Kroger 2010 Annual Report Download - page 147

Download and view the complete annual report

Please find page 147 of the 2010 Kroger annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 156

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156

A-67
NO T E S T O CO N S O L I D A T E D FI N A N C I A L ST A T E M E N T S , CO N T I N U E D
The following table provides information about the target and actual pension plan asset allocations.
Target
allocations Actual allocations
2010 2010 2009
Pension plan asset allocation .......................
Global equity securities ......................... 22.1% 23.1% 24.2%
Emerging market equity securities ................. 9.4 10.5 8.7
Investment grade debt securities .................. 12.2 9.9 12.9
High yield debt securities ........................ 13.6 13.4 14.3
Private equity ................................. 6.3 6.1 6.3
Hedge funds .................................. 23.1 23.5 21.7
Real estate .................................... 2.4 2.5 2.3
Other........................................ 10.9 11.0 9.6
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100.0% 100.0% 100.0%
Investment objectives, policies and strategies are set by the Pension Investment Committee (the
“Committee”) appointed by the CEO. The primary objectives include holding and investing the assets and
distributing benefits to participants and beneficiaries of the pension plans. Investment objectives have been
established based on a comprehensive review of the capital markets and each underlying plan’s current and
projected financial requirements. The time horizon of the investment objectives is long-term in nature and
plan assets are managed on a going-concern basis.
Investment objectives and guidelines specifically applicable to each manager of assets are established
and reviewed annually. Derivative instruments may be used for specified purposes, including rebalancing
exposures to certain asset classes. Any use of derivative instruments for a purpose or in a manner not
specifically authorized is prohibited, unless approved in advance by the Committee.
The current target allocations shown represent 2010 targets that were established in 2009 and revised
slightly in 2010. The Company will rebalance by liquidating assets whose allocation materially exceeds
target, if possible, and investing in assets whose allocation is below target. If markets are illiquid, the
Company may not be able to rebalance to target quickly. To maintain actual asset allocations consistent with
target allocations, assets are reallocated or rebalanced periodically. In addition, cash flow from employer
contributions and participant benefit payments can be used to fund underweight asset classes and divest
overweight asset classes, as appropriate. The Company expects that cash flow will be sufficient to meet
most rebalancing needs. The Company does not expect to make a cash contribution to its Company-
sponsored defined benefit pension plans during 2011. Contributions may be made if required under the
Pension Protection Act to avoid any benefit restrictions. The Company expects any contributions made
during 2011 will reduce its minimum required contributions in future years.
Assumed health care cost trend rates have a significant effect on the amounts reported for the health
care plans. The Company used a 7.50% initial health care cost trend rate and a 4.50% ultimate health care
cost trend rate to determine its expense. A one-percentage-point change in the assumed health care cost
trend rates would have the following effects:
1% Point
Increase
1% Point
Decrease
Effect on total of service and interest cost components . . . . . . . . . . . . . . $ 4 $ (3)
Effect on postretirement benefit obligation ........................ $ 37 $ (33)