Pep Boys 2011 Annual Report Download - page 107

Download and view the complete annual report

Please find page 107 of the 2011 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 172

  • 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
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172

THE PEP BOYS—MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended January 29, 2011, January 30, 2010 and January 31, 2009
NOTE 12—EARNINGS PER SHARE (Continued)
diluted earnings per share calculation were 870,000, 978,000 and 1,125,000 as of January 28, 2012,
January 29, 2011, and January 30, 2010, respectively.
NOTE 13—BENEFIT PLANS
DEFINED BENEFIT AND CONTRIBUTION PLANS
On December 31, 2008, the Company paid $14.4 million to terminate the defined benefit portion
of its Supplemental Executive Retirement Plan (SERP) and recorded a $6.0 million settlement charge.
The Company continues to maintain the non-qualified defined contribution portion of the SERP plan
(the ‘‘Account Plan’’) for key employees designated by the Board of Directors. The Company’s
contribution expense for the Account Plan was $0.3 million, $1.2 million and $0.8 million for fiscal
2011, 2010 and 2009, respectively.
The Company has a qualified 401(k) savings plan and a separate savings plan for employees
residing in Puerto Rico, 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 under both savings plans. For fiscal 2011, 2010
and 2009, the Company’s contributions were conditional upon the achievement of certain
pre-established financial performance goals which were met in fiscal 2010 and 2009, but not in fiscal
2011. The Company’s savings plans’ contribution expense was $3.0 million and $3.1 million in fiscal
2010 and 2009, respectively.
The Company also has a defined benefit pension plan (the ‘‘Plan’’) covering 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. During the third quarter of fiscal 2011, the
Company began the process of terminating the Plan. The termination of the Plan is expected to be
completed by the end of fiscal 2012. In order to terminate the Plan, in accordance with Internal
Revenue Service and Pension Benefit Guaranty Corporation requirements, the Company is required to
fully fund the Plan on a termination basis and will commit to contribute the additional assets necessary
to do so. Plan participants will not be adversely affected by the Plan termination, but rather will have
their benefits either converted into a lump sum cash payment or an annuity contract placed with an
insurance carrier. Until the Plan is terminated, the Plan’s trustee will continue to maintain and invest
Plan assets and will administer benefits payments. The Company uses a fiscal year end measurement
date for determining the benefit obligation and the fair value of Plan assets. 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.
63