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99Xerox 2012 Annual Report
Expected Long-term Rate of Return
We employ a “building block” approach in determining the long-term
rate of return for plan assets. Historical markets are studied and long-
term relationships between equities and fixed income are assessed.
Current market factors such as inflation and interest rates are evaluated
before long-term capital market assumptions are determined. The long-
term portfolio return is established giving consideration to investment
diversification and rebalancing. Peer data and historical returns are
reviewed periodically to assess reasonableness and appropriateness.
Contributions
In 2012, we made cash contributions of $364 ($201 U.S. and
$163 Non-U.S.) and $84 to our defined benefit pension plans and
retiree health benefit plans, respectively. We also elected to make
a contribution of 15.4 million shares of our common stock, with an
aggregate value of approximately $130, to our U.S. defined benefit
pension plan for salaried employees in order to meet our planned
level of funding for 2012. Accordingly, total contributions to our
defined benefit pension plans were $494 ($331 U.S. and $163
Non-U.S.) in 2012.
In 2013 we expect, based on current actuarial calculations, to make
contributions of approximately $195 ($26 U.S. and $169 non-U.S.) to
our defined benefit pension plans and $80 to our retiree health benefit
plans. The decrease in required contributions to our U.S. defined benefit
pension plans reflect the expected benefits from the pension funding
legislation enacted in the U.S. during 2012.
Estimated Future Benefit Payments
The following benefit payments, which reflect expected future service,
as appropriate, are expected to be paid during the following years:
Pension Benefits
U.S. Non-U.S. Total Retiree Health
2013 $ 483 $ 248 $ 731 $ 80
2014 445 251 696 80
2015 402 261 663 79
2016 370 274 644 77
2017 348 280 628 75
Years 2018-2022 1,425 1,550 2,975 339
Assumptions
Weighted-average assumptions used to determine benefit obligations at the plan measurement dates:
Pension Benefits
2012 2011 2010
U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S.
Discount rate 3.7% 4.0% 4.8% 4 . 6% 5 .1% 5. 3%
Rate of compensation increase 0.2% 2 .6% 3.5% 2.7% 3.5% 2.7%
Retiree Health
2012 2011 2010
Discount rate 3.6% 4.5% 4.9%
Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31:
Pension Benefits
2013 2012 2011 2010
U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S. U.S. Non-U.S.
Discount rate 3.7% 4.0% 4.8% 4.6% 5.1% 5.3% 5.7% 5.7%
Expected return on plan assets 7.8% 6.1% 7.8% 6.2% 8.3% 6.6% 8.3% 6.6%
Rate of compensation increase 0.2% 2.6% 3.5% 2.7% 3.5% 2.7% 3.5% 3.6%
Retiree Health
2013 2012 2011 2010
Discount rate 3.6% 4.5% 4.9% 5.4%
Note: Expected return on plan assets is not applicable to retiree health benefits as these plans are not funded. Rate of compensation increase is not applicable to retiree health benefits as
compensation levels do not impact earned benefits.