Pep Boys 2008 Annual Report Download - page 134

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THE PEP BOYS—MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended January 31, 2009, February 2, 2008 and February 3, 2007
(dollar amounts in thousands, except share data)
NOTE 10—BENEFIT PLANS
DEFINED BENEFIT PLANS
The Company has a defined benefit pension plan covering substantially all of its full-time
employees hired on or before February 1, 1992. Normal retirement age is 65. Pension benefits are
based on salary and years of service. The Company’s policy is to fund amounts as are necessary on an
actuarial basis to provide assets sufficient to meet the benefits to be paid to plan members in
accordance with the requirements of ERISA.
The actuarial computations are made using the ‘‘projected unit credit method.’’ Variances between
actual experience and assumptions for costs and returns on assets are amortized over the remaining
service lives of employees under the plan.
As of December 31, 1996, the Company froze the accrued benefits under the plan and active
participants became fully vested. The plan’s trustee will continue to maintain and invest plan assets and
will administer benefit payments.
The Company also has a Supplemental Executive Retirement Plan (SERP). This unfunded plan
has a defined benefit component that provides key employees designated by the Board of Directors
with retirement and death benefits. Retirement benefits are based on salary and bonuses; death
benefits are based on salary. Benefits paid to a participant under the defined pension plan are
deducted from the benefits otherwise payable under the defined benefit portion of the SERP. On
January 31, 2004, we amended and restated our SERP. This amendment converted the defined benefit
portion of the SERP to a defined contribution portion for certain unvested participants and all future
participants. On December 31, 2008 the Company terminated the defined benefit portion of the SERP
with a $14,441 payment and recorded a $6,005 settlement charge in accordance with SFAS No.88
‘‘Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for
Termination Benefits.’’
The Company uses a fiscal-end measurement date for determining benefit obligations and the fair
value of plan assets of its plans.
Pension expense includes the following:
Year ended
January 31, February 2, February 3,
2009 2008 2007
Service cost ......................................... $ 110 $ 166 $ 246
Interest cost ......................................... 3,346 3,419 3,071
Expected return on plan assets ........................... (2,450) (2,320) (2,176)
Amortization of transitional obligation ...................... 150 163 163
Amortization of prior service cost ......................... 340 370 360
Recognized actuarial loss ............................... 975 1,814 2,335
Net periodic benefit cost ................................ 2,471 3,612 3,999
Settlement charge .................................... 6,005 — —
Total Pension Expense ................................. $8,476 $ 3,612 $ 3,999
70