OfficeMax 2012 Annual Report Download - page 112

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The following table presents the assumed healthcare cost trend rates used in measuring the Company’s
postretirement benefit obligations at December 29, 2012 and December 31, 2011:
2012 2011
Weighted average assumptions as of year-end:
Healthcare cost trend rate assumed for next year ........................................ 6.0% 6.5%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) ................ 5.0% 5.0%
Year that the rate reaches the ultimate trend rate ........................................ 2015 2015
A one-percentage-point change in the assumed healthcare cost trend rates would impact operating income
by approximately $1.5 million.
Plan Assets
The allocation of pension plan assets by category at December 29, 2012 and December 31, 2011 is as
follows:
2012 2011
OfficeMax common stock ........................................................... 1.7% 1.2%
U.S. equity securities ............................................................... 31.0% 27.0%
International equity securities ........................................................ 15.3% 10.3%
Global equity securities ............................................................. 11.3% 15.8%
Fixed-income securities ............................................................ 40.7% 45.7%
100% 100%
The Company’s Retirement Funds Investment Committee is responsible for establishing and overseeing the
implementation of the investment policy for the Company’s pension plans. The investment policy is structured to
optimize growth of the pension plan trust assets, while minimizing the risk of significant losses, in order to
enable the plans to satisfy their benefit payment obligations over time. Plan assets are invested primarily in
OfficeMax common stock, U.S. equities, global equities, international equities and fixed-income securities. The
Company uses benefit payments and Company contributions as its primary rebalancing mechanisms to maintain
the asset class exposures within the guideline ranges established under the investment policy.
The current asset allocation guidelines set forth an OfficeMax common stock range of 0% to 15%, a U.S.
equity range of 25% to 35%, an international equity range of 9% to 19%, a global equity range of 6% to 16% and
a fixed-income range of 38% to 48%. Asset-class positions within the ranges are continually evaluated and
adjusted based on expectations for future returns, the funded position of the plans and market risks. Occasionally,
the Company may utilize futures or other financial instruments to alter the pension trust’s exposure to various
asset classes in a lower-cost manner than trading securities in the underlying portfolios.
In 2009, we contributed 8.3 million shares of OfficeMax common stock to our qualified pension plans,
which are managed by an independent fiduciary. At the end of 2012, the plan held 1.7 million shares with a value
of $16.2 million.
Generally, quoted market prices are used to value pension plan assets. Equities, some fixed-income
securities, publicly traded investment funds, and U.S. government obligations are valued by reference to
published market prices. Investments in certain restricted stocks are valued at the quoted market price of the
issuer’s unrestricted common stock less an appropriate discount. If a quoted market price for unrestricted
common stock of the issuer is not available, restricted common stocks are valued at a multiple of current earnings
less an appropriate discount. The multiple chosen is consistent with multiples of similar companies based on
current market prices.
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