McKesson 2005 Annual Report Download - page 75

McKESSON CORPORATION
FINANCIAL NOTES (Continued)
Additional minimum liabilities were established to increase accrued benefit cost, totaling $43.6 million and $46.2 million at March 31, 2005
and 2004 for our plans. The additional minimum liabilities were partially offset by intangible assets of $15.0 million and $5.9 million at March
31, 2005 and 2004, and charged to other comprehensive loss included in the consolidated stockholders’ equity, net of tax.
Projected benefit obligations relating to our unfunded U.S. plans were $77.9 million and $99.3 million at March 31, 2005 and 2004. Pension
costs are funded based on the recommendations of independent actuaries. We expect contributions for our pension plans in 2006 to be
approximately $10 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:
74
(In millions)
2006 $27.9
2007 25.9
2008 29.5
2009 25.5
2010 23.4
2011 – 2015 184.8
Percentage of Fair Value of Total
Plan Assets
Target
(In millions) Allocation 2005 2004
Assets Cate
g
or
y
U.S. equity securities 46% 46% 46%
International equity securities 16% 17%17%
Fixed income 31% 29% 28%
Other 7% 8% 9%
Total 100% 100% 100%
2005 2004 2003
Net
p
eriodic ex
p
ense
Discount rates 6.00% 6.58% 6.42%
Rate of increase in compensation 4.00 4.00 4.00
Expected long-term rate of return on plan assets 8.23 8.21 8.21
Benefit obli
g
ation
Discount rates 5.75% 6.00% 6.27%
Rate of increase in compensation 4.00 4.00 4.00
Expected long-term rate of return on plan assets 8.23 8.21 8.21