Target 2012 Annual Report Download - page 46

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declines in interest rates, we hold high-quality, long-duration bonds and interest rate swaps in our pension plan
trust. At year-end, we had hedged 36 percent of the interest rate exposure of our funded status.
As more fully described in Note 15 and Note 27 of the Notes to Consolidated Financial Statements, we are exposed
to market returns on accumulated team member balances in our nonqualified, unfunded deferred compensation
plans. We control the risk of offering the nonqualified plans by making investments in life insurance contracts and
prepaid forward contracts on our own common stock that offset a substantial portion of our economic exposure to
the returns on these plans. The annualized effect of a one percentage point change in market returns on our
nonqualified defined contribution plans (inclusive of the effect of the investment vehicles used to manage our
economic exposure) would not be significant.
We are exposed to market risk associated with foreign currency exchange rate fluctuations. We will be further
exposed to this risk as we commence Canadian operations during 2013. During 2012 and 2011, gains and losses
due to fluctuations in exchange rates were not significant as all stores were located in the United States, and the
vast majority of imported merchandise was purchased in U.S. dollars.
There have been no other material changes in our primary risk exposures or management of market risks since the
prior year.
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