Kroger 2012 Annual Report Download - page 121

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A-63
NO T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S , CO N T I N U E D
The following table provides the projected benefit obligation (“PBO”), accumulated benefit obligation
(“ABO”) and the fair value of plan assets for all Company-sponsored pension plans.
Qualified Plans Non-Qualified Plan
2012 2011 2012 2011
PBO at end of fiscal year .................... $3,443 $ 3,348 $221 $217
ABO at end of fiscal year .................... $3,278 $ 3,147 $211 $209
Fair value of plan assets at end of year ......... $2,746 $ 2,523 $ — $ —
The following table provides information about the Company’s estimated future benefit payments.
Pension
Benefits
Other
Benefits
2013 ....................................................... $ 151 $ 18
2014 ....................................................... $ 160 $ 20
2015 ....................................................... $ 170 $ 22
2016 ....................................................... $ 181 $ 23
2017 ....................................................... $ 193 $ 26
2018 – 2022 ................................................. $1,121 $157
The following table provides information about the target and actual pension plan asset allocations.
Target
allocations
Actual
Allocations
2012 2012 2011
Pension plan asset allocation
Global equity securities ..................................... 18.5% 19.2% 20.9%
Emerging market equity securities ............................. 8.8 8.9 8.8
Investment grade debt securities .............................. 9.5 8.1 10.8
High yield debt securities .................................... 16.4 17.3 14.1
Private equity ............................................. 6.3 6.0 6.3
Hedge funds .............................................. 27.5 27.2 23.3
Real estate ................................................ 3.0 3.3 3.2
Other.................................................... 10.0 10.0 12.6
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 2012 targets that were established in 2011. The Company
will rebalance by liquidating assets whose allocation materially exceeds target, if possible, and investing in
assets whose allocation is materially 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.