CarMax 2011 Annual Report Download - page 73

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benefit with respect to certain of our uncertain tax positions will increase or decrease during the next 12 months;
however, we do not expect the change to have a significant effect on our results of operations, financial condition or
cash flows. As of February 28, 2010, we had $22.0 million of gross unrecognized tax benefits, $1.7 million of
which, if recognized, would affect our effective tax rate. As of February 28, 2009, we had $25.6 million of gross
unrecognized tax benefits, $2.6 million of which, if recognized, would affect our effective tax rate.
Our continuing practice is to recognize interest and penalties related to income tax matters in SG&A expenses. Our
accrual for interest decreased $2.6 million to $0.5 million as of February 28, 2011, from $3.1 million as of
February 28, 2010. Our accrual for interest decreased $2.1 million to $3.1 million as of February 28, 2010, from
$5.2 million as of February 28, 2009.
CarMax is subject to U.S. federal income tax as well as income tax of multiple states and local jurisdictions. With a
few insignificant exceptions, we are no longer subject to U.S. federal, state and local income tax examinations by
tax authorities for years prior to fiscal 2005.
10. BENEFIT PLANS
(A) Retirement Benefit Plans
We have a noncontributory defined benefit pension plan (the “pension plan”) covering the majority of full-time
associates. We also have an unfunded nonqualified plan (the “restoration plan”) that restores retirement benefits for
certain associates who are affected by Internal Revenue Code limitations on benefits provided under the pension
plan. We use a fiscal year end measurement date for both the pension plan and the restoration plan.
Effective December 31, 2008, we froze both the pension plan and the restoration plan. No additional benefits have
accrued under these plans since that date. These changes resulted in the recognition of a non-cash net curtailment
gain of $7.4 million in fiscal 2009. In connection with benefits earned prior to the freeze, we have a continuing
obligation to fund the pension plan and will continue to recognize net periodic pension expense for both plans.
BENEFIT PLAN INFORMATION
(In thousands)
Change in projected benefit
obligation:
Obligation at beginning of year 107,802$ 83,766$ 8,691$ 8,930$ 116,493$ 92,696$
Service cost ― ― ― ― ― ―
Interest cost 6,541 5,710 520 605 7,061 6,315
Actuarial loss (gain) 5,620 19,540 67 (671) 5,687 18,869
Curtailment gain ― ― ― ― ― ―
Benefits paid (1,451) (1,214) (173) (173) (1,624) (1,387)
Obligation at end of year 118,512 107,802 9,105 8,691 127,617 116,493
Change in fair value of plan assets:
Plan assets at beginning of year 77,723 42,789 ― ― 77,723 42,789
Actual return on plan assets 15,220 21,112 ― ― 15,220 21,112
Employer contributions ― 15,036 173 173 173 15,209
Benefits paid (1,451) (1,214) (173) (173) (1,624) (1,387)
Plan assets at end of year 91,492 77,723 ― ― 91,492 77,723
Funded status recognized (27,020)$ (30,079)$ (9,105)$ (8,691)$ (36,125)$ (38,770)$
Amounts recognized in the
consolidated balance sheets:
Current liability ―$ ―$ (381)$ (406)$ (381)$ (406)$
Noncurrent liability (27,020) (30,079) (8,724) (8,285) (35,744) (38,364)
Net amount recognized (27,020)$ (30,079)$ (9,105)$ (8,691)$ (36,125)$ (38,770)$
Accumulated benefit obligation 118,512$ 107,802$ 9,105$ 8,691$ 127,617$ 116,493$
Years Ended February 28
Pension Plan
Restoration Plan
Total
2011
2010
2011
2010
2011
2010