Target 2006 Annual Report Download - page 60

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 recorded in earnings was pre-tax income of $37 million in 2006, $7 million in 2005 and $29 million
in 2004. During 2006, we invested approximately $111 million in such investment instruments, and these
investments are included in the Consolidated Statement of Cash Flows within other investing activities. The
counterparty to these contracts may deliver Target common shares or cash to us at the settlement dates at
their discretion. At times, adjusting our position in these investment vehicles includes repurchasing shares of
Target common stock, including shares delivered by counterparties when settling the forward contracts. In
2006, 2005 and 2004, these repurchases totaled 1.6 million, 1.5 million and 0.5 million shares,
respectively, and are included in the total share repurchases disclosed in Note 25.
Prepaid Forward Contracts on Target Common Stock
(dollars in millions, except per share data)
Number of Shares Current Fair Value at
Contract Price
Settlement Date February 3, 2007 January 28, 2006 per Share February 3, 2007 January 28, 2006
Nov. 2006 —140,000 $41.70 $ — $7
Jan. 2007 —165,025 54.54 — 9
Oct. 2007 257,000 257,000 38.95 16 14
Oct. 2007 516,033 516,033 29.07 32 28
Oct. 2007 228,276 228,276 43.81 14 12
Oct. 2007 189,479 189,479 52.78 12 10
Oct. 2007 250,000 250,000 53.41 15 14
Oct. 2007 250,000 250,000 53.41 15 14
Oct. 2007 1,025,400 —48.76 64 —
2,716,188 1,995,813 $168 $108
Defined Contribution Plan Expenses
(millions) 2006 2005 2004
401(k) Defined Contribution Plan
401(k) matching contributions $141 $118 $118
Nonqualified Deferred Compensation Plans
Benefits expense $98 $64 $63
Related investment income (68) (34) (40)
Nonqualified plan net expense $30 $30 $23
In 2005 and 2004, certain retired executives accepted our offer to exchange our obligation to them
under certain frozen nonqualified plans for cash or deferrals in our current nonqualified deferred
compensation plan. These exchange transactions resulted in expense of $7 million and $17 million,
respectively. We expect lower future expenses as a result of these transactions. There were no such exchange
transactions during 2006.
Expenses for Marshall Field’s and Mervyn’s team members are included in the table above to the extent
we retained the related assets and obligations of their plans subsequent to the 2004 divestiture of those
businesses.
28. Pension and Postretirement Health Care Benefits
We have qualified defined benefit pension plans covering all U.S. team members who meet age and
service requirements. We also have unfunded nonqualified pension plans for team members with qualified
plan compensation restrictions. Benefits are provided based on years of service and team member
compensation. Upon retirement, team members also become eligible for certain health care benefits if they
meet minimum age and service requirements and agree to contribute a portion of the cost.
In 2005, certain nonqualified pension and survivor benefits owed to current officers were exchanged
for cash or deferrals in our current nonqualified deferred compensation plan, which resulted in expense of
42