Napa Auto Parts 2005 Annual Report Download - page 38

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7. EMPLOYEE BENEFIT PLANS (CONTINUED)
Following are the asset allocations for the Company’s funded
pension plans at December 31, 2005 and 2004, and the target
allocation for 2006, by asset category:
At December 31, 2005 and 2004, the plan held 2,016,932
shares of common stock of the Company with a market value
of approximately $88,584,000 and $88,866,000, respectively.
Dividend payments received by the plan on Company stock
totaled approximately $2,521,000 and $2,420,000 in 2005
and 2004, respectively.Fees paid during the year for services
rendered by parties-in-interest were based on customary and
reasonable rates for such services.
The Company’s benefit plan committees in the U.S. and Canada
establish investment policies and strategies and regularly monitor
the performance of the funds. The pension plan strategy
implemented by the Company’s management is to achieve
long-term objectives and invest the pension assets in accor-
dance with the applicable pension legislation in the U.S. and
Canada, as well as fiduciary standards. The long-term primary
objectives for the pension plan are to provide for a reasonable
amount of long-term growth of capital, without undue exposure
to risk, protect the assets from erosion of purchasing power,
and provide investment results that meet or exceed the pension
plan’sactuarially assumed long term rate of return.
Based on the investment policy for the pension plans, as well
as an asset study that was performed based on the Company’s
asset allocations and future expectations, the Company’s
expected rate of return on plan assets for measuring 2006
pension expense or income is 8.25% for the plans. The asset
study forecasted expected rates of return for the approximate
duration of the Company’s benefit obligations, using capital
market data and historical relationships.
The following table sets forth the funded status of the plans
and the amounts recognized in the consolidated balance sheets
at December 31:
For the pension benefits, the following table reflects the total
benefits expected to be paid from the plans’ or the Company’s
assets. Of the pension benefits expected to be paid in 2006,
$2,066,000 is expected to be paid from employer assets. Expected
contributions reflect amounts expected to be contributed to
funded plans. For other postretirement benefits, the table below
reflects only the Company’s share of the benefit cost without
regard to income from federal subsidy payments received
pursuant to the Medicare Prescription Drug Improvement and
Modernization Act of 2003 (MMA). Expected MMA subsidy
payments, which will reduce the Company’scost for the plan,
are shown separately.
Notes to Consolidated Financial Statements
(continued)
Target Percentage of Plan
Allocation Assets at December 31,
Asset Category 2006 2005 2004
Equity securities 65% 64% 64%
Debt securities 35% 34% 33%
Real estate and other —2% 3%
100% 100% 100%
Other
Pension Postretirement
Benefits Benefits
(In thousands) 2005 2004 2005 2004
Funded status at
end of year $ (121,399) $ (72,987) $ (24,267) $ (22,705)
Unrecognized net
actuarial loss 490,558 341,262 20,906 19,309
Unrecognized prior
service cost (income) 233 (1,115) 2,275 2,646
Net asset (liability)
recognized at end of year $ 369,392 $ 267,160 $ (1,086) $ (750)
Prepaid benefit cost $ 402,993 $ 297,496 $ — $ —
Accrued benefit cost (33,601) (30,336) (1,086) (750)
Additional minimum
liability (11,995) (14,112) ——
Intangible asset 163 688 ——
Accumulated other
comprehensive income 11,832 13,424 ——
Net asset (liability)
recognized at end of year $ 369,392 $ 267,160 $ (1,086) $ (750)