|
|
Minnesota
|
|
41-0215170
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
1000 Nicollet Mall, Minneapolis, Minnesota
|
|
55403
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
|
|
|
||
|
|
|
|
||
|
Consolidated Statements of Operations
|
|
|
|
||||
|
Three Months Ended
|
||||||
(millions, except per share data) (unaudited)
|
May 2,
2015 |
|
|
May 3,
2014 |
|
||
Sales
|
$
|
17,119
|
|
|
$
|
16,657
|
|
Cost of sales
|
11,911
|
|
|
11,748
|
|
||
Selling, general and administrative expenses
|
3,514
|
|
|
3,376
|
|
||
Depreciation and amortization
|
540
|
|
|
511
|
|
||
Earnings from continuing operations before interest expense and income taxes
|
1,154
|
|
|
1,022
|
|
||
Net interest expense
|
155
|
|
|
152
|
|
||
Earnings from continuing operations before income taxes
|
999
|
|
|
870
|
|
||
Provision for income taxes
|
348
|
|
|
299
|
|
||
Net earnings from continuing operations
|
651
|
|
|
571
|
|
||
Discontinued operations, net of tax
|
(16
|
)
|
|
(153
|
)
|
||
Net earnings
|
$
|
635
|
|
|
$
|
418
|
|
Basic earnings per share
|
|
|
|
||||
Continuing operations
|
$
|
1.02
|
|
|
$
|
0.90
|
|
Discontinued operations
|
(0.03
|
)
|
|
(0.24
|
)
|
||
Net earnings per share
|
$
|
0.99
|
|
|
$
|
0.66
|
|
Diluted earnings per share
|
|
|
|
||||
Continuing operations
|
$
|
1.01
|
|
|
$
|
0.89
|
|
Discontinued operations
|
(0.03
|
)
|
|
(0.24
|
)
|
||
Net earnings per share
|
$
|
0.98
|
|
|
$
|
0.66
|
|
Weighted average common shares outstanding
|
|
|
|
||||
Basic
|
640.9
|
|
|
633.3
|
|
||
Dilutive impact of share-based awards
|
5.5
|
|
|
4.9
|
|
||
Diluted
|
646.4
|
|
|
638.2
|
|
||
Antidilutive shares
|
—
|
|
|
5.3
|
|
Consolidated Statements of Comprehensive Income
|
|
||||||
|
Three Months Ended
|
||||||
(millions) (unaudited)
|
May 2,
2015 |
|
|
May 3,
2014 |
|
||
Net earnings
|
$
|
635
|
|
|
$
|
418
|
|
Other comprehensive income, net of tax
|
|
|
|
|
|
||
Pension and other benefit liabilities, net of taxes of $71 and $4
|
109
|
|
|
7
|
|
||
Currency translation adjustment and cash flow hedges, net of taxes of $0 and $1
|
—
|
|
|
62
|
|
||
Other comprehensive income
|
109
|
|
|
69
|
|
||
Comprehensive income
|
$
|
744
|
|
|
$
|
487
|
|
Consolidated Statements of Financial Position
|
|
|
|
|
|
|
|
|
|||
(millions)
|
May 2,
2015 |
|
|
January 31,
2015 |
|
|
May 3,
2014 |
|
|||
Assets
|
(unaudited)
|
|
|
|
|
|
(unaudited)
|
|
|||
Cash and cash equivalents, including short term investments of $2,073, $1,520 and $3
|
$
|
2,768
|
|
|
$
|
2,210
|
|
|
$
|
677
|
|
Inventory
|
8,610
|
|
|
8,790
|
|
|
7,905
|
|
|||
Assets of discontinued operations
|
148
|
|
|
1,333
|
|
|
718
|
|
|||
Other current assets
|
1,672
|
|
|
1,754
|
|
|
1,723
|
|
|||
Total current assets
|
13,198
|
|
|
14,087
|
|
|
11,023
|
|
|||
Property and equipment
|
|
|
|
|
|
|
|
|
|||
Land
|
6,135
|
|
|
6,127
|
|
|
6,146
|
|
|||
Buildings and improvements
|
26,636
|
|
|
26,614
|
|
|
25,991
|
|
|||
Fixtures and equipment
|
5,011
|
|
|
5,346
|
|
|
4,909
|
|
|||
Computer hardware and software
|
2,395
|
|
|
2,553
|
|
|
2,138
|
|
|||
Construction-in-progress
|
576
|
|
|
424
|
|
|
906
|
|
|||
Accumulated depreciation
|
(14,975
|
)
|
|
(15,106
|
)
|
|
(13,756
|
)
|
|||
Property and equipment, net
|
25,778
|
|
|
25,958
|
|
|
26,334
|
|
|||
Noncurrent assets of discontinued operations
|
458
|
|
|
442
|
|
|
5,605
|
|
|||
Other noncurrent assets
|
1,012
|
|
|
917
|
|
|
1,080
|
|
|||
Total assets
|
$
|
40,446
|
|
|
$
|
41,404
|
|
|
$
|
44,042
|
|
Liabilities and shareholders’ investment
|
|
|
|
|
|
|
|
|
|||
Accounts payable
|
$
|
6,799
|
|
|
$
|
7,759
|
|
|
$
|
6,519
|
|
Accrued and other current liabilities
|
3,673
|
|
|
3,783
|
|
|
3,626
|
|
|||
Current portion of long-term debt and other borrowings
|
112
|
|
|
91
|
|
|
1,466
|
|
|||
Liabilities of discontinued operations
|
64
|
|
|
103
|
|
|
429
|
|
|||
Total current liabilities
|
10,648
|
|
|
11,736
|
|
|
12,040
|
|
|||
Long-term debt and other borrowings
|
12,654
|
|
|
12,705
|
|
|
11,391
|
|
|||
Deferred income taxes
|
1,359
|
|
|
1,321
|
|
|
1,300
|
|
|||
Noncurrent liabilities of discontinued operations
|
207
|
|
|
193
|
|
|
1,321
|
|
|||
Other noncurrent liabilities
|
1,404
|
|
|
1,452
|
|
|
1,504
|
|
|||
Total noncurrent liabilities
|
15,624
|
|
|
15,671
|
|
|
15,516
|
|
|||
Shareholders’ investment
|
|
|
|
|
|
|
|
|
|||
Common stock
|
53
|
|
|
53
|
|
|
53
|
|
|||
Additional paid-in capital
|
5,170
|
|
|
4,899
|
|
|
4,512
|
|
|||
Retained earnings
|
9,441
|
|
|
9,644
|
|
|
12,743
|
|
|||
Accumulated other comprehensive loss
|
|
|
|
|
|
|
|
|
|||
Pension and other benefit liabilities
|
(452
|
)
|
|
(561
|
)
|
|
(415
|
)
|
|||
Currency translation adjustment and cash flow hedges
|
(38
|
)
|
|
(38
|
)
|
|
(407
|
)
|
|||
Total shareholders’ investment
|
14,174
|
|
|
13,997
|
|
|
16,486
|
|
|||
Total liabilities and shareholders’ investment
|
$
|
40,446
|
|
|
$
|
41,404
|
|
|
$
|
44,042
|
|
Consolidated Statements of Cash Flows
|
|
|
|
||||
|
Three Months Ended
|
||||||
(millions) (unaudited)
|
May 2,
2015 |
|
|
May 3,
2014 |
|
||
Operating activities
|
|
|
|
|
|
||
Net earnings
|
$
|
635
|
|
|
$
|
418
|
|
Losses from discontinued operations, net of tax
|
(16
|
)
|
|
(153
|
)
|
||
Net earnings from continuing operations
|
651
|
|
|
571
|
|
||
Adjustments to reconcile net earnings to cash provided by operations:
|
|
|
|
|
|
||
Depreciation and amortization
|
540
|
|
|
511
|
|
||
Share-based compensation expense
|
26
|
|
|
20
|
|
||
Deferred income taxes
|
18
|
|
|
(37
|
)
|
||
Noncash (gains)/losses and other, net
|
(70
|
)
|
|
(13
|
)
|
||
Changes in operating accounts:
|
|
|
|
|
|||
Inventory
|
180
|
|
|
372
|
|
||
Other assets
|
138
|
|
|
127
|
|
||
Accounts payable and accrued liabilities
|
(766
|
)
|
|
(736
|
)
|
||
Cash provided by operating activities—continuing operations
|
717
|
|
|
815
|
|
||
Cash provided by/ (required for) operating activities—discontinued operations
|
834
|
|
|
(295
|
)
|
||
Cash provided by operations
|
1,551
|
|
|
520
|
|
||
Investing activities
|
|
|
|
|
|
||
Expenditures for property and equipment
|
(352
|
)
|
|
(471
|
)
|
||
Proceeds from disposal of property and equipment
|
6
|
|
|
5
|
|
||
Other investments
|
21
|
|
|
18
|
|
||
Cash required for investing activities—continuing operations
|
(325
|
)
|
|
(448
|
)
|
||
Cash provided by/ (required for) investing activities—discontinued operations
|
19
|
|
|
(90
|
)
|
||
Cash required for investing activities
|
(306
|
)
|
|
(538
|
)
|
||
Financing activities
|
|
|
|
|
|
||
Change in commercial paper, net
|
—
|
|
|
306
|
|
||
Reductions of long-term debt
|
(14
|
)
|
|
(31
|
)
|
||
Dividends paid
|
(333
|
)
|
|
(272
|
)
|
||
Repurchase of stock
|
(477
|
)
|
|
—
|
|
||
Prepayment of accelerated share repurchase
|
(120
|
)
|
|
—
|
|
||
Stock option exercises and related tax benefit
|
257
|
|
|
26
|
|
||
Cash (required for)/ provided by financing activities
|
(687
|
)
|
|
29
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
9
|
|
||
Net increase in cash and cash equivalents
|
558
|
|
|
20
|
|
||
Cash and cash equivalents at beginning of period
(a)
|
2,210
|
|
|
695
|
|
||
Cash and cash equivalents at end of period
(b)
|
$
|
2,768
|
|
|
$
|
715
|
|
Assets and Liabilities of Discontinued Operations
(millions)
|
|||||||||||
|
May 2,
2015 |
|
January 31,
2015 |
|
|
|
May 3,
2014 |
|
|||
Income tax benefit
|
$
|
264
|
|
$
|
1,430
|
|
|
Inventory
|
$
|
544
|
|
Receivables from Canada Subsidiaries
|
342
|
|
326
|
|
|
Property and equipment, net
|
5,025
|
|
|||
Receivables under the debtor-in-possession credit facility
|
—
|
|
19
|
|
|
Other
|
754
|
|
|||
Total assets
|
$
|
606
|
|
$
|
1,775
|
|
|
Total assets
|
$
|
6,323
|
|
|
|
|
|
Capital lease obligations
|
$
|
1,233
|
|
||||
Accrued liabilities
|
$
|
271
|
|
$
|
296
|
|
|
Accounts payable and other liabilities
|
517
|
|
|
Total liabilities
|
$
|
271
|
|
$
|
296
|
|
|
Total liabilities
|
$
|
1,750
|
|
Restructuring-Related Liabilities
(millions)
|
Severance
|
|
Pension and Other
|
|
Total
|
|
|||
Restructuring liability as of January 31, 2015
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Charges during period
|
99
|
|
4
|
|
103
|
|
|||
Paid or otherwise settled
|
(28
|
)
|
(4
|
)
|
(32
|
)
|
|||
Restructuring liability as of May 2, 2015
|
$
|
71
|
|
$
|
—
|
|
$
|
71
|
|
Fair Value Measurements - Recurring Basis
|
|
Fair Value at
|
||||||||||
(millions)
|
Pricing Category
|
May 2,
2015 |
|
|
January 31,
2015 |
|
|
May 3,
2014 |
|
|||
Assets
|
|
|
|
|
|
|
|
|
|
|||
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|||
Short-term investments
|
Level 1
|
$
|
2,073
|
|
|
$
|
1,520
|
|
|
$
|
3
|
|
Other current assets
|
|
|
|
|
|
|
|
|
|
|||
Interest rate swaps
(a)
|
Level 2
|
—
|
|
|
—
|
|
|
1
|
|
|||
Prepaid forward contracts
|
Level 1
|
35
|
|
|
38
|
|
|
80
|
|
|||
Beneficial interest asset
|
Level 3
|
35
|
|
|
43
|
|
|
62
|
|
|||
Other noncurrent assets
|
|
|
|
|
|
|
|
|
|
|||
Interest rate swaps
(a)
|
Level 2
|
46
|
|
|
65
|
|
|
56
|
|
|||
Company-owned life insurance investments
(b)
|
Level 2
|
332
|
|
|
322
|
|
|
313
|
|
|||
Beneficial interest asset
|
Level 3
|
25
|
|
|
31
|
|
|
46
|
|
|||
Liabilities
|
|
|
|
|
|
|
|
|
|
|||
Other noncurrent liabilities
|
|
|
|
|
|
|
|
|
|
|||
Interest rate swaps
(a)
|
Level 2
|
20
|
|
|
24
|
|
|
35
|
|
Significant Financial Instruments not Measured at Fair Value
(a)
(millions)
|
May 2, 2015
|
|
January 31, 2015
|
|
May 3, 2014
|
|||||||||||||||
Carrying
Amount
|
|
Fair
Value
|
|
|
Carrying
Amount
|
|
Fair
Value
|
|
|
Carrying
Amount
|
|
Fair
Value
|
|
|||||||
Debt
(b)
|
$
|
11,947
|
|
$
|
13,542
|
|
|
$
|
11,946
|
|
$
|
14,089
|
|
|
$
|
12,064
|
|
$
|
13,721
|
|
Commercial Paper
|
Three Months Ended
|
||||||
(dollars in millions)
|
May 2,
2015 |
|
|
May 3,
2014 |
|
||
Maximum daily amount outstanding during the period
|
$
|
—
|
|
|
$
|
590
|
|
Average daily amount outstanding during the period
|
—
|
|
|
279
|
|
||
Amount outstanding at period-end
|
—
|
|
|
386
|
|
||
Weighted average interest rate
|
—
|
%
|
|
0.10
|
%
|
Data Breach Balance Sheet Rollforward
(millions)
|
Liabilities
|
|
|
Insurance Receivable
|
|
||
Balance at February 1, 2014
|
$
|
61
|
|
|
$
|
44
|
|
Expenses incurred/insurance receivable recorded
(a)
|
26
|
|
|
8
|
|
||
Payments made/received
|
(35
|
)
|
|
(13
|
)
|
||
Balance at May 3, 2014
|
52
|
|
|
39
|
|
||
Expenses incurred/insurance receivable recorded
(a)
|
165
|
|
|
38
|
|
||
Payments made/received
|
(46
|
)
|
|
(17
|
)
|
||
Balance at January 31, 2015
|
171
|
|
|
60
|
|
||
Expenses incurred/insurance receivable recorded
(a)
|
3
|
|
|
—
|
|
||
Payments made/received
|
(7
|
)
|
|
(5
|
)
|
||
Balance at May 2, 2015
|
167
|
|
|
55
|
|
Share Repurchases (excluding ASR)
|
Three Months Ended
|
|||||
(millions, except per share data)
|
May 2,
2015
(a)
|
|
May 3,
2014 |
|
||
Total number of shares purchased
|
3.7
|
|
—
|
|
||
Average price paid per share
|
$
|
80.85
|
|
$
|
—
|
|
Total investment
|
$
|
300
|
|
$
|
—
|
|
Net Pension and Postretirement
Health Care Benefits Expense
|
Pension Benefits
|
|
Postretirement Health Care Benefits
|
||||||||||||
|
Three Months Ended
|
|
Three Months Ended
|
||||||||||||
(millions)
|
May 2,
2015 |
|
|
May 3,
2014 |
|
|
May 2,
2015 |
|
|
May 3,
2014 |
|
||||
Service cost
|
$
|
28
|
|
|
$
|
28
|
|
|
$
|
1
|
|
|
$
|
1
|
|
Interest cost
|
38
|
|
|
38
|
|
|
—
|
|
|
1
|
|
||||
Expected return on assets
|
(65
|
)
|
|
(58
|
)
|
|
—
|
|
|
—
|
|
||||
Amortization of losses
|
23
|
|
|
16
|
|
|
1
|
|
|
1
|
|
||||
Amortization of prior service cost
|
(3
|
)
|
|
(3
|
)
|
|
(4
|
)
|
|
(4
|
)
|
||||
Settlement charges
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
23
|
|
|
$
|
21
|
|
|
$
|
(2
|
)
|
|
$
|
(1
|
)
|
Prepaid Forward Contracts on Target Common Stock
(millions, except per share data)
|
Number of Shares
|
|
Contractual Price Paid per Share
|
|
Contractual Fair Value
|
|
Total Cash Investment
|
|
|||
May 2, 2015
|
0.4
|
|
$
|
41.13
|
|
$
|
35
|
|
$
|
18
|
|
January 31, 2015
|
0.5
|
|
$
|
41.11
|
|
$
|
38
|
|
$
|
21
|
|
May 3, 2014
|
1.3
|
|
$
|
48.81
|
|
$
|
80
|
|
$
|
63
|
|
(millions)
|
Cash Flow
Hedges
|
|
|
Currency
Translation
Adjustment
|
|
|
Pension and
Other
Benefits
|
|
|
Total
|
|
||||
February 1, 2014
|
$
|
(25
|
)
|
|
$
|
(444
|
)
|
|
$
|
(422
|
)
|
|
$
|
(891
|
)
|
Other comprehensive income before reclassifications
|
—
|
|
|
61
|
|
|
—
|
|
|
61
|
|
||||
Amounts reclassified from AOCI
|
1
|
|
(a)
|
—
|
|
|
7
|
|
(b)
|
8
|
|
||||
May 3, 2014
|
$
|
(24
|
)
|
|
$
|
(383
|
)
|
|
$
|
(415
|
)
|
|
$
|
(822
|
)
|
January 31, 2015
|
$
|
(22
|
)
|
|
$
|
(16
|
)
|
|
$
|
(561
|
)
|
|
$
|
(599
|
)
|
Other comprehensive (loss)/income before reclassifications
|
—
|
|
|
(1
|
)
|
|
99
|
|
|
98
|
|
||||
Amounts reclassified from AOCI
|
1
|
|
(a)
|
—
|
|
|
10
|
|
(b)
|
11
|
|
||||
May 2, 2015
|
$
|
(21
|
)
|
|
$
|
(17
|
)
|
|
$
|
(452
|
)
|
|
$
|
(490
|
)
|
Business Segment Results
|
Three Months Ended
|
||||||
(millions)
|
May 2,
2015 |
|
|
May 3,
2014 |
|
||
Sales
|
$
|
17,119
|
|
|
$
|
16,657
|
|
Cost of sales
|
11,911
|
|
|
11,748
|
|
||
Gross margin
|
5,208
|
|
|
4,909
|
|
||
Selling, general and administrative expenses
(a)(e)
|
3,407
|
|
|
3,345
|
|
||
Depreciation and amortization
|
540
|
|
|
511
|
|
||
Segment profit
|
$
|
1,261
|
|
|
$
|
1,053
|
|
Restructuring costs
(b)(e)
|
(103
|
)
|
|
—
|
|
||
Data Breach related costs
(c)(e)
|
(3
|
)
|
|
(18
|
)
|
||
Card brand conversion costs
(d)(e)
|
—
|
|
|
(13
|
)
|
||
Earnings from continuing operations before interest expense and income taxes
|
1,154
|
|
|
1,022
|
|
||
Net interest expense
|
155
|
|
|
152
|
|
||
Earnings from continuing operations before income taxes
|
$
|
999
|
|
|
$
|
870
|
|
Reconciliation of Segment Assets to Total Assets
(millions)
|
May 2,
2015 |
|
|
January 31,
2015 |
|
|
May 3,
2014 |
|
|||
Segment assets
|
$
|
39,785
|
|
|
$
|
39,569
|
|
|
$
|
37,680
|
|
Assets of discontinued operations
|
606
|
|
|
1,775
|
|
|
6,323
|
|
|||
Unallocated assets
(a)
|
55
|
|
|
60
|
|
|
39
|
|
|||
Total assets
|
$
|
40,446
|
|
|
$
|
41,404
|
|
|
$
|
44,042
|
|
•
|
GAAP earnings per share were
$0.98
, including dilution of
$(0.03)
related to discontinued operations.
|
•
|
Adjusted earnings per share from continuing operations were
$1.10
.
|
•
|
First quarter comparable sales grew
2.3
percent, driven by growth in both transactions and basket size.
|
•
|
Digital channel sales increased by 37.8 percent, contributing 0.8 percentage points to comparable sales growth.
|
•
|
We returned cash through share repurchase for the first time since the second quarter of 2013, with purchases of $562 million in shares of common stock in the first quarter. Including dividends, we returned $895 million to shareholders in the first quarter, more than 140% of net income.
|
Earnings Per Share from Continuing Operations
|
Three Months Ended
|
|
|
|
||||||
|
May 2,
2015 |
|
|
May 3,
2014 |
|
|
Change
|
|
||
GAAP diluted earnings per share
|
$
|
1.01
|
|
|
$
|
0.89
|
|
|
12.6
|
%
|
Adjustments
|
0.10
|
|
|
0.03
|
|
|
|
|||
Adjusted diluted earnings per share
|
$
|
1.10
|
|
|
$
|
0.92
|
|
|
19.6
|
%
|
|
Three Months Ended
|
|
|
|
||||||
(dollars in millions)
|
May 2,
2015 |
|
|
May 3,
2014 |
|
|
Percent
Change
|
|
||
Sales
|
$
|
17,119
|
|
|
$
|
16,657
|
|
|
2.8
|
%
|
Cost of sales
|
11,911
|
|
|
11,748
|
|
|
1.4
|
|
||
Gross margin
|
5,208
|
|
|
4,909
|
|
|
6.1
|
|
||
SG&A expenses
(a)
|
3,407
|
|
|
3,345
|
|
|
1.9
|
|
||
EBITDA
|
1,801
|
|
|
1,564
|
|
|
15.1
|
|
||
Depreciation and amortization
|
540
|
|
|
511
|
|
|
5.5
|
|
||
EBIT
|
$
|
1,261
|
|
|
$
|
1,053
|
|
|
19.7
|
%
|
Rate Analysis
|
Three Months Ended
|
||||
|
May 2,
2015 |
|
|
May 3,
2014
|
|
Gross margin rate
|
30.4
|
%
|
|
29.5
|
%
|
SG&A expense rate
|
19.9
|
|
|
20.1
|
|
EBITDA margin rate
|
10.5
|
|
|
9.4
|
|
Depreciation and amortization expense rate
|
3.2
|
|
|
3.1
|
|
EBIT margin rate
|
7.4
|
|
|
6.3
|
|
Sales by Channel
|
Three Months Ended
|
||||
|
May 2,
2015 |
|
|
May 3,
2014 |
|
Stores
|
97.2
|
%
|
|
97.9
|
%
|
Digital
|
2.8
|
|
|
2.1
|
|
Total
|
100
|
%
|
|
100
|
%
|
Comparable Sales
|
Three Months Ended
|
||||
|
May 2,
2015 |
|
|
May 3,
2014 |
|
Comparable sales change
|
2.3
|
%
|
|
(0.3
|
)%
|
Drivers of change in comparable sales
|
|
|
|
|
|
Number of transactions
|
0.9
|
|
|
(2.3
|
)
|
Average transaction amount
|
1.4
|
|
|
2.1
|
|
Selling price per unit
|
5.1
|
|
|
1.8
|
|
Units per transaction
|
(3.6
|
)
|
|
0.3
|
|
Contribution to Comparable Sales Change
|
Three Months Ended
|
||||
|
May 2,
2015 |
|
|
May 3,
2014 |
|
Stores channel comparable sales change
|
1.5
|
%
|
|
(0.7
|
)%
|
Digital channel contribution to comparable sales change
|
0.8
|
|
|
0.5
|
|
Total comparable sales change
|
2.3
|
%
|
|
(0.3
|
)%
|
REDcard Penetration
|
Three Months Ended
|
||||
|
May 2,
2015 |
|
|
May 3,
2014 |
|
Target Debit Card
|
12.0
|
%
|
|
11.3
|
%
|
Target Credit Cards
|
9.4
|
|
|
9.1
|
|
Total REDcard Penetration
|
21.5
|
%
|
|
20.4
|
%
|
Change in Number of Stores
|
Three Months Ended
|
||||
|
May 2,
2015 |
|
|
May 3,
2014 |
|
Beginning store count
|
1,790
|
|
|
1,793
|
|
Opened
|
5
|
|
|
4
|
|
Closed
|
—
|
|
|
(8
|
)
|
Ending store count
|
1,795
|
|
|
1,789
|
|
Number of stores remodeled during the period
|
—
|
|
|
13
|
|
Number of Stores and Retail Square Feet
|
Number of Stores
|
|
Retail Square Feet
(a)
|
||||||||||||||
May 2,
2015 |
|
|
January 31,
2015 |
|
|
May 3,
2014 |
|
|
May 2,
2015 |
|
|
January 31,
2015 |
|
|
May 3,
2014 |
|
|
Expanded food assortment stores
|
1,295
|
|
|
1,292
|
|
|
1,261
|
|
|
167,437
|
|
|
167,026
|
|
|
162,954
|
|
SuperTarget stores
|
249
|
|
|
249
|
|
|
249
|
|
|
44,151
|
|
|
44,151
|
|
|
44,152
|
|
General merchandise stores
|
240
|
|
|
240
|
|
|
271
|
|
|
27,945
|
|
|
27,945
|
|
|
31,618
|
|
CityTarget stores
|
8
|
|
|
8
|
|
|
8
|
|
|
820
|
|
|
820
|
|
|
820
|
|
TargetExpress stores
|
3
|
|
|
1
|
|
|
—
|
|
|
61
|
|
|
21
|
|
|
—
|
|
Total
|
1,795
|
|
|
1,790
|
|
|
1,789
|
|
|
240,414
|
|
|
239,963
|
|
|
239,544
|
|
Adjusted EPS
|
|
Three Months Ended
|
||||||||||||||||||||||
|
|
May 2, 2015
|
|
May 3, 2014
|
||||||||||||||||||||
(millions, except per share data)
|
|
Pretax
|
|
|
Net of Tax
|
|
|
Per Share Amounts
|
|
|
Pretax
|
|
|
Net of Tax
|
|
|
Per Share Amounts
|
|
||||||
GAAP diluted earnings per share from continuing operations
|
|
|
|
|
|
$
|
1.01
|
|
|
|
|
|
|
$
|
0.89
|
|
||||||||
Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Restructuring costs
(a)
|
|
$
|
103
|
|
|
$
|
64
|
|
|
$
|
0.10
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Data Breach-related costs
(b)
|
|
3
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
18
|
|
|
11
|
|
|
0.02
|
|
||||
Card brand conversion costs
(c)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
8
|
|
|
0.01
|
|
||||||
Resolution of income tax matters
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
||||||
Adjusted diluted earnings per share from continuing operations
|
|
|
|
|
|
$
|
1.10
|
|
|
|
|
|
|
$
|
0.92
|
|
After-Tax Return on Invested Capital
|
|
|
||||||||||
|
|
|
|
|
||||||||
Numerator
|
|
Trailing Twelve Months
|
|
|
||||||||
(dollars in millions) (unaudited)
|
|
May 2,
2015 |
|
|
May 3,
2014 |
|
|
|
||||
Earnings from continuing operations before interest expense and income taxes
|
|
$
|
4,667
|
|
|
$
|
4,579
|
|
|
|
||
+ Operating lease interest
(a)(b)
|
|
90
|
|
|
95
|
|
|
|
||||
Adjusted earnings from continuing operations before interest expense and income taxes
|
|
4,756
|
|
|
4,674
|
|
|
|
||||
- Income taxes
(c)
|
|
1,575
|
|
|
1,604
|
|
|
|
||||
Net operating profit after taxes
|
|
$
|
3,181
|
|
|
$
|
3,070
|
|
|
|
Denominator
(dollars in millions) (unaudited)
|
|
May 2,
2015 |
|
|
May 3,
2014 |
|
|
May 4,
2013 |
|
|||
Current portion of long-term debt and other borrowings
|
|
$
|
112
|
|
|
$
|
1,466
|
|
|
$
|
522
|
|
+ Noncurrent portion of long-term debt
|
|
12,654
|
|
|
11,391
|
|
|
12,389
|
|
|||
+ Shareholders' equity
|
|
14,174
|
|
|
16,486
|
|
|
16,520
|
|
|||
+ Capitalized operating lease obligations
(b)(d)
|
|
1,495
|
|
|
1,587
|
|
|
1,668
|
|
|||
- Cash and cash equivalents
|
|
2,768
|
|
|
677
|
|
|
1,798
|
|
|||
- Net assets of discontinued operations
|
|
335
|
|
|
4,573
|
|
|
3,412
|
|
|||
Invested capital
|
|
$
|
25,332
|
|
|
$
|
25,680
|
|
|
$
|
25,890
|
|
Average invested capital
(e)
|
|
$
|
25,506
|
|
|
$
|
25,785
|
|
|
|
After-tax return on invested capital
|
|
12.5
|
%
|
|
11.9
|
%
|
|
|
Reconciliation of Capitalized Operating Leases
|
|
Trailing Twelve Months
|
||||||||||||
(dollars in millions) (unaudited)
|
|
May 2,
2015 |
|
|
May 3,
2014 |
|
|
May 4,
2013 |
|
|||||
Total rent expense
|
|
$
|
187
|
|
|
$
|
199
|
|
|
$
|
209
|
|
||
Capitalized operating lease obligations (Total rent expense x 8)
|
|
1,495
|
|
|
1,587
|
|
|
1,668
|
|
|||||
Operating lease interest (Capitalized operating lease obligations x 6%)
|
|
90
|
|
|
95
|
|
|
n/a
|
|
Credit Ratings
|
Moody’s
|
Standard and Poor’s
|
Fitch
|
Long-term debt
|
A2
|
A
|
A-
|
Commercial paper
|
P-1
|
A-1
|
F2
|
Period
|
Total Number
of Shares
Purchased
(a)
|
|
|
Average
Price
Paid per
Share
(a)
|
|
|
Total Number of
Shares Purchased
as Part of the
Current Program
(a)
|
|
|
Dollar Value of
Shares that May
Yet Be Purchased
Under the Program
|
|
|
|
February 1, 2015 through February 28, 2015
|
|
|
|
|
|
|
|
|
|||||
Open market and privately negotiated purchases
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
1,862,860,655
|
|
|
March 1, 2015 through April 4, 2015
|
|
|
|
|
|
|
|
|
|||||
Open market and privately negotiated purchases
|
1,824,328
|
|
|
78.56
|
|
|
1,824,328
|
|
|
1,719,534,509
|
|
|
|
April 5, 2015 through May 2, 2015
|
|
|
|
|
|
|
|
|
|||||
Open market and privately negotiated purchases
|
1,886,191
|
|
|
83.06
|
|
|
1,886,191
|
|
|
1,562,859,653
|
|
|
|
April 2015 ASR
(b)
|
2,200,000
|
|
|
TBD
|
|
|
2,200,000
|
|
|
1,262,859,653
|
|
|
|
Total
|
5,910,519
|
|
|
TBD
|
|
|
5,910,519
|
|
|
$
|
1,262,859,653
|
|
(b)
|
|
|
TARGET CORPORATION
|
||
|
|
||
|
|
||
Dated: May 28, 2015
|
By:
|
/s/ John J. Mulligan
|
|
|
|
John J. Mulligan
|
|
|
|
Executive Vice President,
|
|
|
|
Chief Financial Officer and
|
|
|
|
Chief Accounting Officer
|
|
|
|
(Duly Authorized Officer and
|
|
|
|
Principal Financial Officer)
|
|
|
|
|
|
Exhibit
|
|
Description
|
|
Manner of Filing
|
|
|
|
|
|
(3)A
|
|
Amended and Restated Articles of Incorporation (as amended through June 9, 2010)
|
|
Incorporated by Reference
|
|
|
|
|
|
(3)B
|
|
By-Laws (as amended through September 9, 2009)
|
|
Incorporated by Reference
|
|
|
|
|
|
(10)II
|
|
First Amendment dated February 24, 2015 to Credit Card Program Agreement among Target Corporation, Target Enterprise, Inc. and TD Bank USA, N.A.
|
|
Filed Electronically
|
|
|
|
|
|
(12)
|
|
Statements of Computations of Ratios of Earnings to Fixed Charges
|
|
Filed Electronically
|
|
|
|
|
|
(31)A
|
|
Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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Filed Electronically
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(31)B
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Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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Filed Electronically
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(32)A
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Certification of the Chief Executive Officer As Adopted Pursuant to 18 U.S.C. Section 1350 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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Filed Electronically
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(32)B
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Certification of the Chief Financial Officer As Adopted Pursuant to 18 U.S.C. Section 1350 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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Filed Electronically
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101.INS
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XBRL Instance Document
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Filed Electronically
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101.SCH
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XBRL Taxonomy Extension Schema
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Filed Electronically
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase
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Filed Electronically
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase
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Filed Electronically
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101.LAB
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XBRL Taxonomy Extension Label Linkbase
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Filed Electronically
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase
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Filed Electronically
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1.1.
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Commencing March 13, 2015, Bank shall pay to Company [*] dollars ($[*]) (the "
Program Extension Payment
") per Reference Year during the Term of the Agreement. Bank shall pay the Program Extension Payment to Company in immediately available funds as directed by Company within 5 business days of the start of each Reference Year.
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2.1.
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The Program Managers shall meet at their discretion, but at least once annually, to propose and discuss investments in the Program to grow Alternative Risk Adjusted Revenues, enhance the Cardholder experience or otherwise improve the Program (the "
Agreed Initiatives
"). Bank shall make available, in the aggregate, up to [*] dollars ($[*]) (the "
Annual Program Enhancement Amount
") per Reference Year for reimbursement of Company's and Bank's documented out-of-pocket expenses for Agreed Initiatives. Neither party shall be entitled to any reimbursement from the Annual Program Enhancement Amount to the extent such out-of-pocket expenses have not been agreed in writing by each of the Program Managers of Bank and Company.
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2.2.
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To the extent that the Program Managers cannot mutually agree on spending of the Annual Program Enhancement Amount and/or less than the entire Annual Program Enhancement Amount has been spent in a Reference Year, any funds remaining in the Annual Program Enhancement Amount for such Reference Year shall be retained by Bank and shall not, for greater certainty, be carried over into another Reference Year. In no event shall Company and Bank collectively be entitled under this provision to reimbursement with respect to Agreed Initiatives of more than the Annual Program Enhancement Amount in any Reference Year regardless of the actual amount of out-of-
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2.3.
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Each party shall provide the other with reasonable evidence regarding the expenditure of the mutually agreed out-of-pocket expenses supporting the Agreed Initiatives. Bank shall reimburse Company for expenses incurred by Company for the Agreed Initiatives within forty-five (45) days' receipt of the reasonable evidence, subject to the terms above.
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3.1.
|
Section 2.8(a) of the Agreement is amended by deleting (iv) in its entirety and replacing it with "(iv) [*] as a Company Matter during the Term, [*]." The parties hereby acknowledge that as of the First Amendment Effective Date, Company has already exercised its First Selection by selecting MasterCard to replace Visa as the Network for the Program.
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3.2.
|
Section 2.8(c) of the Agreement is amended by deleting "a single BIN" and replacing it with "one or more BINs".
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3.3.
|
Schedule 3.7(a) of the Agreement is amended by deleting [*].
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3.4.
|
Section 4.1(a)(xii) of the Agreement is amended by deleting "material".
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3.5.
|
Section 14.1 is amended by deleting "seven (7)" and replacing with "twelve (12)".
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3.6.
|
Section 14.2(b) is amended by including ", or a corporate reorganization or restructuring involving a holding company above the ultimate parent, provided that the shareholders of such parent are substantially the same immediately prior to the transaction and immediately after the transaction," immediately following "restructuring".
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3.7.
|
Section 17.11 is amended by including “Each of the parties to this Agreement may specify a different address or email address by giving notice in accordance with this Section 17.11 to each of the other parties.”
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4.1.
|
All provisions of the Agreement which are not modified by this Amendment shall remain in full force and effect as set forth in the Agreement. In the event of any inconsistencies between the terms of the Agreement and this Amendment, the provisions of this Amendment shall prevail.
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4.2.
|
This Amendment shall be deemed as an integral part of the Agreement.
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4.3.
|
Capitalized terms not otherwise defined in this Amendment shall have the meaning given to them in the Agreement.
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4.4.
|
Sections 17.3 (Assignment), 17.6 (Amendment), 17.7 (Non-Waiver), 17.8 (Severability), 17.9 (Governing Law), 17.11 (Notices), 17.12 (Further Assurances), 17.13 (No Joint Venture), 17.14 (Press Releases), 17.16 (Third Parties), 17.19 (Binding Effect; Effectiveness) and 17.20 (Counterparts/Facsimiles/PDF E-Mails) of the Agreement shall apply,
mutatis mutandis
, to this Amendment as if they were fully set
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Ratio of Earnings to Fixed Charges
|
Three Months Ended
|
|
Fiscal Year Ended
|
|||||||||||||||||||
(dollars in millions)
|
May 2,
2015 |
|
May 3,
2014 |
|
|
Jan 31,
2015 |
|
Feb 1,
2014 |
|
Feb 2,
2013 |
|
Jan 28,
2012 |
|
Jan 29,
2011 |
|
|||||||
Earnings from continuing operations before income taxes
|
$
|
1,154
|
|
$
|
1,022
|
|
|
$
|
3,653
|
|
$
|
4,121
|
|
$
|
5,056
|
|
$
|
4,621
|
|
$
|
4,495
|
|
Capitalized interest, net
|
3
|
|
(4
|
)
|
|
(1
|
)
|
(14
|
)
|
(12
|
)
|
6
|
|
2
|
|
|||||||
Adjusted earnings from continuing operations before income taxes
|
1,157
|
|
1,018
|
|
|
3,652
|
|
4,107
|
|
5,044
|
|
4,627
|
|
4,497
|
|
|||||||
Fixed charges:
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest expense
(a)
|
157
|
|
160
|
|
|
619
|
|
641
|
|
721
|
|
750
|
|
776
|
|
|||||||
Interest portion of rental expense
|
27
|
|
28
|
|
|
108
|
|
108
|
|
106
|
|
110
|
|
110
|
|
|||||||
Total fixed charges
|
184
|
|
188
|
|
|
727
|
|
749
|
|
827
|
|
860
|
|
886
|
|
|||||||
Earnings from continuing operations before income taxes and fixed charges
|
$
|
1,341
|
|
$
|
1,206
|
|
|
$
|
4,379
|
|
$
|
4,856
|
|
$
|
5,871
|
|
$
|
5,487
|
|
$
|
5,383
|
|
Ratio of earnings to fixed charges
|
7.29
|
|
6.41
|
|
|
6.02
|
|
6.48
|
|
7.10
|
|
6.38
|
|
6.08
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Target Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: May 28, 2015
|
|
/s/ Brian C. Cornell
|
Brian C. Cornell
|
Chairman and Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Target Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date: May 28, 2015
|
|
/s/ John J. Mulligan
|
John J. Mulligan
|
Executive Vice President and Chief Financial Officer
|
1.
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: May 28, 2015
|
|
/s/ Brian C. Cornell
|
Brian C. Cornell
|
Chairman and Chief Executive Officer
|
1.
|
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date: May 28, 2015
|
|
/s/ John J. Mulligan
|
John J. Mulligan
|
Executive Vice President and Chief Financial Officer
|