1. Which of the five CPRs should Doug Scovanner accept? Be prepared to explain how each of the considerations that follow influenced your decision: (Please Give Explanation and COMPUTATION)

a.NPV and IRR

b.Size of the project

c.Cannibalization of other stores? sales

d.Store sensitivities

e.Variance to prototype

f.Customer demographics

g.Brand-awareness impact

thankss

Note : 5 CPR is Gopher Place, Whalen Court,The barn, Goldie Square, Stadium Remodel. All of the information is only on the file, do not use another information :) thankyou

This spreadsheet supports the STUDENT analysis of the case, "Target Corporation" (Case 20). Copyright 2008 by the University of Virginia Darden School Foundation. All rights reserved. Revised 3.18.2010 Executive Officers and Capital Expenditure Committee Members Timothy R. Baer Michael R. Francis John D. Griffith Jodeen A. Kozlak Troy H. Risch Janet M. Schalk Douglas A. Scovanner Terrence J. Scully Gregg W. Steinhafel Robert J. Ulrich Chairman and CEO Bob Ulrich, 62. Ulrich began his career at Dayton-Hudson as a merchandising trainee i 1967. He advanced to the position of CEO of Target Stores in 1987 and to the position of Dayton-Hudson's CEO in 1994 EVP and CFO Doug Scovanner, 49. Scovanner was named Target CFO in February 2000 after previously serving as CFO of Dayton-Hudson . President of Target Stores Gregg Steinhafel, 50. Steinhafel began his career at Target as a merchandising trainee in 1979. He was named president in 1999. EVP of Stores Troy Risch, 37. Risch was promoted to EVP in September 2006. EVP of Property Development John Griffith, 44. Griffith was promoted to EVP in February 2005 from the position of senior vice president of Property Development he had held since February 2000. Executive Officers and Capital Expenditure Committee Members Executive Vice President, General Counsel, and Corporate Secretary Executive Vice President, Marketing Executive Vice President, Property Development Executive Vice President, Human Resources Executive Vice President, Stores Executive Vice President, Technology Services and Chief Information Officer Executive Vice President and Chief Financial Officer President, Target Financial Services President Chairman and Chief Executive Officer CEC CEC CEC CEC CEC d CEO Bob Ulrich, 62. Ulrich began his career at Dayton-Hudson as a merchandising trainee in vanced to the position of CEO of Target Stores in 1987 and to the position of Dayton-Hudson's O Doug Scovanner, 49. Scovanner was named Target CFO in February 2000 after previously FO of Dayton-Hudson . Target Stores Gregg Steinhafel, 50. Steinhafel began his career at Target as a merchandising 79. He was named president in 1999. s Troy Risch, 37. Risch was promoted to EVP in September 2006. erty Development John Griffith, 44. Griffith was promoted to EVP in February 2005 from the enior vice president of Property Development he had held since February 2000. Retail Company Financial Information Revenue Basic Debt Debt Rating ($ billions) EPS ($ billions) (S&P) Beta Bed Bath & Beyond Inc. Best Buy Co., Inc. Costco Wholesale Corp. Dick's Sporting Goods, Inc. J.CPenney Company, Inc. Kohl's Corporation Sears Holdings Corporation Wal-Mart Stores, Inc. $5.80 $30.80 $52.90 $2.60 $18.80 $13.40 $49.10 $315.70 $1.95 $2.33 $2.24 $1.47 $4.30 $2.45 $5.63 $2.68 $0.00 BBB 1.05 $0.60 BBB 1.25 $0.80 A 0.85 $0.20 Not Rated 1.15 $3.50 BB+ 1.05 $1.20 BBB 0.9 $4.00 BB+ NMF $38.80 AA 0.8 Target Corporation $52.60 $2.73 $9.90 A+ 1.05 Market Capitalization Fiscal Year as of Oct. 31, 2006 Ended ($ billions) 6-Feb 6-Feb 5-Aug 6-Jan 6-Jan 6-Jan 6-Jan 6-Jan $11.40 $26.20 $24.10 $1.30 $16.60 $23.10 $26.90 $199.90 6-Jan $50.10 Target Income Statements (dollars in millions) Fiscal Year Ending 28-Jan-06 29-Jan-05 Net revenues Cost of goods sold Depreciation, depletion, and amortization Gross income Selling, general, and admin. expenses Operating income Net interest expense Pretax income Income taxes Net income before extra items Gain (loss) sale of assets Net income after extra items 52,620 34,927 1,409 16,284 11,961 4,323 463 3,860 1,452 2,408 2,408 46,839 31,445 1,259 14,135 10,534 3,601 570 3,031 1,146 1,885 1,313 3,198 Capital expenditures Capital expenditures/sales 3,330 6.30% 3,012 6.40% Balance Sheet Statements ($ millions) Fiscal Year Ending 28-Jan-06 29-Jan-05 31-Jan-04 Assets Cash and cash equivalents Accounts receivable (net) Inventory Other current assets Total current assets Property plant and equipment, net Other assets Total assets 1,648 5,666 5,838 1,253 14,405 19,038 1,552 34,995 2,245 5,069 5,384 1,224 13,922 16,860 1,511 32,293 708 4,621 4,531 3,092 12,952 15,153 3,311 31,416 Liabilities Accounts payable Current portion of LT debt and notes payable Income taxes payable Other current liabilities Total current liabilities Long-term debt Other liabilities Total liabilities 6,268 753 374 2,193 9,588 9,119 2,083 20,790 5,779 504 304 1,633 8,220 9,034 2,010 19,264 4,956 863 382 2,113 8,314 10,155 1,815 20,284 Shareholders' equity Common equity Retained earnings Total liabilities and shareholders' equity 2,192 12,013 34,995 1,881 11,148 32,293 1,609 9,523 31,416 CAPITAL PROJECT REQUEST \"B/(P) Proto\" => Better or Poorer relative to the prototype Capital Expenditure Committee: FINANCIAL SUMMARY TOTAL R&P SALES Project B/(P) Proto 1st year 2006 Equivalent $27,000 $2,588 5th year 2006 Equivalent $34,155 $3,279 Sales maturity 1.27 0.00 INCREMENTAL R&P SALES 1st year 2006 Equivalent 5th year 2006 Equivalent Sales maturity Project B/(P) Proto $23,000 ($1,412) $34,155 $3,279 1.49 0.22 INVESTMENT Land Sitework Subtotal Building Other Total Net Investment Project B/(P) Proto $3,802 ($202) 3,804 (812) $7,606 ($1,014) 12,786 (2,736) 1,295 (53) $21,687 ($3,804) VALUE Store Credit TOTAL IRR NPV B/(P) Proto 12.8% $12,860 $1,860 10.2% $3,767 $322 12.6% $16,626 $2,182 STORE SENSITIVITIES HURDLE ADJUSTMENT NPV IRR Sales (3.0%) 1.0% Gross Margin (0.55) 0.19 Construction (Building & Sitework) $2,398 ($498) Full Transfer Impact 4.0% 7.5% RISK/OPPORTUNITY 10% sales decline 1 pp GM decline 10% Const. cost increase Market margin, wage rate, etc. 10% sales increase ($6,259) ($3,388) ($1,287) ($603) $6,269 NPV & Investment 25.0 20.0 15.0 10.0 5.0 0.0 Project Inv estment Prototype NPV -10% Sales +10% Sales SALES 40 35 30 25 Total Incremental Prototy pe 20 15 1 2 2007 3 4 COMPETITION COMPETITION 5 2009 22% (1.8) (1.0) (0.6) (0.2) 1.8 33% 33% 67% VARIANCE TO PROTOTYPE Land Non-Land Investment Sales Real Estate Tax P&L SUMMARY EBIT IMPACT Thru Open Yr 5th Yr ($219) ($2,660) $4,818 ($79) (0.1) (1.5) 1.4 0.0 45% 2.2 SF/Cap Project B/(P) Proto ($1,060) ($117) $4,066 $455 TARGET Wal-Mart WMSC Sam's Club Kmart Other Other Other 3.3 SF/Cap TARGET Wal-Mart WMSC Sam's Club Kmart Other Other Other Project: Market: St. Louis Prototype: P04 Sensitivities Key - Dashboard Example Developer: NA Open: Size: 126,842 Own/Lease: Own Address: NA Anchors: NA ment Land Options +10% Sales None Available Total Incremental Prototy pe 4 N/A $222 ($8) Subgeographic Proto Update Market Conditions Government Fees Architectural Technical Procurement A/E Fees Signs Contingency Total Variance Prototype 0% Sales INVESTMENT DETAIL Acres: 11.00 Sitework PSF: $7.93 RE Tax-Per Corp Tax Closing: 10/2007 B/(P) Proto None BUILDING COST VS. PROTOTYPE 5 Characteristics 2005 Population (000's) 2000-2005 Growth Median HH Income # HH +$50,000 (000's) % Adults 4+ Yrs. College, 2005 2009 22% 33% 45% TARGET Wal-Mart WMSC Sam's Club Kmart Other Other Other WMSC = Wal-Mart Super Center $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 INCENTIVE SUMMARY Vendor Fee Legal Fee DEMOGRAPHICS MSA Trade Area 0 0 0.0% 0.0% $0 $0 0 0 0% 0% COMMENTS $0 $0 3-Mile Radius 0 0.0% $0 0 0% Dashboard Sensitivities Key (use with "Sensitivities Key - Dashboard Example") Dashboard Example: P04; Store NPV: $12,860; Store IRR: 12.8% HURDLE ADJUSTMENT (CPR Dashboard) Sales Land NPV ($219) IRR 1.0% Gross Margin the amounts listed are the amounts NPV 0.55 IRR 0.19 Construction (Building & Sitework) For this Dashboard Example: NPV $2,398 IRR ($498) Full Transfer Impact NPV IRR Prototype Assumption: A nearby store transferring sales to a new store, fully recovers these sale Sensitivity Assumption: If transfer sales are NOT fully recovered by the transferring store in year 4.0% 7.5% RISK/OPPORTUNITY 10% Sales Decline NPV ($6,259) IRR (1.8) 1 pp GM Decline Cost NPV % NPV ($3,388) IRR (1.0) 10% Construction Cost Increase NPV IRR ($1,287) (0.6) Market Margin, Wage Rate, etc. NPV IRR 10% Sales Increase NPV IRR ($603) (0.2) $6,269 1.8 VARIANCE TO PROTOTYPE The example dashboard with a Store NPV of $12,860 is $1,860K above Prototypical Store NPV. The following items contri Land NPV IRR Non-Land Investment NPV IRR Sales NPV ($219) (0.1) ($2,660) (1.5) $4,818 IRR Real Estate Taxes NPV IRR 1.4 ($79) 0.0 vities Key (use with "Sensitivities Key - Dashboard Example") 4; Store NPV: $12,860; Store IRR: 12.8% T (CPR Dashboard) Sales could decrease (3.0%) and still achieve Prototype Store NPV Sales would have to increase 1.0% to achieve Prototype Store IRR unts listed are the amounts Gross Margin could decrease (0.55) pp and still achieve Prototype Store NPV Gross Margin would have to increase 0.19 pp to achieve Prototype Store NPV & Sitework) For this Dashboard Example: Construction costs could increase $2,398 and still achieve Prototype Store NPV Construction costs would have to decrease ($498) to achieve Prototype Store IRR Prototype Assumption: A nearby store transferring sales to a new store, fully recovers these sales by the 5th yr. Sensitivity Assumption: If transfer sales are NOT fully recovered by the transferring store in year 5: Sales would have to increase 4.0% to achieve Prototype Store NPV IRR: $3,436; Target could only pay Sales would have to increase 7.5% to achieve Prototype Store IRR $3,436 to achieve Proto Store IRR. If sales decline by 10%, Store NPV would decline by ($6,259). If sales decline by 10%, Store IRR would decline by (1.8) pp. If margin decreased by 1 pp, Store NPV would decline by ($3,388). If margin decreased by 1 pp, Store IRR would decline by (1.0) pp. If construction costs increased by 10%, Store NPV would decline by ($1,287). If construction costs increased by 10%, Store IRR would decline by (0.6) pp. If we applied market specific assumptions, Store NPV would decrease by ($603). If we applied market specific assumptions, Store IRR would decrease by (0.2) pp. If sales increased by 10%, Store NPV would increase by $6,269. If sales increased by 10%, Store IRR would increase by 1.8 pp. with a Store NPV of $12,860 is $1,860K above Prototypical Store NPV. The following items contributed to the variance: Land cost contributed a negative ($219) to the variance from Prototype. Land cost contributed a negative (0.1) pp to the variance from Prototype. Building/Sitework costs contributed a negative ($2,660) to the variance from Prototype. \\Building/Sitework costs contributed a negative (1.5) pp to the variance from Prototype. Sales contributed a positive $4,818 to the variance from Prototype. Sales contributed a positive 1.4 pp to the variance from Prototype. Real Estate Taxes contributed a negative ($79) to the variance from Prototype. Real Estate Taxes contributed a negative (0.0) pp to the variance from Prototype. could only pay oto Store IRR. Approx $ IMPACT ON STORE NPV Cost NPV % Land: $100K $100K Sitework: $100K $100K 110% 70% Building: $100K $100K 85% On-Ggoing Exp: $100K $100K x10 On-going Expense: eg. Real Estate Taxes, Operating Expense Assumes Store Opening occurs 1 year after closing. ed to the variance: Economic Analysis Summary of Project Proposals Net Present Value* Trade Area** Base 10% Case Sales Population Investment NPV Decline Increase ($000) ($000) ($000) IRR Population 2000-2005 Gopher Place $23,000 $16,800 ($4,722) 12.30% 70,000 27% Whalen Court $119,300 $25,900 ($16,611) 9.80% 632,000 3% The Barn $13,000 $20,500 ($4,066) 16.40% 151,000 3% Goldie's Square $23,900 $300 ($4,073) 8.10% 222,000 16% Stadium Remodel $17,000 $15,700 ($7,854) 10.80% N. Ap. N. Ap. * NPV is computed using 9.0% as discount rate for store cash flows and 4.0% for credit-card cash flows. ** Trade area is the geographical area from which 70% of store sales will be realized. Proposals Trade Area** Median Income $56,400 $48,500 $38,200 $56,000 $65,931 % Adults 4+ yrs college 12% 45% 17% 24% 42% CAPITAL PROJECT REQUEST Capital Expenditure Committee: November 2006 FINANCIAL SUMMARY TOTAL R&P SALES Project B/(P) Proto 1st year 2005 Equivalent $26,000 $2,745 5th year 2005 Equivalent $35,100 $5,688 Sales maturity 1.35 0.09 INCREMENTAL R&P SALES 1st year 2005 Equivalent 5th year 2005 Equivalent Sales maturity Project B/(P) Proto $22,800 ($455) $35,100 $5,688 1.54 0.27 INVESTMENT Land Sitework Subtotal Building Other Total Net Investment Project B/(P) Proto $3,205 $264 3,164 (580) $6,369 ($315) 15,420 (5,052) 1,227 (96) $23,016 ($5,463) VALUE Store Credit TOTAL IRR NPV B/(P) Proto 12.7% $13,201 $2,493 8.1% $3,554 $544 12.3% $16,755 $3,038 STORE SENSITIVITIES HURDLE ADJUSTMENT NPV IRR Sales (5.3%) 2.2% Gross Margin (0.72) 0.29 Construction (Building & Sitework) $3,102 ($751) Full Transfer Impact 2.3% 9.3% RISK/OPPORTUNITY 10% sales decline 1 pp GM decline 10% Const. cost increase Market margin, wage rate, etc. 10% sales increase VARIANCE TO PROTOTYPE Land Non-Land Investment Sales Real Estate Tax P&L SUMMARY EBIT IMPACT Thru Open Yr 5th Yr ($4,722) ($3,481) ($1,494) ($5,434) $4,621 NPV & Investment 25.0 20.0 15.0 10.0 5.0 0.0 Project Inv estment Prototype NPV -10% Sales +10% Sales SALES 40 35 30 25 Total Incremental Prototy pe 20 15 1 2 2006 3 4 COMPETITION COMPETITION 5 2008 24% (1.3) (0.9) (0.6) (1.5) 1.2 76% $287 ($4,741) $6,331 $615 0.1 (2.6) 1.9 0.2 Project B/(P) Proto ($567) ($97) $4,452 $886 0.0 6.5 SF/Cap SF/Cap TARGET Wal-Mart WMSC Sam's Club Kmart Other Other Other Developer: Henderson Associates Open: Size: October, 2007 127,000 Own/Lease: Own Address: SWC of Hudson and Elk Anchors: Freestanding ment 0% Sales "Gopher Place" Project: Market: Gopherville Prototype: P04.383-MSP Land Options Subgeographic Proto Update Market Conditions Government Fees Architectural Technical Procurement A/E Fees Signs Contingency Total Variance Prototype +10% Sales None Available Total Incremental Prototy pe 4 5 2008 24% 76% TARGET Wal-Mart WMSC Sam's Club Kmart Other Other Other INVESTMENT DETAIL Acres: 9.78 Sitework Pro Rata, Maximum PSF: $7.52 RE Tax-Per Corp Tax $136 Closing: 11/2006 B/(P) Proto $62 Garden Center, Seismic BUILDING COST VS. PROTOTYPE ($1,238) (117) (1,158) (1,049) (485) (615) (239) (81) 6 (75) ($5,052) INCENTIVE SUMMARY Vendor Fee $0 Legal Fee $0 DEMOGRAPHICS Characteristics MSA Trade Area 3-Mile Radius 2005 Population (000's) 650 70 16 2000-2005 Growth 15.0% 27.0% 20.0% Median HH Income $46,700 $56,400 $59,400 # HH +$50,000 (000's) 97 11 3 % Adults 4+ Yrs. College, 2005 15% 12% 11% COMMENTS - Target currently operates 5 stores in the market. - Transfer Sales: T-1526: 8% (7 miles E) derives 19% of sales from the proposed trade area. - R&P Sales assume Wal-Mart relocates a store to a Supercenter in 2007; Wal-Mart adds an additional Supercenter in Badgerville in 2008. CAPITAL PROJECT REQUEST Capital Expenditure Committee: November 2006 FINANCIAL SUMMARY TOTAL R&P SALES Project B/(P) Proto 1st year 2005 Equivalent $86,000 $52,185 5th year 2005 Equivalent $111,800 $69,031 Sales maturity 1.30 0.04 INCREMENTAL R&P SALES 1st year 2005 Equivalent 5th year 2005 Equivalent Sales maturity Project B/(P) Proto $79,600 $45,785 $111,800 $69,031 1.40 0.14 INVESTMENT Lease Sitework Subtotal Building Other Total Net Investment Project B/(P) Proto $87,309 ($78,855) 0 3,796 $87,309 ($75,059) 29,434 (15,128) 2,520 93 $119,263 ($90,094) NPV & Investment 140.0 120.0 100.0 80.0 60.0 40.0 20.0 0.0 Project Inv estment Prototype NPV -10% Sales +10% Sales SALES 135 115 95 VALUE Store Credit TOTAL IRR NPV B/(P) Proto 9.9% $14,225 ($3,174) 8.2% $11,650 $7,164 9.8% $25,875 $3,989 STORE SENSITIVITIES HURDLE ADJUSTMENT NPV IRR Sales 1.9% 31.1% Gross Margin 0.28 4.58 Construction (Building & Sitework) ($4,289) ($41,070) Full Transfer Impact 7.7% 36.3% RISK/OPPORTUNITY 10% sales decline 1 pp GM decline 10% Const. cost increase Market margin, wage rate, etc. 10% sales increase ($16,611) ($11,494) ($2,178) ($16,877) $16,647 75 55 Total Incremental Prototy pe 35 15 1 2 2006 3 4 COMPETITION COMPETITION 5 2009 (1.0) (0.7) (0.1) (1.1) 1.0 VARIANCE TO PROTOTYPE Lease ($78,912) (15.1) Non-Land Investment ($10,168) (7.9) Sales $99,963 22.9 Real Estate Tax ($637) (0.2) P&L SUMMARY EBIT IMPACT Project B/(P) Proto Thru Open Yr ($1,599) ($1,136) 5th Yr $14,034 $8,509 100% 0.0 0.5 SF/Cap SF/Cap TARGET Wal-Mart WMSC Sam's Club Kmart Other Other Other Developer: Sawicky and Co. Open: Size: October, 2008 173,585 Own/Lease: Lease Address: NWQ of Gopher and High Investment Blvd. Anchors: Home Depot, Best Buy ment 0% Sales "Whalen Court" Project: Market: Buildback Prototype: Unique Single Level INVESTMENT DETAIL Building Lease Sitework Prepay+$3.3K RE Tax (net of abatement) 10/2006 B/(P) Proto Lease Type: Rent: Closing: N/A $358 ($60) Options L4: Unique Risk Security, District Office, 13k sf Exp. Stock, 2nd Lvl Stock BUILDING COST VS. PROTOTYPE Subgeographic Proto Update Market Conditions Government Fees Architectural Technical Procurement A/E Fees Signs Contingency Total Variance Prototype +10% Sales ($1,200) (124) 0 0 0 (7,927) (2,429) (428) (18) (3,000) ($15,128) INCENTIVE SUMMARY Vendor Fee Legal Fee Total Incremental Prototy pe 4 5 2009 100% TARGET Wal-Mart WMSC Sam's Club Kmart Other Other Other DEMOGRAPHICS Characteristics MSA Trade Area 2005 Population (000's) 18,768 632 2000-2005 Growth 2.0% 3.0% Median HH Income $57,200 $48,500 # HH +$50,000 (000's) 3,750 143 % Adults 4+ Yrs. College, 2005 30% 45% COMMENTS See attached for additional information. $92 $0 3-Mile Radius 1,248 2.0% $43,800 238 37% PROJECT SUMMARY Capital Expenditure Committee: November 2006 PROJECT SUMMARY Project Information Store Square Footage Sales Level Stock Support Total Level 2 113,489 3,586 10,397 127,472 Mezzanine 4,733 4,733 Level 1 ### 3,502 851 4,353 - Stock Capacity: Additional stock space will be required in the first year of operation. Stock square foo - District Office: Project includes a District Office on mezzanine level. - CAM: CAM expense assumed at $6 psf to cover operating costs and taxes on parking structure comm - Legal Fees: $175K for external counsel. Incentives - ICIP: First full year real estate taxes reduced to $358K for 15 years. In years 17-25, taxes phased in Gross Benefit: $56.6M; NPV Impact: $15.3M; Vendor Fees: $20K. - Zone: Wage Tax Credits: Gross Benefit: $188K, NPV Impact: $112K. Income Tax Credit: Gross Benefit: $750K, NPV Impact: $308K. Sales Tax Exemption: Gross Benefit: $380K, NPV Impact: $378K. Exemption on const Vendor Fees: $72K Market / Sales - Target currently operates 45 stores in this market. Total Target buildout for this market is currently esti 159 stores, of which 30 are activeear term opportunites. - Transfer Sales: 5% (2 miles N) scheduled to open 10/2009. - R&P Sales assume Target joins a new retail development co-anchored by Home Depot. Project: Market: Buildback Prototype: Unique Single Level "Whalen Court" Developer: Sawicky and Co. Open: Size: October, 2008 173,585 Own/Lease: Lease Address: NWQ of Gopher and High Investment Blvd. Anchors: Home Depot, Best Buy Cellar 34,632 2,395 37,027 Total Target 113,489 41,720 18,376 173,585 ation. Stock square foot capacity is 84% of guide; cubic capacity is 61% of guide. parking structure commencing at store open; $1M annual cost. 17-25, taxes phased in to get to fully assessed taxes of $5M in year 26. 8K. Exemption on construction materials and equipment. s market is currently estimated at me Depot. CAPITAL PROJECT REQUEST Capital Expenditure Committee: November 2006 FINANCIAL SUMMARY TOTAL R&P SALES Project B/(P) Proto 1st year 2005 Equivalent $24,000 $2,043 5th year 2005 Equivalent $30,500 $2,729 Sales maturity 1.27 0.01 NPV & Investment 30.0 25.0 20.0 15.0 10.0 5.0 0.0 INVESTMENT Land Sitework Subtotal Building Other Total Net Investment Project B/(P) Proto $10 $3,390 2,303 290 $2,313 $3,680 9,705 (378) 998 121 $13,017 $3,423 Project Inv estment Prototype NPV -10% Sales +10% Sales SALES 33 31 29 27 VALUE Store Credit TOTAL IRR NPV B/(P) Proto 17.5% $17,406 $7,326 8.2% $3,121 $279 16.4% $20,527 $7,605 STORE SENSITIVITIES HURDLE ADJUSTMENT NPV IRR Sales (18.1%) (23.2%) Gross Margin (2.35) (3.04) Construction (Building & Sitework) $8,908 $6,973 25 23 21 Total Increme Prototy 19 17 15 1 2 2006 RISK/OPPORTUNITY 10% sales decline 1 pp GM decline 10% Const. cost increase Market margin, wage rate, etc. 10% sales increase ($4,066) ($3,111) ($988) ($2,999) $4,096 (1.9) (1.5) (1.0) (1.4) 1.9 3 4 COMPETITION COMPETITION 20% 23% 2008 13% 9% 10% 67% VARIANCE TO PROTOTYPE Land Non-Land Investment Sales Real Estate Tax 58% $3,675 ($570) $3,603 $617 3.2 (0.3) 1.4 0.2 5.7 SF/Cap TARGET Wal-Mart WMSC Sam's Club Kmart Other Other Trad'l/Mass SF/Cap TARG WalWMS Sam Kma Othe Othe Trad' "The Barn" Project: Market: Moose Land Prototype: P04.383-MSP Open: Size: Developer: Hulbert Ventures Own/Lease: Address: NWQ of Badger and Wolverine Anchors: Lowe's V & Investment Land Options t Subgeographic Proto Update Market Conditions Government Fees Architectural Technical Procurement A/E Fees Signs Contingency Total Variance Prototype NPV -10% Sales INVESTMENT DETAIL Acres: 11.48 Sitework PSF: $0.02 RE Tax-Per Corp Tax Closing: 4/2006 B/(P) Proto L3: Enhanced Risk Security BUILDING COST VS. PROTOTYPE +10% Sales SALES None Available Total Incremental Prototy pe 3 4 COMPETITION COMPETITION 20% 5 2008 13% 9% 58% 6.4 SF/Cap TARGET Wal-Mart WMSC Sam's Club Kmart Other Other Trad'l/Mass INCENTIVE SUMMARY Vendor Fee Legal Fee DEMOGRAPHICS MSA Trade Area 3-Mile Radius 135 151 3.0% 3.0% $36,600 $38,200 20 22 16% 17% COMMENTS - Target is entering a new small market. The nearest Target stores are 80 miles NE, 80 miles S, 90 miles NW. - R&P Sales assume Target is part of a major retail development of 600K sf. - See attached Resubmission Summary. Characteristics 2005 Population (000's) 2000-2005 Growth Median HH Income # HH +$50,000 (000's) % Adults 4+ Yrs. College, 2005 March, 2007 126,842 Own Fixed Cost $136 $62 E $523 (22) (410) 0 (95) (122) (91) (76) (9) (75) ($378) $0 $0 3-Mile Radius stores are 80 miles ent of 600K sf. 19 7.0% $47,300 4 34% PROJECT SUMMARY Capital Expenditure Committee: March 2006 PROJECT SUMMARY Resubmission: This project is being resubmitted due to the change in developer. Negotiations between Target (Naughton & Co.) fell through after the project was approved in 2001 due to a disagreement regarding co-tenan no longer apart of the deal, the shopping center development was put on hold. Prior Submission: Opening Date Prior CPR July, 2002 Current Request March, 2007 Land Sitework Building Other Total Investment $1,510 $1,503 $7,121 $1,067 $11,201 $10 $2,303 $9,705 $998 $13,017 First year sales ('05 equiv) Fifth year sales ('05 equiv) $19,287 $25,967 $24,000 $30,500 $4,326 11.5% $17,406 17.5% Store NPV @ 9% Store IRR Project: Market: Moose Land Prototype: P04.383-MSP "The Barn" Developer: Hulbert Ventures Address: NWQ of Badger and Wolverine Anchors: Lowe's loper. Negotiations between Target and the original developer a disagreement regarding co-tenancy rights. Since Target was March, 2007 B/(P) Delayed 4 years, 8 months $1,500 ($800) ($2,584) $69 ($1,591) $4,713 $4,533 $13,080 6.0% Open: Size: March, 2007 126,842 Own/Lease: Own CAPITAL PROJECT REQUEST Capital Expenditure Committee: November 2006 FINANCIAL SUMMARY TOTAL R&P SALES Project B/(P) Proto 1st year 2005 Equivalent $34,000 ($10,304) 5th year 2005 Equivalent $42,000 ($14,036) Sales maturity 1.24 (0.03) INCREMENTAL R&P SALES 1st year 2005 Equivalent 5th year 2005 Equivalent Sales maturity Project B/(P) Proto $25,900 ($18,404) $42,000 ($14,036) 1.62 0.36 NPV & Investment 30.0 25.0 20.0 15.0 10.0 5.0 0.0 Project (5.0) INVESTMENT Land Sitework Subtotal Building Other Total Net Investment Project B/(P) Proto $3,615 $1,385 3,695 (425) $7,310 $960 14,969 (313) 1,660 48 $23,939 $694 Prototype (10.0) Inv estment NPV -10% Sales +10% Sales SALES 60 55 50 45 VALUE Store Credit TOTAL IRR NPV B/(P) Proto 8.1% ($3,319) ($18,222) 8.1% $3,635 ($1,294) 8.1% $317 ($19,516) STORE SENSITIVITIES HURDLE ADJUSTMENT NPV IRR Sales 45.1% 47.2% Gross Margin 4.64 4.91 Construction (Building & Sitework) ($22,167) ($14,576) Full Transfer Impact 62.5% 63.1% RISK/OPPORTUNITY 10% sales decline 1 pp GM decline 10% Const. cost increase Market margin, wage rate, etc. 10% sales increase ($4,073) ($3,929) ($1,470) $6,059 $4,008 40 35 30 Total Incremental Prototy pe 25 20 15 1 2 2006 3 4 COMPETITION COMPETITION 2008 17% 20% (1.1) (1.1) (0.3) 1.6 1.1 5 14% 66% VARIANCE TO PROTOTYPE Land $1,501 0.3 Non-Land Investment ($581) (0.1) Sales ($16,455) (4.4) Real Estate Tax ($2,682) (0.7) P&L SUMMARY EBIT IMPACT Project B/(P) Proto 83% 2.5 SF/Cap TARGET Wal-Mart WMSC Sam's Club Kmart Other Other Other 3.0 SF/Cap TARGET Wal-Mart WMSC Sam's Club Kmart Other Other Other Thru Open Yr 5th Yr ($1,921) $2,951 ($654) ($2,343) Project: Market: Goldie Country Prototype: SUP04M Developer: Barsky Enterprises "Goldie's Square" Open: Size: October, 2007 173,770 Own/Lease: Own Address: SWQ of Ocean and Beach Anchors: JC Penney, Circuit City, Borders, Bed Bath & Beyond, Ross ment Land Options Subgeographic Proto Update Market Conditions Government Fees Architectural Technical Procurement A/E Fees Signs Contingency Total Variance Prototype 0% Sales +10% Sales None Available Total Incremental Prototy pe 4 INVESTMENT DETAIL Acres: 11.69 Sitework PSF: $7.10 RE Tax-Per Corp Tax Closing: 8/2006 B/(P) Proto None BUILDING COST VS. PROTOTYPE 5 2008 17% 83% TARGET Wal-Mart WMSC Sam's Club Kmart Other Other Other Fixed Cost $539 ($269) $829 (153) 545 0 (469) (799) (170) (71) 50 (75) ($313) INCENTIVE SUMMARY Vendor Fee Legal Fee $0 $0 DEMOGRAPHICS Characteristics MSA Trade Area 3-Mile Radius 2005 Population (000's) 1,415 222 67 2000-2005 Growth 13.0% 16.0% 4.0% Median HH Income $56,100 $56,000 $50,000 # HH +$50,000 (000's) 291 41 12 % Adults 4+ Yrs. College, 2005 36% 24% 26% COMMENTS - Target currently operates 12 stores in the market. Total Target buildout for this market is currently estimated at 24 of which 7 are activeear term opportunities. Build out will include 12 SuperTarget units, 50% of the total. - Transfer Sales: 25% from a store located 2.1 miles NE; 4% from a store located 7 miles N; 25% of sales from a store 4 miles away. - General Merchandise/Hardlines C Mix: 82/18. - Alternatives to this buildback scenario: >Relo: T-683 closes when Goldie's Square opens: Total NPV: $6M; Total IRR: 9.3%. >T-683 closes 1 yr after Goldie's Square opens: Total NPV: $3.9M; Total IRR: 8.9%. >T-683 closes 2 yrs after Goldie's Square opens: Total NPV: $3.6M; Total IRR: 8.9%. CAPITAL PROJECT REQUEST Prototype Before & A Capital Expenditure Committee: November 2006 FINANCIAL SUMMARY TOTAL R&P SALES Project B/(P) Proto 1st year 2005 Equivalent $64,000 $19,677 5th year 2005 Equivalent $64,000 $7,940 Sales maturity 1.00 (0.26) INCREMENTAL R&P SALES 1st year 2005 Equivalent 5th year 2005 Equivalent Sales maturity INVESTMENT Land Sitework Subtotal Building Other Total Net Investment Project B/(P) Proto $9,300 ($35,023) $9,300 ($46,760) 1.00 (0.26) Project B/(P) Proto $0 $5,000 1,173 2,097 $1,173 $7,097 12,411 2,245 3,271 (1,618) $16,855 $7,724 Expansion Availabi Offsite Whse/Dist Off NPV & Investment 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 Status Quo Proposed NewTotal New Store Prototype Inv estment NPV -10% Sales +10% Sales SALES 75 65 55 VALUE Store Credit TOTAL IRR NPV 12.5% $14,911 4.6% $828 10.8% $15,739 STORE SENSITIVITIES HURDLE ADJUSTMENT NPV IRR Sales Gross Margin Remodel Construction (Building & Sitework) RISK/OPPORTUNITY 10% sales decline 1 pp GM decline 10% Const. cost increase Market margin, wage rate, etc. 10% sales increase ($7,854) ($6,457) ($910) ($11,317) $6,216 (1.8) (1.5) (0.3) (2.7) 1.5 P&L SUMMARY EBIT IMPACT Thru Open Yr 5th Yr Project B/(P) Proto ($6,103) ($4,812) $1,272 ($4,025) 45 35 Total Incremental Prototy pe 25 15 1 2 3 4 5 Project: Market: Boardwalk Scope: Interior Remodel "Stadium Remodel" Remodel Cycle: Last Remodel: Prototype Before & After: SUP1.1 / S04 Own/Lease: Expansion Availability: Not Site Constrained Offsite Whse/Dist Office: N/A ment Write Off RE Tax-Per Corp Tax B/(P) Proto PROJECT DETAIL $1061 ($657 Bldg, $43 Roof, $361 Other) $332 ($62) SQUARE FOOTAGE al New Store Prototype 0% Sales Sides Before & After: POG Length: +10% Sales Total Incremental Prototy pe 4 5 Total Sales Stock Original Sq Ft Additional Sq Ft Total Sq Ft After Remodel 203,300 203,300 153,019 (10,544) 142,475 35,245 12,870 48,115 SUP04 Prototype B/(P) Prototype B/(P) Guide 1st FY 177,376 25,924 136,616 5,859 27,500 20,615 20,615 DEMOGRAPHICS Characteristics MSA Trade Area 3-Mile Radius 2005 Population (000's) 806 113 2000-2005 Growth 5.0% 16.0% Median HH Income $50,774 $65,931 # HH +$50,000 (000's) 158 29 % Adults 4+ Yrs. College, 2005 28% 42% COMMENTS - Entered market in 1972. Currently operate 8 stores in this market. - A successful store at a strong long-term location serving an affluent family-oriented trade area. - 2006 YTD Sales Trend: -0.9%. - Post-remodel sales assume a 17% sales lift over R&P base case sales. Base case sales assume a (10)% impact from buildback (3.3 miles, October 2007); the store is also in the process of being impacted by Park Place South. - Current Value of T-0530: $18.8M; R&P base case sales; Prototypical Interior Remodel in 2007; Tax benefit of depreciable property write-off: $0.4M; Rank: 783 of 1395. - General Merchandise/Hardlines C Mix: 68/32; based on T-0530 historical trend. - Options: New Entrance System, Relocate Pharmacy, Relocate Electrical Room. - Scope: Refrigeration Replacement, 4 Phases of Grocery Staging, Flooring Replacement, Roof Replacement, Temp Pharmacy, New Food Avenue, New Starbucks, New Optical, New Portrait Studio, New Signage. Cycle 3 2007 NA Own 484 / 455 24'/28' Support 15,036 (2,326) 12,710 13,260 (550) 3-Mile Radius 84 15.0% $64,597 21 44% family-oriented trade ales. Base case al Interior Remodel in torical trend. ctrical Room. looring Replacement, bucks, New Optical