CarMax 2011 Annual Report Download - page 74

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Benefit Obligations. Accumulated and projected benefit obligations (“ABO” and “PBO”) represent the obligations
of the benefit plans for past service as of the measurement date. ABO is the present value of benefits earned to date
with benefits computed based on current service and compensation levels. PBO is ABO increased to reflect
expected future service and increased compensation levels. As a result of the freeze of plan benefits under our
pension and restoration plans as of December 31, 2008, the ABO and PBO balances are equal to one another at all
subsequent dates.
ASSUMPTIONS USED TO DETERMINE BENEFIT OBLIGATIONS
2011 2010
Discount rate 5.80% 6.10% 5.80% 6.10%
As of February 28
Pension Plan
Restoration Plan
2011
2010
Plan Assets. The fair value of plan assets is measured using current market values. Our pension plan assets are held
in trust and management sets the investment policies and strategies. Long-term strategic investment objectives
include asset preservation and appropriately balancing risk and return. We oversee the investment allocation
process, which includes selecting investment managers, setting long-term strategic targets and monitoring asset
allocations and performance. Target allocations for plan assets are guidelines, not limitations, and occasionally plan
fiduciaries will approve allocations above or below the targets. We target allocating 75% of plan assets to equity
and 25% to fixed income securities. Equity securities are currently composed of mutual funds that include highly
diversified investments in large-, mid- and small-cap companies located in the United States and internationally.
The fixed income securities are currently composed of mutual funds that include investments in debt securities,
mortgage-backed securities, corporate bonds and other debt obligations primarily in the United States. We do not
expect any plan assets to be returned to us during fiscal 2012.
FAIR VALUE OF PLAN ASSETS
QUOTED PRICES IN ACTIVE MARKETS FOR IDENTICAL ASSETS (LEVEL 1)
(In thousands)
Cash and cash equivalents 421$ 861$
Investment income receivables, net ― 3
Mutual funds:
Equity securities (1) 58,197 46,539
Equity securities – international (2) 11,395 10,882
Fixed income securities (3) 21,482 19,438
Investment payables, net (3) ―
Total 91,492$ 77,723$
2011
2010
As of February 28
(1) Includes large-, mid- and small-cap companies primarily from diverse U.S. industries including pharmaceuticals, banks,
computers, telecommunications, internet, media and commercial and business services sectors; approximately 85% of
securities relate to U.S. entities and 15% of securities relate to non-U.S. entities.
(2) Consists of equity securities of primarily foreign corporations from diverse industries including banks, oil and gas, mining,
commercial and business services and financial services sectors; approximately 90% of securities relate to non-U.S. entities
and 10% of securities relate to U.S. entities as February 28, 2011 (95% and 5%, respectively, as of February 28, 2010).
(3) Includes debt securities of U.S. and foreign governments, their agencies and corporations, and diverse investments in
mortgage-backed securities, corporate bonds, and other debt obligations; approximately 75% of securities relate to U.S.
entities and 25% of securities relate to non-U.S. entities.
Funding Policy. For the pension plan, we contribute amounts sufficient to meet minimum funding requirements as
set forth in the employee benefit and tax laws, plus any additional amounts as we may determine to be appropriate.
We expect to contribute $3.4 million to the pension plan in fiscal 2012. For the non-funded restoration plan, we
contribute an amount equal to the benefit payments.