True Value 2009 Annual Report Download - page 41

Notes To Consolidated Financial Statements
($ in thousands)
26 True Value Company
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 2, January 3,
($ in thousands) 2010 2009
Change in projected benefit obligation:
Projected benefit obligation at
beginning of year $67,342 $76,320
Service cost – 225
Interest cost 4,141 4,091
Benefit payments (251) (271)
Actuarial (gains)/losses 5,784 (6,498)
Settlements (5,637) (6,525)
Projected benefit obligation at end of year 71,379 67,342
Change in plan assets:
Fair value of plan assets at
beginning of year 42,715 67,828
Actual return/(loss) on assets 8,919 (19,701)
Employer contributions 7,231 1,384
Benefit payments (251) (271)
Settlements (5,637) (6,525)
Fair value of plan assets at end of year 52,977 42,715
Reconciliation of funded status:
Unfunded status at end of fiscal year (18,402) (24,627)
Actuarial (gain)/loss:
Prior year balance 28,809 13,483
Current year amortization (863) (204)
Current year settlement impact (2,427) (2,862)
Loss arising during current period 1,543 18,392
Actuarial loss 27,062 28,809
Net amount recognized $ 8,660 $ 4,182
The Accumulated Benefit Obligation (“ABO”) for True Value
administered pension plans was $71,379 and $67,342 at January
2, 2010 and January 3, 2009, respectively.
As of January 3, 2009, the pension plans had unrecognized
actuarial losses of $28,809. The major source of actuarial losses
under the plans are related to the lower than expected asset
returns during the same period, including the significant decline
in the equity market in 2008. Deviations from expected returns
on assets are rolled into unrecognized actuarial losses over a
three-year period. Actuarial losses are amortized using the min-
imum amortization methodology as described in ASC 715-30,
“Defined Benefit Plans - Pensions”. At January 2, 2010, unrecog-
nized actuarial losses decreased $1,747 to $27,062. Major sources
of this change that occurred during 2009 include greater than
expected asset returns during 2009 of $4,240 as a result of the
rebound in the equity markets, actuarial losses recognized under
ASC 715-30 settlement accounting of $2,427 and amortization
of actuarial losses recognized of $863. Partially offsetting these
decreases were increases resulting from a decrease in the dis-
count rate during 2009 of $2,667, actuarial losses of $2,783, and
miscellaneous census items of $333.
One of True Value’s pension plans is the supplemental retirement
plan (“SRP”), which is an unfunded unqualified defined bene-
fit plan. The SRP had a Projected Benefit Obligation (“PBO”)
of $3,738 and $3,642 as of January 2, 2010 and January 3, 2009,
respectively. Since the SRP is an unfunded plan, there were no
plan assets at January 2, 2010 and January 3, 2009.
At January 2, 2010, True Value recorded in the Pension line of the
Consolidated Balance Sheet a net unfunded PBO of $18,402 for
all True Value administered pension plans. The unrecognized actu-
arial loss for both plans of $27,062 was recorded as a reduction
of Members’ equity in Accumulated other comprehensive loss.
The amount of Accumulated other comprehensive income that
is expected to be recognized into expense during 2010 resulting
from recognition of deferred actuarial losses from amortization
and settlements is $4,005.
The components of net periodic pension cost for True Value
administered pension plans were as follows for the years ended:
January 2, January 3, December 29,
($ in thousands) 2010 2009 2007
Components of net periodic
pension cost:
Service cost $ – $ 225 $ 758
Interest cost 4,141 4,091 4,447
Expected return on assets (4,679) (5,189) (5,276)
Amortization of actuarial loss 863 204 1,230
Settlement loss 2,427 2,862 1,309
Net pension cost $ 2,752 $ 2,193 $ 2,468
The assumptions used to determine True Value’s net periodic
pension cost for all plans were as follows for the years ended:
January 2, January 3, December 29,
2010 2009 2007
Measurement Date 1/3/2009 12/29/2007 12/30/2006
Weighted average assumptions:
Discount rate 6.25% 6.00% 5.75%
Expected return on assets 8.00% 8.00% 8.00%
Rate of compensation increase N/A 3.50% 3.50%