Harris Teeter 2007 Annual Report Download - page 56

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52
RUDDICK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (continued)
Discount rates are based on the expected timing and amounts of the expected employer paid benefits and
are established by reference to the Moody’s AA Corporate Bond annualized yield with durations similar to the
pension liabilities. Expected long-term return on plan assets is estimated by asset class and is generally based
on historical returns, volatilities and risk premiums. Based upon the plan’s asset allocation, composite return
percentiles are developed upon which the plan’s expected long-term is based.
The supplemental plan is unfunded, with benefit payments being made from the Company’s general assets.
Assets of the pension plan are invested in directed trusts. Assets in the directed trusts as of the fiscal year end
were invested as follows:
Asset Class 2007 2006
Fixed income .................................................... 25.8 % 30.0 %
Large cap domestic equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31.5 30.1
Small cap domestic equities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.6 11.3
International equities .............................................. 8.4 7.0
Tactical asset allocation fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.6 11.2
Alternative Investments – Real Estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.0 3.7
Alternative Investments – Hedge Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5 4.6
Guaranteed investment contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.7 0.7
Cash equivalents ................................................. 1.9 1.4
100 % 100 %
Investments in the pension trust are overseen by the Retirement Plan Committee which is made up of
officers of the Company and directors. The plan assets are split into two segments: the Strategic Allocation
segment over which the Committee retains responsibility for directing and monitoring asset allocation, and the
Tactical Allocation segment which is directed by an advisor selected by the Committee.
The Company has developed an Investment Policy Statement based on the need to satisfy the long-
term liabilities of the Company’s pension plan. The Company seeks to maximize return with reasonable and
prudent levels of risk. Risk management is accomplished through diversification across asset classes, multiple
investment manager portfolios and both general and portfolio-specific investment guidelines. Asset guidelines
for the Strategic Allocation segment are:
Asset Class
Minimum
Exposure Target
Maximum
Exposure
Investment grade fixed income and cash equivalents . . . . . . . . . . 30.0 % 40.0 % 50.0 %
Domestic equities: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.0 40.0 55.0
Large cap value .................................... 3.0 9.0 20.0
Large cap growth ................................... 3.0 9.0 20.0
Large cap core ..................................... 3.0 10.0 20.0
Small cap value .................................... 0.0 6.0 12.0
Small cap growth ................................... 0.0 6.0 12.0
International equities: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 10.0 15.0
International growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 5.0 10.0
International value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 5.0 10.0
Alternative Investments: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0.0 10.0 20.0
Real Estate ........................................ 0.0 5.0 10.0
Hedge Funds ....................................... 0.0 5.0 10.0