Name: Section: Student ID# PART 1: RATIO CALCULAION Walmart Target 2020 2019 2018 2020 2019 2018 61,897 Current ratio 0.80 77,477 Working capital (in Millions) Inventory turnover Days in inventory Accounts receivable turnover Average collection period Debt to assets ratio Return on Assets Asset turnover Return on equity (or common stockholders' equity) Profit margin Gross profit rate Earnings per share Payout ratio Free Cash Flows (in Millions)UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K X Annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended January 31, 2020, or Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 Commission file number 001-6991. Walmart K WALMART INC. (Exact name of registrant as specified in its charter) DE 71-0415188 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 702 S.W. 8th Street Bentonville, AR 72716 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (479) 273-4000 Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, par value $0.10 per share WMT NYSE 1.900% Notes Due 2022 WMT22 NYSE 2.550% Notes Due 2026 WMT26 NYSE Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes * No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes No xWalmart Inc. Consolidated Statements of Income Fiscal Years Ended January 31, (Amounts in millions, except per share data) 2020 2019 2018 Revenues: Net sales 519,926 $ 510,329 $ 495,761 Membership and other income 4,038 4,076 4,582 Total revenues 523,964 514,405 500,343 Costs and expenses: Cost of sales 394,605 385,301 373,396 Operating, selling, general and administrative expenses 108,791 107,147 106,510 Operating income 20,568 21,957 20,437 Interest: Debt 2,262 1,975 1,978 Finance, capital lease and financing obligations 337 371 352 Interest income (189) 217) 152) Interest, net 2,410 2,129 2,178 Loss on extinguishment of debt 3,136 Other (gains) and losses (1,958) 8,368 Income before income taxes 20, 116 1 1,460 15,123 Provision for income taxes 4,915 4,281 4,600 Consolidated net income 15,201 7,179 10,523 Consolidated net income attributable to noncontrolling interest (320) (509) (661) Consolidated net income attributable to Walmart $ 14,881 6,670 $ 9,862 Net income per common share: Basic net income per common share attributable to Walmart 5.22 $ 2.28 $ 3.29 Diluted net income per common share attributable to Walmart 5.19 2.26 3.28 Weighted-average common shares outstanding: Basic 2,850 2,929 2,995 Diluted 2,86 2.945 3,010 Dividends declared per common share S 2.12 $ 2.08 $ 2.04 See accompanying notes. 50Walmart Inc. Consolidated Statements of Comprehensive Income Fiscal Years Ended January 31, (Amounts in millions) 2020 2019 2018 Consolidated net income 15,201 $ 7,179 $ 10,523 Consolidated net income attributable to noncontrolling interest (320) (509) (661) Consolidated net income attributable to Walmart 14,881 6,670 ),862 Other comprehensive income (loss), net of income taxes Currency translation and other 286 (226) 2,540 Net investment hedges 122 272 (405) Cash flow hedge 399) (290) 437 Minimum pension liability (1,244) 131 147 Unrealized gain on available-for-sale securities 1,501 Other comprehensive income (loss), net of income taxes (1,235) (113) 4,220 Other comprehensive (income) loss attributable to noncontrolling interest (28) 188 169) Other comprehensive income (loss) attributable to Walmart (1,263) 75 4,051 Comprehensive income, net of income taxes 13,966 7,066 14,743 Comprehensive income attributable to noncontrolling interest (348) 321) 830) Comprehensive income attributable to Walmart S 13,618 $ 6,745 $ 13,913 See accompanying notes. 51Walmart Inc. Consolidated Balance Sheets As of January 31, (Amounts in millions) 2020 2019 ASSETS Current assets: Cash and cash equivalents 9,465 $ 7,722 Receivables, net 6,284 6,283 Inventories 44,435 14,269 Prepaid expenses and other 1,622 3,623 Total current assets 61,806 61,897 Property and equipment, net 105,208 104,317 Operating lease right-of-use assets 17,424 Finance lease right-of-use assets, net 4,417 Property under capital lease and financing obligations, net 7,078 Goodwill 31,073 31,181 Other long-term assets 16,567 14,822 Total assets $ 236,495 219,295 LIABILITIES AND EQUITY Current liabilities: Short-term borrowings 575 5,225 Accounts payable 46,973 47,060 Accrued liabilities 22,29 22, 159 Accrued income taxes 280 428 Long-term debt due within one year 5.362 1,876 Operating lease obligations due within one year 1,793 Finance lease obligations due within one year 511 Capital lease and financing obligations due within one year 729 Total current liabilities 77,790 77,477 Long-term deb 43,714 43,520 Long-term operating lease obligations 16,171 Long-term finance lease obligations 4,307 Long-term capital lease and financing obligations 6,683 Deferred income taxes and other 12,961 11,981 Commitments and contingencies Equity: Common stock 284 288 Capital in excess of par value 3.247 2,965 Retained earnings 83,943 80,785 Accumulated other comprehensive loss (12,805) (11,542) Total Walmart shareholders' equity 74,669 72,496 Noncontrolling interest 6 ,883 7,138 Total equity 31,552 79,634 Total liabilities and equity 236,495 219,295 See accompanying notes.Walmart Inc. Consolidated Statements of Shareholders' Equity Accumulated Total Capital in Other Walmart Common Stock Excess of Retained Comprehensive Shareholders' Noncontrolling Total (Amounts in millions) Shares Amount Par Value Earnings Income (Loss) Equity Interest Equity Balances as of February 1, 2017 3,048 $ 305 $ 2,371 $ 89,354 $ (14,232) 77,798 $ 2,737 $ 80,535 Consolidated net incom 9,862 9,862 661 10,52 Other comprehensive income (loss), net of income taxes 4,051 4,051 169 4,220 Cash dividends declared ($2.04 per share) (6,124) (6,124 (6,124) Purchase of Company stock (103) (10) (219) (7,975 (8,204) (8,204) Cash dividend declared to noncontrolling interest 687) 687 ) Other 7 496 (10) 486 73 559 Balances as of January 31, 2018 2,952 295 2,648 85,107 10,181) 17,869 2,953 80,82 Adoption of new accounting standards on February 1, 2018, net of income taxes 2,361 (1,436) 925 (1) 924 Consolidated net income - - - 6,670 6,670 509 7,179 Other comprehensive income (loss), net of income taxes - - - 75 75 (188) (113) Cash dividends declared ($2.08 per share - (6,102 - (6,102) (6,102) Purchase of Company stock (80 ) (8 ) (245) (7,234 (7,487 (7,487) Cash dividend declared to noncontrolling interest - - - (488) (488) Noncontrolling interest of acquired entity - - 4,345 4,345 Other 6 1 562 (17) 546 554 Balances as of January 31, 2019 2,878 288 2,965 80,785 (11,542) 72,496 7,138 79,634 Adoption of new accounting standards on February 1, 2019, net of income taxes (266) (266) (34) (300) Consolidated net income - - 14,881 14,88 320 15,201 Other comprehensive income (loss), net of income taxes - - - (1,263) (1,263) 28 (1,235) Cash dividends declared ($2.12 per share) - (6,048) (6,048) (6,048) Purchase of Company stock (53) (5) (199) (5,435) (5,639) (5,639) Cash dividends declared to noncontrolling interest (475) (475) Other 7 481 26 508 (94) 414 Balances as of January 31, 2020 2,832 $ 284 $ 3,247 $ 83,943 (12,805) 74,669 6,883 81,552 See accompanying notes. 53Walmart Inc. Consolidated Statements of Cash Flows Fiscal Years Ended January 31, (Amounts in millions) 2020 2019 2018 Cash flows from operating activities: Consolidated net income 15,201 7,179 $ 10,523 Adjustments to reconcile consolidated net income to net cash provided by operating activities: Depreciation and amortization 10,987 10,678 10,529 Unrealized (gains) and losses (1,886) 3,516 (Gains) and losses for disposal of business operations 15 4,850 Asda pension contribution (1,036) Deferred income taxes 320 (499) (304) Loss on extinguishment of debt 3,136 Other operating activities 1.981 1.734 1 ,210 Changes in certain assets and liabilities, net of effects of acquisitions: Receivables, net 154 (368 ) (1,074) Inventories (300) (1,311) (140) Accounts payable (274) 1,831 4,086 Accrued liabilities 186 183 928 Accrued income taxes (93 ) (40) (557 ) Net cash provided by operating activities 25,255 21,53 28,537 Cash flows from investing activities: Payments for property and equipment (10,705) (10,344) (10,051) Proceeds from the disposal of property and equipment 321 519 378 Proceeds from the disposal of certain operations 833 876 1,046 Payments for business acquisitions, net of cash acquired ( 56 ) (14,656) (375) Other investing activities 479 (431) (77 ) Net cash used in investing activities (9,128) 24,036) (9,079) Cash flows from financing activities: Net change in short-term borrowings (4,656) (53) 4,148 Proceeds from issuance of long-term debt 5,492 15,872 7,476 Repayments of long-term debt (1,907) (3,784) (13,061) Premiums paid to extinguish debt (3,059) Dividends paid (6,048 (6,102) (6,124) Purchase of Company stock (5,717) (7,410) 8,296) Dividends paid to noncontrolling interest (555) (431 ) (690) Purchase of noncontrolling interest (8) Other financing activities (908) (629) (261) Net cash used in financing activities (14,299) (2,537) 19,875) Effect of exchange rates on cash, cash equivalents and restricted cash (69) (438) 487 Net increase (decrease) in cash, cash equivalents and restricted cash 1,759 742 (130) Cash, cash equivalents and restricted cash at beginning of year 7 , 756 7,014 7,144 Cash, cash equivalents and restricted cash at end of year 9,515 7,756 7,014 Supplemental disclosure of cash flow information: Income taxes paid 3,616 3,982 $ 6, 179Inventories The Company values inventories at the lower of cost or market as determined primarily by the retail inventory method of accounting, using the last-in, rst-out ("LIFO") method for the Walmart U.S. segment's inventories. The inventory for the Walmart International segment is valued primarily by the retail inventory method of accounting, using the rst-in, rst-out ("FIFO") method The retail inventory method of accounting results in inventory being valued at the lower of cost or market, since permanent markdowns are immediately recorded as a reduction of the retail value of inventory. The inventory at the Sam's Club segment is valued using the weighted-average cost LIFO method. As of January 31, 2020 and January 31, 2019, the Company's inventories valued at LIFO approximated those inventories as if they were valued at FIFO. Assets Held for Sale Assets held for sale represent components and businesses that meet accounn'ng requirements to be classied as held for sale and are presented as single asset and liability amounts in the Company's nancial statements with a valuation allowance, if necessary, to recognize the net carrying amount at the lower of cost or fair value, less costs to sell. The Company reviews all businesses and assets held for sale each reporting period to determine whether the existing carrying amounts are frilly recoverable in comparison to estimated fair values. As of January 31, 2020 and January 31, 2019, immaterial amounts for assets and liabilities held for sale were classied in prepaid expenses and other and accrued liabilities, respectively, in the Consolidated Balance Sheets. Property and Equipment Property and equipment are initially recorded at cost. Gains or losses on disposition are recognized as earned or incurred. Costs of major improvements are capitalized, while costs of normal repairs and maintenance are expensed as incurred. The following table summarizes the Company's property and equipment balances and includes the estimated useful lives that are generally used to depreciate the assets on a straight-line basis: Ar of January 31, (Amounts in millions) Estimated Useful Lives 1020 2019 Land NIA 3 24,619 3 24,5 26 Buildings and improvements 340 years 105,674 101,006 Fixtures and equipment 1-30 years 58,607 54,488 Transportation equipment 3-15 years 2,377 2,316 Construction in progress NIA 3,751 3,474 Property and equipment 195,028 185,810 Accumulated depreciation (89,820) (81,493) Property and equipment, net S 105,208 S 104,317 Leasehold improvements are depreciated or amortized over the shorter of the estimated useful life of the asset or the remaining expected lease term. Total depreciation and amortization expense for property and equipment, property under nance leases and nancing obligations, property under capital leases and intangible assets for scal 2020, 2019 and 2018 was $1 1.0 billion, $ 10.7 billion and $10.5 billion, respectively. Leases In February 2016, the F ASB issued ASU 2016-02, Leases (Topic 842), which requires lease assets and liabilities to be recorded on the balance sheet. The Company adopted this ASU and related amendments as of February 1, 2019 under the modied retrospective approach and elected certain practical expedients permitted under the transition guidance, including to retain the historical lease classication as well as relief from renewing expired or existing contracts to determine if they contain leases. For leases subject to index or rate adjustments, the most current index or rate adjustments were included in the measurement of operating lease obligations at adoption. The adoption of this ASU and related amendments resulted in a $14.8 billion increase to total assets and a $15.1 billion increase to total liabilities in the rst quarter of scal 2020. In the rst quarter of scal 2020, the Company recognized $16.8 billion and $17.5 billion of operating lease rightof-use assets and operating lease obligations, respectively, and removed $2.2 billion and $1.7 billion, respectively, of assets and liabilities related to nancial obligations connected with the construction of leased stores. Several other asset and liability line items in the Company's Consolidated Balance Sheet were also impacted by immaterial amounts. Additionally. the adoption resulted in a cumulativrreffect adjustment to retained earnings of approximately $0.3 billion, net of tax, which primarily consisted of the recognition of impairment. The Company's Consolidated Statement of Income and Consolidated Statement of Cash Flows were immaterially impacted. Accounting policies as a result of the adoption of this ASU are described below. Refer to Note 7 for additional lease disclosures. For any new or modied lease, the Company, at the inception of the contract, determines whether a contract is or contains a lease. The Company records right-of- use (\"ROU\") assets and lease obligations for its nance and operating leases, which are 56 initially recognized based on the discounted future lease payments over the term of the lease. As the rate implicit in the Company's leases is not easily determinable, the Company's applicable incremental borrowing rate is used in calculating the present value of the sum of the lease payments. Lease term is dened as the non-cancelable period of the lease plus any options to extend or terminate the lease when it is reasonably certain that the Company will exercise the option. The Company has elected not to recognize ROU asset and lease obligations for its short-term leases, which are dened as leases with an initial term of 12 months or less. For a majority of all classes of underlying assets, the Company has elected to not separate lease from non-lease components. For leases in which the lease and non- lease components have been combined, the variable lease expense includes expenses such as common area maintenance, utilities, and repairs and maintenance. Impairment ofLmlgLived Assets Management reviews long-lived assets for indicators of impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The evaluation is performed at the lowest level of identiable cash ows, which is at the individual store or club level. Undiscounted cash ows expected to be generated by the related assets are estimated over the assets' useful lives based on updated projections. 1f the evaluation indicates that the carrying amount of the assets may not be recoverable, any potential impairment is measured based upon the fair value of the related asset or asset group as determined by an appropriate market appraisal or other valuation technique. Goodwill and Other Acquired Intangible Assam Goodwill represents the excess of the purchase price over the fair value of net assets acquired in business combinations and is allocated to the appropriate reporting unit when acquired. Other acquired intangible assets are stated at the fair value acquired as determined by a valuation technique commensurate with the intended use of the related asset. Goodwill and indenite-lived intangible assets are not amortized; rather, they are evaluated for impairment annually and whenever events or changes in circumstances indicate that the value of the asset may be impaired. Denite-lived intangible assets are considered long-lived assets and are amortized on a straight-line basis over the periods that expected economic benets will be provided. Goodwill is assigned to the reporting unit which consolidates the acquisition. Components within the same reportable segment are aggregated and deemed a single reporting unit if the components have similar economic characteristics. As of January 31, 2020, the Company's reporting units consisted of Walmart U.S., Walmart International and Sam's Club. Goodwill is evaluated for impairment using either a qualitative or quantitative approach for each of the Company's reporting units. Generally, a qualitative assessment is rst performed to determine whether a quantitative goodwill impairment test is necessary. If management determines, aer performing an assessment based on the qualitative factors, that the fair value of the reporting unit is more likely than not less than the carrying amount, or that a fair value of the reporting unit substantially in excess of the carrying amount cannot be assured, then a quantitative goodwill impairment test would be required. The quantitative test for goodwill impairment is performed by determining the fair value of the related reporting units. Fair value is measured based on the discounted cash ow method and relative market-based approaches. Acr evaluation, management determined the fair value of each reporting unit is signicantly greater than the carrying amount and, accordingly, the Company has not recorded any impairment charges related to goodwill. The following table reects goodwill activity, by reportable segment, for scal 2020 and 2019: Wnlmrt (Amount: in millions) Walmnrt U.S. lnumtlonll Sam's Club Total Balance: at of February 1, 2018 5 2,445 S 15,484 5 313 5 18,242 Changes in currency translation and other (743) (743) Acquisitions 0' 107 13,575 13,682 Balances as of January 31, 2019 2,552 28,316 313 31,181 Changes in currency translation and other (149) (149) Acquisitions 41 4] Balance: ll of January 31, 2020 5 2,593 5 211,167 5 313 3 31,073 (1) Goodwill recorded in scal 2019 for Walmart International relates to Flipkart. Intangible assets are included in other long-term assets in the Company's Consolidated Balance Sheets. As of January 31, 2020 and 2019, the Company had $5.2 billion and $5.8 billion, respectively, in indefmite-lived intangible assets which is primarily made up of acquired trade names. Refer to Note 12 for additional information related to acquired intangible assets for the Flipkart acquisition. During scal 2020, the Company incurred approximately $0.7 billion in impairment charges related to its intangible assets. There were no signicant impairment charges related to intangible assets for scal 2019 and 2018. Refer to Note 8 for additional information. 57 The following table provides a reconciliation of the numerators and denominators used to determine basic and diluted net income per common share amibutable to Walmart: Fiscal Year: Ended January 31, (Amounts in millions, except per share data) 2020 2019 2018 Namerltor Consolidated net income 3 15,201 5 7,179 5 10,523 Consolidated net income attributable to noncontrolling interest (320) (509) (661) Consolidated net income attributable to Walmart 3 14,881 $ 6,670 $ 9,862 Denominator Weighted-average common shares outstanding, basic 2,850 2,929 2,995 Dilutive impact of stock options and other share-based awards 13 16 | 5 Weighted-average common shares outstanding, diluted 2,868 2,945 3,010 Net Income per common Illnre attributable to Walnurt Basic 3 5 .22 t 2.23 s 3.29 Diluted 5.19 2.26 3.28 Note 3. Shareholders' Equity The total authorized shares of $0.10 par value common stock is 11.0 billion, of which 2.8 billion and 2.9 billion were issued and outstanding as of January 31, 2020 and 2019, respectively. Shore-Based Compensation The Company has awarded share-based compensation to associates and nonemployee directors of the Company. The compensation expense recognized for all stock incentive plans, including expense associated with plans of the Company's consolidated subsidiaries granted in the subsidiaries' respective stock, was $854 million, $773 million and $626 million for scal 2020, 2019 and 2018, respectively. Share-based compensation expense is generally included in operating, selling, general and administrative expenses in the Company's Consolidated Statements of Income. The total income tax benet recognized for share-based compensation was $202 million, $181 million and $150 million for scal 2020, 2019 and 2018, respectively. The following table summarizes the Company's share-based compensation expense by award type for all plans: Fiscal Year: Ended January 3], (Amounts in millions) 2020 2019 Restricted stock and performance share units 3 270 3 Restricted stock units 553 Other 31 Share-based compensation expense 8 854 S 293 456 24 773 2018 234 368 24 626 Note 4. Accumulated Other Comprehensive Loss The following table provides the changes in the composition of total accumulated other comprehensive loss for fiscal 2020, 2019, and 2018: Currency Unrealized Gain on Translation Net Investment Available-for-Sale Cash Flow Minimum (Amounts in millions and net of immaterial income taxes) and Other Hedges Securities Hedges Pension Liability Total Balances as of February 1, 2017 $ (14,507) 1,435 145 (315) S (990) (14,232) Other comprehensive income (loss) before reclassifications, 2,345 (405) 1,501 436 83 3,960 net Amounts reclassified from accumulated other comprehensive 26 64 91 loss, net Balances as of January 31, 2018 (12,136) 1,030 1,646 122 (843) (10,181) Adoption of new accounting standards on February 1, 2018() 80 93 (1,646) 28 (1,436) Other comprehensive income (loss) before reclassifications, (2,093) 272 (339) 93 (2,067) net Reclassifications to income, net(2) 2,055 49 38 2, 142 Balances as of January 31, 2019 (12,085) 1,395 - (140) (712) (11,542) Other comprehensive income (loss) before reclassifications, 281 122 1 1 (399) (1,283) (1,279) net(s) Reclassifications to income, net (23) 39 16 Balances as of January 31, 2020 (11,827) 1,517 (539) 1,956) (12,805) (1) Primarily relates to the adoption of ASU 2016-01 and ASU 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. (2) Includes a cumulative foreign currency translation loss of $2.0 billion, for which there was no related income taxes, upon sale of the majority stake in Walmart Brazil (see Note 12). (3) Primarily includes the remeasurement of Asda's pension benefit obligation subsequent to the cash contribution made by Asda, as described more fully in Note 1 1. Amounts reclassified from accumulated other comprehensive loss for derivatives are recorded in interest, net, in the Company's Consolidated Statements of Income, and the amounts for the minimum pension liability, as well as the cumulative translation resulting from the disposition of a business, are recorded in other gains and losses in the Company's Consolidated Statements of Income. Amounts related to the Company's derivatives expected to be reclassified from accumulated other comprehensive loss to net income during the next 12 months are not significant. Note 5. Accrued Liabilities The Company's accrued liabilities consist of the following as of January 31, 2020 and 2019: January 31 (Amounts in millions) 2020 2019 Accrued wages and benefits(!) 6,093 6,504 Self-insurance 4,469 3,979 Accrued non-income taxes(3) 3,039 2,979 Deferred gift card revenue 1,990 1,932 Other (4 ) 6.705 5,765 Total accrued liabilities 22,296 22,159 (1) Accrued wages and benefits include accrued wages, salaries, vacation, bonuses and other incentive plans. (2) Self-insurance consists of insurance-related liabilities, such as workers' compensation, general liability, auto liability, product liability and certain employee-related healthcare benefits. (3) Accrued non-income taxes include accrued payroll, property, value-added, sales and miscellaneous other taxes. (4) Other accrued liabilities consist of various items such as interest, maintenance, utilities, legal contingencies, and advertising.UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 30, 2021 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from Commission File Number 1-6049 O TARGET CORPORATION (Exact name of registrant as specified in its charter) Minnesota (State or other jurisdiction of incorporation or organization) 1000 Nicollet Mall, Minneapolis, Minnesota (Address of principal executive offices) 41-0215170 (1.R.S. Employer Identification No.) 55403 (Zip Code Registrant's telephone number, including area code: 612/304-6073 Former name, former address and former fiscal year, if changed since last report: N/A Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934: Title of each class Trading Symbol(s) Name of each exchange on which registered Common stock, par value $0.0833 per share TGT New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes X No O Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No X Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X] No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T ($232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K ($229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. X] Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company (as defined in Rule 12b-2 of the Exchange Act). Large accelerated filer x Accelerated filer o Non-accelerated filer o Smaller reporting company O Emerging growth company If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial eporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. X Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes O No X The aggregate market value of the voting stock held by non-affiliates of the registrant as of July 31, 2020, was $62,803,635,300 based on the closing price of $125.88 per share of Common Stock as reported on the New York Stock Exchange Composite Index. Indicate the number of shares outstanding of each of registrant's classes of Common Stock, as of the latest practicable date. Total shares of Common Stock, par value $0.0833, outstanding as of March 4, 2021, were 498,616,180. DOCUMENTS INCORPORATED BY REFERENCE Portions of Target's Proxy Statement for the Annual Meeting of Shareholders to be held on June 9, 2021, are incorporated into Part III.FINANCIAL SI'ATEIEN'I'S Table of Contents Index to Financial Statements Consolidated Statements of Operations (millions, except per share data) 2020 2019 2018 Sales is 92.400 35 77.130 55 74.433 Other revenue 1,161 982 923 Total revenue 93.561 78.112 75.356 Cost of sales 65.177 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) I 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 $ 3.231 $ 2.937 Basic earnings per share Continuing operations $ 3.72 S 6.39 S 5.54 Discontinued operations 0.02 0.01 Net earnings per share $ 3.72 $ 6.42 $ 5.55 Diluted earnings per share Continuing operations $ 3.64 $ 6.34 $ 5.50 Discontinued operations 0.02 0.01 Net earnings per share $ 3.64 S 6.36 $ 5.51 Weighted average common shares outstanding Basic 500.6 510.9 523.6 Diluted 505.4 515.6 533.2 Antidilutivesl'iares__ Note: Per share amounts may not foot clue to rounding. See accompanying 301W TARGET OORPORATIM o 2020 Form 10-K 25 FINANCIAL STATEMENTS Table of Contents Index to Financial Statements 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 See accompanying Notes to Consolidated Financial Statements. TARGET CORPORATION O 2020 Form 10-KFINANCIAL STATEMENTS Table of Contents Index to Financial Statements 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 3,992 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 opera 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 1,833 Total liabilities and shareholders' investment $ 51,248 $ 42,779 Common Stock A orized 6,000,000,000 shares, $0.0833 par value; 500,877,129 shares issued and outstanding as of January 30, 2021; 504,198,962 shares issued and outstanding as of February 1, 2020. Preferred Stock Authorized 5,000,000 shares, $0.01 par value; no shares were issued or outstanding during any period presented. See accompanying Notes to Consolidated Financial Statements. TARGET CORPORATION 2020 Form 10-K 37FINANCIAL STATEMENTS Table of Contents Index to Financial Statements 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 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 ,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 L,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 See accompanying Notes to Consolidated Financial Statements. TARGET CORPORATION 2020 Form 10-KFINANCIAL STATEMENTS Table of Contents Index to Financial Statements Consolidated Statements of Shareholders' Investment Common Additional Accumulated Other Stock Par Paid-in Retained Comprehensive (millions) Shares Value Capital Earnings Loss) / Income Total February 3, 2018 541.7 $ 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 27.2 (2 ) (2,068) (2,070) Stock options and awards 3.3 184 184 February 2, 2019 517.8 $ 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 (16.0) (1 ) (1,520 (1,521) Stock options and awards 2.4 184 184 February 1, 2020 504.2 $ 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 5.7) (609) (609) options and awards 2.4 103 103 January 30, 2021 500.9 $ 42 $ 6,329 $ 8,825 $ (756) $ 14,440 We declared $2.70, $2.62, and $2.54 dividends per share for the twelve months ended January 30, 2021, February 1, 2020, and February 2, 2019, respectively. See accompanying Notes to Consolidated Financial Statements. TARGET CORPORATION 2020 Form 10-KFINANCIAL STA'I'EIEN'I'S Table of Contents NOTES Index to Financial Statements 3. Revenues General merchandise sales represent the vast majority of our revenues. We also earn revenues from a variety of other sources. most notably credit card prot-sharing income from our arrangement with TD Bank Group (TD). Revenues (millions) 2020 2019 2018 Apparel and accessories M $ 14,772 $ 14.304 $ 13.434 Beauty and household essentials l\") 24.461 20.616 19.296 Food and beverage \"3 18.135 15.039 14.585 Hardlines ('0 16.626 12.595 12.709 Home lumishings and decor \"9 18.231 14.430 14.298 Other 175 146 111 Sales 92.400 77.130 74.433 Credit card prot sharing 666 680 673 Other 495 302 250 Other revenue 1.161 982 923 Total revenue 3 93.561 3 78.112 3 75.356 (a) Includes apparel for women. men. boys. girls. toddlers, infants and newborns. aswell asjewelry. accessories. and shoes. (\"1 Includes beauty and personal care. baby gear. cleaning. paper products. and pet supplies. (\"9 Includes dry grocery. dairy. frozen food. beverages. candy. snacks. deli, bakery. meat. produce, and food service in our stores. ('1) Includes electronics (including video game hardware and software). toys. entertainment. sporting goods. and luggage. (9) Includes furniture. lighting. storage. kitchenware. small appliances. home door. bed and bath. home improvement, school/office supplies. greeting cards and party supplies. and other seasonal merchandise. Merchandise sales We record almost all retail store revenues at the point of sale. Digitally originated sales may include shipping revenue and are recorded upon delivery to the guest or upon guest pickup at the store. Total revenues do not include sales tax because we are a pass-through conduit for collecting and remitting sales taxes. Generally. guests may return national brand merchandise within 90 days of purchase and owned and exclusive brands within one year of purchase. Sales are recognized net of expected returns. which we estimate using historical return patterns and our expectation of future returns. As of January 30. 2021. February 1. 2020. and February 2. 2019. the liability for estimated returns was $139 million. $117 million. and $116 million. respectively. We routinely enter into arrangements with vendors whereby we do not purchase or pay for merchandise until the merchandise is ultimately sold to a guest. Under the vast majority of these arrangements. which represent less than 5 percent of consolidated sales. we record revenue and related costs gross. We concluded that we are the principal in these transactions for a number of reasons, most notably because we 1) control the overall economics of the transactions. including setting the sales price and realizing the majority of cash flows from the sale. 2) control the relationship with the customer. and 3) are responsible for fullling the promise to provide goods to the customer. Merchandise received under these arrangements is not included in Inventory because the purchase and sale of this inventory are virtually simultaneous. Revenue from Target gift card sales is recognized upon gift card redemption. which is typically within one year of issuance. Our gift cards do not expire. Based on historical redemption rates, a small and relatively stable percentage of gift cards will never be redeemed. referred to as "breakage." Estimated breakage revenue is recognized over time in proportion to actual gift card redemptions. FINANCIAL STATEMENTS Table of Contents NOTES Index to Financial Statements Gift Card Liability Activity Gift Cards Revenue Issued During Recognized Current Period From But Not Beginning (millions) February 1, 2020 Redeemed (b) Liability January 30, 2021 Gift card liability (a) $ 935 $ 739 $ (639) $ 1,035 (a) Included in Accrued and Other Current Liabilities. b) Net of estimated breakage. Guests receive a 5 percent discount on nearly all purchases and receive free shipping at Target.com when they use their Target Debit Card, Target Credit Card, or Target MasterCard (RedCards). The discount is included as a sales reduction and was $1.1 billion, $962 million, and $953 million in 2020, 2019, and 2018, respectively Target Circle program members earn 1 percent rewards on nearly all non-RedCard purchases. As of January 30, 2021, deferred revenue of $72 million related to this loyalty program was included in Accrued and Other Current Liabilities. Amounts related to this program were insignificant at February 1, 2020. Credit card profit sharing - We receive payments under a credit card program agreement with TD. Under the agreement, we receive a percentage of the profits generated by the Target Credit Card and Target MasterCard receivables in exchange for performing account servicing and primary marketing functions. TD underwrites, funds, and owns Target Credit Card and Target MasterCard receivables, controls risk management policies, and oversees regulatory compliance Other - Includes advertising, Shipt membership and service revenues, rental income, and other miscellaneous revenues, none of which are individually significant. 4. Cost of Sales and Selling, General and Administrative Expenses The following table illustrates the primary items classified in each major expense category: Cost of Sales Selling, General and Administrative Expenses Total cost of products sold including Compensation and benefit costs for stores and . Freight expenses associated with moving headquarters, except ship from store costs classified merchandise from our vendors to and between our as cost of sales distribution centers and our retail stores Occupancy and operating costs of retail and Vendor income that is not reimbursement of headquarters facilities specific, incremental, and identifiable costs Advertising, offset by vendor income that is a Inventory shrink reimbursement of specific, incremental, and Markdowns identifiable costs Outbound shipping and handling expenses Pre-opening and exit costs of stores and other facilities associated with sales to our guests Credit cards servicing expenses Payment term cash discounts Costs associated with accepting third-party bank issued Distribution center costs, including including compensation payment cards and benefits costs and depreciation Litigation and defense costs and related insurance Compensation and benefit costs associated with recoveries shipment of merchandise from stores Other administrative costs Import costs Note: The classification of these expenses varies across the retail industry. TARGET CORPORATION 2020 Form 10-Kcomputed by forecasting vendor income collections and estimating the amount 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 n our estimate will change significantly. Note 10 provides additional information. 6. Advertising Costs Advertising costs, which primarily consist of newspaper circulars, digital advertisements, and media broadcast, are generally expensed at first showing or distribution of the advertisement. Reimbursements from vendors that are for specific, incremental, and identifiable advertising costs are recognized as offsets of these advertising costs within Selling, General and Administrative Expenses (SG&A Expenses). Net advertising costs were $1.5 billion, $1.6 billion, and $1.5 billion in 2020, 2019, and 2018, respectively. 7. Fair Value Measurements Fair value measurements are reported in one of three levels based on the lowest level of significant input used: Level 1 (unadjusted quoted prices in active markets); Level 2 (observable market inputs, other than quoted prices included in Level 1); and Level 3 (unobservable inputs that cannot be corroborated by observable market data). Fair Value Measurements - Recurring Basis Fair Value as of Pricing January 30, February 1, (millions) Classification category 2021 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 () Other Current Assets Level 1 39 Interest rate swaps (d) Other Noncurrent Assets Level 2 188 137 "a ) Carrying value approximates fair value because maturities are less than three months. (b ) Initially valued at transaction price. Subsequently valued by reference to the market price of Target common stock. (c ) Represents our investment in Casper common stock ( d ) Valuations are based on observable inputs to the valuation model (e.g., interest rates and credit spreads). See Note 17 for additional information on interest rate swaps In 2020 and 2019, we recorded pretax losses of $19 million and $41 million, respectively, related to our investment in Casper within Net Other (Income) / Expense. We sold our investment during 2020. TARGET CORPORATION 2020 Form 10-K
