Big Lots 2015 Annual Report Download - page 139

62
The following table sets forth certain information for the Pension Plan and the Supplemental Pension Plan at January 30, 2016
and January 31, 2015:
Pension Plan Supplemental Pension Plan
(In thousands) January 30, 2016 January 31, 2015 January 30, 2016 January 31, 2015
Projected benefit obligation $ 70,046 $ 72,659 $ 5,365 $ 5,528
Accumulated benefit obligation 70,046 65,627 5,365 4,667
Fair market value of plan assets $ 55,636 $ 55,292 $ — $ —
During 2015, we elected to make a $10.7 million contribution to the Pension Plan. During 2014, we elected not to make a
discretionary contribution to the Pension Plan. Historically, 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. As a result of executing the plan termination amendments, we expect to make a required
contribution to the Pension Plan during 2016, in order to fund the payout of the final plan termination liability.
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)
2016 $ 76,186
2017 —
2018 —
2019 —
2020 —
2021 - 2025 $ —
Given the amendments to terminate the pension plans, we reclassified our benefit obligations as current and have reflected all
of our benefits expected to be paid in 2016, though the distribution process may extend into 2017, as mentioned above.
Historically, our overall investment strategy was to earn a long-term rate of return sufficient to meet the liability needs of the
Pension Plan, within prudent risk constraints. As a result of executing the plan termination amendments, we modified our
investment strategy to appropriately reduce our exposure to short-term risks, as we intend to complete the payout of the final
plan termination liability within the next year.
Historically, our assets were classified as filling either a liability-hedging or a return-seeking role within our strategy. As a
result of executing the plan termination amendments, assets can generally be considered as filling one of the following roles
within our new strategy: (1) liability-hedging assets, which are designed to approximate the cash payment needs of the plan’s
obligation and provide downside protection, primarily invested in long maturity investment grade bonds and U.S. treasury
STRIPs; or (2) cash and cash equivalents, which are maintained to meet our expectations of near-term lump sum distributions
and significantly reduce our exposure to the market risks associated with bond and equity instruments. Our current target
allocation is approximately 30% liability-hedging assets and 70% cash and cash equivalents. Target allocations may change
over time in response to changes in plan or market conditions. All assets must have readily ascertainable market values and be
easily marketable. The portfolio of assets maintains a high degree of liquidity.
The investment managers have the discretion to invest within sub-classes of assets within the parameters of their investment
guidelines. Fixed income managers can adjust duration exposure as deemed appropriate given current or expected market
conditions. Additionally, the investment managers have the authority to invest in financial futures contracts and financial
options contracts for the purposes of implementing hedging strategies. There were no futures contracts owned directly by the
Pension Plan at January 30, 2016 and January 31, 2015. The primary benchmark for assessing the effectiveness of the Pension
Plan investments is that of the plan’s liabilities themselves. Asset class returns are also judged relative to common benchmark
indices such as the Russell 3000 and Barclay's Capital Long Credit Bond. Investment results and plan funded status are
monitored daily, with a detailed performance review completed on a quarterly basis.