Assumptions used to determine benefit obligations are as follows: As of the fiscal 2004 valuation date, plan assets included 3.2 mil- lion shares of common stock of the company having a market value of $95.9 million (16% of total plan assets). Dividends paid during the year on shares held by the plan were $1.5 million. In 2003, plan assets included 3.3 million shares of common stock  of the company having a market value of $72.2 million (14% of total plan assets). The company made a discretionary contribution of $26.8 million  to the company’s defined benefit pension plans in April 2004.  The company does not anticipate making any discretionary contri- butions to fund the pension or other postretirement benefit plans  during fiscal 2005. The company expects to make contributions  of $42.1 million during fiscal 2005 that represent benefit payments from unfunded plans. Assumptions used to determine net periodic benefit costs are as follows: Benefits expected to be paid over the next ten fiscal years are  as follows: The expected long-term rate of return on plan assets is developed in consultation with outside advisors. A range is determined based on the composition of the asset portfolio, historical long-term rates of return, and estimates of future performance. For measurement purposes, an 8% annual rate of increase in the per capita cost of covered health care benefits was assumed for 2005. The rate is assumed to decrease by 1% per year to 5% for 2008, and remain at that level thereafter. Assumed health care cost trend rates have a significant impact on the amounts reported for the health care plan. A one-percentage- point change in assumed health care cost trend rates would have the following effects: The components of the provision for income taxes are as follows: The actual and target weighted-average asset allocations for the company’s pension plan assets as of the plan measurement date are as follows: Target allocations are established in consultation with outside advi- sors through the use of asset-liability modeling to attempt to match the duration of the plan assets with the duration of the company’s projected benefit liability. The asset allocation strategy attempts to minimize the long-term cost of pension benefits, reduce the volatil- ity of pension expense, and achieve a healthy funded status for the plans. The target allocation was revised in fiscal 2004 to better achieve these objectives. 42 Hormel Foods Corporation Income Taxes > note G 2004 2003 Discount rate 6.25% 6.50% Rate of future compensation increase 5.00% 5.00% 2004 2003 2002 Discount rate 6.50% 7.00% 7.25% Rate of future compensation increase 5.00% 5.00% 5.00% Expected long-term return on plan assets 7.90% 8.60% 9.50% 1-Percentage-Point (In Thousands) Increase Decrease Effect on total of service and interest  cost components $ 2,139 $ (1,707) Effect on the postretirement benefit obligation 32,413 (24,694) 2004 2003 Asset Category Actual Target Actual Target Equity Securities 68% 65-75% 65% 50-75% Fixed Income 31% 25-35% 34% 15-35% Other 1% 0% 1% 5-15% (In Thousands) 2004 2003 2002 Current: U.S. Federal $133,882 $ 97,855 $ 91,590  State 13,794 8,908 9,798 Foreign 880 1,381 208 Total Current 148,556 108,144 101,596 Deferred: U.S. Federal (12,931) (4,533) 2,882 State (2,723) (59) 170 Total Deferred (15,654) (4,592) 3,052 Total Provision for  Income Taxes $132,902 $103,552 $104,648  Pension Other (In Thousands) Benefits Benefits 2005 $ 49,573 $ 25,735 2006 36,456 23,725 2007 35,285 24,503 2008 35,670 25,160 2009 36,654 25,595 2010 and later $202,618 $128,881