PENSION WOES LAY LOCKHEED LOW: Recessions are tough on business. They're even tougher on employees. But not at Lockheed Martin. Lockheed's stock got perfectly pounded after earnings, thrown for a 6.5% loss (and down nearly another 3% yesterday) despite reporting: * Third quarter sales growth of 5% over last year. * An 8% improvement in earnings per share. * An incredible 35% rise in operating cash flow. * And even a modest amount of backlog growth (0.5% from last year's third quarter). Not enough to replace the firm's booked revenue, admittedly, but any growth at all counts as a success in the context of a Pentagon budget crunch.

Lockheed's bottom line crushed Wall Street's projections -- so why is the stock losing altitude? Two words: Profits and pensions. In recent years, we've seen traditional or cash balance corporate pension plans go the way of the dodo at hi-profile corporate names like Wells Fargo, Motorola, and FedEx. Across America, companies have moved to freeze, slash contributions to, and even wash their hands entirely of their pension obligations. And as I wrote back in July, the mayhem isn't even close to being finished. According to Bank of America unit Merrill Lynch, dozens of America's industrial titans face pension funding shortfalls as this year's stock market collapse torpedoes pension fund returns, including Dow Chemical, U.S. Steel , and ExxonMobil. It seems no one is safe.

But while others fret, Lockheed is doing something about the problem -- and getting punished for it. Part and parcel of the earnings warning that Lockheed issued is the company's plan to shore up its pension fund. Lockheed will inject $1 billion into its fund this year, and a further $1.4 billion in 2010. Combined, the twin injections will eat up quite a bit of Lockheed's yearly cash production. Is it worth it? That's the real question, Fools. Wall Street doesn't seem thrilled with the idea, but personally, if I were a Lockheed Martin employee, I'd be feeling pretty darn proud of my company today. As other corporations shirk or slash their pension obligations, Lockheed's paying up in full -- and I'd argue, making a wise investment in employee satisfaction. (Motley Fool.com, 10/22)