Target Corporation Fourth Quarter Earnings Per Share $1.29

Target Corporation (NYSE:TGT) today reported net earnings of $1.119 billion for the fourth quarter ended February 3, 2007, a 14-week period, compared with $939 million in the fourth quarter ended January 28, 2006, a 13-week period. Earnings per share in the fourth quarter 2007 increased 21.7 percent to $1.29 per share from $1.06 per share in the same period a year ago. All earnings per share figures refer to diluted earnings per share. For the full fiscal year 2006, a 53-week period, net earnings were $2.787 billion, compared with $2.408 billion in fiscal 2005, a 52-week period. Earnings per share increased 18.5 percent to $3.21 per share from $2.71 per share a year ago. "We are pleased with our performance in 2006, which reflects the strength of our strategic direction and disciplined execution,” said Bob Ulrich, chairman and chief executive officer of Target Corporation. "In 2007, we remain focused on delighting our guests, creating a preferred workplace for our team members and supporting the communities in which we operate, positioning us to generate considerable profitable market share growth and superior value for our shareholders over time.” Full-Year Results For fiscal 2006, total revenues increased 13.1 percent to $59.490 billion from $52.620 billion in 2005, fueled by the contribution from new store expansion, a 4.8 percent increase in comparable store sales (based on a 52-week period in both years), the impact of one additional week and the contribution from our credit card operations. Total revenues include retail sales and net credit card revenues. Comparable-store sales are sales from stores open longer than one year. Earnings before interest expense and income taxes (EBIT) for the full year increased 17.3 percent to $5.069 billion, compared with $4.323 billion a year ago. EBIT in our core retail operations grew 11.2 percent, while the contribution of our credit card operations to total EBIT rose 51.9 percent. Within our core retail operations, gross margin rate was essentially unchanged from the prior year, while the company’s expense rate was unfavorable to the prior year. Gross margin rate represents sales less cost of sales expressed as a percentage of sales. Expense rate represents selling, general and administrative expenses expressed as a percentage of sales. Total year net interest expense increased $109 million compared with 2005, primarily due to growth in the cost of funding our credit card operations. Earnings before taxes (EBT) for the full year totaled $4.497 billion, representing an increase of $637 million, or 16.5 percent, from the same period in 2005. The contribution from the company’s credit card operations to these results was $693 million, an increase of $241 million, or 53.3 percent, from a year ago. Fourth-Quarter Results Total revenues in the fourth quarter increased 16.3 percent to $19.710 billion from $16.947 billion in 2005, driven by the extra week of sales, the contribution from new store expansion, a 4.8 percent increase in comparable store sales (based on a 13-week period in both years) and the contribution from our credit card operations. Fourth quarter 2006 EBIT increased 22.1 percent to $1.960 billion, compared with $1.606 billion in the fourth quarter a year ago. EBIT in our core retail operations grew 19.5 percent, while the contribution of our credit card operations to total EBIT rose 40.7 percent. Within our core retail operations, gross margin rate in the quarter was slightly favorable and the company’s expense rate was slightly unfavorable to the prior year. Net interest expense for the quarter increased $27 million compared with fourth quarter 2005, due to growth in the cost of funding our credit card operations and the additional week. EBT in the fourth quarter totaled $1.809 billion, representing an increase of $327 million, or 22.1 percent, from the same period in 2005. The contribution from the company’s credit card operations to these results was $187 million, an increase of $54 million, or 40.7 percent, from a year ago. Other Factors For the full year, the effective income tax rate in 2006 was 38.0 percent, compared to 37.6 percent in 2005. Under a $5 billion share repurchase program that began in 2004, the company repurchased 19.5 million shares of its common stock in 2006 at an average price of $50.16 per share, for a total investment of $977 million. Program to-date, the company has acquired 71.0 million shares of its common stock at an average price per share of $48.56, reflecting a total investment of approximately $3.45 billion. The company expects to continue to execute this program primarily in open market transactions, subject to market conditions, and expects to complete the total program by year-end 2008, or sooner. Miscellaneous Target Corporation will webcast its fourth quarter and year end earnings conference call at 9:00am CST 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 + Calendar”, then "webcasts”). A telephone replay of the call will be available beginning at approximately 11:00am CST today through the end of business on Thursday March 1, 2007. The replay number is (800) 642-1687 (passcode: 7387445). Forward-looking statements in this release should be read in conjunction with the cautionary statements in Exhibit (99)C to the company’s 2005 Form 10-K. Target Corporation’s operations include large, general merchandise and food discount stores and a fully integrated on-line business through which we offer a fun and convenient shopping experience with thousands of highly differentiated and affordably priced items. The company gives back more than $3 million each week to its local communities through grants and special programs. The company currently operates 1,487 Target stores in 47 states. Target Corporation news releases are available at www.target.com.   CONSOLIDATED RESULTS OF OPERATIONS   Fourteen Thirteen Fifty-Three Fifty-Two Weeks Ended   Weeks Ended     Weeks Ended   Weeks Ended     (Millions, except per share data) Feb. 3, Jan. 28, % Feb. 3, Jan. 28, % (Unaudited) 2007 2006 Change 2007 2006 Change   Sales $ 19,269  $ 16,570  16.3  % $ 57,878  $ 51,271  12.9  % Net credit card revenues 441  377  17.0  1,612  1,349  19.5    Total revenues 19,710  16,947  16.3  59,490  52,620  13.1    Cost of sales 13,349  11,509  16.0  39,399  34,927  12.8  Selling, general and administrative expenses 3,804  3,254  16.9  12,819  11,185  14.6  Credit card expenses 195  209  (6.6) 707  776  (8.9) Depreciation and amortization 402  369  9.0  1,496  1,409  6.1    Earnings before interest expense and income taxes 1,960  1,606  22.1  5,069  4,323  17.3    Net interest expense 151  124  21.5  572  463  23.4    Earnings before income taxes 1,809  1,482  22.1  4,497  3,860  16.5    Provision for income taxes 690  543  27.2  1,710  1,452  17.8    Net earnings $ 1,119  $ 939  19.2  % $ 2,787  $ 2,408  15.8  %     Basic earnings per share: $ 1.30  $ 1.07  21.7  % $ 3.23  $ 2.73  18.5  %   Diluted earnings per share: $ 1.29  $ 1.06  21.7  % $ 3.21  $ 2.71  18.5  %   Weighted average common shares outstanding: Basic 858.5  876.6  861.9  882.0  Diluted 865.4  883.5  868.6  889.2    CONSOLIDATED STATEMENTS OF FINANCIAL POSITION   SUBJECT TO RECLASSIFICATION (Millions) Feb. 3, Jan. 28, (Unaudited) 2007 2006   ASSETS Cash and cash equivalents $ 813  $ 1,648  Accounts receivable, net 6,194  5,666  Inventory 6,254  5,838  Other current assets 1,445  1,253  Total current assets 14,706  14,405    Property and equipment, net 21,431  19,038  Other non-current assets 1,212  1,552  Total assets $ 37,349  $ 34,995    LIABILITIES AND SHAREHOLDERS' INVESTMENT Accounts payable $ 6,575  $ 6,268  Current portion of long-term debt and notes payable 1,362  753  Other current liabilities 3,180  2,567  Total current liabilities 11,117  9,588    Long-term debt 8,675  9,119  Deferred income taxes 577  851  Other non-current liabilities 1,347  1,232  Shareholders' investment 15,633  14,205  Total liabilities and shareholders' investment $ 37,349  $ 34,995    Common shares outstanding 859.8  874.1    CONSOLIDATED STATEMENTS OF CASH FLOWS   Fifty-Three Fifty-Two SUBJECT TO RECLASSIFICATION Weeks Ended   Weeks Ended (Millions) Feb. 3, Jan. 28, (Unaudited) 2007 2006   OPERATING ACTIVITIES Net earnings $ 2,787  $ 2,408    Reconciliation to cash flow: Depreciation and amortization 1,496  1,409  Share-based compensation expense 99  93  Deferred income taxes (201) (122) Bad debt provision 380  466  Loss on disposal of property and equipment, net 53  70  Other non-cash items affecting earnings (35) (50) Changes in operating accounts providing/(requiring) cash: Accounts receivable originated at Target (226) (244) Inventory (431) (454) Other current assets (30) (28) Other non-current assets 5  (24) Accounts payable 435  489  Accrued liabilities 389  351  Income taxes payable 41  70  Other non-current liabilities 100  2  Other -  15  Cash flow provided by operations 4,862  4,451    INVESTING ACTIVITIES Expenditures for property and equipment (3,928) (3,388) Proceeds from disposal of property and equipment 62  58  Change in accounts receivable originated at third parties (683) (819) Other investment (144) -  Cash flow required for investing activities (4,693) (4,149)   FINANCING ACTIVITIES Additions to long-term debt 1,256  913  Reductions of long-term debt (1,155) (527) Dividends paid (380) (318) Repurchase of stock (901) (1,197) Stock option exercises and related tax benefit 181  231  Other (5) (1) Cash flow required for financing activities (1,004) (899)   Net decrease in cash and cash equivalents (835) (597)   Cash and cash equivalents at beginning of period 1,648  2,245      Cash and cash equivalents at end of period $ 813  $ 1,648    NUMBER OF STORES, RETAIL SQUARE FEET and COMPARABLE-STORE SALES Retail square feet in thousands; reflects total square feet less office, distribution center and vacant space.   Number of Stores Retail Square Feet Feb. 3, Jan. 28, Feb. 3, Jan. 28, (Unaudited) 2007 2006 2007 2006 Change Target General Merchandise Stores 1,311  1,239  160,806  150,318  7.0% SuperTarget Stores 177  158  31,258  27,942  11.9% Total 1,488  1,397  192,064  178,260  7.7%   Thirteen Weeks Ended Fifty-Two Weeks Ended Jan. 27,(a) Jan. 28, Jan. 27,(a) Jan. 28, (Unaudited) 2007 2006 2007 2006 Comparable-Store Sales 4.8% 4.2% 4.8% 5.6%   (a) Comparable-store sales growth is calculated by comparing sales in current year periods against designated prior year periods of equivalent length.   CREDIT CARD CONTRIBUTION TO EBT   Fourteen Thirteen Fifty-Three Fifty-Two Weeks Ended   Weeks Ended Weeks Ended   Weeks Ended Feb. 3, Jan. 28, Feb. 3, Jan. 28, (Millions) (Unaudited) 2007 2006 2007 2006 Revenues Finance charges $ 305  $ 259  $ 1,117  $ 915  Interest expense (a) (83) (59) (286) (193) Net interest income 222  200  831  722    Late fees and other revenues 95  83  356  310  Merchant fees Intracompany 24  24  74  72  Third-party 41  35  139  124  Non-interest income 160  142  569  506    Expenses Bad debt 102  129  380  466  Operations and marketing 93  80  327  310  Total expenses 195  209  707  776    Credit card contribution to EBT $ 187  $ 133  $ 693  $ 452    As a percentage of average receivables (annualized) 10.6% 9.0% 11.0% 8.2%   Net interest margin (annualized) (b) 12.6% 13.5% 13.2% 13.0%   RECEIVABLES Period-end receivables $ 6,711  $ 6,117  Average receivables $ 6,544  $ 5,922  $ 6,161  $ 5,544  Accounts with three or more payments past due as a percentage of period-end receivables 3.5% 2.8%   ALLOWANCE FOR DOUBTFUL ACCOUNTS Allowance at beginning of period $ 514  $ 417  $ 451  $ 387  Bad debt provision 102  129  380  466  Net write-offs (99) (95) (314) (402) Allowance at end of period $ 517  $ 451  $ 517  $ 451    As a percentage of period-end receivables 7.7% 7.4% 7.7% 7.4%   Net write-offs as a percentage of average receivables (annualized) 6.1% 6.5% 5.1% 7.2%   (a) Represents an allocation of consolidated interest expense based on estimated funding costs for average net accounts receivable and other financial services assets. Interest expense allocated to our credit card operations for the first, second, third, and fourth quarters 2005 totaled $40, $43, $50, and $59, respectively.   (b) Net interest income divided by average accounts receivable.