Here For Good.
Table of Contents Target’s Story.............................................................4 Letter to Our Shareholders........................................6 Here For Good .........................................................8 Here For Good Goals................................................14 Financial Summary....................................................18 Shareholder Info........................................................28 List of Directors.........................................................30
Our Brand Promise Our mission is to make Target the preferred shopping destination for our guests by delivering outstanding value, continuous innovation and an exceptional guest experience by consistently fulfilling our Expect More. Pay Less.速 brand promise. To support our mission, we are guided by our commitments to great value, the community, diversity and the environment.
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Letter to our Shareholders In 2010, Target embraced innovation to drive strong financial performance and create new opportunities for profitable growth. Our enduring “Expect More. Pay Less.” brand promise helped us deliver greater convenience, increased savings and a more personalized shopping experience. As a result, we further strengthened our relationship with our guests and generated $67.4 billion in revenue, even in a slow and uneven economic recovery. Through disciplined execution across the company, net earnings grew to $2.9 billion, 17.3 percent above 2009. Diluted earnings per share rose even more quickly, growing 21.4 percent to $4.00, as we reduced our outstanding shares by 40.6 million during the year. And, we sustained our decades-long record of annual dividend increases, with a 47 percent increase of our quarterly dividend to 25 cents per share. Combining dividends with share repurchase, we returned $3.1 billion to our shareholders in 2010. By listening to our guests, we’re making the Target brand experience more personal, relevant and rewarding than ever. For example: • To create a shopping experience guests can’t find anywhere else, we remodeled 341 general merchandise stores in 2010, far more than any other year in our history. These remodels added a broader grocery assortment, along with our latest merchandising innovations across the store, including home, beauty, electronics, video games and shoes. By year-end, we were operating 462 general merchandise locations with our expanded fresh food assortment, and we have plans to complete approximately 380 remodels in 2011. • Our REDcard Rewards program now offers an additional 5 percent discount nearly every time guests use their Target debit and credit cards at our stores and their Target credit card at Target.com, attracting our most loyal guests to shop at Target even more often.
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• To underscore our commitment to value and appeal to our guests’ new frugality, we reinvented or expanded several of our owned brand assortments, including Room Essentials in home, Circo in children’s apparel and accessories, and up & up in both healthcare and household essentials. And our Low Price Promise continued to provide our guests with the assurance that we’ll match competitors’ advertised prices on similar items. • We continue to evolve our marketing to reflect both the realities and aspirations of our guests’ lives. For instance, our popular Life’s a Moving Target television spots further strengthened our guests’ affinity for Target. • We’re creating industry-leading mobile applications and web strategies—including the upcoming launch of our new Target.com site this summer—offering a Target experience that fits guests’ lives and shopping styles, whether in store, at home or on the go.
REDcard
To help guests find new ways to save, we enhanced REDCARD REWARDS. Cardholders now save 5 percent off nearly every item, which is driving sales through higher card issuance and usage.
In addition to our initiatives to drive sales and gain share in existing markets, we’re looking to grow our guest base and enter new markets through a dynamic growth portfolio. In January 2011 we announced an important step in our company’s history as we outlined plans to extend our brand beyond the United States for the first time by opening 100 to 150 Target stores in Canada in 2013 and 2014. Domestically, we continue to expand our presence by opening strategically and financially attractive stores using our traditional formats, while also pursuing opportunities for a smaller-format store in dense urban markets. Beyond driving these critical business initiatives, our team continues to engage vigorously in our broader community commitments. In September, we announced plans to make the largest single charitable donation in Target’s history: $500 million by the end of 2015 to support education, and in December, we announced Target’s first-ever public stainability commitments. We also continue to focus on well-being for our team members, their families and our communities, and on delivering an employment experience that team members love and candidates seek. In addition, safety and preparedness and responsible sourcing remain key facets of our commitment to high ethical standards and strong communities. These are very exciting times for Target, and our outlook has never been brighter, due, in large part, to the hard work, ingenuity and unbounded energy of our talented team, which comprises more than 350,000 diverse team members around the world. By continuing to embrace our long-standing company values, and consistently affirming our commitment to innovation and operational excellence, we are confident Target will drive continued prosperity and create meaningful value for our shareholders for many years to come.
We are rapidly expanding MOBILE AND WEB SOLUTIONS for our guests, giving them greater convenience by allowing them to shop from just about anywhere in the world. Mobile Commerce Daily named Target “2010 Mobile Retailer of the Year.”
Gregg Steinhafel | Chairman, President and CEO, Target Board of Directors Changes: During the past year, Richard Kovacevich, former chairman and CEO of Wells Fargo & Company, retired from our board of directors. We thank Dick for his contributions during his 14 years of service.
TARGET
As we strive to continuously reinvent the retail shopping experience, we REMODELED nearly one out of every five Target stores, adding more fresh food and merchandising innovations.
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Here for Good. Our Commitment At Target, our commitment to guests extends far beyond our stores. We believe that true guest service includes serving the communities we all share. Offering great products, fantastic prices and a fun shopping experience is just one part of the story. We also devote our personal energy, leadership skills and business strengths to supporting the communities where our guests and team members live, work and shop. Community giving is and always has been a cornerstone of our company. Since 1946, Target has given 5 percent of our income – which today totals more than $3 million per week – to our communities. We listen, act and give locally, offering our individual time and talent in addition to our company resources. In business, Target collaborates and innovates to drive results. This collaborative spirit infuses our community involvement, too. We engage with a broad range of public and private partners to build stronger, healthier and safer communities. By working side by side with those around us and sharing Target’s expertise with local partners, we help drive results that benefit all. Recently, Target published measurable goals in three key areas: education, health and well-being and environmental sustainability. Target is proud to be closely connected to our communities and guided by the diverse perspectives and backgrounds of our more than 355,000 team members. Our legacy of local community engagement and corporate social responsibility is a source of pride for our team and a hallmark of our brand.
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Environment Environmental sustainability at Target is integrated throughout our business from the way we build our stores to the products we stock on our shelves.
Environmental sustainability is integrated throughout our business—from the way we build our stores to the products on our shelves. Since we opened our first store in 1962, Target has invested in the health and sustainability of our communities. In the early 1960’s, part of our giving strategy was devoted to urban renewal and cleaning rivers and waterways. In the 1970’s, we sponsored the first Earth Day celebration and developed our first recycling program. Today, we integrate sustainability practices across our business. For example, we have recycling stations in all our stores for guests to join in on our waste reduction efforts and we’ve made commitments to help guide us as we work to reduce carbon emissions, conserve water and minimize waste going to landfills.
Sustainable Living
We're empowering guests and team members to lead a more sustainable lifestyle by providing the right information, tools and incentives to make it easy. In 2010, we launched a comprehensive guest facing recycling program in our stores. The purpose of our new recycling program was to bring our commitment to recycling out of the backroom and into the forefront. By making our recycling programs easily accessible to both our guests and our team members, we’re working together to make an even bigger impact. Guests can now easily recycle cans, glass plastic bottles, plastic bags, MP3 players, ink cartridges and cell phones right in their local Target store.
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Smart Development
Preservation at Blacklick Creek At Target, we believe that clean water is a limited resource, and that we have a responsibility to conserve and protect water resources. As part of our commitment to sustainability, we are taking steps to reduce our water footprint. For example, we rebuilt the stream embankment along Blacklick Creek, a protected body of water running adjacent to our property, during the construction of our Reynoldsburg, Ohio store. The property adjacent to the creek will be preserved in perpetuity by Target and the site developer with conservation easements. The area now provides a habitat for birds, frogs, butterflies and other wetland wildlife, and helps cleanse storm water. A Landfill Goes Green An unlicensed 14-acre landfill that used to top the U.S. Environmental Protection Agency’s “worst sites in New Jersey” list has a new life. Now cleaned up and restored, the site is home to one of Target’s LEED-certified stores. The Stafford Township store is part of a fully LEED Silver-rated redevelopment that integrates retail, office space and homes (including more than 110 units of affordable housing). The store was built with low-emission carpet, glues and paint; recycled concrete and glass; super-efficient HVAC systems; and a storm water management system that captures rainwater from the parking lot to irrigate the native-plant landscaping. The project gets some of its electricity from a wind turbine and solar panels, and even offers special parking spaces for guests who carpool or drive fuel-efficient vehicles.
Efficient Operations
While we must take responsibility for our own contributions to climate change, a solution requires a joint effort among businesses, individuals and government. Target supports government action toward restricting greenhouse gas (GHG) emissions and we are participating in a solution-oriented
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dialogue with stakeholders. We support a national, marketbased approach to GHG-emission reduction and a national standard for green building codes and certifications. The majority of Target’s emissions are an indirect result of the electricity used to operate our stores. Target discloses its carbon emissions each year through the Carbon Disclosure Project, an investor-supported group that solicits emissions data from large companies. We’re taking steps to lessen our impact by enhancing our energy-efficient store design, using new lighting technologies and experimenting with renewable energy. We’re also taking steps to reduce refrigerant emissions from the systems used to cool and freeze the food in our stores. Target recently joined the Environmental Protection Agency’s (EPA’s) GreenChill program, a partnership between the EPA and more than 50 food retailers to reduce refrigerant emissions and decrease their impact on the environment. We’re currently testing a more sustainable refrigerant in 11 Target stores.
2-Lamp fixtures in stores reduce lighting energy by 40%
Since 2008, we have retrofitted more than 600 stores with a new light fixture that converts four-bulb overhead fixtures to energy-efficient twobulb fixtures without sacrificing any light. Another 500 stores will be retrofitted in 2011.
Education We believe every child should have the opportunity to reach his or her full potential. That’s why Target supports education programs that reach children of all ages, with focus on helping U.S. kids read proficiently by the end of third grade.
Reading Matters
Education is a longtime focus of Target’s community giving—and when it comes to causes, it’s by far the top priority of our guests. At Target, we believe every child deserves the opportunity to graduate from high school and reach his or her full potential. That’s why we’re on track to give $1 billion for education by the end of 2015. A significant portion of this giving will fund programs and partnerships that help more U.S. children reach one of the most critical milestones on the path to graduation: reading proficiently by the end of third grade. In fact, research shows that at the end of third grade, school curriculum shifts from learning to read to reading to learn, and that students who can't read at grade level by this time have trouble keeping up, and often fall behind.
REDcard
In partnership with national non-profit organization First Book, we furthered our COMMITMENT TO READING by distributing 1 million new books to schools in all 50 states and the District of Columbia.
Building Educated Leaders for Life
In 2007, Target began a partnership with Building Educated Leaders for Life (BELL), an in-school supplemental education program that helps transform the academic achievements and self-confidence of children living in under-resourced urban communities. By sponsoring the BELL Early Readers program, Target was able to help 3,000 K-3 students sharpen their literacy skills year-round. Through our sponsorship of BELL Summer and BELL After School, students benefit from smallgroup academic instruction, mentorship and a wide range of other enrichment and community-engagement activities.
With the help of our REDcard® holders, Target has donated $324 million to local K–12 schools since 1997.
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Well-Being Healthy Living at Every Level
When you look at the big picture, well-being goes far beyond exercise and a healthy diet. It’s about the quality of the most important parts of your life: your health, your career, your relationships, your finances and your place in the community. Target serves as a community resource and a credible partner to help our guests, team members and their families reach their well-being goals by convenient, healthy choices at an affordable price. We also actively support our more than 350,000 team members and their families in reaching their wellbeing goals. That’s why we set goals to increase the percentage of team members who complete biometric, breast-cancer and other preventive-care screenings, and who use financial tools and resources.
Allies in Good Health
At Target, we know that we have a unique opportunity to help guests, team members and their families live healthy lives. Through our products, pharmacies and clinics, we provide some form of health care to millions of guests each year. And we take a holistic approach to the well-being of our more than 355,000 team members and their families, an approach we believe can help our team make meaningful changes to improve their well-being.
It’s also why Target is a founding member of US Healthiest (The Alliance to Make US Healthiest), a new coalition that strives to help people nationwide become more physically and emotionally healthy, and aims to help the U.S. become the healthiest nation in a healthier world. The vision of US Healthiest is to create a national movement that promotes individual health and well-being in local communities. Target is also one of four organizations that piloted the HealthLead US Healthiest Workplace Accreditation Program, which offers employers accreditation of their employee well-being policies and practices as well as a means to continuous quality improvement of their healthmanagement practices. The program also establishes and recognizes an organization's influence and involvement in broader community health. As part of this pilot program, Target earned silver-level HealthLead accreditation.
A Healthy Destination
Target helps guests make easy, incremental choices that add up to a healthy lifestyle. That’s why we’ve added an expanded fresh-food layout in more than half of our general merchandise stores. By the end of 2012, approximately 1,100 of our more than 1,750 Target stores will offer a curated assortment of fresh produce, fresh meat and baked goods in an inviting, open-market layout, making healthy choices convenient.
“Target is improving the health and wellbeing of its 355,000 team members and their families, and as part of US Healthiest, contributing to a healthier nation.”
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HAVE A NICE RIDE
In addition to reformulating our entire Archer Farms collection in 2008 to meet the Food and Drug Administration standard for labeling items as zero grams of added trans fat, we developed the Archer Farms Simply Balanced line of better-for-you meals, snacks and beverages. Launched in 2009, the line now includes more than 100 products that meet carefully crafted standards for nutrition and ingredients. Guests can easily make better choices using the nutritional criteria that are clearly labeled on the front of the packaging. We’ve also made it easier for guests to identify better-foryou food selections with special signing in key aisles.
Helping Team Members Live Healthier Lives
Well-being is about more than health. It’s about the combination of five key elements—career, social, financial, health and community—and how they interact in our lives. Target provides tools, resources and support for each of the elements to help our team members feel and live well.
On Site LifeResources
Target’s Onsite LifeResources program—which brings a specialist directly to team members at select stores to provide confidential, face-to-face support—helps team members come to work every day and be their personal best. We launched the program in 2007 after learning that team members at certain stores were struggling with significant challenges in their personal lives. Target partnered with ComPsych GuidanceResources® to provide a social worker at these stores eight hours a week. Now Onsite LifeResources is available in 69 stores across the country and helped 52,000 team members in 2010, up from 13,000 participants in 2009. The results? Our 2009 team member survey results show a 5 percent increase in engagement at stores with Onsite LifeResources, compared to a 1 percent increase at stores without the program. These stores also saw a 24 percent decrease in safety incidents and a 17 percent improvement
in attendance. Nearly 80 percent of leaders at these stores said the program improved the store’s overall culture. We believe that prevention is the foundation for a healthier America. That’s why Target introduced a Health Insurance Discount program. By participating in a biometric health screening and online health assessment, team members and a participating spouse or domestic partner can each earn a $250 discount. As part of our commitment to health and well-being, Target sponsors the Twin Cities Marathon and the Medtronic TC 1-Mile. In 2010, more than 500 team members laced up their running shoes for the one-mile run, earning Target first place awards for both Largest Team and Fastest Team.
Increase Preventive Care Screenings
Target believes in prevention to help identify and treat health issues earlier. That’s why we want to increase the percentage of team members and their families enrolled in a Target health plan getting age- and gender-recommended preventive care screenings. Our goal is to make Target “best in class” by exceeding the retail-industry average (RIA) in these areas: Breast Cancer Screenings (RIA 32%) Cervical Cancer Screenings (RIA 30%) Wellness Visits (RIA 29%) Colon Cancer Screenings (RIA 10%)
We carry more than 700 organic foods from produce to pasta.
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Goals for Good. At Target, we know that strong businesses thrive in strong communities—that’s why, since 1946, we’ve made community engagement and social responsibility hallmarks of our brand. Corporate responsibility is more than a business initiative. It’s a commitment to our guests, team, shareholders and communities. This year, we’re taking on new challenges in corporate citizenship by sharing our goals in three areas: education, sustainability and health and well-being. These goals were developed to put more U.S. kids on the path to graduation, reduce our impact on the environment and help Target team members and their families live healthy, balanced lives. We hope you’ll explore the exciting new goals we’ve set for ourselves.
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Environment Supporting a Sustainable Environment Since we opened our first store, Target has invested in the health and sustainability of our communities. We join our guest, team members and partners in making environmental commitments we all can keep.
2009 32%
Reduce Waste Reduce the amount of operating waste sent to landfill by 15 percent.
2009 3.4 BILLION GALLONS 24%
2015
10% REDUCTION/ SQ. FOOT
Reduce Water Usage 2015
Reduce water usage by 10 percent per square foot.
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Education Investing in Kids, Families & Schools
Improve More School Libraries
Through programs like Take Charge of Education and Target School Library Makeovers, we’re on track to give $1 billion for education by the end of 2015. We’ll leverage our commitment to communities and our strengths as a national retailer to put more U.S. kids on the path to graduation, with an emphasis on helping them read proficiently by the end of third grade.
Increase the number of Target School Library Makeovers completed at in-need schools, and increase the number of books donated as part of the Target School Library Makeover and Books for Schools Award programs. 2009
2015 1.125 million books donated
2015
2009
By the end of 2015, double Target’s year-end 2009 cumulative support of education, with a focus on reading.
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2 million books donated = 10,000 books
Well-Being Supporting Smarter, Healthier Living We want our team members and their families to enjoy healthy, balanced lives. By providing preventive care screenings, financial tools and more, we can help them achieve their well-being goals.
80%
2015
80%
2015
2009 26%
2009 15%
Increase the percentage of team members and spouses/domestic partners enrolled in a Target health plan completing a health assessment.
Increase the percentage of team members and spouses/domestic partners enrolled in a Target health plan completing a biometric health screening.
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Percentage of Sales The Target experience now reaches far beyond the walls of our stores, weaving us even more into the modern lives of our guests, 24/7. By understanding their individual needs and anticipating their desires—what they want to shop for and how they want to shop—we are creating connections that are personal, relevant and oh-so-rewarding.
We operate Target general merchandise stores, the majority of which offer a wide assortment of general merchandise and a more limited food assortment than traditional supermarkets. During 2009 and 2010 we completed store remodels that enabled us to offer an expanded food assortment in many of our general merchandise stores. The expanded food assortment includes some perishables and some additional dry, dairy and frozen items. In addition, we operate Super Target stores with general merchandise items and a full line of food items comparable to that of traditional supermarkets. Target.com offers a wide assortment of general merchandise including many items found in our stores and a complementary assortment, such as extended sizes and colors,sold only online. A significant portion of our sales is from national brand merchandise. We also sell many products under our owned and exclusive brands. Effective inventory management is key to our ongoing success. We utilize various techniques including demand forecasting and planning and various forms of replenishment management. We achieve effective inventory management by being in-stock in core product offerings, maintaining positive vendor relationships, and carefully planning inventory levels for seaso-nal and apparel items to minimize markdowns
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Apparel and accessories Household
Home Furnishings
20%
24% 19%
20%
17%
Hardlines
Household essentials includes pharmacy, beauty, personal care, baby care, cleaning and paper products. Hardlines includes electronics (including video game hardware and software), music, movies, books, computer software, sporting goods and toys. Apparel and accessories includes apparel for women, men, boys, girls, toddlers, infants and newborns. It also includes intimate apparel, jewelry, accessories and shoes.
Food and Pet
Home furnishings and d´ecor includes furniture, lighting, kitchenware, small appliances, home d´ecor, bed and bath,home improvement, automotive and seasonal merchandise such as patio furniture and holiday d´ecor. Food and pet supplies includes dry grocery, dairy, frozen food, beverages, candy, snacks, deli, bakery, meat,produce and pet supplies.
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Financials Our 2010 Retail Segment sales increased 3.7 percent over last year due to a 2.1 percent comparable-store increase combined with the contribution from new stores. Our Retail Segment EBITDA and EBIT increased 4.9 percent and 5.8 percent, respectively, compared with the prior year. In the Credit Card Segment, we achieved a significant increase in segment profit primarily due to declining bad debt expense driven by improved trends in key measures of risk. Cash flow provided by operations was $5,271 million, $5,881 million and $4,430
million for 2010, 2009 and 2008. We opened 13 new stores and 76 new stores in 2010 and 2009, respectively. In 2010 we remodeled 341 stores, significantly more than the 67 stores we remodeled in 2009. Additionally, during 2010 and 2009 we repurchased 47.8 million and 9.9 million shares of our common stock for a total cash investment of$2,508 million ($52.44 per share) and $479 million ($48.54 per share).
Net Earnings
Total Revenue
20
‘07
‘08 ‘09
‘10
‘06
‘07
‘08 ‘09
‘10
In Millions
‘06
In Millions
$2,214
$2,488
$2,787
$2,849
$2,920
2010 Growth 17.3% Five-year CAGR 3.9%
$67,390
$65,357
$64,948
$63,367
$59,490
2010 Growth 3.1% Five-year CAGR 5.1%
Summary of Accounting Policies
Organization Target Corporation (Target or the Corporation) operates two reportable segments: Retail and Credit Card. Our Retail Segment includes all of our merchandising operations, including our fully integrated online business. Our Credit Card Segment offers credit to qualified guests through our branded proprietary credit cards, the Target Visa and the Target Card. Additionally, we offer a branded proprietary Target Debit Card. Collectively, these REDcards strengthen the bond with our guests, drive incremental sales and contribute to our results of operations. Consolidation The consolidated financial statements include the balances of the Corporation and its subsidiaries after elimination of intercompany balances and transactions. All material subsidiaries are wholly owned. We consolidate variable interest entities where it has been determined that the Corporation is the primary beneficiary of those entities' operations. The variable interest entity consolidated is a bankruptcy-remote subsidiary through which we sell certain accounts receivable as a method of providing funding for our accounts receivable. Use of estimates The preparation of our consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions affecting reported amounts in the consolidated financial statements and accompanying notes. Actual results may differ significantly from those estimates. Fiscal year Our fiscal year ends on the Saturday nearest January 31. Unless otherwise stated, references to years in this report relate to fiscal years, rather than to calendar years. Fiscal year 2010Â ended January 29, 2011, and consisted of 52 weeks. Fiscal year 2009 ended January 30, 2010, and consisted of 52 weeks. Fiscal year 2008 ended January 31, 2009, and consisted of 52 weeks. Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation. Accounting policies applicable to the items discussed in the Notes to the Consolidated Financial Statement are described in the respective notes.
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Consolidated Statement of Operations Financial Results (In Millions, except per share data)
2010
2009 2008
Sales Credit card revenues
$ 65,786 1,604
$63,435 1,922
$6288 2,064
Total Revenues Cost of sales Selling, general and administrative expense Credit card expenses Depreciation and amortization
67,390 45,725
65,357 44,062
64,984 44,157
13,469 860 2,084
13,078 1,521 2,023
12,954 1,609 1,826
Earnings before interest expense and income taxes Nonrecourse debt collateralized by credit card receivables Other interest expense Interest income Net interest expense
5,252 83 677 (3)
4,673 97 707 (3)
4,402 167 727 (28)
757
801
866
Earnings from continuing operations before income taxes Provision for income taxes
4,495 1,575
3,872 1,384
3,536 1,322
Net earnings
$2,920
$ 2,488
$2,214
Basic earnings per share
$4.03
$3.32
$2.87
Diluted earnings per share
$4.00
$3.30
$2.86
Weighted average common shares outstanding Basic Diluted
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723.6 729.4
752.0 754.8
770.4 773.6
Consolidated Statements of Financial Position (millions, except footnotes) January 29, 2011 Assets Cash and cash equivalents, including marketable securities of $1,129 and $1,617 Credit card receivables, net allowance of $690 and $1,016 Inventory Other current assets
January 30, 2010
$1,712
$2,220
6,153 7,596 1,752
6,966 6,966 2,079
Total current assets Property and equipment Land Buildings and improvements Fixtures and equipment Computer hardware and software Construction in progress Accumulated depreciation
17,213
18,424
5,928 23,081 4,939 2,533 567 (11,555)
5,793 22,152 4,743 2,575 502 (10,485)
Property and equipment, net Other noncurrent assets
25,493 999
25,280 829
Total assets
$43,705
$44,533
$6,625 3,326 119
$6,511 3,120 796
-
900
Total noncurrent liabilities Shareholders’ investment Common stock Additional paid-in-capital Retained earnings Accumulated other comprehensive loss
18,148
17,859
59 3,311 12,698 (581)
62 2,919 12,947 (581)
Total shareholders’ investment
15,487
15,347
Total liabilities and shareholders’ investment
$43,705
$44,533
Liabilities and shareholders’ investment Accounts payable Accrued and other current laibilities Unsecure debt and other borrowings Nonrecourse debt collateralized by credit card receivables
Common Stock Authorized 6,000,000,000 shares, $0.0833 par value; 704,038,218 shares issued and outstanding at January 29, 2011;744,644,454 shares issued and outstanding at January 30, 2010. Preferred Stock Authorized 5,000,000 shares, $0.01 par value; no shares were issued or outstanding at January 29, 2011 or January 30, 2010.
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Derivative Financial Instruments
Derivative financial instruments are reported at fair value on the Consolidated Statements of Financial Position. Historically our derivative instruments have primarily consisted of interest rate swaps. We use these derivatives to mitigate our interest rate risk. We have counterparty credit risk resulting from our derivative instruments. This risk lies primarily with two global financial institutions. We monitor this concentration of counterparty credit risk on an ongoing basis. Prior to 2009, the majority of our derivative instruments qualified for fair value hedge accounting treatment. The changes in market value of an interest rate swap, as well as the offsetting change in market value of the hedged debt, were recognized within earnings in the current period. We assessed at the inception of the hedge whether the hedging derivatives were highly effective in offsetting changes in fair value or cash flows of hedged items. Ineffectiveness resulted when changes in the market value of the hedged debt were not completely offset by changes in the market value of the interest rate swap. For those derivatives whose terms met the conditions of the "short-cut method," 100 percent hedge effectiveness was assumed. There was no ineffectiveness recognized in 2010, 2009 or 2008 related to our derivative instruments. As detailed below, at January 29, 2011, there were no derivative instruments designated as accounting hedges.
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Consolidated Statements of Cash Flows (millions)
2010
2009
2008
$2,920
$2,488
$2,214
2,084 109 445 528 (145)
2,023 103 364 1,185 143
1,826 72 91 1,251 316
(78) (417) (124) (212) 115 149 (103)
(57) (474) (129) (114) 174 257 (82)
(458) 77 (99) (55) (389) (230) (186)
5,271
5,881
4,430
Investing activities Expenditures for property and equipment Proceeds from disposal of property and equipment Change in accounts receivable originated at third parties Other investments
(2,129) 69 363 (47)
(1,729) 33 (10) 3
(3,547) 39 (823) (42)
Cash flow required for investing activities
(1,744)
(1,730)
(4,373)
Financing activities Reductions of short-term notes payable Additions to long-term debt Reductions of long-term debt Dividends paid Repurchase of stock Stock option exercises and related tax benefit Other
- 1,011 (2,259) (609) (2,452) 294 -
- - (1,970) (496) (423) 47 -
(500) 3,557 (1,455) (465) (2,815) 43 (8)
Cash flow required for financing activities
(4,015)
(2,842)
(1,643)
Net increase/(decrease) in case and cash equivalents Cash and cash equivalents at beginning of year
(488) 2,200
(2,842) 846
(1,643) 2,450
Cash and cash equivalents at end of year
$1,712
$2,220
$864
Operating activities Net earnings Reconciliation to cash flow Depreciation and amortization Share-based compensation expense Deferred income taxes Bad debt expense Non-cash (gains)/losses and other, net Changes in operating accounts: Accounts receivable originated at Target Inventory Other current assets Other noncurrent assets Accounts payable Accrued and other current liabilities Other noncurrent liabilities Cash flow provided by operations
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Stock Information Share-Based Compensation
We maintain a long-term incentive plan (the Plan) for key team members and non-employee members of our Board of Directors. Our long-term incentive plan allows us to grant equity-based compensation awards, including stock options, stock appreciation rights, performance share units, restricted stock units, restricted stock awards or a combination of awards (collectively, share-based awards). The number of unissued common shares reserved for future grants under the Plan was 17,552,454 at January 29, 2011 and 21,450,009 at January 30, 2010. Total share-based compensation expense recognized in the Consolidated Statements of Operations was $109 million, $103 million and $72 million in 2010, 2009 and 2008, respectively. The related income tax benefit was $43 million, $40 million and $28 million in 2010, 2009 and 2008, respectively.
Stock Option We grant nonqualified stock options to certain team members under
the Plan that generally vest and become exercisable annually in equal amounts over a four-year period and expire 10 years after the grant date. We also grant options to the non-employee members of our Board of Directors which vest immediately and become exercisable after one year with a term equal to the lesser of 10 years from date of grant or 5 years following departure from the Board. Starting in 2010, the options granted to our Board of Directors vest quarterly over a one-year period.
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Q1
48.65
2010 High/Low Price
54.37
Q2
50.50 57.94
Q3
49.53 55.05
Q4
51.94 60.13
TGT:NYSE
60 55
DOLLARS
50
JAN ‘10
APR ‘10
JUL ‘10
OCT ‘10
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Shareholder Information Annual Meeting
The Annual Meeting of Shareholders is scheduled for June 8, 2011 at 1:30 p.m. (Eastern Daylight Time) at the Target store at 6231 Penn Ave., Pittsburgh, PA 15206.
Shareholder Information
Quarterly and annual shareholder information, including the Form 10-Q and Form 10-K Annual Report, which are filed with the Securities and Exchange Commission, is available at no charge to shareholders. To obtain copies of these materials, you may send an email to InvestorRelations@ Target.com, call 1-800-775-3110, or write to: Director, Investor Communications (TPN-1146), Target Corporation, 1000 Nicollet Mall, Minneapolis, MN 55403. These documents as well as other information about Target Corporation, including our Business Conduct Guide, Corporate Governance Guidelines, Corporate Responsibility Report and Board of Director Committee Position Descriptions, are also available on the internet at www.Target.com/investors.
Sales Information
Comments regarding our sales results are provided periodically throughout the year on a recorded telephone message accessible by calling 1-866-526-7639. Our current sales disclosure practice includes a sales recording on the day of our monthly sales release.
Transfer Agent, Registrar and Dividend Disbursing Agent BNY Mellon Shareowner Services
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Trustee, Employee Savings 401(K) and Pension Plans State Street Bank and Trust Company
Stock Exchange Listings Trading symbol: TGT New York Stock Exchange
Shareholder Assistance
For assistance regarding individual stock records, lost certificates, name or address changes, dividend or tax questions, call BNY Mellon Shareowner Services at 1-800794-9871, access their website at www.bnymellon.com/shareowner/equityaccess, or write to: BNY Mellon Shareowner Services, P.O. Box 358015, Pittsburgh, PA 15252-8015.
Direct Stock Purchase/Dividend Reinvestment Plan
BNY Mellon Shareowner Services administers a direct service investment plan that allows interested investors to purchase Target Corporation stock directly, rather than through a broker, and become a registered shareholder of the company. The program offers many features including dividend reinvestment. For detailed information regarding this program, call BNY Mellon Shareowner Services toll free at 1-866-353-7849 or write to: BNY Mellon Shareowner Services, P.O. Box 358035, Pittsburgh, PA 15252-8035.
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List Of Directors Roxanne S. Austin Former President and Chief Executive Officer, Move Networks, Inc.
Calvin Darden Chairman, Darden Development Group, LLC
Mary N. Dillon President and Chief Executive Officer, United States Cellular Corporation
James A. Johnson Vice Chairman, Perseus, LLC
Mary E. Minnick Partner, Lion Capital, LLP
Anne M. Mulcahy Chairman of the Board, Save the Children Federation, Inc.
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Derica W. Rice Executive Vice President, Global Services and Chief Financial Officer, Eli Lilly & Company
Stephen W. Sanger Former Chairman of the Board and Chief Executive Officer, General Mills, Inc.
Gregg W. Steinhafel Chairman of the Board, President and Chief Executive Officer, Target
John G. Stumpf Chairman of the Board, President and Chief Executive Officer, Wells Fargo & Company
Solomon D. Trujillo Former Chief Executive Officer, Telestra Corporation Limited
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