Target 2006 Annual Report Download - page 52

17. Accrued Liabilities
February 3, January 28,
(millions) 2007 2006
Wages and benefits $ 674 $ 602
Taxes payable (a) 450 366
Gift card liability (b) 338 294
Workers’ compensation and general liability (c) 154 142
Other 1,142 789
Total $2,758 $2,193
(a) Taxes payable consist of real estate, team member withholdings and sales tax liabilities.
(b) Gift card liability represents the amount of gift cards that have been issued but have not been redeemed, net of estimated breakage.
(c) The non-current portion of our liability for workers’ compensation and general liability claims is shown in Note 24.
18. Commitments and Contingencies
At February 3, 2007, our obligations included notes and debentures of $9,897 million (further
described in Note 19), excluding swap fair market value adjustments. At February 3, 2007, capital lease
obligations were $249 million and total future minimum payments of operating leases were $3,325 million.
The amount of future contractual lease payments includes certain options for lease term extension that are
reasonably assured of being exercised in the amount of $1,631 million, and $188 million of legally binding
minimum lease payments for stores that will open in 2007 or later (see additional detail in Note 22).
Deferred compensation obligations were $691 million at February 3, 2007. In addition, real estate
obligations, including commitments for the purchase, construction or remodeling of real estate and
facilities, were approximately $1,106 million at February 3, 2007.
Purchase obligations, which include all legally binding contracts such as firm commitments for
inventory purchases, merchandise royalties, purchases of equipment, marketing-related contracts, software
acquisition/license commitments and service contracts, were approximately $1,613 million at February 3,
2007. We issue inventory purchase orders, which represent authorizations to purchase that are cancelable
by their terms. We do not consider purchase orders to be firm inventory commitments. We also issue trade
letters of credit in the ordinary course of business, which are not firm commitments as they are conditional
on the purchase order not being cancelled. If we choose to cancel a purchase order, we may be obligated to
reimburse the vendor for unrecoverable outlays incurred prior to cancellation under certain circumstances.
Trade letters of credit totaled $1,830 million at February 3, 2007, a portion of which is in accounts
payable. Standby letters of credit, relating primarily to retained risk on our insurance claims, totaled
$81 million at February 3, 2007.
The terms of a significant portion of the Visa/MasterCard antitrust litigation settlement were finalized
during the third quarter of 2005. As a result, we recorded a $27 million ($.02 per share) gain in the third
quarter of 2005 for our share of the proceeds, which we received during the second quarter of 2006. We
also expect to receive an additional, smaller payment; however, the amount and timing of that payment are
not certain at this time. Accordingly, no additional gain has been recorded as of February 3, 2007.
We are exposed to claims and litigation arising in the ordinary course of business and use various
methods to resolve these matters in a manner that we believe serves the best interest of our shareholders and
other constituents. We believe the recorded reserves in our consolidated financial statements are adequate
in light of the probable and estimable liabilities. We do not believe that any of the currently identified claims
or litigation matters will have a material adverse impact on our results of operations, cash flows or financial
condition.
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