Black & Decker 2010 Annual Report Download - page 116

worldwide asset allocations at January 1, 2011 and January 2, 2010 by asset category and the level of the
valuation inputs within the fair value hierarchy established by ASC 820 are as follows:
Asset Category 2010 Level 1 Level 2
Cash and cash equivalents .............................. $ 18.1 $ 1.2 $ 16.9
Equity securities
U.S. equity securities .................................. 513.2 7.2 506.0
Foreign equity securities ............................... 513.4 24.6 488.8
Fixed income securities
Government securities ................................. 281.9 9.0 272.9
Corporate securities ................................... 285.9 16.1 269.8
Mortgage-backed securities ............................. 78.0 18.4 59.6
Insurance contracts .................................. 31.4 — 31.4
Other ............................................. 29.3 — 29.3
Total .............................................. $1,751.2 $76.5 $1,674.7
Asset Category 2009 Level 1 Level 2
Cash and cash equivalents .............................. $ 3.0 $ 3.0 $ —
Equity securities
U.S. equity securities .................................. 69.4 6.6 62.8
Foreign equity securities ............................... 125.8 23.1 102.7
Fixed income securities
Government securities ................................. 62.4 23.8 38.6
Corporate securities ................................... 42.7 18.7 24.0
Insurance contracts ................................... 16.2 — 16.2
Total .............................................. $319.5 $75.2 $244.3
U.S. and foreign equity securities primarily consist of companies with large market capitalizations and to a
small extent mid and small capitalization securities. Government securities consist of U.S. Treasury securities
and foreign government securities with deminimus default risk. Corporate fixed income securities include
publicly traded U.S. and foreign investment grade and high yield securities. Mortgage-backed securities
predominantly consist of U.S. holdings. Assets held in insurance contracts are invested in the general asset
pools of the various insurers, mainly debt and equity securities with guaranteed returns. Other investments
include diversified private equity holdings.
The Company’s investment strategy for pension plan assets includes diversification to minimize interest and
market risks, and generally does not involve the use of derivative financial instruments. Plan assets are
rebalanced periodically to maintain target asset allocations. Currently, the Company’s target allocations include
50%-65% in equity securities, 35%-50% in fixed income securities and up to 10% in other securities.
Maturities of investments are not necessarily related to the timing of expected future benefit payments, but
adequate liquidity to make immediate and medium term benefit payments is ensured.
CONTRIBUTIONS The Company’s funding policy for its defined benefit plans is to contribute amounts
determined annually on an actuarial basis to provide for current and future benefits in accordance with federal
law and other regulations. The Company expects to contribute approximately $140 million to its pension and
other post-retirement benefit plans in 2011.
EXPECTED FUTURE BENEFIT PAYMENTS Benefit payments, inclusive of amounts attributable to
estimated future employee service, are expected to be paid as follows over the next 10 years:
(Millions of Dollars) Total Year 1 Year 2 Year 3 Year 4 Year 5 Years 6-10
Future payments....... $1,563.1 $188.7 $150.7 $149.9 $153.3 $153.5 $767.0
These benefit payments will be funded through a combination of existing plan assets and amounts to be
contributed in the future by the Company.
103