Pep Boys 2009 Annual Report Download - page 125

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THE PEP BOYS—MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended January 30, 2010, January 31, 2009 and February 2, 2008
(dollar amounts in thousands, except share and per share data)
NOTE 14—BENEFIT PLANS (Continued)
The following actuarial assumptions were used to determine benefit obligation and pension
expense:
Year Ended
January 30, January 31, February 2,
2010 2009 2008
Benefit obligation assumptions:
Discount rate ......................... 6.10% 7.00% 6.50%
Rate of compensation increase ............. N/A N/A 4.00%(1)
Pension expense assumptions:
Discount rate ......................... 7.00% 6.50% 5.90%
Expected return on plan assets ............. 6.70% 6.70% 6.30%
Rate of compensation expense ............. N/A 4.00%(1) 4.00%(1)
(1) Bonuses are assumed to be 25% of base pay for the SERP.
The Company selected the discount rate for the benefit obligation at January 30, 2010 to reflect a
rate commensurate with a model bond portfolio with durations that match the expected payment
patterns of the plans. 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 2009 and 2008 and 6.30% for fiscal 2007.
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