Napa Auto Parts 2008 Annual Report Download - page 39

e amount of gross tax effected unrecognized tax benefits as of
December 31, 2008 was approximately $36,429,000 of which
approximately $14,417,000, if recognized, would affect the effective
tax rate. During the year ending December 31, 2008, the Company
paid interest and penalties of approximately $815,000. e Com-
pany had approximately $5,004,000 and $2,328,000 of accrued
interest and penalties at December 31, 2008 and December 31,
2007, respectively. e Company recognizes potential interest and
penalties related to unrecognized tax benefits as a component of
income tax expense.
7. employee benet plans
e Company’s defined benefit pension plans cover substantially
all of its employees in the U.S. and Canada. e plan covering
U.S. employees is noncontributory and benefits are based on the
employees’ compensation during the highest five of their last ten
years of credited service. e Canadian plan is contributory and
benefits are based on career average compensation. e Company’s
funding policy is to contribute an amount equal to the minimum
required contribution under ERISA. e Company may increase
its contribution above the minimum if appropriate to its tax and
cash position and the plans’ funded position.
In 2008, the US defined benefit plan was amended to prohibit
employees hired on or after March 1, 2008 to participate in the plan.
e plan was also amended to freeze credited service for participants
who do not meet certain age and length of service requirements as of
December 31, 2008. However, the plan continues to reflect future
pay increases for all participants.
e Company also sponsors unfunded supplemental retirement plans
covering employees in the U.S. and Canada and other postretirement
benefit plans in the U.S. e Company uses a measurement date of
December 31 for its pension and other postretirement benefit plans.
On September 29, 2006, the FASB issued SFAS No. 158, Employers’
Accounting for Defined Benefit Pension and Other Postretirement Plans,
which amended SFAS No. 87 and SFAS No. 106 to require recogni-
tion of the overfunded or underfunded status of pension and other
postretirement benefit plans on the balance sheet. Under SFAS No.
158, gains and losses, prior service costs and credits, and any remain-
ing transition amounts under SFAS No. 87 and SFAS No. 106 that
have not yet been recognized through net periodic benefit cost are to
be recognized in accumulated other comprehensive income, net of tax
effects, until they are amortized as a component of net periodic cost.
SFAS No. 158 was effective for publicly held companies for fiscal
years ending after December 31, 2006.
Other Postretirement
Pension Benefits Benefits
(in thousands) 2008 2007 2008 2007
Changes in benefit obligation
Benefit obligation at beginning of year $ 1,387,669 $ 1,334,528 $ 28,640 $ 25,669
Service cost 53,311 53,700 880 750
Interest cost 90,300 82,029 1,614 1,441
Plan participants’ contributions 3,216 3,203 3,782 3,721
Plan amendments (66,349) – – –
Actuarial (gain) loss 51,042 (61,447) 1,282 3,874
Exchange rate (gain) loss (24,446) 19,039 – –
Gross benefits paid (44,713) (43,383) (7,664) (7,585)
Less federal subsidy n/a n/a 784 770
Benefit obligation at end of year $ 1,450,030 $ 1,387,669 $ 29,318 $ 28,640
e benefit obligations for the Company’s U.S. pension plans included in the above were $1,360,045,000 and $1,258,892,000 at December
31, 2008 and 2007, respectively. e total accumulated benefit obligation for the Company’s defined benefit pension plans was approximate-
ly $1,238,101,000 and $1,119,588,000 at December 31, 2008 and 2007, respectively.
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