Boeing Co., Chicago, expects to contribute $1.5 billion to its defined benefit pension plans this year, down from $1.55 billion contributed in 2012, according to company financial reports and a conference call Wednesday.
Boeing's pension plans returned an aggregate 12.7% on investments in 2012, according to a presentation during the conference call. Boeing's assumed rate of return was 7.75%.
The company lowered its discount rate for valuing pension obligations to 3.8%, according to the presentation. That number is down from 4.4% in 2011, according to its 10-K for 2011. Boeing hasn't yet released its 10-K for 2012. The company didn't report any change in its expected return assumption.
Boeing's pension plans were in aggregate 74% funded at year-end, according to the presentation, which didn't provide total assets and obligations. As of Dec. 31, 2011, the plans were 75% funded, with $51 billion in pension assets and $67.6 billion in pension obligations, according to its 10-K for 2011.
The aggregate asset allocation of the plans as of Dec. 31, 2011, was 53% fixed income; 26% global equities; 6% private equity; 6% combined real estate and real assets, including energy, farmland, timber, commodities, infrastructure; 5% hedge funds, including relative value, long/short, market neutral; and 4% global strategies, primarily long/short investments, according to its 2011 10-K.
Boeing also unveiled new measures of its operating performance that exclude certain components of its pension and postretirement benefit expense “that we believe are not reflective of the underlying business performance but are driven by financial market volatility,” Greg Smith, executive vice president and chief financial officer, said in the conference call, according to a transcript. The new measures are outside of generally accepted accounting principles, Mr. Smith said.