Target 2015 Annual Report Download - page 57

Classification and
Fair Value
(millions)
Assets Liabilities
Classification
Jan 30,
2016
Jan 31,
2015 Classification
Jan 30,
2016
Jan 31,
2015
Designated: Other€noncurrent assets $27 $27 N/A $—$—
De-designated: Other€current assets 12 — Other current liabilities 8 —
Other€noncurrent assets — 38 Other€noncurrent liabilities — 24
Total $39 $65 $8$24
Periodic payments, valuation adjustments, and amortization of gains or losses on our derivative contracts had the
following effect on our Consolidated Statements of Operations:
Derivative€Contracts€–€Effect€on€Results€of€Operations
(millions)
Type of Contract Classification of (Income)/Expense 2015 2014 2013
Interest€rate€swaps Net interest expense $ (36) $ (32) $ (29)
The amount remaining on unamortized hedged debt valuation gains from terminated or de-designated interest rate
swaps that will be amortized into earnings over the remaining lives of the underlying debt totaled $15 million, $34
million, and $52 million, at the end of 2015, 2014, and 2013, respectively.
22. Leases
We lease certain retail locations, warehouses, distribution centers, office space, land, equipment, and software. Assets
held under capital leases are included in property and equipment. Operating lease rentals are expensed on a straight-
line basis over the life of the lease beginning on the date we take possession of the property. At lease inception, we
determine the lease term by assuming the exercise of those renewal options that are reasonably assured. The exercise
of lease renewal options is at our sole discretion. The lease term is used to determine whether a lease is capital or
operating and is used to calculate straight-line rent expense. Additionally, the depreciable life of leased assets and
leasehold improvements is limited by the expected lease term.
Rent expense is included in SG&A expenses. Some of our lease agreements include rental payments based on a
percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation.
Certain leases require us to pay real estate taxes, insurance, maintenance, and other operating expenses associated
with the leased premises. These expenses are classified in SG&A, consistent with similar costs for owned locations.
Rent income received from tenants who rent properties is recorded as a reduction to SG&A expense.
Rent Expense
(millions) 2015 2014 2013
Property, equipment, and software $198 $195 $212
Rent income (a) (16)(9)(8)
Total rent expense $182 $186 $204
(a) Includes rental income from CVS. See Note 6 for further discussion.
Total capital lease interest expense was $42 million, $38 million, and $39 million in 2015, 2014, and 2013, respectively,
and is included within net interest expense on the Consolidated Statements of Operations.
Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to 50
years or more. Certain leases also include options to purchase the leased property. Assets recorded under capital
leases as of January€30, 2016 and January€31, 2015 were $735 million and $711 million, respectively. These assets
are recorded net of accumulated amortization of $321 million and $242 million as of January 30, 2016 and January
31, 2015, respectively.
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