National Oilwell Varco 2010 Annual Report Download - page 86

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The assumption rates used for net periodic benefit costs are as follows:
Years Ended December 31,
2010 2009 2008
Discount rate:
United States plan 5.26% 6.23% 6.34%
International plans 5.25% - 5.75% 5.75% - 6.50% 5.50% - 5.75%
Salary increase:
United States plan N/A N/A N/A
International plans 2.50% - 4.25% 2.50% - 4.50% 2.50% - 4.50%
Expected return on assets:
United States plan 7.50% 7.75% 7.75%
International plans 6.00% - 6.85% 6.00% - 6.85% 5.50% - 6.86%
In determining the overall expected long-term rate of return for plan assets, the Company takes into consideration the historical experience as
well as future expectations of the asset mix involved. As different investments yield different returns, each asset category is reviewed individually
and then weighted for significance in relation to the total portfolio.
The majority of our plans have projected benefit obligations in excess of plan assets.
The Company expects to pay future benefit amounts on its defined benefit plans ranging from $16 million to $17 million for each of the next five
years and aggregate payments of $163 million.
Plan Assets
The Company and its investment advisers collaboratively reviewed market opportunities using historic and statistical data, as well as the actuarial
valuation reports for the plans, to ensure that the levels of acceptable return and risk are well-defined and monitored. Currently, the Companys
management believes that there are no significant concentrations of risk associated with plan assets. Our pension investment strategy worldwide
prohibits a direct investment in our own stock.
The following table sets forth by level, within the fair value hierarchy, the Plans assets carried at fair value (in millions):
Fair Value Measurements
Total Level 1 Level 2 Level 3
December 31, 2009:
Equity securities $ 70 $ $ 70 $
Bonds 53  53 
Mutual funds 36 16 20
Other (insurance contracts) 32 32
191 16 143 32
Cash 2  2 
Total Fair Value Measurments $ 193 $ 16 $ 145 $ 32
December 31, 2010:
Equity securities $ 66 $ $ 66 $
Bonds 58  58 
Mutual funds 19 19
Other (insurance contracts) 54 22 32
197 19 146 32
Cash 6  6 
Total Fair Value Measurments $ 203 $ 19 $ 152 $ 32
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