1995 Annual Report - Lockheed Martin

Notes to Consolidated Financial Statements ContinuedThe following table sets forth the defined benefitplans' funded status and amounts recognized inthe Corporation's consolidated balance sheet as ofDecember 31:(In millions)Plan assets at fair valueActuarial present value ofbenefit obligations:VestedNon-vestedAccumulated benefit obligationEffect of projected futuresalary increasesProjected benefitobligation (PBO)Plan assets greater than PBOReconciling items:Unrecognized net assetexisting at the date of initialapplication of SFAS No. 87Unrecognized prior-service costUnrecognized gainPrepaid pension assetThe increase in the fair value of plan assetsin 1995 from 1994 was primarily due to favorableinvestment returns. The increase in the projectedbenefit obligation in 1995 from 1994 was primarilydue to a decrease in the assumed discount rate.At December 31, 1995, approximately 50 percentof the plan assets were equity securities and therest were primarily fixed income securities and cashequivalents. Actuarial determinations were basedon various assumptions displayed in the followingtable. Net pension costs in 1995, 1994 and 1993 werebased on assumptions in effect at the end of therespective preceding year. Benefit obligations as ofeach year-end were based on assumptions in effectas of those dates.Assumptions:Plan discount ratesRates of increasein future compensationlevelsExpected long-termrate of returnon assets.19957.5%6.08.81995$13,848$10,83912110,9601,64812,6081,240(279)536(1,332)$ 16519948.2-8.5%5.5-6.08.0-8.81994$11,845$ 9,4231189,5411,33010,871974(369)584(984)$ 20519937.0-7.5%•6.08.0-8.8Retiree Medical and Life Insurance PlansCertain health care and life insurance benefits areprovided to eligible retirees by the Corporation.These benefits are paid by the Corporation orfunded through several trusts.The net periodic post-retirement benefit costfor the years ended December 31, included thefollowing components:(In millions)Service cost—benefitsearned during the yearInterest costNet amortization andother componentsActual return on assetsCurtailment gainNet periodic costThe Corporation has made contributions toirrevocable trusts (including Voluntary Employees'Beneficiary Association (VEBA) trusts and 401(h)accounts) established to pay future medical benefitsto eligible retirees and dependents.The following table sets forth the post-retirementbenefit plans' obligations and funded status asof December 31:(In millions)Plan assets at fair valueActuarial present value ofbenefit obligations:Active employees,eligible to retireActive employees, noteligible to retireFormer employeesAccumulated post-retirementbenefit obligation (APBO)Assets less than APBOUnrecognized prior service costUnrecognized gainPost-retirement benefitunfunded liability1995$ 3417744(82)—$1731994$ 54164(29)(3)(21)$1651995$ 590$ 3444281,5042,2761,6861693$1,7951993$ 4715311(35)(28)$1481994$ 423$ 3714021,4802,2531,830(5)24$1,84972