Target Corporation Third Quarter Earnings Per Share $0.59

Target Corporation (NYSE:TGT) today reported net earnings for the third quarter ended October 28, 2006 of $506 million, or 59 cents per share, compared with $435 million, or 49 cents per share in the third quarter ended October 29, 2005. All earnings per share figures refer to diluted earnings per share. "We are pleased with our third quarter and year-to-date results,” said Bob Ulrich, chairman and chief executive officer of Target Corporation. "We continue to believe that our strategic discipline, consistent execution, and commitment to deliver the right combination of innovation, design and value will delight our guests and produce profitable market share growth in this year’s fourth quarter and well beyond.” Total revenues in the third quarter increased 11.2 percent to $13.570 billion from $12.206 billion in 2005, driven by the contribution from new store expansion, a 4.6 percent increase in comparable store sales and the contribution from our credit card operations. (Total revenues include retail sales and net credit card revenues. Comparable-store sales are sales from stores open longer than one year.) Earnings before interest expense and income taxes (EBIT) in the third quarter of 2006 increased 15.0 percent to $957 million, compared with $831 million in the third quarter a year ago. Both our core retail operations and our credit card operations contributed to this EBIT growth. Within our core retail operations, gross margin rate was slightly favorable to the prior year, while the company’s expense rate in the quarter was unfavorable to the prior year. (Gross margin rate represents sales less cost of sales expressed as a percentage of sales. Expense rate represents selling, general and administrative expenses expressed as a percentage of sales.) Net interest expense for the quarter increased $31 million compared with third quarter 2005, primarily due to growth in the cost of funding our credit card operations. Earnings before taxes (EBT) in the third quarter totaled $808 million, representing an increase of $95 million, or 13.2 percent, from the same period in 2005. The contribution from the company’s credit card operations to these results was $176 million, an increase of $68 million, or 62.9 percent, from a year ago. Other Factors The company’s effective income tax rate for the third quarter was 37.4 percent in 2006 compared with 39.0 percent in 2005. For the full year, the effective income tax rate is now expected to be between 37.9 and 38.4 percent. The company repurchased $59 million of its common stock during the third quarter of 2006, acquiring 1.2 million shares at an average price of $48.86 per share, under a $5 billion program which began in 2004. Program to-date, the company has acquired 70.7 million shares of its common stock at an average price per share of $48.56, reflecting a total investment of approximately $3.43 billion. The company expects to continue to execute this program primarily in open market transactions, subject to market conditions, and expects to complete the total program by year-end 2008, or sooner. Miscellaneous Target Corporation will webcast its third quarter earnings conference call at 9:00am CST today. Investors and the media are invited to listen to the call through the company’s website at www.target.com/investors (click on "Events + Calendar”, then "webcasts”). A telephone replay of the call will be available beginning at approximately 11:00am CST today through the end of business on November 16, 2006. The replay number is (800) 642-1687 (passcode: 1291513). Forward-looking statements in this release should be read in conjunction with the cautionary statements in Exhibit (99)C to the company’s 2005 Form 10-K. Target Corporation’s operations include large, general merchandise discount stores and a fully integrated on-line business through which we offer a fun and convenient shopping experience with thousands of highly differentiated and affordably priced items. The company gives back more than $2 million each week to its local communities through grants and special programs. The company currently operates 1,494 Target stores in 47 states. Target Corporation news releases are available at www.target.com.   CONSOLIDATED RESULTS OF OPERATIONS   Thirteen Weeks Ended Thirty-Nine Weeks Ended (Millions, except per share data)(Unaudited) Oct. 28,2006 Oct. 29,2005 %Change Oct. 28,2006 Oct. 29,2005 %Change   Sales $ 13,156  $ 11,863  10.9% $ 38,609  $ 34,701  11.3% Net credit card revenues 414  343  20.7  1,171  972  20.6    Total revenues 13,570  12,206  11.2  39,780  35,673  11.5    Cost of sales 8,891  8,034  10.7  26,050  23,418  11.2  Selling, general and administrative expenses 3,151  2,786  13.1  9,016  7,931  13.7  Credit card expenses 182  201  (9.4) 512  567  (9.7) Depreciation and amortization 389  354  9.8  1,094  1,040  5.1    Earnings before interest expense and income taxes 957  831  15.0  3,108  2,717  14.4    Net interest expense 149  118  26.0  421  339  24.1    Earnings before income taxes 808  713  13.2  2,687  2,378  13.0    Provision for income taxes 302  278  8.6  1,019  909  12.2    Net earnings $ 506  $ 435  16.2% $ 1,668  $ 1,469  13.6%     Basic earnings per share: $ 0.59  $ 0.49  19.3% $ 1.93  $ 1.66  16.3%   Diluted earnings per share: $ 0.59  $ 0.49  19.2% $ 1.92  $ 1.65  16.3%   Weighted average common shares outstanding: Basic 857.8  881.2  863.1  883.8  Diluted 864.4  887.0  869.7  890.6  CONSOLIDATED STATEMENTS OF FINANCIAL POSITION   SUBJECT TO RECLASSIFICATION (Millions) Oct. 28, Oct. 29, (Unaudited) 2006 2005   ASSETS Cash and cash equivalents $ 451  $ 503  Accounts receivable, net 5,634  5,127  Inventory 7,797  7,488  Other current assets 1,466  1,293  Total current assets 15,348  14,411    Property and equipment, net 20,926  18,573  Other non-current assets 1,593  1,514  Total assets $ 37,867  $ 34,498    LIABILITIES AND SHAREHOLDERS' INVESTMENT Accounts payable $ 7,086  $ 6,966  Current portion of long-term debt and notes payable 2,253  752  Other current liabilities 2,582  1,923  Total current liabilities 11,921  9,641    Long-term debt 9,123  9,143  Deferred income taxes 714  973  Other non-current liabilities 1,309  1,185  Shareholders' investment 14,800  13,556  Total liabilities and shareholders' investment $ 37,867  $ 34,498    Common shares outstanding 858.9  879.2  CONSOLIDATED STATEMENTS OF CASH FLOWS   SUBJECT TO RECLASSIFICATION Thirty-Nine Weeks Ended (Millions) Oct. 28, Oct. 29, (Unaudited) 2006 2005   OPERATING ACTIVITIES Net earnings $ 1,668  $ 1,469    Reconciliation to cash flow: Depreciation and amortization 1,094  1,040  Share-based compensation expense 64  68  Deferred income taxes (167) -  Bad debt provision 278  337  Loss on disposal of property and equipment, net 58  48  Other non-cash items affecting earnings 33  (18) Changes in operating accounts providing/(requiring) cash: Accounts receivable originated at Target (44) (26) Inventory (1,961) (2,104) Other current assets (118) (69) Other non-current assets 4  (14) Accounts payable 817  1,187  Accrued liabilities 271  185  Income taxes payable (337) (303) Other non-current liabilities 44  2  Other -  18  Cash flow provided by operations 1,704  1,820    INVESTING ACTIVITIES Expenditures for property and equipment (3,004) (2,657) Proceeds from disposal of property and equipment 20  22  Change in accounts receivable originated at third parties (203) (369) Other investment (111) -  Cash flow required by investing activities (3,298) (3,004)   FINANCING ACTIVITIES Increase in notes payable, net 955  924  Additions to long-term debt 1,250  13  Reductions of long-term debt (752) (527) Dividends paid (277) (230) Repurchase of stock (901) (898) Stock option exercises and related tax benefit 126  161  Other (4) (1) Cash flow provided by/(required for) financing activities 397  (558)   Net decrease in cash and cash equivalents (1,197) (1,742)   Cash and cash equivalents at beginning of period 1,648  2,245      Cash and cash equivalents at end of period $ 451  $ 503  NUMBER OF STORES, RETAIL SQUARE FEET and COMPARABLE-STORE SALES Retail square feet in thousands; reflects total square feet less office, distribution center and vacant space.   Number of Stores Retail Square Feet Oct. 28, Oct. 29, Oct. 28, Oct. 29, (Unaudited) 2006 2005 2006 2005 Change Target General Merchandise Stores 1,318  1,243  161,152  150,879  6.8% SuperTarget Stores 176  157  31,073  27,764  11.9% Total 1,494  1,400  192,225  178,643  7.6%   Thirteen Weeks Ended Thirty-Nine Weeks Ended Oct. 28, Oct. 29, Oct. 28, Oct. 29, (Unaudited) 2006 2005 2006 2005 Comparable-Store Sales 4.6% 5.9% 4.8% 6.3%   CREDIT CARD CONTRIBUTION TO EBT   Thirteen Weeks Ended Thirty-Nine Weeks Ended (Millions) Oct. 28, Oct. 29, Oct. 28, Oct. 29, (Unaudited) 2006 2005 2006 2005 Revenues Finance charges $ 279  $ 232  $ 812  $ 656  Interest expense (a) (72) (50) (202) (133) Net interest income 207  182  610  523    Late fees and other revenues 101  79  261  227  Merchant fees Intracompany 16  16  50  48  Third-party 34  32  98  89  Non-interest income 151  127  409  364    Expenses Bad debt 97  120  278  337  Operations and marketing 85  81  234  230  Total expenses 182  201  512  567    Credit card contribution to EBT $ 176  $ 108  $ 507  $ 320    As a percent of average receivables (annualized) 11.5% 7.9% 11.2% 7.9%   Net interest margin (annualized) (b) 13.6% 13.3% 13.5% 12.9%   RECEIVABLES Period-end receivables $ 6,148  $ 5,544  Average receivables $ 6,123  $ 5,499  $ 6,007  $ 5,392  Accounts with three or more payments past due as a percent of period-end receivables 3.9% 3.2%   ALLOWANCE FOR DOUBTFUL ACCOUNTS Allowance at beginning of period $ 501  $ 409  $ 451  $ 387  Bad debt provision 97  120  278  337  Net write-offs (84) (112) (215) (307) Allowance at end of period $ 514  $ 417  $ 514  $ 417    As a percent of period-end receivables 8.4% 7.5% 8.4% 7.5%   Net write-offs as a percent of average receivables (annualized) 5.5% 8.1% 4.8% 7.6%   (a) Represents an allocation of consolidated interest expense based on estimated funding costs for average net accounts receivable and other financial services assets. Interest expense allocated to our credit card operations for the first, second, third, and fourth quarters 2005 totaled $40, $43, $50, and $59, respectively.   (b) Net interest income divided by average accounts receivable.