Target 2010 Annual Report Download - page 73

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SG&A, consistent with similar costs for owned locations. Sublease income received from tenants who rent
properties is recorded as a reduction to SG&A expense.
Rent Expense
(millions) 2010 2009 2008
Property and equipment $188 $187 $184
Software 25 27 24
Sublease income (13) (13) (15)
Total rent expense $200 $201 $193
Most long-term leases include one or more options to renew, with renewal terms that can extend the lease term
from one to more than 50 years. Certain leases also include options to purchase the leased property.
Future Minimum Lease Payments
(millions) Operating Leases (a) Capital Leases Sublease Income Total
2011 $ 190 $ 31 $(11) $ 210
2012 189 32 (8) 213
2013 187 32 (7) 212
2014 147 32 (6) 173
2015 141 30 (6) 165
After 2015 3,100 432 (35) 3,497
Total future minimum lease payments $3,954 $ 589 $(73) $4,470
Less: Interest (b) (256)
Present value of future minimum capital lease
payments (c) $ 333
(a) Total contractual lease payments include $1,949 million related to options to extend lease terms that are reasonably assured of being
exercised and also includes $241 million of legally binding minimum lease payments for stores that will open in 2011 or later.
(b) Calculated using the interest rate at inception for each lease.
(c) Includes the current portion of $12 million.
The future minimum lease payments above do not include any payments associated with the leases that may
be acquired under our agreement with Zellers Inc., described in Note 18.
22. Income Taxes
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary
differences between financial statement carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted income tax rates in effect for the year the
temporary differences are expected to be recovered or settled. Tax rate changes affecting deferred tax assets and
liabilities are recognized in income at the enactment date. We have not recorded deferred taxes when earnings from
foreign operations are considered to be indefinitely invested outside the U.S. Such amounts are not significant.
Tax Rate Reconciliation 2010 2009 2008
Federal statutory rate 35.0% 35.0% 35.0%
State income taxes, net of federal tax benefit 1.4 2.8 3.8
Other (1.3) (2.1) (1.4)
Effective tax rate 35.1% 35.7% 37.4%
51
PART II