Sears 2006 Annual Report Download - page 81

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SEARS HOLDINGS CORPORATION
Notes to Consolidated Financial Statements—(Continued)
Pension Plans
2006 2005
millions Kmart
Sears
Domestic
Sears
Canada Total Kmart
Sears
Domestic
Sears
Canada Total
Change in projected benefit obligation
Beginning balance ............... $2,780 $3,354 $1,272 $ 7,406 $2,743 $ 3,309 $1,082 $ 7,134
Benefits earned during the period . . . — — 34 34 — 54 22 76
Interest cost .................... 150 172 63 385 151 152 50 353
Actuarial (gain)/loss .............. (108) (233) (11) (352) 6 123 135 264
Benefits paid .................... (133) (351) (94) (578) (120) (271) (64) (455)
Foreign currency exchange impact . . — — (3) (3) — — 36 36
Other .......................... — — 17 17 — (13) 11 (2)
Balance as of the measurement date ..... $2,689 $2,942 $1,278 $ 6,909 $2,780 $ 3,354 $1,272 $ 7,406
Change in assets at fair value:
Beginning balance ................... $1,949 $2,340 $1,216 $ 5,505 $1,739 $ 2,452 $1,126 $ 5,317
Actual return on plan assets ........ 207 228 167 602 90 151 104 345
Company contributions ........... 241 77 37 355 240 21 1 262
Benefits paid .................... (133) (351) (94) (578) (120) (271) (64) (455)
Foreign currency exchange impact . . — — (1) (1) — — 38 38
Other .......................... — — 13 13 — (13) 11 (2)
Balance as of the measurement date ..... $2,264 $2,294 $1,338 $ 5,896 $1,949 $ 2,340 $1,216 $ 5,505
Funded status ....................... $ (425) $ (648) $ 60 $(1,013) $ (831) $(1,013) $ (56) $(1,900)
Unrecognized net loss ................ — — — — 111 76 169 356
Net amount recognized ............... $ (425) $ (648) $ 60 $(1,013) $ (720) $ (937) $ 113 $(1,544)
The Finance Committee of the Company’s Board of Directors has appointed a non-affiliated third party
professional to advise the Committee with respect to the domestic pension plan assets. The plan’s overall
investment objective is to provide a long-term return that, along with Company contributions, is expected to meet
future benefit payment requirements. A long-term horizon has been adopted in establishing investment policy
such that the likelihood and duration of investment losses are carefully weighed against the long-term potential
for appreciation of assets. The plan’s investment policy requires investments to be diversified across individual
securities, industries, market capitalization and valuation characteristics. In addition, various techniques are
utilized to monitor, measure and manage risk.
Plan assets were invested in the following classes of securities (none of which were securities of the
Company):
Plan Assets as of
February 3,
2007
January 28,
2006
Equity securities ............................................... 43% 43%
Fixed income and other debt securities .............................. 50 49
Other ........................................................ 7 8
Total ........................................................ 100% 100%
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