IR » Topics » Pension Plans

This excerpt taken from the IR 10-Q filed May 8, 2009.

Note 11 – Pension Plans

The Company has noncontributory pension plans covering substantially all non-Trane U.S. employees and maintains a pension plan for non-collectively bargained U.S. employees of Trane, whereby eligible employees may elect to participate and receive a credit equal to 3% of eligible pay. In addition, the Company maintains a U.S. collectively bargained pension plan for Trane employees. Certain non-U.S. employees in other countries, including Trane employees, are covered by pension plans.

The Company’s pension plans for U.S. non-collectively bargained employees provided benefits on a final average pay formula. The Company’s U.S. collectively bargained pension plans, including those covering employees of Trane, principally provide benefits based on a flat benefit formula. Non-U.S. plans provide benefits based on earnings and years of service. The Company maintains additional other supplemental benefit plans for officers and other key employees.

 

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Table of Contents

The components of the Company’s pension related costs for the three months ended March 31 are as follows:

 

In millions

   2009     2008  

Service cost

   $ 17.5     $ 11.4  

Interest cost

     48.5       38.5  

Expected return on plan assets

     (43.9 )     (49.1 )

Net amortization of:

    

Prior service costs

     2.1       2.1  

Transition amount

     0.1       0.2  

Plan net actuarial losses

     14.3       2.4  
                

Net periodic pension benefit cost

     38.6       5.5  

Net curtailment and settlement (gains) losses

     0.8       1.3  
                

Net periodic pension benefit cost after net curtailment and settlement (gains) losses

   $ 39.4     $ 6.8  
                

Amounts recorded in continuing operations

   $ 36.6     $ 10.5  

Amounts recorded in discontinued operations

     2.8       (3.7 )
                

Total

   $ 39.4     $ 6.8  
                

As a result of the acquisition of Trane in the second quarter of 2008, the Company assumed net obligations of $67.7 million, which consisted of long-term prepaid pension costs of $1.4 million and current and noncurrent pension benefit liabilities of $69.1 million.

The Company made employer contributions of $25.7 million and $6.8 million to its pension plans during the three months ended March 31, 2009 and 2008, respectively.

Net periodic pension cost for the three months ended March 31, 2009 included $11.0 million related to Trane plans.

The curtailment and settlement losses in 2009 and 2008 are associated with lump sum distributions under supplemental benefit plans for officers and other key employees.

These excerpts taken from the IR 10-K filed Mar 2, 2009.

Pension Plans

Our investment objectives in managing defined benefit plan assets are to ensure that present and future benefit obligations to all participants and beneficiaries are met as they become due; to provide a total return that, over the long term, minimizes our required contributions at the appropriate levels of risk; and to meet any statutory requirements, laws and local regulatory agencies’ requirements.

We monitor the impact of market conditions on our funding requirements and pension plan expense on a quarterly basis. As a result of the current market environment, our pension plans have experienced negative returns of $523.2 million during 2008. Consequently, this will increase pension expense in 2009 and require cash contributions to our pension plan. However, none of our pension plans have experienced any significant impact on their liquidity to pay retirees in the plans due to the volatility in the markets. For further details on pension plan activity, see Note 15 to the consolidated financial statements.

Pension Plans

Our investment objectives in managing defined benefit plan assets are to ensure that present and future benefit obligations to all participants and beneficiaries are met as they become due; to provide a total return that, over the long term, minimizes our required contributions at the appropriate levels of risk; and to meet any statutory requirements, laws and local regulatory agencies’ requirements.

We monitor the impact of market conditions on our funding requirements and pension plan expense on a quarterly basis. As a result of the current market environment, our pension plans have experienced negative returns of $523.2 million during 2008. Consequently, this will increase pension expense in 2009 and require cash contributions to our pension plan. However, none of our pension plans have experienced any significant impact on their liquidity to pay retirees in the plans due to the volatility in the markets. For further details on pension plan activity, see Note 15 to the consolidated financial statements.

Pension Plans

Our investment objectives in managing defined benefit plan assets are to ensure that present and future benefit obligations to all participants and beneficiaries are met as they become due; to provide a total return that, over the long term, minimizes our required contributions at the appropriate levels of risk; and to meet any statutory requirements, laws and local regulatory agencies’ requirements.

We monitor the impact of market conditions on our funding requirements and pension plan expense on a quarterly basis. As a result of the current market environment, our pension plans have experienced negative returns of $523.2 million during 2008. Consequently, this will increase pension expense in 2009 and require cash contributions to our pension plan. However, none of our pension plans have experienced any significant impact on their liquidity to pay retirees in the plans due to the volatility in the markets. For further details on pension plan activity, see Note 15 to the consolidated financial statements.

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