Target Annual Report 2016

FY2016 Annual Report · Target

Loading PDF…

2
0
1
6
A
n
n
u
a

R
e
p
o
r
t

Visit our online Annual Report at Target.com/annualreport

1000 Nicollet Mall, Minneapolis, MN 55403
612.304.6073

2016
Annual Report

Welcome to our 2016 Annual Report
To explore key stories of the past year
and find out more about what’s in store,
visit Target.com/abullseyeview. You can
also view our Annual Report online at
Target.com/annualreport.

Financial Highlights

(Note: Reflects amounts attributable to continuing operations.)

Sales
In Millions

EBIT
In Millions

Net Earnings
In Millions

Diluted EPS

1
0
3
,
3
7
$

9
7
2
1,
7
$

8
1
6
,
2
7
$

5
8
7
,
3
7
$

5
9
4
,
9
6
$

0
4
7
,
5
$

0
7
,1
5
$

5
3
5
,
4
$

0
3
5
,
5
$

9
6
9
,
4
$

5
1
3
,
3
$

4
9
6
,
2
$

9
4
4
,
2
$

1
2
3
,
3
$

9
6
6
,
2
$

0
0
.
5
$

0
2
.
4
$

3
8
.
3
$

5
2
.
5
$

8
5
.
4
$

’12

’13

’14

’15

’16

’12

’13

’14

’15

’16

’12

’13

’14

’15

’16

’12

’13

’14

’15

’16

2016 Growth: –5.8% (a)
Five-year CAGR: 0.3%

2016 Growth: –10.1%
Five-year CAGR: –1.8%

2016 Growth: –19.6%
Five-year CAGR: –2.6%

2016 Growth: –12.7%
Five-year CAGR: 0.5%

Total Segment Sales: $69,495 Million

22%

20%

19%

17%

Household
Essentials

Food, Beverage
& Pet Supplies

Apparel &
Accessories

Home Furnishings
& Decor

Hardlines

(a) The 2016 sales decline is primarily due to the December 2015 sale of our pharmacy and clinic businesses (Pharmacy Transaction) to CVS Pharmacy, Inc. 2015 sales includes $3,815

million related to our former pharmacy and clinic businesses.

Target 2016 Annual Report

2016 marked a significant year of transition at Target. Two years
ago, we laid out an ambitious, multi-year strategy to put our
company back on the path to long term profitable growth and
create lasting shareholder value.

We said this work would be a journey. And we knew it would
take time to reimagine our operating model, reposition our asset
base and build a new company that is prepared to compete and
win in this new era of retail.

I am pleased to report that in 2016, we made significant
progress on our goals:

• Signature categories, including Style and Kids, gained market
share, growing approximately three percentage points faster
than our total comparable sales.

• Our digital channel sales have consistently outpaced the

industry averages, with annual growth of nearly 30% over
the last two years.

• Our small formats, which bring our brand to new guests in

urban neighborhoods and college campuses, are producing
outstanding results, generating much stronger sales
productivity, healthy profit margins and return on investment.

• We introduced two new blockbuster brands for kids—Cat &

Jack and Pillowfort—that have consistently generated double
digit comp sales increases since they launched.

• Our supply chain investments are beginning to bear fruit,
driving efficiency for Target and elevating the shopping
experience for our guests by offering greater choice, speed,
ease and convenience.

• And we’ve done all this while taking more than $2 billion in
expense and cost of goods out of our business during the
past two years.

Taken together, these efforts have produced strong bottom-line
results. Our 2016 GAAP earnings per share (EPS) from continuing
operations reached $4.58, and our Adjusted EPS reached
$5.01, representing a nine percent average annual growth rate
in Adjusted EPS since we embarked on this strategy two years
ago. And during that same period, we returned nearly $10 billion
to our shareholders through dividends and share repurchase.

Yet, despite this progress, we haven’t seen the growth we
expected on the top line. Significant changes in consumer
behavior are creating real challenges across our industry.
Combine this change with an acceleration in the channel shift
into digital shopping, and instead of building momentum in our

business, we’ve seen a slowdown. Many of our competitors are
struggling to compete in this environment, closing stores and
exiting business lines.

At Target, we are taking a fundamentally different approach.
While others are exiting businesses and cutting investments, we
are confidently investing in our future, creating a growth engine
that we expect to drive consistent, sustainable, profitable growth,
and market-share gains for many years to come.

And we are, by no means, starting from scratch. The progress
we made in 2016 was a direct result of a very deliberate strategy
to align our teams behind several key priorities. And looking
ahead for 2017, those priorities will not change. What will change
is our pace.

Beginning in 2017, we are embarking on capital investments
of more than $7 billion during the next three years to advance
and elevate our digital capabilities, open more than 100 new
small format stores in priority markets, reimagine and reposition
more than 600 existing stores, accelerate enterprise data and
analytics capabilities, unveil more than a dozen new exclusive
brands and continue to transform our supply chain into a smart
network that leverages our inherent structural advantages in
terms of proximity and scale. To support these changes and
give our teams greater flexibility, we’re planning to invest about
$1 billion of our operating profits this year, which will enable us
to grow faster over time.

Given the headwinds facing our industry and the scale and
depth of our investments, it will take time to realize share gains.
We could make different choices—shut down stores, reduce
payroll or service levels—in an effort to prop up our P&L in the
short term, but that would be the wrong approach for Target.

We are playing the long game. Investing to grow and investing
to win. We have a strong balance sheet. A talented team. And
we are asking shareholders to make a meaningful investment
in our future, so we can build a new company that will produce
greater value for our guests and our shareholders for many
years to come.

Brian Cornell, Chairman and CEO

Financial Summary

Target 2016 Annual Report

FINANCIAL RESULTS: (in millions)

Sales (b)

Cost of Sales

Gross Margin

Selling, general and administrative expenses (SG&A)

Credit card expenses

Depreciation and amortization

Gain on sale (c)

Earnings from continuing operations before
interest expense and income taxes (EBIT)

Net interest expense

Earnings from continuing operations before income taxes

Provision for income taxes

Net earnings from continuing operations

Discontinued operations, net of tax

Net earnings / (loss)

PER SHARE:

Basic earnings / (loss) per share

Continuing operations

Discontinued operations

Net earnings / (loss) per share

Diluted earnings / (loss) per share

Continuing operations

Discontinued operations

Net earnings / (loss) per share

Cash dividends declared

FINANCIAL POSITION: (in millions)

Total assets

Capital expenditures (d)

Long-term debt, including current portion (d)

Net debt (d)(e)

Shareholders’ investment

SEGMENT FINANCIAL RATIOS: (f)

Comparable sales growth (g)

Gross margin (% of sales)

SG&A (% of sales)

EBIT margin (% of sales)

OTHER:

2016

2015

2014

2013

2012 (a)

$ 69,495

$ 73,785

$ 72,618

$ 71,279

48,872

20,623

13,356

—

2,298

—

4,969

1,004

3,965

1,296

2,669

51,997

21,788

14,665

—

2,213

(620)

5,530

607

4,923

1,602

3,321

51,278

21,340

14,676

—

2,129

—

4,535

882

3,653

1,204

2,449

(4,085)

50,039

21,240

14,465

—

1,996

(391)

5,170

1,049

4,121

1,427

2,694

(723)

$ 73,301

50,568

22,733

14,643

467

2,044

(161)

5,740

684

5,056

1,741

3,315

(316)

2,737

$ 3,363

(1,636)

1,971

$ 2,999

4.62

0.12

4.74

4.58

0.12

4.70

2.36

$ 37,431

1,547

$ 12,749

$ 11,639

$ 10,953

(0.5)%

29.7%

19.2%

7.1%

5.29

0.07

5.35

5.25

0.07

5.31

2.20

$ 40,262

1,438

$ 12,760

9,752

$ 12,957

2.1%

29.5%

19.6%

6.9%

3.86

(6.44)

(2.58)

3.83

(6.38)

(2.56)

1.99

$ 41,172

1,786

$ 12,725

$ 11,205

$ 13,997

1.3%

29.4%

20.0%

6.5%

4.24

(1.14)

3.10

4.20

(1.13)

3.07

1.65

$ 44,325

1,886

$ 12,494

$ 12,491

$ 16,231

(0.4)%

29.8%

20.2%

6.8%

5.05

(0.48)

4.57

5.00

(0.48)

4.52

1.38

$ 47,878

$ 2,345

$ 16,260

$ 16,185

$ 16,558

2.7%

29.7%

19.1%

7.8%

Common shares outstanding (in millions)

556.2

602.2

640.2

632.9

645.3

Operating cash flow provided by continuing
operations (in millions) (h)

Sales per square foot (d)(i)

Retail square feet (in thousands) (d)

Square footage growth (d)

Total number of stores (d)

Total number of distribution centers (d)

5,329

290

5,254

307

5,157

302

239,502

239,539

239,963

—%

1,802

(0.2)%

1,792

—%

1,790

7,572

298

240,054

0.9%

1,793

$ 5,615

299

237,847

0.9%

1,778

(a) Consisted of 53 weeks.
(b) The 2016 sales decline is primarily due to the Pharmacy Transaction. For 2012, includes credit card revenues.
(c) For 2015, includes the gain on the Pharmacy Transaction. For 2013 and 2012, includes gains related to the sale of our U.S. credit card receivables portfolio.
(d) Represents amounts attributable to continuing operations.
(e) Including current portion and short-term notes payable, net of short-term investments of $1,110 million, $3,008 million, $1,520 million, $3 million, and $75 million in 2016, 2015, 2014, 2013, and 2012,

respectively. Management believes this measure is an indicator of our level of financial leverage because short-term investments are available to pay debt maturity obligations.

(f) Effective January 15, 2015, we operate as a single segment which includes all of our continuing operations, excluding net interest expense and the impact of certain other discretely managed items.
(g) See definition of comparable sales in Form 10-K, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.
(h) Prior year balances have been revised to reflect the impact of adopting ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, described further in Form 10-K, Item 8,

Financial Statements and Supplementary Data, Note 26.

(i) Represents sales per square foot which is calculated using rolling four quarters average square feet. The 2016 decrease is primarily due to the Pharmacy Transaction. Our former pharmacy and

clinic businesses contributed approximately $16 to 2015 sales per square foot. In 2012, sales per square foot was calculated excluding the 53rd week in order to provide a more useful comparison
to other years. Using total reported sales for 2012 (including the 53rd week) resulted in sales per square foot of $304.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

(Mark One)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

For the fiscal year ended January 28, 2017

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

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

Common Stock, par value $0.0833 per share

Name of Each Exchange on Which Registered

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 x No o

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 o No x

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 x No o

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 x No o

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. x

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). See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule
126-2 of the Exchange Act.

Large accelerated filer x

Accelerated filer o Non-accelerated filer o

(Do not check if a smaller reporting company)

Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x

The aggregate market value of the voting stock held by non-affiliates of the registrant as of July 30, 2016 was $43,242,921,133, based on the
closing price of $75.33 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 2, 2017 were 552,675,341.

Portions of Target's Proxy Statement to be filed on or about May 1, 2017 are incorporated into Part III.

DOCUMENTS INCORPORATED BY REFERENCE

TABLE OF CONTENTS

PART I

Item 1

Item 1A

Item 1B

Item 2

Item 3

Item 4

Business

Risk Factors

Unresolved Staff Comments

Properties

Legal Proceedings

Mine Safety Disclosures

Item 4A

Executive Officers

PART II

Item 5

Item 6

Item 7

Item 7A
Item 8

Item 9

Item 9A

Item 9B

PART III

Item 10

Item 11

Item 12

Item 13

Item 14

PART IV

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

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

Item 15

Exhibits, Financial Statement Schedules

Signatures

Exhibit Index

Item 1. Business

General

PART I

Target Corporation (Target, the Corporation or the Company) was incorporated in Minnesota in 1902. We offer our
customers, referred to as "guests," everyday essentials and fashionable, differentiated merchandise at discounted
prices. Our ability to deliver a preferred shopping experience to our guests is supported by our supply chain and
technology, our devotion to innovation, our loyalty offerings such as REDcard Rewards and Cartwheel, and our
disciplined approach to managing our business and investing in future growth. We operate as a single segment designed
to enable guests to purchase products seamlessly in stores or through our digital channels. Since 1946, we have given
5 percent of our profit to communities.

We perform account servicing and primary marketing functions for, and earn a substantial portion of the profits generated
by, the Target Credit Card and Target MasterCard consumer receivables portfolio, which is underwritten, funded, and
owned by TD Bank Group (TD). Refer to Note 9 of the Consolidated Financial Statements included in Item 8, Financial
Statements and Supplementary Data (the Financial Statements) for more information on the credit card profit sharing.

Prior to January 15, 2015, we operated a Canadian Segment. On January 15, 2015, we announced our exit from the
Canadian market, and Target Canada Co. and certain other wholly owned subsidiaries of Target filed for protection
(the Filing) in Canada under the Companies' Creditors Arrangement Act (CCAA) with the Ontario Superior Court of
Justice in Toronto (the Court). Following the Filing, we no longer consolidate our former Canadian retail operation.
Canadian financial results prior to the Filing are included in our financial statements and classified within discontinued
operations. See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations
(MD&A) and Note 7 of the Financial Statements for more information.

Prior to December 16, 2015, we operated 1,672 pharmacies and 79 clinics in our stores. On December 16, 2015, we
sold our pharmacy and clinic businesses (Pharmacy Transaction) to CVS Pharmacy, Inc. (CVS). CVS now operates
the pharmacy and clinic businesses in our stores under a perpetual operating agreement, subject to termination in
limited circumstances. See MD&A and Note 6 of the Financial Statements for more information.

Discontinued operations in this Annual Report on Form 10-K refers only to our discontinued Canadian operations.

Financial Highlights

For information on key financial highlights and segment financial information, see the items referenced in Item 6,
Selected Financial Data, MD&A, and Note 30 of the Financial Statements.

Seasonality

A larger share of annual revenues and earnings traditionally occurs in the fourth quarter because it includes the peak
holiday sales period of November and December.

Merchandise

We sell a wide assortment of general merchandise and food. The majority of our general merchandise stores offer an
edited food assortment, including perishables, dry grocery, dairy, and frozen items. Nearly all of our stores larger than
170,000 square feet offer a full line of food items comparable to traditional supermarkets. Our small, flexible format
stores, generally smaller than 50,000 square feet, offer curated general merchandise and food assortments. Our digital
channels include a wide assortment of general merchandise, including many items found in our stores, along with a
complementary assortment such as additional sizes and colors sold only online.

A significant portion of our sales is from national brand merchandise. Approximately one-third of 2016 sales related to
our owned and exclusive brands, including but not limited to the following:

Owned Brands
Archer Farms®
Art Class™
Ava & Viv®
Boots & Barkley®
Cat & Jack™
Embark®
Gilligan & O'Malley®
Knox Rose™

Market Pantry®
Merona®
Pillowfort™
Room Essentials®
Simply Balanced™
Smith & Hawken®
Sonia Kashuk®
Spritz™

Sutton & Dodge®
Threshold™
up & up®
Wine Cube®
Wondershop™
Xhilaration®

Exclusive Brands
C9 by Champion®
DENIZEN® from Levi's®
Fieldcrest®
Genuine Kids® from OshKosh®

Hand Made Modern®
Just One You® made by carter's®
Kid Made Modern®
Liz Lange® for Target

Mossimo®
Nate Berkus for Target
Oh Joy!® for Target

We also sell merchandise through periodic exclusive design and creative partnerships and generate revenue from in-
store amenities such as Target Café and Target Photo, and leased or licensed departments such as Target Optical,
Starbucks, and other food service offerings. The majority of our stores also have a CVS pharmacy from which we will
generate ongoing annual, inflation adjusted occupancy-related income (see MD&A and Note 6 of the Financial
Statements for more information).

Distribution

The vast majority of merchandise is distributed to our stores through our network of 40 distribution centers. Common
carriers ship general merchandise to and from our distribution centers. Vendors or third party distributors ship certain
food items and other merchandise directly to our stores. Merchandise sold through our digital channels is distributed
to our guests via common carriers from our distribution centers, from vendors or third party distributors, from our stores
or through guest pick-up at our stores. Using our stores as fulfillment points allows improved product availability and
delivery times and also reduces shipping costs.

Employees

At January 28, 2017, we employed approximately 323,000 full-time, part-time and seasonal employees, referred to
as "team members." During the 2016 holiday sales period our employment levels peaked at approximately 373,000
team members. We offer a broad range of company-paid benefits to our team members. Eligibility for and the level of
benefits vary depending on team members' full-time or part-time status, compensation level, date of hire, and/or length
of service. Company-paid benefits include a 401(k) plan, medical and dental plans, disability insurance, paid vacation,
tuition reimbursement, various team member assistance programs, life insurance, a pension plan (closed to new
participants, with limited exceptions), and merchandise and other discounts. We believe our team member relations
are good.

Working Capital

Our working capital needs are greater in the months leading up to the holiday sales period, which we typically finance
with cash flow provided by operations and short-term borrowings. Additional details are provided in the Liquidity and
Capital Resources section in MD&A.

Effective inventory management is key to our ongoing success, and we use various techniques including demand
forecasting and planning and various forms of replenishment management. We achieve effective inventory
management by staying 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 internet retailers, including off-price general merchandise retailers, apparel retailers,
wholesale clubs, category specific retailers, drug stores, supermarkets, and other forms of retail commerce. Our ability
to positively differentiate ourselves from other retailers and provide a compelling value proposition 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

Virtually all of our revenues are generated within the United States. The vast majority of our long-lived assets are
located within the United States.

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
investors.target.com 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 Social
Responsibility Report, and the charters for the committees of our Board of Directors are also available free of charge
in print upon request or at investors.target.com.

Item 1A. Risk Factors

Our business is subject to many risks. Set forth below are the material risks we face. Risks are listed in the categories
where they primarily apply, but other categories may also apply.

Competitive and Reputational Risks

Our continued success is 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, our team members choose Target as a place
of employment and our vendors choose to do business with us is the reputation we have built over many years for
serving our four primary constituencies: guests, team members, shareholders, and the communities in which we
operate. To be successful in the future, we must continue to preserve Target's reputation. Reputational value is based
in large part on perceptions, and broad access to social media makes it easy for anyone to provide public feedback
that can influence perceptions of Target. It may be difficult to control negative publicity, regardless of whether it is
accurate. While reputations may take decades to build, any negative incidents can quickly erode trust and confidence,
particularly if they result in negative mainstream and social media publicity, governmental investigations, or litigation.
Negative incidents could lead to tangible adverse effects on our business, including consumer boycotts, lost sales,
loss of new store and technology development opportunities, or team member retention and recruiting difficulties. In
addition, vendors and others with whom we choose to do business may affect our reputation. For example, CVS
operates clinics and pharmacies within our stores, and our guests’ perceptions of and experiences with CVS may
impact our reputation.

If we are unable to positively differentiate ourselves from other retailers, our results of operations could be
adversely affected.

In the past, we have been able to compete successfully by differentiating our guests’ shopping experience through a
careful combination of price, merchandise assortment, store environment, convenience, guest service, loyalty programs
and marketing efforts. Our ability to create a personalized guest experience through the collection and use of accurate
and relevant guest data is important to our ability to differentiate from other retailers. Guest perceptions regarding the
cleanliness and safety of our stores, the functionality, reliability, and speed of our digital channels and fulfillment options,
our in-stock levels, the effectiveness of our promotions, the attractiveness of our third party offerings, such as the
clinics and pharmacies owned and operated by CVS, 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 or the failure of our strategies
could have an adverse effect on our sales, gross margins, and expenses.

We sell many products under our owned and exclusive brands. These brands are an important part of our business
because they differentiate us from other retailers, generally carry higher margins than equivalent national brand products
and represent a significant portion of our overall sales. If we are unable to successfully develop and support our owned
and exclusive brands, if one or more of these brands experiences a loss of consumer acceptance or confidence, or if
we are unable to successfully protect our intellectual property rights in these brands, our sales and gross margins
could be adversely affected.

The continuing migration and evolution of retailing to digital channels has increased our challenges in differentiating
ourselves from other retailers. In particular, consumers are able to quickly and conveniently comparison shop and
determine real-time product availability using digital tools, which can lead to decisions based solely on price, the
functionality of the digital tools or a combination of those and other factors. We must compete by offering a consistent
and convenient shopping experience for our guests regardless of the ultimate sales channel. We must provide our
guests and team members digital tools that have the right features and are reliable and easy to use. Failures to
effectively execute in these efforts, actions by our competitors in response to these efforts, or failures of our vendors
to manage their own channels, content and technology systems could hurt our ability to differentiate ourselves from
other retailers and, as a result, have an adverse effect on sales, gross margins, and expenses.

If we are unable to successfully provide a relevant and reliable experience for our guests, regardless of where
our guest demand is ultimately fulfilled, our sales, results of operations and reputation 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 must anticipate and meet changing guest expectations and counteract new developments and technology
investments by our competitors. Our evolving retailing efforts include implementing new technology, software and
processes to be able to fulfill guest orders directly from our vendors and from any point within our system of stores
and distribution centers. Providing flexible fulfillment options is complex and may not meet guest expectations for
accurate order fulfillment, faster and guaranteed delivery times, and low-price or free shipping. If we are unable to
attract and retain team members or contract with third parties having the specialized skills needed to support these
efforts, implement improvements to our guest‑facing technology in a timely manner, collect accurate, relevant, and
usable guest data to support our personalization efforts, allow real-time and accurate visibility to product availability
when guests are ready to purchase, quickly and efficiently fulfill our guests orders using the fulfillment and payment
methods they demand, or provide a convenient and consistent experience for our guests across all sales channels,
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 appeal to our guests, reliably function as designed, integrate across all
sales channels, or maintain the privacy of guest data we may experience a loss of guest confidence and lost sales,
which 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 large 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, accessories, home décor, electronics, toys,
seasonal offerings, food and other merchandise. For example, our apparel and home décor assortment is continually
evolving and in other areas of our product assortment, including food, we are supporting guest wellness goals and
offering more items that appeal to local cultural and demographic tastes. Failure to obtain accurate and relevant data
on guest preferences, predict changing consumer tastes, preferences, spending patterns and other lifestyle decisions,
emphasize the correct categories, implement effective promotions, and personalize our offerings to our guests 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.

Technology Investments and Infrastructure Risks

If our capital investments in technology, supply chain, new stores and remodeling existing stores do not
achieve appropriate returns, our competitive position, financial condition and results of operations may be
adversely affected.

Our business is becoming increasingly reliant on technology investments, and the returns on these investments can
be less predictable than building new stores and remodeling existing stores. We are currently making, and will continue
to make, significant technology investments to provide a consistent and improved guest experience across all sales
channels and improve our supply chain and inventory management systems. These technology initiatives might not
provide the anticipated benefits or desired return or may provide them on a delayed schedule or at a higher cost. Our
business also depends, in part, on our ability to build new stores and remodel existing stores in a manner that achieves
appropriate returns on our capital investment. We compete with other retailers and businesses for suitable locations
for our stores. Many of our expected new store sites are smaller and non-standard footprints located in fully developed
markets, which require changes to our supply chain practices and are generally more time-consuming, expensive and
uncertain undertakings than expansion into undeveloped suburban and ex-urban markets. Targeting the wrong
technology or store opportunities, failing to make the best investments, being unable to make new concepts scalable
or making an investment commitment significantly above or below our needs could result in the loss of our competitive
position and adversely impact our financial condition or results of operations.

A significant disruption in our computer systems and our inability to adequately maintain and update those
systems could adversely affect our operations and our ability to maintain guest confidence.

We rely extensively on our computer systems to manage and account for inventory, process guest transactions, manage
and maintain the privacy of guest data, communicate with our vendors and other third parties, service REDcard
accounts, and summarize and analyze results. We also rely on continued and unimpeded access to the Internet to
use our computer systems. Our systems are subject to damage or interruption from power outages, telecommunications
failures, computer viruses, malicious attacks, security breaches, and catastrophic events. If our systems are damaged
or fail to function properly or reliably, we may incur substantial repair or replacement costs, experience data loss or
theft and impediments to our ability to manage inventories or process guest transactions, engage in additional

promotional activities to retain our guests, and encounter lost guest confidence, which could adversely affect our results
of operations.

We continually make significant technology investments that are intended to help maintain and update our existing
computer systems. Implementing significant system changes increases the risk of computer system disruption. The
potential problems and interruptions associated with implementing technology initiatives could disrupt or reduce our
operational efficiency, and could negatively impact guest experience and guest confidence.

Data Security and Privacy Risks

If our efforts to protect the security of information about our guests, team members and vendors are
unsuccessful, we may face additional costly government enforcement actions and private litigation, and our
sales and reputation could suffer.

We regularly receive and store information about our guests, team members, and vendors. We have programs in place
to detect, contain and respond to data security incidents. However, because the techniques used to obtain unauthorized
access, disable or degrade service, or sabotage systems change frequently and may be difficult to detect for long
periods of time, we may be unable to anticipate these techniques or implement adequate preventive measures. In
addition, hardware, software, or applications we develop or procure from third parties may contain defects in design
or manufacture or other problems that could unexpectedly compromise information security. Unauthorized parties may
also attempt to gain access to our systems or facilities, or those of third parties with whom we do business, through
fraud, trickery, or other forms of deceiving our team members, contractors, vendors, and temporary staff.

Until the data breach we experienced in the fourth quarter of 2013, all incidents we encountered were insignificant.
The data breach we experienced in 2013 was significant and went undetected for several weeks. Both we and our
vendors had data security incidents subsequent to the 2013 data breach; however, to date these other incidents have
not been material to our consolidated financial statements. Based on the prominence and notoriety of the 2013 data
breach, even minor additional data security incidents could draw greater scrutiny. If we, our vendors, or other third
parties with whom we do business experience additional significant data security breaches or fail to detect and
appropriately respond to significant data security breaches, we could be exposed to additional government enforcement
actions and private litigation. In addition, our guests could lose confidence in our ability to protect their information,
which could cause them to discontinue using our REDcards or loyalty programs, or stop shopping with us altogether.

Supply Chain and Third Party Risks

Changes in our relationships with our vendors, changes in tax policy or trade relations, interruptions in our
supply chain or increased commodity or supply chain costs could adversely affect our results of operations.

We are dependent on our vendors to supply merchandise to our distribution centers, stores and guests. As we continue
to add capabilities, our fulfillment network becomes increasingly complex and operating it becomes more challenging.
If our fulfillment network does not operate properly or if a vendor fails to deliver on its commitments, we could experience
merchandise out-of-stocks, delivery delays or increased delivery costs, which could lead to lost sales and decreased
guest confidence, and adversely affect our results of operations.

A large portion of our merchandise is sourced, directly or indirectly, from outside the United States, with China as our
single largest source. The results of the recent United States elections may signal a change in trade policy between
the United States and other countries. Because a large portion of our merchandise is sourced, directly or indirectly,
from outside the United States, major changes in tax policy or trade relations, such as the disallowance of tax deductions
for imported merchandise or the imposition of additional tariffs or duties on imported products, could adversely affect
our business, results of operations, effective income tax rate, liquidity and net income.

Political or financial instability, currency fluctuations, changes in trade policy, trade restrictions, tariffs or duties, the
outbreak of pandemics, labor unrest, transport capacity and costs, port security, weather conditions, natural disasters
or other events that could slow or disrupt port activities and affect foreign trade are beyond our control and could
materially disrupt our supply of merchandise, increase our costs, and/or adversely affect our results of operations.
There have been periodic labor disputes impacting the United States ports that have caused us to make alternative
arrangements to continue the flow of inventory, and if these types of disputes recur, worsen, or occur in other countries
through which we source products, it may have a material impact on our costs or inventory supply. Changes in the
costs of procuring commodities used in our merchandise or the costs related to our supply chain, including vendor
costs, labor, fuel, tariffs, duties, currency exchange rates, and supply chain transparency initiatives, could have an

adverse effect on gross margins, expenses, and results of operations. Changes in our relationships with our vendors
also have the potential to increase our expenses and adversely affect results of operations.

A disruption in relationships with third party service providers could adversely affect our operations.

We rely on third parties to support our business, including portions of our technology development and support, our
digital platforms and fulfillment operations, credit and debit card transaction processing, extensions of credit for our
5% REDcard Rewards loyalty program, the clinics and pharmacies operated by CVS within our stores, the infrastructure
supporting our guest contact centers, and aspects of our food offerings. 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, if we fail to properly manage those third parties, if they fail to meet our performance standards and
expectations, including with respect to data security, then 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
and retaining team members to provide these services in-house. An example of our reliance on third parties is our
relationship with CVS. If our guests do not react favorably to CVS’s operations or if our relationship with CVS is
ineffective, our ability to discontinue the relationship is limited and our results of operations may be adversely affected.
In addition, if we wish to have clinics and pharmacies in any new stores, those clinics and pharmacies must be owned
and operated by CVS, which limits our flexibility in designing and operating new stores and new store concepts.

Legal, Regulatory, Global and Other External Risks

Our earnings are highly susceptible to the state of macroeconomic conditions and consumer confidence in
the United States.

Virtually all of our sales are in the United States, making our results highly dependent on United States consumer
confidence and the health of the United States 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 or consumer confidence could
negatively affect our business in many ways, including slowing sales growth, reducing overall sales, and reducing
gross margins.

These same considerations impact the success of our credit card program. Although we no longer own a consumer
credit card receivables portfolio, we share in the economic performance of the credit card program with TD, which
owns the receivables generated by our proprietary credit cards. 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.

Uncharacteristic or significant weather conditions, alone or together with natural disasters, could adversely
affect our 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 natural disasters 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, distribution centers
or key vendors, and cause delays in the distribution of merchandise from our vendors to our distribution centers, stores,
and directly to guests, which could adversely affect our results of operations by increasing our costs and lowering our
sales.

We rely on a large, global and changing workforce of team members, contractors and temporary staffing. If
we do not effectively manage our workforce and the concentration of work in certain global locations, our
labor costs and results of operations could be adversely affected.

With over 300,000 team members, our workforce costs represent our largest operating expense, and our business
and regulatory compliance is dependent on our ability to attract, train, and retain the appropriate mix of qualified team
members, contractors, and temporary staffing and effectively organize and manage those resources as our business
and strategic priorities change. Many team members are in entry-level or part-time positions with historically high
turnover rates. Our ability to meet our changing labor needs while controlling our costs is subject to external factors
such as labor laws and regulations, unemployment levels, prevailing wage rates, collective bargaining efforts, health

care and other benefit costs, changing demographics, and our reputation and relevance within the labor market. If we
are unable to attract and retain adequate numbers and an appropriate mix of qualified team members, contractors
and temporary staffing, our operations, guest service levels, support functions, and competitiveness could suffer. Those
factors, together with increasing wage and benefit costs, could adversely affect our results of operations. 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.

We maintain a headquarters location in India and sourcing offices in China where there has generally been greater
political, financial, environmental and health instability than the United States. An extended disruption of our operations
in India or offices in China could adversely affect certain operations supporting stability and maintenance of our digital
channels, information technology development, and sourcing operations.

Failure to address product safety and sourcing concerns could adversely affect our sales and results of
operations.

If our merchandise offerings do not meet applicable safety standards or Target's or our guests’ expectations regarding
safety, supply chain transparency and integrity of sources of supply, 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. All of
our vendors must also comply with our Standards of Vendor Engagement, which cover a variety of expectations across
multiple areas of social compliance, including supply chain transparency and sources of supply. We have a social
compliance audit process, but we are also dependent on our vendors to ensure that the products we buy comply with
our standards. Negative guest perceptions regarding the safety of the products we sell and events that give rise to
actual, potential or perceived social compliance concerns could hurt our reputation and result in lost sales. For example,
we recently terminated a relationship with a vendor that supplied us with cotton sheets that were represented to be
100 percent Egyptian cotton after we discovered that the vendor substituted non-Egyptian cotton. If that event or if
similar events in the future cause our guests to seek alternative sources for their needs, we could lose sales and it
may be difficult and costly for us to regain the confidence of our guests.

Our failure to comply with federal, state, local, and international 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 in the United States and other countries in which we
operate. Significant workforce-related legislative changes could increase our expenses and adversely affect our
operations. Examples of possible workforce-related legislative changes 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, advance scheduling notice requirements, and health care mandates. In
addition, changes in the regulatory environment affecting privacy and information security, product safety, payment
methods and related fees, responsible sourcing, 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 other applicable laws and regulations, including wage and hour laws, the Foreign
Corrupt Practices Act and local anti-bribery 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.

Financial Risks

Changes in our effective income tax rate could adversely affect our business, results of operations, liquidity,
and net income.

A number of factors influence our effective income tax rate, 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 net income. In addition, our 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, liquidity, and results
of operations could suffer.

We are dependent on a stable, liquid, and well-functioning financial system to fund our operations and capital
investments. In particular, we have historically relied on the public debt markets to fund portions of our capital
investments 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 credit ratings. If rating agencies lower our credit ratings, it could
adversely impact our ability to access the debt markets, our cost of funds, and other terms for new debt issuances.
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.

Item 1B. Unresolved Staff Comments

Not applicable.

Item 2. Properties

Stores at
January 28, 2017
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

Stores
22
3
46
9
273
41
20
3
1
122
51
6
6
92
31
20
18
13
16
5
39
40
55
75
6
35

Retail Sq. Ft.
(in thousands)

3,150 Montana
504 Nebraska

6,136 Nevada
1,165 New Hampshire

35,575 New Jersey
6,215 New Mexico
2,672 New York

440 North Carolina
179 North Dakota

17,135 Ohio

6,916 Oklahoma
971 Oregon
664 Pennsylvania
12,361 Rhode Island

4,174 South Carolina
2,835 South Dakota
2,473 Tennessee
1,551 Texas
2,246 Utah

630 Vermont
4,952 Virginia
5,188 Washington
6,603 West Virginia

10,634 Wisconsin
743 Wyoming

4,609

Total

Stores and Distribution Centers at January 28, 2017

Owned

Leased

Owned buildings on leased land

Total
(a)

The 40 distribution centers have a total of 51,831 thousand square feet.

Stores
7
14
17
9
46
10
75
49
4
61
15
19
69
4
19
5
31
147
13
—
58
37
6
37
2

Retail Sq. Ft.
(in thousands)
780
2,006
2,230
1,148
5,929
1,185
9,961
6,496
554
7,659
2,168
2,280
8,741
517
2,359
580
3,990
20,726
1,953
—
7,689
4,328
755
4,560
187

1,802

239,502

Stores

1,535

107

160

1,802

Distribution
Centers (a)
33

—

We own our corporate headquarters buildings located in and around Minneapolis, Minnesota, and we lease and own
additional office space elsewhere in the United States. We also lease office space in 12 countries for various support
functions. Our properties are in good condition, well maintained, and suitable to carry on our business.

For additional information on our properties, see the Capital Expenditures section in MD&A and Notes 14 and 22 of
the Financial Statements.

Item 3. Legal Proceedings

The following proceedings are being reported pursuant to Item 103 of Regulation S-K:

Federal Securities Law Class Actions

On May 17, 2016 and May 24, 2016, Target Corporation and certain present and former officers were named
as defendants in two purported federal securities law class actions filed in the United States District Court for
the District of Minnesota. The actions subsequently were consolidated under the caption In re: Target
Corporation Securities Litigation, Case No. 0:16-cv-01315-JNE-BRT. The plaintiffs filed a Consolidated
Amended Class Action Complaint (Consolidated Complaint) on November 14, 2016, alleging violations of
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 relating to
certain prior disclosures of Target about its expansion of retail operations into Canada (Canada
Disclosure).Target, its former chief executive officer, its present chief operating officer, and the former president
of Target Canada are named as defendants in the Consolidated Complaint. The plaintiff seeks to represent a
class consisting of all purchasers of Target common stock between March 20, 2013 and August 4, 2014. The
plaintiff seeks damages and other relief, including attorneys’ fees, based on allegations that the defendants
misled investors about the performance and prospects of Target Canada and that such conduct affected the
value of Target common stock. On February 10, 2017, Target and the other defendants moved to dismiss the
Consolidated Complaint. That motion has not yet been heard or decided. Target intends to vigorously defend
this consolidated action.

ERISA Class Actions

On July 12, 2016 and July 15, 2016, Target Corporation, the Plan Investment Committee and Target’s current
chief operating officer were named as defendants in two purported Employee Retirement Income Security Act
of 1974 (ERISA) class actions filed in the United States District Court for the District of Minnesota. The actions
subsequently were consolidated under the caption In re: Target Corporation ERISA Litigation, Case No. 0:16-
cv-02400-JNE-BRT. The plaintiffs filed an Amended Class Action Complaint (Amended Complaint) on
December 14, 2016, alleging violations of Sections 404 and 405 of ERISA relating to the Canada Disclosure.
Target, the Plan Investment Committee, and seven present or former officers are named as defendants in the
Amended Complaint. The plaintiffs seek to represent a class consisting of all persons who were participants
in or beneficiaries of the Target Corporation 401(k) Plan or the Target Corporation Ventures 401(k) Plan
(collectively, the Plans) at any time between February 27, 2013 and May 19, 2014 and whose Plan accounts
included investments in Target stock. The plaintiffs seek damages, an injunction and other unspecified equitable
relief, and attorneys’ fees, expenses, and costs, based on allegations that the defendants breached their
fiduciary duties by failing to take action to prevent Plan participants from continuing to purchase Target stock
during the class period at prices that allegedly were artificially inflated. On February 24, 2017, Target and the
other defendants moved to dismiss the Amended Complaint. That motion has not yet been heard or decided.
Target intends to vigorously defend this consolidated action.

The following governmental enforcement proceedings relating to environmental matters are reported pursuant to
instruction 5(C) of Item 103 of Regulation S-K because they involve potential monetary sanctions in excess of $100,000:

On February 27, 2015, the California Attorney General sent us a letter alleging, based on a series of compliance
checks, that we have not achieved compliance with California’s environmental laws and the provisions of the
injunction that was part of a settlement reached in 2011. Representatives of Target have had a series of
meetings with representatives of the Attorney General’s Office and certain California District Attorneys’ Offices
to discuss the allegations and attempt to resolve the matter. No formal legal action has been commenced, nor
has any specific relief been sought, to date.

For a description of other legal proceedings, see Note 19 of the Financial Statements.

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 are no family relationships
between any of the officers named and any other executive officer or member of the Board of Directors, or any
arrangement or understanding pursuant to which any person was selected as an officer.

Name

Title and Business Experience

Age

Casey L. Carl

Brian C. Cornell

Rick H. Gomez

Don H. Liu

Stephanie A.
Lundquist

Michael E.
McNamara

John J. Mulligan

Janna A. Potts

Jacqueline
Hourigan Rice

Cathy R. Smith

Mark J. Tritton

Laysha L. Ward

Executive Vice President and Chief Strategy and Innovation Officer since December
2014. President, Omnichannel and Senior Vice President, Enterprise Strategy from July
2014 to December 2014. President, Multichannel, from November 2011 to July 2014.

Chairman of the Board and Chief Executive Officer since August 2014. Chief Executive
Officer of PepsiCo Americas Foods, a division of PepsiCo, Inc., a multinational food and
beverage corporation, from March 2012 to July 2014.

Executive Vice President and Chief Marketing Officer since January 2017. Senior Vice
President, Brand and Category Marketing from April 2013 to January 2017. Vice
President, Brand Marketing at MillerCoors, a multinational brewing company, from April
2011 to April 2013.

Executive Vice President, Chief Legal Officer and Corporate Secretary since August
2016. Executive Vice President, General Counsel and Corporate Secretary of Xerox
Corporation from July 2014 to July 2016, and Senior Vice President, General Counsel
and Corporate Secretary from March 2007 to August 2014.

Executive Vice President and Chief Human Resources Officer since February 2016.
Senior Vice President, Human Resources from January 2015 to February 2016. Senior
Vice President, Stores and Distribution Human Resources from February 2014 to
January 2015. From March 2011 to January 2014, Ms. Lundquist held several leadership
positions with Target Canada.

Executive Vice President, Chief Information and Digital Officer since September 2016.
Executive Vice President and Chief Information Officer from June 2015 to September
2016. Chief Information Officer of Tesco PLC, a multinational grocery and general
merchandise retailer, from March 2011 to May 2015.

Executive Vice President and Chief Operating Officer since September 2015. Executive
Vice President and Chief Financial Officer from April 2012 to August 2015.

Executive Vice President and Chief Stores Officer since January 2016. Senior Vice
President, Stores and Supply Chain Human Resources from February 2015 to January
2016. Senior Vice President, Target Canada Stores and Distribution from March 2014
to January 2015. Senior Vice President, Store Operations from August 2009 to March
2014.

Executive Vice President and Chief Risk and Compliance Officer since December 2014.
Chief Compliance Officer of General Motors Company, a vehicle manufacturer, from
March 2013 to November 2014. Executive Director, Global Ethics & Compliance of
General Motors Company from January 2010 to February 2013.

Executive Vice President and Chief Financial Officer since September 2015. Executive
Vice President and Chief Financial Officer of Express Scripts Holding Company, a
pharmacy benefit manager, from February 2014 to December 2014. Executive Vice
President of Strategy and Chief Financial Officer for Walmart International, a division of
Wal-Mart Stores, Inc., a discount retailer, from March 2010 to January 2014.

Executive Vice President and Chief Merchandising Officer since June 2016. President
of Nordstrom Product Group, of Nordstrom Inc., a fashion specialty retailer, from June
2009 to June 2016.

Executive Vice President and Chief External Engagement Officer since January 2017.
Chief Corporate Social Responsibility Officer from December 2014 to January 2017.
President, Community Relations and Target Foundation from July 2008 to December
2014.

PART II

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 2, 2017, there were 15,067 shareholders of record. Dividends declared per share and the high
and low closing common stock price for each fiscal quarter during 2016 and 2015 are disclosed in Note 31 of the
Financial Statements.

On January 11, 2012, our Board of Directors authorized the repurchase of $5 billion of our common stock and on June
9, 2015 expanded the program by an additional $5 billion for a total authorization of $10 billion. On September 20,
2016, our Board of Directors authorized a new $5 billion share repurchase program. We began repurchasing shares
under this new authorization during the fourth quarter of 2016 upon completion of the previous $10 billion program.
There is no stated expiration for the share repurchase programs. Under these programs, we repurchased 50.9 million
shares of common stock in fiscal 2016, at an average price of $72.35, for a total investment of $3.7 billion. The table
below presents information with respect to Target common stock purchases made during the three months ended
January 28, 2017, by Target or any "affiliated purchaser" of Target, as defined in Rule 10b-18(a)(3) under the Exchange
Act.

Period

October 30, 2016 through November 26, 2016

Total Number
of Shares
Purchased

Average
Price
Paid per
Share

Total Number of
Shares Purchased
as Part of Publicly
Announced Programs

Dollar Value of
Shares that May
Yet Be Purchased
Under Publicly
Announced Programs

Open market and privately negotiated purchases
September 2016 ASR (a)

802,412

1,286,423

November 27, 2016 through December 31, 2016

Open market and privately negotiated purchases

December 2016 ASR

January 1, 2017 through January 28, 2017

—

4,618,451

Open market and privately negotiated purchases

2,362,745

9,070,031

67.23

67.67

—

76.77

66.27

71.90

802,412

5,210,467,654

1,286,423

5,246,730,198

—

4,618,451

5,246,730,198

4,892,156,933

2,362,745

4,735,572,452

9,070,031

4,735,572,452

Total

(a)

Represents the incremental shares received upon final settlement of the accelerated share repurchase
agreement (ASR) initiated in third quarter 2016.

Target
S&P 500 Index
Peer Group

Fiscal Years Ended

January 28,
2012
100.00 $
100.00
100.00

February 2,
2013
124.97 $
117.61
127.43

February 1,
2014
118.53 $
141.49
154.12

January 31,
2015
158.98 $
161.61
191.03

January 30,
2016
160.89 $
160.54
208.03

January 28,
2017
146.06
194.04
231.50

The graph above compares the cumulative total shareholder return on our common stock for the last five fiscal years
with the cumulative total return on the S&P 500 Index and a peer group consisting of 18 online, general merchandise,
department store, food, and specialty retailers, which are large and meaningful competitors (Amazon.com, Inc., Best
Buy Co., Inc., Costco Wholesale Corporation, CVS Health Corporation, Dollar General Corporation, The Gap, Inc.,
The Home Depot, Inc., Kohl's Corporation, The Kroger Co., Lowe's Companies, Inc., Macy's, Inc., Publix Super Markets,
Inc., Rite Aid Corporation, Sears Holdings Corporation, Staples, Inc., The TJX Companies, Inc., Walgreens Boots
Alliance, Inc., and Wal-Mart Stores, Inc.) (Peer Group). The peer group is consistent with the retail peer group used
for our definitive Proxy Statement to be filed on or about May 1, 2017.

The peer group is 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 and the Peer Group on January 28, 2012, and
reinvestment of all dividends.

Item 6. Selected Financial Data

(millions, except per share data)
Sales (b)
Net Earnings / (Loss)

Continuing operations

Discontinued operations

Net earnings / (loss)

Basic Earnings / (Loss) Per Share

Continuing operations

Discontinued operations

Basic earnings / (loss) per share

Diluted Earnings / (Loss) Per Share

Continuing operations

Discontinued operations

Diluted earnings / (loss) per share

Cash dividends declared per share

As of or for the Fiscal Year Ended

2016

2015

2014

2013

2012 (a)

69,495 $

73,785 $

72,618 $

71,279 $

73,301

2,669

2,737

4.62

0.12

4.74

4.58

0.12

4.70

2.36

3,321

3,363

2,449
(4,085)
(1,636)

5.29

0.07

5.35

5.25

0.07

5.31

2.20

3.86
(6.44)
(2.58)

3.83
(6.38)
(2.56)
1.99

2,694
(723)
1,971

4.24
(1.14)
3.10

4.20
(1.13)
3.07

1.65

3,315
(316)
2,999

5.05
(0.48)
4.57

5.00
(0.48)
4.52

1.38

Total assets

Long-term debt, including current portion

37,431

12,749

40,262

12,760

41,172

12,725

44,325

12,494

47,878

16,260

Note: This information should be read in conjunction with MD&A and the Financial Statements.
(a)

Consisted of 53 weeks.

(b)

For 2012, includes credit card revenues.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

Executive Summary

Fiscal 2016 included the following notable items:

• GAAP earnings per share from continuing operations were $4.58.
•
•
•

Adjusted earnings per share were $5.01.
Comparable sales decreased 0.5 percent, reflecting a 0.8 percent decrease in traffic.
Comparable digital channel sales growth of 27 percent contributed 1.0 percentage points of comparable sales
growth.

• We returned $5.0 billion to shareholders through dividends and share repurchase.

Sales were $69,495 million for 2016, a decrease of $4,290 million or 5.8 percent from the prior year, primarily due to
the Pharmacy Transaction. Earnings from continuing operations before interest expense and income taxes in 2016
decreased by $561 million or 10.1 percent from 2015 to $4,969 million, primarily due to the 2015 gain on the Pharmacy
Transaction. Operating cash flow provided by continuing operations was $5,329 million, $5,254 million, and $5,157
million for 2016, 2015, and 2014, respectively. In 2015, proceeds from the Pharmacy Transaction are included in
investing cash flows provided by continuing operations. Refer to Note 6 of the Financial Statements for additional
information about the transaction.

Earnings Per Share From
Continuing Operations

GAAP diluted earnings per share
Adjustments
Adjusted diluted earnings per share

2016

4.58 $
0.42
5.01 $

2015

5.25 $
(0.56)
4.69 $

Percent Change

2014

2016/2015

2015/2014

3.83
0.39
4.22

(12.7)%

37.2%

6.7 %

11.3%

Note: Amounts may not foot due to rounding. Adjusted diluted earnings per share from continuing operations (Adjusted EPS), a non-GAAP metric,
excludes the impact of certain items not related to our routine retail operations. Management believes that Adjusted EPS is meaningful to provide
period-to-period comparisons of our operating results. A reconciliation of non-GAAP financial measures to GAAP measures is provided on page 21.

We report after-tax return on invested capital (ROIC) from continuing operations because we believe ROIC provides
a meaningful measure of our capital-allocation effectiveness over time. For the trailing twelve months ended January 28,
2017, ROIC was 15.0 percent, compared with 16.0 percent for the trailing twelve months ended January 30, 2016.
Excluding the net gain on the Pharmacy Transaction, ROIC was 13.9 percent for the trailing twelve months ended
January 30, 2016. A reconciliation of ROIC is provided on page 22.

Analysis of Results of Operations

Segment Results

Percent Change

2015/2014
2016
(dollars in millions)
1.6%
69,495 $
Sales
1.4
48,872
Cost of sales
2.1
20,623
Gross margin
SG&A expenses (b)
(0.4)
13,360
7.4
7,263
EBITDA
3.9
2,298
Depreciation and amortization
8.9%
4,965 $
EBIT
Note: See Note 30 of our Financial Statements for a reconciliation of our segment results to earnings before income taxes and more information
about items recorded outside of segment SG&A.
(a)

2016/2015
(5.8)%
(6.0)
(5.4)
(7.5)
(1.1)
3.8
(3.2)%

2015 (a)
73,785 $
51,997
21,788
14,448
7,340
2,213
5,127 $

2014 (a)
72,618
51,278
21,340
14,503
6,837
2,129
4,708

Sales include $3,815 million and $4,148 million related to our former pharmacy and clinic businesses for 2015 and 2014, respectively,
and cost of sales include $3,076 million and $3,222 million, respectively. The sale of these businesses had no notable impact on EBITDA
or EBIT.
For 2016, 2015, and 2014, SG&A includes $663 million, $641 million, and $629 million, respectively, of net profit-sharing income from
the arrangement with TD.

(b)

Rate Analysis

Gross margin rate

SG&A expense rate
EBITDA margin rate (a)
Depreciation and amortization expense rate
EBIT margin rate (a)
Note: Rate analysis metrics are computed by dividing the applicable amount by sales.
(a)

2016
29.7%
19.2

10.5

3.3

7.1

2015
29.5%
19.6

9.9

3.0

6.9

2014
29.4%
20.0

9.4

2.9

6.5

Excluding sales of our former pharmacy and clinic businesses, EBITDA margin rates were 10.5 percent and 10.0 percent for 2015 and
2014, respectively, and EBIT margin rates were 7.3 percent and 6.9 percent, respectively.

Sales

Sales include all merchandise sales, net of expected returns, and gift card breakage. Refer to Note 2 of the Financial
Statements for a definition of gift card breakage. Digital channel sales include all sales initiated through mobile
applications and our conventional websites. Digital channel sales may be fulfilled through our distribution centers, our
vendors, or our stores.

The decrease in 2016 sales reflects a decrease of approximately $3,815 million due to the Pharmacy Transaction and
a comparable sales decrease of 0.5 percent, partially offset by the contribution from new stores. The increase in 2015
sales reflects an increase in comparable sales of 2.1 percent and the contribution from new stores, partially offset by
a decrease of approximately $550 million due to the Pharmacy Transaction. Inflation did not materially affect sales in
any period presented.

Sales by Channel

Stores

Digital

Total
(a)

2016
95.6%
4.4
100%

2015 (a)
96.6%
3.4
100%

2014 (a)
97.4%
2.6
100%

Excluding sales of our former pharmacy and clinic businesses, stores and digital channels sales were 96.4 percent and 3.6 percent of
total sales, respectively, for 2015 and 97.2 and 2.8 percent of total sales, respectively, for 2014.

Comparable sales is a measure that highlights the performance of our existing stores and digital channel sales by
measuring the change in sales for a period over the comparable, prior-year period of equivalent length. Comparable
sales include all sales, except sales from stores open less than 13 months, digital acquisitions we have owned less
than 13 months, stores that have been closed, and digital acquisitions that we no longer operate. We removed pharmacy
and clinic sales from the 2015 sales amounts when calculating 2016 comparable sales. Comparable sales measures
vary across the retail industry. As a result, our comparable sales calculation is not necessarily comparable to similarly
titled measures reported by other companies.

Comparable Sales

Comparable sales change

Drivers of change in comparable sales:

Number of transactions

Average transaction amount

Contribution to Comparable Sales Change
Stores channel comparable sales change
Digital channel contribution to comparable sales change
Total comparable sales change

Note: Amounts may not foot due to rounding.

2016
(0.5)%

(0.8)
0.3

2016
(1.5)%
1.0
(0.5)%

2015
2.1%

1.3

0.8

2015
1.3%
0.8
2.1%

2014
1.3%

(0.2)
1.5

2014
0.7%
0.7
1.3%

Sales by Product Category

Percentage of Sales

Household essentials (a)
Food, beverage, and pet supplies (b)
Apparel and accessories (c)
Home furnishings and décor (d)
Hardlines (e)
Total
(a)

2016
22%
22

17
100%

2015
26%
21

17
100%

2014
25%
21

18
100%

Includes pharmacy, beauty, personal care, baby care, cleaning, and paper products. Pharmacy represented 5 percent and 6 percent in
2015 and 2014, respectively.
Includes dry grocery, dairy, frozen food, beverages, candy, snacks, deli, bakery, meat, produce, and pet supplies.
Includes apparel for women, men, boys, girls, toddlers, infants and newborns, as well as intimate apparel, jewelry, accessories, and
shoes.
Includes furniture, lighting, kitchenware, small appliances, home décor, bed and bath, home improvement, automotive, and seasonal
merchandise such as patio furniture and holiday décor.
Includes electronics (including video game hardware and software), music, movies, books, computer software, sporting goods, and toys.

(b)

(c)

(d)

(e)

Further analysis of sales metrics is infeasible due to 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.

TD offers credit to qualified guests through Target-branded credit cards: the Target Credit Card and the Target
MasterCard Credit Card (Target Credit Cards). Additionally, we offer a branded proprietary Target Debit Card.
Collectively, we refer to these products as REDcards®. Guests receive a 5 percent discount on virtually all purchases
and free shipping at Target.com when they use a REDcard. We monitor the percentage of sales that are paid for using
REDcards (REDcard Penetration) because our internal analysis has indicated that a meaningful portion of incremental
purchases on our REDcards are also incremental sales for Target.

REDcard Penetration

Target Debit Card

Target Credit Cards

Total REDcard Penetration

2016
12.8%
11.2
24.0%

2015
12.1%
10.1
22.3%

2014
11.2%
9.7
20.9%

Note: Excluding pharmacy and clinic sales, total REDcard penetration would have been 23.2 percent and 21.9 percent for 2015 and 2014,
respectively. The sum of Target Credit Cards and Target Debit Card penetration may not equal Total REDcard Penetration due to rounding.

Gross Margin Rate

0.2%

0.6%

0.2%

(0.2)%

(0.1)%

29.5%

(0.4)%

(0.2)%

29.7%

Mix

Promotions

Shipping

Other

2015
GM
Rate

Pharmacy
Transaction

Mix

Shipping &
Digital
Fulfillment

Other

2016
GM
Rate

29.4%

2014
GM
Rate

Our gross margin rate was 29.7 percent in 2016, 29.5 percent in 2015, and 29.4 percent in 2014. The 2016 increase
was primarily due to the Pharmacy Transaction and favorable category sales mix, partially offset by increased shipping
and digital fulfillment costs. Cost of goods savings helped offset the impact of a competitive promotional environment.

The 2015 increase was primarily due to favorable category sales mix and lower promotional activity relative to the
highly promotional period in 2014 following the 2013 data breach, partially offset by the impact of increased digital
channel sales.

Selling, General and Administrative Expense Rate

20.0%

2014
SG&A
Rate

0.2%

19.6%

(0.4)%

(0.2)%

(0.3)%

0.1%

19.2%

Cost
Savings

Marketing
Expense

Other

2015
SG&A
Rate

Pharmacy
Transaction

Cost
Savings

Stores
Hourly
Payroll

2016
SG&A
Rate

Our SG&A expense rate was 19.2 percent in 2016, 19.6 percent in 2015, and 20.0 percent in 2014. The decrease in
2016 primarily resulted from the benefit of the Pharmacy Transaction and technology-related cost savings, partially
offset by increased stores hourly payroll.

The decrease in 2015 primarily resulted from cost saving initiatives and reduced marketing expense, partially offset
by investments in other initiatives, none of which were individually significant.

Store Data

Change in Number of Stores
Beginning store count
Opened
Closed
Ending store count

Number of Stores and
Retail Square Feet

170,000 or more sq. ft.

50,000 to 169,999 sq. ft.

49,999 or less sq. ft.

Total
(a)

2016
1,792
15
(5)
1,802

2015
1,790
15
(13)
1,792

Number of Stores

Retail Square Feet (a)

January 28,
2017

January 30,
2016

January 28,
2017

January 30,
2016

276

1,504

1,802

278

1,505

1,792

49,328

189,620

554

49,688

189,677

174

239,502

239,539

In thousands, reflects total square feet less office, distribution center and vacant space.

Other Performance Factors

Other Selling, General and Administrative Expenses

We recorded $(4) million, $216 million, and $174 million of selling, general and administrative expenses outside of the
segment during 2016, 2015, and 2014, respectively, because they relate to discretely managed matters. Additional
information about these discretely managed items is provided within Note 30 of the Financial Statements.

Net Interest Expense

Net interest expense from continuing operations was $1,004 million, $607 million, and $882 million for 2016, 2015,
and 2014, respectively. Net interest expense for 2016 and 2014 included a loss on early retirement of debt of $422
million and $285 million, respectively.

Provision for Income Taxes

Our 2016 effective income tax rate from continuing operations increased to 32.7 percent, from 32.5 percent in 2015,
driven primarily by the 2015 rate impact of the $112 million tax benefit from releasing the valuation allowance on a
capital loss. This comparative rate impact was partially offset by $27 million of excess tax benefit in 2016 related to
shared-based payments after the adoption of Accounting Standards Update (ASU) No. 2016-09, Improvements to
Employee Share-Based Payment Accounting, and lower pretax earnings. Note 23 of the Financial Statements provides
a tax rate reconciliation.

Our 2015 effective income tax rate from continuing operations decreased to 32.5 percent, from 33.0 percent in 2014,
driven primarily by the $112 million tax benefit from releasing the valuation allowance on a capital loss. This benefit
was partially offset by a year-over-year decrease in the favorable resolution of various income tax matters and the
rate impact of higher pretax earnings. The resolution of various income tax matters reduced tax expense by $8 million
and $35 million in 2015 and 2014, respectively.

Discontinued Operations

See Note 7 of the Financial Statements for information about our Canada exit.

Reconciliation of Non-GAAP Financial Measures to GAAP Measures

To provide additional transparency, we have disclosed non-GAAP adjusted diluted earnings per share from continuing
operations (Adjusted EPS). This metric excludes certain items presented below. We believe this information is useful
in providing period-to-period comparisons of the results of our continuing operations. This measure is not in accordance
with, or an alternative to, generally accepted accounting principles in the United States (GAAP). The most comparable
GAAP measure is diluted earnings per share from continuing operations. 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
Adjusted EPS differently than we do, limiting the usefulness of the measure for comparisons with other companies.

422

257

0.44

$ — $

— $

— $ 285

173

(millions, except per share data)

Pretax

GAAP diluted earnings per share from
continuing operations

2016

Net of
Tax

Per
Share
Amounts

Pretax

2015

Net of
Tax

2014

Net of
Tax

Per
Share
Amounts

Pretax

Per
Share
Amounts

5.25

Adjustments

Loss on early retirement of debt
Gain on sale (a)
Restructuring costs (b)
Data breach-related costs, net of

insurance (c)

Other (d)
Resolution of income tax matters

Adjusted diluted earnings per share
from continuing operations

4.58

—

(4)

—

(2)

(7)

—

(0.01)

5.01

(620)

138

—

(487)

(8)

(0.77)

0.14

0.04

0.05

(0.01)

—

145

—

(35)

3.83

0.27

—

0.15

0.03

(0.06)

4.69

4.22

Note: Amounts may not foot due to rounding.
(a)

(b)

Refer to Note 6 of the Financial Statements.
Refer to Note 8 of the Financial Statements.
Refer to Note 19 of the Financial Statements.
For 2016, represents items related to the Pharmacy Transaction. For 2015, represents impairments related to our decision to wind down
certain noncore operations, as described in Note 16 of the Financial Statements. The 2014 amounts include impairments of $16 million
related to undeveloped land in the U.S. and $13 million of expense related to converting co-branded card program to MasterCard.

We have also disclosed after-tax return on invested capital for continuing operations (ROIC), which is a ratio based
on GAAP information, with the exception of adjustments made to capitalize operating leases. Operating leases are
capitalized as part of the ROIC calculation to control for differences in capital structure between us and our competitors.
We believe this metric provides a meaningful measure of the effectiveness of our capital allocation over time. Other
companies may calculate ROIC differently than we do, limiting the usefulness of the measure for comparisons with
other companies.

After-Tax Return on Invested Capital

Numerator

(dollars in millions)
Earnings from continuing operations before interest expense and
income taxes
+ Operating lease interest (a)(b)
Adjusted earnings from continuing operations before interest expense

and income taxes

- Income taxes (c)
Net operating profit after taxes

Trailing Twelve Months

January 28,
2017

January 30,
2016

4,969 $
71

5,040

1,648
3,392 $

5,530

5,617

1,827

3,790

Denominator
(dollars in millions)

Current portion of long-term debt and other borrowings

+ Noncurrent portion of long-term debt

+ Shareholders' equity
+ Capitalized operating lease obligations (b)(d)
- Cash and cash equivalents

- Net assets of discontinued operations

Invested capital
Average invested capital (e)

January 31,
2015
91

12,634

13,997

1,490

2,210

1,479

24,523

January 28,
2017
1,718 $

January 30,
2016
815

11,031

10,953

1,187

2,512

62
22,315 $
22,608 $

11,945

12,957

1,457

4,046

226

22,902

23,713

15.0%

16.0% (f)

After-tax return on invested capital
(a)

Represents the add-back to operating income driven by the hypothetical interest expense we would incur if the property under our operating
leases were owned or accounted for as capital leases, using eight times our trailing twelve months rent expense and an estimated interest
rate of six percent.
See the following Reconciliation of Capitalized Operating Leases table for the adjustments to our GAAP total rent expense to obtain the
hypothetical capitalization of operating leases and related operating lease interest.
Calculated using the effective tax rate for continuing operations, which was 32.7 percent and 32.5 percent for the trailing twelve months
ended January 28, 2017 and January 30, 2016. For the twelve months ended January 28, 2017 and January 30, 2016, includes tax effect
of $1,624 million and $1,799 million, respectively, related to EBIT and $23 million and $28 million, respectively, related to operating lease
interest.
Calculated as eight times our trailing twelve months rent expense.
Average based on the invested capital at the end of the current period and the invested capital at the end of the prior period.
Excluding the net gain on the Pharmacy Transaction, ROIC was 13.9 percent for the trailing twelve months ended January 30, 2016.

(b)

(c)

(d)

(e)

(f)

Capitalized operating lease obligations and operating lease interest are not in accordance with, or an alternative for,
GAAP. The most comparable GAAP measure is total rent expense. Capitalized operating lease obligations and
operating lease interest should not be considered in isolation or as a substitution for analysis of our results as reported
under GAAP.

Reconciliation of Capitalized Operating Leases

Trailing Twelve Months

(dollars in millions)
Total rent expense

January 28,
2017

January 30,
2016

148 $

182 $

January 31,
2015
186

Capitalized operating lease obligations (total rent expense x 8)

Operating lease interest (capitalized operating lease obligations x 6%)

1,187

1,457

1,490

n/a

Analysis of Financial Condition

Liquidity and Capital Resources

Our period-end cash and cash equivalents balance decreased to $2,512 million from $4,046 million in 2015, primarily
reflecting deployment during 2016 of proceeds from the Pharmacy Transaction and payment of related taxes. Due to
the timing of the sale late in 2015, we did not fully deploy the net proceeds by the end of 2015. Short-term investments
of $1,110 million and $3,008 million were included in cash and cash equivalents at the end of 2016 and 2015,
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 dollar limits on our investments in individual funds or instruments.

Capital Allocation

We follow a disciplined and balanced approach to capital allocation based on the following priorities, ranked in order
of importance: first, we fully invest in opportunities to profitably grow our business, create sustainable long-term value,
and maintain our current operations and assets; second, we maintain a competitive quarterly dividend and seek to
grow it annually; and finally, we return any excess cash to shareholders by repurchasing shares within the limits of our
credit rating goals.

Cash Flows

Our 2016 operations were funded by internally and externally generated funds. Operating cash flow provided by
continuing operations was $5,329 million in 2016 compared with $5,254 million in 2015. These cash flows, combined
with period year-end cash position, allowed us to invest in the business, fund early debt retirement and maturities, pay
dividends, and repurchase shares under our share repurchase program. Proceeds from the Pharmacy Transaction
are included in investing cash flows provided by continuing operations during 2015.

Inventory

Year-end inventory was $8,309 million, compared with $8,601 million in 2015. The decrease was due to our alignment
of inventory levels with the slowing sales trend while appropriately supporting instocks.

Share Repurchases

During 2016, 2015, and 2014 we returned $3,686 million, $3,441 million, and $41 million, respectively, to shareholders
through share repurchase. See Part II, Item 5 of this Annual Report on Form 10-K and Note 25 to the Financial
Statements for more information.

Dividends

We paid dividends totaling $1,348 million ($2.32 per share) in 2016 and $1,362 million ($2.16 per share) in 2015, a
per share increase of 7.4 percent. We declared dividends totaling $1,359 million ($2.36 per share) in 2016, a per share
increase of 7.3 percent over 2015. We declared dividends totaling $1,378 million ($2.20 per share) in 2015, a per share
increase of 10.6 percent over 2014. We have 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, maintain a balanced spectrum of debt
maturities, and manage our net exposure to floating interest rate volatility. Within these parameters, we seek to minimize
our borrowing costs. Our ability to access the long-term debt and commercial paper 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 credit ratings. As of January 28, 2017,
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-
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 ratings will remain the same as described above.

In 2016, we funded our peak holiday sales period working capital needs through internally generated funds and the
issuance of commercial paper. In 2015, we funded our peak holiday sales period working capital needs through
internally generated funds.

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

2016
89
1
—
0.43%

2015

— $
—
—
—%

2014
590
129
—
0.11%

We have additional liquidity through a committed $2.5 billion revolving credit facility obtained through a group of banks
in October 2016 which expires in October 2021. This new unsecured revolving credit facility replaced a $2.25 billion
unsecured revolving credit facility that was scheduled to expire in October 2018. No balances were outstanding under
either credit facility at any time during 2016, 2015, or 2014.

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. Additionally, at January 28, 2017, no notes or debentures contained provisions requiring
acceleration of payment upon a credit 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 credit ratings are either reduced and the resulting rating is non-investment grade, or our long-term credit
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, fund debt maturities, pay dividends, and execute purchases under our share repurchase
program for the foreseeable future. We continue to anticipate ample access to commercial paper and long-term
financing.

Capital Expenditures

)
s
n
o

i
l
l
i

(
$

$2,000

$1,500

$1,000

$500

$1,547

$587

$130

$830

$1,438

$773

$115

$550

$1,786

$1,072

$381

$333

2016

2015

2014

Existing store
investments

New stores (a)

Information
technology, supply
chain, and other

(a) In addition to these cash investments, we entered into leases related to new stores in 2016, 2015, and 2014 with total future minimum lease
payments of $550 million, $338 million, and $85 million, respectively.

Capital expenditures increased in 2016 from the prior year because we increased our investments in existing stores,
including remodels and guest experience enhancements. These increases were partially offset by continued efficiency
gains in technology. Capital expenditures decreased in 2015 from the prior year as we opened fewer large-format
stores and realized efficiency gains in technology, partially offset by increased guest experience and supply chain
investments. As noted in the footnote to the chart presented above, we substantially increased our investments in
leases in 2016 and 2015.

We expect capital expenditures in 2017 to increase to approximately $2.0 billion to $2.5 billion as we accelerate the
rate of store remodels and flexible-format store openings, and continue to make supply chain investments. We also
expect our rate of investment in store leases to continue to increase.

Commitments and Contingencies

Contractual Obligations as of

Payments Due by Period

January 28, 2017

(millions)

Recorded contractual obligations:

Long-term debt (a)
Capital lease obligations (b)
Deferred compensation (c)
Real estate liabilities (d)
Tax contingencies (e)

Unrecorded contractual obligations:

Interest payments – long-term debt
Operating leases (b)
Purchase obligations (f)
Real estate obligations (g)
Future contributions to retirement plans (h)

Contractual obligations
(a)

Less than

Total

1 Year

1-3

Years

3-5

Years

After 5

Years

$ 11,814 $
1,963

1,683 $
82

1,203 $
174

2,150 $
178

52
—

510

198

609

185

114

—
—

819

398

814

121

—
—

710

364

107

—

6,778

1,529

224

—
—

4,269

2,916

232

—

—
3,375 $

—
3,553 $

—

—
3,630 $ 15,948

515

52
—

6,308

3,876

1,762

216

—

$ 26,506 $

(b)

(c)

(d)

(e)

(f)

(g)

(h)

Represents principal payments only. See Note 20 of the Financial Statements for further information.
These payments also include $348 million and $269 million of legally binding minimum lease payments for stores that are expected to
open in 2017 or later for capital and operating leases, respectively. See Note 22 of the Financial Statements for further information.
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.
Real estate liabilities include costs incurred but not paid related to the construction or remodeling of real estate and facilities.
Estimated tax contingencies of $222 million, including interest and penalties and primarily related to continuing operations, 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
Financial Statements for further information.
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.
Real estate obligations include commitments for the purchase, construction, or remodeling of real estate and facilities.
We have not included obligations under our pension plans in the contractual obligations table above because no additional amounts are
required to be funded as of January 28, 2017. 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 noted above, we do not have
any arrangements or relationships with entities that are not consolidated into the financial statements.

Critical Accounting Estimates

Our consolidated financial statements are prepared in accordance with GAAP, which requires us to make estimates
and apply judgments that affect the reported amounts. In the Notes to Consolidated Financial Statements, we describe
the significant accounting policies used in preparing the consolidated financial statements. Our management has
discussed the development, selection, and disclosure of our critical accounting estimates with the Audit & Finance
Committee of our Board of Directors. The following items require significant estimation or judgment:

Inventory and cost of sales: Our inventory is valued at 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 physical inventory
counts. Historically, our actual physical inventory count results have shown our estimates to be reliable. Market
adjustments for markdowns are recorded when the salability of the merchandise has diminished. We believe the risk
of inventory obsolescence is largely mitigated because our inventory typically turns in less than three months. Inventory
was $8,309 million and $8,601 million at January 28, 2017 and January 30, 2016, respectively, and is further described
in Note 12 of the Financial Statements.

Vendor income: We receive various forms of consideration from our vendors (vendor income), principally earned as
a result of volume rebates, markdown allowances, promotions, and advertising allowances. Substantially all vendor
income 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 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 the 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 $385
million and $384 million at January 28, 2017 and January 30, 2016, respectively. Vendor income is described further
in Note 4 of the Financial Statements.

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. We recorded
impairments of $43 million, $54 million, and $124 million in 2016, 2015, and 2014, respectively, which are described
further in Note 14 of the Financial Statements.

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 $447 million and $498 million at January 28, 2017 and January 30, 2016, 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 five percent increase or decrease in average claim
costs would impact our self-insurance expense by $22 million in 2016. Historically, adjustments to our estimates have
not been material. Refer to Item 7A, Quantitative and Qualitative Disclosures About Market Risk, for further disclosure
of the market risks associated with these exposures. We maintain insurance coverage to limit our exposure to certain
events, including network security matters.

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 appropriate. Liabilities for uncertain tax positions, including interest and penalties, were
$222 million and $215 million at January 28, 2017 and January 30, 2016, respectively, and primarily relate to continuing
operations. 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 Financial Statements.

Pension accounting: We maintain a funded qualified, defined benefit pension plan, as well as several smaller and
unfunded nonqualified plans 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, age, 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, with adjustments made for any significant plan or participant changes, are used to determine the period-
end benefit obligation and establish expense for the next year.

Our 2016 expected long-term rate of return on plan assets of 6.8 percent is determined by the portfolio composition,
historical long-term investment performance, and current market conditions. A one percentage point decrease in our
expected long-term rate of return would increase annual expense by $37 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 $30 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 benefits are further described in Note 28 of the Financial Statements.

Legal and other contingencies: We believe the accruals recorded in our consolidated financial statements properly
reflect loss exposures that are both probable and reasonably estimable. We do not believe any of the currently identified
claims or litigation may materially affect 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, it may
cause 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. Refer to Note 19 of the Financial Statements for further information on contingencies.

New Accounting Pronouncements

Refer to Note 2 and Note 22 of the Financial Statements for a description of new accounting pronouncements related
to revenues and leases, respectively. We do not expect any other recently issued accounting pronouncements will
have a material effect on our financial statements.

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: our financial performance,
statements regarding the adequacy of and costs associated with our sources of liquidity, the expected impact of the
Pharmacy Transaction on our financial performance, the continued execution of our share repurchase program, our
expected capital expenditures and new lease commitments, the impact of changes in the expected effective income
tax rate on net income, 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 plan,
the expected returns on pension plan assets, the expected timing and recognition of compensation expenses, the
effects of macroeconomic conditions, the adequacy of our reserves for general liability, workers' compensation and
property loss, the expected outcome of, and adequacy of our reserves for investigations, inquiries, claims and litigation,
including those related to the 2013 data breach, expected changes to our contractual obligations and liabilities, the
expected ability to recognize deferred tax assets and liabilities and the timing of such recognition, the process, timing
and effects of discontinuing our Canadian operations, the resolution of tax matters, changes in our assumptions and
expectations, and the expected benefits of restructuring activities.

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 January 28, 2017, 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. Our interest rate exposure is primarily due to differences between
our floating rate debt obligations compared to our floating rate short term investments. At January 28, 2017, our floating
rate debt exceeded our floating rate short-term investments by approximately $140 million. Based on our balance
sheet position at January 28, 2017, the annualized effect of a 0.1 percentage point increase in floating interest rates
on our floating rate debt obligations, net of our floating rate short-term investments, would not be significant. 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. See further description of our debt and derivative instruments in Notes 20 and
21 to the Financial Statements.

We record our general liability and workers' compensation liabilities at net present value; therefore, these liabilities
fluctuate with changes in interest rates. Based on our balance sheet position at January 28, 2017, the annualized
effect of a 0.5 percentage point decrease in interest rates would be to decrease earnings before income taxes by
$7 million.

In addition, we are exposed to market return fluctuations on our qualified defined benefit pension plans. The value of
our pension liabilities is inversely related to changes in interest rates. A 0.5 percentage point decrease to the weighted
average discount rate would increase annual expense by $30 million. To protect against 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
55 percent of the interest rate exposure of our funded status.

As more fully described in Notes 15 and 27 to the 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.

There have been no other material changes in our primary risk exposures or management of market risks since the
prior year.

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.

Brian C. Cornell
Chairman and Chief Executive Officer
March 8, 2017

Cathy R. Smith
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 January 28, 2017 and January 30, 2016, and the related consolidated statements of operations, comprehensive
income, cash flows, and shareholders' investment for each of the three years in the period ended January 28, 2017. These financial
statements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these financial
statements 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 January 28, 2017 and January 30, 2016, and the consolidated results of their operations
and their cash flows for each of the three years in the period ended January 28, 2017, in conformity with U.S. generally accepted
accounting principles.

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 January 28, 2017, based on criteria established in Internal Control—
Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework), and
our report dated March 8, 2017, expressed an unqualified opinion thereon.

Minneapolis, Minnesota
March 8, 2017

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
January 28, 2017, based on the framework in Internal Control—Integrated Framework (2013), issued by the Committee of
Sponsoring Organizations of the Treadway Commission (2013 framework). 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 January 28, 2017, 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.

Brian C. Cornell
Chairman and Chief Executive Officer
March 8, 2017

Cathy R. Smith
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 January 28,
2017, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (2013 Framework) (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 January 28,
2017, 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 January 28, 2017 and January 30, 2016,
and the related consolidated statements of operations, comprehensive income, cash flows and shareholders' investment for each
of the three years in the period ended January 28, 2017, and our report dated March 8, 2017, expressed an unqualified opinion
thereon.

Minneapolis, Minnesota
March 8, 2017

Consolidated Statements of Operations

(millions, except per share data)
Sales
Cost of sales
Gross margin
Selling, general and administrative expenses
Depreciation and amortization
Gain on sale
Earnings from continuing operations before interest expense and income

taxes

Net interest expense
Earnings from continuing operations before income taxes
Provision for income taxes
Net earnings from continuing operations
Discontinued operations, net of tax
Net earnings / (loss)
Basic earnings / (loss) per share

Continuing operations
Discontinued operations

Net earnings / (loss) per share
Diluted earnings / (loss) per share

Continuing operations
Discontinued operations

Net earnings / (loss) per share

Weighted average common shares outstanding

Basic
Dilutive effect of share-based awards
Diluted

Antidilutive shares
Dividends declared per share
Note: Per share amounts may not foot due to rounding.

See accompanying Notes to Consolidated Financial Statements.

2016
69,495 $
48,872
20,623
13,356
2,298
—

4,969
1,004
3,965
1,296
2,669
68
2,737 $

4.62 $
0.12
4.74 $

4.58 $
0.12
4.70 $

577.6
4.9
582.5
0.1
2.36 $

2015
73,785 $
51,997
21,788
14,665
2,213
(620)

5,530
607
4,923
1,602
3,321
42
3,363 $

5.29 $
0.07
5.35 $

5.25 $
0.07
5.31 $

627.7
5.2
632.9
—
2.20 $

2014
72,618
51,278
21,340
14,676
2,129
—

4,535
882
3,653
1,204
2,449
(4,085)
(1,636)

3.86
(6.44)
(2.58)

3.83
(6.38)
(2.56)

634.7
5.4
640.1
3.3
1.99

Consolidated Statements of Comprehensive Income

(millions)

Net income / (loss)

Other comprehensive (loss) / income, net of tax

Pension and other benefit liabilities, net of tax benefit of $9, $18, and
$90

Currency translation adjustment and cash flow hedges, net of provision
for taxes of $2, $2, and $2

Other comprehensive (loss) / income

Comprehensive income / (loss)

See accompanying Notes to Consolidated Financial Statements.

2016
2,737 $

2015
3,363 $

2014
(1,636)

(13)

(27)

(139)

4
(9)
2,728 $

(3)
(30)
3,333 $

431

292
(1,344)

Consolidated Statements of Financial Position

(millions, except footnotes)

Assets

Cash and cash equivalents, including short-term investments of $1,110 and $3,008

Inventory

Assets of discontinued operations

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

Noncurrent assets of discontinued operations

Other noncurrent assets

Total assets

Liabilities and shareholders' investment

Accounts payable

Accrued and other current liabilities

Current portion of long-term debt and other borrowings

Liabilities of discontinued operations

Total current liabilities

Long-term debt and other borrowings

Deferred income taxes

Noncurrent liabilities of discontinued operations

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

January 28,
2017

January 30,
2016

2,512 $
8,309

1,100

11,990

6,106

27,611

5,503

2,651

200
(17,413)
24,658

771
37,431 $

7,252 $
3,737

1,718

12,708

11,031

861

1,860

13,770

5,661

5,884

4,046

8,601

322

1,161

14,130

6,125

27,059

5,347

2,617

315
(16,246)
25,217

840

40,262

7,418

4,236

815

153

12,622

11,945

823

1,897

14,683

5,348

8,188

(601)
(37)
10,953
37,431 $

(588)
(41)
12,957

40,262

Common Stock Authorized 6,000,000,000 shares, $0.0833 par value; 556,156,228 shares issued and outstanding at January 28, 2017; 602,226,517
shares issued and outstanding at January 30, 2016.

Preferred Stock Authorized 5,000,000 shares, $0.01 par value; no shares were issued or outstanding at January 28, 2017 or January 30, 2016.

See accompanying Notes to Consolidated Financial Statements.

Consolidated Statements of Cash Flows

(millions)

Operating activities

Net earnings / (loss)

Earnings / (losses) from discontinued operations, net of tax

Net earnings from continuing operations

Adjustments to reconcile net earnings to cash provided by operations:

Depreciation and amortization

Share-based compensation expense

Deferred income taxes

Gain on sale

Loss on debt extinguishment

Noncash (gains) / losses and other, net

Changes in operating accounts:

Inventory

Other assets

Accounts payable and accrued liabilities

Cash provided by operating activities—continuing operations

Cash provided by / (required for) operating activities—discontinued operations

Cash provided by operations

Investing activities

Expenditures for property and equipment

Proceeds from disposal of property and equipment

Proceeds from sale of businesses

Cash paid for acquisitions, net of cash assumed

Other investments

Cash (required for) / provided by investing activities—continuing operations

Cash provided by / (required for) investing activities—discontinued operations

Cash (required for) / provided by investing activities

Financing activities

Change in commercial paper, net

Additions to long-term debt

Reductions of long-term debt

Dividends paid

Repurchase of stock

Stock option exercises

Cash required for financing activities

Net (decrease) / increase in cash and cash equivalents
Cash and cash equivalents at beginning of period (a)
Cash and cash equivalents at end of period

Supplemental information

Interest paid, net of capitalized interest

Income taxes paid / (refunded)

Property and equipment acquired through capital lease obligations

(a)

Includes cash of our discontinued operations of $25 million at February 1, 2014.

See accompanying Notes to Consolidated Financial Statements.

2016

2015

2014

2,737 $

3,363 $

2,669

2,298

113

—

422

—

293

(543)

5,329

107

5,436

(1,547)

—

(1,473)

—

(1,473)

—

1,977

(2,641)

(1,348)

(3,706)

221

(5,497)

(1,534)

4,046

3,321

2,213

115

(322)

(620)

—

(316)

227

579

5,254

704

5,958

(1,438)

1,875

—

489

508

—

(85)

(1,362)

(3,483)

300

(4,630)

1,836

2,210

2,512 $

4,046 $

999 $

1,514

238

604 $

(127)

126

(1,636)

(4,085)

2,449

2,129

—

285

(512)

(115)

803

5,157

(692)

4,465

(1,786)

—

(20)

106

(1,605)

(321)

(1,926)

(80)

1,993

(2,079)

(1,205)

(26)

373

(1,024)

1,515

695

2,210

871

1,251

Consolidated Statements of Shareholders' Investment

Common
Stock
Shares

Stock
Par
Value

Additional
Paid-in
Capital

Retained
Earnings

Accumulated Other
Comprehensive
(Loss) / Income

(millions)

February 1, 2014

Net loss

Other comprehensive income

Dividends declared

Repurchase of stock

Stock options and awards

January 31, 2015

Net earnings

Other comprehensive loss

Dividends declared

Repurchase of stock

Stock options and awards

January 30, 2016

Net earnings

Other comprehensive loss

Dividends declared

Repurchase of stock

Stock options and awards

January 28, 2017

632.9 $
—

53 $
—

—

—
(0.8)
8.1
640.2 $
—

—

—
(44.7)
6.7
602.2 $
—

—

—
(50.9)
4.9
556.2 $

—

—
53 $
—

—

—
(4)
1
50 $
—

—

—
(4)
—
46 $

4,470 $ 12,599 $

—

429
4,899 $
—

—

449
5,348 $
—

—

313
5,661 $

(1,636)
—
(1,273)
(46)
—
9,644 $
3,363

—
(1,378)
(3,441)
—
8,188 $
2,737

—
(1,359)
(3,682)
—
5,884 $

—

292

Total
(891) $ 16,231
— (1,636)
292
— (1,273)
(46)
—
429
(599) $ 13,997
—
3,363
(30)
(30)
— (1,378)
— (3,445)
450
—
(629) $ 12,957
2,737
—
(9)
(9)
— (1,359)
— (3,686)
313
—
(638) $ 10,953

See accompanying Notes to Consolidated Financial Statements.

Notes to Consolidated Financial Statements

1. Summary of Accounting Policies

Organization We are a general merchandise retailer selling products to our guests through our stores and digital
channels.

As described in Note 7, in January 2015, we announced our exit from the Canadian market and filed for protection
(the Filing) under the Companies' Creditors Arrangement Act (CCAA) with the Ontario Superior Court of Justice in
Toronto (the Court). Our prefiling financial results in Canada and subsequent expenses directly attributable to the
Canada exit are included in our financial statements and classified within discontinued operations. Discontinued
operations refers only to our discontinued Canadian operations. Subsequent to the Filing, we operate as a single
segment that includes all of our continuing operations, which are designed to enable guests to purchase products
seamlessly in stores or through our digital channels.

Consolidation The consolidated financial statements include the balances of Target 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 Target is the primary beneficiary of those entities' operations.
As of January 15, 2015, we deconsolidated substantially all of our Canadian operations following the Filing. See Note
7 for more information.

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 2016 ended January 28, 2017, and consisted
of 52 weeks. Fiscal 2015 ended January 30, 2016, and consisted of 52 weeks. Fiscal 2014 ended January 31, 2015,
and consisted of 52 weeks. Fiscal 2017 will end February 3, 2018, and will consist of 53 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. Digital channel sales 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 national brand merchandise within 90 days of
purchase and owned and exclusive brands within one year of purchase. Revenues are recognized net of expected
returns, which we estimate using historical return patterns as a percentage of sales and our expectation of future
returns. Commissions earned on sales generated by leased departments are included within sales and were $42
million, $37 million, and $32 million in 2016, 2015, and 2014, respectively.

Revenue from gift card sales is recognized upon gift card redemption. Our gift cards do not expire. 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.

Guests receive a 5 percent discount on virtually all purchases and receive free shipping at Target.com when they use
their REDcard. The discount is included as a sales reduction in our Consolidated Statements of Operations and was
$899 million, $905 million, and $832 million in 2016, 2015, and 2014, respectively.

In May 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with
Customers (Topic 606).

We plan to adopt the standard in the first quarter of 2018, which begins on February 4, 2018. We are still evaluating
whether to use a full retrospective or a modified retrospective approach to adopt the standard. We do not expect the
standard to materially affect our consolidated net earnings, financial position, or cash flows.

We are evaluating whether we act as principal or agent in certain vendor arrangements where the purchase and sale
of inventory is virtually simultaneous, as further described in Note 12. We currently record revenue and related costs
gross, with approximately 3 percent of 2016 consolidated sales made under such arrangements. Any change to net
presentation would not impact gross margin or earnings.

We are also evaluating the presentation of certain ancillary income streams, including the credit card profit sharing
income described in Note 9.

3. Cost of Sales and Selling, General and Administrative Expenses

The following table illustrates the primary items classified in each major expense category:

Cost of Sales
Total cost of products sold including
• Freight expenses associated with moving
merchandise from our vendors to and between our
distribution centers and our retail stores
• 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 costs

Selling, General and Administrative Expenses
Compensation and benefit costs for stores and
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
U.S. credit cards servicing expenses and profit
sharing
Costs associated with accepting 3rd party bank issued
payment cards
Litigation and defense costs and related insurance
recovery
Other administrative costs

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." Under our
compliance programs, vendors are charged for merchandise shipments that do not meet our requirements (violations),
such as late or incomplete shipments. 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.

5. Advertising Costs

Advertising costs, which primarily consist of newspaper circulars, internet advertisements, and media broadcast, are
generally expensed at first showing or distribution of the advertisement.

Advertising Costs
(millions)
Gross advertising costs
Vendor income
Net advertising costs

2016
1,503 $
(38)
1,465 $

2015
1,472 $
(38)
1,434 $

2014
1,647
(47)
1,600

6. Pharmacy Transaction

In December 2015, we sold our pharmacy and clinic businesses to CVS (the Pharmacy Transaction) for cash
consideration of $1.9 billion, recognizing a gain of $620 million, and deferred income of $694 million. CVS now operates
the pharmacy and clinic businesses in our stores and paid us $24 million for occupancy during 2016.

Gain on Pharmacy Transaction
(millions)
Cash consideration
Less:

Deferred income (a)
Inventory
Other assets
Pretax transaction costs and contingent liabilities (b)

Pretax gain on Pharmacy Transaction (c)

2015

1,868

694
447
13
94
620

(a)

(b)

(c)

Represents the consideration received at the close of the sale related to CVS’s leasehold interest in the related space within our
stores. Deferred income will be recorded as a reduction to SG&A expense evenly over the 23-year weighted average remaining
accounting useful life of our stores. As of January 28, 2017, $660 million remains in other current and other noncurrent liabilities.
Primarily relates to professional services, contract termination charges, severance, and impairment of certain assets not sold to CVS.
Recorded outside of segment results and excluded from Adjusted EPS.

7. Canada Exit

On January 15, 2015, Target Canada Co. and certain other wholly owned subsidiaries of Target (collectively, Canada
Subsidiaries), comprising substantially all of our former Canadian operations and our former Canadian Segment, filed
for protection under the CCAA with the Ontario Superior Court of Justice in Toronto (the Court) and were deconsolidated.
As a result, we recorded a pretax impairment loss on deconsolidation and other related charges, collectively totaling
$5.1 billion. The Canada Subsidiaries are in the process of liquidation.

Subsequent to deconsolidation, we use the cost method to account for our equity investment in the Canada Subsidiaries,
which has been reflected as zero in our Consolidated Statement of Financial Position at January 28, 2017 and January
30, 2016 based on the estimated fair value of the Canada Subsidiaries' net assets.

As of the deconsolidation date, the loans, associated interest, and accounts receivable Target Corporation held are
considered related party transactions and have been recognized in Target Corporation's consolidated financial
statements. In addition, we held an accrual for the estimated probable loss related to claims that may be asserted
directly against us (rather than against the Canada Subsidiaries), primarily under our guarantees of certain leases of
the Canada Subsidiaries.

As part of a March 2016 settlement between the Canada Subsidiaries and all of their former landlords, we agreed to
subordinate a portion of our intercompany claims and make certain cash contributions to the Target Canada Co. estate
in exchange for a full release from our obligations under guarantees of certain leases of the Canada Subsidiaries. The
settlement was contingent upon the Canada Subsidiaries' creditors' and the Court's approval of a plan of compromise
and arrangement to complete the controlled, orderly, and timely wind-down of the Canada Subsidiaries (Plan). During
the second quarter of 2016, a Plan was approved. The net pretax financial impact of the settlement and Plan was
materially consistent with amounts previously recorded in our financial statements. During 2016, we received $182
million from the Target Canada Co. estate and made cash contributions of $27 million.

Income / (Loss) on Discontinued Operations
(millions)
Sales
Cost of sales
SG&A expenses
Depreciation and amortization
Interest expense
Pretax loss from operations
Pretax exit costs
Income taxes
Income / (loss) from discontinued operations

Pretax Exit Costs
(millions)
Investment impairment
Contingent liabilities
Other exit costs
Total

2016

2015

— $
—
—
—
—
—
13
55
68 $

— $
—
—
—
—
—
(129)
171

42 $

2014
1,902
1,541
909
248
73
(869)
(5,105)
1,889
(4,085)

2016
(222) $
229
6
13 $

2015

2014
(6) $ (4,766)
(240)
(99)
(129) $ (5,105)

(62)
(61)

During 2016, we recognized net tax benefits of $55 million in discontinued operations, which primarily related to tax
benefits from our investment losses in Canada recognized upon court approval of the Plan. During 2015, we recognized
net tax benefits of $171 million in discontinued operations, which primarily related to our pretax exit costs and change
in the estimated tax benefit from our investment losses in Canada. During 2014, we recognized a tax benefit of $1,889
million in discontinued operations, which includes the tax benefit of our 2014 Canadian operating losses, the tax benefit
related to a loss on our investment in Canada, and other tax benefits resulting from certain asset write-offs and liabilities
paid or accrued to facilitate the liquidation. The majority of these tax benefits were received in the first quarter of 2015,
and we used substantially all of the remainder in 2015 to reduce our estimated tax payments.

Assets and Liabilities of Discontinued Operations
(millions)

January 28,
2017

January 30,
2016

Income tax benefit
Receivables from Canada Subsidiaries (a)
Total assets

Accrued liabilities

Total liabilities

(a)

Represents loans and accounts receivable from Canada Subsidiaries.

8. Restructuring Initiatives

35 $
46
81 $

19 $
19 $

320

397

171

In 2015, we initiated a series of headquarters workforce reductions intended to increase organizational effectiveness
and provide cost savings that can be reinvested in our growth initiatives. As a result, during 2015 we recorded $138
million of severance and other benefits-related charges within SG&A. The vast majority of these expenses required
cash expenditures during 2015 and were not included in our segment results.

9. Credit Card Profit Sharing

TD Bank Group underwrites, funds, and owns Target Credit Card and Target MasterCard receivables, controls risk
management policies, and oversees regulatory compliance. We perform account servicing and primary marketing
functions. We earn a substantial portion of the profits generated by the Target Credit Card and Target MasterCard
portfolios. We earned $663 million, $641 million, and $629 million of net profit-sharing income during 2016, 2015, and
2014, respectively, which reduced SG&A expense.

10. Fair Value Measurements

Fair value measurements are reported in 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, 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

Beneficial interest asset

Other noncurrent assets
Interest rate swaps (a)
Beneficial interest asset

Liabilities
Other current liabilities
Interest rate swaps (a)

Fair Value at

Pricing
Category

January 28,
2017

January 30,
2016

Level 1 $

1,110 $

3,008

Level 2

Level 1

Level 3

Level 2

Level 3

Level 2

—

(a)

See Note 21 for additional information on interest rate swaps.

Valuation Technique

Short-term investments - Carrying value approximates fair value because maturities are less than three months.
Prepaid forward contracts - Initially valued at transaction price. Subsequently valued by reference to the market price

of Target common stock.

Interest rate swaps - 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).

Significant Financial Instruments not Measured at Fair Value (a)

2016

2015

(millions)
Debt (b)

Carrying
Amount

Fair
Value
$ 11,715 $ 12,545 $ 11,859 $ 13,385

Carrying
Amount

Fair
Value

(a)

(b)

The carrying amounts of certain other current assets, accounts payable, and certain accrued and other current liabilities approximate fair
value due to their short-term nature.
The fair value of debt is generally measured using a discounted cash flow analysis based on current market interest rates for the same
or similar types of financial instruments and would be classified as Level 2. These amounts exclude unamortized swap valuation
adjustments and capital lease obligations.

11. 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 $1,110 million and $3,008 million at January 28, 2017 and January 30, 2016,
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 $346 million and $375 million at
January 28, 2017 and January 30, 2016, respectively.

12. Inventory

The vast 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
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 $2,202 million, $2,261 million, and $2,040 million in 2016,
2015, and 2014, respectively.

13. Other Current Assets

Other Current Assets
(millions)

Vendor income receivable

Income tax and other receivables

Prepaid expenses

Other

Total

14. Property and Equipment

January 28,
2017

January 30,
2016

385 $
364

207

144
1,100 $

384

352

214

211

1,161

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 capital lease amortization expense for 2016,
2015, and 2014 was $2,280 million, $2,191 million, and $2,108 million, respectively. For income tax purposes,
accelerated depreciation methods are generally used. Repair and maintenance costs are expensed as incurred. 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
2-15
2-7

Long-lived assets are reviewed for impairment when events or changes in circumstances, such as a decision to relocate
or close a store or make significant software changes, indicate that the asset's carrying value may not be recoverable.
For asset groups classified as held for sale, the carrying value is compared to the fair value less cost to sell. We
estimate fair value by obtaining market appraisals, valuations from third party brokers, or other valuation techniques.

(b)

Substantially all of the impairments are recorded in SG&A expense on the Consolidated Statements of Operations.
For 2015, represents long-lived asset impairments from our decision to wind down certain noncore operations. For 2014, represents
impairments of undeveloped land. These costs were not included in our segment results.

Impairments (a)
(millions)
Impairments included in segment SG&A
Unallocated impairments (b)
Total impairments
(a)

15. Other Noncurrent Assets

Other Noncurrent Assets
(millions)
Company-owned life insurance investments (a)
Goodwill and intangible assets

Pension asset

Other

Total
(a)

2016

2015

43 $
—
43 $

50 $
4
54 $

2014
108
16
124

January 28,
2017

January 30,
2016

345 $
259

124
771 $

308

277

189

840

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.

16. Goodwill and Intangible Assets

Goodwill totaled $133 million at January 28, 2017 and January 30, 2016. During 2015, we announced our decision
to wind down certain noncore operations. As a result, we recorded a $35 million pretax impairment loss, which included
approximately $23 million of intangible assets and $12 million of goodwill. These costs were included in SG&A on our
Consolidated Statements of Operations, but were not included in our segment results. No impairments were recorded
in 2016 or 2014 as a result of the annual goodwill impairment tests performed.

Intangible Assets

Leasehold
Acquisition Costs

Other (a)

Total

(millions)

Gross asset

Accumulated amortization

Net intangible assets
(a)

January 28,
2017

January 30,
2016

January 28,
2017

January 30,
2016

January 28,
2017

January 30,
2016

208 $
(132)

76 $

211 $
(127)

84 $

88 $
(38)
50 $

88 $
(27)
61 $

296 $
(170)
126 $

299
(154)
145

Other intangible assets relate primarily to trademarks.

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 27 years and 8 years, respectively, at January 28, 2017. Amortization expense was $18 million, $23 million,
and $22 million in 2016, 2015, and 2014, respectively.

Estimated Amortization Expense
(millions)

Amortization expense

17. Accounts Payable

2017

2018

2019

2020

2021

16 $

12 $

11 $

At January 28, 2017 and January 30, 2016, we reclassified book overdrafts of $459 million and $534 million,
respectively, to accounts payable and $24 million and $25 million, respectively, to accrued and other current liabilities.

18. Accrued and Other Current Liabilities

Accrued and Other Current Liabilities
(millions)

Wages and benefits

Gift card liability, net of estimated breakage

Real estate, sales, and other taxes payable

Dividends payable
Straight-line rent accrual (a)
Income tax payable
Workers' compensation and general liability (b)
Interest payable

Other

Total
(a)

(b)

January 28,
2017

January 30,
2016

812 $
693

571

334

271

158

141

686
3,737 $

884

644

574

337

262

502

146

811

4,236

Straight-line rent accrual represents the amount of operating lease rent expense recorded that exceeds cash payments.
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.

19. Commitments and Contingencies

Data Breach

In the fourth quarter of 2013, we experienced a data breach in which an intruder stole certain payment card and other
guest information from our network (the Data Breach), which resulted in a number of claims against us. We have
resolved the most significant claims relating to the Data Breach, and there were no material changes to our loss
contingency assessment relating to the remaining claims during 2016. We do not expect any material changes to the
assessment of our exposure from this event. At January 28, 2017, the remaining accrual for Data Breach-related
liabilities was immaterial to our Consolidated Statements of Financial Position.

We incurred net Data Breach-related expenses of $39 million and $145 million during 2015 and 2014, respectively.
Net expenses include expenditures for legal and other professional services and accruals for Data Breach-related
costs and expected insurance recoveries. These net expenses were included in our Consolidated Statements of
Operations as SG&A, but were not part of segment results. For 2016, Data Breach-related expenses were negligible.

Since the Data Breach, we have incurred $292 million of cumulative expenses, partially offset by insurance recoveries
of $90 million, for net cumulative expenses of $202 million.

Other Contingencies

We are exposed to other 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.
When a loss is probable, we record an accrual based on the reasonably estimable loss or range of loss. When no
point of loss is more likely than another, we record the lowest amount in the estimated range of loss and, if material,
disclose the estimated range of loss. We do not record liabilities for reasonably possible loss contingencies, but do
disclose a range of reasonably possible losses if they are material and we are able to estimate such a range. If we
cannot provide a range of reasonably possible losses, we explain the factors that prevent us from determining such
a range. 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 these identified claims or litigation will be material to our results of operations, cash flows, or financial condition.

Commitments

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 $1,762 million and $1,950 million at January 28, 2017 and January 30, 2016, respectively.
These purchase obligations are primarily due within three years and recorded as liabilities when inventory is received.
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. Real estate
obligations, which include commitments for the purchase, construction or remodeling of real estate and facilities, were
$268 million and $279 million at January 28, 2017 and January 30, 2016, respectively. These real estate obligations
are primarily due within one year, a portion of which are recorded as liabilities.

We issue letters of credit and surety bonds in the ordinary course of business. Trade letters of credit totaled $1,330
million and $1,510 million at January 28, 2017 and January 30, 2016, respectively, a portion of which are reflected in
accounts payable. Standby letters of credit and surety bonds, relating primarily to insurance and regulatory
requirements, totaled $463 million and $438 million at January 28, 2017 and January 30, 2016, respectively.

20. Notes Payable and Long-Term Debt

At January 28, 2017, the carrying value and maturities of our debt portfolio were as follows:

Debt Maturities

(dollars in millions)

Due 2017-2021

Due 2022-2026

Due 2027-2031

Due 2032-2036

Due 2037-2041

Due 2042-2046

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.

January 28, 2017
Rate (a)

Balance

4.2% $
3.2

6.9

6.4

6.8

3.8

4.4

5,007

2,048

462

496

1,237

2,465

11,715

1,025
(1,718)
11,031

Required Principal Payments
(millions)

Total required principal payments

2017
1,683 $

2018

201 $

2019
1,002 $

2020
1,094 $

2021

1,056

In April 2016, we issued unsecured fixed rate debt of $1 billion at 2.5 percent that matures in April 2026 and $1 billion
at 3.625 percent that matures in April 2046. During the first half of 2016, we used cash on hand and proceeds from
these issuances to repurchase $1,389 million of debt before its maturity at a market value of $1,800 million, repay
$750 million of debt maturities, and for general corporate purposes. We recognized a loss on early retirement of
approximately $422 million, which was recorded in net interest expense in our Consolidated Statements of Operations.

In June 2014, we issued $1 billion of unsecured fixed rate debt at 2.3 percent that matures in June 2019 and $1 billion
of unsecured fixed rate debt at 3.5 percent that matures in July 2024. We used proceeds from these issuances to
repurchase $725 million of debt before its maturity at a market value of $1 billion, and for general corporate purposes
including the payment of $1 billion of debt maturities. We recognized a loss of $285 million on the early retirement,
which was recorded in net interest expense in our Consolidated Statements of Operations.

We obtain short-term financing from time to time 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

2016

2015

—
0.43%

— $
—

—
—%

2014

590

129

—
0.11%

In October 2016, we obtained a committed $2.5 billion revolving credit facility that expires in October 2021. This new
unsecured revolving credit facility replaced a $2.25 billion unsecured revolving credit facility that was scheduled to
expire in October 2018. No balances were outstanding under either credit facility at any time during 2016 or 2015.

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.

21. Derivative Financial Instruments

Our derivative instruments primarily consist of interest rate swaps, which are used to mitigate interest rate risk. As a
result of our use of derivative instruments, we have counterparty credit exposure to large global financial institutions.
We monitor this concentration of counterparty credit risk on an ongoing basis. See Note 10 for a description of the fair
value measurement of our derivative instruments and their classification on the Consolidated Statements of Financial
Position.

As of January 28, 2017 and January 30, 2016, interest rate swaps with notional amounts totaling $1,000 million and
$1,250 million, respectively, were designated as fair value hedges. No ineffectiveness was recognized in 2016 or 2015.

Outstanding Interest Rate Swap Summary (a)

(dollars in millions)

Weighted average rate:

Pay

Receive

Weighted average maturity

January 28, 2017

Designated

Pay Floating

De-Designated

Pay Floating

3-month LIBOR
1.8%
2.4 years

1-month LIBOR
1.3%
1.0 year

1,000

250

Notional
(a)

There are two designated swaps and one de-designated swap at January 28, 2017

Classification and
Fair Value
(millions)

Assets

Liabilities

Classification

Jan 28,
2017

Jan 30,
2016

Classification

Jan 28,
2017

Jan 30,
2016

Designated:

De-designated:

Other noncurrent assets $
Other current assets

Total

4 $
1
5 $

N/A $ — $

Other current liabilities

—

$ — $

—

Periodic payments, valuation adjustments, and amortization of gains or losses on our derivative contracts had the
following effect on our Consolidated Statements of Operations:

Derivative Contracts – Effect on Results of Operations
(millions)
Type of Contract
Interest rate swaps

Classification of (Income)/Expense
Net interest expense

2016

2015

(24) $

(36) $

2014
(32)

22. Leases

We lease certain retail locations, warehouses, distribution centers, office space, land, and equipment. 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.
CVS leases the space in our stores in which they operate CVS branded pharmacies and clinics. Rent income received
from tenants who rent properties is recorded as a reduction to SG&A expense.

In February 2016, the FASB issued ASU No. 2016-02, Leases. The new standard requires lessees to record assets
and liabilities on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either
finance or operating, with classification affecting the pattern of expense recognition in the income statement.

We must adopt the standard no later than the first quarter of 2019, which begins on February 3, 2019. A modified
retrospective transition approach is required for leases existing at, or entered into after, the beginning of the earliest
comparative period presented in the financial statements.

We plan to adopt the standard in the first quarter of 2018. We expect to elect the package of practical expedients,
including the use of hindsight to determine the lease term. While lease classification will remain unchanged, hindsight
may result in different lease terms for certain leases and affect the timing of related depreciation, interest, and rent
expense. We do not expect to apply the recognition requirements to short-term leases and will recognize those lease
payments in the Consolidated Statements of Operations on a straight-line basis over the lease term.

We believe the most significant impact relates to our accounting for retail-store and office-space real estate leases,
which will be recorded as assets and liabilities on our balance sheet upon adoption. We do not believe the new standard
will have a notable impact on our liquidity. The standard will have no impact on our debt-covenant compliance under
our current agreements.

Rent Expense
(millions)

Rent expense
Rent income (a)
Total rent expense
(a)

2016

2015

2014

202 $
(54)
148 $

198 $
(16)
182 $

195
(9)
186

Includes rental income from CVS from both ongoing rent payments and amortization of the deferred income liability related to the

Pharmacy Transaction. See Note 6 for further discussion.

Total capital lease interest expense was $49 million, $42 million, and $38 million in 2016, 2015, and 2014, respectively,
and is included within net interest expense on the Consolidated Statements of Operations.

Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to 50
years or more. Certain leases also include options to purchase the leased property. Assets recorded under capital
leases as of January 28, 2017 and January 30, 2016 were $888 million and $735 million, respectively. These assets
are recorded net of accumulated amortization of $406 million and $321 million as of January 28, 2017 and January 30,
2016, respectively.

Capital Leases (b) Rent Income
82 $
86

Future Minimum Lease Payments
(millions)

Operating Leases (a)

2017

2018

2019

2020

2021

After 2021

Total future minimum lease payments
Less: Interest (c)
Present value of future minimum capital

lease payments (d)

198 $
204

194

184

180

2,916
3,876 $

1,529
1,963 $
938

1,025

Total

258

269

262

253

250

4,159

5,451

(22) $
(21)
(20)
(20)
(19)
(286)
(388) $

Note: Minimum lease payments exclude payments to landlords for real estate taxes and common area maintenance. Minimum lease payments
also exclude payments to landlords for fixed purchase options which we believe are reasonably assured of being exercised.
(a)

Total contractual lease payments include $2,024 million related to options to extend lease terms that are reasonably assured of being
exercised and also includes $269 million of legally binding minimum lease payments for stores that are expected to open in 2017 or later.
Capital lease payments include $608 million related to options to extend lease terms that are reasonably assured of being exercised and
also includes $348 million of legally binding minimum lease payments for stores that are expected to open in 2017 or later.
Calculated using the interest rate at inception for each lease.
Includes the current portion of $31 million.

(b)

(c)

(d)

23. Income Taxes

Earnings from continuing operations before income taxes were $3,965 million, $4,923 million, and $3,653 million during
2016, 2015, and 2014, respectively, including $336 million, $373 million, and $261 million earned by our foreign entities
subject to tax outside of the U.S.

Tax Rate Reconciliation – Continuing Operations

Federal statutory rate

State income taxes, net of the federal tax benefit

International
Excess tax benefit related to share-based payments (a)
Change in valuation allowance

Other

Effective tax rate
(a)

Refer to Note 26.

Provision for Income Taxes
(millions)

Current:

Federal

State

International

Total current

Deferred:

Federal

State

International

Total deferred

Total provision

2016
35.0%
2.7
(2.6)
(0.6)
—
(1.8)
32.7%

2015
35.0%
3.0
(2.3)
—
(2.3)
(0.9)
32.5%

2014
35.0%
2.2
(2.3)
—

—
(1.9)
33.0%

2016

2015

2014

1,108 $
141

1,255

21
(1)
41
1,296 $

1,652 $
265

1,924

(272)
(50)
—
(322)
1,602 $

1,074

116

1,197

(2)
10
(1)
7

1,204

Net Deferred Tax Asset/(Liability)
(millions)

Gross deferred tax assets:

Accrued and deferred compensation

Accruals and reserves not currently deductible

Self-insured benefits

Prepaid store-in-store lease income

Other

Total gross deferred tax assets

Gross deferred tax liabilities:

Property and equipment

Inventory

Other

Total gross deferred tax liabilities

Total net deferred tax liability

January 28,
2017

January 30,
2016

455 $
328

178

258

476

323

199

270

1,281

1,358

(1,822)
(182)
(102)
(2,106)

(825) $

(1,790)
(190)
(168)
(2,148)
(790)

In 2014, we incurred a tax effected capital loss of $112 million within discontinued operations from our exit from Canada.
At that time, we neither had nor anticipated sufficient capital gains to absorb this capital loss, and established a full
valuation allowance within discontinued operations. In 2015, we released the entire $112 million valuation allowance
due to a capital gain resulting from the Pharmacy Transaction. The benefit of the valuation allowance release was
recorded in continuing operations in 2015.

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
at the enactment date.

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 certain ongoing operations and were $993 million at
January 28, 2017 and $685 million at January 30, 2016. It is not practicable to determine the income tax liability that
would be payable if such earnings were repatriated.

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 2012 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 2008.

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

2016

2015

2014

153 $
12

6
(16)
(2)
153 $

155 $
10

14
(26)
—
153 $

183

17
(42)
(13)
155

If we were to prevail on all unrecognized tax benefits recorded, $100 million of the $153 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 January 28, 2017, January 30, 2016, and January 31, 2015, we recorded an expense / (benefit) from
accrued penalties and interest of $1 million, $5 million, and $(12) million, respectively. As of January 28, 2017,
January 30, 2016, and January 31, 2015 total accrued interest and penalties were $45 million, $44 million, and $40
million, respectively.

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)
Deferred income liability (a)
Deferred compensation
Workers' compensation and general liability (b)
Income tax

Pension benefits

Other

Total
(a)

(b)

January 28,
2017

January 30,
2016

630 $
473

306
125

280
1,860 $

660

454

353
122

254

1,897

Represents deferred income related to the Pharmacy Transaction. See Note 6 for more information.
See footnote (b) to the Accrued and Other Current Liabilities table in Note 18 for additional detail.

25. Share Repurchase

Share Repurchases
(millions, except per share data)

Total number of shares purchased

Average price paid per share

Total investment

26. Share-Based Compensation

2016

50.9
72.35 $
3,686 $

2015

44.7
77.07 $
3,441 $

2014

0.8

54.07

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 31.0
million and 31.5 million at January 28, 2017 and January 30, 2016, 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. Share-based compensation expense recognized in the
Consolidated Statements of Operations was $116 million, $118 million, and $73 million in 2016, 2015, and 2014,
respectively. The related income tax benefit was $43 million, $46 million, and $29 million in 2016, 2015, and 2014,
respectively.

During the first quarter of 2016, we adopted Accounting Standards Update (ASU) No. 2016-09, Improvements to
Employee Share-Based Payment Accounting (ASU 2016-09). As a result of adoption, we recognized $27 million of
excess tax benefits related to share-based payments in our provision for income taxes for 2016. These items were
historically recorded in additional paid-in capital. In addition, for each period presented, cash flows related to excess
tax benefits are classified as an operating activity along with other income tax cash flows. Cash paid on employees'
behalf related to shares withheld for tax purposes is classified as a financing activity. Retrospective application of the
cash flow presentation resulted in increases to both net cash provided by operations and net cash required for financing
activities of $113 million and $26 million for 2015 and 2014, respectively. Compensation expense each period continues
to reflect estimated forfeitures.

Restricted Stock Units

We issue restricted stock units and performance-based restricted stock units generally with three-year cliff vesting
from the grant date (collectively restricted stock units) to certain team members. The final number of shares issued
under performance-based restricted stock units will be based on our total shareholder return relative to a retail peer
group over a three-year performance period. 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. The fair value for restricted stock units is calculated based on the stock price on the date of grant, incorporating
an analysis of the total shareholder return performance measure where applicable. The weighted average grant date
fair value for restricted stock units was $74.05, $73.76, and $70.50 in 2016, 2015, and 2014, respectively.

Restricted Stock Unit Activity

Total Nonvested Units

Restricted
Stock (a)

Grant Date
Fair Value (b)
69.49

4,226 $
639
(358)
(1,168)
3,339 $

74.05

71.37

64.37

71.62

January 30, 2016

Granted

Forfeited

Vested

January 28, 2017
(a)

Represents the number of shares of restricted stock units, in thousands. For performance-based restricted stock units, assumes attainment
of maximum payout rates as set forth in the performance criteria. Applying actual or expected payout rates, the number of outstanding
restricted stock units and performance-based restricted stock units at January 28, 2017 was 2,765 thousand.
Weighted average per unit.

(b)

The expense recognized each period is partially dependent upon our estimate of the number of shares that will ultimately
be issued. At January 28, 2017, there was $96 million of total unrecognized compensation expense related to restricted
stock units, which is expected to be recognized over a weighted average period of 1.8 years. The fair value of restricted
stock units vested and converted to shares of Target common stock was $75 million, $90 million, and $40 million in
2016, 2015, and 2014, respectively.

Performance Share Units

We issue performance share units to certain team members that 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 certain
measures including domestic market share change, return on invested capital, and EPS growth. In 2015 we also issued
strategic alignment performance share units to certain team members. Issuance is based on performance against
four strategic metrics identified as vital to Target's success, including total sales growth, digital channel sales growth,
EBIT growth, and return on invested capital, over a two-year performance period. 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 $71.37, $74.19, and $73.12 in 2016, 2015, and 2014, respectively.

Performance Share Unit Activity

Total Nonvested Units

Performance
Share Units (a)

Grant Date
Fair Value (b)
70.70

4,023 $
712
(754)
(8)
3,973 $

71.37

73.21

63.54

70.55

January 30, 2016

Granted

Forfeited

Vested

January 28, 2017
(a)

Represents the number of performance share units, in thousands. Assumes attainment of maximum payout rates as set forth in the
performance criteria. Applying actual or expected payout rates, the number of outstanding units at January 28, 2017 was 1,799 thousand.
Weighted average per unit.

(b)

The expense recognized each period is partially dependent upon our estimate of the number of shares that will ultimately
be issued. Future compensation expense for unvested awards could reach a maximum of $191 million assuming
payout of all unvested awards. The unrecognized expense is expected to be recognized over a weighted average
period of 1.9 years. The fair value of performance share units vested and converted to shares of Target common stock
was $1 million in 2016, $2 million in 2015, and $11 million in 2014.

Stock Options

Through 2013, we granted nonqualified stock options to certain team members. Virtually all are vested and currently
exercisable.

Stock Option Activity

Stock Options

Total Outstanding

Number of
Options (a)

Exercise
Price (b)

Intrinsic
Value (c)
199

January 30, 2016
Granted
Expired/forfeited
Exercised/issued
January 28, 2017
(a)
In thousands.
Weighted average per share.
Represents stock price appreciation subsequent to the grant date, in millions.

10,500 $
—
(133)
(4,157)
6,210 $

53.47 $
—
60.24
52.93
53.68 $

(b)

(c)

Number of
Options (a)

Exercisable
Exercise
Price (b)

9,405 $

52.57 $

Intrinsic
Value (c)
187

6,180 $

53.60 $

Stock Option Exercises
(millions)

Cash received for exercise price

Intrinsic value

Income tax benefit

2016

2015

219 $
103

303 $
159

2014

374

143

The weighted average remaining life of outstanding options is 3.9 years. The total fair value of options vested was $9
million, $23 million, and $37 million in 2016, 2015, and 2014, 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 2,200 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 executive officers, in part to recognize the risks inherent to their participation in this plan. We also maintain
a frozen nonqualified, unfunded deferred compensation plan covering approximately 50 participants. Our total liability
under these plans was $514 million and $497 million at January 28, 2017 and January 30, 2016, respectively.

We mitigate some of our risk of offering the nonqualified plans through investing in company-owned life insurance that
offsets a substantial portion of our economic exposure to the returns of these plans. These investments 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. See Note 15 for additional information.

Plan Expenses

(millions)

401(k) plan matching contributions expense

Nonqualified deferred compensation plans

Benefits expense (a)
Related investment (income) expense (b)

Nonqualified plan net expense
(a)

2016

2015

197 $

224 $

2014

220

58
(38)
20 $

15
20 $

52
(45)
7

(b)

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.

28. Pension and Postretirement Health Care Plans

Pension Plans

We have qualified defined benefit pension plans covering team members who meet age and service requirements,
including date of hire in certain circumstances. Effective January 1, 2009, our U.S. qualified defined benefit pension
plan was closed to new participants, with limited exceptions. 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 each team members' date of hire, length of service and/or team member compensation.

Funded Status

(millions)

Projected benefit obligations

Fair value of plan assets

Funded / (underfunded) status

Qualified Plans

Nonqualified Plans

2016
3,760 $
3,785

2015
3,558 $
3,607

25 $

49 $

2016

2015

32 $
—
(32) $

—
(39)

Contributions and Estimated Future Benefit Payments

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 2016 we made no contributions to our qualified defined benefit pension plans.
In 2015 we made a discretionary contribution of $200 million. We are not required to make any contributions in 2017.
However, depending on investment performance and plan funded status, we may elect to make a contribution.

Estimated Future Benefit Payments
(millions)

2017

2018

2019

2020

2021

2022-2026

Pension
Benefits

163

171

179

188

197

1,112

Cost of Plans

Net Pension 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 (a)
Settlement and special termination charges

Total
(a)

2016

2015

87 $

134
(256)
46
(11)
2
2 $

109 $
154
(260)
82
(11)
4
78 $

2014

112

149
(233)
65
(11)
—

Determined using the straight-line method over the average remaining service period of team members expected to receive benefits
under the plan.

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

2016
2015
4.40% 4.70%
3.00

3.00

2016
2015
2014
4.70% 3.87% 4.77%
7.50
6.80

7.50

3.00

The weighted average assumptions used to measure net periodic benefit expense each year are the rates as of the
beginning of the year (i.e., the prior measurement date). Based on a stable asset allocation, our most recent compound
annual rate of return on qualified plans' assets was 7.7 percent, 6.4 percent, 7.7 percent, and 8.2 percent for the 5-
year, 10-year, 15-year, and 20-year time 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.

We review the expected long-term rate of return annually 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. Our expected annualized long-term rate of return assumptions as of January 28, 2017 were
8.0 percent for domestic and international equity securities, 5.0 percent for long-duration debt securities, 8.0 percent
for balanced funds, and 9.5 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.

Benefit Obligation

Change in Projected Benefit Obligation

Qualified Plans

Nonqualified Plans

(millions)

Benefit obligation at beginning of period

Service cost

Interest cost

Actuarial loss / (gain)

Participant contributions

Benefits paid

Plan amendments
Benefit obligation at end of period (a)

2016
3,558 $
86

133

156

7
(180)
—
3,760 $

2015
3,844 $
108

152
(400)
6
(155)
3
3,558 $

2016

2015

39 $
1

1
(2)
—
(7)
—
32 $

2
(4)
—
(3)
—

(a)

Accumulated benefit obligation—the present value of benefits earned to date assuming no future salary growth—is materially
consistent with the projected benefit obligation in each period presented.

Plan Assets

Change in Plan Assets

(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

Qualified Plans

Nonqualified Plans

2016
3,607 $
349

7
(180)
3,785 $

2015
3,784 $
(231)
203

6
(155)
3,607 $

2016

2015

— $
—

—
(7)
— $

—

—
(3)
—

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. 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

Actual Allocation

(b)

Equity securities include our common stock in amounts substantially less than 1 percent of total plan assets as of January 28, 2017 and
January 30, 2016.
Other assets include private equity, mezzanine and high-yield debt, natural resources and timberland funds, multi-strategy hedge funds,
derivative instruments, and real estate. The real estate allocation represents 4 percent of total assets.

Domestic equity securities (a)
International equity securities

Debt securities

Balanced funds
Other (b)
Total
(a)

Fair Value Measurements

(millions)

Cash and cash equivalents
Government securities (a)
Fixed income (b)
Other (c)

Investments valued using NAV per share (d)

Cash and cash equivalents

Common collective trusts

Fixed Income

Balanced funds

Private equity funds

Other

Total plan assets
(a)

Allocation
14%
9

9
100%

2016
14%
9

9
100%

2015
16%
10

9
100%

Pricing
Category

January 31,
2017

Fair Value at

January 30,
2016
43
470

5 $

Level 1 $
Level 2

Level 2

477

1,080

1,566

168

768

942

126

164
3,785 $

979

1,500

455

544

756

141

162

3,607

(b)

(c)

(d)

Investments in government securities and long-term government bonds.
Investments in corporate and municipal bonds.
Investments in derivative investments.
In accordance with Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its
equivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are
intended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position.

Position
Cash and cash equivalents

Carrying value approximates fair value.

Valuation Technique

Government securities
and fixed income

Valued using matrix pricing models and quoted prices of securities with similar
characteristics.

Derivatives

Swap derivatives - Valued initially using models 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.

Option derivatives - Valued at transaction price initially. Subsequent valuations
are based on observable inputs to the valuation model (e.g., underlying
investments).

Amounts Included in Shareholders' Equity

Amounts in Accumulated Other Comprehensive Income
(millions)

Net actuarial loss

Prior service credits
Amounts in accumulated other comprehensive income (a)(b)
(a)

2016
1,035 $
(46)
989 $

2015

1,022
(57)
965

(b)

$601 million and $583 million, net of tax, at the end of 2016 and 2015, respectively.
We expect 2017 net pension expense to include amortization expense of $49 million ($30 million, net of tax) to net actuarial loss and
prior service credit balances included in accumulated other comprehensive income.

Postretirement Health Care

Effective April 1, 2016, we discontinued the postretirement health care benefits that were offered to team members
upon early retirement and prior to Medicare eligibility. This decision resulted in a $58 million reduction in the projected
postretirement health care benefit obligation and a $43 million curtailment gain recorded in SG&A during 2015. As of
January 30, 2016, we extinguished the remaining benefit obligation related to this plan.

29. Accumulated Other Comprehensive Income

(millions)
January 30, 2016

Other comprehensive income / (loss) before

reclassifications

Amounts reclassified from AOCI

January 28, 2017

Cash Flow
Hedges
(19)

Currency
Translation
Adjustment
(22)

—
3 (a)

(16)

—
(21)

Pension and
Other
Benefit
(588)

Total
$ (629)

(32)
19 (b)

(601)

(31)
22
$ (638)

(a)

(b)

Represents gains and losses on cash flow hedges, net of $2 million of taxes, which are recorded in net interest expense on the Consolidated
Statements of Operations.
Represents amortization of pension and other benefit liabilities, net of $12 million of taxes, which is recorded in SG&A expenses on the
Consolidated Statements of Operations. See Note 28 for additional information.

30. Segment Reporting

Our segment measure of profit is used by management to evaluate the return on our investment and to make operating
decisions. Effective January 15, 2015, following the deconsolidation of our former Canadian retail operation, we have
been operating as a single segment that includes all of our continuing operations, which are designed to enable guests
to purchase products seamlessly in stores or through our digital channels.

Business Segment Results

(millions)

Sales

Cost of sales

Gross margin
Selling, general, and administrative expenses (e)
Depreciation and amortization

Segment earnings before interest expense and income taxes
Gain on sale (a)
Restructuring costs (b)(e)
Data breach-related costs, net of insurance (c)(e)
Other (d)(e)
Earnings from continuing operations before interest expense and income

taxes

Net interest expense

Earnings from continuing operations before income taxes

2016

2015

2014
$ 69,495 $ 73,785 $ 72,618
51,278

51,997

48,872

20,623

13,360

2,298

4,965

—

21,788

14,448

2,213

5,127

620
(138)
(39)
(39)

4,969

5,530

1,004
3,965 $

607
4,923 $

21,340

14,503

2,129

4,708

—

—
(145)
(29)

4,535

882

3,653

Note: The sum of the segment amounts may not equal the total amounts due to rounding.
(a)

(b)

(c)

(d)

(e)

For 2015, represents the gain on the Pharmacy Transaction.
Refer to Note 8 for more information on restructuring costs.
Refer to Note 19 for more information on data breach-related costs.
For 2016, represents items related to the Pharmacy Transaction. For 2015, represents impairments related to our decision to wind down
certain noncore operations. For 2014, includes impairments of $16 million related to undeveloped land in the U.S. and $13 million of
expense related to converting co-branded card program to MasterCard.
The sum of segment SG&A expenses, restructuring costs, data breach-related costs, and other charges equal consolidated SG&A
expenses.

Total Assets by Segment
(millions)
U.S.
Assets of discontinued operations
Unallocated assets (a)
Total assets
(a)

Represents the insurance receivable related to the 2013 data breach.

January 28,
2017
37,350 $
81

January 30,
2016
39,845
397

—
37,431 $

20
40,262

31. 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 of November and December.
We follow the same accounting policies for preparing quarterly and annual financial data. The table below summarizes
quarterly results for 2016 and 2015:

Quarterly Results

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Total Year

(millions, except per share data)

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

Sales

Cost of sales

Gross margin

$ 16,196 $ 17,119

$ 16,169 $ 17,427

$ 16,441 $ 17,613

$ 20,690 $ 21,626

$ 69,495 $ 73,785

11,185

11,911

11,102

12,051

11,471

12,440

15,116

15,594

48,872

51,997

5,011

5,208

5,067

5,376

4,970

5,173

5,574

6,032

20,623

21,788

Selling, general, and administrative

expenses

Depreciation and amortization

Gain on sale

Earnings before interest expense
and income taxes

Net interest expense

Earnings from continuing operations

before income taxes

Provision for income taxes

Net earnings from continuing

operations

Discontinued operations, net of

tax

Net earnings

Basic earnings/(loss) per share

Continuing operations

Discontinued operations

Net earnings per share

Diluted earnings/(loss) per share

Continuing operations

Discontinued operations

Net earnings per share

Dividends declared per share

Closing common stock price:

3,153

3,514

3,249

3,495

3,339

3,736

3,614

3,921

13,356

14,665

546

—

540

—

570

—

551

—

1,312

1,154

1,248

1,330

415

897

283

614

155

999

348

651

307

941

316

625

148

1,182

409

773

(16)

(20)

632 $

635

1.03 $

1.02

0.03

(0.03)

1.06 $

0.99

1.02 $

1.01

0.03

(0.03)

1.05 $

0.56 $

0.98

0.52

680 $

753

1.07 $

1.21

0.09

(0.03)

1.17 $

1.18

1.07 $

1.21

0.09

(0.03)

1.16 $

0.60 $

1.18

0.56

570

—

1,061

142

919

311

608

—

608 $

1.07 $

—

1.07 $

1.06 $

—

1.06 $

0.60 $

561

—

876

151

725

249

476

549

0.76

0.12

0.88

0.76

0.11

0.87

0.56

612

—

562

(620)

2,298

2,213

—

(620)

1,348

2,169

140

152

1,208

2,017

387

596

4,969

1,004

3,965

1,296

5,530

607

4,923

1,602

821

1,421

2,669

3,321

(4)

817 $ 1,426

$ 2,737 $ 3,363

1.47 $

(0.01)

1.46 $

(0.01)

1.45 $

0.60 $

2.33

0.01

2.33

2.31

0.01

2.32

0.56

4.62 $

0.12

4.74 $

4.58 $

0.12

4.70 $

2.36 $

5.29

0.07

5.35

5.25

0.07

5.31

2.20

High

Low

83.98

68.05

83.57

74.25

80.12

66.74

85.01

77.26

75.81

67.22

80.87

72.94

78.61

63.70

78.23

67.59

83.98

63.70

85.01

67.59

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.

U.S. Sales by Product Category (a)

First Quarter

Second Quarter

Third Quarter

Fourth Quarter

Total Year

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

Household essentials

23%

28%

23%

28%

23%

28%

19%

21%

22%

26%

Food, beverage, and pet supplies

Apparel and accessories

Home furnishings and décor

Hardlines

Total

100%

Supplemental information
Pharmacy (b)
(a)

(b)

As a percentage of sales.
Included in household essentials.

—%

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9A. Controls and Procedures

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the most recently completed
fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over
financial reporting.

Evaluation of Disclosure 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.

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.

Item 9B. Other Information

Not applicable.

PART III

Certain information required by Part III is incorporated by reference from Target's definitive Proxy Statement to be filed
on or about May 1, 2017. 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

The following sections of Target's Proxy Statement to be filed on or about May 1, 2017, are incorporated herein by
reference:

Item One--Election of Directors
Stock Ownership Information--Section 16(a) Beneficial Ownership Reporting Compliance

•
•
• General Information About Corporate Governance and the Board of Directors

◦
◦

Business Ethics and Conduct
Committees

• Questions and Answers About Our Annual Meeting and Voting--Question 14

See also Item 4A, Executive Officers of Part I hereof.

Item 11. Executive Compensation

The following sections of Target's Proxy Statement to be filed on or about May 1, 2017, are incorporated herein by
reference:

•
•
•

Compensation Discussion and Analysis
Compensation Tables
Human Resources & Compensation Committee Report

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following sections of Target's Proxy Statement to be filed on or about May 1, 2017, are incorporated herein by
reference:

•

Stock Ownership Information--

◦
◦

Beneficial Ownership of Directors and Officers
Beneficial Ownership of Target’s Largest Shareholders
Compensation Tables--Equity Compensation Plan Information

Item 13. Certain Relationships and Related Transactions, and Director Independence

The following sections of Target's Proxy Statement to be filed on or about May 1, 2017, are incorporated herein by
reference:

• General Information About Corporate Governance and the Board of Directors--

◦
◦
◦

Policy on Transactions with Related Persons
Director Independence
Committees

Item 14. Principal Accountant Fees and Services

The following section of Target's Proxy Statement to be filed on or about May 1, 2017, is incorporated herein by
reference:

•

Item Two-- Ratification of Appointment of Ernst & Young LLP As Independent Registered Public Accounting
Firm-Audit and Non-Audit Fees

PART IV

Item 15. Exhibits, Financial Statement Schedules

The following information required under this item is filed as part of this report:

Financial Statements

•

•
•

•

•
•

Consolidated Statements of Operations for the Years Ended January 28, 2017, January 30, 2016, and
January 31, 2015
Consolidated Statements of Comprehensive Income for the Years Ended January 28, 2017, January 30,
2016, and January 31, 2015
Consolidated Statements of Financial Position at January 28, 2017 and January 30, 2016
Consolidated Statements of Cash Flows for the Years Ended January 28, 2017, January 30, 2016, and
January 31, 2015
Consolidated Statements of Shareholders' Investment for the Years Ended January 28, 2017, January 30,
2016, and January 31, 2015
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements

Financial Statement Schedules

None.

Other schedules have not been included either because they are not applicable or because the information is
included elsewhere in this Report.

Exhibits

(2)A †

(3)A

(4)A

(10)A *

B *

C *

D *

E *

F *

G *

H *

I *

J *

K *

L *

M *

N *

O *

P *

Q *

R *

S *

T *

U *

V *

W *

X *

Z ‡

Asset Purchase Agreement dated June 12, 2015 between Target Corporation and CVS Pharmacy,
Inc. (1)
Amended and Restated Articles of Incorporation (as amended through June 9, 2010) (2)
Bylaws (as amended through November 11, 2015) (3)
Indenture, dated as of August 4, 2000 between Target Corporation and Bank One Trust Company,
N.A. (4)
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.) (5)
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 (6)
Target Corporation Long-Term Incentive Plan (as amended and restated effective June 8, 2011) (7)
Amended and Restated Target Corporation 2011 Long-Term Incentive Plan (8)
Target Corporation SPP I (2016 Plan Statement) (as amended and restated effective April 3, 2016)
(9)

Target Corporation SPP II (2016 Plan Statement) (as amended and restated effective April 3,
2016) (10)
Target Corporation SPP III (2014 Plan Statement) (as amended and restated effective January 1,
2014) (11)
Amendment to Target Corporation SPP III (2014 Plan Statement) (effective April 3, 2016) (12)
Target Corporation Officer Deferred Compensation Plan (as amended and restated effective
June 8, 2011) (13)
Target Corporation Officer EDCP (2017 Plan Statement) (as amended and restated effective May
1, 2017)
Target Corporation Deferred Compensation Plan Directors (14)
Target Corporation DDCP (2013 Plan Statement) (as amended and restated effective December 1,
2013) (15)
Target Corporation Officer Income Continuance Policy Statement (as amended and restated
effective April 3, 2016) (16)
Target Corporation Executive Excess Long Term Disability Plan (as restated effective January 1,
2010 (17)
Director Retirement Program (18)
Target Corporation Deferred Compensation Trust Agreement (as amended and restated effective
January 1, 2009) (19)
Amendment to Target Corporation Deferred Compensation Trust Agreement (as amended and
restated effective January 1, 2009) (20)
Form of Amended and Restated Executive Non-Qualified Stock Option Agreement (21)
Form of Executive Restricted Stock Unit Agreement - Cliff Vesting (22)
Form of Executive Restricted Stock Unit Agreement - Ratable Vesting
Form of Executive Performance-Based Restricted Stock Unit Agreement (23)
Form of Executive Performance Share Unit Agreement
Form of Non-Employee Director Non-Qualified Stock Option Agreement (24)
Form of Non-Employee Director Restricted Stock Unit Agreement (25)
Form of Cash Retention Award (26)
Five-Year Credit Agreement dated as of October 5, 2016 among Target Corporation, Bank of
America, N.A. as Administrative Agent and the Banks listed therein (27)
Credit Card Program Agreement dated October 22, 2012 among Target Corporation, Target
Enterprise, Inc. and TD Bank USA, N.A. (28)

AA ‡

BB ‡

CC ‡

DD *

EE *

FF *

GG *

HH *

II *

(12)

(21)

(23)

(24)

(31)A

(31)B

(32)A

(32)B

First Amendment dated February 24, 2015 to Credit Card Program Agreement among Target
Corporation, Target Enterprise, Inc. and TD Bank USA, N.A. (29)
Pharmacy Operating Agreement dated December 16, 2015 between Target Corporation and CVS
Pharmacy, Inc. (30)
First Amendment dated November 30, 2016 to Pharmacy Operating Agreement between Target
Corporation and CVS Pharmacy, Inc.
Restricted Stock Unit Agreement with John J. Mulligan, effective as of May 22, 2014 (31)
Employment Offer Letter to Brian C. Cornell, dated July 26, 2014 (32)
Make-Whole Performance-Based Restricted Stock Unit Agreement with Brian C. Cornell, effective
as of August 21, 2014 (33)
Aircraft Time Sharing Agreement as of March 13, 2015 among Target Corporation and Brian C.
Cornell (34)
Advisory Role Letter to Timothy R. Baer dated July 11, 2016 (35)
Target Corporation Officer EDCP (2017 Plan Statement) (as amended and restated effective
January 1, 2017) (36)
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

101.SCH

101.CAL

101.DEF

101.LAB

101.PRE

XBRL Instance Document

XBRL Taxonomy Extension Schema

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.
_____________________________________________________________________

†

‡

*
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)

Excludes the Seller Disclosure Schedule, Exhibits B through G and Schedules I and II referred to in the agreement which Target Corporation
agrees to furnish supplementally to the Securities and Exchange Commission upon request. Exhibit A is separately filed as Exhibit (10)
BB.
Certain portions of this exhibit have been omitted pursuant to a request for confidential treatment and have been filed separately with the
Securities and Exchange Commission.
Management contract or compensation plan or arrangement required to be filed as an exhibit to this Form 10-K.
Incorporated by reference to Exhibit (2)H to Target's Form 10-Q Report for the quarter ended August 1, 2015.
Incorporated by reference to Exhibit (3)A to Target's Form 8-K Report filed June 10, 2010.
Incorporated by reference to Exhibit (3)A to Target's Form 8-K Report filed November 12, 2015.
Incorporated by reference to Exhibit 4.1 to Target's Form 8-K Report filed August 10, 2000.
Incorporated by reference to Exhibit 4.1 to the Registrant's Form 8-K Report filed May 1, 2007.
Incorporated by reference to Appendix A to the Registrant's Proxy Statement filed April 30, 2012.
Incorporated by reference to Exhibit (10)B to Target's Form 10-Q Report for the quarter ended July 30, 2011.
Incorporated by reference to Exhibit (10)JJ to Target's Form 8-K Report filed June 12, 2015.
Incorporated by reference to Exhibit (10)C to Target's Form 10-Q Report for the quarter ended April 30, 2016.
Incorporated by reference to Exhibit (10)D to Target's Form 10-Q Report for the quarter ended April 30, 2016.
Incorporated by reference to Exhibit (10)E to Target's Form 10-K Report for the year ended February 1, 2014.
Incorporated by reference to Exhibit (10)NN to Target's Form 10-Q Report for the quarter ended April 30, 2016.

(13)
(14)
(15)
(16)
(17)
(18)
(19)
(20)
(21)
(22)
(23)
(24)
(25)
(26)
(27)
(28)
(29)
(30)
(31)
(32)
(33)
(34)
(35)
(36)

Incorporated by reference to Exhibit (10)F to Target's Form 10-Q Report for the quarter ended July 30, 2011.
Incorporated by reference to Exhibit (10)I to Target's Form 10-K Report for the year ended February 3, 2007.
Incorporated by reference to Exhibit (10)I to Target's Form 10-K Report for the year ended February 1, 2014.
Incorporated by reference to Exhibit (10)J to Target's Form 10-Q Report for the quarter ended April 30, 2016.
Incorporated by reference to Exhibit (10)A to Target's Form 10-Q Report for the quarter ended October 30, 2010.
Incorporated by reference to Exhibit (10)O to Target's Form 10-K Report for the year ended January 29, 2005.
Incorporated by reference to Exhibit (10)O to Target's Form 10-K Report for the year ended January 31, 2009.
Incorporated by reference to Exhibit (10)AA to Target's Form 10-Q Report for the quarter ended July 30, 2011.
Incorporated by reference to Exhibit (10)V to Target's Form 10-K Report for the year ended January 31, 2015.
Incorporated by reference to Exhibit (10)W to Target's Form 10-K Report for the year ended January 30, 2016.
Incorporated by reference to Exhibit (10)X to Target's Form 10-K Report for the year ended January 30, 2016.
Incorporated by reference to Exhibit (10)EE to Target's Form 8-K Report filed January 11, 2012.
Incorporated by reference to Exhibit (10)AA to Target's Form 10-K Report for the year ended January 30, 2016.
Incorporated by reference to Exhibit (10)W to Target’s Form 10-K Report for year ended February 2, 2013.
Incorporated by reference to Exhibit (10)O to Target's Form 10-Q Report for the quarter ended October 29, 2016.
Incorporated by reference to Exhibit (10)X to Target's Form 10-Q/A Report for the quarter ended May 4, 2013.
Incorporated by reference to Exhibit (10)II to Target's Form 10-Q Report for the quarter ended May 2, 2015.
Incorporated by reference to Exhibit (10)KK to Target's Form 10-K Report for the year ended January 30, 2016.
Incorporated by reference to Exhibit (10)BB to Target's Form 10-Q Report for the quarter ended August 2, 2014.
Incorporated by reference to Exhibit (10)CC to Target's Form 10-Q Report for the quarter ended August 2, 2014.
Incorporated by reference to Exhibit (10)EE to Target's Form 10-Q Report for the quarter ended August 2, 2014.
Incorporated by reference to Exhibit (10)HH to Target's Form 10-K Report for the year ended January 31, 2015.
Incorporated by reference to Exhibit (10)OO to Target's Form 10-Q Report for the quarter ended July 30, 2016.
Incorporated by reference to Exhibit (10)G to Target's 10-Q Report for the quarter ended October 29, 2016.

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:

Dated: March 8, 2017

Cathy R. Smith
Executive Vice President and Chief Financial Officer

___________________________________________________________________________________________________________________

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 8, 2017

Brian C. Cornell
Chairman of the Board and Chief Executive Officer

Dated: March 8, 2017

Cathy R. Smith
Executive Vice President and Chief Financial Officer

Dated: March 8, 2017

Robert M. Harrison
Senior Vice President, Chief Accounting Officer
and Controller

ROXANNE S. AUSTIN
DOUGLAS M. BAKER, JR.
CALVIN DARDEN
HENRIQUE DE CASTRO
ROBERT L. EDWARDS
MELANIE L. HEALEY

DONALD R. KNAUSS
MONICA C. LOZANO
MARY E. MINNICK
ANNE M. MULCAHY
DERICA W. RICE
KENNETH L. SALAZAR

Constituting a majority of the Board of Directors

Cathy R. Smith, by signing her 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:

Dated: March 8, 2017

Cathy R. Smith
Attorney-in-fact

Exhibit Index

Exhibit
(2)A

Description
Asset Purchase Agreement dated June 12, 2015 between Target
Corporation and CVS Pharmacy, Inc.

Manner of Filing
Incorporated by Reference

(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

(10)I

(10)J

(10)K

(10)L

(10)M

(10)N

(10)O

(10)P

(10)Q

(10)R

(10)S

(10)T

(10)U

(10)V

Amended and Restated Articles of Incorporation (as amended June 9,
2010)

Incorporated by Reference

Bylaws (as amended through November 11, 2015)

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.)

Incorporated by Reference

Target agrees to furnish to the Commission on request copies of other
instruments with respect to long-term debt.

Filed Electronically

Target Corporation Officer Short-Term Incentive Plan

Target Corporation Long-Term Incentive Plan (as amended and restated
effective June 8, 2011)

Incorporated by Reference

Amended and Restated Target Corporation 2011 Long-Term Incentive
Plan

Incorporated by Reference

Target Corporation SPP I (2016 Plan Statement) (as amended and
restated effective April 3, 2016)

Target Corporation SPP II (2016 Plan Statement) (as amended and
restated effective April 3, 2016)

Target Corporation SPP III (2014 Plan Statement) (as amended and
restated effective January 1, 2014)

Amendment to Target Corporation SPP III (2014 Plan Statement)
(effective April 3, 2016)

Incorporated by Reference

Target Corporation Officer Deferred Compensation Plan (as amended and
restated effective June 8, 2011)

Incorporated by Reference

Target Corporation Officer EDCP (2017 Plan Statement) (as amended and
restated effective May 1, 2017)

Filed Electronically

Target Corporation Deferred Compensation Plan Directors

Target Corporation DDCP (2013 Plan Statement) (as amended and
restated effective December 1, 2013)

Target Corporation Officer Income Continuance Policy Statement (as
amended and restated effective April 3, 2016)

Target Corporation Executive Excess Long Term Disability Plan (as
restated effective January 1, 2010)

Director Retirement Program

Target Corporation Deferred Compensation Trust Agreement (as
amended and restated effective January 1, 2009)

Amendment to Target Corporation Deferred Compensation Trust
Agreement (as amended and restated effective January 1, 2009)

Incorporated by Reference

Form of Amended and Restated Executive Non-Qualified Stock Option
Agreement

Incorporated by Reference

Form of Executive Restricted Stock Unit Agreement - Cliff Vesting

Incorporated by Reference

Form of Executive Restricted Stock Unit Agreement - Ratable Vesting

Filed Electronically

Form of Executive Performance-Based Restricted Stock Unit Agreement

Incorporated by Reference

Form of Executive Performance Share Unit Agreement

Filed Electronically

Form of Non-Employee Director Non-Qualified Stock Option Agreement

Incorporated by Reference

(10)W

Form of Non-Employee Director Restricted Stock Unit Agreement

Incorporated by Reference

(10)X

(10)Y

(10)Z

(10)AA

(10)BB

(10)CC

(10)DD

(10)EE

(10)FF

(10)GG

(10)II

(12)

(21)

(23)

(24)

(31)A

(31)B

(32)A

(32)B

Form of Cash Retention Award

Five-Year Credit Agreement dated as of October 5, 2016 among Target
Corporation, Bank of America, N.A. as Administrative Agent and the
Banks listed therein

Incorporated by Reference

Credit Card Program Agreement dated October 22, 2012 among Target
Corporation, Target Enterprise, Inc. and TD Bank USA, N.A.

Incorporated by Reference

First Amendment dated February 24, 2015 to Credit Card Program
Agreement among Target Corporation, Target Enterprise, Inc. and TD
Bank USA, N.A.

Pharmacy Operating Agreement dated December 16, 2015 between
Target Corporation and CVS Pharmacy, Inc.

Incorporated by Reference

First Amendment dated November 30, 2016 to Pharmacy Operating
Agreement between Target Corporation and CVS Pharmacy, Inc.

Filed Electronically

Restricted Stock Unit Agreement with John J. Mulligan, effective as of May
22, 2014

Incorporated by Reference

Employment Offer Letter to Brian C. Cornell, dated July 26, 2014

Incorporated by Reference

Make-Whole Performance-Based Restricted Stock Unit Agreement with
Brian C. Cornell, effective as of August 21, 2014

Incorporated by Reference

Aircraft Time Sharing Agreement as of March 13, 2015 among Target
Corporation and Brian C. Cornell

(10)HH

Advisory Role Letter to Timothy R. Baer dated July 11, 2016

Target Corporation Officer EDCP (2017 Plan Statement) (as amended and
restated effective January 1, 2017)

Incorporated by Reference

Statements of Computations of Ratios of Earnings to Fixed Charges

Filed Electronically

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

Filed Electronically

Certification of the Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002

Filed Electronically

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

Filed Electronically

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

Filed Electronically

101.INS

XBRL Instance Document

101.SCH XBRL Taxonomy Extension Schema

101.CAL XBRL Taxonomy Extension Calculation Linkbase

101.DEF XBRL Taxonomy Extension Definition Linkbase

101.LAB

XBRL Taxonomy Extension Label Linkbase

101.PRE XBRL Taxonomy Extension Presentation Linkbase

Filed Electronically

Shareholder Information

Target 2016 Annual Report

Annual Meeting

The Annual Meeting of Shareholders is scheduled for June 14, 2017 at 9:00 a.m. (Eastern
Daylight Time) at The Westin Cincinnati, 21 East 5th Street, Cincinnati, OH 45202

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: Target Corporation,
Attn: John Hulbert, VP, Investor Relations, 1000 Nicollet Mall (TPN-0841), Minneapolis,
Minnesota 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 Charters, are also available on the Internet at
investors.target.com.

Transfer Agent, Registrar and
Dividend Disbursing Agent

Wells Fargo Shareowner Services

Trustee, Employee Savings
401(K) and Pension Plans

State Street Bank and Trust Company

Stock Exchange Listing

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 Wells Fargo Shareowner Services at
1-800-794-9871, access their website at www.shareowneronline.com or write to:
Wells Fargo Shareowner Services, P.O. Box 64874, St. Paul, Minnesota 55164-0874.

Direct Stock Purchase/
Dividend Reinvestment Plan

Wells Fargo Shareowner Services administers a direct purchase 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 Wells
Fargo Shareowner Services toll free at 1-800-794-9871 or write to: Wells Fargo Shareowner
Services, P.O. Box 64874, St. Paul, Minnesota 55164-0874.

Directors and Management

Directors

Executive Officers

Other Senior Officers

Roxanne S. Austin
President, Austin Investment Advisors
(2) (5)

Casey L. Carl
Executive Vice President and
Chief Strategy and Innovation Officer

Patricia Adams
Executive Vice President,
Merchandising Product Group

Douglas M. Baker, Jr.
Chairman and Chief Executive Officer,
Ecolab Inc. (4) (5)

Brian C. Cornell
Chairman of the Board and
Chief Executive Officer

Rick H. Gomez
Executive Vice President and
Chief Marketing Officer

Don H. Liu
Executive Vice President and
Chief Legal Officer and
Corporate Secretary

Stephanie A. Lundquist
Executive Vice President and
Chief Human Resources Officer

Michael E. McNamara
Executive Vice President and
Chief Information and Digital Officer

John J. Mulligan
Executive Vice President and
Chief Operating Officer

Janna A. Potts
Executive Vice President and
Chief Stores Officer

Jackie Hourigan Rice
Executive Vice President and
Chief Risk and Compliance Officer

Cathy R. Smith
Executive Vice President and
Chief Financial Officer

Mark J. Tritton
Executive Vice President and
Chief Merchandising Officer

Laysha L. Ward
Executive Vice President and
Chief External Engagement Officer

Brian C. Cornell
Chairman of the Board and
Chief Executive Officer,
Target Corporation

Calvin Darden
Chairman, Darden Putnam Energy
& Logistics, LLC (2) (4)

Henrique De Castro
Former Chief Operating Officer,
Yahoo! Inc. (2) (3)

Robert L. Edwards
Former President and
Chief Executive Officer, AB Acquisition
LLC (Albertsons/Safeway) (3) (5)

Melanie L. Healey
Former Group President, North America,
The Procter & Gamble Company (2) (3)

Donald R. Knauss
Former Executive Chairman,
The Clorox Company (2) (4)

Monica C. Lozano
Former Chairman, U.S. Hispanic
Media, Inc. (1) (4)

Mary E. Minnick
Partner, Lion Capital LLP (1) (3)

Anne M. Mulcahy
Chairman of the Board of Trustees,
Save the Children Federation, Inc. (2) (5)
After nearly 20 years of dedicated service,
Anne Mulcahy retired from our Board at
the end of her current term. The Board
is grateful to Anne for her leadership,
wisdom and exemplary service.

Derica W. Rice
Executive Vice President, Global
Services and Chief Financial Officer,
Eli Lilly and Company (1) (5)

Kenneth L. Salazar
Partner, WilmerHale (3) (5)

(1) Audit and Finance Committee
(2) Human Resources and

Compensation Committee

(3) Infrastructure and

Investment Committee

(4) Nominating and

Governance Committee

(5) Risk and Compliance Committee

Rich Agostino
Senior Vice President and
Chief Information Security Officer

Aaron Alt
Senior Vice President, Operations

Kristi Argyilan
Senior Vice President, Media and
Guest Engagement

Corey Haaland
Senior Vice President, Treasurer

Robert Harrison
Senior Vice President and Chief
Accounting Officer and Controller

Christina Hennington
Senior Vice President, Merchandising,
Essentials and Beauty

Cynthia Ho
Senior Vice President, Target Sourcing
Services, Global Sourcing

David Best
Senior Vice President, Merchandise
Planning, Essentials and Hardlines

Yu-Ping Kao
Senior Vice President, Human
Resources, Pay and Benefits

Dawn Block
Senior Vice President, Digital

Karl Bracken
Senior Vice President, Supply
Chain Transformation

Jeff Burt
Senior Vice President, Grocery,
Fresh Food and Beverage

John Butcher
Senior Vice President, Merchandising,
Beauty and Dermstore

Anahita Cameron
Senior Vice President, Human Resources

Kelly Caruso
President, Target Sourcing Services

Joe Contrucci
Senior Vice President, Stores

Ben Cook
Senior Vice President,
Global Inventory Management

Tony Costanzo
Senior Vice President, Stores

Brett Craig
Senior Vice President, Merchandising and
Supply Chain Portfolio Solutions

Tim Curoe
Senior Vice President, Talent and
Organizational Effectiveness

Paritosh Desai
Senior Vice President, Enterprise Data,
Analytics and Business Intelligence

Michael Fiddelke
Senior Vice President,
Merchandising Capabilities

Juan Galarraga
Senior Vice President, Store Operations

Seemantini Godbole
Senior Vice President,
Digital and Marketing,
Target Technology Services

Julie Guggemos
Senior Vice President,
Product Design and Development

Anu Gupta
Senior Vice President,
Operational Excellence

Tom Kadlec
Senior Vice President, Infrastructure
and Operations

Navneet Kapoor
President and Managing Director,
Target India

Scott Kennedy
President, Target Financial and
Retail Services

Rodney Lastinger
Senior Vice President, Stores

Stephanie Lucy
Senior Vice President, Merchandise
Planning, Apparel and Accessories
and Home

Preston Mosier
Senior Vice President,
Fulfillment Operations

Scott Nygaard
Senior Vice President,
Merchandising, Hardlines

Tammy Redpath
Senior Vice President,
Creative and Marketing Operations

Jill Sando
Senior Vice President,
Merchandising, Home

Mark Schindele
Senior Vice President, Target Properties

Samir Shah
Senior Vice President, Stores

Dustee Tucker Jenkins
Senior Vice President and
Chief Communications Officer

Arthur Valdez
Executive Vice President and Chief
Supply Chain and Logistics Officer

Todd Waterbury
Senior Vice President and
Chief Creative Officer

Michelle Wlazlo
Senior Vice President, Merchandising,
Apparel and Accessories

2
0
1
6
A
n
n
u
a

R
e
p
o
r
t

Visit our online Annual Report at Target.com/annualreport

1000 Nicollet Mall, Minneapolis, MN 55403
612.304.6073

2016
Annual Report