13. How many years of data does Tareet disclose its Consolidated Statement of Cash Flows? 14. How large was the increase (decrease) in cash that Target reported in 2016? 15. Is Target a calendar year reporter, or a fiscal year reporter? 16. How are the Consolidated Statements of Operations, Consolidated Statements of Cash Flows, and the Consolidated Statement of Shareholders' Investment dated? Why? 17. How are the Consolidated Statements of Financial Position dated? Why? 18. What is the significance of the Debt-to-Assets ratio? What was Target's Debt-to-Assets ratio in 2016? In 2015? 19. What is the significance of the Return-on-Assets ratio? What was Target's Return-on-Assets ratio in 2016? In 2015? 20. What is the significance of the Return-on-Equity ratio? What was Target's Return-on-Equity ration in 2016? In 2015? APPENDIX B Westend Getty Images PORTION OF THE FORM 10-K FOR TARGET CORPORATION This appendix contains a small portion of the Form 10-K for the Target Corporation that was filed with the Securities and Exchange Commission on March 8, 2017. This material relates to the company's fiscal year ended January 28, 2017. Throughout the text, this is referred to as the company's 2016 fiscal year. This material in this appendix is included for illustra- tive purposes, and it is intended to be used for educational purposes only. For the ATC-1 problem in each chapter, you will need the complete version of Target's Form 10-K, which can be found online at http://investors.target.com. Once on the "sec filings page, under "Filter by form type" drop-down window, select "Annual filings." and then select the "10-K" that has a filing date of "03/08/17. Several versions of this 10-K are available, but the pdf format works best for the purposes of this text. The authors suggest you download and Save this file so that you do not need to look it up each time you need it. The Form 10-K may be also obtained from the SEC'S EDGAR website, using the procedures explained in Appendix A. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20540 FORM 10-K OF 1934 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT For the focal yaran a ry 1, 2014 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the treation Bedrom Comet TARGET TARGET CORPORATION Rehoben we Secure Repaired Punane Totection 1200 of the Item 8. Financial Statements and Supplementary Data 752 Financial Accounting mation in the Annual Report The con 702 Append Report of Management on the Consolidated Financial Statements Management is responsible for the consistency, integrity and presentation of the information in the Annual Report solidated financial statements and other information presented in this Annual Report have been prepared in accordan acement accounting principles generally accepted in the United States and include necessary judgments and estimates by manage To fulfill our responsibility, we maintain comprehensive systems of internal control desired to provide reasonable as ance that assets are safeguarded and transactions are executed in accordance with established procedures. The concepto rasable assurance is based upon recognition that the cost of the controls should b e the benefit derived. We believe our systems of internal control provide this reasonable assurance The Board of Directors exercised its oversight role with respect to the Corporation's systems of internal control primary through its Audit Committee, which is comprised of independent directors. The Committee Oversees the Corporations tems of internal control accounting practices, financial reporting and audits to assess whether their quality, integrity, and objectivity are sufficient to protect shareholders' investments In addition, our consolidated financial statements have been audited by Ernst & Young LLP, independent registered public accounting firm, whose report also appears on this page. RSmith Brian C. Comell Chairman and Chief Executive Officer March 8, 2017 Cathy R. Smith Executive Vice President and Chief Financial Officer Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements The Board of Directors and Shareholders Target Corporation We have audited the accompanying consolidated statements of financial position of Target Corporation and subsidiaries (the Corporation as of January 28, 2017 and January 30, 2016, and the related consolidated statements of operations, compre hensive income cash flows, and shareholders investment for each of the three years in the period ended January 28, 2017 These financial statements are the responsibility of the Corporation's management. Our responsibility is to expressanonin ion on these financial statements based on our audits. We conducted our ots in accordance with the standards of the Public Company Accounting Oversight Board (lai Suates. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the cial statements are free of material misstatement. An audit includes examining. ona lest basis, evidence sure amounts and disclosures in the financial statements. An audit also includes assessing the accounting principle significant estimates made by management, as well as evaluating the overall financial statement presentation that our audits provide a re a ble basis for our opinion. In our in the financial referred to above present fairly, in all material respect the cool position of The Corporation and subsidiaries at January 28, 2017 and January 30, 2016, and the led financial their operations and their cash flows for each of the three years in the period ended January 28, 2017, in se US penerally accepted accounting principles We also have died, in accordance with the standards of the Public Company Accounting Oversight Board the Cometas internal control over financial reporting as of January 24, 2017, based on criteria Carl Fr i ed by the Committee of Sponsoring Organizations of the Tree Framework), and our report dated March 8, 2017, expressed an unqualified opinion thereon ich Board (United States). Lased on criteria established in Internal Organizations of the Treadway Commission (2013 formet & Young up Minneapolis Minnesota March 8, 2017 Appendix 8 703 Report of Management on Internal Control over Financial Reporting Our management is responsible forestaishing and ma i g d e internal rol over financial reporting, as such term is de- fined in Exchange Act Rales 13-15 Under the supervision and with the participation of our ment, including our chief execu- tive officer and chief financial officer, we assessed the effectiveness of our internal control over financial reporting as of January 28 2017, based on the framework in Inmal Control grud Framework (2013 sed by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on our assessment, we conclude that the Corporation's internal control over financial reporting is effective based on those criteria. Our internal control over financial reporting as of January 28, 2017, has been waited by Ernst & Young LLP, the independent registered public accounting firm who has also died our consolidated financial statements, as stated in their report which appears on this page. CR Smith Brian C. Cornell Chairman and Chief Executive Officer March 8, 2017 Cathy R. Smith Executive Vice President and Chief Financial Officer Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting The Board of Directors and Shareholders Target Corporation We have audied Target Corporation and subsidiaries (the Croatial internal control over financial reporting as of January 28, 2017, based on criteria esished in emal C o de d F o r issued by the Commitee of Sponsoring Organizations of the Treadway Commission 2013 Framework) the COSO criterial. The Companion's management is responsible for ma n gelective internal control over financial reporting, and for e ment of the effectiveness of internal control over financial reporting acaded in the companying Report of Management on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Corporation's internal control over financial reporting based on our audit We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit tochtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our discloded obtaining understanding of internal control over financial report in assessing the risk that a material weakness is sting and evaluating the design and operating effectiveness of intenta control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the mainte- nance of records that, in reasonable detail. accurately and fairly reflect the transactions and dispositions of the assets of the company 2) provide reaceable assurance that transactions are recorded as necessary to permit preparation of financial statements in as s e with generally accepted accounting principles, and that recipes and expenditures of the company are being made only in accordance with authorizations of management and directors of the company, and (3) provide reasonable assurance regarding prevention or timely detec tion of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements Because of its inherent limitations, internal control over financial reporting may not prevent or delect misstatements. Also, proiections of by evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in condi- tions or that the degree of compliance with the policies or procedures may detenice In our opinion, the Corporation maintained in all material respects, effective internal control over financial reporting as of January 28, 2017, based on the COSO criteria We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the con solidated statements of financial position of Target Corporation and subsidiaries as of January 28, 2017 and January 30, 2016, and the related consolidated statements of operations, comprehensive income, cash flows and shareholders' investment for each of the three years in the period ended January 28, 2017, and our report dated March 8, 2017, expressed an unqualified opinion thereon. Ernst & Young LL? Minneapolls, Minnesota March 8, 2017 704 Appendix B Consolidated Statements of Operations m on. except per shared 2016 569.495 48.872 20.623 12.356 2.298 2015 $73.785 51.997 21.738 14 665 2.213 2014 $72.618 51.278 21.340 14,676 Cost of sales Gross margin Seling general and Depreciation and amortization Gain on sale Earnings from continuing operations before interest expense and income Net interest expense Earnings from continuing operations before income taxes Provision for income taxes Net earnings from continuing operations Discontinued operations, net of tax Net earnings / floss) Basic earnings / floss) per share Continuing operations Discontinued operations Net earnings per share Diluted earnings / poss) per share Continuing operations 4,969 1004 3.965 1.296 2.669 68 $2.737 5.530 07 4.923 1.602 3.321 42 52363 4,535 882 3 .653 1 ,204 2.449 14.085) $11.636 $ 462 0.12 5474 5.29 0.07 5535 3.86 (6.44) 12.58 5 $ 4.58 0.12 4 .70 5.25 0.07 5.31 3.83 (6.38) 12.56) 5 $ Net earnings / boss) per share Weighted average common shares outstanding Ba Dilutive effect of share based awards 5776627. 7 4.9 52 634.7 5 4 5825 632.9 6401 Duted Antidutive shares Dividends declared p hare 52362205199 Note: Pershare amounts may not foot due to rounding See accompanying Notes to Corso dedic ate 2016 2 2016 527373 2015 .353 2014 51636 Consolidated Statements of Comprehensive Income millions Net income fosse Other comprehensive poss/income, net ofta Pension and other benefit liabilities, net of tax benefit of $9.511 and 590 Currency translation adjustment and cash flow hedges. net of provision forts of 52, 52 and 52 Other comprehensive loss income Comprehensive income foss 4 4 431 52.722 53.333 51.344) Consolidated Statements of Financial Position January 28, January 30, (millions, except footnotes) 2017 2016 Assets Cash and cash equivalents, including short-term investments of $1,110 and $3,008 $ 2,512 $ 4,046 Inventory 8,309 8,601 Assets of discontinued operations 69 322 Other current assets 1.100 1.161 Total current assets 11,990 14,130 Property and equipment Land 6,106 6,125 Buildings and improvements 27.611 2 7,059 Fixtures and equipment 5,503 5,347 Computer hardware and software 2.651 2.617 Construction-in-progress 200 3 15 Accumulated depreciation (17.413) (16,246) Property and equipment, net 24,658 25.217 Noncurrent assets of discontinued operations 1275 Other noncurrent assets - 771 840 Total assets $37.431 5 40.262 Liabilities and shareholders' Investment Accounts payable $ 7.252 S 7.418 Accrued and other current liabilities 3.7374 ,236 Current portion of long-term debt and other borrowings 1718 815 Liabilities of discontinued operations 1 153 Total current liabilities 12.708 12,622 Long-term debt and other borrowings 11.031 11,945 Deferred income taxes 861 8 23 Noncurrent liabilities of discontinued operations 18 18 Other noncurrent liabilities 1.860 1,897 Total noncurrent liabilities 13.770 14,683 Shareholders' investment Common stock 46 50 Additional paid-in capital 5,661 5.348 Retained earnings 5,884 8,188 Accumulated other comprehensive loss Pension and other benefit liabilities (601) (588) Currency translation adjustment and cash flow hedges Total shareholders' investment 10,953 12,957 Total liabilities and shareholders' Investment $37.431 5 40.262 mon Stork thorized 8.000.000.000 shares $0.0833 par value: 556,156,228 shares issued and outstanding at January 28, 2017, 602,226,517 shares issued and 2016 2015 2014 $2.737 68 2,669 $3,363 42 3.321 11.636) 14.085) 2.449 2.298 113 41 2.213 115 322) 2.129 71 7 285 422 - - 57 293 36 (543) 5,329 107 5.436 316) 227 579 5.254 7 04 5.958 (512) (115) 8 03 5.157 6 92 4,465 Consolidated Statements of Cash Flows millions) Operating activities Net earnings / Gloss Earnings / flosses) from discontinued operations, net of tax Net earnings from continuing operations Adjustments to reconcile net earnings to cash provided by operations Depreciation and amortization Share based compensation expense Deferred income taxes Gain on sale Loss on debt extinguishment Noncash (gains) /losses and other net Changes in operating accounts: Inventory Other assets Accounts payable and accrued liabilities Cash provided by operating activities-continuing operations Cash provided by / (required for operating activities - discontinued operations Cash provided by operations Investing activities Expenditures for property and equipment Proceeds from disposal of property and equipment Proceeds from sale of businesses Cash paid for acquisitions, net of cash assumed Other investments Cash (required for provided by investing activities-continuing operations Cash provided by / required for) investing activities-discontinued operations Cash (required for provided by investing activities Financing activities Change in commercial paper, net Additions to long-term debt Reductions of long-term deb Dividends paid Repurchase of stock Stock option exercises Cash required for financing activities Net (decrease]/increase in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period Supplemental Information Interest paid, net of capitalized interest Income taxes paid / frefunded Property and equipment acquired through capital lease obligations 75 million at Forwary 1, 2014 (1.547) 46 - (1.438) 28 1.875 (1.786) 95 28 (1,473) - (1.473) 24 489 19 508 106 (1.605) (321) (1.926) - 1.977 (2,641) 11,348) 13.706) 221 (5.497) (1.534) 4,046 $2.512 - - (85) (1,362) 3.483) 300 (4.630) 1.836 2.210 $4,046 (80) 1993 2.079) (1.205) (26) 3 73 (1.024) 1.515 695 $2.210 S 999 1.514 238 238 $ 604 (127) 1 126 26 87 1.251 88 Consolidated Statements of Shareholders' Investment Common Stock Shares 632.9 (millions) Stock Par Value $53 Additional Paid-in Capital $4,470 Accumulated Other Comprehensive (Loss Income $(891) Retained Earnings $12,599 (1.636) Total 292 (1.273) (46) February 1, 2014 Net loss Other comprehensive income Dividends declared Repurchase of stock Stock options and awards January 31, 2015 Net earnings Other comprehensive loss Dividends declared Repurchase of stock Stock options and awards January 30, 2016 (0.8) 8.1 640.2 - 429 $4,899 $16.231 (1.636) 292 (1.273) (46) 429 $13,997 3,363 (30) (1,378) (3,445) $53 $(599) $9.644 3,363 (30) (1,378) (3,441) (44.7) 450 449 $5,348 $50 $8.188 2,737 Net earnings $(629) - (9) Other comprehensive loss - (4) (1,359) (3,682) Dividends declared Repurchase of stock Stock options and awards January 28, 2017 - (50.9) 4.9 556.2 - - 313 5 5.661 $12,957 2,737 (9) (1,359) (3,686) 313 $10,953 $46 $5,884 $(638) Ons