Harley Davidson 2012 Annual Report Download - page 89

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89
Pension and SERPA Accumulated Benefit Obligation:
Each of the Company’s pension and SERPA plans has a separately determined accumulated benefit obligation (ABO) and
plan asset value. The ABO is the actuarial present value of benefits based on service rendered and current and past
compensation levels. This differs from the projected benefit obligation (PBO) in that it includes no assumption about future
compensation levels. The total ABO for all the Company’s pension and SERPA plans combined was $1.73 billion and $1.46
billion as of December 31, 2012 and 2011, respectively.
The following table summarizes information related to Company pension plans with a PBO in excess of the fair value of
plan assets at December 31 (in millions):
2012 2011
Pension plans with PBOs in excess of fair value of plan assets:
PBO $ 1,833.8 $ 1,530.0
Fair value of plan assets $ 1,539.0 $ 1,253.9
Number of plans 1 4
The following table summarizes information related to Company pension plans with an ABO in excess of the fair value
of plan assets at December 31 (in millions):
2012 2011
Pension plans with ABOs in excess of fair value of plan assets:
ABO $ 1,708.1 $ 1,436.8
Fair value of plan assets $ 1,539.0 $ 1,253.9
Number of plans 1 4
The Company’s SERPA plans, which can only be funded as claims are paid, had projected and accumulated benefit
obligations of $37.8 million and $20.1 million, respectively, as of December 31, 2012 and $41.0 million and $27.4 million,
respectively, as of December 31, 2011.
Plan Assets:
The Company’s investment objective is to ensure assets are sufficient to pay benefits while mitigating the volatility of
retirement plan assets or liabilities recorded in the balance sheet. The company mitigates volatility through asset diversification
and partial asset/liability matching. The investment portfolio contains a diversified blend of equity and fixed-income
investments. The Company’s current overall targeted asset allocation as a percentage of total market value was approximately
68% equities and 32% fixed-income. Assets are rebalanced regularly to keep the actual allocation in line with targets. Equity
holdings primarily include investments in small-, medium- and large-cap companies in the U.S. (including Company stock),
investments in developed and emerging foreign markets and alternative investments such as private equity and real estate.
Fixed-income holdings consist of U.S. government and agency securities, state and municipal bonds, corporate bonds from
diversified industries and foreign obligations. In addition, cash equivalent balances are maintained at levels adequate to meet
near-term plan expenses and benefit payments. Investment risk is measured and monitored on an ongoing basis through
quarterly investment portfolio reviews.
The following tables present the fair values of the plan assets related to the Company’s pension and postretirement
healthcare plans within the fair value hierarchy as defined in Note 8.