Sears 2011 Annual Report Download - page 81

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SEARS HOLDINGS CORPORATION
Notes to Consolidated Financial Statements—(Continued)
The Sears Canada plans’ target allocation is determined by taking into consideration the amounts and timing
of projected liabilities, our funding policies and expected returns on various asset classes. At January 28, 2012,
the plan’s target asset allocation was 55% to 75% fixed income and 25% to 45% equity. To develop the expected
long-term rate of return on assets assumption, we considered the historical returns and the future expectations for
returns for each asset class, as well as the target asset allocation of the pension portfolio.
Future Cash Flows of Benefit Plans
Information regarding expected future cash flows for our benefit plans is as follows:
millions
SHC
Domestic
Sears
Canada Total
Pension benefits:
Employer contributions:
2012 (expected) .............................................. $ 314 $ 34 $ 348
Expected benefit payments:
2012 ........................................................... $ 351 $ 94 $ 445
2013 ........................................................... 359 93 452
2014 ........................................................... 368 93 461
2015 ........................................................... 378 93 471
2016 ........................................................... 388 93 481
2017-2021 ...................................................... 2,034 465 2,499
Postretirement benefits:
Employer contributions:
2012 (expected) .............................................. $ 30 $ 1 $ 31
Expected employer contribution for benefit payments:
2012 ........................................................... $ 30 $ 18 $ 48
2013 ........................................................... 28 18 46
2014 ........................................................... 27 19 46
2015 ........................................................... 25 19 44
2016 ........................................................... 24 19 43
2017-2021 ...................................................... 96 98 194
Domestic Pension Plan Funding
Contributions to our pension plans remain a significant use of our cash on an annual basis. While Sears
Holdings’ pension plan is frozen, and thus associates do not currently earn pension benefits, the company has a
legacy pension obligation for past service performed by Kmart and Sears, Roebuck and Co. associates. During
2011, we contributed $352 million to our domestic pension plans. We estimate that the domestic pension
contribution will be $314 million in 2012 and approximately $740 million in 2013, though the ultimate amount
of pension contributions could be affected by changes in the applicable regulations as well as financial market
and investment performance.
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