Sears 2008 Annual Report Download - page 72

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SEARS HOLDINGS CORPORATION
Notes to Consolidated Financial Statements—(Continued)
benefits for those Sears Canada associates who will not have achieved eligibility for such benefits by
December 31, 2008. The amendments to the post-retirement programs generated a curtailment gain and reduction
to the benefit plan obligation in the amount of $27 million during the fiscal year ended February 2, 2008.
Merger of Plans
The Kmart tax-qualified defined benefit pension plan was merged with and into the Sears domestic pension
plan effective as of the end of the day January 30, 2008. The merged plan was renamed as the Sears Holdings
Pension Plan (“SHC domestic plan”) and Holdings accepted sponsorship of the SHC domestic plan effective as
of that date.
Effective January 1, 2007, the Kmart pre-65 retiree medical plan and the Sears pre-65 and post-65 retiree
medical plans were merged into a master retiree medical program sponsored by Holdings. Effective
December 19, 2007, this master program was merged with a subsidiary’s retiree program, creating a new master
plan, which includes separate Holdings pre-65 and post-65 programs. Eligible Kmart associates who retired on or
after January 1, 2008 and all eligible Sears retirees are covered by both of these programs. Kmart associates who
retired before January 1, 2008 are eligible for the pre-65 program only.
Changes in Accounting for Pensions and Postretirement Plans
Effective January 31, 2009, SFAS No. 158 required us to measure plan assets and benefit obligations at
fiscal year end. We previously performed this measurement at December 31 of each year. The change in our
measurement date did not have a material impact on our results of operations or financial condition.
Pension Plans
2008 2007
millions
SHC
Domestic
Sears
Canada Total Kmart
Sears
Domestic
Sears
Canada Total
Change in projected benefit obligation
Beginning balance ................. $5,232 $1,510 $ 6,742 $2,689 $2,942 $1,278 $6,909
Benefits earned during the period ..... — 23 23 — — 32 32
Interest cost ...................... 356 75 431 154 170 74 398
Actuarial gain ..................... (265) (373) (638) (127) (62) (23) (212)
Benefits paid ..................... (403) (138) (541) (152) (382) (86) (620)
Foreign currency exchange impact .... — (236) (236) — — 220 220
Other ........................... — 7 7 — — 15 15
Balance as of the measurement date ....... $4,920 $ 868 $ 5,788 $2,564 $2,668 $1,510 $6,742
Change in assets at fair value:
Beginning balance ................. $4,421 $1,567 $ 5,988 $2,264 $2,294 $1,338 $5,896
Actual return on plan assets .......... (1,062) (106) (1,168) 104 112 69 285
Company contributions ............. 259 3 262 50 131 3 184
Benefits paid ..................... (403) (138) (541) (152) (382) (86) (620)
Foreign currency exchange impact .... — (267) (267) — — 228 228
Other ........................... — (6) (6) — — 15 15
Balance as of the measurement date ....... $3,215 $1,053 $ 4,268 $2,266 $2,155 $1,567 $5,988
Funded status ......................... $(1,705) $ 185 $(1,520) $ (298) $ (513) $ 57 $ (754)
Employer contributions after measurement
date and on or before fiscal year end ..... — — — — 35 — 35
Net amount recognized ................. $(1,705) $ 185 $(1,520) $ (298) $ (478) $ 57 $ (719)
72