Target 2014 Annual Report Download - page 50

16. Accrued and Other Current Liabilities
Accrued and Other Current Liabilities
(millions)
January 31,
2015
February 1,
2014
Wages and benefits $ 951 $ 865
Gift card liability, net of estimated breakage 609 516
Real estate, sales and other taxes payable 550 529
Dividends payable 333 272
Straight-line rent accrual (a) 255 242
Workers' compensation and general liability (b) 153 152
Interest payable 76 78
Project costs accrual 69 165
Income tax payable 26 216
Other 761 575
Total $ 3,783 $ 3,610
(a) Straight-line
rent accrual represents the amount of rent expense recorded that exceeds cash payments remitted in connection with
operating leases.
(b) We retain a substantial portion of the risk related to general liability and workers' compensation claims. Liabilities associated with these
losses include estimates of both claims filed and losses incurred but not yet reported. We estimate our ultimate cost based on analysis
of historical data and actuarial estimates. General liability and workers' compensation liabilities are recorded at our estimate of their net
present value.
17. Commitments and Contingencies
Data Breach
In the fourth quarter of 2013, we experienced a data breach in which an intruder stole certain payment card and other
guest information from our network (the Data Breach). Based on our investigation to date, we believe that the intruder
installed malware on our point-of-sale system in our U.S. stores and stole payment card data from up to approximately
40 million credit and debit card accounts of guests who shopped at our U.S. stores between November 27 and December
17, 2013. In addition, the intruder stole certain guest information, including names, mailing addresses, phone numbers
or email addresses, for up to 70 million individuals.
Payment Card Network Loss Contingencies
In the event of a data breach where payment card data is or may have been stolen, the payment card networks’
contracts purport to give them the ability to make claims for reimbursement of incremental counterfeit fraud losses and
non-ordinary course operating expenses (such as card reissuance costs) that the payment card networks believe they
or their issuing banks have incurred as a result of the event. For us to have liability for such claims, we believe that a
court would have to find that, among other things, (1) at the time of the Data Breach the portion of our network that
handles payment card data was noncompliant with applicable data security standards in a manner that contributed to
the Data Breach, and (2) the network operating rules around reimbursement of operating costs and counterfeit fraud
losses are enforceable. While an independent third-party assessor found the portion of our network that handles
payment card data to be compliant with applicable data security standards in the fall of 2013 and late 2014, the forensic
investigator working on behalf of the payment card networks claimed in first quarter 2014 that we were not in compliance
with those standards at the time of the Data Breach.
During 2014, three of the four major payment card networks, which between them represent a substantial majority of
the payment cards potentially impacted by the Data Breach, made written claims against us, either directly or through
our acquiring banks. We believe it is probable that the fourth major payment card network will also make a claim against
us. We expect to dispute the claims that have been or may be made against us by the payment card networks, and
we think it is probable that our disputes would lead to settlement negotiations consistent with the experience of other
entities that suffered similar payment card breaches. We believe such negotiations would effect a combined settlement
of the payment card networks' counterfeit fraud loss allegations and their non-ordinary course operating expense
allegations. Our accruals for estimated probable loss discussed below include accruals for what we believe to be the
vast majority of both actual and potential claims from the payment card networks.
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