Sears 2013 Annual Report Download - page 88

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SEARS HOLDINGS CORPORATION
Notes to Consolidated Financial Statements—(Continued)
88
Net Periodic Benefit Cost
The components of net periodic benefit cost were as follows:
2013 2012 2011
millions SHC
Domestic Sears
Canada Total SHC
Domestic Sears
Canada Total SHC
Domestic Sears
Canada Total
Pension benefits:
Interest cost . . . . . . . $ 219 $ 56 $ 275 $ 291 $ 65 $ 356 $ 314 $ 74 $ 388
Expected return on
plan assets. . . . . . . (224) (76) (300) (291)(76)(367)(302)(80)(382)
Cost of settlements. . — — — 452 — 452 — — —
Recognized net loss
and other. . . . . . . . 167 34 201 165 24 189 63 9 72
Net periodic benefit
cost . . . . . . . . . . . . $ 162 $ 14 $ 176 $ 617 $ 13 $ 630 $ 75 $ 3 $ 78
Postretirement benefits:
Interest cost . . . . . . . $ 8 $ 12 $ 20 $ 10 $ 14 $ 24 $ 13 $ 16 $ 29
Expected return on
assets. . . . . . . . . . . — (2) (2) — (3)(3) — (5)(5)
Cost of settlements. . — — — — 3 3 — — —
Net periodic benefit
cost . . . . . . . . . . . . $ 8 $ 10 $ 18 $ 10 $ 14 $ 24 $ 13 $ 11 $ 24
Weighted-average assumptions used to determine net cost were as follows:
2013 2012 2011
SHC
Domestic Sears
Canada SHC
Domestic Sears
Canada SHC
Domestic Sears
Canada
Pension benefits:
Discount Rate. . . . . . . . . . . . . . . . . . 4.25% 4.20% 4.90% 4.70% 5.75% 5.40%
Return of plan assets . . . . . . . . . . . . 7.00% 6.50% 7.25% 6.50% 7.50% 6.50%
Rate of compensation increases . . . . N/A 3.50% N/A 3.50% N/A 3.50%
Postretirement benefits:
Discount Rate. . . . . . . . . . . . . . . . . . 3.55% 4.20% 4.20% 4.60% 5.00% 5.40%
Return of plan assets . . . . . . . . . . . . N/A 3.75% N/A 3.75% 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 $ (36)
Effect on pension benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . $(596) $ 713
For 2014 and beyond, the domestic weighted-average health care cost trend rates used in measuring the
postretirement benefit expense are an 8.0% trend rate in 2014 to an ultimate trend rate of 6.0% in 2018. A one-