Lockheed Martin 2015 Annual Report Download - page 73
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material (Note 15). A 10% appreciation or devaluation of the hedged currency as compared to the level of foreign exchange
rates for currencies under contract at December 31, 2015 would not have a material impact on the aggregate net fair value of
such contracts or our consolidated financial statements.
We evaluate the credit quality of potential counterparties to derivative transactions and only enter into agreements with
those deemed to have acceptable credit risk at the time the agreements are executed. Our foreign currency exchange hedge
portfolio is diversified across several banks. We periodically monitor changes to counterparty credit quality as well as our
concentration of credit exposure to individual counterparties. We do not hold or issue derivative financial instruments for
trading or speculative purposes.
We maintain a separate trust that includes investments to fund certain of our non-qualified deferred compensation plans.
As of December 31, 2015, investments in the trust totaled $1.1 billion and are reflected at fair value on our Balance Sheet in
other noncurrent assets. The trust holds investments in marketable equity securities and fixed-income securities that are
exposed to price changes and changes in interest rates. A portion of the liabilities associated with the deferred compensation
plans supported by the trust is also impacted by changes in the market price of our common stock and certain market indices.
Changes in the value of the liabilities have the effect of partially offsetting the impact of changes in the value of the trust.
Both the change in the fair value of the trust and the change in the value of the liabilities are recognized on our Statements of
Earnings in other unallocated, net and were not material for the year ended December 31, 2015.
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