Target 2005 Annual Report Download - page 39

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Obligations and Funded Status
Pension Benefits Postretirement
Non-qualified Health Care
Qualified Plans Plans Benefits
(millions) 2005 2004 2005 2004 2005 2004
Change in Projected
Benefit Obligation
Benefit obligation
at beginning of
measurement period (a) $1,515 $1,333 $ 34 $ 29 $ 107 $ 123
Service cost 66 78 1123
Interest cost 85 82 2267
Actuarial loss 55 68 443(6)
Benefits paid (94) (65) (5) (3) (13) (13)
Plan amendments (1) 19 (3) 1—(7)
Benefit obligation at end
of measurement period $1,626 $1,515 $ 33 $ 34 $ 105 $ 107
Change in Plan Assets
Fair value of plan assets
at beginning of
measurement period $1,698 $1,405 $— $— $— $—
Actual return on
plan assets 174 157 ————
Employer contribution 67 201 5313 13
Benefits paid (94) (65) (5) (3) (13) (13)
Fair value of plan
assets at end of
measurement period $1,845 $1,698 $— $— $— $—
Funded status $ 219 $ 183 $(33) $(34) $(105) $(107)
Unrecognized
actuarial loss 561 584 16 15 86
Unrecognized prior
service cost (32) (39) —2——
Net amount recognized $ 748 $ 728 $(17) $(17) $ (97) $(101)
(a) Measurement date is October 31 of each year.
Amounts recognized in the Consolidated Statements of Financial
Position consist of:
Pension Benefits Postretirement
Non-qualified Health Care
Qualified Plans Plans Benefits
(millions) 2005 2004 2005 2004 2005 2004
Prepaid benefit cost $ 752 $ 733 $— $— $— $—
Accrued benefit cost (9) (11) (22) (24) (97) (101)
Intangible assets ———2——
Accumulated OCI 5655——
Net amount recognized $ 748 $ 728 $(17) $(17) $ (97) $(101)
Net Pension and Postretirement Health Care Benefits Expense
Postretirement
Pension Benefits Health Care Benefits
(millions) 2005 2004 2003 2005 2004 2003
Service cost benefits
earned during
the period $ 67 $ 79 $ 74 $ 2 $3 $2
Interest cost on
projected benefit
obligation 87 84 75 678
Expected return
on assets (137) (122) (114) ———
Recognized losses 43 36 18 111
Recognized prior
service cost (5) (7) (7) ———
Settlement/ curtailment
charges —1——(7) —
Total $ 55 $ 71 $ 46 $ 9 $ 4 $11
The amortization of any prior service cost is determined using
the straight-line method over the average remaining service period
of employees expected to receive benefits under the plan. As a result
of freezing the benefits for Marshall Field’s and Mervyn’s team
members at the time of their respective dispositions and retaining the
related assets and obligations of the plans, we were required to record
curtailment charges in 2004. These charges are also included in the
gain on disposal of discontinued operations in the Consolidated
Statements of Operations.
Other information related to defined benefit pension plans is
as follows:
(millions) 2005 2004
Accumulated benefit obligation (ABO) for all plans (a) $1,534 $1,501
Projected benefit obligation for pension plans
with an ABO in excess of plan assets (b) 46 49
Total ABO for pension plans with an ABO
in excess of plan assets 41 45
Fair value of plan assets for pension plans
with an ABO in excess of plan assets 35
(a) The present value of benefits earned to date assuming no future salary growth.
(b) The present value of benefits earned to date by plan participants, including the
effect of assumed future salary increases.
Assumptions
Weighted average assumptions used to determine benefit obligations
at October 31:
Postretirement
Pension Benefits Health Care Benefits
2005 2004 2005 2004
Discount rate 5.75% 5.75% 5.75% 5.75%
Average assumed rate
of compensation increase 3.50% 2.75% n/a n/a