Pier 1 2015 Annual Report Download - page 53

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
on highest compensation, years of service and years of plan participation. The Company recorded expenses related to the plans
of $5,993,000, $4,023,000 and $3,423,000 in fiscal 2015, 2014 and 2013, 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 plans’ 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 amount of $17,000 as of
February 28, 2015 and March 1, 2014, that are included in other noncurrent assets. The investments are restricted and may only
be used to satisfy retirement obligations to certain participants. The Company has accounted for the restricted investments as
available-for-sale securities. During fiscal 2015 and 2014, there were no cash contributions made to the trust and no restricted
investments were sold to fund retirement benefits. Any future contributions will be made at the discretion of the Board of
Directors. Funds from the trust will be used to fund or partially fund benefit payments. The Company expects to pay $127,000
during fiscal 2016, $127,000 during fiscal 2017, $127,000 during fiscal 2018, $27,111,000 during fiscal 2019, $134,000
during fiscal 2020, and $1,218,000 during fiscal years 2021 through 2025 under the plans.
Measurement of obligations for the plans is calculated as of each fiscal year end. The following provides a reconciliation of benefit
obligations and funded status of the plans as of February 28, 2015 and March 1, 2014 (in thousands):
2015 2014
Change in projected benefit obligation:
Projected benefit obligation, beginning of year $ 27,481 $ 25,573
Service cost 1,402 1,456
Interest cost 823 765
Actuarial (gain) loss 2,772 (188)
Benefits paid (including settlements) (7,707) (125)
Curtailment 633 —
Projected benefit obligation, end of year $ 25,404 $ 27,481
Reconciliation of funded status:
Projected benefit obligation $ 25,404 $ 27,481
Plan assets ——
Funded status $(25,404) $(27,481)
Accumulated benefit obligation $(25,404) $(27,481)
Amounts recognized in the balance sheets:
Current liability $ (127) $ (127)
Noncurrent liability (25,277) (27,354)
Accumulated other comprehensive loss, pre-tax 4,361 4,724
Net amount recognized $(21,043) $(22,757)
Cumulative other comprehensive loss, net of taxes of $3,121 and $3,261 in fiscal
2015 and 2014, respectively $ 1,240 $ 1,463
Weighted average assumptions used to determine:
Benefit obligation, end of year:
Discount rate 2.50% 3.00%
Lump-sum conversion discount rate 4.00% 5.00%
Rate of compensation increase (1) 3.00% 0.00%
Net periodic benefit cost for years ended:
Discount rate 2.50% 3.00%
Lump-sum conversion discount rate 4.00% 5.00%
Rate of compensation increase 0.00% 3.00%
(1) The rate of compensation increase shown above assumes an increase of 0% for fiscal year 2016 and 3% for fiscal years thereafter, except for the Company’s CEO. The CEO’s rate of
compensation is set forth in his employment agreement.
PIER 1 IMPORTS, INC. 2015 Form 10-K 47