Raytheon 2007 Annual Report Download - page 115

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
in 2007, 2006 and 2005. To develop the expected long-term rate of return on asset assumptions, we considered the
current level of expected returns on risk free investments, the historical level of the risk premium associated with the asset
classes in which we have invested domestic Pension Benefits and Other Benefits plan assets and the expectations for
future returns of each asset class based upon an active management strategy, which is consistent with our investment
profile. 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 our Pension Benefits plans.
The tables below detail assets by category for our 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,
Asset categories 2007 2006
Equity securities 59% 68%
Debt securities 27 22
Real estate 44
Other 10 6
Total 100% 100%
Other Benefits Asset Information Percent of Plan Assets at December 31,
Asset categories 2007 2006
Equity securities 64% 70%
Debt securities 33 19
Real estate ——
Other 311
Total 100% 100%
The tables below provide a reconciliation of benefit obligations, plan assets, funded status and related actuarial
assumptions of our domestic and foreign Pension Benefits and Other Benefits plans.
Change in Benefit Obligation Pension Benefits Other Benefits
(In millions) 2007 2006 2007 2006
Benefit obligation at beginning of year $16,221 $15,511 $1,012 $1,217
Service cost 406 407 13 14
Interest cost 951 883 55 65
Plan participants’ contributions 24 26 49 51
Amendments 14 —(1) —
Loss due to curtailments/settlements (1) ———
Actuarial loss (gain) (220) 260 (111) (210)
Foreign exchange 22 84 ——
Benefits paid (1,124) (953) (112) (125)
Net transfer in/(out) (5) 3——
Benefit obligation at end of year $16,288 $16,221 $ 905 $1,012
86