The company attributed the increase to three primary factors, according to Dow Jones:
- the January 1 addition of Compaq Computer Corporation employees to its pension and post-retirement benefit plans,
- the difference between portfolio performance and historical assumptions, and
- recent changes to expected pension return rates
Hewlett-Packard said the expected return on its pension assets was lowered on October 31, 2002. However, details of the change were not provided.
With the rising costs, Hewlett-Packard now anticipates a pension contribution of $800 million in fiscal year 2003, scheduled to end October 31, 2003.
The Palo Alto, California based computer maker also announced that the company recorded an additional minimum pension liability of $570 million, or $379 million after tax. The charge was due to negative returns in the company’s pension assets and a decline in discount rates used to estimate its pension liability.