Target 2010 Annual Report Download - page 64

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10. Credit Card Receivables
Credit card receivables are recorded net of an allowance for doubtful accounts and are our only significant
class of receivables. Substantially all accounts continue to accrue finance charges until they are written off. All past
due accounts were incurring finance charges at January 29, 2011 and January 30, 2010. Accounts are written off
when they become 180 days past due.
2010 2009Age of Credit Card Receivables
Percent of Percent of
(dollars in millions) Amount Receivables Amount Receivables
Current $6,132 89.6% $6,935 86.9%
1-29 days past due 292 4.3% 337 4.2%
30-59 days past due 131 1.9% 206 2.6%
60-89 days past due 79 1.1% 133 1.6%
90+ days past due 209 3.1% 371 4.7%
Period-end gross credit card receivables $6,843 100% $7,982 100%
Allowance for Doubtful Accounts
The allowance for doubtful accounts is recognized in an amount equal to the anticipated future write-offs of
existing receivables and includes provisions for uncollectible finance charges and other credit-related fees. We
estimate future write-offs on the entire credit card portfolio collectively based on historical experience of
delinquencies, risk scores, aging trends and industry risk trends.
Allowance for Doubtful Accounts
(millions) 2010 2009
Allowance at beginning of period $ 1,016 $ 1,010
Bad debt expense 528 1,185
Write-offs (a) (1,007) (1,287)
Recoveries (a) 153 108
Allowance at end of period $ 690 $ 1,016
(a) Write-offs include the principal amount of losses (excluding accrued and unpaid finance charges), and recoveries include current period
principal collections on previously written-off balances. These amounts combined represent net write-offs.
Deterioration of the macroeconomic conditions in the United States would adversely affect the risk profile of
our credit card receivables portfolio based on credit card holders’ ability to pay their balances. If such deterioration
were to occur, it would lead to an increase in bad debt expense. The Corporation monitors both the credit quality
and the delinquency status of the credit card receivables portfolio. We consider accounts 30 or more days past due
as delinquent, and we update delinquency status daily. We also monitor risk in the portfolio by assigning internally
generated scores to each account and by periodically obtaining a statistically representative sample of current
FICO scores, a nationally recognized credit scoring model. We update these FICO scores monthly, most recently in
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