Sears 2010 Annual Report Download - page 71

SEARS HOLDINGS CORPORATION
Notes to Consolidated Financial Statements—(Continued)
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.
In addition to providing pension benefits, Sears provides domestic and Canadian employees and retirees
certain medical benefits. These benefits provide access to medical plans, with Company subsidies for certain
eligible retirees. Certain domestic Sears retirees are also provided life insurance benefits. To the extent we share
the cost of the retiree medical benefits with retirees, such cost sharing is based on years of service and year of
retirement. Sears’ postretirement benefit plans are not funded. We have the right to modify or terminate these
plans.
In February 2007, Sears Canada announced amendments to its post-retirement programs including the
introduction of a defined contribution component to its pension plan and the discontinuation of retiree medical,
dental and life benefits for those Sears Canada associates who did not achieve 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 year ended February 2, 2008.
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. There were no accrued post-retirement
benefit costs as of January 29, 2011 and January 30, 2010.
Pension Plans
2010 2009
millions
SHC
Domestic
Sears
Canada Total
SHC
Domestic
Sears
Canada Total
Change in projected benefit obligation
Beginning balance ....................... $5,435 $1,256 $ 6,691 $ 4,920 $ 868 $ 5,788
Benefits earned during the period ........... — — — — — —
Interest cost ............................ 320 75 395 336 71 407
Actuarial loss .......................... 176 90 266 525 276 801
Benefits paid ........................... (308) (108) (416) (346) (101) (447)
Foreign currency exchange impact .......... — 88 88 — 142 142
Other ................................. — — — — — —
Balance at the measurement date ............... $5,623 $1,401 $ 7,024 $ 5,435 $1,256 $ 6,691
Change in assets at fair value:
Beginning balance ....................... $3,633 $1,211 $ 4,844 $ 3,215 $1,053 $ 4,268
Actual return on plan assets ............... 452 98 550 591 108 699
Company contributions ................... 277 2 279 173 10 183
Benefits paid ........................... (308) (108) (416) (346) (101) (447)
Foreign currency exchange impact .......... — 85 85 — 154 154
Other ................................. — — — — (13) (13)
Balance at the measurement date ............... $4,054 $1,288 $ 5,342 $ 3,633 $1,211 $ 4,844
Net amount recognized ....................... $(1,569) $ (113) $(1,682) $(1,802) $ (45) $(1,847)
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