LensCrafters 2005 Annual Report Download - page 132

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS | 131 <
of the balance sheet date. Each year, the Company adjusts its accrual based upon headcount, changes in
compensation level and inflation. This liability is not funded. There are also some termination indemnities in
other countries which are provided through payroll tax and other social contributions in accordance with
local statutory requirements. The related charge to earnings for the years ended December 31, 2003, 2004
and 2005 aggregated Euro 12.5 million, Euro 10.4 million and Euro 12.0 million, respectively.
Qualified pension plan
During fiscal years 2004 and 2005, US Holdings continued to sponsor a qualified noncontributory
defined benefit pension plan which provides for the payment of benefits to eligible past and present
employees of US Holdings upon retirement. Pension benefits are accrued based on length of service
and annual compensation under a cash balance formula.
This pension plan was amended effective January 1, 2006, granting eligibility to associates who work
in the Cole Vision stores, field management, and the related labs and distribution centers. Additionally,
the pension accrual formula was amended for the Cole associates as well as all new employees of the
Company. The new formula has a more graded benefit accrual pattern than the previous formula.
As of the effective date of the Cole acquisition, US Holdings, through its newly acquired subsidiary,
sponsors the Cole National Group, Inc. Retirement Plan. This is a qualified noncontributory defined
benefit pension plan that covers Cole employees who have met eligibility service requirements and are
not members of certain collective bargaining units. The pension plan provides for benefits to be paid to
eligible past and present employees at retirement based primarily upon years of service and the
employees’ compensation levels at and around the time of retirement. In January 2002, this plan was
frozen for all participants. The average pay for all participants was frozen as of March 31, 2002 and
covered compensation was frozen on December 31, 2001. Benefit service was also frozen as of
March 31, 2002 except for those individuals who were at least age 50 with at least ten years of benefit
service as of that date, whose service will continue to increase as long as they remain employed by US
Holdings or one of its subsidiaries.
Nonqualified pension plan and agreements
U.S. Holdings also maintains a nonqualified, unfunded supplemental executive retirement plan (“SERP”)
for participants in its qualified pension plan to provide benefits in excess of amounts permitted under the
provisions of prevailing tax law. The pension liability and expense associated with this plan are accrued
using the same actuarial methods and assumptions as those used for the qualified pension plan.
Starting January 1, 2006, this plan’s benefit provisions are amended to reflect the changes made to
the Company’s qualified pension plan.
As of the Cole acquisition date, US Holdings through its newly acquired subsidiary, sponsors the Cole
National Group, Inc. Supplemental Pension Plan. This plan is a nonqualified unfunded SERP for certain
participants of the Cole pension plan who were designated by the Board of Directors of Cole at the
recommendation of Cole’s Chief Executive Officer at such time. This plan provides benefits in excess
of amounts permitted under the provisions of the prevailing tax law. The pension liability and expense
associated with this plan are accrued using the same actuarial methods and assumptions as those
used for the qualified pension plan.
The following tables provide key information pertaining to US Holdings’ pension plans and SERP. US
Holdings uses a September 30 measurement date for these plans.