Raytheon 2012 Annual Report Download - page 125

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
117
The Plan limits the use of derivatives through direct or separate account investments such that the derivatives used are liquid
and able to be readily valued in the market. Derivative usage in separate account structures is limited to hedging purposes or
to gain market exposure in a non-speculative manner. The fair market value of the Plan’s derivatives through direct or separate
account investments was less than $1 million as of December 31, 2012 and December 31, 2011.
In addition, assets are held in trust for non-U.S. Pension Benefits plans, primarily in the U.K. and Canada, which are governed
locally in accordance with specific jurisdictional requirements. These assets are overseen by local management in Canada
and by trustees with a combination of members representing plan participants and local management in the U.K. Investments
in the non-U.S. Pension Benefits plans consist primarily of fixed-income securities and equity securities and had a fair market
value of $717 million and $621 million at December 31, 2012 and December 31, 2011, respectively.
These investments are valued using quoted prices in active markets (Level 1) as well as significant observable inputs (Level
2). Investments with significant unobservable inputs (Level 3) are immaterial in the non-U.S. Pension Benefits plans.
The fair market value of assets related to our Other Benefits was $408 million and $396 million as of December 31, 2012 and
December 31, 2011, respectively. These assets included $179 million and $172 million at December 31, 2012 and
December 31, 2011, respectively, that were invested in the master trust described above and are therefore invested in the same
assets described above. The remaining investments are held within Voluntary Employees’ Beneficiary Association (VEBA)
trusts. The assets of the VEBA trusts are also overseen by the Investment Committee and managed by the same investment
fiduciary that manages the master trust’s investments. These assets are generally invested in mutual funds, and are valued
primarily using quoted prices in active markets (Level 1) as well as significant observable inputs (Level 2). There were no
Level 3 investments in the VEBA trusts at December 31, 2012 or December 31, 2011.
The table below details assets by category for our VEBA trusts. These assets consist primarily of publicly-traded equity
securities and publicly-traded fixed-income securities.
VEBA Trust Asset Information Percent of Plan Assets at Dec 31:
Asset category 2012 2011
Fixed-income securities 35% 47%
U.S. equities 41% 40%
International equities 20% 10%
Cash and cash equivalents 4% 3%
Total 100% 100%
Note 15: Income Taxes
The provision for federal and foreign income taxes consisted of the following:
(In millions) 2012 2011 2010
Current income tax expense
Federal $ 753 $ 360 $ 206
Foreign 32 46 39
Deferred income tax expense (benefit)
Federal 74 387 465
Foreign 19 (11)(120)
Total $ 878 $ 782 $ 590