DIRECTV 2006 Annual Report Download - page 105

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THE DIRECTV GROUP, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS —(continued)
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
2006 pension expense by approximately $0.9 million and our projected benefit obligation by
approximately $11.5 million. A hypothetical 0.25% decrease in our expected return on plan assets
would have had the effect of increasing our 2006 pension expense by $1.0 million.
The following table provides assumed health care costs trend rates:
2006 2005
Health care cost trend rate assumed for next year ............................ 9.00% 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 2011
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 ....................... 1.7 (1.6)
Plan Assets
Our target asset allocation for 2007 and actual pension plan weighted average asset allocations at
December 31, 2006 and 2005, by asset categories, are as follows:
Percentage of
Target Plan Assets
Allocation at December 31,
2007 2006 2005
Equity securities .......................................... 50-70% 54% 54%
Debt securities ............................................ 30-50% 35% 35%
Real estate .............................................. 0-20% 5% 2%
Other .................................................. 0-20% 6% 9%
Total ................................................... 100% 100%
Our investment policy includes various guidelines and procedures designed to ensure we invest
assets in a manner necessary to meet expected future benefits earned by participants. The investment
guidelines consider a broad range of economic conditions. Central to the policy are target allocation
ranges (shown above) by major asset categories.
The objectives of the target allocations are to maintain investment portfolios that diversify risk
through prudent asset allocation parameters, achieve asset returns that meet or exceed the plans’
actuarial assumptions, and achieve asset returns that are competitive with like institutions employing
similar investment strategies.
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