Napa Auto Parts 2010 Annual Report Download - page 59

Table of Contents


The estimated amounts that will be amortized from accumulated other comprehensive loss into net periodic benefit cost in 2011 are
as follows:

 
 

Actuarial loss $ 50,543 $ 1,733
Prior service credit (6,956) (1,059)
Total $ 43,587 $ 674
The assumptions used in measuring the net periodic benefit costs for the plans follow:
 
     
Weighted average discount rate  6.97% 6.49%  5.79% 5.75%
Rate of increase in future compensation levels  3.75% 3.75%  — —
Expected long-term rate of return on plan assets  8.00% 8.25%  — —
A 7.5% annual rate of increase in the per capita cost of covered health care benefits was assumed on December 31, 2009. The rate
was assumed to decrease ratably to 5% at December 31, 2014, and thereafter. The effect of a one-percentage-point change in the assumed
health care cost trend rate is not significant.
The Company has two defined contribution plans that cover substantially all of its domestic employees. The Company’s matching
contributions are determined based on the employee’s participation in the U.S. pension plan. Pension plan participants who continue
earning credited service after 2008 receive a matching contribution of 20% of the first 6% of the employee’s salary. Other employees
receive a matching contribution of 100% of the first 5% of the employee’s salary. Total plan expense for both plans was approximately
$33,476,000 in 2010, $31,783,000 in 2009, and $7,252,000 in 2008.
 
The Company guarantees the borrowings of certain independently controlled automotive parts stores (independents) and certain other
affiliates in which the Company has a noncontrolling equity ownership interest (affiliates). Presently, the independents are generally
consolidated by unaffiliated enterprises that have a controlling financial interest through ownership of a majority voting interest in the
entity. The Company has no voting interest or other equity conversion rights in any of the independents. The Company does not control
the independents or the affiliates, but receives a fee for the guarantee. The Company has concluded that the independents are variable
interest entities, but that the Company is not the primary beneficiary. Specifically, the equity holders of the independents have the power
to direct the activities that most significantly impact the entity’s economic performance including, but not limited to, decisions about
hiring and terminating personnel, local marketing and promotional initiatives, pricing and selling activities, credit decisions, monitoring
and maintaining appropriate inventories, and store hours. Separately, the Company concluded the affiliates are not variable interest
entities. The Company’s maximum exposure to loss as a result of its involvement with these independents and affiliates is generally equal
to the total borrowings subject to the Company’s guarantee. While such borrowings of the independents and affiliates are outstanding, the
Company is required to maintain compliance with certain covenants, including a maximum debt to capitalization ratio and certain
limitations on additional borrowings. At December 31, 2010, the Company was in compliance with all such covenants.
At December 31, 2010, the total borrowings of the independents and affiliates subject to guarantee by the Company were
approximately $200,900,000. These loans generally mature over periods from one to six years. In the event that the Company is required
to make payments in connection with guaranteed obligations of the
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