Sears 2014 Annual Report Download - page 96

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SEARS HOLDINGS CORPORATION
Notes to Consolidated Financial Statements—(Continued)
96
pension benefit in a lump sum. These amendments did not have a significant impact on our plan. Former employees
eligible for the voluntary lump sum payment option are generally those who are vested traditional formula
participants of the Plan who terminated employment prior to January 1, 2012 and who have not yet started receiving
monthly payments of their pension benefits.
The Company offered the one-time voluntary lump sum window in an effort to reduce its long-term pension
obligations and ongoing annual pension expense. This voluntary offer was made to approximately 86,000 eligible
terminated vested participants, representing approximately $2.0 billion of the Company's total qualified pension plan
liabilities. Eligible participants had until November 19, 2012 to make their election. The Company made payments
of approximately $1.5 billion to employees who made the election in December 2012 and funded the payments from
existing pension plan assets. In connection with this transaction, the Company incurred a non-cash charge to
operations of approximately $452 million pre-tax in the fourth quarter of 2012 as a result of the requirement to
expense the unrealized actuarial losses. The charge had no effect on equity because the unrealized actuarial losses
are already recognized in accumulated other comprehensive income/(loss). Accordingly, the effect on retained
earnings was offset by a corresponding reduction in accumulated other comprehensive loss.
Fair Value of Pension and Postretirement Benefit Plan Assets
The following table presents our plan assets using the fair value hierarchy at January 31, 2015 and February 1,
2014:
Investment Assets at Fair Value at
SHC Domestic January 31, 2015
millions Total Level 1 Level 2 Level 3
Cash equivalents and short-term investments . . . . . . . . . . . . . . . . . . . . . . . . $ 363 $ — $ 363 $ —
Equity securities:
U.S. companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 931 931 — —
International companies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 157 157 — —
Fixed income securities:
Corporate bonds and notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,010 — 2,010 —
Sears Holdings Corporation senior secured notes . . . . . . . . . . . . . . . . . . . . 101 — 101 —
Mortgage-backed and asset-backed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 — 2 6
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 — 1 —
Ventures and partnerships. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 — — 5
Total investment assets at fair value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,576 $1,088 $ 2,477 $ 11
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (27)
Net assets available for plan benefits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,616