Office Depot 2008 Annual Report Download - page 73

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72
During 2008, 2007, and 2006, $12.6 million, $12.0 million, $14.1 million, respectively, was recorded as
compensation expense for company contributions to these programs and certain international retirement savings
plans.
Pension Plan
The company has a defined benefit pension plan covering a limited number of employees in Europe. During 2008,
curtailment of that plan of was approved by the trustees and future service benefits ceased for the remaining
employees, resulting an a curtailment gain of $11.4 million. Also during 2008, in accordance with Statement of
Financial Accounting Standards No. 158, Employers’ Accounting for Defined Pension and Other Postretirement
Plans, the company modified the valuation date of plan obligations and assets from the end of October to the end of
December. The impact of this change was an immaterial increase in expense and the company recognized that
charge in operations rather than adjust retained earnings, as provided for in the Standard. The following table
provides a reconciliation of changes in the projected benefit obligation, the fair value of plan assets and the funded
status of the plan to amounts recognized on our balance sheets:
(Dollars in thousands) December 27, 2008 December 29, 2007
Changes in projected benefit obligation:
Obligation at beginning of period.......................................................................
.
$ 230,408 $ 231,180
Service cost.........................................................................................................
.
1,708 4,477
Interest cost.........................................................................................................
.
13,434 11,650
Member contributions.........................................................................................
.
435 1,636
Benefits paid.......................................................................................................
.
(6,998) (7,048)
Actuarial gain .....................................................................................................
.
(14,732) (21,390)
Curtailment gain .................................................................................................
.
(11,437) —
Currency translation ...........................................................................................
.
(57,978) 9,903
Obligation at valuation date................................................................................
.
154,840 230,408
Changes in plan assets:
Fair value at beginning of period........................................................................
.
162,032 140,250
Actual return on plan assets................................................................................
.
(38,595) 18,083
Company contributions.......................................................................................
.
7,214 3,133
Member contributions.........................................................................................
.
435 1,636
Benefits paid.......................................................................................................
.
(6,998) (7,048)
Currency translation ...........................................................................................
.
(35,634) 5,978
Plan assets at valuation date ...............................................................................
.
88,454 162,032
Benefit obligation in excess of plan assets .........................................................
.
(66,386) (68,376)
Post-valuation contributions ...............................................................................
.
— 525
Currency translation ...........................................................................................
.
— (13)
Net amount recognized at end of period.............................................................
.
$ (66,386) $ (67,864)
The net unfunded amount is classified as a non-current liability in the caption deferred taxes and other long-term
liabilities on the Consolidated Balance Sheets. At December 27, 2008, the deferred loss included in accumulated
other comprehensive income was $11.9 million before tax and $7.0 million on an after-tax basis (measured at year
end exchange rates). The $11.9 million deferral is not expected to be amortized into income during 2009. At
December 29, 2007, the deferred gain included in accumulated other comprehensive income was $22.4 million
before tax and $17.1 million on an after-tax basis. The 2008 change in deferred amounts reflects asset returns below
the expected amount, partially offset by an actuarial gain and net of changes in foreign exchange and tax impacts.
The pre-tax and after-tax deferred gains at December 30, 2006 were $8.4 million and $6.1 million, respectively. The
plan’s accumulated benefit obligations were approximately $154.8 million and $216.4 million at the 2008 and 2007
valuation dates, respectively.