National Oilwell Varco 2000 Annual Report Download - page 33

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31
The Company’s subsidiaries in the United Kingdom have a defined benefit pension plan whose
participants are primarily retired and terminated employees who are no longer accruing benefits. The
pension plan assets are invested primarily in equity securities, United Kingdom government securities,
overseas bonds and cash deposits. At December 31, 2000, the plan assets at fair market value were
$46.2 million and the projected benefit obligation was $31.0 million.
Significant assumptions used for the plans follow:
For the year 2000 1999 1998 2000 1999 1998
Weighted average assumptions:
Discount rate 7.6% 8.0% 7.0% 7.6% 7.3% 6.5%
Expected long-term rate of return 8.0% 8.0% 8.0% n/a n/a n/a
Rate of compensation increase n/a n/a n/a n/a n/a n/a
An 8.0% annual rate of increase in the per capita cost of covered health care benefits was ass umed for 2001, decreasing
gradually to 5.5% in 2006, with 5.5% increas es per year thereafter.
Net periodic benefit cost (credit):
For the year 2000 1999 1998 2000 1999 1998
(in thousands)
Service cost - benefits earned during the period 108$ 134$ 151$ 16$ 22$ 17$
Interest cost on projected benefit obligation 1,186 907 1,166 232 218 327
Exppected return on plan assets (1,280) (944) (1,264) - - -
Recognized net (gain)/ loss - 72 9 20 19 45
Net amortization and deferral (8) (8) 15 (33) (23) (25)
Net periodic benefit cost (credit) 6$ 161$ 77$ 235$ 236$ 364$
Assumed health care cost trend rates have a significant effect on the amounts reported for the postretirement benefits. A one
percentage point change in assumed health care cost trend rates would have the following effects:
1% Point Increase 1% Point Decrease
(in thousands)
Effect on total of service and interes t cost components in 2000 $67 $39
Effect on postretirement benefit obligation at year-end 2000 ($628) ($744)
Pension benefits Postretirement benefits
Pension benefits Postretirement benefits