Lockheed Martin 2005 Annual Report Download - page 65

   
Lockheed฀Martin฀Corporation
Defined฀Benefit฀
Pension฀Plans
Retiree฀Medical
and฀Life฀฀
Insurance฀Plans
(In฀millions)  2004  2004

Fair฀value฀of฀plan฀assets฀฀
฀ at฀beginning฀of฀year  $20,913   $฀ 1,135
Actual฀return฀on฀฀
฀ plan฀assets  2,047  150
Benefits฀paid  (1,326)  (355)
Corporation’s฀฀
฀ contributions  505  457
Participants’฀contributions — 93
Fair฀value฀of฀plan฀assets฀฀
฀ at฀end฀of฀year  $22,139   $฀ 1,480
Unfunded฀status฀of฀฀
฀ the฀plans  $฀(4,876)  $฀(2,347)
Unrecognized฀net฀฀
฀ actuarial฀losses  6,603  1,008
Unrecognized฀prior฀฀
฀ service฀cost  461  103
Net฀amount฀recognized   $฀ 2,188  $฀(1,236)

 
 
Prepaid฀assets   $฀ 1,030   $฀ —
Accrued฀liabilities  (1,660)  (1,236)
Intangible฀asset  444 —
Accumulated฀other฀฀
฀ comprehensive฀loss฀฀
฀ related฀to฀minimum฀฀
฀ pension฀liability  2,374 —
Net฀amount฀recognized   $฀ 2,188  $฀(1,236)
The฀ projected฀ benefit฀ obligations฀ (PBO)฀ for฀ the฀
Corporation’s฀ more฀ significant฀ defined฀ benefit฀ pension฀ plans฀
exceeded฀ the฀ fair฀ value฀ of฀ the฀ plans’฀ assets฀ at฀ December฀ 31,฀
2005฀and฀2004,฀as฀reflected฀in฀the฀table฀above.฀
At฀both฀December฀31,฀2005฀and฀2004,฀the฀Corporation’s฀
consolidated฀ balance฀ sheet฀ included฀ pretax฀ additional฀ mini-
mum฀pension฀liabilities฀of฀$2.4฀billion฀related฀to฀certain฀of฀its฀
defined฀benefit฀pension฀plans.฀This฀liability฀is฀calculated฀on฀a฀
plan-by-plan฀basis,฀and฀is฀required฀if฀the฀accumulated฀benefit฀
obligation฀(ABO)฀of฀the฀plan฀exceeds฀the฀fair฀value฀of฀the฀plan฀฀
assets฀and฀the฀plan’s฀accrued฀pension฀liabilities.฀The฀ABO฀for฀
all฀defined฀benefit฀pension฀plans฀was฀approximately฀$25฀billion฀
and฀$23฀billion฀at฀December฀31,฀2005฀and฀2004,฀respectively.
For฀defined฀benefit฀pension฀plans฀in฀which฀the฀ABO฀was฀
in฀excess฀of฀the฀fair฀value฀of฀the฀plans’฀assets,฀the฀PBO,฀ABO฀
and฀fair฀value฀of฀the฀plans’฀assets฀were฀as฀follows:
(In฀millions)  2004
Projected฀benefit฀obligation  $17,051
Accumulated฀benefit฀obligation  14,792
Fair฀value฀of฀plan฀assets  13,132
The฀net฀pension฀cost฀as฀determined฀by฀FAS฀87,฀Employers’฀
Accounting฀ for฀ Pensions,฀ and฀ the฀ net฀ postretirement฀ benefit฀
cost฀ as฀ determined฀ by฀ FAS฀ 106,฀ Employers’฀ Accounting฀ for฀
Postretirement฀ Benefits฀ Other฀ Than฀ Pensions,฀ related฀ to฀ the฀
Corporation’s฀plans฀include฀the฀following฀components:
(In฀millions)  2004 2003

Service฀cost   $฀ 743 $฀ 640
Interest฀cost  1,497 1,453
Expected฀return฀on฀plan฀assets  $฀(1,698) $฀(1,748)
Amortization฀of฀prior฀service฀cost  78 77
Recognized฀net฀actuarial฀losses  264 62
฀ ฀ Total฀net฀pension฀expense  $฀ 884 $฀ 484

 
Service฀cost   $฀ 49 $฀ 40
Interest฀cost  225 211
Expected฀return฀on฀plan฀assets  (88) (69)
Amortization฀of฀prior฀service฀cost  8 1
Recognized฀net฀actuarial฀losses฀  60 49
฀ ฀ ฀Total฀net฀postretirement฀฀
฀ expense   $฀ 254 $฀ 232
In฀May฀2004,฀the฀FASB฀issued฀FASB฀Staff฀Position฀(FSP)฀
106-2,฀ Accounting฀ and฀ Disclosure฀ Requirements฀ Related฀ to฀
the฀ Medicare฀ Prescription฀ Drug,฀ Improvement฀ and฀
Modernization฀Act฀of฀2003.฀This฀FSP฀provides฀specific฀author-
itative฀ guidance฀ on฀ the฀ accounting฀ for฀ the฀ federal฀ subsidy฀ to฀
eligible฀sponsors฀of฀retiree฀health฀care฀benefits฀provided฀under฀
this฀law.฀Using฀this฀guidance,฀the฀Corporation฀estimated฀a฀pro-
jected฀reduction฀in฀its฀accumulated฀postretirement฀benefit฀obli-
gation฀ as฀ of฀ December฀ 31,฀ 2004฀ of฀ $295฀ million฀ from฀ the฀
effects฀of฀the฀new฀law.฀This฀obligation฀will฀be฀recognized฀over฀