Pension, Postretirement Health Care and Other Benefits

6 Months Ended

Aug. 03, 2013

Pension, Postretirement Health Care and Other Benefits

Pension, Postretirement Health Care and Other Benefits

7. Pension, Postretirement Health Care and Other Benefits

Pension and Postretirement Health Care Benefits

We have qualified defined benefit pension plans, unfunded nonqualified pension plans and provide certain postretirement health care benefits to eligible team members.

Net Pension and Postretirement Health Care Benefits Expense	Pension Benefits												Postretirement Health Care Benefits
	Three Months Ended						Six Months Ended						Three Months Ended						Six Months Ended
	August 3,			July 28,			August 3,			July 28,			August 3,			July 28,			August 3,			July 28,
(millions)	2013			2012			2013			2012			2013			2012			2013			2012
Service cost	$	29		$	30		$	59		$	60		$	1		$	2		$	3		$	4
Interest cost	34			35			69			70			1			—			1			1
Expected return on assets	(58		)	(55		)	(117		)	(110		)	—			—			—			—
Amortization of losses	25			26			50			52			2			1			3			2
Amortization of prior service cost	(2		)	—			(5		)	—			(4		)	(2		)	(8		)	(4		)
Total	$	28		$	36		$	56		$	72		$	—		$	1		$	(1	)	$	3

Other Benefits

We offer unfunded nonqualified deferred compensation plans to certain team members. We mitigate some of our risk of these plans through investing in vehicles, including company-owned life insurance and prepaid forward contracts in our own common stock, that offset a substantial portion of our economic exposure to the returns of these plans. These investment vehicles are general corporate assets and are marked to market with the related gains and losses recognized in the Consolidated Statements of Operations in the period they occur.

The total change in fair value for contracts indexed to our own common stock recognized in earnings was pretax income of $1 million and $4 million for the three months ended August 3, 2013 and July 28, 2012, respectively, and pretax income of $12 million and $15 million for the six months ended August 3, 2013 and July 28, 2012, respectively. For the six months ended August 3, 2013 and July 28, 2012, we invested $6 million and $13 million, respectively, in such investment instruments, and this activity is included in the Consolidated Statements of Cash Flows within other investing activities. Adjusting our position in these investment vehicles may involve repurchasing shares of Target common stock when settling the forward contracts as described in Note 6. The settlement dates of these instruments are regularly renegotiated with the counterparty.

Prepaid Forward Contracts on Target Common Stock		Contractual
(millions, except per share data)	Number of Shares	Price Paid per Share		Contractual Fair Value		Total Cash Investment
July 28, 2012	1.2	$	44.70	$	72	$	53
February 2, 2013	1.2	45.46		73		54
August 3, 2013	1.0	45.01		73		46