Big Lots 2009 Annual Report Download - page 181

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BIG LOTS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 8 — Employee Benefit Plans (Continued)
The following table sets forth certain information for the Pension Plan and the Supplemental Pension Plan at
January 30, 2010 and January 31, 2009:
Pension Plan Supplemental Pension Plan
January 30, 2010 January 31, 2009 January 30, 2010 January 31, 2009
(In thousands)
Projected benefit obligation . . . . . . . . $ 53,482 $ 48,549 $6,044 $5,051
Accumulated benefit obligation ..... 47,851 43,170 4,622 4,058
Fair market value of plan assets . . . . . $ 56,865 $ 42,297 $ — $ —
We elected to make $10.0 million and $11.0 million of discretionary contributions to the Pension Plan in 2009
and 2008, respectively, to increase the funded level. Our funding policy of the Pension Plan is to make annual
contributions based on advice from our actuaries and the evaluation of our cash position, but not less than the
minimum required by applicable regulations. Currently, we expect no required contributions to the Pension Plan
during 2010, however discretionary contributions could be made depending upon further analysis.
Using the same assumptions as those used to measure our benefit obligations, the Pension Plan and the
Supplemental Pension Plan benefits expected to be paid in each of the following fiscal years are as follows:
Fiscal Year
(In thousands)
2010 ....................................... $ 4,647
2011 ....................................... 4,911
2012 ....................................... 5,117
2013 ....................................... 5,179
2014 ....................................... 5,475
2015 — 2019 ................................ $28,420
The company’s overall investment strategy is to maximize income and capital appreciation while also protecting
the funded status of the Pension Plan. In order to determine the appropriate asset allocation and investment
strategy, an annual actuarial review of the plan’s expected future distributions is completed. Based upon
this review, an allocation to cash and fixed income is determined based upon the present value of near and
mid-term estimated distributions. The remainder of the assets are allocated toward longer term growth and
invested primarily in the equity markets. 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.
Accordingly, the targeted allocation ranges for plan assets are 39% - 64% equity securities, 23% - 61% fixed
income securities, and up to 38% cash and cash equivalents. The actual portfolio weightings may differ from
targeted ranges due to market appreciation or depreciation but will be re-balanced annually at a minimum. All
assets must have readily ascertainable market values and be easily marketable.
Equity securities primarily include investments in companies of various sizes from diverse industries.
Investments in mutual funds are managed under and in tandem with the same investment objectives as
individual equity securities and consist of diverse funds focused on sub-categories including, but not limited
to, company size, investment strategies such as value, growth and blends, international versus domestic and
specific industry exposures. As permitted by our pension investment policy, equity securities may include
our common shares. At January 30, 2010 and January 31, 2009, the Pension Plan owned 961 and 1,101 of our
common shares, respectively.
Fixed income securities include investments in corporate bonds of companies from diversified industries,
mortgage-backed securities, and obligations of the U.S. Treasury or agencies. Fixed income investments of a
single issuer (with the exception of the U.S. Government or agencies) must not exceed 10% of the total fixed
income portfolio. The aggregate credit quality of the fixed income portfolio must always be at a rating of Aa or
higher. Cash reserves must be invested in interest bearing securities and must be instantly saleable.