Target 2006 Annual Report Download - page 63

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2005 Reconciliation of Amounts Recognized in Consolidated Statement of Financial Position
Pension Benefits Postretirement
Qualified Plans Nonqualified Plans Health Care Benefits
2005 2005 2005
Prepaid pension expense $752 $ — $ —
Accrued pension and benefit expense (9) (22) (97)
Accumulated other comprehensive income 5 5 —
Net amount recognized $748 $(17) $(97)
Net Pension and Postretirement Health Care Benefits Expense
Pension Benefits Postretirement Health Care Benefits
(millions) 2006 2005 2004 2006 2005 2004
Service cost benefits earned during
the period $83 $67 $79 $3 $2 $3
Interest cost on projected benefit
obligation 93 87 84 667
Expected return on assets (141) (137) (122) ———
Recognized losses 47 43 36 111
Recognized prior service cost (5) (5) (7) ———
Settlement/curtailment charges ——1——(7)
Total $ 77 $55 $71 $10 $9 $4
The amortization of prior service cost is determined using the straight-line method over the average
remaining service period of team members 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 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) 2006 2005
Accumulated benefit obligation (ABO) for all plans (a) $1,674 $1,534
Projected benefit obligation for pension plans with an ABO in excess of plan assets (b) $51 $46
Total ABO for pension plans with an ABO in excess of plan assets $44 $41
Fair value of plan assets for pension plans with an ABO in excess of plan assets $2 $3
(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
2006 2005 2006 2005
Discount rate 5.80% 5.75% 5.80% 5.75%
Average assumed rate of compensation increase 4.00% 3.50% n/a n/a
45
PART II