TARGET CORP

(TGT)

10-K
Annual report pursuant to section 13 and 15(d)
Filed on 03/15/2007
Filed Period 02/03/2007

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
(Mark One)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF

1934
For the fiscal year ended February 3, 2007
OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934
For the transition period from
to
Commission file number 1-6049

TARGET CORPORATION
(Exact name of registrant as specified in its charter)
Minnesota
(State or other jurisdiction of
incorporation or organization)

41-0215170
(I.R.S. Employer
Identification No.)

1000 Nicollet Mall, Minneapolis, Minnesota

55403
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: 612/304-6073
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class

Name of Each Exchange on Which Registered

Common Stock, par value $.0833 per share

New York Stock Exchange
Preferred Share Purchase Rights
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No o
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No
Note Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their
obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or
any amendment to this Form 10-K.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the Act).
Large accelerated filer

Accelerated filer o

Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes o No
Aggregate market value of the voting stock held by non-affiliates of the registrant on July 29, 2006 was $39,796,702,943.82, based on the closing price of
$46.46 per share of Common Stock as reported on the New York Stock Exchange-Composite Index.
Indicate the number of shares outstanding of each of registrant's classes of Common Stock, as of the latest practicable date. Total shares of Common Stock,
par value $.0833, outstanding at March 14, 2007 were 858,580,232.
DOCUMENTS INCORPORATED BY REFERENCE
1.

Portions of Target's Proxy Statement to be filed on or about April 9, 2007 are incorporated into Part III.

(This page has been left blank intentionally.)

TARGET

FISCAL

2007

FORM

10-K

TABLE OF CONTENTS
PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
Item 4A.

Business.
Risk Factors.
Unresolved Staff Comments.
Properties.
Legal Proceedings.
Submission of Matters to a Vote of Security Holders.
Executive Officers.

4
6
6
6
7
7
8

Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities.
Selected Financial Data.
Management's Discussion and Analysis of Financial Condition and Results of Operations.
Quantitative and Qualitative Disclosures About Market Risk.
Financial Statements and Supplementary Data.
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
Controls and Procedures.
Other Information.

11
11
21
22
48
48
48

PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.

Directors, Executive Officers and Corporate Governance.

Executive Compensation.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Certain Relationships and Related Transactions, and Director Independence.
Principal Accountant Fees and Services.

49
49
49
49
49

PART IV
Item 15.

Exhibits and Financial Statement Schedules.

50

PART II
Item 5.

Signatures
Schedule II Valuation and Qualifying Accounts
Exhibit Index
Exhibit 12 Computations of Ratios of Earnings to Fixed Charges for each of the Five Years in the Period Ended February 3,
2007
Shareholder Information

52
53
54
55
55

PART I
Item 1.

Business.

General
Target Corporation (the Corporation or Target) was incorporated in Minnesota in 1902. We operate large-format general merchandise and food discount
stores in the United States, which include Target and SuperTarget stores. We offer both everyday essentials and fashionable, differentiated merchandise at
exceptional prices. Our ability to deliver a shopping experience that is preferred by our guests is supported by our strong supply chain and technology
network, a devotion to innovation that is ingrained in our organization and culture, and our disciplined approach to managing our current business and
investing in future growth. We operate as a single business segment.
Our credit card operations represent an integral component of our core retail business. Through our branded proprietary credit card products (REDcard),
we strengthen the bond with our guests, drive incremental sales and contribute meaningfully to earnings. We also operate a fully integrated on-line business,
Target.com. Although Target.com is small relative to our overall size, its sales are growing at a much more rapid annual pace than our other sales, and it
provides important benefits to our stores and credit card operations.
We are committed to consistently delighting our guests, providing a workplace that is preferred by our team members and investing in the communities
where we do business to improve the quality of life. We believe that this unwavering focus, combined with disciplined execution of the fundamentals of our
strategy, will enable us to continue generating profitable market share growth and delivering superior shareholder value for many years to come.
Financial Highlights
Our fiscal year ends on the Saturday nearest January 31. Unless otherwise stated, references to years in this report relate to fiscal years, rather than to
calendar years. Fiscal year 2006 (2006) ended February 3, 2007 and consisted of 53 weeks. Fiscal year 2005 (2005) ended January 28, 2006 and fiscal year
2004 (2004) ended January 29, 2005, and both consisted of 52 weeks.
For information on key financial highlights for 2006 (along with other years), see the items referenced in Item 6, Selected Financial Data, and Item 7,
Management's Discussion and Analysis of Financial Condition and Results of Operations, of this Form 10-K.
Seasonality
Due to the seasonal nature of our business, a substantially larger share of total annual revenues and earnings occur in the fourth quarter because it
includes the peak sales period from Thanksgiving to the end of December.
Merchandise
We operate Target general merchandise stores with a wide assortment of general merchandise and a more limited assortment of food items, as well as
SuperTarget stores with a full line of food and general merchandise items. Target.com offers a wide assortment of general merchandise including many items
found in our stores and a complementary assortment, such as extended sizes and colors, sold only on-line. A significant portion of our sales is from national
brand merchandise. In addition, we sell merchandise under private-label brands including, but not limited to, Archer Farms, Choxie, Circo, Embark,
Gilligan & O'Malley, Kool Toyz, Market Pantry, Merona, ProSpirit, Room Essentials, Target Limited Edition, Trutech and Xhilaration. We also
sell merchandise through unique programs such as ClearRxSM, Global Bazaar and Go International. In addition, we also sell merchandise under licensed
brands including, but not limited to, C9 by Champion, ChefMate, Cherokee, Eddie Bauer, Fieldcrest, Isaac Mizrahi for Target, Kitchen Essentials by
Calphalon, Liz Lange for Target, Michael Graves Design, Mossimo, Nick and Nora, Genuine Kids by Osh Kosh, Sean Conway, Smith & Hawken, Simply
Shabby Chic, Sonia Kashuk, Thomas O'Brien, Waverly, and Woolrich. We also generate revenue from in-store amenities such as Food Avenue, Target
ClinicSM, Target PharmacySM, and Target PhotoSM, and from leased or licensed departments such as Optical, Pizza Hut, Portrait Studio and Starbucks.
For 2006 and 2005, percentage of sales by product category were as follows:
Percentage of Sales
Category
Consumables and commodities
Electronics, entertainment, sporting goods and toys
Apparel and accessories
Home furnishings and dcor
Other
Total
Distribution

2006

2005

32%
23%
22%
19%
4%
100%

30%
23%
22%
20%
5%
100%

The vast majority of our merchandise is distributed through a network of 25 regional distribution centers and four import warehouses. General
merchandise is shipped to and from our distribution centers by common carriers. Certain food items are distributed by third parties. Merchandise sold through
Target.com is either distributed through our own distribution network, through third parties, or shipped directly from vendors.
Employees
At February 3, 2007, we employed approximately 352,000 full-time, part-time and seasonal employees, referred to as "team members." We consider our
team member relations to be good. We offer a broad range of company-paid benefits to our team members, including a pension plan, 401(k) plan, medical and

dental plans, a retiree medical plan, short-term and long-term disability insurance, paid vacation, tuition reimbursement, various team member assistance
programs, life insurance and merchandise discounts. Eligibility for and the level of these benefits varies depending on team members' full-time or part-time
status and/or length of service.
Working Capital
Because of the seasonal nature of our business, our working capital needs are greater in the months leading up to our peak sales period from
Thanksgiving to the end of December each year. The increase in working capital during this time is typically financed with cash flow from operations and
short-term borrowings. See further description in the Liquidity and Capital Resources section in Item 7, Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Competition
Our business is conducted under highly-competitive conditions. Our stores compete with national and local department, specialty, off-price, discount,
supermarket and drug store chains, independent retail stores and Internet businesses that sell similar lines of merchandise. We also compete with other
companies for new store sites.
We believe the principal methods of competing in this industry include brand recognition, customer service, store location, differentiated offerings,
value, quality, fashion, price, advertising, depth of selection and credit availability. We believe that we have a competitive advantage with regard to these
factors. Additionally, we are a leader in supporting the communities where we do business.
Intellectual Property
Our brand image is a critical element of our business strategy. Our principal trademarks, including Target, SuperTarget and our "bullseye" design, have
been registered with the U.S. Patent and Trademark Office.
Geographic Information
Substantially all of our revenues are generated in, and long-lived assets are located in, the United States.
Available Information
Our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished
pursuant to Section 13(a) or 15(d) of the Exchange Act are available free of charge at www.Target.com (click on "Investors" and "SEC Filings") as soon as
reasonably practicable after we file such material with, or furnish it to, the Securities and Exchange Commission (SEC). Our Corporate Governance
Guidelines, Business Conduct Guide, Corporate Responsibility Report and the position descriptions for our Board of Directors and Board committees are also
available free of charge in print upon request or at www.Target.com (click on "Investors" and "Corporate Governance").

Item 1A.

Risk Factors.

A description of risk factors and cautionary statements relating to forward-looking information is included in Exhibit (99)A to this Form 10-K, which is
incorporated herein by reference.

Item 1B.

Unresolved Staff Comments.

Not Applicable.

Item 2.

Properties.

The following table lists our retail stores as of February 3, 2007:

State
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois

Number of Stores

Retail Sq. Ft.

(in thousands)

13

41
6
209
36
14
2
102
47

6
79

1,919

5,081
745
26,391
5,265
1,834
268
13,532
6,222

664
10,589

State
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania

Number of Stores

Retail Sq. Ft.

(in thousands)

7
12
15
8
36
9
55
44
4
56
11
18
41

767
1,581
1,863
1,023
4,666
1,011
7,323
5,716
554
6,836
1,536
2,166
5,220

Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri

32
21
18
12
12
4
31
26
56
66
4
31

4,207
2,855
2,450
1,383
1,726
503
3,935
3,284
6,466
8,997
489
4,068

Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Total

3
17
4
26
130
11

42
32
5
32
2

378
2,097
417
3,210
17,392
1,679

5,498
3,714
626
3,731
187

1,488

192,064

The following table summarizes the number of owned or leased stores and distribution centers at February 3, 2007:

Stores

Distribution
Centers

Owned
Leased
Combined (a)

1,260
71
157

25
1
3

Total

1,488

29 (b)

(a)

Properties within the "combined" category are primarily owned buildings on leased land.

(b)

The 29 distribution centers have a total of 41,460 thousand square feet.

We own our corporate headquarters buildings located in Minneapolis, Minnesota, and we lease and own additional office space elsewhere in the United
States. Our international merchandise sourcing operations headquartered in New York, New York, have 39 office locations in 27 countries, all of which are
leased. We also lease office space in Bangalore, India, where we operate various support functions.
For additional information on our properties see also: Capital Expenditures section in Item 7, Management's Discussion and Analysis of Financial
Condition and Results of Operations; Note 13 and Note 22 of the Notes to Consolidated Financial Statements in Item 8, Financial Statements and
Supplementary Data.

Item 3.

Legal Proceedings.

SEC Rule S-K Item 103 requires that companies disclose environmental legal proceedings involving a governmental authority when such proceedings
involve potential monetary sanctions of $100,000 or more. We are a party to two administrative actions by governmental authorities involving environmental
matters, each of which may involve potential monetary sanctions in excess of $100,000. The allegations, both made by the California Environmental
Protection Agency Air Resources Board, each involve a non-food product we formerly sold that contained levels of a volatile organic compound in excess of
permissible levels. The first allegation was made in March 2006, and we expect the sanctions for this matter will not exceed $200,000. The second allegation
was made in April 2006, and we expect the sanctions for this matter will not exceed $500,000, for which the vendor is indemnifying Target. We previously
reported an allegation made by the United States Environmental Protection Agency in September 2005 that a product we formerly sold contained a prohibited
substance. This matter was settled in January 2007 with a payment of $120,000. For description of other legal proceedings see Note 18.
The American Jobs Creation Act of 2004 requires SEC registrants to disclose if they have been required to pay certain penalties for failing to disclose to
the Internal Revenue Service their participation in listed transactions. We have not been required to pay any of the penalties set forth in Section 6707A(e)(2)
of the Internal Revenue Code.

Item 4.

Submission of Matters to a Vote of Security Holders.

Not Applicable.

Item 4A.

Executive Officers.

The executive officers of Target as of March 14, 2007 and their positions and ages, are as follows:
Name

Title

Timothy R. Baer
Michael R. Francis

Executive Vice President, General Counsel and Corporate Secretary

Executive Vice President, Marketing

Age
46
44

John D. Griffith
Executive Vice President, Property Development
45
Jodeen A. Kozlak
Executive Vice President, Human Resources
43
Troy H. Risch
Executive Vice President, Stores
39
Janet M. Schalk
Executive Vice President and Chief Information Officer
48
Douglas A. Scovanner
Executive Vice President and Chief Financial Officer
51
Terrence J. Scully
President, Target Financial Services
54
Gregg W. Steinhafel
President and Director
52
Robert J. Ulrich
Chairman of the Board, Chief Executive Officer, Chairman of the Executive Committee and Director
63
Each officer is elected by and serves at the pleasure of the Board of Directors. There is neither a family relationship between any of the officers named
and any other executive officer or member of the Board of Directors, nor is there any arrangement or understanding pursuant to which any person was
selected as an officer. The period of service of each officer in the positions listed and other business experience for the past five years is listed below.
Timothy R. Baer

Executive Vice President, General Counsel and Corporate Secretary since March 2007. Senior Vice President,
General Counsel and Corporate Secretary from June 2004 to March 2007. Senior Vice President from April 2004 to
May 2004. Vice President from February 2002 to March 2004.

Michael R. Francis

Executive Vice President, Marketing since February 2003. Senior Vice President, Marketing from January 2001 to
February 2003.

John D. Griffith

Executive Vice President, Property Development since February 2005. Senior Vice President, Property Development
from February 2000 to January 2005.

Jodeen A. Kozlak

Executive Vice President, Human Resources since March 2007. Senior Vice President, Human Resources from
February 2006 to March 2007. Vice President, Human Resources and Employee Relations General Counsel from
November 2005 to February 2006. From June 2001 to November 2005 Ms. Kozlak held several positions in
Employee Relations at Target.

Troy H. Risch

Executive Vice President, Stores since September 2006. Group Vice President from September 2005 to
September 2006. Group Director from February 2002 to September 2005.

Janet M. Schalk

Executive Vice President and Chief Information Officer since March 2007. Senior Vice President and Chief
Information Officer from September 2005 to March 2007. Vice President, Application Development from
November 2004 to September 2005. Director, Target Technology Services from July 1997 to November 2004.

Douglas A. Scovanner

Executive Vice President and Chief Financial Officer since February 2000.

Terrence J. Scully

President, Target Financial Services since March 2003. Vice President, Target Financial Services, from April 1998
to February 2003.

Gregg W. Steinhafel

Director since January 2007. President since August 1999.

Robert J. Ulrich

Chairman of the Board, Chief Executive Officer, Chairman of the Executive Committee and Director of Target since
1994.

PART II
Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities.
Our common stock is listed on The New York Stock Exchange under the symbol "TGT." We are authorized to issue up to 6,000,000,000 shares of
common stock, par value $.0833, and up to 5,000,000 shares of preferred stock, par value $.01. At March 14, 2007, there were 18,139 shareholders of record.
Dividends declared per share and the high and low closing common stock price for each fiscal quarter during 2006 and 2005 are disclosed in Note 29.
The following table presents information with respect to purchases of Target common stock made during the fourteen weeks ended February 3, 2007, by
Target or any "affiliated purchaser" of Target, as defined in Rule 10b-18(a)(3) under the Exchange Act.

Total Number
of Shares
Purchased(b)(c)

Average
Price Paid
per Share(b)

Total Number of
Shares Purchased
as Part of
Publicly Announced
Program(a)(b)(c)

140,000

231,569
371,569

$41.75

53.02
$48.77

70,813,275
70,813,275
71,044,844
71,044,844

Approximate
Dollar Value of
Shares that May
Yet Be Purchased
Under the Program(a)
$1,562,564,371
1,562,564,371
1,550,285,850
$1,550,285,850

Period
October 29, 2006 through November 25, 2006
November 26, 2006 through December 30, 2006
December 31, 2006 through February 3, 2007
Total

(a)

In June 2004, our Board of Directors authorized the repurchase of $3 billion of our common stock. In November 2005, our Board increased the aggregate authorization by $2 billion,
for a total authorization of $5 billion. We expect to continue to execute this share repurchase program primarily in open market transactions, subject to market conditions. We expect
to complete the total program by fiscal year-end 2008 or sooner. Since the inception of this share repurchase program, we have repurchased a total of 71.0 million shares of our
common stock for a total cash investment of $3,450 million ($48.56 per share).

(b)

In addition to shares purchased under our share repurchase program, we acquire shares of common stock held by team members who wish to tender owned shares to satisfy the
exercise price on stock option exercises or tax withholding on equity awards as part of our long-term incentive plans. From October 29, 2006 through February 3, 2007, 1,683 shares
were acquired at an average price of $59.41 pursuant to our long-term incentive plans.

(c)

Includes shares reacquired upon settlement of prepaid forward contracts. In 2006, 1.6 million shares were reacquired through these contracts. The details of our long positions in
prepaid forward contracts is provided in Note 27.

Comparision of Cumulative Five Year Total Return

Fiscal Years Ended

February 2,
2002

February 1,
2003

January 31,
2004

January 29,
2005

January 28,
2006

February 3,
2007

Target
$100.00
$65.49
$88.76
$119.49
$129.74
$148.22
S&P 500 Index
100.00
77.54
104.34
110.84
122.35
141.09
Peer Group
100.00
73.98
97.26
105.61
108.82
123.01
The graph above compares the cumulative total shareholder return on our common stock for the last five fiscal years with the cumulative total return on
the S&P 500 Index and a peer group consisting of the companies comprising the S&P 500 Retailing Index and the S&P 500 Food and Staples Retailing Index
(Peer Group) over the same period. The Peer Group index consists of 38 general merchandise, food and drug retailers and is weighted by the market
capitalization of each component company. The graph assumes the investment of $100 in Target common stock, the S&P 500 Index and the Peer Group on
February 2, 2002 and reinvestment of all dividends.

Item 6.

Selected Financial Data.

2006(a)

Financial Results: (in millions)

Total revenues
Earnings from continuing operations
Per Share:
Basic earnings per share

2005

2004

2003

2002

2001

$59,490
$2,787

$52,620
$2,408

$46,839
$1,885

$42,025
$1,619

$37,410
$1,376

$33,021
$1,101

$3.23

$2.73

$2.09

$1.78

$1.52

$1.22

Diluted earnings per share

Cash dividends declared
Financial Position: (in millions)
Total assets
Long-term debt, including current portion
(a)

$3.21
$.460

$2.71
$.380

$2.07
$.310

$1.76
$.270

$1.51
$.240

$1.21
$.225

$37,349
$10,037

$34,995
$9,872

$32,293
$9,538

$27,390
$11,018

$24,506
$11,090

$19,808
$8,957

Consisted of 53 weeks.

Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations.

Executive Summary
Fiscal 2006, a 53 week period, was a year of substantial sales and earnings growth for Target. Earnings from continuing operations increased
15.8 percent to $2,787 million, and on this same basis, diluted earnings per share rose 18.5 percent to $3.21. Sales increased 12.9 percent, including
comparable-store sales (as defined below) growth of 4.8 percent. The combination of strong performance in both our retail and credit card operations
produced earnings from continuing operations before interest expense and income taxes of $5,069 million, an increase of more than 17 percent from 2005.
Net cash provided by operating activities was $4,862 million for 2006. During 2006 we repurchased 19.5 million shares of our common stock under our
share repurchase program for a total investment of $977 million and paid dividends of $380 million. In addition, we opened 91 net new stores in 2006.
Management's Discussion and Analysis is based on our Consolidated Financial Statements in Item 8, Financial Statements and Supplementary Data.
Analysis of Continuing Operations
Revenues and Comparable-Store Sales
Sales include merchandise sales, net of expected returns, from our stores and our on-line business, as well as gift card breakage. Refer to Note 2 for a
definition of gift card breakage. Total revenues include sales and net credit card revenues. Total revenues do not include sales tax as we consider ourselves a
pass-through conduit for collecting and remitting sales taxes. Comparable-store sales are sales from general merchandise and SuperTarget stores open longer
than one year, including:

sales from stores that have been remodeled or expanded while remaining open

sales from stores that have been relocated to new buildings of the same format within the same trade area, in which the new store opens at about
the same time as the old store closes

Comparable-store sales do not include:

sales from our on-line business

sales from general merchandise stores that have been converted, or relocated within the same trade area, to a SuperTarget store format

sales from stores that were intentionally closed to be remodeled, expanded or reconstructed

Comparable-store sales increases or decreases are calculated by comparing sales in current year periods to comparable, prior fiscal-year periods of equivalent
length. The method of calculating comparable-store sales varies across the retail industry.
Revenue Growth
Comparable-store sales
Sales
Net credit card revenues
Total revenues
(a)

2006

2005

2004

4.8%
12.9%(a)
19.5%(a)
13.1%(a)

5.6%
12.2%
16.5%
12.3%

5.3%
11.6%
5.5%
11.5%

Consisted of 53 weeks.

In 2006, total revenues were $59,490 million compared to $52,620 in 2005, an increase of 13.1 percent. Total revenue growth was attributable to the
opening of new stores, a comparable-store sales increase of 4.8 percent, the addition of the 53rd week and the 19.5 percent increase in net credit card revenues.
Comparable-store sales growth in 2006 and 2005 was attributable to growth in average transaction amount and the number of transactions in comparable
stores. In each of the past several years, our comparable-store sales growth has experienced a modest negative impact due to the transfer of sales to new
stores. In 2006, there was a deflationary impact of approximately 1 percent on sales growth compared to essentially no impact of inflation/deflation in 2005
and a deflationary impact of approximately 1 percent in 2004. In 2007, a 52-week year following a 53-week year, we expect to generate a high single-digit
percent increase in revenues, reflecting contribution from new store expansion, continued growth in comparable-store sales due to increases in average
transaction amount and the number of transactions in comparable stores and growth in net credit card revenues. We do not expect inflation/deflation to have a
significant effect on sales growth in 2007.
Subsequent to year end, we changed our definition of comparable-store sales to include sales from our on-line business because we believe this combined
measure represents a more useful disclosure in light of our fully-integrated, multi-channel approach to our business.

Gross Margin Rate

Gross margin rate represents gross margin (sales less cost of sales) as a percentage of sales. See Note 3 for a description of expenses included in cost of
sales.
In 2006, our consolidated gross margin rate was 31.9 percent compared to 31.9 percent in 2005. Within our gross margin rate for the year, we
experienced an increase in markup, which was offset by an increase in markdowns. Markup is the difference between an item's cost and its retail price
(expressed as a percentage of its retail price). Factors that affect markup include vendor offerings and negotiations, vendor income, sourcing strategies, market
forces like the cost of raw materials and freight, and competitive influences. Markdowns are the reduction in the original or previous price of retail
merchandise. Factors that affect markdowns include inventory management and competitive influences. The definition and method of calculating markup,
markdowns and gross margin varies across the retail industry.
In 2005, our consolidated gross margin rate was 31.9 percent compared to 31.2 percent in 2004. This change in gross margin rate primarily reflected an
improvement in markup, including an increase in direct import penetration, as well as favorable inventory shrink performance.
We expect our consolidated gross margin rate in 2007 to be approximately equal to our 2006 gross margin rate. The factors affecting our outlook include:
our introduction of new merchandising strategies, our growth in direct imports and our ability to leverage our increasing scale, offset by the more rapid pace
of growth of lower margin categories like consumables and commodities.
Selling, General and Administrative Expense Rate
Our selling, general and administrative (SG&A) expense rate represents SG&A expenses as a percentage of sales. See Note 3 for a description of
expenses included in SG&A expenses. SG&A expenses exclude depreciation and amortization, and SG&A expenses also exclude expenses associated with
our credit card operations, which are reflected separately in our Consolidated Statements of Operations.
In 2006, our SG&A expense rate was 22.2 percent compared to 21.8 percent in 2005. This increase was primarily due to higher store payroll costs, the
year-over-year impact of reduced transition services income related to our 2004 divestiture of Mervyn's and the $27 million Visa/MasterCard settlement that
reduced SG&A expense in 2005.
In 2005, our consolidated SG&A expense rate was 21.8 percent compared to 21.4 percent in 2004. The expense rate increase was due to several factors
including the year-over-year impact of reduced transition services income related to our 2004 divestitures of Marshall Field's and Mervyn's, higher utilities
expense and the effects of stronger year-over-year performance on incentive and share-based compensation expense. Some of the expense rate increase was
also attributable to growth in marketing expenses for which the corresponding vendor income is recorded as a reduction of inventory costs because it did not
meet the criteria required for recording it as an element of SG&A expenses. The combination of all unfavorable expense items more than offset the year-overyear favorability from the $65 million lease accounting adjustment during 2004.
In 2007, we expect our SG&A expense rate to be approximately equal to our 2006 rate.
Credit Card Contribution
We offer credit to qualified guests through our REDcard products, the Target Visa and the Target Card. Our credit card program strategically supports
our core retail operations and remains an important contributor to our overall profitability. Our credit card revenues are comprised of finance charges, late fees
and other revenues. In addition, we receive fees from merchants who accept the Target Visa credit card. In 2006, our net credit card revenues primarily
increased due to an 11.1 percent increase in average receivables.
Our credit card operations are allocated a portion of consolidated interest expense based on estimated funding costs for average net accounts receivable
and other financial services assets. Our allocation methodology assumes that 90 percent of the sum of average net receivables and other financial services
assets are debt-financed with a mix of fixed rate and variable rate debt in proportion to the mix of fixed and variable rate financial services assets. Beginning
in 2005, the majority of our credit card portfolio began to earn interest at variable rates; thus, the majority of the interest allocation to the credit card business
in 2006 and 2005 is at rates that are determined based upon our approximate marginal variable rate cost of borrowed funds.
Credit card expenses include a bad debt provision, as well as operations and marketing expenses supporting our credit card portfolio. In 2006 versus
2005, our bad debt provision decreased relative to our average receivables balance due to the favorable write-off experience and continued strength of the
overall credit quality of the portfolio. Our 2006 year-end reserve balance as a percentage of average receivables increased as we reserved for the expected
increase in future write-offs. Our delinquency rates increased in the last quarter of 2006 as compared to 2005 as we cycled the effects of the October 2005
federal bankruptcy legislation and experience the effects of the mandated increases in minimum payments for certain guests. Operations and marketing
expenses increased primarily due to the growth of the Target Visa portfolio.
In 2005 versus 2004, our bad debt provision grew at a slower pace than our average receivables balance due to the aging of the portfolio and the
favorable macro-economic credit card environment. However, our total reserve balance as a percentage of average receivables increased in 2005 as we
reserved for the expected effects of the mandated increases in minimum payments for certain guests. Our net write-offs as a percentage of average receivables
and our delinquency rates continued to improve, despite a significant increase in bankruptcy filings in advance of the October 2005 effective date of the
related federal bankruptcy legislation. Operations and marketing expenses increased primarily due to the growth of the Target Visa portfolio.
In 2006, our credit card operations' contribution to earnings from continuing operations before income taxes (EBT) was $693 million, a 53.3 percent
increase from 2005. The favorability in credit card contribution was attributable to strong growth in net interest income and the year-over-year reduction in
bad debt expense.
In 2005, our credit card operations' contribution to EBT was $452 million, a 77.4 percent increase from 2004. The favorability in credit card contribution
was attributable to strong growth in net interest income. Average receivables rose 12.5 percent from 2004, which was approximately equal to our sales
growth.

We expect our 2007 credit card receivables to increase in line with 2007 sales growth, and we expect our overall credit card performance to remain
strong. In 2007, our delinquency rate is expected to remain stable in the range of our recent experience, approximately 3.5 percent to 4.0 percent of average
receivables, and we expect our net write-off experience to be closer to our 2004 and 2005 rates than our 2006 rate.
Credit Card Contribution to EBT
(millions)
Revenues
Finance charges
Interest expense

2006

2005

2004

$1,117
(286)

$915
(193)

$772
(230)

Net interest income

831

722

542

Late fees and other revenues

Merchant fees
Intracompany
Third-party

356

310

287

74
139

72
124

65
98

Non-interest income

569

506

450

Expenses
Bad debt
Operations and marketing

380
327

466
310

451
286

Total expenses

707

776

737

$693

$452

$255

11.0%
13.2%

8.2%
13.0%

5.2%
11.0%

Credit card contribution to EBT

As a percentage of average receivables
Net interest margin (a)
(a)

Net interest income divided by average accounts receivable.

Receivables
(millions)
Year-end receivables
Average receivables
Accounts with three or more payments past due as a percentage of year-end
receivables

2006

2005

2004

$6,711
$6,161

$6,117
$5,544

$5,456
$4,927

3.5%

2.8%

3.5%

Allowance for Doubtful Accounts

(millions)

2006

2005

2004

Allowance at beginning of year

Bad debt provision
Net write-offs

$451
380
(314)

$387
466
(402)

$352
451
(416)

Allowance at end of year

$517

$451

$387

As a percentage of year-end receivables

7.7%

7.4%

7.1%

Net write-offs as a percentage of average receivables

5.1%

7.2%

8.4%

We offer new account discounts and rewards programs on our REDcard products. These discounts and rewards are redeemable only on purchases made
at Target. The discounts associated with our REDcard products are included as reductions in sales in our Consolidated Statements of Operations and were
$104 million, $97 million and $80 million in 2006, 2005 and 2004, respectively.
Depreciation and Amortization
During 2006, we adjusted the period over which we amortize leasehold acquisition costs to match the expected terms for individual leases, resulting in a
cumulative benefit to depreciation and amortization expense of approximately $28 million. This change reduced depreciation and amortization expense during
2006, when depreciation and amortization expense totaled $1,496 million, compared to $1,409 million in 2005, an increase of 6.1 percent. In 2005,
depreciation and amortization expense increased 11.9 percent, in line with our sales growth for the year, to $1,409 million. We expect 2007 depreciation and
amortization expense to be approximately $1.7 billion.
Net Interest Expense

In 2006, net interest expense was $572 million compared to $463 million in 2005, an increase of 23.4 percent. This increase related primarily to growth
in the cost of funding our credit card operations and was also unfavorably impacted by the 53rd week in the current fiscal year. The average portfolio interest
rate was 6.2 percent in 2006 and 5.9 percent in 2005.
In 2005, net interest expense was $463 million, compared to $570 million in 2004. This decrease was primarily due to a significantly smaller loss on debt
repurchase in 2005 (less than $1 million in 2005 compared to $89 million in 2004). The decrease in 2005 net interest expense also reflected the benefit of
lower average net debt in the first half of the year due to the application of proceeds from the mid-2004 Marshall Field's and Mervyn's sale transactions. This
benefit was partially offset by higher average net debt balances in the second half of the year and a higher annual average portfolio interest rate. For the full
year, the average portfolio interest rate was 5.9 percent in 2005 and 5.5 percent in 2004.
Our 2007 net interest expense is expected to increase due to modestly higher average net debt. To preserve our net interest margin on our receivables, we
intend to maintain a sufficient level of floating-rate debt to generate parallel changes in net interest expense and finance charge revenue.
Provision for Income Taxes
Our effective income tax rate from continuing operations was 38.0 percent in 2006, 37.6 percent in 2005 and 37.8 percent in 2004. Our lower 2005
effective rate was due to the favorable resolution of various tax matters in 2005. We expect our effective income tax rate in 2007 to rise modestly from 2006.
Analysis of Financial Condition
Liquidity and Capital Resources
Our financial condition remains strong. In assessing our financial condition, we consider factors such as cash flow provided by operations, capital
expenditures and debt service obligations. Cash flow provided by operations was $4,862 million in 2006 compared to $4,451 million in 2005, primarily due to
higher earnings from continuing operations.
We continue to fund our growth and execute our share repurchase program through a combination of internally-generated funds and debt financing.
Our year-end gross receivables were $6,711 million compared to $6,117 million in 2005, an increase of 9.7 percent. This growth was driven by increased
issuance and usage of the Target Visa credit card by our guests during 2006. Average receivables in 2006 increased 11.1 percent. In 2007 we expect our credit
card receivables to grow in line with our 2007 sales.
Year-end inventory levels increased $416 million, or 7.1 percent, reflecting the natural increase required to support additional square footage and
comparable-store sales growth. This growth was largely funded by an increase in accounts payable over the same period.
In June 2004, our Board of Directors authorized the repurchase of $3 billion of our common stock. In November 2005, our Board increased the aggregate
authorization by $2 billion for a total authorization of $5 billion. In 2006, we repurchased 19.5 million shares of our common stock for a total investment of
$977 million ($50.16 per share), primarily through open market transactions. Since the inception of this share repurchase program, we have repurchased a
total of 71.0 million shares of our common stock for a total investment of $3,450 million ($48.56 per share). Of the shares reacquired in 2006, a portion was
delivered upon settlement of prepaid forward contracts. The details of prepaid forward contract settlements and our long positions in prepaid forward
contracts have been provided in Note 25 and Note 27. In 2005 we reacquired 23.1 million shares for a total investment of $1,197 million ($51.88 per share).
We expect to continue to execute our share repurchase program primarily in open market transactions, subject to market conditions, and to complete the total
program by year-end 2008 or sooner.
Our financing strategy is to ensure liquidity and access to capital markets, to manage our net exposure to floating interest rate volatility and to maintain a
balanced spectrum of debt maturities. Within these parameters, we seek to minimize our cost of borrowing.
In 2006 we declared dividends of $.46 per share totaling approximately $396 million, an increase of 18.6 percent over 2005. In 2005 we declared
dividends of $.38 per share totaling approximately $334 million, an increase of 19.3 percent over 2004. We 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.
Management believes that cash flows from operations, together with current levels of cash and cash equivalents, proceeds from long-term financing
activities and issuance of short-term debt will be sufficient in 2007 to fund planned capital expenditures, share repurchases, growth in receivables, maturities
of long-term debt, and other cash requirements, including our seasonal inventory buildup.
Maintaining strong investment-grade debt ratings is a key part of our strategy. Our debt ratings as of February 3, 2007 were:
Debt Ratings
Moody's

Standard and
Poor's

Fitch

Long-term debt
A1
A+
A+
Commercial paper
P-1
A-1
F1
Securitized receivables
Aaa
AAA
n/a
As described in Note 19, during 2006 we issued $750 million of long-term debt and issued $500 million of Variable Funding Certificates backed by
credit card receivables through the Target Credit Card Master Trust. As of February 3, 2007, $100 million of the Variable Funding Certificates were
outstanding. Further liquidity is provided by a committed $1.6 billion unsecured revolving credit facility obtained through a group of banks in June 2005,
which is scheduled to expire in June 2010. No balances were outstanding at any time during 2006 or 2005 under this or previously existing revolving credit
facilities. Most of our long-term debt obligations contain covenants related to secured debt levels. In addition, our credit facility contains a debt leverage
covenant. We are, and expect to remain, in compliance with these covenants. At February 3, 2007, no notes or debentures contained provisions requiring
acceleration of payment upon a debt rating downgrade.

Our interest coverage ratio represents the ratio of pre-tax earnings before fixed charges (interest expense and the interest portion of rent expense) to fixed
charges. Our interest coverage ratio calculated as prescribed by Securities and Exchange Commission (SEC) rules was 7.1x, 7.2x, and 5.4x in 2006, 2005 and
2004, respectively. The ratio in 2004 was adversely affected by losses from discretionary debt repurchase transactions and excludes historical income from
discontinued operations. Management believes adjustments for these items are necessary to make the coverage ratio a more useful and consistent indicator of
creditworthiness.
Capital Expenditures
Capital expenditures were $3,928 million in 2006 compared to $3,388 million in 2005 and $3,068 million in 2004. This increase was primarily
attributable to continued new store expansion, an increase in remodel program expenditures and growth in distribution center capital investment. Net property
and equipment increased $2,393 in 2006 following an increase of $2,178 million in 2005.
Spending for new stores, store expansions and remodels, and information systems hardware and software, distribution capacity and other infrastructure to
support store growth as a percentage of total capital expenditures are shown below for each of the last three fiscal years.
Percentage of Capital Expenditures
Capital Expenditures
2006

2005

2004

New stores
61%
60%
64%
Remodels and expansions
12%
12%
12%
Information technology, distribution and other
27%
28%
24%
Total
100%
100%
100%
In 2007, we expect to invest $4.2 billion to $4.4 billion primarily in new stores, store expansions and remodels, as well as information systems hardware
and software, distribution capacity and other infrastructure to support our planned growth. Our estimated 2007 store opening program reflects net square
footage growth of approximately 8 percent, including 115 to 120 new stores partially offset by closings and relocations. We also expect to remodel
approximately 40 to 45 stores, most of which will be expanded. In addition, we expect to open two distribution centers in 2007.
Number of Stores

Target general merchandise stores

SuperTarget stores
Total
Retail Square Feet (b)
Target general merchandise stores
SuperTarget stores
Total

Closed (a)

January 28,
2006

94
19
113

22

22

1,239
158
1,397

12,860
3,316
16,176

2,372

2,372

150,318
27,942
178,260

February 3,
2007

Opened

1,311
177
1,488
160,806
31,258
192,064

(a)

Includes 18 store relocations in the same trade area and four stores closed without replacement.

(b)

Reflects total square feet, less office, distribution center and vacant space.

Commitments and Contingencies

At February 3, 2007, our contractual obligations were as follows:
Contractual Obligations
Payments Due by Period

(millions)
Long-term debt (a)
Interest payments long-term debt (b)
Capital lease obligations
Operating leases (c)
Deferred compensation
Real estate obligations
Purchase obligations
Contractual cash obligations

Total

Less than
1 Year

1-3
Years

3-5
Years

After 5
Years

$9,897
4,165
249
3,325
691
1,106
1,613
$21,046

$1,355
547
15
142
46
1,106
483
$3,694

$2,268
899
30
266
205

605
$4,273

$2,343
625
32
235
98

290
$3,623

$3,931
2,094
172
2,682
342

235
$9,456

(a)

Required principal payments only. Excludes Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities," fair market value
adjustments recorded in long-term debt.

(b)

Includes payments on $1,750 million of floating rate long-term debt secured by credit card receivables, $750 million of which matures in 2007, $900 million of which matures in 2010,
and $100 million of which matures in 12 monthly installments beginning in October 2007. These payments are calculated assuming rates of approximately 5.5 percent, based on a
spread over presumed LIBOR of 5.35%, for each year outstanding. Excludes payments received or made related to interest rate swaps. The fair value of outstanding interest rate
swaps has been provided in Note 21.

(c)

Total contractual lease payments include $1,631 million related to certain options to extend the lease term that are reasonably assured of being exercised and also includes $188
million of legally binding minimum lease payments for stores opening in 2007 or later. Refer to Note 22 for further description of leases.

Real estate obligations include commitments for the purchase, construction or remodeling of real estate and facilities. Purchase obligations include all
legally binding contracts such as firm minimum commitments for inventory purchases, merchandise royalties, purchases of equipment, marketing-related
contracts, software acquisition/license commitments and service contracts.
We issue inventory purchase orders in the normal course of business, which represent authorizations to purchase that are cancelable by their terms. We
do not consider purchase orders to be firm inventory commitments; therefore, they are excluded from the table above. We also issue trade letters of credit in
the ordinary course of business, which are excluded from this table as these obligations are conditional on the purchase order not being cancelled. If we
choose to cancel a purchase order, we may be obligated to reimburse the vendor for unrecoverable outlays incurred prior to cancellation, under certain
circumstances.
We have not included obligations under our pension and postretirement health care benefit plans in the contractual obligations table above. Our historical
practice regarding these plans has been to contribute amounts necessary to satisfy minimum pension funding requirements plus periodic discretionary amounts
determined to be appropriate. Further information on these plans, including our expected contributions for 2007, is included in Note 28.
We have not provided any material financial guarantees as of February 3, 2007. We have not created and are not party to any off-balance sheet entities
for the purpose of raising capital, incurring debt or operating our business. We do not have any arrangements or relationships with entities that are not
consolidated into the financial statements that are reasonably likely to materially affect our liquidity or the availability of capital resources.
Analysis of Discontinued Operations
Marshall Field's and Mervyn's were divested in 2004; no financial results of discontinued operations are included for 2006 or 2005. In 2004, revenues
and earnings from discontinued operations reflected only a partial year of results and excluded the holiday season. For 2004, total revenues included in
discontinued operations were $3,095 million, and earnings from discontinued operations were $75 million, net of taxes of $46 million. In addition, we
recorded a gain on the sale of discontinued operations of $1,238 million, net of taxes of $761 million, during 2004.
Critical Accounting Estimates
Our analysis of operations and financial condition is based on our consolidated financial statements, prepared in accordance with U.S. generally accepted
accounting principles (GAAP). Preparation of these consolidated financial statements requires us to make estimates and assumptions affecting the reported
amounts of assets and liabilities at the date of the financial statements, reported amounts of revenues and expenses during the reporting period and related
disclosures of contingent assets and liabilities. In the Notes to Consolidated Financial Statements, we describe our significant accounting policies used in
preparing the consolidated financial statements. Our estimates are evaluated on an ongoing basis and are drawn from historical experience and other
assumptions that we believe to be reasonable under the circumstances. Actual results could differ under different assumptions or conditions. Our senior
management has discussed the development and selection of our critical accounting estimates with the Audit Committee of our Board of Directors. The
following items in our consolidated financial statements require significant estimation or judgment:
Inventory and cost of sales We use the retail inventory method to account for substantially all of our inventory and the related cost of sales. Under this
method, inventory is stated at cost using the last-in, first-out (LIFO) method as determined by applying a cost-to-retail ratio to each merchandise grouping's
ending retail value. Cost includes the purchase price as adjusted for vendor income. Since inventory value is adjusted regularly to reflect market conditions,
our inventory methodology reflects the lower of cost or market. We reduce inventory for estimated losses related to shrink and markdowns. Our shrink
estimate is based on historical losses verified by ongoing physical inventory counts. Markdowns designated for clearance activity are recorded when the
salability of the merchandise has diminished. Inventory is at risk of obsolescence if economic conditions change. Examples of relevant economic conditions
include shifting consumer demand, changing consumer credit markets or increasing competition. We believe these risks are largely mitigated because
substantially all of our inventory turns in less than six months. Inventory is further described in Note 11.
Vendor income receivable Cost of sales and SG&A expenses are partially offset by various forms of consideration received from our vendors. This "vendor
income" is earned for a variety of vendor-sponsored programs, such as volume rebates, markdown allowances, promotions and advertising, as well as for our
compliance programs. We establish a receivable for the vendor income that is earned but not yet received. Based on provisions of the agreements in place, this
receivable is computed by estimating the point at which we have completed our performance and the amount earned. We perform detailed analyses to
determine the appropriate level of the receivable in aggregate. The majority of all year-end receivables associated with these activities are collected within the
following fiscal quarter. See further description in Note 4.
Allowance for doubtful accounts When receivables are recorded, we recognize an allowance for doubtful accounts in an amount equal to anticipated future
write-offs. This allowance includes provisions for uncollectible finance charges and other credit fees. We estimate future write-offs based on delinquencies,
risk scores, aging trends, industry risk trends and our historical experience. Substantially all accounts continue to accrue finance charges until they are written
off. Accounts are automatically written off when they become 180 days past due. Management believes the allowance for doubtful accounts is adequate to
cover anticipated losses in our credit card accounts receivable under current conditions; however, significant deterioration in any of the factors mentioned
above or in general economic conditions could materially change these expectations. Accounts receivable is described in Note 10.
Analysis of long-lived and intangible assets for impairment We review assets at the lowest level for which there are identifiable cash flows, usually at the
store level. The carrying amount of assets is compared to the expected undiscounted future cash flows to be generated by those assets over their estimated
remaining economic lives. Impairment testing of intangibles requires a comparison between the carrying value and the fair value. Discounted cash flow
models are used in determining fair value for the purposes of the required annual impairment analysis. No material impairments were recorded in 2006, 2005
or 2004 as a result of the tests performed.
Insurance/self-insurance We retain a substantial portion of the risk related to certain general liability, workers' compensation, property loss and team
member medical and dental claims. Liabilities associated with these losses include estimates of both claims filed and losses incurred but not yet reported. We
estimate our ultimate cost based on an analysis of historical data and actuarial estimates. General liability and workers' compensation liabilities are recorded at
our estimate of their net present value; other liabilities are not discounted. We believe that the amounts accrued are adequate, although actual losses may differ
from the amounts provided. We maintain stop-loss coverage to limit the exposure related to certain risks.

Income taxes We pay income taxes based on the tax statutes, regulations and case law of the various jurisdictions in which we operate. Significant judgment
is required in determining income tax provisions and in evaluating the ultimate resolution of tax matters in dispute with tax authorities. Historically, our
assessments of the ultimate resolution of tax issues have been materially accurate. The current open tax issues are not dissimilar in size or substance from
historical items. Management believes the resolution of the foregoing matters will not have a material impact on our consolidated financial statements. Income
taxes are further described in Note 23.
Pension and postretirement health care accounting We fund and maintain a qualified defined benefit pension plan. We also maintain several smaller
nonqualified plans and a postretirement health care plan for certain retired team members. The costs for these plans are calculated based on actuarial
calculations using the assumptions described in the following paragraphs.
Our expected long-term rate of return on plan assets is determined by the composition of our asset portfolio, our historical long-term investment
performance and current market conditions.
The discount rate used to determine benefit obligations is adjusted annually based on the interest rate for long-term high-quality corporate bonds as of the
measurement date (October 31) using yields for maturities that are in line with the duration of our pension liabilities. Historically, this same discount rate has
also been used to determine pension and postretirement health care expense for the following plan year. We are currently evaluating whether we will early
adopt the measurement date provisions of SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans, an
amendment of FASB Statements No. 87, 88, 106, and 132(R)" (SFAS 158), as discussed below in the 2006 Adoptions section. In 2006, we increased our
discount rate by 0.05 percentage points from the previous year for the purpose of calculating the October 31, 2006 benefit obligation.
Based on our experience, we use a graduated compensation growth schedule that assumes higher compensation growth for younger, shorter-service
pension-eligible team members than it does for older, longer-service pension-eligible team members. In 2006, we increased the assumed rate of compensation
increase by 0.50 percentage points for the purpose of calculating the October 31, 2006 benefit obligation. In 2005, we made a 0.75 percentage point increase
in the assumed compensation rate increase, which impacted the net periodic benefit cost for 2006.
Pension and postretirement health care benefits are further described in Note 28.
New Accounting Pronouncements
2006 Adoptions
We adopted the recognition and disclosure provisions of SFAS 158 during 2006. Please refer to Note 28 (Pension and Postretirement Health Care
Benefits) for further description of this adoption. We are currently evaluating whether we will adopt the SFAS 158 measurement date provisions in 2007 or
2008, including the potential impact on our results of operations and financial position.
In September 2006, the SEC staff published Staff Accounting Bulletin No. 108, "Considering the Effects of Prior Year Misstatements when Quantifying
Misstatements in Current Year Financial Statements" (SAB 108). SAB 108 addresses quantifying the financial statement effects of misstatements,
specifically, how the effects of prior year uncorrected errors must be considered in quantifying misstatements in the current year financial statements. We
adopted SAB 108 during the fourth quarter of 2006. The adoption of this statement did not have any impact on our consolidated net earnings, cash flows or
financial position.
2007 and Future Adoptions
In July 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxesan
interpretation of FASB Statement No. 109" (FIN 48). FIN 48 prescribes the financial statement recognition and measurement criteria for tax positions taken in
a tax return, clarifies when tax benefits should be recorded and how they should be classified in financial statements, and requires certain disclosures of
uncertain tax matters. FIN 48 is effective at the beginning of fiscal 2007. We are presently evaluating the impact of the adoption of FIN 48 on our results of
operations and financial position.
In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, "Fair Value Measurement" (SFAS 157). SFAS 157 provides
a definition of fair value, provides guidance for measuring fair value in U.S. GAAP and expands disclosures about fair value measurements. SFAS 157 will be
effective at the beginning of fiscal 2008. We are presently evaluating the impact of the adoption of SFAS 157 on our results of operations and financial
position.
In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, "The Fair Value Option for Financial Assets and Financial
Liabilities" (SFAS 159). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value. SFAS 159 will be
effective at the beginning of fiscal 2008. We are presently evaluating the impact of the adoption of SFAS 159 on our results of operations and financial
position.
Forward-Looking Statements
This report, including the preceding Management's Discussion and Analysis, contains forward-looking statements regarding our performance, financial
position, liquidity and adequacy of capital resources. Forward-looking statements are typically accompanied by the words "expect," "may," "could," "believe,"
"would," "might," "anticipates," or words of similar import. The forward-looking statements in this report include the anticipated impact of new and proposed
accounting pronouncements, the expected outcome of pending and threatened litigation, our expectations with respect to our share repurchase program and
our outlook in fiscal 2007. Forward-looking statements are based on our current assumptions and expectations and are subject to certain risks and
uncertainties that could cause actual results to differ materially from those projected. We caution that the forward-looking statements are qualified by the risks
and challenges posed by increased competition (including the effects of competitor liquidation activities), shifting consumer demand, changing consumer
credit markets, changing wages, health care and other benefit costs, shifting capital markets and general economic conditions, hiring and retaining effective
team members, sourcing merchandise from domestic and international vendors, investing in new business strategies, the outbreak of war or pandemics and
other significant national and international events, and other risks and uncertainties. As a result, although we believe there is a reasonable basis for the

forward- looking statements, you should not place undue reliance on those statements. You are encouraged to review Exhibit (99)A to this Form 10-K, which
contains additional important factors that may cause actual results to differ materially from those predicted in the forward-looking statements.

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk.

Our exposure to market risk results primarily from interest rate changes on our debt obligations and on our credit card receivables, the majority of which
are now assessed finance charges at a prime-based floating rate. To preserve our net interest margin, we intend to maintain sufficient levels of floating-rate
debt to generate parallel changes in net interest expense as finance charge revenues fluctuate. At February 3, 2007, our level of floating-rate debt obligations
exceeded our level of floating-rate credit card assets by approximately $1 billion. As a result, based on our balance sheet position at February 3, 2007, the
annualized effect of a one percentage point increase in floating interest rates on our interest rate swap agreements and other floating rate debt obligations, net
of our floating rate credit card assets, would be to decrease earnings from continuing operations before income taxes by approximately $10 million. See
further description in Note 21.
We record our general liability and workers' compensation liabilities at net present value; therefore, these liabilities fluctuate with changes in interest
rates. We economically hedge a portion of our exposure to these interest rate changes by entering into interest rate forward contracts that partially mitigate the
effects of interest rate changes. As a result, we do not have significant net exposure to interest rate changes for these liabilities.
In addition, we are exposed to fluctuations of market returns on our qualified defined benefit pension and nonqualified defined contribution plans. The
annualized effect of a one percentage point decrease in the return on pension plan assets would decrease plan assets by $21 million at February 3, 2007. The
resulting impact on net pension expense would be calculated consistent with the provisions of SFAS No. 87, "Employers' Accounting for Pensions." See
further description in Note 28.
As more fully described in Note 14 and Note 27, we are exposed to market returns on accumulated team member balances in our nonqualified, unfunded
deferred compensation plans. We control our risk of offering the nonqualified plans by making investments in life insurance contracts and prepaid forward
contracts on our own common stock that offset a substantial portion of our economic exposure to the returns on these plans. The annualized effect of a one
percentage point change in market returns on our nonqualified defined contribution plans (inclusive of the effect of the investment vehicles used to manage
our economic exposure) would not be significant.
We do not have significant direct exposure to foreign currency rates as all of our stores are located in the United States and the vast majority of imported
merchandise is purchased in U.S. dollars.
Overall, there have been no material changes in our primary risk exposures or management of market risks since the prior year.

Item 8.

Financial Statements and Supplementary Data.

Report of Management on the Consolidated Financial Statements

Management is responsible for the consistency, integrity and presentation of the information in the Annual Report. The consolidated financial statements
and other information presented in this Annual Report have been prepared in accordance with accounting principles generally accepted in the United States
and include necessary judgments and estimates by management.
To fulfill our responsibility, we maintain comprehensive systems of internal control designed to provide reasonable assurance that assets are safeguarded
and transactions are executed in accordance with established procedures. The concept of reasonable assurance is based upon recognition that the cost of the
controls should not exceed the benefit derived. We believe our systems of internal control provide this reasonable assurance.
The Board of Directors exercised its oversight role with respect to the Corporation's systems of internal control primarily through its Audit Committee,
which is comprised of four independent directors. The Committee oversees the Corporation's systems of internal control, accounting practices, financial
reporting and audits to assess whether their quality, integrity and objectivity are sufficient to protect shareholders' investments.
In addition, our consolidated financial statements have been audited by Ernst & Young LLP, independent registered public accounting firm, whose report
also appears on this page.

Robert J. Ulrich
Chairman of the Board and
Chief Executive Officer
March 14, 2007

Douglas A. Scovanner
Executive Vice President and
Chief Financial Officer

Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements

The Board of Directors and Shareholders
Target Corporation

We have audited the accompanying consolidated statements of financial position of Target Corporation and subsidiaries (the Corporation) as of
February 3, 2007 and January 28, 2006, and the related consolidated statements of operations, cash flows, and shareholders' investment for each of the three
years in the period ended February 3, 2007. Our audits also included the financial statement schedule listed in Item 15(a). These financial statements and
schedule are the responsibility of the Corporation's management. Our responsibility is to express an opinion on these financial statements and schedule based
on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Target Corporation
and subsidiaries at February 3, 2007 and January 28, 2006, and the consolidated results of their operations and their cash flows for each of the three years in
the period ended February 3, 2007, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth
therein.
As discussed in Note 28, Pension and Postretirement Health Care Benefits, to the consolidated financial statements, effective February 3, 2007, the
Corporation adopted the recognition and disclosure provisions of SFAS 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement
Plans, an amendment of FASB Statements No. 87, 88, 106, and 132(R)."
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of the
Corporation's internal control over financial reporting as of February 3, 2007, based on criteria established in Internal Control Integrated Framework,
issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 14, 2007, expressed an unqualified opinion
thereon.

Minneapolis, Minnesota
March 14, 2007

Report of Management on Internal Control

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange
Act Rules 13a-15(f). Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we
assessed the effectiveness of our internal control over financial reporting as of February 3, 2007, based on the framework in Internal Control Integrated
Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our assessment, we conclude that the
Corporation's internal control over financial reporting is effective based on those criteria.
Our management's assessment of the effectiveness of our internal control over financial reporting as of February 3, 2007, has been audited by Ernst &
Young LLP, independent registered public accounting firm, whose report also appears on this page.

Robert J. Ulrich
Chairman of the Board and
Chief Executive Officer
March 14, 2007

Douglas A. Scovanner
Executive Vice President and
Chief Financial Officer

Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting
The Board of Directors and Shareholders
Target Corporation
We have audited management's assessment, included in the accompanying Report of Management on Internal Control, that Target Corporation and
subsidiaries (the Corporation) maintained effective internal control over financial reporting as of February 3, 2007, based on criteria established in Internal
Control Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). The Corporation's
management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control
over financial reporting. Our responsibility is to express an opinion on management's assessment and an opinion on the effectiveness of the Corporation's
internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management's assessment, testing and
evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion.
A company's internal control over financial reporting is a process designed 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. A company's internal control
over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company, (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and directors of the company, and (3) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of
compliance with the policies or procedures may deteriorate.
In our opinion, management's assessment that Target Corporation and subsidiaries maintained effective internal control over financial reporting as of
February 3, 2007, is fairly stated, in all material respects, based on the COSO criteria. Also, in our opinion, the Corporation maintained, in all material
respects, effective internal control over financial reporting as of February 3, 2007, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated statements
of financial position of Target Corporation and subsidiaries as of February 3, 2007 and January 28, 2006, and the related consolidated statements of
operations, cash flows and shareholders' investment for each of the three years in the period ended February 3, 2007, and our report dated March 14, 2007,
expressed an unqualified opinion thereon.

Minneapolis, Minnesota
March 14, 2007

Consolidated Statements of Operations

(millions, except per share data)
Sales
Net credit card revenues
Total revenues
Cost of sales
Selling, general and administrative expenses
Credit card expenses
Depreciation and amortization
Earnings from continuing operations before interest expense and income taxes
Net interest expense
Earnings from continuing operations before income taxes
Provision for income taxes
Earnings from continuing operations
Earnings from discontinued operations, net of taxes of $46
Gain on disposal of discontinued operations, net of taxes of $761
Net earnings
Basic earnings per share
Continuing operations
Discontinued operations
Gain from discontinued operations
Basic earnings per share
Diluted earnings per share
Continuing operations
Discontinued operations
Gain from discontinued operations
Diluted earnings per share
Weighted average common shares outstanding:
Basic
Diluted
See accompanying Notes to Consolidated Financial Statements.

2006

2005

2004

$57,878
1,612
59,490
39,399
12,819
707
1,496
5,069
572
4,497
1,710
2,787

$2,787

$51,271
1,349
52,620
34,927
11,185
776
1,409
4,323
463
3,860
1,452
2,408

$2,408

$45,682
1,157
46,839
31,445
9,797
737
1,259
3,601
570
3,031
1,146
1,885
75
1,238
$3,198

$3.23

$3.23

$2.73

$2.73

$2.09
.08
1.37
$3.54

$3.21

$3.21

$2.71

$2.71

$2.07
.08
1.36
$3.51

861.9
868.6

882.0
889.2

903.8
912.1

Consolidated Statements of Financial Position

February 3,
2007

January 28,
2006

$813
6,194
6,254
1,445

$1,648
5,666
5,838
1,253

Total current assets

Property and equipment
Land
Buildings and improvements
Fixtures and equipment
Computer hardware and software
Construction-in-progress
Accumulated depreciation

14,706

14,405

4,934
16,110
3,553
2,188
1,596
(6,950)

4,449
14,174
3,219
2,214
1,158
(6,176)

Property and equipment, net

Other non-current assets

21,431
1,212

19,038
1,552

$37,349

$34,995

Liabilities and shareholders' investment

Accounts payable
Accrued and other current liabilities
Income taxes payable
Current portion of long-term debt and notes payable

$6,575
2,758
422
1,362

$6,268
2,193
374
753

Total current liabilities

Long-term debt
Deferred income taxes
Other non-current liabilities

11,117
8,675
577
1,347

9,588
9,119
851
1,232

Shareholders' investment
Common stock
Additional paid-in-capital
Retained earnings
Accumulated other comprehensive loss

72
2,387
13,417
(243)

73
2,121
12,013
(2)

15,633

14,205

$37,349

$34,995

(millions, except footnotes)

Assets
Cash and cash equivalents
Accounts receivable, net
Inventory
Other current assets

Total assets

Total shareholders' investment

Total liabilities and shareholders' investment

Common Stock Authorized 6,000,000,000 shares, $.0833 par value; 859,771,157 shares issued and outstanding at February 3, 2007; 874,074,850 shares issued and outstanding at January 28,
2006.
Preferred Stock Authorized 5,000,000 shares, $.01 par value; no shares were issued or outstanding at February 3, 2007 or January 28, 2006.
See accompanying Notes to Consolidated Financial Statements.

Consolidated Statements of Cash Flows

(millions)
Operating activities
Net earnings
Earnings from and gain on disposal of discontinued operations, net of taxes
Earnings from continuing operations
Reconciliation to cash flow
Depreciation and amortization

2006

2005

2004

$2,787

$2,408

$3,198
(1,313)

2,787

2,408

1,885

1,496

1,409

1,259

Share-based compensation expense

Deferred income taxes
Bad debt provision
Loss on disposal of property and equipment, net
Other non-cash items affecting earnings
Changes in operating accounts providing / (requiring) cash:
Accounts receivable originated at Target
Inventory
Other current assets
Other non-current assets
Accounts payable
Accrued liabilities
Income taxes payable
Other non-current liabilities
Other
Cash flow provided by operations

99
(201)
380
53
(35)

93
(122)
466
70
(50)

60
233
451
59
73

(226)
(431)
(30)
5
435
389
41
100

(244)
(454)
(28)
(24)
489
351
70
2
15

(209)
(853)
(37)
(147)
823
319
(91)
(16)
(1)

4,862

4,451

3,808

Investing activities
Expenditures for property and equipment
Proceeds from disposal of property and equipment
Change in accounts receivable originated at third parties
Other investments
Proceeds from sale of discontinued operations

(3,928)
62
(683)
(144)

(3,388)
58
(819)

(3,068)
56
(690)

4,881

Cash flow (required for) / provided by investing activities

(4,693)

(4,149)

1,179

Financing activities
Additions to long-term debt
Reductions of long-term debt
Dividends paid
Repurchase of stock
Stock option exercises and related tax benefit
Other

1,256
(1,155)
(380)
(901)
181
(5)

913
(527)
(318)
(1,197)
231
(1)

10
(1,487)
(272)
(1,290)
215

Cash flow required for financing activities

(1,004)

(899)

(2,824)

Cash flows of discontinued operations

Required for operations
Required for investing activities
Required for financing activities

(549)
(44)
(33)

Net cash required for discontinued operations

(626)

Net (decrease) / increase in cash and cash equivalents

Cash and cash equivalents at beginning of year

(835)
1,648

Cash and cash equivalents at end of year

$813

(597)
2,245
$1,648

1,537
708
$2,245

Amounts presented herein are on a cash basis and therefore may differ from those shown in other sections of this Annual Report. Consistent with the provisions of Statement of Financial
Accounting Standards (SFAS) No. 95, "Statement of Cash Flows," cash flows related to accounts receivable are classified as either an operating activity or an investing activity, depending on
their origin.
Cash paid for income taxes was $1,823, $1,448, and $1,742 during 2006, 2005, and 2004, respectively. Cash paid for interest (net of interest capitalized) was $584, $468, and $480 during
2006, 2005, and 2004, respectively.
See accompanying Notes to Consolidated Financial Statements.

Consolidated Statements of Shareholders' Investment

(millions, except footnotes)

January 31, 2004
Net earnings
Other comprehensive loss

Common
Stock
Shares

Stock
Par
Value

Additional
Paid-in
Capital

Retained
Earnings

911.8

$76

$1,530

$9,523
3,198

Accumulated
Other
Comprehensive
Income/(Loss)
$3

(6)

Total
$11,132
3,198
(6)

Total comprehensive income

Dividends declared
Repurchase of stock
Stock options and awards

(28.9)
7.7

(3)
1

January 29, 2005

Net earnings
Other comprehensive income

890.6

74

Total comprehensive income

Dividends declared
Repurchase of stock
Stock options and awards

(23.1)
6.6

(2)
1

874.1

73

January 28, 2006

Net earnings
Other comprehensive income, net of
taxes of $5
Total comprehensive income
Cumulative effect of adopting SFAS
158, net of taxes of $152
Dividends declared
Repurchase of stock
Stock options and awards

(19.5)
5.2

February 3, 2007

859.8

(280)
(1,293)

3,192
(280)
(1,296)
281

11,148
2,408

(3)

13,029
2,408
1

(334)
(1,209)

2,409
(334)
(1,211)
312

2,121

12,013
2,787

(2)

14,205
2,787

(7)

280
1,810

311

(7)
2,780

(2)
1
$72

266
$2,387

(396)
(987)

$13,417

(234)

$(243)

(234)
(396)
(989)
267
$15,633

Dividends declared per share were $.46, $.38, and $.31 in 2006, 2005, and 2004, respectively.
See accompanying Notes to Consolidated Financial Statements.

Notes to Consolidated Financial Statements

1. Summary of Accounting Policies
Organization Target Corporation (the Corporation or Target) operates large-format general merchandise and food discount stores in the United States and a
fully integrated on-line business, Target.com. Our credit card operations represent an integral component of our core retail business, strengthening the bond
with our guests, driving incremental sales and contributing meaningfully to earnings. We operate as a single business segment.
Consolidation The consolidated financial statements include the balances of the Corporation and its subsidiaries after elimination of intercompany balances
and transactions. All material subsidiaries are wholly-owned.
Use of Estimates The preparation of our consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (GAAP)
requires management to make estimates and assumptions affecting reported amounts in the consolidated financial statements and accompanying notes. Actual
results may differ significantly from those estimates.
Fiscal Year Our fiscal year ends on the Saturday nearest January 31. Unless otherwise stated, references to years in this report relate to fiscal years, rather
than to calendar years. Fiscal year 2006 (2006) ended February 3, 2007 and consisted of 53 weeks. Fiscal year 2005 (2005) ended January 28, 2006 and fiscal
year 2004 (2004) ended January 29, 2005, and both consisted of 52 weeks.
Reclassifications Certain prior year amounts have been reclassified to conform to the current year presentation.
Share-Based Compensation We adopted the provisions of SFAS No. 123(R), "Share-Based Payment," in 2004 under the modified retrospective transition
method. Therefore, all prior period financial statements have been restated to recognize compensation cost in the amounts previously reported in the Notes to
Consolidated Financial Statements under the provisions of SFAS 123. SFAS 123(R) requires that all share-based compensation be accounted for using a fairvalue-based method.
We estimate the fair value of all share-based awards on the date of grant, which we define as the date the award is approved by our Board of Directors or,
for a limited number of awards to team members who are not executive officers, the date the award is approved by management with appropriate delegated
authority. The majority of granted awards are nonqualified stock options that vest annually in equal amounts over a four-year period, and all stock options
have an exercise price equal to the fair market value of our common stock on the date of grant. Generally, we recognize compensation expense for awards on
a straight-line basis over the four-year vesting period. However, in certain circumstances under our share-based compensation plans, we allow for the vesting
of team member awards to continue post-employment. Accordingly, for awards granted subsequent to our adoption of SFAS 123(R) and to the extent the team
member meets certain age and service requirements on the date of grant, we accelerate expense recognition such that the value of the award is fully expensed
over the team member's minimum service period instead of over the explicit vesting period. Awards granted prior to the adoption of SFAS 123(R) continue to
be expensed over the explicit vesting period. Information related to share-based awards is disclosed in Note 26.

Derivative Financial Instruments Derivative financial instruments are carried at fair value on the balance sheet. Our derivative instruments are primarily
interest rate swaps that hedge the fair value of certain debt by effectively converting interest from a fixed rate to a floating rate. These instruments qualify for
hedge accounting, and the associated assets and liabilities are recorded in the Consolidated Statements of Financial Position. The changes in market value of
an interest rate swap, as well as the offsetting change in market value of the hedged debt, are recognized within earnings in the current period. Ineffectiveness
would result when changes in the market value of the hedged debt are not completely offset by changes in the market value of the interest rate swap. There
was no ineffectiveness recognized in 2006, 2005, or 2004 related to these instruments. Further information related to interest rate swaps is disclosed in
Note 21.
During 2006, we entered into an interest rate forward contract in order to offset a portion of our exposure to our workers' compensation and general
liability obligations, which are recorded on a discounted basis. This instrument has not been designated as an accounting hedge.
Nearly all of our inventory purchases are in U.S. dollars; therefore, we have immaterial foreign currency hedging activities.
Additionally, see the description of our prepaid forward contracts in Note 27.
2. Revenues
Our retail stores record revenue at the point of sale. Sales from our on-line business include shipping revenue and are recorded upon delivery to the guest.
Total revenues do not include sales tax as we consider ourselves a pass through conduit for collecting and remitting sales taxes. Generally, guests may return
merchandise within 90 days of purchase. Revenues are recognized net of expected returns, which we estimate using historical return patterns. Commissions
earned on sales generated by leased departments are included within sales and were $15 million in 2006, $14 million in 2005 and $14 million in 2004.
Revenue from gift card sales is recognized upon redemption of the gift card. Our gift cards do not have expiration dates. Based on historical redemption
rates, a small and relatively stable percentage of gift cards will never be redeemed, referred to as "breakage." Estimated breakage revenue is recognized over a
period of time in proportion to actual gift card redemptions and was immaterial in 2006, 2005 and 2004.
Credit card revenues are recognized according to the contractual provisions of each applicable credit card agreement. When accounts are written-off,
uncollected finance charges and late fees are recorded as a reduction of credit card revenues. Target retail store sales charged to our credit cards totaled
$3,961 million, $3,655 million and $3,269 million in 2006, 2005, and 2004, respectively. We offer new account discounts and rewards programs on our
REDcard products. These discounts are redeemable only on purchases made at Target. The discounts associated with our REDcard products are included as
reductions in sales in our Consolidated Statements of Operations and were $104 million, $97 million and $80 million in 2006, 2005 and 2004, respectively.
3. Cost of Sales and Selling, General and Administrative Expenses
The following illustrates the primary costs classified in each major expense category:
Cost of Sales

Selling, General and Administrative Expenses

Total cost of products sold including:

Freight expenses associated with moving merchandise from our vendors to
our distribution centers and our retail stores, and among our distribution and
retail facilities
Vendor income that is not reimbursement of specific, incremental and
identifiable costs
Inventory shrink
Markdowns
Shipping and handling expenses
Terms cash discount

Compensation and benefit costs including:

Stores
Headquarters, including buying and merchandising
Distribution operations
Occupancy and operating costs of retail, distribution and headquarters
facilities
Advertising, offset by vendor income that is a reimbursement of specific,
incremental and identifiable costs
Pre-opening costs of stores and other facilities
Other administrative costs

The classification of these expenses varies across the retail industry.

Compensation, benefits and other expenses for buying, merchandising and distribution operations classified in selling, general and administrative
expenses were approximately $1,274 million, $1,133 million and $980 million for 2006, 2005 and 2004, respectively.
4. Consideration Received from Vendors
We receive consideration for a variety of vendor-sponsored programs, such as volume rebates, markdown allowances, promotions and advertising and
for our compliance programs, referred to as "vendor income." Vendor income reduces either our inventory costs or selling, general and administrative
expenses based on the provisions of the arrangement. Promotional and advertising allowances are intended to offset our costs of promoting and selling the
vendor's merchandise in our stores. Under our compliance programs, vendors are charged for merchandise shipments that do not meet our requirements
("violations"), such as late or incomplete shipments. These allowances are recorded when violations occur.
We establish a receivable for vendor income that is earned but not yet received. Based on provisions of the agreements in place, this receivable is
computed by estimating the point at which we have completed our performance and the amount earned. We perform detailed analyses to determine the
appropriate level of the receivable in the aggregate. The majority of year-end receivables associated with these activities are collected within the following
fiscal quarter.
5. Advertising Costs
Advertising costs are expensed at first showing or distribution of the advertisement and were $1,170 million, $1,028 million, and $888 million for 2006,
2005 and 2004, respectively. Advertising vendor income that offset advertising expenses was approximately $118 million, $110 million, and $72 million for
2006, 2005 and 2004, respectively. Newspaper circulars and media broadcast made up the majority of our advertising costs in all three years.

6. Discontinued Operations
We completed the sale of our Marshall Field's and Mervyn's businesses during 2004, and the financial results of Marshall Field's and Mervyn's are
reported as discontinued operations. For 2004, total revenues included in discontinued operations were $3,095 million, and earnings from discontinued
operations were $75 million, net of taxes of $46 million. In addition, we recorded a gain on the sale of discontinued operations of $1,238 million, net of taxes
of $761 million, during 2004. There were no assets or liabilities of Marshall Field's or Mervyn's included in our Consolidated Statements of Financial Position
at February 3, 2007 or January 28, 2006.
7. Earnings per Share
Basic earnings per share (EPS) is net earnings divided by the weighted average number of common shares outstanding during the period. Diluted EPS
includes the incremental shares assumed to be issued upon the exercise of stock options and the incremental shares assumed to be issued under performance
share and restricted stock unit arrangements.
Basic EPS
(millions, except per share data)

2006

2005

Diluted EPS
2004

2006

2005

2004

Net earnings
$2,787
$2,408
$3,198
$2,787
$2,408
$3,198
Basic weighted average common shares
outstanding
861.9
882.0
903.8
861.9
882.0
903.8
Incremental stock options, performance share
units and restricted stock units

6.7
7.2
8.3
Weighted average common shares outstanding
861.9
882.0
903.8
868.6
889.2
912.1
Earnings per share
$3.23
$2.73
$3.54
$3.21
$2.71
$3.51
For the 2006, 2005 and 2004 EPS computations, 1.8 million, 4.4 million and 1.0 million stock options, respectively, were excluded from the calculation
of weighted average shares for diluted EPS because their effects were antidilutive.
8. Other Comprehensive Income/(Loss)
Other comprehensive income/(loss) includes revenues, expenses, gains and losses that are excluded from net earnings under GAAP and are recorded
directly to shareholders' investment. In 2006, 2005 and 2004, other comprehensive income/(loss) included gains and losses on certain hedge transactions and
the change in our minimum pension liability, net of related taxes. These amounts were not material in any year presented.
9. Cash Equivalents
Cash equivalents include highly liquid investments with an original maturity of three months or less from the time of purchase. We carry these
investments at cost, which approximates market value. These investments were $281 million and $1,172 million at February 3, 2007 and January 28, 2006,
respectively. Also included in cash equivalents are proceeds due from credit and debit card transactions with settlement terms of less than five days. Credit
and debit card receivables included within cash equivalents were $355 million and $290 million at February 3, 2007 and January 28, 2006, respectively.
10. Accounts Receivable
Accounts receivable are recorded net of an allowance for expected losses. The allowance, recognized in an amount equal to the anticipated future writeoffs, was $517 million at February 3, 2007 and $451 million at January 28, 2006. We estimate future write-offs based on delinquencies, risk scores, aging
trends, industry risk trends and our historical experience. Substantially all accounts continue to accrue finance charges until they are written off. Total
accounts receivable past due ninety days or more and still accruing finance charges were $236 million at February 3, 2007 and $174 million at January 28,
2006. Accounts are written off when they become 180 days past due.
As a method of providing funding for our accounts receivable, we sell on an ongoing basis all of our consumer credit card receivables to Target
Receivables Corporation (TRC), a wholly-owned bankruptcy remote subsidiary. TRC then transfers the receivables to the Target Credit Card Master Trust
(the Trust), which from time to time will sell debt securities to third parties either directly or through a related trust. These debt securities represent undivided
interests in the Trust assets. The servicer of the receivables, Target National Bank, a wholly-owned subsidiary of Target, holds a 2 percent undivided interest
in the Trust assets. In addition, TRC retains an undivided interest in the Trust assets that is not represented by either the debt securities sold to third parties or
the 2 percent held by Target National Bank. TRC uses the proceeds from the sale of debt securities and its share of collections on the receivables to pay the
purchase price of the receivables to Target.
The accounting guidance for such transactions, SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities (a replacement of SFAS No. 125)," requires the inclusion of the receivables within the Trust and any debt securities issued by the Trust, or a related
trust, in our Consolidated Statements of Financial Position. Notwithstanding this accounting treatment, the receivables transferred to the Trust are not
available to general creditors of Target. Upon termination of the securitization program and repayment of all debt securities issued from time to time by the
Trust, or a related trust, any remaining assets could be distributed to Target in a liquidation of TRC.
11. Inventory
Substantially all of our inventory and the related cost of sales are accounted for under the retail inventory accounting method (RIM) using the last-in,
first-out (LIFO) method. Inventory is stated at the lower of LIFO cost or market. Cost includes purchase price as adjusted for vendor income. Inventory is also
reduced for estimated losses related to shrink and markdowns. The LIFO provision is calculated based on inventory levels, markup rates and internally
measured retail price indices. At February 3, 2007 and January 28, 2006, our inventories valued at LIFO approximate those inventories as if they were valued
at FIFO.

Under RIM, the valuation of inventory at cost and the resulting gross margins are calculated by applying a cost-to-retail ratio to the retail value
inventory. RIM is an averaging method that has been widely used in the retail industry due to its practicality. The use of RIM will result in inventory being
valued at the lower of cost or market since permanent markdowns are currently taken as a reduction of the retail value of inventory.
We routinely enter into arrangements with certain vendors whereby we do not purchase or pay for merchandise until the merchandise is ultimately sold
to a guest. Revenues under this program are included in sales in the Consolidated Statements of Operations, but the merchandise received under the program
is not included in inventory in our Consolidated Statements of Financial Position because of the virtually simultaneous timing of our purchase and sale of this
inventory. Sales made under these arrangements totaled $1,178 million, $872 million and $357 million for 2006, 2005 and 2004, respectively.
12. Other Current Assets
(millions)

February 3,
2007

January 28,
2006

$427
285
278
455
$1,445

$344
277
283
349
$1,253

Deferred taxes
Vendor income receivable
Other receivables (a)
Other
Total
Other receivables relate primarily to pharmacy receivables and merchandise sourcing services provided to third parties.

(a)

13. Property and Equipment

Property and equipment are recorded at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over estimated
useful lives or lease term if shorter. We amortize leasehold improvements purchased after the beginning of the initial lease term over the shorter of the assets'
useful lives or a term that includes the original lease term plus any renewals that are reasonably assured at the date the leasehold improvements are purchased.
Depreciation expense for 2006, 2005 and 2004 was $1,509 million, $1,384 million and $1,232 million, respectively. For income tax purposes, accelerated
depreciation methods are generally used. Repair and maintenance costs are expensed as incurred and were $532 million, $474 million and $453 million in
2006, 2005 and 2004, respectively. Pre-opening costs of stores and other facilities, including supplies, payroll and other start-up costs for store and other
facility openings, are expensed as incurred.
Estimated useful lives by major asset category are:
Asset

Life (in years)

Buildings and improvements

8-39
Fixtures and equipment
3-15
Computer hardware and software
4
Long-lived assets are reviewed for impairment annually and also when events or changes in circumstances indicate that the asset's carrying value may
not be recoverable. No material impairments were recorded in 2006, 2005 or 2004 as a result of the tests performed.
14. Other Non-Current Assets
(millions)

February 3,
2007

January 28,
2006

$559
325
212
116
$1,212

$524
752
183
93
$1,552

Cash value of life insurance (a)

Prepaid pension expense (b)
Goodwill and intangible assets
Other
Total
(a)

Company-owned life insurance policies on approximately 3,000 team members who are designated highly-compensated under the Internal Revenue Code and have given their consent
to be insured.

(b)

Prepaid pension expense at February 3, 2007 includes the effect of our adoption of SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement
Plans, an amendment of FASB Statements No. 87, 88, 106, and 132(R)." Refer to Note 28 for more details.

15. Goodwill and Intangible Assets

Goodwill and intangible assets are recorded within other non-current assets at cost less accumulated amortization. Goodwill and intangible assets by
major classes were:

Goodwill
(millions)

Feb. 3,
2007

Jan. 28,
2006

Leasehold acquisition
costs
Feb. 3,
2007

Jan. 28,
2006

Other (a)
Total
Feb. 3,
2007

Jan. 28,
2006

Feb. 3,
2007

Jan. 28,
2006

Gross asset
Accumulated amortization

$80
(20)

$80
(20)

$187
(47)

$182
(70)

$173
(161)

$205
(194)

$440
(228)

$467
(284)

Net goodwill and intangible assets

$60

$60

$140

$112

$12

$11

$212

$183

(a)

Other intangible assets relate primarily to acquired trade names and customer lists.

Amortization is computed on intangible assets with definite useful lives using the straight-line method over estimated useful lives that range from three
to 39 years. During 2006, we adjusted the period over which we amortize leasehold acquisition costs to match the expected terms for individual leases
resulting in a cumulative benefit to amortization expense of approximately $28 million. Amortization expense for 2006, 2005 and 2004 was $(13) million,
$25 million and $27 million, respectively. The estimated aggregate amortization expense of our definite-lived intangible assets for each of the five succeeding
fiscal years is:
(millions)

2007

2008

2009

2010

2011

Amortization expense
$13
$12
$10
$9
Goodwill is not amortized. Instead, it is subject to an annual impairment test. Discounted cash flow models are used in determining fair value for the
purposes of the required annual impairment analysis. No material impairments were recorded in 2006, 2005 or 2004 as a result of the tests performed.
16. Accounts Payable
We reclassify book overdrafts to accounts payable at period end. At February 3, 2007 and January 28, 2006, $652 million and $645 million of such
overdrafts, respectively, were reclassified to accounts payable.
17. Accrued Liabilities
(millions)
Wages and benefits
Taxes payable (a)
Gift card liability (b)
Workers' compensation and general liability (c)
Other
Total
(a)

Taxes payable consist of real estate, team member withholdings and sales tax liabilities.

(b)

Gift card liability represents the amount of gift cards that have been issued but have not been redeemed, net of estimated breakage.

(c)

The non-current portion of our liability for workers' compensation and general liability claims is shown in Note 24.

February 3,
2007

January 28,
2006

$674
450
338
154
1,142
$2,758

$602
366
294
142
789
$2,193

18. Commitments and Contingencies

At February 3, 2007, our obligations included notes and debentures of $9,897 million (further described in Note 19), excluding swap fair market value
adjustments. At February 3, 2007, capital lease obligations were $249 million and total future minimum payments of operating leases were $3,325 million.
The amount of future contractual lease payments includes certain options for lease term extension that are reasonably assured of being exercised in the amount
of $1,631 million, and $188 million of legally binding minimum lease payments for stores that will open in 2007 or later (see additional detail in Note 22).
Deferred compensation obligations were $691 million at February 3, 2007. In addition, real estate obligations, including commitments for the purchase,
construction or remodeling of real estate and facilities, were approximately $1,106 million at February 3, 2007.
Purchase obligations, which include all legally binding contracts such as firm commitments for inventory purchases, merchandise royalties, purchases of
equipment, marketing-related contracts, software acquisition/license commitments and service contracts, were approximately $1,613 million at February 3,
2007. We issue inventory purchase orders, which represent authorizations to purchase that are cancelable by their terms. We do not consider purchase orders
to be firm inventory commitments. We also issue trade letters of credit in the ordinary course of business, which are not firm commitments as they are
conditional on the purchase order not being cancelled. If we choose to cancel a purchase order, we may be obligated to reimburse the vendor for
unrecoverable outlays incurred prior to cancellation under certain circumstances.
Trade letters of credit totaled $1,830 million at February 3, 2007, a portion of which is in accounts payable. Standby letters of credit, relating primarily to
retained risk on our insurance claims, totaled $81 million at February 3, 2007.
The terms of a significant portion of the Visa/MasterCard antitrust litigation settlement were finalized during the third quarter of 2005. As a result, we
recorded a $27 million ($.02 per share) gain in the third quarter of 2005 for our share of the proceeds, which we received during the second quarter of 2006.
We also expect to receive an additional, smaller payment; however, the amount and timing of that payment are not certain at this time. Accordingly, no
additional gain has been recorded as of February 3, 2007.
We are exposed to claims and litigation arising in the ordinary course of business and use various methods to resolve these matters in a manner that we
believe serves the best interest of our shareholders and other constituents. We believe the recorded reserves in our consolidated financial statements are
adequate in light of the probable and estimable liabilities. We do not believe that any of the currently identified claims or litigation matters will have a
material adverse impact on our results of operations, cash flows or financial condition.

$9

19. Notes Payable and Long-Term Debt

We obtain short-term financing throughout the year under our commercial paper program, a form of notes payable. Information on this program is as
follows:
Commercial Paper
(dollars in millions)

2006

2005

Maximum outstanding during the year

$957
$994
Average amount outstanding during the year
$273
$77
Outstanding at year-end
$
$
Weighted average interest rate
5.3%
4.0%
At February 3, 2007, a committed unsecured credit facility totaling $1.6 billion was in place through a group of banks at specified rates and is scheduled
to expire in June 2010. No balances were outstanding at any time during 2006 or 2005 under this or previously existing revolving credit facilities.
In 2006 we issued $750 million of long-term debt at 5.875 percent maturing in 2016. Concurrent with the issuance of this debt, we entered into two
interest rate swaps, the details of which are disclosed in Note 21. In September 2006, TRC issued $500 million of Variable Funding Certificates (Certificates)
backed by credit card receivables through the Target Credit Card Master Trust. At February 3, 2007, the outstanding amount of the Certificates was
$100 million.
In November 2005 TRC issued to the public, through the Target Credit Card Owner Trust 2005-1, $900 million of debt backed by credit card
receivables. This issue of receivable-backed securities had an expected initial maturity of five years and a floating interest rate set at 1-month LIBOR plus
0.06 percent. Refer to Note 10 for further description of our accounts receivable financing program.
The total amount of debt backed by credit card receivables held in the Target Credit Card Master Trust or related trusts was $1,750 million at February 3,
2007 and $1,650 million at January 28, 2006.
In 2004, we called or repurchased $542 million of long-term debt with an average remaining life of 24 years and a weighted average interest rate of
7.0 percent, resulting in a pre-tax loss of $89 million (approximately $.06 per share), reflected in net interest expense. We did not repurchase any significant
amount of long-term debt during 2006 or 2005.
The carrying value of our debt portfolio, including swap valuation adjustments for our fair value hedges, was as follows:

Long-Term Debt
(dollars in millions)
Notes and debentures:
Due 2006-2010
Due 2011-2015
Due 2016-2020
Due 2021-2025
Due 2026-2030
Due 2031-2036
Total notes and debentures (b)
Capital lease obligations and other
Less: current portion
Long-term debt

February 3, 2007
Rate (a)

January 28, 2006

Rate (a)

Balance

6.2%
5.6
5.8
9.0
6.7
6.6

$5,824
1,637
1,078
120
326
905

5.7%
5.6
6.4
9.0
6.7
6.6

6.1%

9,890
147
(1,362)

5.9%

$8,675

Balance

$6,480
1,636
307
119
325
904
9,771
101
(753)
$9,119

(a)

Reflects the weighted average stated interest rate as of year-end, including the impact of interest rate swaps.

(b)

The estimated fair value of total notes and debentures, excluding swap valuation adjustments, using a discounted cash flow analysis based on our incremental interest rates for similar
types of financial instruments, was $10,058 million at February 3, 2007 and $10,229 million at January 28, 2006. See Note 21 for the estimated fair value of our interest rate swaps.

Required principal payments on notes and debentures over the next five years, excluding capital lease obligations and fair market value adjustments
recorded in long-term debt, are:
(millions)

2007

2008

2009

2010

2011

Required principal payments

$1,355
$1,517
$751
$2,236
$107
Most of our long-term debt obligations contain covenants related to secured debt levels. In addition, our credit facility contains a debt leverage covenant.
We are, and expect to remain, in compliance with these covenants.
20. Net Interest Expense

(millions)

2006

2005

2004

Interest expense on debt

Interest expense on capital leases
Loss on debt repurchase
Capitalized interest
Interest income

$635
11

(49)
(25)

$524
8

(42)
(27)

$509
9
89
(18)
(19)

Net interest expense

$572

$463

$570

21. Derivative Financial Instruments

At February 3, 2007 and January 28, 2006, interest rate swaps were outstanding in notional amounts totaling $3,725 million and $3,300 million,
respectively. The increase in swap exposure was executed to manage our mix of fixed-rate debt and floating-rate debt.
During 2006, we entered into three interest rate swaps with notional amounts of $225 million, $500 million and $250 million. During 2005, we entered
into four interest rate swaps with notional amounts of $250 million, $350 million, $325 million and $225 million. In 2005 we also terminated an interest rate
swap with a notional amount of $200 million, resulting in a gain of $24 million that will be amortized into net interest expense over the then remaining 13year life of the hedged debt. In 2006, 2005 and 2004, the total net gains amortized into net interest expense for terminated swaps were $9 million, $8 million
and $7 million, respectively.
Interest Rate Swaps
(dollars in millions)
Pay Floating Rate at (a)

Notional Amount Outstanding at

Maturity (b)

Feb. 3, 2007

Jan. 28, 2006

$
250
250
500
250
200
400
350
325
225
225
500
250

$550
250
250
500
250
200
400
350
325
225

$3,725

$3,300

May 2006
Mar. 2008
Mar. 2008
Oct. 2008
Oct. 2008
Nov. 2008
Jun. 2009
Jun. 2009
Aug. 2010
Aug. 2010
Jan. 2011
Jul. 2016
Jul. 2016

Receive Fixed

(a)

Reflects the year end floating interest rate.

(b)

The weighted average life of the interest rate swaps was approximately 3.7 years at February 3, 2007.

4.6%
3.9
3.8
4.4
3.8
3.9
4.4
4.2
4.8
4.5
5.5
5.7
5.7

Feb. 3, 2007

5.3%
5.3
5.4
5.3
5.3
5.3
5.3
5.3
5.3
5.3
5.3
5.3

Jan. 28, 2006

4.8%
4.4
4.4
4.8
4.4
4.4
4.8
4.5
4.5
4.5

The market value of outstanding interest rate swaps and net unamortized gains/(losses) from terminated interest rate swaps was $(7) million and $(21)
million at February 3, 2007 and January 28, 2006, respectively. No ineffectiveness was recognized related to these instruments in 2006, 2005 or 2004.
During 2006, we entered into an interest rate forward contract with a $300 million notional amount to offset a portion of the interest rate exposure on our
discounted workers' compensation and general liability obligations. See Note 17 and Note 24 for details of our workers' compensation and general liability
accruals.
22. Leases
We lease certain retail locations, warehouses, distribution centers, office space, equipment and land. Assets held under capital lease are included in
property and equipment. Operating lease rentals are expensed on a straight-line basis over the life of the lease. At the inception of a lease, we determine the
lease term by assuming the exercise of those renewal options that are reasonably assured because of the significant economic penalty that exists for not
exercising those options. The exercise of lease renewal options is at our sole discretion. The expected lease term is used to determine whether a lease is capital
or operating and is used to calculate straight-line rent expense. Additionally, the useful life of buildings and leasehold improvements are limited by the
expected lease term.
Rent expense on buildings, included in selling, general and administrative expenses, includes rental payments based on a percentage of retail sales over
contractual levels for certain stores. Total rent expense was $158 million in 2006, $154 million in 2005 and $240 million in 2004, including percentage rent
expense of $5 million in 2006, $5 million in 2005 and $3 million in 2004. We adjusted our method of accounting for leases related to a specific category of
owned store locations on leased land, resulting in a non-cash adjustment primarily attributable to an increase in the straight-line rent accrual of $65 million ($.

04 per share) in the fourth quarter of 2004. Certain leases require us to pay real estate taxes, insurance, maintenance and other operating expenses associated
with the leased premises. These expenses are classified in selling, general and administrative expenses consistent with similar costs for owned locations. Most
long-term leases include one or more options to renew, with renewal terms that can extend the lease term from one to more than 50 years. Certain leases also
include options to purchase the leased property.
Future minimum lease payments required under noncancelable lease agreements existing at February 3, 2007 were:
Future Minimum Lease Payments
(millions)

Operating Leases

Capital Leases

2007
2008
2009
2010
2011
After 2011

$142
136
130
122
113
2,682

$15
15
15
16
16
172

Total future minimum lease payments

Less: Interest (b)

3,325 (a)

249
(126)

Present value of minimum capital lease payments

$123 (c)

(a)

Total contractual lease payments include $1,631 million related to options to extend lease terms that are reasonably assured of being exercised and also includes $188 million of
legally binding minimum lease payments for stores that will open 2007 or later.

(b)

Calculated using the interest rate at inception for each lease.

(c)

Includes current portion of $3 million.

23. Income Taxes

We account for income taxes under the asset and liability method. We have recognized deferred tax assets and liabilities for the estimated future tax
consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted income tax rates in effect for the year the temporary differences are expected to be recovered or
settled. Tax rate changes affecting deferred tax assets and liabilities are recognized in income at the enactment date. In the Consolidated Statements of
Financial Position, the current deferred tax asset balance is the net of all current deferred tax assets and current deferred tax liabilities. The non-current
deferred tax liability is the net of all non-current deferred tax assets and non-current deferred tax liabilities.
To determine our quarterly provision for income taxes we use annual effective tax rates based on expected annual income and statutory tax rates,
adjusted for discrete tax events that occur during the quarter.
Reconciliation of tax rates is as follows:
Tax Rate Reconciliation
2006

2005

2004

Federal statutory rate

State income taxes, net of federal tax benefit
Other

35.0%
4.0
(1.0)

35.0%
3.3
(0.7)

35.0%
3.3
(0.5)

Effective tax rate

38.0%

37.6%

37.8%

The components of the provision for income taxes were:

Provision for Income Taxes: Expense (Benefit)
(millions)

2006

2005

2004

Federal
State/other

$1,627
284
1,911

$1,361
213
1,574

$908
144
1,052

Federal
State/other

(174)
(27)
(201)
$1,710

(110)
(12)
(122)
$1,452

83
11
94
$1,146

Current

Deferred

Total
The components of the net deferred tax asset/(liability) were:

Net Deferred Tax Asset/(Liability)

(millions)
Gross deferred tax assets
Accrued and deferred compensation
Self-insured claims
Allowance for doubtful accounts
Inventory
Postretirement health care obligation
Other

Gross deferred tax liabilities

Property and equipment
Pension
Deferred credit card income
Other

Total

February 3,
2007

January 28,
2006

$466
238
191
13
39
179

$399
217
167
1
39
151

1,126

974

(1,041)
(100)
(119)
(16)

(1,080)
(287)
(103)
(11)

(1,276)

(1,481)

$(150)

$(507)

The change in the 2006 year end deferred tax balance includes the effect of adopting SFAS No. 158, "Employers' Accounting for Defined Benefit
Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132(R)," in addition to the annual provision for deferred
income tax expense.

During the year ended January 29, 2005, $566 million of the proceeds attributable to the real properties sold in the Marshall Field's and Mervyn's
dispositions were used to acquire replacement properties that are being used in our business. $373 million of the gain related to the sold real properties was
deferred for income tax purposes as allowed by Section 1031 of the Internal Revenue Code until the replacement properties are disposed.
In 2006 the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48 (FIN 48). FIN 48 prescribes the financial statement
recognition and measurement criteria for tax positions taken in a tax return, clarifies when tax benefits should be recorded and how they should be classified
in financial statements, and requires certain disclosures of uncertain tax matters. We will adopt the provisions of FIN 48 at the beginning of fiscal 2007. We
are presently evaluating the impact of the adoption of FIN 48 on our results of operations and financial position.
24. Other Non-Current Liabilities
February 3,
2007

(millions)

January 28,
2006

Deferred compensation
$645
$596
Workers' compensation and general liability
418
362
Other
284
274
Total
$1,347
$1,232
We retain a substantial portion of the risk related to certain general liability and workers' compensation claims. Liabilities associated with these losses
include estimates of both claims filed and losses incurred but not yet reported. We estimate our ultimate cost based on analysis of historical data and actuarial
estimates. General liability and workers' compensation liabilities are recorded at our estimate of their net present value.
25. Share Repurchase
In June 2004, our Board of Directors authorized the repurchase of $3 billion of our common stock. In November 2005, our Board increased the aggregate
authorization by $2 billion, for a total authorization of $5 billion. Share repurchases for the last three years, repurchased primarily through open market
transactions, were as follows:
Share Repurchases
(millions, except per share data)

Total Number of
Shares Purchased

Average Price
Paid per Share

Total Investment

2004
28.4
$44.77
$1,276
2005
23.1
$51.88
$1,197
2006
19.5
$50.16
$977
Total program-to-date
71.0
$48.56
$3,450
Of the shares reacquired in 2006, a portion was delivered upon settlement of prepaid forward contracts. The prepaid forward contracts settled in 2006 had
a total cash investment of $76 million and an aggregate market value of $88 million at their respective settlement dates. The prepaid forward contracts settled
in 2005 had a total cash investment of $65 million and an aggregate market value of $79 million at their respective settlement dates. The prepaid forward
contracts settled in 2004 had a total cash investment of $17 million and an aggregate market value of $21 million at their respective settlement dates. These

contracts are among the investment vehicles used to reduce our economic exposure related to our nonqualified deferred compensation plans. The details of our
long positions in prepaid forward contracts have been provided in Note 27.
26. Share-Based Compensation
We maintain a long-term incentive plan for key team members and non-employee members of our Board of Directors. Our long-term incentive plan
allows us to grant equity-based compensation awards, including stock options, performance share unit awards, restricted stock unit awards, or a combination
of awards. A majority of granted awards are nonqualified stock options that vest annually in equal amounts over a four-year period and expire no later than
10 years after the grant date. Options granted to the non-employee members of our Board of Directors become exercisable after one year and have a 10-year
term. We have issued performance share or performance share unit awards annually since January 2003. These awards represent shares potentially issuable in
the future based upon the attainment of performance criteria including compound annual growth rates in revenue and EPS. In 2006, we issued restricted stock
units with three-year cliff vesting to our executive officers other than our chief executive officer. We also issued restricted stock and restricted stock units to
our Board of Directors. The number of unissued common shares reserved for future grants under the share-based compensation plans was 42,974,387 at
February 3, 2007 and 47,659,572 at January 28, 2006.
Share-Based Compensation Awards
Stock Options

Total Outstanding
(number of options and shares
in thousands)

Number
of Options

Currently Exercisable

Exercise
Price (a)

Intrinsic
Value (b)

Number
of Options

Exercise
Price (a)

Intrinsic
Value (b)

Performance
Share Units

Restricted
Stock Units

January 31, 2004

Granted
Canceled/forfeited
Exercised

36,159
4,072
(513)
(7,727)

$28.28
49.12
35.32
20.95

$363

23,689

$24.48

$326

1,125 (c)
629 (d)
(73)
(73)

January 29, 2005

Granted
Canceled/forfeited
Exercised

31,991
4,057
(691)
(6,643)

$32.59
53.94
40.67
26.58

$540

22,102

$28.79

$458

1,608
597 (e)
(252)

January 28, 2006

Granted
Canceled/forfeited
Exercised

28,714
4,980
(607)
(5,177)

$36.82
56.84
48.06
27.08

$505

19,229

$31.64

$438

1,953
119 (e)
(177)

221

February 3, 2007

27,910

$41.95

$558

17,659

$35.32

$470

1,895 (f)

221

(a)

Weighted average.

(b)

Represents stock price appreciation subsequent to the grant date, in millions.

(c)

Awards will be earned based on performance during four years ending February 3, 2007 and February 2, 2008.

(d)

Awards will be earned based on performance during three years ending February 2, 2008.

(e)

Awards will be earned based on performance during three years ending January 31, 2009.

(f)

Approximately 32 percent of these performance share units, if and when earned, will be paid in cash or deferred through a credit to the deferred compensation accounts of the
participants in an amount equal to the value of any earned performance shares.

The Black-Scholes valuation model was used to estimate the fair value of the options at grant date based on the assumptions noted in the following table.
Volatility represents an average of market quotes for implied volatility of 5.5-year options on Target common stock. The expected life is estimated based on
analysis of options already exercised and any foreseeable trends or changes in behavior. The risk-free interest rate is an interpolation of the relevant U.S.
Treasury security maturities as of each applicable grant date. The assumptions disclosed below represent a weighted average of the assumptions used for all of
our stock option grants throughout the year.
Valuation of Share-Based Compensation
2006

2005

2004

Stock option valuation assumptions:

Dividend yield
0.8%
0.7%
0.7%
Volatility
23%
27%
22%
Risk-free interest rate
4.7%
4.4%
3.8%
Expected life in years
5.5
5.5
5.5
Grant date weighted average fair value
$16.52
$16.85
$13.10
Performance share units grant date weighted average fair value
$49.98
$53.96
$49.43
Restricted stock units grant date weighted average fair value
$57.60

Compensation expense recognized in Statements of Operations (millions)

$99
$93
$60
Related income tax benefit (millions)
$39
$37
$23
Compensation realized by team members upon option exercises (millions)
$142
$180
$201
Related income tax benefit (millions)
$56
$71
$77
As of February 3, 2007, there was $116 million of total unrecognized compensation expense related to nonvested stock options. That cost is expected to
be recognized over a weighted average period of 1.5 years. The weighted average remaining life of currently exercisable options is 4.8 years, while total
outstanding options have a weighted average remaining life of 6.3 years.

Holders of performance share units will receive shares of our common stock if we meet certain EPS and revenue growth targets and the holders also
satisfy service-based vesting requirements. Compensation expense associated with outstanding performance share units is recorded over the life of the awards.
The amount of expense recorded each period is dependent upon our estimate of the number of shares that will ultimately be issued and, for some awards, the
current Target common stock price. Future compensation expense for currently outstanding awards could range from a credit of $76 million for previously
recognized amounts up to a maximum of approximately $24 million of expense assuming full payout under all outstanding awards.
Total unrecognized compensation expense related to restricted stock unit awards was $12 million as of February 3, 2007.
27. Defined Contribution Plans
Team members who meet certain eligibility requirements can participate in a defined contribution 401(k) plan by investing up to 80 percent of their
compensation, as limited by statute or regulation. Generally, we match 100 percent of each team member's contribution up to 5 percent of total compensation.
Our contribution to the plan is initially invested in Target common stock. These amounts are free to be diversified by the team member immediately.
In addition, we maintain nonqualified, unfunded deferred compensation plans for approximately 4,900 current and retired team members whose
participation in our 401(k) plan is limited by statute or regulation. These team members choose from a menu of crediting rate alternatives that are the same as
the investment choices in our 401(k) plan, including Target common stock. Through the end of 2005, we credited an additional 2 percent per year to the
accounts of all active participants, in part to recognize the risks inherent to their participation in a plan of this nature. Effective in 2006, the additional
2 percent per year was credited only to the accounts of active participants who were not executive officers. We also maintain a nonqualified, unfunded
deferred compensation plan that was frozen during 1996, covering 15 current and 49 retired participants. In this plan deferred compensation earns returns tied
to market levels of interest rates plus an additional 6 percent return, with a minimum of 12 percent and a maximum of 20 percent, as determined by the plan's
terms.
We control some of our risk of offering the nonqualified plans through investing in vehicles, including prepaid forward contracts in our own common
stock, that offset a substantial portion of our economic exposure to the returns of these plans. These investment vehicles are general corporate assets and are
marked-to-market with the related gains and losses recognized in the Consolidated Statements of Operations in the period they occur. The total change in fair
value for contracts indexed to our own common stock recorded in earnings was pre-tax income of $37 million in 2006, $7 million in 2005 and $29 million in
2004. During 2006, we invested approximately $111 million in such investment instruments, and these investments are included in the Consolidated
Statement of Cash Flows within other investing activities. The counterparty to these contracts may deliver Target common shares or cash to us at the
settlement dates at their discretion. At times, adjusting our position in these investment vehicles includes repurchasing shares of Target common stock,
including shares delivered by counterparties when settling the forward contracts. In 2006, 2005 and 2004, these repurchases totaled 1.6 million, 1.5 million
and 0.5 million shares, respectively, and are included in the total share repurchases disclosed in Note 25.
Prepaid Forward Contracts on Target Common Stock
(dollars in millions, except per share data)
Number of Shares
Settlement Date

Current Fair Value at

February 3, 2007

January 28, 2006

257,000
516,033
228,276
189,479
250,000
250,000
1,025,400
2,716,188

140,000
165,025
257,000
516,033
228,276
189,479
250,000
250,000

1,995,813

Nov. 2006
Jan. 2007
Oct. 2007
Oct. 2007
Oct. 2007
Oct. 2007
Oct. 2007
Oct. 2007
Oct. 2007

Contract Price
per Share
$41.70
54.54
38.95
29.07
43.81
52.78
53.41
53.41
48.76

February 3, 2007

January 28, 2006

16
32
14
12
15
15
64
$168

$7
9
14
28
12
10
14
14

$108

Defined Contribution Plan Expenses

(millions)

2006

2005

2004

401(k) Defined Contribution Plan

401(k) matching contributions

$141

$118

$118

Nonqualified Deferred Compensation Plans

Benefits expense
Related investment income

$98
(68)

$64
(34)

$63
(40)

Nonqualified plan net expense

$30

$30

$23

In 2005 and 2004, certain retired executives accepted our offer to exchange our obligation to them under certain frozen nonqualified plans for cash or
deferrals in our current nonqualified deferred compensation plan. These exchange transactions resulted in expense of $7 million and $17 million, respectively.
We expect lower future expenses as a result of these transactions. There were no such exchange transactions during 2006.
Expenses for Marshall Field's and Mervyn's team members are included in the table above to the extent we retained the related assets and obligations of
their plans subsequent to the 2004 divestiture of those businesses.

28. Pension and Postretirement Health Care Benefits

We have qualified defined benefit pension plans covering all U.S. team members who meet age and service requirements. We also have unfunded
nonqualified pension plans for team members with qualified plan compensation restrictions. Benefits are provided based on years of service and team member
compensation. Upon retirement, team members also become eligible for certain health care benefits if they meet minimum age and service requirements and
agree to contribute a portion of the cost.
In 2005, certain nonqualified pension and survivor benefits owed to current officers were exchanged for cash or deferrals in our current nonqualified
deferred compensation plan, which resulted in expense of $11 million. The effect of these exchange transactions is included in the pension tables below.
There were no such exchange transactions during 2006 or 2004.
In September 2006, the FASB issued SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans, an
amendment of FASB Statements No. 87, 88, 106, and 132(R)" (SFAS 158). SFAS 158 requires plan sponsors of defined benefit pension and other
postretirement benefit plans (collectively postretirement benefit plans) to: recognize the funded status of their postretirement benefit plans in the statement of
financial position, measure the fair value of plan assets and benefit obligations as of the date of the fiscal year-end statement of financial position and provide
additional disclosures. On February 3, 2007, we adopted the recognition and disclosure provisions of SFAS 158. The effect of adopting SFAS 158 on our
financial condition at February 3, 2007 has been included in the accompanying consolidated financial statements as described below. SFAS 158 did not have
an effect on our consolidated financial condition at January 28, 2006 or January 29, 2005. SFAS 158's provisions regarding the change in the measurement
date of postretirement benefit plans will require us to change our measurement date from October 31 to our fiscal year end date beginning with fiscal year
2008; however, we are currently evaluating whether we will early adopt the measurement date provisions in fiscal 2007.
SFAS 158 required us to recognize the funded status, which is the difference between the fair value of plan assets and the projected benefit obligations,
of our postretirement benefit plans in the February 3, 2007 Consolidated Statement of Financial Position, with a corresponding adjustment to accumulated
other comprehensive loss, net of tax. The adjustment to accumulated other comprehensive loss at adoption represents the net unrecognized actuarial losses and
unrecognized prior service costs, both of which were previously netted against the plans' funded status in our Consolidated Statements of Financial Position
pursuant to the provisions of SFAS No. 87, "Employers' Accounting for Pensions" (SFAS 87). These amounts will be subsequently recognized as net periodic
pension expense pursuant to our historical accounting policy for amortizing such amounts. Further, actuarial gains and losses that arise in subsequent periods
and are not recognized as net periodic pension expense in the same periods will be recognized as a component of other comprehensive income. Those
amounts will be subsequently recognized as a component of net periodic pension expense on the same basis as the amounts recognized in accumulated other
comprehensive loss at adoption of SFAS 158.
The effects of adopting the provisions of SFAS 158 on our Consolidated Statement of Financial Position at February 3, 2007 are presented in the
following table. The adoption of SFAS 158 had no effect on our Consolidated Statement of Operations for the year ended February 3, 2007, or for any prior
period. Had we not been required to adopt SFAS 158 at February 3, 2007, we would have recognized an additional minimum liability pursuant to the
provisions of SFAS 87. The effect of recognizing the additional minimum liability is included in the table below in the column labeled "Prior to Adopting
SFAS 158."

At February 3, 2007
(millions)
Prior to Adopting
SFAS 158

Pension and Postretirement Balances Recorded

Effect of Adopting
SFAS 158

As Reported at
February 3, 2007

Other non-current assets

1,569

(357)

1,212

Accrued and other current liabilities

Deferred income taxes
Other non-current liabilities
Accumulated other comprehensive loss

2,742
729
1,334
(9)

16
(152)
13
(234)

2,758
577
1,347
(243)

Obligations and Funded Status

Pension Benefits
Qualified Plans
(millions)

Change in Projected Benefit Obligation

Benefit obligation at beginning of
measurement period (a)
Service cost
Interest cost
Actuarial loss
Participant contributions
Benefits paid
Plan amendments

Postretirement
Health Care Benefits

Nonqualified Plans

2006

2005

$1,626
82
91
32

(76)
9

$1,515
66
85
55

(94)
(1)

2006

$33
1
2
5

(5)

2005

$34
1
2
4

(5)
(3)

2006

2005

$105
3
6
13
9
(21)

$107
2
6
3
17
(30)

Benefit obligation at end of measurement

period
(a)

$1,764

$1,626

$36

$33

$115

$105

Measurement date is October 31 of each year.

Pension Benefits
Qualified Plans

Postretirement
Health Care Benefits

Nonqualified Plans

2006

2005

Change in Plan Assets

Fair value of plan assets at beginning of
measurement period
Actual return on plan assets
Employer contribution
Participant contributions
Benefits paid

$1,845
303
3

(76)

$1,698
174
67

(94)

(5)

(5)

12
9
(21)

13
17
(30)

Fair value of plan assets at end of measurement

period

$2,075

$1,845

$311

$219

$(36)

$(33)

$(115)

$(105)

(millions)

Funded status

2006

2005

2006

2005

The net overfunded status of the qualified plans of $311 million at February 3, 2007 is recognized in the accompanying Consolidated Statement of
Financial Position as $325 million within other non-current assets and $14 million within other non-current liabilities. The underfunded amount for the
nonqualified plans, including the postretirement health care benefits liability, of $151 million at February 3, 2007 is recognized as $16 million within accrued
and other current liabilities and $135 million within other non-current liabilities.
No plan assets are expected to be returned to us during 2007.
Included in accumulated other comprehensive loss at February 3, 2007 are the following amounts that have not yet been recognized in net periodic
pension expense: unrecognized actuarial losses $425 million ($259 million net of tax) partially offset by unrecognized prior service costs of $20 million
($12 million net of tax). The actuarial loss included in accumulated other comprehensive loss and expected to be recognized in net periodic pension expense
during 2007 is $46 million ($28 million net of tax), which will be offset by prior service cost of $4 million ($2 million net of tax) and respectively.
2005 Reconciliation of Prepaid (Accrued) Pension and Benefit Expense to Funded Status

Pension Benefits
(millions)

Qualified Plans
2005

Nonqualified Plans
2005

Postretirement
Health Care Benefits
2005

Funded status
Unrecognized actuarial loss
Unrecognized prior service cost

$219
561
(32)

$(33)
16

$(105)
8

Net amount recognized

$748

$(17)

$(97)

2005 Reconciliation of Amounts Recognized in Consolidated Statement of Financial Position

Pension Benefits
Qualified Plans
2005
Prepaid pension expense
Accrued pension and benefit expense

$752
(9)

Nonqualified Plans
2005
$
(22)

Postretirement
Health Care Benefits
2005
$
(97)

Accumulated other comprehensive income

Net amount recognized

$748

$(17)

$(97)

Net Pension and Postretirement Health Care Benefits Expense

Pension Benefits

Postretirement Health Care Benefits

(millions)

2006

2005

2004

Service cost benefits earned during the period

Interest cost on projected benefit obligation
Expected return on assets
Recognized losses
Recognized prior service cost
Settlement/curtailment charges

$83
93
(141)
47
(5)

$67
87
(137)
43
(5)

$77

$55

Total

2006

2005

2004

$79
84
(122)
36
(7)
1

$3
6

$2
6

$3
7

(7)

$71

$10

$9

$4

The amortization of prior service cost is determined using the straight-line method over the average remaining service period of team members expected
to receive benefits under the plan. As a result of freezing the benefits for Marshall Field's and Mervyn's team members at the time of their respective
dispositions and retaining the related assets and obligations of the plans, we were required to record curtailment charges in 2004. These charges are included
in the gain on disposal of discontinued operations in the Consolidated Statements of Operations.
Other information related to defined benefit pension plans is as follows:
(millions)
Accumulated benefit obligation (ABO) for all plans (a)
Projected benefit obligation for pension plans with an ABO in excess of plan assets (b)
Total ABO for pension plans with an ABO in excess of plan assets
Fair value of plan assets for pension plans with an ABO in excess of plan assets
(a)

The present value of benefits earned to date assuming no future salary growth.

(b)

The present value of benefits earned to date by plan participants, including the effect of assumed future salary increases.

2006

2005

$1,674
51
44
2

$1,534
46
41
3

Assumptions
Weighted average assumptions used to determine benefit obligations at October 31:
Postretirement
Health Care Benefits

Pension Benefits

Discount rate
Average assumed rate of compensation increase

2006

2005

2006

2005

5.80%
4.00%

5.75%
3.50%

5.80%
n/a

5.75%
n/a

Weighted average assumptions used to determine net periodic benefit expense for years ended October 31:

Pension Benefits

Discount rate
Expected long-term rate of return on plan
assets
Average assumed rate of compensation
increase

Postretirement Health Care Benefits

2006

2005

2004

2006

2005

2004

5.75%

5.75%

6.25%

5.75%

5.75%

6.25%

8.00%

8.00%

8.00%

n/a

n/a

n/a

3.50%

2.75%

3.25%

n/a

n/a

n/a

The discount rate used to measure net periodic benefit expense each year is the rate as of the beginning of the year (i.e., the prior measurement date).
With an essentially stable asset allocation over the following time periods, our annualized rate of return on qualified plans' assets has averaged 10.6 percent,
10.1 percent and 10.9 percent for the 5-year, 10-year and 15-year periods, respectively, ending October 31, 2006.

An increase in the cost of covered health care benefits of 9 percent was assumed for 2006. In 2007, the rate is assumed to be 8 percent for non-Medicare
eligible individuals and 9 percent for Medicare eligible individuals. Both rates will be reduced to 5 percent in 2012 and thereafter.
A one percent change in assumed health care cost trend rates would have the following effects:
(millions)

1% Increase

Effect on total of service and interest cost components of net periodic postretirement health care benefit
expense
Effect on the health care component of the postretirement benefit obligation

1% Decrease

$
$9

$
$(8)

Additional Information
Our pension plan weighted average asset allocations at October 31, 2006 and 2005 by asset category were as follows:
Asset Category
2006
Domestic equity securities
International equity securities
Debt securities
Other
Total

2005

35%
20
26
19

36%
20
26
18

100%

100%

Our asset allocation strategy targets 35 percent in domestic equity securities, 20 percent in international equity securities, 25 percent in debt securities
and 20 percent in other assets. Equity securities include our common stock in amounts substantially less than 1 percent of total plan assets at October 31, 2006
and 2005. Other assets include private equity, mezzanine and distressed debt, timber-related assets and less than a 5 percent allocation to real estate. Our
expected long-term rate of return assumptions as of October 31, 2006 were 8.5 percent, 8.5 percent, 5 percent and 10 percent for domestic equity securities,
international equity securities, debt securities and other assets, respectively.
Contributions
Given the qualified pension plan's funded position, we are not required to make any contributions in 2007, although we may choose to make
discretionary contributions of up to $100 million. We expect to make contributions in the range of $5 million to $15 million to our postretirement health care
benefit plan in 2007.
Estimated Future Benefit Payments
Benefit payments by the plans, which reflect expected future service as appropriate, are expected to be paid as follows:
(millions)

Pension Benefits

Postretirement Health
Care Benefits

$83
94
99
104
110
653

$12
13
13
14
14
78

2007
2008
2009
2010
2011
2012-2016
29. Quarterly Results (Unaudited)

Due to the seasonal nature of our business, fourth quarter operating results typically represent a substantially larger share of total year revenues and
earnings because they include our peak sales period from Thanksgiving through the end of December. We follow the same accounting policies for preparing
quarterly and annual financial data. The table below summarizes quarterly results for 2006 and 2005:
First Quarter
(millions, except per share data)
Total revenues
Gross margin
Net earnings
Basic earnings per share (a)
Diluted earnings per share (a)
Dividends declared per share
Closing common stock price
High
Low

Second Quarter

Third Quarter

Fourth Quarter

Total Year

2006

2005

2006

2005

2006

2005

2006

2005

2006

2005

$12,863
$4,020
$554
$.64
$.63
$.10

$11,477
$3,615
$494
$.56
$.55
$.08

$13,347
$4,273
$609
$.71
$.70
$.12

$11,990
$3,839
$540
$.61
$.61
$.10

$13,570
$4,265
$506
$.59
$.59
$.12

$12,206
$3,829
$435
$.49
$.49
$.10

$19,710
$5,920
$1,119
$1.30
$1.29
$.12

$16,947
$5,061
$939
$1.07
$1.06
$.10

$59,490
$18,479
$2,787
$3.23
$3.21
$.46

$52,620
$16,344
$2,408
$2.73
$2.71
$.38

$55.80
$50.85

$52.50
$46.41

$54.71
$45.53

$59.98
$46.28

$59.72
$45.28

$57.80
$50.84

$62.35
$56.03

$58.85
$52.61

$62.35
$45.28

$59.98
$46.28

(a)

Per share amounts are computed independently for each of the quarters presented. The sum of the quarters may not equal the total year amount due to the impact of changes in
average quarterly shares outstanding.

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Not Applicable.

Item 9A.

Controls and Procedures.

As of the end of the period covered by this annual report, we conducted an evaluation, under supervision and with the participation of management,
including the chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures
pursuant to Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934, as amended (Exchange Act). Based upon that evaluation, our chief executive
officer and chief financial officer concluded that our disclosure controls and procedures are effective. Disclosure controls and procedures are defined by
Rules 13a-15(e) and 15d-15(e) of the Exchange Act as controls and other procedures that are designed to ensure that information required to be disclosed by
us in reports filed with the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules
and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be
disclosed by us in reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal
financial officers, or person performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
There were no changes in our internal control over financial reporting during the fourth quarter of fiscal year 2006 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting.
For the Report of Management on Internal Control and the Report of Independent Registered Public Accounting Firm on Internal Control over Financial
Reporting, see Item 8, Financial Statements and Supplementary Data.

Item 9B.

Other Information.

Not applicable.

PART III
Certain information required by Part III is incorporated by reference from Target's definitive Proxy Statement to be filed on or about April 9, 2007.
Except for those portions specifically incorporated in this Form 10-K by reference to Target's Proxy Statement, no other portions of the Proxy Statement are
deemed to be filed as part of this Form 10-K.

Item 10.

Directors, Executive Officers and Corporate Governance.

Election of Directors, Section 16(a) Beneficial Ownership Reporting Compliance, Additional Information Business Ethics and Conduct and General
Information About the Board of Directors Board Meetings and Committees, of Target's Proxy Statement to be filed on or about April 9, 2007, are
incorporated herein by reference. See also Item 4A, Executive Officers of Part I hereof.

Item 11.

Executive Compensation.

Executive and Director Compensation, of Target's Proxy Statement to be filed on or about April 9, 2007, is incorporated herein by reference.

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Equity Compensation Plan Information

Plan Category
Equity compensation plans approved by security
holders

Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights as of
February 3, 2007

Weighted average
exercise price of
outstanding options,
warrants and rights as
of February 3, 2007

Number of securities remaining

available for future issuance
under equity compensation plans
as of February 3, 2007 (excluding
securities reflected in column (a))

(a)

(b)

(c)

30,025,530(1)

$41.95

42,974,387

Equity compensation plans not approved by security

holders
Total
(1)

30,025,530

$41.95

42,974,387

This amount includes 2,115,595 performance shares and RSU shares potentially issuable under our Long-Term Incentive Plan. According to the existing plan provisions and
compensation deferral elections, approximately 32 percent of these potentially issuable performance shares, if and when earned, will be paid in cash or deferred through a credit to
the deferred compensation accounts of the participants in an amount equal to the value of any earned performance shares. The actual number of performance shares to be issued, cash
to be paid, or credits to be made to deferred compensation accounts, if any, depends on our financial performance over a period of time. Performance shares do not have an exercise
price and thus they have been excluded from the weighted average exercise price calculation in column (b).

Beneficial Ownership of Certain Shareholders, of Target's Proxy Statement to be filed on or about April 9, 2007, is incorporated herein by reference.

Item 13.

Certain Relationships and Related Transactions, and Director Independence.

Certain Relationships and General Information About the Board of Directors Director Independence, of Target's Proxy Statement to be filed on or
about April 9, 2007, are incorporated herein by reference.

Item 14.

Principal Accountant Fees and Services.

Audit and Non-audit Fees, of Target's Proxy Statement to be filed on or about April 9, 2007, is incorporated herein by reference.

PART IV
Item 15. Exhibits and Financial Statement Schedules.
The following information required under this item is filed as part of this report:
a)

Financial Statements

Consolidated Statements of Operations for the Years Ended February 3, 2007, January 28, 2006 and January 29, 2005
Consolidated Statements of Financial Position at February 3, 2007 and January 28, 2006
Consolidated Statements of Cash Flows for the Years Ended February 3, 2007, January 28, 2006 and January 29, 2005
Consolidated Statements of Shareholders' Investment for the Years Ended February 3, 2007, January 28, 2006 and January 29, 2005
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements
Target, through its special purpose subsidiary, Target Receivables Corporation (TRC), has entered into a securitization transaction under which it
transfers, on an ongoing basis, substantially all of its credit card receivables to a trust. Separate financial information is filed for TRC in its separate Annual
Report on Form 10-K.
Financial Statement Schedules
For the Years Ended February 3, 2007, January 28, 2006 and January 29, 2005:
II Valuation and Qualifying Accounts
Other schedules have not been included either because they are not applicable or because the information is included elsewhere in this Report.
b)

Exhibits

(3)A.
B.
(4)A.
B.
(10)A.
C.
D.
E.
F.
G.
H.
I.
J.
K.
L.

*
*
*
*
*
*
*
*
*
*
*

Restated Articles of Incorporation (as amended January 9, 2002) (1)

By-Laws (as amended through November 11, 1998) (2)
Indenture, dated August 4, 2000 between Target Corporation and Bank One Trust Company, N.A. (3)
Registrant agrees to furnish to the Commission on request copies of other instruments with respect to long-term debt.
Executive Short-Term Incentive Plan (4)
Amended and Restated Director Stock Option Plan of 1995
Supplemental Pension Plan I (5)
Amended and Restated Executive Long-Term Incentive Plan of 1981
Supplemental Pension Plan II (6)
Supplemental Pension Plan III (7)
Amended and Restated Deferred Compensation Plan Senior Management Group
Amended and Restated Deferred Compensation Plan Directors
Income Continuance Policy Statement (8)
SMG Income Continuance Policy Statement (9)
Amended and Restated SMG Executive Deferred Compensation Plan

N. * Amended and Restated Director Deferred Compensation Plan

O. * Executive Excess Long-Term Disability Plan (10)
P. * Amended and Restated Long-Term Incentive Plan
R. * Director Retirement Program (11)
S. * Deferred Compensation Trust Agreement
T. Five-year credit agreement dated as of June 9, 2005 among Target Corporation, Bank of America, N.A. as Administrative Agent and the Banks listed
therein (12)
(12) Statements re: Computations of Ratios
(21) List of Subsidiaries
(23) Consent of Independent Registered Public Accounting Firm
(24) Powers of Attorney
(31)A. Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(31)B. Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
(32)A. Certification of the Chief Executive Officer Pursuant to Section 18 U.S.C. Section 1350 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(32)B. Certification of the Chief Financial Officer Pursuant to Section 18 U.S.C. Section 1350 Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(99)A. Risk Factors and Cautionary Statements Relating to Forward-Looking Information
Copies of exhibits will be furnished upon written request and payment of Registrant's reasonable expenses in furnishing the exhibits.

Management contract or compensation plan or arrangement required to be filed as an exhibit to this Form 10-K.

(1)

Incorporated by reference to Exhibit (3)A to Target's Form 10-K Report for the year ended February 2, 2002.

(2)

Incorporated by reference to Exhibit (3)(ii) to Target's Form 10-Q Report for the quarter ended October 31, 1998.

(3)

Incorporated by reference to Exhibit 4.1 to Target's Form 8-K Report filed August 10, 2000.

(4)

Incorporated by reference to Exhibit (10)A to Target's Form 10-K Report for the year ended February 2, 2002.

(5)

Incorporated by reference to Exhibit 10(E) to Target's Form 10-K Report for the year ended February 1, 1997, and Amendment thereto, incorporated by reference to Exhibit (10)G to
Target's Form 10-Q Report for the quarter ended November 2, 2002.

(6)

Incorporated by reference to Exhibit (10) G to Target's Form 10-K Report for the year ended February 1, 1997, and Amendment thereto, incorporated by reference to Exhibit (10)G to
Target's Form 10-Q Report for the quarter ended November 2, 2002.

(7)

Incorporated by reference to Exhibit (10) H to Target's Form 10-K Report for the year ended February 1, 1997, and Amendment thereto, incorporated by reference to Exhibit (10)G to
Target's Form 10-Q Report for the quarter ended November 2, 2002.

(8)

Incorporated by reference to Exhibit (10) K to Target's Form 10-K Report for the year ended January 30, 1999.

(9)

Incorporated by reference to Exhibit (10)L to Target's Form 10-K Report for the year ended January 30, 1999.

(10)

Incorporated by reference to Exhibit (10)O to Target's Form 10-K Report for the year ended February 3, 2001.

(11)

Incorporated by reference to Exhibit (10)O to Target's Form 10-K Report for the year ended January 29, 2005.

(12)

Incorporated by reference to Exhibit (10) to Target's Form 10-Q Report for the quarter ended July 29, 2005.

SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Target has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
TARGET CORPORATION
By:

Douglas A. Scovanner
Executive Vice President, Chief Financial
Dated: March 15, 2007
Officer and Chief Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, the report has been signed below by the following persons on behalf of Target and
in the capacities and on the dates indicated.

Dated: March 15, 2007

Dated: March 15, 2007

Robert J. Ulrich
Chairman of the Board and Chief Executive Officer

Douglas A. Scovanner
Executive Vice President, Chief Financial Officer and
Chief Accounting Officer
ROXANNE S. AUSTIN
STEPHEN W. SANGER
CALVIN DARDEN
WARREN R. STALEY
JAMES A. JOHNSON
GREGG W. STEINHAFEL
RICHARD M. KOVACEVICH
GEORGE W. TAMKE
MARY E. MINNICK
SOLOMON D. TRUJILLO
ANNE M. MULCAHY
ROBERT J. ULRICH
Directors
Douglas A. Scovanner, by signing his name hereto, does hereby sign this document pursuant to powers of attorney duly executed by the Directors
named, filed with the Securities and Exchange Commission on behalf of such Directors, all in the capacities and on the date stated.
By:

Douglas A. Scovanner
Attorney-in-fact

Dated: March 15, 2007

TARGET CORPORATION
Schedule II Valuation and Qualifying Accounts
Fiscal Years 2006, 2005 and 2004
(in millions)

Column A

Description
Allowance for doubtful accounts:
2006
2005
2004

Sales returns reserves:

2006
2005
2004

Column B

Column C

Column D

Column E

Balance at
beginning of
period

Additions
charged to cost,
expenses,
revenues

Deductions

Balance at end of
period

$451
$387
$352

$380
$466
$451

$(314)
$(402)
$(416)

$517
$451
$387

$11
$11
$

$1,123
$968
$843

$(1,103)
$(968)
$(832)

$31
$11
$11

Exhibit Index
Exhibit

Description

Manner of Filing

(3)A.
(3)B.
(4)A.

Restated Articles of Incorporation (as amended January 9, 2002)

By-Laws (as amended through November 11, 1998)
Indenture, dated August 4, 2000 between Target Corporation and Bank One Trust Company,
N.A.
Executive Short-Term Incentive Plan
Amended and Restated Director Stock Option Plan of 1995
Supplemental Pension Plan I
Amended and Restated Executive Long-Term Incentive Plan of 1981
Supplemental Pension Plan II
Supplemental Pension Plan III
Amended and Restated Deferred Compensation Plan Senior Management Group
Amended and Restated Deferred Compensation Plan Directors
Income Continuance Policy Statement
SMG Income Continuance Policy Statement

Incorporated by Reference
Incorporated by Reference
Incorporated by Reference

(10)A.
(10)C.
(10)D.
(10)E.
(10)F.
(10)G.
(10)H.
(10)I.
(10)J.
(10)K.

Incorporated by Reference
Filed Electronically
Incorporated by Reference
Filed Electronically
Incorporated by Reference
Incorporated by Reference
Filed Electronically
Filed Electronically
Incorporated by Reference
Incorporated by Reference

(10)L.
(10)N.
(10)O.
(10)P.
(10)R.
(10)S.
(10)T.
(12)
(21)
(23)
(24)
(31)A.
(31)B.
(32)A.
(32)B.
(99)A.

Amended and Restated SMG Executive Deferred Compensation Plan

Amended and Restated Director Deferred Compensation Plan
Executive Excess Long-Term Disability Plan
Amended and Restated Long-Term Incentive Plan
Director Retirement Program
Deferred Compensation Trust Agreement
Five-year credit agreement dated as of June 9, 2005 among Target Corporation, Bank of
America, N.A. as Administrative Agent and the Banks listed therein
Statements re: Computations of Ratios
List of Subsidiaries
Consent of Independent Registered Public Accounting Firm
Powers of Attorney
Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002
Certification of the Chief Executive Officer Pursuant to Section 18 U.S.C. Section 1350
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Certification of the Chief Financial Officer Pursuant to Section 18 U.S.C. Section 1350 Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
Risk Factors and Cautionary Statements Relating to Forward-Looking Information

Filed Electronically
Filed Electronically
Incorporated by Reference
Filed Electronically
Incorporated by Reference
Filed Electronically
Incorporated by Reference
Filed Electronically
Filed Electronically
Filed Electronically
Filed Electronically
Filed Electronically
Filed Electronically
Filed Electronically
Filed Electronically
Filed Electronically

SHAREHOLDER INFORMATION

Annual Meeting

Transfer Agent, Registrar and Dividend Disbursing Agent

The Annual Meeting of Shareholders is scheduled for May 24, 2007, at 1:00
p.m. EDT at the Target store located at 3100 West 117th Street, Cleveland,
Ohio 44111.

Mellon Investor Services

Shareholder Information

Trustee, Employee Savings 401(k) and Pension Plans

Quarterly and annual shareholder information, including the Form 10-Q and
Form 10-K Annual Report, which are filed with the Securities and Exchange
Commission, is available at no charge to shareholders. To obtain copies of
these materials, you may send an e-mail to Investorrelations@Target.com, or
write to: Vice President, Investor Relations (TPN-1448), Target Corporation,
1000 Nicollet Mall, Minneapolis, Minnesota 55403. These documents as well
as other information about Target Corporation, including our Business
Conduct Guide, Corporate Governance Profile, Corporate Responsibility
Report and Board of Director Committee Position Descriptions, are also
available on the internet at www.Target.com/investors.

State Street Bank and Trust Company

Sales Information

Direct Stock Purchase/Dividend Reinvestment Plan

Comments regarding our sales results are provided periodically throughout

the year on a recorded telephone message accessible by calling
612-761-6500. Our current sales disclosure practice includes a sales
recording on the day of our monthly sales release and one mid-month sales
update.

Mellon Investor Services administers a direct service investment plan that

allows interested investors to purchase Target Corporation stock directly,
rather than through a broker, and become a registered shareholder of the
company. The program offers many features including dividend
reinvestment. For detailed information regarding this program, call Mellon
Investor Services toll free at 1-800-842-7629 or write to: Mellon Investor
Services, P.O. Box 3338, South Hackensack, NJ 07606-1938.

Officer Certifications
In accordance with the rules of the New York Stock Exchange (NYSE), the
Chief Executive Officer of Target submitted the required annual certification
to the NYSE regarding the NYSE's Corporate Governance listing standards
on May 25, 2006. Target's Form 10-K for its fiscal year ended February 3,
2007, as filed with the U.S. Securities and Exchange Commission, includes
the certifications of Target's Chief Executive Officer and Chief Financial
Officer required by Section 302 of the Sarbanes Oxley Act of 2002.

Stock Exchange Listings

Trading symbol: TGT
New York Stock Exchange
Shareholder Assistance
For assistance regarding individual stock records, lost certificates, name or
address changes, dividend or tax questions, call Mellon Investor Services at
1-800-794-9871, access their website at www.melloninvestor.com, or write
to: Mellon Investor Services, P.O. Box 3315, South Hackensack, NJ
07606-1915.

Archer Farms, the Bullseye Design, the Bullseye Dog, Channel Red, Choxie, Circo, ClearRx, Expect More. Pay Less., Embark, Fast, Fun and Friendly, Gilligan & O'Malley, Global Bazaar,
Go International, Kool Toyz, Market Pantry, Merona, Perfect Pieces, ProSpirit, Ready. Sit. Read!, REDcard, Room Essentials, Safe City, SuperTarget, Take Charge of Education, Target &
Blue, Target Credit Card, Target House, Target Limited Edition, Target Pharmacy, Target Rewards, Target, Trutech, Wine Cube and Xhilaration are trademarks of Target Brands, Inc.
C9 by Champion is a trademark of HBI Branded Apparel Enterprises, LLC. ChefMate is a registered trademark of Herald Housewares Limited. Cherokee is a registered trademark of
Cherokee Inc. DSN Retailing Today is a registered trademark of Lebhar-Friedman, Inc. Eddie Bauer is a registered trademark of Eddie Bauer, Inc. Fieldcrest is a registered trademark of
Official Pillowtex, LLC. Isaac Mizrahi is a trademark of IM Ready Made LLC. Kitchen Essentials by Calphalon is a registered trademark of Calphalon Corporation. Liz Lange for Target is a
registered trademark of Elizabeth Lange, Inc. Michael Graves Design is a trademark of Michael Graves, Architect, P.A. Mossimo is a registered trademark of Mossimo, Inc. Newsweek is a
registered trademark of Weekly Publications, Inc. Nick and Nora is a registered trademark of American Genius & Co., Inc. Genuine Kids by Osh Kosh is a registered trademark of Oshkosh
B'Gosh Inc. Paul & Joe is a registered trademark of Sofrane (France Corp.) Rafe is a registered trademark of Rafe Totengco. Rolling Stone is a registered trademark of Straight Arrow
Publishers Company, L.P. St. Jude Children's Research Hospital is a registered trademark of St. Jude Children's Research Hospital. Smith & Hawken is a registered trademark of Smith &
Hawken, Ltd. Simply Shabby Chic is a trademark of Rachel Ashwell Designs, Inc. Sonia Kashuk is a trademark of Sonia Kashuk, Inc. Starbucks is a trademark of Starbucks U.S. Brands, LLC.
Sutton & Dodge is a registered trademark of Hormel Foods, LLC. Thomas O'Brien is a registered trademark of TOB International Marketing Corp. Visa is a trademark of Visa International
Service Association. Waverly is a registered trademark of F. Schumacher & Co. Woolrich is a registered trademark of John Rich & Sons Investment Holding Company. All rights reserved.
Copyright 2007 Target

QuickLinks
PART I
Item 1. Business.
Item 1A. Risk Factors.
Item 1B. Unresolved Staff Comments.
Item 2. Properties.
Item 3. Legal Proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
Item 4A. Executive Officers.
PART II
Item 5. Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Item 6. Selected Financial Data.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Item 8. Financial Statements and Supplementary Data.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Item 9A. Controls and Procedures.
Item 9B. Other Information.
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
Item 11. Executive Compensation.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Item 14. Principal Accountant Fees and Services.
PART IV
SIGNATURES
Schedule II Valuation and Qualifying Accounts
Exhibit Index

Exhibit (10)C
DAYTON HUDSON CORPORATION
DIRECTOR STOCK OPTION PLAN OF 1995
(As amended and restated on January 10, 2007)
ARTICLE I
ESTABLISHMENT OF THE PLAN
1.1

The name of this plan shall be "The Dayton Hudson Corporation Director Stock Option Plan of 1995" (hereinafter called the
"Plan").

1.2

The purpose of the Plan is to advance the interim performance and long-term growth of the Company by offering long-term
incentives, in addition to current compensation and other benefits, to outside directors of the Company.
ARTICLE II
DEFINITIONS

2.1

Award. An "Award" is used at times in the Plan to refer to the act of granting a Stock Option under the Plan.

2.2

Board. "Board" is the Board of Directors of the Company.

2.3

Code. "Code" is the Internal Revenue Code of 1986, as amended, as now in force or as hereafter amended.

2.4

Company. "Company" is Dayton Hudson Corporation, a Minnesota corporation, and any successor thereof.

2.5

Date of Grant. "Date of Grant" in 1995 shall be the date of the Company's Annual Shareholder's meeting. Each year
thereafter, Date of Grant shall be the second Wednesday in the month of April.

2.6

Fair Market Value. "Fair Market Value" of a share of Company common stock on any date is 100% of the mean between the
high and low prices for such stock as reported for such stock on the New York Stock Exchange Composite Transactions
Listing ("Composite Listing") on such date, or in the absence of such report 100% of the mean between the high and low
prices of such stock on the New York Stock Exchange on such date or, if no sale has been recorded on the Composite Listing
or made on such Exchange on such date, then on the last preceding date on which any such sale shall have been made in the
order of primacy above indicated.

2.7

Participant. A "Participant" is a member of the Board who is not an employee of Company or any of its Subsidiaries.

2.8

Plan Committee. The "Plan Committee" is the Committee referenced in Article VI hereof.

2.9

Plan Year. The "Plan Year" shall be a fiscal year of the Company falling within the term of this Plan except for the first year
of the Plan, for which the Plan Year shall commence as of the effective date of the Plan and terminate as of February 3, 1996.

2.10

Relevant Change Adjustments. In the event of any equity restructuring (within the meaning of Financial Accounting
Standards No. 123 (revised 2004)) other than: (1) any distribution of securities or other property by the Company to
shareholders in a spin-off or split-up that does not qualify as a tax-free spin-off or split-up under Section 355 of the Code (or
any successor provision of the Code); or (2) any cash dividend (including extraordinary cash dividends), appropriate
adjustments in the number of shares available for grant and in any outstanding Awards, including adjustments in the size of
the Award and in the exercise price per share of Stock Options, shall be made by the Plan Committee to give effect to such
equity restructuring to prevent dilution or enlargement of the benefits or potential benefits intended to be made available
under the Plan. No such adjustment shall be required to reflect the events described in clauses (1) and (2) above, or any other
change in capitalization that does not constitute an equity restructuring, however such adjustment may be made if the Plan
Committee affirmatively determines, in its discretion, that such an adjustment is appropriate.

2.11

Stock Option. A "Stock Option" is a right accruing in a Participant to purchase from the Company one share of the
Company's $1.00 par value common stock at the Fair Market Value of such share of common stock on the Date of Grant of
the Stock Option, and containing the terms and conditions set forth or allowed under Article VI hereof. Such Stock Option
shall be a Non-Qualified Stock Options that are not intended to qualify under Section 422 of the Code.

2.12

Subsidiary Corporation. For purposes of this Plan, the term "Subsidiary" or "Subsidiary Corporation" means any corporation
(other than the Company) in an unbroken chain of corporations beginning with the Company, in which each of the
corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent or more of the total
combined voting power of all classes of stock in one of the other corporations in such chain as determined at the point in time
when reference is made to such "Subsidiary" or "Subsidiary Corporation" in this Plan.

2.13

Change in Control. A "Change in Control" shall be deemed to have occurred if:

(a) a majority of the directors of the Company shall be persons other than persons
(i) for whose election proxies shall have been solicited by the Board or
(ii) who are then serving as directors appointed by the Board to fill vacancies on the Board caused by death or resignation
(but not by removal) or to fill newly-created directorships,

(b) 30% or more of the outstanding Voting Stock (as defined in Article IV of the Restated Articles of Incorporation, as
amended, of the Company) of the Company is acquired or beneficially owned (as defined in Article IV of the Restated
Articles of Incorporation, as amended, of the Company) by any person (as defined in Article IV of the Restated Articles of
Incorporation, as amended, of the Company), or
(c) the shareholders of the Company approve a definitive agreement or plan to
(i) merge or consolidate the Company with or into another corporation (other than (1) a merger or consolidation with a
Subsidiary of the Company or (2) a merger in which the Company is the surviving corporation and either (A) no outstanding
Voting Stock of the Company (other than fractional shares) held by shareholders immediately prior to the merger is
converted into cash (except cash upon the exercise by holders of Voting Stock of the Company of statutory dissenters' rights),
securities, or other property or (B) all holders of outstanding Voting Stock of the Company (other than fractional shares)
immediately prior to the merger (except those that exercise statutory dissenters' rights) have substantially the same
proportionate ownership of the Voting Stock of the Company or its parent corporation immediately after the merger),
(ii) exchange, pursuant to a statutory exchange of shares of Voting Stock of the Company held by shareholders of the
Company immediately prior to the exchange, shares of one or more classes or series of Voting Stock of the Company for
shares of another corporation or other securities, cash or other property,
(iii) sell or otherwise dispose of all or substantially all of the assets of the Company (in one transaction or a series of
transactions) or
(iv) liquidate or dissolve the Company.
ARTICLE III
GRANTING OF STOCK OPTIONS
3.1

Automatic Grant of Stock Options. Each year on the Date of Grant each Participant shall, without any Plan Committee
action, automatically be granted Stock Options, the number of which will be determined by dividing $50,000 by the Fair
Market Value on the Date of Grant.

3.2

Notification to Participants and Delivery of Documents. As soon as practicable after the Award, the Participant shall receive
a Stock Option exercisable for purchase of one share of the Company's $1.00 par value common stock for each Stock Option
granted to the Participant pursuant to this Plan or indicating the aggregate of such grant, which Stock Option shall be in
conformity with the provisions of Article IV hereof.

ARTICLE IV
STOCK OPTIONS
4.1

Stock Option. The Stock Option shall be evidenced by Stock Option agreements in such form and not inconsistent with the
Plan as the Plan Committee shall in its sole discretion approve from time to time, which agreements shall specify the number
of shares to which they pertain and the purchase price of such shares and shall, but without limitation, contain in substance
the following terms and conditions:
(a) Option Period. Each Stock Option granted shall expire and all rights to purchase shares thereunder shall cease ten years
and one day after the Date of Grant of the Stock Option or on such date prior thereto as may be fixed by the Plan Committee,
or on such date prior thereto as is provided by this Plan in the event of reorganization pursuant to Section 7.6(b) hereof. No
Stock Option shall permit the purchase of any shares thereunder during the first year after the Date of Grant of such Stock
Option, except as provided in Section 4.2 hereof.
(b) Transferability and Termination of Options. During the lifetime of an individual to whom a Stock Option is granted, the
Stock Option may be exercised only by such individual and shall terminate at the earlier of i) five years after the date the
Participant ceased to be a director of Company or, ii) ten years and one day after the Date of Grant of the Stock Option.
Rights of a Participant may, upon the death of a Participant, be exercised or perfected by his/her duly designated beneficiary
or otherwise by his/her applicable legal representatives, heirs or legatees to the extent vested in and unexercised or perfected
by the Participant at the date of his/her death. Provided however, that if a Participant dies, the Stock Option must be exercised
within five years after the date of death or the life of the Stock Option, whichever is less, but in no event less than one year
after the date of death.
No Stock Option shall be assignable or transferable by the individual to whom it is granted, except that it may be
transferable (X) by assignment by the Participant to the extent provided in the applicable option agreement, or (Y)
by will or the laws of descent and distribution in accordance with the provisions of this Plan. A Stock Option
transferred after the death of the Participant to whom it is granted may only be exercised by such individual's
beneficiary designated to exercise the Stock Option or otherwise by his/her applicable legal representatives, heirs or
legatees, and only within the specific time period set forth above.
In no event, whether by the Participant directly or by his/her proper assignee or beneficiary or other representative,
shall any Stock Option be exercisable at any time after its expiration date as stated in the Stock Option agreement.
When a Stock Option is no longer exercisable it shall be deemed for all purposes and without further act to have
lapsed and terminated.
(c) Exercise of Options. An individual entitled to exercise a Stock Option may, subject to its terms and conditions and the
terms and conditions of the Plan, exercise it in whole at any time, or in part from time to time, by delivery to the Company at
its principal office

of written notice of exercise, specifying the number of whole shares with respect to which the Stock Option is being
exercised. Before shares may be issued payment must be made in full, in legal United States tender, in the amount of the
purchase price of the shares to be purchased at the time and any amounts for withholding, if any, as provided in Section 7.7
hereof; provided, however, in lieu of paying for the exercise price in cash as described above, the individual may pay all or
part of such exercise price by delivering owned and unencumbered shares of the Company common stock having a Fair
Market Value on the date of exercise of the Stock Option equal to or less than the exercise price of the Stock Options
exercised, with cash, as set forth above, for the remainder, if any, of the purchase price.
4.2

Change in Control. In the event of a Change in Control, all outstanding Stock Options granted under the Plan shall accelerate
and will be exercisable in full for a period of two hundred ten (210) days after the Change in Control; provided that no Stock
Option shall be exercisable by a Participant after the termination date of the Stock Option.
ARTICLE V
SHARES OF STOCK SUBJECT TO THE PLAN

5.1

The total number of shares that may be available for issuance under all Stock Options granted pursuant to the Plan shall not
exceed in the aggregate 100,000 shares of the Company's $1.00 par value common stock. Stock Options which are forfeited
for any reason or are not distributed or are covered by Stock Options that lapse or are canceled before exercise, shall (unless
the Plan shall have been terminated) again be available in the same relative amounts for other Stock Option grants under the
Plan.
ARTICLE VI
ADMINISTRATION OF THE PLAN

6.1

The Plan will be administered by a committee of two or more members of the Board appointed from time to time by the
Board. Each member of the committee shall be a "disinterested person" as that term is defined under Rule 16b-3,
promulgated under the Securities Exchange Act of 1934, as amended, or any successor statute or regulation comprehending
the same subject matter.

6.2

The Plan Committee shall have and exercise all of the powers and responsibilities granted expressly or by implication to it by
the provisions of the Plan. Subject to and as limited by such provisions, the Plan Committee may from time to time enact,
amend and rescind such rules, regulations and procedures with respect to the administration of the Plan as it deems
appropriate or convenient. Notwithstanding any contrary provisions of this Plan, the Plan Committee shall have no discretion
with respect to the granting of Stock Options to any Participant or to alter or amend any terms, conditions and eligibility
requirements of a Stock Option granted or to be granted to any Participant under this Plan, it being understood that the
granting and terms, conditions and eligibility requirements of such Stock Options are governed solely by the provisions set
forth in this Plan pertaining thereto.

6.3

All questions arising under the Plan or any Stock Option agreement, or any rule, regulation or procedure adopted by the Plan
Committee shall be determined by the Plan Committee, and its determination thereof shall be conclusive and binding upon all
parties.

6.4

Any action required or permitted to be taken by the Plan Committee under the Plan shall require the affirmative vote of a
majority of a quorum of the members of the Plan Committee. A majority of all members of the Plan Committee shall
constitute a "quorum" for Plan Committee business. The Plan Committee may act by written determination instead of by
affirmative vote at a meeting, provided that any written determination shall be signed by all members of the Plan Committee,
and any such written determination shall be as fully effective as a majority vote of a quorum at a meeting.
ARTICLE VII
GENERAL PROVISIONS

7.1

Amendment or Termination. The Board may at any time amend, suspend, discontinue or terminate the Plan; provided,
however, that no amendment by the Board shall, without further approval of the shareholders of the Company:
(a) except as provided at Section 2.10 hereof increase the total number of shares of Company common stock which may be
made subject to the Plan; or
(b) except as provided at Section 2.10 hereof change the purchase price of Company common stock under the Plan; or
(c) change the Date of Grant; or
(d) change the calculation used to determine the number of Stock Options granted on the Date of Grant.
No action taken pursuant to this Section 7.1 of the Plan shall, without the consent of a Participant, adversely affect any Stock
Options which have been previously granted to a Participant. Provisions relating to Stock Options may not be amended more
often than once every six months other than to comport with changes in the Code or the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder.

7.2

Non-Alienation of Rights and Benefits. Except as expressly provided herein, no right or benefit under the Plan shall be
subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge and any attempt to anticipate, alienate,
sell, assign, pledge, encumber or charge the same shall be void. No right or benefit hereunder shall in any manner be liable
for or subject to the debts, contracts, liabilities or torts of the person entitled to such right or benefit. If any Participant or
beneficiary hereunder should become bankrupt or attempt to anticipate, alienate, sell, assign, pledge, encumber or charge any
right or benefit hereunder, then such right or benefit shall, in the sole discretion of the Plan Committee, cease and in such
event the Company may hold or apply the same or any or no part thereof for the benefit of the Participant or beneficiary, his/
her spouse, children

or other dependents or any of them in any such manner and in such proportion as the Plan Committee in its sole discretion
may deem proper.
7.3

No Rights as Shareholder. The granting of Stock Option(s) under the Plan shall not entitle a Participant or any other person
succeeding to his/her rights, to any dividend, voting or other right as a shareholder of the Company unless and until the
issuance of a stock certificate to the Participant or such other person pursuant to the provisions of the Plan and then only
subsequent to the date of issuance thereof.

7.4

Government Regulations. Notwithstanding any other provisions of the Plan seemingly to the contrary, the obligation of the
Company with respect to Stock Options granted under the Plan shall at all times be subject to any and all applicable laws,
rules, and regulations and such approvals by any government agencies as may be required or deemed by the Board or Plan
Committee as reasonably necessary or appropriate for the protection of the Company.
In connection with any sale, issuance or transfer hereunder, the Participant acquiring the shares shall, if requested by the
Company give assurances satisfactory to counsel of the Company that the shares are being acquired for investment and not
with a view to resale or distribution thereof and assurances in respect of such other matters as the Company may deem
desirable to assure compliance with all applicable legal requirements.

7.5

Effective Date. Subject to the approval of this Plan by the holders of a majority of the voting power of the shares present and
entitled to vote at the Company's Annual Meeting of Shareholders to be held May 24, 1995 and any necessary approval being
obtained from any department, board or agency of the United States or states having jurisdiction, the Plan shall be effective
as of May 24, 1995.

7.6

Reorganization. In case the Company is merged or consolidated with another corporation, or in case the property or stock of
the Company is acquired by another corporation, or in case of a separation, reorganization or liquidation of the Company, the
Plan Committee or a comparable committee of any corporation assuming the obligations of the Company hereunder, shall
either:
(a) make appropriate provision for the protection of any outstanding Stock Options granted thereunder by the substitution on
an equitable basis of appropriate stock of the Company, or of the merged, consolidated or otherwise reorganized corporation
which will be issuable in respect to the shares of the Company's $1.00 par value common stock.
(b) upon written notice to the Participant, provide that all outstanding Stock Options shall accelerate and become exercisable
in full but that all outstanding Stock Options, whether or not exercisable prior to such acceleration, must be exercised within
not less than sixty days of the date of such notice or they will be terminated. In any such case the Plan Committee may, in its
discretion, extend the sixty day- exercise period.

7.7

Withholding Taxes, etc. All distributions under the Plan shall be subject to any required withholding taxes and other
withholdings and, in case of distributions in Company

common stock, the Participant or other recipient may, as a condition precedent to the delivery of the common stock, be
required to pay to the Company the excess, if any, of the amount of required withholding over the withholdings, if any, from
any distributions in cash under the Plan. No distribution under the Plan shall be made in fractional shares of the Company's
common stock, but the proportional market value thereof shall be paid in cash.
7.8

General Restriction. Each Stock Option shall be subject to the requirement that, if at any time the Board shall determine, in
its discretion, that the listing, registration or qualification of the shares subject to such Stock Option upon any securities
exchange or under any state or Federal Law, or the consent or approval of any government regulatory body, is necessary or
desirable as a condition of, or in connection with the granting of such Stock Option or the issue or purchase of shares
thereunder, such Stock Option may not be exercised in whole or in part unless such listing, registration, qualification, consent
or approval shall have been effected or obtained free of any conditions not acceptable to the Board.

7.9

Use of Proceeds. The proceeds derived from the sale of the stock pursuant to Stock Options granted under the Plan shall
constitute general funds of the Company.

7.10

Headings. The headings of the Articles and their subparts in this Plan are for convenience of reading only and are not meant
to be of substantive significance and shall not add to or detract from the meaning of such Article or subpart to which it refers.

Exhibit (10)E
DAYTON HUDSON CORPORATION
EXECUTIVE LONG TERM INCENTIVE PLAN
OF 1981
(As amended and restated on January 10, 2007)
ARTICLE I
ESTABLISHMENT OF THE PLAN
1.1 The name of this plan shall be "The Dayton Hudson Corporation Executive Long Term Incentive Plan of 1981" (hereinafter
called the "Plan").
1.2 The purpose of the Plan is to advance the interim performance and long-term growth of the Company by offering long-term
incentives, in addition to current compensation and other benefits, to those key employees of the Company and its Subsidiaries who
the Plan Committee determines will contribute to such performance and growth inuring to the benefit of the shareholders of the
Company. Such long-term incentives may take the form of Stock Options, or Performance Shares, or Restricted Stock Awards or any
combination.
ARTICLE II
DEFINITIONS
2.1 AWARD. An "Award" is used at times in the Plan to refer to the act of granting a Stock Option, Performance Share or
Restricted Stock Award under the Plan.
2.2 BOARD.
2.3 CODE.

"Board" is the Board of Directors of Dayton Hudson Corporation.

"Code" is the Internal Revenue Code of 1986, as amended, as now in force or as hereafter amended.

2.4 COMPANY.

"Company" is Dayton Hudson Corporation, a Minnesota corporation, and any successor thereof.

2.5 COVERED OFFICER. "Covered Officer" includes all Participants whose compensation, in the year in which the Award is
made, is subject to the compensation expense deduction limitations set forth in Section 162(m) of the Code.
2.6 DATE OF GRANT. "Date of Grant" shall be the date designated in the resolution by the Plan Committee as the date of
such Stock Option(s) or Performance Share(s) or Restricted Stock Award(s), but such date shall not be earlier than the date of the
resolution and action thereon by the Plan Committee, or earlier than the effective date of the Plan, and in the absence of a date of grant
or a fixed method of computing such date being specifically set forth in the Plan Committee's resolution, then the Date of Grant shall
be the date of such Plan Committee's resolution and action.

2.7 FAIR MARKET VALUE. "Fair Market Value" of a share of Company common stock on any date is 100% of the mean
between the high and low prices for such stock as reported for such stock on the New York Stock Exchange Composite Transactions
Listing ("Composite Listing") on such date, or in the absence of such report 100% of the mean between the high and low prices of
such stock on the New York Stock Exchange on such date or, if no sale has been recorded on the Composite Listing or made on such
Exchange on such date, then on the last preceding date on which any such sale shall have been made in the order of primacy above
indicated.
2.8 HOLDER.

A "Holder" is a person who has been granted a Restricted Stock Award.

2.9 INCENTIVE STOCK OPTIONS.

Section 422 of the Code.
2.10 NON-QUALIFIED OPTIONS.
Section 422 of the Code.
2.11 PARTICIPANT.
participation in the Plan.

"Incentive Stock Options" are Stock Options that are intended to qualify under
"Non-Qualified Options" are Stock Options that are not intended to qualify under

A "Participant" is a person designated as such by the Plan Committee, pursuant to Article III hereof, for

2.12 PERFORMANCE GOALS.

"Performance Goals" are defined in Section 4.1 hereof.

2.13 PERFORMANCE PERIOD. "Performance Period", with respect to a Performance Share, is a period of four consecutive
fiscal years of the Company, beginning with the fiscal year in which such Performance Share is granted and may be referred to herein
and by the Plan Committee by use of the calendar year in which a particular Performance Period commences.
2.14 PERFORMANCE SHARE. A "Performance Share" is a potential award consisting of a right to one share of the
Company's $.3333 par value common stock (subject to increase as provided in Section 4.2 hereof) or a lesser number of shares and the
cash payment set forth in Section 5.2 hereof. A Performance Share shall be of no value to a Participant unless and until earned in
accordance with Article V hereof.
2.15 PLAN COMMITTEE.
2.16 PLAN YEAR.

The "Plan Committee" is the Committee referenced in Article IX hereof.

The "Plan Year" shall be a fiscal year of the Company falling within the term of this Plan.

2.17 RELEVANT CHANGE ADJUSTMENTS. In the event of any equity restructuring (within the meaning of Financial
Accounting Standards No. 123 (revised 2004)) other than: (1) any distribution of securities or other property by the Company to
shareholders in a spin-off or split-up that does not qualify as a tax-free spin-off or split-up under Section 355 of the Code (or any
successor provision of the Code); or (2) any cash dividend (including extraordinary cash dividends), appropriate adjustments in the
number of shares available for grant and in any outstanding Awards, including adjustments in the size of the Award and in the
exercise price per share of Stock Options, shall be made by the Plan Committee to give effect to such equity restructuring to prevent
dilution or enlargement of the benefits or potential benefits intended to

be made available under the Plan. No such adjustment shall be required to reflect the events described in clauses (1) and (2) above, or
any other change in capitalization that does not constitute an equity restructuring, however such adjustment may be made if the Plan
Committee affirmatively determines, in its discretion, that such an adjustment is appropriate.
2.18 RESTRICTED STOCK AWARD.

A "Restricted Stock Award" is an Award granted under Article VII of this Plan.

2.19 STOCK OPTION. A "Stock Option" is a right accruing in a Participant to purchase from the Company one share of the
Company's $.3333 par value common stock at the Fair Market Value of such share of common stock on the Date of Grant of the Stock
Option, such exercise of option to be made any time within ten years and one day (ten years with respect to Incentive Stock Options)
following the Date of Grant, and containing the terms and conditions set forth or allowed under Article VI hereof. Stock Options may
be either Non-Qualified Options or Incentive Stock Options.
2.20 SUBSIDIARY CORPORATION. For purposes of this Plan, the term "Subsidiary" or "Subsidiary Corporation" means any
corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, in which each of the
corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent or more of the total combined
voting power of all classes of stock in one of the other corporations in such chain as determined at the point in time when reference is
made to such "Subsidiary" or "Subsidiary Corporation" in this Plan.
2.21 CHANGE IN CONTROL.

A "Change in Control" shall be deemed to have occurred if:

(a) a majority of the directors of the Company shall be persons other than persons
(i) for whose election proxies shall have been solicited by the Board or
(ii) who are then serving as directors appointed by the Board to fill vacancies on the Board caused by death or resignation (but
not by removal) or to fill newly-created directorships,
(b) 30% or more of the outstanding Voting Stock (as defined in Article IV of the Restated Articles of Incorporation, as
amended, of the Company) of the Company is acquired or beneficially owned (as defined in Article IV of the Restated Articles
of Incorporation, as amended, of the Company) by any person (as defined in Article IV of the Restated Articles of
Incorporation, as amended, of the Company), or
(c) the shareholders of the Company approve a definitive agreement or plan to
(i) merge or consolidate the Company with or into another corporation (other than (1) a merger or consolidation with a
Subsidiary of the Company or (2) a merger in which the Company is the surviving corporation and either (A) no outstanding
Voting Stock of the

Company (other than fractional shares) held by shareholders immediately prior to the merger is converted into cash (except
cash upon the exercise by holders of Voting Stock of the Company of statutory dissenters' rights), securities, or other property
or (B) all holders of outstanding Voting Stock of the Company (other than fractional shares) immediately prior to the merger
(except those that exercise statutory dissenters' rights) have substantially the same proportionate ownership of the Voting Stock
of the Company or its parent corporation immediately after the merger),
(ii) exchange, pursuant to a statutory exchange of shares of Voting Stock of the Company held by shareholders of the
Company immediately prior to the exchange, shares of one or more classes or series of Voting Stock of the Company for shares
of another corporation or other securities, cash or other property,
(iii) sell or otherwise dispose of all or substantially all of the assets of the Company (in one transaction or a series of
transactions) or
(iv) liquidate or dissolve the Company.
ARTICLE III
GRANTING OF STOCK OPTIONS, PERFORMANCE SHARES
AND RESTRICTED STOCK AWARDS TO PARTICIPANTS
3.1 ELIGIBLE EMPLOYEES. Stock Options, Restricted Stock Awards or Performance Shares may be granted by the Plan
Committee to any key employee of the Company or a Subsidiary Corporation. A Stock Option(s) or Performance Share(s) or
Restricted Stock Award(s) may be granted to a director of the Company provided that he/she is also at the time of grant a key
employee of the Company or a Subsidiary Corporation. No Stock Option(s) or Performance Share(s) or Restricted Stock Award(s)
shall be granted to a person who is at the time of award a member of the Plan Committee. A person who has been engaged by the
Company for employment shall be eligible for grants under the Plan, provided such person actually reports for and commences such
employment within ninety days after the Date of Grant.
3.2 DESIGNATION OF PARTICIPANTS. At any time and from time to time during the Plan Year, the Plan Committee may
designate the key employees of the Company and its Subsidiaries eligible for Awards.
3.3 ALLOCATION OF STOCK OPTION(S), PERFORMANCE SHARE(S) OR RESTRICTED STOCK
AWARD(S). Contemporaneously with the designation of a Participant pursuant to Section 3.2 hereof, the Plan Committee shall
determine the number of Stock Option(s) and/or Restricted Stock Award(s) and/or Performance Share(s) to be granted to such
Participant and the Date of Grant for such related Stock Option or Performance Share or Restricted Stock Award, taking into
consideration such factors as it deems relevant, which may include the following:
(a) the total number of Stock Option(s) and/or Restricted Stock Award(s) and/or Performance Share(s) available for allocation
to all Participants; and

(b) the work assignment or the position of the Participant and its sensitivity and/or impact in relationship to the profitability
and growth of the Company and its Subsidiaries; and
(c) the Participant's current and potential performance in reference to such factors.
Allocation of Awards may, in the discretion of the Plan Committee, be in the form of Stock Option(s) solely or Performance Share(s)
solely, or Restricted Stock Award(s) solely, or any combination in whatever relationship one to the other, if any, as the Plan
Committee in its discretion so determines. Allocation of Stock Options may, in the discretion of the Plan Committee, be in the form of
Incentive Stock Option(s) solely or Non-Qualified Option(s) solely or a combination in whatever relationship to the other, if any, as
the Plan Committee in its discretion so determines.
3.4 NOTIFICATION TO PARTICIPANTS AND DELIVERY OF DOCUMENTS. As soon as practicable after such
determinations have been made, each Participant, shall be notified of (i) his/her designation as a Participant, (ii) the Date of Grant, and
(iii) the number of Stock Option(s), and/or Restricted Stock Award(s) and/or the number of Performance Share(s) granted to the
Participant, and in the case of Performance Share(s), the Performance Period and in the case of Restricted Stock Award(s), the
Restriction Period. The Participant shall thereafter be supplied with written evidence of any such granted Performance Share(s) and/or
Restricted Stock Award(s), and shall receive a Stock Option exercisable for purchase of one share of the Company's $.3333 par value
common stock for each Stock Option granted to the Participant pursuant to this Plan or indicating the aggregate of such grant, which
option agreement(s) shall be in conformity with the provisions of Article VI hereof.
ARTICLE IV
PERFORMANCE GOALS AND MAXIMUM AWARD
4.1 ESTABLISHMENT OF GOALS. Within a reasonable period of time after the beginning of each Performance Period,
Performance Goals relative to such Performance Period shall be established by the Plan Committee in its absolute discretion. Such
Performance Goals may include, but, except as provided below, are not limited to, criteria such as PTOC, EVA, amount or rate of
growth in consolidated profits of the Company expressed as a percent, earnings per share, return on capital, return on investment,
return on shareholders' equity. Performance Goals for Covered Officers must be based upon one or more of the foregoing specifically
described performance goals. Performance Goals may be absolute in their terms or be measured against or in relationship to other
companies comparably, similarly or otherwise situated. The Plan Committee, in its sole discretion, may modify the Performance Goals
if it determines that circumstances have changed and modification is required to reflect the original intent of the Performance Goals.
The Plan Committee may in its discretion classify Participants into as many groups as it determines, and as to any Participant(s) relate
his/her Performance Goals partially, or entirely, to the measured performance, either absolutely or relatively, of an identified
Subsidiary, operating company or test strategy or new venture of the Company.

4.2 LEVELS OF PERFORMANCE REQUIRED TO EARN PERFORMANCE SHARES. At or about the same time that
Performance Goals are established for a specific period, the Plan Committee shall in its absolute discretion establish the percentage
(not to exceed 150% thereof) of the Performance Share(s) granted for such Performance Period which shall be earned by the
Participant for various levels of performance measured in relation to achievement of Performance Goals for such Performance Period.
4.3 OTHER RESTRICTIONS. The Plan Committee may provide restrictions on the delivery of common stock of the
Company upon the earning of Performance Shares, including the future forfeiture of all or part of the common stock earned. The Plan
Committee may provide that the shares of the Company's .3333 par value common stock issued on Performance Shares Earned be
held in escrow and/or legended.
4.4 NOTIFICATION TO PARTICIPANTS. Promptly after the Plan Committee has established Performance Goals for a
specific Performance Period or modified such goals, each Participant who has received a grant of any Performance Share(s) for that
period shall be provided with written evidence of the Performance Goals so established or modified.
4.5 During any Plan Year, no Covered Officer may receive Awards that, in the aggregate, could result in that Participant
receiving, earning or acquiring more than 1,000,000 shares of the Company's $.3333 par value common stock, subject to the
adjustments described in Section 2.17.
ARTICLE V
EARNING OF PERFORMANCE SHARES
5.1 MEASUREMENT OF PERFORMANCE AGAINST PERFORMANCE GOALS.
practicable after the close of each Performance Period, make a determination of:

The Plan Committee shall as soon as

(a) the extent to which the Performance Goals for such Performance Period have been achieved;
(b) the percentage of the Performance Shares granted for such Performance Period which are earned for such Performance
Period by Participants who have been from his/her date of hire in the continuous employ of the Company or Subsidiary or a
combination thereof, during the subject Performance Period; and
(c) the percentage of Performance Shares to be paid in cash, if any. The percentage paid in cash shall be uniform for all
Participants in a particular Performance Period.
These determinations shall be absolute and final as to the facts and conclusions therein made and be binding on all parties. Promptly
after the Plan Committee has made the foregoing determination each Participant who has earned Performance Share(s) based thereon
shall be notified, in writing, of the number of Performance Shares so earned. For all purposes of this Plan notice shall be deemed to
have been given the date action is taken by the Plan Committee making the determination. The Participant may not sell, transfer,
pledge, exchange, hypothecate or otherwise dispose of Performance Shares or any part of a Performance Share Award during the

Performance Period, except that Performance Share awards may be transferable by assignment by the Participant to the extent
provided in the applicable Performance Share agreement.
5.2 TREATMENT OF PERFORMANCE SHARES EARNED. Upon the determination that a percentage of the Performance
Share(s) has been earned for a Performance Period, a Participant to whom such earned Performance Share(s) has been granted and
who has been (or was) in the employ of the Company or a Subsidiary thereof continuously from the date of his/her hire during the
subject Performance Period to which the grant relates, subject to the exceptions set forth at Section 5.5 and Section 5.6 hereof, shall be
entitled, subject to the other conditions of this Plan, to receive the shares of the Company's $.3333 par value common stock for each
Performance Share earned (less the shares paid in cash), plus a cash payment in the amount of the Fair Market Value of the shares of
common stock to be paid in cash as determined in Section 5.1(c) hereof, calculated as of the close of business on the date of the notice
referred to in Section 5.1 hereof. The provisions of Section 5.5 to the contrary notwithstanding, the Plan Committee may provide that
the issued shares of common stock be held in escrow and/or be legended and that the common stock be subject to restrictions,
including the future forfeiture of all or a part of the shares. Performance Shares shall under no circumstances become earned or have
any value whatsoever for any Participant who is not in the employ of the Company or its Subsidiaries continuously during the entire
Performance Period for which such Performance Shares are granted, except as provided at Section 5.5 or Section 5.6 hereof.
5.3 STOCK-CASH DISTRIBUTION. Each distribution determined in accordance with Section 5.2 above shall be made as
soon as practicable after Performance Shares have been determined to have been earned unless the provisions of Section 5.4(a) hereof
are applicable to a Participant.
5.4(a) DEFERRAL OF RECEIPT OF PERFORMANCE SHARE EARNOUT. A Participant who has received a grant of
Performance Shares may by compliance with the then applicable procedures under the Plan irrevocably elect in writing to defer
receipt of all or any part of the stock-cash distribution associated with the earnout, if any, of the Performance Shares (the combination
thereof hereafter referred to as the "deferred account"). The deferral shall be effective until the Participant terminates his/her
employment with the Company and its Subsidiaries except as otherwise provided herein.
The terms and conditions of such deferral, including but not limited to, the period of time for, and form of, election; the manner
and method of payout; the form in which the deferred account shall be held; the interest equivalent or other payment that shall accrue
upon the deferred account pending its payout; and the use and form of dividend equivalents in respect of stock units included within
any deferred account, shall be as determined from time to time by the Plan Committee, which Plan Committee may change any and all
of the terms and conditions at any time applicable to deferrals thereafter made.
5.4(b) AMENDMENT OF DEFERRAL ARRANGEMENTS. The Plan Committee may, at any time and from time to time,
but prospectively only except as hereinafter provided, amend, modify, change, suspend or cancel any and all of the rights, procedures,
mechanics and timing parameters relating to the deferral of receipt of Performance Share earnout under the Plan as set forth at
Section 5.4(a) hereof. In addition, the Plan Committee may, in its sole discretion,

accelerate the payout of the deferred account, or any portion thereof, either in a lump sum or in a series of payments, but under the
following conditions only:
(a) the Federal tax statutes, regulations or interpretations are amended, modified, or otherwise changed or affected in such a
manner as to adversely alter or modify the tax effect of the "deferred account" as it is comprehended under the tax law and
interpretations in effect for deferred accounts as of the effective date of this Plan, or
(b) the deferred account holder suffers or incurs an event that would qualify for a "withdrawal" of contributions that have not
been accumulated for two years without adverse consequences on the tax status of a qualified profit-sharing or stock bonus plan
under the Federal tax laws applicable from time to time to such types of plans.
5.5 NON-DISQUALIFYING TERMINATION OF EMPLOYMENT. Except for Section 5.6 hereof, the only exceptions to the
requirement of continuous employment during a Performance Period for Performance Share earnout eligibility are termination of a
Participant's employment by reason of death (in which event the Performance Shares may be transferable by will or the laws of
descent and distribution only to such Participant's beneficiary designated to receive the Performance Shares or to the Participant's
applicable legal representatives, heirs or legatees), total and permanent disability, normal or late retirement or early retirement, with
the consent of the Plan Committee, or transfer of an executive in a spin-off, with the consent of the Plan Committee, occurring during
the Performance Period applicable to the subject Performance share grant. In such instance an earnout of the Performance Shares shall
be made, as of the end of the Performance Period, and 100% of the total Performance Shares that would have been earned during the
Performance Period shall be earned and paid out; provided, however, in a spin-off situation the Plan Committee may set additional
conditions, such as, without limiting the generality of the foregoing, continuous employment with the spin-off entity. If a Participant's
termination of employment does not meet the criteria set forth above, but the Participant had at least 15 years of continuous
employment with the Corporation or a Subsidiary or any combination thereof, provided that if the person is not an Executive Officer
(as defined under the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder) of the Corporation at
time of termination such 15 years need not be continuous, the Plan Committee may allow earn-outs of up to 100% of the total
Performance Shares for the Performance Period(s) in which the termination of employment occurred, subject to any conditions that
the Plan Committee shall determine.
5.6 CHANGE IN CONTROL. In the event of a Change in Control, all outstanding Performance Shares granted under the
Plan shall be proratably payable ten days after the Change in Control; provided that no Performance Share shall be payable to a
Participant within six months after the Date of Grant. The amount of Performance Shares payable shall be determined by multiplying
100% of each Performance Share grant by a fraction, the numerator of which shall be the number of months that have elapsed in the
applicable Performance Period and the denominator of which shall be forty-eight.

ARTICLE VI
STOCK OPTIONS
6.1 NON-QUALIFIED OPTION. Non-Qualified Options granted under the Plan are not intended to be Incentive Stock
Options under the provisions of Section 422 of the Code. The Non-Qualified Options shall be evidenced by Non-Qualified Option
agreements in such form and not inconsistent with the Plan as the Plan Committee shall in its sole discretion approve from time to
time, which agreements shall specify the number of shares to which they pertain and the purchase price of such shares and shall, but
without limitation, contain in substance the following terms and conditions:
(a) OPTION PERIOD. Each option granted shall expire and all rights to purchase shares thereunder shall cease ten years and
one day after the Date of Grant of the Stock Option or on such date prior thereto as may be fixed by the Plan Committee, or on
such date prior thereto as is provided by this Plan in the event of termination of employment or death or reorganization
pursuant to Section 11.8(b) hereof. No option shall permit the purchase of any shares thereunder during the first year after the
Date of Grant of such option, except as provided in Section 6.3 hereof.
(b) TRANSFERABILITY AND TERMINATION OF OPTIONS. During the lifetime of an individual to whom an option is
granted, the option may be exercised only by such individual and only while such individual is an employee of the Company or
a Subsidiary and only if the Participant has been continuously so employed by any one or combination thereof since the Date of
Grant of the option; provided, however, that if the employment of such Participant by the Company or a Subsidiary
Corporation terminates, the option may additionally be exercised as follows, or in any other manner provided by the Plan
Committee, but in no event later than 10 years and one day after the Date of Grant of the Stock Option, except as set forth in
(ii) below:
(i) if a Participant's termination of employment occurs by reason of normal or late retirement under any retirement plan of the
Company or its Subsidiaries, such Participant's Stock Options may be exercised within five years after the date of such
termination of employment. If a Participant's termination of employment occurs by reason of early retirement under any
retirement plan of the Company or its Subsidiaries, or, by reason of the transfer of an executive in a spin-off, or by reason of
total and permanent disability, as determined by the Plan Committee, without retirement, then such Participant's Stock Options
shall be exercisable for a period of up to five years after the date of such termination of employment if the Plan Committee
consents to such an extension. During the extension period the right to exercise options, if any, accruing in installments, shall
continue; provided, however, in an early retirement or a spin-off situation the Plan Committee may set additional conditions,
such as, without limiting the generality of the foregoing, an agreement to not provide services to a competitor of the Company
and its Subsidiaries and/or continuous employment with the spin-off entity.
(ii) if a Participant's termination of employment occurs by reason of death, then within five years after the date of death or the
life of the option, whichever is less, but in no

event less than one year after the date of death, during which time installments shall continue to accrue.
(iii) if a Participant's termination of employment occurs for any reason other than as specified in Section 6.1(b)(i) or (ii) hereof,
the Participant has been continuously employed by the Company or a Subsidiary or any combination for more than 15 years,
provided that if the person is not an Executive Officer (as defined under the Securities Exchange Act of 1934, as amended, and
the regulations promulgated thereunder) of the Corporation at the time of termination such 15 years need not be continuous,
and if the Plan Committee so approves, then within a period of up to five years after the date of termination of employment.
During the period the right to exercise options, if any, accruing in installments shall continue; provided, however, the Plan
Committee may set additional conditions.
(iv) if a Participant's termination of employment occurs for any reason other than as specified in Section 6.1(b)(i) or (ii) hereof,
the Plan Committee has not approved an extension pursuant to Section 6.1(b)(iii) and Participant's termination of employment
is not occasioned by the commission of a dishonest or other illegal act, then, but only with respect to installments that have as
of the date of termination already accrued, within ninety days after the date of such termination of employment except in the
case of Participants who would at the time be subject to the provisions of Section 16(b) of the Securities Exchange Act of 1934,
in which instance the period of exercise shall be two hundred ten days after termination. Those Participants terminated because
of the commission of a dishonest or other illegal act shall have no additional period after termination of employment in which
to exercise their options. Absence on a leave of absence approved by the Plan Committee shall not be deemed a termination or
interruption of continuous employment for the purposes of the Plan.
(v) Rights accruing to a Participant under the aforesaid Subsections (b)(i), (b)(iii) and (b)(iv) may, upon the death of a
Participant subsequent to his/her termination of employment, be exercised or perfected by his/her duly designated beneficiary
or otherwise by his/her applicable legal representatives, heirs or legatees to the extent vested in and unexercised or perfected by
the Participant at the date of his/her death.
No option shall be assignable or transferable by the individual to whom it is granted, except that it may be
transferable (X) by assignment by the Participant to the extent provided in the applicable option agreement, or (Y)
by will or the laws of descent and distribution in accordance with the provisions of this Plan. An option transferred
after the death of the Participant to whom it is granted may only be exercised by such individual's beneficiary
designated to exercise the option or otherwise by his/her applicable legal representatives, heirs or legatees, and only
within the specific time period set forth above and only to the extent vested in and unexercised by the Participant at
the date of his/her death, except as provided in Section 6.1(b)(ii).

In no event, whether by the Participant directly or by his/her proper assignee or beneficiary or other representative,
shall any option be exercisable at any time after its expiration date as stated in the option agreement, except as
provided in Section 6.1(b)(ii). When an option is no longer exercisable it shall be deemed for all purposes and
without further act to have lapsed and terminated. The Plan Committee may in its sole discretion, but shall not be
required to, determine, solely for the purposes of the Plan, that a Participant is permanently and totally disabled, and
the acts and decisions of the Plan Committee made in good faith in relation to any such determination shall be
conclusive upon all persons and interests affected thereby.
(c) EXERCISE OF OPTIONS. An individual entitled to exercise an option may, subject to its terms and conditions and the
terms and conditions of the Plan, exercise it in whole at any time, or in part from time to time, by delivery to the Company at
its principal office of written notice of exercise, specifying the number of whole shares with respect to which the option is
being exercised. Before shares may be issued payment must be made in full, in legal United States tender, in the amount of
the purchase price of the shares to be purchased at the time and any amounts for withholding as provided in Section 11.9
hereof; provided, however, in lieu of paying for the exercise price in cash as described above, the individual may pay (subject
to such conditions and procedures as the Plan Committee may establish) all or part of such exercise price by delivering
owned and unencumbered shares of the Company common stock having a Fair Market Value on the date of exercise of the
option equal to or less than the exercise price of the options exercised, with cash, as set forth above, for the remainder, if any,
of the purchase price. Subject to rules established by the Plan Committee, the withholdings required by Section 11.9 hereof
may be satisfied by the Company withholding shares of Company common stock issued on exercise that have a Fair Market
Value on the date of exercise of the option equal to or less than the withholding required by Section 11.9 hereof.
6.2 INCENTIVE STOCK OPTION. Incentive Stock Options granted under the Plan are intended to be incentive stock
options under Section 422 of the Code and the Plan shall be administered, except with respect to the right to exercise options after
termination of employment, to qualify Incentive Stock Options issued hereunder as incentive stock options under Section 422 of the
Code. An Incentive Stock Option shall not be granted to an employee who owns, or is deemed under Section 424(d) of the Code to
own, stock of the Company (or of any parent or Subsidiary of the Company) possessing more than 10% of the total combined voting
power of all classes of stock therein. The aggregate Fair Market Value (determined as of the time the option is granted) of the stock
with respect to which Incentive Stock Options are exercisable for the first time by any Participant during any calendar year (under all
incentive stock option plans of the Company or any parent or Subsidiary of the Company) shall not exceed $100,000. The Incentive
Stock Options shall be evidenced by Incentive Stock Option Agreements in such form and not inconsistent with the Plan as the Plan
Committee shall in its sole discretion approve from time to time, which agreements shall specify the number of shares to which they
pertain and the purchase price of such shares.

The terms and conditions set forth in Subsections (a) through (c) of Section 6.1 hereof shall apply to an Incentive Stock Option;
provided that the term of the Incentive Stock Option shall not exceed ten years; and provided, further, that in the event Section 6.1(b)
(i) hereof is applicable, all installments shall become immediately exercisable.
6.3 CHANGE IN CONTROL. In the event of a Change in Control, all outstanding options granted under the Plan shall
accelerate and will be exercisable in full for a period of two hundred ten (210) days after the Change in Control; provided that no
option shall be exercisable by a Participant (i) within six months after the Date of Grant of the option or (ii) after the termination date
of the option.
ARTICLE VII
RESTRICTED STOCK
7.1 RESTRICTION PERIOD TO BE ESTABLISHED BY THE PLAN COMMITTEE. At the time a Restricted Stock Award
is made, the Plan Committee shall establish a period of time (the "Restriction Period") applicable to such Award, which shall be not
less than three years. Each Restricted Stock Award may have a different Restriction Period, at the discretion of the Plan Committee.
Except as permitted or pursuant to Sections 7.4, 7.5 or 11.8 hereof, the Restriction Period applicable to a particular Restricted Stock
Award shall not be changed.
7.2 OTHER TERMS AND CONDITIONS. Company common stock awarded pursuant to a Restricted Stock Award shall be
represented by a stock certificate registered in the name of the Holder of such Restricted Stock Award. The Holder shall have the right
to enjoy all shareholder rights during the Restriction Period with the exception that:
(i) The Holder shall not be entitled to delivery of the stock certificate until the Restriction Period shall have expired.
(ii) The Company may either issue shares subject to such restrictive legends and/or stop-transfer instructions as it deems
appropriate or provide for retention of custody of the Company common stock during the Restriction Period.
(iii) The Holder may not sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the Company common stock
during the Restriction Period, except that it may be transferable by assignment by the Holder to the extent provided in the
applicable Restricted Stock Award agreement.
(iv) A breach of the terms and conditions established by the Plan Committee pursuant to the Restricted Stock Award shall
cause a forfeiture of the Restricted Stock Award, and any dividends withheld thereon.
(v) Dividends payable in cash or in shares of stock or otherwise may be either currently paid or withheld by the Company for
the Holder's account. At the discretion of the Plan Committee, interest may be paid on the amount of cash dividends withheld,
including

cash dividends on stock dividends, at a rate and subject to such terms as determined by the Plan Committee.
Provided, however, and the provisions of Section 7.4 to the contrary notwithstanding, in lieu of the foregoing, the Plan Committee
may provide that no shares of common stock be issued until the Restriction Period is over and further provide that the shares of
common stock issued after the Restriction Period has been completed, be issued in escrow and/or be legended and that the common
stock be subject to restrictions including the forfeiture of all or a part of the shares.
7.3 PAYMENT FOR RESTRICTED STOCK. A Holder shall not be required to make any payment for Company common
stock received pursuant to a Restricted Stock Award, unless the Plan Committee requires payment for such stock in the Restricted
Stock Award.
7.4 FORFEITURE PROVISIONS. Subject to Section 7.5, in the event a Holder terminates employment during a Restriction
Period, a Restricted Stock Award will be forfeited; provided, however, when the Plan Committee issues the Restricted Stock Award, it
may provide in the Restricted Stock Award agreement for proration or full payout in the event of a termination of employment
because of normal or late retirement, early retirement or spin-off with the consent of the Plan Committee, or death or total and
permanent disability, as determined by the Plan Committee, or termination of employment after 15 years of continuous employment
with the Corporation or a Subsidiary or any combination thereof, provided that if the person is not an Executive Officer (as defined
under the Securities Exchange Act of 1934, as amended, and the regulations promulgated thereunder) of the Corporation at the time of
termination such 15 years need not be continuous, subject to any other conditions the Plan Committee may determine.
7.5 CHANGE IN CONTROL. In the event of a Change in Control, all outstanding Restricted Stock Awards granted under
the Plan will be proratably payable ten days after the Change in Control; provided that no Restricted Stock Award shall be payable to
a Participant within six months after the Date of Grant. The amount of Company common stock payable shall be determined by
multiplying each Restricted Stock Award granted by a fraction, the numerator of which shall be the number of months that have
elapsed in the applicable Restriction Period and the denominator of which shall be the number of months in the Restriction Period.
ARTICLE VIII
SHARES OF STOCK SUBJECT TO THE PLAN
8.1 The total number of shares that may be available for issuance under all Performance Shares, Stock Options and Restricted
Stock Awards granted pursuant to the Plan shall not exceed in the aggregate 18,600,000 shares of the Company's $.3333 par value
common stock. Shares covered by granted Performance Shares which are not earned pursuant to any of the provisions of Article V
hereof, or Stock Options or Performance Shares or Restricted Stock Awards which are forfeited for any reason or are not distributed or
are covered by options that lapse or are cancelled before exercise, shall (unless the Plan shall have been terminated) again be available
in the same relative amounts for other Performance Share, Restricted Stock Award and Stock Option grants under the Plan (except for
shares for which cash equivalent payments are received by Participants pursuant to the Plan), except that 660,825 shares for Stock
Options, Performance Shares or

Restricted Stock Awards that were outstanding on April 10, 1991 that are not earned or are forfeited for any reason or are not
distributed or lapse or are cancelled before exercise shall be available for future grants and any additional shares for Stock Options,
Performance Shares or Restricted Stock Awards that were outstanding on April 10, 1991 that are not earned or are forfeited for any
reason or are not distributed or lapse or are cancelled before exercise shall not be available for future Performance Shares, Restricted
Stock Awards or Stock Option Grants. Such shares may be authorized and unissued shares, or may be treasury shares held by the
Company or may be shares purchased or held by the Company or a Subsidiary for purposes of the Plan, or any combination thereof.
ARTICLE IX
ADMINISTRATION OF THE PLAN
9.1 The Plan will be administered by a committee of the Board appointed from time to time by the Board. Each member of the
committee shall be a "non-employee director" as that term is defined under Rule 16b-3, promulgated under the Securities Exchange
Act of 1934, as amended, or any successor statute or regulation comprehending the same subject matter.
9.2 The Plan Committee shall have and exercise all of the powers and responsibilities granted expressly or by implication to it
by the provisions of the Plan. Subject to and as limited by such provisions, the Plan Committee may from time to time enact, amend
and rescind such rules, regulations and procedures with respect to the administration of the Plan as it deems appropriate or convenient.
9.3 All questions arising under the Plan, any Incentive Stock Option, Non-Qualified Stock Option, Performance Share or
Restricted Stock Award agreement, or any rule, regulation or procedure adopted by the Plan Committee shall be determined by the
Plan Committee, and its determination thereof shall be conclusive and binding upon all parties.
9.4 Any action required or permitted to be taken by the Plan Committee under the Plan shall require the affirmative vote of a
majority of a quorum of the members of the Plan Committee. A majority of all members of the Plan Committee shall constitute a
"quorum" for Plan Committee business. The Plan Committee may act by written determination instead of by affirmative vote at a
meeting, provided that any written determination shall be signed by all members of the Plan Committee, and any such written
determination shall be as fully effective as a majority vote of a quorum at a meeting.
ARTICLE X
REDUCTION IN AWARDS
10.1 Anything in this Plan to the contrary notwithstanding, the provisions of this Article X shall apply to a Participant if Ernst &
Young determines that each of (a) and (b) below are applicable.
(a) Payments or distributions hereunder, determined without application of this Article X, either alone or together with other
payments in the nature of compensation to the

Participant which are contingent on a change in the ownership or effective control of the Company, or in the ownership of a
substantial portion of the assets of the Company, or otherwise (but after any elimination or reduction of such payments under
the terms of the Company's Income Continuance Policy Statement or SMG Income Continuance Policy Statement), would
result in any portion of the payments hereunder being subject to an excise tax on excess parachute payments imposed under
Section 4999 of the Code.
(b) The excise tax imposed on the Participant under Section 4999 of the Code on excess parachute payments, from whatever
source, would result in a lesser net aggregate present value of payments and distributions to the Participant (after subtraction of
the excise tax) than if payments and distributions to the Participant were reduced to the maximum amount that could be made
without incurring the excise tax.
10.2 Under this Article X the payments and distributions under this Plan shall be reduced (but not below zero) so that the
present value of such payments and distributions shall equal the Reduced Amount. The "Reduced Amount" (which may be zero) shall
be an amount expressed in present value which maximizes the aggregate present value of payments and distributions under this Plan
which can be made without causing any such payment to be subject to the excise tax under Section 4999 of the Code. The
determinations and reductions under this paragraph shall be made after eliminations or reductions, if any, have been made under the
Company's Income Continuance Policy Statement or SMG Income Continuance Policy Statement.
10.3 If Ernst & Young determines that this Article X is applicable to a Participant, it shall so advise the Plan Committee. The
Plan Committee shall then promptly give the Participant notice to that effect together with a copy of the detailed calculation
supporting such determination which shall include a statement of the Reduced Amount. The Participant may then elect, in his/her sole
discretion, which and how much of the Stock Options, Restricted Stock Awards and/or Performance Shares otherwise awarded under
this Plan shall be eliminated or reduced (as long as after such election the aggregate present value of the remaining Stock Options,
Restricted Stock Awards and/or Performance Shares under this Plan equals the Reduced Amount), and shall advise the Plan
Committee in writing of his/her election within ten days of his/her receipt of notice. If no such election is made by the Participant
within such ten-day period, the Plan Committee may elect which and how much of the Stock Options, Restricted Stock Awards, and/
or Performance Shares shall be eliminated or reduced (as long as after such election their aggregate present value equals the Reduced
Amount) and shall notify the Participant promptly of such election. For purposes of this Article X, present value shall be determined
in accordance with Section 280G of the Code. All the foregoing determinations made by Ernst & Young under this Article X shall be
made as promptly as practicable after it is determined that parachute payments will be made to the Participant if an elimination or
reduction is not made. As promptly as practicable following the election hereunder, the Company shall provide to or for the benefit of
the Participant such amounts and shares as are then due to the Participant under this Plan and shall promptly provide to or for the
benefit of the Participant in the future such amounts and shares as become due to the Participant under this Plan.
10.4 As a result of the uncertainty in the application of Section 280G of the Code at the time of the initial determination by
Ernst & Young hereunder, it is possible that payments or

distributions under this Plan will have been made which should not have been made ("Overpayment") or that additional payments or
distributions which will have not been made could have been made ("Underpayment"), in each case, consistent with the calculation of
the Reduced Amount hereunder. In the event that Ernst & Young, based upon the assertion of a deficiency by the Internal Revenue
Service against the Company or the Participant which Ernst & Young believes has a high probability of success, determines that an
Overpayment has been made, any such Overpayment shall be treated for all purposes as a loan to the Participant which the Participant
shall repay together with interest at the applicable Federal rate provided for in Section 7872(f)(2) of the Code; provided, however, that
no amount shall be payable by the Participant if and to the extent such payment would not reduce the amount which is subject to the
excise tax under Section 4999 of the Code. In the event that Ernst & Young, based upon controlling precedent, determines that an
Underpayment has occurred, any such Underpayment shall be promptly paid to or for the benefit of the Participant together with
interest at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the Code.
10.5 In making its determination under this Article X, the value of any non-cash benefit shall be determined by Ernst & Young
in accordance with the principles of Section 280G(d)(3) of the Code.
10.6 All determinations made by Ernst & Young under this Article X shall be binding upon the Company, the Plan Committee
and the Participant.
ARTICLE XI
GENERAL PROVISIONS
11.1 AMENDMENT OR TERMINATION. The Board may at any time amend, suspend, discontinue or terminate the Plan
(including the making of any necessary enabling, conforming and procedural amendments to the Plan to authorize and implement the
granting of qualified Stock Options or other income tax preferred stock options which may be authorized by enactment of the United
States Congress and/or the Internal Revenue Service subsequent to the effective date of this Plan); provided, however, that no
amendment by the Board shall, without further approval of the shareholders of the Company:
(a) except as provided at Section 2.17 hereof, increase the total number of shares of Company common stock which may be
made subject to the Plan; or
(b) except as provided at Section 2.17 hereof, change the purchase price of Company common stock under the Plan; or
(c) materially modify the class of employees that are eligible to receive Stock Options and/or Performance Shares and/or
Restricted Stock Awards pursuant to the Plan.
No action taken pursuant to this Section 11.1 of the Plan shall, without the consent of a Participant, adversely affect any Performance
Share(s) or Stock Option(s) or Restricted Stock Award(s) which have been previously granted to a Participant.

11.2 NON-ALIENATION OF RIGHTS AND BENEFITS. Except as expressly provided herein, no right or benefit under the
Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge and any attempt to anticipate,
alienate, sell, assign, pledge, encumber or charge the same shall be void. No right or benefit hereunder shall in any manner be liable
for or subject to the debts, contracts, liabilities or torts of the person entitled to such right or benefit. If any Participant or beneficiary
hereunder should become bankrupt or attempt to anticipate, alienate, sell, assign, pledge, encumber or charge any right or benefit
hereunder, then such right or benefit shall, in the sole discretion of the Plan Committee, cease and in such event the Company may
hold or apply the same or any or no part thereof for the benefit of the Participant or beneficiary, his/her spouse, children or other
dependents or any of them in any such manner and in such proportion as the Plan Committee in its sole discretion may deem proper.
11.3 NO RIGHTS AS SHAREHOLDER. The granting of Performance Share(s) and/or Stock Option(s) and/or Restricted
Stock Award(s) under the Plan shall not entitle a Participant or any other person succeeding to his/her rights, to any dividend, voting
or other right as a shareholder of the Company unless and until the issuance of a stock certificate to the Participant or such other
person pursuant to the provisions of the Plan and then only subsequent to the date of issuance thereof.
11.4 LIMITATION OF LIABILITY OR OBLIGATION OF THE COMPANY. As illustrative only of the limitations of
liability or obligation of the Company and not intended to be exhaustive thereof, nothing in the Plan shall be construed:
(a) to give any employee of the Company any right to be granted any Stock Option and/or Performance Share and/or Restricted
Stock Award other than at the sole discretion of the Plan Committee;
(b) to give any Participant any rights whatsoever with respect to shares of the Company's $.3333 par value common stock
except as specifically provided in the Plan;
(c) to limit in any way the right of the Company or any Subsidiary to terminate, change or modify, with or without cause, the
employment of any Participant at any time; or
(d) to be evidence of any agreement or understanding, express or implied, that the Company or any Subsidiary will employ any
Participant in any particular position at any particular rate of compensation or for any particular period of time.
11.5 GOVERNMENT REGULATIONS. Notwithstanding any other provisions of the Plan seemingly to the contrary, the
obligation of the Company with respect to Performance Shares, Stock Options or Restricted Stock Awards granted under the Plan
shall at all times be subject to any and all applicable laws, rules, and regulations and such approvals by any government agencies as
may be required or deemed by the Board or Plan Committee as reasonably necessary or appropriate for the protection of the Company.
In connection with any sale, issuance or transfer hereunder, the Participant acquiring the shares shall, if requested by the
Company give assurances satisfactory to counsel of the Company

that the shares are being acquired for investment and not with a view to resale or distribution thereof and assurances in respect of such
other matters as the Company may deem desirable to assure compliance with all applicable legal requirements.
11.6 NON-EXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan by the Board nor the submission of the Plan to
shareholders of the Company for approval shall be construed as creating any limitations on the power or authority of the Board to
adopt such other or additional incentive or other compensation arrangements of whatever nature as the Board may deem necessary or
desirable or preclude or limit the continuation of any other plan, practice or arrangement for the payment of compensation or fringe
benefits to employees generally, or to any class or group of employees, which the Company or any Subsidiary now has lawfully put
into effect, including, without limitation, any retirement, pension, savings, profit sharing or stock purchase plan, insurance, death and
disability benefits, and executive short term incentive plans.
11.7 EFFECTIVE DATE. Subject to the approval of this restated Plan by the holders of a majority of the voting power of the
shares present and entitled to vote at the Company's Annual Meeting of Shareholders to be held May 21, 1997 and any necessary
approval being obtained from any department, board or agency of the United States or states having jurisdiction, the Plan shall be
effective as of May 21, 1997.
11.8 REORGANIZATION. In case the Company is merged or consolidated with another corporation, or in case the property
or stock of the Company is acquired by another corporation, or in case of a separation, reorganization or liquidation of the Company,
the Plan Committee or a comparable committee of any corporation assuming the obligations of the Company hereunder, shall either:
(a) make appropriate provision for the protection of any outstanding Performance Shares, Stock Options and Restricted Stock
Awards granted thereunder by the substitution on an equitable basis of appropriate stock of the Company, or of the merged,
consolidated or otherwise reorganized corporation which will be issuable in respect to the shares of the Company's $.3333 par
value common stock. Stock to be issued pursuant to such Performance Shares shall be limited so that the excess of the
aggregate fair market value of the shares subject to the Performance Shares immediately after such substitution over the
purchase price thereof is not more than the excess of the aggregate fair market value of the shares subject to such Performance
Shares immediately before such substitution over the purchase price thereof; or
(b) upon written notice to the Participant, provide that all Performance Shares granted to the Participant are deemed earned, that
the Restriction Period of all Restricted Stock Awards has been eliminated and that all outstanding Stock Options shall
accelerate and become exercisable in full but that all outstanding Stock Options, whether or not exercisable prior to such
acceleration, must be exercised within not less than sixty days of the date of such notice or they will be terminated. In any such
case the Plan Committee may, in its discretion, extend the sixty-day exercise period.
11.9 WITHHOLDING TAXES, ETC. All distributions under the Plan shall be subject to any required withholding taxes and
other withholdings and, in case of distributions in Company

common stock, the Participant or other recipient may, as a condition precedent to the delivery of the common stock, be required to pay
to his/her participating employer the excess, if any, of the amount of required withholding over the withholdings, if any, from any
distributions in cash under the Plan. No distribution under the Plan shall be made in fractional shares of the Company's common stock,
but the proportional market value thereof shall be paid in cash.
11.10 GENERAL RESTRICTION. Each Performance Share, Stock Option and Restricted Stock Award shall be subject to the
requirement that, if at any time the Board shall determine, in its discretion, that the listing, registration or qualification of the shares
subject to such option and/or right upon any securities exchange or under any state or Federal Law, or the consent or approval of any
government regulatory body, is necessary or desirable as a condition of, or in connection with the granting of such Performance Share
or Stock Option or Restricted Stock Award or the issue or purchase of shares respectively thereunder, such Performance Share or
Stock Option or Restricted Stock Award may not be exercised in whole or in part unless such listing, registration, qualification,
consent or approval shall have been effected or obtained free of any conditions not acceptable to the Board.
11.11 USE OF PROCEEDS. The proceeds derived from the sale of the stock pursuant to Stock Options or Restricted Stock
Awards granted under the Plan shall constitute general funds of the Company.
11.12 HEADINGS. The headings of the Articles and their subparts in this Plan are for convenience of reading only and are not
meant to be of substantive significance and shall not add to or detract from the meaning of such Article or subpart to which it refers.

EXHIBIT (10)H
TARGET CORPORATION
DEFERRED COMPENSATION PLAN
SENIOR MANAGEMENT GROUP
ARTICLE 1
PURPOSE
The purpose of this Deferred Compensation Plan (the "Plan") is to provide a means whereby Target Corporation (the
"Company") may afford financial security to a select group of employees who are in the Senior Management Group of the Company
and its subsidiaries and who have rendered and continue to render valuable services to the Company or its subsidiaries and who make
an important contribution towards the Company's continued growth and success, by providing for additional future compensation so
that such employees may be retained and their productive efforts encouraged. The Plan document has been amended to reflect certain
administrative practices in effect as of May 1, 1999.
ARTICLE 2
DEFINITIONS AND CERTAIN PROVISIONS
Active Status. "Active Status" means the Participant is currently employed by the Company or has terminated employment
under Normal or Early Retirement or under other conditions described in Section 5.2 and has not yet begun to receive payments from
the Plan associated with a particular Deferral Account.
Beneficiary. "Beneficiary" means the person or persons designated as such in accordance with Article 6.
Benefit Deferral Period. "Benefit Deferral Period" means that period of one (1) or four (4) Plan Years as determined pursuant
to Article 4 over which a Participant defers a portion of such Participant's Earnings.
Committee. "Committee" means the plan administration committee appointed to administer the Plan pursuant to Article 3.
Cumulative Deferral Amount. "Cumulative Deferral Amount" means the total cumulative amount by which a Participant's
Earnings must be reduced over the period prescribed in Section 4.1. If for a Plan Year a Matching Allocation for an Employee who is
a member of the Senior Management Group of the Company pursuant to the Target Corporation Supplemental Retirement, Savings
and Employee Stock Ownership Plan ("SRSP") cannot be made because the Before Tax Deposits or After Tax Deposits elected by the
Employee are reduced to comply with the provisions of the SRSP, "Cumulative Deferral Amount" also includes the amount of the
Matching Allocation that cannot be made.
Declared Rate. "Declared Rate" means with respect to any Plan Year the applicable rate announced in advance by the
Committee for such Plan Year. Under no circumstances shall the minimum rate be less than twelve percent (12%) per annum and the
maximum rate shall not exceed twenty percent (20%) per annum. The rate to be announced, subject to the minimum and maximum
percentages referenced above, shall be a calculated rate using the following formula:
1

Moody's Corporate Bond Yield Average. Monthly Average Corporates as published by Moody's Investors Service, Inc. or its
successor (or if said index is no longer available, its successor index, or if no successor index exists, such other index as selected by
the Committee as most closely replicates the measure produced by said Moody index) for the month of June for the year preceding the
subject Plan Year to which the Declared Rate shall apply, said rate of return to be rounded to the nearest .10% of said reported rate, to
which percentage rate shall be added six (6) percentage points (e.g. an index of 7.16% rounded to 7.20% plus 6% equals a 13.2%
"Declared Rate"). Provided however, if any tax or insurance change shall occur which in the reasoned judgment of the Committee
shall have an ongoing adverse economic effect on the underlying COLI financing assumptions related to the Plan, then the Committee
may adjust said Declared Rate to reflect such adverse economic impact but in no event below the twelve percent (12%) minimum
referenced in the first paragraph hereof.
Deferral Account. "Deferral Account" means the account maintained on the books of account of the Company pursuant to
Section 4.4.
Early Retirement. "Early Retirement" means the termination of a Participant's employment with the Employer for a reason
other than death on or after the date the Participant attains age 55.
Earnings. "Earnings" means the base pay and incentive pay paid to a Participant by the Company or a subsidiary, excluding
car and other allowances and other cash and non-cash compensation.
Eligible Employee. "Eligible Employee" means each Employee in the Senior Management Group of the Company who
executes an Enrollment Agreement to participate in the Plan.
Employee. "Employee" means any person employed by the Employer on a regular full-time salaried basis, including officers
of the Employer.
Employer. "Employer" means the Company and any of its wholly owned subsidiaries.
Enrollment Agreement. "Enrollment Agreement" means the written agreement entered into by the Employer and an Eligible
Employee pursuant to which the Eligible Employee becomes a Participant in the Plan. In the sole discretion of the Company,
authorization forms filed by any Participant by which the Participant makes the elections provided for by this Plan may be treated as a
completed and fully executed Enrollment Agreement for all purposes under the Plan.
Normal Retirement. "Normal Retirement" means the termination of a Participant's employment with the Employer for
reasons other than death on or after the date the Participant attains age 65.
Participant. "Participant" means an Eligible Employee who has filed a completed and executed Enrollment Agreement or
authorization form with the Committee and is participating in the Plan in accordance with the provisions of Article 4. "Participant"
also means an Employee who is a member of the Senior Management Group of the Company who has a Cumulative Deferral Amount
based on Matching Allocation that could not be made to the SRSP.
Pay Status. "Pay Status" means that the Participant has terminated employment with the Company and has begun to receive
payments from the Plan associated with a particular Deferral Account.
2

Plan Year. "Plan Year" means the calendar year beginning January 1 and ending December 31.
ARTICLE 3
ADMINISTRATION OF THE PLAN
A Committee shall be appointed by the Chief Executive Officer of the Company to administer the Plan and to
establish, adopt or revise such rules and regulations as it may deem necessary or advisable for the administration of the Plan. The
Committee shall have discretionary authority to determine eligibility for benefits and to construe the terms of the Plan. Interpretations
of the Plan by the Committee shall be conclusive. Members of the Committee shall be eligible to participate in the Plan while serving
as members of the Committee, but a member of the Committee shall not vote or act upon any matter which relates solely to such
member's interest in the Plan as a Participant.
ARTICLE 4
PARTICIPATION
Election to Participate. Any Employee who is a member of the Senior Management Group of the
4.1
Company may enroll in the Plan by filing a completed and fully executed Enrollment Agreement or authorization form with the
Committee. Pursuant to said Enrollment Agreement or authorization form, the Employee shall irrevocably designate a dollar amount
by which the aggregate Earnings of such Participant would be reduced over one (1) or four (4) Plan Years next following the
execution of the Enrollment Agreement (the "Benefit Deferral Period"), provided, however, that:
(a)
Dollars ($5,000.00)
(b)

Minimum Deferral.

The reduction for any Plan Year shall not be less than Five Thousand

Reduction in Earnings.

(i)
In General. Except as otherwise provided in this Section 4.1, the Earnings of the
Participant for each of the Plan Years in the Benefit Deferral Period shall be reduced by the amount specified in the
Enrollment Agreement (including any authorization form) applicable to such Plan Year.
(ii)
Accelerated Reduction. A Participant may elect in a written notice with the consent of
the Committee to increase the amount of the reduction of Earnings otherwise provided for by Section 4.1(b)(i) for
any of the Plan Years remaining in the Benefit Deferral Period, provided, however, that any such increase in the
reduction of Earnings for any remaining Plan Years in the Benefit Deferral Period shall not increase the Cumulative
Deferral Amount, but shall act to shorten the length of the Benefit Deferral Period.
(c)
Maximum Reduction in Earnings. A Participant may not elect a Cumulative Deferral Amount or
an increase in reduction of Earnings pursuant to Section 4.1(b)(ii), or any combination of the two, that would cause the
aggregate total reduction in Earnings in any Plan Year to exceed twenty-five percent (25%) of the base pay and one hundred
3

percent (100%) of the incentive pay payable during such Plan Year up to a total of $250,000 per year plus the amount of any
payout made pursuant to Section 5.4, or such greater percent of base pay and/or incentive pay or greater total amount as the
Committee may permit in its sole discretion. In the event that a Participant elects a Cumulative Deferral Amount or increase
in reduction of Earnings that would violate the limitation described in this paragraph (c), the election shall be valid except
that the Cumulative Deferral Amount or increase in reduction of Earnings so elected shall automatically be reduced to
comply with such limitation, whichever is most appropriate in the sole discretion of the Committee.
4.2
Deferral Accounts. The Committee shall establish and maintain a separate Deferral Account for each
Participant. The amount by which a Participant's Earnings are reduced pursuant to Section 4.1 shall be credited by the Employer to the
Participant's Deferral Account on the fifteenth (15th) day of the month in which such Earnings would otherwise have been paid. The
Participant's Deferral Account shall be credited with the annual SRSP lost Matching Allocation on January 15 following the year of
the lost Matching Allocation. Such Deferral Account shall be debited by the amount of any payments made by the Employer to the
Participant or the Participant's Beneficiary pursuant to this Plan.
Normal and Early Retirement Interest. Each Deferral Account of a Participant who attains
(a)
Normal or Early Retirement shall be deemed to bear interest, in accordance with Appendix A, Section 1, from the date such
Deferral Account was established through the date of commencement of payment of the Normal or Early Retirement Benefit
at a rate equal to the Declared Rate which is announced by the Committee for each Plan Year. Following the date of
commencement of payment of the Normal or Early Retirement Benefit, a Participant's Deferral Account shall be deemed to
bear interest on the balance of such Deferral Account in accordance with Appendix A, Section 2.
(b)
Other Interest. In the case of any termination of a Participant's employment with the Employer
other than by Normal or Early Retirement or upon the Participant's termination of enrollment in this Plan pursuant to Section
5.2(b), the Participant's Deferral Account shall be deemed to bear interest from the date such Deferral Account was
established through the date of the earlier of termination of employment or termination of enrollment in this Plan on the
balance in such Deferral Account in accordance with Appendix A, Section 1, except that the interest rate used to calculate
interest earned in the Deferral Account shall be ten percent (10%) per annum, provided, however, that if more than five (5)
years have elapsed since the first day of the Benefit Deferral Period, the Participant's Deferral Account shall be deemed to
bear interest from the date such Deferral Account was established through the date of the earlier of termination of
employment or termination of enrollment in this Plan on the balance in such Deferral Account at a rate equal to the Declared
Rate which is announced by the Committee for each Plan Year, in accordance with Appendix A, Section 1. Following the
earlier of the date of commencement of payment of the Termination Benefit or the date of termination of enrollment in this
Plan, a Participant's Deferral Account shall be deemed to bear interest on the balance in such Deferral Account in accordance
with Appendix A, Section 1, if the Participant is in Active Status with respect to the Deferral Account or in accordance with
Appendix A, Section 2, if the Participant is in Pay Status with respect to the Deferral Account. However, in either case the
interest rate used to calculate interest earned in the Deferral Account shall be twelve percent (12%) per annum.
Notwithstanding anything contained herein to the contrary, if a Participant has begun receiving benefits under this plan and
the calculation of future benefits, using the method of calculation set forth on Appendix A causes a reduction in
4

benefits, the future payments shall be made in accordance with the method used at the time of the Participant's initial
payment.
Rollover Deferred Compensation Account. In its sole discretion, the Committee may permit a Participant
4.3
to make a special rollover election to transfer any amounts which were previously deferred under the Company's existing deferred
compensation plans to this Plan.
In such event, the Committee shall establish and maintain a separate Rollover Deferral Account for each
Participant who makes a rollover transfer to this Plan. Such Rollover Deferral Account shall be deemed to bear interest at the same
rate and subject to the same conditions as other Deferral Accounts pursuant to Section 4.2. Each Participant who makes a rollover
transfer to a Rollover Deferral Account shall be treated for purposes of determining benefits under the Plan as having a separate
Cumulative Deferral Amount and Deferral Account which shall initially be in the amount of the rollover transfer. A Participant who
makes a rollover transfer shall be deemed to waive all rights under the Company's existing deferred compensation plans from which
rollover transfers are made with respect to the amounts transferred to this Plan, including the right to make elections regarding the
time or manner of payment as permitted thereunder. Rollover transfers shall be subject to the minimum deferral amount set forth in
Section 4.1(a), but shall not be subject to any maximum deferral limitation.
Valuation of Accounts. The value of a Deferral Account as of any date shall equal the amounts theretofore
4.4
credited to such account less any payments debited to such account plus the interest deemed to be earned on such account in
accordance with Section 4.2. Interest shall be credited in accordance with Appendix A.
Statement of Accounts. The Committee shall submit to each Participant, within one hundred twenty (120)
4.5
days after the close of each Plan Year, a statement in such form as the Committee deems desirable setting forth the balance standing to
the credit of each Participant in his Deferral Account.
ARTICLE 5
BENEFITS
5.1
Normal or Early Retirement. Upon Normal or Early Retirement, the payment of benefits shall commence
on the first day of the month following retirement, or following such later date which the Participant elected in his Enrollment
Agreement (including any authorization form). A Participant may elect in his Enrollment Agreement (including any authorization
form) to have payments commence from one (1) to ten (10) years following retirement, but not later than age 65 (or five (5) years after
the first day of the Benefit Deferral Period, if later).
(a)
Single Participant. In the case of a Participant who is single when payments commence, the
Employer shall make periodic payments to the Participant in an amount in accordance with Appendix A, Section 2.B., for the
life of the Participant, but not less than fifteen (15) years. The payments shall be the actuarial equivalent of the aggregate of
the Participant's Deferral Account at the time payments commence and the interest that will accrue on the unpaid balance in
such Deferral Account during the payment period pursuant to Section 4.2(a). The payment amount will be redetermined
annually to reflect the changes in the Declared Rate.
5

(b)
Married Participant. In the case of a Participant who is married when payments commence, the
Employer shall make actuarially reduced payments in accordance with Appendix A, Section 2.B., to the Participant for his
life and thereafter, if the Participant is survived by a spouse who was married to the Participant when Normal or Early
Retirement Benefit payments commenced, shall continue to make payments to the Participant's spouse for his life, with
payments to be made for an aggregate period of not less than fifteen (15) years. The payments shall be the actuarial
equivalent of the payments which would be made to the Participant pursuant to Section 5.1(a) if he were single. The monthly
amount of payments will be redetermined annually to reflect changes in the Declared Rate.
5.2

Termination Benefit.

(a)
Terminations of Employment. If a Participant shall cease to be an Employee for any reason other
than death or Normal or Early Retirement or Certain Terminations of Employment under Section 5.2(b), the Employer shall
pay to the Participant in one lump sum an amount (the "Termination Benefit") equal to the value of the Deferral Account as
of the date of payment and such Participant shall be entitled to no further benefits under this Plan, provided, however, at the
sole discretion of the Committee, no lump sum shall be payable and, instead, the Employer shall pay to the Participant the
balance of the Deferral Account over a four (4) year period in accordance with Appendix A, Section 2.C. Upon termination
of employment the Participant shall immediately cease to be eligible for any benefits under the Plan other than the
Termination Benefit. No other benefit shall be payable to either the Participant or any Beneficiary of such Participant.
Certain Terminations of Employment. If a Participant shall cease to be an Employee for any
(b)
reason other than death or Normal or Early Retirement and shall be at least age 50, have worked for the Company for at least
10 years and has received an ICP Contract under the Company's Income Continuance Policy that is signed by Participant and
Company and not rescinded, the payment of benefits shall commence on the first day of the month following termination, or
following such later date which the Participant elected in his Enrollment Agreement (including any authorization form). A
Participant may elect in his Enrollment Agreement (including any authorization form) to have payments commence from one
(1) to ten (10) years following retirement, but not later than age 65 (or five (5) years after the first day of the Benefit Deferral
Period, if later).
Single Participant. In the case of a Participant who is single when payments commence,
(i)
the Employer shall make periodic payments to the Participant in an amount in accordance with Appendix A, Section
2.B for the life of the Participant, but not less than fifteen (15) years. The payments shall be the actuarial equivalent
of the aggregate of the Participant's Deferral Account at the time payments commence and the interest that will
accrue on the unpaid balance in such Deferral Account during the payment period pursuant to Section 4.2(a). The
amount of payments will be redetermined annually to reflect changes in the Declared Rate.
(ii)
Married Participant. In the case of a Participant who is married when payments
commence, the Employer shall make actuarially reduced payments in accordance with Appendix A, Section 2.B, to
the Participant for his life and thereafter, if the Participant is survived by a spouse who was married to the
Participant when Normal or Early Retirement Benefit payments commenced, shall continue to make pay period
6

payments to the Participant's spouse for his life, with payments to be made for an aggregate period of not less than
fifteen (15) years. The payments shall be the actuarial equivalent of the payments which would be made to the
Participant pursuant to Section 5.1(a) if he were single. The monthly amount of payments will be redetermined
annually to reflect changes in the Declared Rate.
Termination of Enrollment in Plan. With the written consent of the Committee, a Participant may
(c)
terminate his enrollment in the Plan by filing with the Committee a written request to terminate enrollment. The Committee
will consent to the termination of a Participant's enrollment in the Plan in the event of an unforeseeable financial emergency
of the Participant. An unforeseeable financial emergency shall mean an unexpected need for cash arising from an illness,
casualty loss, sudden financial reversal or other such unforeseeable occurrence. Cash needs arising from foreseeable events
such as the purchase of a house or education expenses for children shall not be considered to be the result of an unforeseeable
financial emergency. Upon termination of enrollment, no further reductions shall be made in the Participant's Earnings
pursuant to his Enrollment Agreement, and the Participant shall immediately cease to be eligible for any benefits under the
Plan other than the Termination Benefit. No other benefit shall be payable to either the Participant or any Beneficiary of such
Participant. In its sole discretion, the Committee may pay the Termination Benefit on a date earlier than the Participant's
termination of employment with the Employer, in which event the Termination Benefit shall be calculated as if the
Participant had terminated employment with the Employer on the date of such payment. Following termination of enrollment
in the Plan, a Participant's Deferral Account shall be deemed to bear interest on the balance in such Deferral Account in
accordance with Appendix A, Section 1, except that the interest rate used to calculate interest earned in the Deferral Account
shall be twelve percent (12%) per annum.
Lump Sum Election. Other provisions of Section 5.1 and Section 5.2 notwithstanding, if a Participant in
5.3
his Enrollment Agreement (including any authorization form) has elected a lump sum payment to be made after his retirement, the
amount of his Deferral Account (including interest) for the Benefit Deferral Period covered by that Agreement shall be paid to the
Participant in a lump sum at the time specified in that Agreement.
5.4
Early Payment Option. The Employer shall pay to the Participant, if he is an Employee of the Company,
the amount by which the Participant's Earnings were reduced in any Plan Year pursuant to Section 4.1 during the eighth (8th) year
following the Plan Year ("Early Payment"), provided that such amount has not previously been paid out under other provisions of the
Plan. Such Early Payment shall not include any interest credited to the Participant's Deferral Account pursuant to Section 4.2.
Notwithstanding any other provisions of this Plan, the Participant may elect prior to the beginning of any year in which such an Early
Payment will be made to him to reduce his Earnings during the year in which such Early Payment is made by an amount equal to the
Early Payment. An Early Payment shall not result in any change in the Survivor Benefits payable pursuant to Section 5.5, other than
as a result of the reduction in the Participant's Cumulative Deferral Account and Deferral Account balance by the amount of the Early
Payment.
7

5.5

Survivor Benefits.

(a)
If a Participant dies while employed with an Employer prior to Early or Normal Retirement, the
Employer will pay to the Participant's Beneficiary an annual benefit for the greater of:
(i) ten (10) years, or
(ii) until the Participant would otherwise have attained age 65,
equal to fifty percent (50%) of the Cumulative Deferral Amount. However, if the Committee determines that a distribution of
the Participant's Deferral Account would produce a greater benefit, such Deferral Account balance shall be paid to the
Participant's Beneficiary in equal annual installments in accordance with Appendix A, Section 2.C.2, but over the period
specified above.
(b)
If a Participant dies after Early or Normal Retirement, but prior to commencement of payment of
any Early or Normal Retirement Benefit under the Plan, the Employer will pay to the Participant's Beneficiary the benefit that
such Participant would have received had the Participant retired on the day prior to such Participant's death, provided,
however, that if the present value of the benefit described in this Section 5.5(b) is less than the present value of the benefit
described in Section 5.5(a), using in each case twelve percent (12%) as the discount factor, then the Beneficiary described in
this Section 5.5(b) shall receive the benefit described in Section 5.5(a) and not the benefit described in this Section 5.5(b).
(c)
If a Participant (who was unmarried at the commencement of the payment of any Early or Normal
Retirement Benefit, or whose spouse who was married to the Participant at the time of commencement of payment of any
Early or Normal Retirement Benefit predeceases the Participant) dies after the commencement of the payment of any Early or
Normal Retirement Benefit, the Employer will pay to the Participant's Beneficiary the remaining installments of any such
benefit for the balance of the fifteen (15) years minimum payment period. If a spouse who was married to the Participant at
the time of commencement of payment of the Early or Normal Retirement Benefit survives beyond such fifteen (15) years
minimum payment period, payments shall continue to be made to the spouse until the spouse's death. If the spouse who was
married to the Participant at the time of commencement of payment of the Early or Normal Retirement Benefit survives the
Participant, but does not survive past the fifteen (15) years minimum payment period, the Employer will pay to the
Participant's Beneficiary the remaining installments of any such benefit for the balance of the fifteen (15) years minimum
payment period. In computing any benefits to be paid following the Participant's death pursuant to this paragraph (c), the
Participant's Deferral Account shall be deemed to bear interest following the Participant's death on the balance in such
Deferral Account annually in accordance with Appendix A, Section 2.B.
(d)
If a Participant, who does not receive a lump sum Termination Benefit, dies prior to the time he
has received the four (4) annual payments referred to in Section 5.2(a), the remaining payments for such 4 year-period shall
be paid to the Participant's Beneficiary.
8

(e)
Notwithstanding other provisions of the Plan, if the Beneficiary is not a spouse, the present value
of the installment payments as described in Section 5.2(a), shall be paid as soon as administratively feasible after the death of
the Participant. The interest rate used to compute the present value shall be the average of the Declared Rate for the Plan
Year in which the Participant dies and twelve percent (12%).
(f)
Solely for purposes of this Section 5.5, a Participant who has a Certain Termination of
Employment as defined in Section 5.2(b) shall be deemed to have had an Early Retirement and the benefit payable under
Section 5.2(b) shall be deemed to be an Early Retirement Benefit.
Small Benefit. In the event that the Committee determines in its sole discretion that the amount of any
5.6
benefit is too small to make it administratively convenient to pay such benefit over time, the Committee may pay the benefit in the
form of a lump sum equal to the value of the Deferral Account at the time of the distribution, notwithstanding any provision of this
Article 5 to the contrary.
5.7
Withholding. To the extent required by the law in effect at the time payments are made, the Employer
shall withhold from payments made hereunder the minimum taxes required to be withheld by the federal or any state or local
government.
Lump Sum Payout Option. Notwithstanding any other provisions of the Plan, at any time after retirement,
5.8
but not later than ten (10) years after retirement of the Participant, a Participant or a Beneficiary of a deceased Participant may elect to
receive an immediate lump sum payment of 50% or 100% of the balance of his Deferral Account, reduced by a penalty, which shall be
forfeited to the Company, equal to eight percent (8%) of the amount of his Deferral Account he elected to receive, in lieu of payments
in accordance with the form previously elected by the Participant, or provided elsewhere in this Plan. Such election, if not 100%, may
be made only twice. If less than 100% of his Deferral Account is paid out, the remainder of his Deferral Account will be paid in
accordance with the form previously elected by the Participant, or provided elsewhere in this Plan. However, the penalty shall not
apply if the Committee determines, based on advice of counsel or a final determination by the Internal Revenue Service or any court
of competent jurisdiction, that by reason of the foregoing provision any Participant or Beneficiary has recognized or will recognize
gross income for federal income tax purposes under this Plan in advance of payment to him of Plan benefits. The Company shall
notify all Participants (and Beneficiaries of deceased Participants) of any such determination. Whenever any such determination is
made, the Company shall refund all penalties which were imposed hereunder on account of making lump sum payments at any time
during or after the first year to which such determination applies (i.e., the first year when gross income is recognized for federal
income tax purposes). Interest shall be paid on any such refunds at ten percent (10%) for each Plan Year, compounded annually. The
Committee may also reduce or eliminate the penalty if it determines that this action will not cause any Participant or Beneficiary to
recognize gross income for federal income tax purposes under this Plan in advance of payment to him of Plan benefits.
9

ARTICLE 6
BENEFICIARY DESIGNATION
Each Participant shall have the right, at any time, to designate any person or persons as Beneficiary or Beneficiaries
to whom payment under this Plan shall be made in the event of the Participant's death prior to complete distribution to the Participant
of the benefits due under the Plan. Each Beneficiary designation shall become effective only when filed in writing with the Committee
during the Participant's lifetime on a form prescribed by the Committee.
The filing of a new Beneficiary designation form will cancel all Beneficiary designations previously filed. Any
finalized divorce or marriage (other than a common law marriage) of a Participant subsequent to the date of filing of a Beneficiary
designation form shall revoke such designation unless in the case of divorce the previous spouse was not designated as Beneficiary
and unless in the case of marriage the Participant's new spouse had previously been designated as Beneficiary. The spouse of a
married Participant domiciled in a community property jurisdiction shall join in any designation of Beneficiary or Beneficiaries other
than the spouse.
If a Participant fails to designate a Beneficiary as provided above, or if his Beneficiary designation is revoked by
marriage, divorce, or otherwise without execution of a new designation, or if all designated Beneficiaries predecease the Participant or
die prior to complete distribution of the Participant's benefits, then the Committee shall direct the distribution of such benefits to the
Participant's estate.
ARTICLE 7
AMENDMENT AND TERMINATION OF PLAN
Amendment. The Board of Directors of the Company may at any time amend the Plan , in whole or in part for any
7.1
reason, including but not limited to tax, accounting or insurance changes, a result of which may be to terminate the Plan for future
deferrals (excluding from such power to terminate future deferrals those future deferrals provided for in Section 5.4 Early Payout
Option); provided, however, that no amendment shall be effective to decrease the benefits, nature or timing thereof payable under the
Plan to any Participant with respect to deferrals made (and benefits thereafter accruing) prior to the date of such amendment. Written
notice of any amendment shall be given each Participant then participating in the Plan. Notwithstanding the above, the Board
authorizes the Committee to amend the Plan to make any other amendments to this Plan deemed necessary or desirable by the
Committee for the operation and administration of this Plan provided such amendment does not have a material financial impact on
DHC. Such changes will be considered an Amendment to this Plan and shall be effective without further action by the Board. Written
notice of any amendment shall be given to each Participant then participating in the Plan.
7.2
Automatic Termination of Plan. The Plan shall terminate only under the following circumstances. The Plan shall
automatically terminate upon (a) a determination by the Company that a final decision of a court of competent jurisdiction or the U. S.
Department of Labor holding that the Plan is not maintained "primarily for the purpose of providing deferred compensation for a
select group of management or highly-compensated employees," and therefore is subject to Parts 2, 3 and 4 of Title I of ERISA, would
require that the Plan be funded and would result in immediate taxation to Participants of their vested Plan benefits, or (b) a
determination by the Company that a final decision of a court of competent jurisdiction has declared that the Participants under the
Plan are in constructive receipt under the Internal Revenue Code of their vested Plan benefits.
10

7.3
Payments Upon Automatic Termination. Upon any Plan termination under Section 7.2, the Participants will be
deemed to have terminated their enrollment under the Plan as of the date of such termination. The Employer will pay all Participants
the value of each Participant's Deferral Accounts in a lump sum, determined as if each Participant had a Termination of Employment
on the date of such termination of the Plan as provided under Section 5.2(a) hereof.
Payments Upon Change of Control. Notwithstanding any provision of this Plan to the contrary, if a "Change of
7.4
Control" as defined in the Target Corporation Deferred Compensation Trust Agreement (as it may be amended from time to time)
occurs and results in funding of the trust established under that Agreement, each Participant (or Beneficiary of a deceased Participant)
will be paid the entire value at that time of his or her Deferral Accounts in a lump sum, determined as provided in Appendix B of the
Target Corporation Deferred Compensation Trust Agreement. However, this section shall not apply, and no amounts shall be payable
to Participants or Beneficiaries under this section, in the event the assets of said trust are returned to the Participating Employers
pursuant to the Trust Agreement because no Change of Control actually occurred.
ARTICLE 8
MISCELLANEOUS
Unsecured General Creditor. Participants and their Beneficiaries, heirs, successors, and assigns shall have
8.1
no legal or equitable rights, claims, or interests in any specific property or assets of Employer, nor shall they be beneficiaries of, or
have any rights, claims, or interests in any life insurance policies, annuity contracts, or the proceeds therefrom owned or which may be
acquired by Employer ("Policies"). Such Policies or other assets of Employer shall not be held under any trust for the benefit of
Participants, their Beneficiaries, heirs, successors, or assigns, or held in any way as collateral security for the fulfilling of the
obligations of Employer under this Plan. Any and all of Employer's assets and Policies shall be, and remain, the general, unpledged,
unrestricted assets of Employer. Employer's obligation under the Plan shall be merely that of an unfunded and unsecured promise of
Employer to pay money in the future.
Nonassignability. Neither a Participant nor any other person shall have any right to commute, sell, assign,
8.2
transfer, pledge, anticipate, mortgage or otherwise encumber, hypothecate or convey in advance of actual receipt the amounts, if any,
payable hereunder, or any part thereof, or interest therein which are, and all rights to which are, expressly declared to be unassignable
and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the
payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by
operation of law in the event of a Participant's or any other person's bankruptcy or insolvency.
8.3
Employment Not Guaranteed. Nothing contained in this Plan nor any action taken hereunder shall be
construed as a contract of employment or as giving any Employee any right to be retained in the employ of the Employer.
8.4
Protective Provisions. Each Participant shall cooperate with the Employer by furnishing any and all
information requested by the Employer in order to facilitate the payment of benefits hereunder, taking such physical examinations as
the Employer may deem necessary and taking such other relevant action as may be requested by the Employer. If a Participant refuses
so to cooperate,
11

the Employer shall have no further obligation to the Participant under the Plan, other than payment to such Participant of the
cumulative reductions in Earnings theretofore made pursuant to this Plan. If a Participant commits suicide during the two (2) year
period beginning on the later of (a) the date of adoption of this Plan or (b) the first day of the first Plan Year of such Participant's
participation in the Plan, or if the Participant makes any material misstatement of information or nondisclosure of medical history,
then no benefits will be payable hereunder to such Participant or his Beneficiary, other than payment to such Participant of the
cumulative reductions in Earnings theretofore made pursuant to this Plan, provided, that in the Employer's sole discretion, benefits
may be payable in an amount reduced to compensate the Employer for any loss, cost, damage or expense suffered or incurred by the
Employer as a result in any way of such misstatement or nondisclosure.
8.5
Gender, Singular and Plural. All pronouns and any variations thereof shall be deemed to refer to the
masculine or feminine as the identity of the person or persons may require. As the context may require, the singular may be read as the
plural and the plural as the singular.
Captions. The captions of the articles, sections, and paragraphs of this Plan are for convenience only and
8.6
shall not control or affect the meaning or construction of any of its provisions.
8.7
Validity. In the event any provision of this Plan is held invalid, void, or unenforceable, the same shall not
affect, in any respect whatsoever, the validity of any other provision of this Plan.
Notice. Any notice or filing required or permitted to be given to the Committee under the Plan shall be
8.8
sufficient if in writing and hand delivered, or sent by registered or certified mail, to the principal office of the Employer, directed to
the attention of the President of the Employer. Such notice shall be deemed given as of the date of delivery or, if delivery is made by
mail, as of the date shown on the postmark on the receipt for registration or certification.
Applicable Law. This Plan shall be governed and construed in accordance with the laws of the State of
8.9
Minnesota as applied to contracts executed and to be wholly performed in such state.
12

APPENDIX A
Section 1
Participant Deferral Account Interest Crediting While in Active Status Assuming No Further Deferrals
A. A Participant shall receive interest credited monthly equal to the Participant's beginning-of-year (BOY) Deferral Account
balance times the Declared Rate divided by twelve:
Interest crediting occurs up to the day the Participant begins to receive annuity payments from the Plan.
Example of interest credited calculation
BOY Deferral Account balance at 1/1/99
= $500,000.00
Declared Rate
= 13.7%
Declared Rate divided by 12 = 13.7%/12 = 1.1417%
Credited interest for each month of 1999
= $500,000 .011417 = $5,708.50
B. A participant's Deferral Account balance shall be increased each month by taking the beginning-of-month (BOM) balance plus
interest credited for the month to equal the end-of-month (EOM) balance.
BOM balance + monthly interest credited = EOM balance
Example of monthly account growth
BOM balance at 1/1/99
Monthly crediting dollars for 1998
EOM at 1/31/99
EOM at 2/28/99

= $500,000.00
= $5,708.50
= $500,000.00 + 5,708.50 = $505,708.50
= $505,708.500 + 5,708.50 = $511,417.00
13

Section 2:
Interest Crediting, Deferral Account Balances, and Payments While in Pay Status
A.
1.

Definition of Variables for Participant Payment Calculation

"n" = number of payments expected to be made to a Participant and spouse. The number of expected payments shall be
determined by: (1) The ages of the Participant and spouse at the time annuity payments first begin. (2) The number of years that
the Participant and spouse are expected to live, as determined by an actuarially-based mortality table selected by the Committee.
(3) The frequency of payments made to the Participant. This frequency shall be determined by the payroll procedures of the
Company's operating division responsible for administering the Participant's payments.
Example of number of expected payments (assuming payments to begin on 10/1/99)
Frequency of payments
Participant age on 10/1/99
Spouse age on 10/1/99
Participant's and spouse's joint expected remaining lives
"n" for 10/1/99
"n" for 1/1/00
"n" for 1/1/01

2.

= monthly
= 50 yrs. old
= 48 yrs. old
= 476 months
= 476
= 473
= 461

"i" = interest rate per payment period such that when compounded over the entire year equals the Declared Rate.
"i" shall be expressed either as a weekly or monthly interest rate, depending on the frequency of annuity payments made by the
operating division administering the Participant's payments. If weekly, "i" is the interest rate that, when compounded over 52
periods, will equal the Declared Rate. If monthly, "i" is the interest rate that, when compounded over 12 periods, will equal the
Declared Rate.
Example of weekly and monthly interest rates
Declared Rate = 13.7%
Weekly "i" = (1.137)1/52 = .002472 or .2472%
Monthly "i" = (1.137)1/12 = .010757 or 1.0757%

3.

The beginning-of-period balance (BOP balance) is the Participant's Deferral Account balance at any time before credited interest
has been added for the period and payments have been subtracted for the period.
End-of-period balance (EOP balance) is the Participant's Deferral Account balance at any point in time after credited interest has
been added for the period and payments have been subtracted for the period.
14

Example of EOP balance calculation

EOP balance = BOP balance + interest crediting payment
B.

Payments
1.

Calculation of payments
At the beginning of each year (or at the beginning of a month when a Participant's Deferral Account is first transferred from
active status to payment status), a payment shall be calculated for each Participant who has a Deferral Account that is in the
payment status. The periodicity of payments shall depend on the payroll procedures of the operating division administering
the Participant's payments. The amount of the payment shall be effective for that calendar year (or portion of the calendar
year).
The calculation of the payment amount is based on the present value of an annuity formula. Specifically, the payment is
given by:
Payment =
1

x BOP

1
(1 + i)n

Example of a calculation with monthly payments

n = 476 months
Monthly i = 1.0757%
BOP balance = $500,000.00
Payment = $5,411.73
Example of a calculation with weekly payments
n = 2,070 weeks
Weekly i = 0.2472%
BOP balance = $500,000.00
Payment = $1,243.50
2.

Interest Crediting for Payments

Interest crediting shall be calculated every payment period, with the interest amount equal to the beginning-of-period
Deferral Account balance times the periodic interest rate
Example of interest crediting calculation (assuming monthly payments and a 13.7% Declared Rate)
BOP balance = $500,000.00
Monthly i = 1.0757%
Interest crediting = $500,000.00 .010757 = $5,378.50
15

3.

Amortization of Participant Deferral Account Balances

Participant Deferral Account balances shall be amortized over the remaining number of expected payment periods by
adding to the beginning-of-period balance the interest credits earned during the period less the payment made for the
period to produce an end-of-period Deferral Account balance.
Example of Deferral Account balance amortization (assuming monthly payments and a 13.7% Declared Rate)
BOP balance = $500,000.00
Monthly i = 1.0757%
Interest crediting = $5,378.50
Payment = $5,411.73
EOP balance = $500,000.00 + $5,378.50 - $5,411.73 = $499,966.77

C. Installment Termination Payments

1.

At the Company's discretion, if a participant terminates employment with the Company prior to Normal or Early
Retirement, as described in Article 5, Section 5.2(a), a participant's balance may be paid out over a four (4) year
installment period (one payment a year) instead of as an immediate lump sum payment.

2.

The four equal annual installment payments are determined by using the present value of an annuity formula referenced
in Section 2.B.1. of this Appendix. The interest rate used in calculating the four payments shall be 12%.
Example of a four-year annual installment payout of a Deferral Account balance
n=4
Annual i = 12%
BOP balance = $500,000.00
Annual installment payments = $164,617.22
16

EXHIBIT (10)I
TARGET CORPORATION
DEFERRED COMPENSATION PLAN
DIRECTORS
ARTICLE 1
PURPOSE
The purpose of this Deferred Compensation Plan (the "Plan") is to provide a means whereby Target Corporation (the
"Company") may afford additional financial security to directors of the Company and its subsidiaries who have rendered and continue
to render valuable services to the Company or its subsidiaries and who make an important contribution towards the Company's
continued growth and success by providing for additional future compensation so that such directors may be retained and their
productive efforts encouraged. The Plan document has been amended to reflect certain administrative practices in effect as of May 1,
1999.
ARTICLE 2
DEFINITIONS AND CERTAIN PROVISIONS
Beneficiary. "Beneficiary" means the person or persons designated as such in accordance with Article 6.
Benefit Deferral Period. "Benefit Deferral Period" means that period of one (1) or four (4) Plan Years as determined pursuant
to Article 4 over which a Participant defers a portion of such Participant's Earnings.
Committee. "Committee" means the plan administration committee appointed to administer the Plan pursuant to Article 3.
Cumulative Deferral Amount. "Cumulative Deferral Amount" means the total cumulative amount by which a Participant's
Earnings must be reduced over the period prescribed in Section 4.1.
Declared Rate. "Declared Rate" means with respect to any Plan Year the applicable rate announced in advance by the
Committee for such Plan Year. Under no circumstances shall the minimum rate be less than twelve percent (12%) per annum and the
maximum rate shall not exceed twenty percent (20%) per annum. The rate to be announced, subject to the minimum and maximum
percentages referenced above, shall be a calculated rate using the following formula:
Moody's Corporate Bond Yield Average. Monthly Average Corporates as published by Moody's Investors Service, Inc. or its
successor (or if said index is no longer available, its successor index, or if no successor index exists, such other index as selected by
the Committee as most closely replicates the measure produced by said Moody index) for the month of June for the year preceding the
subject Plan Year to which the Declared Rate shall apply, said rate of return to be rounded to the nearest .10% of said reported rate, to
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which percentage rate shall be added six (6) percentage points (e.g. an index of 7.16% rounded to 7.20% plus 6% equals a 13.2%
"Declared Rate"). Provided however, if any tax or insurance change shall occur which in the reasoned judgment of the Committee
shall have an ongoing adverse economic effect on the underlying COLI financing assumptions related to the Plan, then the Committee
may adjust said Declared Rate to reflect such adverse economic impact but in no event below the twelve percent (12%) minimum
referenced in the first paragraph hereof.
Deferral Account. "Deferral Account" means the account maintained on the books of account of the Company pursuant to
Section 4.4.
Director. "Director" means any director of the Company or a subsidiary.
Earnings. "Earnings" means the total fees paid to a Participant for service on the Board of Directors (or any committee thereof)
of the Company or a subsidiary.
Employer. "Employer" means the Company and any of its wholly owned subsidiaries.
Enrollment Agreement. "Enrollment Agreement" means the written agreement entered into by the Employer and a Director
pursuant to which the Director becomes a Participant in the Plan. In the sole discretion of the Company, authorization forms filed by
any Participant by which the Participant makes the elections provided for by this Plan may be treated as a completed and fully
executed Enrollment Agreement for all purposes under the Plan.
Participant. "Participant" means a Director who has filed a completed and executed Enrollment Agreement or authorization
form with the Committee and is participating in the Plan in accordance with the provisions of Article 4.
Plan Year. "Plan Year" means the fiscal year beginning February 1 and ending January 31.
Retirement. "Retirement" means termination of service as a Director for any reason whatsoever, whether voluntarily or
involuntarily, except death.
ARTICLE 3
ADMINISTRATION OF THE PLAN
A Committee shall be appointed by the Chief Executive Officer of the Company to administer the Plan and to establish, adopt
or revise such rules and regulations as it may deem necessary or advisable for the administration of the Plan. The Committee shall
have discretionary authority to determine eligibility for benefits and to construe the terms of the Plan. Interpretations of the Plan by the
Committee shall be conclusive. Members of the Committee shall be eligible to participate in the Plan while serving as members of the
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Committee, but a member of the Committee shall not vote or act upon any matter which relates solely to such member's interest in the
Plan as a Participant.
ARTICLE 4
PARTICIPATION
4.1 Election to Participate. Any Director may enroll in the Plan by filing a completed and fully executed Enrollment
Agreement or authorization form with the Committee. Pursuant to said Enrollment Agreement or authorization form, the Director
shall irrevocably designate a dollar amount (the "Cumulative Deferral Amount") by which the aggregate Earnings of such Participant
would be reduced over one (1) or four (4) Plan Years next following the execution of the Enrollment Agreement (the "Benefit Deferral
Period"), provided, however, that:
(a) Minimum Deferral. The reduction for any Plan Year shall not be less than Five Thousand Dollars ($5,000.00).
(b) Reduction in Earnings.
(i) In General. Except as otherwise provided in this Section 4.1, the Earnings of the Participant for each of the
Plan Years in the Benefit Deferral Period shall be reduced by the amount specified in the Enrollment Agreement
(including any authorization form) applicable to such Plan Year.
(ii) Accelerated Reduction. A Participant may elect in a written notice with the consent of the Committee to
increase the amount of the reduction of Earnings otherwise provided for by Section 4.1(b) (i) for any of the Plan Years
remaining in the Benefit Deferral Period, provided, however, that any such increase in the reduction of Earnings for any
remaining Plan Years in the Benefit Deferral Period shall not increase the Cumulative Deferral Amount, but shall act to
shorten the length of the Benefit Deferral Period.
(c) Maximum Reduction in Earnings. A Participant may not elect a Cumulative Deferral Amount or an increase in
reduction of Earnings pursuant to Section 4.1(b) (ii), or any combination of the two, that would cause the aggregate total
reduction in Earnings in any Plan Year to exceed one hundred percent (100%) of the Earnings payable during such Plan Year.
In the event that a Participant elects a Cumulative Deferral Amount or increase in reduction of Earnings that would violate the
limitation described in this paragraph (c), the election shall be valid except that the Cumulative Deferral Amount or increase in
reduction of Earnings so elected shall automatically be reduced to comply with such limitation, whichever is most appropriate
in the sole discretion of the Committee.
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4.2 Deferral Accounts. The Committee shall establish and maintain a separate Deferral Account for each Participant. The
amount by which a Participant's Earnings are reduced pursuant to Section 4.1 shall be credited by the Employer to the Participant's
Deferral Account on the fifteenth (15th) day of the month in which such Earnings would otherwise have been paid. Such Deferral
Account shall be debited by the amount of any payments made by the Employer to the Participant or the Participant's Beneficiary
pursuant to this Plan.
(a) Interest. Each Deferral Account of a Participant shall be deemed to bear interest from the date such Deferral
Account was established through the date of commencement of payment of the Retirement Benefit at a rate equal to the
Declared Rate which is announced by the Committee for each Plan Year, compounded annually, on the balance from monthto-month in such Deferral Account. Following the date of commencement of payment of the Retirement Benefit, a
Participant's Deferral Account shall be deemed to bear interest on the balance in such Deferral Account from month to month
at a rate equal to Declared Rate, compounded annually.
4.3 Rollover Deferred Compensation Account. In its sole discretion, the Committee may permit any Participant to make a
special rollover election to transfer any amounts which were previously deferred under any existing deferred compensation plans of
the Company to this Plan.
In such event, the Committee shall establish and maintain a separate Rollover Deferral Account for each Participant who makes
a rollover transfer to this Plan. Such Rollover Deferral Account shall be deemed to bear interest at the same rate and subject to the
same conditions as other Deferral Accounts pursuant to Section 4.2. Each Participant who makes a rollover transfer to a Rollover
Deferral Account shall be treated for purposes of determining benefits under the Plan as having a separate Cumulative Deferral
Amount which shall initially be in the amount of the rollover transfer. A Participant who makes a rollover transfer shall be deemed to
waive all rights under the Company's existing deferred compensation plans from which rollover transfers are made with respect to the
amounts transferred to this Plan, including the right to make elections regarding the time or manner of payment as permitted
thereunder. Rollover transfers shall be subject to the minimum deferral amount set forth in Section 4.1(a), but shall not be subject to
any maximum deferral limitation.
4.4 Valuation of Accounts. The value of a Deferral Account as of any date shall equal the amounts theretofore credited to such
account less any payments debited to such account plus the interest deemed to be earned on such account in accordance with
Section 4.2. Interest shall be credited monthly on the fifteenth (15th) day of each month.
4.5 Statement of Accounts. The Committee shall submit to each Participant, within one hundred twenty (120) days after the
close of each Plan Year, a statement in such form as the Committee deems desirable setting forth the balance standing to the credit of
each Participant in his Deferral Account.
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ARTICLE 5
BENEFITS
5.1 Retirement. Upon Retirement, the payment of benefits shall commence on the first day of the month following retirement,
or following such later date which the Participant elected in his Enrollment Agreement (including any authorization form). A
Participant may elect in his Enrollment Agreement (including any authorization form) to have payments commence from one (1) to
ten (10) years following retirement, but not later than age 65 (or five (5) years after the first day of the Benefit Deferral Period, if
later).
(a) Single Participant. In the case of a Participant who is single when payments commence, the Employer shall pay to
the Participant an amount each month for the life of the Participant, but not less than one hundred eighty (180) months. The
payments shall be the actuarial equivalent of the aggregate of the Participant's Deferral Account at the time payments
commence and the interest that will accrue on the unpaid balance in such Deferral Account during the payment period
pursuant to Section 4.2(a). The monthly amount of payment will be redetermined annually to reflect changes in the Declared
Rate.
(b) Married Participant. In the case of a Participant who is married when payments commence, the Employer shall
make actuarially reduced monthly payments to the Participant for his life and thereafter, if the Participant is survived by a
spouse who was married to the Participant when Retirement Benefit payments commenced, shall continue to make monthly
payments to the Participant's spouse for her life, with payments to be made for an aggregate period of not less than one
hundred eighty (180) months. The payments shall be the actuarial equivalent of the payment which would be made to the
Participant pursuant to Section 5.1(a) if he were single. The monthly amount of payments will be redetermined annually to
reflect the change in the Declared Rate.
5.2 Survivor Benefits.
(a) If a Participant dies prior to Retirement, the Employer will pay to the Participant's Beneficiary an annual benefit
for the greater of:
(i) ten (10) years, or
(ii) until the Participant would otherwise have attained age 65,
equal to fifty percent (50%) of the Cumulative Deferral Amount. However, if the Committee determines that a distribution of
the Participant's Deferral Account would produce a greater benefit, such Deferral Account balance shall be paid to the
Participant's Beneficiary in equal annual installments over the same period as specified above based on crediting the balance
from month-to-month in such
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Deferral Account at a rate equal to twelve percent (12%) per annum, compounded annually.
(b) If a Participant dies after Retirement, but prior to commencement of payment of any Retirement Benefit under the
Plan, the Employer will pay to the Participant's Beneficiary the benefit that such Participant would have received had the
Participant retired on the day prior to such Participant's death, provided, however, that if the present value of the benefit
described in this Section 5.2(b) is less than the present value of the benefit described in Section 5.2(a), using in each case
twelve percent (12%) as the discount factor, then the Beneficiary described in this Section 5.2(b) shall receive the benefit
described in Section 5.2(a) and not the benefit described in this Section 5.2(b).
(c) If a Participant (who was unmarried at the commencement of the payment of any Retirement Benefit, or whose
spouse who was married to the Participant at the time of commencement of payment of any Retirement Benefit predeceases
the Participant) dies after the commencement of the payment of any Retirement Benefit, the Employer will pay to the
Participant's Beneficiary the remaining installments of any such benefit for the balance of the one hundred eighty
(180) months minimum payment period. If a spouse who was married to the Participant at the time of commencement of
payment of the Retirement Benefit survives beyond such one hundred eighty (180) months minimum payment period,
payments shall continue to be made to the spouse until the spouse's death. If the spouse who was married to the Participant at
the time of commencement of payment of the Retirement Benefit survives the Participant, but does not survive past the one
hundred eighty (180) months minimum payment period, the Employer will pay to the Participant's Beneficiary the remaining
installments of any such benefit for the balance of the one hundred eighty (180) months minimum payment period. In
computing any benefits to be paid following the Participant's death pursuant to this paragraph (c), the Participant's Deferral
Account shall be deemed to bear interest following the Participant's death on the balance in such Deferral Account from
month-to-month at a rate equal to the Declared Rate, compounded annually.
(d) Notwithstanding other provisions of the Plan, if the Beneficiary is not a spouse, the present value of the
installments shall be paid as soon as administratively feasible after the death of the Participant. The interest rate used to
compute the present value shall be the average of the declared rate for the Plan Year in which the Participant dies and twelve
percent (12%).
5.3 Small Benefit. In the event that the Committee determines in its sole discretion that the amount of any benefit is too small
to make it administratively convenient to pay such benefit over time, the Committee may pay the benefit in the form of a lump sum,
notwithstanding any provision of this Article 5 to the contrary. Such lump sum shall be computed as the net present value of the
benefit otherwise payable using a twelve percent (12%) per annum discount factor.
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5.4 Withholding. To the extent required by the law in effect at the time payments are made, the Employer shall withhold from
payments made hereunder the minimum taxes required to be withheld by the federal or any state or local government.
5.5 Lump Sum Election. Other provisions of Section 5.1 notwithstanding, if a Participant in his Enrollment Agreement
(including any authorization form) has elected a lump sum payment to be made after his Retirement, the amount of his Deferral
Account (including interest) for the Benefit Deferral Period covered by that Agreement shall be paid to the Participant in a lump sum
at the time specified in that Agreement.
5.6 Lump Sum Payout Option. Notwithstanding any other provisions of the Plan, at any time after Retirement, but not later
than ten (10) years after Retirement of the Participant, a Participant or a Beneficiary of a deceased Participant may elect to receive an
immediate lump sum payment of 50% or 100% of the balance of his Deferral Account, reduced by a penalty, which shall be forfeited
to the Company, equal to eight percent (8%) of the amount of his Deferral Account he elected to receive, in lieu of payments in
accordance with the form previously elected by the Participant, or provided elsewhere in this Plan. Such election, if not 100%, may be
made only twice. If less than 100% of his Deferral Account is paid out, the remainder of his Deferral Account will be paid in
accordance with the form previously elected by the Participant, or provided elsewhere in this Plan. However, the penalty shall not
apply if the Committee determines, based on advice of counsel or a final determination by the Internal Revenue Service or any court
of competent jurisdiction, that by reason of the foregoing provision any Participant or Beneficiary has recognized or will recognize
gross income for federal income tax purposes under this Plan in advance of payment to him of Plan benefits. The Company shall
notify all Participants (and Beneficiaries of deceased Participants) of any such determination. Whenever any such determination is
made, the Company shall refund all penalties which were imposed hereunder on account of making lump sum payments at any time
during or after the first year to which such determination applies (i.e., the first year when gross income is recognized for federal
income tax purposes). Interest shall be paid on any such refunds at ten percent (10%) for each Plan Year, compounded annually. The
Committee may also reduce or eliminate the penalty if it determines that this action will not cause any Participant or Beneficiary to
recognize gross income for federal income tax purposes under this Plan in advance of payment to him of Plan benefits.
ARTICLE 6
BENEFICIARY DESIGNATION
Each Participant shall have the right, at any time, to designate any person or persons as Beneficiary or Beneficiaries to whom
payment under this Plan shall be made in the event of the Participant's death prior to complete distribution to the Participant of the
benefits due under the Plan. Each Beneficiary designation shall become effective only when filed in writing with the Committee
during the Participant's lifetime on a form prescribed by the Committee.
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The filing of a new Beneficiary designation form will cancel all Beneficiary designations previously filed. Any finalized
divorce or marriage (other than a common law marriage) of a Participant subsequent to the date of filing of a Beneficiary designation
form shall revoke such designation unless in the case of divorce the previous spouse was not designated as Beneficiary and unless in
the case of marriage the Participant's new spouse had previously been designated as Beneficiary. The spouse of a married Participant
domiciled in a community property jurisdiction shall join in any designation of Beneficiary or Beneficiaries other than the spouse.
If a Participant fails to designate a Beneficiary as provided above, or if his Beneficiary designation is revoked by marriage,
divorce, or otherwise without execution of a new designation, or if all designated Beneficiaries predecease the Participant or die prior
to complete distribution of the Participant's benefits, then the Committee shall direct the distribution of such benefits to the
Participant's estate.
ARTICLE 7
AMENDMENT AND TERMINATION OF PLAN
7.1 Amendment. The Board of Directors of the Company may at any time amend the Plan, in whole or in part for any reason,
including but not limited to tax, accounting or insurance changes, a result of which may be to terminate the Plan for future deferrals;
provided, however, that no amendment shall be effective to decrease the benefits, nature or timing thereof payable under the Plan to
any Participant with respect to deferrals made (and benefits thereafter accruing) prior to the date of such amendment. Written notice of
any amendment shall be given each Participant then participating in the Plan.
7.2 Automatic Termination of Plan. The Plan shall terminate only under the following circumstances. The Plan shall
automatically terminate upon a determination by the Company that a final decision of a court of competent jurisdiction has declared
that the Participants under the Plan are in constructive receipt under the Internal Revenue Code of their vested Plan benefits.
7.3 Payments Upon Automatic Termination. Upon any Plan termination under Section 7.2, the Participants will be deemed to
have terminated their enrollment under the Plan as of the date of such termination. The Company will pay all Participants the value of
each Participant's Deferral Accounts in a lump sum. The interest rate used to compute the present value shall be the average of the
declared rate for the Plan Year in which the lump sum is to be paid and twelve percent (12%).
7.4 Payments Upon Change of Control. Notwithstanding any provision of this Plan to the contrary, if a "Change of Control" as
defined in the Target Corporation Deferred Compensation Trust Agreement (as it may be amended from time to time) occurs and
results in funding of the trust established under that Agreement, each Participant (or Beneficiary of a deceased Participant) will be
paid the entire value of his or her Deferral Accounts in a lump sum, determined as if the Plan had automatically terminated under
Section 7.2 on the date the Change of Control occurs, with the amount of the payment to
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be determined in the manner provided in Appendix B to the Target Corporation Deferred Compensation Trust Agreement. However,
this section shall not apply, and no amounts shall be payable to Participants or Beneficiaries under this section, in the event the assets
of said trust are returned to the Participating Employers Pursuant to the Trust Agreement because no Change of Control actually
occurred.
ARTICLE 8
MISCELLANEOUS
8.1 Unsecured General Creditor. Participants and their Beneficiaries, heirs, successors, and assigns shall have no legal or
equitable rights, claims, or interests in any specific property or assets of Employer, nor shall they be beneficiaries of, or have any
rights, claims, or interests in any life insurance policies, annuity contracts, or the proceeds therefrom owned or which may be acquired
by Employer ("Policies"). Such Policies or other assets of Employer shall not be held under any trust for the benefit of Participants,
their Beneficiaries, heirs, successors, or assigns, or held in any way as collateral security for the fulfilling of the obligations of
Employer under this Plan. Any and all of Employer's assets and Policies shall be, and remain, the general, unpledged, unrestricted
assets of Employer. Employer's obligation under the Plan shall be merely that of an unfunded and unsecured promise of Employer to
pay money in the future.
8.2 Nonassignability. Neither a Participant nor any other person shall, have any right to commute, sell, assign, transfer, pledge,
anticipate, mortgage or otherwise encumber, hypothecate or convey in advance of actual receipt the amounts, if any, payable
hereunder, or any part thereof, or interest therein which are, and all rights to which are, expressly declared to be unassignable and nontransferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of
any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of
law in the event of a Participant's or any other person's bankruptcy or insolvency.
8.3 Service Not Guaranteed. Nothing contained in this Plan nor any action taken hereunder shall be construed as a contract of
employment or as giving any Director any right to be retained as a Director of the Employer.
8.4 Protective Provisions. Each Participant shall cooperate with the Employer by furnishing any and all information requested
by the Employer in order to facilitate the payment of benefits hereunder, taking such physical examinations as the Employer may
deem necessary and taking such other relevant action as may be requested by the Employer. If a Participant refuses so to cooperate,
the Employer shall have no further obligation to the Participant under the Plan, other than payment to such Participant of the
cumulative reductions in Earnings theretofore made pursuant to this Plan. If a Participant commits suicide during the two (2) year
period beginning on the later of (a) the date of adoption of this Plan or (b) the first day of the first Plan Year of such Participant's
participation in the Plan, or if the Participant makes any material misstatement of information or nondisclosure of medical history,
then no benefits will be payable
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hereunder to such Participant or his Beneficiary, other than payment to such Participant of the cumulative reductions in Earnings
theretofore made pursuant to this Plan, provided, that in the Employer's sole discretion, benefits may be payable in an amount reduced
to compensate the Employer for any loss, cost, damage or expense suffered or incurred by the Employer as a result in any way of such
misstatement or nondisclosure.
8.5 Gender, Singular and Plural. All pronouns and any variations thereof shall be deemed to refer to the masculine or feminine
as the identity of the person or persons may require. As the context may require, the singular may be read as the plural and the plural
as the singular.
8.6 Captions. The captions of the articles, sections, and paragraphs of this Plan are for convenience only and shall not control
or affect the meaning or construction of any of its provisions.
8.7 Validity. In the event any provision of this Plan is held invalid, void, or unenforceable, the same shall not affect, in any
respect whatsoever, the validity of any other provision of this Plan.
8.8 Notice. Any notice or filing required or permitted to be given to the Committee under the Plan shall be sufficient if in
writing and hand delivered, or sent by registered or certified mail, to the principal office of the Employer, directed to the attention of
the President of the Employer. Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the
date shown on the postmark on the receipt for registration or certification.
8.9 Applicable Law. This Plan shall be governed and construed in accordance with the laws of the State of Minnesota as
applied to contracts executed and to be wholly performed in such state.
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EXHIBIT (10)L
TARGET CORPORATION
SMG EXECUTIVE DEFERRED COMPENSATION PLAN
ARTICLE I
GENERAL
Sec. 1.1 Name of Plan. The name of the Plan set forth herein is the Target Corporation SMG Executive Deferred
Compensation Plan. It is referred to herein as the "Plan."
Sec. 1.2 Purpose. The purpose of the Plan is to provide a means whereby Target Corporation (the "Company") may afford
financial security to a select group of Employees of the Company and its subsidiaries who have rendered and continue to render
valuable services to the Company or its subsidiaries and who make an important contribution towards the Company's continued
growth and success, by providing for additional future compensation so that such Employees may be retained and their productive
efforts encouraged.
Sec. 1.3 Effective Date. The Effective Date of the Plan is January 1, 1997.
Sec. 1.4 Company. "Company" means all of the following:
(a)

Target Corporation, a Minnesota corporation.

(b)

Any successor of Target Corporation (whether direct or indirect, by purchase of a majority of the outstanding voting
stock of Target Corporation or all or substantially all of the assets of Target Corporation, or by merger,
consolidation or otherwise).

(c)

Any person that becomes liable for the obligations hereunder of the entities specified in (a) and (b) above by
operation of law.

Sec. 1.5 Participating Employers. The Company is a Participating Employer in the Plan. With the consent of the Company,
by action of the Board or any duly authorized officer, any wholly-owned subsidiary of the Company may, by action of its board of
directors or any duly authorized officer, also become a Participating Employer in the Plan effective as of the date specified by it in its
adoption of the Plan; but the subsidiary shall cease to be a Participating Employer on the date it ceases to be a wholly-owned
subsidiary of the Company. The other Participating Employers on the Effective Date are:

Dayton's Commercial Interiors, Inc.

(Minnesota)

Rivertown Trading Company (Minnesota) (April 15, 1998)

Dayton's Travel Service, Inc.

The Daily Planet Company (April 15, 1998)

Mervyn's (California)

High Bridge Company (April 15, 1998)

Dayton Hudson Brands, Inc. (February 1,

1999)

High Bridge Music Company (April 15, 1998)

DHC Milwaukee, Inc. (Wisconsin)

The Associated Merchandising Corporation only U.S.

based employees who pay U.S. income taxes (January 1,
1999)

DHC Wisconsin, Inc. (Wisconsin)

Marshall Field & Company (Delaware)

Mervyn's Brands, Inc. (August 1, 1999)

Marshall Field Stores, Inc. (Delaware)

target.direct LLC (date company first hired employees)

Retailers National Bank

Hometown America (date company first hired employees)

Northern Fulfillment Services Company

(date company first hired employees)
Target Customs Brokers, Inc. (date company first hired
employees)
Sec. 1.6 Construction and Applicable Law. The Plan is intended to be an unfunded benefit plan maintained for the purpose
of providing deferred compensation for a select group of management or highly compensated Employees, subject to the applicable
requirements of ERISA. The Plan shall be administered and construed consistently with said intent. It shall also be construed and
administered according to the laws of the State of Minnesota to the extent such laws are not preempted by laws of the United States of
America. All controversies, disputes and claims arising hereunder shall be submitted to the United States District Court for the District
of Minnesota.
Sec. 1.7 Rules of Construction. The Plan shall be construed in accordance with the following:
(a)

Headings at the beginning of articles and sections hereof are for convenience of reference, shall not be considered as
part of the text of the Plan and shall not influence its construction.

(b)

Capitalized terms used in the Plan shall have their meaning as defined in the Plan unless the context clearly indicates
to the contrary.
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(c)

All pronouns and any variations thereof shall be deemed to refer to the masculine or feminine as the identity of the
person or persons may require. As the context may require, the singular may be read as the plural and the plural as
the singular.

(d)

Use of the words "hereof," "herein," "hereunder" or similar compounds of the word "here" shall mean and refer to
the entire Plan unless the context clearly indicates to the contrary.

(e)

The provisions of the Plan shall be construed as a whole in such manner as to carry out the provisions thereof and
shall not be construed separately without relation to the context.

Sec. 1.8 Supplements. Some Plan provisions that have application to a limited number of Participants or that otherwise do
not apply equally to all Plan participants may be described in a Supplement to the Plan. In the event of a conflict between the terms of
a Plan Supplement and the terms of the remainder of the Plan, the terms of the Plan Supplement will control.
ARTICLE II
DEFINITIONS
Sec. 2.1 Base Salary. "Base Salary" is the salary an Employee is expected to earn in a Benefit Deferral Period, assuming the
Employee is employed for the full Benefit Deferral Period.
Sec. 2.2 Beneficiary. "Beneficiary" means the person or persons designated as such in accordance with Article VI.
Sec. 2.3 Benefit Deferral Period. "Benefit Deferral Period" means that period of one Plan Year or such other period as
designated by the Committee, as determined pursuant to Article IV over which a Participant defers a portion of such Participant's
Based Salary and/or Bonus.
Sec. 2.4 Bonus. "Bonus" is the bonus under any bonus plan of a Participating Employer. Any part of a "Bonus" earned in a
Benefit Deferral Period, but otherwise payable in the year following the Benefit Deferral Period, is governed by the deferral election
made for the Benefit Deferral Period.
Sec. 2.5 Board. "Board" means the board of directors of the Company, and includes any committee thereof authorized to act
for said board of directors.
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Sec. 2.6 Continuing Participating Salary. "Continuing Participating Salary" shall be the amount of compensation during the
previous Plan Year necessary to make a Participant a Highly Compensated Employee for the current Plan Year.
Sec. 2.7 Committee. "Committee" means the Plan Administrative Committee appointed in accordance with Section 7.1(d)
hereof which is authorized by the Board of Directors of the Company to act on behalf of the Company in accordance with the terms of
this Plan.
Sec. 2.8 Credited Service. "Credited Service" of a Participant means the number of years of service for vesting purposes a
Participant would have under the applicable defined benefit pension plan of the Company and/or a Participating Employer.
Sec. 2.9 Crediting Rate. "Crediting Rate" means the earnings or losses for a day on Crediting Rate Alternative(s) available
for the Plan.
Sec. 2.10 Crediting Rate Alternative. "Crediting Rate Alternative(s)" means Crediting Rate for any of the investment fund
options available to Participants in the TGT 401(k) Plan.
Sec. 2.11 Cumulative Deferral Amount. "Cumulative Deferral Amount" means the total cumulative amount by which a
Participant's Base Salary and/or Bonus must be reduced over the period prescribed in Section 4.1. If for a Plan Year a Matching
Allocation for a Participant pursuant to the TGT 401(k) cannot be made because the Before Tax Deposits or After Tax Deposits
elected by the Employee are reduced to comply with the provisions of the TGT 401(k), "Cumulative Deferral Amount" also includes
the amount of the Matching Allocation that cannot be made. "Cumulative Deferral Amount" also includes amounts transferred from
the HCCAP.
Sec. 2.12 TGT 401(k) Plan. "TGT 401(k) Plan" or "TGT 401(k)" means the Target Corporation 401(k) Plan, formerly
known as "SRSP" (Dayton Hudson Corporation Supplemental Retirement, Savings and Employee Stock Ownership Plan).
Sec. 2.13 EMG. An "EMG" is a member of the Executive Management Group of the Company or a Participating Employer,
as that term is defined by the Vice President of Personnel.
Sec. 2.14 Deferral Account. "Deferral Account" means the accounts maintained on the books of account of the Company
pursuant to Section 4.2.
Sec. 2.15 Employee. "Employee" means a Qualified Employee as that term is defined in the TGT 401(k) Plan.
Sec. 2.16 Enhancement. "Enhancement" means an additional .1667% per month added to each Crediting Rate Alternative.
4

Sec. 2.17 Enrollment Agreement. "Enrollment Agreement" means the agreement entered into by the Company and an
Employee pursuant to which the Employee becomes a Participant in the Plan. In the sole discretion of the Company, authorization
forms filed by any Participant by which the Participant makes the elections provided for by this Plan may be treated as a completed
and fully executed Enrollment Agreement for all purposes under the Plan.
Sec. 2.18 ERISA. "ERISA" means the Employee Retirement Income Security Act of 1974, as from time to time amended.
Sec. 2.19 HCCAP. "HCCAP" is the Company's Highly Compensated Capital Accumulation Plan.
Sec. 2.20 Highly Compensated Employee. "Highly Compensated Employee" means a "Highly Compensated Employee" as
that term is defined in the TGT 401(k).
Sec. 2.21 Named Fiduciary. The Company and the Vice President of Personnel are "Named Fiduciaries" for purposes of
ERISA with authority to control and manage the operation and administration of the Plan. Other persons are also Named Fiduciaries
under ERISA if so provided thereunder or if so identified by the Company, by action of the Board or the Chief Executive Officer.
Such other person or persons shall have such authority to control or manage the operation and administration of the Plan as may be
provided by ERISA or as may be allocated by the Company, by action of the Board, the Chief Executive Officer, or the Vice President
of Personnel.
Sec. 2.22 Participant. "Participant" means an eligible Employee who has filed a completed and executed Enrollment
Agreement or authorization form with the Company and is participating in the Plan in accordance with the provisions of Article IV.
"Participant" also means an Employee of the Company who has a Cumulative Deferral Amount based on Matching Allocation that
could not be made to the TGT 401(k) Plan.
Sec. 2.23 Person. "Person" means an individual, partnership, corporation, estate, trust or other entity.
Sec. 2.24 Plan Year. "Plan Year" means the period commencing with the Effective Date and ending December 31, 1997 and
each subsequent calendar year.
Sec. 2.25 Rate of Return Alternative Change Form. "Rate of Return Alternative Change Form" means the form of
authorization approved by the Company by which the Participant notifies the Plan of its choices for Crediting Rate Alternatives for his
account under the Plans.
5

Sec. 2.26 Signature. "Signature" or "sign" as used herein shall mean either the Participant's written signature or the
Participant's electronic signature evidenced by the use of an electronic personal identification number.
Sec. 2.27 SMG. A "SMG" is a member of the Senior Management Group of the Company or a Participating Employer, as
that term is defined by the Vice President of Personnel.
Sec. 2.28 Termination of Employment. The "Termination of Employment" of an Employee from its Participating Employer
for purposes of the Plan shall be deemed to have occurred one month after the occurrence of the following: his or her resignation,
discharge, retirement, death, failure to return to active work at the end of an authorized leave of absence, or the authorized extension
or extensions thereof, failure to return to work when duly called following a temporary layoff, or upon the happening of any other
event or circumstance which, under the policy of his Participating Employer as in effect from time to time, results in the termination of
the Employer/Employee relationship; provided, however, that "termination of employment" shall not be deemed to have occurred
upon transfer between any combination of participating employers, affiliates and predecessor employers.
Sec. 2.29 Vice President of Personnel. "Vice President of Personnel" means the most senior officer of the Company who is
assigned responsibility for compensation and benefits matters or such other officer as may be designated from time to time by the
Board of Directors.
Sec. 2.30 Year of Vesting. A "Year of Vesting" is a full year of participation under HCCAP or a full year of participation in
a deferred compensation plan of the Company.
ARTICLE III
ELIGIBILITY
Sec. 3.1 Eligibility. An Employee shall be a Participant while, and only while, he or she is a regular Employee of a
Participating Employer, subject to the following:
(a)

An Employee will become a Participant on the first day of the first Plan Year in which he or she is a Highly
Compensated Employee.

(b)

An Employee must be a SMG or EMG on the first day of the Plan Year, or he or she cannot become a Participant.
6

(c)

If an Employee's Base Salary is below the Continuing Participating Salary, he or she will continue to be a
Participant, but no further deferrals will be allowed and no TGT 401(k) match will be added to the Cumulative
Deferral Amount.

(d)

The Employee must complete an enrollment and sign an insurance consent form in the form that the Company
determines in order to defer Base Salary and/or Bonus. The insurance consent form will allow the Company to
purchase life insurance on the Employee with the Company as beneficiary.

Sec. 3.2 Eligibility Upon Hire. Notwithstanding anything contained in this Article 3, to the contrary, if an Employee is
initially hired by a Participating Employer as a SMG or EMG that Employee shall be eligible to be a Participant on his/her date of
employment provided that the Employee has met the requirements of Section 3.1(d). If the Employee does not meet the requirements
of Section 3.1(d) on the date of hire, the Employee must meet the requirements of Section 3.1 to be eligible to participate in the Plan.
Sec. 3.3 No Guarantee of Employment. Participation in the Plan does not constitute a guarantee or contract of employment
with any Participating Employer. Such participation shall in no way interfere with any rights a Participating Employer would have in
the absence of such participation to determine the duration of the Employee's employment.
ARTICLE IV
PARTICIPATION AND BENEFITS
Sec. 4.1 Election to Participate. Any Employee of a Participating Employer who is eligible to participate may enroll in the
Plan by completing the Enrollment Agreement or authorization form with the Company in a form acceptable to the Company.
Pursuant to said Enrollment Agreement or authorization form, the Employee shall irrevocably designate the percentage amount by
which the Base Salary and/or the percentage amount by which the Bonus of such Participant would be reduced over the Benefit
Deferral Period next following the execution of the Enrollment Agreement; provided, however, that:
(a)

Reduction in Earnings. Except as otherwise provided in this Section 4.1, the Base Salary and/or Bonus of the
Participant for the Benefit Deferral Period shall be reduced by the amount specified in the Enrollment Agreement
(including any authorization form) applicable to such Plan Year.
7

(b)

Maximum Reduction in Earnings. A Participant may not elect a Cumulative Deferral Amount that would cause the
reduction in Base Salary in any Plan Year to exceed eighty percent (80%) of the Base Salary and eighty percent
(80%) of the Bonus payable during such Plan Year or such greater amount or percent of base pay and/or incentive
pay or greater total amount as the Company may permit in its sole discretion. In no event can Base Salary be
reduced below one hundred and ten percent (110%) of the Continuing Participating Salary in the previous Plan
Year. In the event that a Participant elects a Cumulative Deferral Amount that would violate the limitation described
in this paragraph (b), the election shall be valid except that the Cumulative Deferral Amount so elected shall
automatically be reduced to comply with such limitation, whichever is most appropriate in the sole discretion of the
Company.

(c)

Mid-Year Elections to Participate. Notwithstanding any provision of the Plan to the contrary, an Employee who met
the requirements of Sec. 3.1(a), (b) and (c) on the first day of the Plan Year, but who did not file an Enrollment
Agreement prior to the Benefit Deferral Period commencing on that date, may file an Enrollment Agreement in
advance of July 1 of that year during a period specified by the Committee and in accordance with such rules as the
Committee may establish, which shall be effective as of July 1, and shall apply to the Participant's Base Salary for
the last six months of the Plan Year. Any Enrollment Agreement made under this subsection (c) shall not apply to
any Bonus payable to the Participant with respect to the Benefit Deferral Period in which the Agreement is filed.

Sec. 4.2 Deferral Accounts. The Company shall establish and maintain separate Deferral Accounts for each Participant. The
amount by which a Participant's Base Salary or Bonus are reduced pursuant to Section 4.1 shall be credited by the Company to the
Participant's Deferral Accounts as soon as administratively possible after the end of each pay cycle in which such Base Salary or
Bonus would otherwise have been paid. The Participant's Deferral Account shall be credited with the annual TGT 401(k) lost
Matching Allocation no later than the last day of January following the year of the lost Matching Allocation. Such Deferral Accounts
shall be debited by the amount of any payments made by the Company to the Participant or the Participant's Beneficiary
8

pursuant to this Plan. A separate Deferral Account shall be maintained for each type of deferral election made and for each Crediting
Rate Alternative.
Sec. 4.3 HCCAP. All persons who become Participants in this Plan on January 1, 1997 will have the balance of their
HCCAP Account transferred to this Plan effective January 1, 1997. All persons who become Participants in this Plan after January 1,
1997 will have the balance in their HCCAP account transferred on the January 1 they become Participants. Unless the Participant
completes a new election, the balances of a participant's HCCAP account shall be deposited in this Plan in the same Crediting Rate
Alternatives and at the same percentages as in the Participant's HCCAP account. The Deferral Accounts transferred from HCCAP will
be paid in immediate lump sum payouts after Termination of Employment.
Sec. 4.4 Crediting Rate Alternatives. The Participant shall select the Crediting Rate Alternatives, using full percentages, that
are to be applied to his or her Deferral Accounts. Participants may change their Crediting Rate Alternatives daily by completing a Rate
of Return Alternative Change Form. If a Participant does not make an election, the Crediting Rate Alternative will remain the same as
previously chosen by Participant. If Participant has not previously made an election in HCCAP or under this Plan, the Crediting Rate
Alternative will be a default Crediting Rate Alternative selected by the Committee.
Sec. 4.5 Benefit Payment Elections. At the time a Participant executes an Enrollment Agreement, he or she must also elect
the method of benefit payment and the time to start the benefit. The elections are to be made for each Plan Year.
(a)

Method of Benefit Payment. Benefits for each Plan Year can be paid in a lump sum, five annual installments or ten
annual installments.

(b)

Commencement of Benefit. The benefit for each Plan Year may be started as soon as possible following
Termination of Employment or one year following Termination of Employment.

(c)

Benefit Payment. If no form of benefit payment is elected, the method of benefit payment shall be lump sum.

(d)

One-Time Election to Change Payment Method. A Participant may file with the Committee a one-time election to
change the method and time of payment of the Participant's existing benefits under this Plan, subject to the
following:
9

(1)

An election under this subsection will be effective as of the last day of the second Plan Year following the
Plan Year in which the election is filed; provided that the Participant's Termination of Employment has not
occurred prior to that effective date.

(2)

An election under this subsection will apply to all of the Participant's Deferral Accounts outstanding on the
effective date of the election, as determined under paragraph (1) including any Account attributable to
deferrals of Base Salary during the Plan Year preceding said effective date. However, the election will not
apply to deferrals of any Bonus for the Plan Year preceding said effective date, or to deferrals of Base
Salary or Bonuses for the Plan Year containing the effective date of the election or subsequent Plan Years.

(3)

Upon the effective date of an election under this subsection, the method of payment of the benefits
described in paragraph (2) shall be changed to payment in ten annual installments. The Participant's
election under this subsection must specify whether said installments are to begin as soon as possible
following Termination of Employment or one year following Termination of Employment.

(4)

Only one election under this subsection may be made by a Participant during the Participant's lifetime.

Sec. 4.6 Crediting. Each Deferral Account will be credited on the balance in the Deferral Account as follows:
(a)

Employee.
(i) Crediting Rate Alternative. Each Deferral Account of an Employee will be credited at the end of a day on the
balance in the Deferral account at the beginning of that day using the Crediting Rate Alternative.
(ii) Enhancement. The total balance in all Deferral Accounts on the first day of the month will be credited at the end
of the month at a rate equal to the Enhancement. The amount will be credited among Participant's Deferral Accounts
at the time the Enhancement is credited in an amount equal to the proportion which each Deferral Account has to the
Participant's entire balance. No Enhancement will be credited
10

after January 29, 2006 with respect to any Participant who is an executive committee member as of such date, or
with respect to any fiscal year of the Company for a Participant who becomes an executive committee member after
that date; provided the Committee, in its sole discretion, can allow the Enhancement to be credited with respect to a
Participant's Account during the portion of the fiscal year of the Company prior to when the Participant initially
becomes an executive committee member.
(b)

Terminated Employee. Each Deferral Account of an Employee who has had a Termination of Employment will be
credited at the end of a day on the balance in the Deferral Account at the beginning of that day, using the Crediting
Rate Alternative.

(c)

Vesting. Each Employee who has a Termination of Employment and does not have five Years of Vesting will have
his or her Deferral Accounts revalued using only the Crediting Rate Alternative and not receiving the Enhancement.
Provided, however, if an Employee's Termination of Employment is because of death or permanent and total
disability, or on or after age 65, the Employee will be treated as if he or she had five years of vesting.

Sec. 4.7 Time of Payment. If a Participant has a Termination of Employment after age 55 or due to an involuntary
termination, the Participant's Deferral Accounts will be paid pursuant to his or her elections. If a Participant has a Termination of
Employment that does not qualify under the first sentence of this section, the Participant's Deferral Accounts will be paid in a lump
sum as soon as administratively possible following Termination of Employment.
Sec. 4.8 Statement of Accounts. The Company shall submit to each Participant, within one hundred twenty days after the
close of each Plan Year, a statement in such form as the Company deems desirable, setting forth the balance standing to the credit of
each Participant in his Deferral Accounts.
ARTICLE V
CERTAIN BENEFIT PAYMENTS
Sec. 5.1 Termination of Enrollment in Plan. With the written consent of the Company, a Participant may terminate his or her
enrollment in the Plan by filing with the Company a written request to terminate enrollment. The Company will consent to the
termination of a Participant's
11

enrollment in the Plan in the event of an unforeseeable financial emergency of the Participant. An unforeseeable financial emergency
shall mean an unexpected need for cash arising from an illness, casualty loss, sudden financial reversal or other such unforeseeable
occurrence. Cash needs arising from foreseeable events such as the purchase of a house or education expenses for children shall not be
considered to be the result of an unforeseeable financial emergency. Upon termination of enrollment, no further reductions shall be
made in the Participant's Base Salary or Bonus pursuant to his or her Enrollment Agreement, and the Participant shall immediately
cease to be eligible for any benefits under the Plan for the current year other than payments from his or her Deferral Accounts. In its
sole discretion, the Committee may pay the Deferral Accounts on a date earlier than the Participant's Termination of Employment with
the Participating Employer, in which event the Committee shall calculate an amount which is appropriate in accordance with the
unforeseeable financial emergency and that amount shall be paid as if the Participant had a Termination of Employment with the
Participating Employer on the date of such payment.
Notwithstanding anything contained hereinto the contrary in the event Participant makes a hardship withdrawal under the
TGT 401(k) Plan or any other qualified plan sponsored by the Company, then the Participant's deferrals under this Plan shall be
terminated until a period which is one year from the date on which the hardship withdrawal was taken.
Sec. 5.2 Survivor Benefits
(a)

Death While Employed. If a Participant dies while employed by a Participating Employer, the Company will pay the
amount in his or her Deferral Accounts to the Participant's Beneficiary as soon as possible after death in a lump sum.

(b)

Death After Termination of Employment. If a Participant dies after Termination of Employment, and has not
received all of his or her payments, and the Participant's Beneficiary is his or her spouse, payments shall be made to
the spouse pursuant to the Participant's payout elections. If the Participant's spouse dies before receiving all
payments, the remaining amount in the Deferral Accounts will be paid in a lump sum as soon as possible after the
spouse's death to the spouse's estate. If a Participant dies after Termination of Employment, has not received all of
his or her payments, and the Participant's Beneficiary is a Person other than his or her spouse, then payment shall be
made in a lump sum as soon as possible after the Participant's death.
12

Sec. 5.3 Small Benefit. In the event that the Company determines in its sole discretion that the amount of any benefit is too
small to make it administratively convenient to pay such benefit over time, the Company may pay the benefit in the form of a lump
sum, notwithstanding any provision of this Article or Article IV to the contrary.
Sec. 5.4 Withholding. To the extent required by the law in effect at the time payments are made, the Company shall withhold
from payments made hereunder or any other payment owing by the Company to the Participant the taxes required to be withheld by
the federal or any state or local government.
Sec. 5.5 Lump Sum Payout Option. Notwithstanding any other provisions of the Plan, at any time after Termination of
Employment, but not later than ten years after Termination of Employment of the Participant, a Participant or a Beneficiary of a
deceased Participant may elect to receive an immediate lump sum payment of 100% of the balance of his or her Deferral Accounts, if
any, reduced by a penalty, which shall be forfeited to the Company, equal to eight percent of the amount of his or her Deferral
Accounts he or she elected to receive, in lieu of payments in accordance with the form previously elected by the Participant, or
provided elsewhere in this Plan. However, the penalty shall not apply if the Company determines, based on advice of counsel or a
final determination by the Internal Revenue Service or any court of competent jurisdiction, that by reason of the foregoing provision
any Participant or Beneficiary has recognized or will recognize gross income for federal income tax purposes under this Plan in
advance of payment to him of Plan benefits. The Company shall notify all Participants (and Beneficiaries of deceased Participants) of
any such determination. Whenever any such determination is made, the Company shall refund all penalties which were imposed
hereunder on account of making lump sum payments at any time during or after the first year to which such determination applies
(i.e., the first year when gross income is recognized for federal income tax purposes). Interest shall be paid on any such refunds at
Variable Interest Crediting Rate for each Plan Year, compounded annually. The Committee may also reduce or eliminate the penalty if
it determines that this action will not cause any Participant or Beneficiary to recognize gross income for federal income tax purposes
under this Plan in advance of payment to him of Plan benefits.
13

ARTICLE VI
BENEFICIARY DESIGNATION
Each Participant shall have the right, at any time, to designate any person or persons as Beneficiary or Beneficiaries to whom
payment under this Plan shall be made in the event of the Participant's death prior to complete distribution to the Participant of the
benefits due under the Plan. Each Beneficiary designation shall become effective only when filed in writing with the Company during
the Participant's lifetime on a form prescribed by the Company.
The filing of a new Beneficiary designation form will cancel all Beneficiary designations previously filed. Any finalized
divorce or marriage (other than a common law marriage) of a Participant subsequent to the date of filing of a Beneficiary designation
form shall revoke such designation unless in the case of divorce the previous spouse was not designated as Beneficiary and unless in
the case of marriage the Participant's new spouse had previously been designated as Beneficiary.
If a Participant fails to designate a Beneficiary as provided above, or if his or her Beneficiary designation is revoked by
marriage, divorce or otherwise without execution of a new designation, or if all designated Beneficiaries predecease the Participant or
die prior to complete distribution of the Participant's benefits, then the Company shall direct the distribution of such benefits to the
Participant's spouse, if any, and if there is no spouse to the Participant's estate.
ARTICLE VII
ADMINISTRATION OF PLAN
Sec. 7.1 Administration by Company. The Company is the "administrator" of the Plan for purposes of ERISA. Except as
expressly otherwise provided herein, the Company shall control and manage the operation and administration of the Plan, make all
decisions and determinations incident thereto and construe the provisions thereof. In carrying out its Plan responsibilities, the
Company shall have discretionary authority to construe the terms of the Plan. Except in cases where the Plan expressly requires action
on behalf of the Company to be taken by the Board, action on behalf of the Company may be taken by any of the following:
(a)

The Board.

(b)

The Chief Executive Officer of the Company.

(c)

The Vice President of Personnel of the Company.

(d)

Any person or persons, natural or otherwise, or committee, to whom responsibilities for the operation and
administration of the Plan are allocated by the Company, by
14

resolution of the Board or by written instrument executed by the Chief Executive Officer or the Vice President of
Personnel of the Company and filed with its permanent records, but action of such person or persons or committee
shall be within the scope of said allocation.
Sec. 7.2 Certain Fiduciary Provisions. For purposes of the Plan:
(a)

Any person or group of persons may serve in more than one fiduciary capacity with respect to the Plan.

(b)

A Named Fiduciary, or a fiduciary designated by a Named Fiduciary pursuant to the provisions of the Plan, may
employ one or more persons to render advice with regard to any responsibility such fiduciary has under the Plan.

(c)

Any time the Plan has more than one Named Fiduciary, if pursuant to the Plan provisions fiduciary responsibilities
are not already allocated among such Named Fiduciaries, the Company, by action of the Board or its chief executive
officer, may provide for such allocation.

(d)

Unless expressly prohibited in the appointment of a Named Fiduciary which is not the Company acting as provided
in Sec. 7.1, such Named Fiduciary by written instrument may designate a person or persons other than such Named
Fiduciary to carry out any or all of the fiduciary responsibilities under the Plan of such Named Fiduciary.

(e)

A person who is a fiduciary with respect to the Plan, including a Named Fiduciary, shall be recognized and treated as
a fiduciary only with respect to the particular fiduciary functions as to which such person has responsibility.

Sec. 7.3 Evidence. Evidence required of anyone under this Plan may be by certificate, affidavit, document or other
instrument which the person acting in reliance thereon considers to be pertinent and reliable and to be signed, made or presented by
the proper party.
Sec. 7.4 Records. Each Participating Employer, each fiduciary with respect to the Plan and each other person performing any
functions in the operation or administration of the Plan shall keep such records as may be necessary or appropriate in the discharge of
their respective functions hereunder, including records required by ERISA or any other applicable law. Records shall be retained as
long as necessary for the proper administration of the Plan and at least for any period required by ERISA or other applicable law.
15

Sec. 7.5 General Fiduciary Standard. Each fiduciary shall discharge his duties with respect to the Plan solely in the interests
of Participants and with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man acting in a
like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.
Sec. 7.6 Waiver of Notice. Any notice required hereunder may be waived by the person entitled thereto.
Sec. 7.7 Agent for Legal Process. The Company shall be the agent for service of legal process with respect to any matter
concerning the Plan, unless and until the Company designates some other person as such agent.
Sec. 7.8 Indemnification. In addition to any other applicable provisions for indemnification, the Participating Employers
jointly and severally agree to indemnify and hold harmless, to the extent permitted by law, each director, officer and Employee of the
Participating Employers against any and all liabilities, losses, costs or expenses (including legal fees) of whatsoever kind and nature
which may be imposed on, incurred by or asserted against such person at any time by reason of such person's services as a fiduciary in
connection with the Plan, but only if such person did not act dishonestly, or in bad faith or in willful violation of the law or regulations
under which such liability, loss, cost or expense arises.
Sec. 7.9 Correction of Errors. It is recognized that in the operation and administration of the Plan certain mathematical and
accounting errors may be made or mistakes may arise by reason of factual errors in information supplied to the Company or Trustee.
The Company shall have power to cause such equitable adjustments to be made to correct for such errors as the Company , in its
discretion, considers appropriate. Such adjustments shall be final and binding on all persons.
ARTICLE VIII
AMENDMENT AND TERMINATION OF PLAN
Sec. 8.1 Amendment. The Board may at any time amend the Plan, in whole or in part, for any reason, including but not
limited to tax, accounting or insurance changes, a result of which may be to terminate the Plan for future deferrals; provided, however,
that no amendment shall be effective to decrease the benefits, nature or timing thereof payable under the Plan to any Participant with
respect to deferrals made (and benefits thereafter accruing) prior to the date of such amendment. Notwithstanding the above, the Board
authorizes the Committee to amend the
16

Plan to make changes to the Credit Rate Alternatives by either adding any new or deleting any existing Crediting Rate Alternatives, to
impose limitations on selection of/or deferral into any Crediting Rate Alternative, or to make any other amendments to this Plan
deemed necessary or desirable by the Committee for the operation and administration of this Plan provided such amendment does not
have a material financial impact on TGT. Such changes will be considered an Amendment to this Plan and shall be effective without
further action by the Board. Written notice of any amendment shall be given to each Participant then participating in the Plan.
Sec. 8.2 Automatic Termination of Plan. The Plan shall terminate only under the following circumstances. The Plan shall
automatically terminate upon (a) a determination by the Company that a final decision of a court of competent jurisdiction or the U. S.
Department of Labor holding that the Plan is not maintained "primarily for the purpose of providing deferred compensation for a
select group of management or highly-compensated Employees," and therefore is subject to Parts 2, 3 and 4 of Title I of ERISA,
would require that the Plan be funded and would result in immediate taxation to Participants of their vested Plan benefits, or (b) a
determination by the Company that a final decision of a court of competent jurisdiction has declared that the Participants under the
Plan are in constructive receipt under the Internal Revenue Code of their vested Plan benefits.
Sec. 8.3 Payments Upon Automatic Termination. Upon any Plan termination under Sec. 8.2, the Participants will be deemed
to have terminated their enrollment under the Plan as of the date of such termination. The Company will pay all Participants the value
of each Participant's Deferral Accounts in a lump sum, determined as if each Participant had a Termination of Employment on the date
of such termination of the Plan and elected to be paid as soon as possible following Termination of Employment.
Sec. 8.4 Payments Upon Change of Control. Notwithstanding any provision of this Plan to the contrary, if a "Change of
Control" as defined in the Target Corporation Deferred Compensation Trust Agreement (as it may be amended from time to time)
occurs and results in funding of the trust established under that Agreement, each Participant (or Beneficiary of a deceased Participant)
will be paid the entire value of his or her Deferral Accounts in a lump sum, determined as if the Participant had a Termination of
Employment on the date the Change of Control occurs, had at least five Years of Vesting on that date, and had elected to be paid his or
her entire benefit in a lump sum as soon as possible following Termination of Employment.
17

However, this section shall not apply, and no amounts shall be payable to Participants or Beneficiaries under this section, in the event
the assets of said trust are returned to the Participating Employers pursuant to the Trust Agreement because no Change of Control
actually occurred.
ARTICLE IX
MISCELLANEOUS
Sec. 9.1 Unsecured General Creditor. Participants and their Beneficiaries, heirs, successors and assigns shall have no legal or
equitable rights, claims or interests in any specific property or assets of the Company or a Participating Employer, nor shall they be
beneficiaries of, or have any rights, claims or interests in any life insurance policies, annuity contracts or the proceeds therefrom
owned or which may be acquired by the Company ("Policies"). Such Policies or other assets of Participating Employers shall not be
held under any trust (except they may be placed in a Rabbi Trust) for the benefit of Participants, their Beneficiaries, heirs, successors
or assigns, or held in any way as collateral security for the fulfilling of the obligations of Participating Employers under this Plan. Any
and all of a Participating Employer's assets and Policies shall be, and remain, the general, unpledged, unrestricted assets of the
Participating Employer. Participating Employers obligations under the Plan shall be merely that of an unfunded and unsecured
promise of a Participating Employer to pay money in the future.
Sec. 9.2 Nonassignability. Neither a Participant nor any other person shall have any right to sell, assign, transfer, pledge,
anticipate, mortgage, commute or otherwise encumber, hypothecate or convey in advance of actual receipt the amounts, if any,
payable hereunder, or any part thereof, or interest therein which are, and all rights to which are, expressly declared to be unassignable
and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the
payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, not be transferable by
operation of law in the event of a Participant's or any other person's bankruptcy or insolvency.
Sec. 9.3 Protective Provisions. Each Participant shall cooperate with the Company by furnishing any and all information
requested by the Company in order to facilitate the payment of benefits hereunder, taking such physical examinations as the Company
may deem necessary and
18

taking such other relevant action as may be requested by the Company. If a Participant refuses so to cooperate, the Company shall
have no further obligation to the Participant under the Plan, other than payment to such Participant of the cumulative reductions in
base salary and or bonus theretofore made pursuant to this Plan. If a Participant commits suicide during the two (2) year period
beginning on the later of (a) the date of adoption of this Plan or (b) the first day of the first Plan Year of such Participant's
participation in the Plan, or if the Participant makes any material misstatement of information or nondisclosure of medical history,
then no benefits will be payable hereunder to such Participant or his Beneficiary, other than payment to such Participant of the
cumulative reductions in Base Salary and or Bonus theretofore made pursuant to this Plan, provided, that in the Company's sole
discretion, benefits may be payable in an amount reduced to compensate the Company for any loss, cost, damage or expense suffered
or incurred by the Company as a result in any way of such misstatement or nondisclosure.
Sec. 9.4 Validity. In the event any provision of this Plan is held invalid, void or unenforceable, the same shall not affect, in
any respect whatsoever, the validity of any other provision of this Plan.
Sec. 9.5 Notice. Any notice or filing required or permitted to be given to the Company under the Plan shall be sufficient if in
writing and hand delivered, or sent by registered or certified mail, to the principal office of the Company, directed to the attention of
the President of the Company. Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the
date shown on the postmark on the receipt for registration or certification.
Sec. 9.6 Applicable Law. This Plan shall be governed and construed in accordance with the laws of the State of Minnesota as
applied to contracts executed and to be wholly performed in such state.
19

SUPPLEMENT A
Benefit Transfer Credits
Sec. A-1. Purpose and Application. The purpose of this Supplement A to the Target Corporation SMG Executive Deferred
Compensation Plan is to modify and supplement the provisions of this Plan as they relate to certain participants whose Deferral
Accounts are to be credited with amounts transferred from certain other non-qualified retirement plans sponsored by the Company.
Sec. A-2. Definitions. For purposes of this Supplement A, each of the following terms have the meaning given it in this
Section:
(a) "ESBP" means the Target Corporation Post Retirement Executive Survivor Benefit Plan.
(b) "Other Plan" means any non-qualified deferred compensation plan, arrangement or agreement maintained by a
Participating Employer.
(c) "SPP I" means the Target Corporation Supplemental Pension Plan I.
(d) "SPP II" means the Target Corporation Supplemental Pension Plan II.
(e) "SPP III" means the Target Corporation Supplemental Pension Plan III.
Sec. A-3. Deferral Account. A Participant's benefit transfer credit or adjustment required under this Supplement A will be
made to his or her Deferral Account.
Sec. A-4. ESBP Benefit Transfer Credits.
(a) A Participant is eligible to receive a One-Time ESBP Benefit Transfer Credit and annual adjustments thereto
under this Sec. A-4 if he or she is a member of the Target Corporation Corporate Operating Committee on April 30, 2002,
had a vested interest under the Company's Qualified Plan, was eligible to become a participant with a survivor benefit under
the ESBP (without regard to attaining retirement age), and executes a Consent and Release waiving all rights to a benefit
under the ESBP.
(b) An eligible Participant will receive a One-Time ESBP Benefit Transfer Credit as of April 30, 2002 in an amount
equal to the actuarial lump sum present value of the Participant's survivor benefit under the ESBP as of December 31, 2001,
determined without regard to whether the Participant had an Early or Normal Retirement under a Qualified Plan within the
meaning of the ESBP. The present value of such survivor benefit will be determined by the Company in its sole and absolute
discretion based on
20

interest rate and mortality factors and other assumptions deemed appropriate by the Company.
(c) A Participant who has received a One-Time ESBP Benefit Transfer Credit under Paragraph (b) and who is
employed by a Participating Employer during a calendar year after 2001 will receive an annual adjustment debited or credited
to his or her Deferral Account on or about each April 30, for the preceding calendar year, beginning on or about April 30,
2003, as provided under this Paragraph (c). For each calendar year, the annual adjustment will be the difference between (i)
an amount equal to a recalculated hypothetical one-time ESBP transfer credit determined as of the determination date in the
manner provided under Paragraph (b), above, and (ii) the aggregate amount of the previous ESBP benefit transfer credits (and
debits) to the Participant's Deferral Account under this Sec. A-4 increased by earnings at a rate equal to the sum of the Stable
Value Crediting Rate Alternative plus an annual two percent rate, from the crediting date through the determination date. If
the amount of the adjustment is positive, a credit will be made to the Participant's Deferral Account and if the amount of the
adjustment is negative, a debit equal to such negative amount will be made to the Deferral Account. The credit or debit will
be made as of the determination date. Notwithstanding the foregoing, a Participant's final annual adjustment will be made as
soon as administratively practicable following his or her Termination of Employment.
(d) A Participant who has a Termination of Employment prior to attaining age 55 will forfeit that portion of his or
her Deferral Account equal to the ESBP Benefit Transfer Credits under Sec. A-4(b) and (c) of this Supplement A and
corresponding earnings credits equal to the amount that would have been credited at a rate equal to the sum of the Stable
Value Crediting Rate plus an annual two percent rate.
(e) Notwithstanding paragraphs (a)-(d) above, with respect to a Participant who has previously received a One-Time
ESBP Benefit Transfer Credit and who has not provided advance written notice of his or her retirement/termination date, nor
had a Termination of Employment prior to January 11, 2006:
(i)
Such Participant will receive a final annual adjustment as of January 28, 2006 in an amount equal to the
actuarial lump sum present value of the sum of future estimated annual adjustments related to service after 2005 that
would have
21

been made until the Participant had attained age 65. The present value is determined by the Company in its sole and
absolute discretion based on interest rate factors, mortality factors, and other assumptions deemed appropriate by the
Company.
(ii)

Such Participant will be fully vested in their ESBP Transfer Credits as of January 11, 2006.

(iii)
Consistent with transition relief allowed under the proposed regulations of Code section 409A, such
Participant will elect the form of distribution for the final annual adjustment credited as of January 28, 2006 from
the methods identified in Section 4.5(a); provided that:
(A) the distribution commences one year following the Participant's Termination of Employment,
(B) the election must be completed no later than February 24, 2006, and
(C) if no election is received by February 24, 2006, or the election is not valid because the transition relief
allowed under the proposed regulations of Code section 409A regarding distribution elections in 2006
would not apply, the distribution will be made consistent with the ESBP distribution election made in 2004
related to adjustments in 2006.
In all cases, no ESBP Benefit Transfer Credits will be made after January 28, 2006.
(f) With respect to a Participant who has previously received a One-Time ESBP Benefit Transfer Credit and who
has provided advance written notice of his or her retirement/termination date, or had a Termination of Employment prior to
January 11, 2006, the provisions of paragraphs (a) (d) above remain in full force and effect.
Sec. A-5. Supplemental Pension Plan Benefit Transfer Credits.
(a) A Participant shall receive a Supplemental Pension Plan (SPP) Benefit Transfer Credit if he or she is an Officer
of Target Corporation at a level of Vice President or higher and is eligible to receive a supplemental pension benefit under
SPP I, SPP II or SPP III.
22

(b) An eligible Participant will receive a One-Time SPP Benefit Transfer Credit as follows:
(i) For an eligible Participant who is a member of the Target Corporation Corporate Operating Committee on April
30, 2002, such Participant will receive a credit equal to the April 30, 2002 actuarial lump sum present value of the
Participant's pension benefit(s) under SPP I, SPP II and, SPP III accrued through December 31, 2001.
(ii) For an eligible Participant on July 31, 2002 who is not included in clause (i), such Participant will receive a
credit equal to the July 31, 2002 actuarial lump sum present value of the Participant's pension benefit(s) under SPP I, SPP II
and SPP III accrued through December 31, 2001.
(iii) For an eligible Participant not included in clause (i) or (ii), such Participant will receive a credit, on or about the
April 30 immediately following the calendar year in which the Participant becomes eligible under Paragraph (a), in an
amount equal to the actuarial lump sum present value of the Participant's pension benefit(s) under SPP I, SPP II and SPP III
accrued through the preceding December 31.
The actuarial lump sum present value of such pension benefit(s) will be determined by the Company in its sole and absolute
discretion using the factors and assumptions deemed appropriate by the Company.
(c) A Participant who has received a One-Time SPP Benefit Transfer Credit under Paragraph (b) and who is
employed by a Participating Employer during a calendar year after 2001 will receive an annual adjustment credited or debited
to his or her Deferral Account on or about each April 30, for the preceding calendar year, beginning on or about April 30,
2003, as provided under this Paragraph (c). For each calendar year, the annual adjustment will be the difference between (i)
the amount of a recalculated hypothetical one-time SPP benefit transfer credit determined in the manner provided under
Paragraph (b), above, and (ii) the aggregate amount of the previous SPP benefit transfer credits (and debits) to the
Participant's Deferral Account under this Sec. A-5 increased by earnings at a rate equal to the sum of the Stable Value
Crediting Rate Alternative plus an annual two percent rate, from the crediting date through the determination date; provided
that with respect to a Participant who is or has been an executive committee member, the earnings rate will be equal to the
Stable Value
23

Crediting Rate during the period where the Participant did not receive the Enhancement on his or her Deferral Account. If the
amount of the adjustment is positive, a credit will be made to the Participant's Deferral Account; if the amount of the
adjustment is negative, the Participant's Deferral Account will be debited by such negative amount. The annual adjustment
credit or debit will be made as of the determination date. Notwithstanding the foregoing, a Participant's final annual
adjustment will be made and credited as soon as administratively practicable following his or her Termination of
Employment.
Sec. A-6. Other Plan Benefit Transfer Credit.
(a) A former employee of the Company who has a benefit payable under an Other Plan and who, at the request of
the Company, executes an Agreement, Consent and Release (the "Agreement") waiving his or her rights to receive all or a
portion of his or her benefit payable under the Other Plan, shall be treated as a Participant eligible to receive an Other Plan
Benefit Transfer Credit as provided in Paragraph (b) below.
(b) An eligible Participant shall receive a credit equal to the lump sum present value of all or a portion of the
Participant's accrued benefit under the Other Plan (the "Affected Benefit Amount"). The actuarial lump sum present value of
the Affected Benefit Amount shall be determined by the Company in its sole and absolute discretion based on such factors
and assumptions deemed appropriate by the Company and as otherwise specified in each Agreement. The credit to the
Participant's Deferral Account shall be made as of the date the Participant executes the Agreement releasing his or her claim
to the Affected Benefit Amount.
(c) Determination and payment of a Participant's Other Plan Benefit Transfer Credit shall be subject to such other
conditions, restrictions or modifications as determined by the Company in its sole and absolute discretion and reflected in the
Agreement. Benefit payments will also be subject to the terms of the SMG EDCP.
Sec. A-7. Benefit Payments.
(a) A Participant will be provided a one-time election as to the form and commencement of distribution of his or her
Deferral Account attributable to the One-Time ESBP Benefit Transfer Credit and One-Time SPP Benefit Transfer Credit on
account of a Termination of Employment after age 55 or due to an involuntary
24

termination. The election shall be made before the date the amount is credited to the Participant's Deferral Account and shall
otherwise be consistent with the provisions of Sec. 4.5 of the Plan. Thereafter, the provisions of Secs. 4.5 and 4.7 will
determine the method and commencement of benefit payments.
(b) Payment of the Other Plan Benefit Transfer Credit and related earnings credits to the Participant shall
commence as provided in the Agreement, but not later than the date the Affected Benefit Amount would have been paid, nor
in amounts which are less than the payments the Participant was receiving or was eligible to receive under the Other Plan.
Payments of a Participant's Other Plan Benefit Transfer Credit and related earnings credits will be made in ten annual
installments unless the Company and the Participant have, pursuant to the Agreement, provided for an accelerated form of
payment, or as otherwise provided under the terms of the SMG EDCP.
Sec. A-8. Crediting Rate Alternative. Amounts credited to a Participant's Deferral Account under this Supplement A will be
subject to the Stable Value Crediting Rate Alternative until the Participant selects another Crediting Rate Alternative."
25

EXHIBIT (10)N
TARGET CORPORATION
DIRECTOR DEFERRED COMPENSATION PLAN
ARTICLE I
GENERAL
Name of Plan. The name of the Plan set forth herein is the Target Corporation Director Deferred
Sec 1.1
Compensation Plan. It is referred to herein as the "Plan."
Sec 1.2
Purpose. The purpose of the Plan is to provide a means whereby Target Corporation (the "Company") may
allow certain directors a way to defer compensation.
Sec 1.3

Effective Date. The Effective Date of the Plan is January 1, 1997.

Sec 1.4

Company. "Company" means all of the following:

(a)

Target Corporation, a Minnesota corporation.

(b)

Any successor of Target Corporation (whether direct or indirect, by purchase of a majority of

the outstanding voting stock of Target Corporation or all or substantially all of the assets of Target Corporation, or
by merger, consolidation or otherwise).

(c)

Any person that becomes liable for the obligations hereunder of the entities specified in (a) and
(b) above by operation of law.

Participating Employers. The Company is a Participating Employer in the Plan. With the consent of the
Sec 1.5
Company, by action of the Board or any duly authorized officer, any wholly-owned subsidiary of the Company may, by action of its
board of directors or any duly authorized officer, also become a Participating Employer in the Plan effective as of the date specified by
it in its adoption of the Plan; but the subsidiary shall cease to be a Participating Employer on the date it ceases to be a wholly-owned
subsidiary of the Company.
Sec 1.6
Construction and Applicable Law. The Plan is intended to be an unfunded benefit plan maintained for the
purpose of providing deferred compensation for certain directors. The Plan shall be construed and administered according to the laws
of the State of Minnesota. All controversies, disputes and claims arising hereunder shall be submitted to the United States District
Court for the District of Minnesota.
Sec 1.7

Rules of Construction. The Plan shall be construed in accordance with the following:

(a)

Headings at the beginning of articles and sections hereof are for convenience of reference, shall
not be considered as part of the text of the Plan and shall not influence its construction.

(b)

Capitalized terms used in the Plan shall have their meaning as defined in the Plan unless the
context clearly indicates to the contrary.

(c)

All pronouns and any variations thereof shall be deemed to refer to the masculine or feminine
as the identity of the person or persons may require. As the context may require, the singular may be read as the
plural and the plural as the singular.

(d)

Use of the words "hereof," "herein," "hereunder" or similar compounds of the word "here" shall
mean and refer to the entire Plan unless the context clearly indicates to the contrary.

(e)

The provisions of the Plan shall be construed as a whole in such manner as to carry out the
provisions thereof and shall not be construed separately without relation to the context.
ARTICLE II
DEFINITIONS

Sec 2.1

Beneficiary. "Beneficiary" means the person or persons designated as such in accordance with Article VI.

Benefit Deferral Period. "Benefit Deferral Period" means that period of one Plan Year as determined
Sec 2.2
pursuant to Article IV over which a Participant defers a portion of such Participant's Earnings.
Board. "Board" means the board of directors of the Company, and includes any committee thereof
Sec 2.3
authorized to act for said board of directors.
Committee. "Committee" means the Plan Administrative Committee appointed in accordance with Section
Sec 2.4
7.1(d) hereof which is authorized by the Board of Directors of the Company to act on behalf of the Company in accordance with the
terms of this Plan.
Sec 2.5
available for the Plan.

Crediting Rate. "Crediting Rate" means the earnings or losses for a day on the Crediting Rate Alternative(s)

Sec 2.6
Crediting Rate Alternative. "Crediting Rate Alternative" means the Crediting Rate for any investment fund
options available to Participants of the TGT 401(k) Plan.
Sec 2.7
Cumulative Deferral Amount. "Cumulative Deferral Amount" means the total cumulative amount by which
a Participant's Earnings must be reduced over the period prescribed in Section 4.1.
Sec 2.8
TGT 401(k) Plan. "TGT 401(k) Plan" or "TGT 401(k)" means the Target Corporation 401(k) Plan, formerly
known as the "SRSP" (Dayton Hudson Corporation Supplemental Retirement Savings and Employee Stock Ownership Plan).
Sec 2.9
Deferral Account. "Deferral Account" means the accounts maintained on the books of account of the
Company pursuant to Section 4.2.
Sec 2.10
Director. "Director" means any person who is a director of the Company or another Participating Employer but
who is not an Employee of a Participating Employer.
2

Sec 2.11
Earnings. "Earnings" means the total fees paid to a Participant for service on the Board (or any committee
thereof) or on a board of a Participating Employer.
Sec 2.12
Sec 2.13
Alternative.

Employee. "Employee" means a Qualified Employee as that term is defined in the TGT 401(k) Plan.
Enhancement. "Enhancement" means an additional .1667% per month added to each Crediting Rate

Sec 2.14
Enrollment Agreement. "Enrollment Agreement" means the agreement entered into by the Company and a
Director pursuant to which the Director becomes a Participant in the Plan. In the sole discretion of the Company, authorization forms
filed by any Participant by which the Participant makes the elections provided for by this Plan may be treated as a completed and fully
executed Enrollment Agreement for all purposes under the Plan.
Participant. "Participant" means an eligible Director who has filed a completed and executed Enrollment
Sec 2.15
Agreement or authorization form with the Company and is participating in the Plan in accordance with the provisions of Article IV.
Sec 2.16

Person. "Person" means an individual, partnership, corporation, estate, trust or other entity.

Sec 2.17
Plan Year. "Plan Year" means the period commencing with the Effective Date and ending December 31, 1997
and each subsequent calendar year.
Rate of Return Alternative Change Form. "Rate of Return Alternative Change Form" means the form of
Sec 2.18
authorization approved by the Company by which the Participant notifies the Plan of its choices for Crediting Rate Alternatives for his
account under the Plans.
Sec 2.19

Retirement. "Retirement" shall mean when the Director ceases to be a director of all Participating Employers.

Sec 2.20
Signature. "Signature" or "sign" as used herein shall mean either the Participant's written signature or the
Participant's electronic signature evidenced by the use of an electronic personal identification number.
ARTICLE III
ELIGIBILITY
Eligibility. A Director shall be a Participant while, and only while, he or she is a director of a Participating
Sec 3.1
Employer, subject to the following:
(a)

The Director must complete an enrollment and sign an insurance consent form, in the form that
the Company determines in order to defer Earnings. The insurance consent form will allow the Company to
purchase life insurance on the Director with the Company as beneficiary.

Sec 3.2
No Guarantee of Continued Directorship. Participation in the Plan does not constitute a guarantee or contract
with any Participating Employer guaranteeing that the Director
3

will continue to be a director. Such participation shall in no way interfere with any rights the shareholders of a Participating Employer
would have in the absence of such participation to determine the duration of the director's service.
ARTICLE IV
PARTICIPATION AND BENEFITS
Sec 4.1
Election to Participate. Any Director of a Participating Employer who is eligible to participate may enroll in
the Plan by filing a completed and fully executed Enrollment Agreement or authorization form with the Company. Pursuant to said
Enrollment Agreement or authorization form, the Director shall irrevocably designate a percent by which the Earnings of such
Participant would be reduced over the Benefit Deferral Period next following the execution of the Enrollment Agreement; provided,
however, that:
(a)

Reduction in Earnings. Except as otherwise provided in this Section 4.1, the Earnings of the
Participant for the Benefit Deferral Period shall be reduced by the amount specified in the Enrollment Agreement
(including any authorization form) applicable to such Plan Year.

(b)

Maximum Reduction in Earnings. A Participant may not elect a Cumulative Deferral Amount
that would cause the reduction in Earnings to exceed one hundred percent (100%) of Earnings payable during such
Plan Year. In the event that a Participant elects a Cumulative Deferral Amount that would violate the limitation
described in this paragraph (c), the election shall be valid except that the Cumulative Deferral Amount so elected
shall automatically be reduced to comply with such limitation.

(c)

Mid-Year Elections to Participate. Notwithstanding any provision of the Plan to the contrary, a
Director who did not file an Enrollment Agreement prior to the Benefit Deferral Period commencing on the first
day of the Plan Year may file an Enrollment Agreement in advance of July 1 of that year during a period specified
by the Committee and in accordance with such rules as the Committee may establish, which shall be effective as
of July 1, and shall apply to the Participant's Earnings payable during the last six months of the Plan Year.

Sec 4.2
Deferral Accounts. The Company shall establish and maintain separate Deferral Accounts for each
Participant. The amount by which a Participant's Earnings are reduced pursuant to Section 4.1 shall be credited by the Company to the
Participant's Deferral Accounts as soon as administratively possible after each payment would otherwise have been paid. Such
Deferral Accounts shall be debited by the amount of any payments made by the Company to the Participant or the Participant's
Beneficiary pursuant to this Plan. A separate Deferral Account shall be maintained for each type of deferral election made and for
each Crediting Rate Alternative.
Sec 4.3
Crediting Rate Alternatives. The Participant shall select the Crediting Rate Alternatives, using full
percentages, that are to be applied to his or her Deferral Accounts. Participants may change their Crediting Rate Alternatives daily, by
completing a Rate of Return
4

Alternative Change Form. If a Participant does not make an election, the Crediting Rate Alternative will be a default Crediting Rate
Alternative selected by the Committee.
Benefit Payment Elections. At the time a Participant completes an Enrollment Agreement, he or she must
Sec 4.4
also elect the method of benefit payment and the time to start the benefit. The elections are to be made for each Plan Year.
(a)

Method of Benefit Payment. Benefits for each Plan Year can be paid in a lump sum, five annual
installments or ten annual installments.

(b)

Commencement of Benefit. The benefit for each Plan Year may be started as soon as possible
following Retirement or one year following Retirement.

Sec 4.5

Each Deferral Account will be credited on the balance in the Deferral Account as follows:
Director.

(a)
(i)

Crediting Rate Alternative. Each Deferral Account of a Director will be credited at the end of a day
on the balance in the Deferral Account at the beginning of that day using the Crediting Rate Alternative.

(ii)

Enhancement. The total balance in all Deferral Accounts on the first day of the month will be credited
at the end of the month at a rate equal to the Enhancement. The amount will be credited among Participant's
Deferral Accounts at the time the Enhancement is credited in an amount equal to the proportion which each
Deferral Account has to the Participant's entire balance No Enhancement will be credited on behalf of a
Participant with respect to any date after January 29, 2006.

(b)

Former Director. Each Deferral Account of a Director who has had a Retirement will be
credited at the end of a day on the balance in the Deferral Account at the beginning of that day, using the Crediting
Rate Alternative.

(c)

One-Time Election to Change Payment Method. A Participant may file with the Committee a
one-time election to change the method and time of payment of the Participant's existing benefits under this Plan,
subject to the following:
(i)

An election under this subsection will be effective as of the last day of the second Plan Year
following the Plan Year in which the election is filed; provided that the Participant is still a Director on that
effective date.

(ii)

An election under this subsection will apply to all of the Participant's Deferral Accounts outstanding
on the effective date of the election, as determined under paragraph (i), including any Account attributable to
deferrals of Earnings during the Plan Year preceding said effective date. However, the election will not apply
to deferrals of Earnings for the Plan
5

Year containing the effective date of the election or subsequent Plan Years.
(iii)

(iv)

Upon the effective date of an election under this subsection, the method of payment of the benefits
described in paragraph (ii) shall be changed to payment in ten annual installments. The Participant's election
under this subsection must specify whether said installments are to begin as soon as possible following
Termination of Employment or one year following Termination of Employment.
Only one election under this subsection may be made by a Participant during the Participant's lifetime.

Sec 4.6
Statement of Accounts. The Company shall submit to each Participant, within one hundred twenty days after
the close of each Plan Year, a statement in such form as the Company deems desirable, setting forth the balance standing to the credit
of each Participant in his Deferral Accounts.
ARTICLE V
CERTAIN BENEFIT PAYMENTS
Sec 5.1
Termination of Enrollment in Plan. With the written consent of the Company, a Participant may terminate
his or her enrollment in the Plan by filing with the Company a written request to terminate enrollment. The Committee will review the
request on behalf of the Company and will consent to the termination of a Participant's enrollment in the Plan in the event of an
unforeseeable financial emergency of the Participant. An unforeseeable financial emergency shall mean an unexpected need for cash
arising from an illness, casualty loss, sudden financial reversal or other such unforeseeable occurrence. Cash needs arising from
foreseeable events such as the purchase of a house or education expenses for children shall not be considered to be the result of an
unforeseeable financial emergency. Upon termination of enrollment, no further reductions shall be made in the Participant's Earnings
pursuant to his or her Enrollment Agreement, and the Participant shall immediately cease to be eligible for any benefits under the Plan
other than payments from his or her Deferral Accounts for the current Plan Year. In its sole discretion, the Committee may pay the
Deferral Accounts on a date earlier than the Participant's Retirement with the Participating Employer, in which event the Committee
shall calculate an amount which is appropriate in accordance with the unforeseeable financial emergency and that amount shall be
paid as if the Participant had a Retirement with the Participating Employer on the date of such payment.
Sec 5.2

Survivor Benefits

(a)

Death While Employed. If a Participant dies while a Director of a Participating Employer, the
Company will pay the amount in his or her Deferral Accounts to the Participant's Beneficiary as soon as possible
after death in a lump sum.

(b)

Death After Retirement. If a Participant dies after Retirement, and has not received all of his or
her payments, and the Participant's Beneficiary is his or her spouse, payments shall be made to the spouse pursuant
to the Participant's payout
6

elections. If the Participant's spouse dies before receiving all payments, the remaining amount in the Deferral
Accounts will be paid in a lump sum as soon as possible after the spouse's death to the spouse's estate. If a
Participant dies after Retirement, has not received all of his or her payments and the Participant's Beneficiary is a
Person other than his or her spouse, then payment shall be made in a lump sum as soon as possible after the
Participant's death.
Sec 5.3
Small Benefit. In the event that the Company determines in its sole discretion that the amount of any benefit
is too small to make it administratively convenient to pay such benefit over time, the Company may pay the benefit in the form of a
lump sum, or reduce the number of installments notwithstanding any provision of this Article or Article IV to the contrary.
Sec 5.4
Withholding. To the extent required by the law in effect at the time payments are made, the Company shall
withhold from payments made hereunder or any other payment owing by the Company to the Participant the taxes required to be
withheld by the federal or any state or local government.
Lump Sum Payout Option. Notwithstanding any other provisions of the Plan, at any time after Retirement,
Sec 5.5
but not later than ten years after Retirement of the Participant, a Participant or a Beneficiary of a deceased Participant may elect to
receive an immediate lump sum payment of 100% of the balance of his or her Deferral Accounts, if any, reduced by a penalty, which
shall be forfeited to the Company, equal to eight percent of the amount of his or her Deferral Accounts he or she elected to receive, in
lieu of payments in accordance with the form previously elected by the Participant, or provided elsewhere in this Plan. However, the
penalty shall not apply if the Company determines, based on advice of counsel or a final determination by the Internal Revenue
Service or any court of competent jurisdiction, that by reason of the foregoing provision any Participant or Beneficiary has recognized
or will recognize gross income for federal income tax purposes under this Plan in advance of payment to him of Plan benefits. The
Company shall notify all Participants (and Beneficiaries of deceased Participants) of any such determination. Whenever any such
determination is made, the Company shall refund all penalties which were imposed hereunder on account of making lump sum
payments at any time during or after the first year to which such determination applies (i.e., the first year when gross income is
recognized for federal income tax purposes). Interest shall be paid on any such refunds at the Variable Interest Crediting Rate for each
Plan Year, compounded annually. The Committee may also reduce or eliminate the penalty if it determines that this action will not
cause any Participant or Beneficiary to recognize gross income for federal income tax purposes under this Plan in advance of payment
to him of Plan benefits.
ARTICLE VI
BENEFICIARY DESIGNATION
Each Participant shall have the right, at any time, to designate any person or persons as Beneficiary or Beneficiaries to whom
payment under this Plan shall be made in the event of the Participant's death prior to complete distribution to the Participant of the
benefits due under the Plan. Each Beneficiary designation shall become effective only when filed in writing with the Company during
the Participant's lifetime on a form prescribed by the Company.
7

The filing of a new Beneficiary designation form will cancel all Beneficiary designations previously filed. Any finalized
divorce or marriage (other than a common law marriage) of a Participant subsequent to the date of filing of a Beneficiary designation
form shall revoke such designation unless in the case of divorce the previous spouse was not designated as Beneficiary and unless in
the case of marriage the Participant's new spouse had previously been designated as Beneficiary.
If a Participant fails to designate a Beneficiary as provided above, or if his or her Beneficiary designation is revoked by
marriage, divorce or otherwise without execution of a new designation, or if all designated Beneficiaries predecease the Participant or
die prior to complete distribution of the Participant's benefits, then the Company shall direct the distribution of such benefits to the
Participant's spouse, if any, and if there is no spouse to the Participant's estate.
ARTICLE VII
ADMINISTRATION OF PLAN
Sec 7.1
Administration by Company. The Company is the "administrator" of the Plan. Except as expressly otherwise
provided herein, the Company shall control and manage the operation and administration of the Plan, make all decisions and
determinations incident thereto and construe the provisions thereof. In carrying out its Plan responsibilities, the Company shall have
discretionary authority to construe the terms of the Plan. Except in cases where the Plan expressly requires action on behalf of the
Company to be taken by the Board, action on behalf of the Company may be taken by any of the following:
(a)

The Board.

(b)

The Chief Executive Officer of the Company.

(c)

The Vice President of Personnel of the Company.

(d)

Sec 7.2

Any person or persons, natural or otherwise, or committee, to whom responsibilities for the
operation and administration of the Plan are allocated by the Company, by resolution of the Board or by written
instrument executed by the Chief Executive Officer or the Vice President of Personnel of the Company and filed
with its permanent records, but action of such person or persons or committee shall be within the scope of said
allocation.
Certain Fiduciary Provisions. For purposes of the Plan:

(a)

Any person or group of persons may serve in more than one fiduciary capacity with respect to
the Plan.

(b)

A Named Fiduciary, or a fiduciary designated by a Named Fiduciary pursuant to the provisions

of the Plan, may employ one or more persons to render advice with regard to any responsibility such fiduciary has
under the Plan.

(c)

Any time the Plan has more than one Named Fiduciary, if pursuant to the Plan provisions
fiduciary responsibilities are not already allocated among such Named
8

Fiduciaries, the Company, by action of the Board or its chief executive officer, may provide for such allocation.
(d)

Unless expressly prohibited in the appointment of a Named Fiduciary which is not the
Company acting as provided in Sec. 7.1, such Named Fiduciary by written instrument may designate a person or
persons other than such Named Fiduciary to carry out any or all of the fiduciary responsibilities under the Plan of
such Named Fiduciary.

(e)

A person who is a fiduciary with respect to the Plan, including a Named Fiduciary, shall be
recognized and treated as a fiduciary only with respect to the particular fiduciary functions as to which such person
has responsibility.

Sec 7.3
Evidence. Evidence required of anyone under this Plan may be by certificate, affidavit, document or other
instrument which the person acting in reliance thereon considers to be pertinent and reliable and to be signed, made or presented by
the proper party.
Records. Each Participating Employer, each fiduciary with respect to the Plan and each other person
Sec 7.4
performing any functions in the operation or administration of the Plan shall keep such records as may be necessary or appropriate in
the discharge of their respective functions hereunder, including records required by applicable law. Records shall be retained as long
as necessary for the proper administration of the Plan and at least for any period required by applicable law.
General Fiduciary Standard. Each fiduciary shall discharge his duties with respect to the Plan solely in the
Sec 7.5
interests of Participants and with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man
acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.
Sec 7.6

Waiver of Notice. Any notice required hereunder may be waived by the person entitled thereto.

Sec 7.7
Agent for Legal Process. The Company shall be the agent for service of legal process with respect to any
matter concerning the Plan, unless and until the Company designates some other person as such agent.
Sec 7.8
Indemnification. In addition to any other applicable provisions for indemnification, the Participating
Employers jointly and severally agree to indemnify and hold harmless, to the extent permitted by law, each director, officer and
employee of the Participating Employers against any and all liabilities, losses, costs or expenses (including legal fees) of whatsoever
kind and nature which may be imposed on, incurred by or asserted against such person at any time by reason of such person's services
as a fiduciary in connection with the Plan, but only if such person did not act dishonestly, or in bad faith or in willful violation of the
law or regulations under which such liability, loss, cost or expense arises.
Sec 7.9
Correction of Errors. It is recognized that in the operation and administration of the Plan certain
mathematical and accounting errors may be made or mistakes may arise by
9

reason of factual errors in information supplied to the Company or Trustee. The Company shall have power to cause such equitable
adjustments to be made to correct for such errors as the Company, in its discretion, considers appropriate. Such adjustments shall be
final and binding on all persons.
ARTICLE VIII
AMENDMENT AND TERMINATION OF PLAN
Sec 8.1
Amendment. The Board may at any time amend the Plan, in whole or in part, for any reason, including but
not limited to tax, accounting or insurance changes, a result of which may be to terminate the Plan for future deferrals; provided,
however, that no amendment shall be effective to decrease the benefits, nature or timing thereof payable under the Plan to any
Participant with respect to deferrals made (and benefits thereafter accruing) prior to the date of such amendment. Written notice of any
amendment shall be given to each Participant then participating in the Plan. Notwithstanding the above, the Board authorizes the
Committee to amend the Plan to make changes to the Crediting Rate Alternatives by either adding any new or deleting any existing
Crediting Rate Alternative, and to impose limitations on selection of or deferral into any Crediting Rate Alternative by the action of
the Committee. Such changes will be considered an Amendment to this Plan and shall be effective without further action by the
Board.
Automatic Termination of Plan. The Plan shall terminate only under the following circumstances. The Plan
Sec 8.2
shall automatically terminate upon a determination by the Company that a final decision of a court of competent jurisdiction has
declared that the Participants under the Plan are in constructive receipt under the Internal Revenue Code of their vested Plan benefits.
Payments Upon Automatic Termination. Upon any Plan termination under Sec. 8.2, the Participants will be
Sec 8.3
deemed to have terminated their enrollment under the Plan as of the date of such termination. The Company will pay all Participants
the value of each Participant's Deferral Accounts in a lump sum, determined as if each Participant had a Termination of Employment
on the date of such termination of the Plan and elected to be paid as soon as possible following Termination of Employment.
Payments Upon Change of Control. Notwithstanding any provision of this Plan to the contrary, if a "Change
Sec 8.4
of Control" as defined in the Target Corporation Deferred Compensation Trust Agreement (as it may be amended from time to time)
occurs and results in funding of the trust established under that Agreement, each Participant (or Beneficiary of a deceased Participant)
will be paid the entire value of his or her Deferral Accounts in a lump sum, determined as if the Participant's Retirement had occurred
on the date the Change of Control occurs, and the Participant had elected to be paid his or her entire benefit in a lump sum as soon as
possible following Retirement. However, this section shall not apply, and no amounts shall be payable to Participants or Beneficiaries
under this section, in the event the assets of said trust are returned to the Participating Employers pursuant to the Trust Agreement
because no Change of Control actually occurred.
10

ARTICLE IX
MISCELLANEOUS
Sec 9.1
Unsecured General Creditor. Participants and their Beneficiaries, heirs, successors and assigns shall have no
legal or equitable rights, claims or interests in any specific property or assets of the Company or a Participating Employer, nor shall
they be beneficiaries of, or have any rights, claims or interests in any life insurance policies, annuity contracts or the proceeds
therefrom owned or which may be acquired by the Company ("Policies"). Such Policies or other assets of Participating Employers
shall not be held under any trust (except they may be placed in a Rabbi Trust) for the benefit of Participants, their Beneficiaries, heirs,
successors, or assigns, or held in any way as collateral security for the fulfilling of the obligations of Participating Employers under
this Plan. Any and all of a Participating Employer's assets and Policies shall be, and remain, the general, unpledged, unrestricted assets
of the Participating Employer. Participating Employers obligations under the Plan shall be merely that of an unfunded and unsecured
promise of a Participating Employer to pay money in the future.
Nonassignability. Neither a Participant nor any other person shall have any right to sell, assign, transfer,
Sec 9.2
pledge, anticipate, mortgage, commute or otherwise encumber, hypothecate or convey in advance of actual receipt the amounts, if any,
payable hereunder, or any part thereof, or interest therein which are, and all rights to which are, expressly declared to be unassignable
and non-transferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the
payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by
operation of law in the event of a Participant's or any other person's bankruptcy or insolvency.
Sec 9.3
Protective Provisions. Each Participant shall cooperate with the Company by furnishing any and all
information requested by the Company in order to facilitate the payment of benefits hereunder, taking such physical examinations as
the Company may deem necessary and taking such other relevant action as may be requested by the Company. If a Participant refuses
so to cooperate, the Company shall have no further obligation to the Participant under the Plan, other than payment to such Participant
of the cumulative reductions in Earnings theretofore made pursuant to this Plan. If a Participant commits suicide during the two (2)
year period beginning on the later of (a) the date of adoption of this Plan or (b) the first day of the first Plan Year of such Participant's
participation in the Plan, or if the Participant makes any material misstatement of information or nondisclosure of medical history,
then no benefits will be payable hereunder to such Participant or his Beneficiary, other than payment to such Participant of the
cumulative reductions in Earnings theretofore made pursuant to this Plan, provided, that in the Company's sole discretion, benefits
may be payable in an amount reduced to compensate the Company for any loss, cost, damage or expense suffered or incurred by the
Company as a result in any way of such misstatement or nondisclosure.
Validity. In the event any provision of this Plan is held invalid, void or unenforceable, the same shall not
Sec 9.4
affect, in any respect whatsoever, the validity of any other provision of this Plan.
11

Sec 9.5
Notice. Any notice or filing required or permitted to be given to the Company under the Plan shall be
sufficient if in writing and hand delivered, or sent by registered or certified mail, to the principal office of the Company, directed to
the attention of the President of the Company. Such notice shall be deemed given as of the date of delivery or, if delivery is made by
mail, as of the date shown on the postmark on the receipt for registration or certification.
Applicable Law. This Plan shall be governed and construed in accordance with the laws of the State of
Sec 9.6
Minnesota as applied to contracts executed and to be wholly performed in such state.
12

EXHIBIT (10)P
TARGET CORPORATION
LONG-TERM INCENTIVE PLAN
(As amended and restated on January 10, 2007)
ARTICLE I
ESTABLISHMENT OF THE PLAN
1.1

PLAN NAME. This plan is known as the "Target Corporation Long-Term Incentive Plan" (hereinafter called the

"Plan").
1.2
EFFECTIVE DATE. This amended and restated plan document (the "2007 Restatement") shall become effective on
January 10, 2007 (the "Effective Date"). Awards made on or after the Effective Date shall be subject to the terms and conditions of
this 2007 Restatement as amended from time to time and not to the terms and conditions of any prior version of the plan document. To
the extent that a Participant's rights under any Awards made prior to the Effective Date are adversely affected by this 2007
Restatement, as amended from time to time, such Awards shall be subject to the terms and conditions of the plan document in effect
on the Award's Date of Grant. Any future amendments to the Plan shall be subject to Section 10.1 hereof.
1.3
PURPOSE. The purpose of the Plan is to advance the performance and long-term growth of the Company by
offering long-term incentives to directors and employees of the Company and its Subsidiaries and such other Participants who the Plan
Committee determines will contribute to such performance and growth inuring to the benefit of the shareholders of the Company. This
Plan is also intended to facilitate recruiting and retaining personnel of outstanding ability.
ARTICLE II
DEFINITIONS
2.1
AWARD. An "Award" is a grant of Stock Options, Stock Appreciation Rights, Dividend Equivalents, Performance
Awards, Restricted Stock or Restricted Stock Units under the Plan.
2.2

BOARD. The "Board" is the Board of Directors of the Company.

2.3
CASH PROCEEDS. "Cash Proceeds" means the cash actually received by the Company for the purchase price
payable upon exercise of a Stock Option plus the maximum tax benefit that could be realized by the Company as a result of the
exercise of such Stock Options, which tax benefit shall be determined by multiplying (a) the amount that is deductible as a result of
any such Stock Option exercise (currently equal to the amount upon which the Participant's tax withholding obligation is calculated),
times (b) the maximum federal corporate income tax rate for the year of exercise. To the extent a Participant pays the exercise price
and/or withholding taxes with shares, Cash Proceeds shall not be calculated with respect to the amounts so paid.

2.4

CHANGE IN CONTROL. A "Change in Control" shall be deemed to have occurred if:

(a)

a majority of the directors of the Company shall be persons other than persons
(i)

for whose election proxies shall have been solicited by the Board or

(ii)

who are then serving as directors appointed by the Board to fill vacancies on the Board caused by death or
resignation (but not by removal) or to fill newly-created directorships,

(b)

30% or more of the outstanding Voting Stock (as defined in Article IV of the Restated Articles of Incorporation, as
amended, of the Company) of the Company is acquired or beneficially owned (as defined in Article IV of the
Restated Articles of Incorporation, as amended, of the Company) by any person (as defined in Article IV of the
Restated Articles of Incorporation, as amended, of the Company), or

(c)

the shareholders of the Company approve a definitive agreement or plan to:

(i)

merge or consolidate the Company with or into another corporation (other than (1) a merger or
consolidation with a Subsidiary of the Company or (2) a merger in which the Company is the surviving
corporation and either (A) no outstanding Voting Stock of the Company (other than fractional shares) held
by shareholders immediately prior to the merger is converted into cash (except cash upon the exercise by
holders of Voting Stock of the Company of statutory dissenters' rights), securities, or other property or (B)
all holders of outstanding Voting Stock of the Company (other than fractional shares) immediately prior to
the merger (except those that exercise statutory dissenters' rights) have substantially the same proportionate
ownership of the Voting Stock of the Company or its parent corporation immediately after the merger),

(ii)

exchange, pursuant to a statutory exchange of shares of Voting Stock of the Company held by shareholders
of the Company immediately prior to the exchange, shares of one or more classes or series of Voting Stock
of the Company for shares of another corporation or other securities, cash or other property,

(iii)

sell or otherwise dispose of all or substantially all of the assets of the Company (in one transaction or a
series of transactions) or
2

(iv)

liquidate or dissolve the Company.

2.5
CODE. The "Code" is the Internal Revenue Code of 1986, as amended, and rules and regulations thereunder, as now
in force or as hereafter amended.
2.6

COMPANY. The "Company" is Target Corporation, a Minnesota corporation, and any successor thereof.

2.7
COMMON STOCK. "Common Stock" is the common stock, $.0833 par value per share (as such par value may be
adjusted from time to time) of the Company.
2.8
DATE OF GRANT. The "Date of Grant" of an Award is the date designated in the resolution by the Plan Committee
as the date of an Award, which shall not be earlier than the date of the resolution and action thereon by the Plan Committee. In the
absence of a designated date or a fixed method of computing such date being specifically set forth in the Plan Committee's resolution,
then the Date of Grant shall be the date of the Plan Committee's resolution or action. In no event shall the Date of Grant of any Award
that is authorized by the Plan Committee on or after the Effective Date be earlier than the Effective Date.
2.9
DIVIDEND EQUIVALENT. A "Dividend Equivalent" is a right to receive an amount equal to the regular cash
dividend paid on one share of Common Stock. Dividend Equivalents may only be granted in connection with the grant of an Award
that is based on but does not consist of shares of Common Stock (whether or not restricted). The number of Dividend Equivalents so
granted shall not exceed the number of related stock-based rights. (For example, the number of Dividend Equivalents granted in
connection with a grant of Stock Appreciation Rights may equal the number of such Stock Appreciation Rights, even though the
number of shares actually paid upon exercise of those Stock Appreciation Rights necessarily will be less than the number of Stock
Appreciation Rights and Dividend Equivalents granted.) Dividend Equivalents shall be subject to such terms and conditions as may
be established by the Plan Committee, but they shall expire no later than the date on which their related stock-based rights are either
exercised, expire or are forfeited (whichever occurs first). The amounts payable due to a grant of Dividend Equivalents may be paid in
cash, either currently or deferred, or converted into shares of Common Stock, as determined by the Plan Committee.
2.10
EXCHANGE ACT. The "Exchange Act" is the Securities Exchange Act of 1934, as amended, and rules and
regulations thereunder, as now in force or as hereafter amended.
2.11
FAIR MARKET VALUE. "Fair Market Value" of a share of Common Stock on any date is the Volume Weighted
Average Price for such stock as reported for such stock by Bloomberg L.P. on such date, or in the absence of such report the Volume
Weighted Average Price for such stock as reported for such stock by the New York Stock Exchange on such date or, if no sale has
been recorded by Bloomberg L.P. or the New
3

York Stock Exchange on such date, then on the last preceding date on which any such sale shall have been made in the order of
primacy indicated above.
2.12
INCENTIVE STOCK OPTIONS. An "Incentive Stock Option" is a Stock Option that is intended to qualify as an
"incentive stock option" under Section 422 of the Code.
2.13
NON-QUALIFIED OPTIONS. A "Non-Qualified Option" is a Stock Option that is not intended to qualify as an
"incentive stock option" under Section 422 of the Code.
2.14
PARTICIPANT. A "Participant" is a person who has been designated as such by the Plan Committee and granted an
Award under this Plan pursuant to Article III hereof.
2.15
PERFORMANCE GOALS. "Performance Goals" are the performance conditions, if any, established pursuant to
Section 4.1 hereof by the Plan Committee in connection with an Award.
2.16
PERFORMANCE PERIOD. The "Performance Period" with respect to a Performance Award is a period of not less
than one calendar year or one fiscal year of the Company, beginning not earlier than the year in which such Performance Award is
granted, which may be referred to herein and by the Plan Committee by use of the calendar or fiscal year in which a particular
Performance Period commences.
2.17
PERFORMANCE AWARD. A "Performance Award" is a right to either a number of shares of Common Stock
("Performance Shares") or a cash amount ("Performance Units") determined (in either case) in accordance with Article IV of this Plan
based on the extent to which the applicable Performance Goals are achieved. A Performance Share shall be of no value to a Participant
unless and until earned in accordance with Article IV hereof.
2.18

PLAN COMMITTEE. The "Plan Committee" is the committee described in Section 8.1 hereof.

2.19

PLAN YEAR. The "Plan Year" shall be a fiscal year of the Company falling within the term of this Plan.

2.20
RESTRICTED STOCK. "Restricted Stock" is Common Stock granted subject to terms and conditions, including a
risk of forfeiture, established by the Plan Committee pursuant to Article VI of this Plan.
2.21
RESTRICTED STOCK UNIT. A "Restricted Stock Unit" is a right to receive one share of Common Stock at a
future date that has been granted subject to terms and conditions, including a risk of forfeiture, established by the Plan Committee
pursuant to Article VI of this Plan.
4

2.22
STOCK APPRECIATION RIGHT. A "Stock Appreciation Right" is a right to receive, upon exercise of that right,
an amount, which may be paid in cash, shares of Common Stock or a combination thereof in the discretion of the Plan Committee,
equal to the difference between the Fair Market Value of one share of Common Stock as of the date of exercise and the exercise price
for that right as determined by the Plan Committee on or before the Date of Grant. Stock Appreciation Rights may be granted in
tandem with Stock Options or other Awards or may be freestanding.
2.23
STOCK OPTION. A "Stock Option" is a right to purchase from the Company at any time not more than ten years
following the Date of Grant, one share of Common Stock for an exercise price not less than the Fair Market Value of a share of
Common Stock on the Date of Grant, subject to such terms and conditions established pursuant to Article V hereof. Stock Options
may be either Non-Qualified Options or Incentive Stock Options.
2.24
SUBSIDIARY CORPORATION. The terms "Subsidiary" or "Subsidiary Corporation" mean any corporation (other
than the Company) in an unbroken chain of corporations beginning with the Company, in which each of the corporations other than
the last corporation in the unbroken chain owns stock possessing fifty percent or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain as determined at the point in time when reference is made to such
"Subsidiary" or "Subsidiary Corporation" in this Plan.
ARTICLE III
GRANTING OF AWARDS TO PARTICIPANTS
3.1
ELIGIBLE PARTICIPANTS. Awards may be granted by the Plan Committee to any employee of the Company or a
Subsidiary Corporation, including any employee who is also a director of the Company or a Subsidiary Corporation. Awards other
than grants of Incentive Stock Options may also be granted to (a) a director of the Company who is not an employee of the Company
or a Subsidiary Corporation and (b) any individual or entity, other than an employee, who provides services to the Company or a
Subsidiary Corporation in the capacity of an advisor or consultant. References in this Plan to "employment" and similar terms (except
"employee") shall include the providing of services in the capacity of a director, advisor or consultant. A person who has been
engaged by the Company for employment shall be eligible for Awards other than Incentive Stock Options, provided such person
actually reports for and commences such employment within 90 days after the Date of Grant. Incentive Stock Options may be granted
only to individuals who are employees on the Date of Grant.
3.2
DESIGNATION OF PARTICIPANTS. At any time and from time to time during the Plan Year, the Plan Committee
may designate the employees of the Company and its Subsidiaries and other Participants eligible for Awards.
5

3.3
ALLOCATION OF AWARDS. Contemporaneously with the designation of a Participant pursuant to Section 3.2
hereof, the Plan Committee shall determine the size, type and Date of Grant for each Award, taking into consideration such factors as
it deems relevant, which may include the following:
(a)

the total number of shares of Common Stock available for Awards under the Plan;

(b)

the work assignment or the position of the Participant and its sensitivity and/or impact in relationship to the
profitability and growth of the Company and its Subsidiaries; and

(c)

the Participant's performance in reference to such factors.

The Plan Committee may grant a Participant only one type of Award or it may grant any combination of Awards in whatever
relationship one to the other, if any, as the Plan Committee in its discretion so determines.
3.4
NOTIFICATION TO PARTICIPANTS AND DELIVERY OF DOCUMENTS. As soon as practicable after such
determinations have been made, each Participant shall be notified of (a) his/her designation as a Participant, (b) the Date of Grant, (c)
the number and type of Awards granted to the Participant, (d) in the case of Performance Awards, the Performance Period and
Performance Goals, and (e) in the case of Restricted Stock or Restricted Stock Units, the Restriction Period. The Participant shall
thereafter be supplied with written evidence of any such Awards.
ARTICLE IV
PERFORMANCE AWARDS
4.1
ESTABLISHMENT OF PERFORMANCE GOALS. Performance Goals applicable to a Performance Award shall be
established by the Plan Committee in its absolute discretion on or before the Date of Grant and not more than a reasonable period of
time after the beginning of the relevant Performance Period. Such Performance Goals may include or be based upon any of the
following criteria: pretax operating contribution; economic value added; consolidated profits of the Company expressed as a percent;
earnings per share; return on capital; return on investment; return on shareholders' equity; revenue; working capital; pre-tax segment
profit; sales volume; return on sales; comparable store sales; earnings before interest and taxes; earnings before interest, taxes,
depreciation and amortization; return on assets; cash flow; gross margin rate; expense rate; market price; and total shareholder return.
Performance Goals may be absolute in their terms or be measured against or in relationship to other companies comparably, similarly
or otherwise situated. The Plan Committee, in its sole discretion, may modify the Performance Goals if it determines that
circumstances have changed and modification is required to reflect the original intent of the Performance Goals; provided, however,
that no such change or modification may be made to the extent it increases the amount of compensation payable to any Participant
who is a "covered employee" within the
6

meaning of Code Section 162(m). The Plan Committee may in its discretion classify Participants into as many groups as it determines,
and as to any Participant relate his/her Performance Goals partially, or entirely, to the measured performance, either absolutely or
relatively, of an identified Subsidiary, operating company or test strategy or new venture of the Company.
4.2
LEVELS OF PERFORMANCE REQUIRED TO EARN PERFORMANCE AWARDS. At or about the same time
that Performance Goals are established for a specific period, the Plan Committee shall in its absolute discretion establish the
percentage of the Performance Awards granted for such Performance Period which shall be earned by the Participant for various
levels of performance measured in relation to achievement of Performance Goals for such Performance Period.
4.3
OTHER RESTRICTIONS. The Plan Committee shall determine the terms and conditions applicable to any
Performance Award, which may include restrictions on the delivery of Common Stock payable in connection with the Performance
Award and restrictions that could result in the future forfeiture of all or part of any Common Stock earned. The Plan Committee may
provide that shares of Common Stock issued in connection with a Performance Award be held in escrow and/or legended.
4.4
NOTIFICATION TO PARTICIPANTS. Promptly after the Plan Committee has established or modified the
Performance Goals with respect to a Performance Award, the Participant shall be provided with written notice of the Performance
Goals so established or modified.
4.5
MEASUREMENT OF PERFORMANCE AGAINST PERFORMANCE GOALS. The Plan Committee shall, as
soon as practicable after the close of a Performance Period, determine:
(a)

the extent to which the Performance Goals for such Performance Period have been achieved; and

(b)

the percentage of the Performance Awards earned as a result.

These determinations shall be absolute and final as to the facts and conclusions therein made and be binding on all parties. Promptly
after the Plan Committee has made the foregoing determination, each Participant who has earned Performance Awards shall be
notified, in writing thereof. For all purposes of this Plan, notice shall be deemed to have been given the date action is taken by the Plan
Committee making the determination. Participants may not sell, transfer, pledge, exchange, hypothecate or otherwise dispose of all or
any portion of their Performance Awards during the Performance Period, except that Performance Awards may be transferable by
assignment by a Participant to the extent provided in the applicable Performance Award agreement.
4.6
TREATMENT OF PERFORMANCE AWARDS EARNED. Upon the Plan Committee's determination that a
percentage of any Performance Awards have been
7

earned for a Performance Period, Participants to whom such earned Performance Awards have been granted and who have been (or
were) in the employ of the Company or a Subsidiary thereof continuously from the Date of Grant, subject to the exceptions set forth at
Section 4.9 and Section 4.10 hereof, shall be entitled, subject to the other conditions of this Plan, to payment in accordance with the
terms and conditions of their Performance Awards. Such terms and conditions may permit or require that any applicable tax
withholding be deducted from the amount payable. Performance Awards shall under no circumstances become earned or have any
value whatsoever for any Participant who is not in the employ of the Company or its Subsidiaries continuously during the entire
Performance Period for which such Performance Award was granted, except as provided at Section 4.9 or Section 4.10 hereof.
4.7
DISTRIBUTION. Distributions payable pursuant to Section 4.6 above shall be made as soon as practicable after the
Plan Committee determines the Performance Awards have been earned unless the provisions of Section 4.8 hereof are applicable to a
Participant.
4.8
DEFERRAL OF RECEIPT OF PERFORMANCE AWARD DISTRIBUTIONS. With the consent of the Plan
Committee, a Participant who has been granted a Performance Award may by compliance with the then applicable procedures under
the Plan irrevocably elect in writing to defer receipt of all or any part of any distribution associated with that Performance Award. The
terms and conditions of any such deferral, including but not limited to, the period of time for, and form of, election; the manner and
method of payout; the plan and form in which the deferred amount shall be held; the interest equivalent or other payment that shall
accrue pending its payout; and the use and form of Dividend Equivalents in respect of stock-based units resulting from such deferral,
shall be as determined by the Plan Committee. The Plan Committee may, at any time and from time to time, but prospectively only
except as hereinafter provided, amend, modify, change, suspend or cancel any and all of the rights, procedures, mechanics and timing
parameters relating to such deferrals. In addition, the Plan Committee may, in its sole discretion, accelerate the payout of such
deferrals (and any earnings thereon), or any portion thereof, either in a lump sum or in a series of payments, but under the following
conditions only:
(a)

the Federal tax statutes, regulations or interpretations are amended, modified, or otherwise changed or affected in
such a manner as to adversely alter or modify the tax effect of such deferrals; or

(b)

the Participant suffers or incurs an event that would qualify for a "withdrawal" of contributions that have not been
accumulated for two years without adverse consequences on the tax status of a qualified profit-sharing or stock
bonus plan under the Federal tax laws applicable from time to time to such types of plans.

4.9
NON-DISQUALIFYING TERMINATION OF EMPLOYMENT. Except for Section 4.10 hereof, the only
exceptions to the requirement of continuous
8

employment during a Performance Period for Performance Award distribution are termination of a Participant's employment by
reason of death (in which event the Performance Award may be transferable by will or the laws of descent and distribution only to
such Participant's beneficiary designated to receive the Performance Award or to the Participant's applicable legal representatives,
heirs or legatees), total and permanent disability, with the consent of the Plan Committee, normal or late retirement or early retirement,
with the consent of the Plan Committee, or transfer of an executive in a spin-off, with the consent of the Plan Committee, occurring
during the Performance Period applicable to the subject Performance Award. In such instance a distribution of the Performance Award
shall be made, as of the end of the Performance Period, and 100% of the total Performance Award that would have been earned during
the Performance Period shall be earned and paid out; provided, however, in a spin-off situation the Plan Committee may set additional
conditions, such as, without limiting the generality of the foregoing, continuous employment with the spin-off entity. If a Participant's
termination of employment does not meet the criteria set forth above, but the Participant had at least 15 years of employment with the
Company or a Subsidiary or any combination thereof, the Plan Committee may allow distribution of up to 100% of the total
Performance Award for the Performance Period(s) in which the termination of employment occurred, subject to any conditions that
the Plan Committee shall determine.
4.10
CHANGE IN CONTROL. In the event of a Change in Control, a pro rata portion of all outstanding Performance
Awards under the Plan shall be payable ten days after the Change in Control. The amount payable shall be determined by assuming
that 100% of each Performance Award was earned, and by multiplying the earned amount by a fraction, the numerator of which shall
be the number of months that have elapsed in the applicable Performance Period prior to the Change in Control and the denominator
of which shall be the total number of months in the Performance Period.
ARTICLE V
STOCK OPTIONS AND
STOCK APPRECIATION RIGHTS
5.1
NON-QUALIFIED OPTION. Non-Qualified Options granted under the Plan are Stock Options that are not intended
to be Incentive Stock Options under the provisions of Section 422 of the Code. Non-Qualified Options shall be evidenced by written
agreements in such form and not inconsistent with the Plan as the Plan Committee shall in its sole discretion approve from time to
time, which agreements shall specify the number of shares to which they pertain and the purchase price of such shares.
5.2
INCENTIVE STOCK OPTION. Incentive Stock Options granted under the Plan are Stock Options that are intended
to be "incentive stock options" under Section 422 of the Code, and the Plan shall be administered, except with respect to the right to
exercise options after termination of employment, to qualify Incentive Stock Options issued hereunder as incentive stock options
under Section 422 of the Code. An Incentive Stock Option shall not be granted to an employee who owns, or is deemed under Section
424(d) of the Code to own, stock of the Company (or of any parent or Subsidiary of the
9

Company) possessing more than 10% of the total combined voting power of all classes of stock therein. The aggregate Fair Market
Value (determined as of the time the option is granted) of the stock with respect to which Incentive Stock Options are exercisable for
the first time by any Participant during any calendar year (under all incentive stock option plans of the Company or any parent or
Subsidiary of the Company) shall not exceed $100,000. Incentive Stock Options shall be evidenced by written agreements in such
form and not inconsistent with the Plan as the Plan Committee shall in its sole discretion approve from time to time, which agreements
shall specify the number of shares to which they pertain and the purchase price of such shares.
5.3

OPTION TERMS. Stock Options granted under this Plan shall be subject to the following terms and conditions:

(a)

Option Period. Each Stock Option shall expire and all rights to purchase shares thereunder shall cease not more than
ten years after its Date of Grant or on such date prior thereto as may be fixed by the Plan Committee, or on such
other date as is provided by this Plan in the event of termination of employment, death or reorganization. No Stock
Option shall permit the purchase of any shares thereunder during the first year after its Date of Grant, except as
provided in Section 5.5 hereof or as otherwise determined by the Plan Committee.

(b)

Exercise Price. The purchase price per share payable upon exercise of a Stock Option shall not be less than the Fair
Market Value of a share of Common Stock on the Date of Grant of the Stock Option.

(c)

Transferability and Termination of Options. During the lifetime of an individual to whom a Stock Option is granted,
the Stock Option may be exercised only by such individual and only while such individual is an employee of the
Company or a Subsidiary and only if the Participant has been continuously so employed by any one or combination
thereof since the Date of Grant of the Stock Option, provided, however, that if the employment of such Participant
by the Company or a Subsidiary Corporation terminates, the Stock Option may additionally be exercised as follows,
or in any other manner provided by the Plan Committee, but in no event later than ten years after the Date of Grant
of the Stock Option, except as set forth in (ii) and (v) below:
(i)

If a Participant's termination of employment occurs by reason of normal or late retirement under any
retirement plan of the Company or its Subsidiaries, such Participant's Stock Options may be exercised
within five years after the date of such termination of employment. If a Participant's termination of
employment occurs by reason of early retirement under any retirement plan of the Company or its
Subsidiaries, or by reason of the transfer of a Participant in a spin-off, or by reason of total and permanent
10

disability, as determined by the Plan Committee, without retirement, then such Participant's Stock Options
shall be exercisable for a period of up to five years after the date of such termination of employment if the
Plan Committee consents to such an extension. During the extension period, the right to exercise Stock
Options, if any, accruing in installments, shall continue unless the Plan Committee provides otherwise;
provided, however, that if the Stock Options are Incentive Stock Options all installments shall be
immediately exercisable; and provided further, that the Plan Committee may set additional conditions, such
as, without limiting the generality of the foregoing, an agreement to not provide services to a competitor of
the Company and its Subsidiaries and/or continuous employment with a spin-off entity.
(ii)

If a Participant's termination of employment occurs by reason of death, then such Participant's outstanding
Stock Options shall all become immediately exercisable and may be exercised within five years after the
date of death or the life of the option, whichever is less, but in the case of Non-Qualified Options in no
event less than one year after the date of death, unless the Plan Committee provides otherwise.

(iii)

If a Participant's termination of employment occurs for any reason other than as specified in Section 5.3(c)
(i) or (ii) hereof, the Participant has been employed by the Company or a Subsidiary or any combination for
more than 15 years, and if the Plan Committee so approves, then such Participant's Stock Options may be
exercised within a period of up to five years after the date of termination of employment. During the
extension period, the right to exercise options, if any, accruing in installments shall continue unless the Plan
Committee provides otherwise; provided, however, the Plan Committee may set additional conditions.

(iv)

If a Participant's termination of employment occurs for any reason other than as specified in Section 5.3(c)
(i) or (ii) hereof, the Plan Committee has not approved an extension and Participant's termination of
employment is not occasioned by the commission of a dishonest or other illegal act, then, but only with
respect to installments that have as of the date of termination already accrued, such Participant's Stock
Options may be exercised within ninety days after the date of such termination of employment except in the
case of Participants who would at the time be subject to the provisions of Section 16(b) of the Exchange
Act, in which instance the period of exercise shall be two hundred ten days after termination. Those
Participants terminated because of the
11

commission of a dishonest or other illegal act shall have no additional period after termination of
employment in which to exercise their options.
(v)

Rights accruing to a Participant under Sections 5.3(c)(i), 5.3(c)(iii) and 5.3(c)(iv) may, upon the death of a
Participant subsequent to his/her termination of employment, be exercised by his/her duly designated
beneficiary or otherwise by his/her applicable legal representatives, heirs or legatees to the extent vested in
and unexercised or perfected by the Participant at the date of his/her death. In the case of Non-Qualified
Options, the period for such exercise shall not expire less than one year after the date of the Participant's
death.

(vi)

Absence on a leave of absence approved by the Plan Committee shall not be deemed a termination or
interruption of continuous employment for the purposes of the Plan.

No Stock Option shall be assignable or transferable by the individual to whom it is granted, except that it may be
transferable (X) by assignment by the Participant to the extent provided in the applicable option agreement, or (Y)
by will or the laws of descent and distribution in accordance with the provisions of this Plan. An option transferred
after the death of the Participant to whom it is granted may only be exercised by such individual's beneficiary
designated to exercise the option or otherwise by his/her applicable legal representatives, heirs or legatees, and only
within the specific time period set forth above and only to the extent vested in and unexercised by the Participant at
the date of his/her death, except as provided in Section 5.3(c)(ii).
In no event, whether by the Participant directly or by his/her proper assignee or beneficiary or other representative,
shall any option be exercisable at any time after its expiration date as stated in the option agreement, except as
provided in Section 5.3(c)(ii) and (v). When an option is no longer exercisable it shall be deemed for all purposes
and without further act to have lapsed and terminated. The Plan Committee may, in its sole discretion, determine
solely for the purposes of the Plan that a Participant is permanently and totally disabled, and the acts and decisions
of the Plan Committee made in good faith in relation to any such determination shall be conclusive upon all persons
and interests affected thereby.
(d)

Exercise of Options. An individual entitled to exercise Stock Options may, subject to their terms and conditions and
the terms and conditions of the Plan, exercise them in whole or in part by delivery of written notice of
12

exercise to the Company at its principal office, specifying the number of whole shares of Common Stock with
respect to which the Stock Options are being exercised. Before shares may be issued, payment must be made in full,
in legal United States tender, in the amount of the purchase price of the shares to be purchased at the time and any
amounts for withholding as provided in Section 10.8 hereof; provided, however, in lieu of paying for the exercise
price in cash as described above, the individual may pay (subject to such conditions and procedures as the Plan
Committee may establish) all or part of such exercise price by tendering (either actually or by attestation) owned and
unencumbered shares of Common Stock acceptable to the Plan Committee and having a Fair Market Value on the
date of exercise of the Stock Options equal to or less than the exercise price of the Stock Options exercised, with
cash, as set forth above, for the remainder, if any, of the purchase price; provided, further, that the Plan Committee
may permit a Participant to elect to pay the exercise price by authorizing a third party to sell shares of Common
Stock (or a sufficient portion of the shares) acquired upon exercise of the Stock Options and remit to the Company a
sufficient portion of the sale proceeds to pay the entire exercise price and any tax withholding resulting from such
exercise. Subject to rules established by the Plan Committee, the withholdings required by Section 10.8 hereof may
be satisfied by the Company withholding shares of Common Stock issued on exercise that have a Fair Market Value
on the date of exercise of the Stock Options equal to or less than the withholding required by Section 10.8 hereof.
(e)

Repricing Prohibited. Subject to Sections 5.5, 7.3 and 10.7, outstanding Stock Options granted under this Plan shall
not be repriced.

5.4
STOCK APPRECIATION RIGHTS. Stock Appreciation Rights may be granted to Participants either alone
("freestanding") or in tandem with other Awards, including Performance Awards, Stock Options and Restricted Stock. Stock
Appreciation Rights granted in tandem with Incentive Stock Options must be granted at the same time as the Incentive Stock Options
are granted. Stock Appreciation Rights granted in tandem with any other Award may be granted at any time prior to the earlier of the
exercise or expiration of such Award. Stock Appreciation Rights granted in tandem with Stock Options shall terminate and no longer
be exercisable upon the termination or exercise of the related Stock Options. The Plan Committee shall establish the terms and
conditions applicable to any Stock Appreciation Rights, which terms and conditions need not be uniform but may not be inconsistent
with the terms of the Plan. Freestanding Stock Appreciation Rights shall generally be subject to terms and conditions substantially
similar to those described in Section 5.3 for Stock Options, including the requirements of 5.3(a), (b) and (e) regarding the maximum
period, minimum price and prohibition on repricing.
13

5.5

CHANGE IN CONTROL. In the event of a Change in Control:

(a)
If the Company is the surviving entity and any adjustments necessary to preserve the value of the Participant's
outstanding Stock Options and Stock Appreciation Rights have been made, or the Company's successor at the time of the Change in
Control irrevocably assumes the Company's obligations under this Plan or replaces the Participant's outstanding Stock Options and
Stock Appreciation Rights with stock options and stock appreciation rights of equal or greater value and having terms and conditions
no less favorable to the Participant than those applicable to the Participant's Stock Options and Stock Appreciation Rights immediately
prior to the Change in Control (collectively, an "Equitable Assumption or Replacement"), then such Awards or their replacement
awards shall become immediately exercisable in full only if within two years after the Change in Control the Participant's
employment:
(i)
is terminated without "Cause", which for purposes of this Section 5.5 shall mean (x) willful and continued
failure to substantially perform the Participant's duties (other than failure resulting from incapacity due to physical
or mental illness) after receipt of a written demand for such performance specifically identifying such failure, or (y)
the willful engaging by the Participant in illegal conduct or gross misconduct that is materially and demonstrably
injurious to the Company or its successor;
(ii)
terminates with "Good Reason", which for purposes of this Section 5.5 shall mean any material diminution
of the Participant's position, authority, duties or responsibilities (including the assignment of duties materially
inconsistent with the Participant's position or a material increase in the time Participant is required by the Company
or its successor to travel), any reduction in salary or in the Participant's aggregate bonus and incentive opportunities,
any material reduction in the aggregate value of the Participant's employee benefits (including retirement, welfare
and fringe benefits), or relocation to a principal work site that is more than 40 miles from the Participant's principal
work site immediately prior to the Change in Control; or
(iii)
terminates under circumstances that entitle the Participant to accelerated exercisability under any individual
employment agreement between the Participant and the Company, a Subsidiary, or any successor thereof.
(b)

If there is no Equitable Assumption or Replacement, then without any action by the Plan Committee or the Board,
each outstanding Stock Option and Stock Appreciation Right granted under the Plan that has not been previously
exercised or otherwise lapsed and terminated shall become immediately exercisable in full; provided, however, that
the Plan Committee, in its sole discretion, and without the consent of any Participant affected thereby, may
determine that a cash payment shall be made promptly following the Change in Control in lieu of all or any portion
of the outstanding Stock Options and Stock Appreciation Rights
14

granted under this Plan. The amount payable with respect to each share of Common Stock subject to an affected
Stock Option and each affected Stock Appreciation Right shall equal the excess of the Fair Market Value of a share
of Common Stock immediately prior to such Change in Control over the exercise price of such Stock Option or
Stock Appreciation Right. After such a determination by the Plan Committee, each Stock Option and Stock
Appreciation Right, with respect to which a cash payment is to be made shall terminate, and the Participant shall
have no further rights thereunder except the right to receive such cash payment.
ARTICLE VI
RESTRICTED STOCK AND RESTRICTED STOCK UNITS
6.1
RESTRICTION PERIOD. At the time an Award of Restricted Stock or Restricted Stock Units is made, the Plan
Committee shall establish the terms and conditions applicable to such Award, including the period of time (the "Restriction Period")
during which certain restrictions established by the Plan Committee shall apply to the Award. The Restriction Period shall be not less
than three years, provided, however, that for Awards to non-employee directors of the Company, the terms of the Award may allow
for the ratable release of the restrictions over a minimum period of three years. Each such Award, and designated portions of the same
Award, may have a different Restriction Period, at the discretion of the Plan Committee. Except as permitted or pursuant to Sections
6.4, 6.5 or 10.7 hereof, the Restriction Period applicable to a particular Award shall not be changed.
6.2
RESTRICTED STOCK TERMS AND CONDITIONS. Restricted Stock shall be represented by a stock certificate
registered in the name of the Participant granted such Restricted Stock. Such Participant shall have the right to enjoy all shareholder
rights during the Restriction Period except that:
(a)

The Participant shall not be entitled to delivery of the stock certificate until the Restriction Period shall have
expired.

(b)

The Company may either issue shares subject to such restrictive legends and/or stop-transfer instructions as
it deems appropriate or provide for retention of custody of the Common Stock during the Restriction
Period.

(c)

The Participant may not sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the Common
Stock during the Restriction Period, except that it may be transferable by assignment by the Participant to
the extent provided in the applicable Restricted Stock Award agreement.

(d)

A breach of the terms and conditions established by the Plan Committee with respect to the Restricted
Stock shall cause a
15

forfeiture of the Restricted Stock, and any dividends withheld thereon.

(e)

Dividends payable in cash or in shares of stock or otherwise may be either currently paid or withheld by the
Company for the Participant's account. At the discretion of the Plan Committee, interest may be paid on the
amount of cash dividends withheld, including cash dividends on stock dividends, at a rate and subject to
such terms as determined by the Plan Committee.

Provided, however, and the provisions of Section 6.4 to the contrary notwithstanding, in lieu of the foregoing, the Plan Committee
may provide that no shares of Common Stock be issued until the Restriction Period is over and further provide that the shares of
Common Stock issued after the Restriction Period has been completed, be issued in escrow and/or be legended and that the Common
Stock be subject to restrictions including the forfeiture of all or a part of the shares.
6.3
PAYMENT FOR RESTRICTED STOCK. A Participant shall not be required to make any payment for Restricted
Stock unless the Plan Committee so requires.
6.4
FORFEITURE PROVISIONS. Subject to Section 6.5, in the event a Participant terminates employment during a
Restriction Period for the Participant's Restricted Stock or Restricted Stock Units, such Awards will be forfeited; provided, however,
that the Plan Committee may provide for proration or full payout in the event of (a) a termination of employment because of normal or
late retirement, (b) with the consent of the Plan Committee, early retirement or spin-off, (c) death, (d) total and permanent disability,
as determined by the Plan Committee, (e) with the consent of the Plan Committee, termination of employment after 15 years of
employment with the Company or a Subsidiary or any combination thereof, or (f) in the case of a non-employee director, a departure
from the Board following the completion of the director's term of office, all subject to any other conditions the Plan Committee may
determine.
6.5
CHANGE IN CONTROL. In the event of a Change in Control, restrictions on a fraction of each Participant's
outstanding Restricted Stock and Restricted Stock Units granted under the Plan will lapse, and any shares not previously distributed
shall be distributed within ten days after the Change in Control. The numerator of such fraction with respect to an Award shall be the
number of months that have elapsed in the applicable Restriction Period prior to the Change in Control and the denominator shall be
the number of months in such Restriction Period.
ARTICLE VII
SHARES OF STOCK SUBJECT TO THE PLAN; MAXIMUM AWARDS
7.1
SHARES AVAILABLE. Subject to the other provisions of this Article VII, the total number of shares available for
grant as Awards pursuant to the Plan shall
16

not exceed in the aggregate 81,000,000 shares of Common Stock. (This limit includes the 44,000,000 shares that were originally made
available under this Plan.) Solely for the purpose of applying the limitation in the preceding sentence and subject to the replenishment
and adjustment provisions of Sections 7.2 and 7.3 below:
(a)
each Award granted under this Plan prior to May 19, 2004 (the date the Plan was last approved by shareholders)
shall reduce the number of shares available for grant by one share for every one share granted;
(b)
each Stock Option or Stock Appreciation Right granted under this Plan on or after May 19, 2004 shall reduce the
number of shares available for grant by one share for every one share granted;
(c)
each Award granted under this Plan on or after May 19, 2004 that may result in the issuance of Common Stock,
other than a Stock Option, Stock Appreciation Right, or Dividend Equivalent, shall reduce the number of shares available for grant by
two shares for every one share granted;
(d)
each Dividend Equivalent that the Corporation has determined may result in the issuance of Common Stock shall
reduce the number of shares available for grant by two shares for every share that would be issuable if the accumulated value of the
Dividend Equivalent were converted into Common Stock at Fair Market Value, but such reduction shall only occur if the
corresponding dividends payable to shareholders were paid in cash; and
(e)
if Awards are granted in tandem, so that only one of the Awards may actually be exercised, only the Award that
results in the greater reduction in the number of shares available for grant shall result in a reduction of the shares so available, and the
other Award shall be disregarded.
Shares available for grant under the Plan may be authorized and unissued shares, treasury shares held by the Company or shares
purchased or held by the Company or a Subsidiary for purposes of the Plan, or any combination thereof. Shares issued upon
assumption or conversion of outstanding stock-based awards granted by an acquired company shall be disregarded in applying the
limitation set forth in this Section 7.1.
7.2
SHARES AGAIN AVAILABLE. In the event all or any portion of an Award is forfeited or cancelled, expires, is
settled for cash, or otherwise does not result in the issuance of all or a portion of the shares subject to the Award in connection with
the exercise or settlement of such Award, the number of shares not issued that were deducted for such Award pursuant to Section 7.1
above shall be restored and may again be used for Awards under the Plan. If a Participant uses shares of Common Stock to pay a
purchase or exercise price or tax withholding, either by having the Company withhold shares or tendering shares (either actually or by
attestation), an equal number of such shares shall be restored and may again be used for Awards under the Plan. In addition, shares
may be reacquired on the open market by the Company using the Cash Proceeds received by the
17

Company from the exercise on or after May 19, 2004 of Stock Options granted under the Plan to restore an equal number of shares
that may again be used for Awards under the Plan; provided, however, that the number of shares so restored does not exceed the
number that could be purchased at Fair Market Value with the Cash Proceeds on the date of exercise of the Stock Option giving rise to
such Cash Proceeds.
If one of the events described in the first sentence of the preceding paragraph occurs with respect to an award that was
granted under a Prior Plan (as defined in Section 10.11) but was outstanding on May 19, 2004, the total number of shares available for
grant under this Plan shall be increased by one share for each share subject to that award that is not issued.
Notwithstanding anything in this Section 7.2 to the contrary and solely for purposes of determining whether shares are
available for the issuance of Incentive Stock Options, the maximum aggregate number of shares that may be granted under this Plan
shall be determined without regard to any shares restored pursuant to this Section 7.2 that, if taken into account, would cause the Plan
to fail the requirement under Code Section 422 that the Plan designate the maximum aggregate number of shares that may be issued.
7.3
RELEVANT CHANGE ADJUSTMENTS. In the event of any equity restructuring (within the meaning of Financial
Accounting Standards No. 123 (revised 2004)) other than: (1) any distribution of securities or other property by the Company to
shareholders in a spin-off or split-up that does not qualify as a tax-free spin-off or split-up under Section 355 of the Code (or any
successor provision of the Code); or (2) any cash dividend (including extraordinary cash dividends), appropriate adjustments in the
number of shares available for grant and in any outstanding Awards, including adjustments in the size of the Award and in the
exercise price per share of Stock Options and Stock Appreciation Rights, shall be made by the Plan Committee to give effect to such
equity restructuring to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the
Plan. No such adjustment shall be required to reflect the events described in clauses (1) and (2) above, or any other change in
capitalization that does not constitute an equity restructuring, however such adjustment may be made if the Plan Committee
affirmatively determines, in its discretion, that such an adjustment is appropriate.
7.4
MAXIMUM PER PARTICIPANT AWARD. During any consecutive thirty-six month period, no Participant may
receive Awards that, in the aggregate, could result in that Participant receiving, earning or acquiring, subject to the adjustments
described in Section 7.3:
(a)
(b)

Stock Options and Stock Appreciation Rights for, in the aggregate, more than 4,000,000 shares of Common Stock;
Performance Shares, Restricted Stock and Restricted Stock Units for, in the aggregate, more than 700,000 shares of
Common Stock;
18

(c)
(d)

A number of Dividend Equivalents greater than the number of shares of Common Stock the Participant could
receive, earn or acquire in connection with the related stock-based Awards granted to the Participant; and
Performance Units with a value exceeding $15,000,000.

In addition, during any consecutive thirty-six month period, no Participant who is a non-employee director may receive Awards that,
in the aggregate, could result in that Participant receiving, earning or acquiring, subject to the adjustments described in Section 7.3,
more than 75,000 shares of Common Stock. For purposes of applying the limits described in this Section 7.4, if Awards subject to the
same limit are granted in tandem, so that only one of the Awards may actually be exercised, only one of the Awards shall be counted.
ARTICLE VIII
ADMINISTRATION
8.1
PLAN COMMITTEE. The Plan will be administered by a committee of two or more members of the Compensation
Committee of the Board who are appointed from time to time by the Board and who are outside, independent Board members who, in
the judgment of the Board, are qualified to administer the Plan as contemplated by (a) Rule 16b-3 of the Securities and Exchange Act
of 1934 (or any successor rule), (b) Section 162(m) of the Code, as amended, and the regulations thereunder (or any successor Section
and regulations), and (c) any rules and regulations of a stock exchange on which Common Stock is traded. Any member of the
committee administering the Plan who does not satisfy or ceases to satisfy the qualifications set out in the preceding sentence may
recuse himself or herself from any vote or other action taken by such committee. The Board may, at any time and in its complete
discretion, remove any member of such committee and may fill any vacancy on such committee.
8.2
POWERS. The Plan Committee shall have and exercise all of the powers and responsibilities granted expressly or by
implication to it by the provisions of the Plan. Subject to and as limited by such provisions, the Plan Committee may from time to time
enact, amend and rescind such rules, regulations and procedures with respect to the administration of the Plan as it deems appropriate
or convenient.
8.3
INTERPRETATION. All questions arising under the Plan, any Award agreement, or any rule, regulation or
procedure adopted by the Plan Committee shall be determined by the Plan Committee, and its determination thereof shall be
conclusive and binding upon all parties.
8.4
COMMITTEE PROCEDURE. Any action required or permitted to be taken by the Plan Committee under the Plan
shall require the affirmative vote of a majority of a quorum of the members of the Plan Committee. A majority of all members of the
Plan Committee shall constitute a "quorum" for Plan Committee business. The Plan Committee may act by written determination
instead of by affirmative vote at a
19

meeting, provided that any written determination shall be signed by all members of the Plan Committee, and any such written
determination shall be as fully effective as a majority vote of a quorum at a meeting.
8.5
DELEGATION. The Plan Committee may delegate all or any part of its authority under the Plan to a subcommittee
of directors and/or officers of the Company for purposes of determining and administering Awards granted to persons who are not
then subject to the reporting requirements of Section 16 of the Exchange Act.
ARTICLE IX
REDUCTION IN AWARDS
9.1
WHEN APPLICABLE. Anything in this Plan to the contrary notwithstanding, the provisions of this Article IX shall
apply to a Participant if an independent auditor selected by the Plan Committee (the "Auditor") determines that each of (a) and (b)
below are applicable.
(a)

Payments or distributions hereunder, determined without application of this Article IX, either alone or together with
other payments in the nature of compensation to the Participant which are contingent on a change in the ownership
or effective control of the Company, or in the ownership of a substantial portion of the assets of the Company, or
otherwise (but after any elimination or reduction of such payments under the terms of the Company's Income
Continuance Policy Statement or SMG Income Continuance Policy Statement), would result in any portion of the
payments hereunder being subject to an excise tax on excess parachute payments imposed under Section 4999 of the
Code.

(b)

The excise tax imposed on the Participant under Section 4999 of the Code on excess parachute payments, from
whatever source, would result in a lesser net aggregate present value of payments and distributions to the Participant
(after subtraction of the excise tax) than if payments and distributions to the Participant were reduced to the
maximum amount that could be made without incurring the excise tax.

9.2
REDUCED AMOUNT. Under this Article IX the payments and distributions under this Plan shall be reduced (but
not below zero) so that the present value of such payments and distributions shall equal the Reduced Amount. The "Reduced Amount"
(which may be zero) shall be an amount expressed in present value which maximizes the aggregate present value of payments and
distributions under this Plan which can be made without causing any such payment to be subject to the excise tax under Section 4999
of the Code. The determinations and reductions under this Section 9.2 shall be made after eliminations or reductions, if any, have been
made under the
20

Company's Income Continuance Policy Statement or SMG Income Continuance Policy Statement.
9.3
PROCEDURE. If the Auditor determines that this Article IX is applicable to a Participant, it shall so advise the Plan
Committee in writing. The Plan Committee shall then promptly give the Participant notice to that effect together with a copy of the
detailed calculation supporting such determination which shall include a statement of the Reduced Amount. The Participant may then
elect, in his/her sole discretion, which and how much of the Awards otherwise awarded under this Plan shall be eliminated or reduced
(as long as after such election the aggregate present value of the remaining Awards under this Plan equals the Reduced Amount), and
shall advise the Plan Committee in writing of his/her election within ten days of his/her receipt of notice. If no such election is made
by the Participant within such ten-day period, the Plan Committee may elect which and how much of the Awards shall be eliminated
or reduced (as long as after such election their aggregate present value equals the Reduced Amount) and shall notify the Participant
promptly of such election. For purposes of this Article IX, present value shall be determined in accordance with Section 280G of the
Code. All the foregoing determinations made by the Auditor under this Article IX shall be made as promptly as practicable after it is
determined that excess parachute payments (as defined in Section 280G of the Code) will be made to the Participant if an elimination
or reduction is not made. As promptly as practicable following the election hereunder, the Company shall provide to or for the benefit
of the Participant such amounts and shares as are then due to the Participant under this Plan and shall promptly provide to or for the
benefit of the Participant in the future such amounts and shares as become due to the Participant under this Plan.
9.4
CORRECTIONS. As a result of the uncertainty in the application of Section 280G of the Code at the time of the
initial determination by the Auditor hereunder, it is possible that payments or distributions under this Plan will have been made which
should not have been made ("Overpayment") or that additional payments or distributions which will have not been made could have
been made ("Underpayment"), in each case, consistent with the calculation of the Reduced Amount hereunder. In the event that the
Auditor, based upon the assertion of a deficiency by the Internal Revenue Service against the Company or the Participant which the
Auditor believes has a high probability of success, determines that an Overpayment has been made, any such Overpayment shall be
treated for all purposes as a loan to the Participant which the Participant shall repay together with interest at the applicable Federal rate
provided for in Section 7872(f)(2) of the Code; provided, however, that no amount shall be payable by the Participant if and to the
extent such payment would not reduce the amount which is subject to the excise tax under Section 4999 of the Code. In the event that
the Auditor, based upon controlling precedent, determines that an Underpayment has occurred, any such Underpayment shall be
promptly paid to or for the benefit of the Participant together with interest at the applicable Federal rate provided for in Section
7872(f)(2)(A) of the Code.
21

9.5
NON-CASH BENEFITS. In making its determination under this Article IX, the value of any non-cash benefit shall
be determined by the Auditor in accordance with the principles of Section 280G(d)(3) of the Code.
9.6
DETERMINATIONS BINDING. All determinations made by the Auditor under this Article IX shall be binding
upon the Company, the Plan Committee and the Participant.
ARTICLE X
GENERAL PROVISIONS
10.1
AMENDMENT OR TERMINATION OF PLAN. The Board may at any time amend, suspend, discontinue or
terminate the Plan (including the making of any necessary enabling, conforming and procedural amendments to the Plan to authorize
and implement the granting of Incentive Stock Options or other income tax preferred stock options which may be authorized by
federal law subsequent to the effective date of this Plan); provided, however, that no amendment by the Board shall, without further
approval of the shareholders of the Company, increase the total number of shares of Common Stock which may be made subject to the
Plan, except as provided at Section 7.3 hereof, or make any other change for which shareholder approval is required by law or under
the applicable rules of the New York Stock Exchange. No action taken pursuant to this Section 10.1 of the Plan shall, without the
consent of the Participant, adversely affect any Awards which have been previously granted to a Participant except pursuant to Section
10.5 of the Plan.
10.2
NON-ALIENATION OF RIGHTS AND BENEFITS. Except as expressly provided herein, no right or benefit under
the Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge and any attempt to anticipate,
alienate, sell, assign, pledge, encumber or charge the same shall be void. No right or benefit hereunder shall in any manner be liable
for or subject to the debts, contracts, liabilities or torts of the person entitled to such right or benefit. If any Participant or beneficiary
hereunder should become bankrupt or attempt to anticipate, alienate, sell, assign, pledge, encumber or charge any right or benefit
hereunder (other than as expressly provided herein), then such right or benefit shall, in the sole discretion of the Plan Committee,
cease and in such event the Company may hold or apply the same or any or no part thereof for the benefit of the Participant or
beneficiary, his/her spouse, children or other dependents or any of them in any such manner and in such proportion as the Plan
Committee in its sole discretion may deem proper.
10.3
NO RIGHTS AS SHAREHOLDER. The granting of Awards under the Plan shall not entitle a Participant or any
other person succeeding to his/her rights, to any dividend, voting or other right as a shareholder of the Company unless and until the
issuance of a stock certificate to the Participant or such other person pursuant to the provisions of the Plan and then only subsequent to
the date of issuance thereof.
22

10.4
LIMITATION OF LIABILITY OR OBLIGATION OF THE COMPANY. As illustrative only of the limitations of
liability or obligation of the Company and not intended to be exhaustive thereof, nothing in the Plan shall be construed:
(a)

to give any employee of the Company any right to be granted any Award other than at the sole discretion of the Plan
Committee;

(b)

to give any Participant any rights whatsoever with respect to shares of Common Stock except as specifically
provided in the Plan;

(c)

to limit in any way the right of the Company or any Subsidiary to terminate, change or modify, with or without
cause, the employment of any Participant at any time; or

(d)

to be evidence of any agreement or understanding, express or implied, that the Company or any Subsidiary will
employ any Participant in any particular position at any particular rate of compensation or for any particular period
of time.

Payments and other benefits received by a Participant under an Award shall not be deemed part of a Participant's regular, recurring
compensation for purposes of any termination, indemnity or severance pay laws and shall not be included in, nor have any effect on,
the determination of benefits under any other employee benefit plan, contract or similar arrangement provided by the Company or any
Subsidiary, unless expressly so provided by such other plan, contract or arrangement or the Plan Committee determines that an Award
or portion of an Award should be included to reflect competitive compensation practices or to recognize that an Award has been made
in lieu of a portion of competitive cash compensation.
10.5
GOVERNMENT REGULATIONS. Notwithstanding any other provisions of the Plan seemingly to the contrary, the
obligation of the Company with respect to Awards granted under the Plan shall at all times be subject to any and all applicable laws,
rules and regulations and such approvals by any government agencies as may be required or deemed by the Board or Plan Committee
as reasonably necessary or appropriate for the protection of the Company.
In connection with any sale, issuance or transfer hereunder, the Participant acquiring the shares shall, if requested by the
Company, give assurances satisfactory to counsel of the Company that the shares are being acquired for investment and not with a
view to resale or distribution thereof and assurances in respect of such other matters as the Company may deem desirable to assure
compliance with all applicable legal requirements.
10.6
NON-EXCLUSIVITY OF THE PLAN. Neither the adoption of the Plan by the Board nor the submission of the Plan
to shareholders of the Company for approval shall be construed as creating any limitations on the power or authority of the Board to
23

adopt such other or additional incentive or other compensation arrangements of whatever nature as the Board may deem necessary or
desirable or preclude or limit the continuation of any other plan, practice or arrangement for the payment of compensation or fringe
benefits to employees generally, or to any class or group of employees, which the Company or any Subsidiary now has lawfully put
into effect, including, without limitation, any retirement, pension, savings, profit sharing or stock purchase plan, insurance, death and
disability benefits, and executive short term incentive plans.
10.7
REORGANIZATION. In case the Company is merged or consolidated with another corporation, or in case the
property or stock of the Company is acquired by another corporation, or in case of a separation, reorganization or liquidation of the
Company (for purposes hereof any such occurrence being referred to as an "Event"), the Plan Committee or a comparable committee
of any corporation assuming the obligations of the Company hereunder, shall either:
(a)

make appropriate provision for the protection of any outstanding stock-based Awards granted thereunder by the
substitution on an equitable basis of appropriate stock, stock units, stock options or stock appreciation rights of the
Company, or of the merged, consolidated or otherwise reorganized corporation which will be issuable in respect to
the Awards. Stock to be issued pursuant to such substitute awards shall be limited so that the excess of the aggregate
fair market value of the shares subject to such substitute awards immediately after such substitution over the
purchase price thereof (if any) is not more than the excess of the aggregate fair market value of the shares subject to
such substitute awards immediately before such substitution over the purchase price thereof (if any); or

(b)

upon written notice to the Participant, declare that all Performance Awards granted to the Participant are deemed
earned, that the Restriction Period of all Restricted Stock and Restricted Stock Units has been eliminated and that all
outstanding Stock Options and Stock Appreciation Rights shall accelerate and become exercisable in full but that all
outstanding Stock Options and Stock Appreciation Rights, whether or not exercisable prior to such acceleration,
must be exercised within the period of time set forth in such notice or they will terminate. In connection with any
declaration pursuant to this Section 10.7(b), the Plan Committee may, but shall not be obligated to, cause a cash
payment to be made to each Participant who holds a Stock Option or Stock Appreciation Right that is terminated in
an amount equal to the product obtained by multiplying (x) the amount (if any) by which the Event Proceeds Per
Share (as hereinafter defined) exceeds the exercise price per share covered by such Stock Option times (y) the
number of shares of Common Stock covered by such Stock Option or Stock Appreciation Right. For purposes of
this Section 10.7(b), "Event Proceeds Per Share" shall mean the cash plus the fair market value, as determined in
good faith by the Plan Committee, of the non-cash
24

consideration to be received per share by the shareholders of the Company upon the occurrence of the Event.
10.8
WITHHOLDING TAXES, ETC. All distributions under the Plan shall be subject to any required withholding taxes
and other withholdings and, in case of distributions in Common Stock, the Participant or other recipient may, as a condition precedent
to the delivery of Common Stock, be required to pay to his/her participating employer the excess, if any, of the amount of required
withholding over the withholdings, if any, from any distributions in cash under the Plan. All or a portion of such payment may, in the
discretion of the Plan Committee and upon the election of the Participant, be made (a) by withholding from shares that would
otherwise be delivered to the Participant a number of shares sufficient to satisfy the remaining required tax withholding or (b) by
tendering (either actually or by attestation) owned and unencumbered shares of Common Stock acceptable to the Plan Committee and
having a Fair Market Value on the date of tender equal to or less than the remaining required tax withholding. No distribution under
the Plan shall be made in fractional shares of Common Stock, but the proportional market value thereof shall be paid in cash.
10.9
GENERAL RESTRICTION. Each Award shall be subject to the requirement that, if at any time the Board shall
determine, in its discretion, that the listing, registration or qualification of the shares subject to such option and/or right upon any
securities exchange or under any state or federal law, or the consent or approval of any government regulatory body, is necessary or
desirable as a condition of, or in connection with the granting of such Award or the issue or purchase of shares respectively
thereunder, such Award may not be exercised in whole or in part unless such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable to the Board.
10.10 USE OF PROCEEDS. The proceeds derived by the Company from the sale of the stock pursuant to Awards granted
under the Plan shall constitute general funds of the Company.
10.11 PRIOR PLANS. Notwithstanding the adoption of this 2007 Restatement of the Plan by the Board, the Company's
Executive Long Term Incentive Plan of 1981 and the Director Stock Option Plan of 1995, as the same have been amended from time
to time (the "Prior Plans"), shall remain in effect, and all grants and awards heretofore made under the Prior Plans shall be governed
by the terms of the Prior Plans. The Plan Committee shall not, however, make any additional grants pursuant to the Prior Plans, nor
shall it grant any additional Awards on or after the Effective Date that are subject to the terms and conditions of the Plan in effect prior
to the Effective Date.
10.12 DURATION OF PLAN. This Plan shall remain in effect until the earliest of the following events occurs: (a)
distribution of all shares of Common Stock subject to the Plan, (b) termination of this Plan pursuant to Section 10.1 hereof, or (c) the
tenth anniversary of the Effective Date.
25

10.13 SEVERABILITY. In the event any provision of this Plan shall be held to be illegal or invalid for any reason, the
illegality or invalidity shall not affect the remaining parts of this Plan, and this Plan shall be construed and enforced as if the illegal or
invalid provision had not been included.
10.14 GOVERNING LAW. To the extent that federal laws do not otherwise control, this Plan and all determinations made
and actions taken pursuant to this Plan shall be governed by the laws of Minnesota and construed accordingly.
10.15 HEADINGS. The headings of the Articles and their subparts in this Plan are for convenience of reading only and are
not meant to be of substantive significance and shall not add to or detract from the meaning of such Article or subpart to which it
refers.
10.16 STOCK CERTIFICATES. Notwithstanding anything in the Plan to the contrary, to the extent the Plan provides for
the issuance of stock certificates to reflect the issuance of shares of Common Stock or Restricted Stock, the issuance may be effected
on a non-certificated basis, to the extent not prohibited by applicable law or the applicable rules of any stock exchange on which the
Common Stock is traded.
26

EXHIBIT (10)S
TARGET CORPORATION
DEFERRED COMPENSATION TRUST AGREEMENT
(As Amended and Restated Effective January 1, 2005)
This Agreement is made, effective as of the 1st day of January, 2005, by and between TARGET CORPORATION, a
Minnesota corporation ("Company") and STATE STREET BANK AND TRUST COMPANY (Trustee');
WHEREAS, Company and certain of its wholly-owned subsidiaries have adopted the non-qualified deferred
compensation plans and certain other programs listed in Appendix A (collectively, the "Plans" and separately, a "Plan");
WHEREAS, Company, each wholly-owned subsidiary of Company which participates in a Plan and which has
indicated to the Trustee in writing its acceptance of this Trust (or may so indicate in the future), and any corporation which succeeds to
the position of an employer hereunder by reason of merger or consolidation, are referred to collectively herein as "Employers" and
individually as an "Employer";
WHEREAS, the Employers have incurred or expect to incur liability under the terms of the Plans with respect to the
individuals participating in such Plans;
WHEREAS, Company has previously established a trust (hereinafter called "Trust") to enable the Employers to
contribute to the Trust assets that shall be held therein, subject to the claims of each Employer's creditors in the event of an Employer's
Insolvency, as herein defined, until paid to Plan participants and their beneficiaries in such manner and at such times as specified in
the Plans;
WHEREAS, it is the intention of the parties that this Trust shall constitute an unfunded arrangement and shall not
affect the status of any Plan as an unfunded plan maintained for the purpose of providing deferred compensation for a select group of
management or highly compensated employees for purposes of Title I of the Employee Retirement Income Security Act of 1974
("ERISA");
WHEREAS, it is the intention of Company to make contributions to the Trust and to cause contributions to be made
to the Trust by other Employers to provide a source of funds to assist in the meeting of the Employers' liabilities under the Plans;
WHEREAS, the parties have agreed to amend and restate the Trust Agreement in its entirety to read as set forth
herein;
NOW, THEREFORE, the parties do hereby amend and restate the Trust and agree that the Trust shall hereafter be
comprised, held and disposed of as follows:

Section 1. Maintenance of Trust.

(a)

Company has previously deposited with Trustee in trust certain amounts which currently constitute the principal of
the Trust and shall continue to be held, administered and disposed of by Trustee as provided in this Trust Agreement
along with such additional contributions as may be deposited with Trustee in the future.

(b)

The Trust hereby established shall be irrevocable, except to the extent provided in Section 4.

(c)

The Trust is intended to be a grantor trust, of which each Employer is the grantor with respect to the portion
attributable to its contributions, within the meaning of subpart E, part I, subchapter J, chapter 1, subtitle A of the
Internal Revenue Code of 1986, as amended, and shall be construed accordingly. The Company or another
Employer shall pay any and all federal, state or local taxes on the Trust, or any part thereof, and on the income of
the Trust.

(d)

The principal of the Trust, and any earnings thereon shall be held separate and apart from other funds of the
Employers and shall be used exclusively for the uses and purposes of Plan participants and their beneficiaries and
general creditors as herein set forth. Plan participants and their beneficiaries shall have no preferred claim on, or any
beneficial ownership interest in, any assets of the Trust. Any rights created under the Plans and this Trust
Agreement shall be unsecured contractual rights of Plan participants and their beneficiaries against the Employers.
Any assets held by the Trust which are attributable to the contributions made by a particular Employer will be
subject to the claims of that Employer's general creditors under federal and state law in the event of Insolvency, as
defined in Section 3(a) herein.

(e)

Company, in its sole discretion, may at any time, or from time to time, make (or cause other Employers to make)
additional deposits of cash or other eligible property in trust with Trustee to augment the principal to be held,
administered and disposed of by Trustee as provided in this Trust Agreement. Neither Trustee nor any Plan
participant or beneficiary shall have any right to compel such additional deposits.

(f)

The following provisions shall apply in the event of an actual or potential Change of Control as defined in Section
13(d):
(1)

In the event there is scheduled a duly called shareholders meeting of Company with respect to which any
person or entity has filed a definitive proxy statement with the Securities and Exchange Commission
soliciting proxies to effect at such meeting a Change of Control of the nature described in Section 13(d)(1) (a
"Change of Board Control"), each Employer shall make contributions to the Trust, no sooner than three
business days or later than one business day prior to the scheduled date of the meeting, of cash or other
eligible property which, together with its previous contributions to the Trust, have a value equal to the
amount required under paragraph (5), unless the Executive Committee of the Board of Directors of Company
(hereinafter, the "Executive Committee")

determines in its sole discretion, not later than three business days prior to the scheduled date of the meeting,
that the Trust shall not be funded. However, no such contribution shall be made if, prior to the time the
Employer makes any such contribution, the person or entity filing the definitive proxy statement has entered
into a settlement agreement or has otherwise informed Company in writing that it will not continue its efforts
to effect a Change of Board Control at such meeting.
(2)

In the event a Change of Control that does not constitute a Change of Board Control occurs prior to any
Change of Board Control, each Employer, as promptly as practicable, but not sooner than 20 days (subject to
extension as hereinafter provided) and not later than 30 days (subject to extension as hereinafter provided)
after a public announcement of such a Change in Control (the "Contribution Period"), shall make
contributions to the Trust of cash or other eligible property which, together with its previous contributions to
the Trust, have a value equal to the amount required under paragraph (5), unless the Executive Committee
determines, in its sole discretion, that funding of the Trust shall not occur and provides a written notice to the
Employer of that determination prior to the earlier of (i) the time the Employer makes the contribution or (ii)
a Change of Board Control. At any time prior to the commencement of the Contribution Period (or any
extension of such commencement date made in accordance with this sentence), the Executive Committee (if
no Change of Board Control shall have occurred), in its sole discretion, may extend the commencement date
and/or the duration of the Contribution Period (or any previous extension of either thereof) by written notice
to the Employers. In the event a Change of Board Control occurs before contributions are made under this
paragraph (2), paragraph (1) shall apply to such Change of Board Control.

(3)

Any written notice from the Executive Committee relating to a contribution pursuant to paragraph (1) or (2)
may be modified or withdrawn by a later dated written notice of the Executive Committee delivered at any
time or from time to time prior to the earlier of (i) the time such contribution is made or (ii) the end of the last
day on which the original notice could have been given in accordance with the provisions of paragraph (1) or
(2).

(4)

Neither Trustee nor any Plan participant or beneficiary shall have any right to compel any contributions under
this subsection (f) or to compel any Employer or the Executive Committee to take any action under this
subsection. In deciding whether or not to take any action authorized under this subsection (f), the Executive
Committee shall have no fiduciary or other duty to participants and beneficiaries.

(5)

If the Trust is to be funded pursuant to paragraph (1) or (2), the amount of each Employer's contribution shall
be 120% of the amount determined by the General Counsel and the Chief Financial Officer of the Company,
in their sole discretion, to be sufficient to pay the present value of the Employer's total

projected liability under the Plans with respect to participants employed or formerly employed by that
Employer or their beneficiaries, plus two percent of such amount as a reserve for payment of Trustee fees and
expenses of the Trust. The determination of an Employer's "total projected liability" under a Plan for
purposes of this paragraph shall be made utilizing the definition specified in Appendix B applicable to the
Plan, if any, and otherwise by utilizing the assumptions prescribed in Section 13(e).
(6)

On or before the date of a contribution made pursuant to this subsection (f), each Employer shall deliver to
the Trustee a schedule showing its best estimate of the aggregate amount of benefits payable by it under each
Plan.

(g)

In the event of a final and unappealable determination by a court of competent jurisdiction or the U. S. Department
of Labor that one or more Plans do not satisfy the requirements for being maintained primarily for the purpose of
providing deferred compensation for a select group of management or highly compensated employees for purposes
of Title I of ERISA, Trustee shall immediately segregate the assets attributable to such Plan or Plans into a separate
Trust. Said separate Trust shall continue to be held and administered by Trustee in accordance with this Agreement
until the provisions applicable to the separate Trust are amended pursuant to Section 12.

(h)

For purposes of this Trust, "eligible property" means property in one or more of the following categories:
(1)

Cash.

(2)

Treasury or other government agency securities not exceeding one year in maturity.

(3)

Money market securities.

(4)

An ownership interest in the Target Corporation Credit Card Master Trust, which may be evidenced by,
among other things, a participation or certificates.

(5)

In the event that the total of the property available under paragraphs (1) through (4) is not sufficient to
provide the entire contribution to be made by an Employer under subsection (f), "eligible property" shall also
include unencumbered real property owned by the Employer with a fair market value that is at least equal to
the additional amount necessary to provide the entire contribution that is to be made.

The fair market value of the property to be contributed under paragraphs (2) through (5) of this subsection shall be
determined by the General Counsel and the Chief Financial Officer of the Company in their sole discretion, taking
into account any reduction in that value that could result from the lack of an orderly liquidation of a particular item
or items of property.

Section 2. Payments to Plan Participants and Their Beneficiaries.

(a)

As soon as reasonably possible after a Change of Control occurs that results in funding of the Trust under Section
1(f) (provided that the funding has not been returned to the Employers pursuant to Section 4), Company's Director
of Executive Compensation (or his or her successor) shall deliver to Trustee a Payment Schedule showing the
amount payable to each Plan participant or beneficiary under each Plan. Except as otherwise provided in subsection
(d), Trustee shall make payments to the Plan participants and their beneficiaries in accordance with such Payment
Schedule, and may rely conclusively on such Payment Schedule in making payments. Trustee shall make provision
for the reporting and withholding of any federal, state or local taxes that may be required to be withheld with respect
to the payment of benefits pursuant to the terms of the Plans and shall pay amounts withheld to the appropriate
taxing authorities or determine that such amounts have been reported, withheld and paid by the Employers. Trustee
may rely on instructions from Company as to any required withholding and shall be fully protected hereunder in
relying on such instructions. For purposes of the preceding sentence, a failure by Company to provide any
instructions as to required withholding may be deemed by Trustee to be an instruction by Company that no
withholding is required.

(b)

Prior to a Change of Control described in subsection (a), the entitlement of a Plan participant or his or her
beneficiaries to benefits under the Plans shall be determined by Company or such party as it shall designate under
the Plans, and any claim for such benefits shall be considered and reviewed under the procedures set out in the
Plans. Company shall make (or cause other Employers to make) payment of benefits directly to Plan participants or
their beneficiaries as they become due under the terms of the Plans, and Trustee shall have no obligation to make
such payments prior to such Change of Control.

(c)

If a Change of Control occurs that results in funding of the Trust under Section 1(f), notwithstanding any provision
of a Plan to the contrary, the entire benefit to which a Plan participant or beneficiary is entitled from the Trust shall
be distributed in a lump sum as soon as administratively feasible following the date that amount is contributed to the
Trust pursuant to Section 1(f). However, this subsection shall not apply if the funding is returned from the Trust to
the Employers pursuant to Section 4.

(d)

In the event of a dispute over a payment under subsection (a) following a Change of Control, a participant or
beneficiary who claims to be entitled to a larger payment from the Plans than shown in the Payment Schedule may
submit a written claim for payment to Trustee, which shall be processed as follows:
(1)

Trustee shall give notice of the claim to Company. If Trustee receives no notice of response from Company
within 30 days after the date Company is given the notice of claim, Trustee shall pay the participant or
beneficiary the amount claimed from the assets in the Trust held on behalf of such participant. If a notice of
response is received within such 30 days, Trustee shall consider the claim,

including Company's response. If the merits of the claim depend on compensation, service or other data in the
possession of Company and such information is not provided to Trustee by Company, Trustee may rely upon
information provided by the participant or beneficiary.

(e)

(2)

Trustee shall give notice to the participant or beneficiary and Company of its decision on the claim, which
shall be made within any period applicable to the particular Plan. The participant or beneficiary shall then
pursue the appeals procedure for the Plan, if any, if he or she wishes to contest Trustee's decision. Either the
participant or beneficiary (after any applicable claims procedure has been exhausted) or Company may
challenge Trustee's decision by filing suit in a court of competent jurisdiction. If no such suit is filed within
60 days after notice of Trustee's decision (and exhaustion of any applicable appeals procedure provided for a
Plan), the decision shall become final and binding on all parties. If the decision is to grant the claim, Trustee
shall make payment to the participant or beneficiary of the appropriate amount; provided, however, that the
amount of any distribution from the Trust shall not exceed the total amount of assets held in the Trust on
behalf of such participant.

(3)

Trustee may decline to decide a claim and may file suit to have the matter resolved by a court of competent
jurisdiction. All of Trustee's expenses in the court proceeding, including attorneys' fees, shall be allowed as
administrative expenses of the Trust.

(4)

In the event of a dispute to be resolved under this subsection (d), Trustee may retain a third party to review
the calculations and the payment amounts and advise Trustee as to the correct amount to be paid. All
expenses of such a third party shall be allowed as administrative expenses of the Trust.

If payment is made to a participant or beneficiary under this Section 2, the obligation of the Employers under the
terms of the applicable Plan or Plans shall be extinguished to the extent of the amount paid. Trustee has no
obligation to make payments to a participant or beneficiary from the Trust under this Section 2 except to the extent
amounts have been contributed to the Trust with respect to such person.
Section 3. Trustee Responsibility Regarding Payments When Employer is Insolvent.

(a)

Trustee shall cease payment of benefits to Plan participants and their beneficiaries attributable to a particular
Employer if the Employer is Insolvent. An Employer shall be considered "Insolvent" for purposes of this Trust
Agreement if (i) it is unable to pay its debts as they become due, or (ii) it is subject to a pending proceeding as a
debtor under the United States Bankruptcy Code.

(b)

At all times during the continuance of this Trust, as provided in Section 1(d) hereof, the principal and income of the
Trust attributable to a particular Employer shall be subject

to claims of general creditors of that Employer under federal and state law as set forth below.

(c)

(1)

The Board of Directors and the Chief Executive Officer of Company shall have the duty to certify to Trustee
in writing of an Employer's Insolvency. If a person claiming to be a creditor of an Employer alleges in
writing to Trustee that an Employer has become Insolvent, Trustee shall determine whether an Employer is
Insolvent and, pending such determination, Trustee shall discontinue payment of benefits to its Plan
participants or their beneficiaries.

(2)

Unless Trustee has actual knowledge of an Employer's Insolvency, or has received notice from Company or a
person claiming to be a creditor alleging that an Employer is Insolvent, Trustee shall have no duty to inquire
whether an Employer is Insolvent. Trustee may in all events rely on such evidence concerning each
Employer's solvency as may be furnished to Trustee and that provides Trustee with a reasonable basis for
making a determination concerning solvency.

(3)

If at any time Trustee has determined that an Employer is Insolvent, Trustee shall discontinue payments to
Plan participants or their beneficiaries and shall hold the assets of the Trust attributable to that Employer for
the benefit of the Employer's general creditors. Nothing in this Trust Agreement shall in any way diminish
any rights of Plan participants or their beneficiaries to pursue their rights as general creditors of Company
with respect to benefits due under the Plans or otherwise.

(4)

Trustee shall resume the payment of benefits to Plan participants or their beneficiaries in accordance with
Section 2 of this Trust Agreement only after Trustee has determined that an Employer is not Insolvent (or is
no longer Insolvent).

Provided that there are sufficient assets, if Trustee discontinues the payment of benefits from the Trust pursuant to
Section 3(b) hereof and subsequently resumes such payments, the first payment following such discontinuance shall
include the aggregate amount of all payments due to the affected Plan participants or their beneficiaries under the
terms of the Plans for the period of such discontinuance, less the aggregate amount of any payments made to Plan
participants or their beneficiaries by Company or another Employer in lieu of the payments provided for hereunder
during any such period of discontinuance.
Section 4. Payments to Employers.

Except as provided in Section 3 or this Section, Company shall have no right or power to direct Trustee to return to Company
or another Employer or to divert to others any of the Trust assets before all payments of benefits have been made to Plan participants
and their beneficiaries pursuant to the terms of the Plans and all other obligations of the Trust, including fees and expenses of Trustee,
have been paid. Notwithstanding the foregoing sentence or anything else in this Trust Agreement to the contrary, if any Employer is
required to contribute assets to the Trust in

accordance with Section 1(f), Trustee shall return such assets plus the earnings attributable to the assets to the Employer upon receipt
of notification from the Executive Committee of the Board of Directors of Company that it has determined that the anticipated Change
of Control will not occur and determination by Trustee that a Change of Control has not in fact occurred.
Section 5. Investment Authority.
(a)

In no event may Trustee invest in assets other than eligible property as defined in Section 1(h). All rights associated
with assets of the Trust shall be exercised by Trustee or the person designated by Trustee, and shall in no event be
exercisable by or rest with Plan participants.

(b)

Company shall have the right, at any time, and from time to time in its sole discretion, to substitute assets of equal
fair market value for any asset held by the Trust, provided that the substitute assets also qualify as eligible property
under Section 1(h)(1) (4).

(c)

Trustee shall hold, manage, invest and otherwise administer the Trust pursuant to the terms of this Agreement. The
Trustee shall be responsible only for contributions actually received by it hereunder. The amount of each
contribution made by the Employers to the Trust shall be determined in the sole discretion of the Executive
Committee or other persons allocated that responsibility herein, and Trustee shall have no duty or responsibility
with respect thereto. Except as otherwise specifically agreed to by Trustee, Trustee shall not be responsible for the
administration of any Plan (including without limitation the determination of Plan participation rights of employees
of the Employers and the determination of benefits of the participants in any Plan). Except to the extent that Trustee
has otherwise specifically agreed in writing, Trustee shall not be responsible, directly or indirectly, for the
investment or reinvestment of the assets of the Trust, which investment and reinvestment shall be the sole
responsibility of Company; provided, however, that upon a Change of Control, Trustee shall become responsible for
the investment and reinvestment of the assets of the Trust as elsewhere provided herein. Prior to Change of Control,
and unless Company and Trustee have mutually agreed in a separate writing that Trustee shall have and exercise
investment discretion, in either case with respect to all or a portion of the assets of the Trust, Company shall have
complete discretion with respect to the investment of such assets at all times, and shall direct Trustee accordingly.
Section 6. Disposition of Income.

During the term of this Trust, all income received by the Trust, net of expenses and taxes, shall be accumulated and
reinvested in eligible property as defined in Section 1(h).
Section 7. Accounting by Trustee.
Trustee shall keep accurate and detailed records of all investments, receipts, disbursements, and other transactions
required to be made, including such specific records as shall be agreed upon in writing between Company and Trustee. Within 60 days
following the close of each calendar year and within 60 days after the removal or resignation of Trustee, Trustee shall

deliver to Company a written account of its administration of the Trust during such year or during the period from the close of the last
preceding year to the date of such removal or resignation, setting forth all investments, receipts, disbursements and other transactions
effected by it, including a description of all securities and investments purchased and sold with the cost or net proceeds of such
purchases or sales (accrued interest paid or receivable being shown separately), and showing all cash, securities and other property
held in the Trust at the end of such year or as of the date of such removal or resignation, as the case may be.
Section 8. Responsibility of Trustee.
(a)

Trustee shall act with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent
person acting in like capacity and familiar with such matters would use in the conduct of an enterprise of a like
character and with like aims, provided, however, that Trustee shall incur no liability to any person for any action
taken pursuant to a direction, request or approval given by Company which is contemplated by, and in conformity
with, the terms of the Plans or this Trust and is given in writing by Company, or for any failure to take any action in
the absence of such a direction, request or approval. The duties of Trustee shall only be those specifically
undertaken pursuant to this Agreement or by means of a separate written agreement. In the event of a dispute
between Company and a party, Trustee may apply to a court of competent jurisdiction to resolve the dispute.

(b)

The Employers and the Trust hereby indemnify Trustee against, and agree to hold Trustee harmless from, all
liabilities and claims (including reasonable attorneys' fees and expenses in defending against such liabilities and
claims) against Trustee as a result of any breach of fiduciary responsibility by a fiduciary other than Trustee or an
agent of Trustee (excluding any agent which is Company or an agent of Company), unless Trustee or such agent of
Trustee participates knowingly in such breach.

(c)

Trustee may consult with legal counsel (who may also be counsel for Company generally) with respect to any of its
duties or obligations hereunder.

(d)

Trustee may hire agents, accountants, actuaries, investment advisors, financial consultants or other professionals to
assist it in performing any of its duties or obligations hereunder.

(e)

Trustee shall have, without exclusion, all powers conferred on Trustees by applicable law, unless expressly
provided otherwise herein.

(f)

Notwithstanding any powers granted to Trustee pursuant to this Trust Agreement or pursuant to applicable law,
Trustee shall not have any power that could give this Trust the objective of carrying on a business and dividing the
gains therefrom, within the meaning of section 301.7701-2 of the Procedure and Administrative Regulations
promulgated pursuant to the Internal Revenue Code.

Section 9. Compensation and Expenses of Trustee.

The Employers shall pay all administrative and Trustee's fees and expenses in such proportions as Company
determines. Unless and until so paid, such expenses and compensation shall be a charge on the Trust and shall constitute a lien on the
Trust in favor of Trustee. All payments to, or reimbursements of, Trustee pursuant to this Trust Agreement may be made without
approval or direction of Company.
Section 10. Resignation and Removal of Trustee.
(a)

Trustee may resign at any time by written notice to Company, which shall be effective 60 days after receipt of such
notice unless Company and Trustee agree otherwise.

(b)

Trustee may be removed by Company on 60 days notice or upon shorter notice accepted by Trustee.

(c)

Notwithstanding subsection (b), upon a Change of Control, Trustee may not be removed by Company for three
years.

(d)

Upon resignation or removal of Trustee and appointment of a successor Trustee, all assets shall subsequently be
transferred to the successor Trustee. The transfer shall be completed within 60 days after receipt of notice of
resignation, removal or transfer, unless Company extends the time limit.

(e)

If Trustee resigns or is removed, a successor shall be appointed, in accordance with Section 11 hereof, by the
effective date of resignation or removal under paragraph(s) (a) or (b) of this section. If no such appointment has
been made, Trustee may apply to a court of competent jurisdiction for appointment of a successor or for
instructions. All expenses of Trustee in connection with the proceeding shall be allowed as administrative expenses
of the Trust.
Section 11. Appointment of Successor.

(a)

If Trustee resigns or is removed in accordance with Section 10(a) or (b) hereof, Company may appoint any national
bank or trust company with capital in excess of $50,000,000 as a successor to replace Trustee upon resignation or
removal. The appointment shall be effective when accepted in writing by the new Trustee, who shall have all of the
rights and powers of the former Trustee, including ownership rights in the Trust assets. The former Trustee shall
execute any instrument necessary or reasonably required by Company or the successor Trustee to evidence the
transfer.

(b)

The successor Trustee need not examine the records and acts of any prior Trustee and may retain or dispose of
existing Trust assets, subject to Sections 7 and 8 hereof. The successor Trustee shall not be responsible for and
Company shall indemnify and defend the successor Trustee from any claim or liability resulting from any action or
inaction of any prior Trustee or from any other past event, or any condition existing at the time it becomes successor
Trustee.

Section 12. Amendment or Termination.

(a)

This Trust Agreement may be amended by a written instrument executed by Trustee and Company. Notwithstanding
the foregoing, no such amendment shall conflict with the terms of the Plans or shall make the Trust revocable after
it has become irrevocable in accordance with Section 1(b) (subject to Sections 3 and 4).

(b)

The Trust shall not terminate until the date on which Plan participants and their beneficiaries are no longer entitled
to benefits pursuant to the terms of the Plans. Upon termination of the Trust, any assets remaining in the Trust shall
be returned to the Employers in such proportions as Company determines.

(c)

Upon written approval of participants or beneficiaries entitled to payment of benefits pursuant to the terms of the
Plans, Company may terminate this Trust prior to the time all benefit payments under the Plans have been made. All
assets in the Trust at termination shall be returned to the Employers in such proportions as Company determines.
Section 13. Miscellaneous.

(a)

Any provision of this Trust Agreement prohibited by law shall be ineffective to the extent of any such prohibition,
without invalidating the remaining provisions hereof.

(b)

Benefits payable to Plan participants and their beneficiaries under this Trust Agreement may not be anticipated,
assigned (either at law or in equity), alienated, pledged, encumbered or subjected to attachment, garnishment, levy,
execution or other legal or equitable process.

(c)

This Trust Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota, to
the extent such laws are not preempted by laws of the United States of America.

(d)

For purposes of this Trust, a "Change of Control" shall occur if:

(1)

(2)

a majority of the directors of Company shall be persons other than persons

(i)

for whose election proxies shall have been solicited by the Board of Directors of Company or

(ii)

who are then serving as directors appointed by the Board of Directors to fill vacancies on the Board of
Directors caused by death or resignation (but not by removal) or to fill newly-created directorships,

30% or more of the outstanding Voting Stock (as defined in Article IV of the Restated Articles of
Incorporation, as amended, of Company) of Company is acquired or beneficially owned (as defined in
Article IV of the Restated Articles

of Incorporation, as amended, of Company) by any person (as defined in Article IV of the Restated Articles
of Incorporation, as amended, of Company), or
(3)

(e)

the shareholders of Company approve a definitive agreement or plan to

(i)

merge or consolidate Company with or into another corporation (other than (1) a merger or
consolidation with a subsidiary of Company or (2) a merger in which Company is the surviving
corporation and either (A) no outstanding Voting Stock of Company (other than fractional shares) held
by shareholders immediately prior to the merger is converted into cash (except cash upon the exercise
by holders of Voting Stock of Company of statutory dissenters' rights), securities, or other property or
(B) all holders of outstanding Voting Stock of Company (other than fractional shares) immediately
prior to the merger (except those that exercise statutory dissenters' rights) have substantially the same
proportionate ownership of the Voting Stock of Company or its parent corporation immediately after
the merger),

(ii)

exchange, pursuant to a statutory exchange of shares of Voting Stock of Company held by

shareholders of Company immediately prior to the exchange, shares of one or more classes or series of
Voting Stock of Company for shares of another corporation or other securities, cash or other property,

(iii)

sell or otherwise dispose of all or substantially all of the assets of Company (in one transaction or a
series of transactions), or

(iv)

liquidate or dissolve Company.

For purposes of this Trust, the phrase "the present value of the Employer's total projected liability" shall be interpreted to
require the calculation of such present value to be done as follows:
(1)

By using the methods specified in Appendix B in the case of the Plans listed in that Appendix.

(2)

In the case of a Plan not listed in Appendix B, by discounting the projected cash flow of each future year by a rate
equal to the then current market yield for U.S. Treasury securities maturing in said future year. To the extent that
said calculation requires the use of an actuarial equivalent factor reflecting matters other than interest, said factor
shall be determined in accordance with the provisions then in effect of Section 417(e)(3)(ii)(I) of the Internal
Revenue Code of 1986, as amended, or any successor or substitute provisions of said Code or its replacement, or
if there are no such applicable provisions, the corresponding factor then being used to calculate immediate lump
sum distributions under the Target Corporation Employees' Retirement Plan or its successor.

(f)

The Company hereby represents and warrants to the Trustee that this Trust shall constitute an unfunded arrangement and
shall not affect the status of any Plan as an unfunded plan maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees for purposes of Title I of ERISA.
Section 14. Effective Date.

The effective date of this Trust Agreement shall be January 1, 2005. The original effective date of the Trust was
January 1, 1987.
IN WITNESS WHEREOF, the Company and the Trustee have caused this Agreement to be executed by their duly
authorized officers this
day of
, 2007.
COMPANY

By

/s/ Douglas A. Scovanner

Title Executive Vice President

and Chief Financial Officer
TRUSTEE
By
Title
By
Title

/s/ Kimberly Moynihan

Vice President

APPENDIX A
The following plans maintained by Company or any other Employer which has indicated in writing its acceptance of the
Trust to Trustee and Company are "Plans" covered by the Deferred Compensation Trust Agreement:

Target Corporation Deferred Compensation PlanSenior Management Group

Target Corporation Deferred Compensation PlanDirectors
Executive Deferred Compensation Plan
SMG Executive Deferred Compensation Plan
Director Executive Deferred Compensation Plan
Highly Compensated Capital Accumulation Plan
Supplemental Pension Plan I
Supplemental Pension Plan II
Supplemental Pension Plan III
Supplemental Pension Plan IV
Supplemental Pension Plan V
Excess Benefit Plan
Pilot Supplemental Pension
Board of Director Consulting Fee

In addition, the following programs are also "Plans", but solely with respect to individuals whose employment or directorship
with the Employers has terminated prior to the date a contribution is required under Section 1(f) due to a potential Change of Control:

Executive Survivor Benefit Plan

Income Continuance Policy
SMG Income Continuance Policy
Excess Long Term Disability Plan
Severance or Supplemental Payment Accruals

APPENDIX B
Definitions of Plan Liabilities
Reference Yield
The yield on Moody's AA Corporate Bond Index (rounded to the nearest .1%) as determined by Bloomberg on the day prior to the
funding of the Trust. If this yield information is no longer available from Bloomberg, an alternative provider of the information will be
chosen by the Chief Financial Officer.
Deferred Compensation Plan Senior Management Group and Directors
The present value of all payments expected to be made to participants and their spouses (or beneficiaries) based on the most recent
calculation of the value of participants' plan account balances (the "plan valuation"). In accordance with the plan document, expected
payments shall be based on (1) the participants' marital status, (2) participants' and their spouses' life expectancies at the time the
participants have scheduled to begin receiving payments, (3) the assumed retirement ages of participants and the time following
retirement that the participants have scheduled to begin receiving payments, (4) the assumed crediting rate on participants' account
balances, which is equal to the crediting rate as of the most recent plan valuation, and (5) the accumulated balances in participants'
accounts as of the latest plan valuation. The discount rate applied to these expected payments shall be the interest rate used to calculate
interest credited to participants' plan account balances during the current plan year less 600 basis points. Should the Trust be activated
after the date of the latest plan valuation (1) the total liability shall be increased by an amount equal to the total liability as of the latest
plan valuation times the discount rate times the number of days since the latest plan valuation divided by 365 and (2) the total liability
shall be reduced by the present value of any payments made to participants since the latest plan valuation.
Executive Deferred Compensation Plan
The total value of participants' balances as of the close of business on the day preceding the funding of the Trust.
Executive Deferred Compensation Plan Senior Management Group and Directors
The total value of participants' balances as of the close of business on the day preceding the funding of the Trust.
Supplemental Pension Plans I and IV
The difference in the present values of all pension annuities that (1) participants would earn excluding any deferred income, but not
taking into account IRS limits on qualified income, and that (2) participants would earn excluding any deferred income and taking into
account IRS qualified income limitations. The calculation of this liability is based on the annual actuarial factors applicable for
Supplemental Pension Plans I and IV respectively. Should the Trust be activated after the date of the latest plan valuation, the amount
of the total liability shall be increased by (1) an amount equal to the total liability as of the most recent plan valuation times the
discount rate used in that valuation divided by the number of days since the plan valuation was conducted divided by 365 and (2)
service credited since the latest annual actuarial valuation.

Supplemental Pension Plans II and V

The difference in the present values of the pension annuities that (1) participants would earn if the participants had not deferred any
income and (2) participants would earn excluding any deferred income, after taking into account any benefits due under Supplemental
Pension Plans I or IV. The calculation of this liability is based on the annual actuarial factors applicable for Supplemental Pension
Plans II and V respectively. Should the Trust be activated after the date of the latest plan valuation, the amount of the total liability
shall be increased by (1) an amount equal to the total liability as of the most recent plan valuation times the discount rate used in that
valuation divided by the number of days since the plan valuation was conducted divided by 365 and (2) service credited since the
latest annual actuarial valuation.
Supplemental Pension Plan III
The difference in the present values of the pension annuities that (1) participants would earn by adding 5 years to their actual ages (but
in no case will the participant's age be deemed to be greater than age 65) and (2) the benefits that these participants would earn
without such an age adjustment, after taking into account any benefits due under Supplemental Pension Plans I and II. The calculation
of this liability is based on the annual actuarial factors applicable for Supplemental Pension Plan III. Should the Trust be activated
after the date of the latest plan valuation, the amount of the total liability shall be increased by (1) an amount equal to the total liability
as of the most recent plan valuation times the discount rate used in that valuation divided by the number of days since the plan
valuation was conducted divided by 365 and (2) service credited since the latest annual actuarial valuation.
Pilot Supplemental Pension Plan
The present value of all annuity payments either currently committed to, or expected to be made to, participants between the ages of
55 and 65. The discount rate applied to the expected annuity payments shall be the discount rate used in the latest qualified pension
plan annual actuarial valuation.
Board of Director Consulting Fee
The present value of all consulting fees committed to members of the Board of Directors as of the date of the Trust's funding. The
discount rate applied to the committed consulting fees shall be the Reference Yield.
Executive Survivor Benefit Plan
The present value of all benefits expected to be paid to the surviving spouses of participants. Expected payments are calculated based
on (1) the existing pension benefit formula, applied to a Joint and 100% Survivor annuity, (2) expected growth in participants'
compensation until retirement, which is equal to the average assumed rate of compensation increase presented in the Company's
annual report pension footnote, (3) participants' marital status and age of their spouses, and (4) the assumed retirement age of
participants. For purposes of calculating the duration of expected annuity payments to surviving spouses, the differences in the
expected lives of participants and their spouses as of the date of the Trust's funding shall be used. The discount rate applied to the
expected annuity payments shall be the Reference Yield.

Income Continuance Policy (tenure-based)

The present value of all ICP (tenure-based) severance agreement payments committed to at the time of the Trust's funding. The
discount rate applied to these payments shall be the Reference Yield.
SMG Income Continuance Policy
The present value of all SMG ICP severance agreement payments committed to at the time of the Trust's funding. The discount rate
applied to the expected annuity payments shall be the Reference Yield.
Non-ICP Severance Accruals
The present value of all non-ICP severance agreement payments committed to at the time o the Trust's funding. The discount rate
applied to the expected annuity payments shall be the Reference Yield.
Excess Long-Term Disability Plan
The present value of all excess long-term disability payments committed to plan participants at the time of the Trust's funding,
assuming that those payments continue until the disabled participants reach the age of 65. The discount rate applied to these projected
payments shall be the Reference Yield.

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Exhibit 12

TARGET CORPORATION
Computations of Ratios of Earnings to Fixed Charges for each of the
Five Years in the Period Ended February 3, 2007

Fiscal Year Ended

(millions of dollars)

Feb. 3,
2007

Jan. 28,
2006

Ratio of Earnings to Fixed Charges:

Earnings:
Net earnings
Earnings from discontinued operations, net of taxes
Gain on disposal of discontinued operations, net of taxes
Provision for income taxes

$2,787

1,710

$2,408

1,452

$3,198
(75)
(1,238)
1,146

$1,809
(190)

984

$1,623
(247)

851

4,497

3,860

3,031

2,603

2,227

Fixed charges:
Interest expense
Interest portion of rental expense

646
88

532
84

607
85

569
68

618
48

Total fixed charges

Plus: Amortization of capitalized interest
Less: Capitalized interest

734
2
(49)

616

(42)

692

(18)

637

(8)

666

(13)

687

574

674

629

653

$5,184

$4,434

$3,705

$3,232

$2,880

7.06

7.21

5.35

5.07

4.33

Earnings from continuing operations before income taxes

Fixed charges in earnings

Earnings available for fixed charges
Ratio of earnings to fixed charges
Note: Computation is based on continuing operations.

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Exhibit 12

Jan. 29,
2005

Jan. 31,
2004

Feb. 1,
2003

Exhibit 21
Target Corporation
(A Minnesota Corporation)
List of Subsidiaries
(As of February 3, 2007)
AMC Dominican Republic, S.A. (Dominican Republic)
AMC El Salvador, S.A. (El Salvador)
AMC Guatemala Sociedad Anonima (Guatemala)
AMC Honduras, S.A. (Honduras)
AMC Nicaragua, S.A. (Nicaragua)
AMC(S) Pte., Ltd. (Singapore)
Amcrest Corporation (NY)
Amcrest France Sarl (France)
Associated Merchandising Corporation (NY)
Associated Merchandising Corporation GmBH (Germany)
Associated Merchandising Korea Corporation (Korea)
DBC, LLC (AK)
Dayton Credit Company (MN)
Dayton Development Company (MN)
Eighth Street Development Company (MN)
Glendale West, LLC (CA)
ITC Sales and Procurement, LLC (MN)
Red Tail LLC (DE)
STL of Nebraska, Inc. (MN)
SuperTarget Liquor of Missouri, Inc. (MN)
SuperTarget Liquor of Texas, Inc. (TX)
Target Bank (UT banking corporation)
Target Brands, Inc. (MN)
Target Bridges, Inc. (DE)
Target Capital Corporation (MN)
Target China Holdings Limited (Hong Kong)
Target Commercial Interiors, Inc. (MN)
Target Connect, Inc. (MN)
Target Corporation India Private Limited (India)
Target Customs Brokers, Inc. (MN)
Target Foundation (a MN not-for-profit organization)
Target Global Trade, Inc. (MN)
Target National Bank (a national banking association)
Target Receivables Corporation (MN)
Target Services, Inc. (MN)
Target Sourcing Services Limited (Hong Kong)
Target Stores, Inc. (MN)
TCDC, Inc. (MN)
TG Holdings (Bermuda)
TGT Energy LLC

TSS One Limited (Hong Kong)

TSS Two Limited (Hong Kong)
Westbury Holding Company (MN)

Exhibit (23)
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements of Target Corporation of our reports dated
March 14, 2007, with respect to the consolidated financial statements and schedule of Target Corporation, Target Corporation
management's assessment of the effectiveness of internal control over financial reporting, and the effectiveness of internal control over
financial reporting of Target Corporation, included in this Annual Report (Form 10-K) for the year ended February 3, 2007.
Registration Statement Form S-3 Nos. 333-139870, 333-65347 and 333-82500; Form S-8 Nos. 33-64013 pertaining to the Dayton
Hudson Corporation Director Stock Plan of 1995; 333-30311 pertaining to the Dayton Hudson Corporation Executive Deferred
Compensation Plan, the Dayton Hudson Corporation Highly Compensated Capital Accumulation Plan, the Dayton Hudson
Corporation SMG Executive Deferred Compensation Plan, and the Dayton Hudson Corporation Director Deferred Compensation
Plan; 333-27435 pertaining to the Dayton Hudson Corporation Supplemental Retirement, Savings, and Employee Stock Ownership
Plan; 333-86373 pertaining to the Dayton Hudson Corporation Long-Term Incentive Plan of 1999; 333-112260 and 333-75782
pertaining to the Dayton Hudson Corporation Highly Compensated Capital Accumulated Plan; 333-116096 pertaining to the Target
Corporation Long-Term Incentive Plan; 333-131082 pertaining to the Target Corporation Director Deferred Compensation Plan,
Target Corporation Executive Deferred Compensation Plan, and the Target Corporation SMG Executive Deferred Compensation Plan;
333-103920, 333-131083 and 33-66050 pertaining to the Target Corporation 401(k) Plan.

Minneapolis, Minnesota
March 14, 2007

Exhibit 24
TARGET CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer of TARGET
CORPORATION, a Minnesota corporation (the "Corporation"), does hereby make, constitute and appoint ROBERT J. ULRICH,
DOUGLAS A. SCOVANNER, TIMOTHY R. BAER, DAVID L. DONLIN and WENDY B. MAHLING and each or any one of
them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's
name, place and stead, to sign and affix the undersigned's name as director and/or officer of the Corporation to (1) a Form 10-K,
Annual Report, or other applicable form, pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"), including
any and all exhibits, schedules, supplements, certifications and supporting documents thereto, including, but not limited to, the Form
11-K Annual Reports of the Corporation's 401(k) Plan and similar plans pursuant to the 1934 Act, and all amendments,
supplementations and corrections thereto, to be filed by the Corporation with the Securities and Exchange Commission (the "SEC"),
as required in connection with its registration under the 1934 Act, as amended; (2) one or more Forms 3, 4 or 5 pursuant to the 1934
Act and all related documents, amendments, supplementations and corrections thereto, to be filed with the SEC as required under the
1934 Act; and (3) one or more Registration Statements, on Form S-3, Form S-8, Form 144 or other applicable forms, and all
amendments, including post-effective amendments, thereto, to be filed by the Corporation with the SEC in connection with the
registration under the Securities Act of 1933, as amended, of debt, equity and other securities of the Corporation, and to file the same,
with all exhibits thereto and other supporting documents, with the SEC.
The undersigned also grants to said attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the powers herein expressly granted. This Power of
Attorney shall remain in effect until revoked in writing by the undersigned.
IN WITNESS WHEREOF, the undersigned has signed below as of this 12th day of February, 2007.

/s/ Roxanne S. Austin

Roxanne S. Austin

TARGET CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer of TARGET
CORPORATION, a Minnesota corporation (the "Corporation"), does hereby make, constitute and appoint ROBERT J. ULRICH,
DOUGLAS A. SCOVANNER, TIMOTHY R. BAER, DAVID L. DONLIN and WENDY B. MAHLING and each or any one of
them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's
name, place and stead, to sign and affix the undersigned's name as director and/or officer of the Corporation to (1) a Form 10-K,
Annual Report, or other applicable form, pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"), including
any and all exhibits, schedules, supplements, certifications and supporting documents thereto, including, but not limited to, the Form
11-K Annual Reports of the Corporation's 401(k) Plan and similar plans pursuant to the 1934 Act, and all amendments,
supplementations and corrections thereto, to be filed by the Corporation with the Securities and Exchange Commission (the "SEC"),
as required in connection with its registration under the 1934 Act, as amended; (2) one or more Forms 3, 4 or 5 pursuant to the 1934
Act and all related documents, amendments, supplementations and corrections thereto, to be filed with the SEC as required under the
1934 Act; and (3) one or more Registration Statements, on Form S-3, Form S-8, Form 144 or other applicable forms, and all
amendments, including post-effective amendments, thereto, to be filed by the Corporation with the SEC in connection with the
registration under the Securities Act of 1933, as amended, of debt, equity and other securities of the Corporation, and to file the same,
with all exhibits thereto and other supporting documents, with the SEC.
The undersigned also grants to said attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the powers herein expressly granted. This Power of
Attorney shall remain in effect until revoked in writing by the undersigned.
IN WITNESS WHEREOF, the undersigned has signed below as of this 9th day of February, 2007.
/s/ Calvin Darden
Calvin Darden

TARGET CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer of TARGET
CORPORATION, a Minnesota corporation (the "Corporation"), does hereby make, constitute and appoint ROBERT J. ULRICH,
DOUGLAS A. SCOVANNER, TIMOTHY R. BAER, DAVID L. DONLIN and WENDY B. MAHLING and each or any one of
them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's
name, place and stead, to sign and affix the undersigned's name as director and/or officer of the Corporation to (1) a Form 10-K,
Annual Report, or other applicable form, pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"), including
any and all exhibits, schedules, supplements, certifications and supporting documents thereto, including, but not limited to, the Form
11-K Annual Reports of the Corporation's 401(k) Plan and similar plans pursuant to the 1934 Act, and all amendments,
supplementations and corrections thereto, to be filed by the Corporation with the Securities and Exchange Commission (the "SEC"),
as required in connection with its registration under the 1934 Act, as amended; (2) one or more Forms 3, 4 or 5 pursuant to the 1934
Act and all related documents, amendments, supplementations and corrections thereto, to be filed with the SEC as required under the
1934 Act; and (3) one or more Registration Statements, on Form S-3, Form S-8, Form 144 or other applicable forms, and all
amendments, including post-effective amendments, thereto, to be filed by the Corporation with the SEC in connection with the
registration under the Securities Act of 1933, as amended, of debt, equity and other securities of the Corporation, and to file the same,
with all exhibits thereto and other supporting documents, with the SEC.
The undersigned also grants to said attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the powers herein expressly granted. This Power of
Attorney shall remain in effect until revoked in writing by the undersigned.
IN WITNESS WHEREOF, the undersigned has signed below as of this 9th day of February, 2007.
/s/ James A. Johnson
James A. Johnson

TARGET CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer of TARGET
CORPORATION, a Minnesota corporation (the "Corporation"), does hereby make, constitute and appoint ROBERT J. ULRICH,
DOUGLAS A. SCOVANNER, TIMOTHY R. BAER, DAVID L. DONLIN and WENDY B. MAHLING and each or any one of
them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's
name, place and stead, to sign and affix the undersigned's name as director and/or officer of the Corporation to (1) a Form 10-K,
Annual Report, or other applicable form, pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"), including
any and all exhibits, schedules, supplements, certifications and supporting documents thereto, including, but not limited to, the Form
11-K Annual Reports of the Corporation's 401(k) Plan and similar plans pursuant to the 1934 Act, and all amendments,
supplementations and corrections thereto, to be filed by the Corporation with the Securities and Exchange Commission (the "SEC"),
as required in connection with its registration under the 1934 Act, as amended; (2) one or more Forms 3, 4 or 5 pursuant to the 1934
Act and all related documents, amendments, supplementations and corrections thereto, to be filed with the SEC as required under the
1934 Act; and (3) one or more Registration Statements, on Form S-3, Form S-8, Form 144 or other applicable forms, and all
amendments, including post-effective amendments, thereto, to be filed by the Corporation with the SEC in connection with the
registration under the Securities Act of 1933, as amended, of debt, equity and other securities of the Corporation, and to file the same,
with all exhibits thereto and other supporting documents, with the SEC.
The undersigned also grants to said attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the powers herein expressly granted. This Power of
Attorney shall remain in effect until revoked in writing by the undersigned.
IN WITNESS WHEREOF, the undersigned has signed below as of this 9th day of February, 2007.
/s/ Richard M. Kovacevich
Richard M. Kovacevich

TARGET CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer of TARGET
CORPORATION, a Minnesota corporation (the "Corporation"), does hereby make, constitute and appoint ROBERT J. ULRICH,
DOUGLAS A. SCOVANNER, TIMOTHY R. BAER, DAVID L. DONLIN and WENDY B. MAHLING and each or any one of
them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's
name, place and stead, to sign and affix the undersigned's name as director and/or officer of the Corporation to (1) a Form 10-K,
Annual Report, or other applicable form, pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"), including
any and all exhibits, schedules, supplements, certifications and supporting documents thereto, including, but not limited to, the Form
11-K Annual Reports of the Corporation's 401(k) Plan and similar plans pursuant to the 1934 Act, and all amendments,
supplementations and corrections thereto, to be filed by the Corporation with the Securities and Exchange Commission (the "SEC"),
as required in connection with its registration under the 1934 Act, as amended; (2) one or more Forms 3, 4 or 5 pursuant to the 1934
Act and all related documents, amendments, supplementations and corrections thereto, to be filed with the SEC as required under the
1934 Act; and (3) one or more Registration Statements, on Form S-3, Form S-8, Form 144 or other applicable forms, and all
amendments, including post-effective amendments, thereto, to be filed by the Corporation with the SEC in connection with the
registration under the Securities Act of 1933, as amended, of debt, equity and other securities of the Corporation, and to file the same,
with all exhibits thereto and other supporting documents, with the SEC.
The undersigned also grants to said attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the powers herein expressly granted. This Power of
Attorney shall remain in effect until revoked in writing by the undersigned.
IN WITNESS WHEREOF, the undersigned has signed below as of this 2nd day of February, 2007.
/s/ Mary E. Minnick
Mary E. Minnick

TARGET CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer of TARGET
CORPORATION, a Minnesota corporation (the "Corporation"), does hereby make, constitute and appoint ROBERT J. ULRICH,
DOUGLAS A. SCOVANNER, TIMOTHY R. BAER, DAVID L. DONLIN and WENDY B. MAHLING and each or any one of
them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's
name, place and stead, to sign and affix the undersigned's name as director and/or officer of the Corporation to (1) a Form 10-K,
Annual Report, or other applicable form, pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"), including
any and all exhibits, schedules, supplements, certifications and supporting documents thereto, including, but not limited to, the Form
11-K Annual Reports of the Corporation's 401(k) Plan and similar plans pursuant to the 1934 Act, and all amendments,
supplementations and corrections thereto, to be filed by the Corporation with the Securities and Exchange Commission (the "SEC"),
as required in connection with its registration under the 1934 Act, as amended; (2) one or more Forms 3, 4 or 5 pursuant to the 1934
Act and all related documents, amendments, supplementations and corrections thereto, to be filed with the SEC as required under the
1934 Act; and (3) one or more Registration Statements, on Form S-3, Form S-8, Form 144 or other applicable forms, and all
amendments, including post-effective amendments, thereto, to be filed by the Corporation with the SEC in connection with the
registration under the Securities Act of 1933, as amended, of debt, equity and other securities of the Corporation, and to file the same,
with all exhibits thereto and other supporting documents, with the SEC.
The undersigned also grants to said attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the powers herein expressly granted. This Power of
Attorney shall remain in effect until revoked in writing by the undersigned.
IN WITNESS WHEREOF, the undersigned has signed below as of this 8th day of February, 2007.
/s/ Anne M. Mulcahy
Anne M. Mulcahy

TARGET CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer of TARGET
CORPORATION, a Minnesota corporation (the "Corporation"), does hereby make, constitute and appoint ROBERT J. ULRICH,
DOUGLAS A. SCOVANNER, TIMOTHY R. BAER, DAVID L. DONLIN and WENDY B. MAHLING and each or any one of
them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's
name, place and stead, to sign and affix the undersigned's name as director and/or officer of the Corporation to (1) a Form 10-K,
Annual Report, or other applicable form, pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"), including
any and all exhibits, schedules, supplements, certifications and supporting documents thereto, including, but not limited to, the Form
11-K Annual Reports of the Corporation's 401(k) Plan and similar plans pursuant to the 1934 Act, and all amendments,
supplementations and corrections thereto, to be filed by the Corporation with the Securities and Exchange Commission (the "SEC"),
as required in connection with its registration under the 1934 Act, as amended; (2) one or more Forms 3, 4 or 5 pursuant to the 1934
Act and all related documents, amendments, supplementations and corrections thereto, to be filed with the SEC as required under the
1934 Act; and (3) one or more Registration Statements, on Form S-3, Form S-8, Form 144 or other applicable forms, and all
amendments, including post-effective amendments, thereto, to be filed by the Corporation with the SEC in connection with the
registration under the Securities Act of 1933, as amended, of debt, equity and other securities of the Corporation, and to file the same,
with all exhibits thereto and other supporting documents, with the SEC.
The undersigned also grants to said attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the powers herein expressly granted. This Power of
Attorney shall remain in effect until revoked in writing by the undersigned.
IN WITNESS WHEREOF, the undersigned has signed below as of this 22nd day of February, 2007.
/s/ Stephen W. Sanger
Stephen W. Sanger

TARGET CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer of TARGET
CORPORATION, a Minnesota corporation (the "Corporation"), does hereby make, constitute and appoint ROBERT J. ULRICH,
DOUGLAS A. SCOVANNER, TIMOTHY R. BAER, DAVID L. DONLIN and WENDY B. MAHLING and each or any one of
them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's
name, place and stead, to sign and affix the undersigned's name as director and/or officer of the Corporation to (1) a Form 10-K,
Annual Report, or other applicable form, pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"), including
any and all exhibits, schedules, supplements, certifications and supporting documents thereto, including, but not limited to, the Form
11-K Annual Reports of the Corporation's 401(k) Plan and similar plans pursuant to the 1934 Act, and all amendments,
supplementations and corrections thereto, to be filed by the Corporation with the Securities and Exchange Commission (the "SEC"),
as required in connection with its registration under the 1934 Act, as amended; (2) one or more Forms 3, 4 or 5 pursuant to the 1934
Act and all related documents, amendments, supplementations and corrections thereto, to be filed with the SEC as required under the
1934 Act; and (3) one or more Registration Statements, on Form S-3, Form S-8, Form 144 or other applicable forms, and all
amendments, including post-effective amendments, thereto, to be filed by the Corporation with the SEC in connection with the
registration under the Securities Act of 1933, as amended, of debt, equity and other securities of the Corporation, and to file the same,
with all exhibits thereto and other supporting documents, with the SEC.
The undersigned also grants to said attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the powers herein expressly granted. This Power of
Attorney shall remain in effect until revoked in writing by the undersigned.
IN WITNESS WHEREOF, the undersigned has signed below as of this 3rd day of February, 2007.
/s/ Warren R. Staley
Warren R. Staley

TARGET CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer of TARGET
CORPORATION, a Minnesota corporation (the "Corporation"), does hereby make, constitute and appoint ROBERT J. ULRICH,
DOUGLAS A. SCOVANNER, TIMOTHY R. BAER, DAVID L. DONLIN and WENDY B. MAHLING and each or any one of
them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's
name, place and stead, to sign and affix the undersigned's name as director and/or officer of the Corporation to (1) a Form 10-K,
Annual Report, or other applicable form, pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"), including
any and all exhibits, schedules, supplements, certifications and supporting documents thereto, including, but not limited to, the Form
11-K Annual Reports of the Corporation's 401(k) Plan and similar plans pursuant to the 1934 Act, and all amendments,
supplementations and corrections thereto, to be filed by the Corporation with the Securities and Exchange Commission (the "SEC"),
as required in connection with its registration under the 1934 Act, as amended; (2) one or more Forms 3, 4 or 5 pursuant to the 1934
Act and all related documents, amendments, supplementations and corrections thereto, to be filed with the SEC as required under the
1934 Act; and (3) one or more Registration Statements, on Form S-3, Form S-8, Form 144 or other applicable forms, and all
amendments, including post-effective amendments, thereto, to be filed by the Corporation with the SEC in connection with the
registration under the Securities Act of 1933, as amended, of debt, equity and other securities of the Corporation, and to file the same,
with all exhibits thereto and other supporting documents, with the SEC.
The undersigned also grants to said attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the powers herein expressly granted. This Power of
Attorney shall remain in effect until revoked in writing by the undersigned.
IN WITNESS WHEREOF, the undersigned has signed below as of this 4th day of February, 2007.
/s/ Gregg W. Steinhafel
Gregg W. Steinhafel

TARGET CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer of TARGET
CORPORATION, a Minnesota corporation (the "Corporation"), does hereby make, constitute and appoint ROBERT J. ULRICH,
DOUGLAS A. SCOVANNER, TIMOTHY R. BAER, DAVID L. DONLIN and WENDY B. MAHLING and each or any one of
them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's
name, place and stead, to sign and affix the undersigned's name as director and/or officer of the Corporation to (1) a Form 10-K,
Annual Report, or other applicable form, pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"), including
any and all exhibits, schedules, supplements, certifications and supporting documents thereto, including, but not limited to, the Form
11-K Annual Reports of the Corporation's 401(k) Plan and similar plans pursuant to the 1934 Act, and all amendments,
supplementations and corrections thereto, to be filed by the Corporation with the Securities and Exchange Commission (the "SEC"),
as required in connection with its registration under the 1934 Act, as amended; (2) one or more Forms 3, 4 or 5 pursuant to the 1934
Act and all related documents, amendments, supplementations and corrections thereto, to be filed with the SEC as required under the
1934 Act; and (3) one or more Registration Statements, on Form S-3, Form S-8, Form 144 or other applicable forms, and all
amendments, including post-effective amendments, thereto, to be filed by the Corporation with the SEC in connection with the
registration under the Securities Act of 1933, as amended, of debt, equity and other securities of the Corporation, and to file the same,
with all exhibits thereto and other supporting documents, with the SEC.
The undersigned also grants to said attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the powers herein expressly granted. This Power of
Attorney shall remain in effect until revoked in writing by the undersigned.
IN WITNESS WHEREOF, the undersigned has signed below as of this 3rd day of February, 2007.
/s/ George W. Tamke
George W. Tamke

TARGET CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer of TARGET
CORPORATION, a Minnesota corporation (the "Corporation"), does hereby make, constitute and appoint ROBERT J. ULRICH,
DOUGLAS A. SCOVANNER, TIMOTHY R. BAER, DAVID L. DONLIN and WENDY B. MAHLING and each or any one of
them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's
name, place and stead, to sign and affix the undersigned's name as director and/or officer of the Corporation to (1) a Form 10-K,
Annual Report, or other applicable form, pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"), including
any and all exhibits, schedules, supplements, certifications and supporting documents thereto, including, but not limited to, the Form
11-K Annual Reports of the Corporation's 401(k) Plan and similar plans pursuant to the 1934 Act, and all amendments,
supplementations and corrections thereto, to be filed by the Corporation with the Securities and Exchange Commission (the "SEC"),
as required in connection with its registration under the 1934 Act, as amended; (2) one or more Forms 3, 4 or 5 pursuant to the 1934
Act and all related documents, amendments, supplementations and corrections thereto, to be filed with the SEC as required under the
1934 Act; and (3) one or more Registration Statements, on Form S-3, Form S-8, Form 144 or other applicable forms, and all
amendments, including post-effective amendments, thereto, to be filed by the Corporation with the SEC in connection with the
registration under the Securities Act of 1933, as amended, of debt, equity and other securities of the Corporation, and to file the same,
with all exhibits thereto and other supporting documents, with the SEC.
The undersigned also grants to said attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the powers herein expressly granted. This Power of
Attorney shall remain in effect until revoked in writing by the undersigned.
IN WITNESS WHEREOF, the undersigned has signed below as of this 15th day of February, 2007.
/s/ Solomon D. Trujillo
Solomon D. Trujillo

TARGET CORPORATION
Power of Attorney
of Director and/or Officer
KNOW ALL MEN BY THESE PRESENTS, that the undersigned director and/or officer of TARGET
CORPORATION, a Minnesota corporation (the "Corporation"), does hereby make, constitute and appoint ROBERT J. ULRICH,
DOUGLAS A. SCOVANNER, TIMOTHY R. BAER, DAVID L. DONLIN and WENDY B. MAHLING and each or any one of
them, the undersigned's true and lawful attorneys-in-fact, with power of substitution, for the undersigned and in the undersigned's
name, place and stead, to sign and affix the undersigned's name as director and/or officer of the Corporation to (1) a Form 10-K,
Annual Report, or other applicable form, pursuant to the Securities Exchange Act of 1934, as amended (the "1934 Act"), including
any and all exhibits, schedules, supplements, certifications and supporting documents thereto, including, but not limited to, the Form
11-K Annual Reports of the Corporation's 401(k) Plan and similar plans pursuant to the 1934 Act, and all amendments,
supplementations and corrections thereto, to be filed by the Corporation with the Securities and Exchange Commission (the "SEC"),
as required in connection with its registration under the 1934 Act, as amended; (2) one or more Forms 3, 4 or 5 pursuant to the 1934
Act and all related documents, amendments, supplementations and corrections thereto, to be filed with the SEC as required under the
1934 Act; and (3) one or more Registration Statements, on Form S-3, Form S-8, Form 144 or other applicable forms, and all
amendments, including post-effective amendments, thereto, to be filed by the Corporation with the SEC in connection with the
registration under the Securities Act of 1933, as amended, of debt, equity and other securities of the Corporation, and to file the same,
with all exhibits thereto and other supporting documents, with the SEC.
The undersigned also grants to said attorneys-in-fact, and each of them, full power and authority to do and perform
any and all acts necessary or incidental to the performance and execution of the powers herein expressly granted. This Power of
Attorney shall remain in effect until revoked in writing by the undersigned.
IN WITNESS WHEREOF, the undersigned has signed below as of this 5th day of February, 2007.
/s/ Robert J. Ulrich
Robert J. Ulrich

Exhibit (31)A
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
Certifications
I, Robert J. Ulrich, certify that:
1.

I have reviewed this Annual Report on Form 10-K 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 15(d)-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.

5.

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 that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and

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 function):
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: March 14, 2007

/s/ Robert J. Ulrich
Robert J. Ulrich
Chairman of the Board and Chief Executive Officer

Exhibit (31)B
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
Certifications
I, Douglas A. Scovanner, certify that:
1.

I have reviewed this Annual Report on Form 10-K 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 15(d)-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.

5.

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 that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and

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 function):
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: March 14, 2007

/s/ Douglas A. Scovanner
Douglas A. Scovanner
Executive Vice President and Chief Financial Officer

Exhibit (32)A
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K (the "Form 10-K") of Target Corporation, a Minnesota corporation ("the
Company"), for the year ended February 3, 2007, as filed with the Securities and Exchange Commission on the date hereof (the
"Report"), the undersigned officer of the Company certifies pursuant to 18 U.S.C. Section 1350, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that, to his knowledge:
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.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the
Company and furnished to the Securities and Exchange Commission or its staff upon request.
Date: March 14, 2007
/s/ Robert J. Ulrich
Robert J. Ulrich
Chairman of the Board and Chief Executive Officer

Exhibit (32)B
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report on Form 10-K (the "Form 10-K") of Target Corporation, a Minnesota corporation ("the
Company"), for the year ended February 3, 2007, as filed with the Securities and Exchange Commission on the date hereof (the
"Report"), the undersigned officer of the Company certifies pursuant to 18 U.S.C. Section 1350, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that, to his knowledge:
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.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the
Company and furnished to the Securities and Exchange Commission or its staff upon request.
Date: March 14, 2007
/s/ Douglas A. Scovanner
Douglas A. Scovanner
Executive Vice President and Chief Financial Officer

Exhibit (99)A
Risk Factors and Cautionary Statements Relating to Forward-Looking Information
Our business is subject to a variety of risks. In addition we may, from time to time, make written or oral forward-looking statements.
Those statements may relate to future revenues, gross margin rate, expense rate, earnings, store openings and store conversions,
market conditions, new strategies, the competitive environment or other events that we expect or anticipate will occur in the future.
Forward-looking statements are based on our current views and assumptions and, as a result, are subject to risks and uncertainties that
could cause actual results to differ materially from those projected.
Set forth below are certain of the important risks that we face and that could cause actual results to differ materially from those
predicted by the forward-looking statements. These risks are not the only ones we face. Our business could also be affected by
additional factors that are presently unknown to us or that we currently believe to be immaterial to our business.
Competitive Pressures
The retail business is highly competitive. We compete for capital, customers, employees, products, services and other important
aspects of our business with many other local, regional and national retailers and other credit providers. Those competitors, some of
which have a greater market presence than Target, include traditional and off-price store-based retailers, Internet and catalog
businesses, drug stores, supermarkets, entertainment and travel providers and other forms of retail commerce as well as credit card
issuers. Changes in the pricing and other terms or practices of those competitors, including the effects of competitor liquidation
activities, may impact our expected results.
Consumer Trends
It is difficult to predict what merchandise consumers will demand, particularly merchandise that is trend driven. A substantial part of
our business is dependent on our ability to make trend-right decisions for a wide variety of merchandise. Our business could also be
impacted by consumer boycotts and other organized activities. Failure to accurately predict constantly changing consumer tastes,
preferences, spending patterns and other lifestyle decisions, or to address consumer concerns effectively, could adversely affect shortterm and long-term results.
Credit Card Operations
Our credit card operations facilitate sales in our stores and generate additional revenue from fees related to extending credit. Our
ability to extend credit to our guests and to collect payments from them depends on many factors including compliance with federal
banking, state banking, consumer protection and bankruptcy laws, any of which may change from time to time. Changes in credit card
use, payment patterns and default rates

may result from a variety of economic, legal, social and other factors that we cannot control or predict with certainty. Changes that
adversely impact our ability to extend credit and collect payments could negatively affect our results. In addition, our finance charge
revenue is subject to changes in interest rates.
General Economic Conditions
General economic factors that are beyond our control impact our forecasts and actual performance. These factors include interest rates,
recession, inflation, deflation, consumer credit availability, consumer debt levels, tax rates and policy, unemployment trends and other
matters that influence consumer confidence and spending. Changes in energy costs also impact our business, both by influencing the
cost of operating our stores and transporting goods, and by affecting consumer spending patterns. Changes in the cost of raw
materials can influence the gross margins on merchandise we sell and the cost of building and maintaining our stores.
Labor Conditions and Costs
Our performance is dependent on attracting and retaining a large and growing number of quality team members. Many of those team
members are in entry-level or part-time positions with historically high rates of turnover. Our ability to meet our labor needs while
controlling our costs is subject to external factors such as unemployment levels, minimum wage legislation, health care legislation and
changing demographics. In addition, our labor costs are influenced by health care and workers' compensation costs, both of which
have been rising in recent years.
Store Expansion Plans
Our future growth is dependent, in part, on our ability to build new stores and expand existing stores in a manner that achieves
appropriate returns on our capital investment. We compete with other retailers and businesses for suitable locations for our stores.
Local land use and other regulations applicable to the types of stores we desire to construct may impact our ability to find suitable
locations, and also influence the cost of constructing and expanding our stores. In addition, the construction of new stores in fullydeveloped urban markets is generally a more time-consuming and expensive undertaking than developments in suburban and ex-urban
markets.
Product Sourcing
The products we sell are sourced from a wide variety of domestic and international vendors. All of our vendors must comply with
applicable laws and our required standards of conduct. Our ability to find qualified vendors and access products in a timely and
efficient manner is a significant challenge which is typically even more difficult with respect to goods sourced outside the United
States. Political or financial instability, trade restrictions, tariffs, currency exchange rates, the outbreak of pandemics, transport
capacity and costs, port security or other events that could slow port activities and other

factors relating to foreign trade are beyond our control and could adversely impact our business.
Privacy and Information Security
The use of individually identifiable data by our business and our business associates is regulated at the international, federal and state
levels. Privacy and information security laws and regulations change, and compliance with them may result in cost increases due to
necessary systems changes and the development of new administrative processes. If we or our business associates fail to comply with
these laws and regulations or experience a data security breach, our reputation could be damaged, possibly resulting in lost future
business, and we could be subjected to additional legal risk as a result of non-compliance.
Other Factors
Other factors that could cause actual results to differ materially from those predicted include:
weather;
changes in the availability or cost of capital;
shifts in the seasonality of shopping patterns;
labor strikes or other work interruptions including work interruptions that impact our supply chain and transport vendors;
the impact of excess retail capacity in our markets;
changes in the cost to us of accepting various payment methods and changes in the rate of utilization of these payment
methods by our guests;
material acquisitions or dispositions;
investments in new business strategies;
the success or failure of significant new business ventures or technologies;
adverse results in material litigation;
our ability to comply with laws and regulations that affect parts of our business which are more heavily regulated than our
traditional retail operations, such as our pharmacy, health clinic and liquor operations;
actions taken or omitted to be taken by legislative, regulatory, judicial and other

governmental authorities and officials;

our ability to react in a timely manner and maintain our critical business processes and information systems capabilities in a
disaster recovery situation; or
natural disasters, the outbreak of war, acts of terrorism or other significant national or international events.
The foregoing list of important factors is not exclusive and we do not undertake to revise any forward-looking statement to reflect
events or circumstances that occur after the date the statement is made.