McKesson 2008 Annual Report Download - page 87

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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
80
At March 31, 2008, future minimum lease payments and sublease rental income for years ending March 31 are:
(In millions)
Non-cancelable
Operating
Leases
Non-cancelable
Sublease Rentals Capital Leases
2009 $ 114 $ 3 $ 1
2010 93 2 1
2011 78 2 -
2012 64 2 -
2013 40 1 -
Thereafter 99 1 -
Total minimum lease payments $ 488 $ 11 2
Less amounts representing interest -
Present value of minimum lease payments $ 2
13. Pension Benefits
We maintain a number of qualified and nonqualified defined benefit pension plans and defined contribution
plans for eligible employees.
Defined Pension Benefit Plans
Eligible U.S. employees who were employed by the Company prior to December 31, 1996 are covered under
the Company-sponsored defined benefit retirement plan. In 1997, we amended this plan to freeze all plan benefits
based on each employee’ s plan compensation and creditable service accrued to that date. The Company has made
no annual contributions since this plan was frozen. The benefits for this defined benefit retirement plan are based
primarily on age of employees at date of retirement, years of service and employees’ pay during the five years prior
to retirement. We also have defined benefit pension plans for eligible Canadian and United Kingdom employees as
well as a nonqualified supplemental defined benefit plan for certain U.S. executives, which is non-funded. We also
assumed a frozen qualified defined benefit plan through our acquisition of Per-Se in 2007. This Per-Se plan was
merged into our retirement plan in 2008. The measurement date for all of our pension plans is December 31.
The net periodic expense for our pension plans is as follows:
Years Ended March 31,
(In millions) 2008 2007 2006
Service cost—benefits earned during the year $ 7 $ 7 $ 6
Interest cost on projected benefit obligation 31 27 26
Expected return on assets (39) (33) (32)
Amortization of unrecognized actuarial loss, prior
service costs and net transitional obligation 11 12 9
Settlement charges and other 4 4 -
Net periodic pension expense $ 14 $ 17 $ 9
The projected unit credit method is utilized for measuring net periodic pension expense over the employees’
service life for the U.S. pension plans. Unrecognized actuarial losses exceeding 10% of the greater of the projected
benefit obligation and the market value of assets are amortized straight-line over the average remaining future
service periods.