CarMax 2014 Annual Report Download - page 65

61
As of February 28, 2014, we had $26.3 million of gross unrecognized tax benefits, $7.6 million of which, if
recognized, would affect our effective tax rate. It is reasonably possible that the amount of the unrecognized tax
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, 2013, we had $25.1 million of gross unrecognized tax benefits, $5.4 million of
which, if recognized, would affect our effective tax rate. As of February 29, 2012, we had $20.9 million of gross
unrecognized tax benefits, $3.9 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 and penalties increased $0.3 million to $1.6 million as of February 28, 2014, from $1.3 million as
of February 28, 2013. Our accrual for interest and penalties increased $0.2 million to $1.3 million as of February
28, 2013, from $1.1 million as of February 29, 2012.
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 2011.
10. BENEFIT PLANS
(A) Retirement Benefit Plans
Effective December 31, 2008, we froze both of our noncontributory defined benefit plans: our pension plan (the
“pension plan”) and our unfunded, nonqualified plan (the “restoration plan”), which restores retirement benefits for
certain associates who are affected by Internal Revenue Code limitations on benefits provided under the pension
plan. No additional benefits have accrued under these plans since that date. In connection with benefits earned prior
to December 31, 2008, we have a continuing obligation to fund the pension plan and will continue to recognize net
periodic pension expense for both plans. We use a fiscal year end measurement date for both the pension plan and
the restoration plan.
BENEFIT PLAN INFORMATION
As of February 28
Pension Plan Restoration Plan Total
(In thousands) 2014 2013 2014 2013 2014 2013
Change in projected benefit
obligation:
Obligation at beginning of year $ 177,531 $ 154,632 $ 9,408 $ 9,892 $ 186,939 $ 164,524
Interest cost 7,583 7,299 433 458
8,016 7,757
Actuarial (gain) loss (4,980) 17,766 803 (488) (4,177) 17,278
Benefits paid (2,460) (2,166) (457) (454)
(2,917) (2,620)
Obligation at end of year 177,674 177,531 10,187 9,408 187,861 186,939
Change in fair value of plan assets:
Plan assets at beginning of year 107,968 96,897 ― ― 107,968 96,897
Actual return on plan assets 19,204 8,175 ― ― 19,204 8,175
Employer contributions ― 5,062 457 454 457 5,516
Benefits paid (2,460) (2,166) (457) (454)
(2,917) (2,620)
Plan assets at end of year 124,712 107,968 ― ― 124,712 107,968
Funded status recognized $ (52,962) $ (69,563) $ (10,187) $ (9,408) $ (63,149) $ (78,971)
Amounts recognized in the
consolidated balance sheets:
Current liability $ ―$ ―$ (451) $ (453) $ (451) $ (453)
Noncurrent liability (52,962) (69,563) (9,736) (8,955)
(62,698) (78,518)
Net amount recognized $ (52,962) $ (69,563) $ (10,187) $ (9,408) $ (63,149) $ (78,971)
Accumulated benefit obligation $ 177,674 $ 177,531 $ 10,187 $ 9,408 $ 187,861 $ 186,939