Target 2015 Annual Report Download - page 32

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Commitments and Contingencies
Contractual€Obligations as of Payments Due by Period
January 30, 2016 Less than 1-3 3-5 After 5
(millions) Total 1 Year Years Years Years
Recorded contractual obligations:
Long-term debt€(a) $11,955 $751 $2,453 $2,095 $6,656
Capital lease obligations€(b) 1,690 130 144 139 1,277
Deferred compensation€(c) 499 57 118 125 199
Real estate liabilities€(d) 52 52 — — —
Tax contingencies€(e) — ————
Loss contingencies (f) — ————
Unrecorded contractual obligations:
Interest payments – long-term debt 6,717 569 936 753 4,459
Operating leases€(b) 3,713 186 361 324 2,842
Purchase obligations€(g) 1,950 605 801 379 165
Real estate obligations€(h) 227 192 35 — —
Future contributions to retirement plans€(i) — ————
Contractual obligations $26,803 $2,542 $4,848 $3,815 $15,598
(a) Represents principal payments only. See Note€20 of the Financial Statements for further information.
(b) These payments also include $311€million and $90€million of legally binding minimum lease payments for stores that are expected to
open in 2016 or later for capital and operating leases, respectively. Capital lease obligations include interest. See Note€22 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 $215€million, including interest and penalties and primarily related to continuing operations, 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€23 of the
Financial Statements for further information.
(f) Estimated loss contingencies, including those related to the Canada Exit and the 2013 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 7 and Note 19 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 plans in the contractual obligations table above because no additional amounts are
required to be funded as of January€30, 2016. 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
results could differ under other assumptions or conditions. However, except as discussed below regarding Canada
Exit-related costs, we do not believe there is a reasonable likelihood that there will be a material change in future
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