Target 2014 Annual Report Download - page 29

Commitments and Contingencies
Contractual Obligations as of Payments Due by Period
January 31, 2015 Less than 1-3 3-5 After 5
(millions) Total 1 Year Years Years Years
Recorded contractual obligations:
Long-term debt (a)
Capital lease obligations (b)
Deferred compensation (c)
Real estate liabilities (d)
$ 11,982 $
1,403
541
39
27 $
123
47
39
3,002 $
152
103
—
1,203 $
109
115
—
7,750
1,019
276
—
Tax contingencies (e)
Loss contingencies (f)
—
—
—
—
—
—
—
—
—
—
Unrecorded contractual obligations:
Interest payments – long-term debt
Operating leases (b)
Purchase obligations (g)
Real estate obligations (h)
Future contributions to retirement plans (i)
7,309
3,827
2,411
204
—
592
186
695
167
—
1,088
348
855
6
—
809
319
697
31
—
4,820
2,974
164
—
—
Contractual obligations $ 27,716 $ 1,876 $ 5,554 $ 3,283 $ 17,003
(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 Financial Statements for further information.
(b)
These
payments also include $59 million and $67 million of legally binding minimum lease payments for stores that are expected to open
in 2015 or later for capital and operating leases, respectively. Capital lease obligations include interest. See Note 20 of the Financial
Statements for further information.
(c)
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.
(d) Real estate liabilities include costs incurred but not paid related to the construction or remodeling of real estate and facilities.
(e) Estimated tax contingencies of $195 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 Financial Statements for further information.
(f) Estimated loss contingencies, including those related to the Canada Exit and 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 6 and Note 17 of the Financial Statements
for further information.
(g) 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. 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.
(h) Real estate obligations include commitments for the purchase, construction or remodeling of real estate and facilities.
(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 January 31, 2015. 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 noted 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
and liabilities. In the Notes to Consolidated Financial Statements, we describe the significant accounting policies used
in preparing the consolidated financial statements. Our estimates are evaluated on an ongoing basis and are drawn
from historical experience and other assumptions that we believe to be reasonable under the circumstances. Actual
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