Lockheed Martin 2007 Annual Report Download - page 95

LMIMCO’s investment policies require that asset allocations of defined benefit pension plans be maintained within the
following ranges:
Investment Groups Asset Allocation Ranges
U.S. equity securities 20 – 60%
Non-U.S. equity securities 10 – 40%
Debt securities 20 – 40%
Cash 0 – 15%
Other 0 – 40%
At December 31, 2007, policies for the plans target an asset mix of 61% in total equity securities and 39% in debt and
other securities.
Investment policies for all plans limit the use of alternative investments and derivatives. Investment in each alternative
asset class or structure (e.g., real estate, private equity, hedge funds and commodities) is limited to 10% of plan assets.
Investments in derivatives are subject to additional limitations and constraints.
Equity securities purchased by external investment managers and included in the assets of the defined benefit pension
plans included our issued and outstanding common stock in the amounts of $14 million (less than 0.06% of total plan assets)
and $7 million (less than 0.03% of total plan assets) at December 31, 2007 and 2006. Equity securities included in the assets
of the retiree medical and life insurance plans included less than $1 million (less than 0.03% of total plan assets) of our
issued and outstanding common stock at both December 31, 2007 and 2006.
We generally refer to U.S. Government Cost Accounting Standards (CAS) and Internal Revenue Code rules in
determining funding requirements for our pension plans. In 2007, we made a discretionary prepayment of $335 million to the
defined benefit pension plans’ trust and $156 million to our retiree medical plans which will reduce our cash funding
requirements for 2008 and 2009. In 2008, we expect to make no contributions to the defined benefit pension plans trust or the
medical and life insurance plans trust, after giving consideration to the 2007 prepayments.
The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:
(In millions)
Pension
Benefits
Other
Benefits
2008 $ 1,560 $ 240
2009 1,560 250
2010 1,610 250
2011 1,680 260
2012 1,750 260
Years 2013 – 2017 10,030 1,180
Note 13 – Leases
Our total rental expense under operating leases was $338 million, $310 million and $324 million for 2007, 2006 and
2005.
Future minimum lease commitments at December 31, 2007 for all operating leases that have a remaining term of more
than one year were $1.1 billion ($295 million in 2008, $234 million in 2009, $185 million in 2010, $148 million in 2011,
$120 million in 2012 and $122 million in later years). Certain major plant facilities and equipment are furnished by the U.S.
Government under short-term or cancelable arrangements.
Note 14 – Legal Proceedings, Commitments and Contingencies
We are a party to or have property subject to litigation and other proceedings, including matters arising under provisions
relating to the protection of the environment. We believe the probability is remote that the outcome of these matters will have
a material adverse effect on our consolidated results of operations, financial position or cash flows. We cannot predict the
outcome of legal proceedings with certainty. These matters include the following items, which have been previously
reported.
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