Pep Boys 2008 Annual Report Download - page 87

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expected return on plan assets of 6.7% and a discount rate of 6.5%. In developing the expected return
on asset assumptions, we evaluated input from our actuaries, including their review of asset class return
expectations. The discount rate utilized for the pension plans is based on a model bond portfolio with
durations that match the expected payment patterns of the plans. We continue to evaluate our actuarial
assumptions and make adjustments as necessary for the existing plans. In fiscal year 2008, we
contributed an aggregate of $19,918,000 to our pension plans to fund the retirement obligations and for
the termination of the defined benefit portion of the SERP. Based upon the current funded status of
the defined benefit pension plan, we do not expect to make any cash contributions in fiscal year 2009.
See Note 10 of Notes to Consolidated Financial Statements in ‘‘Item 8. Financial Statements and
Supplementary Data’’ for further discussion of our pension plans.
RESULTS OF OPERATIONS
The following discussion explains the material changes in our results of operations for the fifty-two
weeks ended January 31, 2009, the fifty-two weeks ended February 2, 2008 and fifty-three weeks ended
February 3, 2007.
Discontinued Operations
In the third quarter of fiscal year 2007, we adopted our long-term strategic plan. One of the initial
steps in this plan was the identification of 31 low-return stores for closure. We have accounted for
these store closures in accordance with the provisions of SFAS No.146 ‘‘Accounting for Costs
Associated with Exit or Disposal Activities’’ and SFAS No.144, ‘‘Accounting for Impairment or Disposal
of Long-Lived Assets’’ (SFAS No.144). In accordance with SFAS No.144, our discontinued operations
for all periods presented reflect the operating results for 11 of the 31 closed stores because we do not
believe that the customers of these stores are likely to become customers of other Pep Boys stores due
to geographical considerations. The operating results for the other 20 closed stores are included in
continuing operations because we believe that the customers of these stores are likely to become
customers of other Pep Boys stores that are in close proximity.
The following analysis of our results of continuing operations excludes the operating results of the
above-referenced 11 stores which have been classified as discontinued operations for all periods
presented.
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