Kroger 2015 Annual Report Download - page 141
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A-67
The current target allocations shown represent the 2015 targets that were established in 2014. 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.
The Company is not required and does not expect to make any contributions to the Qualified Plans
in 2016. If the Company does make any contributions in 2016, the Company expects these contributions
will decrease its required contributions in future years. Among other things, investment performance
of plan assets, the interest rates required to be used to calculate the pension obligations, and future
changes in legislation, will determine the amounts of any contributions. The Company expects 2016
expense for Company-sponsored pension plans to be approximately $80. In addition, the Company
expects 401(k) retirement savings account plans cash contributions and expense from automatic and
matching contributions to participants to be approximately $200 in 2016.
Assumed health care cost trend rates have a significant effect on the amounts reported for the
health care plans. The Company used a 6.90% initial health care cost trend rate, which is assumed
to decrease on a linear basis to a 4.50% ultimate health care cost trend rate in 2028, 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 $ 3 $ (2)
Effect on postretirement benefit obligation $23 $(20)
The following tables set forth by level, within the fair value hierarchy, the Qualified Plans’ assets at
fair value as of January 30, 2016 and January 31, 2015:
ASSETS AT FAIR VALUE AS OF JANUARY 30, 2016
Quoted
Prices
in Active
Markets for
Identical
Assets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3) Total
Cash and cash equivalents $ 27 $ — $ — $ 27
Corporate Stocks 231 — — 231
Corporate Bonds — 76 — 76
U.S. Government Securities — 75 — 75
Mutual Funds/Collective Trusts 89 861 40 990
Partnerships/Joint Ventures — 118 — 118
Hedge Funds — — 1,104 1,104
Private Equity — — 225 225
Real Estate — — 103 103
Other — 96 — 96
Total $347 $1,226 $1,472 $3,045