Change in Projected Benefit Obligation | Pension Benefits | Postretirement Health Care Benefits | ||||||||||||||||||
Qualified Plans | Nonqualified Plans | |||||||||||||||||||
(millions) | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||
Benefit obligation at beginning of period | $ | 3,164 | $ | 3,015 | $ | 37 | $ | 38 | $ | 121 | $ | 100 | ||||||||
Service cost | 117 | 120 | 1 | 1 | 6 | 10 | ||||||||||||||
Interest cost | 136 | 137 | 1 | 2 | 2 | 3 | ||||||||||||||
Actuarial (gain)/loss | (125 | ) | 107 | — | — | (3 | ) | 18 | ||||||||||||
Participant contributions | 1 | 1 | — | — | 5 | 5 | ||||||||||||||
Benefits paid | (122 | ) | (126 | ) | (4 | ) | (3 | ) | (14 | ) | (12 | ) | ||||||||
Plan amendments | 2 | (90 | ) | — | (1 | ) | (44 | ) | (3 | ) | ||||||||||
Benefit obligation at end of period | $ | 3,173 | $ | 3,164 | $ | 35 | $ | 37 | $ | 73 | $ | 121 |
Change in Plan Assets | Pension Benefits | Postretirement Health Care Benefits | ||||||||||||||||||
Qualified Plans | Nonqualified Plans | |||||||||||||||||||
(millions) | 2013 | 2012 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||
Fair value of plan assets at beginning of period | $ | 3,223 | $ | 2,921 | $ | — | $ | — | $ | — | $ | — | ||||||||
Actual return on plan assets | 161 | 305 | — | — | — | — | ||||||||||||||
Employer contributions | 4 | 122 | 4 | 3 | 9 | 7 | ||||||||||||||
Participant contributions | 1 | 1 | — | — | 5 | 5 | ||||||||||||||
Benefits paid | (122 | ) | (126 | ) | (4 | ) | (3 | ) | (14 | ) | (12 | ) | ||||||||
Fair value of plan assets at end of period | 3,267 | 3,223 | — | — | — | — | ||||||||||||||
Benefit obligation at end of period | 3,173 | 3,164 | 35 | 37 | 73 | 121 | ||||||||||||||
Funded/(underfunded) status | $ | 94 | $ | 59 | $ | (35 | ) | $ | (37 | ) | $ | (73 | ) | $ | (121 | ) |
Recognition of Funded/(Underfunded) Status | Qualified Plans | Nonqualified Plans (a) | |||||||||||
(millions) | 2013 | 2012 | 2013 | 2012 | |||||||||
Other noncurrent assets | $ | 112 | $ | 81 | $ | — | $ | — | |||||
Accrued and other current liabilities | (2 | ) | (1 | ) | (9 | ) | (9 | ) | |||||
Other noncurrent liabilities | (16 | ) | (21 | ) | (99 | ) | (149 | ) | |||||
Net amounts recognized | $ | 94 | $ | 59 | $ | (108 | ) | $ | (158 | ) |
(a) | Includes postretirement health care benefits. |
Amounts in Accumulated Other Comprehensive Income | Pension Plans | Postretirement Health Care Plans | |||||||||||
(millions) | 2013 | 2012 | 2013 | 2012 | |||||||||
Net actuarial loss | $ | 792 | $ | 947 | $ | 49 | $ | 58 | |||||
Prior service credits | (80 | ) | (91 | ) | (62 | ) | (34 | ) | |||||
Amounts in accumulated other comprehensive income | $ | 712 | $ | 856 | $ | (13 | ) | $ | 24 |
Change in Accumulated Other Comprehensive Income | Pension Benefits | Postretirement Health Care Benefits | |||||||||||
(millions) | Pretax | Net of Tax | Pretax | Net of Tax | |||||||||
January 28, 2012 | $ | 1,027 | $ | 623 | $ | 3 | $ | 2 | |||||
Net actuarial loss | 23 | 13 | 18 | 11 | |||||||||
Amortization of net actuarial losses | (103 | ) | (63 | ) | (4 | ) | (2 | ) | |||||
Amortization of prior service costs and transition | — | — | 10 | 6 | |||||||||
Plan amendments | (91 | ) | (56 | ) | (3 | ) | (2 | ) | |||||
February 2, 2013 | 856 | 517 | 24 | 15 | |||||||||
Net actuarial gain | (52 | ) | (32 | ) | (3 | ) | (2 | ) | |||||
Amortization of net actuarial losses | (103 | ) | (62 | ) | (6 | ) | (4 | ) | |||||
Amortization of prior service costs and transition | 11 | 7 | 16 | 10 | |||||||||
Plan amendment | — | — | (44 | ) | (27 | ) | |||||||
February 1, 2014 | $ | 712 | $ | 430 | $ | (13 | ) | $ | (8 | ) |
Expected Amortization of Amounts in Accumulated Other Comprehensive Income (millions) | Pretax | Net of Tax | ||||
Net actuarial loss | $ | 70 | $ | 43 | ||
Prior service credits | (27 | ) | (16 | ) | ||
Total amortization expense | $ | 43 | $ | 27 |
Net Pension and Postretirement Health Care Benefits Expense | Pension Benefits | Postretirement Health Care Benefits | |||||||||||||||||
(millions) | 2013 | 2012 | 2011 | 2013 | 2012 | 2011 | |||||||||||||
Service cost benefits earned during the period | $ | 118 | $ | 121 | $ | 117 | $ | 6 | $ | 10 | $ | 10 | |||||||
Interest cost on projected benefit obligation | 137 | 139 | 137 | 2 | 3 | 4 | |||||||||||||
Expected return on assets | (235 | ) | (220 | ) | (206 | ) | — | — | — | ||||||||||
Amortization of losses | 103 | 103 | 67 | 6 | 3 | 4 | |||||||||||||
Amortization of prior service cost | (11 | ) | — | (2 | ) | (16 | ) | (10 | ) | (10 | ) | ||||||||
Settlement and Special Termination Charges | 3 | — | — | — | — | — | |||||||||||||
Total | $ | 115 | $ | 143 | $ | 113 | $ | (2 | ) | $ | 6 | $ | 8 |
Defined Benefit Pension Plan Information (millions) | 2013 | 2012 | |||||
Accumulated benefit obligation (ABO) for all plans (a) | $ | 3,149 | $ | 3,140 | |||
Projected benefit obligation for pension plans with an ABO in excess of plan assets (b) | 54 | 59 | |||||
Total ABO for pension plans with an ABO in excess of plan assets | 48 | 53 |
(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. |
Benefit Obligation Weighted Average Assumptions | Pension Benefits | Postretirement Health Care Benefits | |||||||
2013 | 2012 | 2013 | 2012 | ||||||
Discount rate | 4.77 | % | 4.40 | % | 3.30 | % | 2.75 | % | |
Average assumed rate of compensation increase | 3.00 | 3.00 | n/a | n/a |
Net Periodic Benefit Expense Weighted Average Assumptions | Pension Benefits | Postretirement Health Care Benefits | |||||||||||
2013 | 2012 | 2011 | 2013 | 2012 | 2011 | ||||||||
Discount rate | 4.40 | % | 4.65 | % | 5.50 | % | 2.75 | % | 3.60 | % | 4.35 | % | |
Expected long-term rate of return on plan assets | 8.00 | 8.00 | 8.00 | n/a | n/a | n/a | |||||||
Average assumed rate of compensation increase | 3.00 | 3.50 | 4.00 | n/a | n/a | n/a |
Health Care Cost Trend Rates – 1% Change (millions) | 1% Increase | 1% Decrease | ||||
Effect on total of service and interest cost components of net periodic postretirement health care benefit expense | $ | 1 | $ | (1 | ) | |
Effect on the health care component of the accumulated postretirement benefit obligation | 5 | (5 | ) |
Asset Category | Current Targeted | Actual Allocation | ||||
Allocation | 2013 | 2012 | ||||
Domestic equity securities (a) | 19 | % | 21 | % | 20 | % |
International equity securities | 12 | 12 | 11 | |||
Debt securities | 25 | 26 | 27 | |||
Balanced funds | 30 | 28 | 29 | |||
Other (b) | 14 | 13 | 13 | |||
Total | 100 | % | 100 | % | 100 | % |
(a) | Equity securities include our common stock in amounts substantially less than 1 percent of total plan assets as of February 1, 2014 and February 2, 2013. |
(b) | Other assets include private equity, mezzanine and high-yield debt, natural resources and timberland funds, multi-strategy hedge funds, derivative instruments and a 5 percent allocation to real estate. |
Fair Value Measurements | Fair Value at February 1, 2014 | Fair Value at February 2, 2013 | ||||||||||||||||||||||
(millions) | Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||
Cash and cash equivalents | $ | 150 | $ | 6 | $ | 144 | $ | — | $ | 174 | $ | 5 | $ | 169 | $ | — | ||||||||
Common collective trusts (a) | 1,000 | — | 1,000 | — | 878 | — | 878 | — | ||||||||||||||||
Government securities (b) | 282 | — | 282 | — | 296 | — | 296 | — | ||||||||||||||||
Fixed income (c) | 541 | — | 541 | — | 560 | — | 560 | — | ||||||||||||||||
Balanced funds (d) | 903 | — | 903 | — | 925 | — | 925 | — | ||||||||||||||||
Private equity funds (e) | 221 | — | — | 221 | 236 | — | — | 236 | ||||||||||||||||
Other (f) | 170 | — | 43 | 127 | 154 | — | 32 | 122 | ||||||||||||||||
Total plan assets | $ | 3,267 | $ | 6 | $ | 2,913 | $ | 348 | $ | 3,223 | $ | 5 | $ | 2,860 | $ | 358 |
(a) | Passively managed index funds with holdings in domestic and international equities. |
(b) | Investments in government securities and passively managed index funds with holdings in long-term government bonds. |
(c) | Investments in corporate bonds, mortgage-backed securities and passively managed index funds with holdings in long-term corporate bonds. |
(d) | Investments in equities, nominal and inflation-linked fixed income securities, commodities and public real estate. |
(e) | Includes investments in venture capital, mezzanine and high-yield debt, natural resources and timberland funds. |
(f) | Investments in multi-strategy hedge funds (including domestic and international equity securities, convertible bonds and other alternative investments), real estate and derivative investments. |
Level 3 Reconciliation | Actual Return on Plan Assets (a) | |||||||||||||||||
(millions) | Balance at Beginning of Period | Relating to Assets Still Held at the Reporting Date | Relating to Assets Sold During the Period | Purchases, Sales and Settlements | Transfer in and/or out of Level 3 | Balance at End of Period | ||||||||||||
2012 | ||||||||||||||||||
Private equity funds | $ | 283 | $ | 17 | $ | 25 | $ | (89 | ) | $ | — | $ | 236 | |||||
Other | 115 | 4 | — | 3 | — | 122 | ||||||||||||
2013 | ||||||||||||||||||
Private equity funds | $ | 236 | $ | 7 | $ | 26 | $ | (48 | ) | $ | — | $ | 221 | |||||
Other | 122 | 14 | 1 | (10 | ) | — | 127 |
(a) | Represents realized and unrealized gains (losses) from changes in values of those financial instruments only for the period in which the instruments were classified as Level 3. |
Position | Valuation Technique | |
Cash and cash equivalents | These investments are cash holdings and investment vehicles valued using the Net Asset Value (NAV) provided by the administrator of the fund. The NAV for the investment vehicles is based on the value of the underlying assets owned by the fund minus applicable costs and liabilities, and then divided by the number of shares outstanding. | |
Equity securities | Valued at the closing price reported on the major market on which the individual securities are traded. | |
Common collective trusts/ balanced funds/ certain multi-strategy hedge funds | Valued using the NAV provided by the administrator of the fund. The NAV is a quoted transactional price for participants in the fund, which do not represent an active market. | |
Fixed income and government securities | Valued using matrix pricing models and quoted prices of securities with similar characteristics. | |
Private equity/ real estate/ certain multi-strategy hedge funds/ other | Valued by deriving Target's proportionate share of equity investment from audited financial statements. Private equity and real estate investments require significant judgment on the part of the fund manager due to the absence of quoted market prices, inherent lack of liquidity, and the long term of such investments. Certain multi-strategy hedge funds represent funds of funds that include liquidity restrictions and for which timely valuation information is not available. |
Estimated Future Benefit Payments (millions) | Pension Benefits | Postretirement Health Care Benefits | ||||
2014 | $ | 152 | $ | 6 | ||
2015 | 159 | 6 | ||||
2016 | 169 | 7 | ||||
2017 | 178 | 8 | ||||
2018 | 188 | 8 | ||||
2019-2023 | 1,058 | 45 |