Raytheon 2005 Annual Report Download - page 106

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Weighted-Average Net Periodic Benefit Cost Assumptions Pension Benefits
2005 2004 2003
Discount rate 5.74% 6.22% 6.95%
Expected return on plan assets 8.66% 8.67% 8.67%
Rate of compensation increase 4.49% 4.49% 4.46%
Weighted-Average Net Periodic Benefit Cost Assumptions Other Benefits
2005 2004 2003
Discount rate 5.75% 6.25% 7.00%
Expected return on plan assets 8.75% 7.75% 7.75%
Rate of compensation increase 4.50% 4.50% 4.50%
Health care trend rate in the next year 12.50% 13.50% 13.50%
Gradually declining to an ultimate trend rate of 5.00% 5.75% 5.75%
Year that the rate reaches ultimate trend rate 2015 2014 2013
The effect of a 1% increase or (decrease) in the assumed health care trend rate for each future year for the aggregate of
service cost and interest cost is $3 million or $(3) million, respectively, and for the accumulated postretirement benefit
obligation is $35 million or $(45) million, respectively.
The projected benefit obligation and fair value of plan assets for Pension Benefits plans with projected benefit obligations
in excess of plan assets were $15,154 million and $10,972 million, respectively, at December 31, 2005, and $13,763 million
and $9,900 million, respectively, at December 31, 2004.
The accumulated benefit obligation and fair value of plan assets for Pension Benefits plans with accumulated benefit
obligations in excess of plan assets were $13,455 million and $10,944 million, respectively, at December 31, 2005 and
$12,198 million and $9,878 million, respectively, at December 31, 2004. The accumulated benefit obligation for all
Pension Benefits plans was $14,638 million and $13,314 million at December 31, 2005 and 2004, respectively.
The Company expects total contributions (required and discretionary) to the Pension Benefits and Other Benefits plans
to be approximately $640 million and $75 million, respectively, in 2006.
The table below reflects the total Pension Benefits expected to be paid from the plans or from the Company’s assets,
including both the Company’s share of the benefit cost and the participants’ share of the cost, which is funded by
participant contributions. Other Benefits payments reflect the Company’s portion only.
Pension Benefits Other Benefits
2006 $ 905 $ 94
2007 934 87
2008 959 88
2009 959 88
2010 970 90
2011-2015 5,527 461
The Company also maintains additional contractual pension benefits agreements for its top executive officers. The
liability was $25 million and $22 million at December 31, 2005 and 2004, respectively.
On December 8, 2003, Medicare reform legislation (the “Legislation”) was enacted, providing a Medicare prescription
drug benefit beginning in 2006 and federal subsidies to employers who provide drug coverage to retirees. The Company’s
net periodic benefit cost was reduced by $3 million in 2004 to reflect the impact of the Legislation in accordance with
FASB Staff Position No. FAS 106-2, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug,
Improvement and Modernization Act of 2003. The reduction in the accumulated postretirement benefit obligation as a
result of the Legislation was $45 million.
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