Raytheon 2009 Annual Report Download - page 111

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The total intrinsic value of options exercised in the years ended December 31, 2009, 2008 and 2007 was $24 million, $71
million and $145 million, respectively.
As of December 31, 2009 and 2008 all outstanding options were fully vested and exercisable. The total fair value of
options vested during the years ended December 31, 2008 and 2007 was $1 million and $4 million, respectively.
The following table summarizes information about stock options outstanding and exercisable at December 31, 2009:
(Share amounts in thousands) Options Outstanding and Exercisable
Exercise Price Range Shares
Weighted-Average
Remaining Contractual
Life (In Years)
Weighted-
Average
Exercise
Price
$19.38 to $29.78 2,580 1.2 $26.52
$30.00 to $39.21 2,691 3.3 $31.91
$40.13 to $44.45 3,461 2.3 $44.42
Total 8,732 2.3 $35.28
Shares exercisable at the corresponding weighted-average exercise price at December 31, 2009, 2008 and 2007, were
8.7 million at $35.28, 12.5 million at $41.16 and 17.0 million at $42.50, respectively.
Note 14: Pension and Other Employee Benefits
We have pension plans covering the majority of our employees, including certain employees in foreign countries
(Pension Benefits). Our primary pension obligations relate to our domestic IRS qualified pension plans. For our domestic
qualified pension plans the projected benefit obligation (PBO), accumulated benefit obligation (ABO) and asset values
for these plans were $16,260 million, $14,599 million, and $12,294 million, respectively, as of December 31, 2009 and
$15,419 million, $13,784 million, and $10,465 million, respectively, as of December 31, 2008. The PBO represents the
present value of pension benefits earned through the end of the year, with allowance for future salary increases. The ABO
is similar to the PBO, but does not allow for future salary increases. In addition to providing pension benefits, we provide
certain health care and life insurance benefits to retired employees through other postretirement benefit plans (Other
Benefits). Substantially all of our U.S. employees may become eligible for the Other Benefits.
We are required to recognize the funded status of a postretirement benefit plan (defined benefit pension and other
benefits) as an asset or liability on our consolidated balance sheets. Funded status represents the difference between the
projected benefit liability obligation of the plan and the market value of the plan’s assets. Previously unrecognized
deferred amounts such as demographic or asset gains or losses and the impact of historical plan changes are included in
accumulated other comprehensive (loss) income. Changes in these amounts in future years are adjusted as they occur
through accumulated other comprehensive (loss) income.
As of December 31, 2009, the fair value of our domestic Pension Benefits plan (Plan) assets was $12,294 million,
consisting of investments in equity securities, fixed-income securities, cash and cash equivalents and other assets such as
investments in private equity funds, public real estate securities, private real estate funds and hedge funds. Substantially
all our Plan assets are held in a master trust, which was established for the investment of assets of our Company
sponsored retirement plans. The assets of the master trust are overseen by the Company’s Investment Committee
comprised of members of senior management drawn from appropriate diversified levels of the executive management
team.
The Investment Committee is responsible for setting the policy that provides the framework for management of the Plan
assets. In accordance with its responsibilities and charter, the Investment Committee meets on a regular basis to review
the performance of the Plan assets and compliance with the investment policy. The policy sets forth an investment
structure for managing Plan assets, including setting the asset allocation ranges, which are expected to provide an
97