Pier 1 2008 Annual Report Download - page 58

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NOTE 9 — EMPLOYEE BENEFIT PLANS
The Company offers a qualified, defined contribution employee retirement plan to all its full- and part-
time personnel who are at least 18 years old and have been employed for a minimum of six months.
Employees contributing 1% to 5% of their compensation receive a matching Company contribution of up to
3%. Company contributions to the plan were $2,305,000, $2,645,000 and $2,815,000 in fiscal 2008, 2007 and
2006, respectively.
In addition, the Company offers non-qualified retirement savings plans for the purpose of providing
deferred compensation for certain employees whose benefits under the qualified plan may be limited under
Section 401(k) of the Internal Revenue Code. The Company’s expense for these non-qualified plans was
$831,000, $1,628,000 and $1,594,000 for fiscal 2008, 2007 and 2006, respectively. The Company has trusts
established for the purpose of setting aside funds to be used to settle certain obligations of these non-qualified
retirement savings plans and contributed $475,000 and used $613,000 to satisfy a portion of retirement
obligations during fiscal 2008. As of March 1, 2008 and March 3, 2007, the trusts’ assets consisted of interest
bearing investments of $1,460,000 and $1,507,000 and life insurance policies with cash surrender values of
$7,187,000 and $6,906,000 and death benefits of $17,100,000 and $17,093,000, respectively. The trust assets
are restricted and may only be used to satisfy obligations to plan participants. The Company owns and is the
beneficiary of a number of insurance policies on the lives of current and former key executives that are
unrestricted as to use. At the discretion of the Board of Directors such policies could be contributed to these
trusts or to the trusts established for the purpose of setting aside funds to be used to satisfy obligations arising
from supplemental retirement plans described below. The cash surrender value of these unrestricted policies
was $13,817,000 at March 1, 2008, and the death benefit was $21,081,000. These cash surrender values are
carried in the Company’s consolidated financial statements in other noncurrent assets.
The Company maintains supplemental retirement plans (the “Plans”) for certain of its executive officers.
The Plans provide that upon death, disability, reaching retirement age and certain termination events, a
participant will receive benefits based on highest compensation, years of service and years of plan participa-
tion. The Company recorded expenses related to the Plans of $3,511,000, $15,112,000 and $8,934,000 in fiscal
2008, 2007 and 2006, respectively.
The Plans are not funded and thus have no plan assets. However, a trust has been established for the
purpose of setting aside funds to be used to settle the defined benefit plan obligations upon retirement or death
of certain participants. The trust assets are consolidated in the Company’s financial statements and consist of
interest bearing investments in the amounts of $16,000 included in other noncurrent assets at March 1, 2008,
and $6,123,000 included in other current assets at March 3, 2007, and earned average rates of return of 4.1%,
5.0% and 3.4% in fiscal 2008, 2007 and 2006, respectively. These investments are restricted and may only be
used to satisfy retirement obligations to certain participants. The Company has accounted for these restricted
investments as available-for-sale securities. Cash contributions of $23,000 and $8,212,000 were made to the
trust in fiscal 2008 and 2007, respectively. Any future contributions will be made at the discretion of the
Board of Directors. Restricted investments from the trust were sold to fund retirement benefits of $6,986,000
and $25,707,000 in fiscal 2008 and 2007, respectively. Funds from the trust will be used to fund or partially
fund benefit payments through fiscal year 2018 that are expected to total approximately $16,150,000. Of this
amount, the Company expects to pay $326,000 during fiscal 2009, $330,000 during fiscal 2010, $909,000
during fiscal 2011, $670,000 during fiscal 2012, $3,358,000 during fiscal 2013 and $10,557,000 during fiscal
years 2014 through 2018.
56
Pier 1 Imports, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)