DIRECTV 2011 Annual Report Download - page 109

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DIRECTV
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS—(continued)
Weighted-average assumptions used to determine net periodic benefit cost for The objectives of the target allocations are to maintain investment portfolios
the years ended December 31: that diversify risk through prudent asset allocation parameters, achieve asset returns
that meet or exceed the plans’ actuarial assumptions, and achieve asset returns that
Other are competitive with like institutions employing similar investment strategies.
Pension Postretirement
Benefits Benefits The investment policy is periodically reviewed by us and a designated third-
2011 2010 2009 2011 2010 2009 party fiduciary for investment matters. We establish and administer the policy in a
Discount rate—Qualified Plan ...... 5.59% 5.64% 6.06% 4.99% 5.21% 5.88% manner so as to comply at all times with applicable government regulations.
Discount rate—Non-Qualified Plans . . 5.54% 5.63% 6.04% — — — The fair value measurements of the plan assets as of December 31, 2011 were
Expected long-term return on plan as follows:
assets ..................... 8.00% 8.25% 8.25% — — —
Rate of compensation increase ...... 4.00% 4.00% 4.00% 4.00% 4.00% 4.00% Fair Value Measurements as of December 31, 2011
Quoted Prices
We base our expected long-term return on plan assets assumption on a in Active Percentage of
periodic review and modeling of the plans’ asset allocation and liability structure Markets for Significant Significant Plan Assets
Identical Observable Unobservable as of
over a long-term horizon. Expectations of returns for each asset class are the most Assets Inputs Inputs December 31,
important of the assumptions used in the review and modeling and are based on Total (Level 1) (Level 2) (Level 3) 2011
comprehensive reviews of historical data and economic/financial market theory. (Dollars in millions)
Asset Category
The following table provides assumed health care costs trend rates: Common collective trusts
Cash .............. $ 3 $ 3 $ — $— 1%
2011 2010
Equity securities:
Health care cost trend rate assumed for next year ............. 8.00% 8.00% U.S. large-cap ....... 75 — 75 — 17%
Rate to which the cost trend rate is assumed to decline (ultimate U.S. mid-cap growth . . 17 — 17 — 3%
trend rate) ..................................... 5.00% 5.00% International large-cap
Year that trend rate reaches the ultimate trend rate ............ 2017 2017 value ........... 92 — 92 — 21%
Domestic real estate . . . 23 — 23— 5%
Plan Assets Fixed income ......... 165 — 165 — 37%
Partnership and joint venture
Our investment policy includes various guidelines and procedures designed to interests ............ 30 — — 30 7%
ensure we invest assets in a manner necessary to meet expected future benefits Insurance contracts at
earned by participants. The investment guidelines consider a broad range of contract value ........ 2 — 2 — —%
economic conditions. Central to the policy are target allocation ranges by major Other types of investments . . 41 — 41 — 9%
asset categories. The policy range for plan assets are 20% to 60% equity securities,
Total ................ $448 $ 3 $415 $30 100%
30% to 50% debt securities, 0% to 40% alternatives and other types of
investments.
85