What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-03-08 compared with 2022-03-09 · 84 added, 92 removed, 985 unchanged (15% of the section changed)

9 unchanged sentences

Summary of Accounting Policies

Coronavirus (COVID-19)

Dermstore Sale

32 unchanged sentences

Cornell /s/ Michael J.

Chairman and Chief Executive Officer

Chair of the Board and Chief Executive Officer

March 8, 2023 Michael J.

41 unchanged sentences

Our audit procedures also included, among others, testing the key inputs into the RIM calculation, including purchases, sales, shortage, and price changes (markdowns) by comparing the key inputs back to source information such as third-party vendor invoices, third-party inventory count information and cash receipts.

We performed extensive analytical procedures.

For example, we performed multiple linear regression analysis to predict ending inventory values at each store and distribution center location, as well as predictive markdown analytics based on inquiries held with members of the merchant organization to assess the level of price changes within a category.

We also performed analytical procedures.

For example, we performed predictive markdown analytics based on inquiries held with members of the merchant organization to assess the level of price changes within each category.

In addition, we tested the existence of inventories by observing physical inventory counts for a sample of stores and distribution centers.

Valuation of Vendor Income Receivables

Valuation of Vendor Income Receivable

Description of the Matter

At January 29, 2022, the Corporation’s vendor income receivables totaled $518 million.

At January 28, 2023, the Corporation’s vendor income receivable totaled $526 million.

As discussed in Note 5 of the consolidated financial statements, the Corporation receives consideration for a variety of vendor-sponsored programs, which are primarily recorded as a reduction of cost of sales when earned.

The Corporation records a receivable for amounts earned but not yet received.

Auditing the Corporation's vendor income receivables was complex due to the estimation required in measuring the receivables.

Auditing the Corporation's vendor income receivable was complex due to the estimation required in measuring the receivable.

The estimate was sensitive to significant assumptions, such as forecasted vendor income collections, and estimating the time period over which the collections have been earned, which is primarily based on historical trending and data.

1 unchanged sentence

We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Corporation’s vendor income receivable process, including controls over management’s review of the significant assumptions described above.

To test the estimated vendor income receivables, we performed audit procedures that included, among others, assessing the estimation methodology used by management and evaluating the forecasted vendor income collections and the time period over which collections have been earned as used in the receivable estimation model.

To test the estimated vendor income receivable, we performed audit procedures that included, among others, assessing the estimation methodology used by management and evaluating the forecasted vendor income collections and the time period over which collections have been earned as used in the receivable estimation model.

For a sample of the vendor rebates and concessions, we evaluated the nature and source of the inputs used and the terms of the contractual agreements.

1 unchanged sentence

In addition, we recalculated the time period over which the vendor income collection had been earned to assess the accuracy of management’s estimates.

We also performed sensitivity analyses of significant assumptions to evaluate the significance of changes in the receivables that would result from changes in assumptions.

We also performed sensitivity analyses of significant assumptions to evaluate the significance of changes in the receivable that would result from changes in assumptions.

/s/ Ernst & Young LLP

12 unchanged sentences

Cornell /s/ Michael J.

Chairman and Chief Executive Officer

Chair of the Board and Chief Executive Officer

March 8, 2023 Michael J.

44 unchanged sentences

Net other (income) / expense ( 48 ) ( 382 ) 16

Earnings from continuing operations before income taxes 8,907 5,546 4,190

Earnings before income taxes 3,418 8,907 5,546

Provision for income taxes 638 1,961 1,178

Net earnings from continuing operations 6,946 4,368 3,269

Discontinued operations, net of tax — — 12

Net earnings $ 2,780 $ 6,946 $ 4,368

Basic earnings per share $ 6.02 $ 14.23 $ 8.72

Continuing operations $ 14.23 $ 8.72 $ 6.39

Discontinued operations — — 0.02

Net earnings per share $ 14.23 $ 8.72 $ 6.42

Diluted earnings per share $ 5.98 $ 14.10 $ 8.64

Continuing operations $ 14.10 $ 8.64 $ 6.34

Discontinued operations — — 0.02

Net earnings per share $ 14.10 $ 8.64 $ 6.36

Weighted average common shares outstanding

15 unchanged sentences

Currency translation adjustment and cash flow hedges

Other comprehensive income / (loss)

203 112 ( 63 )

Other comprehensive income

Comprehensive income

54 unchanged sentences

$ 2,780 $ 6,946 $ 4,368

Earnings from discontinued operations, net of tax

Net earnings from continuing operations 6,946 4,368 3,269

Adjustments to reconcile net earnings to cash provided by operations:

10 unchanged sentences

Accrued and other liabilities ( 624 ) ( 746 ) 1,931

Cash provided by operating activities—continuing operations 8,625 10,525 7,099

Cash provided by operating activities—discontinued operations

Cash provided by operating activities 4,018 8,625 10,525

35 unchanged sentences

Net earnings — — — 4,368 — 4,368

Other comprehensive loss — — — — ( 63 ) ( 63 )

Other comprehensive income — — — — 112 112

Dividends declared — — — ( 1,367 ) — ( 1,367 )

1 unchanged sentence

Stock options and awards 2.4 — 103 — — 103

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 — — — 6,946 — 6,946

10 unchanged sentences

January 28, 2023 460.3 $ 38 $ 6,608 $ 5,005 $ ( 419 ) $ 11,232

We declared $ 3.38 , $ 2.70 , and $ 2.62 dividends per share for the twelve months ended January 29, 2022, January 30, 2021, and February 1, 2020, respectively.

We declared $ 4.14 , $ 3.38 , and $ 2.70 dividends per share for the twelve months ended January 28, 2023, January 29, 2022, and January 30, 2021, respectively.

See accompanying Notes to Consolidated Financial Statements .

6 unchanged sentences

Organization - We are a general merchandise retailer selling products to our guests through our stores and digital channels.

We operate as a single segment that includes all of our continuing operations, which are designed to enable guests to purchase products seamlessly in stores or through our digital channels.

We operate as a single segment that includes all of our operations, which are designed to enable guests to purchase products seamlessly in stores or through our digital channels.

Nearly all of our revenues are generated in the United States (U.S.).

1 unchanged sentence

Consolidation - The consolidated financial statements include the balances of Target and its subsidiaries after elimination of intercompany balances and transactions.

All material subsidiaries are wholly owned.

All subsidiaries are wholly owned.

Use of estimates - The preparation of our consolidated financial statements in conformity with U.S.

3 unchanged sentences

Unless otherwise stated, references to years in this report relate to fiscal years, rather than to calendar years.

Fiscal 2021, 2020, and 2019 ended January 29, 2022, January 30, 2021, and February 1, 2020, respectively, and consisted of 52 weeks.

Fiscal 2022 will end January 28, 2023, and will consist of 52 weeks.

Fiscal 2022, 2021, and 2020 ended January 28, 2023, January 29, 2022, and January 30, 2021, respectively, and consisted of 52 weeks.

Fiscal 2023 will end February 3, 2024, and will consist of 53 weeks.

Accounting policies - Our accounting policies are disclosed in the applicable Notes to the Consolidated Financial Statements.

Certain prior-year amounts have been reclassified to conform to the current-year presentation.

Coronavirus (COVID-19)

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 at times 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 of these actions, we recorded $ 226 million of purchase order cancellation fees in Cost of Sales in 2020.

Dermstore Sale

5 unchanged sentences

NOTES Index to Financial Statements

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).

47 unchanged sentences

(b) Net of estimated breakage.

Guests receive a 5 percent discount on nearly all purchases and receive free shipping at Target.com when they use their Target Debit Card, Target Credit Card, or Target MasterCard (RedCards).

Target Circle program members earn 1 percent rewards on nearly all non-RedCard purchases.

Guests receive a 5 percent discount on nearly all purchases and receive free shipping at Target.com when they use their Target Debit Card, RedCard Reloadable Account, Target Credit Card, or Target MasterCard (collectively, RedCards).

Target Circle program members earn 1 percent rewards on nearly all non-RedCard purchases and rewards on various other transactions.

As of January 28, 2023, and January 29, 2022, deferred revenue of $ 112 million and $ 89 million, respectively, related to this loyalty program was included in Accrued and Other Current Liabilities.

2 unchanged sentences

TD underwrites, funds, and owns Target Credit Card and Target MasterCard receivables, controls risk management policies, and oversees regulatory compliance.

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

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

Cost of Sales and Selling, General and Administrative Expenses

35 unchanged sentences

Consideration Received from Vendors

We receive consideration for a variety of vendor-sponsored programs such as volume rebates, markdown allowances, promotions, and advertising activities and for our compliance programs, referred to as "vendor income." Additionally, under our compliance programs, vendors are charged for merchandise shipments that do not meet our requirements (violations), such as late or incomplete shipments.

We receive consideration for a variety of vendor-sponsored programs—such as volume rebates, markdown allowances, promotions, certain advertising activities, and for our compliance programs—referred to as "vendor income." Additionally, under our compliance programs, vendors are charged for merchandise shipments that do not meet our requirements (violations), such as late or incomplete shipments.

Substantially all vendor income is recorded as a reduction of Cost of Sales.

6 unchanged sentences

Reimbursements from vendors that are for specific, incremental, and identifiable advertising costs are recognized as offsets of these advertising costs within Selling, General and Administrative Expenses (SG&A Expenses).

Net advertising costs were $ 1.5 billion, $ 1.5 billion, and $ 1.6 billion in 2021, 2020, and 2019, respectively.

Net advertising costs were $ 1.5 billion in 2022, 2021, and 2020.

Fair Value Measurements

13 unchanged sentences

Other Noncurrent Assets Level 2 7 135

Interest rate swaps (c)

Other Noncurrent Liabilities Level 2 81 —

(a) Carrying value approximates fair value because maturities are less than three months.

34 unchanged sentences

Inventory is also reduced for estimated losses related to shrink and markdowns.

The LIFO provision is calculated based on inventory levels, markup rates, and internally measured retail price indices.

The LIFO provision is calculated based on inventory levels, markup rates, and internally measured retail price indices, and was $ 132 million and $ 33 million as of January 28, 2023, and January 29, 2022, respectively.

Under RIM, inventory cost and the resulting gross margins are calculated by applying a cost-to-retail ratio to the inventory retail value.

15 unchanged sentences

Property and equipment, including assets acquired under finance leases, is depreciated using the straight-line method over estimated useful lives or lease terms if shorter.

We amortize leasehold improvements purchased after the beginning of the initial lease term over the shorter of the assets' useful lives or a term that includes the original lease term, plus any renewals that are reasonably certain at the date the leasehold improvements are acquired.

We amortize leasehold improvements purchased after the beginning of the initial lease term over the shorter of the assets' useful lives or a term that includes the remaining initial lease term, plus any renewals that are reasonably certain at the date the leasehold improvements are acquired.

Total depreciation expense, including depreciation expense included in Cost of Sales, was $ 2.7 billion, $ 2.6 billion, and $ 2.5 billion for 2022, 2021, and 2020, respectively.

6 unchanged sentences

Computer hardware and software 2 - 7

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 review long-lived assets for impairment when 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 losses of $ 66 million, $ 87 million, and $ 62 million during 2022, 2021, and 2020, respectively.

42 unchanged sentences

We do not believe that any of these identified claims or litigation will be material to our results of operations, cash flows, or financial condition.

Purchase obligations, which include all legally binding contracts such as merchandise royalties, equipment purchases, marketing-related contracts, software acquisition/license commitments, firm minimum commitments for inventory purchases, and service contracts, were $ 944 million and $ 785 million as of January 29, 2022, and January 30, 2021, respectively.

Purchase obligations, which include all legally binding contracts such as merchandise royalties, equipment purchases, marketing-related contracts, software acquisition/license commitments, firm minimum commitments for inventory purchases, and service contracts, were $ 1.0 billion and $ 944 million as of January 28, 2023, and January 29, 2022, respectively.

These purchase obligations are primarily due within three years and recorded as liabilities when goods are received or services are rendered.

Real estate obligations, which include legally binding minimum lease payments for leases signed but not yet commenced, and commitments for the purchase, construction, or remodeling of real estate and facilities, were $ 5.3 billion and $ 2.5 billion as of January 28, 2023, and January 29, 2022, respectively.

Over half of these real estate obligations are due within one year , a portion of which are recorded as liabilities.

We issue inventory purchase orders in the ordinary course of business, which represent authorizations to purchase that are cancelable by their terms.

Approximately half of these real estate obligations are due within one year , a portion of which are recorded as liabilities.

We issue inventory purchase orders in the ordinary course of business, which represent authorizations to purchase that are cancellable by their terms.

We do not consider purchase orders to be firm inventory commitments.

8 unchanged sentences

Commercial Paper and Long-Term Debt

As of January 29, 2022, the carrying value and maturities of our debt portfolio were as follows:

Debt Maturities January 29, 2022

(dollars in millions) Rate (a)

Debt Maturities

(dollars in millions) Weighted-Average Interest Rate at January 28, 2023 January 28, 2023 January 29, 2022

Due 2022 — % $ — $ 63

4 unchanged sentences

Due 2043-2047 3.8 1,119 1,118

Due 2048-2052 3.9 2,119 980

Total notes and debentures 14,141 11,568

3 unchanged sentences

Long-term debt and other borrowings $ 16,009 $ 13,549

(a) Reflects the dollar weighted average stated interest rate as of year-end.

Required Principal Payments

2022 2023 2024 2025 2026

2023 2024 2025 2026 2027 Thereafter

Total required principal payments $ — $ 1,000 $ 1,500 $ 2,000 $ 97 $ 9,655

In January 2023, we issued unsecured fixed rate debt of $ 1.15 billion at 4.8 percent that matures in January 2053 and $ 500 million at 4.4 percent that matures in January 2033.

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

Note 16 provides additional information.

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 16 provides additional information.

In January 2022, we issued unsecured fixed rate debt of $ 1.0 billion at 1.95 percent that matures in January 2027 and $ 1.0 billion at 2.95 percent that matures in January 2052.

3 unchanged sentences

In March 2020, we issued unsecured fixed rate debt of $ 1.5 billion at 2.25 percent that matures in April 2025 and $ 1.0 billion at 2.65 percent that matures in September 2030.

In January 2020, we issued $ 750 million of 10 -year unsecured fixed rate debt at 2.350 percent, and separately, we repurchased $ 1.0 billion of 3.875 percent unsecured fixed rate debt before its maturity.

We recognized a loss on early retirement of approximately $ 10 million, which was recorded in Net Interest Expense.

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

For the year ended January 28, 2023, the maximum amount outstanding was $ 2.3 billion, and the average daily amount outstanding was $ 709 million, at a weighted average annual interest rate of 2.4 percent.

As of January 28, 2023, there was no commercial paper outstanding.

No balances were outstanding under our commercial paper program at any time during 2021 or 2020.

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 October 2023.

No balances were outstanding under either facility at any time during 2021, 2020, or 2019.

TARGET CORPORATION

2 unchanged sentences

NOTES Index to Financial Statements

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 facility at any time during 2022, 2021, or 2020.

Substantially all of our outstanding borrowings are senior, unsecured obligations.

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, which have no practical effect on our ability to pay dividends.

3 unchanged sentences

Note 7 provides the fair value and classification of these instruments.

Under our swap agreements, we pay a floating rate equal to 1-month LIBOR and receive a weighted average fixed rate of 2.6 percent.

During 2022, we entered into interest rate swaps with a total notional amount of $ 950 million.

Under the swap agreements, we pay a floating rate equal to the daily Secured Overnight Financing Rate (SOFR) compounded over six months and receive a weighted average fixed rate of 3.1 percent.

The agreements have a weighted average remaining maturity of 7.6 years.

As of January 29, 2022, and January 30, 2021, interest rate swaps with notional amounts totaling $ 1.5 billion were designated as fair value hedges, and all were considered to be perfectly effective under the shortcut method during 2021 and 2020.

As of January 29, 2022, we were party to forward-starting interest rate swaps with notional amounts totaling $ 2.15 billion to hedge the interest rate exposure of anticipated future debt issuances during the next three years.

For other existing swap agreements, with a total notional amount of $ 1.5 billion, we pay a floating rate equal to 1-month LIBOR and receive a weighted average fixed rate of 2.6 percent.

The agreements have a weighted average remaining maturity of 4.9 years.

As of January 28, 2023, and January 29, 2022, interest rate swaps with notional amounts totaling $ 2.45 billion and $ 1.5 billion were designated as fair value hedges, and all were considered to be perfectly effective under the shortcut method during 2022 and 2021.

During 2022, we were party to forward-starting interest rate swaps to hedge the interest rate exposure of anticipated future debt issuances.

We designated these derivative financial instruments as cash flow hedges.

As of January 29, 2022, a $ 75 million gain was recorded in Accumulated Other Comprehensive Loss and will be reclassified to Net Interest Expense as we record interest expense on the associated debt.

In January 2023, we terminated forward-starting interest rate swap agreements that hedged $ 1.45 billion of the $ 1.65 billion debt issuance described in Note 15 .

In September 2022, we terminated forward-starting interest rate swap agreements that hedged $ 700 million of the $ 1 billion debt issuance described in Note 15 .

The resulting gains upon termination of these swap agreements in January 2023 and September 2022 were $ 310 million and $ 109 million, respectively, which were recorded in Accumulated Comprehensive Loss (AOCI) and will be recognized as a reduction to Net Interest Expense over the respective term of the debt.

The cash flows related to forward-starting interest rate swaps are included within operating activities in the Consolidated Statements of Cash Flows.

Effect of Hedges on Debt

8 unchanged sentences

Hedged debt 151 106 ( 46 )

Gain on cash flow hedges recognized in Net Interest Expense 4 — —

Total $ 4 $ — $ —

TARGET CORPORATION

2022 Form 10-K 50

FINANCIAL STATEMENTS Table of Contents

NOTES Index to Financial Statements

We lease certain retail stores, warehouses, distribution centers, office space, land, and equipment.

6 unchanged sentences

The depreciable life of leased assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

We use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.

Certain of our lease agreements require reimbursement of real estate taxes, common area maintenance, and insurance, as well as rental payments based on a percentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation.

3 unchanged sentences

(CVS) for space within our stores.

TARGET CORPORATION

2021 Form 10-K 51

FINANCIAL STATEMENTS Table of Contents

NOTES Index to Financial Statements

Classification January 28, 2023 January 29, 2022

7 unchanged sentences

Total lease liabilities $ 5,006 $ 4,822

We use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

(a) Finance lease assets are recorded net of accumulated amortization of $ 623 million and $ 670 million as of January 28, 2023, and January 29, 2022, respectively.

10 unchanged sentences

Net lease cost $ 649 $ 564 $ 484

(a) 2021 and 2020 include $ 64 million and $ 44 million, respectively, of short-term and variable lease costs.

Short-term and variable lease costs were insignificant for 2019.

(a) 2022, 2021, and 2020 include $ 101 million, $ 64 million, and $ 44 million, respectively, of short-term and variable lease costs.

(b) Supply chain-related amounts are included in Cost of Sales.

(c) Sublease income excludes rental income from owned properties of $ 48 million for each of 2021, 2020, and 2019, which is included in Other Revenue.

(c) Sublease income excludes rental income from owned properties of $ 49 million for 2022, and $ 48 million for each of 2021 and 2020, which is included in Other Revenue.

TARGET CORPORATION

8 unchanged sentences

2027 331 175 506

After 2026 1,828 1,800 3,628

Thereafter 1,826 1,847 3,673

Total lease payments $ 3,629 $ 2,740 $ 6,369

2 unchanged sentences

$ 2,934 $ 2,072

(a) Operating lease payments include $ 942 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $ 290 million of legally binding minimum lease payments for leases signed but not yet commenced.

(a) Operating lease payments include $ 878 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $ 1.8 billion of legally binding minimum lease payments for leases signed but not yet commenced.

(b) Finance lease payments include $ 195 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $ 813 million of legally binding minimum lease payments for leases signed but not yet commenced.

19 unchanged sentences

NOTES Index to Financial Statements

Earnings from continuing operations before income taxes were $ 8.9 billion, $ 5.5 billion, and $ 4.2 billion during 2021, 2020, and 2019, respectively, including $ 896 million, $ 764 million, and $ 653 million earned by our foreign entities subject to tax outside of the U.S.

Tax Rate Reconciliation – Continuing Operations 2021 2020 2019

Earnings before income taxes were $ 3.4 billion, $ 8.9 billion, and $ 5.5 billion during 2022, 2021, and 2020, respectively, including $ 1.3 billion, $ 896 million, and $ 764 million earned by our foreign entities subject to tax outside of the U.S.

Tax Rate Reconciliation 2022 2021 2020

Federal statutory rate 21.0 % 21.0 % 21.0 %

37 unchanged sentences

$ ( 2,190 ) $ ( 1,561 )

(a) $ 6 million and $ 20 million of the balance as of January 29, 2022, and January 30, 2021, respectively, is included in Other Noncurrent Assets.

(a) $ 6 million of the balance as of January 28, 2023, and January 29, 2022, is included in Other Noncurrent Assets.

We file a U.S.

4 unchanged sentences

income tax examinations by tax authorities for years before 2015.

Reconciliation of Liability for Unrecognized Tax Benefits

Reconciliation of Gross Unrecognized Tax Benefits

2022 2021 2020

5 unchanged sentences

Balance at end of period $ 233 $ 125 $ 181

If we were to prevail on all unrecognized tax benefits recorded, $ 67 million of the $ 125 million reserve would benefit the effective tax rate.

If we were to prevail on all unrecognized tax benefits recorded, the amount that would benefit the effective tax rate was $ 107 million, $ 67 million, and $ 99 million as of January 28, 2023, January 29, 2022, and January 30, 2021, respectively.

In addition, the reversal of accrued interest and penalties would also benefit the effective tax rate.

1 unchanged sentence

During 2022, 2021, and 2020, we recorded an expense / (benefit) from accrued interest and penalties of $( 4 ) million, $ 1 million, and $( 12 ) million, respectively.

As of January 29, 2022, January 30, 2021, and February 1, 2020, total accrued interest and penalties were $ 13 million, $ 12 million, and $ 27 million, respectively.

As of January 28, 2023, January 29, 2022, and January 30, 2021, total accrued interest and penalties were $ 7 million, $ 13 million, and $ 12 million, respectively.

It is reasonably possible that the amount of the unrecognized tax benefits with respect to our other unrecognized tax positions will increase or decrease during the next twelve months;

23 unchanged sentences

Share-Based Compensation

We maintain a long-term incentive plan (the Plan) for key team members and non-employee members of our Board of Directors.

The Plan allows us to grant equity-based compensation awards, including stock options, stock appreciation rights, performance share units, restricted stock units, restricted stock awards, or a combination of awards (collectively, share-based awards).

The number of unissued common shares reserved for future grants under the Plan was 34.3 million as of January 29, 2022.

We maintain a long-term incentive plan for key team members and non-employee members of our Board of Directors.

This plan allows us to grant equity-based compensation awards, including stock options, stock appreciation rights, performance share units, restricted stock units, restricted stock awards, or a combination of awards (collectively, share-based awards).

The number of unissued common shares reserved for future grants under this plan was 32.5 million as of January 28, 2023.

Compensation expense associated with share-based awards is recognized on a straight-line basis over the required service period and reflects estimated forfeitures.

55 unchanged sentences

January 29, 2022 210 $ 58.17 $ 33

Expired/forfeited — —

Exercised / issued

16 unchanged sentences

These team members choose from a menu of crediting rate alternatives that are generally the same as the investment choices in our 401(k) plan, but also includes a fund based on Target common stock.

We credit an additional 2 percent per year to the accounts of all active participants, excluding executive officers, in part to recognize the risks inherent to their participation in this plan.

We credit an additional 2 percent per year to the accounts of all active participants, excluding members of our executive leadership team, in part to recognize the risks inherent to their participation in this plan.

We also maintain a frozen, unfunded, nonqualified deferred compensation plan covering less than 50 participants.

10 unchanged sentences

Nonqualified deferred compensation plans

Benefits expense

Benefits (income) / expense

$ ( 15 ) $ 59 $ 86

17 unchanged sentences

Our obligations to plan participants can be met over time through a combination of company contributions to these plans and earnings on plan assets.

In 2022 we made a discretionary contribution of $ 150 million to our qualified defined benefit pension plan.

In 2021 we made no contributions to our qualified defined benefit pension plan.

We are not required to make any contributions to our qualified defined benefit pension plan in 2023.

44 unchanged sentences

Interest cost 116 95 2 1

Actuarial (gain) / loss (a)

Actuarial gain (a)

( 602 ) ( 247 ) ( 9 ) ( 4 )

3 unchanged sentences

$ 3,616 $ 4,305 $ 64 $ 72

(a) The actuarial (gain) / loss was primarily driven by changes in the weighted average discount rate.

(a) The actuarial gain was primarily driven by changes in the weighted average discount rate.

(b) Accumulated benefit obligation—the present value of benefits earned to date assuming no future salary growth—is materially consistent with the projected benefit obligation in each period presented.

25 unchanged sentences

NOTES Index to Financial Statements

Fair Value Measurements Fair Value at

Fair Value Measurements Fair Value as of

(millions) Measurement Level January 31, 2023 January 31, 2022

53 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-K

Item 8. Financial Statements and Supplementary Data