L3 Technologies Inc., New York, intends to freeze all of its salaried employee defined benefit plans, said the firm's fourth-quarter earnings statement.
Effective Jan. 1, 2019, its plans will no longer accrue annual service credit.
The firm's operating margin decreased by 150 basis points due to severance and restructuring costs of $39 million, including a $4 million pension curtailment charge in connection with the decision to discontinue future service accruals for salaried employee pension plans.
"We expect this action to reduce our pension expense by at least $25 million in 2019," said Ralph G. D'Ambrosio, senior vice president and chief financial officer, during the firm's fourth-quarter earnings call Jan. 25.
L3 Technologies had $2.72 billion in pension assets as of Dec. 31, 2016, and $3.76 billion in liabilities, for a funding ratio of 72%, according to its 10-K filed in February last year. The firm expected to contribute about $100 million to its global pension plans in 2017, according to the filing.
The funding ratio for all of L3's pension plans — U.S. and international — was 72.4% in 2016 vs. 74% in 2015. The company contributed $97 million in 2016.
The company's U.S. pension plans' asset allocation in 2016 was 55% domestic equity, 22% fixed income, 10% international equity, 8% real estate securities and 5% other.