What changed in this filing

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Item 1. Financial Statements

2022-11-23 compared with 2022-08-26 · 62 added, 53 removed, 303 unchanged (28% of the section changed)

1 unchanged sentence

Consolidated Statements of Operations

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

(millions, except per share data) (unaudited) October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021

Sales $ 26,122 $ 25,290 $ 76,605 $ 73,995

22 unchanged sentences

Consolidated Statements of Comprehensive Income

Three Months Ended Six Months Ended

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

Three Months Ended Nine Months Ended

(millions) (unaudited) October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021

Net earnings $ 712 $ 1,488 $ 1,904 $ 5,402

4 unchanged sentences

Comprehensive income $ 873 $ 1,514 $ 2,249 $ 5,471

See accompanying Notes to Consolidated Financial State ments .

See accompanying Notes to Consolidated Financial Statements .

TARGET CORPORATION

3 unchanged sentences

Consolidated Statements of Financial Position

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

(millions, except footnotes) (unaudited) October 29,

2022 January 29,

2022 July 31,

2022 October 30,

Cash and cash equivalents $ 954 $ 5,911 $ 5,753

31 unchanged sentences

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

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.

460,297,654 , 471,274,073 and 480,905,493 shares issued and outstanding as of October 29, 2022, January 29, 2022, and October 30, 2021, 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 30, 2022 July 31, 2021

Nine Months Ended

(millions) (unaudited) October 29, 2022 October 30, 2021

Operating activities

Net earnings $ 1,904 $ 5,402

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

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

Depreciation and amortization 2,004 1,952

8 unchanged sentences

Accrued and other liabilities ( 578 ) ( 722 )

Cash (required for) provided by operating activities ( 47 ) 3,422

Cash provided by operating activities 552 5,597

Investing activities

6 unchanged sentences

Change in commercial paper, net 2,104 —

Additions to long-term debt 991 —

Reductions of long-term debt ( 139 ) ( 112 )

65 unchanged sentences

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.

Net earnings — — — 712 — 712

Other comprehensive income — — — — 161 161

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

Stock options and awards 0.1 — 56 — — 56

October 29, 2022 460.3 $ 38 $ 6,558 $ 4,631 $ ( 208 ) $ 11,019

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

See accompanying Notes to Consolidated Financial Statements .

36 unchanged sentences

NOTES Index to Notes

General merchandise sales represent the vast majority of our revenues.

Merchandise sales represent the vast majority of our revenues.

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 30, 2022 July 31, 2021 July 30, 2022 July 31, 2021

Revenues Three Months Ended Nine Months Ended

(millions) October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021

Apparel and accessories (a)

22 unchanged sentences

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

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.

As of October 29, 2022, January 29, 2022, and October 30, 2021, the accrual for estimated returns was $ 209 million, $ 165 million, and $ 210 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 July 30,

Revenue Recognized From Beginning Liability October 29,

Gift card liability (a)

13 unchanged sentences

Financial Instruments Measured On a Recurring Basis Fair Value

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

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

Short-term investments Cash and Cash Equivalents Level 1 $ — $ 4,985 $ 4,818

4 unchanged sentences

Significant Financial Instruments Not Measured at Fair Value (a)

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

October 29, 2022 January 29, 2022 October 30, 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 $ 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.

We recognized impairment charges of $ 5 million and $ 55 million for the three and nine months ended October 29, 2022, respectively.

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

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

Commercial Paper and Long-Term Debt

In September 2022, we issued unsecured fixed rate debt of $ 1.0 billion at 4.5 percent that matures in September 2032.

In connection with this issuance, we terminated certain of our forward-starting interest rate swaps.

Note 7 provides additional information.

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

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.

For the nine months ended October 29, 2022, the maximum amount outstanding was $ 2.1 billion, and the average daily amount outstanding was $ 713 million, at a weighted average annual interest rate of 1.91 percent.

As of October 29, 2022, $ 2.1 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

Our derivative instruments consist of interest rate swaps used to mitigate interest rate risk.

As a result, we have counterparty credit exposure to large global financial institutions, which we monitor on an ongoing basis.

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

TARGET CORPORATION

2 unchanged sentences

NOTES Index to Notes

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.

In October 2022, we obtained a new committed $ 1.0 billion 364 -day unsecured revolving credit facility that will expire in October 2023.

We also extended our existing committed $ 3.0 billion unsecured revolving credit facility, which now expires in October 2027.

No balances were outstanding under either credit facility at any time during 2021 or 2022.

Derivative Financial Instruments

Our derivative instruments consist of interest rate swaps used to mitigate interest rate risk.

As a result, we have counterparty credit exposure to large global financial institutions, which we monitor on an ongoing basis.

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

We were party to interest rate swaps with notional amounts totaling $ 2.45 billion as of October 29, 2022, and $ 1.50 billion as of January 29, 2022, and October 30, 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 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 July 30, 2022, Accumulated Other Comprehensive Loss (AOCI) included an unrealized gain of $ 296 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 29, 2022, and October 30, 2021.

We were party to forward-starting interest rate swaps with notional amounts totaling $ 1.45 billion as of October 29, 2022, $ 2.15 billion as of January 29, 2022, and $ 1.25 billion as of October 30, 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 two years .

In September 2022, we terminated forward-starting interest rate swap agreements that hedged $ 700 million of the $ 1.0 billion debt issuance described in Note 6 .

The resulting gain of $ 109 million was recorded in Accumulated Other Comprehensive Loss (AOCI) and will be recognized as a reduction to Net Interest Expense over the term of the debt.

Based on the fair value of our remaining forward-starting interest rate swaps as of October 29, 2022, AOCI included an unrealized gain of $ 394 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

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

October 29, 2022 January 29, 2022 October 30, 2021

Long-term debt and other borrowings

1 unchanged sentence

Cumulative hedging adjustments, included in carrying amount ( 146 ) 77 114

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

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

(millions) October 29, 2022 October 30, 2021 October 29, 2022 October 30, 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.

TARGET CORPORATION

Q3 2022 Form 10-Q 11

FINANCIAL STATEMENTS Table of Contents

NOTES Index to Notes

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 Six Months Ended

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

July 31, 2021 July 31, 2022 (a)

July 31, 2021

We did not repurchase any of our shares during the three months ended October 29, 2022.

Share Repurchase Activity Three Months Ended Nine Months Ended

(millions, except per share data) October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021

Number of shares purchased — 8.8 12.5 21.5

1 unchanged sentence

Total investment $ — $ 2,184 $ 2,646 $ 4,884

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

Q2 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 Six Months Ended

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

Net Pension Benefits Expense Three Months Ended Nine Months Ended

(millions) Classification October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021

Service cost benefits earned SG&A $ 22 $ 25 $ 68 $ 73

5 unchanged sentences

Accumulated Other Comprehensive Income (Loss)

Change in Accumulated Other Comprehensive Income (Loss) Cash Flow

Hedges Currency Translation Adjustment Pension Total

Change in Accumulated Other Comprehensive Income (Loss) Cash Flow Hedges Currency Translation Adjustment Pension Total

January 29, 2022 $ 49 $ ( 19 ) $ ( 583 ) $ ( 553 )

1 unchanged sentence

Amounts reclassified from AOCI, net of tax ( 1 ) — 33 32

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

October 29, 2022 $ 364 $ ( 22 ) $ ( 550 ) $ ( 208 )

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