2012
annual
report
1000 Nicollet Mall · Minneapolis, MN 55403 · 612.304.6073 · Target.com
TARGET CORPORATION
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Get the 2012 Annual Report with expanded content. Scan this code.Need a scanner? Download the Target app.Or visit Target.com/annualreport
Jeffrey J. Jones II
Executive Vice
President and Chief
Marketing Officer
Gregg W. Steinhafel
Chairman, President
and Chief Executive
Officer
Kathryn A. Tesija
Executive Vice
President,
Merchandising and
Supply Chain
Laysha L. Ward
President,
Community Relations
and Target Foundation
ExECuTIvE OFFICERS
Timothy R. Baer
Executive Vice
President,
General Counsel and
Corporate Secretary
Anthony S. Fisher
President,
Target Canada
Jodeen A. Kozlak
Executive Vice
President,
Human Resources
John D. Griffith
Executive Vice
President,
Property Development
John J. Mulligan
Executive Vice
President and Chief
Financial Officer
Beth M. Jacob
Executive Vice
President,
Target Technology
Services and Chief
Information Officer
Tina M. Schiel
Executive Vice
President,
Stores
Terrence J. Scully
President,
Target Financial and
Retail Services
Retiring 3/31/13
Susan Kahn
Senior Vice President,
Communications
and Reputation
Management
Navneet Kapoor
President and
Managing Director,
Target India
Scott Kennedy
President, Financial
and Retail Services
Effective 4/1/13
Sid Keswani
Senior Vice President,
Stores
Timothy Mantel
President, Target
Sourcing Services
Todd Marshall
Senior Vice President,
Marketing
Annette Miller
Senior Vice President,
Merchandising,
Grocery
John Morioka
Senior Vice President,
Merchandising,
Target Canada
Scott Nelson
Senior Vice President,
Real Estate
Scott Nygaard
Senior Vice President,
Merchandising,
Hardlines
Mike Robbins
Senior Vice President,
Distribution
Mark Schindele
Senior Vice President,
Merchandising
Operations
Samir Shah
Senior Vice President,
Stores
Cary Strouse
Senior Vice President,
Stores
Rich varda
Senior Vice President,
Store Design
Todd Waterbury
Senior Vice President,
Creative
Judy Werthauser
Senior Vice President,
Human Resources,
Headquarters
Jane Windmeier
Senior Vice President,
Global Finance
Systems and Chief
Financial Officer,
Target Canada
Printed on paper with 10 percent
post-consumer fiber by Target
Printing Services, a zero-landfill
facility powered by electrical
energy from wind sources.
TARGET 2012 ANNUAL REPORT
25%
Health, Beauty
& Household
Essentials
18%
Hardlines
19%
Apparel &
Accessories
20%
Food &
Pet Supplies
18%
Home
Furnishings
& Décor
total sales
$72.0 billion
financial highlights
’08
’09
’10
’11
’12
’08
’09
’10
’11
’12
’08
’09
’10
’11
’12
’08
’09
’10
’11
’12
total revenues
$64,948
$65,357
$67,390
$69,865
$73,301
IN MILLIONS
2012 Growth: 4.9% | Five-year CAGR: 3.0%
EBIT
(Earnings before interest
expense and income taxes)
$4,402
$4,673
$5,252
$5,322
$5,371
IN MILLIONS
2012 Growth: 0.9% | Five-year CAGR: 0.4%
net earnings
$2,214
$2,488
$2,920
$2,929
$2,999
IN MILLIONS
2012 Growth: 2.4% | Five-year CAGR: 1.0%
diluted EPS
$2.86
$3.30
$4.00
$4.28
$4.52
2012 Growth: 5.6% | Five-year CAGR: 6.3%
Retail sales, does not include credit card revenues.
Note: 2012 was a 53-week year.
DIRECTORS
Roxanne S. Austin
President,
Austin Investment
Advisors
(1) (4)
James A. Johnson
Founder and
Principal, Johnson
Capital Partners
(2) (3)
Douglas M. Baker Jr.
Chairman and CEO,
Ecolab, Inc.
(1) (5)
Mary E. Minnick
Partner,
Lion Capital LLP
(1) (3)
Henrique De Castro
Chief Operating
Officer, Yahoo! Inc.
(3) (5)
Calvin Darden
Chairman, Darden
Development Group,
LLC
(2) (5)
Mary N. Dillon
President and Chief
Executive Officer,
United States Cellular
Corporation
(2) (3)
OTHER OFFICERS
Janna Adair-Potts
Senior Vice President,
Stores Operations
Patricia Adams
Senior Vice President,
Merchandising,
Apparel and
Accessories
Aaron Alt
Senior Vice President,
Business
Development &
Treasurer
Stacia Andersen
Senior Vice President,
Merchandising,
Home
Jose Barra
Senior Vice President,
Merchandising,
Health and Beauty
Bryan Berg
Senior Vice President,
Stores,
Target Canada
Anne M. Mulcahy
Chairman of the
Board of Trustees,
Save the Children
Federation, Inc.
(4) (5)
Derica W. Rice
Executive Vice
President, Global
Services and
Chief Financial
Officer,
Eli Lilly & Company
(1) (4)
Tom Butterfield
Senior Vice President,
Strategy and
Business Technology
Casey Carl
President,
Multichannel, and
Senior Vice President,
Enterprise Strategy
Naomi Cramer
Senior Vice President,
Human Resources,
Stores and
Distribution
Patricia Dirks
Senior Vice President,
Organizational
Effectiveness
Barbara Dugan
Senior Vice President,
Human Resources
and Administration,
Target Sourcing
Services
Gregg W. Steinhafel
Chairman, President
and Chief Executive
Officer, Target
John G. Stumpf
Chairman of the
Board, President
and Chief Executive
Officer, Wells Fargo
& Company
(2) (4)
Solomon D. Trujillo
Former Chief
Executive Officer,
Telstra Corporation
Limited
(3) (5)
(1) Audit Committee
(2) Compensation Committee
(3) Corporate Responsibility
Committee
(4) Finance Committee
(5) Nominating and
Governance Committee
Bryan Everett
Senior Vice President,
Stores
Shawn Gensch
Senior Vice President,
Marketing
Jason Goldberger
Senior Vice President,
Target.com
and Mobile
Corey Haaland
Senior Vice President,
Financial Planning
Analysis and Tax
Cynthia Ho
Senior Vice President,
Target Sourcing
Services
Derek Jenkins
Senior Vice President,
External Affairs,
Target Canada
Keri Jones
Senior Vice President,
Merchandise Planning
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directors and management
to our shareholders
2012 was an exciting year for Target, as we devoted meaningful
resources to driving performance in support of our publicly
stated sales and financial goals, while transforming Target to
seize the tremendous opportunities we see in the most dynamic
and disruptive retail landscape in generations.
opening Target stores in Canada and are on track to open 124
stores across all 10 provinces by year end. In addition, we’ll
extend our new CityTarget urban format to additional locations
in Los Angeles and San Francisco, and, for the first time, to
Portland, Oregon.
We are excited by the physical and digital growth ahead of us.
By staying focused on creating a superior shopping experience
for our guests—whether they are in urban or suburban markets,
in the U.S. or Canada, in our stores or digital channels—we
believe Target will continue to thrive. And, this strategic clarity,
in combination with our powerful brand, gives us confidence in
our future: confidence in the values that have guided our company
for 50 years, confidence in the talent and passion of our 361,000
team members and confidence in our continued ability to deliver
profitable growth for many years to come.
Gregg Steinhafel | Chairman, President and CEO, Target
Board of Directors Changes: In March 2013, we welcomed
Douglas M. Baker Jr., Chairman and CEO of Ecolab, Inc., and
Henrique De Castro, Chief Operating Officer of Yahoo! Inc., to
our board of directors. Also in March, Stephen W. Sanger,
former Chairman and CEO of General Mills, Inc., retired from
our board of directors. We thank Steve for his contributions
during his 17 years of service.
Total sales and diluted earnings per share reached new highs
of $72.0 billion and $4.52, respectively. We invested $3.3 billion
of capital in our U.S. and Canadian businesses, and we returned
over $2.7 billion to our shareholders through share repurchase
and dividend payments. And our full-year results were right on
track with our Long-Range Plan to reach at least $100 billion in
sales and $8 in earnings per share in 2017.
In addition to our financial successes, we achieved significant
strategic and operational milestones in 2012, including the
launch of our first CityTarget stores in Chicago, Seattle,
San Francisco and Los Angeles; extending our fresh-food
remodel program to another 238 general merchandise stores;
achieving record-setting sales penetration through our 5%
REDcard Rewards loyalty program; and announcing an agreement
to sell our U.S. credit card receivables to TD Bank
Group, a strong partner aligned with our goals for portfolio
growth and profitability. We also surpassed $4 million per week
in charitable giving to support communities we serve.
In 2013, we’ll continue to pursue a strategy that is being shaped
by our guests’ expectations for more shopping flexibility and
price transparency, and the rapid pace of change in technology.
To ensure that we continue to strengthen our guests’ love for
our brand and deliver the surprise and delight they have come
to expect, we’ll leverage our greatest asset, our stores, in
combination with increased investment in our digital platforms,
to create a seamless, relevant and personalized experience.
Differentiation with exceptional value, which represents the
foundation of our “Expect More. Pay Less.” brand promise, will
continue to set Target apart in the marketplace. We remain
committed to offering a truly unique assortment—through our
design partnerships, outstanding portfolio of owned brands
and curated selection of signature national brands. And
we are equally unwavering in our commitment to provide a
compelling value proposition, as we showed by expanding
our Price Match Guarantee to include select online competitors.
We’re also collaborating closely with our vendors on channel-
management strategies that sharpen prices and improve selection
for our guests.
Meanwhile, in 2013, we will also undertake the largest, single-
year store expansion in Target’s history. After two years of
exceptional dedication and hard work by our team, we’ve begun
TARGET 2012 ANNUAL REPORT | 1
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Watch CEO GreggSteinhafel review 2012.Scan the code
building
on our
momentum
We know our guests have more shopping choices than ever, so a
critical part of our strategy is providing them with compelling reasons
and more convenient ways to shop with us. In 2012 we introduced in
four key markets our new CityTarget store format, which is merchandised
and right-sized for urban dwellers. And we embarked on our first
international expansion with 124 stores scheduled to open in Canada
in 2013. Domestically, we opened 23 new stores and continued
to remodel and re-merchandise existing stores, ensuring that our
guests are able to find exactly what they’re looking for in a convenient,
easy-to-shop format. And, to make sure our guests can always shop
at Target with confidence, we introduced new price match and
return policies and continued to offer additional savings with our
REDcard Rewards. Through the work of Target team members around
the globe, we believe we’ve charted a clear course for success in the
years to come.
2 | TARGET 2012 ANNUAL REPORT
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our iPhone app was
awarded its third
consecutive Webby,
called by the
New York Times
the “Internet’s
highest honor”
new ways to shop
Throughout 2012, we accelerated our investment in our digital
channels and began focusing on thoughtful integration of our
digital and store experiences to meet our guests’ ever-changing
needs. For example, we launched free Wi-Fi in all stores, making it
easier for guests to access digital tools and services, like the Target
app and our QR code programs, to inform their in-store shopping
decisions. We’re finding new ways for guests to shop, through
social shopping programs like Give With Friends, and we’re testing,
and learning from, innovative new technologies like our buzzed-about
shoppable short film that brought our fall marketing campaign to life.
Our continued enhancements to mobile technologies and in-store
digital campaigns, like Target’s Top Toys, earned us Mobile Marketer’s
2012 “Mobile Commerce Program of the Year,” and underscore our
commitment to deliver a seamless, relevant, personalized experience
for our guests across all channels.
crossing borders
and entering new
neighborhoods
Our entry into Canada in 2013 will mark Target’s largest ever
single-year of store openings—a remarkable milestone executed
through global collaboration. While teams have been focused
on the massive makeovers of these former Zellers stores,
developing the systems that will power them and constructing
the three distribution centers that will serve them, we have
been introducing Target to our new guests, delivering a series
of buzz-building events tailored just for them. At the same time,
in the U.S., we opened the first of our small-format CityTarget
stores—five locations in all—in Chicago, Los Angeles, Seattle
and San Francisco. CityTarget offers urban dwellers the same
one-stop shopping convenience and value they love at other
Target locations, but tailored for their lifestyles.
saving our guests
even more
In addition to the great value our guests can find throughout
our assortment every day, guests also continue to love REDcard
Rewards, which allows them to save an extra 5 percent off nearly
all purchases, provides free shipping at Target.com, and offers
the benefit of an additional 30 days for most returns. Thanks in large
part to these great benefits, we added millions of new REDcard credit
and debit accounts in the past year and strengthened our bond with
these guests, driving greater shopping frequency and increased
sales. And, to help all of our guests continue to shop at Target with
confidence, we recently extended our Price Match Guarantee to
include select online retailers, providing just the assurance our guests
need to know they are getting an exceptional value.
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bringing
value to
our guests
Expect More. Pay Less.—that’s our promise to guests, each time they
shop with us. How do we do it? We always stock more of what they
need every day. We partner with emerging and established designers
and recording artists to offer products and entertainment guests
won’t find anywhere else. We challenge ourselves to provide unique
experiences—whether it’s using a mobile device to plan a shopping
trip, or shopping with us from a favorite TV show. We make sure
all of our exclusive brands—brands like C9 by Champion, Archer Farms
and Cherokee—are priced lower but rival the quality of established
national brands. And while we love to surprise our guests, they can
count on always getting exactly what they need—and want—for less.
4 | TARGET 2012 ANNUAL REPORT
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an eye for design and a
passion for partnerships
We’re renowned as a purveyor of cheap chic and added a few
exciting new collaborations in 2012 to our already impressive list
of partnerships. In spring, we teamed up with celebrated designer
Jason Wu for an affordable, limited-edition collection of apparel and
accessories. With The Shops at Target, the owners of unique, locally
loved shops from around the country brought their concepts to life
on our shelves and online through special collections. Influential and
well-respected interior designer, author and TV personality Nate
Berkus added “Target design partner” to his ever-growing resume
with an exclusive line of home décor. And just in time for the busy
holiday season, we joined forces with Neiman Marcus to bring
together 24 of America’s most talented designers for one limited-
edition collection of gifts available simultaneously at both retailers.
exclusively ours
and ever growing
At Target, our owned and exclusive brands have evolved from private
labels to a carefully edited assortment of quality brands guests
seek. These brands are critical to our success because they’re core
to our differentiation strategy, and rank as a top reason guests
shop at Target. These brands also represent a significant portion of
our business. Last year saw continued growth, with Cherokee
joining our list of $1 billion owned and exclusive brands. It also
marked the debut of Threshold, a redesign and re-branding of
Target Home with the goal of giving our home collection a distinct
personality and stronger point of view to meet the expectations of
our design-savvy guests.
amazing
guest experiences
No matter where—or how—they shop with us, guests will
continue to enjoy amazing service. Our company is known for
its Fast, Fun and Friendly culture, and that extends to the way
we treat guests. In 2012, we rolled out our new in-store service
model that elevates the shopping experience, building on the
great guest experience that already sets Target apart. By
encouraging team members to look for chances to create
meaningful, memorable moments for guests, we will continue
to surprise and delight while differentiating Target. And we’re
pleased that our work is being recognized. In early 2013, we were
proud to be ranked fourth in Forrester’s Customer Experience
Index for total Target experience, including stores and online,
one of just 13 companies of 154 to receive an Excellent rating.
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a great
place to
work
The energy and sense of fun our guests feel around our brand doesn’t
happen by accident. Behind every product and guest experience are more
than 361,000 talented and dedicated team members collaborating across
our stores, distribution centers and headquarters facilities around
the world. To make sure we attract and retain a great team, we
cultivate a supportive, fun and inclusive workplace culture. That means
building a team of people with diverse backgrounds, supporting
their overall well-being, and investing in their professional growth and
development. We’re proud that these efforts have contributed to
outstanding honors, among them: FORTUNE ranked us No. 25 on its
2012 “World’s Most Admired Companies” list, and Forbes magazine
and the Reputation Institute named us No. 22 on the list of “America’s
Most Reputable Companies.”
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building a
diverse team
Every day, our team members bring their talent,
commitment and unique perspectives to work—
making our communities and company better. Diversity
and inclusion play an important role in every area of
our business, from our suppliers, to our teams, to the
shopping experience in our stores. We create an inclusive
workplace culture that allows our high-performing and
diverse teams to innovate and inspire. We see great
results when we meet our goals and challenge ourselves
to do better. And we take pride in the recognition we
earn, including a score of 100 on the Human Rights
Campaign 2013 Corporate Equality Index, No. 30 on
DiversityInc magazine’s “Top 50 Companies for Diversity,”
and placement on the 2012 Best Companies for Hourly
Workers by Working Mother Media.
investing in team
member well-being
Our team members are our most important competitive
advantage. That’s why our benefits plans and programs
are designed to help team members balance five key
well-being elements that make life and work meaningful:
physical health, financial security, social relationships,
career engagement and community involvement.
From comprehensive, quality health care coverage and
one of the best 401(k) plans in retail to a wide variety
of perks and discounts, we continue to invest in tools,
resources and support to help team members and their
families achieve their personal best.
fortifying our team
for continued success
Our culture is the foundation for Target’s success. One of
the ways we stay ahead and sustain our performance in
the rapidly changing marketplace is by continuously
adapting to meet the needs of our team members and
guests. In 2012 we pushed ourselves to collaborate more
effectively, and become more nimble, adaptable, and
efficient in our work. We made significant investments
in new technologies and processes, both to support our
core business systems as well as improve the productivity
and performance of our team members. From mobile
applications and devices to innovative collaboration
tools, we’re making it easier for team members to put
their heads together, no matter where their feet are.
TARGET 2012 ANNUAL REPORT | 7
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COLOR:
4C + 1 Spot
Set Date
2013 Annual Report Market:
CD:
CM:
AD:
AG:
CB:
BCM:
OPS:
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PB: Kevin Fautch
SEP:
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Printer: TPS
Cyan,
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Apple Macintosh, Application/Version: InDesign 7.0.4
Layout
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CP:
Final Board
Final Release
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strong
communities
equal strong
business
Each year, we give 5 percent of our profit toward building strong,
healthy and safe communities, and in 2012 we proudly reached a new
company milestone: Our giving now totals more than $4 million a week.
Those dollars go toward fighting hunger, aiding disaster preparedness
and relief efforts, supporting the arts and design, and putting more
kids on the path to high school graduation. In addition to the funds we
gave, our team members donated more than 679,000 hours of volunteer
service. As a team, we’ve challenged ourselves to raise that number even
higher—to 700,000 hours annually by the end of 2015. We also continue
to integrate sustainable practices across our business with an eye
on using our resources responsibly and maintaining the health of
our communities. We’re honored that Ethisphere Institute, a leading
international think tank in the field of corporate social responsibility,
continues to acknowledge our hard work, again naming Target one
of the “World’s Most Ethical Companies” in 2012.
8 | TARGET 2012 ANNUAL REPORT
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Learn how we’re helping communities.Scan the code
$1 billion commitment to
education by end of 2015
Education is an important issue to Target, our guests and the
community. To give kids more opportunities to reach their full
potential, we support programs and activities that help get students
reading proficiently by the end of third grade and on the path to high
school graduation. Through these programs, we’re on track to give
$1 billion for education by the end of 2015. In August we gave $5
million to more than 30,000 U.S. schools through our popular Give
with Target program. Fans used a Facebook app to cast votes and
award $2.5 million worth of GiftCards to K-12 schools, while 100
more in-need schools each received $25,000 grants. In November,
visitors to our Target Canada Facebook page used the app
to allocate an additional $1 million donation among six
Canadian nonprofit organizations.
our goals and progress
June 2012 marked a full year since we set our first public-facing
corporate responsibility goals in the areas of education, environment,
team member well-being and volunteerism. In our annual Corporate
Responsibility Report, we shared our progress toward each goal
and also set several new ones.
promoting
safer neighborhoods
Our commitment to strong, healthy communities extends to making
the neighborhoods where we do business safer for our guests
and team members. That means helping communities prepare for
any disaster. Through the work of our public and private partnerships,
innovative store designs, and disaster preparedness and response
plans, we help bring communities more of the tools and resources
they need. In 2012, we donated more than $1 million in cash, products
and GiftCards to support local relief efforts including wildfires in
Colorado, tornadoes in the South and Hurricanes Isaac and Sandy.
smarter choices
for the environment
We build and operate our facilities and supply chains efficiently,
and offer guests resources and products that make it easier to
live sustainably. For example, our buildings around the world earn
accolades for energy efficiency. By the end of 2012, 631 of our facilities
had earned the U.S. Department of Energy’s ENERGY STAR, and
our goal is to have 75 percent of our U.S. buildings certified by the
end of 2015. We’re pursuing LEED certification for all 124 of our
Canada stores opening in 2013, which include features designed
to conserve energy and water, reduce greenhouse gas emissions,
limit waste sent to landfills during construction and more.
$4 million to
communities
every week
more than
K679
volunteer hours
$ million +
for disaster
relief
1
631
ENERGY-STAR-
CERTIFIED
facilities and
counting
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2013 Annual Report Market:
CD:
CM:
AD:
AG:
CB:
BCM:
OPS:
IHP:
CW:
CE:
CP:
PB: Kevin Fautch
SEP:
Periscope
Printer: TPS
Cyan,
Magenta,
Yellow,
Black,
PANTONE 186 C
Apple Macintosh, Application/Version: InDesign 7.0.4
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year-end store count and
square footage
by state
SALES PER CAPITA
Over $300
California
Colorado
Iowa
Maryland
Minnesota
North Dakota
Group ToTal
$201–$300
Arizona
Connecticut
Delaware
Florida
Illinois
Kansas
Massachusetts
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
North Carolina
South Dakota
Texas
Virginia
Washington
Wisconsin
Group ToTal
$151–$200
Alaska
Georgia
Hawaii
Indiana
Louisiana
Michigan
New York
Ohio
Oklahoma
Oregon
Pennsylvania
Tennessee
Utah
Group ToTal
NO. OF
STORES
RETAIL
Sq. FT.
(THOuSANDS)
257
40
22
37
75
4
435
48
20
3
123
89
19
36
36
7
14
19
9
43
47
5
149
57
36
39
799
3
55
4
33
16
59
67
64
15
18
63
32
13
442
34,051
6,080
3,015
4,802
10,777
554
59,279
6,382
2,672
440
17,263
12,188
2,577
4,735
4,735
780
2,006
2,461
1,148
5,701
6,225
580
20,976
7,650
4,194
4,773
107,486
504
7,515
695
4,377
2,246
7,058
9,145
8,002
2,157
2,191
8,239
4,114
1,953
58,196
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2013 Annual Report Market:
CD:
CM:
AD:
AG:
CB:
BCM:
OPS:
IHP:
CW:
CE:
CP:
PB: Kevin Fautch
SEP:
Periscope
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Cyan,
Magenta,
Yellow,
Black,
PANTONE 186 C
Apple Macintosh, Application/Version: InDesign 7.0.4
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SALES PER CAPITA
NO. OF
STORES
RETAIL
Sq. FT.
(THOuSANDS)
$101–$150
Alabama
District of Columbia
Kentucky
Maine
New Mexico
Rhode Island
South Carolina
Group ToTal
$0–$100
Arkansas
Idaho
Mississippi
Vermont
West Virginia
Wyoming
Group ToTal
21
1
14
5
9
4
19
73
9
6
6
-
6
2
29
3,003
179
1,660
630
1,024
517
2,359
9,372
1,165
664
743
-
755
187
3,514
total stores: 1,778
total sq. feet:
237,847
in thousands
Sales per capita is defined as sales by state divided by state population.
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CREATED AT:
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COLOR:
4C + 1 Spot
Set Date
2013 Annual Report Market:
CD:
CM:
AD:
AG:
CB:
BCM:
OPS:
IHP:
CW:
CE:
CP:
PB: Kevin Fautch
SEP:
Periscope
Printer: TPS
Cyan,
Magenta,
Yellow,
Black,
PANTONE 186 C
Apple Macintosh, Application/Version: InDesign 7.0.4
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CP:
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Learn more aboutour store formatsScan the code
FINANCIAL RESuLTS: (in millions)
Sales
Credit card revenues
Total revenues
Cost of sales
Selling, general and administrative expenses (b)
Credit card expenses
Depreciation and amortization
Gain on receivables held for sale
Earnings before interest expense and income taxes (c)
Net interest expense
Earnings before income taxes
Provision for income taxes
Net earnings
PER SHARE:
Basic earnings per share
Diluted earnings per share
Cash dividends declared
FINANCIAL POSITION: (in millions)
Total assets
Capital expenditures
Long-term debt, including current portion
Net debt (d)
Shareholders’ investment
u.S. RETAIL SEGMENT FINANCIAL RATIOS:
Comparable-store sales growth (e)
Gross margin (% of sales)
SG&A (% of sales) (f)
EBIT margin (% of sales)
OTHER:
Common shares outstanding (in millions)
Cash flow provided by operations (in millions)
Revenues per square foot (g)(h)
Retail square feet (in thousands)
Square footage growth
Total number of stores
General merchandise
Expanded food assortment
SuperTarget
CityTarget
Total number of distribution centers
2012 (a)
2011
2010
2009
2008
2007
$ 71,960
$ 68,466
$ 65,786
$ 63,435
$ 62,884
$
61,471
1,341
73,301
50,568
14,914
467
2,142
(161)
5,371
762
4,609
1,610
1,399
69,865
47,860
14,106
446
2,131
-
5,322
866
4,456
1,527
1,604
67,390
45,725
13,469
860
2,084
-
5,252
757
4,495
1,575
1,922
65,357
44,062
13,078
1,521
2,023
-
4,673
801
3,872
1,384
2,064
64,948
44,157
12,954
1,609
1,826
-
4,402
866
3,536
1,322
1,896
63,367
42,929
12,670
837
1,659
-
5,272
647
4,625
1,776
$
2,999
$
2,929
$
2,920
$
2,488
$
2,214
$
2,849
$
$
$
$
$
$
$
$
3.37
3.33
0.54
44,560
4,369
17,090
15,239
15,307
3.0%
30.2%
20.4%
7.1%
$
$
$
$
$
$
$
4.57
4.52
1.38
$
$
$
4.31
4.28
1.15
$
$
$
4.03
4.00
0.92
$
$
$
3.31
3.30
0.67
$
$
$
2.87
2.86
0.62
48,163
3,277
17,648
17,518
$ 46,630
$ 43,705
$ 44,533
$ 44,106
$
$
$
4,368
17,483
17,289
$
$
2,129
15,726
$
$
1,729
$
3,547
16,814
$ 18,752
$ 14,597
$ 15,288
$ 18,562
$ 16,558
$ 15,821
$ 15,487
$ 15,347
$ 13,712
2.1%
30.5%
20.3%
7.0%
(2.5%)
30.5%
20.5%
6.9%
(2.9%)
29.8%
20.4%
6.5%
2.7%
29.7%
19.9%
7.0%
645.3
5,325
299
$
$
$
$
3.0%
30.1%
20.1%
7.0%
669.3
5,434
294
704.0
5,271
290
$
$
744.6
5,881
287
$
$
752.7
4,430
301
$
$
818.7
4,125
318
$
$
237,847
235,721
233,618
231,952
222,588
207,945
0.9%
1,778
391
1,131
251
5
40
0.9%
1,763
637
875
251
-
37
0.7%
1,750
1,037
462
251
-
37
4.2%
1,740
1,381
108
251
-
37
7.0%
1,682
1,441
2
239
-
34
8.3%
1,591
1,381
-
210
-
32
(a) Consisted of 53 weeks.
(b) Also referred to as SG&A.
(c) Also referred to as EBIT.
(d) Including current portion and short-term notes payable, net of short-term investments of $130 million, $194 million, $1,129 million, $1,526 million, $190 million and $1,851 million,
respectively. Management believes this measure is a more appropriate indicator of our level of financial leverage because short-term investments are available to pay debt
maturity obligations.
(e) See definition of comparable-store sales in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.
(f) Effective with the October 2010 nationwide launch of our 5% REDcard Rewards loyalty program, we changed the formula under which the U.S. Retail Segment charges the U.S.
Credit Card Segment to better align with the attributes of this program. Loyalty program charges were $300 million, $258 million, $102 million, $89 million, $117 million and $114
million, respectively. In all periods these amounts were recorded as reductions to SG&A expenses within the U.S. Retail Segment and increases to operations and marketing
expenses within the U.S. Credit Card Segment.
(g) Thirteen-month average retail square feet.
(h) In 2012, revenues per square foot were calculated with 52 weeks of revenues (the 53rd week of revenues was excluded) because management believes that these numbers
provide a more useful analytical comparison to other years. Using our revenues for the 53-week year under generally accepted accounting principles, 2012 revenues per square
foot were $304.
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COLOR:
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Set Date
2013 Annual Report Market:
CD:
CM:
AD:
AG:
CB:
BCM:
OPS:
IHP:
CW:
CE:
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PB: Kevin Fautch
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Printer: TPS
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Apple Macintosh, Application/Version: InDesign 7.0.4
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CP:
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CP: N/A
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Date: N/A
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financial summary
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
(cid:2) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended February 2, 2013
OR
(cid:3) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from
to
Commission file number 1-6049
19SEP201214382419
TARGET CORPORATION
(Exact name of registrant as specified in its charter)
Minnesota
(State or other jurisdiction of
incorporation or organization)
1000 Nicollet Mall, Minneapolis, Minnesota
(Address of principal executive offices)
41-0215170
(I.R.S. Employer
Identification No.)
55403
(Zip Code)
Securities Registered Pursuant To Section 12(B) Of The Act:
Registrant’s telephone number, including area code: 612/304-6073
Title of Each Class
Name of Each Exchange on Which Registered
Common Stock, par value $0.0833 per share
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes (cid:2) No (cid:3)
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes (cid:3) No (cid:2)
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from
their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes (cid:2) No (cid:3)
Indicate by checkmark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for
such shorter period that the registrant was required to submit and post such files. Yes (cid:2) No (cid:3)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. (cid:2)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting
company (as defined in Rule 12b-2 of the Act).
Accelerated filer (cid:3)
Large accelerated filer (cid:2)
Smaller reporting company (cid:3)
Non-accelerated filer (cid:3)
(Do not check if a smaller
reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes (cid:3) No (cid:2)
Aggregate market value of the voting stock held by non-affiliates of the registrant on July 28, 2012 was $40,108,705,685, based on the closing
price of $61.52 per share of Common Stock as reported on the New York Stock Exchange Composite Index.
Indicate the number of shares outstanding of each of registrant’s classes of Common Stock, as of the latest practicable date. Total shares of
Common Stock, par value $0.0833, outstanding at March 15, 2013 were 641,387,165.
1. Portions of Target’s Proxy Statement to be filed on or about April 29, 2013 are incorporated into Part III.
DOCUMENTS INCORPORATED BY REFERENCE
This page has been left blank intentionally
T A B L E O F C O N T E N T S
P A R T I
Item 1
Item 1A
Item 1B
Item 2
Item 3
Item 4
Item 4A
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Executive Officers
P A R T I I
Item 5
Item 6
Item 7
Item 7A
Item 8
Item 9
Item 9A
Item 9B
Market for Registrant’s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results
of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Controls and Procedures
Other Information
P A R T I I I
Item 10
Item 11
Item 12
Item 13
Item 14
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services
P A R T I V
Item 15
Exhibits and Financial Statement Schedules
Signatures
Schedule II – Valuation and Qualifying Accounts
Exhibit Index
Exhibit 12 – Computations of Ratios of Earnings to Fixed Charges for each of the Five Years in
the Period Ended February 2, 2013
P
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I
P
A
R
T
I
I
P
A
R
T
I
I
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P
A
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2
5
9
10
11
11
11
12
14
14
29
31
65
65
65
66
66
66
66
66
67
70
71
72
74
1
Item 1. Business
General
P A R T I
Target Corporation (the Corporation or Target) was incorporated in Minnesota in 1902. We operate as three
reportable segments: U.S. Retail, U.S. Credit Card and Canadian.
Our U.S. Retail Segment includes all of our U.S. merchandising operations. We offer both everyday essentials and
fashionable, differentiated merchandise at discounted prices. Our ability to deliver a shopping experience that is
preferred by our customers, referred to as ‘‘guests,’’ is supported by our strong supply chain and technology
infrastructure, a devotion to innovation that is ingrained in our organization and culture, and our disciplined
approach to managing our current business and investing in future growth. Our business is designed to enable
guests to purchase products seamlessly in stores, online or through their mobile device.
Our U.S. Credit Card Segment offers credit to qualified guests through our branded proprietary credit cards: the
Target Credit Card and the Target Visa. Additionally, we offer a branded proprietary Target Debit Card. Collectively,
these REDcards(cid:2) help strengthen the bond with our guests, drive incremental sales and contribute to our results of
operations. In the first quarter of 2013, we sold our credit card receivables portfolio. Subsequent to the sale, we will
perform account servicing and primary marketing functions, and will earn a substantial portion of the profits
generated by the portfolio. The transaction does not impact Target’s 5% REDcard Rewards loyalty program and will
have minimal impact on Target’s current cardholders and guests. Beginning with the first quarter of 2013, income
from the profit-sharing arrangement, net of account servicing expenses, will be recognized as an offset to selling,
general and administrative (SG&A) expenses, and we will no longer report a U.S. Credit Card Segment. Refer to
Note 7 of the Notes to the Consolidated Financial Statements included in Item 8, Financial Statements and
Supplementary Data for more information on our credit card receivables transaction.
Our Canadian Segment includes costs incurred in the U.S. and Canada related to our 2013 Canadian retail market
entry.
Financial Highlights
Our fiscal year ends on the Saturday nearest January 31. Unless otherwise stated, references to years in this report
relate to fiscal years, rather than to calendar years. Fiscal 2012 ended on February 2, 2013, and consisted of
53 weeks. Fiscal 2011 ended January 28, 2012, and consisted of 52 weeks. Fiscal 2010 ended January 29, 2011,
and consisted of 52 weeks. Fiscal 2013 will end on February 1, 2014, and will consist of 52 weeks.
For information on key financial highlights and segment financial information, see the items referenced in Item 6,
Selected Financial Data, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of
Operations and Item 8, Financial Statements and Supplemental Data — Note 29, Segment Reporting, of this Annual
Report on Form 10-K.
Seasonality
Due to the seasonal nature of our business, a larger share of annual revenues and earnings traditionally occurs in
the fourth quarter because it includes the peak sales period from Thanksgiving to the end of December.
Merchandise
We sell a wide assortment of general merchandise and food in our stores. Our general merchandise and CityTarget
stores offer a food assortment on a smaller scale than traditional supermarkets, while our SuperTarget stores offer a
2
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full line of food items comparable to traditional supermarkets. Over the past several years, we remodeled many of
our general merchandise stores to expand the food assortment to include perishables and additional dry grocery,
dairy and frozen items. Our digital channels include a wide assortment of general merchandise, including many
items found in our stores and a complementary assortment, such as extended sizes and colors, that are only sold
online.
A significant portion of our sales is from national brand merchandise. Approximately one-third of total sales in 2012
related to our owned and exclusive brands, including but not limited to the following:
Owned Brands
Archer Farms(cid:2)
Archer Farms(cid:2) Simply Balanced(cid:3)
Boots & Barkley(cid:2)
Circo(cid:2)
Embark(cid:2)
Gilligan & O’Malley(cid:2)
Market Pantry(cid:2)
Merona(cid:2)
Play Wonder(cid:2)
Prospirit(cid:2)
Room Essentials(cid:2)
Smith & Hawken(cid:2)
Spritz(cid:3)
Sutton & Dodge(cid:2)
Threshold(cid:3)
up & up(cid:2)
Wine Cube(cid:2)
Xhilaration(cid:2)
Exclusive Brands
Assets(cid:2) by Sarah Blakely
Auro(cid:2) by Goldtoe
C9 by Champion(cid:2)
Chefmate(cid:2)
Cherokee(cid:2)
Converse(cid:2) One Star(cid:2)
dENiZEN(cid:3) by Levi’s(cid:2)
Fieldcrest(cid:2)
Genuine Kids by OshKosh(cid:2)
Giada De Laurentiis(cid:3) for Target(cid:2)
Harajuku Mini for Target(cid:2)
Just One You made by Carter’s
Kitchen Essentials(cid:2) from Calphalon(cid:2)
Liz Lange(cid:2) for Target
Mossimo(cid:2)
Nate Berkus for Target(cid:2)
Nick & Nora(cid:2)
Paul Frank(cid:2) for Target
Shaun White
Simply Shabby Chic(cid:2)
Sonia Kashuk(cid:2)
Thomas O’Brien(cid:2) Vintage Modern
Merchandise is also sold through periodic exclusive design and creative partnerships. We also generate revenue
from in-store amenities such as Target Caf´e, Target Clinic, Target Pharmacy and Target Photo, and leased or
licensed departments such as Target Optical, Pizza Hut, Portrait Studio and Starbucks.
Sales by Product Category
Percentage of Sales
Household essentials (a)
Hardlines (b)
Apparel and accessories (c)
Food and pet supplies (d)
Home furnishings and d´ecor (e)
Total
2012
25%
18
19
20
18
100%
2011
25%
19
19
19
18
100%
2010
24%
20
20
17
19
100%
(a)
(b)
(c)
(d)
(e)
Includes pharmacy, beauty, personal care, baby care, cleaning and paper products.
Includes electronics (including video game hardware and software), music, movies, books, computer software, sporting
goods and toys.
Includes apparel for women, men, boys, girls, toddlers, infants and newborns, as well as intimate apparel, jewelry,
accessories and shoes.
Includes dry grocery, dairy, frozen food, beverages, candy, snacks, deli, bakery, meat, produce and pet supplies.
Includes furniture, lighting, kitchenware, small appliances, home d´ecor, bed and bath, home improvement, automotive and
seasonal merchandise such as patio furniture and holiday d´ecor.
Distribution
The vast majority of our merchandise is distributed through our network of 40 distribution centers, 37 in the United
States and 3 in Canada. General merchandise is shipped to and from our distribution centers by common carriers.
In addition, third parties distribute certain food items in the U.S. and Canada. Merchandise sold through Target.com
is distributed through our own distribution network, through third parties, or shipped directly from vendors.
3
Employees
At February 2, 2013, we employed approximately 361,000 full-time, part-time and seasonal employees, referred to
as ‘‘team members.’’ During our peak sales period from Thanksgiving to the end of December, our employment
levels peaked at approximately 409,000 team members. We offer a broad range of company-paid benefits to our
team members. Eligibility for, and the level of, these benefits varies, depending on team members’ full-time or
part-time status, compensation level, date of hire and/or length of service. These company-paid benefits include a
pension plan, 401(k) plan, medical and dental plans, a retiree medical plan, disability insurance, paid vacation,
tuition reimbursement, various team member assistance programs, life insurance and merchandise discounts. We
consider our team member relations to be good.
Working Capital
Because of the seasonal nature of our business, our working capital needs are greater in the months leading up to
our peak sales period from Thanksgiving to the end of December. The increase in working capital during this time is
typically financed with cash flow provided by operations and short-term borrowings. Additional details are provided
in the Liquidity and Capital Resources section in Item 7, Management’s Discussion and Analysis of Financial
Condition and Results of Operations.
Effective inventory management is key to our ongoing success. We utilize various techniques including demand
forecasting and planning and various forms of replenishment management. We achieve effective inventory
management by being in-stock in core product offerings, maintaining positive vendor relationships, and carefully
planning inventory levels for seasonal and apparel items to minimize markdowns.
Competition
We compete with traditional and off-price general merchandise retailers, apparel retailers, internet retailers,
wholesale clubs, category specific retailers, drug stores, supermarkets and other forms of retail commerce. Our
ability to positively differentiate ourselves from other retailers largely determines our competitive position within the
retail industry.
Intellectual Property
Our brand image is a critical element of our business strategy. Our principal trademarks, including Target,
SuperTarget and our ‘‘Bullseye Design,’’ have been registered with the U.S. Patent and Trademark Office. We also
seek to obtain and preserve intellectual property protection for our owned brands.
Geographic Information
Through 2012, all of our revenues were generated within the United States. Beginning in fiscal 2013, a modest
percentage of our revenues will be generated in Canada. The vast majority of our long-lived assets are located
within the United States and Canada.
Available Information
Our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to
those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available free of charge at
www.Target.com/Investors as soon as reasonably practicable after we file such material with, or furnish it to, the
U.S. Securities and Exchange Commission (SEC). Our Corporate Governance Guidelines, Business Conduct
Guide, Corporate Responsibility Report and the position descriptions for our Board of Directors and Board
committees are also available free of charge in print upon request or at www.Target.com/Investors.
4
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Item 1A. Risk Factors
Our business is subject to many risks. Set forth below are the most significant risks that we face.
If we are unable to positively differentiate ourselves from other retailers, our results of operations could be
adversely affected.
The retail business is highly competitive. In the past we have been able to compete successfully by differentiating
our guests’ shopping experience by creating an attractive value proposition through a careful combination of price,
merchandise assortment, convenience, guest service, loyalty programs and marketing efforts. Guest perceptions
regarding the cleanliness and safety of our stores, our in-stock levels and other factors also affect our ability to
compete. No single competitive factor is dominant, and actions by our competitors on any of these factors could
have an adverse effect on our sales, gross margins and expenses.
We sell many products under our owned and exclusive brands discussed on page 2. These brands are an
important part of our business because they differentiate us from other retailers, generally carry higher margins
than national brand products and represent a significant portion of our overall sales. If one or more of these brands
experiences a loss of consumer acceptance or confidence, our sales and gross margins could be adversely
affected.
The continuing migration and evolution of retailing to online and mobile channels has increased our challenges in
differentiating ourselves from other retailers. In particular, consumers are able to quickly and conveniently
comparison shop with digital tools, which can lead to decisions based solely on price. We have been working with
our vendors to offer unique and distinctive merchandise, and encouraging our guests to shop with confidence with
our price match policy. Failure to effectively execute in these efforts, actions by our competitors in response to these
efforts or failure of our vendors to manage their own channels and content could hurt our ability to differentiate
ourselves from other retailers and, as a result, have an adverse effect on sales, gross margins and expenses.
Our continued success is substantially dependent on positive perceptions of Target which, if eroded, could
adversely affect our business and our relationships with our guests and team members.
We believe that one of the reasons our guests prefer to shop at Target and our team members choose Target as a
place of employment is the reputation we have built over many years for serving our four primary constituencies:
guests, team members, the communities in which we operate and shareholders. To be successful in the future, we
must continue to preserve, grow and leverage the value of Target’s reputation. Reputational value is based in large
part on perceptions of subjective qualities. While reputations may take decades to build, even isolated incidents
can erode trust and confidence, particularly if they result in adverse mainstream and social media publicity,
governmental investigations or litigation. Those types of incidents could have an adverse impact on perceptions
and lead to tangible adverse effects on our business, including consumer boycotts, lost sales, loss of new store
development opportunities, or team member retention and recruiting difficulties.
If we are unable to successfully develop and maintain a relevant and reliable multichannel experience for our
guests, our reputation and results of operations could be adversely affected.
Our business has evolved from an in-store experience to interaction with guests across multiple channels (in-store,
online, mobile and social media, among others). Our guests are using computers, tablets, mobile phones and other
devices to shop in our stores and online and provide feedback and public commentary about all aspects of our
business. We currently provide full and mobile versions of our website (Target.com), applications for mobile phones
and tablets and interact with our guests through social media. Multichannel retailing is rapidly evolving and we must
keep pace with changing guest expectations, and new developments and technology investments by our
competitors. If we are unable to attract and retain team members or contract with third parties having the
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specialized skills needed to support our multichannel efforts, implement improvements to our guest-facing
technology in a timely manner, or provide a convenient and consistent experience for our guests regardless of the
ultimate sales channel, our ability to compete and our results of operations could be adversely affected. In addition,
if Target.com and our other guest-facing technology systems do not reliably function as designed, we may
experience a loss of guest confidence, data security breaches, lost sales or be exposed to fraudulent purchases,
which, if significant, could adversely affect our reputation and results of operations.
If we fail to anticipate and respond quickly to changing consumer preferences, our sales, gross margins and
profitability could suffer.
A substantial part of our business is dependent on our ability to make trend-right decisions and effectively manage
our inventory in a broad range of merchandise categories, including apparel, home d´ecor, seasonal offerings, food
and other merchandise. Failure to accurately predict constantly changing consumer tastes, preferences, spending
patterns and other lifestyle decisions may result in lost sales, spoilage and increased inventory markdowns, which
would lead to a deterioration in our results of operations by hurting our sales, gross margins and profitability.
Our earnings are highly susceptible to the state of macroeconomic conditions and consumer confidence in
the United States.
Most of our stores and all of our digital sales are in the United States, making our results highly dependent on U.S.
consumer confidence and the health of the U.S. economy. In addition, a significant portion of our total sales is
derived from stores located in five states: California, Texas, Florida, Minnesota and Illinois, resulting in further
dependence on local economic conditions in these states. Deterioration in macroeconomic conditions, consumer
confidence and guest financial situations could negatively affect our business in many ways, including slowing
sales growth or reduction in overall sales, and reducing gross margins. These same considerations impact the
success of our credit card program. Even though we no longer own a consumer credit card receivables portfolio,
we share in the economic performance of the credit card program with TD Bank Group (TD). Deterioration in
macroeconomic conditions could adversely affect the volume of new credit accounts, the amount of credit card
program balances and the ability of credit card holders to pay their balances. These conditions could result in us
receiving lower profit-sharing payments.
If we do not effectively manage our large and growing workforce, our labor costs and results of operations
could be adversely affected.
With approximately 361,000 team members, our workforce costs represent our largest operating expense, and our
business is dependent on our ability to attract, train and retain qualified team members. Many of those team
members are in entry-level or part-time positions with historically high turnover rates. Our ability to meet our labor
needs while controlling our costs is subject to external factors such as unemployment levels, prevailing wage rates,
collective bargaining efforts, health care and other benefit costs and changing demographics. If we are unable to
attract and retain adequate numbers of qualified team members, our operations, guest service levels and support
functions could suffer. Those factors, together with increasing wage and benefit costs, could adversely affect our
results of operations. As of March 20, 2013, none of our team members were working under collective bargaining
agreements. We are periodically subject to labor organizing efforts. If we become subject to one or more collective
bargaining agreements in the future, it could adversely affect our labor costs and how we operate our business.
Lack of availability of suitable locations in which to build new stores could slow our growth, and difficulty in
executing plans for new stores, expansions and remodels could increase our costs and capital
requirements.
Our future growth is dependent, in part, on our ability to build new stores and expand and remodel existing stores in
a manner that achieves appropriate returns on our capital investment. We compete with other retailers and
6
businesses for suitable locations for our stores. In addition, for many sites we are dependent on a third party
developer’s ability to acquire land, obtain financing and secure the necessary zoning changes and permits for a
larger project, of which our store may be one component. Turmoil in the financial markets may make it difficult for
third party developers to obtain financing for new projects. Local land use and other regulations applicable to the
types of stores we desire to construct may affect our ability to find suitable locations and also influence the cost of
constructing, expanding and remodeling our stores. A significant portion of our expected new store sites is located
in fully developed markets, which is generally a more time-consuming and expensive undertaking than expansion
into undeveloped suburban and ex-urban markets.
Interruptions in our supply chain or increased commodity prices and supply chain costs could adversely
affect our gross margins, expenses and results of operations.
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We are dependent on our vendors to supply merchandise in a timely and efficient manner. If a vendor fails to deliver
on its commitments, whether due to financial difficulties or other reasons, we could experience merchandise
out-of-stocks that could lead to lost sales. In addition, a large portion of our merchandise is sourced, directly or
indirectly, from outside the United States, with China as our single largest source. Political or financial instability,
trade restrictions, the outbreak of pandemics, labor unrest, transport capacity and costs, port security, weather
conditions, natural disasters or other events that could slow port activities and affect foreign trade are beyond our
control and could disrupt our supply of merchandise and/or adversely affect our results of operations. In addition,
changes in the costs of procuring commodities used in our merchandise or the costs related to our supply chain,
including labor, fuel, tariffs, and currency exchange rates could have an adverse effect on gross margins, expenses
and results of operations.
Failure to address product safety concerns could adversely affect our sales and results of operations.
If our merchandise offerings, including food, drug and children’s products, do not meet applicable safety standards
or our guests’ expectations regarding safety, we could experience lost sales and increased costs and be exposed
to legal and reputational risk. All of our vendors must comply with applicable product safety laws, and we are
dependent on them to ensure that the products we buy comply with all safety standards. Events that give rise to
actual, potential or perceived product safety concerns, including food or drug contamination, could expose us to
government enforcement action or private litigation and result in costly product recalls and other liabilities. In
addition, negative guest perceptions regarding the safety of the products we sell could cause our guests to seek
alternative sources for their needs, resulting in lost sales. In those circumstances, it may be difficult and costly for us
to regain the confidence of our guests.
If our efforts to protect the security of personal information about our guests and team members are
unsuccessful, we could be subject to costly government enforcement actions and private litigation and our
reputation could suffer.
The nature of our business involves the receipt and storage of personal information about our guests and team
members. We have a program in place to detect and respond to data security incidents. To date, all incidents we
have experienced have been insignificant. If we experience a significant data security breach or fail to detect and
appropriately respond to a significant data security breach, we could be exposed to government enforcement
actions and private litigation. In addition, our guests could lose confidence in our ability to protect their personal
information, which could cause them to discontinue usage of REDcards, decline to use our pharmacy services, or
stop shopping with us altogether. The loss of confidence from a significant data security breach involving team
members could hurt our reputation, cause team member recruiting and retention challenges, increase our labor
costs and affect how we operate our business.
7
Our failure to comply with federal, state or local laws, or changes in these laws could increase our costs,
reduce our margins and lower our sales.
Our business is subject to a wide array of laws and regulations. Significant legislative changes that affect our
relationship with our workforce could increase our expenses and adversely affect our operations. Examples of
possible legislative changes affecting our relationship with our workforce include changes to an employer’s
obligation to recognize collective bargaining units, the process by which collective bargaining agreements are
negotiated or imposed, minimum wage requirements, and health care mandates. In addition, changes in the
regulatory environment regarding topics such as banking and consumer credit, Medicare reimbursements, privacy
and information security, product safety, supply chain transparency or environmental protection, among others,
could cause our expenses to increase without an ability to pass through any increased expenses through higher
prices. In addition, if we fail to comply with applicable laws and regulations, particularly wage and hour laws, we
could be subject to legal risk, including government enforcement action and class action civil litigation, which could
adversely affect our results of operations by increasing our costs, reducing our margins and lowering our sales.
Weather conditions where our stores are located may impact consumer shopping patterns, which alone or
together with natural disasters, particularly in areas where our sales are concentrated, could adversely
affect our results of operations.
Uncharacteristic or significant weather conditions can affect consumer shopping patterns, particularly in apparel
and seasonal items, which could lead to lost sales or greater than expected markdowns and adversely affect our
short-term results of operations. In addition, our three largest states, by total sales, are California, Texas and Florida,
areas where hurricanes and earthquakes are more prevalent. Natural disasters in those states or in other areas
where our sales are concentrated could result in significant physical damage to or closure of one or more of our
stores or distribution centers, and cause delays in the distribution of merchandise from our vendors to our
distribution centers and stores, which could adversely affect our results of operations by increasing our costs and
lowering our sales.
Changes in our effective income tax rate could adversely affect our profitability and results of operations.
Our effective income tax rate is influenced by a number of factors, including changes in tax law, tax treaties,
interpretation of existing laws, and our ability to sustain our reporting positions on examination. Changes in any of
those factors could change our effective tax rate, which could adversely affect our profitability and results of
operations. In addition, the expansion of our retail store operations outside of the United States may cause greater
volatility in our effective tax rate.
If we are unable to access the capital markets or obtain bank credit, our financial position, growth plans,
liquidity and results of operations could suffer.
We are dependent on a stable, liquid and well-functioning financial system to fund our operations and growth plans.
In particular, we have historically relied on the public debt markets to raise capital for new store development and
other capital expenditures and the commercial paper market and bank credit facilities to fund seasonal needs for
working capital. Our continued access to these markets depends on multiple factors including the condition of debt
capital markets, our operating performance and maintaining strong debt ratings. If our credit ratings were lowered,
our ability to access the debt markets, our cost of funds and other terms for new debt issuances could be adversely
impacted. Each of the credit rating agencies reviews its rating periodically, and there is no guarantee our current
credit rating will remain the same. In addition, we use a variety of derivative products to manage our exposure to
market risk, principally interest rate and equity price fluctuations. Disruptions or turmoil in the financial markets
could reduce our ability to meet our capital requirements or fund our working capital needs, and lead to losses on
derivative positions resulting from counterparty failures, which could adversely affect our financial position and
results of operations.
8
A significant disruption in our computer systems could adversely affect our operations.
We rely extensively on our computer systems to manage inventory, process guest transactions, service REDcard
accounts and summarize and analyze results. Our systems are subject to damage or interruption from power
outages, telecommunications failures, computer viruses and malicious attacks, security breaches and catastrophic
events. If our systems are damaged or fail to function properly, we may incur substantial costs to repair or replace
them, experience loss of critical data and interruptions or delays in our ability to manage inventories or process
guest transactions, and encounter a loss of guest confidence which could adversely affect our results of operations.
If we do not effectively execute our plan to expand retail store operations into Canada, our financial results
could be adversely affected.
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Our 2013 entry into the Canadian retail market is our first retail store expansion outside of the United States. Our
ability to successfully open the expected number of Canadian Target stores on schedule depends, in large
measure, upon our ability to remodel existing assets, build our supply chain capabilities and technology systems
and recruit, hire and retain qualified team members. In addition, our ability to offer the expected assortment of
merchandise in certain markets may be impacted by the availability of local vendors of certain types of goods. The
effective execution of our Canadian retail store expansion is also contingent on our ability to design new marketing
programs that positively differentiate us from other retailers in Canada, and achieve market acceptance by
Canadian guests. If we do not effectively execute our expansion plan in Canada, our financial performance could be
adversely affected.
A disruption in relationships with third parties who provide us services in connection with certain aspects of
our business could adversely affect our operations.
We rely on third parties to support a variety of business functions, including our Canadian supply chain, portions of
our technology systems, multichannel platforms and distribution network, and extensions of credit for our 5%
REDcard Rewards loyalty program. If we are unable to contract with third parties having the specialized skills
needed to support those strategies or integrate their products and services with our business, or if those third
parties fail to meet our performance standards and expectations, our reputation, sales and results of operations
could be adversely affected. In addition, we could face increased costs associated with finding replacement
providers or hiring new team members to provide these services in-house.
Item 1B. Unresolved Staff Comments
Not applicable.
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Item 2. Properties
At February 2, 2013, we had 1,778 stores in 49 states and the District of Columbia:
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
District of Columbia
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Number of Stores
21
3
48
9
257
40
20
3
1
123
55
4
6
89
33
22
19
14
16
5
37
36
59
75
6
36
Retail Sq. Ft.
(in thousands)
3,003
504
6,382
1,165
34,051
6,080
2,672
440
179
17,263
7,515
695
664
12,188
4,377
3,015
2,577
1,660
2,246
630
4,802
4,735
7,058
10,777
743
4,735
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Number of
Stores
7
14
19
9
43
9
67
47
4
64
15
18
63
4
19
5
32
149
13
—
57
36
6
39
2
Retail Sq. Ft.
(in thousands)
780
2,006
2,461
1,148
5,701
1,024
9,145
6,225
554
8,002
2,157
2,191
8,239
517
2,359
580
4,114
20,976
1,953
—
7,650
4,194
755
4,773
187
The following table summarizes the number of owned or leased stores and distribution centers in the United States
at February 2, 2013:
Total
1,778
237,847
Owned
Leased
Owned buildings on leased land
Total
(a) The 37 distribution centers have a total of 49,559 thousand square feet.
Stores
1,526
88
164
1,778
Distribution
Centers (a)
30
7
—
37
We have announced plans to open 124 stores in Canada in 2013, with locations in each province. We also own 3
distribution centers in Canada, with a total of 3,963 thousand square feet.
We own our corporate headquarters buildings located in Minneapolis, Minnesota, and we lease and own additional
office space in the United States. We lease our Canadian headquarters in Mississauga, Ontario. Our international
sourcing operations have 25 office locations in 17 countries, all of which are leased. We also lease office space in
Bangalore, India, where we operate various support functions. Our properties are in good condition, well
maintained and suitable to carry on our business.
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For additional information on our properties, see the Capital Expenditures section in Item 7, Management’s
Discussion and Analysis of Financial Condition and Results of Operations and Notes 14 and 22 of the Notes to
Consolidated Financial Statements included in Item 8, Financial Statements and Supplementary Data.
Item 3. Legal Proceedings
No response is required under Item 103 of Regulation S-K. For a description of other legal proceedings, see
Note 19 of the Notes to Consolidated Financial Statements included in Item 8, Financial Statements and
Supplementary Data.
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Item 4. Mine Safety Disclosures
Not applicable.
Item 4A. Executive Officers
Executive officers are elected by, and serve at the pleasure of, the Board of Directors. There is neither a family
relationship between any of the officers named and any other executive officer or member of the Board of Directors,
nor any arrangement or understanding pursuant to which any person was selected as an officer.
Name
Timothy R. Baer
Anthony S. Fisher
John D. Griffith
Beth M. Jacob
Jeffrey J. Jones II
Jodeen A. Kozlak
John J. Mulligan
Tina M. Schiel
Terrence J. Scully
Gregg W. Steinhafel
Kathryn A. Tesija
Laysha L. Ward
Title and Business Experience
Executive Vice President, General Counsel and Corporate Secretary since March
2007.
President, Target Canada since January 2011. Vice President, Merchandise
Operations from February 2010 to January 2011. From January 1999 to February
2010, Mr. Fisher held several leadership positions with Target in Merchandise and
Merchandise Planning.
Executive Vice President, Property Development since February 2005.
Executive Vice President and Chief Information Officer since January 2010. Senior
Vice President and Chief Information Officer from July 2008 to January 2010. Vice
President, Guest Operations, Target Financial Services from August 2006 to July
2008.
Executive Vice President and Chief Marketing Officer since April 2012. Partner and
President of McKinney Ventures LLC from March 2006 to March 2012.
Executive Vice President, Human Resources since March 2007.
Executive Vice President and Chief Financial Officer since April 2012. Senior Vice
President, Treasury, Accounting and Operations from February 2010 to April 2012.
Vice President, Pay and Benefits from February 2007 to February 2010.
Executive Vice President, Stores since January 2011. Senior Vice President, New
Business Development from February 2010 to January 2011. Senior Vice President,
Stores from February 2001 to February 2010.
President, Financial and Retail Services since March 2003.
Chairman of the Board, President and Chief Executive Officer since February 2009.
President and Chief Executive Officer since May 2008. Director since January 2007.
President since August 1999.
Executive Vice President, Merchandising and Supply Chain since October 2012.
Executive Vice President, Merchandising from May 2008 to September 2012. Senior
Vice President, Merchandising from July 2001 to April 2008.
President, Community Relations and Target Foundation since July 2008. Vice
President, Community Relations from February 2003 to July 2008.
Age
52
38
51
51
45
49
47
47
60
58
50
45
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Item 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
Our common stock is listed on the New York Stock Exchange under the symbol ‘‘TGT.’’ We are authorized to issue
up to 6,000,000,000 shares of common stock, par value $0.0833, and up to 5,000,000 shares of preferred stock, par
value $0.01. At March 15, 2013, there were 16,412 shareholders of record. Dividends declared per share and the
high and low closing common stock price for each fiscal quarter during 2012 and 2011 are disclosed in Note 30 of
the Notes to Consolidated Financial Statements included in Item 8, Financial Statements and Supplementary Data.
During the first quarter of 2012, we completed a $10 billion share repurchase program authorized by our Board of
Directors in November 2007. In January 2012, our Board of Directors authorized the repurchase of an additional
$5 billion of our common stock, with no stated expiration for the share repurchase program. Since the inception of
the $5 billion share repurchase program and through the end of 2012, we have repurchased 27.3 million shares of
our common stock for a total cash investment of $1,621 million ($59.44 average price per share).
The table below presents information with respect to Target common stock purchases made during the three
months ended February 2, 2013 by Target or any ‘‘affiliated purchaser’’ of Target, as defined in Rule 10b-18(a)(3)
under the Exchange Act.
Period
October 28, 2012 through
November 24, 2012
November 25, 2012 through
December 29, 2012
December 30, 2012 through
February 2, 2013
Total Number
of Shares
Purchased (a)(b)
Average
Price Paid
per Share (a)
Total Number of
Shares Purchased
as Part of the
Current Program (a)
Dollar Value of
Shares that May
Yet Be Purchased
Under the Program
4,439,108
2,711,006
3,351,633
10,501,747
$62.78
62.10
60.74
$61.96
21,304,584
$ 3,744,999,754
23,984,097
3,578,603,382
27,276,377
27,276,377
3,378,630,009
$3,378,630,009
(a) The table above includes shares reacquired upon settlement of prepaid forward contracts. For the three months ended February 2, 2013, no
shares were reacquired through these contracts. At February 2, 2013, we held asset positions in prepaid forward contracts for 1.2 million
shares of our common stock, for a total cash investment of $54 million, or an average per share price of $45.46. Refer to Notes 25 and 27 of
the Notes to Consolidated Financial Statements included in Item 8, Financial Statements and Supplementary Data for further details of these
contracts.
(b) The number of shares above includes shares of common stock reacquired from team members who tendered owned shares to satisfy the
tax withholding on equity awards as part of our long-term incentive plans or to satisfy the exercise price on stock option exercises. For the
three months ended February 2, 2013, 91,565 shares were reacquired at an average per share price of $60.73 pursuant to our long-term
incentive plan.
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200
150
s
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a
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D
100
50
0
2008
Target
S&P 500 Index
Previous Peer Group
Current Peer Group
Comparison of Cumulative Five Year Total Return
Target
S&P 500 Index
Previous Peer Group
Current Peer Group
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2009
2010
2011
2012
2013
7MAR201316033131
Fiscal Years Ended
February 2,
2008
$100.00
100.00
100.00
100.00
January 31,
2009
$ 55.44
60.63
77.50
77.58
January 30,
2010
$ 92.63
80.72
95.09
99.38
January 29,
2011
$ 99.76
97.88
106.52
113.90
January 28,
2012
$ 93.85
103.10
117.91
126.61
February 2,
2013
$117.28
121.25
146.56
159.53
The graph above compares the cumulative total shareholder return on our common stock for the last five fiscal
years with (i) the cumulative total return on the S&P 500 Index, (ii) the peer group used in previous filings consisting
of 14 general merchandise, department store, food and specialty retailers which are large and meaningful
competitors (Best Buy, Costco, CVS Caremark, Home Depot, J. C. Penney, Kohl’s, Kroger, Lowe’s, Macy’s,
Safeway, Sears, Supervalu, Walgreens, and Walmart) (Previous Peer Group), and (iii) a new peer group consisting
of the 14 companies in the Previous Peer Group and Amazon.com. The change in peer groups was made to be
consistent with the retail peer group used for our definitive Proxy Statement to be filed on or about April 29, 2013.
Both peer groups are weighted by the market capitalization of each component company. The graph assumes the
investment of $100 in Target common stock, the S&P 500 Index, the Previous Peer Group and the Current Peer
Group on February 2, 2008, and reinvestment of all dividends.
13
Item 6. Selected Financial Data
(millions, except per share data)
Financial Results:
Total revenues
Net earnings
Per Share:
Basic earnings per share
Diluted earnings per share
Cash dividends declared per share
Financial Position:
Total assets
Long-term debt, including current portion
(a) Consisted of 53 weeks.
As of or for the Year Ended
2012 (a)
2011
2010
2009
2008
2007
$73,301
2,999
$69,865
2,929
$67,390
2,920
$65,357
2,488
$64,948
2,214
$63,367
2,849
4.57
4.52
1.38
4.31
4.28
1.15
4.03
4.00
0.92
3.31
3.30
0.67
2.87
2.86
0.62
3.37
3.33
0.54
48,163
17,648
46,630
17,483
43,705
15,726
44,533
16,814
44,106
18,752
44,560
16,590
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations
Executive Summary
Our fiscal year ends on the Saturday nearest January 31. The 2012 period includes 53 weeks, while 2011 and 2010
each consisted of 52 weeks.
Consolidated revenues were $73,301 million for 2012, an increase of $3,436 million or 4.9 percent from the prior
year. Consolidated earnings before interest expense and income taxes for 2012 increased by $49 million or
0.9 percent over 2011 to $5,371 million. Cash flow provided by operations was $5,325 million, $5,434 million and
$5,271 million for 2012, 2011 and 2010, respectively. Diluted earnings per share in 2012 increased 5.6 percent to
$4.52 from $4.28 in the prior year. Adjusted diluted earnings per share, which we believe is useful in providing
period-to-period comparisons of the results of our U.S. operations, increased 7.9 percent to $4.76 in 2012 from
$4.41 in the prior year.
Percent Change
2012/2011
2011/2010
Earnings Per Share
GAAP diluted earnings per share
Adjustments (b)
Adjusted diluted earnings per share
Note: A reconciliation of non-GAAP financial measures to GAAP measures is provided on page 22.
(a) Consisted of 53 weeks.
(b) Adjustments represent the diluted EPS impact of our 2013 Canadian market entry, the gain on receivables held for sale, favorable
7.9%
5.6%
14.3%
7.0%
$
2012 (a)
4.52
$
0.24
4.76
2011
$ 4.28
0.13
$ 4.41
2010
$ 4.00
(0.14)
$ 3.86
resolution of various income tax matters and the loss on early retirement of debt.
Our 2012 financial results in our U.S. Retail Segment reflect increased sales of 5.1 percent over the same period last
year due to a 2.7 percent comparable-store increase, the contribution from new stores and the additional week in
2012. Our 2012 U.S. Retail Segment earnings before interest expense, income taxes, depreciation and amortization
(EBITDA) margin rate decreased slightly from the prior period, primarily due to a lower gross margin rate from our
5% REDcard Rewards loyalty program and our store remodel program. Our earnings before interest expense and
income taxes (EBIT) margin rate remained consistent with the prior year due to a decrease in our depreciation and
amortization rate.
14
In the U.S. Credit Card Segment, we experienced a decrease in segment profit due to annualizing over a significant
reserve reduction in the prior year and lower finance charge revenue resulting from a smaller portfolio. These
changes were partially offset by lower interest expense due to repayment of $2,769 million in collateralized debt in
the fourth quarter of 2011, as well as the additional week in 2012.
The 2012 and 2011 loss in our Canadian Segment totaling $369 million and $122 million, respectively, is comprised
of start-up costs and depreciation related to our 2013 entry into the Canadian retail market.
Credit Card Receivables Transaction
On October 22, 2012, we reached an agreement to sell our entire consumer credit card portfolio to TD Bank Group
(TD). Historically, our credit card receivables were recorded at par value less an allowance for doubtful accounts.
With this agreement, our receivables are classified as held for sale at February 2, 2013, and are recorded at the
lower of cost (par) or fair value. We recorded a gain of $161 million outside of our segments in 2012, representing
the net adjustment to eliminate our allowance for doubtful accounts and record our receivables at lower of cost
(par) or fair value.
On March 13, 2013, we completed the sale to TD for cash consideration of $5.7 billion, equal to the gross (par) value
of the outstanding receivables at the time of closing. Concurrent with the sale of the portfolio for $5.7 billion, 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. As of March 20, 2013, we also have
open tender offers to use up to an aggregate of $1.2 billion of cash proceeds from the sale to repurchase
outstanding debt. Over time, we expect to apply the remaining proceeds from the sale in a manner that will preserve
our strong investment-grade credit ratings by further reducing our debt position and continuing our current share
repurchase program.
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Following this sale, TD will underwrite, fund and own Target Credit Card and Target Visa receivables in the U.S. TD
will control risk management policies and oversee regulatory compliance, and we will perform account servicing
and primary marketing functions. We will earn a substantial portion of the profits generated by the Target Credit
Card and Target Visa portfolios. This transaction will be accounted for as a sale, and the receivables will no longer
be reported on our Consolidated Statements of Financial Position.
In the first quarter of 2013, we will recognize a gain on sale of $391 million related to consideration received in
excess of the recorded amount of the receivables. Consideration received includes cash of $5.7 billion and a
beneficial interest asset of $225 million. The beneficial interest effectively represents a receivable for the present
value of future profit-sharing we expect to receive on the receivables sold. Based on historical payment patterns, we
estimate that the beneficial interest asset will be reduced over a four year period, with larger reductions in the early
years. As a result, a portion of the profit-sharing payments we receive from TD in the first four years of the
arrangement will not be recorded as income on our Consolidated Statements of Operations.
Following the sale of our credit card portfolio in 2013, income from the profit-sharing arrangement, net of account
servicing expenses, will be recognized within SG&A expenses. Including the profit-sharing arrangement in the U.S.
Segment will reduce the SG&A rate below the historical U.S. Retail Segment SG&A rate, and raise EBITDA and EBIT
margin rates above historical U.S. Retail Segment rates.
For comparison purposes, historical U.S. Retail Segment and U.S. Credit Card Segment results will be restated to
form a new U.S. Segment. The combination of these two historical segments into a single U.S. Segment will result in
a higher SG&A rate in 2013 compared with 2012, 2011 and 2010, reflecting credit card profit that will be retained by
TD beginning in 2013.
Although we expect lower EBITDA and EBIT margin rates in the U.S. Segment compared with prior periods, we
expect that the impact of the receivables sale transaction will become neutral and ultimately accretive to EPS over
time.
15
Analysis of Results of Operations
U.S. Retail Segment
Percent Change
2012/2011
U.S. Retail Segment Results
(dollars in millions)
Sales
4.1%
Cost of sales
4.7
Gross margin
2.7
SG&A expenses (b)
3.0
EBITDA
2.1
Depreciation and amortization
0.1
2.9%
EBIT
Note: See Note 29 to our Consolidated Financial Statements for a reconciliation of our segment results to earnings before income taxes.
(a) Consisted of 53 weeks.
(b) Effective with the October 2010 nationwide launch of our 5% REDcard Rewards loyalty program, we changed the formula under which the
U.S. Retail Segment charges the U.S. Credit Card Segment to better align with the attributes of this program. Loyalty program charges
were $300 million, $258 million and $102 million in 2012, 2011 and 2010, respectively. In all periods, these amounts were recorded as
reductions to SG&A expenses within the U.S. Retail Segment and increases to operations and marketing expenses within the U.S. Credit
Card Segment.
2012 (a)
$ 71,960
50,568
21,392
14,342
7,050
2,031
$ 5,019
2010
$65,786
45,725
20,061
13,367
6,694
2,065
$ 4,629
2011
$68,466
47,860
20,606
13,774
6,832
2,067
$ 4,765
5.1%
5.7
3.8
4.1
3.2
(1.8)
5.3%
2011/2010
U.S. Retail Segment Rate Analysis
Gross margin rate
SG&A expense rate
EBITDA margin rate
Depreciation and amortization expense rate
EBIT margin rate
Rate analysis metrics are computed by dividing the applicable amount by sales.
(a) Consisted of 53 weeks.
2012 (a)
29.7%
19.9
9.8
2.8
7.0
2011
30.1%
20.1
10.0
3.0
7.0
2010
30.5%
20.3
10.2
3.1
7.0
Sales
Sales include merchandise sales, net of expected returns, and gift card breakage. Refer to Note 2 of the Notes to
Consolidated Financial Statements for a definition of gift card breakage. Sales growth in 2012 and 2011 resulted
from higher comparable-store sales and the contribution from new stores, with 2012 also benefitting by
1.7 percentage points from the additional week. Inflation did not materially affect sales in any period presented.
Refer to the Merchandise section in Item 1, Business, for additional product category information.
Comparable-store sales is a measure that highlights the performance of our existing stores and digital sales by
measuring the change in sales for a period over the comparable, prior-year period of equivalent length. The method
of calculating comparable-store sales varies across the retail industry. As a result, our comparable-store sales
calculation is not necessarily comparable to similarly titled measures reported by other companies. Comparable-
store sales include all sales, except sales from stores open less than thirteen months.
Comparable-Store Sales
Comparable-store sales change
Drivers of change in comparable-store sales:
Number of transactions
Average transaction amount
Selling price per unit
Units per transaction
16
2012
2.7%
0.5%
2.3%
1.3%
1.0%
2011
3.0%
0.4%
2.6%
0.3%
2.3%
2010
2.1%
2.0%
0.1%
(2.3)%
2.5%
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The collective interaction of a broad array of macroeconomic, competitive and consumer behavioral factors, as well
as sales mix, and transfer of sales to new stores makes further analysis of sales metrics infeasible.
Credit is offered to qualified guests through our branded proprietary credit cards: the Target Credit Card and the
Target Visa (Target Credit Cards). Additionally, we offer a branded proprietary Target Debit Card. Collectively, we
refer to these products as REDcards(cid:2). Since October 2010, guests receive a 5-percent discount on virtually all
purchases at checkout, every day, when they use a REDcard. In November 2011, guests also began to receive free
shipping at Target.com when they use their REDcard.
We monitor the percentage of store sales that are paid for using REDcards (REDcard Penetration) because our
internal analysis has indicated that a meaningful portion of the incremental purchases on our REDcards are also
incremental sales for Target, with the remainder representing a shift in tender type.
REDcard Penetration
Target Credit Cards
Target Debit Card
Total store REDcard Penetration
Gross Margin Rate
2012
7.9%
5.7
13.6%
2011
6.8%
2.5
9.3%
2010
5.2%
0.7%
5.9%
Our gross margin rate was 29.7 percent in 2012, 30.1 percent in 2011 and 30.5 percent in 2010. The decrease in
each period reflects the impact of our integrated growth strategies of our 5% REDcard Rewards loyalty program and
our store remodel program, which impacted the rate by 0.4 percent and 0.5 percent in 2012 and 2011, respectively,
partially offset by underlying rate improvements within categories in 2011. The REDcard Rewards loyalty program
reduces gross margin rates because it drives incremental sales among guests who receive a 5-percent discount on
virtually all items purchased. The remodel program reduces the overall gross margin rate because it drives
incremental sales with a stronger-than-average mix in lower-than-average gross margin rate product categories,
primarily food.
We changed certain merchandise vendor contracts beginning in 2013. As a result, we expect our gross margin rate
to increase by about 20 to 25 basis points from prior years, with an equal and offsetting increase in our SG&A rate.
This shift will result from a larger proportion of vendor income offsetting cost of sales as compared to certain
advertising expenses within SG&A. This change will have no impact on our EBITDA or EBIT margins or margin rates
as our SG&A rate will increase by the same amount.
In January 2013 we announced plans to price match top online retailers year-round. Based on our experience
during the 2012 holiday season, we do not expect this change to significantly affect our gross margin rate.
Selling, General and Administrative Expense Rate
Our SG&A expense rate was 19.9 percent, 20.1 percent and 20.3 percent in 2012, 2011 and 2010, respectively. The
change in 2012 was primarily due to improvements in store hourly payroll expense, which impacted the rate by
0.1 percent, and continued disciplined expense management across the Company, partially offset by technology
and multichannel investments, which impacted the rate by nearly 0.2 percent. The change in 2011 was primarily
due to increased loyalty program charges to the U.S. Credit Segment and favorable leverage on store hourly payroll
expense.
As noted above, a 2013 change to certain merchandise vendor contracts is expected to increase our SG&A rate by
about 20 to 25 basis points because vendor funding will no longer offset certain advertising expenses. This change
will have no impact on our EBITDA or EBIT margins or margin rates as our gross margin rate will increase by the
same amount.
Following the sale of our credit card portfolio in 2013, income from the profit-sharing arrangement, net of account
servicing expenses, will be recognized as an offset to SG&A expenses.
17
Depreciation and Amortization Expense Rate
Our depreciation and amortization expense rate was 2.8 percent, 3.0 percent and 3.1 percent in 2012, 2011 and
2010, respectively. The decrease in 2012 was due to the favorable impact of higher sales combined with stable
depreciation and amortization expenses, reflecting the moderate pace of capital investments in recent years, and
the impact from the additional week in 2012.
Store Data
Change in Number of Stores
Beginning store count
Opened
Closed
Relocated
Ending store count
Number of stores remodeled during the year
Number of Stores and
Retail Square Feet
Target general merchandise stores
Expanded food assortment stores
SuperTarget stores
CityTarget stores
Total
2012
1,763
23
(5)
(3)
1,778
252
2011
1,750
21
(3)
(5)
1,763
394
Number of Stores
Retail Square Feet (a)
February 2,
2013
391
1,131
251
5
1,778
January 28,
2012
637
875
251
—
1,763
February 2,
2013
46,584
146,249
44,500
514
237,847
January 28,
2012
76,999
114,219
44,503
—
235,721
(a)
In thousands, reflects total square feet less office, distribution center and vacant space.
U.S. Credit Card Segment
Credit is offered to qualified guests through the Target Credit Cards, which support our core retail operations and
are important contributors to our overall profitability and engagement with our guests. Credit card revenues are
comprised of finance charges, late fees and other revenue, and third party merchant fees, which are amounts
received from merchants who accept the Target Visa.
18
U.S Credit Card Segment Results
2012 (a)
2011
2010
(dollars in millions)
Finance charge revenue
Late fees and other revenue
Third party merchant fees
Total revenue
Bad debt expense (b)
Operations and marketing
expenses (b)
Depreciation and amortization
Total expenses
EBIT
Interest expense on nonrecourse
debt collateralized by credit card
receivables
Segment profit
Average receivables funded by
Target (c)
Amount
$1,089
173
79
1,341
196
562
13
771
570
13
$ 557
$4,569
Rate (e)
17.8%
2.8
1.3
22.0
3.2
9.2
0.2
12.6
9.3
Amount
$1,131
179
89
1,399
154
550
17
721
678
72
$ 606
$2,514
Rate (e)
17.9%
2.8
1.4
22.1
2.4
8.7
0.3
11.4
10.7
Amount
$1,302
197
105
1,604
528
433
19
980
624
83
$ 541
$2,771
Rate (e)
18.3%
2.8
1.5
22.6
7.4
6.1
0.3
13.8
8.8
Segment pretax ROIC (d)
Note: See Note 29 to our Consolidated Financial Statements for a reconciliation of our segment results to earnings before income taxes.
(a) Consisted of 53 weeks.
(b) The combination of bad debt expense and operations and marketing expenses, less amounts the U.S. Retail Segment charges the U.S.
Credit Card Segment for loyalty programs, within the U.S. Credit Card Segment represent credit card expenses on the Consolidated
Statements of Operations. For 2012, fourth quarter bad debt expense was replaced by net write-offs in this calculation. See footnote (b) to
our U.S. Retail Segment Results table for an explanation of our loyalty program charges.
19.5%
24.1%
12.0%
(c) Amounts represent the portion of average credit card receivables, at par, funded by Target. For 2012, 2011 and 2010, these amounts
exclude $1,423 million, $3,801 million and $4,335 million, respectively, of receivables funded by nonrecourse debt collateralized by credit
card receivables.
(d) ROIC is return on invested capital. This rate equals our segment profit divided by average credit card receivables, at par, funded by Target,
expressed as an annualized rate.
(e) As a percentage of average credit card receivables, at par. For 2012, the additional week has been adjusted to provide comparable results
to the prior period.
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Rate
2011
2012 (a)
Amount
$570
Spread Analysis – Total
Portfolio
(dollars in millions)
EBIT
LIBOR (b)
Spread to LIBOR (c)
Note: Numbers are individually rounded.
(a) Consisted of 53 weeks.
(b) Balance-weighted one-month LIBOR.
(c) Spread to LIBOR is a metric used to analyze the performance of our total credit card portfolio because the majority of our portfolio earned
finance charge revenue at rates tied to the Prime Rate, and the interest rate on all nonrecourse debt securitized by credit card receivables
is tied to LIBOR.
9.3% (d)
0.2%
9.1% (d)
Rate
10.7% (d)
Amount
$678
Amount
$624
10.5% (d)
$555
0.2%
2010
$663
$604
Rate
8.8% (d)
0.3%
8.5% (d)
(d) As a percentage of average credit card receivables, at par. For 2012, the additional week has been adjusted to provide comparable results
to the prior period.
Our primary measure of segment profit is the EBIT generated by our total credit card receivables portfolio less the
interest expense on nonrecourse debt collateralized by credit card receivables. We also measure the performance
of our overall credit card receivables portfolio by calculating the dollar Spread to LIBOR at the portfolio level. This
metric approximates overall financial performance of the entire credit card portfolio by measuring the difference
between EBIT earned on the portfolio and a hypothetical benchmark rate financing cost applied to the entire
portfolio. The interest rate on all nonrecourse debt securitized by credit card receivables is tied to LIBOR. We
19
continue to recognize an allowance for doubtful accounts and bad debt expense within our U.S. Credit Card
Segment, which allows us to evaluate the performance of the portfolio. The allowance for doubtful accounts is
eliminated in consolidation to present the receivables at the lower of cost (par) or fair value. On a consolidated
basis, net write-offs are reported within credit card expenses in our Consolidated Statements of Operations.
In 2012 and 2011, segment revenues decreased from the prior year primarily due to lower average receivables
resulting in reduced finance charge revenue. In 2012, segment expense increases were driven by higher bad debt
expense, primarily attributable to annualizing over a significant reserve reduction in the prior year. In 2011, segment
expenses decreased from the prior year as we significantly reduced our bad debt reserve due to improved trends in
key measures of risk. Segment interest expense on nonrecourse debt declined in both 2012 and 2011 due to lower
outstanding nonrecourse debt securitized by credit card receivables.
Receivables Rollforward Analysis
(dollars in millions)
Beginning credit card receivables, at par
Charges at Target
Charges at third parties
Payments
Other
Period-end credit card receivables, at par
Average credit card receivables, at par
Accounts with three or more payments (60+ days) past
due as a percentage of period-end credit card
receivables, at par
Accounts with four or more payments (90+ days) past
due as a percentage of period-end credit card
receivables, at par
2012
2011
2010
2012/2011
2011/2010
Percent Change
$ 6,357
6,294
4,709
(12,286)
950
$ 6,024
$ 5,992
$ 6,843
5,098
5,192
(11,653)
877
$ 6,357
$ 6,314
$ 7,982
3,699
5,815
(11,283)
630
$ 6,843
$ 7,106
(7.1)%
23.5
(9.3)
5.4
8.3
(5.2)%
(5.1)%
(14.3)%
37.8
(10.7)
3.3
39.3
(7.1)%
(11.1)%
2.7%
3.3%
4.2%
1.9%
2.3%
3.1%
Allowance for Doubtful Accounts
(dollars in millions)
Allowance at beginning of period
Bad debt expense
Write-offs (a)
Recoveries (a)
Segment allowance at end of period
As a percentage of period-end credit card receivables, at par
Net write-offs as an annualized percentage of average credit
2012
2011
2010
2012/2011
2011/2010
Percent Change
$
$
$ 430
196
(424)
133
$ 335
5.6%
690
154
(572)
158
430
6.8%
$ 1,016
528
(1,007)
153
690
10.1%
$
(37.7)%
27.3
(25.8)
(15.2)
(22.0)%
(32.1)%
(70.8)
(43.2)
3.0
(37.7)%
card receivables, at par
4.9%
6.6%
12.0%
(a) Write-offs include the principal amount of losses (excluding accrued and unpaid finance charges), and recoveries include current period
principal collections on previously written-off balances. These amounts combined represent net write-offs.
Period-end and average credit card receivables, at par, have declined because of an increase in payment rates and
a decrease in Target Visa charges at third-parties, partially offset by an increase in charges at Target over the past
two years. The decrease in charges at third parties is primarily due to the fact that we no longer issue new Target
Visa accounts.
Canadian Segment
During 2012 and 2011, start-up costs reported in SG&A expense in the Consolidated Statements of Operations
totaled $272 million and $74 million, respectively, and primarily consisted of compensation, benefits and third-party
20
service expenses. Additionally, we recorded $97 million and $48 million in depreciation for 2012 and 2011,
respectively.
Other Performance Factors
Net Interest Expense
Net interest expense was $762 million in 2012, including $78 million of interest on Canadian capitalized leases. This
decrease of 12.0 percent, or $104 million, from 2011 was primarily due to an $87 million loss on early retirement of
debt in 2011. As of March 20, 2013, we also have open tender offers to use up to an aggregate of $1.2 billion of cash
proceeds from the sale to repurchase outstanding debt, which will impact interest expense in 2013.
Net interest expense was $866 million for 2011, increasing 14.4 percent, or $109 million from 2010. This increase
was due to an $87 million loss on early retirement of debt, $44 million of interest on Canadian capitalized leases and
higher average debt balances, partially offset by a lower average portfolio interest rate.
Provision for Income Taxes
Our effective income tax rate increased to 34.9 percent in 2012, from 34.3 percent in 2011, primarily due to a
reduction in the favorable resolution of various income tax matters and the unfavorable impact of losses in Canada,
which are tax effected at a lower rate than U.S. earnings. Various income tax matters were resolved in 2012 and
2011 which reduced tax expense by $58 million and $85 million, respectively. A tax rate reconciliation is provided in
Note 23 to our Consolidated Financial Statements.
Our effective income tax rate decreased to 34.3 percent in 2011, from 35.1 percent in 2010, primarily due to a
reduction in the structural domestic effective tax rate. This reduction was slightly offset by a reduction in the
favorable resolution of various income tax matters and the unfavorable impact of losses in Canada, which are tax
effected at a lower rate than U.S. earnings. Various income tax matters were resolved in 2011 and 2010 which
reduced tax expense by $85 million and $102 million, respectively.
We expect a 2013 consolidated effective income tax rate of 35.7 percent to 36.7 percent, excluding the impact of
resolution of income tax matters.
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Reconciliation of Non-GAAP Financial Measures to GAAP Measures
Our segment measure of profit is used by management to evaluate the return on our investment and to make
operating decisions. To provide additional transparency, we have disclosed non-GAAP adjusted diluted earnings
per share, which excludes the impact of our 2013 Canadian market entry, the gain on receivables held for sale,
favorable resolution of various income tax matters and the loss on early retirement of debt. We believe this
information is useful in providing period-to-period comparisons of the results of our U.S. operations. This measure
is not in accordance with, or an alternative for, generally accepted accounting principles in the United States. The
most comparable GAAP measure is diluted earnings per share. Non-GAAP adjusted EPS should not be considered
in isolation or as a substitution for analysis of our results as reported under GAAP. Other companies may calculate
non-GAAP adjusted EPS differently than we do, limiting the usefulness of the measure for comparisons with other
companies.
(millions, except per share data)
U.S. Retail
U.S.
Credit Card
Total U.S.
Canada Other
Consolidated
GAAP Total
2012 (a)
Segment profit
Other net interest expense (b)
Adjustment related to receivables
held for sale (c)
Earnings before income taxes
Provision for income taxes (d)
Net earnings
Diluted earnings per share (e)
2011
Segment profit
Other net interest expense (b)
Earnings before income taxes
Provision for income taxes (d)
Net earnings
Diluted earnings per share (e)
2010
Segment profit
Other net interest expense (b)
Earnings before income taxes
Provision for income taxes (d)
Net earnings
$5,019
$557
$5,576
672
$ (369) $ —
—
78
$4,765
$606
$4,629
$541
—
4,904
1,744
— (152)
(447)
(132)
152
(3) (f)
$3,160
$ (315) $ 155
$ 4.76
$(0.48) $0.23
$ 5,371
663
4,708
1,690
$ (122) $ —
44
(166)
(47)
87 (g)
(87)
(117)
(f)
$ 3,018
$ (119) $ 30
$ 4.41
$ (0.17) $ 0.04
$ 5,169
674
4,495
1,677
$ — $ —
—
—
—
—
—
(102)
(f)
$ 2,818
$ — $ 102
$5,206
749
(152)
4,609
1,610
$2,999
$ 4.52
$5,250
794
4,456
1,527
$2,929
$ 4.28
$5,169
674
4,495
1,575
$2,920
Diluted earnings per share (e)
Note: A non-GAAP financial measures summary is provided on page 14. The sum of the non-GAAP adjustments may not equal the total
adjustment amounts due to rounding.
(a) Consisted of 53 weeks.
(b) Represents interest expense, net of interest income, not included in U.S. Credit Card Segment profit. For 2012, 2011 and 2010, U.S. Credit
Card Segment profit included $13 million, $72 million and $83 million of interest expense on nonrecourse debt collateralized by credit card
receivables, respectively. These amounts, along with other net interest expense, equal consolidated GAAP net interest expense.
(c) Represents the gain on receivables held for sale recorded in our Consolidated Statements of Operations, plus the difference between U.S.
$ — $ 0.14
$ 4.00
$ 3.86
Credit Card Segment bad debt expense and net write-offs for the fourth quarter of 2012.
(d) Taxes are allocated to our business segments based on income tax rates applicable to the operations of the segment for the period.
(e) For 2012, 2011 and 2010, average diluted shares outstanding were 663.3 million, 683.9 million and 729.4 million, respectively.
(f) Represents the effect of resolution of income tax matters. The 2012 results also include a $55 million tax expense for the adjustment
related to receivables held for sale, while the 2011 results include a $32 million tax benefit related to the loss on early retirement of debt.
(g) Represents the loss on early retirement of debt.
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Analysis of Financial Condition
Liquidity and Capital Resources
Our period-end cash and cash equivalents balance was $784 million compared with $794 million in 2011.
Short-term investments (highly liquid investments with an original maturity of three months or less from the time of
purchase) of $130 million and $194 million were included in cash and cash equivalents at the end of 2012 and 2011,
respectively. Our investment policy is designed to preserve principal and liquidity of our short-term investments.
This policy allows investments in large money market funds or in highly rated direct short-term instruments that
mature in 60 days or less. We also place certain dollar limits on our investments in individual funds or instruments.
Cash Flows
Our 2012 operations were funded by both internally and externally generated funds. Cash flow provided by
operations was $5,325 million in 2012 compared with $5,434 million in 2011. During 2012, we issued $1.5 billion of
unsecured debt that matures in July 2042, and we amended the 2006/2007 Series Variable Funding Certificate to
obtain additional funding of $500 million and to extend the maturity to 2013. These cash flows, combined with our
prior year-end cash position, allowed us to fund capital expenditures, pay current maturities, pay dividends and
continue purchases under our share repurchase program.
Our 2012 period-end credit card receivables, at par, were $6,024 million compared with $6,357 million in 2011, a
decrease of 5.2 percent. Average credit card receivables, at par, in 2012 decreased 5.1 percent compared with
2011 levels. This change was driven by the factors indicated in the U.S. Credit Card Segment above. As of
February 2, 2013, $1,500 million of our credit card receivables portfolio was funded by third parties.
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On October 22, 2012, we reached an agreement to sell our entire consumer credit card portfolio to TD Bank Group
(TD). On March 13, 2013, we completed the sale to TD for cash consideration of $5.7 billion, equal to the gross (par)
value of the outstanding receivables at the time of closing. Concurrent with the sale of the portfolio, 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. As of March 20, 2013, we also have open tender offers to
use up to an aggregate of $1.2 billion of cash proceeds from the sale to repurchase outstanding debt. Over time, we
expect to apply the remaining proceeds from the sale in a manner that will preserve our strong investment-grade
credit ratings by further reducing our debt position and continuing our current share repurchase program.
Year-end inventory levels decreased slightly from $7,918 million in 2011 to $7,903 million in 2012, primarily due to
supply chain management improvements and continued disciplined inventory management, partially offset by an
increase in inventory for our 2013 Canadian retail market entry. Accounts payable increased by $199 million, or
2.9 percent over the same period.
Share Repurchases
During the first quarter of 2012, we completed a $10 billion share repurchase program authorized by our Board of
Directors in November 2007, and began repurchasing shares under a new $5 billion program authorized by our
Board of Directors in January 2012. During 2012, we repurchased 32.2 million shares of our common stock for a
total investment of $1,900 million ($58.96 per share). During 2011, we repurchased 37.2 million shares of our
common stock for a total investment of $1,894 million ($50.89 per share).
Dividends
We paid dividends totaling $869 million in 2012 and $750 million in 2011, for an increase of 15.9 percent. We
declared dividends totaling $903 million ($1.38 per share) in 2012, for an increase of 16.2 percent over 2011. We
declared dividends totaling $777 million ($1.15 per share) in 2011, an increase of 17.8 percent over 2010. We have
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paid dividends every quarter since our 1967 initial public offering, and it is our intent to continue to do so in the
future.
Short-term and Long-term Financing
Our financing strategy is to ensure liquidity and access to capital markets, to manage our net exposure to floating
interest rate volatility, and to maintain a balanced spectrum of debt maturities. Within these parameters, we seek to
minimize our borrowing costs. Our ability to access the long-term debt, commercial paper and securitized debt
markets has provided us with ample sources of liquidity. Our continued access to these markets depends on
multiple factors, including the condition of debt capital markets, our operating performance and maintaining strong
debt ratings. As of February 2, 2013, our credit ratings were as follows:
Credit Ratings
Long-term debt
Commercial paper
Moody’s
A2
P-1
Standard and
Poor’s
A+
A-1
Fitch
A(cid:4)
F2
If our credit ratings were lowered, our ability to access the debt markets, our cost of funds and other terms for new
debt issuances could be adversely impacted. Each of the credit rating agencies reviews its rating periodically and
there is no guarantee our current credit rating will remain the same as described above.
As a measure of our financial condition, we monitor our interest coverage ratio, representing the ratio of pretax
earnings before fixed charges to fixed charges. Fixed charges include interest expense and the interest portion of
rent expense. Our interest coverage ratio was 6.1x in 2012, 5.9x in 2011 and 6.1x in 2010.
In 2012, we funded our peak sales season working capital needs through internally generated funds. In 2011, we
funded our peak sales season working capital needs through our commercial paper program and used the cash
generated from that sales season to repay the commercial paper issued.
Commercial Paper
(dollars in millions)
Maximum daily amount outstanding during the year
Average amount outstanding during the year
Amount outstanding at year-end
Weighted average interest rate
2012
$ 970
120
970
0.16%
2011
$ 1,211
244
—
0.11%
2010
$—
—
—
—%
We have additional liquidity through a committed $2.25 billion revolving credit facility obtained in October 2011 and
expiring in October 2017. No balances were outstanding at any time during 2012 or 2011 under this facility.
Most of our long-term debt obligations contain covenants related to secured debt levels. Our credit facility also
contains a debt leverage covenant. We are, and expect to remain, in compliance with these covenants, and these
covenants have no practical effect on our ability to pay dividends. Additionally, at February 2, 2013, no notes or
debentures contained provisions requiring acceleration of payment upon a debt rating downgrade, except that
certain outstanding notes allow the note holders to put the notes to us if within a matter of months of each other we
experience both (i) a change in control; and (ii) our long-term debt ratings are either reduced and the resulting
rating is non-investment grade, or our long-term debt ratings are placed on watch for possible reduction and those
ratings are subsequently reduced and the resulting rating is non-investment grade.
We believe our sources of liquidity will continue to be adequate to maintain operations, finance anticipated
expansion and strategic initiatives, pay dividends and continue purchases under our share repurchase program for
the foreseeable future. We continue to anticipate ample access to commercial paper and long-term financing.
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Capital Expenditures
Capital Expenditures (a)
(millions)
New stores
Store remodels and
expansions
Information technology,
distribution and other
2012
2011
U.S.
Canada
Total
U.S.
Canada
$ 673
$417
$1,090
$ 439
$1,619
Total
$2,058
2010
$ 574
690
—
690
1,289
—
1,289
966
Total
(a) See Note 29 to our Consolidated Financial Statements for capital expenditures by segment.
982
$2,345
515
$932
1,497
$3,277
748
$2,476
273
$1,892
1,021
$4,368
589
$2,129
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The decrease in capital expenditures in 2012 from the prior year was primarily driven by the purchase of Zellers
leases in Canada in 2011 and fewer store remodels in the U.S. in 2012, partially offset by continued investment in
new stores in the U.S. and Canada and technology and multichannel investments. We expect approximately
$3.8 billion of capital expenditures in 2013, reflecting an estimated $2.3 billion in our U.S. Segment and
approximately $1.5 billion in our Canadian Segment.
Commitments and Contingencies
Contractual Obligations
as of February 2, 2013
(millions)
Recorded contractual obligations:
Long-term debt (a)
Unsecured
Nonrecourse
Capital lease obligations (b)
Real estate liabilities (c)
Deferred compensation (d)
Tax contingencies (e)
Unrecorded contractual obligations:
Interest payments – long-term debt
Unsecured
Nonrecourse
Operating leases (b)
Real estate obligations (f)
Purchase obligations (g)
Future contributions to retirement
plans (h)
Contractual obligations
Payments Due by Period
Total
Less than
1 Year
1-3
Years
3-5
Years
After 5
Years
$13,179
1,500
4,997
316
505
—
10,805
7
4,029
812
1,472
—
$37,622
$ 501
1,500
136
316
41
—
666
7
179
620
685
—
$4,651
$1,028
—
323
—
88
—
1,309
—
343
192
646
—
$3,929
$3,002
—
294
—
99
—
1,213
—
312
—
40
—
$4,960
$ 8,648
—
4,244
—
277
—
7,617
—
3,195
—
101
—
$24,082
(a) Represents principal payments only, and excludes any fair market value adjustments recorded in long-term debt under derivative and
hedge accounting rules. See Note 20 of the Notes to Consolidated Financial Statements for further information.
(b) Total contractual lease payments include $3,323 million and $2,039 million of capital and operating lease payments, respectively, related to
options to extend the lease term that are reasonably assured of being exercised. These payments also include $947 million and $181 million
of legally binding minimum lease payments for stores that are expected to open in 2013 or later for capital and operating leases,
respectively. Capital lease obligations include interest. See Note 22 of the Notes to Consolidated Financial Statements for further
information.
(c) Real estate liabilities include costs incurred but not paid related to the construction or remodeling of real estate and facilities.
(d) Deferred compensation obligations include commitments related to our nonqualified deferred compensation plans. The timing of deferred
compensation payouts is estimated based on payments currently made to former employees and retirees, forecasted investment returns,
and the projected timing of future retirements.
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(e) Estimated tax contingencies of $280 million, including interest and penalties, are not included in the table above because we are not able to
make reasonably reliable estimates of the period of cash settlement. See Note 23 of the Notes to Consolidated Financial Statements for
further information.
(f) Real estate obligations include commitments for the purchase, construction or remodeling of real estate and facilities.
(g) Purchase obligations include all legally binding contracts such as firm minimum commitments for inventory purchases, merchandise
royalties, equipment purchases, marketing-related contracts, software acquisition/license commitments and service contracts. We issue
inventory purchase orders in the normal course of business, which represent authorizations to purchase that are cancelable by their terms.
We do not consider purchase orders to be firm inventory commitments; therefore, they are excluded from the table above. If we choose to
cancel a purchase order, we may be obligated to reimburse the vendor for unrecoverable outlays incurred prior to cancellation. We also
issue trade letters of credit in the ordinary course of business, which are excluded from this table as these obligations are conditioned on
terms of the letter of credit being met.
(h) We have not included obligations under our pension and postretirement health care benefit plans in the contractual obligations table above
because no additional amounts are required to be funded as of February 2, 2013. Our historical practice regarding these plans has been to
contribute amounts necessary to satisfy minimum pension funding requirements, plus periodic discretionary amounts determined to be
appropriate.
Off Balance Sheet Arrangements: Other than the unrecorded contractual obligations above, we do not have any
arrangements or relationships with entities that are not consolidated into the financial statements.
Critical Accounting Estimates
Our analysis of operations and financial condition is based on our consolidated financial statements prepared in
accordance with U.S. generally accepted accounting principles (GAAP). Preparation of these consolidated
financial statements requires us to make estimates and assumptions affecting the reported amounts of assets and
liabilities at the date of the consolidated financial statements, reported amounts of revenues and expenses during
the reporting period and related disclosures of contingent assets and liabilities. In the Notes to Consolidated
Financial Statements, we describe the significant accounting policies used in preparing the consolidated financial
statements. Our estimates are evaluated on an ongoing basis and are drawn from historical experience and other
assumptions that we believe to be reasonable under the circumstances. Actual results could differ under other
assumptions or conditions. However, we do not believe there is a reasonable likelihood that there will be a material
change in future estimates or assumptions. Our senior management has discussed the development and selection
of our critical accounting estimates with the Audit Committee of our Board of Directors. The following items in our
consolidated financial statements require significant estimation or judgment:
Inventory and cost of sales: We use the retail inventory method to account for the majority of our inventory and the
related cost of sales. Under this method, inventory is stated at cost using the last-in, first-out (LIFO) method as
determined by applying a cost-to-retail ratio to each merchandise grouping’s ending retail value. The cost of our
inventory includes the amount we pay to our suppliers to acquire inventory, freight costs incurred in connection with
the delivery of product to our distribution centers and stores, and import costs, reduced by vendor income and cash
discounts. The majority of our distribution center operating costs, including compensation and benefits, are
expensed in the period incurred. Since inventory value is adjusted regularly to reflect market conditions, our
inventory methodology reflects the lower of cost or market. We reduce inventory for estimated losses related to
shrink and markdowns. Our shrink estimate is based on historical losses verified by ongoing physical inventory
counts. Historically, our actual physical inventory count results have shown our estimates to be reliable. Markdowns
designated for clearance activity are recorded when the salability of the merchandise has diminished. Inventory is
at risk of obsolescence if economic conditions change, including changing consumer demand, guest preferences,
changing consumer credit markets or increasing competition. We believe these risks are largely mitigated because
our inventory typically turns in less than three months. Inventory was $7,903 million and $7,918 million at
February 2, 2013 and January 28, 2012, respectively, and is further described in Note 12 of the Notes to
Consolidated Financial Statements.
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Vendor income receivable: Cost of sales and SG&A expenses are partially offset by various forms of consideration
received from our vendors. This ‘‘vendor income’’ is earned for a variety of vendor-sponsored programs, such as
volume rebates, markdown allowances, promotions and advertising allowances, as well as for our compliance
programs. We establish a receivable for the vendor income that is earned but not yet received. Based on the
agreements in place, this receivable is computed by estimating when we have completed our performance and
when the amount is earned. The majority of all year-end vendor income receivables are collected within the
following fiscal quarter, and we do not believe there is a reasonable likelihood that the assumptions used in our
estimate will change significantly. Historically, adjustments to our vendor income receivable have not been material.
Vendor income receivable was $621 million and $592 million at February 2, 2013 and January 28, 2012,
respectively, and is described further in Note 4 of the Notes to Consolidated Financial Statements.
Credit card receivables accounting: Historically, our credit card receivables were recorded at par value less an
allowance for doubtful accounts. When receivables were recorded, we recognized an allowance for doubtful
accounts in an amount equal to anticipated future write-offs. The allowance included provisions for uncollectible
finance charges and other credit-related fees. We estimated future write-offs based on historical experience of
delinquencies, risk scores, aging trends and industry risk trends. Accounts were automatically written off when they
became 180 days past due. Management believes the allowance for doubtful accounts was appropriate to cover
anticipated losses in our credit card accounts receivable; however, unexpected, significant deterioration in any of
the factors mentioned above or in general economic conditions could have materially changed these expectations.
As of February 2, 2013, our consumer credit card receivables are recorded at the lower of cost (par) or fair value
because they are classified as held for sale as a result of the credit card receivables transaction. Lower of cost (par)
or fair value is determined on a segmented basis using the delinquency and credit-quality segmentation we have
historically used to determine the allowance for doubtful accounts. Many nondelinquent balances are recorded at
cost (par) because fair value exceeds cost. Delinquent balances are generally recorded at fair value, which reflects
our expectation of losses on these receivables. Refer to Note 11 of the Notes to Consolidated Financial Statements
for more information on our credit card receivables.
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Long-lived assets: Long-lived assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amounts may not be recoverable. The evaluation is performed at the lowest level of
identifiable cash flows independent of other assets. An impairment loss would be recognized when estimated
undiscounted future cash flows from the operation and/or disposition of the assets are less than their carrying
amount. Measurement of an impairment loss would be based on the excess of the carrying amount of the asset
group over its fair value. Fair value is measured using discounted cash flows or independent opinions of value, as
appropriate. A 10 percent decrease in the fair value of assets we intend to sell or close as of February 2, 2013 would
result in additional impairment of $4 million in 2012. Historically, we have not realized material losses upon sale of
long-lived assets.
Insurance/self-insurance: We retain a substantial portion of the risk related to certain general liability, workers’
compensation, property loss and team member medical and dental claims. However, we maintain stop-loss
coverage to limit the exposure related to certain risks. Liabilities associated with these losses include estimates of
both claims filed and losses incurred but not yet reported. We use actuarial methods which consider a number of
factors to estimate our ultimate cost of losses. General liability and workers’ compensation liabilities are recorded at
our estimate of their net present value; other liabilities referred to above are not discounted. Our workers’
compensation and general liability accrual was $627 million and $646 million at February 2, 2013 and January 28,
2012, respectively. We believe that the amounts accrued are appropriate; however, our liabilities could be
significantly affected if future occurrences or loss developments differ from our assumptions. For example, a
5 percent increase or decrease in average claim costs would impact our self-insurance expense by $31 million in
2012. Historically, adjustments to our estimates have not been material. Refer to Item 7A for further disclosure of the
market risks associated with these exposures.
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Income taxes: We pay income taxes based on the tax statutes, regulations and case law of the various
jurisdictions in which we operate. Significant judgment is required in determining the timing and amounts of
deductible and taxable items, and in evaluating the ultimate resolution of tax matters in dispute with tax authorities.
The benefits of uncertain tax positions are recorded in our financial statements only after determining it is likely the
uncertain tax positions would withstand challenge by taxing authorities. We periodically reassess these
probabilities, and record any changes in the financial statements as deemed appropriate. Liabilities for uncertain
tax positions, including interest and penalties, were $280 million and $318 million at February 2, 2013 and
January 28, 2012, respectively. We believe the resolution of these matters will not have a material adverse impact on
our consolidated financial statements. Income taxes are described further in Note 23 of the Notes to Consolidated
Financial Statements.
Pension and postretirement health care accounting: We maintain a funded qualified defined benefit pension plan,
as well as several smaller and unfunded nonqualified plans and a postretirement health care plan for certain current
and retired team members. The costs for these plans are determined based on actuarial calculations using the
assumptions described in the following paragraphs. Eligibility and the level of benefits varies depending on team
members’ full-time or part-time status, date of hire and/or length of service. The benefit obligation and related
expense for these plans are determined based on actuarial calculations using assumptions about the expected
long-term rate of return, the discount rate and compensation growth rates. The assumptions used to determine the
period-end benefit obligation also establish the expense for the next year, with adjustments made for any significant
plan or participant changes.
Our expected long-term rate of return on plan assets of 8.0 percent is determined by the portfolio composition,
historical long-term investment performance and current market conditions. Our compound annual rate of return on
qualified plans’ assets was 5.7 percent, 10.0 percent, 7.8 percent and 9.5 percent for the 5-year, 10-year, 15-year
and 20-year periods, respectively. A one percentage point decrease in our expected long-term rate of return would
increase annual expense by $27 million.
The discount rate used to determine benefit obligations is adjusted annually based on the interest rate for long-term
high-quality corporate bonds, using yields for maturities that are in line with the duration of our pension liabilities.
Our benefit obligation and related expense will fluctuate with changes in interest rates. A 0.5 percentage point
decrease to the weighted average discount rate would increase annual expense by $28 million.
Based on our experience, we use a graduated compensation growth schedule that assumes higher compensation
growth for younger, shorter-service pension-eligible team members than it does for older, longer-service pension-
eligible team members.
Pension and postretirement health care benefits are further described in Note 28 of the Notes to Consolidated
Financial Statements.
Legal contingencies: We are exposed to claims and litigation arising in the ordinary course of business and use
various methods to resolve these matters in a manner that we believe serves the best interest of our shareholders
and other constituents. Historically, adjustments to our estimates have not been material. We believe the recorded
reserves in our consolidated financial statements are adequate in light of the probable and estimable liabilities. We
do not believe that any of the currently identified claims or litigation matters will have a material adverse impact on
our results of operations, cash flows or financial condition. However, litigation is subject to inherent uncertainties,
and unfavorable rulings could occur. If an unfavorable ruling were to occur, there may be a material adverse impact
on the results of operations, cash flows or financial condition for the period in which the ruling occurs, or future
periods.
New Accounting Pronouncements
We do not expect that any recently issued accounting pronouncements will have a material effect on our financial
statements.
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Forward-Looking Statements
This report contains forward-looking statements, which are based on our current assumptions and expectations.
These statements are typically accompanied by the words ‘‘expect,’’ ‘‘may,’’ ‘‘could,’’ ‘‘believe,’’ ‘‘would,’’ ‘‘might,’’
‘‘anticipates,’’ or words of similar import. The principal forward-looking statements in this report include: For our
U.S. Credit Card Segment, aggregate portfolio risks; for our Canadian Segment, the timing and amount of future
capital investments in Canada and our subsequent financial performance; on a consolidated basis, statements
regarding the adequacy of and costs associated with our sources of liquidity, the fair value of our consumer credit
card receivables, the pending sale of these receivables and related gain, including beneficial interest, the
application of proceeds from the sale and the impact on our future results of operations, earnings and rates, the
continued execution of our share repurchase program, our expected capital expenditures, the expected effective
income tax rate, the expected compliance with debt covenants, the expected impact of new accounting
pronouncements, our intentions regarding future dividends, contributions and payments related to our pension
and postretirement health care plans, the expected returns on pension plan assets, the impact of future changes in
foreign currency exchange rates, the expected changes in gross margin and SG&A rates, the effects of
macroeconomic conditions, the adequacy of our reserves for general liability, workers’ compensation and property
loss, the expected outcome of claims and litigation, the expected ability to recognize deferred tax assets and
liabilities, including foreign net operating loss carryforwards, and the resolution of tax matters.
All such forward-looking statements are intended to enjoy the protection of the safe harbor for forward-looking
statements contained in the Private Securities Litigation Reform Act of 1995, as amended. Although we believe
there is a reasonable basis for the forward-looking statements, our actual results could be materially different. The
most important factors which could cause our actual results to differ from our forward-looking statements are set
forth on our description of risk factors in Item 1A to this Form 10-K, which should be read in conjunction with the
forward-looking statements in this report. Forward-looking statements speak only as of the date they are made, and
we do not undertake any obligation to update any forward-looking statement.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
At February 2, 2013, our exposure to market risk was primarily from interest rate changes on our debt obligations,
some of which are at a LIBOR-plus floating-rate, and on our credit card receivables, the majority of which are
assessed finance charges at a Prime-based floating-rate. Historically, to manage our net interest margin, we
generally maintained levels of floating-rate debt to generate similar changes in net interest expense as finance
charge revenues fluctuated. The degree of floating asset and liability matching varied over time and in different
interest rate environments. At February 2, 2013, the amount of floating-rate credit card assets exceeded the amount
of net floating-rate debt obligations by approximately $1 billion. See further description of our debt and derivative
instruments in Notes 20 and 21 of the Notes to Consolidated Financial Statements. As a result of the sale of our
consumer credit card portfolio, funding risk was transferred to TD Bank Group. Following the sale, our interest rate
exposure will primarily be due to the extent by which our floating rate debt obligations differ from our floating rate
short term investments. In general, we expect our floating rate debt to exceed our floating rate short term
investments over time but that may vary in different interest rate environments.
We record our general liability and workers’ compensation liabilities at net present value; therefore, these liabilities
fluctuate with changes in interest rates. Periodically, in certain interest rate environments, we economically hedge a
portion of our exposure to these interest rate changes by entering into interest rate forward contracts that partially
mitigate the effects of interest rate changes. Based on our balance sheet position at February 2, 2013, the
annualized effect of a 0.5 percentage point decrease in interest rates would be to decrease earnings before income
taxes by $9 million.
In addition, we are exposed to market return fluctuations on our qualified defined benefit pension plans. A
0.5 percentage point decrease to the weighted average discount rate would increase annual expense by
$28 million. The value of our pension liabilities is inversely related to changes in interest rates. To protect against
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declines in interest rates, we hold high-quality, long-duration bonds and interest rate swaps in our pension plan
trust. At year-end, we had hedged 36 percent of the interest rate exposure of our funded status.
As more fully described in Note 15 and Note 27 of the Notes to Consolidated Financial Statements, we are exposed
to market returns on accumulated team member balances in our nonqualified, unfunded deferred compensation
plans. We control the risk of offering the nonqualified plans by making investments in life insurance contracts and
prepaid forward contracts on our own common stock that offset a substantial portion of our economic exposure to
the returns on these plans. The annualized effect of a one percentage point change in market returns on our
nonqualified defined contribution plans (inclusive of the effect of the investment vehicles used to manage our
economic exposure) would not be significant.
We are exposed to market risk associated with foreign currency exchange rate fluctuations. We will be further
exposed to this risk as we commence Canadian operations during 2013. During 2012 and 2011, gains and losses
due to fluctuations in exchange rates were not significant as all stores were located in the United States, and the
vast majority of imported merchandise was purchased in U.S. dollars.
There have been no other material changes in our primary risk exposures or management of market risks since the
prior year.
30
Item 8. Financial Statements and Supplementary Data
Report of Management on the Consolidated Financial Statements
Management is responsible for the consistency, integrity and presentation of the information in the Annual Report. The
consolidated financial statements and other information presented in this Annual Report have been prepared in accordance with
accounting principles generally accepted in the United States and include necessary judgments and estimates by management.
To fulfill our responsibility, we maintain comprehensive systems of internal control designed to provide reasonable assurance
that assets are safeguarded and transactions are executed in accordance with established procedures. The concept of
reasonable assurance is based upon recognition that the cost of the controls should not exceed the benefit derived. We believe
our systems of internal control provide this reasonable assurance.
The Board of Directors exercised its oversight role with respect to the Corporation’s systems of internal control primarily through
its Audit Committee, which is comprised of independent directors. The Committee oversees the Corporation’s systems of
internal control, accounting practices, financial reporting and audits to assess whether their quality, integrity and objectivity are
sufficient to protect shareholders’ investments.
In addition, our consolidated financial statements have been audited by Ernst & Young LLP, independent registered public
accounting firm, whose report also appears on this page.
4MAR200909320639
Gregg W. Steinhafel
Chief Executive Officer and President
March 20, 2013
11MAR201319003653
John J. Mulligan
Executive Vice President and
Chief Financial Officer
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements
The Board of Directors and Shareholders
Target Corporation
We have audited the accompanying consolidated statements of financial position of Target Corporation and subsidiaries (the
Corporation) as of February 2, 2013 and January 28, 2012, and the related consolidated statements of operations,
comprehensive income, cash flows, and shareholders’ investment for each of the three years in the period ended February 2,
2013. Our audits also included the financial statement schedule listed in Item 15(a). These financial statements and schedule are
the responsibility of the Corporation’s management. Our responsibility is to express an opinion on these financial statements
and schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial
position of Target Corporation and subsidiaries at February 2, 2013 and January 28, 2012, and the consolidated results of their
operations and their cash flows for each of the three years in the period ended February 2, 2013, in conformity with U.S. generally
accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the
basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the
Corporation’s internal control over financial reporting as of February 2, 2013, based on criteria established in Internal Control—
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated
March 20, 2013, expressed an unqualified opinion thereon.
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Minneapolis, Minnesota
March 20, 2013
31
Report of Management on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term
is defined in Exchange Act Rules 13a-15(f). Under the supervision and with the participation of our management, including our
chief executive officer and chief financial officer, we assessed the effectiveness of our internal control over financial reporting as
of February 2, 2013, based on the framework in Internal Control—Integrated Framework, issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on our assessment, we conclude that the Corporation’s internal control over
financial reporting is effective based on those criteria.
Our internal control over financial reporting as of February 2, 2013, has been audited by Ernst & Young LLP, the independent
registered public accounting firm who has also audited our consolidated financial statements, as stated in their report which
appears on this page.
4MAR200909320639
Gregg W. Steinhafel
Chief Executive Officer and President
March 20, 2013
11MAR201319003653
John J. Mulligan
Executive Vice President and
Chief Financial Officer
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting
The Board of Directors and Shareholders
Target Corporation
We have audited Target Corporation and subsidiaries’ (the Corporation) internal control over financial reporting as of February 2,
2013, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (the COSO criteria). The Corporation’s management is responsible for maintaining
effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial
reporting included in the accompanying Report of Management on Internal Control over Financial Reporting. Our responsibility
is to express an opinion on the Corporation’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal
control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company, (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company, and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the Corporation maintained, in all material respects, effective internal control over financial reporting as of
February 2, 2013, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the
consolidated statements of financial position of Target Corporation and subsidiaries as of February 2, 2013 and January 28,
2012, and the related consolidated statements of operations, comprehensive income, cash flows and shareholders’ investment
for each of the three years in the period ended February 2, 2013, and our report dated March 20, 2013, expressed an unqualified
opinion thereon.
Minneapolis, Minnesota
March 20, 2013
32
Consolidated Statements of Operations
(millions, except per share data)
Sales
Credit card revenues
Total revenues
Cost of sales
Selling, general and administrative expenses
Credit card expenses
Depreciation and amortization
Gain on receivables held for sale
Earnings before interest expense and income taxes
Net interest expense
Earnings before income taxes
Provision for income taxes
Net earnings
Basic earnings per share
Diluted earnings per share
Weighted average common shares outstanding
Basic
Diluted
See accompanying Notes to Consolidated Financial Statements.
2012
2011
2010
$71,960
1,341
73,301
50,568
14,914
467
2,142
(161)
5,371
762
4,609
1,610
$ 2,999
$ 4.57
$ 4.52
$68,466
1,399
69,865
47,860
14,106
446
2,131
—
5,322
866
4,456
1,527
$ 2,929
4.31
$
4.28
$
$65,786
1,604
67,390
45,725
13,469
860
2,084
—
5,252
757
4,495
1,575
$ 2,920
$ 4.03
$ 4.00
656.7
663.3
679.1
683.9
723.6
729.4
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Consolidated Statements of Comprehensive Income
(millions) (unaudited)
Net earnings
Other comprehensive income/(loss), net of tax
Pension and other benefit liabilities, net of provision/(benefit) for taxes of $58, $(56)
and $(3)
Currency translation adjustment and cash flow hedges, net of provision/(benefit) for
taxes of $8, $(11) and $3
Other comprehensive income/(loss)
Comprehensive income
See accompanying Notes to Consolidated Financial Statements.
2012
2011
2010
$ 2,999
$ 2,929
$ 2,920
92
(83)
(4)
13
105
$ 3,104
(17)
(100)
$ 2,829
4
—
$ 2,920
34
Consolidated Statements of Financial Position
(millions, except footnotes)
Assets
Cash and cash equivalents, including short-term investments of $130 and $194
Credit card receivables, held for sale
Credit card receivables, net of allowance of $0 and $430
Inventory
Other current assets
Total current assets
Property and equipment
Land
Buildings and improvements
Fixtures and equipment
Computer hardware and software
Construction-in-progress
Accumulated depreciation
Property and equipment, net
Other noncurrent assets
Total assets
Liabilities and shareholders’ investment
Accounts payable
Accrued and other current liabilities
Unsecured debt and other borrowings
Nonrecourse debt collateralized by credit card receivables
Total current liabilities
Unsecured debt and other borrowings
Nonrecourse debt collateralized by credit card receivables
Deferred income taxes
Other noncurrent liabilities
Total noncurrent liabilities
Shareholders’ investment
Common stock
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Pension and other benefit liabilities
Currency translation adjustment and cash flow hedges
Total shareholders’ investment
Total liabilities and shareholders’ investment
February 2,
2013
January 28,
2012
$
784
5,841
—
7,903
1,860
16,388
6,206
28,653
5,362
2,567
1,176
(13,311)
30,653
1,122
$ 48,163
$ 7,056
3,981
1,494
1,500
14,031
14,654
—
1,311
1,609
17,574
54
3,925
13,155
(532)
(44)
16,558
$ 48,163
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$
794
—
5,927
7,918
1,810
16,449
6,122
26,837
5,141
2,468
963
(12,382)
29,149
1,032
$ 46,630
$ 6,857
3,644
3,036
750
14,287
13,447
250
1,191
1,634
16,522
56
3,487
12,959
(624)
(57)
15,821
$ 46,630
Common Stock Authorized 6,000,000,000 shares, $0.0833 par value; 645,294,423 shares issued and outstanding at February 2, 2013;
669,292,929 shares issued and outstanding at January 28, 2012.
Preferred Stock Authorized 5,000,000 shares, $0.01 par value; no shares were issued or outstanding at February 2, 2013 or January 28, 2012.
See accompanying Notes to Consolidated Financial Statements.
35
Consolidated Statements of Cash Flows
(millions)
Operating activities
Net earnings
Reconciliation to cash flow
Depreciation and amortization
Share-based compensation expense
Deferred income taxes
Bad debt expense (a)
Gain on receivables held for sale
Noncash (gains)/losses and other, net
Changes in operating accounts:
Accounts receivable originated at Target
Inventory
Other current assets
Other noncurrent assets
Accounts payable
Accrued and other current liabilities
Other noncurrent liabilities
Cash flow provided by operations
Investing activities
Expenditures for property and equipment
Proceeds from disposal of property and equipment
Change in accounts receivable originated at third parties
Other investments
Cash flow required for investing activities
Financing activities
Change in commercial paper, net
Additions to short-term debt
Reductions of short-term debt
Additions to long-term debt
Reductions of long-term debt
Dividends paid
Repurchase of stock
Stock option exercises and related tax benefit
Other
Cash flow required for financing activities
Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Supplemental information
Interest paid, net of capitalized interest
Income taxes paid
Noncash financing activities
2012
2011
2010
$ 2,999
$ 2,929
$ 2,920
2,142
105
(14)
206
(161)
14
(217)
15
(123)
(98)
199
138
120
5,325
(3,277)
66
254
102
(2,855)
970
—
(1,500)
1,971
(1,529)
(869)
(1,875)
360
(16)
(2,488)
8
(10)
794
784
$
2,131
90
371
154
—
22
(187)
(322)
(150)
43
232
218
(97)
5,434
(4,368)
37
259
(108)
(4,180)
—
1,500
—
1,994
(3,125)
(750)
(1,842)
89
(6)
(2,140)
(32)
(918)
1,712
794
$
2,084
109
445
528
—
(145)
(78)
(417)
(124)
(212)
115
149
(103)
5,271
(2,129)
69
363
(47)
(1,744)
—
—
—
1,011
(2,259)
(609)
(2,452)
294
—
(4,015)
—
(488)
2,200
$ 1,712
$
775
1,603
$
816
1,109
$
752
1,259
(a)
Property and equipment acquired through capital lease obligations
Includes both bad debt expense on credit card receivables through the end of the third quarter of 2012 and net write-offs of credit card
receivables during the fourth quarter of 2012.
1,388
176
282
See accompanying Notes to Consolidated Financial Statements.
36
Consolidated Statements of Shareholders’ Investment
(millions, except footnotes)
January 30, 2010
Net earnings
Other comprehensive income
Dividends declared
Repurchase of stock
Stock options and awards
January 29, 2011
Net earnings
Other comprehensive income
Dividends declared
Repurchase of stock
Stock options and awards
January 28, 2012
Net earnings
Other comprehensive income
Dividends declared
Repurchase of stock
Stock options and awards
February 2, 2013
Stock
Common Stock Additional
Par
Shares Value
$62
—
—
—
(4)
1
Paid-in Retained
Capital Earnings
$12,947
$2,919
2,920
—
—
—
(659)
—
(2,510)
—
—
392
744.6
—
—
—
(47.8)
7.2
Accumulated Other
Comprehensive
Income/(Loss)
Total
$(581) $15,347
— 2,920
—
—
(659)
—
— (2,514)
393
—
704.0
—
—
—
(37.2)
2.5
669.3
—
—
—
(32.2)
8.2
645.3
$59
—
—
—
(3)
—
$56
—
—
—
(3)
1
$54
$ 3,311
—
—
—
—
176
$ 12,698
2,929
—
(777)
(1,891)
—
$ 12,959
$ 3,487
2,999
—
—
—
(903)
—
— (1,900)
—
438
$3,925
$13,155
$ (581) $ 15,487
— 2,929
(100)
(100)
—
(777)
— (1,894)
176
—
$ (681) $ 15,821
— 2,999
105
105
(903)
—
— (1,903)
439
—
$(576) $16,558
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See accompanying Notes to Consolidated Financial Statements.
37
Notes to Consolidated Financial Statements
1. Summary of Accounting Policies
Organization Target Corporation (Target, the Corporation, or the Company) operates three reportable segments:
U.S. Retail, U.S. Credit Card and Canadian. Our U.S. Retail Segment includes all of our U.S. merchandising
operations. Our U.S. Credit Card Segment offers credit to qualified guests through our branded proprietary credit
cards: the Target Credit Card and the Target Visa (Target Credit Cards). Additionally, we offer a branded proprietary
Target Debit Card. Collectively, we refer to these products as REDcards(cid:2), which strengthen the bond with our
guests, drive incremental sales and contribute to our profitability. Our Canadian Segment was initially reported in
the first quarter of 2011 as a result of our purchase of leasehold interests in Canada from Zellers, Inc. (Zellers). This
segment includes costs incurred in the U.S. and Canada related to our 2013 Canadian retail market entry.
Consolidation The consolidated financial statements include the balances of the Corporation and its subsidiaries
after elimination of intercompany balances and transactions. All material subsidiaries are wholly owned. We
consolidate variable interest entities where it has been determined that the Corporation is the primary beneficiary of
those entities’ operations, including a bankruptcy remote subsidiary through which we sell certain accounts
receivable as a method of providing funding for our accounts receivable.
Use of estimates The preparation of our consolidated financial statements in conformity with U.S. generally
accepted accounting principles (GAAP) requires management to make estimates and assumptions affecting
reported amounts in the consolidated financial statements and accompanying notes. Actual results may differ
significantly from those estimates.
Fiscal year Our fiscal year ends on the Saturday nearest January 31. Unless otherwise stated, references to years
in this report relate to fiscal years, rather than to calendar years. Fiscal 2012 ended February 2, 2013 and consisted
of 53 weeks. Fiscal 2011 ended January 28, 2012, and consisted of 52 weeks. Fiscal 2010 ended January 29, 2011,
and consisted of 52 weeks. Fiscal 2013 will end February 1, 2014, and will consist of 52 weeks.
Accounting policies Our accounting policies are disclosed in the applicable Notes to the Consolidated Financial
Statements.
2. Revenues
Our retail stores generally record revenue at the point of sale. Sales from our online and mobile applications include
shipping revenue and are recorded upon delivery to the guest. Total revenues do not include sales tax because we
are a pass-through conduit for collecting and remitting sales taxes. Generally, guests may return merchandise
within 90 days of purchase. Revenues are recognized net of expected returns, which we estimate using historical
return patterns as a percentage of sales. Commissions earned on sales generated by leased departments are
included within sales and were $25 million, $22 million and $20 million in 2012, 2011 and 2010, respectively.
Revenue from gift card sales is recognized upon gift card redemption. Our gift cards do not have expiration dates.
Based on historical redemption rates, a small and relatively stable percentage of gift cards will never be redeemed,
referred to as ‘‘breakage.’’ Estimated breakage revenue is recognized over time in proportion to actual gift card
redemptions and was not material in any period presented.
Credit card revenues are recognized according to the contractual provisions of each credit card agreement. When
accounts are written off, uncollected finance charges and late fees are recorded as a reduction of credit card
revenues. Target retail sales charged on our credit cards totaled $5,807 million, $4,686 million and $3,455 million in
2012, 2011 and 2010, respectively.
38
Since October 2010, guests receive a 5-percent discount on virtually all purchases at checkout every day when they
use a REDcard. In November 2011, guests also began to receive free shipping at Target.com when they use their
REDcard. The discounts associated with loyalty programs are included as reductions in sales in our Consolidated
Statements of Operations and were $583 million, $340 million and $162 million in 2012, 2011 and 2010,
respectively.
3. Cost of Sales and Selling, General and Administrative Expenses
The following table illustrates the primary costs classified in each major expense category:
Cost of Sales
Total cost of products sold including
(cid:129) Freight expenses associated with moving
merchandise from our vendors to our distribution
centers and our retail stores, and among our
distribution and retail facilities
(cid:129) Vendor income that is not reimbursement of
specific, incremental and identifiable costs
Inventory shrink
Markdowns
Outbound shipping and handling expenses
associated with sales to our guests
Payment term cash discounts
Distribution center costs, including compensation
and benefits costs
Import cost
Selling, General and Administrative Expenses
Compensation and benefit costs including
(cid:129) Stores
(cid:129) Headquarters
Occupancy and operating costs of retail and
headquarters facilities
Advertising, offset by vendor income that is a
reimbursement of specific, incremental and
identifiable costs
Pre-opening costs of stores and other facilities
Other administrative costs
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Note: The classification of these expenses varies across the retail industry.
4. Consideration Received from Vendors
We receive consideration for a variety of vendor-sponsored programs, such as volume rebates, markdown
allowances, promotions and advertising allowances and for our compliance programs, referred to as ‘‘vendor
income.’’ Vendor income reduces either our inventory costs or SG&A expenses based on the provisions of the
arrangement. Promotional and advertising allowances are intended to offset our costs of promoting and selling
merchandise in our stores. Under our compliance programs, vendors are charged for merchandise shipments that
do not meet our requirements (violations), such as late or incomplete shipments. These allowances are recorded
when violations occur. Substantially all consideration received is recorded as a reduction of cost of sales.
We establish a receivable for vendor income that is earned but not yet received. Based on provisions of the
agreements in place, this receivable is computed by estimating the amount earned when we have completed our
performance. We perform detailed analyses to determine the appropriate level of the receivable in the aggregate.
The majority of year-end receivables associated with these activities are collected within the following fiscal quarter.
We have not historically had significant write-offs for these receivables.
39
5. Advertising Costs
Advertising costs, which primarily consist of newspaper circulars, internet advertisements and media broadcast,
are expensed at first showing or distribution of the advertisement, and are recorded net of related vendor income.
Advertising Costs
(millions)
Gross advertising costs
Vendor income
Net advertising costs
6. Earnings per Share
2012
$1,653
231
$1,422
2011
$1,589
229
$1,360
2010
$1,490
198
$1,292
Basic earnings per share (EPS) is calculated as net earnings divided by the weighted average number of common
shares outstanding during the period. Diluted EPS includes the potentially dilutive impact of share-based awards
outstanding at period end, consisting of the incremental shares assumed to be issued upon the exercise of stock
options and the incremental shares assumed to be issued under performance share and restricted stock unit
arrangements.
Earnings Per Share
(millions, except per share data)
Net earnings
Basic weighted average common shares outstanding
Dilutive impact of share-based awards (a)
Dilutive weighted average common shares outstanding
Basic earnings per share
Dilutive earnings per share
2012
$2,999
656.7
6.6
663.3
$ 4.57
$ 4.52
2011
$2,929
679.1
4.8
683.9
$ 4.31
$ 4.28
2010
$2,920
723.6
5.8
729.4
$ 4.03
$ 4.00
(a) Excludes 5.0 million, 15.5 million and 10.9 million share-based awards for 2012, 2011 and 2010, respectively, because their effects were
antidilutive.
7. Credit Card Receivables Transaction
On October 22, 2012, we reached an agreement to sell our entire consumer credit card portfolio to TD Bank Group
(TD) for cash consideration equal to the gross (par) value of the outstanding receivables at the time of closing.
Historically, our credit card receivables were recorded at par value less an allowance for doubtful accounts. With
this agreement, our receivables are classified as held for sale at February 2, 2013, and are recorded at the lower of
cost (par) or fair value. We recorded a gain of $161 million outside of our segments in 2012, representing the net
adjustment to eliminate our allowance for doubtful accounts and record our receivables at lower of cost (par) or fair
value.
On March 13, 2013, we completed the sale to TD for cash consideration of $5.7 billion, equal to the gross (par) value
of the outstanding receivables at the time of closing. Subsequent to year-end, and concurrent with the sale of the
portfolio, 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. As of March 20, 2013, we
also have open tender offers to use up to an aggregate of $1.2 billion of cash proceeds from the sale to repurchase
outstanding debt.
Following this sale, TD will underwrite, fund and own Target Credit Card and Target Visa receivables in the U.S. TD
will control risk management policies and oversee regulatory compliance, and we will perform account servicing
and primary marketing functions. We will earn a substantial portion of the profits generated by the Target Credit
Card and Target Visa portfolios. This transaction will be accounted for as a sale, and the receivables will no longer
be reported on our Consolidated Statements of Financial Position.
40
Beginning with the first quarter of 2013, we will no longer report a U.S. Credit Card Segment. Income from the profit-
sharing arrangement, net of account servicing expenses, will be recognized as an offset to SG&A expenses.
8. Canadian Leasehold Acquisition
During 2011, we purchased the leasehold interests in 189 sites operated by Zellers in Canada, in exchange for
$1,861 million. In addition, we sold our right to acquire the leasehold interests in 54 of these sites to third-parties for
a total of $225 million. These transactions resulted in a final net purchase price of $1,636 million, which was
included in expenditures for property and equipment in the Consolidated Statements of Cash Flows.
As a result of the acquisition, the following net assets were recorded in our Canadian Segment: buildings and
improvements of $2,887 million; finite-lived intangible assets of $23 million; unsecured debt and other borrowings
of $1,274 million. The finite-lived intangible assets are recorded in other noncurrent assets on the Consolidated
Statements of Financial Position and have an amortization period ranging from 3-13 years.
The acquired sites were subleased back to Zellers for various terms, which all end no later than March 31, 2013.
9. Fair Value Measurements
Fair value measurements are categorized into one of three levels based on the lowest level of significant input used:
Level 1 (unadjusted quoted prices in active markets); Level 2 (observable market inputs available at the
measurement date, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be
corroborated by observable market data).
Fair Value Measurements – Recurring Basis
(millions)
Assets
Cash and cash equivalents
Short-term investments
Other current assets
Interest rate swaps (a)
Prepaid forward contracts
Other noncurrent assets
Interest rate swaps (a)
Company-owned life insurance
investments (b)
Total
Liabilities
Other current liabilities
Interest rate swaps (a)
Other noncurrent liabilities
Interest rate swaps (a)
Total
Fair Value at February 2, 2013
Fair Value at January 28, 2012
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
$ 130
$ —
$ —
$ 194
$ —
$ —
—
73
—
4
—
85
—
—
—
—
69
—
20
—
114
—
—
—
—
$ 203
269
$ 358
—
$ —
—
$ 263
371
$ 505
—
$ —
$ —
$ —
$ —
$
$
$
2
54
56
$ —
$ —
$ —
$ —
$ —
$ —
$
$
$
7
69
76
$ —
$ —
$ —
(a) There was one interest rate swap designated as an accounting hedge at February 2, 2013 and January 28, 2012. See Note 21 for
additional information on interest rate swaps.
(b) Company-owned life insurance investments consist of equity index funds and fixed income assets. Amounts are presented net of
nonrecourse loans that are secured by some of these policies. These loan amounts were $817 million at February 2, 2013 and $669 million
at January 28, 2012.
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Position
Short-term
investments
Carrying value approximates fair value because maturities are less than three months.
Valuation Technique
Prepaid forward
contracts
Initially valued at transaction price. Subsequently valued by reference to the market price of
Target common stock.
Interest rate swaps
Company-owned life
insurance
investments
Valuation models are calibrated to initial trade price. Subsequent valuations are based on
observable inputs to the valuation model (e.g., interest rates and credit spreads). Model inputs
are changed only when corroborated by market data. A credit-risk adjustment is made on
each swap using observable market credit spreads.
Includes investments in separate accounts that are valued based on market rates credited by
the insurer.
The following table presents the carrying amounts and estimated fair values of financial instruments not measured
at fair value in the Consolidated Statements of Financial Position. The fair value of marketable securities is
determined using available market prices at the reporting date and would be classified as Level 1. The fair value of
debt is generally measured using a discounted cash flow analysis based on current market interest rates for similar
types of financial instruments and would be classified as Level 2.
Financial Instruments Not Measured at Fair Value
February 2, 2013
(millions)
Financial assets
Other current assets
Marketable securities (a)
Other noncurrent assets
Marketable securities (a)
Total
Financial liabilities
Total debt (b)
Total
Carrying
Amount
January 28, 2012
Fair
Value
Fair Carrying
Amount
Value
$
$
61
$
4
65
$
61
4
65
$
$
35
$
6
41
$
35
6
41
$15,618
$15,618
$18,143
$18,143
$15,680
$15,680
$18,142
$18,142
(a) Represents held-to-maturity investments and cash equivalents that are held to satisfy the regulatory requirements of Target Bank and Target
National Bank.
(b) Represents the sum of nonrecourse debt collateralized by credit card receivables and unsecured debt and other borrowings, excluding
unamortized swap valuation adjustments and capital lease obligations.
As of February 2, 2013, our consumer credit card receivables are recorded at the lower of cost (par) or fair value
because they are classified as held for sale. We estimated the fair value of our consumer credit card portfolio to be
approximately $6.3 billion using a cash flow-based, economic-profit model using Level 3 inputs, including the
forecasted performance of the portfolio and a market-based discount rate. We used internal data to forecast
expected payment patterns and write-offs, revenue, and operating expenses (credit EBIT yield) related to the credit
card portfolio. Changes in macroeconomic conditions in the United States could affect the estimated fair value used
in our lower of cost (par) or fair value assessment, which could cause gains or losses on our receivables held for
sale. A one percentage point change in the forecasted credit EBIT yield would impact our fair value estimate by
approximately $37 million. A one percentage point change in the forecasted discount rate would impact our fair
value estimate by approximately $8 million. Refer to Note 7 for more information on our credit card receivables
transaction. As of January 28, 2012, we estimated that the fair value of our credit card receivables approximated par
value.
The carrying amounts of accounts payable and certain accrued and other current liabilities approximate fair value
due to their short-term nature.
42
10. Cash Equivalents
Cash equivalents include highly liquid investments with an original maturity of three months or less from the time of
purchase. These investments were $130 million and $194 million at February 2, 2013 and January 28, 2012,
respectively. Cash equivalents also include amounts due from third-party financial institutions for credit and debit
card transactions. These receivables typically settle in less than five days and were $371 million and $330 million at
February 2, 2013 and January 28, 2012, respectively. Payables due to Visa resulting from the use of Target Visa
Cards are included within cash equivalents and were $34 million and $35 million at February 2, 2013 and
January 28, 2012, respectively.
11. Credit Card Receivables
Historically, our credit card receivables were recorded at par value less an allowance for doubtful accounts. As of
February 2, 2013, our consumer credit card receivables are recorded at the lower of cost (par) or fair value because
they are classified as held for sale. Lower of cost (par) or fair value was determined on a segmented basis using the
delinquency and credit-quality segmentation we have historically used to determine the allowance for doubtful
accounts. Many nondelinquent balances are recorded at cost (par) because fair value exceeds cost. Delinquent
balances are generally recorded at fair value, which reflects our expectation of losses on these receivables. Refer to
Note 7 for more information on our credit card receivables transaction.
Credit card receivables are our only significant class of financing receivables. Substantially all past-due accounts
accrue finance charges until they are written off. Accounts are written off when they become 180 days past due.
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Age of Credit Card Receivables
(dollars in millions)
Current
1-29 days past due
30-59 days past due
60-89 days past due
90+ days past due
Credit card receivables, at par
Lower of cost or fair value adjustment
Allowance for doubtful accounts
Credit card receivables, net
Allowance for Doubtful Accounts
February 2, 2013
January 28, 2012
Percent of
Amount Receivables
93.1%
3.0
1.2
0.8
1.9
100%
$5,614
179
70
45
116
$6,024
183
—
$5,841
Amount
$5,791
260
97
62
147
$6,357
—
430
$5,927
Percent of
Receivables
91.1%
4.1
1.5
1.0
2.3
100%
Historically, we recognized an allowance for doubtful accounts in an amount equal to the anticipated future
write-offs of existing receivables and uncollectible finance charges and other credit-related fees. We estimated
future write-offs on the entire credit card portfolio collectively based on historical experience of delinquencies, risk
scores, aging trends and industry risk trends. We continue to recognize an allowance for doubtful accounts and
bad debt expense within our U.S. Credit Card Segment, which allows us to evaluate the performance of the
43
portfolio. The allowance for doubtful accounts is eliminated in consolidation to present the receivables at the lower
of cost (par) or fair value.
Allowance for Doubtful Accounts
(millions)
Allowance at beginning of period
Bad debt expense
Write-offs (a)
Recoveries (a)
Segment allowance at end of period
Elimination of segment allowance
Allowance at end of period
$
2012
$ 430
196
(424)
133
335
335
$ — $
2011
690
154
(572)
158
430
—
430
2010
$ 1,016
528
(1,007)
153
690
—
690
$
(a) Write-offs include the principal amount of losses (excluding accrued and unpaid finance charges), and recoveries include current period
principal collections on previously written-off balances. These amounts combined represent net write-offs.
We monitor both the credit quality and the delinquency status of the portfolio. We consider accounts 30 or more
days past due as delinquent, and we update delinquency status daily. We also monitor risk in the portfolio by
assigning internally generated scores to each account and by obtaining current FICO scores, a nationally
recognized credit scoring model, for a statistically representative sample of accounts each month. The credit-
quality segmentation presented below is consistent with the approach used in determining our allowance for
doubtful accounts in our U.S. Credit Card Segment.
Receivables Credit Quality
(dollars in millions)
Nondelinquent accounts
FICO score of 700 or above
FICO score of 600 to 699
FICO score below 600
Total nondelinquent accounts
Delinquent accounts (30+ days past due)
Credit card receivables, at par
Lower of cost or fair value adjustment
Allowance for doubtful accounts
Credit card receivables, net
Funding for Credit Card Receivables
February 2, 2013
January 28, 2012
Percent of
Amount Receivables
Amount
Percent of
Receivables
$2,826
2,387
580
5,793
231
6,024
183
—
$5,841
46.8%
39.6
9.7
96.1
3.9
100%
$2,882
2,463
706
6,051
306
6,357
—
430
$5,927
45.4%
38.7
11.1
95.2
4.8
100%
As a method of providing funding for our credit card receivables, we sell, on an ongoing basis, all of our consumer
credit card receivables to Target Receivables LLC (TR LLC), a wholly owned, bankruptcy remote subsidiary. TR LLC
then transfers the receivables to the Target Credit Card Master Trust (the Trust), which from time to time will sell debt
securities to third parties, either directly or through a related trust. These debt securities represent undivided
interests in the Trust assets. TR LLC uses the proceeds from the sale of debt securities and its share of collections
on the receivables to pay the purchase price of the receivables to the Corporation.
We consolidate the receivables within the Trust and any debt securities issued by the Trust, or a related trust, in our
Consolidated Statements of Financial Position. The receivables transferred to the Trust are not available to general
creditors of the Corporation.
Interests in our credit card receivables issued by the Trust are accounted for as secured borrowings. Interest and
principal payments are satisfied provided the cash flows from the Trust assets are sufficient and are nonrecourse to
the general assets of the Corporation. If the cash flows are less than the periodic interest, the available amount, if
any, is paid with respect to interest. Interest shortfalls will be paid to the extent subsequent cash flows from the
44
assets in the Trust are sufficient. Future principal payments will be made from the third party’s pro rata share of cash
flows from the Trust assets.
In March 2012, we amended the 2006/2007 Series Variable Funding Certificate to obtain additional funding of
$500 million and to extend the maturity to 2013. Parties who hold the Variable Funding Certificate receive interest at
a variable short-term market rate. Outstanding debt related to the 2006/2007 securitized borrowing was
$1,500 million and $1,000 million at February 2, 2013 and January 28, 2012, respectively. Collateral related to these
borrowings was $1,899 million and $1,266 million at February 2, 2013 and January 28, 2012, respectively. We
repaid this borrowing at par and terminated the Master Trust concurrent with the closing of the credit card
receivables transaction described in Note 7.
12. Inventory
The majority of our inventory is accounted for under the retail inventory accounting method (RIM) using the last-in,
first-out (LIFO) method. Inventory is stated at the lower of LIFO cost or market. The cost of our inventory includes the
amount we pay to our suppliers to acquire inventory, freight costs incurred in connection with the delivery of
product to our distribution centers and stores, and import costs, reduced by vendor income and cash discounts.
The majority of our distribution center operating costs, including compensation and benefits, are expensed in the
period incurred. Inventory is also reduced for estimated losses related to shrink and markdowns. The LIFO
provision is calculated based on inventory levels, markup rates and internally measured retail price indices.
Under RIM, inventory cost and the resulting gross margins are calculated by applying a cost-to-retail ratio to the
inventory retail value. RIM is an averaging method that has been widely used in the retail industry due to its
practicality. The use of RIM will result in inventory being valued at the lower of cost or market because permanent
markdowns are currently taken as a reduction of the retail value of inventory.
We routinely enter into arrangements with vendors whereby we do not purchase or pay for merchandise until the
merchandise is ultimately sold to a guest. Activity under this program is included in sales and cost of sales in the
Consolidated Statements of Operations, but the merchandise received under the program is not included in
inventory in our Consolidated Statements of Financial Position because of the virtually simultaneous purchase and
sale of this inventory. Sales made under these arrangements totaled $1,800 million, $1,736 million and
$1,581 million in 2012, 2011 and 2010, respectively.
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13. Other Current Assets
Other Current Assets
(millions)
Vendor income receivable
Other receivables (a)
Prepaid expenses
Deferred taxes
Other
Total
(a)
Includes pharmacy receivables and income taxes receivable.
February 2,
2013
$ 621
395
310
193
341
$1,860
January 28,
2012
$ 592
411
206
275
326
$1,810
14. Property and Equipment
Property and equipment is depreciated using the straight-line method over estimated useful lives or lease terms if
shorter. We amortize leasehold improvements purchased after the beginning of the initial lease term over the
shorter of the assets’ useful lives or a term that includes the original lease term, plus any renewals that are
reasonably assured at the date the leasehold improvements are acquired. Depreciation and amortization expense
for 2012, 2011 and 2010 was $2,120 million, $2,107 million and $2,060 million, respectively. For income tax
45
purposes, accelerated depreciation methods are generally used. Repair and maintenance costs are expensed as
incurred and were $695 million, $666 million and $726 million in 2012, 2011 and 2010, respectively. Facility
pre-opening costs, including supplies and payroll, are expensed as incurred.
Estimated Useful Lives
Buildings and improvements
Fixtures and equipment
Computer hardware and software
Life (Years)
8-39
3-15
4-7
Long-lived assets are reviewed for impairment when events or changes in circumstances indicate that the asset’s
carrying value may not be recoverable. Impairments of $37 million, $43 million and $34 million in 2012, 2011 and
2010, respectively, were recorded as a result of the reviews performed and project scope changes.
15. Other Noncurrent Assets
Other Noncurrent Assets
(millions)
Company-owned life insurance investments (a)
Goodwill and intangible assets
Deferred taxes
Interest rate swaps (b)
Other
Total
(a) Company-owned life insurance policies on approximately 4,000 team members who have been designated highly compensated under
the Internal Revenue Code and have given their consent to be insured. Amounts are presented net of loans that are secured by some of
these policies.
February 2,
2013
$ 269
224
206
85
338
$1,122
January 28,
2012
$ 371
242
56
114
249
$1,032
(b) See Notes 9 and 21 for additional information relating to our interest rate swaps.
16. Goodwill and Intangible Assets
Goodwill totaled $59 million at February 2, 2013 and January 28, 2012. No impairments were recorded in 2012,
2011 or 2010 as a result of the goodwill impairment tests performed.
Intangible Assets
Leasehold
Acquisition Costs
Other (a)
Total
(millions)
Gross asset
Accumulated amortization
Net intangible assets
(a) Other intangible assets relate primarily to acquired customer lists and trademarks.
February 2,
2013
$ 237
(120)
$ 117
February 2,
2013
$ 149
(101)
$ 48
January 28,
2012
$ 243
(119)
$ 124
January 28,
2012
$146
(87)
$ 59
February 2,
2013
$ 386
(221)
$ 165
January 28,
2012
$ 389
(206)
$ 183
We use the straight-line method to amortize leasehold acquisition costs primarily over 9 to 39 years and other
definite-lived intangibles over 3 to 15 years. The weighted average life of leasehold acquisition costs and other
intangible assets was 29 years and 5 years, respectively, at February 2, 2013. Amortization expense was $22 million
in 2012 and $24 million in each of 2011 and 2010.
Estimated Amortization Expense
(millions)
Amortization expense
2013
$24
2014
$21
2015
$20
2016
$19
2017
$14
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17. Accounts Payable
At February 2, 2013 and January 28, 2012, we reclassified book overdrafts of $588 million and $575 million,
respectively, to accounts payable.
18. Accrued and Other Current Liabilities
Accrued and Other Current Liabilities
(millions)
Wages and benefits
Real estate, sales and other taxes payable
Gift card liability (a)
Project costs accrual
Income tax payable
Straight-line rent accrual (b)
Dividends payable
Workers’ compensation and general liability (c)
Interest payable
Other
Total
(a) Gift card liability represents the amount of unredeemed gift cards, net of estimated breakage.
(b) Straight-line rent accrual represents the amount of rent expense recorded that exceeds cash payments remitted in connection with
February 2,
2013
$ 938
624
503
347
272
235
232
160
91
579
$3,981
January 28,
2012
$ 898
547
467
131
257
215
202
164
109
654
$3,644
operating leases.
(c) See footnote (a) to the Other Noncurrent Liabilities table in Note 24 for additional detail.
19. Commitments and Contingencies
Purchase obligations, which include all legally binding contracts such as firm commitments for inventory
purchases, merchandise royalties, equipment purchases, marketing-related contracts, software acquisition/license
commitments and service contracts, were $1,472 million and $1,396 million at February 2, 2013 and January 28,
2012, respectively. These purchase obligations are primarily due within three years. We issue inventory purchase
orders, which represent authorizations to purchase that are cancelable by their terms. We do not consider purchase
orders to be firm inventory commitments. If we choose to cancel a purchase order, we may be obligated to
reimburse the vendor for unrecoverable outlays incurred prior to cancellation.
We issue trade letters of credit in the ordinary course of business. Trade letters of credit totaled $1,539 million and
$1,516 million at February 2, 2013 and January 28, 2012, respectively, a portion of which are reflected in accounts
payable. Standby letters of credit, relating primarily to retained risk on our insurance claims, totaled $76 million and
$66 million at February 2, 2013 and January 28, 2012, respectively.
We are exposed to claims and litigation arising in the ordinary course of business and use various methods to
resolve these matters in a manner that we believe serves the best interest of our shareholders and other
constituents. We believe the recorded reserves in our consolidated financial statements are adequate in light of the
probable and estimable liabilities. We do not believe that any of the currently identified claims or litigation will be
material to our results of operations, cash flows or financial condition.
47
20. Notes Payable and Long-Term Debt
At February 2, 2013, the carrying value and maturities of our debt portfolio were as follows:
Debt Maturities
(dollars in millions)
Due 2013-2017 (b)
Due 2018-2022
Due 2023-2027
Due 2028-2032
Due 2033-2037
Due 2038-2042
Total notes and debentures
Swap valuation adjustments
Capital lease obligations
Less: Amounts due within one year
Long-term debt
(a) Reflects the weighted average stated interest rate as of year-end.
(b)
Includes $1.5 billion of nonrecourse debt collateralized by credit card receivables. See Note 11.
February 2, 2013
Rate (a)
3.6%
4.0
6.7
6.6
6.8
4.0
4.7
Balance
$ 6,031
2,416
171
1,060
3,501
1,469
14,648
78
1,952
(2,024)
$14,654
Required Principal Payments
(millions)
Unsecured
Nonrecourse
Total required principal payments
2013
$ 501
1,500
$2,001
2014
$1,001
—
$1,001
2015
$ 27
—
$ 27
2016
$751
—
$751
2017
$2,251
—
$2,251
On March 13, 2013, we repaid $1.5 billion of outstanding nonrecourse debt as described in Note 7. As of March 20,
2013, we also have open tender offers to use up to an aggregate of $1.2 billion of cash proceeds from the sale of our
receivables portfolio to repurchase outstanding debt with original maturities between 2020 through 2038.
We periodically obtain short-term financing under our commercial paper program, a form of notes payable.
Commercial Paper
(dollars in millions)
Maximum daily amount outstanding during the year
Average amount outstanding during the year
Amount outstanding at year-end
Weighted average interest rate
2012
2011
$ 970
$1,211
120
244
970
—
0.16% 0.11% —%
2010
$—
—
—
In October 2011, we entered into a five-year $2.25 billion revolving credit facility that expires in October 2017. No
balances were outstanding at any time during 2012 or 2011.
In June 2012, we issued $1.5 billion of unsecured fixed rate debt at 4.0% that matures in July 2042. Proceeds from
this issuance were used for general corporate purposes.
48
As described in Note 11, as of February 2, 2013, we maintained an accounts receivable financing program through
which we sold credit card receivables to a bankruptcy remote, wholly owned subsidiary, which in turn transferred
the receivables to a Trust. The Trust, either directly or through related trusts, sold debt securities to third parties.
Nonrecourse Debt Collateralized by Credit Card Receivables
(millions)
Balance at beginning of period
Issued
Accretion
Repaid (a)
Balance at end of period
(a)
2012
2011
$ 1,000
$ 3,954
500
—
—
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— (2,995)
$ 1,000
$ 1,500
Includes repayments of $226 million for the 2008 series of secured borrowings during 2011 due to declines in gross credit card
receivables and payment of $2,769 million in 2011 to repurchase and retire in full this series of secured borrowings.
Other than debt backed by our credit card receivables, substantially all of our outstanding borrowings are senior,
unsecured obligations. Most of our long-term debt obligations contain covenants related to secured debt levels. In
addition to a secured debt level covenant, our credit facility also contains a debt leverage covenant. We are, and
expect to remain, in compliance with these covenants, which have no practical effect on our ability to pay dividends.
In March 2012, we amended the 2006/2007 Series Variable Funding Certificate to obtain additional funding of
$500 million and to extend the maturity to 2013. We repaid this borrowing at par and terminated the Master Trust
concurrent with the closing of the credit card receivables transaction described in Note 7.
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21. Derivative Financial Instruments
Historically our derivative instruments have primarily consisted of interest rate swaps, which are used to mitigate
our interest rate risk. We have counterparty credit risk resulting from our derivative instruments, primarily with large
global financial institutions. We monitor this concentration of counterparty credit risk on an ongoing basis. See
Note 9 for a description of the fair value measurement of our derivative instruments and their classification on the
Consolidated Statements of Financial Position.
As of February 2, 2013 and January 28, 2012, one swap was designated as a fair value hedge for accounting
purposes, and no ineffectiveness was recognized in 2012 or 2011.
Outstanding Interest Rate Swap Summary
February 2, 2013
(dollars in millions)
Weighted average rate:
Pay
Receive
Weighted average maturity
Notional
Designated Swap
Pay Floating
De-designated Swap
Pay Floating
Pay Fixed
three-month LIBOR
1.0%
1.5 years
$350
one-month LIBOR
3.1%
5.3% one-month LIBOR
2.4 years
$750
2.4 years
$750
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Derivative Contracts – Type, Statement of Financial Position Classification and Fair Value
(millions)
Assets
Liabilities
Classification
Feb. 2,
2013
Jan. 28,
2012
Classification
Feb. 2,
2013
Jan. 28,
2012
Designated as hedging instrument:
Interest rate swaps
Other noncurrent
assets
$ 3
$
3
N/A
$ —
$—
Not designated as hedging
instruments:
Interest rate swaps
Interest rate swaps
Other current
assets
Other noncurrent
assets
4
82
20
Other current
liabilities
111 Other noncurrent
liabilities
2
54
7
69
Total
$89
$134
$56
$76
Periodic payments, valuation adjustments and amortization of gains or losses on our derivative contracts had the
following impact on our Consolidated Statements of Operations:
Derivative Contracts – Effect on Results of Operations
(millions)
Type of Contract
Interest rate swaps
Classification of Income/(Expense)
Net interest expense
2012
$44
2011
$41
2010
$51
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 $75 million,
$111 million and $152 million, at the end of 2012, 2011 and 2010, 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)
Property and equipment
Software
Rent income (a)
Total rent expense
(a) Rent income in 2012 and 2011 includes $75 million and $51 million, respectively, related to sites acquired in our Canadian leasehold
2012
$194
33
(85)
$142
2010
$188
25
(13)
$200
2011
$193
33
(61)
$165
acquisition that are being subleased back to Zellers for various terms, which all end no later than March 31, 2013.
50
Total capital lease interest expense was $109 million in 2012 (including $78 million of interest expense on Canadian
capitalized leases), $69 million in 2011 (including $44 million of interest expense on Canadian capitalized leases)
and $16 million in 2010, 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. Certain leases also include options to purchase the leased property. Assets recorded under capital leases
as of February 2, 2013 and January 28, 2012 were $2,038 million and $1,752 million, respectively.
Future Minimum Lease Payments
(millions)
2013
2014
2015
2016
2017
After 2017
Total future minimum lease payments
Less: Interest (c)
Present value of future minimum capital lease
payments (d)
Operating Leases (a) Capital Leases (b) Rent Income
$ 179
174
169
158
154
3,195
$4,029
$
136
173
150
148
146
4,244
$ 4,997
(3,035)
$ 1,962
Total
$ (11) $ 304
341
314
302
296
(17) 7,422
$ (47) $8,979
(6)
(5)
(4)
(4)
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(a) Total contractual lease payments include $2,039 million related to options to extend lease terms that are reasonably assured of being
exercised and also includes $181 million of legally binding minimum lease payments for stores that are expected to open in 2013 or later.
(b) Capital lease payments include $3,323 million related to options to extend lease terms that are reasonably assured of being exercised and
also includes $947 million of legally binding minimum payments for stores opening in 2013 or later.
(c) Calculated using the interest rate at inception for each lease.
(d)
Includes the current portion of $21 million.
23. Income Taxes
Tax Rate Reconciliation
(millions)
Federal statutory rate
State income taxes, net of the federal tax benefit
International
Other
Effective tax rate
2012
35.0%
2.0
(0.6)
(1.5)
34.9%
2011
35.0%
1.0
(0.7)
(1.0)
34.3%
2010
35.0%
1.4
(0.6)
(0.7)
35.1%
51
Certain discrete state income tax items reduced our effective tax rate by 1.0 percentage points, 2.0 percentage
points, and 2.4 percentage points in 2012, 2011 and 2010, respectively.
Provision for Income Taxes
(millions)
Current:
Federal
State
International
Total current
Deferred:
Federal
State
International
Total deferred
Total provision
Net Deferred Tax Asset/(Liability)
(millions)
Gross deferred tax assets:
Accrued and deferred compensation
Allowance for doubtful accounts and lower of cost or fair value adjustment on credit
card receivables held for sale
Accruals and reserves not currently deductible
Self-insured benefits
Foreign operating loss carryforward
Other
Total gross deferred tax assets
Gross deferred tax liabilities:
Property and equipment
Deferred credit card income
Inventory
Other
Total gross deferred tax liabilities
Total net deferred tax asset/(liability)
2012
2011
2010
$1,471
135
18
1,624
$1,069
74
13
1,156
124
14
(152)
(14)
$1,610
427
—
(56)
371
$1,527
$1,086
40
4
1,130
388
57
—
445
$1,575
February 2,
2013
January 28,
2012
$
537
$
489
67
352
249
189
123
1,517
(1,995)
(91)
(210)
(133)
(2,429)
$ (912)
157
347
257
43
149
1,442
(1,930)
(102)
(162)
(109)
(2,303)
$ (861)
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary
differences between financial statement carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted income tax rates in effect for the year the
temporary differences are expected to be recovered or settled. Tax rate changes affecting deferred tax assets and
liabilities are recognized in income at the enactment date.
At February 2, 2013, we had foreign net operating loss carryforwards of $714 million, which are available to offset
future income. We expect substantially all of these carryforwards, which generally expire in 2031 and 2032, to be
fully utilized prior to expiration.
We have not recorded deferred taxes when earnings from foreign operations are considered to be indefinitely
invested outside the U.S. These accumulated net earnings relate to ongoing operations and were $52 million
($592 million earnings offset by deficits) at February 2, 2013 and $300 million ($483 million earnings offset by
deficits) at January 28, 2012. It is not practicable to determine the income tax liability that would be payable if such
earnings were repatriated.
52
We file a U.S. federal income tax return and income tax returns in various states and foreign jurisdictions. The U.S.
Internal Revenue Service has completed exams on the U.S. federal income tax returns for years 2010 and prior. With
few exceptions, we are no longer subject to state and local or non-U.S. income tax examinations by tax authorities
for years before 2003.
Reconciliation of Liability for Unrecognized Tax Benefits
(millions)
Balance at beginning of period
Additions based on tax positions related to the current year
Additions for tax positions of prior years
Reductions for tax positions of prior years
Settlements
Balance at end of period
2012
$236
10
19
(42)
(7)
$216
2011
$ 302
12
31
(101)
(8)
$ 236
2010
$ 452
16
68
(222)
(12)
$ 302
If we were to prevail on all unrecognized tax benefits recorded, $142 million of the $216 million reserve would
benefit the effective tax rate. In addition, the reversal of accrued penalties and interest would also benefit the
effective tax rate. Interest and penalties associated with unrecognized tax benefits are recorded within income tax
expense. During the years ended February 2, 2013, January 28, 2012 and January 29, 2011, we recorded a benefit
from the reversal of accrued penalties and interest of $16 million, $12 million and $28 million, respectively. We had
accrued for the payment of interest and penalties of $64 million, $82 million and $95 million at February 2, 2013,
January 28, 2012 and January 29, 2011, respectively.
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It is reasonably possible that the amount of the unrecognized tax benefits with respect to our other unrecognized
tax positions will increase or decrease during the next twelve months; however, an estimate of the amount or range
of the change cannot be made at this time.
24. Other Noncurrent Liabilities
Other Noncurrent Liabilities
(millions)
Workers’ compensation and general liability (a)
Deferred compensation
Income tax
Pension and postretirement health care benefits
Other
Total
(a) We retain a substantial portion of the risk related to general liability and workers’ compensation claims. Liabilities associated with these
losses include estimates of both claims filed and losses incurred but not yet reported. We estimate our ultimate cost based on analysis of
historical data and actuarial estimates. General liability and workers’ compensation liabilities are recorded at our estimate of their net
present value.
February 2,
2013
$ 467
479
180
170
313
$1,609
January 28,
2012
$ 482
421
224
225
282
$1,634
25. Share Repurchase
We repurchase shares primarily through open market transactions under a $5 billion share repurchase program
authorized by our Board of Directors in January 2012. During the first quarter of 2012, we completed a $10 billion
share repurchase program that was authorized by our Board of Directors in November 2007.
Share Repurchases
(millions, except per share data)
Total number of shares purchased
Average price paid per share
Total investment
2012
32.2
$58.96
$1,900
2011
37.2
$50.89
$1,894
2010
47.8
$52.44
$2,508
53
Of the shares reacquired, a portion was delivered upon settlement of prepaid forward contracts as follows:
Settlement of Prepaid Forward Contracts (a)
(millions)
Total number of shares purchased
Total cash investment
Aggregate market value (b)
2012
2011
2010
0.5
$25
$29
1.0
$52
$52
1.1
$56
$61
(a) These contracts are among the investment vehicles used to reduce our economic exposure related to our nonqualified deferred
compensation plans. The details of our positions in prepaid forward contracts have been provided in Note 27.
(b) At their respective settlement dates.
26. Share-Based Compensation
We maintain a long-term incentive plan (the Plan) for key team members and non-employee members of our Board
of Directors. The Plan allows us to grant equity-based compensation awards, including stock options, stock
appreciation rights, performance share units, restricted stock units, restricted stock awards or a combination of
awards (collectively, share-based awards). The number of unissued common shares reserved for future grants
under the Plan was 24.9 million and 32.5 million at February 2, 2013 and January 28, 2012, respectively.
Compensation expense associated with share-based awards is recognized on a straight-line basis over the shorter
of the vesting period or the minimum required service period. Total share-based compensation expense recognized
in the Consolidated Statements of Operations was $105 million, $90 million and $109 million in 2012, 2011 and
2010, respectively. The related income tax benefit was $42 million, $35 million and $43 million in 2012, 2011 and
2010, respectively.
Stock Options
We grant nonqualified stock options to certain team members under the Plan that generally vest and become
exercisable annually in equal amounts over a four-year period and expire 10 years after the grant date. We also
grant options with a ten-year term to the non-employee members of our Board of Directors which vest immediately,
but are not exercisable until one year after the grant date. We use a Black-Scholes valuation model to estimate the
fair value of the options at the grant date.
Stock Option Activity
January 28, 2012
Granted
Expired/forfeited
Exercised/issued
Stock Options
Intrinsic
Value (c)
$166
Number of
Options (a)
23,283
Exercisable
Exercise
Price (b)
$ 47.06
Intrinsic
Value (c)
$121
Total Outstanding
Number of
Options (a)
38,154
5,063
(971)
(7,788)
Exercise
Price (b)
$ 47.59
60.57
49.15
42.55
February 2, 2013
In thousands.
(a)
(b) Weighted average per share.
(c) Represents stock price appreciation subsequent to the grant date, in millions.
34,458
$50.60
$366
21,060
$48.25
$273
54
Black-Scholes Model Valuation Assumptions
2012
2011
2010
Dividend yield
Volatility (a)
Risk-free interest rate (b)
Expected life in years (c)
2.4%
23%
1.0%
5.5
$9.70
2.5%
27%
1.0%
5.5
$9.20
1.8%
26%
2.1%
5.5
$12.51
Stock options grant date fair value
(a) Volatility represents an average of market estimates for implied volatility of Target common stock.
(b) The risk-free interest rate is an interpolation of the relevant U.S. Treasury security maturities as of each applicable grant date.
(c) The expected life is estimated based on an analysis of options already exercised and any foreseeable trends or changes in recipients’
behavior.
Stock Option Exercises
(millions)
Cash received for exercise price
Intrinsic value
Income tax benefit
2012
2011
2010
$331
139
55
$93
27
11
$271
132
52
At February 2, 2013, there was $88 million of total unrecognized compensation expense related to nonvested stock
options, which is expected to be recognized over a weighted average period of 1.2 years. The weighted average
remaining life of currently exercisable options is 5.1 years, and the weighted average remaining life of all
outstanding options is 6.6 years. The total fair value of options vested was $68 million, $75 million and $87 million in
2012, 2011 and 2010, respectively.
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Performance Share Units
We have issued performance share units to certain team members annually since January 2003. These units
represent shares potentially issuable in the future. Issuance is based upon our performance relative to a retail peer
group over a three-year performance period on two measures: domestic market share change and EPS growth.
The fair value of performance share units is calculated based on the stock price on the date of grant. The weighted
average grant date fair value for performance share units was $58.61, $48.63 and $52.62 in 2012, 2011 and 2010,
respectively.
Performance Share Unit Activity
January 28, 2012
Granted
Forfeited
Vested
Performance
Share Units (a)
Total Nonvested Units
Grant Date
Price (b)
1,552
422
(135)
(583)
$39.93
58.61
31.53
27.19
February 2, 2013
(a) Assumes attainment of maximum payout rates as set forth in the performance criteria based in thousands of share units. Applying actual
$51.53
1,256
or expected payout rates, the number of outstanding units at February 2, 2013 was 876 thousand.
(b) Weighted average per unit.
The expense recognized each period is dependent upon our estimate of the number of shares that will ultimately be
issued. Future compensation expense for currently unvested awards could reach a maximum of $24 million
assuming payout of all unvested awards. The unrecognized expense is expected to be recognized over a weighted
average period of 0.8 years. The fair value of performance share units vested and converted was $16 million in 2012
and was not significant in 2011 and 2010.
55
Restricted Stock
We issue restricted stock units and restricted stock awards (collectively restricted stock) to certain team members
with three-year cliff vesting from the grant date. We also regularly issue restricted stock units to our Board of
Directors, which vest quarterly over a one-year period and are settled in shares of Target common stock upon
departure from the Board. Restricted stock units represent shares potentially issuable in the future whereas
restricted stock awards represent shares issued upon grant that are restricted. The fair value for restricted stock
units and restricted stock awards is calculated based on the stock price on the date of grant. The weighted average
grant date fair value for restricted stock was $60.44, $49.42 and $55.17 in 2012, 2011 and 2010, respectively.
Restricted Stock Activity
January 28, 2012
Granted
Forfeited
Vested
February 2, 2013
(a) Represents the number of restricted stock units and restricted stock awards, in thousands.
(b) Weighted average per unit.
Total Nonvested Units
Grant Date
Price (b)
Restricted
Stock (a)
1,610
1,540
(41)
(214)
2,895
$ 50.76
60.44
53.88
50.76
$ 56.12
The expense recognized each period is dependent upon our estimate of the number of shares that will ultimately be
issued. At February 2, 2013, there was $103 million of total unrecognized compensation expense related to
restricted stock, which is expected to be recognized over a weighted average period of 1.3 years. The fair value of
restricted stock vested and converted was $11 million, $9 million and $3 million in 2012, 2011 and 2010,
respectively.
27. Defined Contribution Plans
Team members who meet eligibility requirements can participate in a defined contribution 401(k) plan by investing
up to 80 percent of their compensation, as limited by statute or regulation. Generally, we match 100 percent of each
team member’s contribution up to 5 percent of total compensation. Company match contributions are made to
funds designated by the participant.
In addition, we maintain a nonqualified, unfunded deferred compensation plan for approximately 3,000 current and
retired team members whose participation in our 401(k) plan is limited by statute or regulation. These team
members choose from a menu of crediting rate alternatives that are the same as the investment choices in our
401(k) plan, including Target common stock. We credit an additional 2 percent per year to the accounts of all active
participants, excluding members of our management executive committee, in part to recognize the risks inherent to
their participation in a plan of this nature. We also maintain a nonqualified, unfunded deferred compensation plan
that was frozen during 1996, covering substantially fewer than 100 participants, most of whom are retired. In this
plan, deferred compensation earns returns tied to market levels of interest rates plus an additional 6 percent return,
with a minimum of 12 percent and a maximum of 20 percent, as determined by the plan’s terms. Our total liability
under these plans is $505 million at February 2, 2013.
We mitigate some of our risk of offering the nonqualified plans through investing in vehicles, including company-
owned life insurance and prepaid forward contracts in our own common stock, that offset a substantial portion of
our economic exposure to the returns of these plans. These investment vehicles are general corporate assets and
are marked to market with the related gains and losses recognized in the Consolidated Statements of Operations in
the period they occur.
The total change in fair value for contracts indexed to our own common stock recognized in earnings was pretax
income/(loss) of $14 million, $(4) million and $4 million in 2012, 2011 and 2010, respectively. During 2012 and 2011,
56
we invested $19 million and $61 million, respectively, in such investment instruments, and this activity is included in
the Consolidated Statements of Cash Flows within other investing activities. Adjusting our position in these
investment vehicles may involve repurchasing shares of Target common stock when settling the forward contracts
as described in Note 25. The settlement dates of these instruments are regularly renegotiated with the counterparty.
Prepaid Forward Contracts on Target Common Stock
(millions, except per share data)
January 28, 2012
February 2, 2013
Plan Expenses
(millions)
401(k) plan
Matching contributions expense
Nonqualified deferred compensation plans
Benefits expense (a)
Related investment loss/(income) (b)
Nonqualified plan net expense
(a)
Number of
Shares
1.4
1.2
Contractual
Price Paid
per Share
$ 44.21
$45.46
Contractual
Fair Value
Total Cash
Investment
$69
$73
$61
$54
2012
2011
2010
$218
$197
$190
78
(43)
38
(10)
63
(31)
$ 35
$ 28
$ 32
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Includes market-performance credits on accumulated participant account balances and annual crediting for additional benefits earned
during the year.
Includes investment returns and life-insurance proceeds received from company-owned life insurance policies and other investments
used to economically hedge the cost of these plans.
(b)
28. Pension and Postretirement Health Care Plans
We have qualified defined benefit pension plans covering team members who meet age and service requirements,
including in certain circumstances, date of hire. We also have unfunded nonqualified pension plans for team
members with qualified plan compensation restrictions. Eligibility for, and the level of, these benefits varies
depending on team members’ date of hire, length of service and/or team member compensation. Upon early
retirement and prior to Medicare eligibility, team members also become eligible for certain health care benefits if
they meet minimum age and service requirements and agree to contribute a portion of the cost. Effective January 1,
2009, our qualified defined benefit pension plan was closed to new participants, with limited exceptions.
Change in Projected Benefit Obligation
Pension Benefits
(millions)
Benefit obligation at beginning of period
Service cost
Interest cost
Actuarial (gain)/loss
Participant contributions
Benefits paid
Plan amendments
Qualified Plans
2012
2011
Nonqualified Plans
2012
2011
$3,015
120
137
107
1
(126)
(90)
$2,525
116
135
349
1
(111)
—
$ 38
1
2
—
—
(3)
(1)
$ 37
$ 31
1
2
7
—
(3)
—
$ 38
Benefit obligation at end of period
$3,164
$3,015
Postretirement
Health Care Benefits
2012
$ 100
10
3
18
5
(12)
(3)
$ 121
2011
$ 94
10
4
—
6
(14)
—
$ 100
57
Change in Plan Assets
Pension Benefits
(millions)
Fair value of plan assets at beginning of period
Actual return on plan assets
Employer contributions
Participant contributions
Benefits paid
Fair value of plan assets at end of period
Benefit obligation at end of period
Funded/(underfunded) status
Recognition of Funded/(Underfunded) Status
(millions)
Other noncurrent assets
Accrued and other current liabilities
Other noncurrent liabilities
Net amounts recognized
(a)
Includes postretirement health care benefits.
Qualified Plans
2012
$2,921
305
122
1
(126)
3,223
3,164
59
2011
$2,515
364
152
1
(111)
2,921
3,015
$ (94)
$
Nonqualified Plans
2012
$ —
—
3
—
(3)
—
37
$(37)
2011
$ —
—
3
—
(3)
—
38
$(38)
Postretirement
Health Care Benefits
2012
$ —
—
7
5
(12)
—
121
$(121)
2011
$ —
—
8
6
(14)
—
100
$(100)
Qualified Plans
2012
$ 81
(1)
(21)
$ 59
2011
$ 3
(1)
(96)
$(94)
Nonqualified Plans (a)
2011
$ —
(9)
(129)
$(138)
2012
$ —
(9)
(149)
$(158)
The following table summarizes the amounts recorded in accumulated other comprehensive income, which have
not yet been recognized as a component of net periodic benefit expense:
Amounts in Accumulated Other Comprehensive Income
(millions)
Net actuarial loss
Prior service credits
Amounts in accumulated other comprehensive income
Pension Plans
2012
$ 947
(91)
$ 856
2011
$1,027
—
$1,027
Postretirement
Health Care Plans
2012
$ 58
(34)
$ 24
2011
$ 44
(41)
$ 3
The following table summarizes the changes in accumulated other comprehensive income for the years ended
February 2, 2013 and January 28, 2012, related to our pension and postretirement health care plans:
Change in Accumulated Other Comprehensive Income
(millions)
January 29, 2011
Net actuarial loss
Amortization of net actuarial losses
Amortization of prior service costs and transition
January 28, 2012
Net actuarial loss
Amortization of net actuarial losses
Amortization of prior service costs and transition
Plan amendments
February 2, 2013
Pension Benefits
Pretax Net of Tax
$543
$ 894
120
198
(41)
(67)
1
2
623
1,027
13
23
(63)
(103)
—
—
(56)
(91)
$517
$ 856
Postretirement
Health Care Benefits
Pretax Net of Tax
$ (2)
—
(2)
6
2
11
(2)
6
(2)
$ 15
$ (3)
—
(4)
10
3
18
(4)
10
(3)
$ 24
58
The following table summarizes the amounts in accumulated other comprehensive income expected to be
amortized and recognized as a component of net periodic benefit expense in 2013:
Expected Amortization of Amounts in Accumulated Other Comprehensive Income
(millions)
Net actuarial loss
Prior service credits
Total amortization expense
Pretax Net of Tax
$ 65
(16)
$ 49
$108
(27)
$ 81
The following table summarizes our net pension and postretirement health care benefits expense for the years
2012, 2011 and 2010:
Net Pension and Postretirement Health Care Benefits Expense
(millions)
Service cost benefits earned during the period
Interest cost on projected benefit obligation
Expected return on assets
Amortization of losses
Amortization of prior service cost
Total
Pension Benefits
2011
$ 117
137
(206)
67
(2)
$ 113
2012
$ 121
139
(220)
103
—
$ 143
2010
$ 115
129
(191)
44
(3)
$ 94
Postretirement
Health Care Benefits
2012
2011
$ 10
$ 10
3
4
—
—
3
4
(10)
(10)
6
8
2010
9
$
4
—
4
(10)
7
$
$
$
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Prior service cost amortization is determined using the straight-line method over the average remaining service
period of team members expected to receive benefits under the plan.
Defined Benefit Pension Plan Information
(millions)
Accumulated benefit obligation (ABO) for all plans (a)
Projected benefit obligation for pension plans with an ABO in excess of plan assets (b)
Total ABO for pension plans with an ABO in excess of plan assets
(a) The present value of benefits earned to date assuming no future salary growth.
(b) The present value of benefits earned to date by plan participants, including the effect of assumed future salary increases.
2012
$3,140
59
53
2011
$2,872
55
48
59
Assumptions
Benefit Obligation Weighted Average Assumptions
Discount rate
Average assumed rate of compensation increase
Net Periodic Benefit Expense Weighted Average
Assumptions
Discount rate
Expected long-term rate of return on plan assets
Average assumed rate of compensation increase
Pension Benefits
2012
4.40%
3.00
2011
4.65%
3.50
Postretirement
Health Care Benefits
2011
3.60%
n/a
2012
2.75%
n/a
Pension Benefits
Postretirement
Health Care Benefits
2012
4.65%
8.00
3.50
2011
5.50%
8.00
4.00
2010
5.85%
8.00
4.00
2012
3.60%
n/a
n/a
2011
4.35%
n/a
n/a
2010
4.85%
n/a
n/a
The discount rate used to measure net periodic benefit expense each year is the rate as of the beginning of the year
(i.e., the prior measurement date). With an essentially stable asset allocation over the following time periods, our
most recent compound annual rate of return on qualified plans’ assets was 5.7 percent, 10.0 percent, 7.8 percent,
and 9.5 percent for the 5-year, 10-year, 15-year and 20-year periods, respectively.
The market-related value of plan assets, which is used in calculating expected return on assets in net periodic
benefit cost, is determined each year by adjusting the previous year’s value by expected return, benefit payments
and cash contributions. The market-related value is adjusted for asset gains and losses in equal 20 percent
adjustments over a five-year period.
Our expected annualized long-term rate of return assumptions as of February 2, 2013 were 8.5 percent for domestic
and international equity securities, 5.5 percent for long-duration debt securities, 8.5 percent for balanced funds and
10.0 percent for other investments. These estimates are a judgmental matter in which we consider the composition
of our asset portfolio, our historical long-term investment performance and current market conditions. We review
the expected long-term rate of return on an annual basis, and revise it as appropriate. Additionally, we monitor the
mix of investments in our portfolio to ensure alignment with our long-term strategy to manage pension cost and
reduce volatility in our assets.
An increase in the cost of covered health care benefits of 7.5 percent was assumed for 2012 and is assumed for
2013. The rate will be reduced to 5.0 percent in 2019 and thereafter.
Health Care Cost Trend Rates – 1% Change
(millions)
Effect on total of service and interest cost components of net periodic postretirement
health care benefit expense
Effect on the health care component of the accumulated postretirement benefit
obligation
1% Increase
1% Decrease
$1
9
$(1)
(8)
60
Plan Assets
Our asset allocation policy is designed to reduce the long-term cost of funding our pension obligations. The plan
invests with both passive and active investment managers depending on the investment’s asset class. The plan
also seeks to reduce the risk associated with adverse movements in interest rates by employing an interest rate
hedging program, which may include the use of interest rate swaps, total return swaps and other instruments.
Asset Category
Current Targeted
Allocation
Actual Allocation
2012
2011
19%
Domestic equity securities (a)
11
International equity securities
29
Debt securities
25
Balanced funds
16
Other (b)
Total
100%
(a) Equity securities include our common stock in amounts substantially less than 1 percent of total plan assets as of February 2, 2013 and
19%
12
25
30
14
100%
20%
11
27
29
13
100%
January 28, 2012.
(b) Other assets include private equity, mezzanine and high-yield debt, natural resources and timberland funds, multi-strategy hedge funds,
derivative instruments and a 4 percent allocation to real estate.
Fair Value Measurements
(millions)
Cash and cash equivalents
Common collective trusts (a)
Government securities (b)
Fixed income (c)
Balanced funds (d)
Private equity funds (e)
Other (f)
Total plan assets
Total
$ 174
878
296
560
925
236
154
$3,223
Fair Value at February 2, 2013
Level 2
Level 1
Level 3
$ 169
$ 5
878
—
296
—
560
—
925
—
—
—
—
32
$2,860
$ 5
—
—
—
—
236
122
$358
Total
$ — $ 263
653
356
466
744
283
156
$2,921
Fair Value at January 28, 2012
Level 3
Level 2
Level 1
$ —
$ 252
$11
—
653
—
—
356
—
—
466
—
—
744
—
283
—
—
115
41
—
$398
$2,512
$11
(a) Passively managed index funds with holdings in domestic and international equities.
(b)
(c)
Investments in government securities and passively managed index funds with holdings in long-term government bonds.
Investments in corporate bonds, mortgage-backed securities and passively managed index funds with holdings in long-term corporate
bonds.
Investments in equities, nominal and inflation-linked fixed income securities, commodities and public real estate.
Includes investments in venture capital, mezzanine and high-yield debt, natural resources and timberland funds.
Investments in multi-strategy hedge funds (including domestic and international equity securities, convertible bonds and other alternative
investments), real estate and derivative investments.
(d)
(e)
(f)
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Level 3 Reconciliation
Actual Return on Plan Assets (a)
Relating to
Assets Sold
During the
Period
Relating to
Assets Still Held
at the Reporting
Date
Balance at
Beginning of
Period
Purchases,
Sales and
Settlements
Transfer in
and/or out of
Level 3
Balance at
End of Period
(millions)
2011
Private equity funds
Other
2012
Private equity funds
Other
(a) Represents realized and unrealized gains (losses) from changes in values of those financial instruments only for the period in which the
$(89)
3
$(64)
(21)
$283
115
$236
122
$283
115
$327
127
$ (6)
9
$17
4
$25
—
$26
—
$—
—
$—
—
instruments were classified as Level 3.
61
Position
Cash and cash equivalents
Valuation Technique
These investments are cash holdings and investment vehicles valued using the Net Asset
Value (NAV) provided by the administrator of the fund. The NAV for the investment vehicles
is based on the value of the underlying assets owned by the fund minus applicable costs
and liabilities, and then divided by the number of shares outstanding.
Equity securities
Valued at the closing price reported on the major market on which the individual securities
are traded.
Common collective trusts/
balanced funds/ certain
multi-strategy hedge funds
Valued using the NAV provided by the administrator of the fund. The NAV is a quoted
transactional price for participants in the fund, which do not represent an active market.
Fixed income and
government securities
Valued using matrix pricing models and quoted prices of securities with similar
characteristics.
Private equity/ real estate/
certain multi-strategy
hedge funds/ other
Valued by deriving Target’s proportionate share of equity investment from audited financial
statements. Private equity and real estate investments require significant judgment on the
part of the fund manager due to the absence of quoted market prices, inherent lack of
liquidity, and the long-term nature of such investments. Certain multi-strategy hedge funds
represent funds of funds that include liquidity restrictions and for which timely valuation
information is not available.
Contributions
Our obligations to plan participants can be met over time through a combination of company contributions to these
plans and earnings on plan assets. In 2012 and 2011, we made discretionary contributions of $122 million and
$152 million, respectively, to our qualified defined benefit pension plans. We are not required to make any
contributions in 2013. However, depending on investment performance and plan funded status, we may elect to
make a contribution. We expect to make contributions in the range of $6 million to $7 million to our postretirement
health care benefit plan in 2013.
Estimated Future Benefit Payments
Benefit payments by the plans, which reflect expected future service as appropriate, are expected to be paid as
follows:
Estimated Future Benefit Payments
(millions)
2013
2014
2015
2016
2017
2018-2022
Pension
Benefits
$ 141
150
158
167
176
1,007
Postretirement
Health Care Benefits
$ 6
7
7
8
8
48
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29. Segment Reporting
Our segment measure of profit is used by management to evaluate the return on our investment and to make
operating decisions.
Business Segment Results
2012 (a)
(millions)
Retail
Card Canadian
Total
U.S.
U.S. Credit
2011
U.S.
U.S. Credit
2010
U.S.
U.S. Credit
Retail
Card Canadian
Total
Retail
Card Canadian
Total
Sales/Credit card revenues
Cost of sales
Bad debt expense (b)
Selling, general and administrative/
Operations and marketing
expenses (b)(c)
Depreciation and amortization
Segment EBIT (d)
Interest expense on nonrecourse debt
collateralized by credit card
receivables (e)
Segment profit/(loss)
Unallocated (income) and expenses:
Other net interest expense (e)
Adjustment related to receivables held
for sale (f)
Earnings before income taxes
$71,960 $1,341
—
196
50,568
—
$ — $73,301 $68,466 $1,399
—
154
— 50,568 47,860
196
—
—
$ — $69,865 $65,786 $1,604
—
528
— 47,860 45,725
—
154
—
$— $67,390
— 45,725
528
—
14,342
2,031
5,019
562
13
570
272 15,176 13,774
2,142
2,067
97
(369)
5,219
4,765
550
17
678
74 14,398 13,367
2,065
48
2,131
(122)
5,322
4,629
433
19
624
— 13,801
— 2,084
— 5,252
—
13
$ 5,019 $ 557
—
72
$(369) $ 5,206 $ 4,765 $ 606
13
—
—
72
—
83
$(122) $ 5,250 $ 4,629 $ 541
—
83
$— $ 5,169
749
(152)
$ 4,609
794
—
$ 4,456
674
—
$ 4,495
Note: The sum of the segment amounts may not equal the total amounts due to rounding.
(a) Consisted of 53 weeks.
(b) The combination of bad debt expense and operations and marketing expenses, less amounts the U.S. Retail Segment charges the U.S.
Credit Card Segment for loyalty programs, within the U.S. Credit Card Segment represent credit card expenses on the Consolidated
Statements of Operations. For the fourth quarter of 2012, bad debt expense was replaced by net write-offs in this calculation.
(c) Effective with the October 2010 nationwide launch of our new 5% REDcard Rewards loyalty program, we changed the formula under
which the U.S. Retail Segment charges the U.S. Credit Card Segment to better align with the attributes of the new program. Loyalty
program charges were $300 million, $258 million and $102 million in 2012, 2011 and 2010, respectively. In all periods these amounts were
recorded as reductions to SG&A expenses within the U.S. Retail Segment and increases to operations and marketing expenses within the
U.S. Credit Card Segment.
(d) The combination of Segment EBIT and the adjustment related to receivables held for sale represents earnings before interest expense
and income taxes on the Consolidated Statements of Operations.
(e) The combination of interest expense on nonrecourse debt collateralized by credit card receivables and other net interest expense
represents net interest expense on the Consolidated Statements of Operations.
(f) Represents the gain on receivables held for sale recorded in our Consolidated Statements of Operations, plus the difference between U.S.
Credit Card Segment bad debt expense and net write-offs for the fourth quarter of 2012.
Total Assets by Segment
(millions)
U.S. Retail
U.S. Credit Card
Canadian
Total segment assets
Unallocated assets (a)
Total assets
February 2,
2013
$37,404
5,885
4,722
$48,011
152
$48,163
January 28,
2012
$37,108
6,135
3,387
$46,630
—
$46,630
(a) Represents the net adjustment to eliminate our allowance for doubtful accounts and record our credit card receivables at lower of cost
(par) or fair value.
Capital Expenditures by Segment
(millions)
U.S. Retail
U.S. Credit Card
Canadian
Total
(a) Consisted of 53 weeks.
2012(a)
$2,335
10
932
$3,277
2011
$ 2,466
10
1,892
$ 4,368
2010
$ 2,121
8
—
$ 2,129
63
30. Quarterly Results (Unaudited)
Due to the seasonal nature of our business, fourth quarter operating results typically represent a substantially larger
share of total year revenues and earnings because they include our peak sales period from Thanksgiving through
the end of December. We follow the same accounting policies for preparing quarterly and annual financial data. The
table below summarizes quarterly results for 2012 and 2011:
Quarterly Results
First Quarter
Second Quarter
Third Quarter
Total Year
(millions, except per share data)
Sales
Credit card revenues
Total revenues
Cost of sales
Selling, general and administrative
expenses
Credit card expenses
Depreciation and amortization
Gain on receivables held for sale
Earnings before interest expense and
income taxes
Net interest expense
Earnings before income taxes
Provision for income taxes
Net earnings
Basic earnings per share
Diluted earnings per share
Dividends declared per share
Closing common stock price:
High
Low
2011
2011
2012
2012
2011
$16,537 $15,580 $16,451 $15,895 $16,601 $16,054 $ 22,370 $20,937 $ 71,960 $68,466
1,399
73,301 69,865
50,568 47,860
355
16,867 15,935
11,541 10,838
345
16,779 16,240
11,297 10,872
351
22,726 21,288
16,160 14,986
348
16,929 16,402
11,569 11,165
2012 (a)
1,341
2012
2011
2011
330
356
328
328
Fourth Quarter
2012 (a)
3,392
120
529
—
3,233
88
512
—
3,588
108
531
—
3,473
86
509
—
3,704
106
542
(156)
3,525
109
546
—
4,229
135
539
(5)
3,876
162
564
—
14,914 14,106
446
2,131
—
467
2,142
(161)
1,285
184
1,264
183
1,255
184
1,300
191
1,164
192
1,057
200
1,668
204
1,700
292
1,101
404
$
697 $
$ 1.05 $
1.04
0.30
1,071
1,081
367
392
689 $
704 $
0.99 $ 1.07 $
0.99
0.25
1.06
0.36
972
1,109
335
405
704 $
637 $
1.03 $ 0.97 $
1.03
0.30
0.96
0.36
857
302
555 $
0.82 $
0.82
0.30
1,464
503
961 $
1.48 $
1.47
0.36
1,408
427
981 $
1.46 $
1.45
0.30
5,371
762
5,322
866
4,609
4,456
1,610
1,527
2,999 $ 2,929
4.57 $ 4.31
4.52
4.28
1.38
1.15
58.86
50.33
55.39
49.10
61.95
54.81
51.81
46.33
65.44
60.62
55.56
46.44
64.48
58.57
54.75
48.51
65.44
50.33
55.56
46.33
Note: Per share amounts are computed independently for each of the quarters presented. The sum of the quarters may not equal the total year
amount due to the impact of changes in average quarterly shares outstanding and all other quarterly amounts may not equal the total year due to
rounding.
(a) The fourth quarter and total year 2012 consisted of 14 weeks and 53 weeks, respectively, compared with 13 weeks and 52 weeks in the
comparable prior-year periods.
Sales by Product Category (a)
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Total Year
Household essentials
Hardlines
Apparel and accessories
Food and pet supplies
Home furnishings and d´ecor
Total
(a) As a percentage of sales.
2012
2011
2012
2011
2012
2011
2012
2011
2012
2011
26%
16
20
21
17
26%
17
20
20
17
27%
15
20
20
18
26%
16
21
18
19
26%
14
20
21
19
26%
15
20
20
19
21%
24
18
18
19
21%
26
18
17
18
25%
18
19
20
18
25%
19
19
19
18
100% 100%
100% 100%
100% 100%
100% 100%
100% 100%
64
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
Not applicable.
Item 9A. Controls and Procedures
As of the end of the period covered by this Annual Report, we conducted an evaluation, under supervision and with
the participation of management, including the chief executive officer and chief financial officer, of the effectiveness
of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 of the
Securities Exchange Act of 1934, as amended (Exchange Act). Based upon that evaluation, our chief executive
officer and chief financial officer concluded that our disclosure controls and procedures are effective. Disclosure
controls and procedures are defined by Rules 13a-15(e) and 15d-15(e) of the Exchange Act as controls and other
procedures that are designed to ensure that information required to be disclosed by us in reports filed with the SEC
under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the
SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by us in reports filed under the Exchange Act is
accumulated and communicated to our management, including our principal executive and principal financial
officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required
disclosure.
There were no changes in our internal control over financial reporting during the fourth quarter of fiscal 2012 that
have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
For the Report of Management on Internal Control and the Report of Independent Registered Public Accounting
Firm on Internal Control over Financial Reporting, see Item 8, Financial Statements and Supplementary Data.
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Item 9B. Other Information
Not applicable.
65
P A R T I I I
Certain information required by Part III is incorporated by reference from Target’s definitive Proxy Statement to be
filed on or about April 29, 2013. Except for those portions specifically incorporated in this Form 10-K by reference to
Target’s Proxy Statement, no other portions of the Proxy Statement are deemed to be filed as part of this Form 10-K.
Item 10. Directors, Executive Officers and Corporate Governance
Election of Directors, Section 16(a) Beneficial Ownership Reporting Compliance, Additional Information—Business
Ethics and Conduct, and General Information About the Board of Directors and Corporate Governance—
Committees, of Target’s Proxy Statement to be filed on or about April 29, 2013, are incorporated herein by
reference. See also Item 4A, Executive Officers of Part I hereof.
Item 11. Executive Compensation
Executive Compensation and Director Compensation, of Target’s Proxy Statement to be filed on or about April 29,
2013, is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
Beneficial Ownership of Certain Shareholders and Equity Compensation Plan Information, of Target’s Proxy
Statement to be filed on or about April 29, 2013, is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Certain Relationships and General Information About the Board of Directors and Corporate Governance—Director
Independence, of Target’s Proxy Statement to be filed on or about April 29, 2013, are incorporated herein by
reference.
Item 14. Principal Accountant Fees and Services
Audit and Non-Audit Fees, of Target’s Proxy Statement to be filed on or about April 29, 2013, are incorporated herein
by reference.
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Item 15. Exhibits and Financial Statement Schedules
The following information required under this item is filed as part of this report:
a) Financial Statements
Consolidated Statements of Operations for the Years Ended February 2, 2013, January 28, 2012 and
January 29, 2011
Consolidated Statements of Financial Position at February 2, 2013 and January 28, 2012
Consolidated Statements of Cash Flows for the Years Ended February 2, 2013, January 28, 2012 and
January 29, 2011
Consolidated Statements of Shareholders’ Investment for the Years Ended February 2, 2013, January 28,
2012 and January 29, 2011
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements
Financial Statement Schedules
For the Years Ended February 2, 2013, January 28, 2012 and January 29, 2011:
II – Valuation and Qualifying Accounts
Other schedules have not been included either because they are not applicable or because the information is
included elsewhere in this Report.
b) Exhibits
(2)A † Amended and Restated Transaction Agreement dated September 12, 2011 among Zellers Inc.,
Hudson’s Bay Company, Target Corporation and Target Canada Co. (1)
C
B † First Amending Agreement dated January 20, 2012 to Amended and Restated Transaction
Agreement among Zellers Inc., Hudson’s Bay Company, Target Corporation and Target Canada Co.
(2)
Second Amending Agreement dated June 18, 2012 to Amended and Restated Transaction
Agreement among Zellers Inc., Hudson’s Bay Company, Target Corporation and Target Canada Co.
(3)
Third Amending Agreement dated June 18, 2012 to Amended and Restated Transaction Agreement
among Zellers Inc., Hudson’s Bay Company, Target Corporation and Target Canada Co. (4)
E † Fourth Amending Agreement dated December 14, 2012 to Amended and Restated Transaction
Agreement among Zellers Inc., Hudson’s Bay Company, Target Corporation and Target Canada Co.
‡ Purchase and Sale Agreement dated October 22, 2012 among Target National Bank, Target
F
D
Receivables LLC, Target Corporation and TD Bank USA, N.A. (5)
G ‡ First Amendment to Purchase and Sale Agreement dated March 13, 2013 among Target National
(3)A
B
(4)A
Bank, Target Receivables LLC, Target Corporation and TD Bank USA, N.A. (6)
Amended and Restated Articles of Incorporation (as amended through June 9, 2010) (7)
By-Laws (as amended through September 9, 2009) (8)
Indenture, dated as of August 4, 2000 between Target Corporation and Bank One Trust Company,
N.A. (9)
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C
First Supplemental Indenture dated as of May 1, 2007 to Indenture dated as of August 4, 2000
between Target Corporation and The Bank of New York Trust Company, N.A. (as successor in interest
to Bank One Trust Company N.A.) (10)
Target agrees to furnish to the Commission on request copies of other instruments with respect to
long-term debt.
(10)A * Target Corporation Officer Short-Term Incentive Plan (11)
B * Target Corporation Long-Term Incentive Plan (as amended and restated effective June 8, 2011) (12)
C * Target Corporation SPP I (2011 Plan Statement) (as amended and restated effective June 8, 2011)
(13)
D * Target Corporation SPP II (2011 Plan Statement) (as amended and restated effective June 8, 2011)
(14)
E * Target Corporation SPP III (2011 Plan Statement) (as amended and restated effective June 8, 2011)
(15)
F
* Target Corporation Officer Deferred Compensation Plan (as amended and restated effective June 8,
2011) (16)
G * Target Corporation Officer EDCP (2012 Plan Statement) (as amended and restated effective June 5,
2012) (17)
H * Amended and Restated Deferred Compensation Plan Directors (18)
I
* Target Corporation DDCP (2011 Plan Statement) (as amended and restated effective June 8, 2011)
(19)
J
* Target Corporation Officer Income Continuance Policy Statement (as amended and restated effective
June 8, 2011) (20)
K * Target Corporation Executive Excess Long Term Disability Plan (21)
L
M * Target Corporation Deferred Compensation Trust Agreement (as amended and restated effective
* Director Retirement Program (22)
N
O
January 1, 2009) (23)
Five-Year Credit Agreement dated as of October 14, 2011 among Target Corporation, Bank of
America, N.A. as Administrative Agent and the Banks listed therein (24)
Extension and Amendment dated August 28, 2012 to Five-Year Credit Agreement among Target
Corporation, Bank of America, N.A. as Administrative Agent and the Banks listed therein (25)
P * Target Corporation 2011 Long-Term Incentive Plan (26)
Q * Amendment to Target Corporation Deferred Compensation Trust Agreement (as amended and
restated effective January 1, 2009) (27)
* Form of Executive Performance Share Unit Agreement (28)
R * Form of Executive Non-Qualified Stock Option Agreement
S * Form of Executive Restricted Stock Unit Agreement
T
U * Form of Non-Employee Director Non-Qualified Stock Option Agreement (29)
V * Form of Non-Employee Director Restricted Stock Unit Agreement
W * Form of Cash Retention Award
Statements of Computations of Ratios of Earnings to Fixed Charges
List of Subsidiaries
Consent of Independent Registered Public Accounting Firm
Powers of Attorney
Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
Certification of the Chief Executive Officer Pursuant to Section 18 U.S.C. Section 1350 Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
Certification of the Chief Financial Officer Pursuant to Section 18 U.S.C. Section 1350 Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
XBRL Instance Document
XBRL Taxonomy Extension Schema
(12)
(21)
(23)
(24)
(31)A
(31)B
(32)A
(32)B
101.INS
101.SCH
68
101.CAL
101.DEF
101.LAB
101.PRE
XBRL Taxonomy Extension Calculation Linkbase
XBRL Taxonomy Extension Definition Linkbase
XBRL Taxonomy Extension Label Linkbase
XBRL Taxonomy Extension Presentation Linkbase
Copies of exhibits will be furnished upon written request and payment of Registrant’s reasonable expenses in
furnishing the exhibits.
† Excludes the Disclosure Letter and Schedule A referred to in the agreement, Exhibits A and B to the First Amending Agreement, and
Exhibit A to the Fourth Amending Agreement which Target Corporation agrees to furnish supplementally to the Securities and Exchange
Commission upon request.
‡ Excludes Schedules A through N, Annex A and Exhibits A-1 through C-2 referred to in the agreement and First Amendment, which Target
Corporation agrees to furnish supplementally to the Securities and Exchange Commission upon request.
* Management contract or compensation plan or arrangement required to be filed as an exhibit to this Form 10-K.
(1) Incorporated by reference to Exhibit (2)A to Target’s Form 10-Q Report for the quarter ended October 29, 2011.
(2) Incorporated by reference to Exhibit (2)B to Target’s Form 10-K Report for the year ended January 28, 2012.
(3) Incorporated by reference to Exhibit (2)C to Target’s Form 10-Q Report for the quarter ended July 28, 2012.
(4) Incorporated by reference to Exhibit (2)D to Target’s Form 10-Q Report for the quarter ended July 28, 2012.
(5) Incorporated by reference to Exhibit (2)E to Target’s Form 10-Q Report for the quarter ended October 27, 2012.
(6) Incorporated by reference to Exhibit (2)G to Target’s Form 8-K Report filed March 14, 2013.
(7) Incorporated by reference to Exhibit (3)A to Target’s Form 8-K Report filed June 10, 2010.
(8) Incorporated by reference to Exhibit (3)B to Target’s Form 8-K Report filed September 10, 2009.
(9) Incorporated by reference to Exhibit 4.1 to Target’s Form 8-K Report filed August 10, 2000.
(10) Incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-K Report filed May 1, 2007.
(11) Incorporated by reference to Appendix A to the Registrant’s Proxy Statement filed April 30, 2012.
(12) Incorporated by reference to Exhibit (10)B to Target’s Form 10-Q Report for the quarter ended July 30, 2011.
(13) Incorporated by reference to Exhibit (10)C to Target’s Form 10-Q Report for the quarter ended July 30, 2011.
(14) Incorporated by reference to Exhibit (10)D to Target’s Form 10-Q Report for the quarter ended July 30, 2011.
(15) Incorporated by reference to Exhibit (10)E to Target’s Form 10-Q Report for the quarter ended July 30, 2011.
(16) Incorporated by reference to Exhibit (10)F to Target’s Form 10-Q Report for the quarter ended July 30, 2011.
(17) Incorporated by reference to Exhibit (10)G to Target’s Form 10-Q Report for the quarter ended July 28, 2012.
(18) Incorporated by reference to Exhibit (10)I to Target’s Form 10-K Report for the year ended February 3, 2007.
(19) Incorporated by reference to Exhibit (10)I to Target’s Form 10-Q Report for the quarter ended July 30, 2011.
(20) Incorporated by reference to Exhibit (10)J to Target’s Form 10-Q Report for the quarter ended July 30, 2011.
(21) Incorporated by reference to Exhibit (10)A to Target’s Form 10-Q Report for the quarter ended October 30, 2010.
(22) Incorporated by reference to Exhibit (10)O to Target’s Form 10-K Report for the year ended January 29, 2005.
(23) Incorporated by reference to Exhibit (10)O to Target’s Form 10-K Report for the year ended January 31, 2009.
(24) Incorporated by reference to Exhibit (10)O to Target’s Form 10-Q Report for the quarter ended October 29, 2011.
(25) Incorporated by reference to Exhibit (10)AA to Target’s Form 10-Q Report for the quarter ended October 27, 2012.
(26) Incorporated by reference to Appendix A to Target’s Proxy Statement filed April 28, 2011.
(27) Incorporated by reference to Exhibit (10)AA to Target’s Form 10-Q Report for the quarter ended July 30, 2011.
(28) Incorporated by reference to Exhibit (10)X to Target’s Form 10-K Report for the year ended January 28, 2012.
(29) Incorporated by reference to Exhibit (10)EE to Target’s Form 8-K Report filed January 11, 2012.
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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Target has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
TARGET CORPORATION
By:
11MAR201319003653
John J. Mulligan
Executive Vice President, Chief Financial
Officer and Chief Accounting Officer
Dated: March 20, 2013
Pursuant to the requirements of the Securities Exchange Act of 1934, the report has been signed below by the
following persons on behalf of Target and in the capacities and on the dates indicated.
Dated: March 20, 2013
Dated: March 20, 2013
ROXANNE S. AUSTIN
CALVIN DARDEN
MARY N. DILLON
JAMES A. JOHNSON
MARY E. MINNICK
4MAR200909320639
Gregg W. Steinhafel
Chairman of the Board, Chief Executive Officer
and President
11MAR201319003653
John J. Mulligan
Executive Vice President, Chief Financial Officer and
Chief Accounting Officer
ANNE M. MULCAHY
DERICA W. RICE
JOHN G. STUMPF
SOLOMON D. TRUJILLO
Constituting a majority of the
Board of Directors
John J. Mulligan, by signing his name hereto, does hereby sign this document pursuant to powers of attorney duly
executed by the Directors named, filed with the Securities and Exchange Commission on behalf of such Directors,
all in the capacities and on the date stated.
By:
11MAR201319003653
John J. Mulligan
Attorney-in-fact
Dated: March 20, 2013
70
TARGET CORPORATION
Schedule II—Valuation and Qualifying Accounts
Fiscal Years 2012, 2011 and 2010
(millions)
Column A
Description
Allowance for doubtful accounts:
2012 (a)
2011
2010
Sales returns reserves (b):
Column B
Column C
Column D
Column E
Balance at
Beginning of
Period
Additions
Charged to
Cost, Expenses
Deductions
Balance at End
of Period
$ 430
$ 690
$1,016
196
154
528
(626)
(414)
(854)
$ —
$430
$690
2012
2011
2010
38
38
41
(a) As of February 2, 2013, our receivables were classified as held for sale and recorded at the lower of cost (par) or fair value. As a result, we no
(1,241)
(1,238)
(1,149)
1,249
1,238
1,146
$ 46
$ 38
$ 38
$
$
$
longer reported an allowance for doubtful accounts in our Consolidated Statements of Financial Position.
(b) These amounts represent the gross margin effect of sales returns during the respective years. Expected merchandise returns after year-end
for sales made before year-end were $114 million, $98 million and $97 million for 2012, 2011 and 2010, respectively.
71
Exhibit
Description
Exhibit Index
Amended and Restated Transaction Agreement dated
September 12, 2011 among Zellers Inc., Hudson’s Bay Company,
Target Corporation and Target Canada Co.
First Amending Agreement dated January 20, 2012 to Amended
and Restated Transaction Agreement among Zellers Inc., Hudson’s
Bay Company, Target Corporation and Target Canada Co.
Second Amending Agreement dated June 18, 2012 to Amended
and Restated Transaction Agreement among Zellers Inc., Hudson’s
Bay Company, Target Corporation and Target Canada Co.
Third Amending Agreement dated June 18, 2012 to Amended and
Restated Transaction Agreement among Zellers Inc., Hudson’s Bay
Company, Target Corporation and Target Canada Co.
Fourth Amending Agreement dated December 14, 2012 to
Amended and Restated Transaction Agreement among Zellers Inc.,
Hudson’s Bay Company, Target Corporation and Target
Canada Co.
Purchase and Sale Agreement dated October 22, 2012 among
Target National Bank, Target Receivables LLC, Target Corporation
and TD Bank USA, N.A.
First Amendment to Purchase and Sale Agreement dated
March 13, 2013 among Target National Bank, Target
Receivables LLC, Target Corporation and TD Bank USA, N.A.
Amended and Restated Articles of Incorporation (as amended
June 9, 2010)
By-Laws (as amended through September 9, 2009)
Indenture, dated as of August 4, 2000 between Target Corporation
and Bank One Trust Company, N.A.
First Supplemental Indenture dated as of May 1, 2007 to Indenture
dated as of August 4, 2000 between Target Corporation and The
Bank of New York Trust Company, N.A. (as successor in interest to
Bank One Trust Company N.A.)
Target agrees to furnish to the Commission on request copies of
other instruments with respect to long-term debt.
Target Corporation Officer Short-Term Incentive Plan
Target Corporation Long-Term Incentive Plan (as amended and
restated effective June 8, 2011)
Target Corporation SPP I (2011 Plan Statement) (as amended and
restated effective June 8, 2011)
Target Corporation SPP II (2011 Plan Statement) (as amended and
restated effective June 8, 2011)
Target Corporation SPP III (2011 Plan Statement) (as amended and
restated effective June 8, 2011)
Target Corporation Officer Deferred Compensation Plan (as
amended and restated effective June 8, 2011)
Target Corporation Officer EDCP (2012 Plan Statement) (as
amended and restated effective June 5, 2012)
Amended and Restated Deferred Compensation Plan Directors
(2)A
(2)B
(2)C
(2)D
(2)E
(2)F
(2)G
(3)A
(3)B
(4)A
(4)B
(4)C
(10)A
(10)B
(10)C
(10)D
(10)E
(10)F
(10)G
(10)H
72
Manner of Filing
Incorporated by Reference
Incorporated by Reference
Incorporated by Reference
Incorporated by Reference
Filed Electronically
Incorporated by Reference
Incorporated by Reference
Incorporated by Reference
Incorporated by Reference
Incorporated by Reference
Incorporated by Reference
Filed Electronically
Incorporated by Reference
Incorporated by Reference
Incorporated by Reference
Incorporated by Reference
Incorporated by Reference
Incorporated by Reference
Incorporated by Reference
Incorporated by Reference
Exhibit
Description
(10)I
(10)J
(10)N
(10)O
(10)P
(10)Q
(10)K
(10)L
(10)M
(10)R
(10)S
(10)T
(10)U
Target Corporation DDCP (2011 Plan Statement) (as amended and
restated effective June 8, 2011)
Target Corporation Officer Income Continuance Policy Statement
(as amended and restated effective June 8, 2011)
Target Corporation Executive Excess Long Term Disability Plan
Director Retirement Program
Target Corporation Deferred Compensation Trust Agreement (as
amended and restated effective January 1, 2009)
Five-Year Credit Agreement dated as of October 14, 2011 among
Target Corporation, Bank of America, N.A. as Administrative Agent
and the Banks listed therein
Extension and Amendment dated August 28, 2012 to Five-Year
Credit Agreement among Target Corporation, Bank of America,
N.A. as Administrative Agent and the Banks listed therein
Target Corporation 2011 Long-Term Incentive Plan
Amendment to Target Corporation Deferred Compensation Trust
Agreement (as amended and restated effective January 1, 2009)
Form of Executive Non-Qualified Stock Option Agreement
Form of Executive Restricted Stock Unit Agreement
Form of Executive Performance Share Unit Agreement
Form of Non-Employee Director Non-Qualified Stock Option
Agreement
Form of Non-Employee Director Restricted Stock Unit Agreement
Form of Cash Retention Award
Statements of Computations of Ratios of Earnings to Fixed
Charges
List of Subsidiaries
Consent of Independent Registered Public Accounting Firm
Powers of Attorney
Certification of the Chief Executive Officer Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
Certification of the Chief Financial Officer Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
Certification of the Chief Executive Officer Pursuant to Section 18
U.S.C. Section 1350 Pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
Certification of the Chief Financial Officer Pursuant to Section 18
U.S.C. Section 1350 Pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
101.INS
XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema
101.CAL
101.DEF
101.LAB
101.PRE
XBRL Taxonomy Extension Calculation Linkbase
XBRL Taxonomy Extension Definition Linkbase
XBRL Taxonomy Extension Label Linkbase
XBRL Taxonomy Extension Presentation Linkbase
(21)
(23)
(24)
(31)A
(10)V
(10)W
(12)
(31)B
(32)B
(32)A
Manner of Filing
Incorporated by Reference
Incorporated by Reference
Incorporated by Reference
Incorporated by Reference
Incorporated by Reference
Incorporated by Reference
Incorporated by Reference
Incorporated by Reference
Incorporated by Reference
Filed Electronically
Filed Electronically
Incorporated by Reference
Incorporated by Reference
Filed Electronically
Filed Electronically
Filed Electronically
Filed Electronically
Filed Electronically
Filed Electronically
Filed Electronically
Filed Electronically
Filed Electronically
Filed Electronically
Filed Electronically
Filed Electronically
Filed Electronically
Filed Electronically
Filed Electronically
Filed Electronically
73
Exhibit 12
TARGET CORPORATION
Computations of Ratios of Earnings to Fixed Charges for each of the
Five Years in the Period Ended February 2, 2013
Ratio of Earnings to Fixed Charges
(millions)
Earnings from continuing operations
before income taxes
Capitalized interest, net
Adjusted earnings from continuing
operations before income taxes
Fixed charges:
Interest expense (a)
Interest portion of rental expense
Total fixed charges
Earnings from continuing
operations before income taxes
and fixed charges
Ratio of earnings to fixed charges
February 2,
2013
January 28,
2012
Fiscal Year Ended
January 29,
2011
January 30,
2010
January 31,
2009
$4,609
(12)
$4,456
5
$4,495
2
$3,872
(9)
$3,536
(48)
4,597
4,461
4,497
3,863
799
111
910
797
111
908
776
110
886
830
105
935
3,488
956
103
1,059
$5,507
6.05
$5,369
5.91
$5,383
6.08
$4,798
5.13
$4,547
4.29
(a)
Includes interest on debt and capital leases (including capitalized interest) and amortization of debt issuance costs. Excludes interest
income and interest associated with unrecognized tax benefit liabilities, which is recorded within income tax expense.
74
84275_Target_Annual_Report_Guts_1.indd 14
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annual meeting
The Annual Meeting of Shareholders is
scheduled for June 12, 2013 at 1:00 p.m.
(Mountain Daylight Time) at the Target store,
7777 East Hampden Avenue, Denver CO 80231
transfer agent,
registrar
and dividend
disbursing agent
Computershare
shareholder
information
Quarterly and annual shareholder information,
including the Form 10-Q and Form 10-K Annual
Report, which are filed with the Securities
and Exchange Commission, is available at
no charge to shareholders. To obtain copies
of these materials, you may send an e-mail
to Investorrelations@Target.com, call 1-800-
775-3110, or write to: Senior Director, Investor
Communications (TPN-1146), Target Corporation,
1000 Nicollet Mall, Minneapolis, MN 55403.
These documents as well as other information
about Target Corporation, including our
Business Conduct Guide, Corporate Governance
Guidelines, Corporate Responsibility Report
and Board of Director Committee Position
Descriptions, are also available on the Internet
at Target.com/investors.
trustee,
employee savings
401(k) and pension
plans
State Street Bank and Trust Company
stock exchange
listings
Trading Symbol: TGT
New York Stock Exchange
shareholder
assistance
For assistance regarding individual stock records,
lost certificates, name or address changes,
dividend or tax questions, call Computershare at
1-800-794-9871, access their website at https://
www-us.computershare.com/investor/contact,
or write to: Computershare, P.O. Box 43006,
Providence, RI 02940-3006.
direct stock
purchase/
dividend
reinvestment
plan
Computershare administers a direct service
investment plan that allows interested investors
to purchase Target Corporation stock directly,
rather than through a broker, and become a
registered shareholder of the company. The
program offers many features including dividend
reinvestment. For detailed information regarding
this program, call Computershare toll free at
1-866-353-7849 or write to: Computershare, P.O.
Box 43006, Providence, RI 02940-3006.
©2013 Target Brands, Inc. Archer Farms, the Bullseye Design, the Bullseye Dog, CityTarget, Expect More. Pay Less., Market Pantry, Merona, REDcard,
SuperTarget, Target, Target Home, Threshold and up & up are trademarks of Target Brands, Inc.
TARGET 2012 ANNUAL REPORT
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shareholder information
Jeffrey J. Jones II
Executive Vice
President and Chief
Marketing Officer
Gregg W. Steinhafel
Chairman, President
and Chief Executive
Officer
Kathryn A. Tesija
Executive Vice
President,
Merchandising and
Supply Chain
Laysha L. Ward
President,
Community Relations
and Target Foundation
ExECuTIvE OFFICERS
Timothy R. Baer
Executive Vice
President,
General Counsel and
Corporate Secretary
Anthony S. Fisher
President,
Target Canada
Jodeen A. Kozlak
Executive Vice
President,
Human Resources
John D. Griffith
Executive Vice
President,
Property Development
John J. Mulligan
Executive Vice
President and Chief
Financial Officer
Beth M. Jacob
Executive Vice
President,
Target Technology
Services and Chief
Information Officer
Tina M. Schiel
Executive Vice
President,
Stores
Terrence J. Scully
President,
Target Financial and
Retail Services
Retiring 3/31/13
Susan Kahn
Senior Vice President,
Communications
and Reputation
Management
Navneet Kapoor
President and
Managing Director,
Target India
Scott Kennedy
President, Financial
and Retail Services
Effective 4/1/13
Sid Keswani
Senior Vice President,
Stores
Timothy Mantel
President, Target
Sourcing Services
Todd Marshall
Senior Vice President,
Marketing
Annette Miller
Senior Vice President,
Merchandising,
Grocery
John Morioka
Senior Vice President,
Merchandising,
Target Canada
Scott Nelson
Senior Vice President,
Real Estate
Scott Nygaard
Senior Vice President,
Merchandising,
Hardlines
Mike Robbins
Senior Vice President,
Distribution
Mark Schindele
Senior Vice President,
Merchandising
Operations
Samir Shah
Senior Vice President,
Stores
Cary Strouse
Senior Vice President,
Stores
Rich varda
Senior Vice President,
Store Design
Todd Waterbury
Senior Vice President,
Creative
Judy Werthauser
Senior Vice President,
Human Resources,
Headquarters
Jane Windmeier
Senior Vice President,
Global Finance
Systems and Chief
Financial Officer,
Target Canada
Printed on paper with 10 percent
post-consumer fiber by Target
Printing Services, a zero-landfill
facility powered by electrical
energy from wind sources.
TARGET 2012 ANNUAL REPORT
25%
Health, Beauty
& Household
Essentials
18%
Hardlines
19%
Apparel &
Accessories
20%
Food &
Pet Supplies
18%
Home
Furnishings
& Décor
total sales
$72.0 billion
financial highlights
’08
’09
’10
’11
’12
’08
’09
’10
’11
’12
’08
’09
’10
’11
’12
’08
’09
’10
’11
’12
total revenues
$64,948
$65,357
$67,390
$69,865
$73,301
IN MILLIONS
2012 Growth: 4.9% | Five-year CAGR: 3.0%
EBIT
(Earnings before interest
expense and income taxes)
$4,402
$4,673
$5,252
$5,322
$5,371
IN MILLIONS
2012 Growth: 0.9% | Five-year CAGR: 0.4%
net earnings
$2,214
$2,488
$2,920
$2,929
$2,999
IN MILLIONS
2012 Growth: 2.4% | Five-year CAGR: 1.0%
diluted EPS
$2.86
$3.30
$4.00
$4.28
$4.52
2012 Growth: 5.6% | Five-year CAGR: 6.3%
Retail sales, does not include credit card revenues.
Note: 2012 was a 53-week year.
DIRECTORS
Roxanne S. Austin
President,
Austin Investment
Advisors
(1) (4)
James A. Johnson
Founder and
Principal, Johnson
Capital Partners
(2) (3)
Douglas M. Baker Jr.
Chairman and CEO,
Ecolab, Inc.
(1) (5)
Mary E. Minnick
Partner,
Lion Capital LLP
(1) (3)
Henrique De Castro
Chief Operating
Officer, Yahoo! Inc.
(3) (5)
Calvin Darden
Chairman, Darden
Development Group,
LLC
(2) (5)
Mary N. Dillon
President and Chief
Executive Officer,
United States Cellular
Corporation
(2) (3)
OTHER OFFICERS
Janna Adair-Potts
Senior Vice President,
Stores Operations
Patricia Adams
Senior Vice President,
Merchandising,
Apparel and
Accessories
Aaron Alt
Senior Vice President,
Business
Development &
Treasurer
Stacia Andersen
Senior Vice President,
Merchandising,
Home
Jose Barra
Senior Vice President,
Merchandising,
Health and Beauty
Bryan Berg
Senior Vice President,
Stores,
Target Canada
Anne M. Mulcahy
Chairman of the
Board of Trustees,
Save the Children
Federation, Inc.
(4) (5)
Derica W. Rice
Executive Vice
President, Global
Services and
Chief Financial
Officer,
Eli Lilly & Company
(1) (4)
Tom Butterfield
Senior Vice President,
Strategy and
Business Technology
Casey Carl
President,
Multichannel, and
Senior Vice President,
Enterprise Strategy
Naomi Cramer
Senior Vice President,
Human Resources,
Stores and
Distribution
Patricia Dirks
Senior Vice President,
Organizational
Effectiveness
Barbara Dugan
Senior Vice President,
Human Resources
and Administration,
Target Sourcing
Services
Gregg W. Steinhafel
Chairman, President
and Chief Executive
Officer, Target
John G. Stumpf
Chairman of the
Board, President
and Chief Executive
Officer, Wells Fargo
& Company
(2) (4)
Solomon D. Trujillo
Former Chief
Executive Officer,
Telstra Corporation
Limited
(3) (5)
(1) Audit Committee
(2) Compensation Committee
(3) Corporate Responsibility
Committee
(4) Finance Committee
(5) Nominating and
Governance Committee
Bryan Everett
Senior Vice President,
Stores
Shawn Gensch
Senior Vice President,
Marketing
Jason Goldberger
Senior Vice President,
Target.com
and Mobile
Corey Haaland
Senior Vice President,
Financial Planning
Analysis and Tax
Cynthia Ho
Senior Vice President,
Target Sourcing
Services
Derek Jenkins
Senior Vice President,
External Affairs,
Target Canada
Keri Jones
Senior Vice President,
Merchandise Planning
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directors and management
2012
annual
report
1000 Nicollet Mall · Minneapolis, MN 55403 · 612.304.6073 · Target.com
TARGET CORPORATION
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