSP No. 106-2). FSP No. 106-2 provides guidance on
accounting for the effects of the
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