Pep Boys 2011 Annual Report Download - page 108

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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 13—BENEFIT PLANS (Continued)
Pension expense follows:
Year Ended
January 28, January 29, January 30,
(dollar amounts in thousands) 2012 2011 2010
Service cost ........................... $ — $ — $ —
Interest cost ........................... 2,558 2,561 2,539
Expected return on plan assets .............. (2,745) (2,151) (1,804)
Amortization of prior service cost . . . . . . . . . . . 14 14 14
Recognized actuarial loss .................. 1,499 1,672 1,766
Total pension expense .................... $1,326 $ 2,096 $ 2,515
The following actuarial assumptions were used to determine benefit obligation and pension
expense:
Year Ended
January 22, January 29, January 30,
2012 2011 2010
Benefit obligation assumptions:
Discount rate .......................... 4.60% 5.70% 6.10%
Rate of compensation increase . . . . . . . . . . . . . . N/A N/A N/A
Pension expense assumptions:
Discount rate .......................... 5.70% 6.10% 7.00%
Expected return on plan assets .............. 6.80% 6.95% 6.70%
Rate of compensation expense . . . . . . . . . . . . . . N/A N/A N/A
The Company selected the discount rate for the benefit obligation at January 29, 2011 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 a
long-term rate of return on assets of 6.80% for fiscal 2011, 6.95% for fiscal 2010 and 6.70% for fiscal
2009.
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