{
  "markdown": "2015 Annual Report\n\n-- 1 of 84 --\n\nWelcome to our 2015 Annual Report\nTo explore key stories of the past year\nand find out more about what’s in store,\nvisit target.com/abullseyeview. You can\nalso view our Annual Report online at\ntarget.com/annualreport.\nFinancial Highlights \t(Note: Reflects amounts attributable to continuing operations.)\n2015 Growth: 1.6%\nFive-year CAGR: 3.1%\nSales\nIn Millions\n2015 Growth: 22.0%\nFive-year CAGR: 3.4%\nEBIT\nIn Millions\n2015 Growth: 35.6%\nFive-year CAGR: 5.9%\nNet Earnings\nIn Millions\n2015 Growth: 37.2%\nFive-year CAGR: 9.7%\nDiluted EPS\n‘11 \n$68,466\n\t$71,960\n\t$71,279\n\t$72,618\n\t$73,785\n‘12 \t‘13 \t‘14 \t‘15 \t‘11 \n$5,443\n\t$5,740\n\t$5,170\n$4,535\n\t$5,530\n‘12 \t‘13 \t‘14 \t‘15 \t‘11 \n$3,049\n\t$3,315\n\t$2,694\n\t$2,449\n\t$3,321\n‘12 \t‘13 \t‘14 \t‘15 \t‘11 \n$4.46\n$5.00\n$4.20\n$3.83\n$5.25\n‘12 \t‘13 \t‘14 \t‘15\nTotal Segment Sales: $73.8 Billion\nHousehold\nEssentials\n26%\nFood & Pet\nSupplies\n21%\nApparel &\nAccessories\n19%\nHardlines\n17%\nHome Furnishings\n& Décor\n17%\n\n-- 2 of 84 --\n\nTarget 2015 Annual Report\nour food position and further innovate in our merchandising, for an\nexperience that best suits our guests.\nTarget.com & mobile – what’s clear from talking to our guests is\nthat the easier we make it to shop across all of Target – physical and\ndigital – the happier they are. We’re focused on offering a rich digital\nexperience that deepens engagement in stores and online, and we’ll\ncontinue to invest in digital capabilities that enable our guests to\nseamlessly experience Target.\nLocal relevance and flexible formats – we’ve seen positive initial\nresults in creating locally relevant experiences in focus markets like\nChicago. And, with flexible-format stores making up the bulk of our\nnew-store openings, we’ll learn even more, as each store and its\nassortment is custom-designed for the neighborhood it serves.\nTarget rewards – we know our guests love a great deal, and\ncurrent offerings like Cartwheel and REDcard Rewards offer fantastic\nopportunities to save. This year, we’re focused on integrating our\nloyalty vehicles as we continue to develop a broader rewards\nportfolio for our guests – getting to know their attitudes, preferences\nand behaviors more deeply, so we can deliver more personalized\npromotions and experiences.\nRetail foundations – getting the basics right is essential. When we\nfall short on the basics, guests have a hard time getting excited about\nany innovations we might envision. So, beneath all our efforts is a\nrelentless focus on getting the fundamentals right: modernizing our\nsupply chain, enhancing our technology, taking complexity out of our\nsystems, elevating the use of data and driving productivity across the\nentire business.\nThe progress Target made as a team and a brand in 2015 is real, and\nit’s sustainable. Yet, this is a team that takes nothing for granted and\nis working every day to deliver the best experience for our guests.\nWe know that getting it right for them drives growth for us and strong\nreturns for our shareholders, and we’re committed to this formula for\nvalue creation as we move confidently into the future.\nBrian Cornell, Chairman and CEO\nIn 2015, Target drove profitable growth throughout the year with a\nstrategic framework that we are confident will keep our company\ngrowing for years to come.\nCentral to our strategy – really, to everything we do – is a clear\nunderstanding of what our guests expect. Listening to our guests\nand investing the time and resources to get to know them better has\nalready helped us achieve:\n• Positive traffic growth in each quarter of 2015, building on traffic\nmomentum from the end of 2014.\n• Sales results on the high end of our comparable store sales\nguidance for the year, driven primarily by our signature\nbusinesses, which grew about three times faster than our\noverall comp.\n• Digital sales growth of more than 30 percent, which continued\nto set the pace for U.S. retail.\n• Full-year adjusted earnings per share of $4.69*, above our initial\nguidance of $4.45 to $4.65, and 11 percent higher than in 2014.\nOur team drove these results while also undertaking several key\nstrategic shifts. Some were challenging, like discontinuing our\nCanadian operations and restructuring our U.S. headquarters. Some\nwere groundbreaking, like announcing our $1.9-billion transaction\nwith CVS Health. This partnership will deliver ongoing value by\ngrowing traffic in our store pharmacies. Importantly, the transaction\nalso provided more than $1 billion of net cash to support our capital\ndeployment priorities, including the return of nearly $5 billion to\nshareholders through dividends and share repurchase, well above\nthe goal we set at the beginning of 2015.\nAbove all, our team rallied around a set of key enterprise priorities\nfocused on the things that matter most to our guests. In the course\nof the year, I visited with hundreds of guests in our stores and in their\nhomes. They shared with me the reasons they love Target, and the\ntimes we’ve let them down. Those conversations, and the firsthand\ninput our team receives from our guests across all touchpoints, have\ndefined our priorities for the year.\nSignature businesses – the categories for which our guests\nturn to Target and in which they expect us to lead – namely Style,\nBaby, Kids and Wellness. We’ll continue to invest in innovation and\ninspiration, knowing that signature businesses play a unique role in\nour results, driving the strongest growth in our portfolio. This year,\nwe will continue to focus on category roles, redefine and improve\nA Growth Story Again\n*A reconciliation of adjusted EPS from continuing operations to GAAP EPS from continuing operations is provided on page 23 of our Form 10-K.\n\n-- 3 of 84 --\n\nFinancial Summary Target 2015 Annual Report\n2015 \t2014 \t2013 \t2012 (a) \t2011\nFINANCIAL RESULTS: (in millions)\nSales (b) \t$ \t73,785 \t$ \t72,618 \t$ \t71,279 \t$ \t73,301 \t$ \t69,865\nCost of sales \t51,997 \t51,278 \t50,039 \t50,568 \t47,860\nSelling, general and administrative expenses (SG&A) \t14,665 \t14,676 \t14,465 \t14,643 \t14,032\nCredit card expenses \t— \t— \t— \t467 \t446\nDepreciation and amortization \t2,213 \t2,129 \t1,996 \t2,044 \t2,084\nGain on sale (c) \t(620) \t— \t(391) \t(161) \t—\nEarnings from continuing operations before\ninterest expense and income taxes (EBIT) \t5,530 \t4,535 \t5,170 \t5,740 \t5,443\nNet interest expense \t607 \t882 \t1,049 \t684 \t822\nEarnings from continuing operations before income taxes \t4,923 \t3,653 \t4,121 \t5,056 \t4,621\nProvision for income taxes \t1,602 \t1,204 \t1,427 \t1,741 \t1,572\nNet earnings from continuing operations \t3,321 \t2,449 \t2,694 \t3,315 \t3,049\nDiscontinued operations, net of tax \t42 \t(4,085) \t(723) \t(316) \t(120)\nNet earnings /(loss) \t$ \t3,363 \t$ \t(1,636) \t$ \t1,971 \t$ \t2,999 \t$ \t2,929\nPER SHARE:\nBasic earnings/(loss) per share\nContinuing operations \t$ \t5.29 \t$ \t3.86 \t$ \t4.24 \t$ \t5.05 \t$ \t4.49\nDiscontinued operations \t0.07 \t(6.44) \t(1.14) \t(0.48) \t(0.18)\nNet earnings/(loss) per share \t$ \t5.35 \t$ \t(2.58) \t$ \t3.10 \t$ \t4.57 \t$ \t4.31\nDiluted earnings/(loss) per share\nContinuing operations \t$ \t5.25 \t$ \t3.83 \t$ \t4.20 \t$ \t5.00 \t$ \t4.46\nDiscontinued operations \t0.07 \t(6.38) \t(1.13) \t(0.48) \t(0.18)\nNet earnings/(loss) per share \t$ \t5.31 \t$ \t(2.56) \t$ \t3.07 \t$ \t4.52 \t$ \t4.28\nCash dividends declared \t$ \t2.20 \t$ \t1.99 \t$ \t1.65 \t$ \t1.38 \t$ \t1.15\nFINANCIAL POSITION: (in millions)\nTotal assets (d) \t$ \t40,262 \t$ \t41,172 \t$ \t44,325 \t$ \t47,878 \t$ \t46,260\nCapital expenditures (e) \t$ \t1,438 \t$ \t1,786 \t$ \t1,886 \t$ \t2,345 \t$ \t2,476\nLong-term debt, including current portion (e) \t$ \t12,760 \t$ \t12,725 \t$ \t12,494 \t$ \t16,260 \t$ \t16,127\nNet debt (e)(f) \t$ \t9,752 \t$ \t11,205 \t$ \t12,491 \t$ \t16,185 \t$ \t15,983\nShareholders’ investment \t$ \t12,957 \t$ \t13,997 \t$ \t16,231 \t$ \t16,558 \t$ \t15,821\nSEGMENT FINANCIAL RATIOS: (g)\nComparable sales growth (h) \t2.1% \t1.3% \t(0.4)% \t2.7% \t3.0%\nGross margin (% of sales) \t29.5% \t29.4% \t29.8% \t29.7% \t30.1%\nSG&A (% of sales) \t19.6% \t20.0% \t20.2% \t19.1% \t19.1%\nEBIT margin (% of sales) \t6.9% \t6.5% \t6.8% \t7.8% \t7.9%\nOTHER:\nCommon shares outstanding (in millions) \t602.2 \t640.2 \t632.9 \t645.3 \t669.3\nOperating cash flow provided by continuing\noperations (in millions) \t$ \t5,140 \t$ \t5,131 \t$ \t7,519 \t$ \t5,568 \t$ \t5,520\nSales per square foot (e)(i) \t$ \t307 \t$ \t302 \t$ \t298 \t$ \t299 \t$ \t294\nRetail square feet (in thousands) (e) \t239,539 \t239,963 \t240,054 \t237,847 \t235,721\nSquare footage growth (e) \t(0.2%) \t—% \t0.9% \t0.9% \t0.9%\nTotal number of stores (e) \t1,792 \t1,790 \t1,793 \t1,778 \t1,763\nTotal number of distribution centers (e) \t40 \t38 \t37 \t37 \t37\n(a) Consisted of 53 weeks.\n(b) For 2012 and prior, includes sales generated by retail operations and credit card revenues.\n(c) For 2015, includes the gain on the pharmacies and clinics transaction. For 2013, includes the gain on the receivables transaction. Refer to Form 10-K for more information.\n(d) Prior year balances have been revised to reflect the impact of adopting ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs and ASU No. 2015-17, Balance Sheet\nClassification of Deferred Taxes, described further in Form 10-K, Item 8, Financial Statements and Supplementary Data, Notes 20 and 23, respectively.\n(e) Represents amounts attributable to continuing operations.\n(f) Including current portion and short-term notes payable, net of short-term investments of $3,008 million, $1,520 million, $3 million, $75 million and $144 million in 2015, 2014, 2013, 2012 and\n2011, respectively. Management believes this measure is an indicator of our level of financial leverage because short-term investments are available to pay debt maturity obligations.\n(g) Effective January 15, 2015, we operate as a single segment which includes all of our continuing operations, excluding net interest expense, data breach related costs and certain other expenses\nwhich are discretely managed.\n(h) See definition of comparable sales in Form 10-K, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.\n(i) Represents sales per square foot which is calculated using rolling four quarters average square feet. In 2015, sales per square feet decreased by approximately $2 due to the December 2015\nsale of our pharmacy and clinic businesses. In 2012, sales per square foot was calculated excluding the 53rd week in order to provide a more useful comparison to other years. Using total\nreported sales for 2012 (including the 53rd week) resulted in sales per square foot of $304.\n\n-- 4 of 84 --\n\nUNITED STATES\nSECURITIES AND EXCHANGE COMMISSION\nWashington, D.C. 20549\nFORM 10-K\n(Mark One)\nx ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT\nOF 1934\nFor the fiscal year ended January 30, 2016\nOR\no TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE\nACT OF 1934\nFor the transition period from to\nCommission file number 1-6049\nTARGET CORPORATION\n(Exact name of registrant as specified in its charter)\nMinnesota\n(State or other jurisdiction of\nincorporation or organization)\n41-0215170\n(I.R.S. Employer\nIdentification No.)\n1000 Nicollet Mall, Minneapolis, Minnesota\n(Address of principal executive offices) 55403\n(Zip Code)\nRegistrant's telephone number, including area code: 612/304-6073\nSecurities Registered Pursuant To Section 12(B) Of The Act:\nTitle of Each Class Name of Each Exchange on Which Registered\nCommon Stock, par value $0.0833 per share New York Stock Exchange\nSecurities registered pursuant to Section 12(g) of the Act: None\nIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o\nIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x\nNote – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their\nobligations under those Sections.\nIndicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of\n1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to\nsuch filing requirements for the past 90 days. Yes x No o\nIndicate by checkmark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File\nrequired to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such\nshorter period that the registrant was required to submit and post such files). Yes x No o\nIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein,\nand will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of\nthis Form 10-K or any amendment to this Form 10-K. x\nIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company\n(as defined in Rule 12b-2 of the Act). See the definitions of \"large accelerated filer,\" \"accelerated filer\" and \"smaller reporting company\" in Rule\n126-2 of the Exchange Act.\nLarge accelerated filer x Accelerated filer o Non-accelerated filer o\n(Do not check if a smaller reporting company) Smaller reporting company o\nIndicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No x\nThe aggregate market value of the voting stock held by non-affiliates of the registrant as of August 1, 2015 was $51,550,988,273, based on the\nclosing price of $81.85 per share of Common Stock as reported on the New York Stock Exchange Composite Index.\nIndicate the number of shares outstanding of each of registrant's classes of Common Stock, as of the latest practicable date. Total shares of Common\nStock, par value $0.0833, outstanding at March 4, 2016 were 599,982,121.\nDOCUMENTS INCORPORATED BY REFERENCE\nPortions of Target's Proxy Statement to be filed on or about April 25, 2016 are incorporated into Part III.\n\n-- 5 of 84 --\n\nTABLE OF CONTENTS\nPART I\nItem 1 Business 2\nItem 1A Risk Factors 5\nItem 1B Unresolved Staff Comments 10\nItem 2 Properties 11\nItem 3 Legal Proceedings 11\nItem 4 Mine Safety Disclosures 12\nItem 4A Executive Officers 12\nPART II\nItem 5 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer\nPurchases of Equity Securities 14\nItem 6 Selected Financial Data 16\nItem 7 Management's Discussion and Analysis of Financial Condition and Results of\nOperations 16\nItem 7A Quantitative and Qualitative Disclosures About Market Risk 30\nItem 8 Financial Statements and Supplementary Data 32\nItem 9 Changes in and Disagreements with Accountants on Accounting and Financial\nDisclosure 66\nItem 9A Controls and Procedures 66\nItem 9B Other Information 66\nPART III\nItem 10 Directors, Executive Officers and Corporate Governance 66\nItem 11 Executive Compensation 66\nItem 12 Security Ownership of Certain Beneficial Owners and Management and\nRelated Stockholder Matters 67\nItem 13 Certain Relationships and Related Transactions, and Director Independence 67\nItem 14 Principal Accountant Fees and Services 67\nPART IV\nItem 15 Exhibits, Financial Statement Schedules 68\nSignatures 72\nExhibit Index 74\n1\n\n-- 6 of 84 --\n\nPART I\nItem 1. Business\nGeneral\nTarget Corporation (Target, the Corporation or the Company) was incorporated in Minnesota in 1902. We offer our\ncustomers, referred to as \"guests,\" everyday essentials and fashionable, differentiated merchandise at discounted\nprices. Our ability to deliver a preferred shopping experience to our guests is supported by our supply chain and\ntechnology, our devotion to innovation, and our disciplined approach to managing our business and investing in future\ngrowth. We operate as a single segment designed to enable guests to purchase products seamlessly in stores or\nthrough our digital sales channels.\nPrior to the first quarter of 2013, we operated a U.S. Credit Card Segment that offered credit to qualified guests through\nour branded credit cards. In the first quarter of 2013, we sold our U.S. consumer credit card portfolio, and TD Bank\nGroup (TD) now underwrites, funds, and owns Target Credit Card and Target MasterCard consumer receivables in\nthe U.S. We perform account servicing and primary marketing functions and earn a substantial portion of the profits\ngenerated by the portfolio. Refer to Note 9 of the Consolidated Financial Statements included in Item 8, Financial\nStatements and Supplementary Data (the Financial Statements) for more information on the credit card receivables\ntransaction.\nPrior to January 15, 2015, we operated a Canadian Segment. On January 15, 2015, we announced our exit from the\nCanadian market, and Target Canada Co. and certain other wholly owned subsidiaries of Target filed for protection\n(the Filing) in Canada under the Companies' Creditors Arrangement Act (CCAA) with the Ontario Superior Court of\nJustice in Toronto (the Court). Following the Filing, we no longer consolidate our former Canadian retail operation.\nCanadian financial results prior to the Filing are included in our financial statements and classified within discontinued\noperations. See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations\n(MD&A) and Note 7 of the Financial Statements for more information.\nPrior to December 16, 2015, we operated pharmacies and clinics in 1,672 and 79 of our stores, respectively. On\nDecember 16, 2015, we sold our pharmacy and clinic businesses to CVS Pharmacy, Inc. (CVS). Following the sale,\nCVS will operate the pharmacy and clinic businesses in our stores under a perpetual operating agreement, subject to\ntermination in limited circumstances. See MD&A and Note 6 of the Financial Statements for more information.\nDiscontinued operations in this Annual Report on Form 10-K refers only to our discontinued Canadian operations.\nFinancial Highlights\nFor information on key financial highlights and segment financial information, see the items referenced in Item 6,\nSelected Financial Data, MD&A, and Note 30 of the Financial Statements.\nSeasonality\nA larger share of annual revenues and earnings traditionally occurs in the fourth quarter because it includes the peak\nholiday sales period of November and December.\nMerchandise\nWe sell a wide assortment of general merchandise and food. The majority of our general merchandise stores offer an\nedited food assortment, including perishables, dry grocery, dairy, and frozen items. Nearly all of our stores larger than\n170,000 square feet offer a full line of food items comparable to traditional supermarkets. Our small, flexible format\nstores, generally smaller than 50,000 square feet, offer edited general merchandise and food assortments. Our digital\nchannels include a wide assortment of general merchandise, including many items found in our stores, along with a\ncomplementary assortment such as additional sizes and colors sold only online.\n2\n\n-- 7 of 84 --\n\nA significant portion of our sales is from national brand merchandise. Approximately one-third of 2015 sales related to\nour owned and exclusive brands, including but not limited to the following:\nOwned Brands\nArcher Farms® Market Pantry® Threshold™\nSimply Balanced™ Merona® up & up®\nBoots & Barkley® Room Essentials® Wine Cube®\nCirco® Smith & Hawken® Xhilaration®\nEmbark® Spritz™ Ava & Viv®\nGilligan & O'Malley® Sutton & Dodge® Sonia Kashuk®\nExclusive Brands\nC9 by Champion® DENIZEN® from Levi's® Nate Berkus for Target\nCherokee® Fieldcrest® Oh Joy!® for Target\nMossimo® Genuine Kids® from OshKosh® Hand Made Modern®\nLiz Lange® for Target Just One You® made by carter's® Shaun White\nKid Made Modern®\nWe also sell merchandise through periodic exclusive design and creative partnerships and generate revenue from in-\nstore amenities such as Target Café and Target Photo, and leased or licensed departments such as Target Optical,\nPortrait Studio, Starbucks, and other food service offerings. The majority of our stores also have a CVS pharmacy\nfrom which we will generate ongoing annual, inflation adjusted occupancy-related income (see MD&A and Note 6 of\nthe Financial Statements for more information).\nDistribution\nThe vast majority of merchandise is distributed to our stores through our network of 40 distribution centers. Common\ncarriers ship general merchandise to and from our distribution centers. Vendors or third party distributors ship certain\nfood items and other merchandise directly to our stores. Merchandise sold through our digital sales channels is\ndistributed to our guests via common carriers from our distribution centers, from vendors or third party distributors,\nfrom our stores or through guest pick-up at our stores. Using our stores as fulfillment points allows improved product\navailability and delivery times and also reduces shipping costs.\nEmployees\nAt January 30, 2016, we employed approximately 341,000 full-time, part-time and seasonal employees, referred to\nas \"team members.\" During the 2015 holiday sales period our employment levels peaked at approximately 390,000\nteam members. We offer a broad range of company-paid benefits to our team members. Eligibility for, and the level\nof, these benefits varies depending on team members' full-time or part-time status, compensation level, date of hire,\nand/or length of service. These company-paid benefits include a pension plan, 401(k) plan, medical and dental plans,\ndisability insurance, paid vacation, tuition reimbursement, various team member assistance programs, life insurance,\nand merchandise and other discounts. We believe our team member relations are good.\nWorking Capital\nOur working capital needs are greater in the months leading up to the holiday sales period, which we typically finance\nwith cash flow provided by operations and short-term borrowings. Additional details are provided in the Liquidity and\nCapital Resources section in MD&A.\nEffective inventory management is key to our ongoing success, and we use various techniques including demand\nforecasting and planning and various forms of replenishment management. We achieve effective inventory\nmanagement by staying in-stock in core product offerings, maintaining positive vendor relationships, and carefully\nplanning inventory levels for seasonal and apparel items to minimize markdowns.\n3\n\n-- 8 of 84 --\n\nCompetition\nWe compete with traditional and internet retailers, including off-price general merchandise retailers, apparel retailers,\nwholesale clubs, category specific retailers, drug stores, supermarkets, and other forms of retail commerce. Our ability\nto positively differentiate ourselves from other retailers and provide a compelling value proposition largely determine\nour competitive position within the retail industry.\nIntellectual Property\nOur brand image is a critical element of our business strategy. Our principal trademarks, including Target, SuperTarget\nand our \"Bullseye Design,\" have been registered with the U.S. Patent and Trademark Office. We also seek to obtain\nand preserve intellectual property protection for our owned brands.\nGeographic Information\nVirtually all of our revenues from continuing operations are generated within the United States. Through 2014, our\ndiscontinued operations generated revenues in Canada. The vast majority of our long-lived assets are located within\nthe United States.\nAvailable Information\nOur Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to\nthose reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available free of charge at\nwww.Target.com/Investors as soon as reasonably practicable after we file such material with, or furnish it to, the U.S.\nSecurities and Exchange Commission (SEC). Our Corporate Governance Guidelines, Business Conduct Guide,\nCorporate Social Responsibility Report, and the charters for the committees of our Board of Directors are also available\nfree of charge in print upon request or at www.Target.com/Investors.\n4\n\n-- 9 of 84 --\n\nItem 1A. Risk Factors\nOur business is subject to many risks. Set forth below are the material risks that we face. For the convenience of the\nreader, the risks are listed in the categories where those risks primarily apply, but they may also apply to other categories.\nCompetitive and Reputational Risks\nOur continued success is dependent on positive perceptions of Target which, if eroded, could adversely affect\nour business and our relationships with our guests and team members.\nWe believe that one of the reasons our guests prefer to shop at Target, our team members choose Target as a place\nof employment and our vendors choose to do business with us is the reputation we have built over many years for\nserving our four primary constituencies: guests, team members, shareholders, and the communities in which we\noperate. To be successful in the future, we must continue to preserve, grow, and leverage the value of Target's reputation.\nReputational value is based in large part on perceptions. While reputations may take decades to build, any negative\nincidents can quickly erode trust and confidence, particularly if they result in adverse mainstream and social media\npublicity, governmental investigations, or litigation. Those types of incidents could have an adverse impact on\nperceptions and lead to tangible adverse effects on our business, including consumer boycotts, lost sales, loss of new\nstore and technology development opportunities, or team member retention and recruiting difficulties. For example,\nwe experienced weaker than expected sales immediately following the announcement of a data breach that occurred\nin the fourth quarter of 2013. More recently, the sale of our pharmacy and clinic assets to CVS means that CVS will\nbe operating clinics and pharmacies within our stores, and our guests’ perceptions of and experiences with CVS,\nwhether within our stores, at independent CVS locations, or otherwise may impact our reputation.\nIf we are unable to positively differentiate ourselves from other retailers, our results of operations could be\nadversely affected.\nThe retail business is highly competitive. In the past, we have been able to compete successfully by differentiating our\nguests’ shopping experience through a careful combination of price, merchandise assortment, store environment,\nconvenience, guest service, loyalty programs and marketing efforts. Our ability to create a personalized guest\nexperience through the collection and use of accurate and relevant guest data is important to our ability to differentiate\nfrom other retailers. Guest perceptions regarding the cleanliness and safety of our stores, the functionality and reliability\nof our digital channels, our in-stock levels, the effectiveness of our promotions, the attractiveness of our third party\nofferings, such as the clinics and pharmacies owned and operated by CVS, and other factors also affect our ability to\ncompete. No single competitive factor is dominant, and actions by our competitors on any of these factors or the failure\nof our strategies to drive traffic across all sales channels could have an adverse effect on our sales, gross margins,\nand expenses.\nWe sell many products under our owned and exclusive brands. These brands are an important part of our business\nbecause they differentiate us from other retailers, generally carry higher margins than equivalent national brand products\nand represent a significant portion of our overall sales. If one or more of these brands experiences a loss of consumer\nacceptance or confidence, or if we are unable to successfully protect our intellectual property rights in our owned and\nexclusive brands, our sales and gross margins could be adversely affected.\nThe continuing migration and evolution of retailing to online and mobile channels has increased our challenges in\ndifferentiating ourselves from other retailers. In particular, consumers are able to quickly and conveniently comparison\nshop and determine real-time product availability using digital tools, which can lead to decisions based solely on price,\nthe functionality of the digital tools or a combination of those and other factors. We must compete by offering a consistent\nand convenient shopping experience for our guests regardless of the ultimate sales channel; providing and maintaining\ndigital tools for our guests and team members that have the right features and are reliable and easy to use; working\nwith our vendors to offer unique and distinctive merchandise, offering certain services our guests desire in our stores\nthrough third parties, such as CVS, offering a compelling guest loyalty program, and encouraging our guests to shop\nwith confidence with our price-match policy. Failures to effectively execute in these efforts, actions by our competitors\nin response to these efforts, or failures of our vendors to manage their own channels, content and technology systems\ncould hurt our ability to differentiate ourselves from other retailers and, as a result, have an adverse effect on sales,\ngross margins, and expenses.\n5\n\n-- 10 of 84 --\n\nIf we are unable to successfully develop and maintain a relevant and reliable experience for our guests,\nregardless of where our guest demand is ultimately fulfilled, our sales, results of operations and reputation\ncould be adversely affected.\nOur business has evolved from an in-store experience to interaction with guests across multiple channels (in-store,\nonline, mobile and social media, among others). Our guests are using computers, tablets, mobile phones and other\ndevices to shop in our stores and online and provide feedback and public commentary about all aspects of our business.\nWe currently provide full and mobile versions of our website (Target.com), offer applications for mobile phones and\ntablets, and interact with our guests through social media. Retailing is rapidly evolving so that the majority of our sales\nin all of our channels are digitally enabled, and we must anticipate and meet changing guest expectations and counteract\nnew developments and technology investments by our competitors. Our evolving retailing efforts include implementing\nnew technology, software and processes to be able to fulfill guest orders directly from our vendors and from any point\nwithin our system of stores and distribution centers. Providing flexible fulfillment options is complex and may not meet\nguest expectations for accurate order fulfillment, faster and guaranteed delivery times, and low-price or free shipping.\nIf we are unable to attract and retain team members or contract with third parties having the specialized skills needed\nto support these efforts, implement improvements to our guest‑facing technology in a timely manner, allow real-time\nand accurate visibility to product availability when guests are ready to purchase, quickly and efficiently fulfill our guests\norders using the fulfillment and payment methods they demand, or provide a convenient and consistent experience\nfor our guests across all sales channels, our ability to compete and our results of operations could be adversely affected.\nIn addition, if Target.com and our other guest‑facing technology systems do not appeal to our guests, reliably function\nas designed, integrate across all sales channels, or maintain the privacy of guest data, or if we are unable consistently\nmeet our guests' expectations, we may experience a loss of guest confidence and lost sales, which could adversely\naffect our reputation and results of operations.\nIf we fail to anticipate and respond quickly to changing consumer preferences, our sales, gross margins and\nprofitability could suffer.\nA large part of our business is dependent on our ability to make trend‑right decisions and effectively manage our\ninventory in a broad range of merchandise categories, including apparel, accessories, home décor, electronics, toys,\nseasonal offerings, food and other merchandise. For example, our apparel and home décor assortment is continually\nevolving and in other areas of our product assortment, including food, we are supporting guest wellness goals and\nbecoming more localized with items that appeal to local cultural and demographic tastes. Failure to obtain accurate\nand relevant data on guest preferences, predict changing consumer tastes, preferences, spending patterns and other\nlifestyle decisions, emphasize the correct categories, implement effective promotions, and personalize our offerings\nto our guests may result in lost sales, spoilage, and increased inventory markdowns, which would lead to a deterioration\nin our results of operations by hurting our sales, gross margins, and profitability.\nTechnology Investments and Infrastructure Risks\nIf our capital investments in technology, supply chain, new stores and remodeling existing stores do not\nachieve appropriate returns, our competitive position, financial condition and results of operations may be\nadversely affected.\nOur business is becoming increasingly reliant on technology investments, and the returns on these investments can\nbe less predictable than building new stores and remodeling existing stores. We are currently making, and will continue\nto make, significant technology investments to support our efforts to provide a consistent guest experience across all\nsales channels, implement improvements to our guest‑facing technology, and evolve our supply chain and our inventory\nmanagement systems, information processes, and computer systems to more efficiently run our business and remain\ncompetitive and relevant to our guests. These technology initiatives might not provide the anticipated benefits or may\nprovide them on a delayed schedule or at a higher cost. We must monitor and choose the right investments and\nimplement them at the right pace, which depends on our ability to accurately forecast our needs and is influenced by\nthe amount and pace of investments by our competitors. In addition, our growth also depends, in part, on our ability\nto build new stores and remodel existing stores in a manner that achieves appropriate returns on our capital investment.\nWe compete with other retailers and businesses for suitable locations for our stores. Many of our expected new store\nsites are smaller and non-standard footprints located in fully developed markets, which require changes to our supply\nchain practices and are generally more time-consuming, expensive and uncertain undertakings than expansion into\nundeveloped suburban and ex-urban markets. Targeting the wrong opportunities, failing to make the best investments,\nor making an investment commitment significantly above or below our needs could result in the loss of our competitive\nposition and adversely impact our financial condition or results of operations.\n6\n\n-- 11 of 84 --\n\nA significant disruption in our computer systems and our inability to adequately maintain and update those\nsystems could adversely affect our operations and our ability to maintain guest confidence.\nWe rely extensively on our computer systems to manage and account for inventory, process guest transactions, manage\nand maintain the privacy of guest data, communicate with our vendors and other third parties, service REDcard\naccounts, summarize and analyze results, and on continued and unimpeded access to the Internet to use our computer\nsystems. Our systems are subject to damage or interruption from power outages, telecommunications failures,\ncomputer viruses and malicious attacks, security breaches and catastrophic events. If our systems are damaged or\nfail to function properly or reliably, we may incur substantial repair or replacement costs, experience data loss or theft\nand impediments to our ability to manage inventories or process guest transactions, engage in additional promotional\nactivities to retain our guests, and encounter lost guest confidence, which could adversely affect our results of\noperations.\nWe continually make significant technology investments that will help maintain and update our existing computer\nsystems. Implementing significant system changes increases the risk of computer system disruption. The potential\nproblems and interruptions associated with implementing technology initiatives could disrupt or reduce our operational\nefficiency, and could negatively impact guest experience and guest confidence.\nData Security and Privacy Risks\nIf our efforts to protect the security of information about our guests, team members and vendors are\nunsuccessful, we may face additional costly government enforcement actions and private litigation, and our\nsales and reputation could suffer.\nAn important component of our business involves the receipt and storage of information about our guests, team\nmembers, and vendors. We have programs in place to detect, contain and respond to data security incidents. However,\nbecause the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change\nfrequently and may be difficult to detect for long periods of time, we may be unable to anticipate these techniques or\nimplement adequate preventive measures. In addition, hardware, software, or applications we develop or procure from\nthird parties may contain defects in design or manufacture or other problems that could unexpectedly compromise\ninformation security. Unauthorized parties may also attempt to gain access to our systems or facilities, or those of third\nparties with whom we do business, through fraud, trickery, or other forms of deceiving our team members, contractors,\nvendors, and temporary staff.\nUntil the data breach in the fourth quarter of 2013, all incidents we experienced were insignificant. The data breach\nwe experienced in 2013 was significant and went undetected for several weeks. Both we and our vendors have\nexperienced data security incidents subsequent to the 2013 data breach; however, to date these other incidents have\nnot been material to our consolidated financial statements. Based on the prominence and notoriety of the 2013 data\nbreach, even minor additional data security incidents could draw greater scrutiny. If we or our vendors experience\nadditional significant data security breaches or fail to detect and appropriately respond to significant data security\nbreaches, we could be exposed to additional government enforcement actions and private litigation. In addition, our\nguests could lose confidence in our ability to protect their information, which could cause them to discontinue using\nour REDcards or loyalty programs, or stop shopping with us altogether.\nSupply Chain and Third Party Risks\nInterruptions in our supply chain or fulfillment network, increased commodity, supply chain and fulfillment\ncosts, or changes in our relationships with our vendors could adversely affect our gross margins, expenses\nand results of operations.\nWe are dependent on our vendors to supply merchandise to our distribution centers, stores and our guests in a timely\nand efficient manner. As we continue to add fulfillment capabilities or pursue strategies with different fulfillment\nrequirements, our fulfillment network becomes increasingly complex and operating it becomes more challenging. If\nour fulfillment network does not operate properly or if a vendor fails to deliver on its commitments, whether due to\nfinancial difficulties or other reasons, we could experience merchandise out-of-stocks, delivery delays or increased\ndelivery costs that could lead to lost sales and decreased guest confidence, and adversely affect our results of\noperations.\nIn addition, a large portion of our merchandise is sourced, directly or indirectly, from outside the United States, with\nChina as our single largest source. Political or financial instability, currency fluctuations, trade restrictions, the outbreak\n7\n\n-- 12 of 84 --\n\nof pandemics, labor unrest, transport capacity and costs, port security, weather conditions, natural disasters or other\nevents that could slow or disrupt port activities and affect foreign trade are beyond our control and could disrupt our\nsupply of merchandise and/or adversely affect our results of operations. There have been periodic labor disputes\nimpacting the U.S. ports that have caused us to make alternative arrangements to continue the flow of inventory, and\nif these types of disputes recur or worsen, it may have a material impact on our costs or inventory supply. Changes in\nthe costs of procuring commodities used in our merchandise or the costs related to our supply chain, including vendor\ncosts, labor, fuel, tariffs, currency exchange rates and supply chain transparency initiatives, could have an adverse\neffect on gross margins, expenses and results of operations. Changes in our relationships with our vendors also have\nthe potential to increase our expenses and adversely affect results of operations.\nA disruption in relationships with third parties who provide us services in connection with certain aspects of\nour business could adversely affect our operations.\nWe rely on third parties to support a variety of business functions, including portions of our technology development\nand systems, our digital platforms and distribution network operations, credit and debit card transaction processing,\nextensions of credit for our 5% REDcard Rewards loyalty program, the clinics and pharmacies operated by CVS within\nour stores, the infrastructure supporting our guest contact centers, and aspects of our food offerings. If we are unable\nto contract with third parties having the specialized skills needed to support those strategies or integrate their products\nand services with our business, or if we fail to properly manage those third parties or if they fail to meet our performance\nstandards and expectations, including with respect to data security, then our reputation, sales, and results of operations\ncould be adversely affected. In addition, we could face increased costs associated with finding replacement providers\nor hiring new team members to provide these services in-house. If our guests do not react favorably to CVS’s operations\nor if our relationship with CVS is ineffective, our ability to discontinue the relationship is limited and our results of\noperations may be adversely affected. In addition, if we wish to have clinics and pharmacies in any new stores, those\nclinics and pharmacies must be owned and operated by CVS.\nLegal, Regulatory, Global and Other External Risks\nOur earnings are highly susceptible to the state of macroeconomic conditions and consumer confidence in\nthe United States.\nVirtually all of our sales are in the United States, making our results highly dependent on U.S. consumer confidence\nand the health of the U.S. economy. In addition, a significant portion of our total sales is derived from stores located\nin five states: California, Texas, Florida, Minnesota and Illinois, resulting in further dependence on local economic\nconditions in these states. Deterioration in macroeconomic conditions or consumer confidence could negatively affect\nour business in many ways, including slowing sales growth or reduction in overall sales, and reducing gross margins.\nThese same considerations impact the success of our credit card program. Even though we no longer own a consumer\ncredit card receivables portfolio, we share in the economic performance of the credit card program with TD. Deterioration\nin macroeconomic conditions could adversely affect the volume of new credit accounts, the amount of credit card\nprogram balances and the ability of credit card holders to pay their balances. These conditions could result in us\nreceiving lower profit‑sharing payments.\nWeather conditions where our stores are located may impact consumer shopping patterns, which alone or\ntogether with natural disasters, particularly in areas where our sales are concentrated, could adversely affect\nour results of operations.\nUncharacteristic or significant weather conditions can affect consumer shopping patterns, particularly in apparel and\nseasonal items, which could lead to lost sales or greater than expected markdowns and adversely affect our short-\nterm results of operations. In addition, our three largest states by total sales are California, Texas and Florida, areas\nwhere natural disasters are more prevalent. Natural disasters in those states or in other areas where our sales are\nconcentrated could result in significant physical damage to or closure of one or more of our stores, distribution centers\nor key vendors, and cause delays in the distribution of merchandise from our vendors to our distribution centers, stores,\nand directly to guests, which could adversely affect our results of operations by increasing our costs and lowering our\nsales.\n8\n\n-- 13 of 84 --\n\nWe rely on a large, global and changing workforce of Target team members, contractors and temporary staffing.\nIf we do not effectively manage our workforce and the concentration of work in certain global locations, our\nlabor costs and results of operations could be adversely affected.\nWith approximately 341,000 team members, our workforce costs represent our largest operating expense, and our\nbusiness and regulatory compliance is dependent on our ability to attract, train, and retain the appropriate mix of\nqualified team members, contractors, and temporary staffing and effectively organize and manage those resources\nas our business and strategic priorities change. Many team members are in entry-level or part-time positions with\nhistorically high turnover rates. Our ability to meet our changing labor needs while controlling our costs is subject to\nexternal factors such as unemployment levels, prevailing wage rates, collective bargaining efforts, health care and\nother benefit costs, changing demographics, and our reputation and relevance within the labor market. If we are unable\nto attract and retain adequate numbers and an appropriate mix of qualified team members, contractors and temporary\nstaffing, our operations, guest service levels and support functions could suffer. Those factors, together with increasing\nwage and benefit costs, could adversely affect our results of operations. We are periodically subject to labor organizing\nefforts. If we become subject to one or more collective bargaining agreements in the future, it could adversely affect\nour labor costs and how we operate our business.\nWe maintain a headquarters location in India where there has generally been greater political, financial, environmental\nand health instability than the United States. An extended disruption of our operations in India could adversely affect\ncertain operations supporting stability and maintenance of our digital sales channels and information technology\ndevelopment.\nFailure to address product safety concerns could adversely affect our sales and results of operations.\nIf our merchandise offerings, including food, drug and children’s products, do not meet applicable safety standards or\nour guests’ expectations regarding safety, we could experience lost sales and increased costs and be exposed to legal\nand reputational risk. All of our vendors must comply with applicable product safety laws, and we are dependent on\nthem to ensure that the products we buy comply with all safety standards. Events that give rise to actual, potential or\nperceived product safety concerns, including food or drug contamination, could expose us to government enforcement\naction or private litigation and result in costly product recalls and other liabilities. In addition, negative guest perceptions\nregarding the safety of the products we sell could cause our guests to seek alternative sources for their needs, resulting\nin lost sales. In those circumstances, it may be difficult and costly for us to regain the confidence of our guests.\nOur failure to comply with federal, state, local, and international laws, or changes in these laws could increase\nour costs, reduce our margins, and lower our sales.\nOur business is subject to a wide array of laws and regulations in the United States and other countries in which we\noperate. Significant workforce-related legislative changes could increase our expenses and adversely affect our\noperations. Examples of possible workforce-related legislative changes include changes to an employer's obligation\nto recognize collective bargaining units, the process by which collective bargaining agreements are negotiated or\nimposed, minimum wage requirements, advance scheduling notice requirements, and health care mandates. In\naddition, changes in the regulatory environment affecting privacy and information security, product safety, payment\nmethods and related fees, responsible sourcing, supply chain transparency, or environmental protection, among others,\ncould cause our expenses to increase without an ability to pass through any increased expenses through higher prices.\nIn addition, if we fail to comply with other applicable laws and regulations, including wage and hour laws, the Foreign\nCorrupt Practices Act and local anti-bribery laws, we could be subject to legal risk, including government enforcement\naction and class action civil litigation, which could adversely affect our results of operations by increasing our costs,\nreducing our margins, and lowering our sales.\nFinancial Risks\nChanges in our effective income tax rate could adversely affect our net income.\nA number of factors influence our effective income tax rate, including changes in tax law, tax treaties, interpretation of\nexisting laws, and our ability to sustain our reporting positions on examination. Changes in any of those factors could\nchange our effective tax rate, which could adversely affect our net income. In addition, our operations outside of the\nUnited States may cause greater volatility in our effective tax rate.\n9\n\n-- 14 of 84 --\n\nIf we are unable to access the capital markets or obtain bank credit, our financial position, liquidity, and results\nof operations could suffer.\nWe are dependent on a stable, liquid, and well-functioning financial system to fund our operations and capital\ninvestments. In particular, we have historically relied on the public debt markets to fund portions of our capital\ninvestments and the commercial paper market and bank credit facilities to fund seasonal needs for working capital.\nOur continued access to these markets depends on multiple factors including the condition of debt capital markets,\nour operating performance, and maintaining strong credit ratings. If rating agencies lower our credit ratings, it could\nadversely impact our ability to access the debt markets, our cost of funds, and other terms for new debt issuances.\nEach of the credit rating agencies reviews its rating periodically, and there is no guarantee our current credit rating will\nremain the same. In addition, we use a variety of derivative products to manage our exposure to market risk, principally\ninterest rate and equity price fluctuations. Disruptions or turmoil in the financial markets could reduce our ability to\nmeet our capital requirements or fund our working capital needs, and lead to losses on derivative positions resulting\nfrom counterparty failures, which could adversely affect our financial position and results of operations.\nItem 1B. Unresolved Staff Comments\nNot applicable.\n10\n\n-- 15 of 84 --\n\nItem 2. Properties\nU.S. Stores at\nJanuary 30, 2016 Stores Retail Sq. Ft.\n(in thousands) Stores Retail Sq. Ft.\n(in thousands)\nAlabama 22 3,150 Montana 7 780\nAlaska 3 504 Nebraska 14 2,006\nArizona 46 6,136 Nevada 17 2,230\nArkansas 9 1,165 New Hampshire 9 1,148\nCalifornia 272 35,674 New Jersey 44 5,837\nColorado 41 6,215 New Mexico 10 1,185\nConnecticut 20 2,672 New York 71 9,747\nDelaware 3 440 North Carolina 49 6,496\nDistrict of Columbia 1 179 North Dakota 4 554\nFlorida 122 17,137 Ohio 61 7,659\nGeorgia 52 7,099 Oklahoma 16 2,285\nHawaii 6 971 Oregon 19 2,280\nIdaho 6 664 Pennsylvania 65 8,549\nIllinois 90 12,307 Rhode Island 4 517\nIndiana 31 4,174 South Carolina 19 2,359\nIowa 20 2,835 South Dakota 5 580\nKansas 18 2,473 Tennessee 31 3,990\nKentucky 13 1,551 Texas 148 20,822\nLouisiana 16 2,246 Utah 13 1,953\nMaine 5 630 Vermont — —\nMaryland 39 4,952 Virginia 58 7,671\nMassachusetts 39 5,171 Washington 37 4,328\nMichigan 55 6,603 West Virginia 6 755\nMinnesota 75 10,634 Wisconsin 37 4,560\nMississippi 6 743 Wyoming 2 187\nMissouri 36 4,736\nTotal 1,792 239,539\nU.S. Stores and Distribution Centers at January 30, 2016\nStores Distribution\nCenters (a)\nOwned 1,537 33\nLeased 103 7\nOwned buildings on leased land 152 —\nTotal 1,792 40\n(a) The 40 distribution centers have a total of 51,671 thousand square feet.\nWe own our corporate headquarters buildings located in and around Minneapolis, Minnesota, and we lease and own\nadditional office space in Minneapolis and elsewhere in the United States. We also lease office space in 13 countries\nfor various support functions. Our properties are in good condition, well maintained, and suitable to carry on our\nbusiness.\nFor additional information on our properties, see the Capital Expenditures section in MD&A and Notes 14 and 22 of\nthe Financial Statements.\n11\n\n-- 16 of 84 --\n\nItem 3. Legal Proceedings\nOn January 15, 2015, Target Canada Co. and certain other wholly owned subsidiaries of Target (collectively Canada\nSubsidiaries), filed for protection under the Companies’ Creditors Arrangement Act with the Ontario Superior Court of\nJustice in Toronto (the Court). The Canada Subsidiaries comprise substantially all of our former Canadian operations\nand our former Canadian Segment. The Canada Subsidiaries are in the process of liquidation. See MD&A and Note\n7 of the Financial Statements for more information.\nThe following governmental enforcement proceedings relating to environmental matters are reported pursuant to\ninstruction 5(C) of Item 103 of Regulation S-K because they involve potential monetary sanctions in excess of $100,000:\nOn February 27, 2015, California Attorney General sent us a letter alleging, based on a series of compliance\nchecks, that we have not achieved compliance with California’s environmental laws and the provisions of the\ninjunction that was part of a settlement reached in 2011. No formal legal action has been commenced to date.\nFor a description of other legal proceedings, including a discussion of litigation and government inquiries related to\nthe Data Breach, see Note 19 of the Financial Statements.\nItem 4. Mine Safety Disclosures\nNot applicable.\n12\n\n-- 17 of 84 --\n\nItem 4A. Executive Officers\nExecutive officers are elected by, and serve at the pleasure of, the Board of Directors. There are no family relationships\nbetween any of the officers named and any other executive officer or member of the Board of Directors, or any\narrangement or understanding pursuant to which any person was selected as an officer.\nName Title and Business Experience Age\nTimothy R. Baer Executive Vice President, Chief Legal Officer and Corporate Secretary since March 2007. 55\nCasey L. Carl Executive Vice President and Chief Strategy and Innovation Officer since December\n2014. President, Omnichannel and Senior Vice President, Enterprise Strategy from July\n2014 to December 2014. President, Multichannel, from November 2011 to July 2014.\nFrom July 2008 to November 2011, Mr. Carl held several leadership positions with Target\nin Merchandising.\n40\nBrian C. Cornell Chairman of the Board and Chief Executive Officer since August 2014. Chief Executive\nOfficer of PepsiCo Americas Foods, a division of PepsiCo, Inc., a multinational food and\nbeverage corporation, from March 2012 to July 2014. Chief Executive Officer and\nPresident of Sam's Club, a division of Wal-Mart Stores, Inc., a discount retailer, and\nExecutive Vice President of Wal-Mart Stores, Inc. from April 2009 to January 2012.\n57\nJeffrey J. Jones II Executive Vice President and Chief Marketing Officer since April 2012. Partner and\nPresident of McKinney Ventures LLC, an advertising agency, from March 2006 to March\n2012.\n48\nStephanie A.\nLundquist Executive Vice President and Chief Human Resources Officer since February 2016.\nSenior Vice President, Human Resources from January 2015 to February 2016. Senior\nVice President, Stores and Distribution Human Resources from February 2014 to\nJanuary 2015. From March 2011 to January 2014 Ms. Lundquist held several leadership\npositions with Target Canada.\n40\nMichael E.\nMcNamara Executive Vice President and Chief Information Officer since June 2015. Chief\nInformation Officer of Tesco PLC, a multinational grocery and general merchandise\nretailer, from March 2011 to May 2015.\n51\nJohn J. Mulligan Executive Vice President and Chief Operating Officer since September 2015. Executive\nVice President and Chief Financial Officer from April 2012 to August 2015. Senior Vice\nPresident, Treasury, Accounting and Operations from February 2010 to March 2012.\n50\nJanna A. Potts Executive Vice President and Chief Stores Officer since January 2016. Senior Vice\nPresident, Stores and Supply Chain Human Resources from February 2015 to January\n2016. Senior Vice President, Target Canada Stores and Distribution from March 2014\nto January 2015. Senior Vice President, Store Operations from August 2009 to March\n2014.\n48\nJacqueline\nHourigan Rice Executive Vice President and Chief Risk and Compliance Officer since December 2014.\nChief Compliance Officer of General Motors Company, a vehicle manufacturer, from\nMarch 2013 to November 2014. Executive Director, Global Ethics & Compliance of\nGeneral Motors Company from January 2010 to February 2013.\n44\nCatherine R. Smith Executive Vice President and Chief Financial Officer since September 2015. Executive\nVice President and Chief Financial Officer of Express Scripts Holding Company, a\npharmacy benefit manager, from February 2014 to December 2014. Executive Vice\nPresident of Strategy and Chief Financial Officer for Walmart International, a division of\nWal-mart Stores Inc., a discount retailer, from March 2010 to January 2014.\n52\nLaysha L. Ward Executive Vice President and Chief Corporate Social Responsibility Officer since\nDecember 2014. President, Community Relations and Target Foundation from July 2008\nto December 2014.\n48\n13\n\n-- 18 of 84 --\n\nPART II\nItem 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of\nEquity Securities\nOur common stock is listed on the New York Stock Exchange under the symbol \"TGT.\" We are authorized to issue up\nto 6,000,000,000 shares of common stock, par value $0.0833, and up to 5,000,000 shares of preferred stock, par\nvalue $0.01. At March 4, 2016, there were 15,416 shareholders of record. Dividends declared per share and the high\nand low closing common stock price for each fiscal quarter during 2015 and 2014 are disclosed in Note 31 of the\nFinancial Statements.\nIn January 2012, our Board of Directors authorized the repurchase of $5 billion of our common stock and in June 2015\nexpanded the program by an additional $5 billion for a total authorization of $10 billion. There is no stated expiration\nfor the share repurchase program. Under this program, we have repurchased 94.6 million shares of common stock\nthrough January 30, 2016, at an average price of $69.57, for a total investment of $6.6 billion. The table below presents\ninformation with respect to Target common stock purchases made during the three months ended January 30, 2016,\nby Target or any \"affiliated purchaser\" of Target, as defined in Rule 10b-18(a)(3) under the Exchange Act.\nPeriod\nTotal Number\nof Shares\nPurchased (a)(b)\nAverage\nPrice\nPaid per\nShare (a)\nTotal Number of\nShares Purchased\nas Part of the\nCurrent Program (a)\nDollar Value of\nShares that May\nYet Be Purchased\nUnder the Program\nNovember 1, 2015 through November 28, 2015\nOpen market and privately negotiated purchases 4,291,434 $ 74.57 4,291,434 $ 4,360,899,740\nNovember 29, 2015 through January 2, 2016\nOpen market and privately negotiated purchases 7,442,198 72.59 7,430,138 3,821,513,044\nJanuary 3, 2016 through January 30, 2016\nOpen market and privately negotiated purchases 5,600,350 71.42 5,600,350 3,421,513,081\nTotal 17,333,982 $ 72.70 17,321,922 $ 3,421,513,081\n(a) The table above includes shares reacquired upon the noncash settlement of prepaid forward contracts. At\nJanuary 30, 2016, we held asset positions in prepaid forward contracts for 0.4 million shares of our common\nstock, for a total cash investment of $18.2 million, or an average per share price of $41.13. During the fourth\nquarter, no shares were reacquired under such contracts. Refer to Note 27 of the Financial Statements for\nfurther details of these contracts.\n(b) The number of shares above includes shares of common stock reacquired from team members who tendered\nowned shares to i) satisfy the tax withholding on equity awards as part of our long-term incentive plans or ii)\nsatisfy the exercise price on stock option exercises. For the three months ended January 30, 2016, 12,060\nshares were reacquired at an weighted average per share price of $71.71 pursuant to our long-term incentive\nplan.\n14\n\n-- 19 of 84 --\n\nFiscal Years Ended\nJanuary 29,\n2011 January 28,\n2012 February 2,\n2013 February 1,\n2014 January 31,\n2015 January 30,\n2016\nTarget $ 100.00 $ 94.08 $ 117.57 $ 111.51 $ 149.56 $ 151.35\nS&P 500 Index 100.00 105.33 123.87 149.02 170.22 169.09\nPeer Group 100.00 111.14 141.62 171.29 212.31 231.19\nThe graph above compares the cumulative total shareholder return on our common stock for the last five fiscal years\nwith the cumulative total return on the S&P 500 Index and a peer group consisting of 18 online, general merchandise,\ndepartment store, food, and specialty retailers, which are large and meaningful competitors (Amazon.com, Inc., Best\nBuy Co., Inc., Costco Wholesale Corporation, CVS Health Corporation, Dollar General Corporation, The Gap, Inc.,\nThe Home Depot, Inc., Kohl's Corporation, The Kroger Co., Lowe's Companies, Inc., Macy's, Inc., Publix Super Markets,\nInc., Rite Aid Corporation, Sears Holdings Corporation, Staples, Inc., The TJX Companies, Inc., Walgreens Boots\nAlliance, Inc., and Wal-Mart Stores, Inc.) (Peer Group). Safeway, Inc. was included in the peer group used in previous\nfilings, but was removed because the company was acquired during 2015 and its equity is no longer publicly traded.\nThe peer group is consistent with the retail peer group used for our definitive Proxy Statement to be filed on or about\nApril 25, 2016.\nThe peer group is weighted by the market capitalization of each component company. The graph assumes the\ninvestment of $100 in Target common stock, the S&P 500 Index and the Peer Group on January 29, 2011, and\nreinvestment of all dividends.\n15\n\n-- 20 of 84 --\n\nItem 6. Selected Financial Data\nAs of or for the Fiscal Year Ended\n(millions, except per share data) 2015 2014 2013 2012 (a) 2011 2010\nSales (b) $ 73,785 $ 72,618 $ 71,279 $ 73,301 $ 69,865 $ 67,390\nNet Earnings / (Loss)\nContinuing operations 3,321 2,449 2,694 3,315 3,049 2,920\nDiscontinued operations 42 (4,085) (723) (316) (120) —\nNet earnings / (loss) 3,363 (1,636) 1,971 2,999 2,929 2,920\nBasic Earnings / (Loss) Per Share\nContinuing operations 5.29 3.86 4.24 5.05 4.49 4.03\nDiscontinued operations 0.07 (6.44) (1.14) (0.48) (0.18) —\nBasic earnings / (loss) per share 5.35 (2.58) 3.10 4.57 4.31 4.03\nDiluted Earnings / (Loss) Per Share\nContinuing operations 5.25 3.83 4.20 5.00 4.46 4.00\nDiscontinued operations 0.07 (6.38) (1.13) (0.48) (0.18) —\nDiluted earnings / (loss) per share 5.31 (2.56) 3.07 4.52 4.28 4.00\nCash dividends declared per share 2.20 1.99 1.65 1.38 1.15 0.92\nTotal assets (c) 40,262 41,172 44,325 47,878 46,260 43,240\nLong-term debt, including current portion 12,760 12,725 12,494 16,260 16,127 15,638\nNote: This information should be read in conjunction with MD&A and the Financial Statements.\n(a) Consisted of 53 weeks.\n(b) For 2012 and prior, includes sales generated by our retail operations and credit card revenues.\n(c) Prior year balances have been revised to reflect the impact of adopting ASU No. 2015-03, Simplifying the Presentation of Debt\nIssuance Costs and ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes, described further in Notes 20 and 23 to the\nFinancial Statements, respectively.\nItem 7. Management's Discussion and Analysis of Financial Condition and Results of Operations\nExecutive Summary\nFiscal 2015 included the following notable items:\n• GAAP earnings per share were $5.31, including $0.07 related to discontinued operations.\n• Adjusted earnings per share from continuing operations were $4.69.\n• Comparable sales grew 2.1 percent. Digital channel sales growth of more than 30 percent contributed 0.8\npercentage points to 2015 comparable sales growth.\n• We sold our pharmacy and clinic businesses to CVS, recognizing a pretax gain of $620 million.\n• We paid dividends of $1,362 million in 2015, an increase of 13.0 percent above 2014.\n• We returned cash through share repurchase for the first time since second quarter 2013, with purchases of $3,441\nmillion of common stock at an average price of $77.07 per share.\nSales were $73,785 million for 2015, an increase of $1,167 million or 1.6 percent from the prior year. Earnings from\ncontinuing operations before interest expense and income taxes in 2015 increased by $995 million or 22.0 percent\nfrom 2014 to $5,530 million. Operating cash flow provided by continuing operations was $5,140 million, $5,131 million,\nand $7,519 million for 2015, 2014, and 2013, respectively. Proceeds from the sale of our pharmacy and clinic businesses\nto CVS are included in investing cash flows provided by continuing operations. In 2013, operating cash flow provided\nby continuing operations includes $2.7 billion of proceeds from the sale of our U.S. credit card receivables.\n16\n\n-- 21 of 84 --\n\nEarnings Per Share From\nContinuing Operations\nPercent Change\n2015 2014 2013 2015/2014 2014/2013\nGAAP diluted earnings per share $ 5.25 $ 3.83 $ 4.20 37.2% (8.8)%\nAdjustments (0.56) 0.39 0.09\nAdjusted diluted earnings per share $ 4.69 $ 4.22 $ 4.29 11.3% (1.7)%\nNote: Adjusted diluted earnings per share from continuing operations (Adjusted EPS), a non-GAAP metric, excludes the impact of certain matters\nnot related to our routine retail operations and the impact of our discontinued Canadian operations. Management believes that Adjusted EPS is\nmeaningful to provide period-to-period comparisons of our operating results. A reconciliation of non-GAAP financial measures to GAAP measures\nis provided on page 23.\nWe report after-tax return on invested capital (ROIC) from continuing operations as we believe ROIC provides a\nmeaningful measure of the effectiveness of our capital allocation over time. For the trailing twelve months ended\nJanuary 30, 2016, ROIC was 16.0 percent, compared with 12.4 percent for the trailing twelve months ended January 31,\n2015. Excluding the net gain on the sale of our pharmacy and clinic businesses, ROIC was 13.9 percent for the trailing\ntwelve months ended January 30, 2016. A reconciliation of ROIC is provided on page 24.\nPharmacies and Clinics Transaction\nIn December 2015, we closed the previously announced sale of our pharmacy and clinic businesses to CVS for cash\nconsideration of $1.9 billion. CVS now operates the pharmacy and clinic businesses in our stores under a perpetual\noperating agreement, subject to termination in limited circumstances. No profit-sharing arrangement exists, but CVS\nwill make an annual, inflation-adjusted occupancy-related payment to us, starting at $20 million to $25 million in the\nfirst year of the agreement. We also entered into a development agreement with CVS through which we may jointly\ndevelop small-format stores.\nIn connection with the sale, we recognized a pretax gain of $620 million, which we recorded outside of segment results\nand excluded from Adjusted EPS. We also recorded deferred income of $694 million, which we will amortize into\nincome evenly over the 23-year weighted average remaining accounting useful life of our stores.\nDuring 2015, we used a portion of the $1.9 billion cash consideration to repurchase shares of our common stock and\nsettle approximately $200 million of retained pharmacy and clinic net liabilities. We expect to use the remaining proceeds\nto pay approximately $500 million of related taxes and repurchase shares.\nHad this transaction closed prior to this year, our 2015 reported sales and cost of goods sold would have been lower\nby approximately $3.8 billion and $3.1 billion, respectively, with no notable effect on EBITDA or EBIT.\nThis transaction is expected to be accretive to EPS in every period following the closing, and should add 50 basis\npoints or more to ROIC over time. In addition, due to the lower sales base without a significant effect on profits, we\nexpect the transaction to have a favorable impact on our EBITDA and EBIT margin rates.\nRefer to Note 6 of the Financial Statements for additional information about the transaction.\n17\n\n-- 22 of 84 --\n\nAnalysis of Results of Operations\nSegment Results\nPercent Change\n(dollars in millions) 2015 2014 2013 2015/2014 2014/2013\nSales $ 73,785 $ 72,618 $ 71,279 1.6% 1.9 %\nCost of sales 51,997 51,278 50,039 1.4 2.5\nGross margin 21,788 21,340 21,240 2.1 0.5\nSG&A expenses (a) 14,448 14,503 14,383 (0.4) 0.8\nEBITDA 7,340 6,837 6,857 7.4 (0.3)\nDepreciation and amortization 2,213 2,129 1,996 3.9 6.7\nEBIT $ 5,127 $ 4,708 $ 4,861 8.9% (3.1)%\nNote: Effective January 15, 2015, we operate as a single segment which includes all of our continuing operations, excluding net interest expense,\ndata breach related costs, and certain other expenses which are discretely managed. Our segment operations are designed to enable guests to\npurchase products seamlessly in stores or through our digital sales channels. Beginning with the first quarter of 2015, segment EBIT includes the\nimpact of the reduction of the beneficial interest asset. For comparison purposes, prior years' segment EBIT has been revised. See Note 30 of our\nFinancial Statements for a reconciliation of our segment results to earnings before income taxes.\n(a) SG&A includes credit card revenues and expenses for all periods presented prior to the March 2013 sale of our U.S. consumer credit\ncard portfolio to TD. For 2015, 2014, and 2013, SG&A also includes $641 million, $629 million, and $555 million, respectively, of net\nprofit-sharing income from the arrangement with TD.\nRate Analysis 2015 2014 2013\nGross margin rate 29.5% 29.4% 29.8%\nSG&A expense rate 19.6 20.0 20.2\nEBITDA margin rate 9.9 9.4 9.6\nDepreciation and amortization expense rate 3.0 2.9 2.8\nEBIT margin rate 6.9 6.5 6.8\nNote: Rate analysis metrics are computed by dividing the applicable amount by sales.\nSales\nSales include merchandise sales, net of expected returns, and gift card breakage. Refer to Note 2 of the Financial\nStatements for a definition of gift card breakage. The increase in 2015 and 2014 sales reflects an increase in comparable\nsales of 2.1 percent and 1.3 percent, respectively, and the contribution from new stores, partially offset by a decrease\nin 2015 of approximately $550 million due to the sale of our pharmacy and clinic businesses. Inflation did not materially\naffect sales in any period presented.\nSales by Channel 2015 2014 2013\nStores 96.6% 97.4% 98.0%\nDigital 3.4 2.6 2.0\nTotal 100% 100% 100%\nComparable sales is a measure that highlights the performance of our existing stores and digital channel sales by\nmeasuring the change in sales for a period over the comparable, prior-year period of equivalent length. Comparable\nsales include all sales, except sales from stores open less than 13 months, digital acquisitions operating less than one\nyear, stores that have been closed, and digital acquisitions that we no longer operate. Pharmacy and clinic sales for\nthe comparable period following the sale to CVS are excluded from the calculation. Comparable sales measures vary\nacross the retail industry. As a result, our comparable sales calculation is not necessarily comparable to similarly titled\nmeasures reported by other companies.\n18\n\n-- 23 of 84 --\n\nComparable Sales 2015 2014 2013\nComparable sales change 2.1% 1.3% (0.4)%\nDrivers of change in comparable sales:\nNumber of transactions 1.3 (0.2) (2.7)\nAverage transaction amount 0.8 1.5 2.3\nSelling price per unit 3.3 3.2 1.6\nUnits per transaction (2.4) (1.6) 0.7\nContribution to Comparable Sales Change 2015 2014 2013\nStores channel comparable sales change 1.3% 0.7% (0.7)%\nDigital channel contribution to comparable sales change 0.8 0.7 0.3\nTotal comparable sales change 2.1% 1.3% (0.4)%\nNote: Amounts may not foot due to rounding.\nSales by Product Category Percentage of Sales\n2015 2014 2013\nHousehold essentials (a) 26% 25% 25%\nHardlines (b) 17 18 18\nApparel and accessories (c) 19 19 19\nFood and pet supplies (d) 21 21 21\nHome furnishings and décor (e) 17 17 17\nTotal 100% 100% 100%\n(a) Includes pharmacy, beauty, personal care, baby care, cleaning, and paper products. Pharmacy represented 5 percent, 6 percent, and 6\npercent in 2015, 2014, and 2013, respectively.\n(b) Includes electronics (including video game hardware and software), music, movies, books, computer software, sporting goods, and toys.\n(c) Includes apparel for women, men, boys, girls, toddlers, infants and newborns, as well as intimate apparel, jewelry, accessories, and\nshoes.\n(d) Includes dry grocery, dairy, frozen food, beverages, candy, snacks, deli, bakery, meat, produce, and pet supplies.\n(e) Includes furniture, lighting, kitchenware, small appliances, home décor, bed and bath, home improvement, automotive, and seasonal\nmerchandise such as patio furniture and holiday décor.\nFurther analysis of sales metrics is infeasible due to the collective interaction of a broad array of macroeconomic,\ncompetitive, and consumer behavioral factors, as well as sales mix and transfer of sales to new stores.\nTD offers credit to qualified guests through Target-branded credit cards: the Target Credit Card and the Target\nMasterCard Credit Card (Target Credit Cards). Additionally, we offer a branded proprietary Target Debit Card.\nCollectively, we refer to these products as REDcards®. Guests receive a 5 percent discount on virtually all purchases\nand free shipping at Target.com when they use a REDcard. We monitor the percentage of sales that are paid for using\nREDcards (REDcard Penetration) because our internal analysis has indicated that a meaningful portion of incremental\npurchases on our REDcards are also incremental sales for Target.\nREDcard Penetration 2015 2014 2013\nTarget Debit Card 12.1% 11.2% 9.9%\nTarget Credit Cards 10.1 9.7 9.3\nTotal REDcard Penetration 22.3% 20.9% 19.3%\nNote: Excluding pharmacy and clinic sales, total REDcard penetration would have been 23.2 percent, 21.9 percent, and 20.1 percent for 2015,\n2014, and 2013, respectively. The sum of Target Credit Cards and Target Debit Card penetration may not equal Total REDcard Penetration due to\nrounding.\n19\n\n-- 24 of 84 --\n\nGross Margin Rate\n2013\nGM\nRate\nPromotions Other 2014\nGM\nRate\nCategory\nSales\nMix\nPromotions Shipping Other 2015\nGM\nRate\n29.8%\n(0.6)%\n0.2% 29.4%\n0.2%\n0.2%\n(0.2)% (0.1)%\n29.5%\nOur gross margin rate was 29.5 percent in 2015, 29.4 percent in 2014, and 29.8 percent in 2013. The 2015 increase\nwas primarily due to favorable category sales mix and lower promotional activity relative to the highly promotional\nperiod in 2014 following the 2013 data breach, partially offset by the impact of increased digital channel sales.\nThe 2014 decrease was primarily due to promotional activity.\nSelling, General and Administrative Expense Rate\n2013\nSG&A\nRate\nCost\nSaving\nInitiatives\nTechnology Other 2014\nSG&A\nRate\nCost\nSaving\nInitiatives\nMarketing\nExpense\nOther 2015\nSG&A\nRate\n20.2%\n(0.8)%\n0.2%\n0.4% 20.0%\n(0.4)%\n(0.2)%\n0.2% 19.6%\nOur SG&A expense rate was 19.6 percent in 2015, 20.0 percent in 2014, and 20.2 percent in 2013. The decrease in\n2015 primarily resulted from cost saving initiatives and reduced marketing expense, partially offset by investments in\nother initiatives, none of which were individually significant. We will continue to seek efficiency savings to reinvest in\nour business; however, we do not expect the SG&A rate to continue to decline at the pace realized during 2014 and\n2015.\nThe decrease in 2014 was primarily related to cost savings initiatives, partially offset by investments in technology and\nother initiatives, none of which were individually significant.\n20\n\n-- 25 of 84 --\n\nStore Data\nChange in Number of Stores 2015 2014\nBeginning store count 1,790 1,793\nOpened 15 16\nClosed (13) (19)\nRelocated — —\nEnding store count 1,792 1,790\nNumber of stores remodeled during the year 9 39\nNumber of Stores and\nRetail Square Feet Number of Stores Retail Square Feet (a)\nJanuary 30,\n2016 January 31,\n2015 January 30,\n2016 January 31,\n2015\n170,000 or more sq. ft. 278 280 49,688 50,037\n50,000 to 169,999 sq. ft. 1,505 1,509 189,677 189,905\n0 to 49,999 sq. ft. 9 1 174 21\nTotal 1,792 1,790 239,539 239,963\n(a) In thousands, reflects total square feet less office, distribution center and vacant space.\nOther Performance Factors\nOther Selling, General and Administrative Expenses\nWe recorded $216 million, $174 million, and $81 million of selling, general and administrative expenses outside of the\nsegment during 2015, 2014, and 2013, respectively. Additional information about these items is provided within the\nReconciliation of Non-GAAP Financial Measures to GAAP Measures on page 23 and Note 30 of the Financial\nStatements.\nNet Interest Expense\nNet interest expense from continuing operations was $607 million, $882 million, and $1,049 million for 2015, 2014,\nand 2013, respectively. Net interest expense for 2014 and 2013 included a loss on early retirement of debt of $285\nmillion and $445 million, respectively.\nProvision for Income Taxes\nOur effective income tax rate from continuing operations decreased to 32.5 percent in 2015, from 33.0 percent in 2014,\ndriven primarily by the $112 million tax benefit that resulted from releasing the valuation allowance on a capital loss\nrelated to our Canada exit. This benefit is recorded in continuing operations as the release of the valuation allowance\nis attributable to a capital gain generated by the CVS transaction. The tax rate benefit from this valuation allowance\nrelease was partially offset by a year-over-year decrease in the favorable resolution of various income tax matters and\nthe rate impact of higher pretax earnings. The resolution of various income tax matters reduced tax expense by\n$8 million and $35 million in 2015 and 2014, respectively. Note 23 of the Financial Statements provides a tax rate\nreconciliation.\nOur effective income tax rate from continuing operations decreased to 33.0 percent in 2014, from 34.6 percent in 2013,\ndriven primarily by the net tax effect of our global sourcing operations and the favorable resolution of various income\ntax matters. The resolution of various income tax matters reduced tax expense by $35 million and $16 million in 2014\nand 2013, respectively.\n21\n\n-- 26 of 84 --\n\nDiscontinued Operations\nOn January 15, 2015, Target Canada Co. and certain other wholly owned subsidiaries of Target (collectively Canada\nSubsidiaries), comprising substantially all of our former Canadian operations and our former Canadian Segment, filed\nfor protection (the Filing) under the Companies' Creditors Arrangement Act (CCAA) with the Ontario Superior Court of\nJustice in Toronto (the Court) and were deconsolidated. As a result, we recorded a pretax impairment loss on\ndeconsolidation and other charges, collectively totaling $5.1 billion. The Canada Subsidiaries are executing a liquidation\nthrough the CCAA process.\nIncome from discontinued operations, net of tax, was $42 million during 2015.\nIn the fourth quarter of 2015, we reached settlements with two entities that controlled guaranteed leases representing\napproximately 46 percent of the recorded accrual at that time. Under the settlement terms, these entities have\nsubrogated to us their claims against the Canada Subsidiaries. The settlement amounts were materially consistent\nwith our previously recorded accruals.\nAs part of a March 2016 settlement between the Canada Subsidiaries and all of their former landlords, we have agreed\nto subordinate a portion of our intercompany claims and make certain cash contributions to the estate in exchange for\na full release from obligations under guarantees of certain leases. This agreement remains subject to creditor and\nCourt approval. The financial impact of this agreement is materially consistent with amounts recorded in our financial\nstatements.\nFor more information about our Canada exit, see Note 7 of the Financial Statements.\n22\n\n-- 27 of 84 --\n\nReconciliation of Non-GAAP Financial Measures to GAAP Measures\nTo provide additional transparency, we have disclosed non-GAAP adjusted diluted earnings per share from continuing\noperations (Adjusted EPS). This metric excludes the impact of the 2015 sale of our pharmacy and clinic businesses,\nthe 2013 sale of our U.S. consumer credit card receivables portfolio, losses on early retirement of debt, net expenses\nrelated to the 2013 data breach, and other matters presented below. We believe this information is useful in providing\nperiod-to-period comparisons of the results of our continuing operations. This measure is not in accordance with, or\nan alternative to, generally accepted accounting principles in the United States (GAAP). The most comparable GAAP\nmeasure is diluted earnings per share from continuing operations. Adjusted EPS from continuing operations should\nnot be considered in isolation or as a substitution for analysis of our results as reported under GAAP. Other companies\nmay calculate non-GAAP adjusted EPS from continuing operations differently than we do, limiting the usefulness of\nthe measure for comparisons with other companies. Prior year amounts have been revised to present Adjusted EPS\non a continuing operations basis.\n2015 2014 2013\n(millions, except per share data) Pretax Net of\nTax\nPer\nShare\nAmounts Pretax Net of\nTax\nPer\nShare\nAmounts Pretax Net of\nTax\nPer\nShare\nAmounts\nGAAP diluted earnings per share from\ncontinuing operations $ 5.25 $ 3.83 $ 4.20\nAdjustments\nGain on sale (a) $ (620) $ (487) $ (0.77) $ — $ — $ — $ (391) $ (247) $ (0.38)\nRestructuring costs (b) 138 87 0.14 — — — — — —\nLoss on early retirement of debt — — — 285 173 0.27 445 270 0.42\nData breach-related costs, net of\ninsurance (c) 39 28 0.04 145 94 0.15 17 11 0.02\nOther (d) 39 29 0.05 29 18 0.03 64 40 0.06\nResolution of income tax matters — (8) (0.01) — (35) (0.06) — (16) (0.03)\nAdjusted diluted earnings per share\nfrom continuing operations $ 4.69 $ 4.22 $ 4.29\nNote: The sum of the non-GAAP adjustments may not equal the total adjustment amounts due to rounding.\n(a) For 2015, includes the gain on the pharmacies and clinics transaction. Refer to Note 6 of the Financial Statements for more information.\nFor 2013, includes the gain on receivables transaction. Refer to Note 9 of the Financial Statements for more information.\n(b) Refer to Note 8 of the Financial Statements.\n(c) Refer to Note 19 of the Financial Statements.\n(d) For 2015, represents impairments related to our decision to wind down certain noncore operations. Refer to Note 16 of the Financial\nStatements for more information. 2014 includes impairments of $16 million related to undeveloped land in the U.S. and $13 million of\nexpense related to converting co-branded card program to MasterCard. 2013 includes a $23 million workforce-reduction charge primarily\nrelated to severance and benefits costs, a $22 million charge related to part-time team member health benefit changes, and $19 million\nin impairment charges related to certain parcels of undeveloped land.\n23\n\n-- 28 of 84 --\n\nWe have also disclosed after-tax return on invested capital for continuing operations (ROIC), which is a ratio based\non GAAP information, with the exception of adjustments made to capitalize operating leases. Operating leases are\ncapitalized as part of the ROIC calculation to control for differences in capital structure between us and our competitors.\nWe believe this metric provides a meaningful measure of the effectiveness of our capital allocation over time. Other\ncompanies may calculate ROIC differently than we do, limiting the usefulness of the measure for comparisons with\nother companies.\nAfter-Tax Return on Invested Capital\nNumerator Trailing Twelve Months\n(dollars in millions)\nJanuary 30,\n2016 January 31,\n2015\nEarnings from continuing operations before interest expense and\nincome taxes $ 5,530 $ 4,535\n+ Operating lease interest (a)(b) 87 89\nAdjusted earnings from continuing operations before interest expense\nand income taxes 5,617 4,624\n- Income taxes (c) 1,827 1,524\nNet operating profit after taxes $ 3,790 $ 3,100\nDenominator\n(dollars in millions)\nJanuary 30,\n2016 January 31,\n2015 February 1,\n2014\nCurrent portion of long-term debt and other borrowings $ 815 $ 91 $ 1,143\n+ Noncurrent portion of long-term debt 11,945 12,634 11,351\n+ Shareholders' equity 12,957 13,997 16,231\n+ Capitalized operating lease obligations (b)(d) 1,457 1,490 1,635\n- Cash and cash equivalents 4,046 2,210 670\n- Net assets of discontinued operations 226 1,479 4,270\nInvested capital $ 22,902 $ 24,523 $ 25,420\nAverage invested capital (e) $ 23,713 $ 24,971\nAfter-tax return on invested capital 16.0% (f) 12.4%\n(a) Represents the add-back to operating income driven by the hypothetical capitalization of our operating leases, using eight times our trailing\ntwelve months rent expense and an estimated interest rate of six percent.\n(b) See the following Reconciliation of Capitalized Operating Leases table for the adjustments to our GAAP total rent expense to obtain the hypothetical\ncapitalization of operating leases and related operating lease interest.\n(c) Calculated using the effective tax rate for continuing operations, which was 32.5 percent and 33.0 percent for the trailing twelve months ended\nJanuary 30, 2016 and January 31, 2015.\n(d) Calculated as eight times our trailing twelve months rent expense.\n(e) Average based on the invested capital at the end of the current period and the invested capital at the end of the prior period.\n(f) Excluding the net gain on the sale of our pharmacy and clinic businesses, ROIC was 13.9 percent for the trailing twelve months ended January\n30, 2016.\nCapitalized operating lease obligations and operating lease interest are not in accordance with, or an alternative for,\nGAAP. The most comparable GAAP measure is total rent expense. Capitalized operating lease obligations and\noperating lease interest should not be considered in isolation or as a substitution for analysis of our results as reported\nunder GAAP.\nReconciliation of Capitalized Operating Leases Trailing Twelve Months\n(dollars in millions)\nJanuary 30,\n2016 January 31,\n2015 February 1,\n2014\nTotal rent expense $ 182 $ 186 $ 204\nCapitalized operating lease obligations (total rent expense x 8) 1,457 1,490 1,635\nOperating lease interest (capitalized operating lease obligations x 6%) 87 89 n/a\n24\n\n-- 29 of 84 --\n\nAnalysis of Financial Condition\nLiquidity and Capital Resources\nOur period-end cash and cash equivalents balance increased to $4,046 million from $2,210 million in 2014, primarily\nreflecting the proceeds from the sale of the pharmacy and clinic businesses. Due to the timing of the sale late in 2015,\nwe did not fully deploy the net proceeds by the end of 2015. Short-term investments of $3,008 million and $1,520 million\nwere included in cash and cash equivalents at the end of 2015 and 2014, respectively. Our investment policy is designed\nto preserve principal and liquidity of our short-term investments. This policy allows investments in large money market\nfunds or in highly rated direct short-term instruments that mature in 60 days or less. We also place dollar limits on our\ninvestments in individual funds or instruments.\nCash Flows\nOur 2015 operations were funded by internally generated funds. Operating cash flow provided by continuing operations\nwas $5,140 million in 2015 compared with $5,131 million in 2014. Proceeds from the sale of our pharmacy and clinic\nbusinesses to CVS are included in investing cash flows provided by continuing operations. These cash flows, combined\nwith period year-end cash position, allowed us to invest in the business, pay dividends and repurchase shares under\nour share repurchase program.\nInventory\nYear-end inventory was $8,601 million, compared with $8,282 million in 2014. The increase was due to investments\nto drive growth in certain merchandise categories, improve in-stocks, and earlier receipts of certain merchandise.\nShare Repurchases\nIn June 2015, our Board of Directors authorized a $5 billion expansion of our existing share repurchase program to\n$10 billion. Under this program, we have repurchased 94.6 million shares of common stock through January 30, 2016,\nat an average price of $69.57, for a total investment of $6.6 billion.\nDuring 2015, we repurchased 44.7 million shares of our common stock, for a total investment of $3,441 million ($77.07\nper share), including shares repurchased under accelerated share repurchase agreements. We did not repurchase\nany shares on the open market during 2014. However, as described in Note 25 to the Financial Statements, we\nreacquired 0.8 million shares upon the noncash settlement of prepaid forward contracts related to nonqualified deferred\ncompensation plans.\nDividends\nWe paid dividends totaling $1,362 million in 2015 and $1,205 million in 2014, an increase of 13.0 percent. We declared\ndividends totaling $1,378 million ($2.20 per share) in 2015, a per share increase of 10.6 percent over 2014. We declared\ndividends totaling $1,271 million ($1.99 per share) in 2014, a per share increase of 20.6 percent over 2013. We have\npaid dividends every quarter since our 1967 initial public offering, and it is our intent to continue to do so in the future.\nShort-term and Long-term Financing\nOur financing strategy is to ensure liquidity and access to capital markets, to manage our net exposure to floating\ninterest rate volatility, and to maintain a balanced spectrum of debt maturities. Within these parameters, we seek to\nminimize our borrowing costs. Our ability to access the long-term debt and commercial paper markets has provided\nus with ample sources of liquidity. Our continued access to these markets depends on multiple factors, including the\ncondition of debt capital markets, our operating performance, and maintaining strong credit ratings. As of January 30,\n2016, our credit ratings were as follows:\nCredit Ratings Moody's Standard and Poor's Fitch\nLong-term debt A2 A A-\nCommercial paper P-1 A-1 F2\n25\n\n-- 30 of 84 --\n\nIf our credit ratings were lowered, our ability to access the debt markets, our cost of funds, and other terms for new\ndebt issuances could be adversely impacted. Each of the credit rating agencies reviews its rating periodically and\nthere is no guarantee our current credit ratings will remain the same as described above.\nIn 2015, we funded our peak holiday sales period working capital needs through internally generated funds. In 2014,\nwe funded our peak holiday sales period working capital needs through internally generated funds and the issuance\nof commercial paper.\nCommercial Paper\n(dollars in millions) 2015 2014 2013\nMaximum daily amount outstanding during the year $ — $ 590 $ 1,465\nAverage amount outstanding during the year — 129 408\nAmount outstanding at year-end — — 80\nWeighted average interest rate —% 0.11% 0.13%\nWe have additional liquidity through a committed $2.25 billion revolving credit facility that expires in October 2018. No\nbalances were outstanding at any time during 2015, 2014, or 2013 under this facility.\nMost of our long-term debt obligations contain covenants related to secured debt levels. In addition to a secured debt\nlevel covenant, our credit facility also contains a debt leverage covenant. We are, and expect to remain, in compliance\nwith these covenants. Additionally, at January 30, 2016, no notes or debentures contained provisions requiring\nacceleration of payment upon a credit rating downgrade, except that certain outstanding notes allow the note holders\nto put the notes to us if within a matter of months of each other we experience both (i) a change in control and (ii) our\nlong-term credit ratings are either reduced and the resulting rating is non-investment grade, or our long-term credit\nratings are placed on watch for possible reduction and those ratings are subsequently reduced and the resulting rating\nis non-investment grade.\nWe believe our sources of liquidity will continue to be adequate to maintain operations, finance anticipated expansion\nand strategic initiatives, fund obligations incurred as a result of our exit from Canada, pay dividends, and execute\npurchases under our share repurchase program for the foreseeable future. Our exit from Canada increased our after-\ntax cash flows beginning in 2015. We continue to anticipate ample access to commercial paper and long-term financing.\nCapital Expenditures\nCapital Expenditures\n2015 2014 2013\t(millions)\nInformation technology, distribution and other $ 1,289 $ 1,306 $ 1,069\nNew stores 115 381 536\nStore remodels and expansions 34 99 281\nTotal $ 1,438 $ 1,786 $ 1,886\nCapital expenditures decreased in 2015 from the prior year as we opened fewer large-format stores and realized\nefficiency gains in technology, partially offset by increased guest experience and supply chain investments. Capital\nexpenditures were less than our initial expectations reflecting efficiency gains in technology combined with the impact\nof project timing shifts as we aligned investments against specific initiatives to drive growth, invest in our supply chain,\nand build out our omnichannel capabilities. Capital expenditures decreased in 2014 from the prior year due to fewer\nremodels and new stores, partially offset by increased technology investments to support our omnichannel efforts and\nsecurity enhancements.\nWe expect capital expenditures in 2016 to return to a level comparable with 2013 and 2014.\n26\n\n-- 31 of 84 --\n\nCommitments and Contingencies\nContractual Obligations as of Payments Due by Period\nJanuary 30, 2016 Less than 1-3 3-5 After 5\n(millions) Total 1 Year Years Years Years\nRecorded contractual obligations:\nLong-term debt (a) $ 11,955 $ 751 $ 2,453 $ 2,095 $ 6,656\nCapital lease obligations (b) 1,690 130 144 139 1,277\nDeferred compensation (c) 499 57 118 125 199\nReal estate liabilities (d) 52 52 — — —\nTax contingencies (e) — — — — —\nLoss contingencies (f) — — — — —\nUnrecorded contractual obligations:\nInterest payments – long-term debt 6,717 569 936 753 4,459\nOperating leases (b) 3,713 186 361 324 2,842\nPurchase obligations (g) 1,950 605 801 379 165\nReal estate obligations (h) 227 192 35 — —\nFuture contributions to retirement plans (i) — — — — —\nContractual obligations $ 26,803 $ 2,542 $ 4,848 $ 3,815 $ 15,598\n(a) Represents principal payments only. See Note 20 of the Financial Statements for further information.\n(b) These payments also include $311 million and $90 million of legally binding minimum lease payments for stores that are expected to\nopen in 2016 or later for capital and operating leases, respectively. Capital lease obligations include interest. See Note 22 of the Financial\nStatements for further information.\n(c) Deferred compensation obligations include commitments related to our nonqualified deferred compensation plans. The timing of deferred\ncompensation payouts is estimated based on payments currently made to former employees and retirees, forecasted investment returns,\nand the projected timing of future retirements.\n(d) Real estate liabilities include costs incurred but not paid related to the construction or remodeling of real estate and facilities.\n(e) Estimated tax contingencies of $215 million, including interest and penalties and primarily related to continuing operations, are not included\nin the table above because we are not able to make reasonably reliable estimates of the period of cash settlement. See Note 23 of the\nFinancial Statements for further information.\n(f) Estimated loss contingencies, including those related to the Canada Exit and the 2013 data breach, are not included in the table above\nbecause we are not able to make reasonably reliable estimates of the period of cash settlement. See Note 7 and Note 19 of the Financial\nStatements for further information.\n(g) Purchase obligations include all legally binding contracts such as firm minimum commitments for inventory purchases, merchandise\nroyalties, equipment purchases, marketing-related contracts, software acquisition/license commitments, and service contracts. We issue\ninventory purchase orders in the normal course of business, which represent authorizations to purchase that are cancelable by their\nterms. We do not consider purchase orders to be firm inventory commitments; therefore, they are excluded from the table above. If we\nchoose to cancel a purchase order, we may be obligated to reimburse the vendor for unrecoverable outlays incurred prior to cancellation.\nWe also issue trade letters of credit in the ordinary course of business, which are excluded from this table as these obligations are\nconditioned on terms of the letter of credit being met.\n(h) Real estate obligations include commitments for the purchase, construction, or remodeling of real estate and facilities.\n(i) We have not included obligations under our pension plans in the contractual obligations table above because no additional amounts are\nrequired to be funded as of January 30, 2016. Our historical practice regarding these plans has been to contribute amounts necessary\nto satisfy minimum pension funding requirements, plus periodic discretionary amounts determined to be appropriate.\nOff Balance Sheet Arrangements: Other than the unrecorded contractual obligations noted above, we do not have\nany arrangements or relationships with entities that are not consolidated into the financial statements.\nCritical Accounting Estimates\nOur analysis of operations and financial condition is based on our consolidated financial statements prepared in\naccordance with GAAP. Preparation of these consolidated financial statements requires us to make estimates and\nassumptions affecting the reported amounts of assets and liabilities at the date of the consolidated financial statements,\nreported amounts of revenues and expenses during the reporting period, and related disclosures of contingent assets\nand liabilities. In the Notes to Consolidated Financial Statements, we describe the significant accounting policies used\nin preparing the consolidated financial statements. Our estimates are evaluated on an ongoing basis and are drawn\nfrom historical experience and other assumptions that we believe to be reasonable under the circumstances. Actual\nresults could differ under other assumptions or conditions. However, except as discussed below regarding Canada\nExit-related costs, we do not believe there is a reasonable likelihood that there will be a material change in future\n27\n\n-- 32 of 84 --\n\nestimates or assumptions. Our senior management has discussed the development and selection of our critical\naccounting estimates with the Audit & Finance Committee of our Board of Directors. The following items in our\nconsolidated financial statements require significant estimation or judgment:\nInventory and cost of sales: We use the retail inventory method to account for the majority of our inventory and the\nrelated cost of sales. Under this method, inventory is stated at cost using the last-in, first-out (LIFO) method as\ndetermined by applying a cost-to-retail ratio to each merchandise grouping's ending retail value. The cost of our\ninventory includes the amount we pay to our suppliers to acquire inventory, freight costs incurred in connection with\nthe delivery of product to our distribution centers and stores, and import costs, reduced by vendor income and cash\ndiscounts. The majority of our distribution center operating costs, including compensation and benefits, are expensed\nto cost of sales in the period incurred. Since inventory value is adjusted regularly to reflect market conditions, our\ninventory methodology reflects the lower of cost or market. We reduce inventory for estimated losses related to shrink\nand markdowns. Our shrink estimate is based on historical losses verified by physical inventory counts. Historically,\nour actual physical inventory count results have shown our estimates to be reliable. Markdowns designated for clearance\nactivity are recorded when the salability of the merchandise has diminished. Inventory is at risk of obsolescence if\neconomic conditions change, including changing consumer demand, guest preferences, changing consumer credit\nmarkets, or increasing competition. We believe these risks are largely mitigated because our inventory typically turns\nin less than three months. Inventory was $8,601 million and $8,282 million at January 30, 2016 and January 31, 2015,\nrespectively, and is further described in Note 12 of the Financial Statements.\nVendor income receivable: Cost of sales and SG&A expenses are partially offset by various forms of consideration\nreceived from our vendors (Vendor Income). Vendor Income is earned for a variety of programs, such as volume\nrebates, markdown allowances, promotions, advertising allowances, and compliance programs. We establish a\nreceivable for Vendor Income that is earned but not yet received. Based on the agreements in place, this receivable\nis computed by estimating when we have completed our performance and when the amount is earned. The majority\nof year-end Vendor Income receivables are collected within the following fiscal quarter, and we do not believe there\nis a reasonable likelihood that the assumptions used in our estimate will change significantly. Historically, adjustments\nto our Vendor Income receivable have not been material. Excluding pharmacy-related receivables, which were\ninsignificant at period-end, Vendor Income receivable was $379 million and $426 million at January 30, 2016 and\nJanuary 31, 2015, respectively. The Vendor Income receivable balance is described further in Note 4 of the Financial\nStatements.\nLong-lived assets: Long-lived assets are reviewed for impairment whenever events or changes in circumstances\nindicate that the carrying amounts may not be recoverable. The evaluation is performed at the lowest level of identifiable\ncash flows independent of other assets. An impairment loss would be recognized when estimated undiscounted future\ncash flows from the operation and/or disposition of the assets are less than their carrying amount. Measurement of\nan impairment loss would be based on the excess of the carrying amount of the asset group over its fair value. Fair\nvalue is measured using discounted cash flows or independent opinions of value, as appropriate. We recorded\nimpairments of $54 million, $124 million, and $77 million in 2015, 2014, and 2013, respectively, which are described\nfurther in Note 14. As of January 30, 2016, a 10 percent decrease in the fair value of assets we intend to sell or close\nwould result in additional impairment of $7 million in 2015. Historically, we have not realized material losses upon sale\nof long-lived assets.\nInvestments in and receivables from Canada Subsidiaries: We determined the fair value and recoverability of our\nCanadian investments by comparing the estimated fair value of the underlying assets of the Canada Subsidiaries to\nestimated liabilities. We estimated the fair value of the major asset classes using estimated selling price less cost to\nsell, the income approach based on estimated market rents and capitalization rates, and discounted cash flow analysis\nof the differential between estimated market rent and contractual rent payments, as appropriate. We also applied an\nestimated liquidation discount to reflect the CCAA filing.\nOutstanding liabilities include accounts payable and other liabilities, forward commitments, unsubordinated related\nparty payables, lease liabilities, and other potential claims. Potential claims include an accrual for the estimated probable\nloss related to claims that may be asserted against the Canada Subsidiaries under certain contracts. Based on our\nestimates, the fair value of liabilities exceeds the fair value of assets.\nTo assess the fair value and recoverability of amounts receivable from the Canada Subsidiaries, we estimated the fair\nvalue of the underlying net assets of the Canada Subsidiaries available for distribution to their creditors in relation to\nthe estimated creditor claims and the priority of those claims.\n28\n\n-- 33 of 84 --\n\nOur estimates involve significant judgment and are based on currently available information, an assessment of the\nvalidity of certain claims, and estimated payments by the Canada Subsidiaries. Our ultimate recovery is subject to the\nfinal liquidation value of the Canada Subsidiaries and may vary significantly from our current estimates. See Note 7\nof the Financial Statements for further information.\nInsurance/self-insurance: We retain a substantial portion of the risk related to certain general liability, workers'\ncompensation, property loss, and team member medical and dental claims. However, we maintain stop-loss coverage\nto limit the exposure related to certain risks. Liabilities associated with these losses include estimates of both claims\nfiled and losses incurred but not yet reported. We use actuarial methods which consider a number of factors to estimate\nour ultimate cost of losses. General liability and workers' compensation liabilities are recorded at our estimate of their\nnet present value; other liabilities referred to above are not discounted. Our workers' compensation and general liability\naccrual was $498 million and $566 million at January 30, 2016 and January 31, 2015, respectively. We believe that\nthe amounts accrued are appropriate; however, our liabilities could be significantly affected if future occurrences or\nloss developments differ from our assumptions. For example, a five percent increase or decrease in average claim\ncosts would impact our self-insurance expense by $25 million in 2015. Historically, adjustments to our estimates have\nnot been material. Refer to Item 7A, Quantitative and Qualitative Disclosures About Market Risk, for further disclosure\nof the market risks associated with these exposures. We maintain insurance coverage to limit our exposure to certain\nevents, including network security matters.\nIncome taxes: We pay income taxes based on the tax statutes, regulations, and case law of the various jurisdictions\nin which we operate. Significant judgment is required in determining the timing and amounts of deductible and taxable\nitems, and in evaluating the ultimate resolution of tax matters in dispute with tax authorities. The benefits of uncertain\ntax positions are recorded in our financial statements only after determining it is likely the uncertain tax positions would\nwithstand challenge by taxing authorities. We periodically reassess these probabilities, and record any changes in the\nfinancial statements as appropriate. Liabilities for uncertain tax positions, including interest and penalties, were\n$215 million and $195 million at January 30, 2016 and January 31, 2015, respectively, and primarily relate to continuing\noperations. We believe the resolution of these matters will not have a material adverse impact on our consolidated\nfinancial statements. Income taxes are described further in Note 23 of the Financial Statements.\nPension accounting: We maintain a funded qualified, defined benefit pension plan, as well as several smaller and\nunfunded nonqualified plans for certain current and retired team members. The costs for these plans are determined\nbased on actuarial calculations using the assumptions described in the following paragraphs. Eligibility and the level\nof benefits varies depending on team members' full-time or part-time status, date of hire, and/or length of service. The\nbenefit obligation and related expense for these plans are determined based on actuarial calculations using assumptions\nabout the expected long-term rate of return, the discount rate, and compensation growth rates. The assumptions, with\nadjustments made for any significant plan or participant changes, are used to determine the period-end benefit obligation\nand establish expense for the next year.\nOur 2015 expected long-term rate of return on plan assets of 7.5 percent is determined by the portfolio composition,\nhistorical long-term investment performance, and current market conditions. Our compound annual rate of return on\nqualified plans' assets was 8.4 percent, 7.2 percent, 6.8 percent, and 8.5 percent for the 5-year, 10-year, 15-year, and\n20-year periods, respectively. A one percentage point decrease in our expected long-term rate of return would increase\nannual expense by $35 million. Based on a change in our asset allocation policy in late 2015, our expected long-term\nrate of return is 6.8 percent for 2016.\nThe discount rate used to determine benefit obligations is adjusted annually based on the interest rate for long-term\nhigh-quality corporate bonds, using yields for maturities that are in line with the duration of our pension liabilities. Our\nbenefit obligation and related expense will fluctuate with changes in interest rates. A 0.5 percentage point decrease\nto the weighted average discount rate would increase annual expense by $32 million.\nBased on our experience, we use a graduated compensation growth schedule that assumes higher compensation\ngrowth for younger, shorter-service pension-eligible team members than it does for older, longer-service pension-\neligible team members.\nPension benefits are further described in Note 28 of the Financial Statements.\nLegal and other contingencies: We are exposed to other claims and litigation arising in the ordinary course of business\nand use various methods to resolve these matters in a manner that we believe serves the best interest of our\nshareholders and other constituents. When a loss is probable, we record an accrual based on the reasonably estimable\nloss or range of loss. When no point of loss is more likely than another, we record the lowest amount in the estimated\n29\n\n-- 34 of 84 --\n\nrange of loss and disclose the estimated range. We do not record liabilities for reasonably possible loss contingencies,\nbut do disclose a range of reasonably possible losses if they are material and we are able to estimate such a range.\nIf we cannot provide a range of reasonably possible losses, we explain the factors that prevent us from determining\nsuch a range. Historically, adjustments to our estimates have not been material.\nWe believe the accruals recorded in our consolidated financial statements properly reflect loss exposures that are both\nprobable and reasonably estimable. With the exception of Canada Exit-related loss exposures, we do not believe any\nof the currently identified claims or litigation may materially affect our results of operations, cash flows, or financial\ncondition. However, litigation is subject to inherent uncertainties, and unfavorable rulings could occur. If an unfavorable\nruling were to occur, it may cause a material adverse impact on the results of operations, cash flows, or financial\ncondition for the period in which the ruling occurs, or future periods. Refer to Note 7 of the Financial Statements for\nfurther information on the Canada Exit-related contingencies, respectively.\nNew Accounting Pronouncements\nIn February 2016, the FASB issued ASU No. 2016-02, Leases, to require organizations that lease assets to recognize\nthe rights and obligations created by those leases on the balance sheet. The new standard is effective in 2019, with\nearly adoption permitted. We are currently evaluating the effect the new standard will have on our financial statements.\nWe do not expect that any other recently issued accounting pronouncements will have a material effect on our financial\nstatements.\nForward-Looking Statements\nThis report contains forward-looking statements, which are based on our current assumptions and expectations. These\nstatements are typically accompanied by the words \"expect,\" \"may,\" \"could,\" \"believe,\" \"would,\" \"might,\" \"anticipates,\"\nor words of similar import. The principal forward-looking statements in this report include: our financial performance,\nstatements regarding the adequacy of and costs associated with our sources of liquidity, the expected impact of the\npharmacies and clinics sale transaction on our financial performance and the anticipated use of proceeds, the continued\nexecution of our share repurchase program, our expected capital expenditures, the impact of changes in the expected\neffective income tax rate on net income, the expected compliance with debt covenants, the expected impact of new\naccounting pronouncements, our intentions regarding future dividends, contributions and payments related to our\npension plan, the expected returns on pension plan assets, the timing and financial impact of discontinuing\npostretirement health care benefits that were offered to team members upon early retirement and prior to Medicare\neligibility, the expected timing and recognition of compensation expenses, the effects of macroeconomic conditions,\nthe adequacy of our reserves for general liability, workers' compensation and property loss, the expected outcome of,\nand adequacy of our reserves for investigations, inquiries, claims and litigation, including those related to the 2013\ndata breach and discontinuing our Canadian operations, expected changes to our contractual obligations and liabilities,\nthe expected ability to recognize deferred tax assets and liabilities and the timing of such recognition, the process,\ntiming and effects of discontinuing our Canadian operations, the resolution of tax matters, changes in our assumptions\nand expectations, and the expected benefits and timing of cash disbursements related to restructuring activities.\nAll such forward-looking statements are intended to enjoy the protection of the safe harbor for forward-looking\nstatements contained in the Private Securities Litigation Reform Act of 1995, as amended. Although we believe there\nis a reasonable basis for the forward-looking statements, our actual results could be materially different. The most\nimportant factors which could cause our actual results to differ from our forward-looking statements are set forth on\nour description of risk factors in Item 1A to this Form 10-K, which should be read in conjunction with the forward-looking\nstatements in this report. Forward-looking statements speak only as of the date they are made, and we do not undertake\nany obligation to update any forward-looking statement.\n30\n\n-- 35 of 84 --\n\nItem 7A. Quantitative and Qualitative Disclosures About Market Risk\nAt January 30, 2016, our exposure to market risk was primarily from interest rate changes on our debt obligations,\nsome of which are at a LIBOR-plus floating-rate. Our interest rate exposure is primarily due to differences between\nour floating rate debt obligations compared to our floating rate short term investments. At January 30, 2016, our floating\nrate short-term investments exceeded our floating rate debt by approximately $1,758 million. Based on our balance\nsheet position at January 30, 2016, the annualized effect of a 0.1 percentage point decrease in floating interest rates\non our floating rate short-term investments, net of our debt obligations, would decrease earnings before income taxes\nby approximately $2 million. In general, we expect our floating rate debt to exceed our floating rate short-term\ninvestments over time, but that may vary in different interest rate environments. See further description of our debt\nand derivative instruments in Notes 20 and 21 of the Notes to Financial Statements.\nWe record our general liability and workers' compensation liabilities at net present value; therefore, these liabilities\nfluctuate with changes in interest rates. Based on our balance sheet position at January 30, 2016, the annualized\neffect of a 0.5 percentage point decrease in interest rates would be to decrease earnings before income taxes by\n$9 million.\nIn addition, we are exposed to market return fluctuations on our qualified defined benefit pension plans. The value of\nour pension liabilities is inversely related to changes in interest rates. A 0.5 percentage point decrease to the weighted\naverage discount rate would increase annual expense by $32 million. To protect against declines in interest rates, we\nhold high-quality, long-duration bonds and interest rate swaps in our pension plan trust. At year-end, we had hedged\n55 percent of the interest rate exposure of our funded status.\nAs more fully described in Note 15 and Note 27 of the Financial Statements, we are exposed to market returns on\naccumulated team member balances in our nonqualified, unfunded deferred compensation plans. We control the risk\nof offering the nonqualified plans by making investments in life insurance contracts and prepaid forward contracts on\nour own common stock that offset a substantial portion of our economic exposure to the returns on these plans. The\nannualized effect of a one percentage point change in market returns on our nonqualified defined contribution plans\n(inclusive of the effect of the investment vehicles used to manage our economic exposure) would not be significant.\nThere have been no other material changes in our primary risk exposures or management of market risks since the\nprior year.\n31\n\n-- 36 of 84 --\n\nItem 8. Financial Statements and Supplementary Data\nReport of Management on the Consolidated Financial Statements\nManagement is responsible for the consistency, integrity, and presentation of the information in the Annual Report. The consolidated\nfinancial statements and other information presented in this Annual Report have been prepared in accordance with accounting\nprinciples generally accepted in the United States and include necessary judgments and estimates by management.\nTo fulfill our responsibility, we maintain comprehensive systems of internal control designed to provide reasonable assurance that\nassets are safeguarded and transactions are executed in accordance with established procedures. The concept of reasonable\nassurance is based upon recognition that the cost of the controls should not exceed the benefit derived. We believe our systems\nof internal control provide this reasonable assurance.\nThe Board of Directors exercised its oversight role with respect to the Corporation's systems of internal control primarily through\nits Audit Committee, which is comprised of independent directors. The Committee oversees the Corporation's systems of internal\ncontrol, accounting practices, financial reporting and audits to assess whether their quality, integrity, and objectivity are sufficient\nto protect shareholders' investments.\nIn addition, our consolidated financial statements have been audited by Ernst & Young LLP, independent registered public accounting\nfirm, whose report also appears on this page.\nBrian C. Cornell\nChairman and Chief Executive Officer\nMarch 11, 2016\nCatherine R. Smith\nExecutive Vice President and\nChief Financial Officer\n___________________________________________________________________________________________________________________\nReport of Independent Registered Public Accounting Firm on Consolidated Financial Statements\nThe Board of Directors and Shareholders\nTarget Corporation\nWe have audited the accompanying consolidated statements of financial position of Target Corporation and subsidiaries (the\nCorporation) as of January 30, 2016 and January 31, 2015, and the related consolidated statements of operations, comprehensive\nincome, cash flows, and shareholders' investment for each of the three years in the period ended January 30, 2016. These financial\nstatements are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these financial\nstatements based on our audits.\nWe conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).\nThose standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements\nare free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures\nin the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by\nmanagement, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable\nbasis for our opinion.\nIn our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position\nof Target Corporation and subsidiaries at January 30, 2016 and January 31, 2015, and the consolidated results of their operations\nand their cash flows for each of the three years in the period ended January 30, 2016, in conformity with U.S. generally accepted\naccounting principles.\nWe also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the\nCorporation's internal control over financial reporting as of January 30, 2016, based on criteria established in Internal Control—\nIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) and\nour report dated March 11, 2016, expressed an unqualified opinion thereon.\nMinneapolis, Minnesota\nMarch 11, 2016\n32\n\n-- 37 of 84 --\n\nReport of Management on Internal Control over Financial Reporting\nOur management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term\nis defined in Exchange Act Rules 13a-15(f). Under the supervision and with the participation of our management, including our chief\nexecutive officer and chief financial officer, we assessed the effectiveness of our internal control over financial reporting as of\nJanuary 30, 2016, based on the framework in Internal Control—Integrated Framework (2013), issued by the Committee of\nSponsoring Organizations of the Treadway Commission (2013 framework). Based on our assessment, we conclude that the\nCorporation's internal control over financial reporting is effective based on those criteria.\nOur internal control over financial reporting as of January 30, 2016, has been audited by Ernst & Young LLP, the independent\nregistered public accounting firm who has also audited our consolidated financial statements, as stated in their report which appears\non this page.\nBrian C. Cornell\nChairman and Chief Executive Officer\nMarch 11, 2016\nCatherine R. Smith\nExecutive Vice President and\nChief Financial Officer\n___________________________________________________________________________________________________________________\nReport of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting\nThe Board of Directors and Shareholders\nTarget Corporation\nWe have audited Target Corporation and subsidiaries' (the Corporation) internal control over financial reporting as of January 30,\n2016, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations\nof the Treadway Commission (2013 Framework) (the COSO criteria). The Corporation's management is responsible for maintaining\neffective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting\nincluded in the accompanying Report of Management on Internal Control over Financial Reporting. Our responsibility is to express\nan opinion on the Corporation's internal control over financial reporting based on our audit.\nWe conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).\nThose standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control\nover financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control\nover financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating\neffectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary\nin the circumstances. We believe that our audit provides a reasonable basis for our opinion.\nA company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability\nof financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted\naccounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain\nto the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets\nof the company, (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial\nstatements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are\nbeing made only in accordance with authorizations of management and directors of the company, and (3) provide reasonable\nassurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that\ncould have a material effect on the financial statements.\nBecause of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections\nof any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes\nin conditions or that the degree of compliance with the policies or procedures may deteriorate.\nIn our opinion, the Corporation maintained, in all material respects, effective internal control over financial reporting as of January 30,\n2016, based on the COSO criteria.\nWe also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the\nconsolidated statements of financial position of Target Corporation and subsidiaries as of January 30, 2016 and January 31, 2015,\nand the related consolidated statements of operations, comprehensive income, cash flows and shareholders' investment for each\nof the three years in the period ended January 30, 2016, and our report dated March 11, 2016, expressed an unqualified opinion\nthereon.\nMinneapolis, Minnesota\nMarch 11, 2016\n33\n\n-- 38 of 84 --\n\nConsolidated Statements of Operations\n(millions, except per share data) 2015 2014 2013\nSales $ 73,785 $ 72,618 $ 71,279\nCost of sales 51,997 51,278 50,039\nGross margin 21,788 21,340 21,240\nSelling, general and administrative expenses 14,665 14,676 14,465\nDepreciation and amortization 2,213 2,129 1,996\nGain on sale (620) — (391)\nEarnings from continuing operations before interest expense and income\ntaxes 5,530 4,535 5,170\nNet interest expense 607 882 1,049\nEarnings from continuing operations before income taxes 4,923 3,653 4,121\nProvision for income taxes 1,602 1,204 1,427\nNet earnings from continuing operations 3,321 2,449 2,694\nDiscontinued operations, net of tax 42 (4,085) (723)\nNet earnings / (loss) $ 3,363 $ (1,636) $ 1,971\nBasic earnings / (loss) per share\nContinuing operations $ 5.29 $ 3.86 $ 4.24\nDiscontinued operations 0.07 (6.44) (1.14)\nNet earnings / (loss) per share $ 5.35 $ (2.58) $ 3.10\nDiluted earnings / (loss) per share\nContinuing operations $ 5.25 $ 3.83 $ 4.20\nDiscontinued operations 0.07 (6.38) (1.13)\nNet earnings / (loss) per share $ 5.31 $ (2.56) $ 3.07\nWeighted average common shares outstanding\nBasic 627.7 634.7 635.1\nDilutive effect of share-based awards 5.2 5.4 6.7\nDiluted 632.9 640.1 641.8\nAntidilutive shares — 3.3 2.3\nNote: Per share amounts may not foot due to rounding.\nSee accompanying Notes to Consolidated Financial Statements.\n34\n\n-- 39 of 84 --\n\nConsolidated Statements of Comprehensive Income\n(millions) 2015 2014 2013\nNet income / (loss) $ 3,363 $ (1,636) $ 1,971\nOther comprehensive income / (loss), net of tax\nPension and other benefit liabilities, net of (benefit) / provision for taxes\nof $(18), $(90), and $71 (27) (139) 110\nCurrency translation adjustment and cash flow hedges, net of provision\nfor taxes of $2, $2, and $11 (3) 431 (425)\nOther comprehensive income / (loss) (30) 292 (315)\nComprehensive (loss) / income $ 3,333 $ (1,344) $ 1,656\nSee accompanying Notes to Consolidated Financial Statements.\n35\n\n-- 40 of 84 --\n\nConsolidated Statements of Financial Position\n(millions, except footnotes) January 30,\n2016 January 31,\n2015\nAssets\nCash and cash equivalents, including short-term investments of $3,008 and $1,520 $ 4,046 $ 2,210\nInventory 8,601 8,282\nAssets of discontinued operations 322 1,058\nOther current assets 1,161 2,074\nTotal current assets 14,130 13,624\nProperty and equipment\nLand 6,125 6,127\nBuildings and improvements 27,059 26,613\nFixtures and equipment 5,347 5,329\nComputer hardware and software 2,617 2,552\nConstruction-in-progress 315 424\nAccumulated depreciation (16,246) (15,093)\nProperty and equipment, net 25,217 25,952\nNoncurrent assets of discontinued operations 75 717\nOther noncurrent assets 840 879\nTotal assets $ 40,262 $ 41,172\nLiabilities and shareholders' investment\nAccounts payable $ 7,418 $ 7,759\nAccrued and other current liabilities 4,236 3,783\nCurrent portion of long-term debt and other borrowings 815 91\nLiabilities of discontinued operations 153 103\nTotal current liabilities 12,622 11,736\nLong-term debt and other borrowings 11,945 12,634\nDeferred income taxes 823 1,160\nNoncurrent liabilities of discontinued operations 18 193\nOther noncurrent liabilities 1,897 1,452\nTotal noncurrent liabilities 14,683 15,439\nShareholders' investment\nCommon stock 50 53\nAdditional paid-in capital 5,348 4,899\nRetained earnings 8,188 9,644\nAccumulated other comprehensive loss\nPension and other benefit liabilities (588) (561)\nCurrency translation adjustment and cash flow hedges (41) (38)\nTotal shareholders' investment 12,957 13,997\nTotal liabilities and shareholders' investment $ 40,262 $ 41,172\nCommon Stock Authorized 6,000,000,000 shares, $0.0833 par value; 602,226,517 shares issued and outstanding at January 30, 2016; 640,213,987\nshares issued and outstanding at January 31, 2015.\nPreferred Stock Authorized 5,000,000 shares, $0.01 par value; no shares were issued or outstanding at January 30, 2016 or January 31, 2015.\nSee accompanying Notes to Consolidated Financial Statements.\n36\n\n-- 41 of 84 --\n\nConsolidated Statements of Cash Flows\n(millions) 2015 2014 2013\nOperating activities\nNet earnings / (loss) $ 3,363 $ (1,636) $ 1,971\nEarnings / (losses) from discontinued operations, net of tax 42 (4,085) (723)\nNet earnings from continuing operations 3,321 2,449 2,694\nAdjustments to reconcile net earnings to cash provided by operations:\nDepreciation and amortization 2,213 2,129 1,996\nShare-based compensation expense 115 71 106\nDeferred income taxes (322) 7 58\nGain on sale (620) — (391)\nLoss on debt extinguishment — 285 445\nNoncash (gains) / losses and other, net (12) 40 87\nChanges in operating accounts:\nAccounts receivable originated at Target — — 157\nProceeds on sale of accounts receivable originated at Target — — 2,703\nInventory (316) (512) (504)\nOther assets 227 (115) (79)\nAccounts payable and accrued liabilities 534 777 247\nCash provided by operating activities—continuing operations 5,140 5,131 7,519\nCash provided by / (required for) operating activities—discontinued operations 704 (692) (999)\nCash provided by operations 5,844 4,439 6,520\nInvesting activities\nExpenditures for property and equipment (1,438) (1,786) (1,886)\nProceeds from disposal of property and equipment 28 95 70\nProceeds from sale of businesses 1,875 — —\nChange in accounts receivable originated at third parties — — 121\nProceeds from sale of accounts receivable originated at third parties — — 3,002\nCash paid for acquisitions, net of cash assumed — (20) (157)\nOther investments 24 106 130\nCash provided by / (required for) investing activities—continuing operations 489 (1,605) 1,280\nCash provided by / (required for) investing activities—discontinued operations 19 (321) (1,551)\nCash provided by / (required for) investing activities 508 (1,926) (271)\nFinancing activities\nChange in commercial paper, net — (80) (890)\nAdditions to long-term debt — 1,993 —\nReductions of long-term debt (85) (2,079) (3,463)\nDividends paid (1,362) (1,205) (1,006)\nRepurchase of stock (3,438) — (1,461)\nStock option exercises and related tax benefit 369 373 456\nCash required for financing activities (4,516) (998) (6,364)\nEffect of exchange rate changes on cash and cash equivalents — — 26\nNet increase / (decrease) in cash and cash equivalents 1,836 1,515 (89)\nCash and cash equivalents at beginning of period (a) 2,210 695 784\nCash and cash equivalents at end of period (b) $ 4,046 $ 2,210 $ 695\nSupplemental information\nInterest paid, net of capitalized interest $ 604 $ 871 $ 1,043\nIncome taxes (refunded) / paid (127) 1,251 1,386\nProperty and equipment acquired through capital lease obligations 126 88 132\n(a) Includes cash of our discontinued operations of $25 million and $59 million at February 1, 2014 and February 2, 2013, respectively.\n(b) Includes cash of our discontinued operations of $25 million at February 1, 2014.\nSee accompanying Notes to Consolidated Financial Statements.\n37\n\n-- 42 of 84 --\n\nConsolidated Statements of Shareholders' Investment\n(millions, except footnotes)\nCommon\nStock\nShares\nStock\nPar\nValue\nAdditional\nPaid-in\nCapital Retained\nEarnings\nAccumulated Other\nComprehensive\nIncome/(Loss) Total\nFebruary 2, 2013 645.3 $ 54 $ 3,925 $ 13,155 $ (576) $ 16,558\nNet earnings — — — 1,971 — 1,971\nOther comprehensive income — — — — (315) (315)\nDividends declared — — — (1,051) — (1,051)\nRepurchase of stock (21.9) (2) — (1,476) — (1,478)\nStock options and awards 9.5 1 545 — — 546\nFebruary 1, 2014 632.9 $ 53 $ 4,470 $ 12,599 $ (891) $ 16,231\nNet loss — — — (1,636) — (1,636)\nOther comprehensive loss — — — — 292 292\nDividends declared — — — (1,273) — (1,273)\nRepurchase of stock (0.8) — — (46) — (46)\nStock options and awards 8.1 — 429 — — 429\nJanuary 31, 2015 640.2 $ 53 $ 4,899 $ 9,644 $ (599) $ 13,997\nNet earnings — — — 3,363 — 3,363\nOther comprehensive income — — — — (30) (30)\nDividends declared — — — (1,378) — (1,378)\nRepurchase of stock (44.7) (4) — (3,441) — (3,445)\nStock options and awards 6.7 1 449 — — 450\nJanuary 30, 2016 602.2 $ 50 $ 5,348 $ 8,188 $ (629) $ 12,957\nDividends declared per share were $2.20, $1.99, and $1.65 in 2015, 2014, and 2013, respectively.\nSee accompanying Notes to Consolidated Financial Statements.\n38\n\n-- 43 of 84 --\n\nNotes to Consolidated Financial Statements\n1. Summary of Accounting Policies\nOrganization We are a general merchandise retailer selling products to our guests through our stores and digital\nchannels.\nAs more fully described in Note 7, in January 2015, we announced our exit from the Canadian market and filed for\nprotection (the Filing) under the Companies' Creditors Arrangement Act (CCAA) with the Ontario Superior Court of\nJustice in Toronto (the Court). Our prefiling financial results in Canada and subsequent expenses directly attributable\nto the Canada exit are included in our financial statements and classified within discontinued operations. Discontinued\noperations refers only to our discontinued Canadian operations. Subsequent to the Filing, we operate as a single\nsegment that includes all of our continuing operations, which are designed to enable guests to purchase products\nseamlessly in stores, online, or through mobile devices.\nConsolidation The consolidated financial statements include the balances of the Corporation and its subsidiaries\nafter elimination of intercompany balances and transactions. All material subsidiaries are wholly owned. We consolidate\nvariable interest entities where it has been determined that the Corporation is the primary beneficiary of those entities'\noperations. As of January 15, 2015, we deconsolidated substantially all of our Canadian operations following the Filing.\nSee Note 7 for more information.\nUse of estimates The preparation of our consolidated financial statements in conformity with U.S. generally accepted\naccounting principles (GAAP) requires management to make estimates and assumptions affecting reported amounts\nin the consolidated financial statements and accompanying notes. Actual results may differ significantly from those\nestimates.\nFiscal year Our fiscal year ends on the Saturday nearest January 31. Unless otherwise stated, references to years\nin this report relate to fiscal years, rather than to calendar years. Fiscal 2015 ended January 30, 2016, and consisted\nof 52 weeks. Fiscal 2014 ended January 31, 2015, and consisted of 52 weeks. Fiscal 2013 ended February 1, 2014,\nand consisted of 52 weeks. Fiscal 2016 will end January 28, 2017, and will consist of 52 weeks.\nAccounting policies Our accounting policies are disclosed in the applicable Notes to the Consolidated Financial\nStatements. Certain prior-year amounts have been reclassified to conform to current year presentation.\n2. Revenues\nOur retail stores generally record revenue at the point of sale. Digital channel sales include shipping revenue and are\nrecorded upon delivery to the guest. Total revenues do not include sales tax because we are a pass-through conduit\nfor collecting and remitting sales taxes. Generally, guests may return national brand merchandise within 90 days of\npurchase and owned and exclusive brands within one year of purchase. Revenues are recognized net of expected\nreturns, which we estimate using historical return patterns as a percentage of sales. Commissions earned on sales\ngenerated by leased departments are included within sales and were $37 million, $32 million, and $29 million in 2015,\n2014, and 2013, respectively.\nRevenue from gift card sales is recognized upon gift card redemption. Our gift cards do not expire. Based on historical\nredemption rates, a small and relatively stable percentage of gift cards will never be redeemed, referred to as \"breakage.\"\nEstimated breakage revenue is recognized over time in proportion to actual gift card redemptions and was not material\nin any period presented.\nGuests receive a 5 percent discount on virtually all purchases and receive free shipping at Target.com when they use\ntheir REDcard. The discounts associated with loyalty programs are included as reductions in sales in our Consolidated\nStatements of Operations and were $1,067 million, $943 million, and $833 million in 2015, 2014, and 2013, respectively.\n39\n\n-- 44 of 84 --\n\n3. Cost of Sales and Selling, General and Administrative Expenses\nThe following table illustrates the primary items classified in each major expense category:\nCost of Sales Selling, General and Administrative Expenses\nTotal cost of products sold including\n• Freight expenses associated with moving\nmerchandise from our vendors to our\ndistribution centers and our retail stores, and\namong our distribution and retail facilities\n• Vendor income that is not reimbursement of\nspecific, incremental, and identifiable costs\nInventory shrink\nMarkdowns\nOutbound shipping and handling expenses\nassociated with sales to our guests\nPayment term cash discounts\nDistribution center costs, including compensation\nand benefits costs\nImport costs\nCompensation and benefit costs including\n• Stores\n• Headquarters\nOccupancy and operating costs of retail and\nheadquarters facilities\nAdvertising, offset by vendor income that is a\nreimbursement of specific, incremental, and\nidentifiable costs\nPre-opening costs of stores and other facilities\nU.S. credit cards servicing expenses and profit\nsharing\nLitigation and defense costs and related insurance\nrecovery\nOther administrative costs\nNote: The classification of these expenses varies across the retail industry.\n4. Consideration Received from Vendors\nWe receive consideration for a variety of vendor-sponsored programs, such as volume rebates, markdown allowances,\npromotions, and advertising allowances and for our compliance programs, referred to as \"vendor income.\" Vendor\nincome reduces either our inventory costs or SG&A expenses based on the provisions of the arrangement. Under our\ncompliance programs, vendors are charged for merchandise shipments that do not meet our requirements (violations),\nsuch as late or incomplete shipments. These allowances are recorded when violations occur. Substantially all\nconsideration received is recorded as a reduction of cost of sales.\nWe establish a receivable for vendor income that is earned but not yet received. Based on provisions of the agreements\nin place, this receivable is computed by estimating the amount earned when we have completed our performance.\nWe perform detailed analyses to determine the appropriate level of the receivable in the aggregate. The majority of\nyear-end receivables associated with these activities are collected within the following fiscal quarter. We have not\nhistorically had significant write-offs for these receivables.\n5. Advertising Costs\nAdvertising costs, which primarily consist of newspaper circulars, internet advertisements, and media broadcast, are\nexpensed at first showing or distribution of the advertisement.\nAdvertising Costs\n(millions) 2015 2014 2013\nGross advertising costs $ 1,472 $ 1,647 $ 1,623\nVendor income 38 47 75\nNet advertising costs $ 1,434 $ 1,600 $ 1,548\n6. Pharmacies and Clinics Transaction\nIn December 2015, we closed the previously announced sale of our pharmacy and clinic businesses to CVS for cash\nconsideration of $1.9 billion, recognizing a gain of $620 million, and deferred income of $694 million. This transaction\nwas accounted for as a sale, and following the transaction, the inventory and other assets sold are no longer reported\nin our Consolidated Statement of Financial Position.\nCVS now operates the pharmacy and clinic businesses in our stores under a perpetual operating agreement. No profit\nsharing arrangement exists, but CVS will make an ongoing annual, inflation-adjusted occupancy-related payment to\nus, starting at $20 million to $25 million in the first year of the agreement that will be recorded as a reduction to SG&A\nexpense. The operating agreement may only be terminated by mutual consent of both parties, or by either party if\n(i) the other party suffers an adverse event that materially and adversely harms such other party’s goodwill or reputation\n40\n\n-- 45 of 84 --\n\nthat could reasonably be expected to have a material adverse effect on the reputation or goodwill of the terminating\nparty if it continued its association with the nonterminating party, (ii) the other party breaches its obligations, which\nbreach remains uncured and results in a material adverse effect on the business or operations of the nonterminating\nparty in Target stores, (iii) the other party files for bankruptcy protection, or (iv) the other party is acquired by or\nconsolidated with certain identified competitors of the terminating party. We also entered a development agreement\nwith CVS through which we may jointly develop small-format stores.\nGain on Pharmacies and Clinics Transaction\n(millions) 2015\nCash consideration $ 1,868\nLess:\nDeferred income (a) 694\nInventory 447\nOther assets 13\nPretax transaction costs and contingent liabilities (b) 94\nPretax gain on pharmacies and clinics transaction (c) $ 620\n(a) Represents deferred income that will be recorded as a reduction to SG&A expense evenly over the 23-year weighted average\nremaining accounting useful life of our stores. As of January 30, 2016, $690 million remains in other current and other noncurrent\nliabilities.\n(b) Primarily relates to professional services, contract termination charges, severance, and impairment of certain assets not sold to CVS.\n(c) Recorded outside of segment results and excluded from Adjusted EPS.\nDeferred income of $694 million represents the consideration received at the close of the sale related to CVS’s leasehold\ninterest in the related space within our stores. We estimated the fair value of this leasehold interest using a discounted\ncash flow analysis.\nThe pharmacy and clinic inventory and other assets sold had the following balances as of January 31, 2015:\n(millions) January 31,\n2015\nInventory included in other current assets $ 508\nOther current assets 2\nOther noncurrent assets 12\nTotal $ 522\n7. Canada Exit\nBackground\nOn January 15, 2015, Target Canada Co. and certain other wholly owned subsidiaries of Target (collectively Canada\nSubsidiaries), comprising substantially all of our former Canadian operations and our former Canadian Segment, filed\nfor protection under the CCAA with the Court and were deconsolidated. As a result, we recorded a pretax impairment\nloss on deconsolidation and other related charges, collectively totaling $5.1 billion. The Canada Subsidiaries are in\nthe process of liquidation.\nSubsequent to deconsolidation, we use the cost method to account for our equity investment in the Canada Subsidiaries,\nwhich has been reflected as zero in our Consolidated Statement of Financial Position at January 30, 2016 and January\n31, 2015 based on the estimated fair value of the Canada Subsidiaries' net assets.\nIncome / (Loss) on Discontinued Operations\nOur Canadian exit represented a strategic shift in our business. For this reason, our Canadian Segment results for\nall periods prior to deconsolidation and costs to exit are classified as discontinued operations.\n41\n\n-- 46 of 84 --\n\nIncome / (Loss) on Discontinued Operations\n(millions) 2015 2014 2013\nSales $ — $ 1,902 $ 1,317\nCost of sales — 1,541 1,121\nSG&A expenses — 909 910\nDepreciation and amortization — 248 227\nInterest expense — 73 77\nPretax loss from operations — (869) (1,018)\nPretax exit costs (129) (5,105) —\nIncome taxes 171 1,889 295\nIncome / (loss) from discontinued operations $ 42 $ (4,085) $ (723)\nThe 2015 and 2014 Canadian pretax exit costs totaled $129 million and $5,105 million, respectively, and included the\nfollowing:\nPretax Exit Costs\n(millions) 2015 2014\nInvestment impairment $ 6 $ 4,766\nContingent liabilities 62 240\nOther exit costs 61 99\nTotal $ 129 $ 5,105\nInvestments in Canada Subsidiaries\nTarget continues to indirectly own 100% of the common stock of the Canada Subsidiaries, but has deconsolidated\nthose entities because Target no longer has a controlling interest. At the date of deconsolidation, we adjusted our\ninvestment in the Canada Subsidiaries to fair value with a corresponding charge to income. Because the estimated\namount of the Canada Subsidiaries' liabilities exceed the estimated fair value of the assets available for distribution\nto its creditors, the fair value of Target’s equity investment approximates zero.\nTarget Corporation Amounts Receivable from Canada Subsidiaries\nPrior to deconsolidation, Target Corporation made loans to the Canada Subsidiaries for the purpose of funding its\noperations and had accounts receivable generated in the ordinary course of business. The loans, corresponding\ninterest and the accounts receivable were considered intercompany transactions and eliminated in the consolidated\nTarget Corporation financial statements. As of the deconsolidation date, the loans, associated interest, and accounts\nreceivable are now considered related party transactions and have been recognized in Target Corporation's\nconsolidated financial statements at $320 million and $326 million at January 30, 2016 and January 31, 2015,\nrespectively.\nRecovery Estimates and Valuation Techniques\nWe assessed the recoverability of amounts receivable from the Canada Subsidiaries by comparing the estimated fair\nvalue of the underlying net assets of the Canada Subsidiaries available for distribution to their creditors in relation to\nthe estimated creditor claims and the priority of those claims. The net assets were valued based on the liquidation\nprice received by the Canada Subsidiaries, less the operating costs incurred to execute the liquidation process.\nEstimated creditor claims were valued based on our estimate of probable loss related to claims submitted to the Canada\nSubsidiaries. Based on our estimates, creditor claims exceed net assets.\nOur estimates involve significant judgment and are based on currently available information, an assessment of the\nvalidity of certain claims and estimated payments by the Canada Subsidiaries. Our ultimate recovery is subject to the\nfinal liquidation value of the Canada Subsidiaries. Further, the final liquidation value and ultimate recovery by the\ncreditors of the Canada Subsidiaries, including Target Corporation, is likely to be impacted by the manner in which the\nTarget Corporation guarantees described below are resolved.\n42\n\n-- 47 of 84 --\n\nTarget Corporation Contingencies\nThe recorded expenses include an accrual for the estimated probable loss related to claims that may be asserted\ndirectly against us (rather than against the Canada Subsidiaries), primarily under our guarantees of certain leases of\nthe Canada Subsidiaries. The beneficiaries of those guarantees may seek damages or other related relief as a result\nof our exit from Canada. Our probable loss estimate is based on the expectation that claims will be asserted against\nus and negotiated settlements will be reached, and not on any determination that it is probable we would be found\nliable were these claims to be litigated. Our estimates involve significant judgment and are based on currently available\ninformation, an assessment of the validity of certain claims and estimated payments by the Canada Subsidiaries in\nthe liquidation process, including estimated payments to the beneficiaries of the guarantees.\nIn the fourth quarter of 2015, we reached settlements with two entities that controlled guaranteed leases representing\napproximately 46 percent of the recorded accrual at that time. Under the settlement terms, these entities have\nsubrogated to us their claims against the Canada Subsidiaries. The settlement amounts were materially consistent\nwith our previously recorded accruals.\nAs part of a March 2016 settlement between the Canada Subsidiaries and all of their former landlords, we have agreed\nto subordinate a portion of our intercompany claims and make certain cash contributions to the estate in exchange for\na full release from obligations under guarantees of certain leases. This agreement remains subject to creditor and\nCourt approval. The financial impact of this agreement is materially consistent with amounts recorded in our financial\nstatements. If the agreement is not approved by the creditors and the Court, it is reasonably possible that future\nchanges to our estimates of loss and the ultimate amount paid on these claims could be material to our results of\noperations in future periods. We are not able to reasonably estimate a range of possible losses in excess of the year-\nend accrual because there would be significant factual and legal issues to be resolved if the agreement is not approved.\nAny such losses would be reported in discontinued operations.\nRecorded Assets and Liabilities\nAssets and Liabilities of Discontinued Operations\n(millions) January 30,\n2016 January 31,\n2015\nIncome tax benefit $ 77 $ 1,430\nReceivables from Canada Subsidiaries (a) 320 326\nReceivables under the debtor-in-possession credit facility — 19\nTotal assets $ 397 $ 1,775\nAccrued liabilities $ 171 296\nTotal liabilities $ 171 $ 296\n(a) Represents loans and accounts receivable from Canada Subsidiaries.\nIncome Taxes\nDuring 2015, we recognized net tax benefits of $171 million in discontinued operations, which primarily related to our\npretax exit costs and change in the estimated tax benefit from our investment losses in Canada. During 2014, we\nrecognized a tax benefit of $1,627 million in discontinued operations, which primarily related to a loss on our investment\nin Canada and includes other tax benefits resulting from certain asset write-offs and liabilities paid or accrued to\nfacilitate the liquidation. The majority of these tax benefits were received in the first quarter of 2015, and we used\nsubstantially all of the remainder in 2015 to reduce our estimated tax payments.\n43\n\n-- 48 of 84 --\n\n8. Restructuring Initiatives\nIn 2015, we initiated a series of headquarters workforce reductions intended to increase organizational effectiveness\nand provide cost savings that can be reinvested in our growth initiatives. As a result, we recorded the following charges\nwithin SG&A, the vast majority of which required cash expenditures:\nRestructuring Costs (a)\n(millions) 2015\nSeverance $ 128\nPension and other 10\nTotal $ 138\n(a) Restructuring costs are not included in our segment results.\nAccruals for restructuring costs are included in other current liabilities.\nRestructuring-Related Liabilities\n(millions) Severance Pension and\nOther Total\nRestructuring liability as of January 31, 2015 $ — $ — $ —\nCharges during period 128 10 138\nPaid or otherwise settled (125) (10) (135)\nRestructuring liability as of January 30, 2016 $ 3 $ — $ 3\n9. Credit Card Receivables Transaction\nIn March 2013, we sold our entire U.S. consumer credit card portfolio to TD Bank Group (TD) and recognized a gain\nof $391 million. This transaction was accounted for as a sale, and the receivables are no longer reported in our\nConsolidated Statements of Financial Position. Consideration received included cash of $5.7 billion, equal to the gross\n(par) value of the outstanding receivables at the time of closing, and a $225 million beneficial interest asset.\nTD underwrites, funds, and owns Target Credit Card and Target MasterCard receivables, controls risk management\npolicies, and oversees regulatory compliance. We perform account servicing and primary marketing functions. We\nearn a substantial portion of the profits generated by the Target Credit Card and Target MasterCard portfolios. We\nearned $641 million, $629 million, and $555 million of net profit-sharing income during 2015, 2014, and 2013,\nrespectively, which reduced SG&A expense.\n44\n\n-- 49 of 84 --\n\n10. Fair Value Measurements\nFair value measurements are reported in one of three levels based on the lowest level of significant input used: Level 1\n(unadjusted quoted prices in active markets); Level 2 (observable market inputs, other than quoted prices included in\nLevel 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data).\nFair Value Measurements - Recurring Basis Fair Value at\n(millions) Pricing\nCategory January 30,\n2016 January 31,\n2015\nAssets\nCash and cash equivalents\nShort-term investments Level 1 $ 3,008 $ 1,520\nOther current assets\nInterest rate swaps(a) Level 2 12 —\nPrepaid forward contracts Level 1 32 38\nBeneficial interest asset Level 3 19 43\nOther noncurrent assets\nInterest rate swaps(a) Level 2 27 65\nBeneficial interest asset Level 3 12 31\nLiabilities\nOther current liabilities\nInterest rate swaps(a) Level 2 8 —\nOther noncurrent liabilities\nInterest rate swaps(a) Level 2 — 24\n(a) See Note 21 for additional information on interest rate swaps.\nValuation Technique\nShort-term investments - Carrying value approximates fair value because maturities are less than three months.\nPrepaid forward contracts - Initially valued at transaction price. Subsequently valued by reference to the market price\nof Target common stock.\nInterest rate swaps - Valuation models are calibrated to initial trade price. Subsequent valuations are based on\nobservable inputs to the valuation model (e.g., interest rates and credit spreads).\nSignificant Financial Instruments not Measured at Fair Value (a)\n(millions)\n2015 2014\nCarrying\nAmount Fair\nValue Carrying\nAmount Fair\nValue\nDebt (b) $ 11,859 $ 13,385 $ 11,875 $ 14,089\n(a) The carrying amounts of certain other current assets, accounts payable, and certain accrued and other current liabilities approximate fair\nvalue due to their short-term nature.\n(b) The fair value of debt is generally measured using a discounted cash flow analysis based on current market interest rates for the same\nor similar types of financial instruments and would be classified as Level 2. These amounts exclude unamortized swap valuation\nadjustments and capital lease obligations.\nRefer to Note 7 for information about fair value measurements related to our discontinued Canadian operations.\n45\n\n-- 50 of 84 --\n\n11. Cash Equivalents\nCash equivalents include highly liquid investments with an original maturity of three months or less from the time of\npurchase. These investments were $3,008 million and $1,520 million at January 30, 2016 and January 31, 2015,\nrespectively. Cash equivalents also include amounts due from third-party financial institutions for credit and debit card\ntransactions. These receivables typically settle in less than five days and were $375 million and $379 million at\nJanuary 30, 2016 and January 31, 2015, respectively.\n12. Inventory\nThe majority of our inventory is accounted for under the retail inventory accounting method (RIM) using the last-in,\nfirst-out (LIFO) method. Inventory is stated at the lower of LIFO cost or market. The cost of our inventory includes the\namount we pay to our suppliers to acquire inventory, freight costs incurred in connection with the delivery of product\nto our distribution centers and stores, and import costs, reduced by vendor income and cash discounts. The majority\nof our distribution center operating costs, including compensation and benefits, are expensed in the period incurred.\nInventory is also reduced for estimated losses related to shrink and markdowns. The LIFO provision is calculated\nbased on inventory levels, markup rates, and internally measured retail price indices.\nUnder RIM, inventory cost and the resulting gross margins are calculated by applying a cost-to-retail ratio to the\ninventory retail value. RIM is an averaging method that has been widely used in the retail industry due to its practicality.\nThe use of RIM will result in inventory being valued at the lower of cost or market because permanent markdowns are\ntaken as a reduction of the retail value of inventory.\nCertain other inventory is recorded at the lower of cost or market using the cost method. The valuation allowance for\ninventory valued under a cost method was not material to our Consolidated Financial Statements as of the end of\nfiscal 2015 or 2014.\nWe routinely enter into arrangements with vendors whereby we do not purchase or pay for merchandise until the\nmerchandise is ultimately sold to a guest. Activity under this program is included in sales and cost of sales in the\nConsolidated Statements of Operations, but the merchandise received under the program is not included in inventory\nin our Consolidated Statements of Financial Position because of the virtually simultaneous purchase and sale of this\ninventory. Sales made under these arrangements totaled $2,261 million, $2,040 million, and $1,833 million in 2015,\n2014, and 2013, respectively.\n13. Other Current Assets\nOther Current Assets\n(millions) January 30,\n2016 January 31,\n2015\nIncome tax and other receivables $ 352 $ 426\nVendor income receivable 379 426\nPrepaid expenses 214 231\nPharmacy-related receivables(a) 48 274\nPharmacy and clinic assets held for sale (b) — 510\nOther 168 207\nTotal $ 1,161 $ 2,074\n(a) We did not sell outstanding pharmacy-related receivables as part of the pharmacies and clinics transaction. See Note 6 for more\ninformation on the pharmacies and clinics transaction.\n(b) See Note 6 for additional information relating to the pharmacy and clinic assets held for sale.\n46\n\n-- 51 of 84 --\n\n14. Property and Equipment\nProperty and equipment is depreciated using the straight-line method over estimated useful lives or lease terms if\nshorter. We amortize leasehold improvements purchased after the beginning of the initial lease term over the shorter\nof the assets' useful lives or a term that includes the original lease term, plus any renewals that are reasonably assured\nat the date the leasehold improvements are acquired. Depreciation and capital lease amortization expense for 2015,\n2014, and 2013 was $2,191 million, $2,108 million, and $1,975 million, respectively. For income tax purposes,\naccelerated depreciation methods are generally used. Repair and maintenance costs are expensed as incurred. Facility\npre-opening costs, including supplies and payroll, are expensed as incurred.\nEstimated Useful Lives Life (Years)\nBuildings and improvements 8-39\nFixtures and equipment 2-15\nComputer hardware and software 2-7\nLong-lived assets are reviewed for impairment when events or changes in circumstances, such as a decision to relocate\nor close a store or make significant software changes, indicate that the asset's carrying value may not be recoverable.\nFor asset groups classified as held for sale, the carrying value is compared to the fair value less cost to sell. We\nestimate fair value by obtaining market appraisals, valuations from third party brokers, or other valuation techniques.\nImpairments (a)\n(millions) 2015 2014 2013\nImpairments included in segment SG&A $ 50 $ 108 $ 58\nUnallocated impairments (b) 4 16 19\nTotal impairments $ 54 $ 124 $ 77\n(a) Substantially all of the impairments are recorded in SG&A expense on the Consolidated Statements of Operations, primarily from completed\nor planned store closures and software changes.\n(b) For 2015, represents long-lived asset impairments from our decision to wind down certain noncore operations. For 2014 and 2013,\nrepresents impairments of undeveloped land.\n15. Other Noncurrent Assets\nOther Noncurrent Assets\n(millions) January 30,\n2016 January 31,\n2015\nGoodwill and intangible assets $ 277 $ 298\nCompany-owned life insurance investments (a) 308 322\nPension asset 66 1\nInterest rate swaps (b) 27 65\nOther 162 193\nTotal $ 840 $ 879\n(a) Company-owned life insurance policies on approximately 4,000 team members who have been designated highly compensated under\nthe Internal Revenue Code and have given their consent to be insured. Amounts are presented net of loans that are secured by some\nof these policies.\n(b) See Notes 10 and 21 for additional information relating to our interest rate swaps.\n16. Goodwill and Intangible Assets\nGoodwill totaled $133 million and $147 million at January 30, 2016 and January 31, 2015, respectively. During 2015,\nwe announced our decision to wind down certain noncore operations. As a result, we recorded a $35 million pretax\nimpairment loss, which included approximately $23 million of intangible assets and $12 million of goodwill. These costs\nwere included in SG&A on our Consolidated Statements of Operations, but were not included in our segment results.\nNo impairments were recorded in 2015, 2014 or 2013 as a result of the annual goodwill impairment tests performed.\n47\n\n-- 52 of 84 --\n\nIntangible Assets Leasehold\nAcquisition Costs Other (a) Total\n(millions) January 30,\n2016 January 31,\n2015 January 30,\n2016 January 31,\n2015 January 30,\n2016 January 31,\n2015\nGross asset $ 211 $ 224 $ 88 $ 181 $ 299 $ 405\nAccumulated amortization (127) (133) (27) (117) (154) (250)\nNet intangible assets $ 84 $ 91 $ 61 $ 64 $ 145 $ 155\n(a) Other intangible assets relate primarily to trademarks. We sold $91 million of gross intangible assets with accumulated depreciation of\n$88 million in connection with the sale of our pharmacy and clinics businesses. See Note 6 for additional information.\nWe use the straight-line method to amortize leasehold acquisition costs primarily over 9 to 39 years and other definite-\nlived intangibles over 3 to 15 years. The weighted average life of leasehold acquisition costs and other intangible\nassets was 27 years and 8 years, respectively, at January 30, 2016. Amortization expense was $23 million, $22 million,\nand $20 million in 2015, 2014, and 2013, respectively.\nEstimated Amortization Expense\n(millions) 2016 2017 2018 2019 2020\nAmortization expense $ 18 $ 16 $ 12 $ 11 $ 11\n17. Accounts Payable\nAt January 30, 2016 and January 31, 2015, we reclassified book overdrafts of $534 million and $682 million,\nrespectively, to accounts payable and $99 million and $82 million, respectively, to accrued and other current liabilities.\n18. Accrued and Other Current Liabilities\nAccrued and Other Current Liabilities\n(millions) January 30,\n2016 January 31,\n2015\nWages and benefits $ 884 $ 951\nGift card liability, net of estimated breakage 644 612\nReal estate, sales, and other taxes payable 574 550\nIncome tax payable 502 26\nDividends payable 337 333\nStraight-line rent accrual (a) 262 255\nWorkers' compensation and general liability (b) 146 153\nInterest payable 76 76\nProject costs accrual 73 69\nOther 738 758\nTotal $ 4,236 $ 3,783\n(a) Straight-line rent accrual represents the amount of rent expense recorded that exceeds cash payments remitted in connection with\noperating leases.\n(b) We retain a substantial portion of the risk related to general liability and workers' compensation claims. Liabilities associated with these\nlosses include estimates of both claims filed and losses incurred but not yet reported. We estimate our ultimate cost based on analysis\nof historical data and actuarial estimates. General liability and workers' compensation liabilities are recorded at our estimate of their net\npresent value.\n48\n\n-- 53 of 84 --\n\n19. Commitments and Contingencies\nData Breach\nAs previously reported, in the fourth quarter of 2013, we experienced a data breach in which an intruder stole certain\npayment card and other guest information from our network (the Data Breach) which resulted in a number of claims\nagainst us, several of which have been finally or preliminarily resolved as follows:\nPayment Card Network Claims. Each of the four major payment card networks made a written claim against us\nregarding the Data Breach. During 2015 we entered into settlement agreements with all four networks.\nConsumer Class Action. A class action suit was asserted on behalf of a class of guests whose information was\ncompromised in the Data Breach. This action was settled and received Court approval during 2015, but is being\nappealed by several objecting parties. We believe the settlement terms will be maintained on appeal.\nFinancial Institutions Class Action. A class action was asserted on behalf of financial institution issuers of credit\ncards impacted by the Data Breach. This action was settled and received preliminary Court approval in the fourth\nquarter of 2015. A hearing for final Court approval of the settlement is scheduled for the second quarter of our\nfiscal 2016.\nActions related to the Data Breach that remain pending are: (1) one action previously filed in Canada; (2) several\nputative class action suits brought on behalf of shareholders; and (3) ongoing investigations by State Attorneys General\nand the Federal Trade Commission.\nOur accrual for estimated probable losses is based on actual settlements reached to date and the expectation of\nnegotiated settlements in the pending actions. We have not based our accrual on any determination that it is probable\nwe would be found liable for the losses we have accrued were these claims to be litigated. While our estimates may\nchange as new information becomes available, we do not believe any adjustments will be material.\nExpenses Incurred and Amounts Accrued\nData Breach Balance Sheet Rollforward\n(millions) Liabilities Insurance\nReceivable\nBalance at February 1, 2014 $ 61 $ 44\nExpenses incurred/insurance receivable recorded (a) 191 46\nPayments made/received (81) (30)\nBalance at January 31, 2015 $ 171 $ 60\nExpenses incurred/insurance receivable recorded (a) 39 —\nPayments made/received (130) (40)\nBalance at January 30, 2016 $ 80 $ 20\n(a) Includes expenditures and accruals for Data Breach-related costs and expected insurance recoveries as discussed below.\nWe recorded $39 million of pretax Data Breach-related expenses during 2015. Along with legal and other professional\nservices, expenses included an adjustment to the accrual based on refined estimates of our probable exposure. We\nrecorded $191 million of Data Breach-related expenses, partially offset by expected insurance proceeds of $46 million,\nfor net expenses of $145 million during 2014. These expenses were included in our Consolidated Statements of\nOperations as SG&A, but were not part of segment results.\nSince the Data Breach, we have incurred $291 million of cumulative expenses, partially offset by expected insurance\nrecoveries of $90 million, for net cumulative expenses of $201 million.\n49\n\n-- 54 of 84 --\n\nCanada Exit\nSee Note 7 for information related to Canada exit-related contingent liabilities.\nOther Contingencies\nWe are exposed to other claims and litigation arising in the ordinary course of business and use various methods to\nresolve these matters in a manner that we believe serves the best interest of our shareholders and other constituents.\nWe believe the recorded reserves in our consolidated financial statements are adequate in light of the probable and\nestimable liabilities. We do not believe that any of these identified claims or litigation will be material to our results of\noperations, cash flows, or financial condition.\nCommitments\nPurchase obligations, which include all legally binding contracts such as firm commitments for inventory purchases,\nmerchandise royalties, equipment purchases, marketing-related contracts, software acquisition/license commitments,\nand service contracts, were $1,950 million and $2,411 million at January 30, 2016 and January 31, 2015, respectively.\nThese purchase obligations are primarily due within three years and recorded as liabilities when inventory is received.\nWe issue inventory purchase orders, which represent authorizations to purchase that are cancelable by their terms.\nWe do not consider purchase orders to be firm inventory commitments. If we choose to cancel a purchase order, we\nmay be obligated to reimburse the vendor for unrecoverable outlays incurred prior to cancellation. Real estate\nobligations, which include commitments for the purchase, construction or remodeling of real estate and facilities, were\n$279 million and $243 million at January 30, 2016 and January 31, 2015, respectively. These real estate obligations\nare primarily due within one year, a portion of which are recorded as liabilities.\nWe issue letters of credit and surety bonds in the ordinary course of business. Trade letters of credit totaled $1,510\nmillion and $1,447 million at January 30, 2016 and January 31, 2015, respectively, a portion of which are reflected in\naccounts payable. Standby letters of credit and surety bonds, relating primarily to insurance and regulatory\nrequirements, totaled $438 million and $459 million at January 30, 2016 and January 31, 2015, respectively.\n20. Notes Payable and Long-Term Debt\nIn April 2015, the FASB issued ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs. ASU 2015-03\namended ASC 835-30 Interest-Imputation of Debt Interest, to simplify the presentation of deferred issuance costs by\nrequiring they be classified as a direct reduction of the debt balances. We have retrospectively adopted this ASU for\nthe year ended January 30, 2016. As a result, $63 million and $71 million of deferred issuance costs have been\nreclassified from Other noncurrent assets to Long-term debt and other borrowings in our Consolidated Statements of\nFinancial Position as of January 30, 2016 and January 31, 2015, respectively.\nAt January 30, 2016, the carrying value and maturities of our debt portfolio were as follows:\nDebt Maturities January 30, 2016\n(dollars in millions) Rate (a) Balance\nDue 2016-2020 4.8% $ 5,268\nDue 2021-2025 3.5 2,104\nDue 2026-2030 6.7 244\nDue 2031-2035 6.5 762\nDue 2036-2040 6.7 2,010\nDue 2041-2045 4.0 1,471\nTotal notes and debentures 4.9 11,859\nSwap valuation adjustments 42\nCapital lease obligations 859\nLess: Amounts due within one year (815)\nLong-term debt $ 11,945\n(a) Reflects the weighted average stated interest rate as of year-end.\n50\n\n-- 55 of 84 --\n\nRequired Principal Payments\n(millions) 2016 2017 2018 2019 2020\nTotal required principal payments $ 751 $ 2,251 $ 201 $ 1,001 $ 1,094\nIn June 2014, we issued $1 billion of unsecured fixed rate debt at 2.3 percent that matures in June 2019 and $1 billion\nof unsecured fixed rate debt at 3.5 percent that matures in July 2024. We used proceeds from these issuances to\nrepurchase $725 million of debt before its maturity at a market value of $1 billion, and for general corporate purposes\nincluding the payment of $1 billion of debt maturities. We recognized a loss of $285 million on the early retirement,\nwhich was recorded in net interest expense in our Consolidated Statements of Operations.\nWe periodically obtain short-term financing under our commercial paper program, a form of notes payable.\nCommercial Paper\n(dollars in millions) 2015 2014 2013\nMaximum daily amount outstanding during the year $ — $ 590 $ 1,465\nAverage amount outstanding during the year — 129 408\nAmount outstanding at year-end — — 80\nWeighted average interest rate —% 0.11% 0.13%\nNo balances were outstanding at any time during 2015 or 2014 under our $2.25 billion revolving credit facility that\nexpires in October 2018.\nSubstantially all of our outstanding borrowings are senior, unsecured obligations. Most of our long-term debt obligations\ncontain covenants related to secured debt levels. In addition to a secured debt level covenant, our credit facility also\ncontains a debt leverage covenant. We are, and expect to remain, in compliance with these covenants, which have\nno practical effect on our ability to pay dividends.\n21. Derivative Financial Instruments\nOur derivative instruments primarily consist of interest rate swaps, which are used to mitigate interest rate risk. As a\nresult of our use of derivative instruments, we have counterparty credit exposure to large global financial institutions.\nWe monitor this concentration of counterparty credit risk on an ongoing basis. See Note 10 for a description of the fair\nvalue measurement of our derivative instruments and their classification on the Consolidated Statements of Financial\nPosition.\nAs of January 30, 2016 and January 31, 2015, three interest rate swaps with notional amounts totaling $1,250 million\nwere designated as fair value hedges. No ineffectiveness was recognized in 2015 or 2014.\nOutstanding Interest Rate Swap Summary January 30, 2016\nDesignated De-Designated\n(dollars in millions) Pay Floating Pay Floating Pay Fixed\nWeighted average rate:\nPay (a) 1-month LIBOR 3.8%\nReceive 1.7% 5.7% 1-month LIBOR\nWeighted average maturity 3.1 years 0.5 years 0.5 years\nNotional $ 1,250 $ 500 $ 500\n(a) There are three designated swaps at January 30, 2016. Two swaps have floating pay rates equal to 3-month LIBOR and one swap\nhas a floating pay rate equal to 1-month LIBOR.\n51\n\n-- 56 of 84 --\n\nClassification and\nFair Value\n(millions)\nAssets Liabilities\nClassification Jan 30,\n2016 Jan 31,\n2015 Classification Jan 30,\n2016 Jan 31,\n2015\nDesignated: Other noncurrent assets $ 27 $ 27 N/A $ — $ —\nDe-designated: Other current assets 12 — Other current liabilities 8 —\nOther noncurrent assets — 38 Other noncurrent liabilities — 24\nTotal $ 39 $ 65 $ 8 $ 24\nPeriodic payments, valuation adjustments, and amortization of gains or losses on our derivative contracts had the\nfollowing effect on our Consolidated Statements of Operations:\nDerivative Contracts – Effect on Results of Operations\n(millions)\nType of Contract Classification of (Income)/Expense 2015 2014 2013\nInterest rate swaps Net interest expense $ (36) $ (32) $ (29)\nThe amount remaining on unamortized hedged debt valuation gains from terminated or de-designated interest rate\nswaps that will be amortized into earnings over the remaining lives of the underlying debt totaled $15 million, $34\nmillion, and $52 million, at the end of 2015, 2014, and 2013, respectively.\n22. Leases\nWe lease certain retail locations, warehouses, distribution centers, office space, land, equipment, and software. Assets\nheld under capital leases are included in property and equipment. Operating lease rentals are expensed on a straight-\nline basis over the life of the lease beginning on the date we take possession of the property. At lease inception, we\ndetermine the lease term by assuming the exercise of those renewal options that are reasonably assured. The exercise\nof lease renewal options is at our sole discretion. The lease term is used to determine whether a lease is capital or\noperating and is used to calculate straight-line rent expense. Additionally, the depreciable life of leased assets and\nleasehold improvements is limited by the expected lease term.\nRent expense is included in SG&A expenses. Some of our lease agreements include rental payments based on a\npercentage of retail sales over contractual levels and others include rental payments adjusted periodically for inflation.\nCertain leases require us to pay real estate taxes, insurance, maintenance, and other operating expenses associated\nwith the leased premises. These expenses are classified in SG&A, consistent with similar costs for owned locations.\nRent income received from tenants who rent properties is recorded as a reduction to SG&A expense.\nRent Expense\n(millions) 2015 2014 2013\nProperty, equipment, and software $ 198 $ 195 $ 212\nRent income (a) (16) (9) (8)\nTotal rent expense $ 182 $ 186 $ 204\n(a) Includes rental income from CVS. See Note 6 for further discussion.\nTotal capital lease interest expense was $42 million, $38 million, and $39 million in 2015, 2014, and 2013, respectively,\nand is included within net interest expense on the Consolidated Statements of Operations.\nMost leases include one or more options to renew, with renewal terms that can extend the lease term from one to 50\nyears or more. Certain leases also include options to purchase the leased property. Assets recorded under capital\nleases as of January 30, 2016 and January 31, 2015 were $735 million and $711 million, respectively. These assets\nare recorded net of accumulated amortization of $321 million and $242 million as of January 30, 2016 and January\n31, 2015, respectively.\n52\n\n-- 57 of 84 --\n\nFuture Minimum Lease Payments\n(millions) Operating Leases (a) Capital Leases (b) Rent Income Total\n2016 $ 186 $ 130 $ (21) $ 295\n2017 183 73 (19) 237\n2018 178 71 (18) 231\n2019 167 70 (17) 220\n2020 157 69 (17) 209\nAfter 2020 2,842 1,277 (286) 3,833\nTotal future minimum lease payments $ 3,713 $ 1,690 $ (378) $ 5,025\nLess: Interest (c) 831\nPresent value of future minimum capital\nlease payments (d) $ 859\nNote: Minimum lease payments exclude payments to landlords for real estate taxes and common area maintenance. Minimum lease payments\nalso exclude payments to landlords for fixed purchase options which we believe are reasonably assured of being exercised.\n(a) Total contractual lease payments include $1,995 million related to options to extend lease terms that are reasonably assured of being\nexercised and also includes $90 million of legally binding minimum lease payments for stores that are expected to open in 2016 or later.\n(b) Capital lease payments include $614 million related to options to extend lease terms that are reasonably assured of being exercised and\nalso includes $311 million of legally binding minimum lease payments for stores that are expected to open in 2016 or later.\n(c) Calculated using the interest rate at inception for each lease.\n(d) Includes the current portion of $59 million.\n23. Income Taxes\nEarnings from continuing operations before income taxes were $4,923 million, $3,653 million, and $4,121 million during\n2015, 2014, and 2013, including $373 million, $261 million, and $196 million earned by our foreign entities subject to\ntax outside of the U.S.\nTax Rate Reconciliation – Continuing Operations 2015 2014 2013\nFederal statutory rate 35.0% 35.0% 35.0%\nState income taxes, net of the federal tax benefit 3.0 2.2 2.4\nInternational (2.3) (2.3) (1.2)\nChange in valuation allowance (2.3) — —\nOther (0.9) (1.9) (1.6)\nEffective tax rate 32.5% 33.0% 34.6%\nProvision for Income Taxes\n(millions) 2015 2014 2013\nCurrent:\nFederal $ 1,652 $ 1,074 $ 1,206\nState 265 116 150\nInternational 7 7 13\nTotal current 1,924 1,197 1,369\nDeferred:\nFederal (272) (2) 56\nState (50) 10 —\nInternational — (1) 2\nTotal deferred (322) 7 58\nTotal provision $ 1,602 $ 1,204 $ 1,427\n53\n\n-- 58 of 84 --\n\nNet Deferred Tax Asset/(Liability)\n(millions) January 30,\n2016 January 31,\n2015\nGross deferred tax assets:\nAccrued and deferred compensation $ 476 $ 531\nAccruals and reserves not currently deductible 323 316\nSelf-insured benefits 199 223\nPrepaid store-in-store lease income 270 —\nOther 90 176\nTotal gross deferred tax assets 1,358 1,246\nGross deferred tax liabilities:\nProperty and equipment (1,790) (1,946)\nInventory (190) (307)\nOther (168) (123)\nTotal gross deferred tax liabilities (2,148) (2,376)\nTotal net deferred tax liability $ (790) $ (1,130)\nIn 2014, we incurred a tax effected capital loss of $112 million within discontinued operations from our exit from Canada.\nAt that time, we neither had nor anticipated sufficient capital gains to absorb this capital loss, and established a full\nvaluation allowance within discontinued operations. In 2015, we released the entire $112 million valuation allowance\ndue to a capital gain resulting from the sale of our pharmacy and clinic businesses. The benefit of the valuation\nallowance release is recorded in continuing operations.\nDeferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences\nbetween financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred\ntax assets and liabilities are measured using enacted income tax rates in effect for the year the temporary differences\nare expected to be recovered or settled. Tax rate changes affecting deferred tax assets and liabilities are recognized\nin income at the enactment date.\nWe have not recorded deferred taxes when earnings from foreign operations are considered to be indefinitely invested\noutside the U.S. These accumulated net earnings relate to certain ongoing operations and were $685 million at\nJanuary 30, 2016 and $328 million at January 31, 2015. It is not practicable to determine the income tax liability that\nwould be payable if such earnings were repatriated.\nIn November 2015, the FASB issued ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes. ASU 2015-17\namended ASC 740, Income Taxes, to simplify the presentation of deferred taxes by requiring deferred tax assets and\nliabilities be classified as noncurrent on the balance sheet. We have retrospectively adopted this ASU for the year\nended January 30, 2016. As a result, $289 million and $188 million of current deferred tax assets from continuing\noperations have been reclassified from other current assets to deferred income taxes in our Consolidated Statements\nof Financial Position as of January 30, 2016 and January 31, 2015, respectively, and $74 million and $274 million of\ncurrent deferred tax assets from discontinued operations have been reclassified from assets of discontinued operations\nto noncurrent assets of discontinued operations, respectively.\nWe file a U.S. federal income tax return and income tax returns in various states and foreign jurisdictions. The U.S.\nInternal Revenue Service has completed exams on the U.S. federal income tax returns for years 2012 and prior. With\nfew exceptions, we are no longer subject to state and local or non-U.S. income tax examinations by tax authorities for\nyears before 2003.\n54\n\n-- 59 of 84 --\n\nReconciliation of Liability for Unrecognized Tax Benefits\n(millions) 2015 2014 2013\nBalance at beginning of period $ 155 $ 183 $ 216\nAdditions based on tax positions related to the current year 10 10 15\nAdditions for tax positions of prior years 14 17 28\nReductions for tax positions of prior years (26) (42) (57)\nSettlements — (13) (19)\nBalance at end of period $ 153 $ 155 $ 183\nIf we were to prevail on all unrecognized tax benefits recorded, $99 million of the $153 million reserve would benefit\nthe effective tax rate. In addition, the reversal of accrued penalties and interest would also benefit the effective tax\nrate. Interest and penalties associated with unrecognized tax benefits are recorded within income tax expense. During\nthe years ended January 30, 2016, January 31, 2015, and February 1, 2014, we recorded a net expense/(benefit)\nfrom accrued penalties and interest of $5 million, $(12) million, and $(1) million, respectively. As of January 30, 2016,\nJanuary 31, 2015, and February 1, 2014 total accrued interest and penalties were $44 million, $40 million, and $58\nmillion, respectively.\nIt is reasonably possible that the amount of the unrecognized tax benefits with respect to our other unrecognized tax\npositions will increase or decrease during the next twelve months; however, an estimate of the amount or range of the\nchange cannot be made at this time.\n24. Other Noncurrent Liabilities\nOther Noncurrent Liabilities\n(millions) January 30,\n2016 January 31,\n2015\nDeferred income liability (a) $ 660 $ —\nDeferred compensation 454 507\nWorkers' compensation and general liability (b) 353 413\nIncome tax 122 128\nPension and postretirement health care benefits 54 151\nOther 254 253\nTotal $ 1,897 $ 1,452\n(a) Represents deferred income related to the pharmacies and clinics transaction. See Note 6 for more information.\n(b) See footnote (b) to the Accrued and Other Current Liabilities table in Note 18 for additional detail.\n25. Share Repurchase\nIn 2015, our Board of Directors authorized a $5 billion expansion of our existing share repurchase program to $10\nbillion. Under this program, we have repurchased 94.6 million shares of common stock through January 30, 2016, at\nan average price of $69.57, for a total investment of $6.6 billion.\nShare Repurchases\n(millions, except per share data) 2015 2014 2013\nTotal number of shares purchased (a) 44.7 0.8 21.9\nAverage price paid per share $ 77.07 $ 54.07 $ 67.41\nTotal investment $ 3,441 $ 41 $ 1,474\n(a) Includes 0.1 million, 0.8 million, and 0.2 million shares delivered upon the non-cash settlement of prepaid contracts in 2015, 2014, and\n2013, respectively. These contracts had an original cash investment of $3 million, $41 million, and $14 million, respectively, and an\naggregate market value of $7 million, $46 million, and $17 million. These contracts are among the investment vehicles used to reduce\nour economic exposure related to our nonqualified deferred compensation plans. Note 27 provides the details of our positions in prepaid\nforward contracts.\n55\n\n-- 60 of 84 --\n\n26. Share-Based Compensation\nWe maintain a long-term incentive plan (the Plan) for key team members and non-employee members of our Board\nof Directors. The Plan allows us to grant equity-based compensation awards, including stock options, stock appreciation\nrights, performance share units, restricted stock units, restricted stock awards, or a combination of awards (collectively,\nshare-based awards). The number of unissued common shares reserved for future grants under the Plan was 31.5\nmillion and 14.0 million at January 30, 2016 and January 31, 2015, respectively.\nCompensation expense associated with share-based awards is recognized on a straight-line basis over the shorter\nof the vesting period or the minimum required service period. Share-based compensation expense for continuing\noperations recognized in the Consolidated Statements of Operations was $118 million, $73 million, and $106 million\nin 2015, 2014, and 2013, respectively. The related income tax benefit was $46 million, $29 million, and $41 million in\n2015, 2014, and 2013, respectively.\nShare information includes all outstanding awards for continuing and discontinued operations.\nRestricted Stock\nWe issue restricted stock units and performance-based restricted stock units generally with three-year cliff vesting\nfrom the grant date (collectively restricted stock) to certain team members. The final number of shares issued under\nperformance-based restricted stock units will be based on our total shareholder return relative to a retail peer group\nover a three-year performance period. We also regularly issue restricted stock units to our Board of Directors, which\nvest quarterly over a one-year period and are settled in shares of Target common stock upon departure from the Board.\nThe fair value for restricted stock is calculated based on the stock price on the date of grant, incorporating an analysis\nof the total shareholder return performance measure where applicable. The weighted average grant date fair value\nfor restricted stock was $73.76, $70.50, and $62.76 in 2015, 2014, and 2013, respectively.\nRestricted Stock Activity Total Nonvested Units\nRestricted\nStock (a) Grant Date\nFair Value (b)\nJanuary 31, 2015 4,713 $ 65.11\nGranted 1,677 73.76\nForfeited (704) 65.87\nVested (1,460) 61.51\nJanuary 30, 2016 4,226 $ 69.49\n(a) Represents the number of shares of restricted stock, in thousands. For performance-based restricted stock units, assumes attainment\nof maximum payout rates as set forth in the performance criteria. Applying actual or expected payout rates, the number of outstanding\nrestricted stock units and performance-based restricted stock units at January 30, 2016 was 3,471 thousand.\n(b) Weighted average per unit.\nThe expense recognized each period is partially dependent upon our estimate of the number of shares that will ultimately\nbe issued. At January 30, 2016, there was $149 million of total unrecognized compensation expense related to restricted\nstock, which is expected to be recognized over a weighted average period of 1.3 years. The fair value of restricted\nstock vested and converted to shares of Target common stock was $90 million, $40 million, and $28 million in 2015,\n2014, and 2013, respectively.\nPerformance Share Units\nWe issue performance share units to certain team members that represent shares potentially issuable in the future.\nIssuance is based upon our performance relative to a retail peer group over a three-year performance period on certain\nmeasures including domestic market share change, return on invested capital, and EPS growth. In 2015 we also issued\nstrategic alignment performance share units to certain team members. Issuance is based on performance against\nfour strategic metrics identified as vital to Target's success, including total sales growth, digital channel sales growth,\nEBIT growth, and return on invested capital, over a two-year performance period. The fair value of performance share\nunits is calculated based on the stock price on the date of grant. The weighted average grant date fair value for\nperformance share units was $74.19, $73.12, and $57.22 in 2015, 2014, and 2013, respectively.\n56\n\n-- 61 of 84 --\n\nPerformance Share Unit Activity Total Nonvested Units\nPerformance\nShare Units (a) Grant Date\nFair Value (b)\nJanuary 31, 2015 3,600 $ 63.16\nGranted 2,190 74.19\nForfeited (1,728) 60.48\nVested (39) 55.58\nJanuary 30, 2016 4,023 $ 70.70\n(a) Represents the number of performance share units, in thousands. Assumes attainment of maximum payout rates as set forth in the\nperformance criteria. Applying actual or expected payout rates, the number of outstanding units at January 30, 2016 was 1,812 thousand.\n(b) Weighted average per unit.\nThe expense recognized each period is dependent upon our estimate of the number of shares that will ultimately be\nissued. Future compensation expense for unvested awards could reach a maximum of $230 million assuming payout\nof all unvested awards. The unrecognized expense is expected to be recognized over a weighted average period of\n2.0 years. The fair value of performance share units vested and converted was $2 million in 2015, $11 million in 2014,\nand $14 million in 2013.\nStock Options\nThrough 2013, we granted nonqualified stock options to certain team members that generally vest and become\nexercisable annually in equal amounts over a four-year period and expire 10 years after the grant date. We previously\ngranted options with a ten-year term to the non-employee members of our Board of Directors that vest immediately,\nbut are not exercisable until one year after the grant date.\nStock Option Activity Stock Options\nTotal Outstanding Exercisable\nNumber of\nOptions (a) Exercise\nPrice (b) Intrinsic\nValue (c) Number of\nOptions (a) Exercise\nPrice (b) Intrinsic\nValue (c)\nJanuary 31, 2015 16,725 $ 53.04 $ 344 12,843 $ 52.02 $ 277\nGranted — —\nExpired/forfeited (404) 55.77\nExercised/issued (5,821) 52.07\nJanuary 30, 2016 10,500 $ 53.47 $ 199 9,405 $ 52.57 $ 187\n(a) In thousands.\n(b) Weighted average per share.\n(c) Represents stock price appreciation subsequent to the grant date, in millions.\nStock Option Exercises\n(millions) 2015 2014 2013\nCash received for exercise price $ 303 $ 374 $ 422\nIntrinsic value 159 143 197\nIncome tax benefit 77 41 77\nThe weighted average remaining life of exercisable options is 4.6 years, and the weighted average remaining life of\nall outstanding options is 4.7 years. The total fair value of options vested was $23 million, $37 million, and $53 million\nin 2015, 2014, and 2013, respectively.\n57\n\n-- 62 of 84 --\n\n27. Defined Contribution Plans\nTeam members who meet eligibility requirements can participate in a defined contribution 401(k) plan by investing up\nto 80 percent of their compensation, as limited by statute or regulation. Generally, we match 100 percent of each team\nmember's contribution up to 5 percent of total compensation. Company match contributions are made to funds\ndesignated by the participant.\nIn addition, we maintain a nonqualified, unfunded deferred compensation plan for approximately 2,500 current and\nretired team members whose participation in our 401(k) plan is limited by statute or regulation. These team members\nchoose from a menu of crediting rate alternatives that are the same as the investment choices in our 401(k) plan,\nincluding Target common stock. We credit an additional 2 percent per year to the accounts of all active participants,\nexcluding executive officers, in part to recognize the risks inherent to their participation in this plan. We also maintain\na nonqualified, unfunded deferred compensation plan that was frozen during 1996, covering approximately 55\nparticipants, all of whom are no longer at Target. In this plan, deferred compensation earns returns tied to market levels\nof interest rates plus an additional 6 percent return, with a minimum of 12 percent and a maximum of 20 percent, as\ndetermined by the plan's terms. Our total liability under these plans was $497 million and $539 million at January 30,\n2016 and January 31, 2015, respectively.\nWe mitigate some of our risk of offering the nonqualified plans through investing in vehicles, including company-owned\nlife insurance and prepaid forward contracts in our own common stock, that offset a substantial portion of our economic\nexposure to the returns of these plans. These investment vehicles are general corporate assets and are marked to\nmarket with the related gains and losses recognized in the Consolidated Statements of Operations in the period they\noccur.\nThere was no change in fair value for contracts indexed to our own common stock recognized in earnings during 2015.\nThe total change in fair value for contracts indexed to our own common stock recognized in earnings was pretax\nincome/(loss) of $11 million and $(5) million in 2014 and 2013, respectively. During 2015 and 2014, we made no\ninvestments in prepaid forward contracts in our own common stock. Adjusting our position in these investment vehicles\nmay involve repurchasing shares of Target common stock when settling the forward contracts as described in Note 25.\nThe settlement dates of these instruments are regularly renegotiated with the counterparty.\nPrepaid Forward Contracts on Target\nCommon Stock\n(millions, except per share data) Number of\nShares\nContractual\nPrice Paid per\nShare Contractual\nFair Value Total Cash\nInvestment\nJanuary 31, 2015 0.5 $ 41.11 $ 38 $ 21\nJanuary 30, 2016 0.4 $ 41.11 $ 32 $ 18\nPlan Expenses\n(millions) 2015 2014 2013\n401(k) plan matching contributions expense $ 224 $ 220 $ 229\nNonqualified deferred compensation plans\nBenefits expense (a) 5 52 41\nRelated investment expense (income) (b) 15 (45) (23)\nNonqualified plan net expense $ 20 $ 7 $ 18\n(a) Includes market-performance credits on accumulated participant account balances and annual crediting for additional benefits earned\nduring the year.\n(b) Includes investment returns and life-insurance proceeds received from company-owned life insurance policies and other investments\nused to economically hedge the cost of these plans.\n58\n\n-- 63 of 84 --\n\n28. Pension and Postretirement Health Care Plans\nWe have qualified defined benefit pension plans covering team members who meet age and service requirements,\nincluding date of hire in certain circumstances. Effective January 1, 2009, our U.S. qualified defined benefit pension\nplan was closed to new participants, with limited exceptions. We also have unfunded nonqualified pension plans for\nteam members with qualified plan compensation restrictions. Eligibility for, and the level of, these benefits varies\ndepending on each team members' date of hire, length of service and/or team member compensation. Effective April\n1, 2016, we will discontinue the postretirement health care benefits that were offered to team members upon early\nretirement and prior to Medicare eligibility. This decision resulted in a $58 million reduction in the projected\npostretirement health care benefit obligation and a $43 million curtailment gain recorded in SG&A during 2015. As of\nJanuary 30, 2016, we have extinguished the remaining benefit obligation related to this plan.\nChange in Projected Benefit Obligation Qualified Plans Nonqualified Plans\n(millions) 2015 2014 2015 2014\nBenefit obligation at beginning of period $ 3,844 $ 3,173 $ 43 $ 35\nService cost 108 111 1 1\nInterest cost 152 148 2 1\nActuarial (gain)/loss (400) 556 (4) 9\nParticipant contributions 6 3 — —\nBenefits paid (155) (147) (3) (3)\nPlan amendments 3 — — —\nBenefit obligation at end of period $ 3,558 $ 3,844 $ 39 $ 43\nChange in Plan Assets Qualified Plans Nonqualified Plans\n(millions) 2015 2014 2015 2014\nFair value of plan assets at beginning of period $ 3,784 $ 3,267 $ — $ —\nActual return on plan assets (231) 507 — —\nEmployer contributions 203 154 3 3\nParticipant contributions 6 3 — —\nBenefits paid (155) (147) (3) (3)\nFair value of plan assets at end of period 3,607 3,784 — —\nBenefit obligation at end of period 3,558 3,844 39 43\nFunded/(underfunded) status $ 49 $ (60) $ (39) $ (43)\nRecognition of Funded/(Underfunded) Status Qualified Plans Nonqualified Plans\n(millions) 2015 2014 2015 2014\nOther noncurrent assets $ 66 $ — $ — $ —\nAccrued and other current liabilities (1) (1) (6) (4)\nOther noncurrent liabilities (16) (59) (33) (39)\nNet amounts recognized $ 49 $ (60) $ (39) $ (43)\nAmounts in Accumulated Other Comprehensive Income\n(millions) 2015 2014\nNet actuarial loss $ 1,022 $ 1,018\nPrior service credits (57) (69)\nAmounts in accumulated other comprehensive income $ 965 $ 949\n59\n\n-- 64 of 84 --\n\nChange in Accumulated Other Comprehensive Income\n(millions) Pretax Net of Tax\nFebruary 1, 2014 $ 712 $ 430\nNet actuarial loss 291 176\nAmortization of net actuarial losses (65) (40)\nAmortization of prior service costs and transition 11 7\nJanuary 31, 2015 $ 949 $ 573\nNet actuarial loss 87 53\nAmortization of net actuarial losses (82) (50)\nAmortization of prior service costs and transition 11 7\nJanuary 30, 2016 $ 965 $ 583\nExpected Amortization of Amounts in Accumulated Other Comprehensive Income\n(millions) Pretax Net of Tax\nNet actuarial loss $ 46 $ 28\nPrior service credits (11) (7)\nTotal amortization expense $ 35 $ 21\nNet Pension Benefits Expense\n(millions) 2015 2014 2013\nService cost benefits earned during the period $ 109 $ 112 $ 118\nInterest cost on projected benefit obligation 154 149 137\nExpected return on assets (260) (233) (235)\nAmortization of losses 82 65 103\nAmortization of prior service cost (11) (11) (11)\nSettlement and special termination charges 4 — 3\nTotal $ 78 $ 82 $ 115\nPrior service cost amortization is determined using the straight-line method over the average remaining service period\nof team members expected to receive benefits under the plan.\nDefined Benefit Pension Plan Information\n(millions) 2015 2014\nAccumulated benefit obligation (ABO) for all plans (a) $ 3,550 $ 3,834\nProjected benefit obligation for pension plans with an ABO in excess of plan assets (b) 65 65\nTotal ABO for pension plans with an ABO in excess of plan assets 60 56\nFair value of plan assets for pension plans with an ABO in excess of plan assets 10 —\n(a) The present value of benefits earned to date assuming no future salary growth.\n(b) The present value of benefits earned to date by plan participants, including the effect of assumed future salary increases.\n60\n\n-- 65 of 84 --\n\nAssumptions\nBenefit Obligation Weighted Average Assumptions\n2015 2014\nDiscount rate 4.70% 3.87%\nAverage assumed rate of compensation increase 3.00 3.00\nNet Periodic Benefit Expense Weighted Average Assumptions\n2015 2014 2013\nDiscount rate 3.87% 4.77% 4.40%\nExpected long-term rate of return on plan assets 7.50 7.50 8.00\nAverage assumed rate of compensation increase 3.00 3.00 3.00\nThe weighted average assumptions used to measure net periodic benefit expense each year are the rates as of the\nbeginning of the year (i.e., the prior measurement date). Based on a stable asset allocation, our most recent compound\nannual rate of return on qualified plans' assets was 8.4 percent, 7.2 percent, 6.8 percent, and 8.5 percent for the 5-\nyear, 10-year, 15-year, and 20-year time periods, respectively.\nThe market-related value of plan assets, which is used in calculating expected return on assets in net periodic benefit\ncost, is determined each year by adjusting the previous year's value by expected return, benefit payments, and cash\ncontributions. The market-related value is adjusted for asset gains and losses in equal 20 percent adjustments over\na five-year period.\nWe review the expected long-term rate of return annually, and revise it as appropriate. Additionally, we monitor the\nmix of investments in our portfolio to ensure alignment with our long-term strategy to manage pension cost and reduce\nvolatility in our assets. Our expected annualized long-term rate of return assumptions as of January 30, 2016 were\n8.0 percent for domestic and international equity securities, 5.0 percent for long-duration debt securities, 8.0 percent\nfor balanced funds, and 9.5 percent for other investments. These estimates are a judgmental matter in which we\nconsider the composition of our asset portfolio, our historical long-term investment performance, and current market\nconditions.\nPlan Assets\nOur asset allocation policy is designed to reduce the long-term cost of funding our pension obligations. The plan invests\nwith both passive and active investment managers depending on the investment's asset class. The plan also seeks\nto reduce the risk associated with adverse movements in interest rates by employing an interest rate hedging program,\nwhich may include the use of interest rate swaps, total return swaps, and other instruments.\nAsset Category Current Targeted Actual Allocation\nAllocation 2015 2014\nDomestic equity securities (a) 14% 16% 19%\nInternational equity securities 9 10 12\nDebt securities 45 44 28\nBalanced funds 23 21 31\nOther (b) 9 9 10\nTotal 100% 100% 100%\n(a) Equity securities include our common stock in amounts substantially less than 1 percent of total plan assets as of January 30, 2016 and\nJanuary 31, 2015.\n(b) Other assets include private equity, mezzanine and high-yield debt, natural resources and timberland funds, multi-strategy hedge funds,\nderivative instruments, and a 4 percent allocation to real estate.\n61\n\n-- 66 of 84 --\n\nIn May 2015, the FASB issued ASU No. 2015-07, Disclosures for Investments in Certain Entities That Calculate Net\nAsset Value per Share (or Its Equivalent). ASU 2015-07 amended ASC 820, Fair Value Measurements and Disclosures,\nto remove the requirement to categorize within the fair value hierarchy all investments for which fair value is measured\nusing the net asset value per share practical expedient. The amendment also removes the requirement to make certain\ndisclosures for these investments. We have retrospectively adopted this ASU for the year ended January 30, 2016.\nFair Value Measurements Fair Value at\n(millions) Pricing\nCategory January 30,\n2016 January 31,\n2015\nCash and cash equivalents Level 1 $ 43 $ 7\nGovernment securities (a) Level 2 470 349\nFixed income (b) Level 2 979 571\nOther (c) Level 2 8 21\n1,500 948\nInvestments valued using NAV per share (d)\nCash and cash equivalents 455 204\nCommon collective trusts 544 1,102\nFixed Income 49 53\nBalanced funds 756 1,152\nPrivate equity funds 141 171\nOther 162 154\nTotal plan assets $ 3,607 $ 3,784\n(a) Investments in government securities and long-term government bonds.\n(b) Investments in corporate and municipal bonds.\n(c) Investments in derivative investments.\n(d) In accordance with Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share (or its\nequivalent) practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are\nintended to permit reconciliation of the fair value hierarchy to the amounts presented in the statement of financial position.\nPosition Valuation Technique\nCash and cash equivalents Carrying value approximates fair value.\nGovernment securities\nand fixed income Valued using matrix pricing models and quoted prices of securities with similar\ncharacteristics.\nDerivatives Swap derivatives - Valued initially using models calibrated to initial trade price.\nSubsequent valuations are based on observable inputs to the valuation model\n(e.g., interest rates and credit spreads). Model inputs are changed only when\ncorroborated by market data. A credit risk adjustment is made on each swap\nusing observable market credit spreads.\nOption derivatives - Valued at transaction price initially. Subsequent valuations\nare based on observable inputs to the valuation model (e.g., underlying\ninvestments).\nContributions\nOur obligations to plan participants can be met over time through a combination of company contributions to these\nplans and earnings on plan assets. In 2015 and 2014, we made discretionary contributions of $200 million and $150\nmillion, respectively, to our qualified defined benefit pension plans. We are not required to make any contributions in\n2016. However, depending on investment performance and plan funded status, we may elect to make a contribution.\n62\n\n-- 67 of 84 --\n\nEstimated Future Benefit Payments\n(millions) Pension\nBenefits\n2016 $ 169\n2017 170\n2018 172\n2019 180\n2020 188\n2021-2025 1,068\n29. Accumulated Other Comprehensive Income\n(millions) Cash Flow\nHedges\nCurrency\nTranslation\nAdjustment\nPension and\nOther\nBenefit Total\nJanuary 31, 2015 $ (22) $ (16) $ (561) $ (599)\nOther comprehensive (loss)/income before\nreclassifications — (6) (23) (29)\nAmounts reclassified from AOCI 3 (a) — (4) (b) (1)\nJanuary 30, 2016 $ (19) $ (22) $ (588) $ (629)\n(a) Represents gains and losses on cash flow hedges, net of $2 million of taxes, which are recorded in net interest expense on the Consolidated\nStatements of Operations.\n(b) Represents amortization of pension and other benefit liabilities, net of $14 million of taxes, which is recorded in SG&A expenses on the\nConsolidated Statements of Operations. See Note 28 for additional information.\n63\n\n-- 68 of 84 --\n\n30. Segment Reporting\nOur segment measure of profit is used by management to evaluate the return on our investment and to make operating\ndecisions. Effective January 15, 2015, following the deconsolidation of our former Canadian retail operation, we have\nbeen operating as a single segment that includes all of our continuing operations, which are designed to enable guests\nto purchase products seamlessly in stores or through our digital sales channels.\nBusiness Segment Results\n2015 2014 2013\t(millions)\nSales $ 73,785 $ 72,618 $ 71,279\nCost of sales 51,997 51,278 50,039\nGross margin 21,788 21,340 21,240\nSelling, general, and administrative expenses (e) 14,448 14,503 14,383\nDepreciation and amortization 2,213 2,129 1,996\nSegment profit 5,127 4,708 4,861\nGain on sale (a) 620 — 391\nRestructuring costs (b)(e) (138) — —\nData breach-related costs, net of insurance (c)(e) (39) (145) (17)\nOther (d)(e) (39) (29) (64)\nEarnings from continuing operations before interest expense and income\ntaxes 5,530 4,535 5,170\nNet interest expense 607 882 1,049\nEarnings from continuing operations before income taxes $ 4,923 $ 3,653 $ 4,121\nNote: The sum of the segment amounts may not equal the total amounts due to rounding.\n(a) For 2015, includes the gain on the pharmacies and clinics transaction. Refer to Note 6 for more information. For 2013, includes the gain\non receivables transaction. Refer to Note 9 for more information.\n(b) Refer to Note 8 for more information on restructuring costs.\n(c) Refer to Note 19 for more information on data breach-related costs.\n(d) For 2015, represents impairments related to our decision to wind down certain noncore operations. For 2014, includes impairments of\n$16 million related to undeveloped land in the U.S. and $13 million of expense related to converting co-branded card program to MasterCard.\nFor 2013, includes a $23 million workforce-reduction charge primarily related to severance and benefits costs, a $22 million charge related\nto part-time team member health benefit changes, and $19 million in impairment charges related to undeveloped land in the U.S.\n(e) The sum of segment SG&A expenses, restructuring costs, data breach-related costs, and other charges equal consolidated SG&A\nexpenses.\nTotal Assets by Segment\n(millions)\nJanuary 30,\n2016 January 31,\n2015\nU.S. $ 39,845 $ 39,337\nAssets of discontinued operations 397 1,775\nUnallocated assets (a) 20 60\nTotal assets $ 40,262 $ 41,172\n(a) Represents the insurance receivable related to the 2013 data breach.\n64\n\n-- 69 of 84 --\n\n31. Quarterly Results (Unaudited)\nDue to the seasonal nature of our business, fourth quarter operating results typically represent a substantially larger\nshare of total year revenues and earnings because they include our peak sales period of November and December.\nWe follow the same accounting policies for preparing quarterly and annual financial data. The table below summarizes\nquarterly results for 2015 and 2014:\nQuarterly Results First Quarter Second Quarter Third Quarter Fourth Quarter Total Year\n(millions, except per share data) 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014\nSales $ 17,119 $ 16,657 $ 17,427 $ 16,957 $ 17,613 $ 17,254 $ 21,626 $ 21,751 $ 73,785 $ 72,618\nCost of sales 11,911 11,748 12,051 11,798 12,440 12,171 15,594 15,563 51,997 51,278\nGross margin 5,208 4,909 5,376 5,159 5,173 5,083 6,032 6,188 21,788 21,340\nSelling, general, and administrative\nexpenses 3,514 3,376 3,495 3,599 3,736 3,644 3,921 4,058 14,665 14,676\nDepreciation and amortization 540 511 551 537 561 535 562 545 2,213 2,129\nGain on sale — — — — — — (620) — (620) —\nEarnings before interest expense\nand income taxes 1,154 1,022 1,330 1,023 876 904 2,169 1,585 5,530 4,535\nNet interest expense 155 152 148 433 151 146 152 151 607 882\nEarnings from continuing operations\nbefore income taxes 999 870 1,182 590 725 758 2,017 1,434 4,923 3,653\nProvision for income taxes 348 299 409 199 249 232 596 474 1,602 1,204\nNet earnings from continuing\noperations 651 571 773 391 476 526 1,421 960 3,321 2,449\nDiscontinued operations, net of\ntax (16) (153) (20) (157) 73 (174) 5 (3,600) 42 (4,085)\nNet earnings/(loss) $ 635 $ 418 $ 753 $ 234 $ 549 $ 352 $ 1,426 $ (2,640) $ 3,363 $ (1,636)\nBasic earnings/(loss) per share\nContinuing operations $ 1.02 $ 0.90 $ 1.21 $ 0.62 $ 0.76 $ 0.83 $ 2.33 $ 1.51 $ 5.29 $ 3.86\nDiscontinued operations (0.03) (0.24) (0.03) (0.25) 0.12 (0.28) 0.01 (5.64) 0.07 (6.44)\nNet earnings/(loss) per share $ 0.99 $ 0.66 $ 1.18 $ 0.37 $ 0.88 $ 0.55 $ 2.33 $ (4.14) $ 5.35 $ (2.58)\nDiluted earnings/(loss) per share\nContinuing operations $ 1.01 $ 0.89 $ 1.21 $ 0.61 $ 0.76 $ 0.82 $ 2.31 $ 1.49 $ 5.25 $ 3.83\nDiscontinued operations (0.03) (0.24) (0.03) (0.25) 0.11 (0.27) 0.01 (5.59) 0.07 (6.38)\nNet earnings/(loss) per share $ 0.98 $ 0.66 $ 1.18 $ 0.37 $ 0.87 $ 0.55 $ 2.32 $ (4.10) $ 5.31 $ (2.56)\nDividends declared per share $ 0.52 $ 0.43 $ 0.56 $ 0.52 $ 0.56 $ 0.52 $ 0.56 $ 0.52 $ 2.20 $ 1.99\nClosing common stock price:\nHigh 83.57 62.54 85.01 61.38 80.87 63.93 78.23 77.13 85.01 77.13\nLow 74.25 55.07 77.26 55.34 72.94 57.50 67.59 61.12 67.59 55.07\nNote: Per share amounts are computed independently for each of the quarters presented. The sum of the quarters may not equal the total year\namount due to the impact of changes in average quarterly shares outstanding and all other quarterly amounts may not equal the total year due to\nrounding.\nU.S. Sales by Product Category (a) First Quarter Second Quarter Third Quarter Fourth Quarter Total Year\n2015 2014 2015 2014 2015 2014 2015 2014 2015 2014\nHousehold essentials 28% 27% 28% 28% 28% 27% 21% 22% 26% 25%\nHardlines 14 15 14 15 13 15 24 24 17 18\nApparel and accessories 20 19 21 20 19 19 18 17 19 19\nFood and pet supplies 22 23 20 20 22 21 19 19 21 21\nHome furnishings and décor 16 16 17 17 18 18 18 18 17 17\nTotal 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%\nSupplemental information\nPharmacy (b) 6% 6% 6% 6% 6% 6% 3% 5% 5% 6%\n(a) As a percentage of sales.\n(b) Included in household essentials.\n65\n\n-- 70 of 84 --\n\nItem 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure\nNot applicable.\nItem 9A. Controls and Procedures\nChanges in Internal Control Over Financial Reporting\nThere have been no changes in our internal control over financial reporting during the most recently completed\nfiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over\nfinancial reporting.\nEvaluation of Disclosure Controls and Procedures\nAs of the end of the period covered by this Annual Report, we conducted an evaluation, under supervision and with\nthe participation of management, including the chief executive officer and chief financial officer, of the effectiveness\nof the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 of the\nSecurities Exchange Act of 1934, as amended (Exchange Act). Based upon that evaluation, our chief executive officer\nand chief financial officer concluded that our disclosure controls and procedures are effective. Disclosure controls and\nprocedures are defined by Rules 13a-15(e) and 15d-15(e) of the Exchange Act as controls and other procedures that\nare designed to ensure that information required to be disclosed by us in reports filed with the SEC under the Exchange\nAct is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms.\nDisclosure controls and procedures include, without limitation, controls and procedures designed to ensure that\ninformation required to be disclosed by us in reports filed under the Exchange Act is accumulated and communicated\nto our management, including our principal executive and principal financial officers, or persons performing similar\nfunctions, as appropriate, to allow timely decisions regarding required disclosure.\nFor the Report of Management on Internal Control and the Report of Independent Registered Public Accounting Firm\non Internal Control over Financial Reporting, see Item 8, Financial Statements and Supplementary Data.\nItem 9B. Other Information\nNot applicable.\nPART III\nCertain information required by Part III is incorporated by reference from Target's definitive Proxy Statement to be filed\non or about April 25, 2016. Except for those portions specifically incorporated in this Form 10-K by reference to Target's\nProxy Statement, no other portions of the Proxy Statement are deemed to be filed as part of this Form 10-K.\nItem 10. Directors, Executive Officers and Corporate Governance\nThe following sections of Target's Proxy Statement to be filed on or about April 25, 2016, are incorporated herein by\nreference:\n• Item One--Election of Directors\n• Stock Ownership Information--Section 16(a) Beneficial Ownership Reporting Compliance\n• General Information About Corporate Governance and the Board of Directors\n◦ Business Ethics and Conduct\n◦ Committees\n• Questions and Answers About Our Annual Meeting and Voting-Question 14\nSee also Item 4A, Executive Officers of Part I hereof.\n66\n\n-- 71 of 84 --\n\nItem 11. Executive Compensation\nThe following sections of Target's Proxy Statement to be filed on or about April 25, 2016, are incorporated herein by\nreference:\n• Compensation Discussion and Analysis\n• Compensation Tables\n• Human Resources and Compensation Committee Report\nItem 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters\nThe following sections of Target's Proxy Statement to be filed on or about April 25, 2016, are incorporated herein by\nreference:\n• Stock Ownership Information--\n◦ Beneficial Ownership of Directors and Officers\n◦ Beneficial Ownership of Target’s Largest Shareholders\n• Compensation Tables--Equity Compensation Plan Information\nItem 13. Certain Relationships and Related Transactions, and Director Independence\nThe following sections of Target's Proxy Statement to be filed on or about April 25, 2016, are incorporated herein by\nreference:\n• General Information About Corporate Governance and the Board of Directors--\n◦ Policy on Transactions with Related Persons\n◦ Director Independence\n◦ Committees\nItem 14. Principal Accountant Fees and Services\nThe following section of Target's Proxy Statement to be filed on or about April 25, 2016, is incorporated herein by\nreference:\n• Item Two-- Ratification of Appointment of Ernst & Young LLP As Independent Registered Public Accounting\nFirm-Audit and Non-Audit Fees\n67\n\n-- 72 of 84 --\n\nPART IV\nItem 15. Exhibits, Financial Statement Schedules\nThe following information required under this item is filed as part of this report:\na) Financial Statements\n• Consolidated Statements of Operations for the Years Ended January 30, 2016, January 31, 2015, and\nFebruary 1, 2014\n• Consolidated Statements of Comprehensive Income for the Years Ended January 30, 2016, January 31,\n2015, and February 1, 2014\n• Consolidated Statements of Financial Position at January 30, 2016 and January 31, 2015\n• Consolidated Statements of Cash Flows for the Years Ended January 30, 2016, January 31, 2015, and\nFebruary 1, 2014\n• Consolidated Statements of Shareholders' Investment for the Years Ended January 30, 2016, January 31,\n2015, and February 1, 2014\n• Notes to Consolidated Financial Statements\n• Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements\nFinancial Statement Schedules\nNone.\nOther schedules have not been included either because they are not applicable or because the information is\nincluded elsewhere in this Report.\n68\n\n-- 73 of 84 --\n\nb) Exhibits\n(2)A † Amended and Restated Transaction Agreement dated September 12, 2011 among Zellers Inc.,\nHudson's Bay Company, Target Corporation and Target Canada Co. (1)\nB † First Amending Agreement dated January 20, 2012 to Amended and Restated Transaction\nAgreement among Zellers Inc., Hudson's Bay Company, Target Corporation and Target\nCanada Co. (2)\nC Second Amending Agreement dated June 18, 2012 to Amended and Restated Transaction\nAgreement among Zellers Inc., Hudson's Bay Company, Target Corporation and Target\nCanada Co. (3)\nD Third Amending Agreement dated June 18, 2012 to Amended and Restated Transaction\nAgreement among Zellers Inc., Hudson's Bay Company, Target Corporation and Target\nCanada Co. (4)\nE † Fourth Amending Agreement dated December 14, 2012 to Amended and Restated Transaction\nAgreement among Zellers Inc., Hudson's Bay Company, Target Corporation and Target\nCanada Co. (5)\nF ‡ Purchase and Sale Agreement dated October 22, 2012 among Target National Bank, Target\nReceivables LLC, Target Corporation and TD Bank USA, N.A. (6)\nG ‡ First Amendment to Purchase and Sale Agreement dated March 13, 2013 among Target National\nBank, Target Receivables LLC, Target Corporation and TD Bank USA, N.A. (7)\nH Ÿ Asset Purchase Agreement dated June 12, 2015 between Target Corporation and CVS Pharmacy,\nInc. (8)\n(3)A Amended and Restated Articles of Incorporation (as amended through June 9, 2010) (9)\nB By-laws (as amended through November 11, 2015) (10)\n(4)A Indenture, dated as of August 4, 2000 between Target Corporation and Bank One Trust Company,\nN.A. (11)\nB First Supplemental Indenture dated as of May 1, 2007 to Indenture dated as of August 4, 2000\nbetween Target Corporation and The Bank of New York Trust Company, N.A. (as successor in\ninterest to Bank One Trust Company N.A.) (12)\nC Target agrees to furnish to the Commission on request copies of other instruments with respect to\nlong-term debt.\n(10)A * Target Corporation Officer Short-Term Incentive Plan (13)\nB * Target Corporation Long-Term Incentive Plan (as amended and restated effective June 8, 2011)\n(14)\nC * Target Corporation SPP I (2011 Plan Statement) (as amended and restated effective June 8, 2011)\n(15)\nD * Target Corporation SPP II (2011 Plan Statement) (as amended and restated effective June 8,\n2011) (16)\nE * Target Corporation SPP III (2014 Plan Statement) (as amended and restated effective January 1,\n2014) (17)\nF * Target Corporation Officer Deferred Compensation Plan (as amended and restated effective\nJune 8, 2011) (18)\nG * Target Corporation Officer EDCP (2015 Plan Statement) (as amended and restated effective\nJanuary 1, 2015) (19)\nH * Target Corporation Deferred Compensation Plan Directors (20)\nI * Target Corporation DDCP (2013 Plan Statement) (as amended and restated effective December 1,\n2013) (21)\nJ * Target Corporation Officer Income Continuance Policy Statement (as amended and restated\neffective June 8, 2011) (22)\nK * Target Corporation Executive Excess Long Term Disability Plan (as restated effective January 1,\n2010 (23)\nL * Director Retirement Program (24)\nM * Target Corporation Deferred Compensation Trust Agreement (as amended and restated effective\nJanuary 1, 2009) (25)\n69\n\n-- 74 of 84 --\n\nN * Amendment to Target Corporation Deferred Compensation Trust Agreement (as amended and\nrestated effective January 1, 2009) (26)\nO Five-Year Credit Agreement dated as of October 14, 2011 among Target Corporation, Bank of\nAmerica, N.A. as Administrative Agent and the Banks listed therein (27)\nP Extension and Amendment dated August 28, 2012 to Five-Year Credit Agreement among Target\nCorporation, Bank of America, N.A. as Administrative Agent and the Banks listed therein (28)\nQ Second Extension and Amendment dated September 3, 2013 to Five-Year Credit Agreement\namong Target Corporation, Bank of America, N.A. as Administrative Agent and the Banks listed\ntherein (29)\nR Third Amendment dated January 5, 2015 to Five-Year Credit Agreement among Target\nCorporation, Bank of America, N.A. as Administrative Agent and the Banks listed therein (30)\nS DIP Facility Term Sheet dated January 14, 2015 among Target Corporation, as DIP Lender, and\nTarget Canada Co. and its subsidiaries listed therein (31)\nT s Credit Card Program Agreement dated October 22, 2012 among Target Corporation, Target\nEnterprise, Inc. and TD Bank USA, N.A. (32)\nU * Target Corporation 2011 Long-Term Incentive Plan (33)\nV * Form of Amended and Restated Executive Non-Qualified Stock Option Agreement (34)\nW * Form of Executive Restricted Stock Unit Agreement\nX * Form of Executive Performance-Based Restricted Stock Unit Agreement\nY * Form of Executive Performance Share Unit Agreement\nZ * Form of Non-Employee Director Non-Qualified Stock Option Agreement (35)\nAA * Form of Non-Employee Director Restricted Stock Unit Agreement\nBB * Form of Cash Retention Award (36)\nCC * Advisory Period Letter to Gregg W. Steinhafel, dated May 21, 2014 (37)\nDD * Restricted Stock Unit Agreement with John J. Mulligan, effective as of May 22, 2014 (38)\nEE * Employment Offer Letter to Brian C. Cornell, dated July 26, 2014 (39)\nFF * Make-Whole Restricted Stock Unit Agreement with Brian C. Cornell, effective as of August 21,\n2014 (40)\nGG * Make-Whole Performance-Based Restricted Stock Unit Agreement with Brian C. Cornell, effective\nas of August 21, 2014 (41)\nHH * Aircraft Time Sharing Agreement as of March 13, 2015 among Target Corporation and Brian C.\nCornell (42)\nII s First Amendment dated February 24, 2015 to Credit Card Program Agreement among Target\nCorporation, Target Enterprise, Inc. and TD Bank USA, N.A. (43)\nJJ * Amended and Restated Target Corporation 2011 Long-Term Incentive Plan (44)\nKK s Pharmacy Operating Agreement dated December 16, 2015 between Target Corporation and CVS\nPharmacy, Inc.\nLL * Short-Term Incentive Plan Letter to Tina M. Tyler, dated January 14, 2016\nMM * Non-Competition, Non-Solicitation and Confidentiality Agreement with Tina M. Tyler, effective as of\nJanuary 27, 2016\n(12) Statements of Computations of Ratios of Earnings to Fixed Charges\n(21) List of Subsidiaries\n(23) Consent of Independent Registered Public Accounting Firm\n(24) Powers of Attorney\n(31)A Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of\n2002\n(31)B Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of\n2002\n(32)A Certification of the Chief Executive Officer Pursuant to Section 18 U.S.C. Section 1350 Pursuant to\nSection 906 of the Sarbanes-Oxley Act of 2002\n(32)B Certification of the Chief Financial Officer Pursuant to Section 18 U.S.C. Section 1350 Pursuant to\nSection 906 of the Sarbanes-Oxley Act of 2002\n70\n\n-- 75 of 84 --\n\nCopies of exhibits will be furnished upon written request and payment of Registrant's reasonable expenses in furnishing\nthe exhibits.\n_____________________________________________________________________\n† Excludes the Disclosure Letter and Schedule A referred to in the agreement, Exhibits A and B to the First Amending Agreement, and\nExhibit A to the Fourth Amending Agreement which Target Corporation agrees to furnish supplementally to the Securities and\nExchange Commission upon request.\n‡ Excludes Schedules A through N, Annex A and Exhibits A-1 through C-2 referred to in the agreement and First Amendment, which Target\nCorporation agrees to furnish supplementally to the Securities and Exchange Commission upon request.\nŸ Excludes the Seller Disclosure Schedule, Exhibits B through G and Schedules I and II referred to in the agreement which Target Corporation\nagrees to furnish supplementally to the Securities and Exchange Commission upon request. Exhibit A is separately filed as Exhibit (10)\nKK.\nw Certain portions of this exhibit have been omitted pursuant to a request for confidential treatement and have been filed separately with\nthe Securities and Exchange Commission.\n* Management contract or compensation plan or arrangement required to be filed as an exhibit to this Form 10-K.\n(1) Incorporated by reference to Exhibit (2)A to Target's Form 10-Q Report for the quarter ended October 29, 2011.\n(2) Incorporated by reference to Exhibit (2)B to Target's Form 10-K Report for the year ended January 28, 2012.\n(3) Incorporated by reference to Exhibit (2)C to Target's Form 10-Q Report for the quarter ended July 28, 2012.\n(4) Incorporated by reference to Exhibit (2)D to Target's Form 10-Q Report for the quarter ended July 28, 2012.\n(5) Incorporated by reference to Exhibit (2)E to Target's Form 10-K Report for the year ended February 2, 2013.\n(6) Incorporated by reference to Exhibit (2)E to Target's Form 10-Q Report for the quarter ended October 27, 2012.\n(7) Incorporated by reference to Exhibit (2)G to Target's Form 8-K Report filed March 13, 2013.\n(8) Incorporated by reference to Exhibit (2)H to Target's Form 10-Q Report for the quarter ended August 1, 2015.\n(9) Incorporated by reference to Exhibit (3)A to Target's Form 8-K Report filed June 10, 2010.\n(10) Incorporated by reference to Exhibit (3)A to Target's Form 8-K Report filed November 11, 2015.\n(11) Incorporated by reference to Exhibit 4.1 to Target's Form 8-K Report filed August 10, 2000.\n(12) Incorporated by reference to Exhibit 4.1 to the Registrant's Form 8-K Report filed May 1, 2007.\n(13) Incorporated by reference to Appendix A to the Registrant's Proxy Statement filed April 30, 2012.\n(14) Incorporated by reference to Exhibit (10)B to Target's Form 10-Q Report for the quarter ended July 30, 2011.\n(15) Incorporated by reference to Exhibit (10)C to Target's Form 10-Q Report for the quarter ended July 30, 2011.\n(16) Incorporated by reference to Exhibit (10)D to Target's Form 10-Q Report for the quarter ended July 30, 2011.\n(17) Incorporated by reference to Exhibit (10)E to Target's Form 10-K Report for the year ended February 1, 2014.\n(18) Incorporated by reference to Exhibit (10)F to Target's Form 10-Q Report for the quarter ended July 30, 2011.\n(19) Incorporated by reference to Exhibit (10)G to Target's 10-K Report for the year ended January 31, 2015.\n(20) Incorporated by reference to Exhibit (10)I to Target's Form 10-K Report for the year ended February 3, 2007.\n(21) Incorporated by reference to Exhibit (10)I to Target's Form 10-K Report for the year ended February 1, 2014.\n(22) Incorporated by reference to Exhibit (10)J to Target's Form 10-Q Report for the quarter ended July 30, 2011.\n(23) Incorporated by reference to Exhibit (10)A to Target's Form 10-Q Report for the quarter ended October 30, 2010.\n(24) Incorporated by reference to Exhibit (10)O to Target's Form 10-K Report for the year ended January 29, 2005.\n(25) Incorporated by reference to Exhibit (10)O to Target's Form 10-K Report for the year ended January 31, 2009.\n(26) Incorporated by reference to Exhibit (10)AA to Target's Form 10-Q Report for the quarter ended July 30, 2011.\n(27) Incorporated by reference to Exhibit (10)O to Target's Form 10-Q Report for the quarter ended October 29, 2011.\n(28) Incorporated by reference to Exhibit (10)AA to Target's Form 10-Q Report for the quarter ended October 27, 2012.\n(29) Incorporated by reference to Exhibit (10)Y to Target’s Form 10-Q Report for the quarter ended November 2, 2013.\n(30) Incorporated by reference to Exhibit (10)R to Target's Form 10-K Report for the year ended January 31, 2015.\n(31) Incorporated by reference to Exhibit (10)S to Target's Form 10-K Report for the year ended January 31, 2015.\n(32) Incorporated by reference to Exhibit (10)X to Target’s Form 10-Q/A Report for the quarter ended May 4, 2013.\n(33) Incorporated by reference to Appendix A to Target's Proxy Statement filed April 28, 2011.\n(34) Incorporated by reference to Exhibit (10)V to Target's Form 10-K Report for the year ended January 31, 2015.\n(35) Incorporated by reference to Exhibit (10)EE to Target's Form 8-K Report filed January 11, 2012.\n(36) Incorporated by reference to Exhibit (10)W to Target’s Form 10-K Report for year ended February 2, 2013.\n(37) Incorporated by reference to Exhibit (10)AA to Target's Form 10-Q Report for the quarter ended August 2, 2014.\n(38) Incorporated by reference to Exhibit (10)BB to Target's Form 10-Q Report for the quarter ended August 2, 2014.\n(39) Incorporated by reference to Exhibit (10)CC to Target's Form 10-Q Report for the quarter ended August 2, 2014.\n(40) Incorporated by reference to Exhibit (10)DD to Target's Form 10-Q Report for the quarter ended August 2, 2014.\n(41) Incorporated by reference to Exhibit (10)EE to Target's Form 10-Q Report for the quarter ended August 2, 2014.\n(42) Incorporated by reference to Exhibit (10)HH to Target's Form 10-K Report for the year ended January 31, 2015.\n(43) Incorporated by reference to Exhibit (10)II to Target's Form 10-Q Report for the quarter ended May 2, 2015.\n(44) Incorporated by reference to Exhibit (10)JJ to Target's Form 8-K Report filed June 12, 2015.\n101.INS XBRL Instance Document\n101.SCH XBRL Taxonomy Extension Schema\n101.CAL XBRL Taxonomy Extension Calculation Linkbase\n101.DEF XBRL Taxonomy Extension Definition Linkbase\n101.LAB XBRL Taxonomy Extension Label Linkbase\n101.PRE XBRL Taxonomy Extension Presentation Linkbase\n71\n\n-- 76 of 84 --\n\nSIGNATURES\nPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Target has duly caused\nthis report to be signed on its behalf by the undersigned, thereunto duly authorized.\nTARGET CORPORATION\nBy:\nDated: March 11, 2016\nCatherine R. Smith\nExecutive Vice President and Chief Financial Officer\n___________________________________________________________________________________________________________________\nPursuant to the requirements of the Securities Exchange Act of 1934, the report has been signed below by the following\npersons on behalf of Target and in the capacities and on the dates indicated.\nDated: March 11, 2016\nBrian C. Cornell\nChairman of the Board and Chief Executive Officer\nDated: March 11, 2016\nCatherine R. Smith\nExecutive Vice President and Chief Financial Officer\nDated: March 11, 2016\nRobert M. Harrison\nSenior Vice President, Chief Accounting Officer\nand Controller\nROXANNE S. AUSTIN\nDOUGLAS M. BAKER, JR.\nCALVIN DARDEN\nHENRIQUE DE CASTRO\nROBERT L. EDWARDS\nMELANIE L. HEALEY\nDONALD R. KNAUSS\nMARY E. MINNICK\nANNE M. MULCAHY\nDERICA W. RICE\nKENNETH L. SALAZAR\nJOHN G. STUMPF Constituting a majority of the Board of Directors\n72\n\n-- 77 of 84 --\n\nCatherine R. Smith, by signing his name hereto, does hereby sign this document pursuant to powers of attorney duly\nexecuted by the Directors named, filed with the Securities and Exchange Commission on behalf of such Directors, all\nin the capacities and on the date stated.\nBy:\nDated: March 11, 2016\nCatherine R. Smith\nAttorney-in-fact\n73\n\n-- 78 of 84 --\n\nExhibit Index\nExhibit Description Manner of Filing\n(2)A Amended and Restated Transaction Agreement dated September 12,\n2011 among Zellers Inc., Hudson's Bay Company, Target Corporation and\nTarget Canada Co.\nIncorporated by Reference\n(2)B First Amending Agreement dated January 20, 2012 to Amended and\nRestated Transaction Agreement among Zellers Inc., Hudson's Bay\nCompany, Target Corporation and Target Canada Co.\nIncorporated by Reference\n(2)C Second Amending Agreement dated June 18, 2012 to Amended and\nRestated Transaction Agreement among Zellers Inc., Hudson's Bay\nCompany, Target Corporation and Target Canada Co.\nIncorporated by Reference\n(2)D Third Amending Agreement dated June 18, 2012 to Amended and\nRestated Transaction Agreement among Zellers Inc., Hudson's Bay\nCompany, Target Corporation and Target Canada Co.\nIncorporated by Reference\n(2)E Fourth Amending Agreement dated December 14, 2012 to Amended and\nRestated Transaction Agreement among Zellers Inc., Hudson's Bay\nCompany, Target Corporation and Target Canada Co.\nIncorporated by Reference\n(2)F Purchase and Sale Agreement dated October 22, 2012 among Target\nNational Bank, Target Receivables LLC, Target Corporation and TD Bank\nUSA, N.A.\nIncorporated by Reference\n(2)G First Amendment to Purchase and Sale Agreement dated March 13, 2013\namong Target National Bank, Target Receivables LLC, Target Corporation\nand TD Bank USA, N.A.\nIncorporated by Reference\n(2)H Asset Purchase Agreement dated June 12, 2015 between Target\nCorporation and CVS Pharmacy, Inc. Incorporated by Reference\n(3)A Amended and Restated Articles of Incorporation (as amended June 9,\n2010) Incorporated by Reference\n(3)B By-laws (as amended through November 11, 2015) Incorporated by Reference\n(4)A Indenture, dated as of August 4, 2000 between Target Corporation and\nBank One Trust Company, N.A. Incorporated by Reference\n(4)B First Supplemental Indenture dated as of May 1, 2007 to Indenture dated\nas of August 4, 2000 between Target Corporation and The Bank of New\nYork Trust Company, N.A. (as successor in interest to Bank One Trust\nCompany N.A.)\nIncorporated by Reference\n(4)C Target agrees to furnish to the Commission on request copies of other\ninstruments with respect to long-term debt. Filed Electronically\n(10)A Target Corporation Officer Short-Term Incentive Plan Incorporated by Reference\n(10)B Target Corporation Long-Term Incentive Plan (as amended and restated\neffective June 8, 2011) Incorporated by Reference\n(10)C Target Corporation SPP I (2011 Plan Statement) (as amended and\nrestated effective June 8, 2011) Incorporated by Reference\n(10)D Target Corporation SPP II (2011 Plan Statement) (as amended and\nrestated effective June 8, 2011) Incorporated by Reference\n(10)E Target Corporation SPP III (2014 Plan Statement) (as amended and\nrestated effective January 1, 2014) Incorporated by Reference\n(10)F Target Corporation Officer Deferred Compensation Plan (as amended and\nrestated effective June 8, 2011) Incorporated by Reference\n(10)G Target Corporation Officer EDCP (2015 Plan Statement) (as amended and\nrestated effective January 1, 2015) Incorporated by Reference\n(10)H Target Corporation Deferred Compensation Plan Directors Incorporated by Reference\n(10)I Target Corporation DDCP (2013 Plan Statement) (as amended and\nrestated effective December 1, 2013) Incorporated by Reference\n(10)J Target Corporation Officer Income Continuance Policy Statement (as\namended and restated effective June 8, 2011) Incorporated by Reference\n74\n\n-- 79 of 84 --\n\n(10)K Target Corporation Executive Excess Long Term Disability Plan (as\nrestated effective January 1, 2010) Incorporated by Reference\n(10)L Director Retirement Program Incorporated by Reference\n(10)M Target Corporation Deferred Compensation Trust Agreement (as\namended and restated effective January 1, 2009) Incorporated by Reference\n(10)N Amendment to Target Corporation Deferred Compensation Trust\nAgreement (as amended and restated effective January 1, 2009) Incorporated by Reference\n(10)O Five-Year Credit Agreement dated as of October 14, 2011 among Target\nCorporation, Bank of America, N.A. as Administrative Agent and the\nBanks listed therein\nIncorporated by Reference\n(10)P Extension and Amendment dated August 28, 2012 to Five-Year Credit\nAgreement among Target Corporation, Bank of America, N.A. as\nAdministrative Agent and the Banks listed therein\nIncorporated by Reference\n(10)Q Second Extension and Amendment dated September 3, 2013 to Five-Year\nCredit Agreement among Target Corporation, Bank of America, N.A. as\nAdministrative Agent and the Banks listed therein\nIncorporated by Reference\n(10)R Third Amendment dated January 5, 2015 to Five-Year Credit Agreement\namong Target Corporation, Bank of America, N.A. as Administrative Agent\nand the Banks listed therein\nIncorporated by Reference\n(10)S DIP Facility Term Sheet dated January 14, 2015 among Target\nCorporation, as DIP Lender, and Target Canada Co. and its subsidiaries\nlisted therein\nIncorporated by Reference\n(10)T Credit Card Program Agreement dated October 22, 2012 among Target\nCorporation, Target Enterprise, Inc. and TD Bank USA, N.A. Incorporated by Reference\n(10)U Target Corporation 2011 Long-Term Incentive Plan Incorporated by Reference\n(10)V Form of Amended and Restated Executive Non-Qualified Stock Option\nAgreement Incorporated by Reference\n(10)W Form of Executive Restricted Stock Unit Agreement Filed Electronically\n(10)X Form of Executive Performance-Based Restricted Stock Unit Agreement Filed Electronically\n(10)Y Form of Executive Performance Share Unit Agreement Filed Electronically\n(10)Z Form of Non-Employee Director Non-Qualified Stock Option Agreement Incorporated by Reference\n(10)AA Form of Non-Employee Director Restricted Stock Unit Agreement Filed Electronically\n(10)BB Form of Cash Retention Award Incorporated by Reference\n(10)CC Advisory Period Letter to Gregg W. Steinhafel, dated May 21, 2014 Incorporated by Reference\n(10)DD Restricted Stock Unit Agreement with John J. Mulligan, effective as of May\n22, 2014 Incorporated by Reference\n(10)EE Employment Offer Letter to Brian C. Cornell, dated July 26, 2014 Incorporated by Reference\n(10)FF Make-Whole Restricted Stock Unit Agreement with Brian C. Cornell,\neffective as of August 21, 2014 Incorporated by Reference\n(10)GG Make-Whole Performance-Based Restricted Stock Unit Agreement with\nBrian C. Cornell, effective as of August 21, 2014 Incorporated by Reference\n(10)HH Aircraft Time Sharing Agreement as of March 13, 2015 among Target\nCorporation and Brian C. Cornell Incorporated by Reference\n(10)II First Amendment dated February 24, 2015 to Credit Card Program\nAgreement among Target Corporation, Target Enterprise, Inc. and TD\nBank USA, N.A.\nIncorporated by Reference\n(10)JJ Amended and Restated Target Corporation 2011 Long-Term Incentive\nPlan Incorporated by Reference\n(10)KK Pharmacy Operating Agreement dated December 16, 2015 between\nTarget Corporation and CVS Pharmacy, Inc. Filed Electronically\n(10)LL Short-Term Incentive Plan Letter to Tina M. Tyler, dated January 14, 2016 Filed Electronically\n(10)MM Non-Competition, Non-Solicitation and Confidentiality Agreement with\nTina M. Tyler, effective as of January 27, 2016 Filed Electronically\n(12) Statements of Computations of Ratios of Earnings to Fixed Charges Filed Electronically\n75\n\n-- 80 of 84 --\n\n(21) List of Subsidiaries Filed Electronically\n(23) Consent of Independent Registered Public Accounting Firm Filed Electronically\n(24) Powers of Attorney Filed Electronically\n(31)A Certification of the Chief Executive Officer Pursuant to Section 302 of the\nSarbanes-Oxley Act of 2002 Filed Electronically\n(31)B Certification of the Chief Financial Officer Pursuant to Section 302 of the\nSarbanes-Oxley Act of 2002 Filed Electronically\n(32)A Certification of the Chief Executive Officer Pursuant to Section 18 U.S.C.\nSection 1350 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Filed Electronically\n(32)B Certification of the Chief Financial Officer Pursuant to Section 18 U.S.C.\nSection 1350 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Filed Electronically\n101.INS XBRL Instance Document Filed Electronically\n101.SCH XBRL Taxonomy Extension Schema Filed Electronically\n101.CAL XBRL Taxonomy Extension Calculation Linkbase Filed Electronically\n101.DEF XBRL Taxonomy Extension Definition Linkbase Filed Electronically\n101.LAB XBRL Taxonomy Extension Label Linkbase Filed Electronically\n101.PRE XBRL Taxonomy Extension Presentation Linkbase Filed Electronically\n76\n\n-- 81 of 84 --\n\nTarget 2015 Annual Report\nThe Annual Meeting of Shareholders is scheduled for June 8, 2016 at 9:00 a.m. (Pacific\nDaylight Time) at Segerstrom Center for the Arts – Samueli Theater, 615 Town Center Drive,\nCosta Mesa, CA 92626.\nQuarterly and annual shareholder information (including the Form 10-Q and Form 10-K\nAnnual Report, which are filed with the Securities and Exchange Commission) is available\nat no charge to shareholders. To obtain copies of these materials, you may send an e-mail\nto investorrelations@target.com, call 1-800-775-3110, or write to: Target Corporation,\nAttn: Investor Relations, 1000 Nicollet Mall, Minneapolis, Minnesota 55403.\nThese documents as well as other information about Target Corporation, including our\nBusiness Conduct Guide, Corporate Governance Guidelines, Corporate Responsibility\nReport and Board of Director Committee Charters, are also available on the Internet at\nwww.target.com/investors.\nWells Fargo Shareowner Services\nState Street Bank and Trust Company\nTrading Symbol: TGT\nNew York Stock Exchange\nFor assistance regarding individual stock records, lost certificates, name or address\nchanges, dividend or tax questions, call Wells Fargo Shareowner Services at\n1-800-794-9871, access their website at www.shareowneronline.com or write to: Wells Fargo\nShareowner Services, P.O. Box 64874, St. Paul, Minnesota 55164-0874.\nWells Fargo Shareowner Services administers a direct purchase plan that allows interested\ninvestors to purchase Target Corporation stock directly, rather than through a broker,\nand become a registered shareholder of the company. The program offers many features\nincluding dividend reinvestment. For detailed information regarding this program, call\nWells Fargo Shareowner Services toll free at 1-800-794-9871 or write to: Wells Fargo\nShareowner Services, P.O. Box 64874, St. Paul, Minnesota 55164-0874.\nAnnual Meeting\nShareholder Information\nTransfer Agent, Registrar and\nDividend Disbursing Agent\nTrustee, Employee Savings\n401(K) and Pension Plans\nStock Exchange Listing\nShareholder Assistance\nDirect Stock Purchase/Dividend\nReinvestment Plan\nShareholder Information\n\n-- 82 of 84 --\n\nRoxanne S. Austin\nPresident, Austin Investment\nAdvisors (6) (3)\nDouglas M. Baker, Jr.\nChairman and Chief Executive\nOfficer, Ecolab Inc. (2) (5) (4)\nBrian C. Cornell\nChairman of the\nBoard and Chief Executive Officer\nCalvin Darden\nChairman, Darden Putnam Energy\n& Logistics, LLC (2) (5)\nHenrique De Castro\nFormer Chief Operating Officer,\nYahoo! Inc. (2) (3)\nRobert L. Edwards\nFormer President and Chief\nExecutive Officer, AB Acquisition\nLLC (Albertsons/Safeway) (1) (3)\nMelanie L. Healey\nFormer Group President, North\nAmerica, The Procter & Gamble\nCompany (2) (3)\nDonald R. Knauss\nFormer Executive Chairman, The\nClorox Company (2) (5)\nMonica C. Lozano\nFormer Chairman, U.S. Hispanic\nMedia, Inc. (1) (5)\nMary E. Minnick\nPartner, Lion Capital LLP\n(1) (3)\nAnne M. Mulcahy\nChairman of the Board of\nTrustees, Save the Children\nFederation, Inc. (2) (6)\nDerica W. Rice\nExecutive Vice\nPresident, Global Services and\nChief Financial Officer, Eli Lilly &\nCompany (1) (6)\nKenneth L. Salazar\nPartner, WilmerHale (6) (3)\nJohn G. Stumpf\nChairman of the Board and Chief\nExecutive Officer, Wells Fargo &\nCompany (5) (6)\n(1) Audit and Finance Committee\n(2) Human Resources and\nCompensation Committee\n(3) Infrastructure and Investment\nCommittee\n(4) Lead Independent Director\n(5) Nominating and Governance\nCommittee\n(6) Risk and Compliance\nCommittee\nTimothy R. Baer\nExecutive Vice President, Chief\nLegal Officer and Corporate\nSecretary\nCasey L. Carl\nExecutive Vice President and\nChief Strategy and Innovation\nOfficer\nBrian C. Cornell\nChairman of the Board and Chief\nExecutive Officer\nJeffrey J. Jones II\nExecutive Vice President and\nChief Marketing Officer\nStephanie A. Lundquist\nExecutive Vice President and\nChief Human Resources Officer\nMichael E. McNamara\nExecutive Vice President and\nChief Information Officer\nJohn J. Mulligan\nExecutive Vice President and\nChief Operating Officer\nJanna A. Potts\nExecutive Vice President and\nChief Stores Officer\nJackie Hourigan Rice\nExecutive Vice President and\nChief Risk and Compliance\nOfficer\nCathy R. Smith\nExecutive Vice President and\nChief Financial Officer\nLaysha L. Ward\nExecutive Vice President\nand Chief Corporate Social\nResponsibility Officer\nPatricia Adams\nExecutive Vice President,\nMerchandising Product Group\nAaron Alt\nSenior Vice President, Grocery\nTransformation\nKristi Argyilan\nSenior Vice President, Media and\nGuest Engagement\nDavid Best\nSenior Vice President, Merchandising\nPlanning, Hardlines and Essentials\nDawn Block\nSenior Vice President, Merchandising\nEssentials & Beauty\nKarl Bracken\nSenior Vice President, Supply Chain\nTransformation\nJohn Butcher\nSenior Vice President, Merchandising\nBeauty & Dermstore\nKelly Caruso\nPresident, Target Sourcing Services\nKeith Colbourn\nSenior Vice President, Loyalty and\nLifecycle Marketing\nJoe Contrucci\nSenior Vice President, Stores\nTony Costanzo\nSenior Vice President, Stores\nTim Curoe\nSenior Vice President, Talent &\nOrganizational Effectiveness\nAnne Dament\nSenior Vice President,\nMerchandising, Grocery\nParitosh Desai\nSenior Vice President, Enterprise\nData, Analytics and Business\nIntelligence\nMichael Fiddelke\nSenior Vice President, Financial\nPlanning Analysis\nJuan Galarraga\nSenior Vice President, Store\nOperations\nJamil Ghani\nSenior Vice President, Enterprise\nStrategy and Innovation\nJason Goldberger\nPresident, Target.com & Mobile\nRick Gomez\nSenior Vice President, Brand and\nCategory Marketing\nJulie Guggemos\nSenior Vice President, Product\nDesign and Development\nAnu Gupta\nSenior Vice President, Operational\nExcellence\nCorey Haaland\nSenior Vice President, Treasurer\nRobert Harrison\nSenior Vice President, Chief\nAccounting Officer and Controller\nChristina Hennington\nSenior Vice President, Merchandising\nTransformation and Operations\nCynthia Ho\nSenior Vice President, Target\nSourcing Services\nYu-Ping Kao\nSenior Vice President, Human\nResources, Pay and Benefits\nNavneet Kapoor\nPresident and Managing Director,\nTarget India\nScott Kennedy\nPresident, Target Financial and Retail\nServices\nCarson Landsgard\nSenior Vice President, Distribution\nRodney Lastinger\nSenior Vice President, Stores\nStephanie Lucy\nSenior Vice President, Merchandise\nPlanning, Apparel and Accessories\nBrad Maiorino\nSenior Vice President and Chief\nInformation Security Officer\nScott Nygaard\nSenior Vice President,\nMerchandising, Hardlines\nTammy Redpath\nSenior Vice President, Creative and\nMarketing Operations\nRyan Rumbarger\nSenior Vice President, Human\nResources, Stores and Operations\nJill Sando\nSenior Vice President,\nMerchandising, Home\nMark Schindele\nSenior Vice President, Target\nProperties\nSamir Shah\nSenior Vice President, Stores\nDustee Tucker Jenkins\nSenior Vice President,\nCommunications\nArthur Valdez\nExecutive Vice President and Chief\nSupply Chain & Logistics Officer\nTodd Waterbury\nSenior Vice President and Chief\nCreative Officer\nMichelle Wlazlo\nSenior Vice President, Merchandising\nApparel & Accessories\nDirectors \tExecutive Officers \tOther Senior Officers\nDirectors and Management\n\n-- 83 of 84 --\n\nVisit our online Annual Report\nat target.com/annualreport.\n1000 Nicollet Mall, Minneapolis, MN 55403 612.304.6073\n\n-- 84 of 84 --\n\n",
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