Target 2015 Annual Report Download - page 46

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that could reasonably be expected to have a material adverse effect on the reputation or goodwill of the terminating
party if it continued its association with the nonterminating party, (ii)€the other party breaches its obligations, which
breach remains uncured and results in a material adverse effect on the business or operations of the nonterminating
party in Target stores, (iii)€the other party files for bankruptcy protection, or (iv)€the other party is acquired by or
consolidated with certain identified competitors of the terminating party. We also entered a development agreement
with CVS through which we may jointly develop small-format stores.
Gain on Pharmacies and Clinics Transaction
(millions) 2015
Cash consideration $1,868
Less:
Deferred income (a) 694
Inventory 447
Other assets 13
Pretax transaction costs and contingent liabilities (b) 94
Pretax gain on pharmacies and clinics transaction (c) $ 620
(a) Represents deferred income that will be recorded as a reduction to SG&A expense evenly over the 23-year weighted average
remaining accounting useful life of our stores. As of January 30, 2016, $690 million remains in other current and other noncurrent
liabilities.
(b) Primarily relates to professional services, contract termination charges, severance, and impairment of certain assets not sold to CVS.
(c) Recorded outside of segment results and excluded from Adjusted EPS.
Deferred income of $694 million represents the consideration received at the close of the sale related to CVS’s leasehold
interest in the related space within our stores. We estimated the fair value of this leasehold interest using a discounted
cash flow analysis.
The pharmacy and clinic inventory and other assets sold had the following balances as of January 31, 2015:
(millions)
January 31,
2015
Inventory included in other current assets $508
Other current assets 2
Other noncurrent assets 12
Total $522
7. Canada Exit
Background
On January 15, 2015, Target Canada Co. and certain other wholly owned subsidiaries of Target (collectively Canada
Subsidiaries), comprising substantially all of our former Canadian operations and our former Canadian Segment, filed
for protection under the CCAA with the Court and were deconsolidated. As a result, we recorded a pretax impairment
loss on deconsolidation and other related charges, collectively totaling $5.1 billion. The Canada Subsidiaries are in
the process of liquidation.
Subsequent to deconsolidation, we use the cost method to account for our equity investment in the Canada Subsidiaries,
which has been reflected as zero in our Consolidated Statement of Financial Position at January 30, 2016 and January
31, 2015 based on the estimated fair value of the Canada Subsidiaries' net assets.
Income / (Loss) on Discontinued Operations
Our Canadian exit represented a strategic shift in our business. For this reason, our Canadian Segment results for
all periods prior to deconsolidation and costs to exit are classified as discontinued operations.
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