Target 2008 Annual Report Download - page 62

We file a U.S. federal income tax return and income tax returns in various states and foreign jurisdictions.
With few exceptions, we are no longer subject to income tax examinations for years before 1999.
Reconciliation of Unrecognized Tax Benefit Liabilities
(millions) 2008 2007
Balance at beginning of period $442 $379
Additions based on tax positions related to the current year 27 60
Additions for tax positions of prior years 100 26
Reductions for tax positions of prior years (101) (8)
Settlements (34) (15)
Balance at end of period $434 $442
If the Corporation were to prevail on all unrecognized tax benefit liabilities recorded, approximately
$208 million of the $434 million reserve would benefit the effective tax rate. In addition, the impact of penalties
and interest would also benefit the effective tax rate. Interest and penalties associated with unrecognized tax
benefit liabilities are recorded within income tax expense. During the years ended January 31, 2009,
February 2, 2008 and February 3, 2007, we recognized approximately $33 million, $37 million and $37 million,
respectively, in interest and penalties. We had accrued for the payment of interest and penalties of
approximately $153 million at January 31, 2009 and $129 million at February 2, 2008.
Included in the balance at January 31, 2009 and February 2, 2008 are $116 million and $72 million,
respectively, of liabilities for tax positions for which the ultimate deductibility is highly certain, but for which
there is uncertainty about the timing of such deductibility. Because of the impact of deferred tax accounting,
other than interest and penalties, the disallowance of the shorter deductibility period would not affect the
annual effective tax rate, but would accelerate the cash payment to the taxing authority to an earlier period.
It is reasonably possible that the amount of the unrecognized tax benefit liabilities with respect to certain
of our unrecognized tax positions will increase or decrease during the next twelve months; however, we do not
currently expect any change to have a significant effect on our results of operations or our financial position.
23. Other Noncurrent Liabilities
Other Noncurrent Liabilities January 31, February 2,
(millions) 2009 2008
Income tax liability $ 506 $ 571
Workers’ compensation and general liability 506 475
Pension and postretirement health care benefits 318 142
Deferred compensation 309 486
Other 298 201
Total $1,937 $1,875
We retain a substantial portion of the risk related to certain general liability and workers’ compensation
claims. Liabilities associated with these losses include estimates of both claims filed and losses incurred but
not yet reported. We estimate our ultimate cost based on analysis of historical data and actuarial estimates.
General liability and workers’ compensation liabilities are recorded at our estimate of their net present value.
24. Share Repurchase
In November 2007, our Board of Directors approved a share repurchase program totaling $10 billion that
replaced a prior program. In November 2008, we announced that, in light of our business outlook, we were
temporarily suspending our open-market share repurchase program.
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