Pep Boys 2009 Annual Report Download - page 90

Download and view the complete annual report

Please find page 90 of the 2009 Pep Boys annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 164

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164

retirement and death benefits. Retirement benefits were based on salary and bonuses; death benefits
were 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
$14,441,000 payment and recorded a charge of $6,005,000. The SERP currently consists of only the
defined contribution plan which we refer to as our ‘‘Account Plan.’’
The Company has two qualified 401(k) savings plans, which cover all full-time employees who are
at least 21 years of age with one or more years of service. The Company contributes the lesser of 50%
of the first 6% of a participant’s contributions or 3% of the participant’s compensation. For fiscal 2009,
and again for fiscal 2010, the Company’s contributions were conditional upon the achievement of
certain pre-established financial performance goals. The Company’s savings plans’ contribution expense
was $3,111,000, $3,286,000 and $3,480,000 in fiscal 2009, 2008 and 2007, respectively.
We also have a defined benefit pension plan covering our full-time employees hired on or before
February 1, 1992. 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 benefits payments. Pension plan assets are stated at fair market value and are
composed primarily of money market funds, and collective trust funds primarily invested in equity and
fixed income investments.
The expense under these plans for fiscal 2009, 2008 and 2007 was $6,415,000, $11,925,000 and
$7,532,000, respectively. The fiscal 2008 pension expense includes a SERP settlement charge of
$6,005,000. Pension expense is calculated based upon a number of actuarial assumptions, including an
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 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
Account Plan, we do not expect to make any cash contributions in fiscal 2010. See Note 14 of Notes to
Consolidated Financial Statements in ‘‘Item 8 Financial Statements and Supplementary Data’’ for
further discussion of our pension plans.
32