Macy's 2011 Annual Report Download - page 70

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F-30
Net pension costs and other amounts recognized in other comprehensive income for the supplementary retirement plan
included the following actuarially determined components:
2011 2010 2009
(millions)
Net Periodic Pension Cost
Service cost.............................................................................................. $ 6 $ 6 $ 4
Interest cost.............................................................................................. 36 37 42
Amortization of net actuarial loss............................................................ 8 3 —
Amortization of prior service credit......................................................... (1)(1)(2)
49 45 44
Other Changes in Plan Assets and Projected Benefit Obligation
Recognized in Other Comprehensive Income
Net actuarial (gain) loss ........................................................................... 90 22 113
Amortization of net actuarial loss............................................................ (8)(3) —
Amortization of prior service credit......................................................... 1 1 2
83 20 115
Total recognized in net periodic pension cost and
other comprehensive income....................................................................... $ 132 $ 65 $ 159
The estimated net actuarial loss and prior service credit for the supplementary retirement plan that will be amortized from
accumulated other comprehensive (income) loss into net periodic benefit cost during 2012 are $16 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 plans.
The following weighted average assumptions were used to determine the projected benefit obligations for the
supplementary retirement plan at January 28, 2012 and January 29, 2011:
2011 2010
Discount rate.................................................................................................................... 4.65% 5.40%
Rate of compensation increases....................................................................................... 4.90% 4.90%
The following weighted average assumptions were used to determine net pension costs for the supplementary retirement
plan:
2011 2010 2009
Discount rate ................................................................................................... 5.40% 5.65% 7.45%
Rate of compensation increases...................................................................... 4.90% 4.90% 7.20%
The supplementary retirement 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 supplementary retirement
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 rate of compensation increase assumption on an age-graded basis based on recent experience
and reflects an estimate of future compensation levels taking into account general increase levels, seniority, promotions and
other factors. The salary increase assumption is used to project employees’ pay in future years and its impact on the projected
benefit obligation for the supplementary retirement plan.