What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-05-27 compared with 2021-11-24 · 64 added, 85 removed, 275 unchanged (35% of the section changed)

1 unchanged sentence

Consolidated Statements of Operations

Three Months Ended Nine Months Ended

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

Three Months Ended

(millions, except per share data) (unaudited) April 30, 2022 May 1, 2021

Sales $ 24,830 $ 23,879

22 unchanged sentences

Consolidated Statements of Comprehensive Income

Three Months Ended Nine Months Ended

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

Three Months Ended

(millions) (unaudited) April 30, 2022 May 1, 2021

Net earnings $ 1,009 $ 2,097

1 unchanged sentence

Pension benefit liabilities 11 22

Currency translation adjustment and cash flow hedges 5 14 6 5

Cash flow hedges and currency translation adjustment 190 9

Other comprehensive income 201 31

6 unchanged sentences

Consolidated Statements of Financial Position

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

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

2022 January 29,

2021 October 31,

Cash and cash equivalents $ 1,112 $ 5,911 $ 7,816

31 unchanged sentences

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

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.

463,683,711 , 471,274,073 and 496,093,160 shares issued and outstanding as of April 30, 2022, January 29, 2022, and May 1, 2021, respectively.

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

6 unchanged sentences

Consolidated Statements of Cash Flows

Nine Months Ended

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

Three Months Ended

(millions) (unaudited) April 30, 2022 May 1, 2021

Operating activities

Net earnings $ 1,009 $ 2,097

Adjustments to reconcile net earnings to cash provided by operating activities:

Adjustments to reconcile net earnings to cash (required for) provided by operating activities:

Depreciation and amortization 679 667

2 unchanged sentences

Gain on Dermstore sale — ( 335 )

Loss on extinguishment of debt — 512

Noncash losses / (gains) and other, net

4 unchanged sentences

Accrued and other liabilities ( 505 ) ( 413 )

Cash provided by operating activities 5,597 7,044

Cash (required for) provided by operating activities ( 1,394 ) 1,139

Investing activities

5 unchanged sentences

Financing activities

Additions to long-term debt — 2,480

Change in commercial paper, net 945 —

Reductions of long-term debt ( 48 ) ( 21 )

1 unchanged sentence

Repurchase of stock ( 181 ) ( 1,310 )

Accelerated share repurchase pending final settlement ( 2,750 ) —

Stock option exercises 1 2

Cash required for financing activities ( 2,457 ) ( 1,669 )

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

Net decrease in cash and cash equivalents ( 4,799 ) ( 695 )

Cash and cash equivalents at beginning of period 5,911 8,511

12 unchanged sentences

(millions) (unaudited) Shares Value Capital Earnings (Loss) / Income

February 1, 2020 504.2 $ 42 $ 6,226 $ 6,433 $ ( 868 ) $ 11,833

January 30, 2021 500.9 $ 42 $ 6,329 $ 8,825 $ ( 756 ) $ 14,440

Net earnings — — — 2,097 — 2,097

7 unchanged sentences

Dividends declared — — — ( 445 ) — ( 445 )

Repurchase of stock ( 6.6 ) — — ( 1,544 ) — ( 1,544 )

Stock options and awards 0.2 — 61 — — 61

August 1, 2020 500.3 $ 42 $ 6,248 $ 7,121 $ ( 833 ) $ 12,578

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

Net earnings — — — 1,488 — 1,488

1 unchanged sentence

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

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

Stock options and awards — — 49 — — 49

3 unchanged sentences

Dividends declared — — — ( 428 ) — ( 428 )

Repurchase of stock ( 9.8 ) ( 1 ) — ( 2,265 ) — ( 2,266 )

Stock options and awards 0.2 — 40 — — 40

13 unchanged sentences

Repurchase of stock ( 0.1 ) — — ( 10 ) — ( 10 )

Stock options and awards 1.3 — ( 58 ) — — ( 58 )

May 1, 2021 496.1 $ 41 $ 6,271 $ 9,372 $ ( 725 ) $ 14,959

Net earnings — — — 1,817 — 1,817

Other comprehensive income — — — — 12 12

Dividends declared — — — ( 445 ) — ( 445 )

Repurchase of stock ( 6.6 ) — — ( 1,544 ) — ( 1,544 )

Stock options and awards 0.2 — 61 — — 61

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

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 )

Accelerated share repurchase pending final settlement ( 8.9 ) ( 1 ) ( 751 ) ( 1,998 ) — ( 2,750 )

Stock options and awards 1.4 1 ( 78 ) — — ( 77 )

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.

April 30, 2022 463.7 $ 39 $ 5,592 $ 5,495 $ ( 352 ) $ 10,774

We declared $ 0.90 and $ 0.68 dividends per share for the three months ended April 30, 2022, and May 1, 2021, respectively, and $ 3.38 per share for the fiscal year ended January 29, 2022.

See accompanying Notes to Consolidated Financial Statements .

6 unchanged sentences

Accounting Policies

Coronavirus (COVID-19)

Dermstore Sale

5 unchanged sentences

Pension Benefits

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Income (Loss)

TARGET CORPORATION

13 unchanged sentences

Due to the seasonal nature of our business, quarterly revenues, expenses, earnings, and cash flows are not necessarily indicative of the results that may be expected for the full year.

Coronavirus (COVID-19)

The novel coronavirus (COVID-19) pandemic continues to evolve.

In 2020, states and cities took various measures in response to COVID-19, including mandating the closure of certain businesses and encouraging or requiring citizens to avoid large gatherings.

To date, virtually all of our stores, digital channels, and distribution centers have remained open.

Since the onset of the COVID-19 pandemic, we have experienced strong comparable sales growth and significant volatility in our sales category and channel mix, including same-day fulfillment options.

Note 4 presents sales by category.

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.

Dermstore Sale

In February 2021, we sold our wholly owned subsidiary Dermstore LLC (Dermstore) for $ 356 million in cash and recognized a $ 335 million pretax gain, which is included in Net Other (Income) / Expense.

Dermstore has historically represented less than 1 percent of our consolidated revenues, operating income, and net assets.

Dermstore represented less than 1 percent of our consolidated revenues, operating income and net assets.

TARGET CORPORATION

4 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 Nine Months Ended

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

Revenues Three Months Ended

(millions) April 30, 2022 May 1, 2021

Apparel and accessories (a)

1 unchanged sentence

Beauty and household essentials (b)

6,980 6,103 20,070 18,172

Food and beverage (c)

5,074 4,397 14,617 13,158

Hardlines (d)

3,841 3,377 11,654 9,959

Home furnishings and décor (e)

4,989 4,506 14,147 12,395

Other 42 26 123 89

Sales 24,830 23,879

7 unchanged sentences

(d) Includes electronics (including video game hardware and software), toys, entertainment, sporting goods, and luggage.

(e) Includes furniture, lighting, storage, kitchenware, small appliances, home décor, bed and bath, home improvement, school and office supplies, greeting cards and party supplies, and other seasonal merchandise.

(e) Includes furniture, lighting, storage, kitchenware, small appliances, home décor, bed and bath, home improvement, school/office supplies, greeting cards and party supplies, and other seasonal merchandise.

Merchandise sales — We record almost all retail store revenues at the point of sale.

Digitally originated sales may include shipping revenue and are recorded upon delivery to the guest or upon guest pickup at the store.

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

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.

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

As of April 30, 2022, January 29, 2022, and May 1, 2021, the accrual for estimated returns was $ 204 million, $ 165 million, and $ 196 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

2022 Gift Cards Issued During Current Period But Not Redeemed (b)

Revenue Recognized From Beginning Liability October 30,

Revenue Recognized From Beginning Liability April 30,

Gift card liability (a)

9 unchanged sentences

NOTES Index to Notes

Other — Includes advertising, Shipt membership and service revenues, commissions earned on third-party sales through Target.com, rental income, and other miscellaneous revenues.

Fair Value Measurements

Fair value measurements are reported in one of three levels reflecting the valuation techniques used to determine fair value.

Fair value measurements are reported in one of three levels reflecting the significant inputs used to determine fair value.

Financial Instruments Measured On a Recurring Basis Fair Value

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

(millions) Classification Measurement Level April 30, 2022 January 29, 2022 May 1, 2021

Short-term investments Cash and Cash Equivalents Level 1 $ 182 $ 4,985 $ 6,895

Prepaid forward contracts Other Current Assets Level 1 37 35 37

Equity securities Other Current Assets Level 1 — — 19

Interest rate swaps Other Current Assets Level 2 41 17 —

2 unchanged sentences

Significant Financial Instruments Not Measured at Fair Value (a)

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

April 30, 2022 January 29, 2022 May 1, 2021

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 $ 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.

We recognized impairment charges of $ 23 million and $ 41 million during the three months ended April 30, 2022, and May 1, 2021, 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.

We obtain short-term financing from time to time under our commercial paper program.

For the three months ended April 30, 2022 , the maximum amount outstanding was $ 1.1 billion, and the average daily amount outstanding was $ 291 million, at a weighted average annual interest rate of 0.4 percent.

As of April 30, 2022, $ 945 million was outstanding and is classified within Current Portion of Long-Term Debt and Other Borrowings on our Consolidated Statement of Financial Position.

No balances were outstanding at any time during the three months ended May 1, 2021.

Derivative Financial Instruments

2 unchanged sentences

Note 4 to the Consolidated Financial Statements provides the fair value and classification of these instruments.

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 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.

As of April 30, 2022, January 29, 2022, and May 1, 2021, 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 months ended April 30, 2022, and May 1, 2021.

We were party to forward-starting interest rate swaps with notional amounts totaling $ 2.15 billion as of April 30, 2022, and January 29, 2022, and $ 250 million as of May 1, 2021.

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.

Based on the fair value of these swaps as of April 30, 2022, Accumulated Other Comprehensive Loss (AOCI) included an unrealized gain of $ 333 million.

Any unrealized gain or loss at the time of debt issuance will be reclassified and reduce Net Interest Expense as we record interest expense on the associated debt.

Effect of Hedges on Debt

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

April 30, 2022 January 29, 2022 May 1, 2021

Long-term debt and other borrowings

1 unchanged sentence

Cumulative hedging adjustments, included in carrying amount ( 27 ) 77 132

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

Effect of Hedges on Net Interest Expense Three Months Ended

(millions) April 30, 2022 May 1, 2021

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

3 unchanged sentences

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 Nine Months Ended

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

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

Share Repurchase Activity Three Months Ended

(millions, except per share data) April 30, 2022 May 1, 2021

Number of shares purchased 0.1 6.1

1 unchanged sentence

Total investment $ 10 $ 1,165

This table excludes activity related to the ASR arrangements described below because final settlement had not occurred as of April 30, 2022.

During the first quarter of 2022, we entered into an ASR arrangement to repurchase up to $ 2.75 billion of our common stock.

Under the agreement, we paid $ 2.75 billion and received an initial delivery of 8.9 million shares, which were retired, resulting in a $ 2 billion reduction to Retained Earnings.

As of April 30, 2022, $ 751 million is included in the Consolidated Statement of Financial Position as a reduction to Additional Paid-in Capital.

TARGET CORPORATION

Q1 2022 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 Nine Months Ended

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

Net Pension Benefits Expense Three Months Ended

(millions) Classification April 30, 2022 May 1, 2021

Service cost benefits earned SG&A $ 23 $ 24

2 unchanged sentences

Amortization of losses Net Other (Income) / Expense 15 29

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

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

Total $ 8 $ 18

TARGET CORPORATION

Q3 2021 Form 10-Q 11

FINANCIAL STATEMENTS Table of Contents

NOTES Index to Notes

Accumulated Other Comprehensive Loss

Change in Accumulated Other Comprehensive Loss Cash Flow

Accumulated Other Comprehensive Income (Loss)

Change in Accumulated Other Comprehensive Income (Loss) Cash Flow

Hedges Currency Translation Adjustment Pension Total

2 unchanged sentences

Amounts reclassified from AOCI, net of tax — — 11 11

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

April 30, 2022 $ 239 $ ( 19 ) $ ( 572 ) $ ( 352 )

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