True Value 2009 Annual Report Download - page 40

Notes To Consolidated Financial Statements
($ in thousands)
2009 Financial Report 25
10. SUPPLEMENTAL CASH FLOW INFORMATION
The annual patronage dividend is satisfied through cash payments
and issuance of subordinated promissory notes and Redeemable
Class B nonvoting common stock; for members with loss allo-
cation accounts, the Class B nonvoting common stock is offset
to satisfy members’ remaining allocation of the 1999 loss. Non-
cash operating and financing activities relating to the issuance
of patronage dividends were as follows for the years ended:
January 2, January 3, December 29,
($ in thousands) 2010 2009 2007
Distribution of annual
patronage dividend:
Patronage dividend
payable in cash $ 23,520 $ 17,509 $ 17,392
Issuance of subordinated
promissory notes 20,754 16,520 8,857
Issuance of Redeemable
Class B nonvoting
common stock 12,533 21,523 28,721
Reduction of Loss
allocation accounts 457 611 1,161
Total $ 57,264 $ 56,163 $ 56,131
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 2009
and 2008 of $8,684 and $9,434, respectively, against obligation
owed by the member to True Value for loss allocation accounts,
amounts related to the 2001 loss and accounts receivables of
$2,861 and $2,770. The remaining amount due to members was
partially satisfied with subordinated promissory installment notes
of $5,598 and $5,321 in 2009 and 2008, respectively.
True Value exercised its set-off rights with member accounts
receivable when True Value member notes and interest came
due. True Value in 2009, 2008 and 2007 set off $2,599, $573 and
$565, respectively, of notes and interest payments due to mem-
bers against amounts due from members for accounts receivable.
Historically, True Value has offered the members who own the
subordinated promissory notes with a scheduled maturity in
December of the current year the option to extend the maturity
of their notes at a new rate and term. For 2009, and in light of
the current economic conditions, True Value has chosen to offer
its members improved liquidity on their investment in the co-op
and offered members the option to extend the term of their notes
maturing in December for an additional six months. Whereas in
2008 and 2007, True Value offered members the option to extend
the term of their notes maturing in December for an additional
three-year period. In 2009, 2008 and 2007, True Value extended
subordinated promissory notes, at the option of the member
in the amounts of $10,246, $14,464 and $12,796, respectively.
True Value had non-cash financing activities related to True Value’s
programs to provide interest free or low interest bearing loans to
members to open new stores, make store expansions or remodel
stores. The loans are for periods of five or ten years and are gen-
erally repaid through the members’ non Class B common stock
portion of the annual patronage dividend. The amount of the
loans issued during 2009, 2008 and 2007 were $4,703, $2,877 and
$1,880, respectively.
True Value also had non-cash financing and investing activities
by entering into capital leases in the amount of $1,168, $37 and
$953 for 2009, 2008 and 2007, respectively. True Value’s capi-
tal leases in 2009 and 2007 primarily related to the acquisition
of warehouse equipment and in 2008 primarily related to ware-
house office equipment.
Cash paid for interest during 2009, 2008 and 2007 totaled $7,283,
$9,925 and $12,236, respectively. Cash paid for state income taxes
during 2009, 2008 and 2007 totaled $58, $57 and $38, 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 agree-
ments. The plans for the certain participants covered by certain