TARGET'S STRATEGIC AND FINANCIAL PLANNING

Target's Strategic and Financial Planning

Target's Strategic and Financial Planning

Question 1

The identified strategic initiative in Target`s annual report as per Year-end inventory levels increased $474 million, or 7.1 percent from 2008, primarily due to unusually low inventory levels at the end of 2008 in response to the challenging economic environment. Inventory levels were also higher to support traffic-driving strategic initiatives, such as food and pharmacy, in addition to comparatively higher retail square footage. Accounts payable increased by $174 million, or 2.7 percent over the same period. During 2009, we repurchased 9.9 million shares of our common stock for a total cash investment of $479 million ($48.54 per share) under a $10 billion share repurchase plan authorized by our Board of Directors in November 2007. In 2008, we repurchased 67.2 million shares of our common stock for a total cash investment of $3,395 million ($50.49 per share). Company paid dividends totaling $496 million in 2009 and $465 million in 2008, an increase of 6.7 percent. They declared dividends totaling $503 million ($0.67 per share) in 2009, an increase of 6.8 percent over 2008. In 2008, we declared dividends totaling $471 million ($0.62 per share), an increase of 3.8 percent over 2007. They have paid dividends every quarter since our first dividend was declared following our 1967 initial public offering, and it is our intent to continue to do so in the future.

Question 2

Company`s financing strategy is to ensure liquidity and access to capital markets, to manage their net exposure to floating interest rate volatility, and to maintain a balanced spectrum of debt maturities. Within these parameters, they seek to minimize their borrowing costs.

At January 30, 2010 and January 31, 2009, there were no amounts outstanding under their commercial paper program. In past years, they funded their peak sales season working capital needs through their commercial paper program and then used the cash generated from that sales season to repay the commercial paper issued. In 2009 they funded their working capital needs through internally generated funds. Additionally, during 2008 sold to JPMorgan Chase an interest in their credit card receivables for approximately $3.8 billion. Company received proceeds of approximately $3.6 billion, reflecting a 7 percent discount.

An additional source of liquidity is available to company through a committed $2 billion unsecured revolving credit facility obtained through a group of banks in April 2007, which will expire in April 2012. No balances were outstanding at any time during 2009 or 2008 under this facility. Most of their long-term debt obligations contain covenants related to secured debt levels. In addition to a secured debt level covenant, their credit facility also contains a debt leverage covenant. Company is, and expects to remain, in compliance with these covenants.

Additionally, at January 30, 2010, no notes or debentures contained provisions requiring acceleration of payment upon a debt rating downgrade, except that certain outstanding notes allow the note holders to put the notes to them if within a matter of months of each ...