Lockheed Martin Corporation NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2002 Approximately 19.6 million, 27.1 million and 27.9 million outstanding options were exercisable by employees at December 31, 2002, 2001 and 2000, respectively.
Information regarding options outstanding at December 31, 2002 follows (number of options in thousands):
## Table 0 ##
All stock options granted in 2002, 2001 and 2000 under the Omnibus Plan have 10-year terms and generally vest over a two-year service period.
Exercise prices of options awarded in those years were equal to the market price of the stock on the date of grant.
Pro forma information regarding net earnings and earnings per share as if the Corporation had accounted for its employee stock options under the fair value method is included in Note 1.
The fair value for these options was estimated at the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions for 2002, 2001 and 2000, respectively: risk-free interest rates of 4.24%, 4.95% and 6.61%; dividend yields of 1.0%, 0.6% and 0.8%; volatility factors related to the expected market price of the Corporation’s common stock of .376, .366 and .342; and a weighted average expected option life of five years.
The weighted average fair value of each option granted during 2002, 2001 and 2000 was $18.23, $13.32 and $7.62, respectively NOTE 13—POST-RETIREMENT BENEFIT PLANS Defined contribution plans—The Corporation maintains a number of defined contribution plans which cover substantially all employees, the most significant of which are the 401(k) plans for salaried employees and hourly employees.
Under the provisions of these 401(k) plans, employees’ eligible contributions are matched by the Corporation at established rates.
The Corporation’s matching obligations were $232 million in 2002, $226 million in 2001 and $221 million in 2000.
The Lockheed Martin Corporation Salaried Savings Plan includes an ESOP which purchased 34.8 million shares of the Corporation’s common stock in 1989 with the proceeds from a $500 million note issue which is guaranteed by the Corporation.
The Corporation’s match consisted of shares of its common stock, which was partially fulfilled with stock released from the ESOP at approximately 2.4 million shares per year based upon the debt repayment schedule through the year 2004.
Compensation cost recognized relative to the ESOP shares was $134 million, $90 million and $59 million in 2002, 2001 and 2000, respectively.
The remainder of the Corporation’s match to the Salaried Savings Plan was fulfilled through purchases of common stock from terminating participants or in the open market, or through newly issued shares from the Corporation.
Interest incurred on the ESOP debt totaled $10 million, $13 million and $17 million in 2002, 2001 and 2000, respectively.
Dividends received by the ESOP with respect to unallocated shares held are used for debt service.
The ESOP held approximately 45.8 million issued shares of the Corporation’s common stock at December 31, 2002, of which approximately 42.3 million were allocated and 3.5 million were unallocated.
The fair value of the unallocated ESOP shares at December 31, 2002 was approximately $200 million.
Unallocated common shares held by the ESOP are considered outstanding for voting and other Corporate purposes, but excluded from weighted average outstanding shares in calculating earnings per share.
For 2002, 2001 and 2000, the weighted average unallocated ESOP shares excluded in calculating earnings per share totaled approximately 4.4 million, 6.7 million and 9.0 million common shares, respectively
We use a measurement date of December 31 for plan assets and benefit obligations.
A reconciliation of the changes in the projected benefit obligation for qualified pension, nonqualified pension and postretirement benefit plans as well as the change in plan assets for the qualified pension plan follows: Reconciliation of Changes in Projected Benefit Obligation and Change in Plan Assets
## Table 1 ##
At December 31, 2011, the fair value of the qualified pension plan assets were less than both the accumulated benefit obligation and the projected benefit obligation.
This is due to unfavorable 2011 investment returns, as well as an increase in obligations due to a drop in the discount rate.
The nonqualified pension plan is unfunded.
Contributions from us and, in the case of postretirement benefit plans, participant contributions cover all benefits paid under the nonqualified pension plan and postretirement benefit plans.
The postretirement plan provides benefits to certain retirees that are at least actuarially equivalent to those provided by Medicare Part D and accordingly, we receive a federal subsidy as shown in the table.
The Early Retiree Reinsurance Program (ERRP) was established by the Patient Protection and Affordable Care Act.
Congress appropriated funding of $5 billion for this temporary ERRP to provide financial assistance to employers, unions, and state and local governments to help them maintain coverage for early retirees age 55 and older who are not yet eligible for Medicare, including their spouses, surviving spouses, and dependents.
The ERRP ceased accepting applications after May 5, 2011.
PNC submitted an application for reimbursement from the ERRP in 2011 for the 2010 and 2011 plan years.
In 2011, PNC received reimbursement of $.6 million related to the 2010 plan year.
The reimbursement for the 2011 plan year is not reflected in the above financial statements because the reimbursement of $.9 million was not approved until 2012.
These reimbursements will be used to offset increases in the employer’s costs of maintaining coverage.
securities have historically returned approximately 10% annually over long periods of time, while U. S.  debt securities have returned approximately 6% annually over long periods.
Application of these historical returns to the plan’s allocation ranges for equities and bonds produces a result between 7.25% and 8.75% and is one point of reference, among many other factors, that is taken into consideration.
We also examine the plan’s actual historical returns over various periods and consider the current economic environment.
Recent experience is considered in our evaluation with appropriate consideration that, especially for short time periods, recent returns are not reliable indicators of future returns.
While annual returns can vary significantly (actual returns for 2012, 2011, and 2010 were +15.29%, +.11%, and +14.87%, respectively), the selected assumption represents our estimated long-term average prospective returns.
Acknowledging the potentially wide range for this assumption, we also annually examine the assumption used by other companies with similar pension investment strategies, so that we can ascertain whether our determinations markedly differ from others.
In all cases, however, this data simply informs our process, which places the greatest emphasis on our qualitative judgment of future investment returns, given the conditions existing at each annual measurement date.
Taking into consideration all of these factors, the expected long-term return on plan assets for determining net periodic pension cost for 2012 was 7.75%, the same as it was for 2011.
After considering the views of both internal and external capital market advisors, particularly with regard to the effects of the recent economic environment on long-term prospective fixed income returns, we are reducing our expected long-term return on assets to 7.50% for determining pension cost for 2013.
Under current accounting rules, the difference between expected long-term returns and actual returns is accumulated and amortized to pension expense over future periods.
Each one percentage point difference in actual return compared with our expected return causes expense in subsequent years to increase or decrease by up to $8 million as the impact is amortized into results of operations.
We currently estimate a pretax pension expense of $73 million in 2013 compared with pretax expense of $89 million in 2012.
This year-over-year expected decrease reflects the impact of favorable returns on plan assets experienced in 2012 as well as the effects of the lower discount rate required to be used in 2013.
The table below reflects the estimated effects on pension expense of certain changes in annual assumptions, using 2013 estimated expense as a baseline.
Table 27: Pension Expense - Sensitivity Analysis
## Table 2 ##
(a) The impact is the effect of changing the specified assumption while holding all other assumptions constant.
Our pension plan contribution requirements are not particularly sensitive to actuarial assumptions.
Investment performance has the most impact on contribution requirements and will drive the amount of required contributions in future years.
Also, current law, including the provisions of the Pension Protection Act of 2006, sets limits as to both minimum and maximum contributions to the plan.
We do not expect to be required by law to make any contributions to the plan during 2013.
We maintain other defined benefit plans that have a less significant effect on financial results, including various nonqualified supplemental retirement plans for certain employees, which are described more fully in Note 15 Employee Benefit Plans in the Notes To Consolidated Financial Statements in Item 8 of this Report.

Tables referenced above, in order (Table 0 first):
<table><tr><td> Range of Exercise Prices</td><td> Number of Options</td><td> Weighted Average Exercise Price</td><td> Weighted Average Remaining Contractual Life</td></tr><tr><td>Options outstanding:</td><td></td><td></td><td></td></tr><tr><td>Less than $20.00</td><td>2,969</td><td>$18.36</td><td>5.7</td></tr><tr><td>$20.00–$29.99</td><td>3,200</td><td>25.99</td><td>4.1</td></tr><tr><td>$30.00–$39.99</td><td>10,606</td><td>36.01</td><td>6.5</td></tr><tr><td>$40.00–$50.00</td><td>3,453</td><td>45.58</td><td>4.1</td></tr><tr><td>Greater than $50.00</td><td>10,406</td><td>51.00</td><td>7.7</td></tr><tr><td>Total</td><td>30,634</td><td>39.42</td><td>6.3</td></tr><tr><td>Options exercisable:</td><td></td><td></td><td></td></tr><tr><td>Less than $20.00</td><td>2,959</td><td>$18.36</td><td>5.7</td></tr><tr><td>$20.00–$29.99</td><td>2,486</td><td>25.77</td><td>3.2</td></tr><tr><td>$30.00–$39.99</td><td>7,253</td><td>36.45</td><td>5.8</td></tr><tr><td>$40.00–$50.00</td><td>3,443</td><td>45.57</td><td>4.1</td></tr><tr><td>Greater than $50.00</td><td>3,483</td><td>52.06</td><td>5.0</td></tr><tr><td>Total</td><td>19,624</td><td>36.74</td><td>5.0</td></tr></table>
<table><tr><td></td><td colspan="2">Qualified Pension</td><td colspan="2">Nonqualified Pension</td><td colspan="2">Postretirement Benefits</td></tr><tr><td>December 31 (Measurement Date) – in millions</td><td>2011</td><td>2010</td><td>2011</td><td>2010</td><td>2011</td><td>2010</td></tr><tr><td>Accumulated benefit obligation at end of year</td><td>$4,095</td><td>$3,619</td><td>$289</td><td>$286</td><td></td><td></td></tr><tr><td>Projected benefit obligation at beginning of year</td><td>$3,803</td><td>$3,611</td><td>$290</td><td>$282</td><td>$393</td><td>$374</td></tr><tr><td>Service cost</td><td>94</td><td>102</td><td>4</td><td>3</td><td>7</td><td>5</td></tr><tr><td>Interest cost</td><td>196</td><td>203</td><td>13</td><td>14</td><td>19</td><td>20</td></tr><tr><td>Actuarial losses and changes in assumptions</td><td>304</td><td>92</td><td>15</td><td>11</td><td>-1</td><td>20</td></tr><tr><td>Participant contributions</td><td></td><td></td><td></td><td></td><td>13</td><td>14</td></tr><tr><td>Federal Medicare subsidy on benefits paid</td><td></td><td></td><td></td><td></td><td>2</td><td>2</td></tr><tr><td>Early Retirement Reinsurance Program payments received</td><td></td><td></td><td></td><td></td><td>1</td><td></td></tr><tr><td>Benefits paid</td><td>-209</td><td>-205</td><td>-25</td><td>-20</td><td>-37</td><td>-42</td></tr><tr><td>Projected benefit obligation at end of year</td><td>$4,188</td><td>$3,803</td><td>$297</td><td>$290</td><td>$397</td><td>$393</td></tr><tr><td>Fair value of plan assets at beginning of year</td><td>$3,991</td><td>$3,721</td><td></td><td></td><td></td><td></td></tr><tr><td>Actual return on plan assets</td><td>23</td><td>475</td><td></td><td></td><td></td><td></td></tr><tr><td>Employer contribution</td><td></td><td></td><td>$25</td><td>$20</td><td>$22</td><td>$26</td></tr><tr><td>Participant contributions</td><td></td><td></td><td></td><td></td><td>13</td><td>14</td></tr><tr><td>Federal Medicare subsidy on benefits paid</td><td></td><td></td><td></td><td></td><td>2</td><td>2</td></tr><tr><td>Benefits paid</td><td>-209</td><td>-205</td><td>-25</td><td>-20</td><td>-37</td><td>-42</td></tr><tr><td>Fair value of plan assets at end of year</td><td>$3,805</td><td>$3,991</td><td></td><td></td><td></td><td></td></tr><tr><td>Funded status</td><td>$-383</td><td>$188</td><td>$-297</td><td>$-290</td><td>$-397</td><td>$-393</td></tr><tr><td>Amounts recognized in the statement of financial positions</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Noncurrent asset</td><td></td><td>188</td><td></td><td></td><td></td><td></td></tr><tr><td>Current liability</td><td></td><td></td><td>-30</td><td>-33</td><td>-34</td><td>-35</td></tr><tr><td>Noncurrent liability</td><td>-383</td><td></td><td>-267</td><td>-257</td><td>-363</td><td>-358</td></tr><tr><td>Net amount recognized on the balance sheet</td><td>$-383</td><td>$188</td><td>$-297</td><td>$-290</td><td>$-397</td><td>$-393</td></tr><tr><td>Amounts recognized in accumulated other comprehensive income consist of:</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Prior service cost (credit)</td><td>$-39</td><td>$-46</td><td>$2</td><td>$2</td><td>$-11</td><td>$-14</td></tr><tr><td>Net actuarial loss</td><td>1,087</td><td>526</td><td>71</td><td>61</td><td>54</td><td>55</td></tr><tr><td>Amount recognized in AOCI</td><td>$1,048</td><td>$480</td><td>$73</td><td>$63</td><td>$43</td><td>$41</td></tr></table>
<table><tr><td>Change in Assumption (a)</td><td>EstimatedIncrease to 2013PensionExpense(In millions)</td></tr><tr><td>.5% decrease in discount rate</td><td>$21</td></tr><tr><td>.5% decrease in expected long-term return on assets</td><td>$19</td></tr><tr><td>.5% increase in compensation rate</td><td>$2</td></tr></table>

Question: If service cost develops with the same increasing rate in 2011 for qualified pension, what will it reach in 2012? (in million)
Answer: 86.6274
Reasoning program: subtract(94,102), divide(#0,102), add(#1,1), multiply(#2,94)