Macy's 2008 Annual Report Download - page 82

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Net pension costs and other amounts recognized in other comprehensive loss for the Company’s Pension
Plan included the following actuarially determined components:
2008 2007 2006
(millions)
Net Periodic Pension Cost
Service cost ......................................................... $ 97 $104 $119
Interest cost ......................................................... 159 157 163
Expected return on assets .............................................. (192) (196) (206)
Amortization of net actuarial loss ........................................ 5 23 27
Amortization of prior service credit ...................................... – (1) –
69 87 103
Other Changes in Plan Assets and Projected Benefit Obligation
Recognized in Other Comprehensive Income
Net actuarial loss ..................................................... 604 40 –
Amortization of net actuarial loss ........................................ (5) (23) –
Amortization of prior service credit ......................................–1–
599 18 –
Total recognized in net periodic pension cost and other comprehensive income ........ $668 $105 $103
The estimated net actuarial loss and prior service credit for the Pension Plan that will be amortized from
accumulated other comprehensive loss (income) into net periodic benefit cost during 2009 are $0 and $(1)
million, respectively.
As permitted under SFAS No. 87, “Employers’ Accounting for Pensions,” the amortization of any prior
service cost is determined using a straight-line amortization of the cost over the average remaining service period
of employees expected to receive the benefits under the Pension Plan.
The following weighted average assumptions were used to determine benefit obligations for the Pension
Plan at January 31, 2009 and February 2, 2008:
2008 2007
Discount rate ........................................................... 7.45% 6.25%
Rate of compensation increases ............................................ 5.40% 5.40%
The following weighted average assumptions were used to determine net periodic pension cost for the
Company’s Pension Plan:
2008 2007 2006
Discount rate prior to plan merger or change in measurement date .................. – 5.85% 5.70%
Discount rate subsequent to plan merger or change in measurement date ............. 6.25% 5.95% 6.50%
Expected long-term return on plan assets ...................................... 8.75% 8.75% 8.75%
Rate of compensation increases .............................................. 5.40% 5.40% 5.40%
The Pension Plan’s assumptions are evaluated annually and updated as necessary. The discount rate used to
determine the present value of the Company’s future Pension Plan obligations is based on a yield curve
constructed from a portfolio of high quality corporate debt securities with various maturities. Each year’s
expected future benefit payments are discounted to their present value at the appropriate yield curve rate, thereby
generating the overall discount rate for Pension Plan obligations. The Company develops its long-term rate of
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