Sears 2007 Annual Report Download - page 78

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SEARS HOLDINGS CORPORATION
Notes to Consolidated Financial Statements—(Continued)
NOTE 10—BENEFIT PLANS
We sponsor a number of pension and postretirement benefit plans. Expenses for retirement and
savings-related benefit plans were as follows:
millions 2007 2006 2005
Retirement/401(k) Savings Plans ............................ $91 $ 96 $ 83
Pension plans ........................................... (21) (4) 73
Postretirement benefits ................................... 6 46 33
Total .................................................. $76 $138 $189
Retirement Savings Plans
We sponsor Sears and Kmart 401(k) retirement savings plans for employees meeting certain service
eligibility requirements. We match a portion of employee contributions made to the plans. Total expense related
to the Retirement Savings Plans was $91 million, $96 million, and $83 million in fiscal 2007, fiscal 2006 and
fiscal 2005, respectively.
Kmart’s Benefit Plans
Prior to 1996, the Predecessor Company (defined in Note 13) had a tax-qualified and a non-qualified
defined benefit pension plan, which covered eligible associates who met certain requirements of age, length of
service, and hours worked per year. Effective January 31, 1996, the pension plans were frozen, and associates no
longer earn additional benefits under the plans.
The non-qualified, defined benefit plan is for certain current and former Kmart associates, and is funded as
benefits are paid. The benefit obligation was $2 million at each of February 2, 2008 and February 3, 2007, and is
included in the accompanying consolidated balance sheet. The projected benefit obligation is equal to the
accumulated benefit obligation for all periods presented.
Full-time Kmart associates who have worked 10 years and who have retired after age 55 have the option of
participation in Kmart’s medical plan until age 65. The plan is contributory, with retiree contributions adjusted
annually. The accounting for the plan anticipates future cost-sharing changes that are consistent with our
expressed intent to increase the retiree contribution rate annually. There were no accrued post-retirement benefit
costs as of February 2, 2008 and February 3, 2007.
Sears’ Benefit Plans
Expense associated with the Sears benefit plans is included in the consolidated financial statements
subsequent to the effective date of the Merger. Certain domestic full-time and part-time employees of Sears are
eligible to participate in noncontributory defined benefit plans after meeting age and service requirements.
Substantially all full-time Canadian employees as well as some part-time employees are eligible to participate in
contributory defined benefit plans. Pension benefits are based on length of service, compensation and, in certain
plans, social security or other benefits. Funding for the various plans is determined using various actuarial cost
methods.
Effective January 1, 2006, the Sears domestic pension plan was frozen and domestic associates no longer
earn additional benefits under the plan. Benefits earned through December 31, 2005 will be paid out to eligible
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