Macy's 2011 Annual Report Download - page 65

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F-25
Net pension costs and other amounts recognized in other comprehensive income for the Pension Plan included the
following actuarially determined components:
2011 2010 2009
(millions)
Net Periodic Pension Cost
Service cost.............................................................................................. $ 102 $ 99 $ 81
Interest cost.............................................................................................. 160 158 173
Expected return on assets......................................................................... (248)(218)(187)
Amortization of net actuarial loss............................................................ 88 61 —
Amortization of prior service credit......................................................... (1)(1)(1)
101 99 66
Other Changes in Plan Assets and Projected Benefit Obligation
Recognized in Other Comprehensive Income
Net actuarial (gain) loss ........................................................................... 530 (9) 311
Amortization of net actuarial loss............................................................ (88)(61) —
Amortization of prior service credit......................................................... 1 1 1
443 (69) 312
Total recognized in net periodic pension cost and
other comprehensive income....................................................................... $ 544 $ 30 $ 378
The estimated net actuarial loss and prior service credit for the Pension Plan that will be amortized from accumulated
other comprehensive (income) loss into net periodic benefit cost during 2012 are $139 million and $(1) million, respectively.
As permitted under ASC Subtopic 715-30, “Defined Benefit Plans – Pension,” 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 the projected benefit obligations for the Pension
Plan at January 28, 2012 and January 29, 2011:
2011 2010
Discount rate.................................................................................................................... 4.65% 5.40%
Rate of compensation increases....................................................................................... 4.50% 4.50%
The following weighted average assumptions were used to determine the net periodic pension cost for the Pension Plan:
2011 2010 2009
Discount rate ................................................................................................... 5.40% 5.65% 7.45%
Expected long-term return on plan assets ....................................................... 8.00% 8.75% 8.75%
Rate of compensation increases...................................................................... 4.50% 4.50% 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 projected benefit obligation for the Pension Plan 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 the projected benefit obligation.
The Company develops its expected long-term rate of return on plan asset assumption by evaluating input from several
professional advisors taking into account the asset allocation of the portfolio and long-term asset class return expectations, as
well as long-term inflation assumptions. Expected returns for each major asset class are considered along with their volatility
and the expected correlations among them. These expectations are based upon historical relationships as well as forecasts of