Supercuts 2012 Annual Report Download - page 131

Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
13. BENEFIT PLANS (Continued)
In addition, the Company has other unfunded deferred compensation contracts covering key executives within the Company. The key
executives' benefits are based on years of service and the employee's compensation prior to departure. Effective June 30, 2012, the Company
amended the deferred compensation contracts such that the benefits are based on years of service and employee's compensation as of June 30,
2012. The Company utilizes a June 30 measurement date for these deferred compensation contracts, a discount rate based on the Aa Bond
index rate (4.0 and 5.5 percent at June 30, 2012 and 2011, respectively) and projected salary increases of 4.0 percent at June 30, 2011 to
estimate the obligations associated with these deferred compensation contracts.
Compensation associated with these agreements is charged to expense as services are provided. Associated costs included in general and
administrative expenses on the Consolidated Statement of Operations totaled $5.9, $2.5 and $2.2 million for fiscal years 2012, 2011, and 2010,
respectively. The projected benefit obligation of these deferred compensation contracts totaled $21.3 and $22.2 million at June 30, 2012 and
2011, respectively, in the Consolidated Balance Sheet. As of June 30, 2012 and 2011, $11.8 and $17.2 million is included in other noncurrent
liabilities, respectively. As of June 30, 2012 and 2011, $9.5 and $5.0 million of the balance is included in accrued liabilities, respectively. The
tax-affected accumulated other comprehensive loss for the deferred compensation contracts, consisting of primarily unrecognized actuarial
loss, was $0.5 and $1.6 million at June 30, 2012 and 2011, respectively. The Company intends to fund its future obligations under these
arrangements through company-owned life insurance policies on the participants. Cash values of these policies totaled $24.4 and $22.3 million
at June 30, 2012 and 2011, respectively, and are included in other assets in the Consolidated Balance Sheet.
The Company has agreed to pay the former Vice Chairman an annual amount of $0.6 million, adjusted for inflation to $0.9 million in
fiscal years 2012 and 2011, for the remainder of his life. The former Vice Chairman has agreed that during the period in which payments are
made, as provided in the agreement, he will not engage in any business competitive with the business conducted by the Company. Additionally,
the Company has a survivor benefit plan for the former Vice Chairman's spouse, payable upon his death, at a rate of one half of his deferred
compensation benefit, adjusted for inflation, for the remaining life of his spouse. Estimated associated costs included in general and
administrative expenses on the Consolidated Statement of Operations totaled $0.8, $0.7 and $0.6 million for fiscal years 2012, 2011, and 2010,
respectively. Related obligations totaled $4.9 and $5.9 million at June 30, 2012 and 2011, respectively, and are included in other noncurrent
liabilities in the Consolidated Balance Sheet. The Company intends to fund all future obligations under this agreement through company-
owned life insurance policies on the former Vice Chairman. Cash values of these policies totaled $4.5 and $4.2 million at June 30, 2012 and
2011, respectively, and are included in other assets in the Consolidated Balance Sheet. The policy death benefits exceed the obligations under
this agreement.
Compensation expense included in (loss) income before income taxes and equity in (loss) income of affiliated companies related to the
aforementioned plans, excluding amounts paid for expenses and
128