Target 2011 Annual Report Download - page 71

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Derivative Contracts – Type, Statement of Financial Position Classification and Fair Value
(millions)
Asset Liability
Jan. 28, Jan. 29, Jan. 28, Jan. 29,
Type of Contract Classification 2012 2011 Classification 2012 2011
Designated as hedging instrument:
Interest rate swap Other noncurrent $3 $ — N/A $— $—
assets
Not designated as hedging
instruments:
Interest rate swaps Other current 20 — Other current 7—
assets liabilities
Interest rate swaps Other noncurrent 111 139 Other noncurrent 69 54
assets liabilities
Total $134 $139 $76 $54
Periodic payments, valuation adjustments and amortization of gains or losses on our derivative contracts had
the following impact on our Consolidated Statement of Operations:
Derivative Contracts – Effect on Results of Operations
(millions)
Type of Contract Classification of Income/(Expenses) 2011 2010 2009
Interest rate swaps Other interest expense $41 $51 $65
The amount remaining on unamortized hedged debt valuation gains from terminated or de-designated interest
rate swaps that will be amortized into earnings over the remaining lives of the underlying debt totaled $111 million,
$152 million and $197 million, at the end of 2011, 2010 and 2009, respectively.
21. Leases
We lease certain retail locations, warehouses, distribution centers, office space, land, equipment and software.
Assets held under capital leases are included in property and equipment. Operating lease rentals are expensed on
a straight-line basis over the life of the lease beginning on the date we take possession of the property. At lease
inception, we determine the lease term by assuming the exercise of those renewal options that are reasonably
assured. The exercise of lease renewal options is at our sole discretion. The expected lease term is used to
determine whether a lease is capital or operating and is used to calculate straight-line rent expense. Additionally,
the depreciable life of leased buildings and leasehold improvements is limited by the expected lease term.
Rent expense is included in SG&A expenses. Some of our lease agreements include rental payments based on
a percentage of retail sales over contractual levels and others include rental payments adjusted periodically for
inflation. Certain leases require us to pay real estate taxes, insurance, maintenance and other operating expenses
associated with the leased premises. These expenses are classified in 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) 2011 2010 2009
Property and equipment $193 $188 $187
Software 33 25 27
Sublease income (a) (61) (13) (13)
Total rent expense $165 $200 $201
(a) Sublease income in 2011 includes $51 million related to sites acquired in our Canadian leasehold acquisition that are being subleased to
Zellers through March 2013, or earlier, at our option.
47
PART II