Sears 2007 Annual Report Download - page 80

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SEARS HOLDINGS CORPORATION
Notes to Consolidated Financial Statements—(Continued)
Pension Plans
millions
2007 2006
Kmart
Sears
Domestic
Sears
Canada Total Kmart
Sears
Domestic
Sears
Canada Total
Change in projected benefit obligation
Beginning balance ................. $2,689 $2,942 $1,278 $6,909 $2,780 $3,354 $1,272 $ 7,406
Benefits earned during the period ...... — — 32 32 — — 34 34
Interest cost ....................... 154 170 74 398 150 172 63 385
Actuarial gain ..................... (127) (62) (23) (212) (108) (233) (11) (352)
Benefits paid ...................... (152) (382) (86) (620) (133) (351) (94) (578)
Foreign currency exchange impact ..... — — 220 220 — — (3) (3)
Other ............................ — — 15 15 — — 17 17
Balance as of the measurement date ........ $2,564 $2,668 $1,510 $6,742 $2,689 $2,942 $1,278 $ 6,909
Change in assets at fair value:
Beginning balance ................. $2,264 $2,294 $1,338 $5,896 $1,949 $2,340 $1,216 $ 5,505
Actual return on plan assets .......... 104 112 69 285 207 228 167 602
Company contributions .............. 50 131 3 184 241 77 37 355
Benefits paid ...................... (152) (382) (86) (620) (133) (351) (94) (578)
Foreign currency exchange impact ..... — — 228 228 — — (1) (1)
Other ............................ — — 15 15 — — 13 13
Balance as of the measurement date ........ $2,266 $2,155 $1,567 $5,988 $2,264 $2,294 $1,338 $ 5,896
Funded status ......................... $ (298) $ (513) $ 57 $ (754) $ (425) $ (648) $ 60 $(1,013)
Employer contributions after measurement
date and on or before fiscal year end ..... — 35 — 35 — — — —
Net amount recognized .................. $ (298) $ (478) $ 57 $ (719) $ (425) $ (648) $ 60 $(1,013)
The Investment Committee made up of select members of senior management 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 2,
2008
February 3,
2007
Equity securities ....................................... 43% 43%
Fixed income and other debt securities ...................... 50 50
Other ................................................ 7 7
Total ................................................ 100% 100%
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