Lockheed Martin 2007 Annual Report Download - page 91

Note 12 – Postretirement Benefit Plans
Defined contribution plans – We maintain a number of defined contribution plans with 401(k) features that cover
substantially all of our employees. Under the provisions of our 401(k) plans, our employees’ eligible contributions are
matched by our established rates. Our matching obligations were $327 million in 2007, $303 million in 2006 and $273
million in 2005, the majority of which were funded in our common stock.
Our Salaried Savings Plan is a defined contribution plan with a 401(k) feature that includes an ESOP. Our matching
contributions to the Salaried Savings Plan have been fulfilled through purchases of common stock from participant account
balance reallocations or through newly issued shares. At December 31, 2007, the Salaried Savings Plan held 59.9 million
issued and outstanding shares of our common stock, all of which were allocated to participant accounts.
Certain plans for hourly employees include a non-leveraged ESOP. In one such plan, the match is made, generally at the
election of the participant, in either our common stock or cash which is invested at the participant’s direction in one of the
plan’s other investment options. Contributions to these plans were made through small amounts of newly issued shares by us
or cash contributed to the ESOP trust which was used by the trustee, if so elected, to purchase common stock from
participant account balance reallocations or in the open market for allocation to participant accounts. This ESOP trust held
2.2 million issued and outstanding shares of our common stock at December 31, 2007, all of which were allocated to
participant accounts.
Defined benefit pension plans and retiree medical and life insurance plans – Most of our employees hired on or
before December 31, 2005 are covered by defined benefit pension plans, and we provide certain health care and life
insurance benefits to eligible retirees. Non-union represented employees hired after January 1, 2006 do not participate in our
defined benefit pension plans, but are eligible to participate in a defined contribution plan in addition to our other retirement
savings plans. They also have the ability to participate in our retiree medical plans, but we do not subsidize the cost of their
participation. We have made contributions to trusts established to pay future benefits to eligible retirees and dependents
(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). We use December 31 as the measurement date. 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 each of the years
presented were based on assumptions in effect at the end of the respective preceding year.
In December 2006, we adopted the recognition and disclosure provisions of FAS 158, which required us to recognize
assets for all of our overfunded postretirement benefit plans and liabilities for our underfunded plans at December 31, 2006,
with a corresponding noncash adjustment to Accumulated other comprehensive loss, net of tax, in Stockholders’ equity. The
funded status is measured as the difference between the fair value of the plan’s assets and the projected benefit obligation
(PBO) of the plan. The adjustment to Stockholders’ equity represented the net unrecognized actuarial losses and prior service
costs which were previously netted against the plan’s funded status on our Balance Sheet in accordance with FAS 87, and
included the elimination of the minimum pension liability and intangible asset related to our defined benefit pension plans
that had been recorded prior to its adoption.
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