Target 2008 Annual Report Download - page 57

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 $1,359 million and $1,861 million at January 31, 2009 and February 2, 2008,
respectively, a portion of which are reflected in accounts payable. Standby letters of credit, relating primarily to
retained risk on our insurance claims, totaled $64 million and $69 million at January 31, 2009 and February 2,
2008, respectively.
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.
19. Notes Payable and Long-Term Debt
We obtain short-term financing throughout the year under our commercial paper program, a form of
notes payable.
Commercial Paper
(millions) 2008 2007
Maximum amount outstanding during the year $1,385 $1,589
Average amount outstanding during the year 274 404
Amount outstanding at year-end ——
Weighted average interest rate 2.1% 5.2%
In April 2007, we entered into a five-year $2 billion unsecured revolving credit facility with a group of
banks, which will expire in 2012. No balances were outstanding at any time during 2008 or 2007 under this or
previously existing revolving credit facilities.
We did not issue any unsecured, long-term debt during 2008. We issued various long-term, unsecured
debt instruments during 2007. Information on these transactions is as follows:
Issuance of Long-Term Unsecured Debt – 2007
(millions) Amount
5.375% notes due May 2017 $1,000
LIBOR plus 0.125% floating rates notes due August 2009 500
6.5% notes due October 2037 1,250
5.125% notes due January 2013 500
6.0% notes due January 2018 1,250
7.0% notes due January 2038 2,250
Total for 2007 $6,750
As further explained in Note 10, we maintain an accounts receivable financing program through which we
sell credit card receivables to a bankruptcy remote, wholly owned subsidiary, which in turn transfers the
receivables to a trust. The trust, either directly or through related trusts, sells debt securities to third parties.
The following summarizes this activity for fiscal 2007 and 2008.
Nonrecourse Debt Collateralized by Credit Card Receivables
(millions) Amount
At February 3, 2007 $ 1,750
Issued 1,900
Repaid (1,250)
At February 2, 2008 2,400
Issued, net of $268 discount 3,557
Accretion (a) 33
Repaid (500)
At January 31, 2009 $ 5,490
(a) Represents the accretion of the 7 percent discount on the 47 percent interest in credit card receivables sold to JPMC.
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PART II