LONG-LIVED ASSETS

Refer to the notes to the financial statements.The first note, "Summary of Significant Accounting Policies," should provide information about the company's depreciation and amortization methods. You will also need to refer to the other notes to the financial statements and to the financial statements themselves in order to answer the following questions.

PLANT, PROPERTY & EQUIPMENT

What is the amount of the company's plant, property and equipment?

What depreciation method(s) does the company use (if not detailed out on the income statement, see the operating section of the Cash Flow Statement)?

What is the amount of depreciation expense for the current year?

INTANGIBLE ASSETS

Does the company have any intangible assets? If so, what are they?

Does the company report any goodwill? If so, what is the amount?

CASH FLOW STATEMENT

a. What was the amount spent to purchase property and equipment?

Current year $_______________Last year $_____________

b. What was the amount received (proceeds) from the sale of property and equipment?

Current year $______________Last year $____________

c. Did these activities result in net increase or decrease in the company's cash

balance?

Financial Summary Target 2016 Annual Report 2016 2015 2014 2013 2012 (a) FINANCIAL RESULTS: (in millions) Sales (b) 71,279 $ 73,301 Cost of Sales 48,872 51,997 51,278 50,039 50,568 Gross Margin 20,623 21,788 21,340 21,240 22,733 Selling, general and administrative expenses (SG&A) 13,356 14,665 14,676 14,465 14,643 467 2,298 2,213 2,129 1,996 2,044 (391) (161) 5,740 $ Credit card expenses Depreciation and amortization Gain on sale (c) 69,495 $ 73,785 $ 72,618 $ (620) Earnings from continuing operations before interest expense and income taxes (EBIT) 4,969 5,530 4,535 5,170 Net interest expense 1,004 607 882 1,049 684 Earnings from continuing operations before income taxes 3,965 4,923 3,653 4,121 5,056 Provision for income taxes 1,296 1,602 1,204 1,427 1,741 Net earnings from continuing operations 2,669 3,321 2,449 2,694 3,315 Discontinued operations, net of tax Net earnings / (loss) 42 68 (4,085) $ 2,737 $ 3,363 $ $ 4.62 $ 5.29 $ (723) (316) (1,636) $ 1,971 $ 3.86 $ 4.24 $ 2,999 PER SHARE: Basic earnings / (loss) per share Continuing operations Discontinued operations Net earnings / (loss) per share 0.07 0.12 (6.44) $ 4.74 $ 5.35 $ $ 4.58 $ 5.25 $ (1.14) 5.05 (0.48) (2.58) $ 3.10 $ 3.83 $ 4.20 $ 4.57 Diluted earnings / (loss) per share Continuing operations Discontinued operations 0.07 0.12 (6.38) (1.13) 5.00 (0.48) Net earnings / (loss) per share $ 4.70 $ 5.31 $ (2.56) $ 3.07 $ 4.52 Cash dividends declared $ 2.36 $ 2.20 $ 1.99 $ 1.65 $ 1.38 Total assets $ 37,431 $ 40,262 $ 41,172 Capital expenditures (d) $ 1,547 $ 1,438 $ 1,786 Long-term debt, including current portion (d) $ 12,749 $ 12,760 $ 12,725 $ 12,494 $ 16,260 Net debt (d)(e) $ 11,639 $ 9,752 $ 11,205 $ 12,491 $ 16,185 Shareholders' investment $ 10,953 $ 12,957 $ 13,997 $ 16,231 $ 16,558 FINANCIAL POSITION: (in millions) $ 44,325 $ 47,878 $ $ 1,886 2,345 SEGMENT FINANCIAL RATIOS: (f) Comparable sales growth (g) (0.5)% 2.1% 1.3% (0.4)% 2.7% Gross margin (% of sales) 29.7% 29.5% 29.4% 29.8% 29.7% SG&A (% of sales) 19.2% 19.6% 20.0% 20.2% 19.1% 7.1% 6.9% 6.5% 6.8% 7.8% 556.2 602.2 640.2 632.9 645.3 EBIT margin (% of sales) OTHER: Common shares outstanding (in millions) Operating cash flow provided by continuing operations (in millions) (h) $ 5,329 $ 5,254 $ 5,157 $ 7,572 $ Sales per square foot (d)(i) $ 290 $ 307 $ 302 $ 298 $ Retail square feet (in thousands) (d) Square footage growth (d) Total number of stores (d) Total number of distribution centers (d) 239,502 239,539 239,963 240,054 5,615 299 237,847 % (0.2)% % 0.9% 0.9% 1,802 1,792 1,790 1,793 1,778 40 40 38 37 37 (a) Consisted of 53 weeks. (b) The 2016 sales decline is primarily due to the Pharmacy Transaction. For 2012, includes credit card revenues. (c) For 2015, includes the gain on the Pharmacy Transaction. For 2013 and 2012, includes gains related to the sale of our U.S. credit card receivables portfolio. (d) Represents amounts attributable to continuing operations. (e) Including current portion and short-term notes payable, net of short-term investments of $1,110 million, $3,008 million, $1,520 million, $3 million, and $75 million in 2016, 2015, 2014, 2013, and 2012, respectively. Management believes this measure is an indicator of our level of financial leverage because short-term investments are available to pay debt maturity obligations. (f) Effective January 15, 2015, we operate as a single segment which includes all of our continuing operations, excluding net interest expense and the impact of certain other discretely managed items. (g) See definition of comparable sales in Form 10-K, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations. (h) Prior year balances have been revised to reflect the impact of adopting ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting, described further in Form 10-K, Item 8, Financial Statements and Supplementary Data, Note 26. (i) Represents sales per square foot which is calculated using rolling four quarters average square feet. The 2016 decrease is primarily due to the Pharmacy Transaction. Our former pharmacy and clinic businesses contributed approximately $16 to 2015 sales per square foot. In 2012, sales per square foot was calculated excluding the 53rd week in order to provide a more useful comparison to other years. Using total reported sales for 2012 (including the 53rd week) resulted in sales per square foot of $304. PART II Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our common stock is listed on the New York Stock Exchange under the symbol "TGT." We are authorized to issue up to 6,000,000,000 shares of common stock, par value $0.0833, and up to 5,000,000 shares of preferred stock, par value $0.01. At March 2, 2017, there were 15,067 shareholders of record. Dividends declared per share and the high and low closing common stock price for each fiscal quarter during 2016 and 2015 are disclosed in Note 31 of the Financial Statements. On January 11, 2012, our Board of Directors authorized the repurchase of $5 billion of our common stock and on June 9, 2015 expanded the program by an additional $5 billion for a total authorization of $10 billion. On September 20, 2016, our Board of Directors authorized a new $5 billion share repurchase program. We began repurchasing shares under this new authorization during the fourth quarter of 2016 upon completion of the previous $10 billion program. There is no stated expiration for the share repurchase programs. Under these programs, we repurchased 50.9 million shares of common stock in fiscal 2016, at an average price of $72.35, for a total investment of $3.7 billion. The table below presents information with respect to Target common stock purchases made during the three months ended January 28, 2017, by Target or any "affiliated purchaser" of Target, as defined in Rule 10b-18(a)(3) under the Exchange Act. Average Price Paid per Share Total Number of Shares Purchased Period Total Number of Shares Purchased as Part of Publicly Announced Programs Dollar Value of Shares that May Yet Be Purchased Under Publicly Announced Programs October 30, 2016 through November 26, 2016 Open market and privately negotiated purchases September 2016 ASR (a) 802,412 $ $ 67.23 802,412 1,286,423 67.67 1,286,423 5,210,467,654 5,246,730,198 5,246,730,198 4,618,451 76.77 4,618,451 4,892,156,933 66.27 2,362,745 71.90 9,070,031 November 27, 2016 through December 31, 2016 Open market and privately negotiated purchases December 2016 ASR January 1, 2017 through January 28, 2017 Open market and privately negotiated purchases Total (a) 2,362,745 9,070,031 $ 4,735,572,452 $ 4,735,572,452 Represents the incremental shares received upon final settlement of the accelerated share repurchase agreement (ASR) initiated in third quarter 2016. 14 Item 6. Selected Financial Data As of or for the Fiscal Year Ended (millions, except per share data) Sales (b) $ Net Earnings / (Loss) Continuing operations Discontinued operations Net earnings / (loss) Basic Earnings / (Loss) Per Share Continuing operations Discontinued operations Basic earnings / (loss) per share Diluted Earnings / (Loss) Per Share Continuing operations Discontinued operations Diluted earnings / (loss) per share Cash dividends declared per share Total assets Long-term debt, including current portion 2016 2015 2014 2013 2012 (a) 69,495 $ 73,785 $ 72,618 $ 71,279 $ 73,301 2,669 68 2,737 3,321 42 3,363 2,449 (4,085) (1,636) 2,694 (723) 1,971 3,315 (316) 2,999 4.62 0.12 4.74 5.29 0.07 5.35 3.86 (6.44) (2.58) 4.24 (1.14) 3.10 5.05 (0.48) 4.57 4.58 0.12 4.70 2.36 5.25 0.07 5.31 2.20 3.83 (6.38) (2.56) 1.99 4.20 (1.13) 3.07 1.65 5.00 (0.48) 4.52 1.38 37,431 12,749 40,262 12,760 41,172 12,725 44,325 12,494 47,878 16,260 Note: This information should be read in conjunction with MD&A and the Financial Statements. (a) Consisted of 53 weeks. (b) For 2012, includes credit card revenues. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Executive Summary Fiscal 2016 included the following notable items: GAAP earnings per share from continuing operations were $4.58. Adjusted earnings per share were $5.01. Comparable sales decreased 0.5 percent, reflecting a 0.8 percent decrease in traffic. Comparable digital channel sales growth of 27 percent contributed 1.0 percentage points of comparable sales growth. We returned $5.0 billion to shareholders through dividends and share repurchase. Sales were $69,495 million for 2016, a decrease of $4,290 million or 5.8 percent from the prior year, primarily due to the Pharmacy Transaction. Earnings from continuing operations before interest expense and income taxes in 2016 decreased by $561 million or 10.1 percent from 2015 to $4,969 million, primarily due to the 2015 gain on the Pharmacy Transaction. Operating cash flow provided by continuing operations was $5,329 million, $5,254 million, and $5,157 million for 2016, 2015, and 2014, respectively. In 2015, proceeds from the Pharmacy Transaction are included in investing cash flows provided by continuing operations. Refer to Note 6 of the Financial Statements for additional information about the transaction. 16 Earnings Per Share From Continuing Operations GAAP diluted earnings per share Adjustments Adjusted diluted earnings per share $ $ 2016 2015 2014 4.58 $ 0.42 5.01 $ 5.25 $ (0.56) 4.69 $ 3.83 0.39 4.22 Percent Change 2016/2015 2015/2014 (12.7)% 37.2% 6.7 % 11.3% Note: Amounts may not foot due to rounding. Adjusted diluted earnings per share from continuing operations (Adjusted EPS), a non-GAAP metric, excludes the impact of certain items not related to our routine retail operations. Management believes that Adjusted EPS is meaningful to provide period-to-period comparisons of our operating results. A reconciliation of non-GAAP financial measures to GAAP measures is provided on page 21. We report after-tax return on invested capital (ROIC) from continuing operations because we believe ROIC provides a meaningful measure of our capital-allocation effectiveness over time. For the trailing twelve months ended January 28, 2017, ROIC was 15.0 percent, compared with 16.0 percent for the trailing twelve months ended January 30, 2016. Excluding the net gain on the Pharmacy Transaction, ROIC was 13.9 percent for the trailing twelve months ended January 30, 2016. A reconciliation of ROIC is provided on page 22. Analysis of Results of Operations Segment Results (dollars in millions) Sales Cost of sales Gross margin SG&A expenses (b) EBITDA Depreciation and amortization EBIT $ $ 2016 69,495 $ 48,872 20,623 13,360 7,263 2,298 4,965 $ (a) 2015 73,785 $ 51,997 21,788 14,448 7,340 2,213 5,127 $ (a) 2014 72,618 51,278 21,340 14,503 6,837 2,129 4,708 Percent Change 2016/2015 2015/2014 (5.8)% 1.6% (6.0) 1.4 (5.4) 2.1 (7.5) (0.4) (1.1) 7.4 3.8 3.9 (3.2)% 8.9% Note: See Note 30 of our Financial Statements for a reconciliation of our segment results to earnings before income taxes and more information about items recorded outside of segment SG&A. (a) Sales include $3,815 million and $4,148 million related to our former pharmacy and clinic businesses for 2015 and 2014, respectively, and cost of sales include $3,076 million and $3,222 million, respectively. The sale of these businesses had no notable impact on EBITDA or EBIT. (b) For 2016, 2015, and 2014, SG&A includes $663 million, $641 million, and $629 million, respectively, of net profit-sharing income from the arrangement with TD. Rate Analysis Gross margin rate SG&A expense rate EBITDA margin rate (a) Depreciation and amortization expense rate EBIT margin rate (a) 2016 29.7% 19.2 10.5 3.3 7.1 2015 29.5% 19.6 9.9 3.0 6.9 2014 29.4% 20.0 9.4 2.9 6.5 Note: Rate analysis metrics are computed by dividing the applicable amount by sales. (a) Excluding sales of our former pharmacy and clinic businesses, EBITDA margin rates were 10.5 percent and 10.0 percent for 2015 and 2014, respectively, and EBIT margin rates were 7.3 percent and 6.9 percent, respectively. 17 Sales Sales include all merchandise sales, net of expected returns, and gift card breakage. Refer to Note 2 of the Financial Statements for a definition of gift card breakage. Digital channel sales include all sales initiated through mobile applications and our conventional websites. Digital channel sales may be fulfilled through our distribution centers, our vendors, or our stores. The decrease in 2016 sales reflects a decrease of approximately $3,815 million due to the Pharmacy Transaction and a comparable sales decrease of 0.5 percent, partially offset by the contribution from new stores. The increase in 2015 sales reflects an increase in comparable sales of 2.1 percent and the contribution from new stores, partially offset by a decrease of approximately $550 million due to the Pharmacy Transaction. Inflation did not materially affect sales in any period presented. Sales by Channel Stores Digital Total (a) 2016 95.6% 4.4 100% 2015 (a) 96.6% 3.4 100% 2014 (a) 97.4% 2.6 100% Excluding sales of our former pharmacy and clinic businesses, stores and digital channels sales were 96.4 percent and 3.6 percent of total sales, respectively, for 2015 and 97.2 and 2.8 percent of total sales, respectively, for 2014. Comparable sales is a measure that highlights the performance of our existing stores and digital channel sales by measuring the change in sales for a period over the comparable, prior-year period of equivalent length. Comparable sales include all sales, except sales from stores open less than 13 months, digital acquisitions we have owned less than 13 months, stores that have been closed, and digital acquisitions that we no longer operate. We removed pharmacy and clinic sales from the 2015 sales amounts when calculating 2016 comparable sales. Comparable sales measures vary across the retail industry. As a result, our comparable sales calculation is not necessarily comparable to similarly titled measures reported by other companies. Comparable Sales Comparable sales change Drivers of change in comparable sales: Number of transactions Average transaction amount 2016 (0.5)% 2015 2.1% 2014 1.3% (0.8) 0.3 1.3 0.8 (0.2) 1.5 Contribution to Comparable Sales Change Stores channel comparable sales change Digital channel contribution to comparable sales change Total comparable sales change 2016 (1.5)% 1.0 (0.5)% 2015 1.3% 0.8 2.1% 2014 0.7% 0.7 1.3% Note: Amounts may not foot due to rounding. 18 Net Interest Expense Net interest expense from continuing operations was $1,004 million, $607 million, and $882 million for 2016, 2015, and 2014, respectively. Net interest expense for 2016 and 2014 included a loss on early retirement of debt of $422 million and $285 million, respectively. Provision for Income Taxes Our 2016 effective income tax rate from continuing operations increased to 32.7 percent, from 32.5 percent in 2015, driven primarily by the 2015 rate impact of the $112 million tax benefit from releasing the valuation allowance on a capital loss. This comparative rate impact was partially offset by $27 million of excess tax benefit in 2016 related to shared-based payments after the adoption of Accounting Standards Update (ASU) No. 2016-09, Improvements to Employee Share-Based Payment Accounting, and lower pretax earnings. Note 23 of the Financial Statements provides a tax rate reconciliation. Our 2015 effective income tax rate from continuing operations decreased to 32.5 percent, from 33.0 percent in 2014, driven primarily by the $112 million tax benefit from releasing the valuation allowance on a capital loss. This benefit was partially offset by a year-over-year decrease in the favorable resolution of various income tax matters and the rate impact of higher pretax earnings. The resolution of various income tax matters reduced tax expense by $8 million and $35 million in 2015 and 2014, respectively. Discontinued Operations See Note 7 of the Financial Statements for information about our Canada exit. Reconciliation of Non-GAAP Financial Measures to GAAP Measures To provide additional transparency, we have disclosed non-GAAP adjusted diluted earnings per share from continuing operations (Adjusted EPS). This metric excludes certain items presented below. We believe this information is useful in providing period-to-period comparisons of the results of our continuing operations. This measure is not in accordance with, or an alternative to, generally accepted accounting principles in the United States (GAAP). The most comparable GAAP measure is diluted earnings per share from continuing operations. Adjusted EPS should not be considered in isolation or as a substitution for analysis of our results as reported under GAAP. Other companies may calculate Adjusted EPS differently than we do, limiting the usefulness of the measure for comparisons with other companies. 2016 (millions, except per share data) Net of Tax Pretax GAAP diluted earnings per share from continuing operations Adjustments Loss on early retirement of debt Gain on sale (a) Restructuring costs (b) Data breach-related costs, net of insurance (c) Other (d) Resolution of income tax matters Adjusted diluted earnings per share from continuing operations $ 422 $ 257 2015 Per Share Amounts $ 4.58 $ 0.44 Net of Tax Pretax 2014 Per Share Amounts $ $ $ $ Net of Tax Pretax 5.25 $ 285 $ 173 Per Share Amounts $ 3.83 $ 0.27 (620) (487) (0.77) 138 87 0.14 39 28 0.04 145 94 0.15 (4) (2) (7) 39 29 (8) 0.05 (0.01) 29 18 (35) 0.03 (0.06) (0.01) $ 5.01 $ 4.69 $ 4.22 Note: Amounts may not foot due to rounding. (a) Refer to Note 6 of the Financial Statements. (b) Refer to Note 8 of the Financial Statements. (c) Refer to Note 19 of the Financial Statements. (d) For 2016, represents items related to the Pharmacy Transaction. For 2015, represents impairments related to our decision to wind down certain noncore operations, as described in Note 16 of the Financial Statements. The 2014 amounts include impairments of $16 million related to undeveloped land in the U.S. and $13 million of expense related to converting co-branded card program to MasterCard. 21 We have also disclosed after-tax return on invested capital for continuing operations (ROIC), which is a ratio based on GAAP information, with the exception of adjustments made to capitalize operating leases. Operating leases are capitalized as part of the ROIC calculation to control for differences in capital structure between us and our competitors. We believe this metric provides a meaningful measure of the effectiveness of our capital allocation over time. Other companies may calculate ROIC differently than we do, limiting the usefulness of the measure for comparisons with other companies. After-Tax Return on Invested Capital Numerator Trailing Twelve Months January 28, January 30, 2017 2016 (dollars in millions) Earnings from continuing operations before interest expense and income taxes + Operating lease interest (a)(b) Adjusted earnings from continuing operations before interest expense and income taxes - Income taxes (c) Net operating profit after taxes $ $ 4,969 71 5,040 1,648 3,392 Denominator January 28, 2017 Current portion of long-term debt and other borrowings + Noncurrent portion of long-term debt + Shareholders' equity + Capitalized operating lease obligations (b)(d) - Cash and cash equivalents - Net assets of discontinued operations Invested capital Average invested capital (e) $ (dollars in millions) After-tax return on invested capital (a) (b) (c) (d) (e) (f) $ $ 5,530 87 5,617 1,827 3,790 January 30, 2016 $ 1,718 11,031 10,953 1,187 2,512 62 22,315 $ 815 11,945 12,957 1,457 4,046 226 22,902 $ 22,608 $ 23,713 15.0% $ 16.0% January 31, 2015 $ $ 91 12,634 13,997 1,490 2,210 1,479 24,523 (f) Represents the add-back to operating income driven by the hypothetical interest expense we would incur if the property under our operating leases were owned or accounted for as capital leases, using eight times our trailing twelve months rent expense and an estimated interest rate of six percent. See the following Reconciliation of Capitalized Operating Leases table for the adjustments to our GAAP total rent expense to obtain the hypothetical capitalization of operating leases and related operating lease interest. Calculated using the effective tax rate for continuing operations, which was 32.7 percent and 32.5 percent for the trailing twelve months ended January 28, 2017 and January 30, 2016. For the twelve months ended January 28, 2017 and January 30, 2016, includes tax effect of $1,624 million and $1,799 million, respectively, related to EBIT and $23 million and $28 million, respectively, related to operating lease interest. Calculated as eight times our trailing twelve months rent expense. Average based on the invested capital at the end of the current period and the invested capital at the end of the prior period. Excluding the net gain on the Pharmacy Transaction, ROIC was 13.9 percent for the trailing twelve months ended January 30, 2016. Capitalized operating lease obligations and operating lease interest are not in accordance with, or an alternative for, GAAP. The most comparable GAAP measure is total rent expense. Capitalized operating lease obligations and operating lease interest should not be considered in isolation or as a substitution for analysis of our results as reported under GAAP. 22 Reconciliation of Capitalized Operating Leases Trailing Twelve Months January 28, 2017 (dollars in millions) Total rent expense Capitalized operating lease obligations (total rent expense x 8) Operating lease interest (capitalized operating lease obligations x 6%) $ 148 1,187 71 January 30, 2016 $ 182 1,457 87 January 31, 2015 $ 186 1,490 n/a Analysis of Financial Condition Liquidity and Capital Resources Our period-end cash and cash equivalents balance decreased to $2,512 million from $4,046 million in 2015, primarily reflecting deployment during 2016 of proceeds from the Pharmacy Transaction and payment of related taxes. Due to the timing of the sale late in 2015, we did not fully deploy the net proceeds by the end of 2015. Short-term investments of $1,110 million and $3,008 million were included in cash and cash equivalents at the end of 2016 and 2015, respectively. Our investment policy is designed to preserve principal and liquidity of our short-term investments. This policy allows investments in large money market funds or in highly rated direct short-term instruments that mature in 60 days or less. We also place dollar limits on our investments in individual funds or instruments. Capital Allocation We follow a disciplined and balanced approach to capital allocation based on the following priorities, ranked in order of importance: first, we fully invest in opportunities to profitably grow our business, create sustainable long-term value, and maintain our current operations and assets; second, we maintain a competitive quarterly dividend and seek to grow it annually; and finally, we return any excess cash to shareholders by repurchasing shares within the limits of our credit rating goals. Cash Flows Our 2016 operations were funded by internally and externally generated funds. Operating cash flow provided by continuing operations was $5,329 million in 2016 compared with $5,254 million in 2015. These cash flows, combined with period year-end cash position, allowed us to invest in the business, fund early debt retirement and maturities, pay dividends, and repurchase shares under our share repurchase program. Proceeds from the Pharmacy Transaction are included in investing cash flows provided by continuing operations during 2015. Inventory Year-end inventory was $8,309 million, compared with $8,601 million in 2015. The decrease was due to our alignment of inventory levels with the slowing sales trend while appropriately supporting instocks. Share Repurchases During 2016, 2015, and 2014 we returned $3,686 million, $3,441 million, and $41 million, respectively, to shareholders through share repurchase. See Part II, Item 5 of this Annual Report on Form 10-K and Note 25 to the Financial Statements for more information. Dividends We paid dividends totaling $1,348 million ($2.32 per share) in 2016 and $1,362 million ($2.16 per share) in 2015, a per share increase of 7.4 percent. We declared dividends totaling $1,359 million ($2.36 per share) in 2016, a per share increase of 7.3 percent over 2015. We declared dividends totaling $1,378 million ($2.20 per share) in 2015, a per share increase of 10.6 percent over 2014. We have paid dividends every quarter since our 1967 initial public offering, and it is our intent to continue to do so in the future. 23 Short-term and Long-term Financing Our financing strategy is to ensure liquidity and access to capital markets, maintain a balanced spectrum of debt maturities, and manage our net exposure to floating interest rate volatility. Within these parameters, we seek to minimize our borrowing costs. Our ability to access the long-term debt and commercial paper markets has provided us with ample sources of liquidity. Our continued access to these markets depends on multiple factors, including the condition of debt capital markets, our operating performance, and maintaining strong credit ratings. As of January 28, 2017, our credit ratings were as follows: Credit Ratings Long-term debt Commercial paper Moody's A2 P-1 Standard and Poor's A A-1 Fitch AF2 If our credit ratings were lowered, our ability to access the debt markets, our cost of funds, and other terms for new debt issuances could be adversely impacted. Each of the credit rating agencies reviews its rating periodically and there is no guarantee our current credit ratings will remain the same as described above. In 2016, we funded our peak holiday sales period working capital needs through internally generated funds and the issuance of commercial paper. In 2015, we funded our peak holiday sales period working capital needs through internally generated funds. Commercial Paper (dollars in millions) Maximum daily amount outstanding during the year Average amount outstanding during the year Amount outstanding at year-end Weighted average interest rate $ 2016 89 $ 1 0.43% 2015 $ % 2014 590 129 0.11% We have additional liquidity through a committed $2.5 billion revolving credit facility obtained through a group of banks in October 2016 which expires in October 2021. This new unsecured revolving credit facility replaced a $2.25 billion unsecured revolving credit facility that was scheduled to expire in October 2018. No balances were outstanding under either credit facility at any time during 2016, 2015, or 2014. Most of our long-term debt obligations contain covenants related to secured debt levels. In addition to a secured debt level covenant, our credit facility also contains a debt leverage covenant. We are, and expect to remain, in compliance with these covenants. Additionally, at January 28, 2017, no notes or debentures contained provisions requiring acceleration of payment upon a credit rating downgrade, except that certain outstanding notes allow the note holders to put the notes to us if within a matter of months of each other we experience both (i) a change in control and (ii) our long-term credit ratings are either reduced and the resulting rating is non-investment grade, or our long-term credit ratings are placed on watch for possible reduction and those ratings are subsequently reduced and the resulting rating is non-investment grade. We believe our sources of liquidity will continue to be adequate to maintain operations, finance anticipated expansion and strategic initiatives, fund debt maturities, pay dividends, and execute purchases under our share repurchase program for the foreseeable future. We continue to anticipate ample access to commercial paper and long-term financing. 24 Commitments and Contingencies Contractual Obligations as of January 28, 2017 (millions) Recorded contractual obligations: Long-term debt (a) (b) Capital lease obligations Deferred compensation (c) Real estate liabilities (d) Tax contingencies (e) Unrecorded contractual obligations: Interest payments - long-term debt Operating leases (b) Purchase obligations (f) Real estate obligations (g) Future contributions to retirement plans (h) Contractual obligations (a) (b) (c) (d) (e) (f) (g) (h) Total Payments Due by Period Less than 1-3 3-5 1 Year Years Years After 5 Years $ 11,814 $ 1,963 515 52 1,683 $ 82 56 52 1,203 $ 174 114 2,150 $ 178 121 6,778 1,529 224 6,308 3,876 1,762 216 $ 26,506 $ 510 198 609 185 3,375 $ 819 398 814 31 3,553 $ 710 4,269 364 2,916 107 232 3,630 $ 15,948 Represents principal payments only. See Note 20 of the Financial Statements for further information. These payments also include $348 million and $269 million of legally binding minimum lease payments for stores that are expected to open in 2017 or later for capital and operating leases, respectively. See Note 22 of the Financial Statements for further information. The timing of deferred compensation payouts is estimated based on payments currently made to former employees and retirees, forecasted investment returns, and the projected timing of future retirements. Real estate liabilities include costs incurred but not paid related to the construction or remodeling of real estate and facilities. Estimated tax contingencies of $222 million, including interest and penalties and primarily related to continuing operations, are not included in the table above because we are not able to make reasonably reliable estimates of the period of cash settlement. See Note 23 of the Financial Statements for further information. Purchase obligations include all legally binding contracts such as firm minimum commitments for inventory purchases, merchandise royalties, equipment purchases, marketing-related contracts, software acquisition/license commitments, and service contracts. We issue inventory purchase orders in the normal course of business, which represent authorizations to purchase that are cancelable by their terms. We do not consider purchase orders to be firm inventory commitments; therefore, they are excluded from the table above. If we choose to cancel a purchase order, we may be obligated to reimburse the vendor for unrecoverable outlays incurred prior to cancellation. We also issue trade letters of credit in the ordinary course of business, which are excluded from this table as these obligations are conditioned on terms of the letter of credit being met. Real estate obligations include commitments for the purchase, construction, or remodeling of real estate and facilities. We have not included obligations under our pension plans in the contractual obligations table above because no additional amounts are required to be funded as of January 28, 2017. Our historical practice regarding these plans has been to contribute amounts necessary to satisfy minimum pension funding requirements, plus periodic discretionary amounts determined to be appropriate. Off Balance Sheet Arrangements: Other than the unrecorded contractual obligations noted above, we do not have any arrangements or relationships with entities that are not consolidated into the financial statements. Critical Accounting Estimates Our consolidated financial statements are prepared in accordance with GAAP, which requires us to make estimates and apply judgments that affect the reported amounts. In the Notes to Consolidated Financial Statements, we describe the significant accounting policies used in preparing the consolidated financial statements. Our management has discussed the development, selection, and disclosure of our critical accounting estimates with the Audit & Finance Committee of our Board of Directors. The following items require significant estimation or judgment: Inventory and cost of sales: Our inventory is valued at the lower of cost or market. We reduce inventory for estimated losses related to shrink and markdowns. Our shrink estimate is based on historical losses verified by physical inventory counts. Historically, our actual physical inventory count results have shown our estimates to be reliable. Market adjustments for markdowns are recorded when the salability of the merchandise has diminished. We believe the risk of inventory obsolescence is largely mitigated because our inventory typically turns in less than three months. Inventory was $8,309 million and $8,601 million at January 28, 2017 and January 30, 2016, respectively, and is further described in Note 12 of the Financial Statements. 26 Vendor income: We receive various forms of consideration from our vendors (vendor income), principally earned as a result of volume rebates, markdown allowances, promotions, and advertising allowances. Substantially all vendor income is recorded as a reduction of cost of sales. We establish a receivable for vendor income that is earned but not yet received. Based on the agreements in place, this receivable is computed by estimating when we have completed our performance and when the amount is earned. The majority of the year-end vendor income receivables are collected within the following fiscal quarter, and we do not believe there is a reasonable likelihood that the assumptions used in our estimate will change significantly. Historically, adjustments to our vendor income receivable have not been material. Vendor income receivable was $385 million and $384 million at January 28, 2017 and January 30, 2016, respectively. Vendor income is described further in Note 4 of the Financial Statements. Long-lived assets: Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. The evaluation is performed at the lowest level of identifiable cash flows independent of other assets. An impairment loss would be recognized when estimated undiscounted future cash flows from the operation and/or disposition of the assets are less than their carrying amount. Measurement of an impairment loss would be based on the excess of the carrying amount of the asset group over its fair value. Fair value is measured using discounted cash flows or independent opinions of value, as appropriate. We recorded impairments of $43 million, $54 million, and $124 million in 2016, 2015, and 2014, respectively, which are described further in Note 14 of the Financial Statements. Insurance/self-insurance: We retain a substantial portion of the risk related to certain general liability, workers' compensation, property loss, and team member medical and dental claims. However, we maintain stop-loss coverage to limit the exposure related to certain risks. Liabilities associated with these losses include estimates of both claims filed and losses incurred but not yet reported. We use actuarial methods which consider a number of factors to estimate our ultimate cost of losses. General liability and workers' compensation liabilities are recorded at our estimate of their net present value; other liabilities referred to above are not discounted. Our workers' compensation and general liability accrual was $447 million and $498 million at January 28, 2017 and January 30, 2016, respectively. We believe that the amounts accrued are appropriate; however, our liabilities could be significantly affected if future occurrences or loss developments differ from our assumptions. For example, a five percent increase or decrease in average claim costs would impact our self-insurance expense by $22 million in 2016. Historically, adjustments to our estimates have not been material. Refer to Item 7A, Quantitative and Qualitative Disclosures About Market Risk, for further disclosure of the market risks associated with these exposures. We maintain insurance coverage to limit our exposure to certain events, including network security matters. Income taxes: We pay income taxes based on the tax statutes, regulations, and case law of the various jurisdictions in which we operate. Significant judgment is required in determining the timing and amounts of deductible and taxable items, and in evaluating the ultimate resolution of tax matters in dispute with tax authorities. The benefits of uncertain tax positions are recorded in our financial statements only after determining it is likely the uncertain tax positions would withstand challenge by taxing authorities. We periodically reassess these probabilities and record any changes in the financial statements as appropriate. Liabilities for uncertain tax positions, including interest and penalties, were $222 million and $215 million at January 28, 2017 and January 30, 2016, respectively, and primarily relate to continuing operations. We believe the resolution of these matters will not have a material adverse impact on our consolidated financial statements. Income taxes are described further in Note 23 of the Financial Statements. Pension accounting: We maintain a funded qualified, defined benefit pension plan, as well as several smaller and unfunded nonqualified plans for certain current and retired team members. The costs for these plans are determined based on actuarial calculations using the assumptions described in the following paragraphs. Eligibility and the level of benefits varies depending on team members' full-time or part-time status, date of hire, age, and/or length of service. The benefit obligation and related expense for these plans are determined based on actuarial calculations using assumptions about the expected long-term rate of return, the discount rate, and compensation growth rates. The assumptions, with adjustments made for any significant plan or participant changes, are used to determine the periodend benefit obligation and establish expense for the next year. Our 2016 expected long-term rate of return on plan assets of 6.8 percent is determined by the portfolio composition, historical long-term investment performance, and current market conditions. A one percentage point decrease in our expected long-term rate of return would increase annual expense by $37 million. The discount rate used to determine benefit obligations is adjusted annually based on the interest rate for long-term high-quality corporate bonds, using yields for maturities that are in line with the duration of our pension liabilities. Our 27 benefit obligation and related expense will fluctuate with changes in interest rates. A 0.5 percentage point decrease to the weighted average discount rate would increase annual expense by $30 million. Based on our experience, we use a graduated compensation growth schedule that assumes higher compensation growth for younger, shorter-service pension-eligible team members than it does for older, longer-service pensioneligible team members. Pension benefits are further described in Note 28 of the Financial Statements. Legal and other contingencies: We believe the accruals recorded in our consolidated financial statements properly reflect loss exposures that are both probable and reasonably estimable. We do not believe any of the currently identified claims or litigation may materially affect our results of operations, cash flows, or financial condition. However, litigation is subject to inherent uncertainties, and unfavorable rulings could occur. If an unfavorable ruling were to occur, it may cause a material adverse impact on the results of operations, cash flows, or financial condition for the period in which the ruling occurs, or future periods. Refer to Note 19 of the Financial Statements for further information on contingencies. New Accounting Pronouncements Refer to Note 2 and Note 22 of the Financial Statements for a description of new accounting pronouncements related to revenues and leases, respectively. We do not expect any other recently issued accounting pronouncements will have a material effect on our financial statements. Forward-Looking Statements This report contains forward-looking statements, which are based on our current assumptions and expectations. These statements are typically accompanied by the words "expect," "may," "could," "believe," "would," "might," "anticipates," or words of similar import. The principal forward-looking statements in this report include: our financial performance, statements regarding the adequacy of and costs associated with our sources of liquidity, the expected impact of the Pharmacy Transaction on our financial performance, the continued execution of our share repurchase program, our expected capital expenditures and new lease commitments, the impact of changes in the expected effective income tax rate on net income, the expected compliance with debt covenants, the expected impact of new accounting pronouncements, our intentions regarding future dividends, contributions and payments related to our pension plan, the expected returns on pension plan assets, the expected timing and recognition of compensation expenses, the effects of macroeconomic conditions, the adequacy of our reserves for general liability, workers' compensation and property loss, the expected outcome of, and adequacy of our reserves for investigations, inquiries, claims and litigation, including those related to the 2013 data breach, expected changes to our contractual obligations and liabilities, the expected ability to recognize deferred tax assets and liabilities and the timing of such recognition, the process, timing and effects of discontinuing our Canadian operations, the resolution of tax matters, changes in our assumptions and expectations, and the expected benefits of restructuring activities. All such forward-looking statements are intended to enjoy the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, as amended. Although we believe there is a reasonable basis for the forward-looking statements, our actual results could be materially different. The most important factors which could cause our actual results to differ from our forward-looking statements are set forth on our description of risk factors in Item 1A to this Form 10-K, which should be read in conjunction with the forward-looking statements in this report. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update any forward-looking statement. 28 Item 7A. Quantitative and Qualitative Disclosures About Market Risk At January 28, 2017, our exposure to market risk was primarily from interest rate changes on our debt obligations, some of which are at a LIBOR-plus floating-rate. Our interest rate exposure is primarily due to differences between our floating rate debt obligations compared to our floating rate short term investments. At January 28, 2017, our floating rate debt exceeded our floating rate short-term investments by approximately $140 million. Based on our balance sheet position at January 28, 2017, the annualized effect of a 0.1 percentage point increase in floating interest rates on our floating rate debt obligations, net of our floating rate short-term investments, would not be significant. In general, we expect our floating rate debt to exceed our floating rate short-term investments over time, but that may vary in different interest rate environments. See further description of our debt and derivative instruments in Notes 20 and 21 to the Financial Statements. We record our general liability and workers' compensation liabilities at net present value; therefore, these liabilities fluctuate with changes in interest rates. Based on our balance sheet position at January 28, 2017, the annualized effect of a 0.5 percentage point decrease in interest rates would be to decrease earnings before income taxes by $7 million. In addition, we are exposed to market return fluctuations on our qualified defined benefit pension plans. The value of our pension liabilities is inversely related to changes in interest rates. A 0.5 percentage point decrease to the weighted average discount rate would increase annual expense by $30 million. To protect against declines in interest rates, we hold high-quality, long-duration bonds and interest rate swaps in our pension plan trust. At year-end, we had hedged 55 percent of the interest rate exposure of our funded status. As more fully described in Notes 15 and 27 to the Financial Statements, we are exposed to market returns on accumulated team member balances in our nonqualified, unfunded deferred compensation plans. We control the risk of offering the nonqualified plans by making investments in life insurance contracts and prepaid forward contracts on our own common stock that offset a substantial portion of our economic exposure to the returns on these plans. The annualized effect of a one percentage point change in market returns on our nonqualified defined contribution plans (inclusive of the effect of the investment vehicles used to manage our economic exposure) would not be significant. There have been no other material changes in our primary risk exposures or management of market risks since the prior year. 29 Item 8. Financial Statements and Supplementary Data Report of Management on the Consolidated Financial Statements Management is responsible for the consistency, integrity, and presentation of the information in the Annual Report. The consolidated financial statements and other information presented in this Annual Report have been prepared in accordance with accounting principles generally accepted in the United States and include necessary judgments and estimates by management. To fulfill our responsibility, we maintain comprehensive systems of internal control designed to provide reasonable assurance that assets are safeguarded and transactions are executed in accordance with established procedures. The concept of reasonable assurance is based upon recognition that the cost of the controls should not exceed 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 primarily through its Audit Committee, which is comprised of independent directors. The Committee oversees the Corporation's systems 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. 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 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, comprehensive 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 express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Target Corporation and subsidiaries at January 28, 2017 and January 30, 2016, and the consolidated results of their operations and their cash flows for each of the three years in the period ended January 28, 2017, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Corporation's internal control over financial reporting as of January 28, 2017, based on criteria established in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework), and our report dated March 8, 2017, expressed an unqualified opinion thereon. Minneapolis, Minnesota March 8, 2017 30 Report of Management on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Under the supervision and with the participation of our management, including our chief executive 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 Internal ControlIntegrated Framework (2013), issued 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 audited by Ernst & Young LLP, the independent registered public accounting firm who has also audited our consolidated financial statements, as stated in their report which appears on this page. 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 audited Target Corporation and subsidiaries' (the Corporation) internal control over financial reporting as of January 28, 2017, based on criteria established in Internal ControlIntegrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) (the COSO criteria). The Corporation's management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying 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 to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal 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 maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts 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 detection 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 detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. 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 consolidated 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. Minneapolis, Minnesota March 8, 2017 31 Consolidated Statements of Operations (millions, except per share data) Sales Cost of sales Gross margin Selling, general and administrative expenses Depreciation and amortization Gain on sale Earnings from continuing operations before interest expense and income taxes 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 / (loss) Basic earnings / (loss) per share Continuing operations Discontinued operations Net earnings / (loss) per share Diluted earnings / (loss) per share Continuing operations Discontinued operations Net earnings / (loss) per share Weighted average common shares outstanding Basic Dilutive effect of share-based awards Diluted Antidilutive shares Dividends declared per share Note: Per share amounts may not foot due to rounding. See accompanying Notes to Consolidated Financial Statements. 32 2016 69,495 $ 48,872 20,623 13,356 2,298 2015 73,785 $ 51,997 21,788 14,665 2,213 (620) 2014 72,618 51,278 21,340 14,676 2,129 4,969 1,004 3,965 1,296 2,669 68 2,737 $ 5,530 607 4,923 1,602 3,321 42 3,363 $ 4,535 882 3,653 1,204 2,449 (4,085) (1,636) 4.62 $ 0.12 4.74 $ 5.29 $ 0.07 5.35 $ 3.86 (6.44) (2.58) $ 4.58 $ 0.12 4.70 $ 5.25 $ 0.07 5.31 $ 3.83 (6.38) (2.56) $ 577.6 4.9 582.5 0.1 2.36 $ 627.7 5.2 632.9 2.20 $ 634.7 5.4 640.1 3.3 1.99 $ $ $ $ $ Consolidated Statements of Comprehensive Income (millions) Net income / (loss) $ Other comprehensive (loss) / income, net of tax Pension and other benefit liabilities, net of tax benefit of $9, $18, and $90 Currency translation adjustment and cash flow hedges, net of provision for taxes of $2, $2, and $2 Other comprehensive (loss) / income Comprehensive income / (loss) $ See accompanying Notes to Consolidated Financial Statements. 33 2016 2,737 $ 2015 3,363 $ (13) (27) 4 (9) 2,728 $ (3) (30) 3,333 $ 2014 (1,636) (139) 431 292 (1,344) Consolidated Statements of Financial Position (millions, except footnotes) Assets Cash and cash equivalents, including short-term investments of $1,110 and $3,008 Inventory Assets of discontinued operations Other current assets Total current assets Property and equipment Land Buildings and improvements Fixtures and equipment Computer hardware and software Construction-in-progress Accumulated depreciation Property and equipment, net Noncurrent assets of discontinued operations Other noncurrent assets Total assets Liabilities and shareholders' investment Accounts payable Accrued and other current liabilities Current portion of long-term debt and other borrowings Liabilities of discontinued operations Total current liabilities Long-term debt and other borrowings Deferred income taxes Noncurrent liabilities of discontinued operations Other noncurrent liabilities Total noncurrent liabilities Shareholders' investment Common stock Additional paid-in capital Retained earnings Accumulated other comprehensive loss Pension and other benefit liabilities Currency translation adjustment and cash flow hedges Total shareholders' investment Total liabilities and shareholders' investment January 28, January 30, 2017 2016 $ $ $ 2,512 $ 8,309 69 1,100 11,990 4,046 8,601 322 1,161 14,130 6,106 27,611 5,503 2,651 200 (17,413) 24,658 12 771 37,431 $ 6,125 27,059 5,347 2,617 315 (16,246) 25,217 75 840 40,262 7,252 $ 3,737 1,718 1 12,708 11,031 861 18 1,860 13,770 7,418 4,236 815 153 12,622 11,945 823 18 1,897 14,683 46 5,661 5,884 $ (601) (37) 10,953 37,431 $ 50 5,348 8,188 (588) (41) 12,957 40,262 Common Stock Authorized 6,000,000,000 shares, $0.0833 par value; 556,156,228 shares issued and outstanding at January 28, 2017; 602,226,517 shares issued and outstanding at January 30, 2016. Preferred Stock Authorized 5,000,000 shares, $0.01 par value; no shares were issued or outstanding at January 28, 2017 or January 30, 2016. See accompanying Notes to Consolidated Financial Statements. 34 Consolidated Statements of Cash Flows (millions) Operating activities Net earnings / (loss) Earnings / (losses) 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 activitiescontinuing operations Cash provided by / (required for) operating activitiesdiscontinued 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 activitiescontinuing operations Cash provided by / (required for) investing activitiesdiscontinued operations Cash (required for) / provided by investing activities Financing activities Change in commercial paper, net Additions to long-term debt Reductions of long-term debt 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 (a) Cash and cash equivalents at end of period Supplemental information Interest paid, net of capitalized interest Income taxes paid / (refunded) Property and equipment acquired through capital lease obligations (a) Includes cash of our discontinued operations of $25 million at February 1, 2014. See accompanying Notes to Consolidated Financial Statements. 35 $ $ $ 2016 2015 2014 2,737 $ 68 2,669 3,363 $ 42 3,321 2,298 113 41 422 2,213 115 (322) (620) 57 2,129 71 7 285 40 293 36 (543) 5,329 107 5,436 (316) 227 579 5,254 704 5,958 (512) (115) 803 5,157 (692) 4,465 (1,547) 46 28 (1,473) (1,473) (1,438) 28 1,875 24 489 19 508 (1,786) 95 (20) 106 (1,605) (321) (1,926) 1,977 (2,641) (1,348) (3,706) 221 (5,497) (1,534) 4,046 2,512 $ (85) (1,362) (3,483) 300 (4,630) 1,836 2,210 4,046 $ (80) 1,993 (2,079) (1,205) (26) 373 (1,024) 1,515 695 2,210 999 $ 1,514 238 604 $ (127) 126 (1,636) (4,085) 2,449 871 1,251 88 Consolidated Statements of Shareholders' Investment (millions) 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 Net earnings Other comprehensive loss Dividends declared Repurchase of stock Stock options and awards January 28, 2017 Common Stock Shares 632.9 (0.8) 8.1 640.2 (44.7) 6.7 602.2 (50.9) 4.9 556.2 Stock Par Value $ 53 $ 53 (4) 1 $ 50 (4) $ 46 See accompanying Notes to Consolidated Financial Statements. 36 $ $ $ $ Additional Paid-in Capital 4,470 429 4,899 449 5,348 313 5,661 Retained Earnings $ 12,599 (1,636) (1,273) (46) 9,644 $ 3,363 (1,378) (3,441) 8,188 $ 2,737 (1,359) (3,682) 5,884 $ Accumulated Other Comprehensive (Loss) / Income (891) $ 292 (599) $ (30) (629) $ (9) (638) $ $ $ $ $ Total 16,231 (1,636) 292 (1,273) (46) 429 13,997 3,363 (30) (1,378) (3,445) 450 12,957 2,737 (9) (1,359) (3,686) 313 10,953 Notes to Consolidated Financial Statements 1. Summary of Accounting Policies Organization We are a general merchandise retailer selling products to our guests through our stores and digital channels. As described in Note 7, in January 2015, we announced our exit from the Canadian market and filed for protection (the Filing) under the Companies' Creditors Arrangement Act (CCAA) with the Ontario Superior Court of Justice in Toronto (the Court). Our prefiling financial results in Canada and subsequent expenses directly attributable to the Canada exit are included in our financial statements and classified within discontinued operations. Discontinued operations refers only to our discontinued Canadian operations. Subsequent to the Filing, we operate as a single segment that includes all of our continuing operations, which are designed to enable guests to purchase products seamlessly in stores or through our digital channels. Consolidation The consolidated financial statements include the balances of Target and its subsidiaries after elimination of intercompany balances and transactions. All material subsidiaries are wholly owned. We consolidate variable interest entities where it has been determined that Target is the primary beneficiary of those entities' operations. As of January 15, 2015, we deconsolidated substantially all of our Canadian operations following the Filing. See Note 7 for more information. 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 2016 ended January 28, 2017, and consisted of 52 weeks. Fiscal 2015 ended January 30, 2016, and consisted of 52 weeks. Fiscal 2014 ended January 31, 2015, and c