Raytheon 2006 Annual Report Download - page 119

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Weighted-Average Net Periodic Benefit Cost Assumptions Other Benefits
2006 2005 2004
Discount rate 5.75% 5.75% 6.25%
Expected return on plan assets 8.75% 8.75% 7.75%
Rate of compensation increase 4.50% 4.50% 4.50%
Health care trend rate in the next year 9.95% 11.80% 12.80%
Gradually declining to an ultimate trend rate of 5.00% 5.00% 5.75%
Year that the rate reaches ultimate trend rate 2015 2015 2014
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 $(2) million, respectively, and for the accumulated postretirement benefit
obligation is $26 million or $(32) 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 $15,053 million and $11,789 million, respectively, at December 31, 2006, and $14,312 million
and $10,387 million, respectively, at December 31, 2005.
The accumulated benefit obligation and fair value of plan assets for Pension Benefits plans with accumulated benefit
obligations in excess of plan assets were $13,318 million and $11,747 million, respectively, at December 31, 2006 and
$12,658 million and $10,359 million, respectively, at December 31, 2005. The accumulated benefit obligation for all
Pension Benefits plans was $14,483 million and $13,841 million at December 31, 2006 and 2005, respectively.
We expect total contributions (required and discretionary) to the Pension Benefits and Other Benefits plans to be
approximately $815 million and $45 million, respectively, in 2007.
The table below reflects the total Pension Benefits expected to be paid from the plans or from our assets, including both
our share of the benefit cost and the participants’ share of the cost, which is funded by participant contributions. Other
Benefits payments reflect our portion only.
(In millions) Pension Benefits Other Benefits
2007 $ 986 $ 76
2008 1,007 74
2009 1,019 75
2010 1,006 75
2011 991 76
2012-2016 5,659 388
We also maintain additional contractual pension benefits agreements for our top executive officers. The liability was $28
million and $25 million at December 31, 2006 and 2005, respectively.
On December 8, 2003, Medicare reform legislation (the “Medicare Legislation”) was enacted, providing a Medicare
prescription drug benefit beginning in 2006 and federal subsidies to employers who provide drug coverage to retirees.
Since our post retirement benefit programs do not provide any prescription drug benefits to retirees, the legislation does
not apply to our plans.
We maintain an employee stock ownership plan (ESOP) which includes our 401(k) plan (defined contribution plan),
under which covered employees are allowed to contribute up to a specific percentage of their pay. The Company matches
the employee’s contribution, up to a maximum of generally between 3 and 4% of the employee’s pay (Company Match).
Prior to January 1, 2005, the Company Match was made through a contribution to the Company stock fund. Effective
January 1, 2005, the Company Match was invested in the same way as employee contributions. Total expense for the
Company Match was $189 million, $190 million and $171 million in 2006, 2005 and 2004, respectively.
91