Target 2013 Annual Report Download - page 55

50
Classification and
Fair Value
(millions)
Assets Liabilities
Classification Feb 1, 2014 Feb 2, 2013 Classification Feb 1, 2014 Feb 2, 2013
Designated: Other current assets $1$ — N/A $ — $ —
Other noncurrent assets —3 N/A ——
De-designated: Other current assets —4 Other current liabilities —2
Other noncurrent assets 62 82 Other noncurrent liabilities 39 54
Total $63 $ 89 $ 39 $ 56
Periodic payments, valuation adjustments and amortization of gains or losses on our derivative contracts had the
following impact on our Consolidated Statements of Operations:
Derivative Contracts – Effect on Results of Operations
(millions)
Type of Contract Classification of Income/(Expense) 2013 2012 2011
Interest rate swaps Net interest expense $ 29 $ 44 $ 41
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 $52 million, $75
million and $111 million, at the end of 2013, 2012 and 2011, respectively.
20. 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 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 assets 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.
Rent income received from tenants who rent properties is recorded as a reduction to SG&A expense.
Rent Expense
(millions) 2013 2012 2011
Property and equipment $ 194 $ 194 $ 193
Software 33 33 33
Rent income (a) (12) (85) (61)
Total rent expense $ 215 $ 142 $ 165
(a) Rent income in 2013, 2012, and 2011 includes $4 million, $75 million and $51 million, respectively, related to sites acquired in our Canadian
leasehold acquisition that were being subleased back to Zellers for various terms, which all ended by March 31, 2013.
Total capital lease interest expense was $116 million, $109 million and $69 million in 2013, 2012 and 2011, respectively,
including interest expense on Canadian capitalized leases of $77 million, $78 million and $44 million, respectively, and
is included within net interest expense on the Consolidated Statements of Operations.
Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to 50
years. Certain leases also include options to purchase the leased property. Assets recorded under capital leases as
of February 1, 2014 and February 2, 2013 were $2,106 million and $2,038 million, respectively.