DIRECTV 2005 Annual Report Download - page 107

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THE DIRECTV GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS —(continued)
Weighted-average assumptions used to determine net periodic benefit cost for the years ended
December 31:
Other Postretirement
Pension Benefits Benefits
2005 2004 2003 2005 2004 2003
Discount rate—Qualified Plan .................... 6.00% 6.14% 7.00% 5.75% 5.89% 6.75%
Discount rate—Non-Qualified Plan ................. 6.00% 6.14% 7.00% — — —
Expected long-term return on plan assets ............ 9.00% 9.00% 9.00% — — —
Rate of compensation increase .................... 4.00% 4.50% 5.00% 4.00% 4.50% 5.00%
We base our expected long-term return on plan assets assumption on a periodic review and
modeling of the plans’ asset allocation and liability structure over a long-term horizon. Expectations of
returns for each asset class are the most important of the assumptions used in the review and modeling
and are based on comprehensive reviews of historical data and economic/financial market theory.
A hypothetical 0.25% decrease in our discount rate would have had the effect of increasing our
2005 pension expense by approximately $1.0 million and our minimum pension liability by
approximately $8.0 million. A hypothetical 0.25% decrease in our expected return on plan assets would
have had the effect of increasing our 2005 pension expense by $0.6 million.
The following table provides assumed health care costs trend rates:
2005 2004
Health care cost trend rate assumed for next year ............................ 10.00% 10.00%
Rate to which the cost trend rate is assumed to decline (ultimate trend rate) ........ 5.00% 5.00%
Year that trend rate reaches the ultimate trend rate ........................... 2011 2010
A one-percentage-point change in assumed health care cost trend rates would have the following
effects:
1-Percentage 1-Percentage
Point Increase Point Decrease
(Dollars in Millions)
Effect on total of service and interest cost components ............... $0.1 $(0.1)
Effect on postretirement benefit obligation ....................... 1.6 (1.5)
94