Big Lots 2007 Annual Report Download - page 150

62
BIG LOTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 8 — Employee Benefit Plans (Continued)
Pension Plan is designed to pay benefits in the same amount as if the participants continued to accrue benefits
under the Pension Plan. We have no obligation to fund the Supplemental Pension Plan, and all assets and amounts
payable under the Supplemental Pension Plan are subject to the claims of our general creditors.
The investments owned by the Pension Plan are managed with the primary objective of utilizing a balanced
approach with equal emphasis on income and capital appreciation. Investment results are compared to market
performance metrics on a quarterly basis. Changing market cycles require flexibility in asset allocation to allow
movement of capital within the asset classes for purposes of increasing investment return and/or reducing risk.
The targeted ranges of asset allocations are:
Equity securities ............................. 45-70%
Debt Securities .............................. 30-55%
Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . up to 25%
As permitted by our pension investment policy, equity securities may include our common shares. At the end of
the two most recent plan years on December 31, 2007 and 2006, the Pension Plan owned 1,321 and 2,651 of our
common shares, respectively.
Financial futures contracts and financial options contracts can be utilized for purposes of implementing hedging
strategies. All assets must have readily ascertainable market value and be easily marketable. There were no
futures contracts owned by the Pension Plan at February 2, 2008.
The equity portfolio is generally fully invested with minimal emphasis on short-term market fluctuations and
is broadly diversified. Global equities (foreign) and American Depository Receipts may be included to further
diversify the equity security portfolio.
Debt securities of a single issuer (with the exception of U.S. Government or fully guaranteed agencies) must not
exceed 10% of the total debt securities portfolio. Corporate debt securities must meet or exceed a credit rating of
Aa at the time of purchase and throughout the holding period. There are no limitations on the maximum amount
allocated to each credit rating within the debt securities portfolio.
The Pension Plan asset allocations at December 31 by asset category were as follows:
2007 2006
Equity securities ............................. 68.9 % 70.4 %
Debt securities .............................. 30.0 27.6
Cash equivalents ............................. 1.1 2.0
Total .................................... 100.0 % 100.0 %
Contributions to the Pension Plan have historically been based on the adequacy of current funding levels and
projections of future funding levels as estimated by third party actuaries. In addition, we evaluated our cash
position and ensured that the minimum contributions were made as required by applicable regulations. We
expect no required contributions in 2008. Discretionary contributions could be made in 2008 upon further
analysis. The assets allocated to debt securities of 27.6% at December 31, 2006 were below the low end of the
targeted range of 30.0%, primarily due to the impact of changing the custodian and manager of the plan assets
and related transition allocations. The asset managers perform reallocations of assets at least annually to address
situations outside of the targeted guidelines.