Please help, this is actually due today and the person who said they would answer this question that was initially due last night. Thank you for the help if possible.

I need help with putting the final project together. I have attached the guidelines and the rubric for the final project along with the first 2 parts which need to be combined and added to. On the guidelines and rubric I have highlighted what needs to be added in yellow and the rubric is highlighted in green. I have also attached the annual report for Target which is where the data is coming from. The final product needs to be 15 pages of report not including the cover page, abstract, and references.

ACC 345: Final Project Guidelines and Grading Guide Overview The final project for this course is the creation of a research paper, which will be submitted as a Word document. Research for the project will take place throughout the course, with class discussions about conclusions. The final product represents an authentic demonstration of competency because you will be performing market research on a company. The project is divided into three milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality final submissions. The milestones are submitted in Modules One, Three, and Five. The final paper is submitted in Module Seven. The final paper helps students to meet the following objectives: Explain the importance of various financial reports Analyze financial reports to assess a company's financial health Interpret results and make recommendations Main Elements Discussion Board questions and activities that serve as milestones to a final paper: 1. 2. 3. 4. 5. 6. 7. 8. Identify a company to study and develop a hypothesis of the company's financial health Analyze the company's disclosures Perform and analyze a quality earnings assessment Analyze the statements of cash flows Analyze ROA, various turnover measures, and ROE Discuss steps for preparing a projected income statement and projected balance sheet Calculate and analyze liquidity and solvency Recast the income statement and judge hypothesis Format Milestone One: Identify a Company to Study In task 1-2, you will select a U.S.-based publicly traded company that has not already been selected by another student. There will be a discussion forum where you will post your selection after reviewing other students' posts to make sure that the company is not already taken. In the post to the discussion forum, you should list the name of the company, the industry the company is engaged in, the stock exchange it trades on, and the ticker symbol, and also post a link to the most recent annual financial report you will be using for the project. This should be done by Thursday of Module One, and you should make comments/questions to at least two other students by Sunday. This milestone is graded with the Discussion Rubric. Milestone Two: Perform an Analysis of Your Chosen Company's Balance Sheet The first of three papers for this project is due at the end of Module Three. In task 3-3, you will perform a quality balance sheet assessment of the company you chose in Module One. This analysis will include a review of the current assets and liabilities and appropriate liquidity ratios, the capital structure, and the fixed and intangible asset accounting of the company. A thorough review of off-balance-sheet items should be included, such as leases and contingent liabilities. The format should be a Word document, following APA-style guidelines provided below. This paper should be approximately 5 pages of written text, not counting cover page, abstract, or reference page. You are encouraged to include diagrams or exhibits illustrating your work. The first two papers will become part of the final paper due in Module Seven. This milestone will be graded with the Short Paper Rubric. Milestone Three: Analyze Cash Flow and Cash Management of Chosen Company In task 5-3, you will analyze the statement of cash flow and cash management of your chosen company. A review of return on invested capital and profitability should also be made using a variety of appropriate ratios and horizontal and/or vertical analysis. . The format should be a Word document, following APA-style guidelines provided below. This paper should be approximately 5 pages of written text, not counting cover page, abstract, or reference page. This milestone will be graded with the Short Paper Rubric. Final Submission: Final Paper In task 7-2, you will submit the final research paper including a prospective analysis projecting the next year income statement and using this product to produce a valuation of the company stock going forward, plus the edited papers from Milestones Two and Three. It should be approximately 15 pages, including Milestones Two and Three from Modules Three and Five. The two milestone papers should be edited with corrections/additions made based on grading feedback. They become Parts 1 and 2 of the final paper, and then new content is added as Part 3, as described above. It should be a complete, polished artifact containing all of the main elements of the final product, reflecting the incorporation of feedback gained throughout the course. This submission will be graded with the Final Paper Rubric (below). Basic APA rules to be followed: 1. Include a cover page 2. Include an abstract page: Only the abstract and nothing else is on the abstract page. This is a brief one-paragraph description of what you will demonstrate to the reader of your paper. 3. Each page should have a running header with the title of the paper and the page number. 4. All pages in the paper use 12-point Times New Roman font, double-spaced, with a 1-inch margin all around. 5. Any ideas or quotes taken from a source MUST be cited in the body of the text immediately following the idea or quote. The citation should include the last name of the author and the year of the publication. Any cited item should also appear on the reference page. 6. All quotes MUST be enclosed in quotation marks. APA strongly discourages direct quotes of 40 words or more and requires special handling for such. For purposes of this project, quotes of 40 words or more are NOT PERMITTED. Use your own words to describe what you have learned. 7. The last page should be the reference page. It is a page by itself, and it is titled simply References (see the textbook References page for an example). Any citation in the paper should have a matching reference listed on the reference page, and ONLY cited work belongs on the reference page. If you do not cite it in the paper, do not list it as a reference. Your textbook may be one of your references. Deliverable Milestones Milestone Deliverables One Identify company Two Balance sheet analysis Three Cash flow and cash management analysis Final Project Paper Module Due Grading One Graded separately; Discussion Rubric Three Graded separately; Short Paper Rubric Five Graded separately; Short Paper Rubric Seven Graded separately; Final Paper Rubric Final Paper Rubric Requirements of submission: Written components of project must follow these formatting guidelines when applicable: approximately 15 pages (not including notes pages), double spacing, 12-point Times New Roman font, 1-inch margins, and discipline-appropriate citations. Instructor Feedback: Students can find their feedback in the Grade Center as an attachment. Critical Elements Main Elements Inquiry and Analysis Integration and Application Critical Thinking Research Writing (Mechanics/Citations) Comments: Exemplary Includes all of the main elements and requirements and cites multiple examples to illustrate each element (25) Explores multiple issues through extensive collection and in-depth analysis of evidence to make informed conclusions (20) All of the course concepts are correctly applied (10) Demonstrates comprehensive exploration of issues and ideas before accepting or forming an opinion or conclusion (20) Incorporates many scholarly resources effectively that reflect depth and breadth of research (15) No errors related to organization, grammar and style, and citations (10) Proficient Includes most of the main elements and requirements and cites one or two examples to illustrate each element (21.25) Explores a few issues through collection and in-depth analysis of evidence to make informed conclusions Needs Improvement Includes some of the main elements and requirements Not Evident Does not include any of the main elements and requirements (13.75) Explores one or two issues through collection and analysis of evidence to make informed conclusions (0) Does not explore issues through collection and analysis of evidence and does not make informed conclusions (17) Most of the course concepts are correctly applied (8.5) Demonstrates moderate exploration of issues and ideas before accepting or forming an opinion or conclusion (17) Incorporates some scholarly resources effectively that reflect depth and breadth of research (12.75) Minor errors related to organization, grammar and style, and citations (8.5) (11) Some of the course concepts are correctly applied (5.5) Demonstrates minimal exploration of issues and ideas before accepting or forming an opinion or conclusion (11) Incorporates very few scholarly resources that reflect depth and breadth of research (0) Does not correctly apply any of the course concepts (0) Does not demonstrate exploration of issues and ideas before accepting or forming an opinion or conclusion (0) Does not incorporate scholarly resources that reflect depth and breadth of research (8.25) Some errors related to organization, grammar and style, and citations (5.5) (0) Major errors related to organization, grammar and style, and citations (0) Earned Total Value 25 20 10 20 15 10 100% Analysis of Balance Sheet: Target Corporation Erin Passon Instructor: Mark Taylor ACC345: Fin Statement Analysis/Bus Valuati on January 29, 2017 Running head: ANALYSIS OF BALANCE SHEET 2 Abstract Analysis of financial statements of a company enables the user to know the financial position as well as performance of the company. It provides both qualitative and quantitative information about the business. Balance sheet, also called statement of financial position depicts the financial position of the business in form of assets and liabilities. The vital information that the balance sheet provides is about the quality of assets that the company holds, liquidity of the company, capital structure of the company, etc. Liquidity analysis enables the users or investors to measure the ability of the company to pay its short term obligations whereas analysis of capital structure enables the user to know about the debts in relation to equity, assets, etc. Capital structure is also important for the management of the company as it enables them to make strategic decisions about debts in proportion to capital. This paper attempts to undergo an analysis of the balance sheet of Target Corporation. It checks the liquidity of the company as well as its capital structure and also focuses on fixed and intangibles assets accounting. The paper also attempts to highlight the various off balance sheet items such as leases and contingent liabilities, etc. Running head: ANALYSIS OF BALANCE SHEET 3 Assessment of Assets Current Assets The balance sheet of Target Corporation has three classifications of assets. The first part of balance sheet contains description of current assets of the company. The current assets include cash and cash equivalents, inventory, assets of discontinued operations and other current assets. The total current assets of the Target Corporation are $14,130 million which account to 35.10% of total assets. Current assets of the company have shown an increasing trend during the last three years. The current assets during the fiscal year 2013 were $11,573 million which increased by $2,051 million or 17.72% during fiscal year 2014 and stood at $13,624 million. During fiscal year 2015 current assets increased by $506 million or 3.71% and stood at $14,130 million. Cash and cash equivalents of the Target Corporation have increased significantly during the last three years. Cash and cash equivalents were $695 million during the fiscal year 2014 which increased by $1,515 million or 217.99% during fiscal year 2014 and stood at $2,210 million in 2015. During the fiscal year 2015 the cash and cash equivalents increased by $1,836 million or 83.08% and stood at $4,046 million in 2016. The company had inventory of $8,766 million during the fiscal year 2014 which decreased by $484 million or 5.52% and stood at $8,282 million in 2015. During fiscal year 2015 the inventory increased by $319 million or 3.85% and stood at $8,601 million in 2016. ($ in millions) Current Assets Cash and cash equivalents Inventory Assets of discontinued operations Other current assets Total current assets January 30, 2016 January 31, 2015 February 1, 2014 $4,046 8,601 322 1,161 14,130 $2,210 8,282 1,058 2,074 13,624 695 8,766 2,112 11,573 Running head: ANALYSIS OF BALANCE SHEET 4 Fixed and Intangible Assets The second classification of assets is property and equipment. It has shown a decreasing trend during the last three years. During fiscal year 2013 the property and equipment were 70.43% of total assets which decreased to 63.03% of total assets in fiscal year 2014 and further decreased to 62.63% of total assets during fiscal year 2015. Property and equipment of the company decreased primarily due to shut down of Canadian operations of the company. Company had property and equipment of $31,378 million during fiscal year 2013 which decreased by $5,426 million during fiscal year 2014 and stood at $25,952 million in 2015. During fiscal year 2015 it again decreased by $735 million or 2.83% and stood at $25,217 million. The company does not possess any intangible asset. ($ in millions) Property and equipment Land Buildings and improvements Fixtures and equipment Computer hardware and software Construction-in-progress Accumulated depreciation Property and equipment, net January 30, 2016 6,125 27,059 5,347 2,617 315 (16,246) 25,217 January 31, February 1, 2015 2014 6,127 26,613 5,329 2,552 424 (15,093) 25,952 6,234 30,356 5,583 2,764 843 (14,402) 31,378 Assessment of Liabilities Current Liabilities The current liabilities of the company include accounts payable, accrued and other current liabilities, current portion of long term debts and liabilities of discontinued operations. During fiscal year 2013 the company had accounts payable of $7,683 million which increased by $76 million or 0.99% during the fiscal year 2014 and stood at $7,759 million. During fiscal year 2015 the accounts payable of the company decreased by $341 million or 4.39% and stood at Running head: ANALYSIS OF BALANCE SHEET 5 $7,418 million. Accrued and other current liabilities of the company decreased by $151 million or 3.84% during the fiscal year 2014 and stood at $3,783 million. During the fiscal year 2015 it increased by $453 million or 11.97% and stood at $4,236 million. The company observed a decrease of $1,041 million or 8.15% in total current liabilities during the fiscal year 2014, the total current liabilities were $11,736. But during the fiscal year 2015 the total current liabilities increased by $886 million or 7.55% and stood at $12,622 million. Non-Current Liabilities Primarily the company has long term debts and other borrowings in its non-current liabilities. During fiscal year 2013 it was $12,622 million which increased by $12 million or 0.10% during fiscal year 2014 and stood at $12,634million. During fiscal year 2015 long term debts and other borrowings decreased by $689 million or 5.45% and stood at $11,945 million. The other non-current liabilities decreased by $38 million or 2.55% during the fiscal year 2014 and stood at $1,452 million. But during the fiscal year 2015 other current liabilities increased by $445 million and stood at $1,897 million. Liquidity Ratios In accounting liquidity refers to the ability of business to pay its financial commitments on-time. The liquidity ratios calculate ability of a business to pay its short-term obligations as they become due. Liquidity ratios of Target Corporation are discussed here: Current Ratio Current ratio measures the capacity or the ability of the business to honor its short-term commitments or current liabilities on time from its current assets. This ratio is important because the current liabilities become due within the next one year. To calculate this ratio current assets are divided by current liabilities. The current ratio of Target Corporation was 0.91 during the fiscal year 2013 showing that the company had $0.91 of current assets against each dollar of Running head: ANALYSIS OF BALANCE SHEET 6 current liabilities. It shows that the company will not be able to pay its current liabilities form its current assets. The ratio increased to 1.16 during fiscal year 2014 depicting an increase in ability of the company to pay its current liabilities from its current assets. But during fiscal year 2015 the ratio of the company declined and stood at 1.12. The ratio can be considered fair as it is higher than 1. Quick Ratio Quick ratio measures the capacity or the ability of the business to honor its short-term commitments or current liabilities on time from its quick assets. To calculate this ratio current liabilities are divided by quick assets. The quick ratio of the company was extremely low at 0.22 during the fiscal year 2013. The ratio improved during fiscal year 2014 and stood at 0.46. During fiscal year 2015 the ratio again decreased marginally and stood at 0.44. The ratio is lower and indicates that the company will not be able to pay its short term obligations from its quick assets. The reason of low quick ratio is that the company is high on inventories which are more than 50% of current assets and inventories are deducted from current assets to calculate quick assets. Cash Ratio This ratio measures the ability of company to pay its current liabilities from its cash and cash equivalents. Owing to increase in cash and cash equivalents this ratio has shown an increasing trend. The ratio was 0.05 during fiscal year 2013 which increase to 0.19 during fiscal year 2014. The ratio again improved during fiscal year 2015 and stood at 0.32. It shows that the cash position of the company is strengthening and its ability to pay current liabilities from cash and cash equivalents is improving. Working Capital The working capital of the business is calculated by deducting current liabilities from current assets. The working capital showed a negative of $1,204 million during fiscal 2013 as the Running head: ANALYSIS OF BALANCE SHEET 7 current assets were lower than current liabilities. During fiscal year 2014 current assets increased significantly and stood at $1,888 million. In fiscal year 2015 the working capital of company decreased and stood at $1,508 million. Capital Structure The capital structure refers to the composition of the capital of the business firm. The two broad sources of capital are stockholders' investment and borrowed funds. The stockholders' investment is treated as own funds whereas borrowed funds are treated as debts. The debts are raised in form of bonds or long-term loan from banks or financial institutions. Target Corporation is high on debts and its debts have shown an increasing trend during the last three years. The debts were 63.57% of total assets during the fiscal year 2013 which increased to 66% during fiscal year 2014. During fiscal year 2015 the debts increased to 67.82% of total assets. The shareholder's investment showed a decreasing trend as it decreased from 36.43% during fiscal year 2013 to 34% during fiscal year 2014 and further to 32.18% of total assets during fiscal year 2015. January 30, January 31, February 1, 2016 2015 2014 27,305 27,175 28,322 Total Liabilities Total shareholders' investment 12,957 13,997 16,231 40,262 41,172 44,553 Total liabilities and shareholders' investment Total Liabilities (% of Total Assets) 67.82% 66.00% 63.57% Total shareholders' investment (% of Total Assets) 32.18% 34.00% 36.43% To determine the solvency position of the company the following ratios have been calculated: Debt to Equity This ratio measures debts of the company in relation to its shareholders' equity. Lower the ratio the better it is. The ratio of company was higher at 3.49 during fiscal year 2013 which Running head: ANALYSIS OF BALANCE SHEET 8 decreased to 1.80 during fiscal year 2014. Again the ratio increased during fiscal year 2015 and stood at 2.03. It shows that the company is higher on debts in comparison to shareholders' equity. Debts to Total Assets This ratio measures the debts of the company in relation to its total assets. It is better to have lower debts to total assets ratio. The ratio of company has shown an increasing trend. The ratio was 0.64 during fiscal year 2013 which increased to 0.66 during fiscal year 2014 and further increased to 0.68 during the fiscal year 2015. It shows increase in the debts of the company in comparison to total assets. Off Balance Sheet Items Off balance sheet items are important item which is to be reported by the corporation. These items are reported in the footnotes to financial statements of the company and enables the user to know about the various contingent liabilities and leases that are not shown in the balance sheet of the company (Jeffrey, Peter. 2002). The company has pretax transaction costs and contingent liabilities of $94 million. The company had an exit from its Canadian operations. A contingent liability of $62 million is also shown in foot notes as pretax exit cost. The company has also undergone several leases. The expenditure related to capital leases increased to $42 million during fiscal year 2015 as compared to $38 million during fiscal year 2014. The company incurred a total rent expenditure of $182 million during the fiscal year 2015 which was marginally lower in comparison to the expenditure of $186 million incurred during fiscal year 2014. Company expects that its operating and capital lease payments will decrease in coming years. The future minimum lease payments of the company are given below: Running head: ANALYSIS OF BALANCE SHEET 9 Conclusion The above analysis of the balance sheet of the company reveals that the company is in hot water. The company is low on liquidity as well as is high on debts. The size of assets of the company is decreasing whereas the debts are increasing. The company is trying to overcome losses that it sustained from its Canadian operations. To improve its financial position the company should reduce its current liabilities as well as its debts. Running head: ANALYSIS OF BALANCE SHEET 10 References Form 10-K (2016) Target Corporation. Retrieved from: https://www.sec.gov/Archives/edgar/data/27419/000002741916000043/tgt20160130x10k.htm Jeffrey, Peter. 2002. \"International Harmonization of Accounting Standards, and the Question of Off-Balance Sheet Treatment.\" Duke Journal of Comparative & International Law 12: 341-351. Cash Flow and Management Analysis: Target Corporation Erin Passon Instructor: Mark Taylor ACC345: Fin Statement Analysis/Bus Valuati on February 12, 2017 Running head: CASH FLOW AND MANAGEMENT ANALYSIS 2 Abstract Analysis of financial statements of a company enables the user to know the financial position as well as performance of the company. It provides both qualitative and quantitative information about the business. The income statement is one of the major financial statements used by accountants and management. It is also known as the profit and loss statement (P&L), statement of operations, or statement of income. The main use of the income statement is to show how profitable a company is during a specific interval of time, which can vary depending on how the company wants to look at. This report allows current lender and investors, potential lender and investors, company management, competitors, government agencies, labor unions and others to see the ability of the company to operate profitably. This paper attempts to undergo an analysis of the income statement of Target Corporation. It checks the profitability of the company. The paper also discusses horizontal and vertical analysis of the balance sheet and income statements. Running head: CASH FLOW AND MANAGEMENT ANALYSIS 3 Cash Flow and Cash Management Income Statement The income statement is an important part of calculating financial ratios. These financial ratios indicate the profitability of the company. Profitability of a company refers to the capacity of the company to make profits. These statements analyze the performance of the company and the information is used for both shareholders and the company's management to make decisions regarding how the company is to be run. The shareholders can use this information to identify which companies to invest in. Profitability Ratios Gross Margin Ratio The first profitability ratio is gross margin ratio which is also known as the gross profit margin or the gross profit percentage. This ratio compares the gross margin of a business to the net sales. Another way to think about it is that the gross margin ration is the percentage markup on merchandise from its cost. It is very useful in retail since it tells management how much \"pure profit\" from sales can go to pay operating expenses. The formula to calculate the gross margin ratio is: Gross Profit Net Sales The gross margin ratio for the past three years for Target Corp is: Gross Profit Net Sales Gross Margin Ratio % 2015 $3,363 $73,785 4.56% 2014 ($1,636) $72,618 (2.52%) 2013 $1,971 $71,279 2.77% Running head: CASH FLOW AND MANAGEMENT ANALYSIS 4 As we can see above the gross margin ratio drastically dropped from 2013 at 2.77% to 2014 at (2.52%), the major decline in sales and profitability in 2014 is due to the data breach towards the end of 2013. This major data breach caused consumers to not want to shop at Target until they could be assured that it was safe again. The fact that the gross profit margin shot up to 4.56% in 2015 shows that the company earned the trust back of their consumers and then some. The way the company handled the breach hurt them at first but did eventually help the company's profitability. Operating Margin Another ratio that measures profitability in a company is the operating margin. Operating margin is also known as operating profit margin, operating income margin, return on sales, or net profit margin. This ratio is used to measure a company's pricing strategy and operating efficiency. It is a measurement of what proportion of the company's revenue is left over to pay the variable costs of production. The operating margin includes other costs that are not directly linked to the production process. For Target Corporation these include the selling, general and administrative expenses (SG&A) as well as the company's overhead expenses. The formula for operating margin is as follows: Operating Income Net Sales The operating margin for the last 3 years of Target are as follows: Operating Income Net Sales Operating Margin % 2015 $7,340 $73,785 9.95% 2014 $6,837 $72,618 9.42% 2013 $6,857 $71,279 9.62% Running head: CASH FLOW AND MANAGEMENT ANALYSIS 5 Based on the numbers above the operating margin for Target is very low, a company wants a higher percentage rather than a lower percentage. The fact that these percentages are low suggest that the costs that are not directly related to production process are high and the company should find ways of reducing costs, such as overhead and administrative expenses. The lower the operating margin means the shareholders will receive less after taxes and interest. Even though the operating margin is staying consistent, it is too low and the management should figure out a strategy to work on raising it. Return on Assets Return on assets is yet another ratio that indicates how profitable a company is based on its total assets. This ratio measures the effectiveness with which a company produces income using the assets that it owns. It can give an idea of how good management is at using its assets to generate earnings. The formula for return on assets is: Net Income Assets The return on assets for the last 3 year for Target Corporation are as follows: Net Income Assets Return on Assets % 2015 $3,363 $40,262 8.35% 2014 ($1,636) $41,172 (3.97%) 2013 $1,971 $44,325 4.45% The return on assets are quite low, these numbers imply that for the assets that are available the company generates 8.35% profit from the assets for 2015. This also means that for every dollar of assets, the company generates $0.0835. The efficiency of the company in generating income is therefore low and the company should consider increasing the utilization of Running head: CASH FLOW AND MANAGEMENT ANALYSIS 6 the assets and if possible consider investing in other types of investments that may be more profitable. Return on Equity Return on equity measures how much profit a company can generate with the money the shareholders have invested. Basically return on equity is the amount of net income as a percentage of shareholders equity. The formula for the return on equity is as follows: Net Income Shareholder's Equity The total shareholder's equity for 2015 is $12,957, which means the return on equity for 2015 is equal to $3,636/$12,957 = 28.06%. This implies that the company is able to generate $0.2806 per dollar invested in the company by the shareholders. Which means the shareholders will receive small dividends and the company should find new methods to increase their profits. Horizontal and Vertical Analysis Horizontal Analysis Horizontal analysis, or trend analysis, uses the amounts over the years on financial statements as percentages to the first year. This analysis can be done on each line of the balance sheet and the income statement. For example, when looking at a balance sheet for Target Corporation you would see the years 2015, 2014, 2013, 2012, and 2011 and each line of the balance sheet would be expressed as a percentage of the amounts from 2011. So instead of seeing dollar amounts you might see 125, 95, 103, 110, and 100, which would be the percentages as related to 2011. This type of analysis can allow someone to see how the numbers have changed over the years, as well as how they change in relationship to changes in other lines. Running head: CASH FLOW AND MANAGEMENT ANALYSIS 7 Vertical Analysis Vertical analysis is similar to horizontal analysis in the respect that it looks at the financial statements as percentages related to something else. But with vertical analysis you are using the data from one year not multiple years. The vertical analysis of the balance sheet restates all of the amounts as a percentage of total assets. For example, looking at Target's balance sheet for 2015, inventory is $8,282 and total assets are $41,172 then inventory would be presented as 20.12 which is the percentage of inventory to total assets. For the income statement the amount would be a percentage of sales. By changing these amounts to percentages it can allow management or investors to be able to compare your numbers with that of other companies in the same industry. If the percentages are similar than that would be considered an industry standard. But if the numbers are way off that will allow management to take a look at why the company is not within the industry standards. Conclusion The above analysis of the different ratios of profitability show that the company is not doing too well. It is very evident that the data breach of 2013 is still hurting the company, but it looks like things are finally starting to change in the right direction. In addition to the data breach of 2013 the discontinuing of the Canadian stores have also hurt the company's profitability. Hopefully since they just closed these stores it will start to make a difference after a few years. Running head: CASH FLOW AND MANAGEMENT ANALYSIS References Dictionary of Terms. (2017). Retrieved February 9, 2017, from Investopedia: http://www.investopedia.com/dictionary/ Form 10-K (2016) Target Corporation. Retrieved from: https://www.sec.gov/Archives/edgar/data/27419/000002741916000043/tgt20160130x10k.htm Profitability Ratio: Definition, Formula, Analysis & Example - Video & Lesson Transcript | Study.com. (2013). Study.com. Retrieved February 4, 2017, from http://study.com/academy/lesson/profitability-ratio-definition-formula-analysisexample.html What is the difference between vertical analysis and horizontal analysis? | Accounting Coach. (2008). AccountingCoach.com. Retrieved February 12, 2017, from http://www.accountingcoach.com/blog/vertical-analysis-horizontal-analysis 8 2015 Annual Report Welcome to our 2015 Annual Report To explore key stories of the past year and find out more about what's in store, visit target.com/abullseyeview. You can also view our Annual Report online at target.com/annualreport. Directors and Management Directors Executive Officers Other Senior Officers Roxanne S. Austin President, Austin Investment Advisors (6) (3) Timothy R. Baer Executive Vice President, Chief Legal Officer and Corporate Secretary Patricia Adams Executive Vice President, Merchandising Product Group Douglas M. Baker, Jr. Chairman and Chief Executive Officer, Ecolab Inc. (2) (5) (4) Brian C. Cornell Chairman of the Board and Chief Executive Officer Calvin Darden Chairman, Darden Putnam Energy & Logistics, LLC (2) (5) Henrique De Castro Former Chief Operating Officer, Yahoo! Inc. (2) (3) Robert L. Edwards Former President and Chief Executive Officer, AB Acquisition LLC (Albertsons/Safeway) (1) (3) Financial Highlights Sales (Note: Reflects amounts attributable to continuing operations.) EBIT In Millions Melanie L. Healey Former Group President, North America, The Procter & Gamble Company (2) (3) Net Earnings In Millions Diluted EPS In Millions $3,321 $4.46 $3.83 $5.25 1.6% 2015 Growth: Five-year CAGR: 3.1% 22.0% 35.6% 2015 Growth: Five-year CAGR: 3.4% 2015 Growth: Five-year CAGR: 5.9% $4.20 $2,449 '15 $5.00 $3,049 '11 '12 '13 '14 $2,694 $5,530 '15 $3,315 $4,535 '11 '12 '13 '14 $5,170 $5,443 '15 $5,740 $73,785 '11 '12 '13 '14 $71,279 $72,618 $71,960 $68,466 '15 37.2% 2015 Growth: Five-year CAGR: 9.7% 26 Household Essentials 21 Food & Pet Supplies 19 % Anne M. Mulcahy Chairman of the Board of Trustees, Save the Children Federation, Inc. (2) (6) Derica W. Rice Executive Vice President, Global Services and Chief Financial Officer, Eli Lilly & Company (1) (6) Kenneth L. Salazar Partner, WilmerHale (6) (3) (1) Audit and Finance Committee Apparel & Accessories 17 % Hardlines 17 % Home Furnishings & Dcor Michael E. McNamara Executive Vice President and Chief Information Officer John J. Mulligan Executive Vice President and Chief Operating Officer Jackie Hourigan Rice Executive Vice President and Chief Risk and Compliance Officer (3) Infrastructure and Investment Committee % Stephanie A. Lundquist Executive Vice President and Chief Human Resources Officer Monica C. Lozano Former Chairman, U.S. Hispanic Media, Inc. (1) (5) (2) Human Resources and Compensation Committee % Jeffrey J. Jones II Executive Vice President and Chief Marketing Officer Janna A. Potts Executive Vice President and Chief Stores Officer John G. Stumpf Chairman of the Board and Chief Executive Officer, Wells Fargo & Company (5) (6) Total Segment Sales: $73.8 Billion Brian C. Cornell Chairman of the Board and Chief Executive Officer Donald R. Knauss Former Executive Chairman, The Clorox Company (2) (5) Mary E. Minnick Partner, Lion Capital LLP (1) (3) '11 '12 '13 '14 Casey L. Carl Executive Vice President and Chief Strategy and Innovation Officer (4) Lead Independent Director (5) Nominating and Governance Committee (6) Risk and Compliance Committee Cathy R. Smith Executive Vice President and Chief Financial Officer Laysha L. Ward Executive Vice President and Chief Corporate Social Responsibility Officer Aaron Alt Senior Vice President, Grocery Transformation Kristi Argyilan Senior Vice President, Media and Guest Engagement David Best Senior Vice President, Merchandising Planning, Hardlines and Essentials Dawn Block Senior Vice President, Merchandising Essentials & Beauty Karl Bracken Senior Vice President, Supply Chain Transformation John Butcher Senior Vice President, Merchandising Beauty & Dermstore Kelly Caruso President, Target Sourcing Services Keith Colbourn Senior Vice President, Loyalty and Lifecycle Marketing Joe Contrucci Senior Vice President, Stores Corey Haaland Senior Vice President, Treasurer Robert Harrison Senior Vice President, Chief Accounting Officer and Controller Christina Hennington Senior Vice President, Merchandising Transformation and Operations Cynthia Ho Senior Vice President, Target Sourcing Services Yu-Ping Kao Senior Vice President, Human Resources, Pay and Benefits Navneet Kapoor President and Managing Director, Target India Scott Kennedy President, Target Financial and Retail Services Carson Landsgard Senior Vice President, Distribution Rodney Lastinger Senior Vice President, Stores Stephanie Lucy Senior Vice President, Merchandise Planning, Apparel and Accessories Tony Costanzo Senior Vice President, Stores Brad Maiorino Senior Vice President and Chief Information Security Officer Tim Curoe Senior Vice President, Talent & Organizational Effectiveness Scott Nygaard Senior Vice President, Merchandising, Hardlines Anne Dament Senior Vice President, Merchandising, Grocery Tammy Redpath Senior Vice President, Creative and Marketing Operations Paritosh Desai Senior Vice President, Enterprise Data, Analytics and Business Intelligence Ryan Rumbarger Senior Vice President, Human Resources, Stores and Operations Michael Fiddelke Senior Vice President, Financial Planning Analysis Juan Galarraga Senior Vice President, Store Operations Jamil Ghani Senior Vice President, Enterprise Strategy and Innovation Jason Goldberger President, Target.com & Mobile Rick Gomez Senior Vice President, Brand and Category Marketing Julie Guggemos Senior Vice President, Product Design and Development Anu Gupta Senior Vice President, Operational Excellence Jill Sando Senior Vice President, Merchandising, Home Mark Schindele Senior Vice President, Target Properties Samir Shah Senior Vice President, Stores Dustee Tucker Jenkins Senior Vice President, Communications Arthur Valdez Executive Vice President and Chief Supply Chain & Logistics Officer Todd Waterbury Senior Vice President and Chief Creative Officer Michelle Wlazlo Senior Vice President, Merchandising Apparel & Accessories Financial Summary Target 2015 Annual Report FINANCIAL RESULTS: (in millions) Sales (b) 2015 $ 73,785 2014 $ 72,618 2013 $ 71,279 2012 (a) $ 73,301 2011 $ 69,865 Cost of sales 51,997 51,278 50,039 50,568 47,860 Selling, general and administrative expenses (SG&A) 14,665 14,676 14,465 14,643 14,032 Credit card expenses 467 446 Depreciation and amortization 2,213 2,129 1,996 2,044 2,084 (391) (161) 5,443 Gain on sale (c) (620) Earnings from continuing operations before interest expense and income taxes (EBIT) 5,530 4,535 5,170 5,740 Net interest expense 607 882 1,049 684 822 Earnings from continuing operations before income taxes 4,923 3,653 4,121 5,056 4,621 Provision for income taxes 1,602 1,204 1,427 1,741 1,572 Net earnings from continuing operations 3,321 2,449 2,694 3,315 3,049 Discontinued operations, net of tax 42 (4,085) Net earnings /(loss) $ 3,363 $ (1,636) $ $ $ (723) 1,971 $ 4.24 $ (316) 2,999 $ 5.05 $ (120) 2,929 PER SHARE: Basic earnings/(loss) per share Continuing operations $ 5.29 3.86 Discontinued operations 0.07 (6.44) Net earnings/(loss) per share $ 5.35 $ (2.58) $ $ 5.25 $ 3.83 $ (1.14) 3.10 $ 4.20 $ (0.48) 4.57 $ 5.00 $ 4.49 (0.18) 4.31 Diluted earnings/(loss) per share Continuing operations Discontinued operations 0.07 (6.38) (1.13) (0.48) 4.46 (0.18) Net earnings/(loss) per share $ 5.31 $ (2.56) $ 3.07 $ 4.52 $ 4.28 Cash dividends declared $ 2.20 $ 1.99 $ 1.65 $ 1.38 $ 1.15 FINANCIAL POSITION: (in millions) Total assets (d) $ 41,172 $ 44,325 $ 47,878 $ 46,260 Capital expenditures (e) $ 1,438 $ 40,262 $ $ $ $ Long-term debt, including current portion (e) $ 12,760 $ 12,725 1,786 1,886 $ 12,494 2,345 $ 16,260 2,476 $ 16,127 Net debt (e)(f) $ 9,752 $ 11,205 $ 12,491 $ 16,185 $ 15,983 Shareholders' investment $ 13,997 $ 16,231 $ 16,558 $ 15,821 $ 12,957 SEGMENT FINANCIAL RATIOS: (g) Comparable sales growth (h) 2.1% 1.3% (0.4)% 2.7% 3.0% Gross margin (% of sales) 29.5% 29.4% 29.8% 29.7% 30.1% SG&A (% of sales) 19.6% 20.0% 20.2% 19.1% 19.1% EBIT margin (% of sales) 6.9% 6.5% 6.8% 7.8% 7.9% 602.2 640.2 632.9 645.3 669.3 5,140 $ 5,131 $ 7,519 $ 5,568 $ 5,520 Sales per square foot (e)(i) $ 307 $ 302 $ 298 $ 299 $ OTHER: Common shares outstanding (in millions) Operating cash flow provided by continuing operations (in millions) $ Retail square feet (in thousands) (e) 239,539 239,963 240,054 237,847 294 235,721 Square footage growth (e) (0.2%) % 0.9% 0.9% 0.9% Total number of stores (e) 1,792 1,790 1,793 1,778 1,763 Total number of distribution centers (e) 40 38 37 37 37 (a) Consisted of 53 weeks. (b) For 2012 and prior, includes sales generated by retail operations and credit card revenues. (c) For 2015, includes the gain on the pharmacies and clinics transaction. For 2013, includes the gain on the receivables transaction. Refer to Form 10-K for more information. (d) Prior year balances have been revised to reflect the impact of adopting ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs and ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes, described further in Form 10-K, Item 8, Financial Statements and Supplementary Data, Notes 20 and 23, respectively. (e) Represents amounts attributable to continuing operations. (f) Including current portion and short-term notes payable, net of short-term investments of $3,008 million, $1,520 million, $3 million, $75 million and $144 million in 2015, 2014, 2013, 2012 and 2011, 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. (g) Effective January 15, 2015, we operate as a single segment which includes all of our continuing operations, excluding net interest expense, data breach related costs and certain other expenses which are discretely managed. (h) See definition of comparable sales in Form 10-K, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations. (i) Represents sales per square foot which is calculated using rolling four quarters average square feet. In 2015, sales per square feet decreased by approximately $2 due to the December 2015 sale of our pharmacy and clinic businesses. 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. Shareholder Information Target 2015 Annual Report Annual Meeting The Annual Meeting of Shareholders is scheduled for June 8, 2016 at 9:00 a.m. (Pacific Daylight Time) at Segerstrom Center for the Arts - Samueli Theater, 615 Town Center Drive, Costa Mesa, CA 92626. Shareholder Information Quarterly and annual shareholder information (including the Form 10-Q and Form 10-K Annual Report, which are filed with the Securities and Exchange Commission) is available at no charge to shareholders. To obtain copies of these materials, you may send an e-mail to investorrelations@target.com, call 1-800-775-3110, or write to: Target Corporation, Attn: Investor Relations, 1000 Nicollet Mall, Minneapolis, Minnesota 55403. These documents as well as other information about Target Corporation, including our Business Conduct Guide, Corporate Governance Guidelines, Corporate Responsibility Report and Board of Director Committee Charters, are also available on the Internet at www.target.com/investors. Transfer Agent, Registrar and Dividend Disbursing Agent Wells Fargo Shareowner Services Trustee, Employee Savings 401(K) and Pension Plans State Street Bank and Trust Company Stock Exchange Listing Trading Symbol: TGT New York Stock Exchange Shareholder Assistance For assistance regarding individual stock records, lost certificates, name or address changes, dividend or tax questions, call Wells Fargo Shareowner Services at 1-800-794-9871, access their website at www.shareowneronline.com or write to: Wells Fargo Shareowner Services, P.O. Box 64874, St. Paul, Minnesota 55164-0874. Direct Stock Purchase/Dividend Reinvestment Plan Wells Fargo Shareowner Services administers a direct purchase plan that allows interested investors to purchase Target Corporation stock directly, rather than through a broker, and become a registered shareholder of the company. The program offers many features including dividend reinvestment. For detailed information regarding this program, call Wells Fargo Shareowner Services toll free at 1-800-794-9871 or write to: Wells Fargo Shareowner Services, P.O. Box 64874, St. Paul, Minnesota 55164-0874. UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 30, 2016 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 1-6049 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 (I.R.S. Employer Identification No.) 55403 (Zip Code) Registrant's telephone number, including area code: 612/304-6073 Securities Registered Pursuant To Section 12(B) Of The Act: Title of Each Class Common Stock, par value $0.0833 per share Name of Each Exchange on Which Registered 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 o Indicate by checkmark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes x No o 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, or a smaller reporting company (as defined in Rule 12b-2 of the Act). See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 126-2 of the Exchange Act. Large accelerated filer x Accelerated filer o Non-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting company o 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 August 1, 2015 was $51,550,988,273, based on the closing price of $81.85 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 at March 4, 2016 were 599,982,121. DOCUMENTS INCORPORATED BY REFERENCE Portions of Target's Proxy Statement to be filed on or about April 25, 2016 are incorporated into Part III. TABLE OF CONTENTS PART I Item 1 Item 1A Item 1B Item 2 Item 3 Item 4 Item 4A PART II Item 5 Item 6 Item 7 Item 7A Item 8 Item 9 Item 9A Item 9B PART III Item 10 Item 11 Item 12 Item 13 Item 14 PART IV Item 15 Signatures Exhibit Index 1 Business Risk Factors Unresolved Staff Comments Properties Legal Proceedings Mine Safety Disclosures Executive Officers 2 5 10 11 11 12 12 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Selected Financial Data Management's Discussion and Analysis of Financial Condition and Results of Operations Quantitative and Qualitative Disclosures About Market Risk Financial Statements and Supplementary Data Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information 14 Directors, Executive Officers and Corporate Governance Executive Compensation 66 66 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain Relationships and Related Transactions, and Director Independence Principal Accountant Fees and Services 67 Exhibits, Financial Statement Schedules 68 72 74 16 16 30 32 66 66 66 67 67 PART I Item 1. Business General Target Corporation (Target, the Corporation or the Company) was incorporated in Minnesota in 1902. We offer our customers, referred to as "guests," everyday essentials and fashionable, differentiated merchandise at discounted prices. Our ability to deliver a preferred shopping experience to our guests is supported by our supply chain and technology, our devotion to innovation, and our disciplined approach to managing our business and investing in future growth. We operate as a single segment designed to enable guests to purchase products seamlessly in stores or through our digital sales channels. Prior to the first quarter of 2013, we operated a U.S. Credit Card Segment that offered credit to qualified guests through our branded credit cards. In the first quarter of 2013, we sold our U.S. consumer credit card portfolio, and TD Bank Group (TD) now underwrites, funds, and owns Target Credit Card and Target MasterCard consumer receivables in the U.S. We perform account servicing and primary marketing functions and earn a substantial portion of the profits generated by the portfolio. Refer to Note 9 of the Consolidated Financial Statements included in Item 8, Financial Statements and Supplementary Data (the Financial Statements) for more information on the credit card receivables transaction. Prior to January 15, 2015, we operated a Canadian Segment. On January 15, 2015, we announced our exit from the Canadian market, and Target Canada Co. and certain other wholly owned subsidiaries of Target filed for protection (the Filing) in Canada under the Companies' Creditors Arrangement Act (CCAA) with the Ontario Superior Court of Justice in Toronto (the Court). Following the Filing, we no longer consolidate our former Canadian retail operation. Canadian financial results prior to the Filing are included in our financial statements and classified within discontinued operations. See Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) and Note 7 of the Financial Statements for more information. Prior to December 16, 2015, we operated pharmacies and clinics in 1,672 and 79 of our stores, respectively. On December 16, 2015, we sold our pharmacy and clinic businesses to CVS Pharmacy, Inc. (CVS). Following the sale, CVS will operate the pharmacy and clinic businesses in our stores under a perpetual operating agreement, subject to termination in limited circumstances. See MD&A and Note 6 of the Financial Statements for more information. Discontinued operations in this Annual Report on Form 10-K refers only to our discontinued Canadian operations. Financial Highlights For information on key financial highlights and segment financial information, see the items referenced in Item 6, Selected Financial Data, MD&A, and Note 30 of the Financial Statements. Seasonality A larger share of annual revenues and earnings traditionally occurs in the fourth quarter because it includes the peak holiday sales period of November and December. Merchandise We sell a wide assortment of general merchandise and food. The majority of our general merchandise stores offer an edited food assortment, including perishables, dry grocery, dairy, and frozen items. Nearly all of our stores larger than 170,000 square feet offer a full line of food items comparable to traditional supermarkets. Our small, flexible format stores, generally smaller than 50,000 square feet, offer edited general merchandise and food assortments. Our digital channels include a wide assortment of general merchandise, including many items found in our stores, along with a complementary assortment such as additional sizes and colors sold only online. 2 A significant portion of our sales is from national brand merchandise. Approximately one-third of 2015 sales related to our owned and exclusive brands, including but not limited to the following: Owned Brands Archer Farms Simply Balanced Boots & Barkley Circo Embark Gilligan & O'Malley Exclusive Brands C9 by Champion Cherokee Mossimo Liz Lange for Target Kid Made Modern Market Pantry Merona Room Essentials Smith & Hawken Spritz Sutton & Dodge Threshold up & up Wine Cube Xhilaration Ava & Viv Sonia Kashuk DENIZEN from Levi's Fieldcrest Genuine Kids from OshKosh Just One You made by carter's Nate Berkus for Target Oh Joy! for Target Hand Made Modern Shaun White We also sell merchandise through periodic exclusive design and creative partnerships and generate revenue from instore amenities such as Target Caf and Target Photo, and leased or licensed departments such as Target Optical, Portrait Studio, Starbucks, and other food service offerings. The majority of our stores also have a CVS pharmacy from which we will generate ongoing annual, inflation adjusted occupancy-related income (see MD&A and Note 6 of the Financial Statements for more information). Distribution The vast majority of merchandise is distributed to our stores through our network of 40 distribution centers. Common carriers ship general merchandise to and from our distribution centers. Vendors or third party distributors ship certain food items and other merchandise directly to our stores. Merchandise sold through our digital sales channels is distributed to our guests via common carriers from our distribution centers, from vendors or third party distributors, from our stores or through guest pick-up at our stores. Using our stores as fulfillment points allows improved product availability and delivery times and also reduces shipping costs. Employees At January 30, 2016, we employed approximately 341,000 full-time, part-time and seasonal employees, referred to as "team members." During the 2015 holiday sales period our employment levels peaked at approximately 390,000 team members. We offer a broad range of company-paid benefits to our team members. Eligibility for, and the level of, these benefits varies depending on team members' full-time or part-time status, compensation level, date of hire, and/or length of service. These company-paid benefits include a pension plan, 401(k) plan, medical and dental plans, disability insurance, paid vacation, tuition reimbursement, various team member assistance programs, life insurance, and merchandise and other discounts. We believe our team member relations are good. Working Capital Our working capital needs are greater in the months leading up to the holiday sales period, which we typically finance with cash flow provided by operations and short-term borrowings. Additional details are provided in the Liquidity and Capital Resources section in MD&A. Effective inventory management is key to our ongoing success, and we use various techniques including demand forecasting and planning and various forms of replenishment management. We achieve effective inventory management by staying in-stock in core product offerings, maintaining positive vendor relationships, and carefully planning inventory levels for seasonal and apparel items to minimize markdowns. 3 Competition We compete with traditional and internet retailers, including off-price general merchandise retailers, apparel retailers, wholesale clubs, category specific retailers, drug stores, supermarkets, and other forms of retail commerce. Our ability to positively differentiate ourselves from other retailers and provide a compelling value proposition largely determine our competitive position within the retail industry. Intellectual Property Our brand image is a critical element of our business strategy. Our principal trademarks, including Target, SuperTarget and our "Bullseye Design," have been registered with the U.S. Patent and Trademark Office. We also seek to obtain and preserve intellectual property protection for our owned brands. Geographic Information Virtually all of our revenues from continuing operations are generated within the United States. Through 2014, our discontinued operations generated revenues in Canada. The vast majority of our long-lived assets are located within the United States. Available Information Our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available free of charge at www.Target.com/Investors as soon as reasonably practicable after we file such material with, or furnish it to, the U.S. Securities and Exchange Commission (SEC). Our Corporate Governance Guidelines, Business Conduct Guide, Corporate Social Responsibility Report, and the charters for the committees of our Board of Directors are also available free of charge in print upon request or at www.Target.com/Investors. 4 Item 1A. Risk Factors Our business is subject to many risks. Set forth below are the material risks that we face. For the convenience of the reader, the risks are listed in the categories where those risks primarily apply, but they may also apply to other categories. Competitive and Reputational Risks Our continued success is dependent on positive perceptions of Target which, if eroded, could adversely affect our business and our relationships with our guests and team members. We believe that one of the reasons our guests prefer to shop at Target, our team members choose Target as a place of employment and our vendors choose to do business with us is the reputation we have built over many years for serving our four primary constituencies: guests, team members, shareholders, and the communities in which we operate. To be successful in the future, we must continue to preserve, grow, and leverage the value of Target's reputation. Reputational value is based in large part on perceptions. While reputations may take decades to build, any negative incidents can quickly erode trust and confidence, particularly if they result in adverse mainstream and social media publicity, governmental investigations, or litigation. Those types of incidents could have an adverse impact on perceptions and lead to tangible adverse effects on our business, including consumer boycotts, lost sales, loss of new store and technology development opportunities, or team member retention and recruiting difficulties. For example, we experienced weaker than expected sales immediately following the announcement of a data breach that occurred in the fourth quarter of 2013. More recently, the sale of our pharmacy and clinic assets to CVS means that CVS will be operating clinics and pharmacies within our stores, and our guests' perceptions of and experiences with CVS, whether within our stores, at independent CVS locations, or otherwise may impact our reputation. If we are unable to positively differentiate ourselves from other retailers, our results of operations could be adversely affected. The retail business is highly competitive. In the past, we have been able to compete successfully by differentiating our guests' shopping experience through a careful combination of price, merchandise assortment, store environment, convenience, guest service, loyalty programs and marketing efforts. Our ability to create a personalized guest experience through the collection and use of accurate and relevant guest data is important to our ability to differentiate from other retailers. Guest perceptions regarding the cleanliness and safety of our stores, the functionality and reliability of our digital channels, our in-stock levels, the effectiveness of our promotions, the attractiveness of our third party offerings, such as the clinics and pharmacies owned and operated by CVS, and other factors also affect our ability to compete. No single competitive factor is dominant, and actions by our competitors on any of these factors or the failure of our strategies to drive traffic across all sales channels could have an adverse effect on our sales, gross margins, and expenses. We sell many products under our owned and exclusive brands. These brands are an important part of our business because they differentiate us from other retailers, generally carry higher margins than equivalent national brand products and represent a significant portion of our overall sales. If one or more of these brands experiences a loss of consumer acceptance or confidence, or if we are unable to successfully protect our intellectual property rights in our owned and exclusive brands, our sales and gross margins could be adversely affected. The continuing migration and evolution of retailing to online and mobile channels has increased our challenges in differentiating ourselves from other retailers. In particular, consumers are able to quickly and conveniently comparison shop and determine real-time product availability using digital tools, which can lead to decisions based solely on price, the functionality of the digital tools or a combination of those and other factors. We must compete by offering a consistent and convenient shopping experience for our guests regardless of the ultimate sales channel; providing and maintaining digital tools for our guests and team members that have the right features and are reliable and easy to use; working with our vendors to offer unique and distinctive merchandise, offering certain services our guests desire in our stores through third parties, such as CVS, offering a compelling guest loyalty program, and encouraging our guests to shop with confidence with our price-match policy. Failures to effectively execute in these efforts, actions by our competitors in response to these efforts, or failures of our vendors to manage their own channels, content and technology systems could hurt our ability to differentiate ourselves from other retailers and, as a result, have an adverse effect on sales, gross margins, and expenses. 5 If we are unable to successfully develop and maintain a relevant and reliable experience for our guests, regardless of where our guest demand is ultimately fulfilled, our sales, results of operations and reputation could be adversely affected. Our business has evolved from an in-store experience to interaction with guests across multiple channels (in-store, online, mobile and social media, among others). Our guests are using computers, tablets, mobile phones and other devices to shop in our stores and online and provide feedback and public commentary about all aspects of our business. We currently provide full and mobile versions of our website (Target.com), offer applications for mobile phones and tablets, and interact with our guests through social media. Retailing is rapidly evolving so that the majority of our sales in all of our channels are digitally enabled, and we must anticipate and meet changing guest expectations and counteract new developments and technology investments by our competitors. Our evolving retailing efforts include implementing new technology, software and processes to be able to fulfill guest orders directly from our vendors and from any point within our system of stores and distribution c