Target 2015 Annual Report Download - page 48

Target Corporation Contingencies
The recorded expenses include an accrual for the estimated probable loss related to claims that may be asserted
directly against us (rather than against the Canada Subsidiaries), primarily under our guarantees of certain leases of
the Canada Subsidiaries. The beneficiaries of those guarantees may seek damages or other related relief as a result
of our exit from Canada. Our probable loss estimate is based on the expectation that claims will be asserted against
us and negotiated settlements will be reached, and not on any determination that it is probable we would be found
liable were these claims to be litigated. Our estimates involve significant judgment and are based on currently available
information, an assessment of the validity of certain claims and estimated payments by the Canada Subsidiaries in
the liquidation process, including estimated payments to the beneficiaries of the guarantees.
In the fourth quarter of 2015, we reached settlements with two entities that controlled guaranteed leases representing
approximately 46 percent of the recorded accrual at that time. Under the settlement terms, these entities have
subrogated to us their claims against the Canada Subsidiaries. The settlement amounts were materially consistent
with our previously recorded accruals.
As part of a March 2016 settlement between the Canada Subsidiaries and all of their former landlords, we have agreed
to subordinate a portion of our intercompany claims and make certain cash contributions to the estate in exchange for
a full release from obligations under guarantees of certain leases. This agreement remains subject to creditor and
Court approval. The financial impact of this agreement is materially consistent with amounts recorded in our financial
statements. If the agreement is not approved by the creditors and the Court, it is reasonably possible that future
changes to our estimates of loss and the ultimate amount paid on these claims could be material to our results of
operations in future periods. We are not able to reasonably estimate a range of possible losses in excess of the year-
end accrual because there would be significant factual and legal issues to be resolved if the agreement is not approved.
Any such losses would be reported in discontinued operations.
Recorded Assets and Liabilities
Assets and Liabilities of Discontinued Operations
(millions)
January 30,
2016
January 31,
2015
Income tax benefit $77 $1,430
Receivables from Canada Subsidiaries (a) 320 326
Receivables under the debtor-in-possession credit facility — 19
Total assets $397 $1,775
Accrued liabilities $171 296
Total liabilities $171 $296
(a) Represents loans and accounts receivable from Canada Subsidiaries.
Income Taxes
During 2015, we recognized net tax benefits of $171 million in discontinued operations, which primarily related to our
pretax exit costs and change in the estimated tax benefit from our investment losses in Canada. During 2014, we
recognized a tax benefit of $1,627 million in discontinued operations, which primarily related 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 majority of these tax benefits were received in the first quarter of 2015, and we used
substantially all of the remainder in 2015 to reduce our estimated tax payments.€
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