Medtronic 2009 Annual Report Download - page 93

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89
Medtronic, Inc.
The Company’s pension plan weighted average asset allocations
and the target allocations at April 24, 2009 and April 25, 2008, by
asset category, is as follows:
U.S. Plans
Pension
Benefits
Allocation
Target
Allocation
2009 2008 2009 2008
Asset Category
Equity securities 46% 53% 60% 60%
Debt securities 19 11 10 10
Other 35 36 30 30
Total 100% 100% 100% 100%
Non-U.S. Plans
Pension
Benefits
Allocation
Target
Allocation
2009 2008 2009 2008
Asset Category
Equity securities 36% 41% 37% 41%
Debt securities 16 12 15 14
Cash 41——
Other 44 46 48 45
Total 100% 100% 100% 100%
It is the Company’s policy to fund retirement costs within the
limits of allowable tax deductions. During fiscal year 2009, the
Company made discretionary contributions of approximately $89
million to the U.S. pension plan and approximately $18 million
to fund post-retirement benefits. Internationally, the Company
contributed approximately $66 million for pension benefits during
fiscal year 2009. During fiscal year 2010, the Company anticipates
that its contribution for pension benefits and post-retirement
benefits will be consistent with those contributions made during
fiscal year 2009. Based on the guidelines under the U.S. Employee
Retirement Income Security Act (ERISA) and the various guidelines
which govern the plans outside the U.S., the majority of anticipated
fiscal year 2010 contributions will be discretionary.
Retiree benefit payments, which reflect expected future service,
are anticipated to be paid as follows:
(in millions)
U.S.
Pension
Benefits
Non-U.S.
Pension
Benefits Post-Retirement Benefits
Fiscal Year
Gross
Payments
Gross
Payments
Gross
Payments
Gross Medicare
Part D Receipts
2010 $ 32 $ 12 $ 8 $ 1
2011 36 14 9 1
2012 41 15 10 1
2013 46 16 11 1
2014 52 17 13 1
2015–2019 377 105 96 13
Total $584 $179 $147 $18
In August 2006, the Pension Protection Act was signed into law
in the U.S. The Pension Protection Act replaces the funding
requirements for defined benefit pension plans by subjecting
defined benefit plans to 100 percent of the current liability
funding target. Defined benefit plans with a funding status of less
than 80 percent of the current liability are defined as being “at
risk.” The Pension Protection Act was effective for the 2008 plan
year. The Company’s U.S. qualified defined benefit plans are
funded in excess of 80 percent, and therefore the Company
expects that the plans will not be subject to the “at risk” funding
requirements of the Pension Protection Act and that the law will
not have a material impact on future contributions.
The healthcare cost trend rate for post-retirement benefit plans
was 8.5 percent at April 24, 2009. The trend rate is expected to
decline to 5.0 percent over a five-year period. Assumed healthcare
cost trend rates have a significant effect on the amounts reported
for the healthcare plans. A one-percentage-point change in
assumed healthcare cost trend rates would have the following
effects:
(in millions)
One-Percentage-
Point Increase
One-Percentage-
Point Decrease
Effect on post-retirement
benefit cost $2 $(2)
Effect on post-retirement
benefit obligation 9 (9)