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8-K
TARGET CORP filed this Form 8-K on 05/11/2018
Entire Document
 
Document


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported) May 11, 2018
 
Target Corporation
(Exact name of registrant as specified in its charter)
Minnesota
 
1-6049
 
41-0215170
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
(I.R.S. Employer Identification No.)
1000 Nicollet Mall, Minneapolis, Minnesota 55403
(Address of principal executive offices, including zip code)
(612) 304-6073
(Registrant’s telephone number, including area code)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o            Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o            Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o            Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o            Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company  o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o 

 




Item 8.01.             Other Events.
 
Beginning February 4, 2018, Target Corporation (the Company) adopted the new accounting standards for revenue recognition, leases, and pensions. The Company is filing this Form 8-K to present the Company's previously reported financial information on a basis consistent with the standards. The financial information included in the Company's first quarter earnings release and Form 10-Q will reflect the adoption of the standards, with prior periods adjusted to conform with the current period presentation.

Beginning with the first quarter 2018, the Company will no longer present segment EBIT and a segment rate analysis in its quarterly earnings releases and within Management's Discussion and Analysis of Financial Condition and Results of Operations in Forms 10-Q and 10-K. Instead, the Company will present its analysis of results of operations, including an analysis of operating income, on a consolidated basis. For additional clarity of the impact of the new accounting standards, the Company is showing the impact using both its previous presentation of its analysis of results of operations, including segment EBIT, and its planned future presentation of its analysis of consolidated operating income.

Revenue Recognition

The Company adopted Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), using the full retrospective approach. Adoption of the new revenue standard did not materially affect its consolidated net earnings, financial position, or cash flows.
The new standard primarily impacts the Company's consolidated financial statements as follows:
Reclassification of certain ancillary income streams, including credit card profit sharing income, from Sales and Selling, General, and Administrative Expenses (SG&A) to Other Revenue on its Consolidated Statements of Operations; and
Minor changes to the timing of revenue recognition, primarily related to certain promotional gift card programs, resulting in an adjustment to retained earnings of approximately $10 million.

Leases

The Company adopted ASU No. 2016-02, Leases (Topic 842) using the modified retrospective approach. The new standard requires lessees to record assets and liabilities on the statement of financial position for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the statements of operations.
The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed it to carryforward the historical lease classification. In addition, the Company elected the hindsight practical expedient to determine the reasonably certain lease term for existing leases. Election of the hindsight practical expedient resulted in the shortening of lease terms for certain existing leases and the useful lives of corresponding leasehold improvements. The Company made an accounting policy election to keep leases with an initial term of 12 months or less off of its Consolidated Statements of Financial Position and will recognize those lease payments in its Consolidated Statements of Operations on a straight-line basis over the lease term.
Adoption of the new standard resulted in the recording of additional net lease assets and lease liabilities of approximately $1.3 billion and $1.4 billion, respectively, as of February 4, 2018. The difference between the additional lease assets and lease liabilities was recorded as an adjustment to retained earnings. The standard did not materially affect the Company's consolidated net earnings and had no impact on cash flows.

Pensions

The Company adopted ASU No. 2017-07, Compensation – Retirement Benefits (ASC Topic 715), which requires employers to disaggregate and present separately the current service cost component from the other components of net benefit cost within the statement of operations. The Company retrospectively reclassified the other components of net benefit cost from SG&A to an Other Income and Expense line on its Consolidated Statements of Operations upon adoption.

Refer to Exhibit 99 for financial information on a basis consistent with the new standards.


2



Item 9.01.             Financial Statements and Exhibits.
 
(d)                                 Exhibits.

                        

3



SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
TARGET CORPORATION
 
 
Date: May 11, 2018
/s/ Cathy R. Smith
 
Cathy R. Smith
 
Executive Vice President and Chief Financial Officer


4
Exhibit
Exhibit 99




Consolidated Statements of Operations
 
 
 
 
 
 
 
 
Adjusted for new standards
(millions, except per share data) (unaudited)
2017
2016
2015
Sales
$
71,786

$
69,414

$
73,717

Other revenue
928

857

777

Total revenue
72,714

70,271

74,494

Cost of sales
51,125

49,145

52,241

Selling, general and administrative expenses
15,140

14,217

15,406

Depreciation and amortization (exclusive of depreciation included in cost of sales)
2,225

2,045

1,969

Operating income
4,224

4,864

4,878

Net interest expense
653

991

607

Net other (income) / expense
(59
)
(88
)
(652
)
Earnings from continuing operations before income taxes
3,630

3,961

4,923

Provision for income taxes
722

1,295

1,602

Net earnings from continuing operations
2,908

2,666

3,321

Discontinued operations, net of tax
6

68

42

Net earnings
$
2,914

$
2,734

$
3,363

Basic earnings per share
 
 
 
Continuing operations
$
5.32

$
4.61

$
5.29

Discontinued operations
0.01

0.12

0.07

Net earnings per share
$
5.32

$
4.73

$
5.35

Diluted earnings per share
 
 
 
Continuing operations
$
5.29

$
4.58

$
5.25

Discontinued operations
0.01

0.12

0.07

Net earnings per share
$
5.29

$
4.69

$
5.31

Note: Per share amounts may not foot due to rounding. 2017 was a 53-week year.


1


TARGET CORPORATION
 
Effect of Accounting Standards Adoption on Consolidated Statement of Operations
 
 
 
 
 
 
 
 
 
 
2017
As Previously
Reported
Effect of the Adoption of
 
 
 
ASC
Topic 606
(Revenue
Recognition)
 
ASC
Topic 842
(Leases)
 
ASU
2017-07
(Pension)
 
(millions, except per share data) (unaudited)
 
 
 
2017
As Adjusted
Sales
$
71,879

$
(93
)
(a) 
$

 
$

 
$
71,786

Other revenue

928

(a) 

 

 
928

Total revenue
71,879

835

 

 

 
72,714

Cost of sales
51,125


 

 

 
51,125

Selling, general and administrative expenses
14,248

835

(a) 
(2
)
(b) 
59

(c) 
15,140

Depreciation and amortization (exclusive of depreciation included in cost of sales)
2,194


 
31

(b) 

 
2,225

Operating income
4,312


 
(29
)
 
(59
)
 
4,224

Net interest expense
666


 
(13
)
(b) 

 
653

Net other (income) / expense


 

 
(59
)
(c) 
(59
)
Earnings from continuing operations before income taxes
3,646


 
(16
)
 

 
3,630

Provision for income taxes
718

(2
)
 
6

(d) 

 
722

Net earnings from continuing operations
2,928

2

 
(22
)
 

 
2,908

Discontinued operations, net of tax
6


 

 

 
6

Net earnings
$
2,934

$
2

 
$
(22
)
 
$

 
$
2,914

Basic earnings per share
 
 
 
 
 
 
 
 
Continuing operations
$
5.35

 
 
 
 
 
 
$
5.32

Discontinued operations
0.01

 
 
 
 
 
 
0.01

Net earnings per share
$
5.36

 
 
 
 
 
 
$
5.32

Diluted earnings per share
 
 
 
 
 
 
 
 
Continuing operations
$
5.32

 
 
 
 
 
 
$
5.29

Discontinued operations
0.01

 
 
 
 
 
 
0.01

Net earnings per share
$
5.33

 
 
 
 
 
 
$
5.29

Note: 2017 was a 53-week year. Per share amounts may not foot due to rounding. The sum of "As Previously Reported" amounts and effect of the adoption of the new standards may not equal "As Adjusted" amounts due to rounding. Footnote explanations are provided on page 4.

2



Effect of Accounting Standards Adoption on Consolidated Statement of Operations
 
 
 
 
 
 
 
 
 
 
2016
As Previously
Reported
Effect of the Adoption of
 
 
 
ASC
Topic 606
(Revenue
Recognition)
 
ASC
Topic 842
(Leases)
 
ASU
2017-07
(Pension)
 
(millions, except per share data) (unaudited)
 
 
 
2016
As Adjusted
Sales
$
69,495

$
(80
)
(a) 
$

 
$

 
$
69,414

Other revenue

857

(a) 

 

 
857

Total revenue
69,495

777

 

 

 
70,271

Cost of sales
49,145


 

 

 
49,145

Selling, general and administrative expenses
13,356

777

(a) 
(4
)
(b) 
88

(c) 
14,217

Depreciation and amortization (exclusive of depreciation included in cost of sales)
2,025


 
20

(b) 

 
2,045

Operating income
4,969


 
(16
)
 
(88
)
 
4,864

Net interest expense
1,004


 
(13
)
(b) 

 
991

Net other (income) / expense


 

 
(88
)
(c) 
(88
)
Earnings from continuing operations before income taxes
3,965


 
(3
)
 

 
3,961

Provision for income taxes
1,296


 
(1
)
 

 
1,295

Net earnings from continuing operations
2,669


 
(2
)
 

 
2,666

Discontinued operations, net of tax
68


 

 

 
68

Net earnings
$
2,737

$

 
$
(2
)
 
$

 
$
2,734

Basic earnings per share
 
 
 
 
 
 
 
 
Continuing operations
$
4.62

 
 
 
 
 
 
$
4.61

Discontinued operations
0.12

 
 
 
 
 
 
0.12

Net earnings per share
$
4.74

 
 
 
 
 
 
$
4.73

Diluted earnings per share
 
 
 
 
 
 
 
 
Continuing operations
$
4.58

 
 
 
 
 
 
$
4.58

Discontinued operations
0.12

 
 
 
 
 
 
0.12

Net earnings per share
$
4.70

 
 
 
 
 
 
$
4.69

Note: Per share amounts may not foot due to rounding. The sum of "As Previously Reported" amounts and effect of the adoption of the new standards may not equal "As Adjusted" amounts due to rounding. Footnote explanations are provided on page 4.


3



Effect of Accounting Standards Adoption on Consolidated Statement of Operations
 
 
 
 
 
 
2015
As Previously
Reported
Effect of the Adoption of
 
 
 
ASC
Topic 606
(Revenue
Recognition)
 
ASU
2017-07
(Pension)
 
(millions, except per share data) (unaudited)
 
 
2015
As Adjusted
Sales
$
73,785

$
(68
)
(a) 
$

 
$
73,717

Other revenue

777

(a) 

 
777

Total revenue
73,785

709

 

 
74,494

Cost of sales
52,241


 

 
52,241

Selling, general and administrative expenses
14,665

709

(a) 
32

(c) 
15,406

Depreciation and amortization (exclusive of depreciation included in cost of sales)
1,969


 

 
1,969

Operating income
4,910


 
(32
)
 
4,878

Gain on sale
(620
)

 
620

(e) 

Net interest expense
607


 

 
607

Net other (income) / expense


 
(652
)
(e) 
(652
)
Earnings from continuing operations before income taxes
4,923


 

 
4,923

Provision for income taxes
1,602


 

 
1,602

Net earnings from continuing operations
3,321


 

 
3,321

Discontinued operations, net of tax
42


 

 
42

Net earnings
$
3,363

$

 
$

 
$
3,363

Basic earnings per share
 
 
 
 
 
 
Continuing operations
$
5.29

 
 
 
 
$
5.29

Discontinued operations
0.07

 
 
 
 
0.07

Net earnings per share
$
5.35

 
 
 
 
$
5.35

Diluted earnings per share
 
 
 
 
 
 
Continuing operations
$
5.25

 
 
 
 
$
5.25

Discontinued operations
0.07

 
 
 
 
0.07

Net earnings per share
$
5.31

 
 
 
 
$
5.31

Note: Per share amounts may not foot due to rounding. The sum of "As Previously Reported" amounts and effect of the adoption of the new standards may not equal "As Adjusted" amounts due to rounding.

(a) 
For 2017, 2016, and 2015, we reclassified $694 million, $663 million, and $641 million of profit-sharing income under our credit card program agreement to Other Revenue from SG&A. In addition, we reclassified certain advertising, rental, and other miscellaneous revenues, none of which are individually significant, from Sales and SG&A Expenses to Other Revenues.
(b) 
Relates to the impact of changes in lease terms for certain leases resulting from our election of the hindsight practical expedient.
(c) 
Primarily relates to other components of net benefit cost related to our pension plan reclassified from SG&A Expenses to Net Other (Income) / Expense.
(d) 
Includes tax expense related to remeasurement of incremental deferred tax assets from the adoption of the new lease standard due to the Tax Cuts and Jobs Act (Tax Act), partially offset by the tax benefit of lower pretax earnings.
(e) 
In addition to other components of net benefit cost related to our pension plan reclassified from SG&A Expenses, we reclassified the gain on the sale of our pharmacy and clinic businesses to Net Other (Income) / Expense.

4




Consolidated Statements of Financial Position
 

 

 
Adjusted for new standards
(millions) (unaudited)
February 3, 2018
January 28, 2017
Assets
 
 
Cash and cash equivalents
$
2,643

$
2,512

Inventory
8,597

8,253

Other current assets
1,300

1,202

Total current assets
12,540

11,967

Property and equipment
 

 

Land
6,095

6,106

Buildings and improvements
28,131

27,318

Fixtures and equipment
5,623

5,503

Computer hardware and software
2,645

2,651

Construction-in-progress
440

200

Accumulated depreciation
(18,398
)
(17,536
)
Property and equipment, net
24,536

24,242

Operating lease assets
1,884

1,808

Other noncurrent assets
1,343

707

Total assets
$
40,303

$
38,724

Liabilities and shareholders’ investment
 

 

Accounts payable
$
8,677

$
7,252

Accrued and other current liabilities
4,094

3,559

Current portion of long-term debt and other borrowings
281

1,729

Total current liabilities
13,052

12,540

Long-term debt and other borrowings
11,117

10,862

Noncurrent operating lease liabilities
1,924

1,861

Deferred income taxes
693

836

Other noncurrent liabilities
1,866

1,710

Total noncurrent liabilities
15,600

15,269

Shareholders’ investment
 

 

Common stock
45

46

Additional paid-in capital
5,858

5,661

Retained earnings
6,495

5,846

Accumulated other comprehensive loss
(747
)
(638
)
Total shareholders’ investment
11,651

10,915

Total liabilities and shareholders’ investment
$
40,303

$
38,724



5



Consolidated Statement of Financial Position
 

 
 

 
 
 
 

 
 
 
 
 
 
 
 
 
February 3, 2018
As Previously
Reported
 
Effect of the Adoption of
 
 
(millions) (unaudited)
 
ASC
Topic 606
(Revenue
Recognition)
 
ASC
Topic 842
(Leases)
 
February 3, 2018
As Adjusted
Assets
 
 
 

 
 
 
 
Cash and cash equivalents
$
2,643

 
$

 
$

 
$
2,643

Inventory
8,657

 
(60
)
(a) 

 
8,597

Other current assets
1,264

 
60

(a) 
(24
)
(b) 
1,300

Total current assets
12,564

 

 
(24
)
 
12,540

Property and equipment
 

 
 
 
 
 
 

Land
6,095

 

 

 
6,095

Buildings and improvements
28,396

 

 
(265
)
(c) 
28,131

Fixtures and equipment
5,623

 

 

 
5,623

Computer hardware and software
2,645

 

 

 
2,645

Construction-in-progress
440

 

 

 
440

Accumulated depreciation
(18,181
)
 

 
(217
)
(c) 
(18,398
)
Property and equipment, net
25,018

 

 
(482
)
 
24,536

Operating lease assets

 

 
1,884

(d) 
1,884

Other noncurrent assets
1,417

 

 
(74
)
(e) 
1,343

Total assets
$
38,999

 
$

 
$
1,304

 
$
40,303

Liabilities and shareholders’ investment
 

 
 
 
 
 
 

Accounts payable
$
8,677

 
$

 
$

 
$
8,677

Accrued and other current liabilities
4,254

 
(14
)
(k) 
(146
)
(f) 
4,094

Current portion of long-term debt and other borrowings
270

 

 
11

(g) 
281

Total current liabilities
13,201

 
(14
)
 
(135
)
 
13,052

Long-term debt and other borrowings
11,317

 

 
(200
)
(g) 
11,117

Noncurrent operating lease liabilities

 

 
1,924

(h) 
1,924

Deferred income taxes
713

 
4

 
(24
)
 
693

Other noncurrent liabilities
2,059

 

 
(192
)
(i) 
1,866

Total noncurrent liabilities
14,089

 
4

 
1,508

 
15,600

Shareholders’ investment
 

 
 
 
 
 
 

Common stock
45

 

 

 
45

Additional paid-in capital
5,858

 

 

 
5,858

Retained earnings
6,553

 
10

(k) 
(69
)
(j) 
6,495

Accumulated other comprehensive loss
(747
)
 

 

 
(747
)
Total shareholders’ investment
11,709

 
10

 
(69
)
 
11,651

Total liabilities and shareholders’ investment
$
38,999

 
$

 
$
1,304

 
$
40,303

Note: The sum of "As Previously Reported" amounts and effect of the adoption of the new standards may not equal "As Adjusted" amounts due to rounding. Footnote explanations are provided on page 7.

6



Consolidated Statement of Financial Position
 

 
 

 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
Effect of the Adoption of
 
 
(millions) (unaudited)
January 28, 2017
As Previously
Reported
 
ASC
Topic 606
(Revenue
Recognition)
 
ASC
Topic 842
(Leases)
 
January 28, 2017
As Adjusted
Assets
 
 
 

 
 
 
 
Cash and cash equivalents
$
2,512

 
$

 
$

 
$
2,512

Inventory
8,309

 
(56
)
(a) 

 
8,253

Other current assets
1,169

 
56

(a) 
(23
)
(b) 
1,202

Total current assets
11,990

 

 
(23
)
 
11,967

Property and equipment
 

 
 
 
 
 
 

Land
6,106

 

 

 
6,106

Buildings and improvements
27,611

 

 
(293
)
(c) 
27,318

Fixtures and equipment
5,503

 

 

 
5,503

Computer hardware and software
2,651

 

 

 
2,651

Construction-in-progress
200

 

 

 
200

Accumulated depreciation
(17,413
)
 

 
(123
)
(c) 
(17,536
)
Property and equipment, net
24,658

 

 
(416
)
 
24,242

Operating lease assets

 

 
1,808

(d) 
1,808

Other noncurrent assets
783

 

 
(76
)
(e) 
707

Total assets
$
37,431

 
$

 
$
1,293

 
$
38,724

Liabilities and shareholders’ investment
 

 
 
 
 
 
 

Accounts payable
$
7,252

 
$

 
$

 
$
7,252

Accrued and other current liabilities
3,737

 
(14
)
(k) 
(164
)
(f) 
3,559

Current portion of long-term debt and other borrowings
1,718

 

 
11

(g) 
1,729

Total current liabilities
12,707

 
(14
)
 
(153
)
 
12,540

Long-term debt and other borrowings
11,031

 

 
(169
)
(g) 
10,862

Noncurrent operating lease liabilities

 
 
 
1,861

(h) 
1,861

Deferred income taxes
861

 
5

 
(30
)
 
836

Other noncurrent liabilities
1,879

 

 
(169
)
(i) 
1,710

Total noncurrent liabilities
13,771

 
5

 
1,493

 
15,269

Shareholders’ investment
 

 
 
 
 
 
 

Common stock
46

 

 

 
46

Additional paid-in capital
5,661

 

 

 
5,661

Retained earnings
5,884

 
9

(k) 
(47
)
(j) 
5,846

Accumulated other comprehensive loss
(638
)
 

 

 
(638
)
Total shareholders’ investment
10,953

 
9

 
(47
)
 
10,915

Total liabilities and shareholders’ investment
$
37,431

 
$

 
$
1,293

 
$
38,724

Note: The sum of "As Previously Reported" amounts and effect of the adoption of the new standards may not equal "As Adjusted" amounts due to rounding.

(a) 
Represents estimated merchandise returns, which were reclassified from Inventory to Other Current Assets.
(b) 
Represents prepaid rent reclassified to Operating Lease Assets.
(c) 
Represents impact of changes in finance lease terms and related leasehold improvements (net of accumulated depreciation) due to election of the hindsight practical expedient and derecognition of assets related to build-to-suit transactions.
(d) 
Represents capitalization of operating lease assets and reclassification of leasehold acquisition costs, straight-line rent accrual, and tenant incentives.
(e) 
Represents reclassification of leasehold acquisition costs to Operating Lease Assets.
(f) 
Represents reclassification of straight-line rent accrual to Operating Lease Assets partially offset by recognition of the current portion of operating lease liabilities.
(g) 
Represents the impact of changes in financing lease terms for certain leases due to the election of the hindsight practical expedient.
(h) 
Represents recognition of operating lease liabilities.
(i) 
Represents derecognition of liabilities related to build-to-suit transactions and reclassification of tenant incentives to Operating Lease Assets.
(j) 
Represents the retained earnings impact of changes in lease terms due to the use of hindsight, primarily from the shortening of lease terms for certain existing leases and the useful lives of corresponding leasehold improvements.
(k) 
Primarily represents the impact of a change in timing of revenue recognition for certain promotional gift card programs.

7




Quarterly Results
 
 
Effect of the Adoption of
 
 
 
First Quarter
As Previously
Reported
 
ASC
Topic 606
(Revenue
Recognition)
 
ASC
Topic 842
(Leases)
 
ASU
2017-07
(Pension)
 
First Quarter
As Adjusted
(millions, except per share data) (unaudited)
2017

2016

 
2017

2016

 
2017

2016

 
2017

2016

 
2017

2016

Sales
$
16,017

$
16,196

 
$
(22
)
$
(19
)
 
$

$

 
$

$

 
$
15,995

$
16,177

Other revenue


 
228

203

 


 


 
228

203

Total revenue
16,017

16,196

 
206

184

 


 


 
16,223

16,380

Cost of sales
11,199

11,250

 


 


 


 
11,199

11,250

Selling, general, and administrative expenses
3,132

3,153

 
206

184

 


 
15

10

 
3,353

3,347

Depreciation and amortization (exclusive of depreciation included in cost of sales)
508

481

 


 
8

7

 


 
516

488

Operating income
1,178

1,312

 


 
(8
)
(7
)
 
(15
)
(10
)
 
1,155

1,295

Net interest expense
144

415

 


 
(3
)
(3
)
 


 
140

411

Net other (income) / expense


 


 


 
(15
)
(10
)
 
(15
)
(10
)
Earnings from continuing operations before income taxes
1,034

897

 


 
(5
)
(4
)
 


 
1,030

894

Provision for income taxes
357

283

 


 
(2
)
(1
)
 


 
355

282

Net earnings from continuing operations
677

614

 


 
(3
)
(3
)
 


 
675

612

Discontinued operations, net of tax
4

18

 


 


 


 
3

18

Net earnings
$
681

$
632

 
$

$

 
$
(3
)
$
(3
)
 
$

$

 
$
678

$
630

Basic earnings per share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Continuing operations
$
1.23

$
1.03

 
 
 
 
 
 
 
 
 
 
$
1.22

$
1.02

Discontinued operations
0.01

0.03

 
 
 
 
 
 
 
 
 
 
0.01

0.03

Net earnings per share
$
1.23

$
1.06

 
 
 
 
 
 
 
 
 
 
$
1.23

$
1.05

Diluted earnings per share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Continuing operations
$
1.22

$
1.02

 
 
 
 
 
 
 
 
 
 
$
1.21

$
1.01

Discontinued operations
0.01

0.03

 
 
 
 
 
 
 
 
 
 
0.01

0.03

Net earnings per share
$
1.23

$
1.05

 
 
 
 
 
 
 
 
 
 
$
1.22

$
1.04

Note: Per share amounts may not foot due to rounding. The sum of "As Previously Reported" amounts and effect of the adoption of the new standards may not equal "As Adjusted" amounts due to rounding.


8



Quarterly Results
 
 
Effect of the Adoption of
 
 
 
Second Quarter
As Previously
Reported
 
ASC
Topic 606
(Revenue
Recognition)
 
ASC
Topic 842
(Leases)
 
ASU
2017-07
(Pension)
 
Second Quarter
As Adjusted
(millions, except per share data) (unaudited)
2017

2016

 
2017

2016

 
2017

2016

 
2017

2016

 
2017

2016

Sales
$
16,429

$
16,169

 
$
(19
)
$
(15
)
 
$

$

 
$

$

 
$
16,410

$
16,154

Other revenue


 
224

204

 


 


 
224

204

Total revenue
16,429

16,169

 
205

189

 


 


 
16,634

16,358

Cost of sales
11,419

11,172

 


 


 


 
11,419

11,172

Selling, general, and administrative expenses
3,382

3,249

 
205

189

 
(2
)
(1
)
 
15

28

 
3,601

3,465

Depreciation and amortization (exclusive of depreciation included in cost of sales)
514

500

 


 
8

6

 


 
521

506

Operating income
1,114

1,248

 


 
(6
)
(5
)
 
(15
)
(28
)
 
1,093

1,215

Net interest expense
135

307

 


 
(3
)
(3
)
 


 
131

304

Net other (income) / expense


 


 


 
(15
)
(28
)
 
(15
)
(28
)
Earnings from continuing operations before income taxes
979

941

 


 
(3
)
(2
)
 


 
977

939

Provision for income taxes
308

316

 


 
(1
)
(1
)
 


 
307

315

Net earnings from continuing operations
671

625

 


 
(2
)
(1
)
 


 
670

624

Discontinued operations, net of tax
1

55

 


 


 


 
1

55

Net earnings
$
672

$
680

 
$

$

 
$
(2
)
$
(1
)
 
$

$

 
$
671

$
679

Basic earnings per share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Continuing operations
$
1.22

$
1.07

 
 
 
 
 
 
 
 
 
 
$
1.22

$
1.07

Discontinued operations

0.09

 
 
 
 
 
 
 
 
 
 

0.09

Net earnings per share
$
1.22

$
1.17

 
 
 
 
 
 
 
 
 
 
$
1.22

$
1.17

Diluted earnings per share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Continuing operations
$
1.22

$
1.07

 
 
 
 
 
 
 
 
 
 
$
1.21

$
1.06

Discontinued operations

0.09

 
 
 
 
 
 
 
 
 
 

0.09

Net earnings per share
$
1.22

$
1.16

 
 
 
 
 
 
 
 
 
 
$
1.22

$
1.16

Note: Per share amounts may not foot due to rounding. The sum of "As Previously Reported" amounts and effect of the adoption of the new standards may not equal "As Adjusted" amounts due to rounding.


9



Quarterly Results
 
 
Effect of the Adoption of
 
 
 
Third Quarter
As Previously
Reported
 
ASC
Topic 606
(Revenue
Recognition)
 
ASC
Topic 842
(Leases)
 
ASU
2017-07
(Pension)
 
Third Quarter
As Adjusted
(millions, except per share data) (unaudited)
2017

2016

 
2017

2016

 
2017

2016

 
2017

2016

 
2017

2016

Sales
$
16,667

$
16,441

 
$
(20
)
$
(18
)
 
$

$

 
$

$

 
$
16,647

$
16,423

Other revenue


 
227

215

 


 


 
227

215

Total revenue
16,667

16,441

 
207

197

 


 


 
16,874

16,638

Cost of sales
11,712

11,536

 


 


 


 
11,712

11,536

Selling, general, and administrative expenses
3,512

3,339

 
207

197

 
(2
)
(1
)
 
15

25

 
3,733

3,562

Depreciation and amortization (exclusive of depreciation included in cost of sales)
574

505

 


 
9

5

 


 
582

509

Operating income
869

1,061

 


 
(7
)
(4
)
 
(15
)
(25
)
 
847

1,031

Net interest expense
254

142

 


 
(3
)
(3
)
 


 
251

138

Net other (income) / expense


 


 


 
(15
)
(25
)
 
(15
)
(25
)
Earnings from continuing operations before income taxes
615

919

 


 
(4
)
(1
)
 


 
611

918

Provision for income taxes
137

311

 


 
(1
)

 


 
135

310

Net earnings from continuing operations
478

608

 


 
(3
)
(1
)
 


 
476

608

Discontinued operations, net of tax
2


 


 


 


 
2

(1
)
Net earnings
$
480

$
608

 
$

$

 
$
(3
)
$
(1
)
 
$

$

 
$
478

$
607

Basic earnings per share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Continuing operations
$
0.88

$
1.07

 
 
 
 
 
 
 
 
 
 
$
0.87

$
1.07

Discontinued operations


 
 
 
 
 
 
 
 
 
 


Net earnings per share
$
0.88

$
1.07

 
 
 
 
 
 
 
 
 
 
$
0.88

$
1.06

Diluted earnings per share
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Continuing operations
$
0.87

$
1.06

 
 
 
 
 
 
 
 
 
 
$
0.87

$
1.06

Discontinued operations


 
 
 
 
 
 
 
 
 
 


Net earnings per share
$
0.88

$
1.06

 
 
 
 
 
 
 
 
 
 
$
0.87

$
1.06

Note: Per share amounts may not foot due to rounding. The sum of "As Previously Reported" amounts and effect of the adoption of the new standards may not equal "As Adjusted" amounts due to rounding.

10



Quarterly Results
 
 
Effect of the Adoption of
 
 
 
Fourth Quarter
As Previously
Reported
 
ASC
Topic 606
(Revenue
Recognition)
 
ASC
Topic 842
(Leases)
 
ASU
2017-07
(Pension)
 
Fourth Quarter
As Adjusted
(millions, except per share data) (unaudited)
2017

2016

 
2017

2016

 
2017

2016

 
2017

2016

 
2017

2016

Sales
$
22,766

$
20,690

 
$
(32
)
$
(29
)
 
$

$

 
$

$

 
$
22,734

$
20,661

Other revenue


 
249

235

 


 


 
249

235

Total revenue
22,766

20,690

 
217

206

 


 


 
22,983

20,896

Cost of sales
16,795

15,188

 


 


 


 
16,795

15,188

Selling, general, and administrative expenses
4,221

3,614

 
217

206

 
2

(2
)
 
14

25

 
4,454

3,844

Depreciation and amortization (exclusive of depreciation included in cost of sales)
598

540

 


 
7

3

 


 
605

542

Operating income
1,152

1,348

 


 
(9
)
(1
)
 
(14
)
(25
)
 
1,129

1,322

Net interest expense
134

140

 


 
(3
)
(3
)
 


 
131

137

Net other (income) / expense


 


 


 
(14
)
(25
)
 
(14
)
(25
)
Earnings from continuing operations before income taxes
1,018

1,208

 


 
(6
)
2

 


 
1,012

1,210

Provision for income taxes
(84
)
387

 
(2
)

 
10

1

 


 
(76
)
387

Net earnings from continuing operations
1,102

821

 
2


 
(16
)
1

 


 
1,088

823

Discontinued operations, net of tax
(1
)
(4
)
 


 


 


 
(1
)
(5
)
Net earnings
$
1,101