Target 2007 Annual Report Download - page 61

Defined Contribution Plan Expenses
(millions) 2007 2006 2005
401(k) Defined Contribution Plan
Matching contributions expense $172 $141 $118
Nonqualified Deferred Compensation Plans
Benefits expense $46 $98 $64
Related investment income (26) (68) (34)
Nonqualified plan net expense $20 $30 $30
27. 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 September 2006, the FASB issued SFAS No. 158, ‘‘Employers’ Accounting for Defined Benefit Pension
and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132(R)’’ (SFAS 158).
SFAS 158 requires plan sponsors of defined benefit pension and other postretirement benefit plans
(collectively postretirement benefit plans) to recognize the funded status of their postretirement benefit plans
in the statement of financial position, measure the fair value of plan assets and benefit obligations as of the
date of the fiscal year-end statement of financial position and provide additional disclosures.
At the beginning of fiscal 2007, we early adopted the measurement date provisions of SFAS 158. The
measurement date provisions of SFAS 158 require us to measure the fair value of plan assets and benefit
obligations as of the date of the year-end statement of financial position. Before 2007, we measured our
pension and postretirement benefit obligations at the end of October each year. As a result, we recorded a
$16 million decrease to retained earnings, a $54 million increase to accumulated other comprehensive
income, a $65 million increase to other noncurrent assets, a $3 million increase to other noncurrent liabilities
and a $24 million decrease to deferred income taxes. The adoption of the measurement date provisions of
SFAS 158 had no effect on our Consolidated Statements of Financial Position at February 4, 2007 or any prior
periods.
We adopted the recognition and disclosure provisions of SFAS 158 on February 3, 2007. The recognition
provisions of SFAS 158 required us to recognize the funded status, which is the difference between the fair
value of plan assets and the projected benefit obligations, of our postretirement benefit plans in the
February 3, 2007 Consolidated Statements of Financial Position, with a corresponding adjustment to
accumulated other comprehensive loss, net of tax. The adjustment to accumulated other comprehensive loss
at adoption represents the net unrecognized actuarial losses and unrecognized prior service costs, both of
which were previously netted against the plans’ funded status in our Consolidated Statements of Financial
Position pursuant to the provisions of SFAS No. 87, ‘‘Employers’ Accounting for Pensions’’ (SFAS 87). These
amounts will be subsequently recognized as net periodic pension expense pursuant to our historical
accounting policy for amortizing such amounts. Further, actuarial gains and losses that arise in subsequent
periods and are not recognized as net periodic pension expense in the same periods will be recognized as a
component of other comprehensive income. Those amounts will be subsequently recognized as a
component of net periodic pension expense on the same basis as the amounts recognized in accumulated
other comprehensive loss at adoption of SFAS 158. The adoption of the recognition provisions of SFAS 158
had no effect on our Consolidated Statements of Operations at February 3, 2007 or any prior periods.
43
PART II