Target 2013 Annual Report Download - page 33

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28
Commitments and Contingencies
Contractual Obligations as of Payments Due by Period
February 1, 2014 Less than 1-3 3-5 After 5
(millions) Total 1 Year Years Years Years
Recorded contractual obligations:
Long-term debt (a) $ 11,708 $ 1,001 $ 778 $ 2,453 $ 7,476
Capital lease obligations (b) 5,313 204 390 307 4,412
Real estate liabilities (c) 144 144 — — —
Deferred compensation (d) 522 46 99 111 266
Tax contingencies (e) — ————
Loss contingencies (f) — ————
Unrecorded contractual obligations:
Interest payments – long-term debt 8,618 590 1,145 917 5,966
Operating leases (b) 4,103 187 359 330 3,227
Real estate obligations (g) 305 289 16 — —
Purchase obligations (h) 1,317 828 301 61 127
Future contributions to retirement plans (i) — ————
Contractual obligations $ 32,030 $ 3,289 $ 3,088 $ 4,179 $ 21,474
(a) Represents principal payments only, and excludes any fair market value adjustments recorded in long-term debt under derivative and hedge
accounting rules. See Note 18 of the Notes to Consolidated Financial Statements for further information.
(b) Total contractual lease payments include $3,740 million and $2,105 million of capital and operating lease payments, respectively, related
to options to extend the lease term that are reasonably assured of being exercised. These payments also include $80 million and $135 million
of legally binding minimum lease payments for stores that are expected to open in 2014 or later for capital and operating leases, respectively.
Capital lease obligations include interest. See Note 20 of the Notes to Consolidated Financial Statements for further information.
(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 $241 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. See Note 21 of the Notes to Consolidated Financial Statements for
further information.
(f) Estimated loss contingencies, including those related to the Data Breach, are not included in the table above because we are not able to
make reasonably reliable estimates of the period of cash settlement. See Note 17 of the Notes to Consolidated Financial Statements for
further information.
(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. (Note: we expect to
extend certain merchandise contracts during the first quarter of 2014, which could increase our minimum purchase commitment by
approximately $1,500 million.) 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) 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 February 1, 2014. 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.
Off Balance Sheet Arrangements: Other than the unrecorded contractual obligations above, we do not have any
arrangements or relationships with entities that are not consolidated into the financial statements.
Critical Accounting Estimates
Our analysis of operations and financial condition is based on our consolidated financial statements prepared in
accordance with GAAP. Preparation of these consolidated financial statements requires us to make estimates and
assumptions affecting the reported amounts of assets and liabilities at the date of the consolidated financial statements,
reported amounts of revenues and expenses during the reporting period and related disclosures of contingent assets