Raytheon 2007 Annual Report Download - page 118

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Weighted-Average Net Periodic Benefit Cost Assumptions Pension Benefits
2007 2006 2005
Discount rate 5.95% 5.71% 5.74%
Expected return on plan assets 8.64% 8.64% 8.66%
Rate of compensation increase 4.49% 4.48% 4.49%
Weighted-Average Net Periodic Benefit Cost Assumptions Other Benefits
2007 2006 2005
Discount rate 5.75% 5.75% 5.75%
Expected return on plan assets 8.75% 8.75% 8.75%
Rate of compensation increase 4.50% 4.50% 4.50%
Health care trend rate in the next year 9.00% 9.95% 11.80%
Gradually declining to an ultimate trend rate of 5.00% 5.00% 5.00%
Year that the rate reaches ultimate trend rate 2015 2015 2015
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 $1 million or $(1) million, respectively, and for the accumulated postretirement benefit
obligation is $17 million or $(15) 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 $15,045 million and $12,878 million, respectively, at December 31, 2007, and $15,053 million
and $11,789 million, respectively, at December 31, 2006.
The accumulated benefit obligation and fair value of plan assets for Pension Benefits plans with accumulated benefit
obligations in excess of plan assets were $6,304 million and $5,701 million, respectively, at December 31, 2007 and
$13,318 million and $11,747 million, respectively, at December 31, 2006. The accumulated benefit obligation for all
Pension Benefits plans was $14,577 million and $14,483 million at December 31, 2007 and 2006, respectively.
We expect total contributions to the Pension Benefits and Other Benefits plans to be approximately $535 million and $30
million, respectively, in 2008.
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
2008 $1,141 $ 72
2009 1,146 72
2010 1,139 72
2011 1,073 73
2012 1,053 73
2013-2017 6,070 369
We also maintain additional contractual pension benefits agreements for our top executive officers. The liability was $29
million and $28 million at December 31, 2007 and 2006, 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 postretirement benefit programs provide prescription drug benefits to retirees, secondary to Medicare, 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
89