Alaska Airlines and Horizon Air 2009 Annual Report Download - page 174
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Pension assets are rebalanced periodically to
maintain these target asset allocations. An
individual equity investment will not exceed 10%
of the entire equity portfolio. Fixed-income
securities carry a minimum “A” rating by Moody’s
and/or Standard and Poor’s and the average life
of the bond portfolio may not exceed ten years.
The Company does not currently intend to invest
plan assets in the Company’s common stock.
The Company made a $100 million contribution
to the plan on December 30, 2009. The majority
of that contribution was invested in a money
market account at year-end and will be
distributed to the other investment categories
throughout 2010 in accordance with the target
asset allocations.
As of December 31, 2009, other than the money
market fund, all assets were invested in common
comingled trust funds. The Company uses the
net asset values of these funds to determine fair
value as allowed using the practical expediency
method outlined in the accounting standards.
The fund categories included in plan assets as of
December 31, 2009 and 2008, their amounts,
and their fair value hierarchy level are as follows
(dollars in millions):
2009 2008 Level
Fund type:
Money market fund .... $ 90.6 $ — 1
U.S. equity market
fund .............. 408.0 316.3 2
Non-U.S. equity fund . . . 164.4 136.7 2
U.S. debt index fund . . . 147.6 153.6 2
Government/credit bond
index fund ......... 96.3 43.4 2
Plan assets .......... $906.9 $650.0
Nonqualified Defined-Benefit Pension Plan
Alaska also maintains an unfunded,
noncontributory defined-benefit plan for certain
elected officers. This plan uses a December 31
measurement date.
Weighted average assumptions used to
determine benefit obligations as of
December 31:
Discount rates of 5.85% and 6.20% were used
as of December 31, 2009 and 2008
respectively. The rate of compensation increase
used was 5.00% as of December 31, 2009 and
2008.
Weighted average assumptions used to
determine net periodic benefit cost for the
years ended December 31:
Discount rates of 6.20%, 6.00%, and 5.75%
were used for the years ended December 31,
2009, 2008, and 2007, respectively. The rate of
compensation increase used was 5.00% for all
three years presented.
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