Napa Auto Parts 2003 Annual Report Download - page 33

The asset allocation for the Company’s pension plan at
December 31, 2003 and 2002, and the target allocation for
2004, by asset category follows:
At December 31, 2003 and 2002, the Company-sponsored
pension plan held 1,619,480 shares of common stock of the
Company with a market value of approximately $53,767,000
and $49,880,000, respectively. Dividend payments received by
the plan on Company stock totaled approximately $1,903,000
and $1,867,000 in 2003 and 2002, respectively. Fees paid dur-
ing the year for services rendered by parties-in-interest were
based on customary and reasonable rates for such services.
The Company’s benefit plan committee establishes investment
policies and strategies and regularly monitors the perform-
ance of the funds. The pension plan strategy implemented by
The accumulated benefit obligation was approximately $657,703,000 and $551,543,000 at December 31, 2003 and 2002,
respectively.
The assumptions used in accounting for the defined benefit plans and other postretirement plan obligations are as follows:
A 10% annual rate of increase in the per capita cost of covered health care benefits is assumed for 2004. The rate was assumed
to decrease gradually, reaching 5% in 2009 and thereafter.
31
Pension Benefits Other Postretirement Benefits
(In Thousands) 2003 2002 2003 2002
CHANGES IN BENEFIT OBLIGATION
Net benefit obligation at beginning of year $ 769,643 $ 662,532 $10,018 $10,769
Service cost 31,031 25,622 90 235
Interest cost 53,338 49,810 481 877
Plan participants’ contributions ——3,209 2,993
Plan amendments —(2,727) (2,104) —
Actuarial loss 36,661 55,556 17,689 677
Gross benefits paid (26,084) (21,150) (4,975) (5,533)
Net benefit obligation at end of year $ 864,589 $769,643 $24,408 $10,018
Pension Benefits Other Postretirement Benefits
2003 2002 2003 2002
Weighted-average discount rate 6.25% 6.75% 6.25% 6.75%
Rate of increase in future compensation levels 3.25% 4.15% ——
Health care cost trend on covered charges ——10.00% 10.00%
9. EMPLOYEE BENEFIT PLANS
The Company’s noncontributory defined benefit pension plan covers substantially all of its employees in the United States. The
benefits are based on an average of the employees’ compensation during the five highest of their last ten years of credited
service. The Company’s funding policy is to contribute amounts deductible for income tax purposes. Contributions are intended
to provide not only for benefits attributed for service to date but also for those expected to be earned in the future. Pension
benefits also include amounts related to a supplemental retirement plan. The Company uses a measurement date of December 31
for its pension and other benefit plans.
Pension Benefits Other Postretirement Benefits
(In Thousands) 2003 2002 2003 2002
CHANGES IN PLAN ASSETS
Fair value of plan assets at beginning of year $ 655,010 $707,158 $— $—
Actual return (loss) on plan assets 99,858 (43,083) ——
Employer contributions 28,900 12,085 1,766 2,540
Plan participants’ contribution ——3,209 2,993
Gross benefits paid (26,084) (21,150) (4,975) (5,533)
Fair value of plan assets at end of year $ 757,684 $655,010 $— $—
Target Percentage of Plan
Allocation Assets at December 31
Asset Category 2004 2003 2002
Equity securities 60% 62% 53%
Debt securities 40% 35% 43%
Real estate and other — 3% 4%
100% 100% 100%