Sears 2011 Annual Report Download - page 79

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SEARS HOLDINGS CORPORATION
Notes to Consolidated Financial Statements—(Continued)
Net Periodic Benefit Cost
The components of net periodic benefit cost are as follows:
2011 2010 2009
millions
SHC
Domestic
Sears
Canada Total
SHC
Domestic
Sears
Canada Total
SHC
Domestic
Sears
Canada Total
Pension benefits:
Interest cost ........... $314 $ 74 $388 $320 $ 76 $396 $336 $ 71 $407
Expected return on plan
assets .............. (302) (80) (382) (287) (77) (364) (241) (70) (311)
Recognized net loss ..... 63 9 72 87 — 87 76 — 76
Net periodic benefit cost
(benefit) ............ $ 75 $ 3 $ 78 $120 $ (1) $119 $171 $ 1 $172
Postretirement benefits:
Benefits earned during the
period .............. $— $— $— $— $ 1 $ 1 $— $ 1 $ 1
Interest cost ........... 13 16 29 16 16 32 19 16 35
Expected return on
assets .............. — (5) (5) — (6) (6) — (6) (6)
Recognized net gain ..... — — — — — — (1) — (1)
Amortization of net
actuarial gain ........ — — — — — — — (2) (2)
Net periodic benefit
cost ................ $ 13 $ 11 $ 24 $ 16 $ 11 $ 27 $ 18 $ 9 $ 27
Weighted-average assumptions used to determine net cost are as follows:
2011 2010 2009
SHC
Domestic
Sears
Canada
SHC
Domestic
Sears
Canada
SHC
Domestic
Sears
Canada
Pension benefits:
Discount Rate .......................... 5.75% 5.40% 6.00% 6.00% 7.00% 7.90%
Return of plan assets ..................... 7.50% 6.50% 8.00% 6.50% 7.75% 6.50%
Rate of compensation increases ............ N/A 3.50% N/A 3.50% N/A 3.50%
Postretirement benefits:
Discount Rate .......................... 5.00% 5.40% 6.00% 6.00% 7.00% 7.80%
Return of plan assets ..................... N/A 6.50% N/A 6.50% N/A 6.50%
Rate of compensation increases ............ N/A 3.50% N/A 3.50% N/A 3.50%
For purposes of determining the periodic expense of our defined benefit plans, we use the fair value of plan
assets as the market related value. A one-percentage-point change in the assumed discount rate would have the
following effects on the pension liability:
millions
1 percentage-point
Increase
1 percentage-point
Decrease
Effect on interest cost component ................ $ 28 $(37)
Effect on pension benefit obligation .............. $(771) $935
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