Credit Card Receivables Transaction	3 Months Ended
May 03, 2014
Credit Card Receivables Transaction
Credit Card Receivables Transaction	Credit Card Receivables Transaction In March 2013, we sold our entire U.S. consumer credit card portfolio to TD Bank Group (TD) and recognized a gain of $391 million. This transaction was accounted for as a sale, and the receivables are no longer reported in our Consolidated Statements of Financial Position. Consideration received included cash of $5.7 billion, equal to the gross (par) value of the outstanding receivables at the time of closing, and a $225 million beneficial interest asset. Concurrent with the sale, we repaid the nonrecourse debt collateralized by credit card receivables (2006/2007 Series Variable Funding Certificate) at par of $1.5 billion, resulting in net cash proceeds of $4.2 billion. TD now underwrites, funds and owns Target Credit Card and Target Visa consumer receivables in the U.S. TD controls risk management policies and oversees regulatory compliance, and we perform account servicing and primary marketing functions. We earn a substantial portion of the profits generated by the Target Credit Card and Target Visa portfolios. We classify this profit-sharing income in SG&A expense in the U.S. Segment. The U.S. Segment earned $167 million and $105 million of profit-sharing from TD during the three months ended May 3, 2014 and May 4, 2013, respectively. The U.S. Segment also earned credit card revenue for the three months ended May 4, 2013 prior to the close of the transaction. On a consolidated basis, profit-sharing income is offset by a $18 million and $17 million reduction in the beneficial interest asset, as of May 3, 2014 and May 4, 2013, respectively, for a net $148 million and $88 million impact, respectively. The $225 million beneficial interest asset effectively represents a receivable for the present value of future profit-sharing we expect to receive on the receivables sold. Profit-sharing payments reduced the beneficial interest asset by $21 million and $15 million during the three months ended May 3, 2014 and May 4, 2013, respectively. Revaluation adjustments increased the asset by $2 million during the first quarter of 2014, and decreased the asset by $2 million during the first quarter of 2013. As of May 3, 2014 and May 4, 2013, a beneficial interest asset of $108 million and $208 million, respectively, remains and is recorded within other current assets and other noncurrent assets in our Consolidated Statements of Financial Position. Based on historical payment patterns, we estimate that the remaining beneficial interest asset will be reduced over the next three years, with larger reductions in the early years.

Credit Card Receivables Transaction

In March 2013, we sold our entire U.S. consumer credit card portfolio to TD Bank Group (TD) and recognized a gain of $391 million. This transaction was accounted for as a sale, and the receivables are no longer reported in our Consolidated Statements of Financial Position. Consideration received included cash of $5.7 billion, equal to the gross (par) value of the outstanding receivables at the time of closing, and a $225 million beneficial interest asset. Concurrent with the sale, we repaid the nonrecourse debt collateralized by credit card receivables (2006/2007 Series Variable Funding Certificate) at par of $1.5 billion, resulting in net cash proceeds of $4.2 billion.

TD now underwrites, funds and owns Target Credit Card and Target Visa consumer receivables in the U.S. TD controls risk management policies and oversees regulatory compliance, and we perform account servicing and primary marketing functions. We earn a substantial portion of the profits generated by the Target Credit Card and Target Visa portfolios. We classify this profit-sharing income in SG&A expense in the U.S. Segment.

The U.S. Segment earned $167 million and $105 million of profit-sharing from TD during the three months ended May 3, 2014 and May 4, 2013, respectively. The U.S. Segment also earned credit card revenue for the three months ended May 4, 2013 prior to the close of the transaction. On a consolidated basis, profit-sharing income is offset by a $18 million and $17 million reduction in the beneficial interest asset, as of May 3, 2014 and May 4, 2013, respectively, for a net $148 million and $88 million impact, respectively.

The $225 million beneficial interest asset effectively represents a receivable for the present value of future profit-sharing we expect to receive on the receivables sold. Profit-sharing payments reduced the beneficial interest asset by $21 million and $15 million during the three months ended May 3, 2014 and May 4, 2013, respectively. Revaluation adjustments increased the asset by $2 million during the first quarter of 2014, and decreased the asset by $2 million during the first quarter of 2013. As of May 3, 2014 and May 4, 2013, a beneficial interest asset of $108 million and $208 million, respectively, remains and is recorded within other current assets and other noncurrent assets in our Consolidated Statements of Financial Position. Based on historical payment patterns, we estimate that the remaining beneficial interest asset will be reduced over the next three years, with larger reductions in the early years.