Pep Boys 2006 Annual Report Download - page 102

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THE PEP BOYS—MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended February 3, 2007, January 28, 2006 and January 29, 2005
(dollar amounts in thousands, except share data)
63
The following table sets forth additional fiscal year-end information for the defined benefit portion of
the Company’s SERP for which the accumulated benefit obligation is in excess of plan assets:
Year ended
February 3,
2007
January 28,
2006
Projectedbenefitobligation...................................... $17,499 $16,859
Accumulatedbenefitobligation .................................. 14,264 12,914
The following actuarial assumptions were used by the Company to determine pension expense and to
present disclosure benefit obligations:
Year ended
February 3,
2007
January 28,
2006
January 29,
2005
Weighted-Average Assumptions as of December 31:
Discountrate .................................. 5.90% 5.70%
Rate of compensation increase . . . . . . . . . . . . . . . . . . . 4.0%(1) 4.0%(1)
Weighted-Average Assumptions for Net Periodic
Benefit Cost Development:
Discountrate .................................. 5.70% 5.75% 6.25%
Expectedreturnonplanassets................... 6.30% 6.75% 6.75%
Rate of compensation expense . . . . . . . . . . . . . . . . . . . 4.0%(1) 4.0%(1) 4.0%(1)
(1) In addition, bonuses are assumed to be 25% of base pay for the SERP.
To develop the expected long-term rate of return on assets assumption, the Company considered the
historical returns and the future expectations for returns for each asset class, as well as the target asset
allocation of the pension portfolio. This resulted in the selection of the 6.30% long-term rate of return on
assets assumption.
The Company selected the discount rate at December 31, 2006 to reflect a rate commensurate with a
model bond portfolio with durations that match the expected payment patterns of the plans.
Pension plan assets are stated at fair market value and are composed primarily of money market
funds, stock index funds, fixed income investments with maturities of less than five years, and the
Company’s common stock.
Our target asset allocation is 50% equity securities and 50% fixed income. The weighted average asset
allocations by asset category are as follows:
Plan Assets
As of
December 31,
2006
As of
December 31,
2005
Equitysecurities............................................ 54% 50%
Fixedincome .............................................. 46% 50%
Total...................................................... 100% 100%