CarMax 2004 Annual Report Download - page 41

CARMAX 2004 39
Based on the company’s historical and current pretax
earnings, management believes the amount of gross deferred tax
assets will more likely than not be realized through future
taxable income and future reversals of existing temporary
differences; therefore, no valuation allowance is necessary.
RETIREMENT PLANS
The company has a noncontributory defined benefit pension
plan covering the majority of full-time employees who are at
least 21 years old and have completed one year of service. The
cost of the program is being funded currently. Plan benefits
generally are based on years of service and average
compensation. The company also has an unfunded nonqualified
plan (“restoration plan”) that restores retirement benefits for
certain senior executives who are affected by Internal Revenue
Code limitations on benefits provided under the pension plan.
The liabilities for these plans are included in accrued expenses
and other current liabilities in the consolidated balance sheets.
Funding Policy. For the defined benefit pension plan, the
company contributes amounts sufficient to meet minimum
funding requirements as set forth in the employee benefit and
tax laws plus any additional amounts as the company may
determine to be appropriate. The company expects to
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contribute approximately $0.2 million to the pension plan in
fiscal 2005.
Projected Benefit Obligations. The projected benefit
obligations are the present value of future benefits to
employees, including assumed salary increases. Changes in
the company’s projected benefit obligations are presented in
Table 1.
Assets. Assets used in calculating the funded status are
measured at current market values. The restoration plan is
excluded since it is unfunded. Changes in the market value of
the company’s pension plan assets were as follows:
Years Ended February 29 or 28
Pension Plan
(In thousands) 2004 2003
Change in plan assets:
Fair value of plan assets at
beginning of year $5,676 $ 5,008
Actual return on plan assets 2,564 (1,095)
Adjustment for separation 606 (478)
Employer contributions 7,785 2,343
Benefits paid (227) (102)
Fair value of plan assets at end of year $16,404 $ 5,676
TABLE 1
Years Ended February 29 or 28
Pension Plan Restoration Plan Total
(In thousands) 2004 2003 2004 2003 2004 2003
Change in projected benefit obligation:
Benefit obligation at beginning of year $24,555 $14,868 $2,031 $1,583 $26,586 $16,451
Service cost 5,529 4,021 231 197 5,760 4,218
Interest cost 1,679 1,104 126 99 1,805 1,203
Plan amendments —367 —(220) —147
Actuarial loss 3,074 4,297 1,208 372 4,282 4,669
Adjustment for separation 1,308 ———1,308 —
Benefits paid (227) (102) ——(227) (102)
Projected benefit obligation at end of year $35,918 $24,555 $3,596 $2,031 $39,514 $26,586