Earnings Per Share $0.75 Fiscal 2002 EPS $1.81
MINNEAPOLIS, Feb 20, 2003 /PRNewswire-FirstCall via COMTEX/ --
Target
Corporation (NYSE: TGT) today reported earnings per share for the fourth quarter
ended February 1, 2003 of 75 cents, compared with 72 cents in the fourth quarter
ended February 2, 2002. Fourth quarter net earnings increased 4.4 percent to
$688 million, compared with $658 million in 2001. All earnings per share figures
refer to diluted earnings per share.
For the full year, diluted earnings per share were $1.81, an increase of 16.7
percent compared with $1.55 before a 5-cent reduction related to the impact of
restoring our securitized accounts receivable to our financial statements in
2001. On the same basis, net earnings were $1.654 billion, up 17.3 percent
compared with $1.410 billion in the prior year. On a GAAP basis, 2002 net
earnings grew 20.9 percent.
"We are pleased with our overall financial results for fiscal 2002, especially
in light of our relatively soft sales performance," said Bob Ulrich, chairman
and chief executive officer of Target Corporation. "In 2003, we will continue to
focus on delivering even greater value to our guests and achieving profitable
market share growth. We remain confident that we will continue to generate
average annual earnings per share growth of 15 percent or more over time."
Full Year Results
Total revenues in 2002 increased 10.3 percent to $43.917 billion from $39.826
billion in 2001, driven by an increase in consolidated comparable-store sales of
1.1 percent as well as contribution from Target's new store expansion and from
credit card operations. (Total revenues include retail sales and net credit
revenues. Comparable-store sales are sales from stores open longer than one
year.)
For the year, pre-tax segment profit increased 16.7 percent to $3.461 million,
compared with $2.965 million in 2001. Pre-tax profit at Target Stores increased
$542 million, or 21.3 percent. Pre-tax profit at Marshall Field's rose by $2
million and pre-tax profit at Mervyn's declined $48 million. (Pre-tax segment
profit is earnings before LIFO, securitization effects, interest, other expense
and unusual items.)
The company's full year gross margin rate increased from the prior year, due to
improvement at both Target and Mervyn's, partially offset by the mix impact of
growth at Target, our lowest gross margin rate division. (Gross margin rate
represents gross margin as a percentage of sales.)
The full year expense rate, excluding credit card operations, was unfavorable to
prior year, principally due to slower-than-expected same store sales growth.
This effect was only partially offset by the benefit of overall growth at
Target, our lowest expense rate division. (Expense rate represents selling,
general and administrative expenses as a percentage of sales. It includes buying
and occupancy, advertising, start-up and other expense, and excludes
depreciation and expenses associated with credit card operations.)
The full year contribution from the company's credit card operations increased
19.6 percent to $532 million from $445 million last year. At year-end, gross
receivables were $5.964 billion, compared with $4.092 billion at the end of
2001, due to the continued growth in issuance and usage of the Target Visa card.
The provision for bad debt expense exceeded net write-offs by $138 million for
the year, as a result of the company's consistent practice of providing for
projected future write-offs as receivables are created. Results of credit card
operations are reflected in the pre-tax segment profit of each of our three
business segments.
Fourth Quarter Results
Fourth quarter revenues increased 6.4 percent to $14.061 billion from $13.220
billion in the same period a year ago. Comparable store sales for the quarter
decreased 2.2 percent.
Fourth quarter 2002 pre-tax segment profit increased 1.4 percent to $1.291
billion, compared with $1.272 billion in the fourth quarter of 2001, due to
continued growth at Target Stores, partially offset by the declines at Mervyn's
and Marshall Field's.
The company's fourth quarter gross margin rate was favorable to the prior year,
while the expense rate in the quarter was unfavorable. Contribution from the
corporation's credit card operations to pre-tax segment profit rose 41.5
percent, or $44 million, to $150 million.
Other Factors
Fourth quarter and full year gross margin results include a pretax LIFO credit
of $12 million, or $0.01 per share, in 2002, compared with an $8 million charge
in 2001.
Net interest expense for the quarter increased $19 million, due to higher
average funded balances, partially offset by the benefit of a lower average
portfolio interest rate. For the full year, net interest expense rose $88
million compared with net interest expense and interest equivalent in 2001. This
increase is due to higher average funded balances and the repurchase of high
interest rate debt at a premium, partially offset by a lower portfolio interest
rate.
The company's annual effective income tax rate was 38.2 percent, compared with
38.0 percent last year.
Miscellaneous
Target Corporation will webcast its fourth quarter earnings conference call at
9:30am CST today. Investors and the media are invited to listen to the call
through the company's website at www.target.com (click on "company/Target
Corporation/investor information/webcasts"). A telephone replay of the call will
be available beginning at approximately 11:30am CST today through the end of
business on February 21, 2003. The replay number is (800) 934-7969.
Forward-looking statements in this release should be read in conjunction with
the cautionary statements in Exhibit (99)C to the company's 2001 Form 10-K.
Additional 2002 quarterly and annual credit card disclosures for Target Visa and
Target Corporation's proprietary credit cards are included in a separate news
release issued this morning.
Target Corporation operates large-store general merchandise formats, including
discount stores, moderate-priced promotional and traditional department stores,
as well as a direct mail and on-line business called target.direct. The company
currently operates 1,475 stores in 47 states. This included 1,147 Target stores,
264 Mervyn's stores and 64 Marshall Field's stores.
Target Corporation news releases are available at www.target.com or
www.prnewswire.com .
CONSOLIDATED RESULTS OF OPERATIONS
Three Months Ended (unaudited) Year Ended
(Millions, except per
share data) Feb. 1, Feb. 2, % Feb. 1, Feb. 2, %
2003 2002 Change 2003 2002 Change
Sales $13,711 $12,985 5.6% $42,722 $39,114 9.2%
Net credit revenues 350 235 49.4 1,195 712 68.0
Total revenues 14,061 13,220 6.4 43,917 39,826 10.3
Cost of sales 9,562 9,121 4.8 29,260 27,143 7.8
Selling, general and
administrative expense 2,676 2,457 8.9 9,416 8,461 11.3
Credit expense 233 163 42.7 765 463 65.1
Depreciation and
amortization 323 283 14.2 1,212 1,079 12.4
Interest expense 154 135 14.9 588 473 24.2
Earnings before income
taxes 1,113 1,061 4.7 2,676 2,207 21.3
Provision for income taxes 425 403 5.3 1,022 839 21.9
Net earnings $688 $658 4.4% $1,654 $1,368 20.9%
Basic earnings per share $0.76 $0.73 3.8% $1.82 $1.52 20.0%
Diluted earnings per
share $0.75 $0.72 4.3% $1.81 $1.50 20.3%
Weighted average common
shares outstanding:
Basic 909.3 903.9 908.0 901.5
Diluted 914.3 913.6 914.0 909.8
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Millions) February 1, February 2,
2003 2002
ASSETS
Cash and cash equivalents $758 $499
Accounts receivable, net 5,565 3,831
Inventory 4,760 4,449
Other 852 869
Total current assets 11,935 9,648
Property and equipment, net 15,307 13,533
Other 1,361 973
Total assets $28,603 $24,154
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Accounts payable $4,684 $4,160
Current portion of long-term debt and notes payable 975 905
Other 1,864 1,989
Total current liabilities 7,523 7,054
Long-term debt 10,186 8,088
Other 1,451 1,152
Shareholders' investment 9,443 7,860
Total liabilities and shareholders' investment $28,603 $24,154
Common shares outstanding 909.8 905.2
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended
(Millions) February 1, February 2,
2003 2002
OPERATING ACTIVITIES
Net earnings $1,654 $1,368
Reconciliation to cash flow:
Depreciation and amortization 1,212 1,079
Bad debt provision 460 230
Deferred tax provision 248 49
Other non-cash items affecting earnings 226 212
Changes in operating accounts providing/
(requiring) cash:
Accounts receivable (2,194) (1,193)
Inventory (311) (201)
Other current assets 15 (91)
Other assets (174) (178)
Accounts payable 524 584
Accrued liabilities (21) 29
Income taxes payable (79) 124
Other 30 -
Cash Flow Provided by Operations 1,590 2,012
INVESTING ACTIVITIES
Expenditures for property and equipment (3,221) (3,163)
Decrease in receivable-backed securities - (174)
Proceeds from disposals of property and equipment 32 32
Other - (5)
Cash Flow Required by Investing Activities (3,189) (3,310)
Net Financing Requirements (1,599) (1,298)
FINANCING ACTIVITIES
Increase/(decrease) in notes payable, net - (808)
Additions to long-term debt 3,153 3,250
Reductions of long-term debt (1,071) (793)
Dividends paid (218) (203)
Repurchase of stock (14) (20)
Other 8 15
Cash Flow Provided by Financing Activities 1,858 1,441
Net Increase in Cash and Cash Equivalents 259 143
Cash and Cash Equivalents at Beginning of Year 499 356
Cash and Cash Equivalents at End of Year $758 $499
Target Corporation
(Millions, except as indicated)
REVENUES and COMPARABLE-STORE SALES
Comparable-store sales are sales from stores open longer than one year.
Three Months Ended (unaudited)
% Change
Feb. 1, 2003 Feb. 2, 2002 Revenues Comp. Sales
Target $11,930 $10,941 9.0% (1.1)%
Mervyn's 1,150 1,265 (9.1) (9.3)
Marshall Field's 800 853 (6.2) (6.2)
Other 181 161 11.9 na
TOTAL $14,061 $13,220 6.4% (2.2)%
REVENUES and COMPARABLE-STORE SALES
Comparable-store sales are sales from stores open longer than one year.
Year Ended
% Change
Feb. 1, 2003 Feb. 2, 2002 Revenues Comp. Sales
Target $36,917 $32,588 13.3% 2.2%
Mervyn's 3,816 4,027 (5.2) (5.3)
Marshall Field's 2,691 2,778 (3.1) (3.7)
Other 493 433 13.8 na
TOTAL $43,917 $39,826 10.3% 1.1 %
NUMBER OF STORES, RETAIL SQUARE FEET and INVENTORY
Retail square feet in thousands; reflects total square feet less office,
warehouse and vacant space.
Number of Stores Retail Square Feet
Feb.1, 2003 Feb. 2, 2002 Feb. 1, 2003 Feb. 2, 2002 % Change
Target 1,147* 1,053* 140,255 125,245 12.0%
Mervyn's 264 264 21,425 21,425 0.0
Marshall Field's 64 64 14,845 14,954 (0.7)
Other -- -- -- -- --
TOTAL 1,475 1,381 176,525 161,624 9.2%
*Includes 94 SuperTargets in 2002 and 62 SuperTargets in 2001.
NUMBER OF STORES, RETAIL SQUARE FEET and INVENTORY
Retail square feet in thousands; reflects total square feet less office,
warehouse and vacant space.
Inventory
Feb. 1, 2003 Feb. 2, 2002 % Change
Target $3,748 $3,348 12.0%
Mervyn's 486 523 (7.1)
Marshall Field's 324 348 (6.9)
Other 202 230 (12.1)
TOTAL $4,760 $4,449 7.0%
*Includes 94 SuperTargets in 2002 and 62 SuperTargets in 2001.
PRE-TAX SEGMENT PROFIT AND EARNINGS RECONCILIATION
Pre-tax segment profit is earnings before LIFO, securitization effects,
interest, other expense and unusual items.
Three Months Ended (unaudited) Year Ended
Feb. 1, Feb. 2, % Feb. 1, Feb. 2, %
2003 2002 Change 2003 2002 Change
Target $1,165 $1,078 8.0% $3,088 $2,546 21.3%
Mervyn's 75 131 (42.9) 238 286 (16.8)
Marshall Field's 51 63 (18.9) 135 133 1.4
Total pre-tax segment
profit 1,291 1,272 1.4 3,461 2,965 16.7
LIFO credit / (provision) 12 (8) 12 (8)
Securitization adjustment
(unusual item) - - - (67)
Securitization adjustment
(interest equivalent) - - - (27)
Interest expense (154) (135) (588) (473)
Other (36) (68) (209) (183)
Earnings before income
taxes $1,113 $1,061 4.7% $2,676 $2,207 21.3%
EBITDA (unaudited)
EBITDA is pre-tax segment profit before depreciation and amortization, and
is not intended to be a substitute for GAAP reported measures of
profitability and cash flow.
Three Months Ended Year Ended
Feb. 1, Feb. 2, % Feb. 1, Feb. 2, %
2003 2002 Change 2003 2002 Change
Target $1,409 $1,284 9.6% $4,013 $3,330 20.5%
Mervyn's 113 163 (30.6) 360 412 (12.6)
Marshall Field's 82 95 (13.9) 260 268 (3.2)
Total segment EBITDA $1,604 $1,542 4.0% $4,633 $4,010 15.5%
Segment depreciation
and amortization (313) (270) (1,172) (1,045)
Pre-tax segment profit $1,291 $1,272 1.4% $3,461 $2,965 16.7%
Three Months Ended Year Ended
Feb. 1, Feb. 2, Feb. 1, Feb. 2,
2003 2002 2003 2002
Pre-tax Segment Profit
as a % of Revenues:
Target 9.8% 9.9% 8.4% 7.8%
Mervyn's 6.5% 10.3% 6.2% 7.1%
Marshall Field's 6.4% 7.4% 5.0% 4.8%
EBITDA as a % of Revenues:
Target 11.8% 11.7% 10.9% 10.2%
Mervyn's 9.8% 12.8% 9.4% 10.2%
Marshall Field's 10.3% 11.2% 9.7% 9.7%
Target Corporation
(Millions)
(Unaudited)
CREDIT CARD CONTRIBUTION
Three Months Ended Year Ended
Feb. 1, Feb. 2, Feb. 1, Feb. 2,
2003 2002 2003 2002
Revenues
Finance charges, late fees and other
revenues $329 $221 $1,126 $779
Merchant fees
Intracompany 32 34 102 102
Third-party 22 14 69 18
Total revenues 383 269 1,297 899
Expenses
Bad debt 150 99 460 230
Operations and marketing 83 64 305 224
Total expenses 233 163 765 454
Pre-tax credit contribution $150 $106 $532 $445
As a percent of average receivables
(annualized) 10.5% 11.7% 11.0% 14.7%
QUARTER-END RECEIVABLES
Feb. 1, Feb. 2,
2003 2002
Target
Guest Card $827 $1,063
Target Visa 3,774 1,567
Mervyn's 626 706
Marshall Field's 737 756
Quarter-end receivables $5,964 $4,092
Past due* 3.8% 3.2%
Quarter-to-date average receivables $5,731 $3,642
Year-to-date average receivables $4,841 $3,016
* Accounts with three or more payments past due as a percent of total
outstanding receivables.
ALLOWANCE FOR DOUBTFUL ACCOUNTS
Three Months Ended Year Ended
Feb. 1, Feb. 2, Feb. 1, Feb. 2,
2003 2002 2003 2002
Allowance at beginning of period $360 $216 $261 $211
Bad debt provision 150 99 460 230
Net write-offs (111) (54) (322) (180)
Allowance at end of period $399 $261 $399 $261
As a percent of period-end receivables 6.7% 6.4% 6.7% 6.4%
SOURCE Target Corporation
CONTACT:
Investors, Susan Kahn, +1-612-761-6735, Financial Media, Cathy
Wright, +1-612-761-6627, both for Target Corporation
URL: http://www.target.com
Copyright (C) 2003 PR Newswire. All rights reserved.
