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Press release from Business Wire

Target Reports Second Quarter 2012 Earnings

<p class='bwalignc'> <i><b>Adjusted EPS of $1.12 Up 4.6% from Second Quarter 2011</b></i> </p> <p class='bwalignc'> <i><b>GAAP EPS of $1.06 Up 3.4% from Second Quarter 2011</b></i> </p>

Wednesday, August 15, 2012

Target Reports Second Quarter 2012 Earnings07:30 EDT Wednesday, August 15, 2012 MINNEAPOLIS (Business Wire) -- Target Corporation (NYSE: TGT) today reported second quarter net earnings of $704 million, or $1.06 per share. Adjusted earnings per share, a measure the company believes is useful in providing period-to-period comparisons of the results of its U.S. operations, were $1.12 in second quarter 2012, up 4.6 percent from $1.07 in 2011. A reconciliation of non-GAAP financial measures to GAAP measures is provided in the tables attached to this press release. All earnings per share figures refer to diluted earnings per share. “We're pleased with Target's strong second quarter financial performance, which reflects a continued focus on delivering an outstanding experience for our guests and disciplined execution of our strategy,” said Gregg Steinhafel, chairman, president, and chief executive officer of Target Corporation. “In addition, we're very pleased with the initial response to the July opening of our first three CityTarget locations in Seattle, Los Angeles and Chicago. We look forward to serving guests in these dense urban areas with an exciting store format and uniquely-tailored assortment.” Fiscal 2012 Earnings Guidance For third quarter 2012, the company expects adjusted EPS of $0.83 to $0.93 and GAAP EPS of $0.69 to $0.79. For full-year 2012, the company has raised its guidance and now expects adjusted EPS of $4.65 to $4.85 and GAAP EPS of $4.20 to $4.40. The difference between the GAAP and adjusted EPS range of 14 cents in the third quarter reflects the expected EPS impact of expenses related to the company's Canadian market entry. The difference between the GAAP and adjusted EPS range of 45 cents for the full year reflects the expected 50-cent EPS impact of expenses related to the company's Canadian market entry, offset by the beneficial impact of the resolution of income tax matters recognized in first and second quarter 2012. U.S. Retail Segment Results As previously reported, sales increased 3.5 percent to $16.5 billion in second quarter 2012 from $15.9 billion last year, reflecting a 3.1 percent increase in comparable-store sales combined with the contribution from new stores. Segment earnings before interest expense and income taxes (EBIT) were $1,181 million in the second quarter of 2012, an increase of 2.9 percent from $1,147 million in 2011. Second quarter EBITDA and EBIT margin rates were 10.2 percent and 7.2 percent, respectively, compared with 10.3 percent and 7.2 percent in 2011. Second quarter gross margin rate declined to 31.3 percent in 2012 from 31.6 percent in 2011, reflecting the impact of the company's integrated growth strategies partially offset by underlying rate improvements within categories. Second quarter selling, general and administrative (SG&A) expense rate was 21.1 percent in 2012 compared with 21.3 percent in 2011, reflecting disciplined control of expenses across the organization. U.S. Credit Card Segment Results Second quarter average receivables decreased 5.0 percent to $5.9 billion in 2012 from $6.2 billion in 2011. Second quarter 2012 portfolio spread to LIBOR was $140 million, or 9.5 percent, compared with $186 million, or 12.0 percent, in 2011. Performance in second quarter 2012 reflected a $30 million reduction in the allowance for doubtful accounts, compared with an $85 million reduction in second quarter 2011. Canadian Segment Results Second quarter 2012 EBIT was $(69) million, due to start-up expenses, depreciation and amortization related to the company's expected market entry in 2013. Total expenses related to investments in Target's Canadian market entry reduced Target's earnings per share by approximately 9 cents in second quarter 2012.11 This amount includes interest expense and tax expense that are not included in the segment measure of profit. A reconciliation of non-GAAP measures is included in the tables attached to this release. Interest Expense and Taxes Net interest expense for the quarter was $184 million, including $19 million of interest on capitalized leases related to Target's Canadian market entry. Net interest expense was $191 million in second quarter 2011. The company's effective income tax rate was 34.3 percent in second quarter 2012, including the favorable resolution of various income tax matters which benefited second quarter EPS by approximately 3 cents. Capital Returned to Shareholders In second quarter 2012, the company repurchased approximately 9.6 million shares of its common stock at an average price of $57.09, for a total investment of $549 million. The company also paid dividends of $198 million during the quarter. Miscellaneous Target Corporation will webcast its second quarter earnings conference call at 9:30 a.m. CDT today. Investors and the media are invited to listen to the call through the company's website at www.target.com/investors (click on “Events + Presentations” and then “Archives + Webcasts”). A telephone replay of the call will be available beginning at approximately 11:30 a.m. CDT today through the end of business on August 17, 2012. The replay number is (855) 859-2056 (passcode: 39813226). Statements in this release regarding third quarter and fiscal 2012 earnings guidance are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements speak only as of the date they are made and are subject to risks and uncertainties which could cause the company's actual results to differ materially. The most important risks and uncertainties are described in Item 1A of the company's Form 10-K for the fiscal year ended January 28, 2012. In addition to the GAAP results provided in this release, the company provides adjusted diluted earnings per share for the three and six months ended July 28, 2012 and July 30, 2011. This measure is not in accordance with, or an alternative for, generally accepted accounting principles in the United States. The most comparable GAAP measure is diluted earnings per share. Management believes adjusted EPS is useful in providing period-to-period comparisons of the results of the company's U.S. operations. Adjusted EPS should not be considered in isolation or as a substitution for analysis of the company's results as reported under GAAP. Other companies may calculate adjusted EPS differently than the company does, limiting the usefulness of the measure for comparisons with other companies. About Target Minneapolis-based Target Corporation (NYSE:TGT) serves guests at 1,772 stores across the United States and at Target.com. The company plans to open its first stores in Canada in 2013. In addition, the company operates a credit card segment that offers branded proprietary credit card products. Since 1946, Target has given 5 percent of its income through community grants and programs; today, that giving equals more than $3 million a week. For more information about Target's commitment to corporate responsibility, visit Target.com/hereforgood. For more information, visit Target.com/Pressroom.   TARGET CORPORATION   Consolidated Statements of Operations     Three Months Ended         Six Months Ended     July 28,     July 30, July 28,     July 30, (millions, except per share data) (unaudited)     2012     2011     Change     2012     2011     Change Sales $16,451 $ 15,895 3.5 % $32,989 $ 31,475 4.8 % Credit card revenues       328       345     (5.1 )         657       700     (6.1 )   Total revenues 16,779 16,240 3.3 33,646 32,175 4.6 Cost of sales 11,297 10,872 3.9 22,838 21,710 5.2 Selling, general and administrative expenses 3,588 3,473 3.3 6,981 6,705 4.1 Credit card expenses 108 86 25.1 228 174 30.4 Depreciation and amortization       531       509     4.3           1,060       1,022     3.8     Earnings before interest expense and income taxes 1,255 1,300 (3.5 ) 2,539 2,564 (1.0 ) Net interest expense       184       191     (4.0 )         366       374     (1.9 )   Earnings before income taxes 1,071 1,109 (3.4 ) 2,173 2,190 (0.8 ) Provision for income taxes       367       405     (9.3 )         772       797     (3.3 )   Net earnings     $704     $ 704     0.0   %     $1,401     $ 1,393     0.6   % Basic earnings per share     $1.07     $ 1.03     3.7   %     $2.12     $ 2.03     4.4   % Diluted earnings per share     $1.06     $ 1.03     3.4   %     $2.10     $ 2.02     4.2   % Weighted average common shares outstanding Basic 656.7 680.8 (3.6 ) % 661.5 686.7 (3.7 ) % Diluted       662.9       685.1     (3.2 ) %       667.6       691.2     (3.4 ) %   Subject to reclassification     TARGET CORPORATION   Consolidated Statements of Financial Position     July 28,     January 28,     July 30, (millions)     2012     2012     2011 Assets(unaudited) (unaudited) Cash and cash equivalents, including short-term investments of $830, $194 and $116 $1,442 $ 794 $ 890 Credit card receivables, net of allowance of $365, $430 and $480 5,540 5,927 5,722 Inventory 7,733 7,918 7,926 Other current assets       1,700         1,810         1,521   Total current assets 16,415 16,449 16,059 Property and equipment Land 6,137 6,122 5,999 Buildings and improvements 27,394 26,837 26,092 Fixtures and equipment 5,192 5,141 4,906 Computer hardware and software 2,333 2,468 2,392 Construction-in-progress 1,260 963 571 Accumulated depreciation       (12,542)       (12,382 )       (11,587 ) Property and equipment, net 29,774 29,149 28,373 Other noncurrent assets       1,136         1,032         1,067   Total assets     $47,325       $ 46,630       $ 45,499   Liabilities and shareholders' investment Accounts payable $6,505 $ 6,857 $ 6,519 Accrued and other current liabilities 3,539 3,644 3,721 Unsecured debt and other borrowings 2,535 3,036 1,130 Nonrecourse debt collateralized by credit card receivables       750         750         250   Total current liabilities 13,329 14,287 11,620 Unsecured debt and other borrowings 14,479 13,447 12,661 Nonrecourse debt collateralized by credit card receivables 750 250 3,499 Deferred income taxes 1,173 1,191 969 Other noncurrent liabilities       1,697         1,634         1,644   Total noncurrent liabilities 18,099 16,522 18,773 Shareholders' investment Common stock 54 56 56 Additional paid-in capital 3,721 3,487 3,385 Retained earnings 12,774 12,959 12,213 Accumulated other comprehensive loss Pension and other benefit liabilities (596) (624 ) (525 ) Currency translation adjustment and cash flow hedges       (56)       (57 )       (23 ) Total shareholders' investment       15,897         15,821         15,106   Total liabilities and shareholders' investment     $47,325       $ 46,630       $ 45,499   Common shares outstanding       653.9         669.3         675.2     Subject to reclassification     TARGET CORPORATION   Consolidated Statements of Cash Flows     Six Months Ended July 28,     July 30, (millions) (unaudited)     2012     2011 Operating activities Net earnings $1,401 $ 1,393 Reconciliation to cash flow Depreciation and amortization 1,060 1,022 Share-based compensation expense 48 44 Deferred income taxes (92) 122 Bad debt expense 95 27 Non-cash (gains)/losses and other, net (1) 62 Changes in operating accounts: Accounts receivable originated at Target 116 143 Inventory 185 (330 ) Other current assets 72 80 Other noncurrent assets (9) 16 Accounts payable (352) (119 ) Accrued and other current liabilities (150) (129 ) Other noncurrent liabilities       98         5   Cash flow provided by operations       2,471         2,336   Investing activities Expenditures for property and equipment (1,603) (2,379 ) Proceeds from disposal of property and equipment 18 2 Change in accounts receivable originated at third parties 176 261 Other investments       (18)       (19 ) Cash flow required for investing activities       (1,427)       (2,135 ) Financing activities Additions to long-term debt 1,971 1,000 Reductions of long-term debt (1,011) (238 ) Dividends paid (399) (346 ) Repurchase of stock (1,130) (1,493 ) Stock option exercises and related tax benefit 183 34 Other       (16)       20   Cash flow required for financing activities       (402)       (1,023 ) Effect of exchange rate changes on cash and cash equivalents       6         -   Net increase (decrease) in cash and cash equivalents 648 (822 ) Cash and cash equivalents at beginning of period       794         1,712   Cash and cash equivalents at end of period     $1,442       $ 890     Subject to reclassification   TARGET CORPORATION   U.S. Retail Segment   U.S. Retail Segment Results     Three Months Ended         Six Months Ended     July 28,     July 30, July 28,     July 30, (millions) (unaudited)     2012     2011     Change       2012     2011     Change   Sales $16,451 $ 15,895 3.5 % $32,989 $ 31,475 4.8 % Cost of sales       11,297       10,872     3.9         22,838       21,710     5.2 Gross margin 5,154 5,023 2.6 10,151 9,765 3.9 SG&A expenses(a)       3,468       3,382     2.6         6,762       6,554     3.2 EBITDA 1,686 1,641 2.7 3,389 3,211 5.5 Depreciation and amortization       505       494     2.2         1,009       1,002     0.8   EBIT     $1,181     $ 1,147     2.9 %     $2,380     $ 2,209     7.7 %   EBITDA is earnings before interest expense, income taxes, depreciation and amortization. EBIT is earnings before interest expense and income taxes. (a) Loyalty program charges were $74 million and $66 million for the three months ended July 28, 2012 and July 30, 2011, respectively, and $138 million and $115 million for the six months ended July 28, 2012 and July 30, 2011, respectively. In all periods, these amounts were recorded as reductions to SG&A expenses within the U.S. Retail Segment and increases to operations and marketing expenses within the U.S. Credit Card Segment.   U.S. Retail Segment Rate Analysis     Three Months Ended     Six Months Ended July 28,     July 30, July 28,     July 30, (unaudited)     2012     2011     2012     2011 Gross margin rate 31.3% 31.6 % 30.8% 31.0 % SG&A expense rate 21.1 21.3 20.5 20.8 EBITDA margin rate 10.2 10.3 10.3 10.2 Depreciation and amortization expense rate 3.1 3.1 3.1 3.2 EBIT margin rate     7.2       7.2       7.2       7.0     Rate analysis metrics are computed by dividing the applicable amount by sales.   Comparable-Store Sales Three Months Ended Six Months Ended July 28, July 30, July 28, July 30, (unaudited)     2012     2011     2012     2011 Comparable-store sales change 3.1% 3.9 % 4.2% 2.9 % Drivers of change in comparable-store sales: Number of transactions 0.7 0.5 1.3 0.4 Average transaction amount 2.4 3.5 2.8 2.6 Units per transaction 1.3 1.8 1.0 3.1 Selling price per unit     1.1       1.7       1.8       (0.5 )   The comparable-store sales increases or decreases above are calculated by comparing sales in fiscal year periods with comparable prior-year periods of equivalent length.   REDcard Penetration Three Months Ended Six Months Ended July 28, July 30, July 28, July 30, (unaudited)     2012     2011     2012     2011 Target Credit Cards 7.7% 6.6 % 7.4% 6.2 % Target Debit Cards     5.1       2.1       4.8       1.9     Total Store REDcard Penetration     12.8%     8.7 %     12.2%     8.1   % Represents the percentage of Target store sales that are paid for using REDcards.     Number of Stores and Retail Square Feet     Number of Stores     Retail Square Feet(a)July 28,     January 28,     July 30, July 28,     January 28,     July 30, (unaudited)     2012     2012     2011     2012     2012     2011 Target general merchandise stores 428 637 774 50,974 76,999 93,699 Expanded food assortment stores 1,090 875 736 141,020 114,219 97,058 SuperTarget stores 251 251 252 44,500 44,503 44,681 CityTarget stores     3     -     -     314     -     - Total     1,772     1,763     1,762     236,808     235,721     235,438 (a) In thousands; reflects total square feet, less office, distribution center and vacant space.   Subject to reclassification     TARGET CORPORATION   U.S. Credit Card Segment   U.S. Credit Card Segment Results     Three Months Ended     Three Months Ended     Six Months Ended     Six Months Ended July 28, 2012 July 30, 2011 July 28, 2012 July 30, 2011     Annualized     Annualized     Annualized     Annualized (millions) (unaudited)     Amount     Rate(d)     Amount     Rate(d)     Amount     Rate(d)     Amount     Rate(d) Finance charge revenue $26518.0% $ 278 17.9 % $53617.9% $ 570 18.0 % Late fees and other revenue 432.8 44 2.8 822.7 86 2.7 Third party merchant fees       20       1.4         23       1.5         39       1.3         44       1.4 Total revenues       328       22.2         345       22.2         657       21.9         700       22.1 Bad debt expense 432.9 15 1.0 953.2 27 0.9 Operations and marketing expenses(a)1399.3 137 8.8 2719.0 262 8.3 Depreciation and amortization       3       0.2         4       0.3         7       0.2         9       0.3 Total expenses       185       12.5         156       10.0         373       12.4         298       9.4 EBIT 1439.7 189 12.2 2849.5 402 12.7 Interest expense on nonrecourse debt collateralized by credit card receivables       3                 18                 5                 37         Segment profit     $140               $ 171               $279               $ 365         Average gross credit card receivables funded by Target(b)$4,406 $ 2,398 $4,646 $ 2,451 Segment pretax ROIC(c)       12.7%               28.5 %               12.0%               29.7 %         (a) See footnote (a) to our U.S. Retail Segment Results table for an explanation of our loyalty program charges. (b)Amounts represent the portion of average gross credit card receivables funded by Target. These amounts exclude $1,500 million and $1,343 million for the three and six months ended July 28, 2012, respectively, and $3,817 million and $3,888 million for the three and six months ended July 30, 2011, respectively, of receivables funded by nonrecourse debt collateralized by credit card receivables. (c)ROIC is return on invested capital, and this rate equals our segment profit divided by average gross credit card receivables funded by Target, expressed as an annualized rate. (d)As an annualized percentage of average gross credit card receivables.   Spread Analysis - Total Portfolio     Three Months Ended     Three Months Ended     Six Months Ended     Six Months Ended July 28, 2012 July 30, 2011 July 28, 2012 July 30, 2011 Yield Yield Yield Yield Amount     Annualized Amount     Annualized Amount     Annualized Amount     Annualized (unaudited)     (in millions)     Rate       (in millions)     Rate       (in millions)     Rate       (in millions)     Rate EBIT $1439.7%(c) $ 189 12.2 % (c)$2849.5%(c) $ 402 12.7 % (c) LIBOR(a)0.2% 0.2 % 0.2% 0.2 % Spread to LIBOR(b)     $140     9.5%(c)     $ 186     12.0 % (c)     $277     9.3%(c)     $ 395     12.5 % (c)   (a) Balance-weighted one-month LIBOR. (b) Spread to LIBOR is a metric used to analyze the performance of our total credit card portfolio because the majority of our portfolio earns finance charge revenue at rates tied to the Prime Rate, and the interest rate on all nonrecourse debt collateralized by credit card receivables is tied to LIBOR. (c) As an annualized percentage of average gross credit card receivables.   Receivables Rollforward Analysis     Three Months Ended         Six Months Ended     July 28,     July 30, July 28,     July 30, (millions) (unaudited)     2012     2011     Change       2012     2011     Change Beginning gross credit card receivables $ 5,943 $ 6,286 (5.4) % $ 6,357 $ 6,843 (7.1) % Charges at Target 1,398 1,140 22.6 2,686 2,143 25.4 Charges at third parties 1,206 1,353 (10.8) 2,345 2,603 (9.9) Payments (2,875) (2,792) 3.0 (5,935) (5,793) 2.5 Other     233     215     8.1       452     406     11.3 Period-end gross credit card receivables     $ 5,905     $ 6,202     (4.8) %     $ 5,905     $ 6,202     (4.8) % Average gross credit card receivables     $ 5,906     $ 6,215     (5.0) %     $ 5,989     $ 6,339     (5.5) % Accounts with three or more payments (60+ days) past due as a percentage of period-end gross credit card receivables     2.6%     3.0%             2.6%     3.0%       Accounts with four or more payments (90+ days) past due as a percentage of period-end gross credit card receivables     1.7%     2.1%             1.7%     2.1%         Allowance for Doubtful Accounts Three Months Ended Six Months Ended July 28, July 30, July 28, July 30, (millions) (unaudited)     2012     2011     Change       2012     2011     Change Allowance at beginning of period $ 395 $ 565 (30.1) % $ 430 $ 690 (37.7) % Bad debt expense 43 15 186.9 95 27 248.4 Write-offs(a)(105) (142) (26.6) (232) (326) (29.3) Recoveries(a)     32     42     (23.7)       72     89     (19.4) Allowance at end of period     $ 365     $ 480     (23.8) %     $ 365     $ 480     (23.8) % As a percentage of period-end gross credit card receivables     6.2%     7.7%             6.2%     7.7%       Net write-offs as an annualized percentage of average gross credit card receivables     4.9%     6.5%             5.3%     7.5%         (a) Write-offs include the principal amount of losses (excluding accrued and unpaid finance charges), and recoveries include current period collections on previously written-off balances. These amounts combined represent net write-offs. Subject to reclassification   TARGET CORPORATION   Canadian Segment     Canadian Segment Results     Three Months Ended         Six Months Ended     July 28,     July 30, July 28,     July 30, (millions) (unaudited)     2012     2011     Change       2012     2011     Change   Sales $- $ - - % $- $ - - % Cost of sales       -         -       -         -         -       -   Gross margin - - - - - - SG&A expenses(a)       47         25       86.2         81         36       126.1   EBITDA (47) (25 ) 86.2 (81) (36 ) 126.1 Depreciation and amortization(b)       22         11       107.4         44         11       305.1   EBIT     $(69)     $ (36 )     92.5 %     $(125)     $ (47 )     167.2 %   EBITDA is earnings/(loss) before interest expense, income taxes, depreciation and amortization. EBIT is earnings/(loss) before interest expense and income taxes. (a)SG&A expenses include start-up costs consisting primarily of compensation, benefits and consulting expenses. (b)Depreciation and amortization results from depreciation of capital lease assets and leasehold interests. For the three and six months ended July 28, 2012, the lease payment obligation also gave rise to $19 million and $38 million of interest expense, respectively, compared with $10 million in each of the respective prior year periods, recorded in our consolidated statements of operations. Subject to reclassificationTARGET CORPORATION   Reconciliation of Non-GAAP Financial Measures       Three Months Ended         Six Months Ended           July 28,     July 30, July 28,     July 30,     (unaudited)     2012     2011     Change     2012     2011           Change GAAP diluted earnings per share $1.06 $ 1.03 3.4 % $2.10 $ 2.02 4.2 % Adjustments       0.06       0.04             0.13         0.04               Adjusted diluted earnings per share     $1.12     $ 1.07       4.6 %     $2.23       $ 2.06               8.0 % A detailed reconciliation is provided below.                                                 U.S. U.S.       Consolidated (millions, except per share data) (unaudited)     Retail     Credit Card     Total U.S.     Canadian     Other           GAAP Total Three Months Ended July 28, 2012 Segment profit $1,181$140$1,321$(69)$-$1,252 Other net interest expense(a)   161         19         -               181   Earnings before income taxes 1,160(88)-1,071 Provision for income taxes(b)   418         (27)       (23)     (d)       367   Net earnings $742       $(61)     $23             $704   Diluted earnings per share(c)                 $1.12       $(0.09)     $0.03             $1.06   Three Months Ended July 30, 2011 Segment profit $ 1,147 $ 171 $ 1,318 $ (36 ) $ - $ 1,282 Other net interest expense(a)   163         10         -               173   Earnings before income taxes 1,155 (46 ) - 1,109 Provision for income taxes(b)   422         (13 )       (4 )     (d)       405   Net earnings $ 733       $ (33 )     $ 4             $ 704   Diluted earnings per share(c)                 $ 1.07       $ (0.05 )     $ 0.01             $ 1.03   Six Months Ended ended July 28, 2012 Segment profit $2,380$279$2,659$(125)$-$2,534 Other net interest expense(a)   323         38         -               361   Earnings before income taxes 2,336(163)-2,173 Provision for income taxes(b)   850         (47)       (31)     (d)       772   Net earnings $1,486       $(116)     $31             $1,401   Diluted earnings per share(c)                 $2.23       $(0.17)     $0.05             $2.10   Six Months Ended ended July 30, 2011 Segment profit $ 2,209 $ 365 $ 2,574 $ (47 ) $ - $ 2,527 Other net interest expense(a)   327         10         -               337   Earnings before income taxes 2,247 (57 ) - 2,190 Provision for income taxes(b)   822         (16 )       (9 )     (d)       797   Net earnings $ 1,425       $ (41 )     $ 9             $ 1,393   Diluted earnings per share(c)                 $ 2.06       $ (0.06 )     $ 0.01             $ 2.02     Note: Our segment measure of profit is used by management to evaluate the return on our investment and to make operating decisions. To provide additional transparency, we have disclosed non-GAAP adjusted diluted earnings per share, which excludes the impact of our planned 2013 Canadian market entry and favorable resolutions of various income tax matters. We believe this information is useful in providing period-to-period comparisons of the results of our U.S. operations. The sum of the non-GAAP adjustments may not equal the total adjustment amounts due to rounding. (a)Represents interest expense, net of interest income, not included in U.S. Credit Card segment profit. For the three and six months ended July 28, 2012, U.S. Credit Card segment profit included $3 million and $5 million of interest expense on nonrecourse debt collateralized by credit card receivables, compared with $18 million and $37 million in the respective prior year periods. These amounts, along with other net interest expense, equal consolidated GAAP net interest expense. (b)Taxes are allocated to our business segments based on estimated income tax rates applicable to the operations of the segment for the period. (c)For the three and six months ended July 28, 2012, average diluted shares outstanding were 662.9 million and 667.6 million, respectively, and for the three and six months ended July 30, 2011, average diluted shares outstanding were 685.1 million and 691.2 million, respectively. (d)Represents the effect of the resolution of income tax matters. Subject to reclassificationTarget CorporationJohn Hulbert, Investors, 612-761-6627orAmy Reilly, Financial Media, 612-761-6782orTarget Media Hotline, 612-696-3400