McKesson 2009 Annual Report Download - page 105

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McKESSON CORPORATION
FINANCIAL NOTES (Continued)
99
We estimate that we will amortize $2 million of prior service cost and $22 million of actuarial loss for the
pension plans from shareholders’ equity to pension expense in 2010. Comparable 2009 amounts were $2 million
and $8 million.
Projected benefit obligations relating to our unfunded U.S. plans were $110 million and $112 million at March
31, 2009 and 2008. Pension costs are funded based on the recommendations of independent actuaries.
Expected benefit payments for our pension plans are as follows: $38 million, $35 million, $38 million, $31
million and $31 million for 2010 to 2014, and $262 million for 2015 through 2019. Expected benefit payments are
based on the same assumptions used to measure the benefit obligations and include estimated future employee
service. Expected contributions to be made for our pension plans are $17 million for 2010.
Should the financial markets continue to deteriorate, the decline in fair value of the plan assets may result in
increased total pension costs in the future and may also result in additional future cash contributions in accordance
with the U.S. Pension Protection Act of 2006 or other international retirement plan funding requirements. We
currently do not expect additional cash contributions to be material.
Weighted average asset allocations of the investment portfolio for our pension plans at March 31 and target
allocations are as follows:
Percentage of Fair Value of Total
Plan Assets
Target
Allocation 2009 2008
Assets Category
Equity securities 59% 52% 56%
Fixed income 33% 36% 35%
Other 8% 12% 9%
Total 100% 100% 100%
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:
2009 2008 2007
Net periodic pension expense
Discount rates 5.34% 5.33% 5.35%
Rate of increase in compensation 3.93 3.85 3.83
Expected long-term rate of return on plan assets 7.75 7.53 7.47
Benefit obligation
Discount rates 7.74% 6.18% 5.70%
Rate of increase in compensation 3.93 4.01 3.97
Expected long-term rate of return on plan assets 7.90 8.04 8.09