Sears 2012 Annual Report Download - page 81
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SEARS HOLDINGS CORPORATION
Notes to Consolidated Financial Statements—(Continued)
81
Net Periodic Benefit Cost
The components of net periodic benefit cost were as follows:
2012 2011 2010
millions SHC
Domestic Sears
Canada Total SHC
Domestic Sears
Canada Total SHC
Domestic Sears
Canada Total
Pension benefits:
Interest cost . . . . . . . $ 291 $ 65 $ 356 $ 314 $ 74 $ 388 $ 320 $ 76 $ 396
Expected return on
plan assets. . . . . . . (291) (76) (367) (302)(80)(382)(287)(77)(364)
Cost of settlements. . 452 — 452 — — — — — —
Recognized net loss .165 24 189 63 9 72 87 — 87
Net periodic benefit
cost (benefit). . . . . $ 617 $ 13 $ 630 $ 75 $ 3 $ 78 $ 120 $ (1) $ 119
Postretirement benefits:
Benefits earned
during the period .$ — $ — $ — $ — $ — $ — $ — $ 1 $ 1
Interest cost . . . . . . . 10 14 24 13 16 29 16 16 32
Expected return on
assets. . . . . . . . . . . — (3) (3) — (5)(5) — (6)(6)
Cost of settlements. . — 3 3 — — — — — —
Net periodic benefit
cost. . . . . . . . . . . . . . $ 10 $ 14 $ 24 $ 13 $ 11 $ 24 $ 16 $ 11 $ 27
Weighted-average assumptions used to determine net cost were as follows:
2012 2011 2010
SHC
Domestic Sears
Canada SHC
Domestic Sears
Canada SHC
Domestic Sears
Canada
Pension benefits: . . . . . . . . . . . . . . . . . . .
Discount Rate. . . . . . . . . . . . . . . . . . 4.90% 4.70% 5.75% 5.40% 6.00% 6.00%
Return of plan assets . . . . . . . . . . . . 7.25% 6.50% 7.50% 6.50% 8.00% 6.50%
Rate of compensation increases . . . . N/A 3.50% N/A 3.50% N/A 3.50%
Postretirement benefits:
Discount Rate. . . . . . . . . . . . . . . . . . 4.20% 4.60% 5.00% 5.40% 6.00% 6.00%
Return of plan assets . . . . . . . . . . . . N/A 3.75% 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 30 $ (39)
Effect on pension benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . $(674) $ 814