OfficeMax 2009 Annual Report Download - page 79

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service. The Company’s general funding policy is to make contributions to the plans in amounts
that are within the limits of deductibility under current tax regulations, and not less than the
minimum contribution required by law.
The Company also sponsors various retiree medical benefit and life insurance plans. The type
of retiree benefits and the extent of coverage vary based on employee classification, date of
retirement, location, and other factors. All of the Company’s postretirement medical plans are
unfunded. The Company explicitly reserves the right to amend or terminate its retiree medical and
life insurance plans at any time, subject only to constraints, if any, imposed by the terms of
collective bargaining agreements. Amendment or termination may significantly affect the amount of
expense incurred.
During the second quarter of 2009, based on the high level of inactive participants in the
Company’s pension plans as well as the fact that all plan participants were fully vested, the
Company changed the estimated amortization period for its unrecognized actuarial loss (which
represents the difference between the actual funded status and the expected funded status
measured through 2009), from the average remaining service period of the participants to their
average remaining life expectancy. The impact of the change in the amortization period was a
reduction in pension expense for 2009 of $11.2 million ($6.8 million after-tax), or $0.09 per diluted
share.
Obligations and Funded Status
The changes in pension and other postretirement benefit obligations and plan assets during
2009 and 2008, as well as the funded status of the Company’s plans at December 26, 2009 and
December 27, 2008 were as follows:
Pension Benefits Other Benefits
2009 2008 2009 2008
(thousands)
Change in benefit obligation:
Benefit obligation at beginning of year ........ $1,276,209 $ 1,292,023 $ 17,582 $ 24,281
Service cost ........................... 4,506 2,132 184 237
Interest cost ........................... 75,858 78,041 1,137 1,164
Actuarial (gain) loss ..................... 5,721 10,250 1,432 (2,573)
Changes due to exchange rates ............ — — 1,885 (3,053)
Benefits paid .......................... (101,618) (106,237) (1,883) (2,474)
Benefit obligation at end of year ............ $1,260,676 $1,276,209 $ 20,337 $ 17,582
Change in plan assets:
Fair value of plan assets at beginning of year . . . $ 841,204 $ 1,184,447 $ — $ —
Actual return on plan assets ............... 222,022 (250,076) — —
Employer contributions ................... 88,906 13,070 1,883 2,474
Benefits paid .......................... (101,618) (106,237) (1,883) (2,474)
Fair value of plan assets at end of year ....... $1,050,514 $ 841,204 $ — $ —
Funded status ......................... $ (210,162) $ (435,005) $(20,337) $(17,582)
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