Napa Auto Parts 2004 Annual Report Download - page 39

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Other Postretirement Benefits
Net Employer
Pension Contribution Value Due to
(in thousands) Benefits (Excluding MMA Subsidy) MMA Subsidy
Employer Contribution
2005 (expected) $ 31,235 $ — $ —
Expected Benefit Payments
2005 31,794 3,014 —
2006 33,802 3,124 (736)
2007 36,384 3,082 (797)
2008 39,442 3,020 (856)
2009 43,254 2,821 (477)
2010 through 2014 288,424 10,483 (432)
Information about the expected cash flows for the pension plans and other post retirement benefit plans follows:
Net periodic benefit cost included the following components:
The assumptions used in measuring the net periodic benefit costs for the plans follow:
The effect of a one-percentage point change in the 2004
assumed health care cost trend is as follows:
The MMA was signed December 8, 2003 to make additional
voluntary benefits available through Medicare. The federal
government will begin making subsidy payments to qualifying
employers in 2006. Effective July 1, 2004, the Company adopted
FASB Staff Position No. 106-2 (FSP 106-2), Accounting and
Disclosure Requirements Related to the Medicare Prescription
Drug, Improvement and Modernization Act of 2003 (which
superseded FSP No. 106-1). FSP 106-2 provides authoritative
guidance on accounting for the federal subsidy and other
provisions of MMA. The adoption of FSP 106-2 reduced the
Company’s accumulated postretirement benefit obligations by
approximately $6.2 million and resulted in an unrecognized
actuarial gain of a similar amount. The adoption resulted in
approximately a $417,000 reduction in postretirement benefit
cost for the year ended December 31, 2004.
The Company has a defined contribution plan that covers
substantially all of its domestic employees. The Company’s
contributions are determined based on 20% of the first 6% of the
covered employee’s salary. Total plan expense was approximately
$6,034,000 in 2004, $5,674,000 in 2003 and $6,112,000 in 2002.
(in thousands) Decrease Increase
Total service and interest cost components
on 2004 net periodic postretirement health
care benefit cost $ (364) $ 573
Accumulated postretirement benefit obligation
for health care benefits at December 31, 2004 (3,900) 5,861
Pension Benefits Other Postretirement Benefits
(in thousands) 2004 2003 2002 2004 2003 2002
Service cost $ 35,740 $ 32,488 $ 27,021 $460 $ 90 $ 235
Interest cost 60,039 57,520 53,220 1,256 481 877
Expected return on plan assets (81,962) (77,763) (77,690) –––
Amortization of prior service cost (1,006) (3,145) (2,864) 371 372 487
Amortization of actuarial loss 13,600 8,588 974 996 150 268
Net periodic benefit cost $ 26,411 $ 17,688 $ 661 $ 3,083 $ 1,093 $ 1,867
Pension Benefits Other Postretirement Benefits
2004 2003 2002 2004 2003 2002
Weighted average discount rate 6.25% 6.75% 7.35% 6.25% 6.75% 7.35%
Rate of increase in future compensation levels 3.25% 4.15% 4.15% —––
Expected long-term rate of return on plan assets 8.75% 8.95% 9.45% —––
Health care cost trend covered charges —–– 10.00% 10.00% 6.50%