Target 2010 Annual Report Download - page 46

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Commitments and Contingencies
At January 29, 2011, our contractual obligations were as follows:
Payments Due by Period
Contractual Obligations
Less than 1-3 3-5 After 5
(millions) Total 1 Year Years Years Years
Recorded Contractual Obligations:
Long-term debt (a)
Unsecured $11,287 $ 106 $2,002 $ 28 $ 9,151
Nonrecourse 4,061 — 4,061 — —
Capital lease obligations (b) 617 32 66 62 457
Real estate liabilities (c) 65 65 — — —
Deferred compensation (d) 440 44 96 106 194
Tax contingencies (e) —————
Unrecorded Contractual Obligations:
Interest payments – long-term debt
Unsecured 10,080 678 1,214 1,127 7,061
Nonrecourse (f) 101 32 69 — —
Operating leases (b) 3,954 190 376 288 3,100
Real estate obligations (g) 243 209 34 — —
Purchase obligations (h) 1,907 713 747 348 99
Payment for Canadian leasehold
interests (i) 1,825 1,825 — — —
Future contributions to retirement
plans (j) —————
Contractual obligations $34,580 $3,894 $8,665 $1,959 $20,062
(a) Required principal payments only. Excludes fair market value adjustments recorded in long-term debt, as required by derivative and
hedging accounting rules. Principal includes the 47 percent interest in credit card receivables sold to JPMC at the principal amount. In the
event of a decrease in the receivables principal balance, accelerated repayment of this obligation may occur.
(b) Total contractual lease payments include $1,949 million of operating lease payments related to options to extend the lease term that are
reasonably assured of being exercised. These payments also include $28 million and $241 million of legally binding minimum lease
payments for stores opening in 2011 or later for capital and operating leases, respectively. Capital lease obligations include interest.
(c) Real estate liabilities include costs incurred but not paid related to the construction or remodeling of real estate and facilities.
(d) Deferred compensation obligations include commitments related to our nonqualified deferred compensation plans. The timing of deferred
compensation payouts is estimated based on payments currently made to former employees and retirees, forecasted investment returns,
and the projected timing of future retirements.
(e) Estimated tax contingencies of $397 million, including interest and penalties, are not included in the table above because we are not able to
make reasonably reliable estimates of the period of cash settlement.
(f) These payments vary with LIBOR and are calculated assuming LIBOR of 0.25 percent plus a spread, for each year outstanding.
(g) Real estate obligations include commitments for the purchase, construction or remodeling of real estate and facilities.
(h) Purchase obligations include all legally binding contracts such as firm minimum commitments for inventory purchases, merchandise
royalties, equipment purchases, marketing related contracts, software acquisition/license commitments and service contracts. We issue
inventory purchase orders in the normal course of business, which represent authorizations to purchase that are cancelable by their terms.
We do not consider purchase orders to be firm inventory commitments; therefore, they are excluded from the table above. If we choose to
cancel a purchase order, we may be obligated to reimburse the vendor for unrecoverable outlays incurred prior to cancellation. We also
issue trade letters of credit in the ordinary course of business, which are excluded from this table as these obligations are conditioned on
terms of the letter of credit being met.
(i) In January 2011, we entered into an agreement to purchase the leasehold interests in up to 220 sites in Canada currently operated by
Zellers Inc., in exchange for C$1,825 million. At January 29, 2011 the value of C$1.00 approximated the value of $1.00. This commitment
does not include future minimum lease payments on sites that may be selected in 2011.
(j) We have not included obligations under our pension and postretirement health care benefit plans in the contractual obligations table above
because no additional amounts are required to be funded as of January 29, 2011. Our historical practice regarding these plans has been to
contribute amounts necessary to satisfy minimum pension funding requirements, plus periodic discretionary amounts determined to be
appropriate.
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