Lockheed Martin 2010 Annual Report Download - page 80

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72
The following table presents the changes during 2010 and 2009 in the fair value of plan assets categorized as Level 3 in the
preceding table:
(In millions)
International
Equity
Commin-
gled
Equity
Funds
Corporate
Debt
Other
Fixed
Income
Private
Equity
Funds
Real
Estate
Funds
Hedge
Funds
Total
Balance at January 1, 2009
$ 7
$ 228
$ 113
$ 114
$ 1,417
$ 163
$ 973
$ 3,015
Actual return on plan assets:
Realized gains (losses), net
(1)
—
(21)
1
66
—
(1)
44
Unrealized gains (losses), net
1
92
44
12
133
(103)
57
236
Purchases, sales, and settlements,
net
12
—
(71)
(84)
114
65
(279)
(243)
Transfers out of Level 3
(3)
(320)
(60)
(6)
—
—
—
(389)
Balance at December 31, 2009
$ 16
$ —
$ 5
$ 37
$ 1,730
$ 125
$ 750
$ 2,663
Actual return on plan assets:
Realized gains (losses), net
—
—
—
2
123
—
1
126
Unrealized gains (losses), net
(3)
—
2
1
103
7
13
123
Purchases, sales, and
settlements, net
(4)
—
61
8
129
32
261
487
Transfers in (out of) Level 3
7
—
(5)
(1)
—
—
—
1
Balance at December 31, 2010
$ 16
$ —
$ 63
$ 47
$ 2,085
$ 164
$ 1,025
$ 3,400
Valuation techniques – Cash equivalents are mostly comprised of short-term money-market instruments and are valued at cost,
which approximates fair value.
U.S. equity securities and international equity securities categorized as Level 1 are traded on national and international
exchanges and are valued at their closing prices on the last trading day of the year. For U.S. equity securities and international equity
securities not traded on an active exchange, or if the closing price is not available, the trustee obtains indicative quotes from a pricing
vendor, broker, or investment manager. These securities are categorized as Level 2 if the custodian obtains corroborated quotes from a
pricing vendor or categorized as Level 3 if the custodian obtains uncorroborated quotes from a broker or investment manager.
Commingled equity funds are public investment vehicles valued using the Net Asset Value (“NAV”) provided by the fund
manager. The NAV is the total value of the fund divided by the number of shares outstanding. Commingled equity funds are
categorized as Level 1 if traded at their NAV on a nationally recognized securities exchange or categorized as Level 2 if the NAV is
corroborated by observable market data (e.g., purchases or sales activity).
Fixed income securities categorized as Level 2 are valued by the trustee using pricing models that use verifiable observable
market data (e.g. interest rates and yield curves observable at commonly quoted intervals), bids provided by brokers or dealers, or
quoted prices of securities with similar characteristics.
Private equity funds, real estate funds, hedge funds, and certain fixed income securities categorized as Level 3 are valued based
on valuation models that include significant unobservable inputs and cannot be corroborated using verifiable observable market data.
Valuations for private equity funds and real estate funds are determined by the general partners, while hedge funds are valued by
independent administrators. Depending on the nature of the assets, the general partners or independent administrators use both the
income and market approaches in their models. The market approach consists of analyzing market transactions for comparable assets
while the income approach uses earnings or the net present value of estimated future cash flows adjusted for liquidity and other risk
factors.
Commodities categorized as Level 1 are traded on a commodity exchange and are valued at their closing prices on the last
trading day of the year. Commodities categorized as Level 2 represent shares in a commingled commodity fund valued using the
NAV, which is corroborated by observable market data.
Note 12 – Stockholders’ Equity
At December 31, 2010, our authorized capital was composed of 1.5 billion shares of common stock and 50 million shares of
series preferred stock. Of the 348 million shares of common stock issued and outstanding, 346 million shares were considered
outstanding for Balance Sheet presentation purposes; the remaining shares were held in the Rabbi Trust. No preferred stock shares
were issued and outstanding at December 31, 2010.