Pep Boys 2008 Annual Report Download - page 136

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)
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:
January 31, February 2,
2009 2008
Projected benefit obligation ......................... $— $18,369
Accumulated benefit obligation ...................... — 15,552
January 31, February 2,
2009 2008
Estimated Amortization ............................ $1,760 $1,623
The following actuarial assumptions were used by the Company to determine pension expense and
to present disclosure benefit obligations:
January 31, February 2, February 3,
2009 2008 2007
Weighted-Average Assumptions:
Measurement date ........................ January 31, February 2, December 31,
2009 2008 2006
Discount rate ........................... 7.00% 6.50% 5.90%
Rate of compensation increase ............... N/A 4.00%(1) 4.00%(1)
Weighted-Average Assumptions for Net Periodic
Benefit Cost Development:
Discount rate ........................... 6.50% 5.90% 5.70%
Expected return on plan assets ............... 6.70% 6.30% 6.30%
Rate of compensation expense ............... 4.00%(1) 4.00%(1) 4.00%(1)
(1) 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 6.70% long-term rate of
return on assets assumption for fiscal year 2008 and 6.30% for fiscal year 2007 and fiscal year 2006.
The Company selected the discount rate at January 31, 2009 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 and fixed income mutual fund 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:
January 31, February 2,
Plan Assets 2009 2008
Equity securities ................................. 44% 54%
Fixed income ................................... 56% 46%
Total ......................................... 100% 100%
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