Napa Auto Parts 2008 Annual Report Download - page 40

notes to consolidated nancial statements (continued)
december 31, 2008
7. employee benet plans (continued)
e assumptions used to measure the pension and other postretire-
ment plan benefit obligations for the plans at December 31, 2008
and 2007, were:
Other
Postretirement
Pension Benefits Benefits
2008 2007 2008 2007
Weighted-average
discount rate 6.50% 6.49% 6.00% 5.75%
Rate of increase in
future compensation
levels 3.75% 3.75% – –
An 8% annual rate of increase in the per capita cost of covered
health care benefits was assumed on December 31, 2008. e rate
was assumed to decrease ratably to 5% at December 31, 2014, and
thereafter.
Other
Postretirement
Pension Benefits Benefits
(in thousands) 2008 2007 2008 2007
Changes in plan assets
Fair value of plan assets
at beginning
of year $ 1,365,776 $ 1,260,538 $ – $ –
Actual return on
plan assets (326,669) 89,248 – –
Exchange rate
(loss) gain (23,098) 21,030 – –
Employer contributions 3,355 35,140 3,882 3,094
Plan participants’
contribution 3,216 3,203 3,782 3,721
Benefits paid (44,713) (43,383) (7,664) (6,815)
Fair value of plan
assets at end of year $ 977,867 $ 1,365,776 $ – $ –
e fair values of plan assets for the Company’s U.S. pension plans
included in the above were $882,211,000 and $1,222,686,000 at
December 31, 2008 and 2007, respectively.
e asset allocations for the Company’s funded pension plans at
December 31, 2008 and 2007, and the target allocation for 2009,
by asset category were:
Target Percentage of Plan
Allocation Assets at December 31
2009 2008 2007
Asset Category
Equity securities 65% 58% 68%
Debt securities 34% 39% 29%
Real estate and other 1% 3% 3%
100% 100% 100%
At December 31, 2008 and 2007, the plan held 2,016,932 shares
of common stock of the Company with a market value of approxi-
mately $76,361,000 and $93,384,000, respectively. Dividend pay-
ments received by the plan on Company stock totaled approximately
$3,146,000 and $2,945,000 in 2008 and 2007, respectively. Fees
paid during the year for services rendered by parties in interest were
based on customary and reasonable rates for such services.
e Company’s benefit plan committees in the U.S. and Canada es-
tablish investment policies and strategies and regularly monitor the
performance of the funds. e pension plan strategy implemented
by the Company’s management is to achieve long-term objectives
and invest the pension assets in accordance with the applicable pen-
sion legislation in the U.S. and Canada, as well as fiduciary stan-
dards. e long-term primary objectives for the pension plans 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 ex-
ceed the pension plans’ actuarially assumed long term rates 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 2009 pension expense or income
is 8.00% for the plans. e asset study forecasted expected rates of
return for the approximate duration of the Company’s benefit obli-
gations, using capital market data and historical relationships.
e following table sets forth the funded status of the plans and the
amounts recognized in the consolidated balance sheets at December 31:
Amounts recognized in the consolidated balance sheets consist of:
Other
Postretirement
Pension Benefits Benefits
(in thousands) 2008 2007 2008 2007
Other long-term
asset $ 7,229 $ 45,680 $ n/a $ n/a
Other current
liability (2,742) (2,200) (3,363) (2,854)
Other long-term
liability (476,650) (65,373) (25,955) (25,786)
$ (472,163) $ (21,893) $ (29,318) $ (28,640)
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