True Value 2008 Annual Report Download - page 48

notes to consolidated financial statements
2008 FINAN CIA L REP OR T :: 27
True Value exercised its set-off rights with member accounts receiv-
able when True Value member notes and interest came due. True
Value in 2008, 2007 and 2006 set off $573, $565 and $477, respec-
tively, of notes and interest payments due to members against
amounts due from members for accounts receivable.
In 2008, 2007 and 2006, True Value extended subordinated prom-
issory notes, at the option of the member for a three-year period
in the amounts of $14,464, $12,796 and $13,914, respectively.
True Value had non-cash financing activities related to True Value’s
program to provide interest free loans to members to open new
stores or make store expansions. The loans are for a period of
ten years and are generally repaid through the members’ non
Class B common stock portion of the annual patronage dividend.
The amount of the loans issued during 2008, 2007 and 2006 were
$2,752, $1,880 and $270, respectively.
True Value also had non-cash financing and investing activities
by entering into capital leases in the amount of $37, $953 and
$3,817 for 2008, 2007 and 2006, respectively. True Value’s capital
leases in 2008, 2007 and 2006 primarily related to the acquisition
of warehouse office equipment, warehouse equipment, and paint
manufacturing and computer equipment, respectively.
Cash paid for interest during 2008, 2007 and 2006 totaled $9,925,
$12,236 and $14,161, respectively. Cash paid for state income
taxes during 2008, 2007 and 2006 totaled $57, $38 and $32,
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 cease offering the plan to new partici-
pants and to freeze the benefit and service accruals except for
vesting purposes 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
$3,620 was recorded in 2006. The plans for the certain partici-
pants covered by certain collective bargaining agreements were
similarly amended at later dates between year end 2006 and
September 30, 2008. As of September 30, 2008 all True Value
sponsored plans were frozen.
January 3, December 29,
($ in thousands) 2009 2007
Change in projected benefit obligation:
Projected benefit obligation at
beginning of year $ 76,320 $ 74,766
Service cost 225 758
Interest cost 4,091 4,447
Benefit payments (271) (393)
Actuarial (gains)/losses (6,498) 4,380
Settlements (6,525) (7,638)
Projected benefit obligation at end of year 67,342 76,320
Change in plan assets:
Fair value of plan assets at
beginning of year 67,828 68,045
Actual return/(loss) on assets (19,701) 4,512
Employer contributions 1,384 3,302
Benefit payments (270) (393)
Settlements (6,526) (7,638)
Fair value of plan assets at end of year 42,715 67,828
Reconciliation of funded status:
Unfunded status at end of fiscal year (24,627) (8,492)
Actuarial (gain)/loss:
Prior year balance 13,483 10,878
Current year amortization (204) (1,230)
Current year settlement impact (2,862) (1,309)
Loss arising during current period 18,392 5,144
Actuarial loss 28,809 13,483
Net amount recognized $ 4,182 $ 4,991
The Accumulated Benefit Obligation (”ABO”) for True Value
administered pension plans was $67,342 and $75,602 at January 3,
2009 and December 29, 2007, respectively.
($ in thousands)