Target said it incurred $18 million of net expense in first quarter 2014 directly related to the breach in data that occurred during the holiday period. This reflects $26 million of total expenses partially offset by the recognition of an $8 million insurance receivable.
This expense does not include any accrual for the potential claims by the payment card networks for counterfeit fraud losses. The amount accrued to date for probable losses on potential payment card network claims consists solely of operating expense reimbursement obligations.
At this time Target said it is unable to reasonably estimate a range of possible losses on the payment card networks potential claims in excess of the amount accrued.
Target recently announced that beginning in early 2015 the entire REDcard portfolio will be enabled with chip-and-PIN solution, and existing co-branded cards will be reissued as MasterCard co-branded chip-and-PIN cards. The retailer recorded $13 million of expense in first quarter 2014 related to the decision to convert existing co-branded cards to MasterCard.