Pep Boys 2012 Annual Report Download - page 102

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THE PEP BOYS—MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended February 2, 2013, January 28, 2012 and January 29, 2011
NOTE 13—BENEFIT PLANS (Continued)
The following actuarial assumptions were used to determine benefit obligation and pension
expense:
Year Ended
February 2, January 28, January 29,
2013 2012 2011
Benefit obligation assumptions:
Discount rate .......................... N/A 4.60% 5.70%
Rate of compensation increase .............. N/A N/A N/A
Pension expense assumptions:
Discount rate .......................... 4.60% 5.70% 6.10%
Expected return on plan assets .............. 6.80% 6.80% 6.95%
Rate of compensation expense .............. N/A N/A N/A
The Company selected the discount rate for the benefit obligation at January 28, 2012 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 2012 and fiscal 2011, and 6.95% for fiscal 2010.
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