Notes to Consolidated Financial Statements
The investment objectives of the pension benefit plans are to secure the benefit obligations to participants at a reasonable cost to us. The goal is to optimize the long-term return on plan assets at a moderate level of risk, by balancing higher-returning assets such as equity securities, with less volatile assets, such as fixed income securities. The assets are managed by professional investment firms and performance is evaluated quarterly against specific benchmarks.
Equity securities in the U.S. plan included McCormick stock with a fair value of $16.1 million (0.4 million shares and 5.0% of total U.S. pension plan assets) and $28.8 million (0.9 million shares and 10.5% of total U.S. pension plan assets) at November 30, 2006 and 2005, respectively. Dividends paid on these shares were $0.6 million in 2006 and $0.6 million in 2005.
Pension benefit payments in our major plans are made from assets of the pension plans. It is anticipated that future benefit payments for the U.S. plans for the next 10 fiscal years will be as follows:
| (millions) | United States Expected Payments |
||
|---|---|---|---|
| 2007 | $ | 17.5 | |
| 2008 | 18.3 | ||
| 2009 | 19.2 | ||
| 2010 | 20.7 | ||
| 2011 | 22.1 | ||
| 2012 - 2016 | 138.5 | ||
It is anticipated that future benefit payments for the international plans for the next 10 fiscal years will be as follows:
| (millions) | International Expected Payments |
||
|---|---|---|---|
| 2007 | $ | 4.5 | |
| 2008 | 5.1 | ||
| 2009 | 5.3 | ||
| 2010 | 5.7 | ||
| 2011 | 6.1 | ||
| 2012 - 2016 | 38.7 | ||
In 2007, we expect to contribute approximately $28 million to our U.S. pension plans, including $6 million to our plan that has assets held in a Rabbi Trust. In addition, we expect to contribute approximately $13 million to our international pension plans in 2007.
401(k) Retirement Plans
For the U.S. McCormick 401(k) Retirement Plan, we match 100% of the participant’s contribution up to the first 3% of the participant’s salary, and 50% of the next 2% of a participant’s salary. Certain of our U.S. subsidiaries sponsor separate 401(k) retirement plans. Our contributions charged to expense under all 401(k) Retirement Plans were $5.6 million, $5.7 million and $5.7 million in 2006, 2005 and 2004, respectively.
At the participant’s election, 401(k) Retirement Plans held 3.3 million shares, with a fair value of $127.9 million, of our stock at November 30, 2006. Dividends paid on these shares in 2006 were $2.5 million.