What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-08-26 compared with 2022-05-27 · 55 added, 38 removed, 301 unchanged (24% of the section changed)

1 unchanged sentence

Consolidated Statements of Operations

Three Months Ended

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

Three Months Ended Six Months Ended

(millions, except per share data) (unaudited) July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021

Sales $ 25,653 $ 24,826 $ 50,483 $ 48,705

22 unchanged sentences

Consolidated Statements of Comprehensive Income

Three Months Ended

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

Three Months Ended Six Months Ended

(millions) (unaudited) July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021

Net earnings $ 183 $ 1,817 $ 1,192 $ 3,914

4 unchanged sentences

Comprehensive income $ 166 $ 1,829 $ 1,376 $ 3,957

See accompanying Notes to Consolidated Financial Statements .

See accompanying Notes to Consolidated Financial State ments .

TARGET CORPORATION

3 unchanged sentences

Consolidated Statements of Financial Position

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

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

2022 January 29,

2022 July 31,

Cash and cash equivalents $ 1,117 $ 5,911 $ 7,368

31 unchanged sentences

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

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.

460,236,393 , 471,274,073 and 489,651,196 shares issued and outstanding as of July 30, 2022, January 29, 2022, and July 31, 2021, respectively.

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

6 unchanged sentences

Consolidated Statements of Cash Flows

Three Months Ended

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

Six Months Ended

(millions) (unaudited) July 30, 2022 July 31, 2021

Operating activities

23 unchanged sentences

Repurchase of stock ( 2,821 ) ( 2,850 )

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

Stock option exercises 2 5

56 unchanged sentences

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.

Net earnings — — — 183 — 183

Other comprehensive income — — — — ( 17 ) ( 17 )

Dividends declared — — — ( 502 ) — ( 502 )

Repurchase of stock ( 3.6 ) ( 1 ) 870 ( 755 ) — 114

Stock options and awards 0.1 — 40 — — 40

July 31, 2022 460.2 $ 38 $ 6,502 $ 4,421 $ ( 369 ) $ 10,592

We declared $ 1.08 and $ 0.90 dividends per share for the three months ended July 30, 2022, and July 31, 2021, and $ 3.38 per share for the fiscal year ended January 29, 2022.

See accompanying Notes to Consolidated Financial Statements .

38 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

(millions) April 30, 2022 May 1, 2021

Revenues Three Months Ended Six Months Ended

(millions) July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021

Apparel and accessories (a)

1 unchanged sentence

Beauty and household essentials (b)

7,208 6,726 14,261 13,090

Food and beverage (c)

5,268 4,687 10,773 9,543

Hardlines (d)

3,866 3,867 7,579 7,813

Home furnishings and décor (e)

4,647 4,748 8,918 9,158

Other 47 47 96 81

Sales 25,653 24,826 50,483 48,705

11 unchanged sentences

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.

As of July 30, 2022, January 29, 2022, and July 31, 2021, the accrual for estimated returns was $ 175 million, $ 165 million, and $ 176 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 April 30,

Revenue Recognized From Beginning Liability July 30,

Gift card liability (a)

13 unchanged sentences

Financial Instruments Measured On a Recurring Basis Fair Value

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

(millions) Classification Measurement Level July 30, 2022 January 29, 2022 July 31, 2021

Short-term investments Cash and Cash Equivalents Level 1 $ 189 $ 4,985 $ 6,439

4 unchanged sentences

Significant Financial Instruments Not Measured at Fair Value (a)

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

July 30, 2022 January 29, 2022 July 31, 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 $ 23 million and $ 41 million during the three months ended April 30, 2022, and May 1, 2021, respectively.

We recognized impairment charges of $ 27 million and $ 50 million for the three and six months ended July 30, 2022, respectively.

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

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

1 unchanged sentence

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.

For the six months ended July 30, 2022, the maximum amount outstanding was $ 1.5 billion, and the average daily amount outstanding was $ 538 million, at a weighted average annual interest rate of 1.1 percent.

As of July 30, 2022, $ 1.5 billion 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 2021.

Derivative Financial Instruments

6 unchanged sentences

NOTES Index to Notes

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 were party to interest rate swaps with notional amounts totaling $ 2.25 billion as of July 30, 2022, and $ 1.5 billion as of January 29, 2022, and July 31, 2021.

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.

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 30, 2022, and July 31, 2021.

We were party to forward-starting interest rate swaps with notional amounts totaling $ 2.15 billion as of July 30, 2022, and January 29, 2022, and $ 250 million as of July 31, 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.

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.

Based on the fair value of these swaps as of July 30, 2022, Accumulated Other Comprehensive Loss (AOCI) included an unrealized gain of $ 296 million.

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

Effect of Hedges on Debt

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

July 30, 2022 January 29, 2022 July 31, 2021

Long-term debt and other borrowings

1 unchanged sentence

Cumulative hedging adjustments, included in carrying amount 22 77 154

Effect of Hedges on Net Interest Expense Three Months Ended

(millions) April 30, 2022 May 1, 2021

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

(millions) July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021

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

2 unchanged sentences

Total $ — $ — $ — $ —

For the three and six months ended July 30, 2022 , our effective tax rate was 15.8 percent and 18.7 percent, respectively, compared with 23.4 percent and 21.4 percent for the three and six months ended July 31, 2021, respectively.

For the three month period, the decrease reflects lower pretax earnings during the three months ended July 30, 2022, resulting in a larger tax rate benefit from ongoing and discrete tax items, compared with the prior year.

For the six month period, the decrease reflects lower pretax earnings during the six months ended July 30, 2022, compared with the prior year, partially offset by the impacts of discrete tax benefits during the six months ended July 31, 2021, including the resolution of certain income tax matters.

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 (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

Share Repurchase Activity Three Months Ended Six Months Ended

(millions, except per share data) July 31, 2022 (a)

July 31, 2021 July 31, 2022 (a)

July 31, 2021

Number of shares purchased 12.5 6.6 12.5 12.7

1 unchanged sentence

Total investment $ 2,636 $ 1,535 $ 2,646 $ 2,700

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.

(a) Includes activity related to the ASR arrangement entered in first quarter 2022 because final settlement occurred in second quarter 2022.

Under the ASR arrangement, we repurchased 12.5 million shares for a total cash investment of $ 2.6 billion.

We did not enter into any other ASR arrangements during the periods presented.

TARGET CORPORATION

4 unchanged sentences

We provide pension plan benefits to eligible team members.

Net Pension Benefits Expense Three Months Ended

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

Net Pension Benefits Expense Three Months Ended Six Months Ended

(millions) Classification July 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021

Service cost benefits earned SG&A $ 23 $ 24 $ 46 $ 48

2 unchanged sentences

Amortization of losses Net Other (Income) / Expense 15 28 30 57

Amortization of prior service cost Net Other (Income) / Expense 10 ( 1 ) 10 ( 1 )

Total $ 20 $ 16 $ 28 $ 34

5 unchanged sentences

Amounts reclassified from AOCI, net of tax — — 22 22

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

July 30, 2022 $ 212 $ ( 20 ) $ ( 561 ) $ ( 369 )

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