DIRECTV 2002 Annual Report Download - page 102

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HUGHES ELECTRONICS CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (continued)
There were no GM Class H common stock shares included in the pension plan assets at
December 31, 2002 and December 31, 2001.
Pension
Benefits
Other
Postretirement
Benefits
2002 2001 2002 2001
Weighted-average assumptions as of December 31
Discount rate ............................................... 7.00% 7.25% 6.75% 7.00%
Expected return on plan assets ................................ 9.50% 9.50% N/A N/A
Rate of compensation increase ................................ 5.00% 5.00% 5.00% 5.00%
For measurement purposes, an 8.0% annual rate of increase in per capita cost of covered health
care benefits was assumed for 2003. The rate was assumed to decrease gradually 0.5% per year to
6.0% in 2007.
Hughes determines the discount rate assumption annually for each of its retirement-related benefit
plans on December 1, Hughes’ SFAS No. 87 measurement date, utilizing the yield of high quality fixed-
income debt instruments.
Hughes’ expected return on plan assets assumption is derived from a review of Hughes’ long-term
actual return on plan assets and periodic detailed studies conducted by Hughes’ actuary. While the
review gives appropriate consideration to recent fund performance and historical returns, the
assumption is primarily a long-term, prospective rate. Based on the most recent review, Hughes is
revising its expected return on plan assets assumption for 2003 to 9.0%. Hughes has achieved a
compounded annual return on plan assets of about 12% over the 20 year period ended December 1,
2002.
Pension Benefits
Other
Postretirement
Benefits
2002 2001 2000 2002 2001 2000
(Dollars in Millions)
Components of net periodic benefit cost
Benefits earned during the year .................... $21.7 $16.0 $14.7 $0.5 $0.5 $0.6
Interest accrued on benefits earned in prior years ..... 33.8 32.7 30.4 2.2 1.9 2.7
Expected return on assets ......................... (36.5) (41.0) (37.9) — — —
Amortization components .........................
Amount resulting from changes in plan provisions . . 2.2 2.1 0.1 — — —
Net amount resulting from changes in plan
experience and actuarial assumptions ......... 3.0 0.4 3.6 — (0.5) 0.8
Net periodic benefit cost ................... $24.2 $10.2 $10.9 $2.7 $1.9 $4.1
The projected benefit obligation and accumulated benefit obligation for the pension plans with
accumulated benefit obligations in excess of plan assets were $493.5 million and $440.1 million,
respectively, as of December 31, 2002 and $62.3 million and $52.8 million, respectively, as of
December 31, 2001. The fair value of plan assets for pension plans with accumulated benefit
obligations in excess of plan assets was $357.1 as of December 31, 2002.
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