The document provides an overview of Ryder's pension plans, including recent changes, accounting practices, funding status, investment strategies and results, contribution requirements, expenses, and equity charges. It notes that in 2008 and 2010, Ryder froze its US and Canadian pension plans respectively for most participants, shifting them to enhanced defined contribution plans. As of 2008, Ryder's consolidated pension plans were 66% funded, with the primary US plan 62% funded. The document reviews Ryder's asset allocation strategy and historical investment returns. It also outlines the rules for determining annual cash contribution requirements under the Pension Protection Act.
2. Safe Harbor
Note Regarding Forward-Looking Statements: Certain statements and information included in this
presentation are quot;forward-looking statementsquot; under the Federal Private Securities Litigation Reform
Act of 1995 including statements relating to estimated pension expense and contributions for 2009.
Accordingly, these forward-looking statements should be evaluated with consideration given to the
many risks and uncertainties that could cause actual results and events to differ materially from those
in the forward-looking statements. Important factors that could cause such differences include, among
others, the adequacy of actuarial assumptions and estimates; the requirement to have an interim re-
measurement of the plan as a result of material workforce reductions, temporary suspensions in
benefit accruals or other circumstances; the impact of new pension regulations; and a change in the
level of pension contributions resulting from, among other things, a change in expected free cash flow
levels. Our expectations are also subject to the risks described in our filings with the Securities and
Exchange Commission (SEC). The risks included here and in our SEC filings are not exhaustive. New
risks emerge from time to time and it is not possible for management to predict all such risk factors or
to assess the impact of such risks on our business. Accordingly, we undertake no obligation to publicly
update or revise any forward-looking statements, whether as a result of new information, future events,
or otherwise.
2/19/2009 Proprietary and Confidential 2
4. Purpose of Overview
►Provide clarity to the main components and drivers of pension expense:
generally and specific to Ryder
►Provide insight into the factors which create funding requirements: generally
and specific to Ryder
►Provide information on Ryder’s U.S. pension funding status, pension asset
returns and asset allocation strategies
►Provide information on estimated future cash funding requirements
►Provide information on estimated 2009 pension costs, go-forward sensitivity
guides and drivers of changes in 2009 pension costs
►Provide information on equity charge as a result of under-funded status
2/19/2009 Proprietary and Confidential 4
5. Plan Overview / Recent Changes
►Ryder historically offered defined-benefit pension benefits in the U.S., U.K, and
Canada. Substantially all employees, except U.S. drivers and warehouseman,
were covered under the plans. The majority of the employees covered by the
plans are in Fleet Management Solutions and Central Support Services.
►Effective 1/1/08, U.S. pension plans were frozen for participants who did not
meet certain grandfathering criteria. Almost 70% of active participants ceased
accruing benefits under the plan. These impacted employees began
participating in a new enhanced defined contribution plan.
►Effective 1/1/10, the Canadian pension plan will be frozen for participants who do
not meet certain grandfathering criteria. Impacted employees will participate in a
new enhanced defined contribution plan.
►Reductions in pension expense from these plan changes is expected to be offset
by costs associated with the new enhanced defined contribution plans.
2/19/2009 Proprietary and Confidential 5
7. Accounting Fundamentals
Guiding literature - SFAS 87 for expense purposes; SFAS 158 for balance sheet
presentation
Delayed Recognition - changes in pension obligation and the value of net assets
are recognized in earnings systematically and gradually over future periods
Net Reporting of Expense - consequences of events and transactions
(compensation element, interest cost, investment return) are recorded as a
single net expense
Offsetting of Assets and Liabilities - value of pension assets and liabilities to
participants (funded status) shown net on the balance sheet
Assumptions-Based Expense Calculation - discount rate, pension earnings rate,
salary progression rate
2/19/2009 Proprietary and Confidential 7
8. Accounting Fundamentals
Pension Assumptions
Discount Rate - rate that discounts expected future cash benefit payments to a
present value.
► Rate determined from models that match the expected benefit payments underlying the
liability to coupons and maturities from a hypothetical portfolio of high quality corporate
bonds.
► Rate considered in determining 2009 pension expense of our primary U.S. Plan is
6.25% vs. 6.35% in 2008. Average rate for international plans is 6.77% vs. 5.64% in
2008.
Pension Earnings Rate - long-term expected rate of return on assets based on
asset allocation, current returns and expected reinvestment rates.
► Rate considered in determining 2009 pension expense for our primary U.S. Plan is
7.90% vs. 8.40% in 2008. Average rate for international plans is 7.25% vs. 7.50% in
2008.
► Rate includes impact of investment management and other fees.
2/19/2009 Proprietary and Confidential 8
9. Accounting Fundamentals
Pension Assumptions
Salary Progression Rate – annual rate of growth based on expected compensation
until retirement, including all salary increase components (merit, promotion, equity,
overtime and inflation).
► Rate used to produce our 12/31/2008 pension liability valuation and 2009 pension
expense, for our primary U.S. plan, remained at 4.0% based on actuarial review of
historical experience.
► Assumption less significant now that U.S. Plan is frozen with limited active participants.
Retirement and Mortality Rate – retirement rate based on actual plan experience;
mortality rate based on standard actuarial tables.
► Mortality assumptions used to produce our 12/31/2008 pension liability valuation and
2009 pension expense, for our primary U.S. plan, were unchanged from prior year. In
the previous year, assumptions were updated to reflect more current actuarial tables.
Mortality assumptions in the international plans were updated in 2008 to reflect more
current actuarial tables.
2/19/2009 Proprietary and Confidential 9
11. Funded Status
Ryder System, Inc. and Subsidiaries
Funded Status and Balance Sheet Impact of Pension
(Amounts in millions)
2008 2007 2006
Projected benefit obligations (PBO) at 12/31 $ 1,477.5 1,522.5 1,531.6
Fair value of Plan assets at 12/31 975.5 1,521.4 1,417.3
Funded status $ (502.0) (1.1) (114.3)
Non-current asset $ 5.2 41.1 -
Current liability (2.5) (2.3) (2.0)
Non-current liability (504.7) (39.9) (112.3)
$ (502.0) (1.1) (114.3)
Unrecognized net actuarial loss * $ 753.8 237.9 318.5
Actuarial Assumptions U.S. Plan:
Discount Rate 6.25% 6.35% 6.00%
Salary Progression Rate 4.00% 4.00% 4.00%
Gain and Loss Amortization (in years) 28.4 8.4 8.4
* Actuarial losses are amortized to earnings over the average remaining service life of active participants or the
remaining life expectancy of inactive participants if all or almost all of the plan’s participants are inactive. The
delayed recognition of actuarial losses drives future volatility.
2/19/2009 Proprietary and Confidential 11
12. Funded Status
Consolidated Funded Status
(Amounts in millions)
2008 2007 2006
U.S. Qualified Plan $ (465.2) 20.0 (53.3)
U.S. Non Qualified Plan (36.8) (33.3) (33.0)
International Plans 0.0 12.2 (28.0)
Total Consolidated Funded Status $ (502.0) (1.1) (114.3)
Percent Funded 66% 100% 93%
2/19/2009 Proprietary and Confidential 12
13. Funded Status
U.S. Qualified Pension Plan
12/31/08 12/31/07
(Dollars in millions)
(1)
$ 747.4 1,158.5
Fair Value of Assets (FVA)
(2)
1,212.6 1,138.5
PV of Liability (PBO)
$ (465.2) 20.0
SFAS 87 Funded Status
62% 102%
Percent Funded
(1) Actual return on plan assets was approximately (31)% for 2008.
(2) Discount rate was 6.25% at 12/31/08 (6.35% at 12/31/07).
2/19/2009 Proprietary and Confidential 13
14. Funded Status
Pension Assets
Under Ryder’s application of SFAS 87, pension assets are measured at
the end of each reporting year (December 31)
► Point-in-time valuation
► Reflects fair market value
► Not market-related (smoothed) value which is another accepted method under
SFAS 87
The fair market value of pension assets changes from year to year as a
result of the following items:
► Actual returns earned on plan assets
► Contributions to the plan
► Benefit payments to retirees
► Payment of plan expenses
2/19/2009 Proprietary and Confidential 14
15. Funded Status
Pension Liabilities
Projected Benefit Obligation (PBO) measures the present value of expected
future benefit payments to plan participants including future salary increases
► Point-in-time valuation (year-end unless interim assessment required)
► Based on service to date of valuation
► Based on selected discount rate
Discount rate based on actuarial models that match expected timing of
expected benefit payments to coupons and maturities from a hypothetical
portfolio of high quality (Aa or better) corporate bonds at the end of each
reporting year (December 31).
Future benefit payments are based on current plan provisions and are
impacted by the following assumptions:
► Salary progression rate
► Retirement age
► Mortality, Disability, Turnover, etc.
2/19/2009 Proprietary and Confidential 15
16. Funded Status
Historical Consolidated Funded Status
170
150
150
130
% 121
110
100
96
90 93
83
80 78
74
70
66
50
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Note: All years as of 12/31
2/19/2009 Proprietary and Confidential 16
17. Funded Status
Historical Funded Status-U.S. Only
170
158
150
128
130
%
110
100
100
97
90
87
83 81
77
70
62
50
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Note: All years as of 12/31
2/19/2009 Proprietary and Confidential 17
19. Pension Investment Strategies & Results
The purpose of the pension fund is to accumulate sufficient assets to
meet the Plan’s future payment obligations (liabilities).
Ryder’s Investment Committee oversees the asset management and
investment activities of our pension plans. Responsibilities include:
► Establishing and maintaining a broad asset allocation strategy
► Building investment structure within asset classes to ensure diversification
► Retaining and monitoring investment managers
► Evaluating performance of plans
Assets are accumulated largely through investment returns; investment
returns are maximized through asset allocation; asset allocation is
structured to produce the required long-term returns within a risk-
controlled framework.
Allocation of assets is largely a function of the time horizon for future
liability payments and expected return/risk characteristics for the various
asset classes. Investment allocations are subject to change at any time.
2/19/2009 Proprietary and Confidential 19
20. Pension Investment Strategies & Results
Asset Allocation Strategy
Ryder’s U.S. Pension asset allocation and approved ranges* are as follows:
12/31/07 12/31/08 Target
Allocation Allocation Range
► U.S. Equity 44% 37% 37% - 47%
► Non-U.S. Equity 16% 14% 8% - 18%
► U.S. Fixed Income 22% 32% 21% - 31%
► Tactical Asset Allocation (TAA**) 15% 13% 10% - 20%
► Venture Capital (fund of funds) 2% 3% 0% - 5%
► Cash <1% <1%
100% 100%
* Asset allocation ranges are approved and managed by the Ryder Investment Committee. Long-term strategy is to manage to the mid-point of
the target range.
** The TAA account was invested 100% in U.S. equity (S&P 500 Index Fund) as of 12/31/08. Investment allocations are subject to change at
any time.
2/19/2009 Proprietary and Confidential 20
21. Pension Investment Strategies & Results
Asset Return History
25 25
15 15
8.4%
7.9%
5 5
%
% 6.1%
-5 -5
-15 -15
-25 -25
-35 -35
2001 2002 2003 2004 2005 2006 2007 2008 2009
Annual Actual Asset Return
Current Expected Long Term Return on Assets
Rolling 15-Year Compound Annual Return
2/19/2009 Proprietary and Confidential 21
23. Pension Contribution
Annual U.S. cash contribution requirements were historically
determined under Employee Retirement Income Security Act (ERISA).
In 2006, the Pension Protection Act (PPA) was passed which amended
ERISA for the purpose of strengthening pension funding and helping
the Pension Benefit Guarantee Corporation (PBGC) remain solvent.
Annual U.S. cash contribution requirements are determined by two sets
of rules under the current PPA.
► Minimum Funding Requirements - sufficient contributions to cover normal
costs for the period and the amount to amortize funding shortfalls (if liability
exceeds assets) over 7 years.
● Additional contribution requirements if funded status falls below certain thresholds
and plan considered “at-risk” (75% for 2009 and 80% for 2010).
● At-risk status also requires additional participant notification and reporting.
► PBGC – flat dollar amount (per participant) for all plans PLUS variable
premium requirements for all less than 100% funded (under PPA, no
exemptions).
2/19/2009 Proprietary and Confidential 23
24. Pension Contribution
Contribution requirements are determined primarily by the following
factors:
► Actual return on plan assets
► Discount rate applied to expected plan payouts – based on corporate bond
yield curve
► Salary growth, retirement age and turnover
► Mortality – table issued by IRS and updated every 10 years
► Funded status
The Internal Revenue Code allows annual contributions greater than
PPA minimum funding requirements, thus a range of contributions is
possible
► IRS is also considering a one-time election to change the method of calculating
pension assets used in determining contributions.
► Proposed change allows for a smoothing of asset values versus a point-in-time
valuation.
► If approved, the election would reduce required pension contributions in 2009
and 2010.
2/19/2009 Proprietary and Confidential 24
25. Pension Contribution
Under PPA minimum funding rules, Ryder will be required to make annual contributions
for at least the next five years. Ryder may elect to make voluntary contributions earlier
than required and in amounts greater than the minimum requirements. The 2009 forecast
assumes $73 million of U.S. voluntary contributions in addition to the minimum
requirements for a total of $100 million.
The following table presents Ryder’s estimated funding requirements:
Contribution
Minimum Contribution Requirements to Avoid
(1), (2) (1), (2)
Requirements quot;At-Riskquot; Status
Current Proposed Current Proposed
Regulations Regulations Regulations Regulations
($ in millions)
Present value over 5 years
U.S. Qualified Plan $ 423 $ 405 $ 458 $ 452
2009 Calendar Year
U.S. Qualified Plan $ 8 $ - $ 201 $ 113
Global $ 27 $ 18 $ 219 $ 131
2009 PPA Funded Status 60% 66% 75% 75%
(1) Based on a discount rate of 6.25% and return on assets of 7.90%
(2) The level of future contributions will change based on plan asset performance
2/19/2009 Proprietary and Confidential 25
27. Pension Expense
Consolidated Pension Expense History
Years Ended December 31:
(Amounts in millions)
2008 2007 2006 2005
(1)
Service cost $ 26.6 40.1 42.6 37.3
Interest cost 92.4 86.6 82.5 76.5
Expected return on plan assets (120.6) (118.5) (99.5) (90.7)
Canadian curtailment gain (3.6) - - -
(1)
Recognized net actuarial loss 5.9 19.4 33.6 30.0
Amortization of prior service cost (2.5) (2.9) 6.3 1.4
Pension expense, excluding union plans (1.8) 24.7 65.5 54.5
Union-administered plans 4.9 4.8 4.9 4.7
Net pension expense $ 3.1 29.5 70.4 59.2
U.S. Actuarial Assumptions:
Discount rate 6.35% 6.00% 5.73% 5.90%
Salary progression rate 4.00% 4.00% 4.00% 4.00%
Expected return on Plan assets 8.40% 8.50% 8.50% 8.50%
(1)
Gain and loss amortization in years 28.4 8.4 8.4 8.5
(1) Change due to U.S. pension freeze
2/19/2009 Proprietary and Confidential 27
28. Pension Expense
Detail of Consolidated Pension
Expense History
Years Ended December 31:
(Amounts in millions)
2008 2007 2006 2005
U.S. Qualified Plan $ (8.9) 7.9 41.6 36.2
U.S. Non Qualified Plan 3.3 3.3 4.6 3.3
International Plans 3.8 13.5 19.3 15.0
Union Administered Plans 4.9 4.8 4.9 4.7
Net Pension Expense $ 3.1 29.5 70.4 59.2
2/19/2009 Proprietary and Confidential 28
29. Pension Expense
Service Cost
(Amounts in millions) 2008 2007
• Service cost is
determined as the
Company-administered plans:
actuarial present value of
Service cost $ 26.6 $ 40.1 benefits for employee
Interest cost 92.4 86.6 service during the period
Expected return on plan assets (120.6) (118.5) • Amount is impacted by:
Canadian curtailment gain (3.6) -
1) Discount Rate
Recognized net actuarial loss 5.9 19.4
2) Number of
Amortization of prior service credit (2.5) (2.9) employees
Pension expense, excluding union plans (1.8) 24.7
3) Expected lives /
Union-administered plans 4.9 4.8 retirement period
of employees
Net pension expense $ 3.1 $ 29.5
2/19/2009 Proprietary and Confidential 29
30. Pension Expense
Interest Cost
(Amounts in millions) 2008 2007
• Interest cost
Company-administered plans:
represents the
Service cost $ 26.6 $ 40.1
increase in the
Interest cost 92.4 86.6 projected benefit
Expected return on plan assets (120.6) (118.5) obligation due to the
passage of time
Canadian curtailment gain (3.6) -
Recognized net actuarial loss 5.9 19.4
• Amount is measured
Amortization of prior service credit (2.5) (2.9) by accrual of interest
cost at assumed
Pension expense, excluding union plans (1.8) 24.7
discount rate
Union-administered plans 4.9 4.8
Net pension expense $ 3.1 $ 29.5
2/19/2009 Proprietary and Confidential 30
31. Pension Expense
Expected Return on Assets
• Return on Plan assets
(Amounts in millions) 2008 2007
represents the assumed
change in the fair value of
Company-administered plans:
Plan assets during the
Service cost $ 26.6 $ 40.1 year, after considering plan
contributions and
Interest cost 92.4 86.6
distributions
Expected return on plan assets (120.6) (118.5)
Canadian curtailment gain (3.6) - • Average long-term
expected rate of return of:
Recognized net actuarial loss 5.9 19.4
Amortization of prior service credit (2.5) (2.9) 2001 9.25%
2002 8.75%
Pension expense, excluding union plans (1.8) 24.7
2003-2007 8.50%
Union-administered plans 4.9 4.8
2008 8.40%
Net pension expense $ 3.1 $ 29.5
2/19/2009 Proprietary and Confidential 31
32. Pension Expense
Canadian Curtailment Gain
(Amounts in millions) 2008 2007
• Gain recognized in Q3-08
upon amendment to freeze
Company-administered plans:
Canadian plan effective on
Service cost $ 26.6 $ 40.1
1/1/2010
Interest cost 92.4 86.6
• SFAS 88 is guiding
Expected return on plan assets (120.6) (118.5)
literature
Canadian curtailment gain (3.6) -
• Represents the write-off of
Recognized net actuarial loss 5.9 19.4
unrecognized prior service
Amortization of prior service credit (2.5) (2.9)
credits associated with
Pension expense, excluding union plans (1.8) 24.7
years of service no longer
Union-administered plans 4.9 4.8 expected to be rendered.
Net pension expense $ 3.1 $ 29.5
2/19/2009 Proprietary and Confidential 32
33. Pension Expense
Actuarial Gain / Loss
• Actuarial gains or losses
include changes in pension
(Amounts in millions) 2008 2007 assets or obligations
resulting from experience
different than that assumed
Company-administered plans:
or changes in assumptions
Service cost $ 26.6 $ 40.1
• G/L recognized over time
Interest cost 92.4 86.6
Expected return on plan assets (120.6) (118.5) • G/L recognition is subject to
a “corridor” which is
Canadian curtailment gain (3.6) -
generally 10% of the greater
Recognized net actuarial loss 5.9 19.4
of pension obligations ($1.5
Amortization of prior service credit (2.5) (2.9)
billion at 12/31/08) or assets
Pension expense, excluding union plans (1.8) 24.7 ($976 million at 12/31/08)
Union-administered plans 4.9 4.8
• Corridor at 12/31/08 was
Net pension expense $ 3.1 $ 29.5 $148 million
• For U.S. plan, in light of plan
freeze, gains and losses are
recognized over average
remaining life expectancy of
plan participants (28.4 years
in 2008)
2/19/2009 Proprietary and Confidential 33
34. Pension Expense
Prior Service Credit
(Amounts in millions) 2008 2007
• Prior Service Credit
Company-administered plans:
represents the cost of
Service cost $ 26.6 $ 40.1
retroactive benefit
Interest cost 92.4 86.6
reductions made in a
Expected return on plan assets (120.6) (118.5) Plan amendment
Canadian curtailment gain (3.6) -
• Recognized over the
Recognized net actuarial loss 5.9 19.4 anticipated future service
Amortization of prior service credit (2.5) (2.9) period of employees
affected
Pension expense, excluding union plans (1.8) 24.7
Union-administered plans 4.9 4.8
Net pension expense $ 3.1 $ 29.5
2/19/2009 Proprietary and Confidential 34
35. Pension Expense
Sensitivity Analysis - U.S. Qualified Pension Plan
2008 Pension
Assumption Change Expense
Expected Long-Term Return on Assets 8.40% +/- 0.25% -/+ $ 2 Million
Actual 2008 Asset Returns vs. Expected +/- 0.25% -/+ $ 0.4 Million
Contributions at beginning of year + $ 25 Million - $ 2 Million
Discount Rate 6.35% +/- 0.25% -/+ $ 0.5 Million
Salary Progression Rate 4.00% +/- 0.50% +/- $ 0.5 Million
2/19/2009 Proprietary and Confidential 35
36. Pension Expense
2009 Expectations - U.S. Qualified Pension Plan
Estimate Actual Actual
(Amounts in millions) 2009 2008 2007
U.S. Qualified Pension Plan
Service cost $ 12.6 12.8 23.4
Interest cost 74.9 71.8 67.1
Expected return on plan assets (59.6) (94.9) (93.0)
Net amortization 18.3 1.4 10.4
Pension expense $ 46.2 (8.9) 7.9
Actuarial Assumptions:
Discount rate 6.25% 6.35% 6.00%
Salary progression rate 4.00% 4.00% 4.00%
Expected return on Plan assets 7.90% 8.40% 8.50%
2/19/2009 Proprietary and Confidential 36
37. Pension Expense
2009 Expectations - Consolidated Pension Expense
(Amounts in millions) Estimate Actual Actual
2009 2008 2007
U.S. Qualified Plan $ 46.2 (8.9) 7.9
U.S. Non Qualified Plan 3.4 3.3 3.3
International Plans 10.7 3.8 13.5
Union Administered Plans 4.9 4.9 4.8
Net Pension Expense $ 65.2 3.1 29.5
2/19/2009 Proprietary and Confidential 37
38. Pension Expense
Drivers of the Change in 2009 Consolidated
Pension Expense
(Amounts in millions)
2008 Pension Expense $ 3
U.S. Qualified Plan Adjustments:
Lower than Assumed Return on Assets in 2008 (-31.5% vs 8.40%) 52
Reduction in Asset Return Assumption (7.90% vs 8.40%) 4
Benefit of 2009 Pension Contributions (3)
Decrease in Discount Rate (from 6.35% to 6.25%) -
Other 2
Total U.S. Qualified Plan Adjustments 55
U.S. Non-Qualified / International and Union Plans' Adjustments* 7
Total Adjustments 62
2009 Estimated Pension Expense $ 65
* Primarily lower 2008 asset returns partially offset by increase in discount rate and FX.
2/19/2009 Proprietary and Confidential 38
40. Pension Equity Charges
SFAS 158 requires the funded status of a defined benefit plan be
recognized in the balance sheet.
► Funded Status = Fair value of plan assets compared to PBO
► Overfunded Plan → Balance sheet asset
► Underfunded Plan → Balance sheet liability
► Year-end (December 31 for Ryder) calculation in conjunction with actuarial
valuation
SFAS 158 requires the changes in funded status be recognized through
comprehensive income.
► Relates to actuarial gains/losses and prior service costs/credits that arise during
the period but are not recognized in pension expense
► Changes are recognized net of tax
► Accumulated changes in other comprehensive income are presented within
shareholders’ equity
2/19/2009 Proprietary and Confidential 40
41. Pension Equity Charges
Impact to Ryder
Negative asset returns from 2000-2002 and 2008 have led to significant
unrecognized actuarial losses since 12/31/02. Following is a summary of net
pension equity charges since 2002:
Year Cumulative Equity Charge
2002 $229M
2003 $187M
2004 $189M
2005 $221M
2006 $201M
2007 $148M
2008 $480M
Required charge to equity increased substantially in 2008 because of
significant negative asset returns.
Global revolving credit facility includes a covenant to maintain a ratio of debt
to consolidated tangible net worth, as defined, of less than or equal to 300%.
► Pension equity charge is included in debt covenant calculation.
► Ratio at 12/31/08 was 181%.
► Ryder continues to be in compliance with the debt covenant.
2/19/2009 Proprietary and Confidential 41
43. Conclusions
Ryder has frozen U.S. and Canadian pension plans to most active
employees.
Pension expense is sensitive to expected long-term asset returns versus
actual returns as well as interest rate changes.
► Difference between actual and expected asset returns and the impact of
interest rate changes are required to be amortized in order to smooth
recognition of gains and losses
Plan cash contributions can lower pension expense.
Pension expense for all plans (especially our primary U.S. plan) is
expected to significantly increase in 2009 over 2008.
► Driven by impact of 2008 asset returns that were substantially below
assumed return rates
2/19/2009 Proprietary and Confidential 43
44. Conclusions
At year end 2008, the plans were 66% funded. The funded status is
negative $502M.
Minimum pension funding requirements are manageable relative to free
cash flow – pending regulation changes may reduce contribution
requirements in the near-term.
► Pension contributions to avoid “at-risk” status (75% funded) are substantially
higher than the minimum funding requirement in the near-term.
Underfunded status results in a charge to equity (cumulative $480M at
12/31/08).
Pension charge to equity does not affect earnings or current
compliance with the debt covenant.
2/19/2009 Proprietary and Confidential 44
