Target 2014 Annual Report Download - page 45

Recorded Assets and Liabilities
Assets and Liabilities of Discontinued Operations
(millions)
January 31, February 1,
Equity investment in Canada Subsidiaries
2015
$ — Inventory
2014
$ 488
Income tax benefit 1,430 Property and equipment, net 4,966
Receivables from Canada Subsidiaries (a) 326 Other 800
Receivables under the debtor-in-possession
credit facility
Total assets
19
$ 1,775 Total assets
Capital lease obligations
$ 6,254
$ 1,210
Accrued liabilities
Total liabilities
$ 296
$ 296
Accounts payable and other liabilities
Total liabilities
775
$ 1,985
(a) Represents the fair value of loans and accounts receivable from Canada Subsidiaries.
DIP Financing
In conjunction with the Filing, the Court approved Target's agreement to provide a debtor-in-possession credit facility
(the DIP facility) to the Canada Subsidiaries, which provides for borrowings under the facility up to $175 million. The
DIP facility will be used to finance the Canada Subsidiaries' operations during the CCAA process. Amounts borrowed
by the Canada Subsidiaries under the DIP facility will have a priority claim over certain other secured and unsecured
claims except for other Court ordered charges and permitted priority liens under the law. Amounts drawn under the
DIP and repaid cannot be reborrowed. As of January 31, 2015, there was $19 million drawn and outstanding under
the DIP facility, which was fully repaid in 2015.
Income Taxes
We have recognized a tax benefit of $1,627 million in discontinued operations, which primarily relates to a loss on our
investment in Canada and includes other tax benefits resulting from certain asset write-offs and liabilities paid or
accrued to facilitate the liquidation. The tax benefit in discontinued operations reflects certain tax attribute carryforwards
including a gross federal operating loss of $694 million and gross state operating losses of $423 million. We have
realized the majority of these tax benefits in the first quarter of 2015, and expect to realize substantially all of the
remainder in 2015.
Canadian deferred tax assets relating to both historical and current year net operating losses were included in our
equity investment in the Canada Subsidiaries that has been reduced to zero.
As part of our exit from Canada we also incurred a $284 million gross capital loss on a transaction within our consolidated
group. We currently do not have nor anticipate sufficient capital gains to absorb this capital loss. Therefore, we have
established a full valuation allowance against this deferred tax asset.
7. Credit Card Receivables Transaction
In March 2013, we sold our entire U.S. consumer credit card portfolio to TD Bank Group (TD) and recognized a gain
of $391 million. This transaction was accounted for as a sale, and the receivables are no longer reported in our
Consolidated Statements of Financial Position. Consideration received included cash of $5.7 billion, equal to the gross
(par) value of the outstanding receivables at the time of closing, and a $225 million beneficial interest asset. Concurrent
with the sale of the portfolio, we repaid the nonrecourse debt collateralized by credit card receivables (2006/2007
Series Variable Funding Certificate) at par of $1.5 billion, resulting in net cash proceeds of $4.2 billion.
TD now underwrites, funds and owns Target Credit Card and Target Visa receivables. TD controls risk management
policies and oversees regulatory compliance, and we perform account servicing and primary marketing functions. We
earn a substantial portion of the profits generated by the Target Credit Card and Target Visa portfolios. Income from
the TD profit-sharing arrangement and our related account servicing expenses are classified within segment SG&A
expenses.
40