Financial Statements of - Shoppers Drug Mart

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SHOPPERS DRUG MART CORPORATION Notes to the Consolidated Financial Statements (unaudited) (in thousands of Canadian dollars, except per share data) 22. RETIREMENT BENEFIT OBLIGATIONS (continued) The health care cost trend rate used was 8% for 2010, with 8% being the trend rate for 2011 and 2012. The trend rate is then reduced by 0.50% in each of the following years until reaching the ultimate trend rate of 5% for 2018 and later years. A 1% change in the assumed health care cost trend rate would result in an impact of $570 on the defined benefit obligation and a pre-tax impact of $30 on the benefits expense recognized in earnings. Assumptions regarding future mortality are based on published statistics and mortality tables. The current longevities underlying the values of the liabilities in the defined benefit plans are as follows: Males Females Longevity at age 65 for current pensioners 19.7 22.1 Longevity at age 65 for current member aged 45 21.2 22.9 The calculation of the defined benefit obligation is sensitive to the mortality assumptions set out above. As the actuarial estimates of mortality continue to be refined, an increase of one year in the lives shown above is considered reasonably possible in the next financial year. The experience adjustments are as follows: 52 Weeks Ended January 1, 2011 Pension plans Other benefit plans Asset experience adjustments Asset (gain)/loss during period $ (2,161) $ - Liability experience adjustments Liability (gain)/loss during period $ - $ 506 Liability assumptions Liability (gain)/loss during period $ 12,709 $ N/A The components of the Company's pension and other post-retirement benefit plans expense are as follows: 52 Weeks Ended January 1, 2011 Other benefit Pension plans plans Current service costs $ 5,936 $ 287 Interest cost 5,200 295 Expected return on plan assets (5,659) - Expense recognized in operating and administrative expenses $ 5,477 $ 582 The expense is recognized in operating and administrative expenses on the consolidated statements of earnings. The actual return on plan assets for the financial year ended January 1, 2011 was $7,820. The Company recognized the following actuarial loss in other comprehensive loss for the financial year ended January 1, 2011: 77
SHOPPERS DRUG MART CORPORATION Notes to the Consolidated Financial Statements (unaudited) (in thousands of Canadian dollars, except per share data) 22. RETIREMENT BENEFIT OBLIGATIONS (continued) 52 Weeks Ended January 1, 2011 Other benefit Pension plans plans Cumulative amount, beginning of financial year $ - $ - Recognized during the financial year 10,548 506 Cumulative amount, end of financial year $ 10,548 $ 506 Cash payments for employee future benefits consist of the Company’s contributions to the pension plans and cash payments made directly to beneficiaries of the other benefit plans and totalled $16,740. The Company expects to make contributions to the pension plans and cash payments made directly to beneficiaries of the other benefit plans of $6,116 in 2011. The assets of the registered pension plans consist of cash, contributions receivable and a proportionate share of a Master Trust. The assets held by the Master Trust are invested in a limited number of pooled funds, based on market values as at November 30, 2010 and 2009, respectively, as follows: January 1, 2011 January 3, 2010 Equity 60% 61% Fixed income 39% 39% Cash and cash equivalents 1% - 100% 100% There were no significant changes in the assets held by the Master Trust between November 30, 2010 and January 1, 2011 and between November 30, 2009 and January 3, 2010. The assets of the non-registered plan consist of investments and refundable tax on account with Canada Revenue Agency. The investments are in pooled funds with an allocation of 61% equities, 38% bonds and 1% cash and cash equivalents based on market values as at November 30, 2010 and 60% equities, 39% bonds and 1% cash and cash equivalents based on market values as at November 30, 2009. There were no significant changes in the allocation of investments between November 30, 2010 and January 1, 2011 and between November 30, 2009 and January 3, 2010. 23. PROVISIONS Provisions are comprised as follows: Balance at January 3, 2010 $ 12,071 Provisions made during the financial year 12,341 Provisions used during the financial year (9,817) Provisions reversed during the financial year (306) Unwind of discount 125 Balance at January 1, 2011 $ 14,414 Balance at January 1, 2011, presented as follows: Accounts payable and accrued liabilities $ 12,563 Other long-term liabilities 1,851 $ 14,414 Balance at January 3, 2010, presented as follows: Accounts payable and accrued liabilities $ 11,009 Other long-term liabilities 1,062 $ 12,071 78
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Financial Statements of - Shoppers Drug Mart

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