What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-03-08 compared with 2022-03-09 · 102 added, 108 removed, 320 unchanged (40% of the section changed)

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During 2022, in support of our enterprise strategy described in Item 1 on page 2 of this Form 10-K, we

• Expanded our digital fulfillment capabilities, including adding permanent storage capacity in more than 200 high-volume stores, adding thousands of new items to the list available for Order Pickup and Drive Up, and doubling the number of Drive Up parking stalls compared with last year.

During 2021, over 50 percent of our digital sales were fulfilled by our same-day fulfillment options:

• Expanded our supply chain capacity and digital fulfillment capabilities, including adding one new distribution center and six new sortation centers to support our growth and commitment to fast delivery times, while helping our teams work more efficiently and managing our shipping costs;

• Fulfilled over 50 percent of our digital sales through our same-day fulfillment options:

Order Pickup, Drive Up, and delivery via Shipt;

• Continued the steady stream of newness across our assortment and continued to introduce new owned brands, including our arts and crafts owned brand, Mondo Llama TM , our sweet and savory food brand, Favorite Day TM , our pet food brand, Kindfull TM , and our first dedicated storage and home organization owned brand, Brightroom TM .

For the first time in history, 11 brands delivered $1 billion or more in sales, with 4 brands delivering over $2 billion in sales, driven by strength in Apparel, Home Furnishings & Decor and Food & Beverage.

• Launched Ulta Beauty at Target on Target.com and in about 100 Target locations, and expanded our Apple and Disney experiences.

• Remodeled 145 stores.

• Opened 32 new stores, including 28 additional small format stores in key urban markets and on college campuses.

• Invested significantly in our team, including recognition bonuses and launch of a new debt-free education assistance program.

• Continued the steady stream of newness across our assortment and continued to introduce new owned and exclusive brands, including fashion forward brands Future Collective TM and Houston White x Target;

• Completed 140 full store remodels and invested in hundreds of other stores through projects to increase efficiency of our Same-Day Services, build-out and open Ulta Beauty shop-in-shops, and expand Apple and Disney experiences;

• Opened 23 new stores, including a new larger-footprint store with reimagined design elements and additional stores in key urban markets and on college campuses;

• Invested in our team through our updated starting wage range, expanded access to health care benefits, and our debt-free education assistance program;

• Offered compelling promotions, attractive every day price points on key items, and free and easy payment and fulfillment options, including our new RedCard Reloadable Account, which provides all the benefits of our RedCard program without the need for a credit check or an existing bank account;

• Launched Target Zero, a collection of products designed to reduce waste and make it easier to shop sustainably, and completed retrofitting our first store designed to be net zero energy, located in Vista, California.

Financial Summary

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• Adjusted diluted earnings per share were $6.02.

• Total revenue increased 13.3 percent, driven by an increase in comparable sales.

• Total revenue increased 2.9 percent, reflecting total sales growth of 2.8 percent and a 9.8 percent increase in other revenue.

• Comparable sales increased 2.2 percent, driven by a 2.1 percent increase in traffic.

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◦ Comparable digitally originated sales increased 1.5 percent.

• Operating income of $8.9 billion was 36.8 percent higher than the comparable prior-year period.

• We recognized a $335 million pretax gain on the sale of Dermstore.

• Operating income of $3.8 billion was 57.0 percent lower than the comparable prior-year period.

See Business Environment below for additional information.

Sales were $107.6 billion for 2022, an increase of $3.0 billion, or 2.8 percent, from the prior year.

Operating cash flow provided by continuing operations was $8.6 billion for 2021, a decrease of $(1.9) billion, or (18.1) percent, from $10.5 billion for 2020.

Operating cash flow was $4.0 billion for 2022, a decrease of $(4.6) billion, or (53.4) percent, from $8.6 billion for 2021.

The drivers of the operating cash flow decrease are described on page 27 .

Earnings Per Share From

Continuing Operations

TARGET CORPORATION

2022 Form 10-K 19

MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents

FINANCIAL SUMMARY & ANALYSIS OF OPERATIONS Index to Financial Statements

Earnings Per Share

Percent Change

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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.

Management believes that Adjusted EPS is useful in providing period-to-period comparisons of the results of our continuing operations.

Adjusted diluted earnings per share (Adjusted EPS), a non-GAAP metric, excludes the impact of certain items.

Management believes that Adjusted EPS is useful in providing period-to-period comparisons of the results of our operations.

A reconciliation of non-GAAP financial measures to GAAP measures is provided on page 24 .

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.

We report after-tax return on invested capital (ROIC) because we believe ROIC provides a meaningful measure of our capital-allocation effectiveness over time.

For the trailing twelve months ended January 28, 2023, after-tax ROIC was 12.6 percent, compared with 33.1 percent for the trailing twelve months ended January 29, 2022.

The calculation of ROIC is provided on page 26 .

TARGET CORPORATION

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MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents

FINANCIAL SUMMARY & ANALYSIS OF OPERATIONS Index to Financial Statements

The COVID-19 pandemic continues to evolve.

In 2020 and 2021, governments took various measures in response to COVID-19, such as 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.

Supply Chain Disruptions

In recent months, we have seen increasing supply chain disruptions.

In addition to country of origin production delays, trucker and dockworker shortages, a broad-based surge in consumer demand, and other factors have led to industry-wide U.S.

Business Environment

Following the onset of the COVID-19 pandemic in 2020, we experienced strong comparable sales growth and significant volatility in our category and channel mix, which continued through 2021, along with increasing supply chain disruptions.

In addition to country of origin production delays, trucker and dockworker shortages, a broad-based surge in consumer demand, and other factors led to industry-wide U.S.

port and ground transportation delays.

In response, we have taken various actions, including ordering merchandise earlier, securing ocean freight routes, and increased use of air transport for certain merchandise.

Some of these supply chain disruptions and resulting actions have resulted in increased costs.

The Gross Margin Rate analysis on page 22 provides additional information.

In response to the rising guest demand and supply chain constraints, we took various actions, including ordering merchandise earlier, securing ocean freight routes, adding incremental holding capacity near U.S.

ports, and increasing use of air transport for certain merchandise.

Some of these supply chain disruptions and resulting actions resulted in increased costs.

In 2022, our comparable sales growth slowed significantly, reflecting sales decreases in our Discretionary categories (Apparel & Accessories, Hardlines, and Home Furnishings & Decor) that substantially offset growth in our Frequency categories (Beauty & Household Essentials and Food & Beverage).

In response to this shift in demand, we took several actions to address our inventory position and create additional flexibility in a rapidly changing environment, including increasing promotional and clearance markdowns, removing excess inventory, and cancelling purchase orders.

In addition, during the second half of 2022, port congestion, shipping container availability, and other supply chain pressures improved.

This resulted in some inventory arriving earlier than anticipated, which resulted in increased costs of managing elevated inventory levels and an increased working capital investment.

These factors, net of the impact of retail price increases taken to address merchandise and freight cost inflation, resulted in decreased profitability compared to the prior year.

The Gross Margin Rate analysis on page 23 and Inventory section on page 27 provide additional information.

Sale of Dermstore

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

TARGET CORPORATION

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MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents

ANALYSIS OF OPERATIONS Index to Financial Statements

Analysis of Results of Operations

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All other rates are calculated by dividing the applicable amount by total revenue.

A discussion regarding Results of Operations and Analysis of Financial Condition for 2020, as compared to 2019, is included in Part II , Item 7 , MD&A to our Annual Report on Form 10-K for the year ended January 30, 2021.

TARGET CORPORATION

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MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents

ANALYSIS OF OPERATIONS Index to Financial Statements

A discussion regarding Analysis of Results of Operations and Analysis of Financial Condition for 2021, as compared to 2020, is included in Part II, Item 7, MD&A to our Annual Report on Form 10-K for the year ended January 29, 2022.

Sales include all merchandise sales, net of expected returns, and our estimate of gift card breakage.

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Average transaction amount 0.1 0.4 15.0

TARGET CORPORATION

2022 Form 10-K 21

MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents

ANALYSIS OF OPERATIONS Index to Financial Statements

Comparable Sales by Channel 2022 2021 2020

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Sales fulfilled by stores include in-store purchases and digitally originated sales fulfilled by shipping merchandise from stores to guests, Order Pickup, Drive Up, and Shipt.

Sales by Product Category 2021 2020 2019

Apparel and accessories 17 % 16 % 19 %

Beauty and household essentials 26 26 27

Food and beverage 20 20 19

Hardlines 18 18 16

Home furnishings and décor 19 20 19

Total 100 % 100 % 100 %

TARGET CORPORATION

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MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents

ANALYSIS OF OPERATIONS Index to Financial Statements

Note 4 to the Financial Statements provides additional product category sales information.

Part I, Item 1 , Business of this Form 10-K and Note 3 to the Financial Statements provides additional product category sales information.

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 makes further analysis of sales metrics infeasible.

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the Target Credit Card and the Target MasterCard Credit Card (Target Credit Cards).

Additionally, we offer a branded proprietary Target Debit Card.

Additionally, we offer a branded proprietary Target Debit Card and RedCard Reloadable Account.

Collectively, we refer to these products as RedCards™.

We monitor the percentage of purchases 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.

Guests receive a 5 percent discount on virtually all purchases when they use a RedCard at Target.

RedCard sales increased for all years presented below;

however, RedCard penetration declined as total Sales increased at a faster pace.

RedCard Penetration 2021 2020 2019

Target Debit Card 11.7 % 12.3 % 12.6 %

Target Credit Cards 8.7 9.2 10.7

Total RedCard Penetration 20.5 % 21.5 % 23.3 %

Amounts may not foot due to rounding.

For the years ended January 28, 2023, January 29, 2022, and January 30, 2021, total RedCard Penetration was 19.8 percent, 20.5 percent, and 21.5 percent, respectively.

TARGET CORPORATION

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MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents

ANALYSIS OF OPERATIONS Index to Financial Statements

Gross Margin Rate

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This decrease reflected the net impact of

• supply chain pressure related to increased compensation and headcount in our distribution centers, partially offset by the small net benefit of a higher percentage of digital sales fulfilled through our lower-cost same-day fulfillment options

• higher merchandise and freight costs partially offset by historically low promotional and clearance markdown rates;

• merchandising pressure, including

◦ higher clearance and promotional markdown rates, including the impact of inventory impairments and other actions taken in our Discretionary categories;

◦ higher merchandise and freight costs, partially offset by the benefit of retail price increases;

• supply chain pressure related to increased compensation and headcount in our distribution centers, investments in new facilities, and costs of managing excess inventory;

• higher inventory shrink;

• favorable mix in the relative growth rates of higher and lower margin categories.

Selling, General and Administrative (SG&A) Expense Rate

Our SG&A expense rate was 18.6 percent in 2021, compared with 19.9 percent in 2020, reflecting the leverage benefit from strong revenue growth.

TARGET CORPORATION

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MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents

ANALYSIS OF OPERATIONS Index to Financial Statements

Our SG&A expense rate was 18.9 percent in 2022, compared with 18.6 percent in 2021, reflecting the net impact of cost increases across our business, including investments in hourly team member wages, partially offset by lower incentive compensation in 2022 compared to the prior year.

Change in Number of Stores 2022 2021

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

TARGET CORPORATION

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MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents

ANALYSIS OF OPERATIONS Index to Financial Statements

Other Performance Factors

Net Interest Expense

Net interest expense was $421 million for 2021, compared with $977 million for 2020, which included a $512 million loss on early debt retirement.

Net interest expense was $478 million for 2022, compared with $421 million for 2021.

The increase in net interest expense was primarily due to higher average debt and commercial paper levels in 2022 compared with 2021.

Net Other (Income) / Expense

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Our 2022 effective income tax rate was 18.7 percent compared with 22.0 percent in 2021.

The rate increase was driven by significantly higher pretax earnings, which diluted the tax-rate benefit of fixed and discrete tax items.

The decrease reflects lower pretax earnings in the current year and the impacts of discrete tax benefits.

Our effective tax rate is generally more volatile at lower amounts of pretax income because the impact of discrete, deductible and nondeductible tax items and credits is greater.

Note 18 to the Financial Statements provides additional information.

TARGET CORPORATION

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MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Index to Financial Statements

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).

To provide additional transparency, we have disclosed non-GAAP adjusted diluted earnings per share (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.

We believe this information is useful in providing period-to-period comparisons of the results of our operations.

This measure is not in accordance with, or an alternative to, generally accepted accounting principles in the U.S.

The most comparable GAAP measure is diluted earnings per share from continuing operations.

The most comparable GAAP measure is diluted earnings per share.

Adjusted EPS should not be considered in isolation or as a substitution for analysis of our results as reported in accordance with GAAP.

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(millions, except per share data) Pretax Net of Tax Per Share Amounts Pretax Net of Tax Per Share Amounts Pretax Net of Tax Per Share Amounts

GAAP diluted earnings per share from continuing operations

GAAP diluted earnings per share

$ 5.98 $ 14.10 $ 8.64

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— — — — — — — (21) (0.04)

Adjusted diluted earnings per share from continuing operations

Adjusted diluted earnings per share

$ 6.02 $ 13.56 $ 9.42

Amounts may not foot due to rounding.

(a) Represents a loss on our investment in Casper Sleep Inc., which is not core to our continuing operations.

(a) Represents a loss on our investment in Casper Sleep Inc., which is not core to our operations.

(b) Other items unrelated to current period operations, none of which were individually significant.

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RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Index to Financial Statements

Earnings from continuing operations before interest expense and income taxes (EBIT) and earnings from continuing operations before interest expense, income taxes, depreciation, and amortization (EBITDA) are non-GAAP financial measures.

Earnings before interest expense and income taxes (EBIT) and earnings before interest expense, income taxes, depreciation, and amortization (EBITDA) are non-GAAP financial measures.

We believe these measures provide meaningful information about our operational efficiency compared with our competitors by excluding the impact of differences in tax jurisdictions and structures, debt levels, and for EBITDA, capital investment.

These measures are not in accordance with, or an alternative to, GAAP.

The most comparable GAAP measure is net earnings from continuing operations.

The most comparable GAAP measure is net earnings.

EBIT and EBITDA should not be considered in isolation or as a substitution for analysis of our results as reported in accordance with GAAP.

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(dollars in millions) 2022 2021 2020 2022/2021 2021/2020

Net earnings from continuing operations $ 6,946 $ 4,368 $ 3,269 59.0 % 33.6 %

Net earnings $ 2,780 $ 6,946 $ 4,368 (60.0) % 59.0 %

+ Provision for income taxes 638 1,961 1,178 (67.5) 66.5

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Net operating profit after taxes $ 3,245 $ 7,342

January 29, 2022 January 30, 2021 February 1, 2020

January 28, 2023 January 29, 2022 January 30, 2021

Current portion of long-term debt and other borrowings $ 130 $ 171 $ 1,144

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Operating lease interest is added back to operating income in the ROIC calculation to control for differences in capital structure between us and our competitors.

(b) Calculated using the effective tax rates for continuing operations, which were 22.0 percent and 21.2 percent for the trailing twelve months ended January 29, 2022, and January 30, 2021, respectively.

(b) Calculated using the effective tax rates, which were 18.7 percent and 22.0 percent for the trailing twelve months ended January 28, 2023, and January 29, 2022, respectively.

For the trailing twelve months ended January 28, 2023, and January 29, 2022, includes tax effect of $0.7 billion and $2.1 billion, respectively, related to EBIT, and $17 million and $19 million, respectively, related to operating lease interest.

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Cash flows provided by operating activities were $4.0 billion in 2022 compared with $8.6 billion in 2021.

For 2021, operating cash flows reflect stronger operating results, offset by increased inventory investment and lower accounts payable leverage, compared with 2020.

Additionally, operating cash flows for 2021 reflect a $1.0 billion increase in income tax payments.

For 2022, operating cash flows decreased as a result of lower earnings and lower accounts payable leverage, partially offset by decreased inventory investment, compared with 2021.

Year-end inventory was $13.5 billion, compared with $13.9 billion in 2021.

The increase in inventory levels reflect our efforts to align inventory with sales trends, and elevated in-transit inventory related to import supply chain delays.

The decrease in inventory levels primarily reflects the following:

• decreased in-transit and late-arriving inventory as lead times improved,

• investments in our inventory position in our Frequency categories, offsetting reductions in our Discretionary categories, and

• increases in unit costs across all of our categories.

The Business Environment section on page 20 provides additional information.

TARGET CORPORATION

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Amounts may not foot due to rounding.

Capital expenditures increased in 2021 from the prior year as we invested in our strategic initiatives, including store remodels, some of which were delayed in 2020, new store openings, and supply chain projects.

Beyond full-store remodels, we invested in optimizing front-end space in high-volume locations to increase the efficiency of our Same-Day Services, and built-out about 100 Ulta Beauty shop-in-shops.

Capital expenditures increased in 2022 from the prior year as we invested in our strategic initiatives, including an increase in investments in both stores and in our supply chain.

The increase also reflects the impact of inflation on these projects.

Beyond full-store remodels, we invested in optimizing front-end space in high-volume locations to increase the efficiency of our Same-Day Services, and built-out and opened approximately 250 Ulta Beauty shop-in-shops.

We have completed over 1,000 full-store remodels since the launch of the current program in 2017, including 140 in 2022.

In addition to these cash investments, we entered into leases related to new stores in 2021, 2020, and 2019 with total future minimum lease payments of $401 million, $764 million, and $669 million, respectively, and new leases related to our supply chain with total future minimum lease payments of $226 million, $442 million, and $185 million, respectively.

We expect capital expenditures in 2022 of approximately $4.0 billion to $5.0 billion to support remodels, new stores, and supply chain projects.

In addition to these cash investments, we entered into leases related to new stores in 2022, 2021, and 2020 with total future minimum lease payments of $319 million, $401 million, and $764 million, respectively, and new leases related to our supply chain with total future minimum lease payments of $1.6 billion, $226 million, and $442 million, respectively.

We expect capital expenditures in 2023 of approximately $4.0 billion to $5.0 billion to support full-store remodels and other existing store investments, new stores, and supply chain projects.

Supply chain projects will add replenishment capacity and modernize our network, including the use of sortation centers to enhance our last-mile delivery capabilities.

We expect to complete approximately 200 full-store remodels, open 25 to 30 new stores, and add more than 250 Ulta Beauty shop-in-shops during 2022.

We expect to complete approximately 70 full-store remodels, open about 20 new stores, and add additional Ulta Beauty shop-in-shops during 2023.

Additionally, we will continue to invest in optimizing front-end space.

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Share Repurchases

During 2021 and 2020 we returned $7.2 billion and $609 million, respectively, to shareholders through share repurchase.

During 2022 and 2021 we returned $2.6 billion and $7.2 billion, respectively, to shareholders through share repurchase.

See Part II , Item 5 , Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities of this Annual Report on Form 10-K and Note 20 to the Financial Statements for more information.

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ANALYSIS OF FINANCIAL CONDITION Index to Financial Statements

Subsequent to year-end, we entered into an accelerated share repurchase 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, subject to a final settlement of cash or additional shares in the second quarter of 2022.

Our financing strategy is to ensure liquidity and access to capital markets, to maintain a balanced spectrum of debt maturities, and to manage our net exposure to floating interest rate volatility.

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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.

Fitch raised our long-term debt rating from A- to A during 2021.

In 2021, we issued $2.0 billion of debt, and we repaid $1.1 billion of debt at maturity.

In 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.

In 2022, we issued $2.7 billion of debt, and we repaid $62 million of debt at maturity.

In 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 2022 or 2021.

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.

In addition to a secured debt level covenant, our credit facilities also contain a debt leverage covenant.

We are, and expect to remain, in compliance with these covenants.

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We believe our sources of liquidity, namely operating cash flows, credit facility capacity, and access to capital markets, will continue to be adequate to meet our contractual obligations, working capital and capital expenditure requirements, finance anticipated expansion and strategic initiatives, fund debt maturities, pay dividends, and execute purchases under our share repurchase program for the foreseeable future.

TARGET CORPORATION

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ANALYSIS OF FINANCIAL CONDITION Index to Financial Statements

Critical Accounting Estimates

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The following items require significant estimation or judgment:

TARGET CORPORATION

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ANALYSIS OF FINANCIAL CONDITION Index to Financial Statements

Inventory and cost of sales:

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We maintain insurance coverage to limit our exposure to certain events, including network security matters.

TARGET CORPORATION

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ANALYSIS OF FINANCIAL CONDITION & NEW ACCOUNTING PRONOUNCEMENTS Index to Financial Statements

Income taxes:

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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 $138 million and $193 million as of January 29, 2022, and January 30, 2021, respectively.

Gross uncertain tax positions, including interest and penalties, were $241 million and $138 million as of January 28, 2023, and January 29, 2022, respectively.

We believe the resolution of these matters will not materially affect our consolidated financial statements.

Income taxes are described further in Note 18 to the Financial Statements.

TARGET CORPORATION

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ANALYSIS OF FINANCIAL CONDITION & NEW ACCOUNTING PRONOUNCEMENTS Index to Financial Statements

Pension accounting:

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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 funding of debt maturities, the continued execution of our share repurchase program, our expected capital expenditures and new lease commitments, 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 return on 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 claims, litigation, and the resolution of tax matters, our expectations regarding our contractual obligations, liabilities, and vendor income, the expected ability to recognize deferred tax assets and liabilities and the timing of such recognition, the expected impact of changes in information technology systems, future responses to and effects of the COVID-19 pandemic, and changes in our assumptions and expectations.

our financial performance, statements regarding the adequacy of and costs associated with our sources of liquidity, the funding of debt maturities, the execution of our share repurchase program, our expected capital expenditures and new lease commitments, the expected compliance with debt covenants, the expected impact of new accounting pronouncements, our intentions regarding future dividends, the expected contributions and payments related to our pension plan, the expected return on plan assets, the expected timing and recognition of compensation expenses, the adequacy of our reserves for general liability, workers' compensation, and property loss, the expected outcome of, and adequacy of our reserves for claims, litigation, and the resolution of tax matters, our expectations regarding our contractual obligations, liabilities, and vendor income, the expected ability to recognize deferred tax assets and liabilities and the timing of such recognition, our expectations regarding arrangements with our partners, and changes in our assumptions and expectations.

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 included in Part I , Item 1A , Risk Factors to this Form 10-K, which should be read in conjunction with the forward-looking statements in this report.

The most important factors which could cause our actual results to differ from our forward-looking statements are set forth in our description of risk factors included in Part I , Item 1A , Risk Factors 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.

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-K

Item 7. Management’s Discussion and Analysis