Target 2007 Annual Report Download - page 34

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Maintaining strong investment-grade debt ratings is a key part of our strategy. Our debt ratings as of
February 2, 2008 were as follows:
Standard andDebt Ratings
Moody’s Poor’s Fitch
Long-term debt A2 A+ A
Commercial paper P-1 A-1 F1
Securitized receivables Aaa AAA n/a
As described in Note 18, during 2007 we issued $6,750 million of long-term debt, and we issued
$1,900 million of Variable Funding Certificates backed by credit card receivables through the Target Credit
Card Master Trust. As of February 2, 2008, $1,500 million of the Variable Funding Certificates were
outstanding. Further liquidity is provided by a committed $2 billion unsecured revolving credit facility obtained
through a group of banks in April 2007, which will expire in April 2012. No balances were outstanding at any
time during 2007 or 2006 under this or previously existing revolving credit facilities. Most of our long-term debt
obligations contain covenants related to secured debt levels. In addition to a secured debt level covenant, our
credit facility also contains a debt leverage covenant. We are, and expect to remain, in compliance with these
covenants. At February 2, 2008, no notes or debentures contained provisions requiring acceleration of
payment upon a debt rating downgrade, except that certain outstanding notes allow the note holders to put
the notes to us if within a matter of months of each other we experience both (a) a change in control and
(b) our long-term debt ratings are either reduced and the resulting rating is non-investment grade, or our long-
term debt ratings are placed on watch for possible reduction and those ratings are subsequently reduced and
the resulting rating is non-investment grade.
Our interest coverage ratio represents the ratio of pre-tax earnings before fixed charges (interest expense
and the interest portion of rent expense) to fixed charges. Our interest coverage ratio calculated as prescribed
by Securities and Exchange Commission (SEC) rules was 6.4x, 7.1x, and 7.2x in 2007, 2006 and 2005,
respectively.
Capital Expenditures
Capital expenditures were $4,369 million in 2007 compared with $3,928 million in 2006 and $3,388 million
in 2005. This increase was primarily attributable to continued new store expansion. Approximately
$1,404 million of 2007 capital expenditures is related to stores that will open in 2008 and later years. Net
property and equipment increased $2,664 million in 2007 following an increase of $2,393 million in 2006.
Percentage of Capital Expenditures
Capital Expenditures
2007 2006 2005
New stores 71% 61% 60%
Remodels and expansions 712 12
Information technology, distribution and other 22 27 28
Total 100% 100% 100%
16