Target Reports Third Quarter 2012 Earnings
Target Reports Third Quarter 2012 Earnings
Adjusted EPS of $0.90 Up 4.3% from Third Quarter 2011;
GAAP EPS of $0.96 Includes 15-cent Gain from Pending Receivables Sale^1
Business Wire
MINNEAPOLIS -- November 15, 2012
Target Corporation (NYSE: TGT) today reported third quarter net earnings of
$637 million, or $0.96 per share, which includes a 15-cent gain from the
pending sale of its credit-card receivables portfolio.^1 Adjusted earnings per
share, a measure the company believes is useful in providing period-to-period
comparisons of the results of its U.S. operations, were $0.90 in third quarter
2012, up 4.3 percent from $0.86 in 2011. A reconciliation of non-GAAP
financial measures to GAAP measures is provided in the tables attached to this
press release. All earnings per share figures refer to diluted earnings per
share.
“We’re pleased with Target’s third quarter financial performance, which
reflects superb execution across each of our business segments,” said Gregg
Steinhafel, chairman, president, and chief executive officer of Target
Corporation. “We are well-positioned to deliver strong fourth quarter
performance by offering compelling merchandise and unbeatable value through
initiatives like the Target/Neiman Marcus Holiday Collection, 5% REDcard
Rewards and our new Holiday Price Match which allow our guests to shop at
Target with confidence throughout the holiday season.”
^1Please refer to the detail provided in the reconciliation of GAAP to
adjusted EPS in the tables attached to this release.
Fiscal 2012 Earnings Guidance
For fourth quarter 2012, the company expects adjusted EPS of $1.64 to $1.74
and GAAP EPS of $1.45 to $1.55. The 19-cent difference between these ranges
reflects the expected EPS impact of expenses related to the company’s Canadian
market entry.
U.S. Retail Segment Results
As previously reported, sales increased 3.4 percent to $16.6 billion in third
quarter 2012 from $16.1 billion last year, reflecting a 2.9 percent increase
in comparable-store sales combined with the contribution from new stores.
Segment earnings before interest expense and income taxes (EBIT) were $963
million in the third quarter of 2012, an increase of 3.4 percent from $931
million in 2011. Third quarter EBITDA and EBIT margin rates were 8.9 percent
and 5.8 percent, respectively, compared with 9.1 percent and 5.8 percent in
2011. Third quarter gross margin rate declined to 30.3 percent in 2012 from
30.5 percent in 2011, reflecting the impact of the company’s integrated growth
strategies partially offset by underlying rate improvements within categories.
Third quarter selling, general and administrative (SG&A) expense rate was 21.4
percent in 2012, unchanged from 2011.
U.S. Credit Card Segment Results^2
Third quarter average receivables decreased 4.7 percent to $5.9 billion in
2012 from $6.2 billion in 2011. Third quarter 2012 portfolio spread to LIBOR
was $138 million, or 9.3 percent, compared with $158 million, or 10.2 percent,
in 2011. Performance in third quarter 2012 reflected a $20 million reduction
in the allowance for doubtful accounts, compared with a $49 million reduction
in third quarter 2011.
^2The Company intends to continue reporting a U.S. Credit Card segment until
the credit card receivables transaction with TD Bank closes in 2013. The
segment results will continue to be reported on the same basis as historical
results.
Canadian Segment Results
Third quarter 2012 EBIT was $(96) million, due to start-up expenses,
depreciation and amortization related to the company’s expected market entry
in 2013. Total expenses related to investments in Target’s Canadian market
entry reduced Target’s earnings per share by approximately 13 cents in third
quarter 2012.^3
Interest Expense and Taxes
Net interest expense for the quarter was $192 million, including $20 million
of interest on capitalized leases related to Target’s Canadian market entry.
Net interest expense was $200 million in third quarter 2011.
The company’s effective income tax rate was 34.5 percent in third quarter
2012, including the favorable resolution of various income tax matters that
benefited third quarter EPS by approximately 4 cents.
Capital Returned to Shareholders
In third quarter 2012, the company repurchased approximately 1.7 million
shares of its common stock at an average price of $62.90, for a total
investment of $104 million. The company also paid dividends of $236 million
during the quarter.
Year-to-date the company has repurchased approximately 21.8 million shares of
its common stock at an average price of $57.53, for a total investment of
$1.25 billion, and paid dividends of $635 million.
^3This amount includes interest expense and tax expense that are not included
in the segment measure of profit. A reconciliation of non-GAAP measures is
included in the tables attached to this release.
Accounting Considerations
As a result of Target’s recently announced agreement to sell its credit card
receivables portfolio to TD Bank Group, third quarter 2012 GAAP earnings per
share reflect a pre-tax gain of $156 million due to a change in the accounting
treatment of its receivables from “held for investment” to “held for sale”.
Miscellaneous
Target Corporation will webcast its third quarter earnings conference call at
9:30 a.m. 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 &
presentations”). A telephone replay of the call will be available beginning at
approximately 11:30 a.m. CST today through the end of business on November 16,
2012. The replay number is (855) 859-2056 (passcode: 39813512).
Statements in this release regarding fourth quarter 2012 earnings guidance are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements speak only as of the date they
are made and are subject to risks and uncertainties which could cause the
company’s actual results to differ materially. The most important risks and
uncertainties are described in Item 1A of the company’s Form 10-K for the
fiscal year ended January 28, 2012 and Form 10-Q for the fiscal quarter ended
July 28, 2012.
In addition to the GAAP results provided in this release, the company provides
adjusted diluted earnings per share for the three and nine months ended
October 27, 2012 and October 29, 2011. This measure is not in accordance with,
or an alternative for, generally accepted accounting principles in the United
States. The most comparable GAAP measure is diluted earnings per share.
Management believes adjusted EPS is useful in providing period-to-period
comparisons of the results of the company’s U.S. operations. Adjusted EPS
should not be considered in isolation or as a substitution for analysis of the
company’s results as reported under GAAP. Other companies may calculate
adjusted EPS differently than the company does, limiting the usefulness of the
measure for comparisons with other companies.
About Target
Minneapolis-based Target Corporation (NYSE:TGT) serves guests at 1,782 stores
across the United States and at Target.com. The company plans to open its
first stores in Canada in 2013. Since 1946, Target has given 5 percent of its
profit through community grants and programs; today, that giving equals more
than $4 million a week. For more information about Target’s commitment to
corporate responsibility, visit Target.com/hereforgood.
For more information, visit Target.com/Pressroom.
TARGET CORPORATION
Consolidated Statements of Operations
Three Months Ended Nine Months Ended
October October October October
27, 29, 27, 29,
(millions,
except per 2012 2011 Change 2012 2011 Change
share data)
(unaudited)
Sales $ 16,601 $ 16,054 3.4 % $ 49,589 $ 47,529 4.3 %
Credit card 328 348 (5.8 ) 986 1,048 (6.0 )
revenues
Total revenues 16,929 16,402 3.2 50,575 48,577 4.1
Cost of sales 11,569 11,165 3.6 34,406 32,874 4.7
Selling,
general and 3,704 3,525 5.1 10,686 10,230 4.4
administrative
expenses
Credit card 106 109 (3.4 ) 333 283 17.4
expenses
Depreciation
and 542 546 (0.7 ) 1,603 1,568 2.2
amortization
Gain on
receivables (156 ) - n/a (156 ) - n/a
held for sale
Earnings
before
interest 1,164 1,057 10.1 3,703 3,622 2.3
expense and
income taxes
Net interest 192 200 (4.1 ) 558 574 (2.7 )
expense
Earnings
before income 972 857 13.4 3,145 3,048 3.2
taxes
Provision for 335 302 10.8 1,107 1,100 0.6
income taxes
Net earnings $ 637 $ 555 14.8 % $ 2,038 $ 1,948 4.6 %
Basic earnings $ 0.97 $ 0.82 18.0 % $ 3.09 $ 2.85 8.3 %
per share
Diluted
earnings per $ 0.96 $ 0.82 17.6 % $ 3.06 $ 2.84 7.9 %
share
Weighted
average common
shares
outstanding
Basic 654.8 673.2 (2.7 ) % 659.3 682.2 (3.4 ) %
Diluted 662.2 678.3 (2.4 ) % 665.8 686.9 (3.1 ) %
TARGET CORPORATION
Consolidated Statements of Financial Position
October 27, January October 29,
28,
(millions) 2012 2012 2011
Assets (unaudited) (unaudited)
Cash and cash
equivalents, including $ 1,469 $ 794 $ 821
short-term investments of
$800, $194 and $66
Credit card receivables, 5,647 - -
held for sale
Credit card receivables,
net of allowance of $0, - 5,927 5,713
$430 and $431
Inventory 9,533 7,918 9,890
Other current assets 1,846 1,810 1,948
Total current assets 18,495 16,449 18,372
Property and equipment
Land 6,188 6,122 6,069
Buildings and 27,800 26,837 26,850
improvements
Fixtures and equipment 5,280 5,141 5,153
Computer hardware and 2,418 2,468 2,457
software
Construction-in-progress 1,365 963 546
Accumulated depreciation (12,982 ) (12,382 ) (12,035 )
Property and equipment, 30,069 29,149 29,040
net
Other noncurrent assets 1,015 1,032 1,035
Total assets $ 49,579 $ 46,630 $ 48,447
Liabilities and
shareholders' investment
Accounts payable $ 8,050 $ 6,857 $ 8,053
Accrued and other current 3,631 3,644 3,273
liabilities
Unsecured debt and other 2,528 3,036 2,313
borrowings
Nonrecourse debt
collateralized by credit 1,500 750 500
card receivables
Total current liabilities 15,709 14,287 14,139
Unsecured debt and other 14,526 13,447 12,897
borrowings
Nonrecourse debt
collateralized by credit - 250 3,259
card receivables
Deferred income taxes 1,279 1,191 1,199
Other noncurrent 1,713 1,634 1,689
liabilities
Total noncurrent 17,518 16,522 19,044
liabilities
Shareholders' investment
Common stock 55 56 56
Additional paid-in 3,854 3,487 3,431
capital
Retained earnings 13,069 12,959 12,340
Accumulated other
comprehensive loss
Pension and other benefit (581 ) (624 ) (516 )
liabilities
Currency translation
adjustment and cash flow (45 ) (57 ) (47 )
hedges
Total shareholders' 16,352 15,821 15,264
investment
Total liabilities and $ 49,579 $ 46,630 $ 48,447
shareholders' investment
Common shares outstanding 654.5 669.3 671.4
TARGET CORPORATION
Consolidated Statements of Cash Flows
Nine Months Ended
October 27, October 29,
(millions) (unaudited) 2012 2011
Operating activities
Net earnings $ 2,038 $ 1,948
Reconciliation to cash flow
Depreciation and amortization 1,603 1,568
Share-based compensation expense 74 61
Deferred income taxes 73 397
Bad debt expense 141 67
Gain on receivables held for sale (156 ) -
Non-cash (gains)/losses and other, net (15 ) 76
Changes in operating accounts:
Accounts receivable originated at Target 97 120
Inventory (1,615 ) (2,294 )
Other current assets (98 ) (131 )
Other noncurrent assets - 49
Accounts payable 1,193 1,428
Accrued and other current liabilities (109 ) (360 )
Other noncurrent liabilities 122 46
Cash flow provided by operations 3,348 2,975
Investing activities
Expenditures for property and equipment (2,338 ) (3,750 )
Proceeds from disposal of property and 35 7
equipment
Change in accounts receivable originated 192 253
at third parties
Other investments 86 (114 )
Cash flow required for investing (2,025 ) (3,604 )
activities
Financing activities
Change in commercial paper, net - 1,211
Additions to long-term debt 1,971 1,000
Reductions of long-term debt (1,024 ) (272 )
Dividends paid (635 ) (549 )
Repurchase of stock (1,230 ) (1,693 )
Stock option exercises and related tax 279 66
benefit
Other (16 ) 1
Cash flow required for financing (655 ) (236 )
activities
Effect of exchange rate changes on cash 7 (26 )
and cash equivalents
Net increase (decrease) in cash and cash 675 (891 )
equivalents
Cash and cash equivalents at beginning of 794 1,712
period
Cash and cash equivalents at end of period $ 1,469 $ 821
TARGET CORPORATION
U.S. Retail Segment
U.S. Retail
Segment Three Months Ended Nine Months Ended
Results
October October October October
27, 29, 27, 29,
(millions) 2012 2011 Change 2012 2011 Change
(unaudited)
Sales $ 16,601 $ 16,054 3.4 % $ 49,589 $ 47,529 4.3 %
Cost of 11,569 11,165 3.6 34,406 32,874 4.7
sales
Gross margin 5,032 4,889 2.9 15,183 14,655 3.6
SG&A 3,553 3,433 3.5 10,315 9,988 3.3
expenses^(a)
EBITDA 1,479 1,456 1.6 4,868 4,667 4.3
Depreciation
and 516 525 (1.7 ) 1,526 1,527 (0.1 )
amortization
EBIT $ 963 $ 931 3.4 % $ 3,342 $ 3,140 6.4 %
EBITDA is earnings before interest expense, income taxes, depreciation and
amortization.
EBIT is earnings before interest expense and income taxes.
^(a) Loyalty program charges were $78 million and $74 million for the three
months ended October 27, 2012 and October 29, 2011, respectively, and $217
million and $189 million for the nine months ended October 27, 2012 and
October 29, 2011, respectively. In all periods, these amounts were recorded as
reductions to SG&A expenses within the U.S. Retail Segment and increases to
operations and marketing expenses within the U.S. Credit Card Segment.
U.S. Retail Segment Three Months Ended Nine Months Ended
Rate Analysis
October October October October
27, 29, 27, 29,
(unaudited) 2012 2011 2012 2011
Gross margin rate 30.3 % 30.5 % 30.6 % 30.8 %
SG&A expense rate 21.4 21.4 20.8 21.0
EBITDA margin rate 8.9 9.1 9.8 9.8
Depreciation and
amortization expense 3.1 3.3 3.1 3.2
rate
EBIT margin rate 5.8 5.8 6.7 6.6
Rate analysis metrics are computed by dividing the applicable amount by sales.
Comparable-Store Sales Three Months Ended Nine Months Ended
October October October October
27, 29, 27, 29,
(unaudited) 2012 2011 2012 2011
Comparable-store sales 2.9 % 4.3 % 3.7 % 3.4 %
change
Drivers of change in
comparable-store sales:
Number of transactions 0.5 0.3 1.0 0.4
Average transaction 2.4 4.1 2.7 3.1
amount
Selling price per unit 1.2 1.6 1.6 0.2
Units per transaction 1.2 2.5 1.0 2.9
The comparable-store sales increases or decreases above are calculated by
comparing
sales in fiscal year periods with comparable prior-year periods of equivalent
length.
REDcard Penetration Three Months Ended Nine Months Ended
October October October October
27, 29, 27, 29,
(unaudited) 2012 2011 2012 2011
Target Credit Cards 8.0 % 6.9 % 7.6 % 6.5 %
Target Debit Cards 6.0 2.6 5.2 2.1
Total Store REDcard 14.0 % 9.5 % 12.8 % 8.6 %
Penetration
Represents the percentage of Target store sales that are paid for using
REDcards.
Number of
Stores and Number of Stores Retail Square Feet^(a)
Retail
Square Feet
October January October October January October
27, 28, 29, 27, 28, 29,
(unaudited) 2012 2012 2011 2012 2012 2011
Target
general 395 637 640 47,038 76,999 77,349
merchandise
stores
Expanded
food 1,130 875 875 146,087 114,219 114,218
assortment
stores
SuperTarget 251 251 252 44,500 44,503 44,681
stores
CityTarget 5 - - 514 - -
stores
Total 1,781 1,763 1,767 238,139 235,721 236,248
^(a) In thousands; reflects total square feet, less office, distribution center and
vacant space.
TARGET CORPORATION
U.S. Credit Card Segment
U.S. Credit
Card Segment Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended
Results
October 27, 2012 October 29, 2011 October 27, 2012 October 29, 2011
Annualized Annualized Annualized Annualized
(millions) Amount Rate^(d) Amount Rate^(d) Amount Rate^(d) Amount Rate^(d)
(unaudited)
Finance charge $ 265 18.0 % $ 279 18.1 % $ 801 17.9 % $ 849 18.0 %
revenue
Late fees and 44 3.0 47 3.1 126 2.8 133 2.8
other revenue
Third party 19 1.3 22 1.4 59 1.3 66 1.4
merchant fees
Total revenues 328 22.3 348 22.5 986 22.1 1,048 22.2
Bad debt 46 3.1 40 2.6 141 3.2 67 1.4
expense
Operations and
marketing 138 9.4 143 9.2 409 9.2 405 8.6
expenses^(a)
Depreciation
and 3 0.2 4 0.3 11 0.2 13 0.3
amortization
Total expenses 187 12.7 187 12.1 561 12.5 485 10.3
EBIT 141 9.6 161 10.4 425 9.5 563 11.9
Interest
expense on
nonrecourse
debt
collateralized
by credit card 3 18 8 55
receivables
Segment profit $ 138 $ 143 $ 417 $ 508
Average
receivables $ 4,393 $ 2,427 $ 4,557 $ 2,443
funded by
Target^(b)
Segment pretax 12.5 % 23.6 % 12.2 % 27.7 %
ROIC^(c)
^(a) See footnote (a) to our U.S. Retail Segment Results table for an
explanation of our loyalty program charges.
^(b) Amounts represent the portion of average credit card receivables, at
par, funded by Target. These amounts exclude $1,500 million and $1,395 million
for the three and nine months ended October 27, 2012, respectively, and $3,754
million and $3,843 million for the three and nine months ended October 29,
2011, respectively, of receivables funded by nonrecourse debt collateralized
by credit card receivables.
^(c) ROIC is return on invested capital, and this rate equals our segment
profit divided by average credit card receivables, at par, funded by Target,
expressed as an annualized rate.
^(d) As an annualized percentage of average credit card receivables, at par.
Spread
Analysis - Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended
Total
Portfolio
October 27, 2012 October 29, 2011 October 27, 2012 October 29, 2011
Yield Yield Yield Yield
Amount Annualized Amount Annualized Amount Annualized Amount Annualized
(unaudited) (in Rate (in Rate (in Rate (in Rate
millions) millions) millions) millions)
EBIT $ 141 9.6 % ^(c) $ 161 10.4 % ^(c) $ 425 9.5 % ^(c) $ 563 11.9 % ^(c)
LIBOR^(a) 0.2 % 0.2 % 0.2 % 0.2 %
Spread to $ 138 9.3 % ^(c) $ 158 10.2 % ^(c) $ 415 9.3 % ^(c) $ 552 11.7 % ^(c)
LIBOR^(b)
Note: Annualized rates are calculated on a standalone basis.
^(a) Balance-weighted one-month LIBOR.
^(b) Spread to LIBOR is a metric used to analyze the performance of our total
credit card portfolio because the majority of our portfolio earns finance
charge revenue at rates tied to the Prime Rate, and the interest rate on all
nonrecourse debt collateralized by credit card receivables is tied to LIBOR.
^(c) As an annualized percentage of average credit card receivables, at par.
Receivables
Rollforward Three Months Ended Nine Months Ended
Analysis
October October October October
27, 29, 27, 29,
(millions) 2012 2011 Change 2012 2011 Change
(unaudited)
Beginning
credit card $ 5,905 $ 6,202 (4.8 ) % $ 6,357 $ 6,843 (7.1 ) %
receivables,
at par
Charges at 1,456 1,205 20.8 4,142 3,348 23.7
Target
Charges at 1,143 1,283 (10.9 ) 3,488 3,886 (10.2 )
third parties
Payments (2,902 ) (2,784 ) 4.2 (8,837 ) (8,577 ) 3.0
Other 234 238 (2.1 ) 686 644 6.4
Period-end
credit card 5,836 ^(a) 6,144 (5.0 ) 5,836 ^(a) 6,144 (5.0 )
receivables,
at par
Average credit
card $ 5,893 $ 6,181 (4.7 ) $ 5,952 $ 6,287 (5.3 )
receivables,
at par
Accounts with three or more payments (60+ days) past due as a percentage
of period-end
credit card 2.8 % 3.3 % 2.8 % 3.3 %
receivables,
at par
Accounts with four or more payments (90+ days) past due as a percentage
of period-end
credit card 1.9 % 2.2 % 1.9 % 2.2 %
receivables,
at par
Allowance for
Doubtful Three Months Ended Nine Months Ended
Accounts
October October October October
27, 29, 27, 29,
(millions) 2012 2011 Change 2012 2011 Change
(unaudited)
Allowance at
beginning of $ 365 $ 480 (23.8 ) % $ 430 $ 690 (37.7 ) %
period
Bad debt 46 40 15.3 141 67 109.8
expense
Write-offs^(b) (95 ) (122 ) (21.0 ) (326 ) (448 ) (27.1 )
Recoveries^(b) 29 33 (12.6 ) 100 122 (17.6 )
Segment
allowance at 345 ^(a) 431 (20.1 ) 345 ^(a) 431 (20.1 )
end of period
As a percentage of period-end credit
card
receivables, 5.9 % 7.0 % 5.9 % 7.0 %
at par
Net write-offs as an annualized percentage of
average credit
card 4.5 % 5.7 % 5.1 % 6.9 %
receivables,
at par
^(a) Period-end credit card receivables, at par, less the segment allowance of
$345 million, plus the gain on receivables held for sale of $156 million
represents credit card receivables, held for sale as reported on the
Consolidated Statements of Financial Position.
^(b) Write-offs include the principal amount of losses (excluding accrued and
unpaid finance charges), and recoveries include current period collections on
previously written-off balances. These amounts combined represent net
write-offs.
TARGET CORPORATION
Canadian Segment
Canadian Segment Three Months Ended Nine Months Ended
Results
October October October October
27, 29, 27, 29,
(millions) 2012 2011 Change 2012 2011 Change
(unaudited)
Sales $ - $ - - % $ - $ - - %
Cost of sales - - - - - -
Gross margin - - - - - -
SG&A 72 18 317.4 154 53 188.4
expenses^(a)
EBITDA (72 ) (18 ) 317.4 (154 ) (53 ) 188.4
Depreciation and 24 17 36.7 67 28 139.3
amortization^(b)
EBIT $ (96 ) $ (35 ) 177.2 % $ (221 ) $ (81 ) 171.5 %
EBITDA is earnings/(loss) before interest expense, income taxes, depreciation
and amortization.
EBIT is earnings/(loss) before interest expense and income
taxes.
^(a) SG&A expenses include start-up costs consisting primarily of
compensation, benefits and consulting expenses.
^(b) Depreciation and amortization results from depreciation of capital lease
assets and leasehold interests. For the three and nine months ended October
27, 2012, the lease payment obligation also gave rise to $20 million and $58
million of interest expense, respectively, compared with $15 million and $25
million for the three and nine months ended October 29, 2011, respectively,
recorded in our Consolidated Statements of Operations.
TARGET CORPORATION
Reconciliation of Non-GAAP Financial Measures
Three Months Ended Nine Months Ended
October October October October
27, 29, 27, 29,
(unaudited) 2012 2011 Change 2012 2011 Change
GAAP diluted
earnings per $ 0.96 $ 0.82 17.6 % $ 3.06 $ 2.84 7.9 %
share
Adjustments (0.06 ) 0.04 0.06 0.09
Adjusted
diluted $ 0.90 $ 0.86 4.3 % $ 3.12 $ 2.93 6.8 %
earnings per
share
A detailed
reconciliation
is provided
below.
(millions, U.S.
except per U.S. Credit Total Canadian Other Consolidated
share data) Retail Card U.S. GAAP Total
(unaudited)
Three Months
Ended October
27, 2012
Segment profit $ 963 $ 138 $ 1,100 $ (96 ) $ - $ 1,005
Other net
interest 168 20 - 189
expense^(a)
Gain on
receivables - - (156 ) (156 )
held for sale
Earnings
before income 932 (116 ) 156 972
taxes
Provision for
income 337 (33 ) 31 ^(d) 335
taxes^(b)
Net earnings $ 595 $ (83 ) $ 125 $ 637
Diluted
earnings per $ 0.90 $ (0.13 ) $ 0.19 $ 0.96
share^(c)
Three Months
Ended October
29, 2011
Segment profit $ 931 $ 143 $ 1,074 $ (35 ) $ - $ 1,039
Other net
interest 167 15 - 182
expense^(a)
Earnings
before income 907 (50 ) - 857
taxes
Provision for
income 323 (15 ) (6 ) ^(d) 302
taxes^(b)
Net earnings $ 584 $ (35 ) $ 6 $ 555
Diluted
earnings per $ 0.86 $ (0.05 ) $ 0.01 $ 0.82
share^(c)
Nine Months
Ended October
27, 2012
Segment profit $ 3,342 $ 417 $ 3,759 $ (221 ) $ - $ 3,539
Other net
interest 491 58 - 550
expense^(a)
Gain on
receivables - - (156 ) (156 )
held for sale
Earnings
before income 3,268 (279 ) 156 3,145
taxes
Provision for
income 1,187 (80 ) - ^(d) 1,107
taxes^(b)
Net earnings $ 2,081 $ (199 ) $ 156 $ 2,038
Diluted
earnings per $ 3.12 $ (0.30 ) $ 0.23 $ 3.06
share^(c)
Nine Months
Ended October
29, 2011
Segment profit $ 3,140 $ 508 $ 3,648 $ (81 ) $ - $ 3,567
Other net
interest 494 25 - 519
expense^(a)
Earnings
before income 3,154 (106 ) - 3,048
taxes
Provision for
income 1,144 (30 ) (15 ) ^(d) 1,100
taxes^(b)
Net earnings $ 2,010 $ (76 ) $ 15 $ 1,948
Diluted
earnings per $ 2.93 $ (0.11 ) $ 0.02 $ 2.84
share^(c)
Note: Our segment measure of profit is used by management to evaluate the
return on our investment and to make operating decisions. To provide
additional transparency, we have disclosed non-GAAP adjusted diluted earnings
per share, which excludes the impact of our planned 2013 Canadian market
entry, the gain on receivables held for sale and favorable resolution of
various income tax matters. We believe this information is useful in providing
period-to-period comparisons of the results of our U.S. operations. The sum of
the non-GAAP adjustments may not equal the total adjustment amounts due to
rounding.
^(a) Represents interest expense, net of interest income, not included in
U.S. Credit Card segment profit. For the three and nine months ended October
27, 2012, U.S. Credit Card segment profit included $3 million and $8 million
of interest expense on nonrecourse debt collateralized by credit card
receivables, compared with $18 million and $55 million in the respective prior
year periods. These amounts, along with other net interest expense, equal
consolidated GAAP net interest expense.
^(b) Taxes are allocated to our business segments based on estimated income
tax rates applicable to the operations of the segment for the period.
^(c) For the three and nine months ended October 27, 2012, average diluted
shares outstanding were 662.2 million and 665.8 million, respectively, and for
the three and nine months ended October 29, 2011, average diluted shares
outstanding were 678.3 million and 686.9 million, respectively.
^(d) Represents the effect of the resolution of income tax matters. The
results for the three and nine months ended October 27, 2012 also include a
$57 million tax effect related to the gain on receivables held for sale.
Contact:
Target Corporation
John Hulbert, Investors, 612-761-6627
or
Stacey Wempen, Financial Media, 612-761-6785
or
Target Media Hotline, 612-696-3400
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