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)

November 17, 2009

 

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)

 

(IRS Employer
Identification No.)

 

 

 

 

 

1000 Nicollet Mall
Minneapolis, Minnesota

 

55403

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code  (612) 304-6073

 

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 (see General Instruction A.2. below):

 

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))

 

 

 



 

Item 2.02.

Results of Operations and Financial Condition.

 

On November 17, 2009, Target Corporation issued a News Release containing its financial results for the three months ended October 31, 2009.  The News Release is attached hereto as Exhibit 99.

 

Item 8.01.

Other Events

 

On November 17, 2009, Target Corporation issued a News Release containing its financial results for the three months ended October 31, 2009.  The News Release is attached hereto as Exhibit 99.

 



 

Item 9.01.

Financial Statements and Exhibits.

 

 

 

(d)

Exhibits.

 

 

 

 

 

(99).

Target Corporation’s News Release dated November 17, 2009 containing its financial results for the three months ended October 31, 2009.

 

 



 

SIGNATURES

 

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:  November 17, 2009

/s/ Douglas A. Scovanner

 

 

Douglas A. Scovanner

 

Executive Vice President and Chief Financial Officer

 

 



 

EXHIBIT INDEX

 

Exhibit

 

Description

 

Method
of Filing

 

 

 

 

 

(99).

 

Target Corporation’s News Release dated November 17, 2009 containing its financial results for the three months ended October 31, 2009.

 

Filed Electronically

 


Exhibit 99

 

 

TARGET CORPORATION ANNOUNCES STRONG THIRD QUARTER EARNINGS

 

Remains Cautious on Fourth Quarter Outlook

 

MINNEAPOLIS, November 17, 2009 –– Target Corporation (NYSE:TGT) today reported net earnings of $436 million for the third quarter ended October 31, 2009, compared with $369 million in the third quarter ended November 1, 2008. Earnings per share in the third quarter increased 18.6 percent to $0.58 from $0.49 in the same period a year ago. All earnings per share figures refer to diluted earnings per share.

“We’re very pleased with our third quarter earnings performance, which reflects strong execution and a commitment to continued innovation by teams throughout the company,” said Gregg Steinhafel, chairman, president and chief executive officer of Target Corporation. “Profitability in our retail segment during the third quarter was well above expectations, and credit card segment profitability also improved due to continued thoughtful portfolio management in a challenging credit environment. As we look ahead, we remain keenly focused on delighting our guests with exciting merchandise, exceptional prices and superior service during the holiday season and believe we are well-positioned to capture profitable market share.”

 

Retail Segment Results

Sales increased 1.4 percent in the third quarter to $14.8 billion in 2009 from $14.6 billion in 2008, due to the contribution from new store expansion, partially offset by a 1.6 percent decline in comparable-store sales. Retail segment earnings before interest expense and income taxes (EBIT) were $791 million in the third quarter of 2009, a 2.4 percent increase from $772 million in 2008.

Third quarter gross margin rate increased to 30.8 percent from 30.6 percent in 2008, due to gross margin rate improvements within categories, partially offset by a smaller-than-expected mix impact of faster sales growth in non-discretionary lower margin rate categories. Third quarter selling, general and administrative (SG&A) expense dollars were up 0.5 percent compared to 2008, as the expense related to operating additional stores was substantially offset by productivity improvements. At quarter-end, the company was operating 59 more stores than a year ago.

Depreciation and amortization was $533 million in the third quarter, up 14.8 percent from $465 million in 2008. More than half of this increase was driven by the recognition of accelerated depreciation on store assets that are expected to be replaced as part of the company’s 2010 store remodel program.

 

Credit Card Segment Results

Average credit card receivables in the quarter decreased $547 million, or 6.3 percent, from the third quarter of 2008, and quarter-end receivables decreased $717 million, or 8.2 percent, from the same period a year ago.

 

--more--

 



 

TARGET CORPORATION

Page 2

 

Credit card segment profit in the quarter increased to $60 million from $35 million last year as a result of improved portfolio performance that more than offset the impact of lower floating interest rates. Target’s pretax return on invested capital (ROIC) from its investment in the credit card segment increased to 9.0 percent in the third quarter from 4.3 percent in 2008.

Net write-offs in the quarter were $280 million, in line with expectations. The allowance for doubtful accounts was $1,025 million at quarter-end, compared with $1,004 million at the end of the second quarter.

 

Other Expenses

Net interest expense for the quarter decreased $43 million from third quarter 2008 to $191 million, reflecting a lower average portfolio interest rate combined with lower average debt balances.

The company’s effective income tax rate for the third quarter was 36.1 percent in 2009, down from 41.7 percent in 2008, primarily due to a decrease in the amount of reserves recorded for tax uncertainties and a higher proportion of earnings that are not subject to tax. For the full year, the company now expects an effective income tax rate in the range of 36.5 to 37.5 percent.

 

Fourth Quarter Outlook

In light of the current and projected economic environment and expectations for a highly promotional holiday season, Target remains cautious about fourth quarter performance and is planning conservatively in both business segments.

 

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 “webcasts”). 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 19, 2009. The replay number is (800) 642-1687 (passcode: 73959981).

The statements on the expected tax rate and fourth quarter outlook 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 31, 2009.

Target Corporation’s retail segment includes large, general merchandise and food discount stores, and a fully integrated on-line business called Target.com. In addition, the company operates a credit card segment that offers branded proprietary and Visa credit card products. At quarter-end, the company operated 1,743 Target stores in 49 states.

Target Corporation news releases are available at www.target.com.

###

(Tables Follow)

 

Contacts:

John Hulbert (Investors)

Eric Hausman (Financial Media)

 

 

 

(612) 761-6627

(612) 761-2054

 



 

TARGET CORPORATION

 

Consolidated Statements of Operations

 

 

Three Months Ended

 

 

 

Nine Months Ended

 

 

 

 

 

October 31,

 

November 1,

 

 

 

October 31,

 

November 1,

 

 

 

(millions, except per share data)

 

2009

 

2008 

 

Change

 

2009

 

2008

 

Change

 

 

 

(unaudited)

 

(unaudited)

 

 

 

(unaudited)

 

(unaudited)

 

 

 

Sales

 

  $

14,789

 

   $

14,588

 

1.4

  %

   $

43,717

 

   $

43,861

 

(0.3

)  %

Credit card revenues

 

487

 

526

 

(7.5

)

1,459

 

1,527

 

(4.5

)

Total revenues

 

15,276

 

15,114

 

1.1

 

45,176

 

45,388

 

(0.5

)

Cost of sales

 

10,229

 

10,130

 

1.0

 

30,080

 

30,332

 

(0.8

)

Selling, general and administrative expenses

 

3,255

 

3,245

 

0.3

 

9,405

 

9,436

 

(0.3

)

Credit card expenses

 

381

 

403

 

(5.5

)

1,153

 

1,023

 

12.7

 

Depreciation and amortization

 

537

 

469

 

14.5

 

1,487

 

1,352

 

9.9

 

Earnings before interest expense and income taxes

 

874

 

867

 

0.9

 

3,051

 

3,245

 

(6.0

)

Net interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonrecourse debt collateralized by credit card receivables

 

23

 

60

 

(60.6

)

74

 

126

 

(41.4

)

Other interest expense

 

168

 

180

 

(6.8

)

517

 

550

 

(6.1

)

Interest income

 

-    

 

(6

)

(96.4

)

(3

)

(24

)

(89.2

)

Net interest expense

 

191

 

234

 

(18.3

)

588

 

652

 

(9.8

)

Earnings before income taxes

 

683

 

633

 

8.0

 

2,463

 

2,593

 

(5.0

)

Provision for income taxes

 

247

 

264

 

(6.5

)

911

 

988

 

(7.7

)

Net earnings

 

  $

436

 

   $

369

 

18.4

  %

   $

1,552

 

   $

1,605

 

(3.3

) %

Basic earnings per share

 

  $

0.58

 

   $

0.49

 

18.7

  %

   $

2.06

 

   $

2.07

 

(0.2

) %

Diluted earnings per share

 

  $

0.58

 

   $

0.49

 

18.6

  %

   $

2.06

 

   $

2.06

 

0.0

  %

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

751.8

 

753.5

 

 

 

752.0

 

776.4

 

 

 

Diluted

 

755.7

 

756.6

 

 

 

754.3

 

780.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subject to reclassification

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

TARGET CORPORATION

 

Consolidated Statements of Financial Position

 

 

October 31,

 

January 31,

 

November 1,

 

 (millions)

 

2009

 

2009

 

2008

 

 Assets

 

(unaudited)

 

 

 

(unaudited)

 

 Cash and cash equivalents, including marketable securities of $273, $302 and $397

 

$

864

 

$

864

 

$

918

 

 Credit card receivables, net of allowance of $1,025, $1,010 and $765

 

7,023

 

8,084

 

7,999

 

 Inventory

 

9,382

 

6,705

 

9,050

 

 Other current assets

 

2,314

 

1,835

 

2,272

 

Total current assets

 

19,583

 

17,488

 

20,239

 

 Property and equipment

 

 

 

 

 

 

 

Land

 

5,754

 

5,767

 

5,727

 

Buildings and improvements

 

22,250

 

20,430

 

20,454

 

Fixtures and equipment

 

4,732

 

4,270

 

4,212

 

Computer hardware and software

 

2,599

 

2,586

 

2,610

 

Construction-in-progress

 

291

 

1,763

 

1,320

 

Accumulated depreciation

 

(10,035

)

(9,060

)

(8,798

)

Property and equipment, net

 

25,591

 

25,756

 

25,525

 

 Other noncurrent assets

 

805

 

862

 

1,277

 

 Total assets

 

$

45,979

 

$

44,106

 

$

47,041

 

 Liabilities and shareholders’ investment

 

 

 

 

 

 

 

 Accounts payable

 

$

7,641

 

$

6,337

 

$

7,590

 

 Accrued and other current liabilities

 

3,117

 

2,913

 

3,057

 

 Unsecured debt and other borrowings

 

577

 

1,262

 

2,849

 

 Nonrecourse debt collateralized by credit card receivables

 

1,063

 

-   

 

-   

 

Total current liabilities

 

12,398

 

10,512

 

13,496

 

 Unsecured debt and other borrowings

 

11,432

 

12,000

 

11,966

 

 Nonrecourse debt collateralized by credit card receivables

 

4,463

 

5,490

 

5,478

 

 Deferred income taxes

 

804

 

455

 

589

 

 Other noncurrent liabilities

 

1,911

 

1,937

 

1,932

 

Total noncurrent liabilities

 

18,610

 

19,882

 

19,965

 

 Shareholders’ investment

 

 

 

 

 

 

 

Common stock

 

63

 

63

 

63

 

Additional paid-in capital

 

2,866

 

2,762

 

2,725

 

Retained earnings

 

12,559

 

11,443

 

10,967

 

Accumulated other comprehensive loss

 

(517

)

(556

)

(175

)

Total shareholders’ investment

 

14,971

 

13,712

 

13,580

 

 Total liabilities and shareholders’ investment

 

$

45,979

 

$

44,106

 

$

47,041

 

 Common shares outstanding

 

752.2

 

752.7

 

752.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subject to reclassification

 

 

 

 

 

 

 

 



 

TARGET CORPORATION

 

Consolidated Statements of Cash Flows

 

 

Nine Months Ended

 

 

 

October 31,

 

 

November 1,

 

 (millions) (unaudited)

 

2009

 

 

2008

 

 Operating activities

 

 

 

 

 

 

 Net earnings

 

  $

1,552

 

 

$

1,605

 

 Reconciliation to cash flow

 

 

 

 

 

 

Depreciation and amortization

 

1,487

 

 

1,352

 

Share-based compensation expense

 

72

 

 

43

 

Deferred income taxes

 

451

 

 

(32

)

Bad debt provision

 

900

 

 

751

 

Loss on disposal of property and equipment, net

 

85

 

 

33

 

Other non-cash items affecting earnings

 

44

 

 

165

 

Changes in operating accounts providing / (requiring) cash

 

 

 

 

 

 

Accounts receivable originated at Target

 

190

 

 

(313

)

Inventory

 

(2,677

)

 

(2,270

)

Other current assets

 

(251

)

 

(322

)

Other noncurrent assets

 

27

 

 

5

 

Accounts payable

 

1,303

 

 

869

 

Accrued and other current liabilities

 

(148

)

 

(270

)

Other noncurrent liabilities

 

(8

)

 

4

 

Other

 

-    

 

 

160

 

 Cash flow provided by operations

 

3,027

 

 

1,780

 

 Investing activities

 

 

 

 

 

 

Expenditures for property and equipment

 

(1,440

)

 

(2,827

)

Proceeds from disposal of property and equipment

 

25

 

 

26

 

Change in accounts receivable originated at third parties

 

(29

)

 

(383

)

Other investments

 

10

 

 

(179

)

 Cash flow required for investing activities

 

(1,434

)

 

(3,363

)

 Financing activities

 

 

 

 

 

 

Change in commercial paper, net

 

-    

 

 

1,382

 

Reductions of short-term notes payable

 

-    

 

 

(500

)

Additions to long-term debt

 

-    

 

 

3,557

 

Reductions of long-term debt

 

(1,255

)

 

(1,254

)

Dividends paid

 

(369

)

 

(345

)

Repurchase of stock

 

-    

 

 

(2,815

)

Stock option exercises and related tax benefit

 

31

 

 

34

 

Other

 

-    

 

 

(8

)

 Cash flow (required for)/provided by financing activities

 

(1,593

)

 

51

 

 Net increase/(decrease) in cash and cash equivalents

 

-    

 

 

(1,532

)

 Cash and cash equivalents at beginning of period

 

864

 

 

2,450

 

 Cash and cash equivalents at end of period

 

   $

864

 

 

   $

918

 

 

 

 

 

 

 

 

Subject to reclassification

 

 

 

 

 

 

 



 

TARGET CORPORATION

 

Retail Segment

 

Retail Segment Results

 

Three Months Ended

 

 

 

Nine Months Ended

 

 

 

 

 

October 31,

 

November 1,

 

 

 

October 31,

 

November 1,

 

 

 

(millions) (unaudited)

 

2009

 

2008

 

Change

 

2009

 

2008

 

Change

 

Sales

 

 $

14,789

 

 $

14,588

 

1.4

 %

 $

43,717

 

 $

43,861

 

(0.3)

 %

Cost of sales

 

10,229

 

10,130

 

1.0

 

30,080

 

30,332

 

(0.8)

 

Gross margin

 

4,560

 

4,458

 

2.3

 

13,637

 

13,529

 

0.8

 

SG&A expenses(a)

 

3,236

 

3,221

 

0.5

 

9,345

 

9,361

 

(0.2)

 

EBITDA

 

1,324

 

1,237

 

7.1

 

4,292

 

4,168

 

3.0

 

Depreciation and amortization

 

533

 

465

 

14.8

 

1,476

 

1,339

 

10.2

 

EBIT

 

 $

791

 

 $

772

 

2.4

 %

 $

2,816

 

 $

2,829

 

(0.4)

 %

EBITDA is earnings before interest expense, income taxes, depreciation and amortization.

EBIT is earnings before interest expense and income taxes.

(a) New account and loyalty rewards redeemed by our guests reduce reported sales. Our Retail Segment charges the cost of these discounts to our Credit Card Segment, and the reimbursements of $19 million and $59 million for the three and nine months ended October 31, 2009, respectively, and $24 million and $75 million for the three and nine months ended November 1, 2008, respectively, are recorded as a reduction to SG&A expenses within the Retail Segment.

 

Retail Segment Rate Analysis

 

Three Months Ended

 

Nine Months Ended

 

 

 

 

 

 

 

October 31,

 

November 1,

 

October 31,

 

November 1,

 

 

 

 

 

(unaudited)

 

2009

 

2008

 

2009

 

2008

 

 

 

 

 

Gross margin rate

 

30.8%

 

30.6%

 

31.2%

 

30.8%

 

 

 

 

 

SG&A expense rate

 

21.9%

 

22.1%

 

21.4%

 

21.3%

 

 

 

 

 

EBITDA margin rate

 

9.0%

 

8.5%

 

9.8%

 

9.5%

 

 

 

 

 

Depreciation and amortization expense rate

 

3.6%

 

3.2%

 

3.4%

 

3.1%

 

 

 

 

 

EBIT margin rate

 

5.3%

 

5.3%

 

6.4%

 

6.4%

 

 

 

 

 

Retail Segment rate analysis metrics are computed by dividing the applicable amount by sales.

 

Comparable-Store Sales

 

Three Months Ended

 

Nine Months Ended

 

 

 

 

 

 

 

October 31,

 

November 1,

 

October 31,

 

November 1,

 

 

 

 

 

(unaudited)

 

2009

 

2008

 

2009

 

2008

 

 

 

 

 

Comparable-store sales

 

(1.6)%

 

(3.3)%

 

(3.9)%

 

(1.5)%

 

 

 

 

 

Drivers of changes in comparable-store sales:

 

 

 

 

 

 

 

 

 

 

 

 

 

Number of transactions

 

0.6 %

 

(3.6)%

 

(1.1)%

 

(2.5)%

 

 

 

 

 

Average transaction amount

 

(2.2)%

 

0.3 %

 

(2.8)%

 

1.0 %

 

 

 

 

 

Units per transaction

 

(1.6)%

 

(1.5)%

 

(2.4)%

 

(1.3)%

 

 

 

 

 

Selling price per unit

 

(0.6)%

 

1.8 %

 

(0.4)%

 

2.3 %

 

 

 

 

 

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.

 

Number of Stores and Retail Square Feet

 

Number of Stores

 

Retail Square Feet(a)

 

 

 

October 31,

 

January 31,

 

November 1,

 

October 31,

 

January 31,

 

November 1,

 

(unaudited)

 

2009

 

2009

 

2008

 

2009

 

2009

 

2008

 

Target general merchandise stores

 

1,491

 

1,443

 

1,445

 

187,481

 

180,321

 

180,200

 

SuperTarget stores

 

252

 

239

 

239

 

44,645

 

42,267

 

42,220

 

Total

 

1,743

 

1,682

 

1,684

 

232,126

 

222,588

 

222,420

 

(a) In thousands; reflects total square feet, less office, distribution center and vacant space.

 

 

Subject to reclassification

 



 

TARGET CORPORATION

 

Credit Card Segment

 

Credit Card Segment Results

 

Three Months Ended

 

Three Months Ended

 

Nine Months Ended

 

Nine Months Ended

 

 

 

October 31, 2009

 

November 1, 2008

 

October 31, 2009

 

November 1, 2008

 

 

 

Amount

 

Annualized

 

Amount

 

Annualized

 

Amount

 

Annualized

 

Amount

 

Annualized

 

(millions) (unaudited)

 

(in millions)

 

Rate(d)

 

(in millions)

 

Rate(d)

 

(in millions)

 

Rate(d)

 

(in millions)

 

Rate(d)

 

Finance charge revenue

 

 $

365

 

17.8

 %

 $

366

 

16.7

 %

 $

1,097

 

17.4

 %

   $

1,060

 

16.5

 %

Late fees and other revenue

 

92

 

4.5

 

123

 

5.6

 

270

 

4.3

 

352

 

5.5

 

Third party merchant fees

 

30

 

1.5

 

37

 

1.7

 

92

 

1.5

 

115

 

1.8

 

Total revenues

 

487

 

23.8

 

526

 

24.1

 

1,459

 

23.1

 

1,527

 

23.8

 

Bad debt expense

 

301

 

14.7

 

314

 

14.4

 

900

 

14.3

 

751

 

11.7

 

Operations and marketing expenses(a)

 

99

 

4.8

 

113

 

5.2

 

312

 

4.9

 

347

 

5.4

 

Depreciation and amortization

 

4

 

0.2

 

4

 

0.2

 

11

 

0.2

 

13

 

0.2

 

Total expenses

 

404

 

19.7

 

431

 

19.7

 

1,223

 

19.4

 

1,111

 

17.3

 

EBIT

 

83

 

4.1

 

95

 

4.3

 

236

 

3.7

 

416

 

6.5

 

Interest expense on nonrecourse debt collateralized by credit card receivables

 

23

 

 

 

60

 

 

 

74

 

 

 

126

 

 

 

Segment profit

 

 $

60

 

 

 

 $

35

 

 

 

 $

162

 

 

 

   $

290

 

 

 

Average gross credit card receivables funded by Target(b)

 

 $

2,677

 

 

 

 $

3,272

 

 

 

 $

2,910

 

 

 

   $

4,392

 

 

 

Segment pretax ROIC(c)

 

9.0%

 

 

 

4.3%

 

 

 

7.4%

 

 

 

8.8%

 

 

 

(a)  New account and loyalty rewards redeemed by our guests reduce reported sales. Our Retail Segment charges the cost of these discounts to our Credit Card Segment, and the reimbursements of $19 million and $59 million for the three and nine months ended October 31, 2009, respectively, and $24 million and $75 million for the three and nine months ended November 1, 2008, respectively, are recorded as an increase to operations and marketing expenses within the Credit Card Segment.

(b) Amounts represent the portion of average credit card receivables funded by Target. These amounts exclude $5,520 million and $5,508 million for the three and nine months ended October 31, 2009, respectively, and $5,473 million and $4,176 million for the three and nine months ended November 1, 2008, respectively, of receivables funded by nonrecourse debt collateralized by credit card receivables.

(c) ROIC is return on invested capital, and this rate represents segment profit divided by average receivables funded by Target, expressed as an annualized rate.

(d) As an annualized percentage of average gross credit card receivables.

 

Spread Analysis - Total Portfolio

 

Three Months Ended

 

Three Months Ended

 

Nine Months Ended

 

Nine Months Ended

 

 

 

October 31, 2009

 

November 1, 2008

 

October 31, 2009

 

November 1, 2008

 

 

 

Yield

 

Yield

 

Yield

 

Yield

 

 

 

Amount

 

Annualized

 

Amount

 

Annualized

 

Amount

 

Annualized

 

Amount

 

Annualized

 

(unaudited)

 

(in millions)

 

Rate

 

(in millions)

 

Rate

 

(in millions)

 

Rate

 

(in millions)

 

Rate

 

EBIT

 

    $

83

 

4.1%

  (b)

    $

95

 

4.3%

  (b)

    $

236

 

3.7%

  (b)

    $

416

 

6.5%

   (b)

LIBOR(a)

 

 

 

0.3%

 

 

 

3.1%

 

 

 

0.3%

 

 

 

2.8%

 

Spread to LIBOR(c)

 

    $

78

 

3.8%

  (b)

    $

27

 

1.2%

  (b)

    $

213

 

3.4%

  (b)

    $

235

 

3.7%

   (b)

(a) Balance-weighted average one-month LIBOR

(b) As a percentage of average gross credit card receivables.

(c) Spread to LIBOR is a metric used to analyze the performance of our total credit card portfolio because the vast majority of our portfolio earns finance charge revenue at rates tied to the Prime Rate, and the interest rate on all nonrecourse debt securitized by credit card receivables is tied to LIBOR.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Receivables Rollforward Analysis

 

Three Months Ended

 

 

 

Nine Months Ended

 

 

 

 

 

 

 

 

 

October 31,

 

November 1,

 

 

 

October 31,

 

November 1,

 

 

 

 

 

 

 

(millions) (unaudited)

 

2009

 

2008

 

Change

 

2009

 

2008

 

Change

 

 

 

 

 

Beginning gross credit card receivables

 

   $

8,293

 

   $

8,641

 

(4.0)

 %

  $

 9,094

 

 $

8,624

 

5.4  

  %

 

 

 

 

Charges at Target

 

799

 

955

 

(16.4)

 

2,445

 

2,923

 

(16.3)

 

 

 

 

 

Charges at third parties

 

1,648

 

2,082

 

(20.8)

 

5,080

 

6,488

 

(21.7)

 

 

 

 

 

Payments

 

(2,870

)

(3,221

)

(10.9)

 

(9,071

)

(10,209

)

(11.1)

 

 

 

 

 

Other

 

178

 

307

 

(42.0)

 

500

 

938

 

(46.7)

 

 

 

 

 

Period-end gross credit card receivables

 

   $

8,048

 

   $

8,764

 

(8.2)

 %

  $

8,048

 

 $

8,764

 

(8.2)

  %

 

 

 

 

Average gross credit card receivables

 

   $

8,197

 

   $

8,745

 

(6.3)

 %

  $

8,418

 

 $

8,568

 

(1.7)

  %

 

 

 

 

Accounts with three or more payments (60+ days) past due as a percentage of period-end gross credit card receivables

 

6.5%

 

5.6%

 

 

 

6.5%

 

5.6%

 

 

 

 

 

 

 

Accounts with four or more payments (90+ days) past due as a percentage of period-end gross credit card receivables

 

4.6%

 

3.8%

 

 

 

4.6%

 

3.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for Doubtful Accounts

 

Three Months Ended

 

 

 

Nine Months Ended

 

 

 

 

 

 

 

 

 

October 31,

 

November 1,

 

 

 

October 31,

 

November 1,

 

 

 

 

 

 

 

(millions) (unaudited)

 

2009

 

2008

 

Change

 

2009

 

2008

 

Change

 

 

 

 

 

Allowance at beginning of period

 

   $

 1,004

 

   $

661 

 

52.0 

 %

   $

 1,010

 

   $

570

 

77.1

 %

 

 

 

 

Bad debt provision

 

301

 

314 

 

(4.3)

 

900

 

751

 

19.9

 

 

 

 

 

Net write-offs(a)

 

(280

)

(210

)

33.4 

 

(885

)

(556

)

59.2

 

 

 

 

 

Allowance at end of period

 

   $

 1,025

 

   $

765

 

33.9 

 %

   $

 1,025

 

   $

765

 

33.9

 %

 

 

 

 

As a percentage of period-end gross credit card receivables

 

12.7%

 

8.7%

 

 

 

12.7%

 

8.7%

 

 

 

 

 

 

 

Net write-offs as a percentage of average gross credit card receivables (annualized)

 

13.7%

 

9.6%

 

 

 

14.0%

 

8.7%

 

 

 

 

 

 

 

(a) Net write-offs include the principal amount of losses (excluding accrued and unpaid finance charges) less current period principal recoveries.

 

Subject to reclassification