Target Reports Third Quarter 2015 Earnings
Adjusted EPS up 8.6% to
-
Third quarter Adjusted EPS of
$0.86 was above the midpoint of the company’s guidance of$0.79 to $0.89 . The Company now expects full-year 2015 Adjusted EPS of$4.65 to $4.75 , compared with prior guidance of$4.60 to $4.75 . - Third quarter comparable sales growth of 1.9 percent was near the high-end of the company’s expectations, driven by traffic growth of 1.4 percent. On a two-year stacked basis, sales and traffic growth were stronger in the third quarter than either of the first two quarters of the year.
- Comparable sales in signature categories (Style, Baby, Kids and Wellness) grew more than 2.5 times faster than the company average.
- Digital channel sales increased 20 percent, contributing 0.4 percentage points to comparable sales growth.
-
Target returned$1.3 billion to shareholders in the third quarter through dividends and share repurchases.
1Adjusted EPS, a non-GAAP financial measure, excludes restructuring charges and the impact of certain matters not related to the Company’s single segment, such as discontinued operations, data breach expenses and certain other expenses that are discretely managed. See the “Discontinued Operations” and “Miscellaneous” sections of this release for additional information about the items that have been excluded from Adjusted EPS. |
“We’re pleased with our third quarter financial results, as both sales
and adjusted earnings per share were near the upper end of our
expectations,” said
Fiscal 2015 Earnings Guidance
In fourth quarter 2015,
The Company now expects full-year 2015 Adjusted EPS of
Target’s full-year 2015 GAAP EPS will include the following items, which are excluded from Adjusted EPS and reflected in our year-to-date GAAP results through the third quarter:
-
Restructuring costs of
$135 million , or(13) cents per share -
Net pre-tax data breach expenses of
$38 million , or(4) cents per share -
Pre-tax asset-impairment expenses of
$39 million , or(5) cents per share -
A
1 cent per share benefit from the favorable resolution of various income tax matters -
A
6 cent per share benefit related to discontinued Canadian operations
Guidance for GAAP EPS does not include an estimate of future data breach-related expenses, restructuring costs, discontinued operations costs, the potential impact from the resolution of income tax matters or any impact from the potential close of the pharmacy sale transaction with CVS.
Segment Results
Third quarter 2015 sales increased 2.1 percent to
Third quarter EBITDA and EBIT margin rates were 8.6 percent and 5.5 percent, respectively, compared with 8.4 percent and 5.3 percent in 2014. Third quarter gross margin rate was 29.4 percent, compared with 29.5 percent in 2014, as benefits from a favorable merchandise mix and the comparison over last year’s intense promotional markdowns were offset by reimbursement pressure in Healthcare and the impact of investments in quality and innovation on the company’s owned and exclusive brands. Third quarter SG&A expense rate was 20.7 percent in 2015, compared with 21.1 percent in 2014, reflecting the discontinuation of an outdated retiree medical plan and continued expense discipline across the organization.
Interest Expense and Taxes from Continuing Operations
The Company’s third quarter 2015 net interest expense was
Capital Returned to Shareholders
The Company returned
-
In the quarter, the Company repurchased 12.1 million shares of common
stock at an average price of
$77.87 , for a total investment of$942 million . -
The Company also paid dividends of
$352 million in the quarter, an increase of 6.7 percent from$330 million last year.
Year-to-date, the company has repurchased 27.3 million shares at an
average price of
For the trailing twelve months through third quarter 2015, after-tax return on invested capital (ROIC) was 13.0 percent, compared with 11.2 percent for the twelve months through third quarter 2014, driven by higher profits on a stable base of invested capital. See the “Reconciliation of Non-GAAP Financial Measures” section of this release for additional information about the Company’s ROIC calculation.
Discontinued Operations
Third quarter net earnings from discontinued operations were
Certain assets and liabilities of Target’s discontinued operations are
based on estimates. The recorded assets include estimated receivables,
and the remaining liabilities include accruals for estimated losses
related to claims that may be asserted against
Conference Call Details
Miscellaneous
Statements in this release regarding fourth quarter and full-year 2015
earnings per share guidance and future expenses related to discontinued
operations 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
In addition to the GAAP results provided in this release, the Company
provides Adjusted EPS for the three- and nine-month periods ended
About
TARGET CORPORATION |
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Consolidated Statements of Operations |
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Three Months Ended | Nine Months Ended | |||||||||||||||||||||
October 31, | November 1, | October 31, | November 1, | |||||||||||||||||||
(millions, except per share data) (unaudited) | 2015 | 2014 | Change | 2015 | 2014 | Change | ||||||||||||||||
Sales | $ | 17,613 | $ | 17,254 | 2.1 |
% |
$ | 52,159 | $ | 50,868 | 2.5 | % | ||||||||||
Cost of sales | 12,440 | 12,171 | 2.2 | 36,402 | 35,716 | 1.9 | ||||||||||||||||
Selling, general and administrative expenses | 3,736 | 3,644 | 2.5 | 10,745 | 10,619 | 1.2 | ||||||||||||||||
Depreciation and amortization | 561 | 535 | 4.8 | 1,651 | 1,584 | 4.3 | ||||||||||||||||
Earnings from continuing operations before interest expense and income taxes | 876 | 904 | (3.1 | ) | 3,361 | 2,949 | 14.0 | |||||||||||||||
Net interest expense | 151 | 146 | 3.5 | 455 | 730 | (37.7 | ) | |||||||||||||||
Earnings from continuing operations before income taxes | 725 | 758 | (4.4 | ) | 2,906 | 2,219 | 31.0 | |||||||||||||||
Provision for income taxes | 249 | 232 | 7.2 | 1,006 | 730 | 37.7 | ||||||||||||||||
Net earnings from continuing operations | 476 | 526 | (9.5 | ) | 1,900 | 1,489 | 27.7 | |||||||||||||||
Discontinued operations, net of tax | 73 | (174 | ) | 37 | (485 | ) | ||||||||||||||||
Net earnings | $ | 549 | $ | 352 | 56.0 |
% |
$ | 1,937 | $ | 1,004 | 92.9 | % | ||||||||||
Basic earnings/(loss) per share | ||||||||||||||||||||||
Continuing operations | $ | 0.76 | $ | 0.83 | (8.0 | )% | $ | 3.00 | $ | 2.35 | 27.7 | % | ||||||||||
Discontinued operations | 0.12 | (0.28 | ) | 0.06 | (0.76 | ) | ||||||||||||||||
Net earnings per share | $ | 0.88 | $ | 0.55 | 58.6 |
% |
$ | 3.06 | $ | 1.58 | 92.9 | % | ||||||||||
Diluted earnings/(loss) per share | ||||||||||||||||||||||
Continuing operations | $ | 0.76 | $ | 0.82 | (7.9 | )% | $ | 2.98 | $ | 2.33 | 27.7 | % | ||||||||||
Discontinued operations | 0.11 | (0.27 | ) | 0.06 | (0.76 | ) | ||||||||||||||||
Net earnings per share | $ | 0.87 | $ | 0.55 | 58.7 |
% |
$ | 3.03 | $ | 1.57 | 92.9 | % | ||||||||||
Weighted average common shares outstanding | ||||||||||||||||||||||
Basic | 623.7 | 634.0 | (1.6 | )% | 633.5 | 633.6 | — | % | ||||||||||||||
Dilutive impact of share-based awards | 5.1 | 5.6 |
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5.2 | 5.1 | |||||||||||||||||
Diluted | 628.8 | 639.6 | (1.7 | )% | 638.7 | 638.7 | — | % | ||||||||||||||
Antidilutive shares | — | 2.3 | — | 4.2 | ||||||||||||||||||
Note: Per share amounts may not foot due to rounding.
Subject to reclassification
TARGET CORPORATION |
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Consolidated Statements of Financial Position |
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October 31, | January 31, | November 1, | ||||||||||
(millions) | 2015 | 2015 | 2014 | |||||||||
(unaudited) | (unaudited) | |||||||||||
Assets | ||||||||||||
Cash and cash equivalents, including short term investments of $1,154, $1,520 and $4 | $ | 1,977 | $ | 2,210 | $ | 718 | ||||||
Inventory (a) | 10,374 | 8,283 | 9,957 | |||||||||
Assets of discontinued operations | 451 | 1,333 | 808 | |||||||||
Other current assets (a) | 2,402 | 2,261 | 2,355 | |||||||||
Total current assets | 15,204 | 14,087 | 13,838 | |||||||||
Property and equipment | ||||||||||||
Land | 6,118 | 6,127 | 6,111 | |||||||||
Buildings and improvements | 26,912 | 26,613 | 26,439 | |||||||||
Fixtures and equipment | 5,283 | 5,329 | 5,247 | |||||||||
Computer hardware and software | 2,652 | 2,552 | 2,437 | |||||||||
Construction-in-progress | 428 | 424 | 440 | |||||||||
Accumulated depreciation | (15,921 | ) | (15,093 | ) | (14,641 | ) | ||||||
Property and equipment, net | 25,472 | 25,952 | 26,033 | |||||||||
Noncurrent assets of discontinued operations | 42 | 442 | 5,540 | |||||||||
Other noncurrent assets | 978 | 923 | 1,050 | |||||||||
Total assets | $ | 41,696 | $ | 41,404 | $ | 46,461 | ||||||
Liabilities and shareholders’ investment | ||||||||||||
Accounts payable | $ | 8,904 | $ | 7,759 | $ | 8,839 | ||||||
Accrued and other current liabilities | 3,868 | 3,783 | 3,697 | |||||||||
Current portion of long-term debt and other borrowings | 825 | 91 | 483 | |||||||||
Liabilities of discontinued operations | 261 | 103 | 506 | |||||||||
Total current liabilities | 13,858 | 11,736 | 13,525 | |||||||||
Long-term debt and other borrowings | 11,951 | 12,705 | 12,623 | |||||||||
Deferred income taxes | 1,316 | 1,321 | 1,195 | |||||||||
Noncurrent liabilities of discontinued operations | 36 | 193 | 1,292 | |||||||||
Other noncurrent liabilities | 1,279 | 1,452 | 1,453 | |||||||||
Total noncurrent liabilities | 14,582 | 15,671 | 16,563 | |||||||||
Shareholders’ investment | ||||||||||||
Common stock | 52 | 53 | 53 | |||||||||
Additional paid-in capital | 5,314 | 4,899 | 4,612 | |||||||||
Retained earnings | 8,359 | 9,644 | 12,631 | |||||||||
Accumulated other comprehensive loss | ||||||||||||
Pension and other benefit liabilities | (431 | ) | (561 | ) | (401 | ) | ||||||
Currency translation adjustment and cash flow hedges | (38 | ) | (38 | ) | (522 | ) | ||||||
Total shareholders’ investment | 13,256 | 13,997 | 16,373 | |||||||||
Total liabilities and shareholders’ investment | $ | 41,696 | $ | 41,404 | $ | 46,461 |
Common Stock Authorized 6,000,000,000 shares,
Preferred Stock Authorized 5,000,000 shares,
(a) At
Subject to reclassification
TARGET CORPORATION |
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Consolidated Statements of Cash Flows |
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Nine Months Ended | |||||||||
October 31, | November 1, | ||||||||
(millions) (unaudited) | 2015 | 2014 | |||||||
Operating activities | |||||||||
Net earnings | $ | 1,937 | $ | 1,004 | |||||
Earnings / (losses) from discontinued operations, net of tax | 37 | (485 | ) | ||||||
Net earnings from continuing operations | 1,900 | 1,489 | |||||||
Adjustments to reconcile net earnings to cash provided by operations: | |||||||||
Depreciation and amortization | 1,651 | 1,584 | |||||||
Share-based compensation expense | 84 | 61 | |||||||
Deferred income taxes | (111 | ) | (213 | ) | |||||
Loss on debt extinguishment | — | 285 | |||||||
Noncash (gains) / losses and other, net | (25 | ) | (33 | ) | |||||
Changes in operating accounts: | |||||||||
Inventory | (2,096 | ) | (2,186 | ) | |||||
Other assets | 95 | 92 | |||||||
Accounts payable and accrued liabilities | 1,458 | 1,520 | |||||||
Cash provided by operating activities—continuing operations | 2,956 | 2,599 | |||||||
Cash provided by / (required for) operating activities—discontinued operations | 804 | (549 | ) | ||||||
Cash provided by operations | 3,760 | 2,050 | |||||||
Investing activities | |||||||||
Expenditures for property and equipment | (1,129 | ) | (1,362 | ) | |||||
Proceeds from disposal of property and equipment | 21 | 84 | |||||||
Proceeds from sale of business | 8 | — | |||||||
Cash paid for acquisitions, net of cash assumed | — | (18 | ) | ||||||
Other investments | 12 | 88 | |||||||
Cash required for investing activities—continuing operations | (1,088 | ) | (1,208 | ) | |||||
Cash provided by / (required for) investing activities—discontinued operations | 19 | (208 | ) | ||||||
Cash required for investing activities | (1,069 | ) | (1,416 | ) | |||||
Financing activities | |||||||||
Change in commercial paper, net | — | 305 | |||||||
Additions to long-term debt | — | 1,993 | |||||||
Reductions of long-term debt | (72 | ) | (2,062 | ) | |||||
Dividends paid | (1,017 | ) | (874 | ) | |||||
Repurchase of stock | (2,179 | ) | — | ||||||
Stock option exercises and related tax benefit | 344 | 88 | |||||||
Cash required for financing activities | (2,924 | ) | (550 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | — | 1 | |||||||
Net increase in cash and cash equivalents | (233 | ) | 85 | ||||||
Cash and cash equivalents at beginning of period | 2,210 | 695 | (a) | ||||||
Cash and cash equivalents at end of period | $ | 1,977 | $ | 780 | (b) |
(a) Includes cash of our discontinued operations of
(b) Includes
cash of our discontinued operations of
Subject to reclassification
TARGET CORPORATION |
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Segment Results |
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Three Months Ended | Nine Months Ended | |||||||||||||||||
October 31, | November 1, | October 31, | November 1, | |||||||||||||||
(millions) (unaudited) | 2015 | 2014 | Change | 2015 | 2014 | Change | ||||||||||||
Sales | $ | 17,613 | $ | 17,254 | 2.1 | % | $ | 52,159 | $ | 50,868 | 2.5 | % | ||||||
Cost of sales | 12,440 | 12,171 | 2.2 | 36,402 | 35,716 | 1.9 | ||||||||||||
Gross margin | 5,173 | 5,083 | 1.8 | 15,757 | 15,152 | 4.0 | ||||||||||||
SG&A expenses(a) | 3,650 | 3,632 | 0.5 | 10,533 | 10,450 | 0.8 | ||||||||||||
EBITDA | 1,523 | 1,451 | 4.9 | 5,224 | 4,702 | 11.1 | ||||||||||||
Depreciation and amortization | 561 | 535 | 4.8 | 1,651 | 1,584 | 4.3 | ||||||||||||
EBIT | $ | 962 | $ | 916 | 5.0 | % | $ | 3,573 | $ | 3,118 | 14.6 | % |
Note: We operate as a single segment which includes all of our
continuing operations, excluding net interest expense, data breach
related costs and certain other expenses that are discretely managed.
Our segment operations are designed to enable guests to purchase
products seamlessly in stores, online or through mobile devices.
Beginning with the first quarter of 2015, segment EBIT includes the
impact of the reduction of the beneficial interest asset. For comparison
purposes, prior year segment EBIT has been revised.
(a)
SG&A includes
Three Months Ended | Nine Months Ended | |||||||||||
Segment Rate Analysis | October 31, | November 1, | October 31, | November 1, | ||||||||
(unaudited) | 2015 | 2014 | 2015 | 2014 | ||||||||
Gross margin rate | 29.4 |
% |
29.5 |
% |
30.2 |
% |
29.8 |
% |
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SG&A expense rate | 20.7 | 21.1 | 20.2 | 20.5 | ||||||||
EBITDA margin rate | 8.6 | 8.4 | 10.0 | 9.2 | ||||||||
Depreciation and amortization expense rate | 3.2 | 3.1 | 3.2 | 3.1 | ||||||||
EBIT margin rate | 5.5 | 5.3 | 6.8 | 6.1 | ||||||||
Note: Rate analysis metrics are computed by dividing the applicable amount by sales. |
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Three Months Ended | Nine Months Ended | |||||||||||
Sales by Channel | October 31, | November 1, | October 31, | November 1, | ||||||||
(unaudited) | 2015 | 2014 | 2015 | 2014 | ||||||||
Stores | 97.3 |
% |
97.7 |
% |
97.2 |
% |
97.8 |
% |
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Digital | 2.7 | 2.3 | 2.8 | 2.2 | ||||||||
Total | 100 |
% |
100 |
% |
100 |
% |
100 |
% |
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Three Months Ended | Nine Months Ended | |||||||||||
Comparable Sales | October 31, | November 1, | October 31, | November 1, | ||||||||
(unaudited) | 2015 | 2014 | 2015 | 2014 | ||||||||
Comparable sales change | 1.9 |
% |
1.2 |
% |
2.2 |
% |
0.3 |
% |
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Drivers of change in comparable sales | ||||||||||||
Number of transactions | 1.4 | (0.4 | ) | 1.3 | (1.5 | ) | ||||||
Average transaction amount | 0.4 | 1.6 | 0.9 | 1.8 | ||||||||
Selling price per unit | 2.5 | 3.1 | 3.8 | 2.6 | ||||||||
Units per transaction | (2.1 | ) | (1.5 | ) | (2.8 | ) | (0.8 | ) | ||||
Note: Amounts may not foot due to rounding. |
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Contribution to Comparable Sales Change |
Three Months Ended | Nine Months Ended | ||||||||||
October 31, |
November 1, |
October 31, |
November 1, |
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Stores channel comparable sales change | 1.4 |
% |
0.6 |
% |
1.6 |
% |
(0.2 | )% | ||||
Digital channel contribution to comparable sales change | 0.4 | 0.6 | 0.6 | 0.5 | ||||||||
Total comparable sales change | 1.9 |
% |
1.2 |
% |
2.2 |
% |
0.3 |
% |
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Note: Amounts may not foot due to rounding. |
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Three Months Ended | Nine Months Ended | |||||||||||
REDcard Penetration | October 31, | November 1, | October 31, | November 1, | ||||||||
(unaudited) | 2015 | 2014 | 2015 | 2014 | ||||||||
Target Debit Card | 12.1 |
% |
11.2 |
% |
12.0 |
% |
11.2 |
% |
||||
Target Credit Cards | 10.2 | 9.8 | 9.9 | 9.5 | ||||||||
Total REDcard Penetration | 22.3 |
% |
21.0 |
% |
22.0 |
% |
20.7 |
% |
||||
Note: Amounts may not foot due to rounding. |
Number of Stores | Retail Square Feet(a) | |||||||||||
Number of Stores and Retail Square Feet | October 31, | January 31, | November 1, | October 31, | January 31, | November 1, | ||||||
(unaudited) | 2015 | 2015 | 2014 | 2015 | 2015 | 2014 | ||||||
Expanded food assortment stores | 1,306 | 1,292 | 1,294 | 168,745 | 167,026 | 167,291 | ||||||
SuperTarget stores | 249 | 249 | 249 | 44,150 | 44,151 | 44,151 | ||||||
General merchandise stores | 232 | 240 | 249 | 27,028 | 27,945 | 28,861 | ||||||
CityTarget stores | 9 | 8 | 8 | 987 | 820 | 820 | ||||||
TargetExpress stores | 9 | 1 | 1 | 173 | 21 | 21 | ||||||
Total | 1,805 | 1,790 | 1,801 | 241,083 | 239,963 | 241,144 | ||||||
(a) In thousands: reflects total square feet, less office, distribution center and vacant space. |
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Subject to reclassification
Reconciliation of Non-GAAP Financial Measures
To provide additional transparency, we have disclosed non-GAAP adjusted
diluted earnings per share from continuing operations (Adjusted EPS).
This metric excludes restructuring costs, net expenses related to the
2013 data breach and other matters presented below. We believe this
information is useful in providing period-to-period comparisons of the
results of our continuing operations. This measure is not in accordance
with, or an alternative for, generally accepted accounting principles in
Adjusted EPS | Three Months Ended | ||||||||||||||||||||||||||
October 31, 2015 | November 1, 2014 | ||||||||||||||||||||||||||
Net of | Per Share | Net of | Per Share | ||||||||||||||||||||||||
(millions, except per share data) (unaudited) | Pretax | Tax | Amounts | Pretax | Tax | Amounts | Change | ||||||||||||||||||||
GAAP diluted earnings per share from continuing operations | $ | 0.76 | $ | 0.82 | (7.9 | )% | |||||||||||||||||||||
Adjustments | |||||||||||||||||||||||||||
Restructuring costs (a) | $ | 21 | $ | 13 | $ | 0.02 | $ | — | $ | — | $ | — | |||||||||||||||
Data Breach-related costs (b) | 26 | 20 | 0.03 | 12 | 7 | 0.01 | |||||||||||||||||||||
Impairments (c) | 39 | 29 | 0.05 | — | — | — | |||||||||||||||||||||
Resolution of income tax matters | — | — | — | — | (30 | ) | (0.05 | ) | |||||||||||||||||||
Adjusted diluted earnings per share from continuing operations | $ | 0.86 | $ | 0.79 | 8.6 |
% |
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Nine Months Ended | |||||||||||||||||||||||||||
October 31, 2015 | November 1, 2014 | ||||||||||||||||||||||||||
Net of | Per Share | Net of | Per Share | ||||||||||||||||||||||||
(millions, except per share data) | Pretax | Tax | Amounts | Pretax | Tax | Amounts | |||||||||||||||||||||
GAAP diluted earnings per share from continuing operations | $ | 2.98 | $ | 2.33 | 27.7 |
% |
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Adjustments | |||||||||||||||||||||||||||
Restructuring costs (a) | $ | 135 | $ | 85 | $ | 0.13 | $ | — | $ | — | $ | — | |||||||||||||||
Data Breach-related costs (b) | 38 | 27 | 0.04 | 140 | 90 | 0.14 | |||||||||||||||||||||
Loss on early retirement of debt | — | — | — | 285 | 174 | 0.27 | |||||||||||||||||||||
Impairments (c) | 39 | 29 | 0.05 | 16 | 9 | 0.01 | |||||||||||||||||||||
Card brand conversion costs (d) | — | — | — | 13 | 8 | 0.01 | |||||||||||||||||||||
Resolution of income tax matters | — |
(8 |
) | (0.01 | ) | — | (31 | ) | (0.05 | ) | |||||||||||||||||
Adjusted diluted earnings per share from continuing operations | $ | 3.18 | $ | 2.72 | 16.9 |
% |
Note: Amounts may not foot due to rounding. Beginning with
the first quarter 2015, we no longer adjust for the reduction of the
beneficial interest asset because it is no longer meaningful. For
comparison purposes, prior year Adjusted EPS has been revised.
(a)
Costs related to our previously announced corporate restructuring.
(b)
For the three and nine months ended October 31, 2015, we recorded
(c)
For the three and nine months ended
(d) Expense related to
converting the co-branded REDcard program to
We have also disclosed after-tax return on invested capital for continuing operations (ROIC), which is a ratio based on GAAP information, with the exception of adjustments made to capitalize operating leases. Operating leases are capitalized as part of the ROIC calculation to control for differences in capital structure between us and our competitors. We believe this metric provides a meaningful measure of the effectiveness of our capital allocation over time. Other companies may calculate ROIC differently than we do, limiting the usefulness of the measure for comparisons with other companies.
After-Tax Return on Invested Capital | |||||||||||
Numerator | Trailing Twelve Months | ||||||||||
October 31, | November 1, | ||||||||||
(dollars in millions) (unaudited) | 2015 | 2014 | |||||||||
Earnings from continuing operations before interest expense and income taxes | $ | 4,946 | $ | 4,264 | |||||||
+ Operating lease interest (a)(b) | 90 | 98 | |||||||||
Adjusted earnings from continuing operations before interest expense and income taxes | 5,036 | 4,362 | |||||||||
- Income taxes (c) | 1,717 | 1,444 | |||||||||
Net operating profit after taxes | $ | 3,319 | $ | 2,918 | |||||||
Denominator | October 31, | November 1, | November 2, | ||||||||
(dollars in millions) (unaudited) | 2015 | 2014 | 2013 | ||||||||
Current portion of long-term debt and other borrowings | $ | 825 | $ | 483 | $ | 2,109 | |||||
+ Noncurrent portion of long-term debt | 11,951 | 12,623 | 11,381 | ||||||||
+ Shareholders' equity | 13,256 | 16,373 | 16,155 | ||||||||
+ Capitalized operating lease obligations (b)(d) | 1,503 | 1,639 | 1,546 | ||||||||
- Cash and cash equivalents | 1,977 | 718 | 687 | ||||||||
- Net assets of discontinued operations | 196 | 4,550 | 4,457 | ||||||||
Invested capital | $ | 25,362 | $ | 25,850 | $ | 26,047 | |||||
Average invested capital (e) | $ | 25,606 | $ | 25,949 | |||||||
After-tax return on invested capital | 13.0 | % | 11.2 | % |
(a) Represents the hypothetical capitalization of our
operating leases, using eight times our trailing twelve months rent
expense and an estimated interest rate of six percent.
(b)
See the following Reconciliation of Capitalized Operating Leases table
for the adjustments to our GAAP total rent expense to obtain the
hypothetical capitalization of operating leases and related operating
lease interest.
(c) Calculated using the
effective tax rate for continuing operations, which was 34.1% and 33.1%
for the trailing twelve months ended October 31, 2015 and November 1,
2014.
(d) Calculated as eight times our trailing
twelve months rent expense.
(e) Average based on
the invested capital at the end of the current period and the invested
capital at the end of the prior period.
Capitalized operating lease obligations and operating lease interest are
not in accordance with, or an alternative for, generally accepted
accounting principles in
Reconciliation of Capitalized Operating Leases | Trailing Twelve Months | ||||||||
October 31, | November 1, | November 2, | |||||||
(dollars in millions) (unaudited) | 2015 | 2014 | 2013 | ||||||
Total rent expense | $ | 188 | $ | 205 | $ | 193 | |||
Capitalized operating lease obligations (total rent expense x 8) | 1,503 | 1,639 | 1,546 | ||||||
Operating lease interest (capitalized operating lease obligations x 6%) | 90 | 98 | n/a | ||||||
Subject to reclassification
View source version on businesswire.com: http://www.businesswire.com/news/home/20151118005731/en/
Source:
Target Corporation
John Hulbert, Investors, 612-761-6627
or
Erin
Conroy, Media, 612-761-5928
or
Target Media Hotline,
612-696-3400