Raytheon 2005 Annual Report Download - page 103

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2003. The long-term return on asset assumption for the Company’s Other Benefits plans was 8.75% in 2005 and 7.75% in
2004 and 2003. To develop the expected long-term rate of return on asset assumptions, the Company considered the
current level of expected returns on risk free investments, the historical level of the risk premium associated with the
other asset classes in which the Company has invested domestic Pension Benefits and Other Benefits plan assets, and the
expectations for future returns of each asset class. Since the Company’s investment policy is to employ active
management strategies in all asset classes, the potential exists to outperform the broader markets; therefore, the expected
returns were adjusted upward. The expected return for each asset class was then weighted based on the target asset
allocation to develop the long-term return on asset assumptions.
The long-term return on asset assumptions for foreign Pension Benefits plans are based on the asset allocations and the
economic environment prevailing in the locations where the Pension Benefits plans reside. Foreign pension assets do not
make up a significant portion of the total assets for all of the Company’s Pension Benefits plans.
The tables below detail assets by category for the Company’s domestic and foreign Pension Benefits and Other Benefits
plans. These assets consist primarily of publicly-traded equity securities and publicly-traded fixed income securities.
Pension Benefits Asset Information
Percent of Plan
Assets at
December 31: 2005 2004
Asset categories
Equity securities 65% 68%
Debt securities 22 23
Real estate 34
Other 10 5
Total 100% 100%
Other Benefits Asset Information
Percent of Plan
Assets at
December 31: 2005 2004
Asset categories
Equity securities 81% 68%
Debt securities 13 27
Real estate —1
Other 64
Total 100% 100%
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