Case 1 - Ratio Analysis

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item 2 properties

Item 2. Properties
Stores as of January 30, 2021 Stores Retail Sq. Ft. (in thousands) Stores as of January 30, 2021 Stores Retail Sq. Ft. (in thousands)
Alabama 22 3,132 Montana 7 777
Alaska 3 504 Nebraska 14 2,005
Arizona 46 6,080 Nevada 18 2,262
Arkansas 9 1,165 New Hampshire 9 1,148
California 307 36,968 New Jersey 47 5,992
Colorado 42 6,244 New Mexico 10 1,185
Connecticut 21 2,731 New York 87 10,289
Delaware 3 440 North Carolina 51 6,540
District of Columbia 5 342 North Dakota 4 554
Florida 126 17,142 Ohio 64 7,829
Georgia 50 6,814 Oklahoma 15 2,167
Hawaii 7 1,111 Oregon 20 2,312
Idaho 6 664 Pennsylvania 75 9,094
Illinois 99 12,131 Rhode Island 4 517
Indiana 32 4,185 South Carolina 19 2,359
Iowa 21 2,859 South Dakota 5 580
Kansas 17 2,385 Tennessee 30 3,816
Kentucky 14 1,571 Texas 153 21,029
Louisiana 15 2,120 Utah 14 1,950
Maine 5 630 Vermont 1 60
Maryland 40 4,960 Virginia 60 7,754
Massachusetts 49 5,506 Washington 40 4,424
Michigan 53 6,286 West Virginia 6 755
Minnesota 73 10,315 Wisconsin 36 4,427
Mississippi 6 743 Wyoming 2 187
Missouri 35 4,608
Total 1,897 241,648

item 2 properties-1

Stores and Distribution Centers as of January 30, 2021 Stores Distribution Centers (a)
Owned 1,526 34
Leased 214 10
Owned buildings on leased land 157 —
Total 1,897 44

item 4a executive officers

Item 4A. Executive Officers
Name Title and Business Experience Age
Katie M. Boylan Executive Vice President and Chief Communications Officer since February 2021. Senior Vice President and Chief Communications Officer from January 2019 to February 2021. Senior Vice President, Communications from June 2017 to January 2019. Vice President, Communications from December 2015 to June 2017. 44
Brian C. Cornell Chairman of the Board and Chief Executive Officer since August 2014. 62
Michael J. Fiddelke Executive Vice President and Chief Financial Officer since November 2019. Senior Vice President, Operations from August 2018 to October 2019. Senior Vice President, Merchandising Capabilities from March 2017 to August 2018. Senior Vice President, Financial Planning & Analysis from July 2015 to March 2017. 44
Rick H. Gomez Executive Vice President and Chief Food and Beverage Officer since February 2021. Executive Vice President and Chief Marketing, Digital & Strategy Officer from December 2019 to February 2021. Executive Vice President and Chief Marketing & Digital Officer from January 2019 to December 2019. Executive Vice President and Chief Marketing Officer from January 2017 to January 2019. Senior Vice President, Brand and Category Marketing from April 2013 to January 2017. 51
A. Christina Hennington Executive Vice President and Chief Growth Officer since February 2021. Executive Vice President and Chief Merchandising Officer, Hardlines, Essentials and Capabilities from January 2020 to February 2021. Senior Vice President, Group Merchandise Manager, Essentials, Beauty, Hardlines and Services from January 2019 to January 2020. Senior Vice President, Merchandising Essentials, Beauty and Wellness from April 2017 to January 2019. Senior Vice President, Merchandising Transformation and Operations from August 2015 to April 2017. 46
Melissa K. Kremer Executive Vice President and Chief Human Resources Officer since January 2019. Senior Vice President, Talent and Organizational Effectiveness from October 2017 to January 2019. Vice President, Human Resources, Merchandising, Strategy & Innovation, from September 2015 to October 2017. 43
Don H. Liu Executive Vice President, Chief Legal & Risk Officer and Corporate Secretary since October 2017. Executive Vice President, Chief Legal Officer and Corporate Secretary from August 2016 to September 2017. Executive Vice President, General Counsel and Corporate Secretary of Xerox Corporation from July 2014 to August 2016. 59
Michael E. McNamara Executive Vice President and Chief Information Officer since January 2019. Executive Vice President and Chief Information & Digital Officer from September 2016 to January 2019. Executive Vice President and Chief Information Officer from June 2015 to September 2016. 56
John J. Mulligan Executive Vice President and Chief Operating Officer since September 2015. 55
Jill K. Sando Executive Vice President and Chief Merchandising Officer since February 2021. Executive Vice President and Chief Merchandising Officer, Style and Owned Brands from January 2020 to February 2021. Senior Vice President, Group Merchandise Manager, Apparel & Accessories and Home from January 2019 to January 2020. Senior Vice President, Home from May 2014 to January 2019. 52
Mark J. Schindele Executive Vice President and Chief Stores Officer since January 2020. Senior Vice President, Target Properties from January 2015 to January 2020. 52
Cara A. Sylvester Executive Vice President and Chief Marketing & Digital Officer since February 2021 . Senior Vice President, Home from March 2019 to February 2021. Vice President, Beauty & Dermstore from June 2017 to March 2019. From March 2014 to June 2017, Ms. Sylvester held different leadership positions in Housewares. 43
Laysha L. Ward Executive Vice President and Chief External Engagement Officer since January 2017. Executive Vice President and Chief Corporate Social Responsibility Officer from December 2014 to January 2017. 53

item 4a executive officers-1

Fiscal Years Ended
January 30, 2016 January 28, 2017 February 3, 2018 February 2, 2019 February 1, 2020 January 30, 2021
Target $ 100.00 $ 90.84 $ 108.44 $ 109.33 $ 175.54 $ 292.98
S&P 500 Index 100.00 120.87 148.47 148.38 180.37 211.48
Current Peer Group 100.00 111.09 159.84 166.68 201.97 280.21
Previous Peer Group 100.00 111.11 160.34 167.11 202.85 283.29

item 4a executive officers-2

Earnings Per Share From Continuing Operations Percent Change
2020 2019 2018 2020/2019 2019/2018
GAAP diluted earnings per share $ 8.64 $ 6.34 $ 5.50 36.3% 15.4%
Adjustments 0.78 0.05 (0.10)
Adjusted diluted earnings per share $ 9.42 $ 6.39 $ 5.39 47.4% 18.4%

analysis of results of ope

Analysis of Results of Operations
Summary of Operating Income Percent Change
(dollars in millions) 2020 2019 2018 2020/2019 2019/2018
Sales $ 92,400 $ 77,130 $ 74,433 19.8% 3.6%
Other revenue 1,161 982 923 18.20 6.30
Total revenue 93,561 78,112 75,356 19.80 3.70
Cost of sales 66,177 54,864 53,299 20.60 2.90
SG&A expenses 18,615 16,233 15,723 14.70 3.20
Depreciation and amortization (exclusive of depreciation included in cost of sales) 2,230 2,357 2,224 (5.40) 6.00
Operating income $ 6,539 $ 4,658 $ 4,110 40.4% 13.3%

analysis of results of ope-1

Rate Analysis 2020 2019 2018
Gross margin rate 28.4% 28.9% 28.4%
SG&A expense rate 19.90 20.80 20.90
Depreciation and amortization (exclusive of depreciation included in cost of sales) expense rate 2.40 3.00 3.00
Operating income margin rate 7.00 6.00 5.50

sales

Sales
Comparable Sales 2020 2019 2018
Comparable sales change 19.3% 3.4% 5.0%
Drivers of change in comparable sales
Number of transactions 3.70 2.70 5.00
Average transaction amount 15.00 0.70 0.10

sales-1

Contribution to Comparable Sales Change 2020 2019 2018
Stores originated channel comparable sales change 7.2% 1.4% 3.2%
Contribution from digitally originated sales to comparable sales 12.10 1.90 1.80
Total comparable sales change 19.3% 3.4% 5.0%

sales-2

Sales by Channel 2020 2019 2018
Stores originated 82.1% 91.2% 92.9%
Digitally originated 17.90 8.80 7.10
Total 100% 100% 100%

sales-3

Sales by Product Category 2020 2019 2018
Apparel and accessories 16% 19% 18%
Beauty and household essentials 26 27 26
Food and beverage 20 19 20
Hardlines 18 16 17
Home furnishings and décor 20 19 19
Total 100% 100% 100%

sales-4

RedCard Penetration 2020 2019 2018
Target Debit Card 12.3% 12.6% 13.0%
Target Credit Cards 9.20 10.70 10.90
Total RedCard Penetration 21.5% 23.3% 23.8%

store data

Store Data
Change in Number of Stores 2020 2019
Beginning store count 1,868 1,844
Opened 30 26
Closed (1) (2)
Ending store count 1,897 1,868

store data-1

Number of Stores and Retail Square Feet Number of Stores Retail Square Feet (a)
January 30, 2021 February 1, 2020 January 30, 2021 February 1, 2020
170,000 or more sq. ft. 273 272 48,798 48,619
50,000 to 169,999 sq. ft. 1,509 1,505 189,508 189,227
49,999 or less sq. ft. 115 91 3,342 2,670
Total 1,897 1,868 241,648 240,516

reconciliation of nongaap

Reconciliation of Non-GAAP Financial Measures to GAAP Measures
Reconciliation of Non-GAAP Adjusted EPS 2020 2019 2018
(millions, except per share data) Pretax Net of Tax Per Share Amounts Pretax Net of Tax Per Share Amounts Pretax Net of Tax Per Share Amounts
GAAP diluted earnings per share from continuing operations $ 8.64 $ 6.34 $ 5.50
Adjustments
Loss on debt extinguishment $ 512 $ 379 $ 0.75 $ 10 $ 8 $ 0.01 $— $— $—
Loss on investment (a) 19 14 0.03 41 31 0.06 — — —
Tax Act (b) — — — — — — — (36) (0.07)
Other (c) 28 20 0.04 (17) (13) (0.02) — — —
Other income tax matters (d) — (21) (0.04) — — — — (18) (0.03)
Adjusted diluted earnings per share from continuing operations $ 9.42 $ 6.39 $ 5.39

d

(d)
EBIT and EBITDA Percent Change
(dollars in millions) 2020 2019 2018 2020/2019 2019/2018
Net earnings from continuing operations $ 4,368 $ 3,269 $ 2,930 33.6% 11.6%
+ Provision for income taxes 1,178 921 746 27.90 23.40
+ Net interest expense 977 477 461 105.10 3.30
EBIT $ 6,523 $ 4,667 $ 4,137 39.8% 12.8%
+ Total depreciation and amortization (a) 2,485 2,604 2,474 (4.60) 5.30
EBITDA $ 9,008 $ 7,271 $ 6,611 23.9% 10.0%

d-1

After-Tax Return on Invested Capital
(dollars in millions)
Trailing Twelve Months
Numerator January 30, 2021 February 1, 2020
Operating income $ 6,539 $ 4,658
+ Net other income / (expense) (16) 9
EBIT 6,523 4,667
+ Operating lease interest (a) 87 86
- Income taxes (b) 1,404 1,045
Net operating profit after taxes $ 5,206 $ 3,708

d-2

Denominator January 30, 2021 February 1, 2020 February 2, 2019
Current portion of long-term debt and other borrowings $ 1,144 $ 161 $ 1,052
+ Noncurrent portion of long-term debt 11,536 11,338 10,223
+ Shareholders' investment 14,440 11,833 11,297
+ Operating lease liabilities (c) 2,429 2,475 2,170
- Cash and cash equivalents 8,511 2,577 1,556
Invested capital $ 21,038 $ 23,230 $ 23,186
Average invested capital (d) $ 22,134 $ 23,208

item 8 financial statement

Item 8. Financial Statements and Supplementary Data
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Reports of Independent Registered Public Accounting Firm 32
Consolidated Statements of Operations 35
Consolidated Statements of Comprehensive Income 36
Consolidated Statements of Financial Position 37
Consolidated Statements of Cash Flows 38
Consolidated Statements of Shareholders' Investment 39
Notes to Consolidated Financial Statements 40
Note 1 Summary of Accounting Policies 40
Note 2 Coronavirus (COVID-19) 40
Note 3 Revenues 41
Note 4 Cost of Sales and Selling, General and Administrative Expenses 42
Note 5 Consideration Received from Vendors 43
Note 6 Advertising Costs 43
Note 7 Fair Value Measurements 43
Note 8 Cash and Cash Equivalents 44
Note 9 Inventory 44
Note 10 Other Current Assets 44
Note 1 1 Property and Equipment 45
Note 12 Other Noncurrent Assets 45
Note 1 3 Goodwill and Intangible Assets 45
Note 1 4 Accrued and Other Current Liabilities 46
Note 1 5 Commitments and Contingencies 46
Note 16 Commercial Paper and Long-Term Debt 47
Note 17 Derivative Financial Instruments 48
Note 18 Leases 48
Note 1 9 Incomes Taxes 51
Note 20 Other Noncurrent Liabilities 53
Note 2 1 Share Repurchase 53
Note 2 2 Share-Based Compensation 53
Note 2 3 Defined Contribution Plans 55
Note 24 Pension Plans 56
Note 25 Accumulated Other Comprehensive Income 60

operations

Consolidated Statements of Operations
(millions, except per share data) 2020 2019 2018
Sales $ 92,400 $ 77,130 $ 74,433
Other revenue 1,161 982 923
Total revenue 93,561 78,112 75,356
Cost of sales 66,177 54,864 53,299
Selling, general and administrative expenses 18,615 16,233 15,723
Depreciation and amortization (exclusive of depreciation included in cost of sales) 2,230 2,357 2,224
Operating income 6,539 4,658 4,110
Net interest expense 977 477 461
Net other (income) / expense 16 (9) (27)
Earnings from continuing operations before income taxes 5,546 4,190 3,676
Provision for income taxes 1,178 921 746
Net earnings from continuing operations 4,368 3,269 2,930
Discontinued operations, net of tax — 12 7
Net earnings $ 4,368 $ 3,281 $ 2,937
Basic earnings per share
Continuing operations $ 8.72 $ 6.39 $ 5.54
Discontinued operations — 0.02 0.01
Net earnings per share $ 8.72 $ 6.42 $ 5.55
Diluted earnings per share
Continuing operations $ 8.64 $ 6.34 $ 5.50
Discontinued operations — 0.02 0.01
Net earnings per share $ 8.64 $ 6.36 $ 5.51
Weighted average common shares outstanding
Basic 500.60 510.90 528.60
Diluted 505.40 515.60 533.20
Antidilutive shares — — —

comprehensive income

Consolidated Statements of Comprehensive Income
(millions) 2020 2019 2018
Net earnings $ 4,368 $ 3,281 $ 2,937
Other comprehensive income / (loss), net of tax
Pension benefit liabilities 102 (65) (52)
Currency translation adjustment and cash flow hedges 10 2 (6)
Other comprehensive income / (loss) 112 (63) (58)
Comprehensive income $ 4,480 $ 3,218 $ 2,879

financial position

Consolidated Statements of Financial Position
(millions, except footnotes) January 30, 2021 February 1, 2020
Assets
Cash and cash equivalents $ 8,511 $ 2,577
Inventory 10,653 8,992
Other current assets 1,592 1,333
Total current assets 20,756 12,902
Property and equipment
Land 6,141 6,036
Buildings and improvements 31,557 30,603
Fixtures and equipment 5,914 6,083
Computer hardware and software 2,765 2,692
Construction-in-progress 780 533
Accumulated depreciation (20,278) (19,664)
Property and equipment, net 26,879 26,283
Operating lease assets 2,227 2,236
Other noncurrent assets 1,386 1,358
Total assets $ 51,248 $ 42,779
Liabilities and shareholders' investment
Accounts payable $ 12,859 $ 9,920
Accrued and other current liabilities 6,122 4,406
Current portion of long-term debt and other borrowings 1,144 161
Total current liabilities 20,125 14,487
Long-term debt and other borrowings 11,536 11,338
Noncurrent operating lease liabilities 2,218 2,275
Deferred income taxes 990 1,122
Other noncurrent liabilities 1,939 1,724
Total noncurrent liabilities 16,683 16,459
Shareholders' investment
Common stock 42 42
Additional paid-in capital 6,329 6,226
Retained earnings 8,825 6,433
Accumulated other comprehensive loss (756) (868)
Total shareholders' investment 14,440 11,833
Total liabilities and shareholders' investment $ 51,248 $ 42,779

cash flows

Consolidated Statements of Cash Flows
(millions) 2020 2019 2018
Operating activities
Net earnings $ 4,368 $ 3,281 $ 2,937
Earnings from discontinued operations, net of tax — 12 7
Net earnings from continuing operations 4,368 3,269 2,930
Adjustments to reconcile net earnings to cash provided by operations:
Depreciation and amortization 2,485 2,604 2,474
Share-based compensation expense 200 147 132
Deferred income taxes (184) 178 322
Loss on debt extinguishment 512 10 —
Noncash losses / (gains) and other, net 86 29 95
Changes in operating accounts:
Inventory (1,661) 505 (900)
Other assets (137) 18 (299)
Accounts payable 2,925 140 1,127
Accrued and other liabilities 1,931 199 89
Cash provided by operating activities—continuing operations 10,525 7,099 5,970
Cash provided by operating activities—discontinued operations — 18 3
Cash provided by operations 10,525 7,117 5,973
Investing activities
Expenditures for property and equipment (2,649) (3,027) (3,516)
Proceeds from disposal of property and equipment 42 63 85
Other investments 16 20 15
Cash required for investing activities (2,591) (2,944) (3,416)
Financing activities
Additions to long-term debt 2,480 1,739 —
Reductions of long-term debt (2,415) (2,069) (281)
Dividends paid (1,343) (1,330) (1,335)
Repurchase of stock (745) (1,565) (2,124)
Stock option exercises 23 73 96
Cash required for financing activities (2,000) (3,152) (3,644)
Net increase / (decrease) in cash and cash equivalents 5,934 1,021 (1,087)
Cash and cash equivalents at beginning of period 2,577 1,556 2,643
Cash and cash equivalents at end of period $ 8,511 $ 2,577 $ 1,556
Supplemental information
Interest paid, net of capitalized interest $ 939 $ 492 $ 476
Income taxes paid 1,031 696 373
Leased assets obtained in exchange for new finance lease liabilities 428 379 130
Leased assets obtained in exchange for new operating lease liabilities 262 464 246

shareholders investment

Consolidated Statements of Shareholders' Investment
(millions) Common Stock Shares Stock Par Value Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive (Loss) / Income Total
February 3, 2018 541.70 $ 45 $ 5,858 $ 6,495 ($747) $ 11,651
Net earnings — — — 2,937 — 2,937
Other comprehensive loss — — — — (58) (58)
Dividends declared — — — (1,347) — (1,347)
Repurchase of stock (27.20) (2) — (2,068) — (2,070)
Stock options and awards 3.30 — 184 — — 184
February 2, 2019 517.80 $ 43 $ 6,042 $ 6,017 ($805) $ 11,297
Net earnings — — — 3,281 — 3,281
Other comprehensive loss — — — — (63) (63)
Dividends declared — — — (1,345) — (1,345)
Repurchase of stock (16.00) (1) — (1,520) — (1,521)
Stock options and awards 2.40 — 184 — — 184
February 1, 2020 504.20 $ 42 $ 6,226 $ 6,433 ($868) $ 11,833
Net earnings — — — 4,368 — 4,368
Other comprehensive income — — — — 112 112
Dividends declared — — — (1,367) — (1,367)
Repurchase of stock (5.70) — — (609) — (609)
Stock options and awards 2.40 — 103 — — 103
January 30, 2021 500.90 $ 42 $ 6,329 $ 8,825 ($756) $ 14,440

3 revenues

3. Revenues
Revenues (millions) 2020 2019 2018
Apparel and accessories (a) $ 14,772 $ 14,304 $ 13,434
Beauty and household essentials (b) 24,461 20,616 19,296
Food and beverage (c) 18,135 15,039 14,585
Hardlines (d) 16,626 12,595 12,709
Home furnishings and décor (e) 18,231 14,430 14,298
Other 175 146 111
Sales 92,400 77,130 74,433
Credit card profit sharing 666 680 673
Other 495 302 250
Other revenue 1,161 982 923
Total revenue $ 93,561 $ 78,112 $ 75,356

3 revenues-1

Gift Card Liability Activity (millions) February 1, 2020 Gift Cards Issued During Current Period But Not Redeemed (b) Revenue Recognized From Beginning Liability January 30, 2021
Gift card liability (a) $ 935 $ 739 ($639) $ 1,035

7 fair value measurements

7. Fair Value Measurements
Fair Value Measurements - Recurring Basis Fair Value as of
(millions) Classification Pricing Category January 30, 2021 February 1, 2020
Assets
Short-term investments (a) Cash and Cash Equivalents Level 1 $ 7,644 $ 1,810
Prepaid forward contracts (b) Other Current Assets Level 1 38 23
Equity securities (c) Other Current Assets Level 1 — 39
Interest rate swaps (d) Other Noncurrent Assets Level 2 188 137

7 fair value measurements-1

Significant Financial Instruments not Measured at Fair Value (a) As of January 30, 2021 As of February 1, 2020
(millions) Carrying Amount Fair Value Carrying Amount Fair Value
Long-term debt, including current portion (b) $ 10,643 $ 12,787 $ 9,992 $ 11,864

8 cash and cash equivalents

8. Cash and Cash Equivalents
Cash and Cash Equivalents (millions) January 30, 2021 February 1, 2020
Cash $ 307 $ 326
Short-term investments 7,644 1,810
Receivables from third-party financial institutions for credit and debit card transactions 560 441
Cash and cash equivalents (a) $ 8,511 $ 2,577

10 other current assets

10. Other Current Assets
Other Current Assets (millions) January 30, 2021 February 1, 2020
Accounts and other receivables $ 631 $ 498
Vendor income receivable 504 464
Prepaid expenses 171 154
Other 286 217
Total $ 1,592 $ 1,333

12 other noncurrent assets

12. Other Noncurrent Assets
Other Noncurrent Assets (millions) January 30, 2021 February 1, 2020
Goodwill and intangible assets $ 668 $ 686
Company-owned life insurance investments, net of loans 450 418
Other 268 254
Total $ 1,386 $ 1,358

14 accrued and other curre

14. Accrued and Other Current Liabilities
Accrued and Other Current Liabilities (millions) January 30, 2021 February 1, 2020
Wages and benefits $ 1,677 $ 1,158
Real estate, sales, and other taxes payable 1,103 601
Gift card liability, net of estimated breakage 1,035 935
Income tax payable 473 129
Dividends payable 341 333
Current portion of operating lease liabilities 211 200
Workers' compensation and general liability  (a) 169 155
Interest payable 79 69
Other 1,034 826
Total $ 6,122 $ 4,406

16 commercial paper and lo

16. Commercial Paper and Long-Term Debt
Debt Maturities January 30, 2021
(dollars in millions) Rate  (a) Balance
Due 2021-2025 3.0% $ 3,607
Due 2026-2030 3.00 3,392
Due 2031-2035 6.60 507
Due 2036-2040 6.80 936
Due 2041-2045 4.00 1,084
Due 2046-2050 3.80 1,117
Total notes and debentures 3.70 10,643
Swap valuation adjustments 183
Finance lease liabilities 1,854
Less: Amounts due within one year (1,144)
Long-term debt and other borrowings $ 11,536

a

(a)
Required Principal Payments  (millions) 2021 2022 2023 2024 2025
Total required principal payments $ 1,056 $ 63 $— $ 1,000 $ 1,500

a-1

Commercial Paper (dollars in millions) 2020 2019 2018
Maximum daily amount outstanding during the year $— $ 744 $ 658
Average amount outstanding during the year — 41 63
Amount outstanding at year-end — — —
Weighted average interest rate —% 2.36% 2.00%

17 derivative financial in

17. Derivative Financial Instruments
Effect of Hedges on Debt (millions) January 30, 2021 February 1, 2020
Long-term debt and other borrowings
Carrying amount of hedged debt $ 1,677 $ 1,630
Cumulative hedging adjustments, included in carrying amount 183 137

17 derivative financial in-1

Effect of Hedges on Net Interest Expense (millions) 2020 2019 2018
Gain (loss) on fair value hedges recognized in Net Interest Expense
Interest rate swap designated as fair value hedges $ 46 $ 130 $ 13
Hedged debt (46) (130) (13)
Total $— $— $—

17 derivative financial in-2

Leases (millions) Classification January 30, 2021 February 1, 2020
Assets
Operating Operating Lease Assets $ 2,227 $ 2,236
Finance Buildings and Improvements, net of Accumulated Depreciation (a) 1,504 1,180
Total leased assets $ 3,731 $ 3,416
Liabilities
Current
Operating Accrued and Other Current Liabilities $ 211 $ 200
Finance Current Portion of Long-term Debt and Other Borrowings 88 67
Noncurrent
Operating Noncurrent Operating Lease Liabilities 2,218 2,275
Finance Long-term Debt and Other Borrowings 1,766 1,303
Total lease liabilities $ 4,283 $ 3,845

a-2

(a)
Lease Cost (millions) Classification 2020 2019 2018
Operating lease cost (a) SG&A Expenses $ 332 $ 287 $ 251
Finance lease cost
Amortization of leased assets Depreciation and Amortization (b) 105 82 65
Interest on lease liabilities Net Interest Expense 62 51 42
Sublease income (c) Other Revenue (15) (13) (11)
Net lease cost $ 484 $ 407 $ 347

a-3

Maturity of Lease Liabilities (millions) Operating  Leases  (a) Finance Leases  (b) Total
2021 $ 289 $ 152 $ 441
2022 290 159 449
2023 283 158 441
2024 269 155 424
2025 256 154 410
After 2025 1,694 1,687 3,381
Total lease payments $ 3,081 $ 2,465 $ 5,546
Less: Interest 652 611
Present value of lease liabilities $ 2,429 $ 1,854

b

(b)
Lease Term and Discount Rate January 30, 2021 February 1, 2020
Weighted average remaining lease term (years)
Operating leases 12.60 13.20
Finance leases 15.80 15.40
Weighted average discount rate
Operating leases 3.54% 3.71%
Finance leases 3.68% 4.23%

b-1

Other Information (millions) 2020 2019 2018
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases $ 284 $ 254 $ 231
Operating cash flows from finance leases 59 49 45
Financing cash flows from finance leases 70 57 80

19 income taxes

19. Income Taxes
Tax Rate Reconciliation – Continuing Operations 2020 2019 2018
Federal statutory rate 21.0% 21.0% 21.0%
State income taxes, net of the federal tax benefit 3.30 3.70 3.60
International (1.20) (1.40) (1.30)
Tax Act (a) — — (1.00)
Excess tax benefit related to share-based payments (1.00) (0.40) (0.30)
Federal tax credits (0.60) (0.80) (1.10)
Other (0.30) (0.10) (0.60)
Effective tax rate 21.2% 22.0% 20.3%

a-4

(a)
Provision for Income Taxes (millions) 2020 2019 2018
Current:
Federal $ 1,013 $ 536 $ 257
State 281 169 116
International 68 38 51
Total current 1,362 743 424
Deferred:
Federal (118) 150 263
State (64) 29 57
International (2) (1) 2
Total deferred (184) 178 322
Total provision $ 1,178 $ 921 $ 746

a-5

Net Deferred Tax Asset / (Liability) (millions) January 30, 2021 February 1, 2020
Gross deferred tax assets:
Accrued and deferred compensation $ 623 $ 286
Accruals and reserves not currently deductible 192 147
Self-insured benefits 138 124
Deferred occupancy income 141 148
Lease liabilities 1,108 1,000
Other 55 58
Total gross deferred tax assets 2,257 1,763
Gross deferred tax liabilities:
Property and equipment (2,003) (1,767)
Leased assets (996) (880)
Inventory (146) (156)
Other (82) (74)
Total gross deferred tax liabilities (3,227) (2,877)
Total net deferred tax liability ($970) ($1,114)

a-6

Reconciliation of Liability for Unrecognized Tax Benefits (millions) 2020 2019 2018
Balance at beginning of period $ 160 $ 300 $ 325
Additions based on tax positions related to the current year 35 28 58
Additions for tax positions of prior years 32 13 10
Reductions for tax positions of prior years (36) (69) (91)
Settlements (10) (112) (2)
Balance at end of period $ 181 $ 160 $ 300

20 other noncurrent liabil

20. Other Noncurrent Liabilities
Other Noncurrent Liabilities (millions) January 30, 2021 February 1, 2020
Deferred compensation $ 549 $ 493
Deferred occupancy income (a) 509 539
Income and other taxes payable 436 194
Workers' compensation and general liability 341 310
Pension benefits 57 107
Other 47 81
Total $ 1,939 $ 1,724

21 share repurchase

21. Share Repurchase
Share Repurchase Activity (millions, except per share data) 2020 2019 2018
Total number of shares purchased 5.70 16.00 27.20
Average price paid per share $ 107.58 $ 95.07 $ 75.88
Total investment $ 609 $ 1,518 $ 2,067

21 share repurchase-1

Restricted Stock Unit Activity Total Nonvested Units
Restricted Stock (a) Grant Date Fair Value (b)
February 1, 2020 4,316 $ 72.93
Granted 1,833 110.80
Forfeited (358) 80.65
Vested (1,427) 70.55
January 30, 2021 4,364 $ 88.99

performance share units

Performance Share Units
Performance Share Unit Activity Total Nonvested Units
Performance Share Units (a) Grant Date Fair Value (b)
February 1, 2020 3,575 $ 72.80
Granted 786 106.00
Forfeited (746) 77.73
Vested (827) 62.50
January 30, 2021 2,788 $ 87.93

performance share units-1

Stock Option Activity Stock Options
Total Outstanding Exercisable
Number of Options (a) Exercise Price (b) Intrinsic Value (c) Number of Options (a) Exercise Price (b) Intrinsic Value (c)
February 1, 2020 2,478 $ 55.72 $ 136 714 $ 56.02 $ 39
Granted — —
Expired/forfeited — —
Exercised/issued (2,011) 55.70
January 30, 2021 467 $ 55.81 $ 59 467 $ 55.81 $ 59

c

(c)
Stock Option Exercises (millions) 2020 2019 2018
Cash received for exercise price $ 23 $ 73 $ 96
Intrinsic value 161 59 50
Income tax benefit 41 15 12

23 defined contribution pl

23. Defined Contribution Plans
Plan Expenses
(millions) 2020 2019 2018
401(k) plan matching contributions expense $ 281 $ 237 $ 229
Nonqualified deferred compensation plans
Benefits expense $ 86 $ 80 $ 18
Related investment (income) / expense (58) (53) 6
Nonqualified plans net expense $ 28 $ 27 $ 24

24 pension plans

24. Pension Plans
Funded Status Qualified Plan Nonqualified and International Plans
(millions) 2020 2019 2020 2019
Projected benefit obligations $ 4,594 $ 4,492 $ 74 $ 66
Fair value of plan assets 4,588 4,430 11 11
Funded / (underfunded) status ($6) ($62) ($63) ($55)

contributions and estimate

Contributions and Estimated Future Benefit Payments
Estimated Future Benefit Payments (millions) Pension Benefits
2021 $ 280
2022 218
2023 226
2024 233
2025 239
2026 - 2030 1,279

cost of plans

Cost of Plans
Net Pension Benefits Expense
(millions) Classification 2020 2019 2018
Service cost benefits earned SG&A Expenses $ 103 $ 93 $ 95
Interest cost on projected benefit obligation Net Other (Income) / Expense 118 149 146
Expected return on assets Net Other (Income) / Expense (242) (248) (246)
Amortization of losses Net Other (Income) / Expense 127 62 82
Amortization of prior service cost Net Other (Income) / Expense (11) (11) (11)
Settlement charges Net Other (Income) / Expense 1 1 4
Total $ 96 $ 46 $ 70

assumptions

Assumptions
Benefit Obligation Weighted Average Assumptions
2020 2019
Discount rate 2.84% 3.13%
Average assumed rate of compensation increase 3.00 3.00
Cash balance plan interest crediting rate 4.64 4.64

assumptions-1

Net Periodic Benefit Expense Weighted Average Assumptions
2020 2019 2018
Discount rate 3.13% 4.28% 3.93%
Expected long-term rate of return on plan assets 6.10 6.30 6.30
Average assumed rate of compensation increase 3.00 3.00 3.00
Cash balance plan interest crediting rate 4.64 4.64 4.64

benefit obligation

Benefit Obligation
Change in Projected Benefit Obligation Qualified Plan Nonqualified and International Plans
(millions) 2020 2019 2020 2019
Benefit obligation at beginning of period $ 4,492 $ 3,905 $ 66 $ 53
Service cost 97 90 6 3
Interest cost 117 146 1 3
Actuarial loss (a) 144 615 7 11
Participant contributions 7 11 — —
Benefits paid (263) (275) (6) (4)
Benefit obligation at end of period (b) $ 4,594 $ 4,492 $ 74 $ 66

plan assets

Plan Assets
Change in Plan Assets Qualified Plan Nonqualified and International Plans
(millions) 2020 2019 2020 2019
Fair value of plan assets at beginning of period $ 4,430 $ 3,915 $ 11 $ 10
Actual return on plan assets 414 729 2 —
Employer contributions — 50 4 5
Participant contributions 7 11 — —
Benefits paid (263) (275) (6) (4)
Fair value of plan assets at end of period $ 4,588 $ 4,430 $ 11 $ 11

plan assets-1

Asset Category Current Targeted Actual Allocation
Allocation 2020 2019
Domestic equity securities  (a) 15% 16% 14%
International equity securities 10 10 10
Debt securities 45 44 46
Diversified funds 25 25 25
Other  (b) 5 5 5
Total 100% 100% 100%

plan assets-2

Fair Value Measurements Fair Value at
(millions) Pricing Category January 31, 2021 January 31, 2020
Cash and cash equivalents Level 1 $ 19 $ 12
Derivatives Level 2 (5) 18
Government securities  (a) Level 2 516 604
Fixed income  (b) Level 2 1,424 1,330
1,954 1,964
Investments valued using NAV per share (c)
Fixed income 68 64
Private equity funds 73 75
Cash and cash equivalents 115 163
Common collective trusts 1,122 961
Diversified funds 1,165 1,109
Other 102 105
Total plan assets $ 4,599 $ 4,441

amounts included in shareh

Amounts Included in Shareholders' Investment
Amounts in Accumulated Other Comprehensive Loss
(millions) 2020 2019
Net actuarial loss $ 987 $ 1,138
Prior service credits (2) (13)
Amounts in Accumulated Other Comprehensive Loss (a) $ 985 $ 1,125

25 accumulated other compr

25. Accumulated Other Comprehensive Loss
Change in Accumulated Other Comprehensive Loss (millions) Cash Flow Hedges Currency Translation Adjustment Pension Total
February 1, 2020 ($12) ($19) ($837) ($868)
Other comprehensive income before reclassifications, net of tax 3 1 15 19
Amounts reclassified from AOCI, net of tax 6 (a) — 87 (b) 93
January 30, 2021 ($3) ($18) ($735) ($756)

table of contents

TABLE OF CONTENTS
Section 1 INTRODUCTION; DEFINITIONS 1
1.10 Name of Plan; History 1
1.20 Definitions 2
Section 2 PARTICIPATION AND DEFERRAL ELECTIONS 9
2.10 Eligibility. 9
2.20 Special Rules for Participating Employees 9
2.30 Termination of Participation 9
2.40 Rehires and Transfers. 9
2.50 Effect on Employment. 10
2.60 Condition of Participation. 10
2.70 Deferral Elections 11
2.80 Base Salary Deferrals 11
2.90 Bonus Deferrals 12
2.10 Performance Share Award Deferrals 12
2.11 Cancellation of Deferral Elections. 12
Section 3 CREDITS TO ACCOUNTS 13
3.10 Elective Deferral Credit 13
3.20 Restoration Match Credit. 13
3.30 SPP Benefit Transfer Credits. 14
3.40 ESBP Benefit Transfer Credit 15
3.50 Discretionary Credits 15
Section 4 ADJUSTMENTS OF ACCOUNTS 17
4.10 Establishment of Accounts 17
4.20 Adjustments of Accounts 17
4.30 Investment Adjustment 17
4.40 Enhancement. 18
4.50 Account Adjustments Upon a Change-in-Control or Plan Termination. 19
Section 5 VESTING 20
5.10 Deferral Credits and Restoration Match Credits. 20
5.20 Discretionary Credits 20
5.30 Enhancement. 20
5.40 Failure to Cooperate; Misinformation or Failure to Disclose 21

table of contents-1

5.50 Plan Administrator Discretion 21
Section 6 DISTRIBUTION 22
6.10 Distribution Elections 22
6.20 General Rule 22
6.30 Six-Month Suspension for Specified Employees 24
6.40 Distribution on Account of Death; Distribution Following Death 24
6.50 Distribution on Account of Unforeseeable Emergency. 25
6.60 Designation of Beneficiaries. 25
6.70 Facility of Payment. 27
6.80 Tax Withholding 27
6.90 Payments Upon Rehire 27
6.10 Application for Distribution 27
6.11 Acceleration of Distributions 27
6.12 Delay of Distributions 28
Section 7 SOURCE OF PAYMENTS; NATURE OF INTEREST 29
7.10 Source of Payments. 29
7.20 Unfunded Obligation 29
7.30 Establishment of Trust 29
7.40 Spendthrift Provision 29
7.50 Compensation Recovery (Recoupment) 30
Section 8 ADOPTION, AMENDMENT AND TERMINATION 31
8.10 Adoption 31
8.20 Amendment. 31
8.30 Termination and Liquidation. 31
Section 9 CLAIM PROCEDURES 33
9.10 Claims Procedure 33
9.20 Rules and Regulations. 34
9.30 Limitations and Exhaustion. 35
Section 10 PLAN ADMINISTRATION 37
10.10 Plan Administration. 37
10.20 Conflict of Interest 37
10.30 Service of Process 38
10.40 Choice of Law 38
10.50 Responsibility for Delegate 38
10.60 Expenses 38
10.70 Errors in Computations 38
10.80 Indemnification 38

table of contents-2

10.90 Notice 38
Section 11 CONSTRUCTION 39
11.10 ERISA Status 39
11.20 IRC Status 39
11.30 Rules of Document Construction 39
11.40 References to Laws 39
11.50 Appendices 39

exhibit 10s

Exhibit (10)S
COMPANY By     /s/ Melissa Kremer             Name: Melissa Kremer Title: EVP & CHRO TRUSTEE By /s/ Jason Landry Name: Jason Landry Title:     Vice President

consent of independent reg

Consent of Independent Registered Public Accounting Firm
/s/ Ernst & Young, LLP
Minneapolis, Minnesota March 10, 2021

certification of the chief

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
Date: March 10, 2021
/s/ Brian C. Cornell
Brian C. Cornell
Chairman and Chief Executive Officer

certification of the chief-1

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER
Date: March 10, 2021
/s/ Michael J. Fiddelke
Michael J. Fiddelke
Executive Vice President and Chief Financial Officer

certification of the chief-2

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
Date: March 10, 2021
/s/ Brian C. Cornell
Brian C. Cornell
Chairman and Chief Executive Officer

certification of the chief-3

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER
Date: March 10, 2021
/s/ Michael J. Fiddelke
Michael J. Fiddelke
Executive Vice President and Chief Financial Officer