Lockheed Martin 2002 Annual Report Download - page 64

SEVENTY-ONE
Certain plans for hourly employees include non-leveraged
ESOPs where the match is made, generally at the election of
the participant, in the Corporation’s common stock. The
Corporation’s match to these plans was made through cash con-
tributions to the ESOP trusts which were used, if so elected, to
purchase common stock from terminating participants and in
the open market for allocation to participant accounts. These
ESOP trusts held approximately 3.5 million issued and out-
standing shares of common stock at December 31, 2002.
Defined benefit pension plans, and retiree medical and life
insurance plans—Most employees are covered by defined bene-
fit pension plans, and certain health care and life insurance ben-
efits are provided to eligible retirees by the Corporation. The
Corporation has made contributions to trusts (including
Voluntary Employees’ Beneficiary Association trusts and
401(h) accounts, the assets of which will be used to pay
expenses of certain retiree medical plans) established to pay
future benefits to eligible retirees and dependents. Benefit
obligations as of the end of each year reflect assumptions in
effect as of those dates. Net pension and net retiree medical
costs for 2002, 2001 and 2000 were based on assumptions in
effect at the end of the respective preceding years.
The following provides a reconciliation of benefit obliga-
tions, plan assets and funded status of the plans:
Defined Retiree Medical
Benefit and Life
Pension Plans Insurance Plans
(In millions) 2002 2001 2002 2001
CHANGE IN BENEFIT
OBLIGATIONS
Benefit obligations at
beginning of year $19,713 $18,524 $3,125 $2,984
Service cost 565 523 37 41
Interest cost 1,401 1,357 213 211
Benefits paid (1,247) (1,223) (320) (281)
Actuarial losses 1,417 497 190 115
Amendments 102 38 13 11
Divestitures (33) (3) (6) —
Participants’ contributions ——64 44
Benefit obligations
at end of year $21,918 $19,713 $3,316 $3,125
Defined Retiree Medical
Benefit and Life
Pension Plans Insurance Plans
(In millions) 2002 2001 2002 2001
CHANGE IN PLAN ASSETS
Fair value of plan assets at
beginning of year $20,300 $22,738 $ 1,026 $ 1,098
Actual return on plan assets (1,397) (1,238) (125) (70)
Benefits paid (1,247) (1,223) (318) (181)
Corporation’s contributions 69 8259 135
Participants’ contributions ——64 44
Divestitures (64) 15 ——
Fair value of plan assets
at end of year $17,661 $20,300 $ 906 $ 1,026
Funded (unfunded)
status of the plans $(4,257) $ 587 $(2,410) $(2,099)
Unrecognized net
actuarial losses 6,075 1,036 891 512
Unrecognized prior
service cost 568 538 39 22
Unrecognized
transition asset (3) (5) ——
Net amount recognized $ 2,383 $ 2,156 $(1,480) $(1,565)
AMOUNTS RECOGNIZED
IN THE CONSOLIDATED
BALANCE SHEET:
Prepaid (accrued)
benefit cost $(651) $ 2,081 $(1,480) $(1,565)
Intangible asset 551 20 ——
Accumulated other
comprehensive loss
related to minimum
pension liability 2,483 55 ——
Net amount recognized $ 2,383 $ 2,156 $(1,480) $(1,565)
At December 31, 2002 and 2001, the Corporation recorded
pretax minimum pension liability adjustments of $2.5 billion
and $55 million, respectively, related to certain of its defined
benefit pension plans. This adjustment is calculated on a plan-
by-plan basis, and is required if the accumulated benefit obli-
gation of the plan exceeds the fair value of the plan assets and
the plan’s accrued pension liabilities.
The accumulated benefit obligation and fair value of plan
assets for the benefit plans with accumulated benefit obliga-
tions in excess of the plans’ assets totaled $12.0 billion and
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