Famous Footwear 2004 Annual Report Download - page 49

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Table of Contents
Notes to Consolidated Financial Statements (continued)
BROWN SHOE COMPANY, INC. 2003 FORM 10-K
Assumed health care cost trend rates have a minor effect on the benefit obligations reported for health care plans. A 1-percentage-point change
in the assumed health care cost trend rates would have the following effect (in thousands):
1-Percentage 1-Percentage
Point Increase Point Decrease
Effect on postretirement benefit obligation $ 7 $(6)
Plan Assets
The following table sets forth changes in the fair value of plan assets, including all domestic and Canadian plans:
Other Postretirement
Pension Benefits Benefits
($ thousands) 2003 2002 2003 2002
Fair value of plan assets at beginning of year $163,238 $170,405 $ — $ —
Actual return on plan assets 35,695 1,142 — —
Employer contributions 31 3,435 213 467
Plan participants’ contributions 35 36 175 241
Benefits paid (8,256) (12,025) (388) (708)
Foreign exchange rate changes 808 245 — —
Fair value of plan assets at end of year $191,551 $163,238 $ — $ —
Employer contributions and benefits paid in the above table include both those amounts contributed directly to and paid directly from plan
assets and those amounts paid directly to plan participants.
The asset allocation for the Brown Shoe Company, Inc. Retirement Plan at the end of 2003 and 2002 and the target allocation for 2004, by
asset category, are as follows:
Target Percentage of Plan
Allocation for 2004 Assets at Year-End
2003 2002
Asset Category
Domestic equities 65% 67% 59%
Debt securities 30% 29% 37%
Foreign equities 5% 4% 4%
Total 100% 100% 100%
Domestic equities do not include any Company stock at January 31, 2004 or February 1, 2003. Plan assets are valued at fair value based on
quoted market values.
Pension assets are managed in accordance with the “prudent investor” standards of ERISA. The plan’s investment objective is to earn a
competitive total return on assets, while also ensuring plan assets are adequately managed to provide for future pension obligations. This
results in the protection of plan surplus and is accomplished by matching the duration of the projected benefit obligation using leveraged fixed
income instruments and, while maintaining a 70% overall (U.S. and international) equity commitment, managing an equity overlay
strategy. The overlay strategy is intended to protect the managed equity portfolios against adverse stock market environments. The Company
delegates investment management to specialists in each asset class and regularly monitors manager performance and compliance with
investment guidelines.
Assets of the Canadian pension plans, which total approximately $6.2 million at January 31, 2004, were invested 58% in equity funds,