Big Lots 2008 Annual Report Download - page 130

62
BIG LOTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
The targeted ranges of asset allocations are:
Equity securities ............................. 41-66%
Debt securities .............................. 22-59%
Cash equivalents ............................. up to 37%
The Pension Plan asset allocations at January 31, 2009 and December 31, 2007, by asset category were as follows:
January 31, 2009 December 31, 2007
Equity securities ............................ 37.8% 68.9%
Debt securities.............................. 33.5 30.0
Cash equivalents ............................ 28.7 1.1
Total ................................... 100.0% 100.0%
As permitted by our pension investment policy, equity securities may include our common shares. At January
31, 2009 and December 31, 2007, the Pension Plan owned 1,101 and 1,321 of our common shares, respectively.
During 2008, we elected to make $11.0 million of discretionary contributions to the Pension Plan principally
due to the market decline in the fair value of the Pension Plan’s investments. Included in the $11.0 million of
contributions was an $8.0 million contribution late in our fiscal year, which was included in the Pension Plan’s
cash equivalents at the end of the year. Excluding the $8.0 million contribution made in late January 2009, the
asset allocations would have been within the targeted ranges. Our funding policy of the Pension Plan is to make
annual contributions based on advice from its actuaries and the evaluation of its cash position, but not less than
the minimum required by applicable regulations. Currently, we expect no required contributions to the Pension
Plan during 2009. Discretionary contributions could be made in 2009 upon further analysis.
Weighted-average assumptions used to determine net periodic benefit expense were:
2008 2007 2006
Discount rate ........................................... 6.5% 5.9% 5.7% to 6.0%
Rate of increase in compensation levels ...................... 3.5% 3.5% 3.5%
Expected long-term rate of return .......................... 8.5% 8.5% 8.5%
Measurement date for plan assets and benefit obligations ........ 12/31/07 12/31/06 12/31/05
The components of net periodic pension expense were comprised of the following:
2008 2007 2006
(In thousands)
Service cost — benefits earned in the period......................... $ 2,438 $ 2,632 $ 2,944
Interest cost on projected benefit obligation.......................... 3,332 3,150 3,158
Expected investment return on plan assets........................... (3,963) (4,289) (4,285)
Amortization of prior service cost ................................. (34) 135 135
Amortization of transition obligation ............................... 13 13 13
Amortization of actuarial loss..................................... 824 694 1,264
Settlement loss................................................. — 1,259 1,510
Net periodic pension expense................................... $2,610 $ 3,594 $ 4,739
In 2007 and 2006, we incurred pretax non-cash settlement charges of $1.3 million and $1.5 million, respectively.
The settlement charges were caused by lump sum benefit payments made to plan participants in excess of
combined annual service cost and interest cost for each year. A portion of the 2006 settlement charge was
due to benefit payments to former employees of the 130 closed stores previously reclassified as discontinued
operations and, accordingly, $0.7 million pretax of the 2006 settlement loss was reported in income (loss) from
discontinued operations on our consolidated statement of operations.
Note 8 — Employee Benefit Plans (Continued)