Napa Auto Parts 2004 Annual Report Download - page 38

36
notes to consolidated financial statements
(continued)
Following are the asset allocations for the Company's funded
pension plans at December 31, 2004 and 2003, and the target
allocation for 2005, by asset category:
At December 31, 2004 and 2003, the plan held 2,016,932 shares
and 1,619,480 shares, respectively, of common stock of the
Company with a market value of approximately $88,866,024 and
$53,767,000, respectively. Dividend payments received by the
plan on Company stock totaled approximately $2,147,542 and
$1,903,000 in 2004 and 2003, respectively. Fees paid during the
year for services rendered by parties-in-interest were based on
customary and reasonable rates for such services.
The Company’s benefit plan committees in the U.S. and Canada
establish investment policies and strategies and regularly monitor
the performance of the funds. The pension plan strategy imple-
mented by the Company’s management is to achieve long-term
objectives and invest the pension assets in accordance with the
applicable pension legislation in the U.S. and Canada, as well
as fiduciary standards. The long-term primary objectives for the
pension plan are to provide for a reasonable amount of long-term
growth of capital, without undue exposure to risk, protect the
assets from erosion of purchasing power, and provide investment
results that meet or exceed the pension plan's actuarially
assumed long term rate of return.
Based on the investment policy for the pension plans, as well
as an asset study that was performed based on the Company’s
asset allocations and future expectations, the Company’s expected
rate of return on plan assets for measuring 2005 pension expense
or income is 8.5% for the plans. The asset study forecasted
expected rates of return for the approximate duration of the
Company’s benefit obligations, using capital market data and
historical relationships.
The following table sets forth the funded status of the plans and
the amounts recognized in the consolidated balance sheets at
December 31:
For the pension benefits, the following table reflects the total
benefits expected to be paid from the plans' or the Company’s
assets. Of the pension benefits expected to be paid in 2005,
$1,898,000 is expected to be paid from employer assets.
Expected contributions reflect amounts expected to be
contributed to funded plans. For other postretirement benefits,
the above table reflects only the Company’s share of the benefit
cost without regard to income from federal subsidy payments
received pursuant to the Medicare Prescription Drug Improve-
ment and Modernization Act of 2003 (MMA). Expected MMA
subsidy payments, which will reduce the Company’s cost for
the plan, are shown separately.
Target Percentage of Plan
Allocation Assets at December 31
Asset Category 2005 2004 2003
Equity securities 65% 64% 62%
Debt securities 35% 33% 35%
Real estate and other — 3% 3%
100% 100% 100%
Pension Benefits Other Postretirement Benefits
(in thousands) 2004 2003 2004 2003
Funded status at end of year $ (72,987) $ (109,008) $ (22,705) $ (24,408)
Unrecognized net actuarial loss 341,262 340,416 19,309 20,788
Unrecognized prior service (income) cost (1,115) (2,191) 2,646 3,017
Net asset (liability) recognized at end of year $ 267,160 $ 229,217 $ (750) $ (603)
Prepaid benefit cost $ 297,496 $ 256,668 $ — $ —
Accrued benefit cost (30,336) (27,451) (750) (603)
Additional minimum liability (14,112) ———
Intangible asset 688 — — —
Accumulated other comprehensive income 13,424 ———
Net asset (liability) recognized at end of year $ 267,160 $ 229,217 $ (750) $ (603)