v2.4.0.6
Pension, Postretirement Health Care and Other Benefits
 3 Months Ended
May 04, 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 benefits pension plans, unfunded nonqualified pension plans and provide certain post-retirement health care benefits to eligible team members.

 

Net Pension and Postretirement Health Care Benefits Expense

 

Pension Benefits

 

Postretirement Health
Care Benefits

 

 

 

Three Months Ended

 

Three Months Ended

 

(millions)

 

May 4,
2013

 

April 28,
2012

 

May 4,
2013

 

April 28,
2012

 

Service cost benefits earned during the period

 

$

30

 

$

30

 

$

2

 

$

2

 

Interest cost on projected benefit obligation

 

35

 

36

 

—

 

2

 

Expected return on assets

 

(59

)

(55

)

—

 

—

 

Amortization of losses

 

25

 

25

 

1

 

1

 

Amortization of prior service cost

 

(3

)

—

 

(4

)

(3

)

Total

 

$

28

 

$

36

 

$

(1

)

$

2

 

 

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 $11 million for both the three months ended May 4, 2013 and April 28, 2012. For the three months ended May 4, 2013, we made no investments in prepaid forward contracts in our own common stock. For the three months ended April 28, 2012, we invested $7 million 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

 

 

 

 

 

 

 

Number of

 

Price Paid

 

Contractual

 

Total Cash

 

(millions, except per share data)

 

Shares

 

per Share

 

Fair Value

 

Investment

 

April 28, 2012

 

1.3

 

$

45.56

 

$

74

 

$

58

 

February 2, 2013

 

1.2

 

45.46

 

73

 

54

 

May 4, 2013

 

1.0

 

45.07

 

74

 

47