What changed in this filing

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Item 1. Financial Statements

2021-11-24 compared with 2021-08-27 · 54 added, 43 removed, 306 unchanged (24% of the section changed)

1 unchanged sentence

Consolidated Statements of Operations

Three Months Ended Six Months Ended

(millions, except per share data) (unaudited) July 31, 2021 August 1, 2020 July 31, 2021 August 1, 2020

Three Months Ended Nine Months Ended

(millions, except per share data) (unaudited) October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020

Sales $ 25,290 $ 22,336 $ 73,995 $ 64,403

16 unchanged sentences

Antidilutive shares — — — —

Per share amounts may not foot due to rounding.

See accompanying Notes to Consolidated Financial Statements .

4 unchanged sentences

Consolidated Statements of Comprehensive Income

Three Months Ended Six Months Ended

(millions) (unaudited) July 31, 2021 August 1, 2020 July 31, 2021 August 1, 2020

Three Months Ended Nine Months Ended

(millions) (unaudited) October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020

Net earnings $ 1,488 $ 1,014 $ 5,402 $ 2,988

Other comprehensive income / (loss), net of tax

Other comprehensive income, net of tax

Pension benefit liabilities 21 22 63 66

8 unchanged sentences

Consolidated Statements of Financial Position

(millions, except footnotes) (unaudited) July 31,

(millions, except footnotes) (unaudited) October 30,

2021 January 30,

2021 August 1,

2021 October 31,

Cash and cash equivalents $ 5,753 $ 8,511 $ 5,996

31 unchanged sentences

Common Stock Authorized 6,000,000,000 shares, $ 0.0833 par value;

489,651,196 , 500,877,129 and 500,252,831 shares issued and outstanding as of July 31, 2021, January 30, 2021, and August 1, 2020, respectively.

480,905,493 , 500,877,129 and 500,754,729 shares issued and outstanding as of October 30, 2021, January 30, 2021, and October 31, 2020, respectively.

Preferred Stock Authorized 5,000,000 shares, $ 0.01 par value;

6 unchanged sentences

Consolidated Statements of Cash Flows

Six Months Ended

(millions) (unaudited) July 31, 2021 August 1, 2020

Nine Months Ended

(millions) (unaudited) October 30, 2021 October 31, 2020

Operating activities

5 unchanged sentences

Gain on Dermstore sale ( 335 ) —

Loss on extinguishment of debt — 512

Noncash losses / (gains) and other, net

17 unchanged sentences

Stock option exercises 5 18

Cash (required for) / provided by financing activities ( 3,593 ) 993

Cash required for financing activities ( 6,265 ) ( 1,640 )

Net (decrease) / increase in cash and cash equivalents ( 2,758 ) 3,419

56 unchanged sentences

July 31, 2021 489.7 $ 41 $ 6,332 $ 9,200 $ ( 713 ) $ 14,860

We declared $ 0.90 and $ 0.68 dividends per share for the three months ended July 31, 2021, and August 1, 2020, respectively, and $ 2.70 per share for the fiscal year ended January 30, 2021.

Net earnings — — — 1,488 — 1,488

Other comprehensive income — — — — 26 26

Dividends declared — — — ( 439 ) — ( 439 )

Repurchase of stock ( 8.8 ) ( 1 ) — ( 2,180 ) — ( 2,181 )

Stock options and awards — — 49 — — 49

October 30, 2021 480.9 $ 40 $ 6,381 $ 8,069 $ ( 687 ) $ 13,803

We declared $ 0.90 and $ 0.68 dividends per share for the three months ended October 30, 2021, and October 31, 2020, respectively, and $ 2.70 per share for the fiscal year ended January 30, 2021.

See accompanying Notes to Consolidated Financial Statements .

10 unchanged sentences

Property and Equipment

Commercial Paper and Long-Term Debt

Derivative Financial Instruments

23 unchanged sentences

Note 4 presents sales by category.

We have taken various actions, including accelerating purchases of certain merchandise in our core categories and slowing or canceling purchase orders, primarily for Apparel and Accessories.

We have taken various actions, including accelerating purchases of certain merchandise in our core categories and, early in the pandemic, slowing or canceling purchase orders, primarily for Apparel and Accessories.

As a result, during the quarter ended May 2, 2020, we recorded $ 216 million of purchase order cancellation fees in Cost of Sales.

8 unchanged sentences

We also earn revenues from a variety of other sources, most notably credit card profit-sharing income from our arrangement with TD Bank Group (TD).

Revenues Three Months Ended Six Months Ended

(millions) July 31, 2021 August 1, 2020 July 31, 2021 August 1, 2020

Revenues Three Months Ended Nine Months Ended

(millions) October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020

Apparel and accessories (a)

22 unchanged sentences

Sales are recognized net of expected returns, which we estimate using historical return patterns.

As of July 31, 2021, January 30, 2021, and August 1, 2020, the accrual for estimated returns was $ 176 million, $ 139 million, and $ 201 million, respectively.

As of October 30, 2021, January 30, 2021, and October 31, 2020, the accrual for estimated returns was $ 210 million, $ 139 million, and $ 182 million, respectively.

Revenue from Target gift card sales is recognized upon gift card redemption, which is typically within one year of issuance.

1 unchanged sentence

2021 Gift Cards Issued During Current Period But Not Redeemed (b)

Revenue Recognized From Beginning Liability July 31,

Revenue Recognized From Beginning Liability October 30,

Gift card liability (a)

12 unchanged sentences

Financial Instruments Measured On a Recurring Basis Fair Value

(millions) Classification Pricing Category July 31, 2021 January 30, 2021 August 1, 2020

(millions) Classification Pricing Category October 30, 2021 January 30, 2021 October 31, 2020

Short-term investments Cash and Cash Equivalents Level 1 $ 4,818 $ 7,644 $ 5,089

1 unchanged sentence

Equity securities Other Current Assets Level 1 — — 19

Interest rate swaps Other Current Assets Level 2 12 — —

Interest rate swaps Other Noncurrent Assets Level 2 116 188 205

1 unchanged sentence

Significant Financial Instruments Not Measured at Fair Value (a)

July 31, 2021 January 30, 2021 August 1, 2020

October 30, 2021 January 30, 2021 October 31, 2020

Value Carrying

7 unchanged sentences

We review long-lived assets for impairment when store performance expectations, events, or changes in circumstances—such as a decision to relocate or close a store, office, or distribution center, discontinue a project, or make significant software changes—indicate that the asset’s carrying value may not be recoverable.

We recognized impairment charges of $ 39 million and $ 81 million during the three and six months ended July 31, 2021, respectively.

We recognized impairment charges of $ 25 million and $ 60 million during the three and six months ended August 1, 2020, respectively.

We recognized impairment charges of $ 3 million and $ 84 million during the three and nine months ended October 30, 2021, respectively.

We recognized impairment charges of $ 2 million and $ 62 million during the three and nine months ended October 31, 2020, respectively.

These impairment charges are included in Selling, General and Administrative Expenses (SG&A).

Commercial Paper and Long-Term Debt

In October 2021, we obtained a committed $ 3.0 billion unsecured revolving credit facility that will expire in October 2026.

This new facility replaced our $ 2.5 billion unsecured revolving credit facility that was set to expire in October 2023.

No balances were outstanding under either credit facility at any time during 2021 or 2020.

Derivative Financial Instruments

2 unchanged sentences

Note 5 to the Consolidated Financial Statements provides the fair value and classification of these instruments.

As of July 31, 2021, January 30, 2021, and August 1, 2020, we were party to interest rate swaps with notional amounts totaling $ 1.5 billion.

As of October 30, 2021, January 30, 2021, and October 31, 2020, we were party to interest rate swaps with notional amounts totaling $ 1.5 billion.

We pay a floating rate and receive a fixed rate under each of these agreements.

All of the agreements are designated as fair value hedges, and all were considered to be perfectly effective under the shortcut method during the three and six months ended July 31, 2021, and August 1, 2020.

As of July 31, 2021, January 30, 2021, and August 1, 2020, we were party to forward-starting interest rate swaps with notional amounts totaling $ 250 million.

We use these derivative financial instruments, which have been designated as cash flow hedges, to hedge the interest rate exposure of anticipated future debt issuances.

As of July 31, 2021, Accumulated Other Comprehensive Loss (AOCI) included $ 6 million that will be reclassified and reduce Net Interest Expense when the forecasted transaction affects earnings.

During August 2021, we entered into additional forward-starting interest rate swaps with notional amounts totaling $ 675 million.

All of the agreements are designated as fair value hedges, and all were considered to be perfectly effective under the shortcut method during the three and nine months ended October 30, 2021, and October 31, 2020.

TARGET CORPORATION

2 unchanged sentences

NOTES Index to Notes

As of October 30, 2021, we were party to forward-starting interest rate swaps with notional amounts totaling $ 1.25 billion.

As of January 30, 2021, and October 31, 2020, we were party to forward-starting interest rate swaps with notional amounts totaling $ 250 million.

We use these derivative financial instruments, which have been designated as cash flow hedges, to hedge the interest rate exposure of anticipated future debt issuances during the next three years.

As of October 30, 2021, Accumulated Other Comprehensive Loss (AOCI) included a gain of $ 15 million that will be reclassified and reduce Net Interest Expense as we record interest expense on the associated debt.

Effect of Hedges on Debt

July 31, 2021 January 30, 2021 August 1, 2020

October 30, 2021 January 30, 2021 October 31, 2020

Long-term debt and other borrowings

1 unchanged sentence

Cumulative hedging adjustments, included in carrying amount 114 183 203

Effect of Hedges on Net Interest Expense Three Months Ended Six Months Ended

(millions) July 31, 2021 August 1, 2020 July 31, 2021 August 1, 2020

Effect of Hedges on Net Interest Expense Three Months Ended Nine Months Ended

(millions) October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020

Gain (loss) on fair value hedges recognized in Net Interest Expense

2 unchanged sentences

Total $ — $ — $ — $ —

For the three and six months ended July 31, 2021, our effective tax rate was 23.4 percent and 21.4 percent, respectively, compared with 22.8 percent and 21.6 percent for the three and six months ended August 1, 2020, as higher pretax earnings diluted the tax-rate benefit from fixed and discrete items, such as employee share-based compensation and the Dermstore sale.

A dditionally, for the six months ended July 31, 2021, the favorable resolution of certain income tax matters resulted in a $ 44 million discrete tax benefit.

Share Repurchase

We periodically repurchase shares of our common stock under a board-authorized repurchase program through a combination of open market transactions, accelerated share repurchase arrangements, and other privately negotiated transactions with financial institutions.

Share Repurchase Activity Three Months Ended Six Months Ended

(millions, except per share data) July 31, 2021 August 1, 2020 July 31, 2021 August 1, 2020

Share Repurchase Activity Three Months Ended Nine Months Ended

(millions, except per share data) October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020

Number of shares purchased 8.8 — 21.5 5.7

1 unchanged sentence

Total investment $ 2,184 $ — $ 4,884 $ 609

TARGET CORPORATION

Q2 2021 Form 10-Q 11

FINANCIAL STATEMENTS Table of Contents

NOTES Index to Notes

Pension Benefits

We provide pension plan benefits to eligible team members.

Net Pension Benefits Expense Three Months Ended Six Months Ended

(millions) Classification July 31, 2021 August 1, 2020 July 31, 2021 August 1, 2020

Net Pension Benefits Expense Three Months Ended Nine Months Ended

(millions) Classification October 30, 2021 October 31, 2020 October 30, 2021 October 31, 2020

Service cost benefits earned SG&A $ 25 $ 25 $ 73 $ 76

3 unchanged sentences

Amortization of prior service cost Net Other (Income) / Expense 2 ( 3 ) 1 ( 9 )

Settlement charges Net Other (Income) / Expense — 1 — 1

Total $ 19 $ 24 $ 53 $ 71

TARGET CORPORATION

Q3 2021 Form 10-Q 11

FINANCIAL STATEMENTS Table of Contents

NOTES Index to Notes

Accumulated Other Comprehensive Loss

2 unchanged sentences

January 30, 2021 $ ( 3 ) $ ( 18 ) $ ( 735 ) $ ( 756 )

Other comprehensive income before reclassifications, net of tax 1 — — 1

Other comprehensive income (loss) before reclassifications, net of tax 7 ( 1 ) — 6

Amounts reclassified from AOCI, net of tax — — 63 63

July 31, 2021 $ ( 2 ) $ ( 18 ) $ ( 693 ) $ ( 713 )

October 30, 2021 $ 4 $ ( 19 ) $ ( 672 ) $ ( 687 )

TARGET CORPORATION

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements