True Value 2007 Annual Report Download - page 48

2007 FINANCIAL REPORT | 27
N O T E S T O
CONSOLIDATED FINANCIAL STATEMENTS
($ in thousands)
True Value may set off its obligation to make payments to mem-
bers for redeemable stock, notes, interest or declared and unpaid
dividends against any obligation owed by the member to True
Value. True Value classifies stock redemption requests that had
not fully completed the redemption process in Liabilities. True
Value exercised its set-off rights on stock redemptions in 2007
and 2006 of $9,816 and $7,447, respectively, against obligation
owed by the member to True Value for loss allocation accounts,
amounts related to the 2001 loss and accounts receivables of
$3,437 and $2,926. The remaining amount due to members was
partially satisfied with subordinated promissory installment notes
of $5,061 and $4,403 in 2007 and 2006, respectively.
True Value exercised its set-off rights with member accounts
receivable when True Value member notes and interest came due.
True Value in 2007, 2006 and 2005 set off $565, $477 and $579,
respectively, of notes and interest payments due to members
against amounts due from members for accounts receivable.
In 2007, 2006 and 2005, True Value extended subordinated prom-
issory notes, at the option of the member for a three-year period
in the amounts of $12,796, $13,914 and $18,075, respectively.
True Value’s non-cash financing and investing activities in 2007
were related to the acquisition of warehouse equipment by
entering into capital leases in the amount $953. In 2006 and
2005, True Value’s non-cash financing and investing activities
were primarily related to the acquisition of paint manufacturing
and computer equipment by entering into capital leases in the
amounts of $3,817 and $4,760, respectively.
Cash paid for interest during 2007, 2006 and 2005 totaled
$12,236, $14,161 and $13,088, respectively. Cash paid for income
taxes during 2007, 2006 and 2005 totaled $38, $32 and $39,
respectively.
11. BENEFIT PLANS
True Value had sponsored two noncontributory defined benefit
retirement plans. Effective with the fiscal year ended 2006, these
plans were amended to freeze participation and benefit accru-
als, with no additional service accrued after such date, except
with respect to certain participants covered by certain collective
bargaining agreements. As a result of the freeze in these plans,
a curtailment net gain of $3,620 was recorded in 2006. At
December 29, 2007, only True Value’s Allentown and Manchester
facilities remained under the defined pension retirement plan
provisions under the old collective bargaining agreements. The
Allentown facility’s defined benefit retirement plan will be fro-
zen effective April 2008. The Manchester facility’s collective
bargaining agreement has not yet been renegotiated.
December 29, December 30,
($ in thousands) 2007 2006
Change in projected benefit obligation:
Projected benefit obligation at
beginning of year $ 74,766 $ 85,490
Service cost 758 5,563
Interest cost 4,447 4,119
Benefit payments (393) (411)
Actuarial (gains)/losses 4,380 (2,856)
Curtailments – (8,829)
Settlements (7,638) (8,310)
Projected benefit obligation at end of year 76,320 74,766
Change in plan assets:
Fair value of plan assets at
beginning of year 68,045 67,647
Actual return on assets 4,512 5,994
Employer contributions 3,302 3,125
Benefit payments (393) (411)
Settlements (7,638) (8,310)
Fair value of plan assets at end of year 67,828 68,045
Reconciliation of funded status:
Funded status (8,492) (6,721)
Items not yet recognized as a
component of net pension cost:
Prior Service Cost:
Prior year balance – (3,795)
Current year amortization – 175
Current year curtailment impact – 3,620
Prior service cost – –
Actuarial (gain)/loss:
Prior year balance 10,878 27,123
Current year amortization (1,230) (1,710)
Current year settlement impact (1,309) (1,917)
Current year curtailment impact – (8,830)
(Gain)/loss arising during
current period 5,144 (3,788)
Actuarial loss 13,483 10,878
Prepaid expense $ 4,991 $ 4,157
The Accumulated Benefit Obligation (“ABO”) for True Value
administered pension plans was $75,602 and $74,766 at
December 29, 2007 and December 30, 2006, respectively.
As of December 30, 2006, the pension plans had unrecognized
actuarial losses of $10,878. The major source of actuarial losses
under the plan are related to the decline in interest rates over