Target 2007 Annual Report Download - page 53

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In September 2006, through TRC, we issued $500 million of Variable Funding Certificates (Certificates)
backed by credit card receivables through the Target Credit Card Master Trust. At February 3, 2007, the
outstanding amount of the Certificates was $100 million, and including the Certificates, the total amount of
debt backed by credit card receivables held in the Target Credit Card Master Trust or related trusts was
$1,750 million.
In April 2007, TRC amended its Certificates, and we borrowed an additional $900 million through our
Certificates. In August 2007, through TRC, we borrowed an additional $1 billion through our Certificates,
$500 million of which was repaid before the end of 2007. At February 2, 2008, the outstanding amount of the
Certificates was $1,500 million. During 2007, we repaid $750 million of long-term debt that was backed by
credit card receivables held in the Target Credit Card Master Trust. At February 2, 2008, the total amount of
debt backed by credit card receivables held in the Target Credit Card Master Trust or related trusts, including
the Certificates, was $2,400 million.
Refer to Note 9 for further description of our accounts receivable financing program. Other than debt
backed by our credit card receivables and other immaterial borrowings, all of our outstanding borrowings are
senior, unsecured obligations.
The carrying value and maturities of our debt portfolio, including swap valuation adjustments for our fair
value hedges, was as follows:
Debt Maturities February 2, 2008 February 3, 2007
(dollars in millions) Rate (a) Balance Rate (a) Balance
Due fiscal 2007-2011 4.9% $ 5,614 6.2% $ 5,931
Due fiscal 2012-2016 4.9 3,893 5.4 2,302
Due fiscal 2017-2021 5.4 2,661 6.8 362
Due fiscal 2022-2026 8.7 64 8.7 64
Due fiscal 2027-2031 6.8 680 6.8 680
Due fiscal 2032-2037 6.8 4,051 6.3 551
Total notes and debentures (b) 5.5 16,963 6.1 9,890
Capital lease obligations 127 147
Less: amounts due within one year (1,964) (1,362)
Long-term debt $15,126 $ 8,675
(a) Reflects the weighted average stated interest rate as of year-end, including the impact of interest rate swaps.
(b) The estimated fair value of total notes and debentures, excluding swap valuation adjustments, using a discounted cash flow analysis
based on our incremental interest rates for similar types of financial instruments, was $17,117 million at February 2, 2008 and
$10,058 million at February 3, 2007. See Note 20 for the estimated fair value of our interest rate swaps.
Required principal payments on notes and debentures over the next five years, excluding capital lease
obligations and fair market value adjustments recorded in long-term debt, are as follows:
Required Principal Payments
(millions) 2008 2009 2010 2011 2012
Required principal payments $1,951 $1,251 $2,236 $107 $2,251
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.
19. Net Interest Expense
Net Interest Expense
(millions) 2007 2006 2005
Interest expense on debt $736 $635 $524
Interest expense on capital leases 11 11 8
Capitalized interest (78) (49) (42)
Interest income (22) (25) (27)
Net interest expense $647 $572 $463
35
PART II