Target 2015 Annual Report Download - page 54

19. Commitments and Contingencies
Data Breach
As previously reported, 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) which resulted in a number of claims
against us, several of which have been finally or preliminarily resolved as follows:
Payment Card Network Claims. Each of the four major payment card networks made a written claim against us
regarding the Data Breach. During 2015 we entered into settlement agreements with all four networks.
Consumer Class Action. A class action suit was asserted on behalf of a class of guests whose information was
compromised in the Data Breach.€This action was settled and received Court approval during 2015, but is being
appealed by several objecting parties. We believe the settlement terms will be maintained on appeal.
Financial Institutions Class Action. A class action was asserted on behalf of financial institution issuers of credit
cards impacted by the Data Breach. This action was settled and received preliminary Court approval in the fourth
quarter of 2015. A hearing for final Court approval of the settlement is scheduled for the second quarter of our
fiscal 2016.
Actions related to the Data Breach that remain pending are: (1) one action previously filed in Canada; (2) several
putative class action suits brought on behalf of shareholders; and (3) ongoing investigations by State Attorneys General
and the Federal Trade Commission.
Our accrual for estimated probable losses is based on actual settlements reached to date and the expectation of
negotiated settlements in the pending actions. We have not based our accrual on any determination that it is probable
we would be found liable for the losses we have accrued were these claims to be litigated. While our estimates may
change as new information becomes available, we do not believe any adjustments will be material.
Expenses Incurred and Amounts Accrued€€
Data Breach Balance Sheet Rollforward
(millions) Liabilities Insurance Receivable
Balance at February 1, 2014 $61 $44
Expenses incurred/insurance receivable recorded (a) 191 46
Payments made/received (81)(30)
Balance at January 31, 2015 $171 $60
Expenses incurred/insurance receivable recorded (a) 39 —
Payments made/received (130)(40)
Balance at January 30, 2016 $80 $20
(a) Includes expenditures and accruals for Data Breach-related costs and expected insurance recoveries as discussed below.
We recorded $39 million of pretax Data Breach-related expenses during 2015. Along with legal and other professional
services, expenses included an adjustment to the accrual based on refined estimates of our probable exposure. We
recorded $191 million of Data Breach-related expenses, partially offset by expected insurance proceeds of $46 million,
for net expenses of $145 million during 2014. These expenses were included in our Consolidated Statements of
Operations as SG&A, but were not part of segment results.
Since the Data Breach, we have incurred $291 million of cumulative expenses, partially offset by expected insurance
recoveries of $90 million, for net cumulative expenses of $201 million.
49