McKesson 2006 Annual Report Download - page 78

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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
Additional minimum liabilities were established to increase accrued benefit cost for our plans, totaling $48 million and $44 million at
March 31, 2006 and 2005. The additional minimum liabilities were partially offset by intangible assets of $14 million and $15 million at
March 31, 2006 and 2005, and charged to other comprehensive income (loss) included in the consolidated stockholders’ equity, net of tax.
Projected benefit obligations relating to our unfunded U.S. plans were $87 million and $78 million at March 31, 2006 and 2005. Pension
costs are funded based on the recommendations of independent actuaries. We expect contributions for our pension plans in 2007 to be
approximately $22 million.
Expected benefit payments for our pension plans are as follows:
Expected benefit payments are based on the same assumptions used to measure the benefit obligations and include estimated future
employee service.
Weighted average asset allocations of the investment portfolio for our pension plans at December 31 and target allocations are as follows:
We develop our expected long-term rate of return assumption based on the historical experience of our portfolio and the review of projected
returns by asset class on broad, publicly traded equity and fixed-income indices. Our target asset allocation was determined based on the risk
tolerance characteristics of the plan and, at times, may be adjusted to achieve our overall investment objective.
Weighted-average assumptions used to estimate the net periodic pension expense and the actuarial present value of benefit obligations were
as follows:
73
(In millions)
2007 $36
2008 27
2009 29
2010 27
2011 32
2012 – 2016 262
Percentage of Fair Value of Total
Plan Assets
Target
(In millions) Allocation 2006 2005
Assets Cate
g
or
y
U.S. equity securities 44% 44% 46%
International equity securities 17% 17%17%
Fixed income 31% 30% 29%
Other 8% 9% 8%
Total 100% 100% 100%
2006 2005 2004
Net
p
eriodic ex
p
ense
Discount rates 5.75% 6.00% 6.58%
Rate of increase in compensation 4.00 4.00 4.00
Expected long-term rate of return on plan assets 8.23 8.23 8.21
Benefit obli
g
ation
Discount rates 5.56% 5.75% 6.00%
Rate of increase in compensation 3.97 4.00 4.00
Expected long-term rate of return on plan assets 8.11 8.23 8.21