National Oilwell Varco 2002 Annual Report Download - page 40

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Significant assumptions used for the plans follow:
For the year 2002 2001 2000 2002 2001 2000
Weighted average assumptions:
Discount rate 5.8% 6.5% 7.5% 6.5% 6.9% 7.6%
Expected long-term rate of return 6.3% 7.0% 8.0% n/a n/a n/a
Rate of compensation increase 4.0% 4.25% 5.0% n/a n/a n/a
A 17% annual rate of increase in the per capita cost of covered health care benefits was assumed for 2003, decreasing
by approximately 3% points per year to 5.5% in 2007, with 5.5% increases per year thereafter.
Net periodic benefit cost (credit):
For the year 2002 2001 2000 2002 2001 2000
(in thousands)
Service cost - benefits earned during the period 422$ -$ 108$ 40$ 21$ 16$
Interest cost on projected benefit obligation 3,313 1,194 1,186 552 506 232
Expected return on plan assets (3,886) (1,183) (1,280) - - -
Net amortization and deferral 74 46 (8) 257 178 (13)
Net periodic benefit cost (credit) (77)$ 57$ 6$ 849$ 705$ 235$
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 interest cost components in 2002 47$ (40)$
Effect on postretirement benefit obligation at year-end 2002 770$ (655)$
Pension benefits Postretirement benefits
Pension benefits Postretirement benefits
In addition, our subsidiaries in Norway have defined benefit pension plans. The pension plan assets are
invested primarily in equity securities, overseas bonds, real estate and cash deposits. At December 31, 2002,
the plan assets at fair market value and the projected benefit obligation were approximately $12.0 million.
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