McKesson 2006 Annual Report Download - page 76

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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
Future minimum lease payments and sublease rental income for years ending March 31 are:
14. 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 nonqualified
supplemental defined benefit plans for certain U.S. executives, which are non-funded. The measurement date for all of our pension plans is
December 31.
The net periodic expense for our pension plans is as follows:
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 projected benefit obligation and the market value of assets are amortized straight-
line over the remaining future service periods.
71
Non-cancelable Non-cancelable
Operating Sublease
(In millions) Leases Rentals Capital Leases
2007 $87 $ 4 $ 1
2008 60 2
—
2009 42 1 —
2010 35 —
—
2011 25 —
—
Thereafter 47 2 1
Total minimum lease payments $296 $ 9 2
Less amounts representing interest
—
Present value of minimum lease payments $ 2
Years Ended March 31,
(In millions) 2006 2005 2004
Service cost—benefits earned during the year $ 6 $ 6 $ 7
Interest cost on projected benefit obligation 26 26 27
Expected return on assets (32) (30) (26)
Amortization of unrecognized loss, prior service costs and net transitional obligation 9 9 12
Immediate recognition of pension cost — 7
—
Settlement charges — 12
—
Net periodic pension expense $ 9 $ 30 $ 20