MINNEAPOLIS--(BUSINESS WIRE)--Target Corporation (NYSE: TGT) today reported first quarter net earnings of $697 million, or $1.04 per share. Adjusted earnings per share, a measure the company believes is useful in providing period-to-period comparisons of the results of its U.S. operations, were $1.11 in first quarter 2012, up 11.5 percent from $0.99 in 2011. A reconciliation of non-GAAP financial measures to GAAP measures is provided in the tables attached to this press release. All earnings per share figures refer to diluted earnings per share.
“We’re very pleased with our first quarter earnings, which benefited from better-than-expected sales,” said Gregg Steinhafel, chairman, president, and chief executive officer of Target Corporation. “While our outlook for the remainder of 2012 reflects continued economic uncertainty, we are confident in our strategy, keenly focused on delivering an affordable and inspirational merchandise assortment to our guests and committed to making thoughtful investments in our U.S. and Canadian business segments that we expect will reward our shareholders over time."
Fiscal 2012 Earnings Guidance
For second quarter 2012, the company expects adjusted EPS of $1.04 to $1.14 and GAAP EPS of $0.94 to $1.04.
For full-year 2012, the company has raised its guidance by 5 cents and now expects adjusted EPS of $4.60 to $4.80 and GAAP EPS of $4.10 to $4.30.
The difference between the GAAP and adjusted EPS ranges of 10 cents in the quarter and 50 cents for the full year represents the expected EPS impact of expenses related to the company’s Canadian market entry.
U.S. Retail Segment Results
As previously reported, sales increased 6.1 percent in the first quarter to $16.5 billion in 2012 from $15.6 billion in 2011, due to a 5.3 percent increase in comparable-store sales and the contribution from new stores. Segment earnings before interest expense and income taxes (EBIT) were $1,199 million in the first quarter of 2012, an increase of 12.9 percent from $1,062 million in 2011.
First quarter 2012 U.S. Retail Segment EBITDA and EBIT margin rates were 10.3 percent and 7.3 percent, respectively, compared with 10.1 percent and 6.8 percent in 2011. First quarter gross margin rate declined to 30.2 percent in 2012 from 30.4 percent in 2011, reflecting downward pressure from the company’s integrated growth strategies partially offset by a beneficial mix of higher-margin sales and underlying rate improvements within categories. U.S. Retail Segment first quarter selling, general and administrative (SG&A) expense rate was 19.9 percent in 2012 compared with 20.4 percent in 2011.
U.S. Credit Card Segment Results
First quarter average receivables decreased 6.0 percent to $6.1 billion in 2012 from $6.5 billion in 2011. First quarter 2012 portfolio spread to LIBOR was $137 million, or 9.1%, compared with $209 million, or 13.0%, in 2011. Performance in first quarter 2012 reflected a $35 million reduction in the allowance for doubtful accounts, compared with a $125 million reduction in first quarter 2011.
Canadian Segment Results
First quarter 2012 EBIT was $(55) million, due to start-up expenses, depreciation and amortization related to the company’s expected market entry in 2013. Total expenses related to investments in Target’s Canadian market entry reduced Target’s earnings per share by approximately 8 cents in first quarter 2012.1
1 This amount includes interest expense and tax expense that are not included in the segment measure of profit. A reconciliation of non-GAAP measures is included in the tables attached to this release.
Interest Expense and Taxes
Net interest expense for the quarter was $184 million, including $20 million of interest on capitalized leases related to Target’s Canadian market entry. Net interest expense was $183 million in first quarter 2011.
The company’s effective income tax rate was 36.7 percent in first quarter 2012, including the benefit from favorable resolution of various income tax matters. These tax items increased EPS by approximately 1 cent per share in first quarter 2012.
Capital Returned to Shareholders
In first quarter 2012, the company repurchased approximately 10.5 million shares of its common stock at an average price of $57.31, for a total investment of $604 million, and paid dividends of $201 million.
Miscellaneous
Target Corporation will webcast its first quarter earnings conference call at 9:30 a.m. CDT today. Investors and the media are invited to listen to the call through the company’s website at www.target.com/investors (click on “Events + Presentations” and then “Archives + Webcasts”). A telephone replay of the call will be available beginning at approximately 11:30 a.m. CDT today through the end of business on May 18, 2012. The replay number is (800) 642-1687 (passcode: 39811558).
Statements in this release regarding second quarter and fiscal 2012 earnings guidance are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements speak only as of the date they are made and are subject to risks and uncertainties which could cause the company's actual results to differ materially. The most important risks and uncertainties are described in Item 1A of the company's Form 10-K for the fiscal year ended January 28, 2012.
In addition to the GAAP results provided in this release, the company provides adjusted diluted earnings per share for the three months ended April 28, 2012 and April 30, 2011. This measure is not in accordance with, or an alternative for, generally accepted accounting principles in the United States. The most comparable GAAP measure is diluted earnings per share. Management believes adjusted EPS is useful in providing period-to-period comparisons of the results of the company’s U.S. operations. Adjusted EPS should not be considered in isolation or as a substitution for analysis of the company’s results as reported under GAAP. Other companies may calculate adjusted EPS differently than the company does, limiting the usefulness of the measure for comparisons with other companies.
About Target
Minneapolis-based Target Corporation (NYSE:TGT) serves guests at 1,764 stores across the United States and at Target.com. The company plans to open its first stores in Canada in 2013. In addition, the company operates a credit card segment that offers branded proprietary credit card products. Since 1946, Target has given 5 percent of its income through community grants and programs; today, that giving equals more than $3 million a week. For more information about Target’s commitment to corporate responsibility, visit Target.com/hereforgood.
For more information, visit Target.com/Pressroom.
| TARGET CORPORATION | ||||||||||||
| Consolidated Statements of Operations | ||||||||||||
| Three Months Ended | ||||||||||||
| April 28, | April 30, | |||||||||||
| (millions, except per share data) (unaudited) | 2012 | 2011 | Change | |||||||||
| Sales | $ | 16,537 | $ | 15,580 | 6.1 | % | ||||||
| Credit card revenues | 330 | 355 | (7.1 | ) | ||||||||
| Total revenues | 16,867 | 15,935 | 5.9 | |||||||||
| Cost of sales | 11,541 | 10,838 | 6.5 | |||||||||
| Selling, general and administrative expenses | 3,392 | 3,233 | 4.9 | |||||||||
| Credit card expenses | 120 | 88 | 35.5 | |||||||||
| Depreciation and amortization | 529 | 512 | 3.3 | |||||||||
| Earnings before interest expense and income taxes | 1,285 | 1,264 | 1.6 | |||||||||
| Net interest expense | 184 | 183 | 0.3 | |||||||||
| Earnings before income taxes | 1,101 | 1,081 | 1.8 | |||||||||
| Provision for income taxes | 404 | 392 | 3.0 | |||||||||
| Net earnings | $ | 697 | $ | 689 | 1.2 | % | ||||||
| Basic earnings per share | $ | 1.05 | $ | 0.99 | 5.2 | % | ||||||
| Diluted earnings per share | $ | 1.04 | $ | 0.99 | 5.0 | % | ||||||
| Weighted average common shares outstanding | ||||||||||||
| Basic | 666.3 | 692.6 | (3.8 | )% | ||||||||
| Diluted | 672.4 | 697.4 | (3.6 | )% | ||||||||
| Subject to reclassification | ||||||||||||
| TARGET CORPORATION | |||||||||||||||
| Consolidated Statements of Financial Position | |||||||||||||||
| April 28, | January 28, | April 30, | |||||||||||||
| (millions) | 2012 | 2012 | 2011 | ||||||||||||
| Assets | (unaudited) | (unaudited) | |||||||||||||
| Cash and cash equivalents, including short-term investments of $18, $194 and $872 | $ | 675 | $ | 794 | $ | 1,424 | |||||||||
| Credit card receivables, net of allowance of $395, $430 and $565 | 5,548 | 5,927 | 5,721 | ||||||||||||
| Inventory | 7,670 | 7,918 | 7,696 | ||||||||||||
| Other current assets | 1,698 | 1,810 | 1,527 | ||||||||||||
| Total current assets | 15,591 | 16,449 | 16,368 | ||||||||||||
| Property and equipment | |||||||||||||||
| Land | 6,136 | 6,122 | 5,989 | ||||||||||||
| Buildings and improvements | 27,037 | 26,837 | 23,197 | ||||||||||||
| Fixtures and equipment | 4,979 | 5,141 | 4,691 | ||||||||||||
| Computer hardware and software | 2,275 | 2,468 | 2,270 | ||||||||||||
| Construction-in-progress | 1,232 | 963 | 837 | ||||||||||||
| Accumulated depreciation | (12,151 | ) | (12,382 | ) | (11,336 | ) | |||||||||
| Property and equipment, net | 29,508 | 29,149 | 25,648 | ||||||||||||
| Other noncurrent assets | 1,076 | 1,032 | 980 | ||||||||||||
| Total assets | $ | 46,175 | $ | 46,630 | $ | 42,996 | |||||||||
| Liabilities and shareholders' investment | |||||||||||||||
| Accounts payable | $ | 6,292 | $ | 6,857 | $ | 6,296 | |||||||||
| Accrued and other current liabilities | 3,671 | 3,644 | 3,229 | ||||||||||||
| Unsecured debt and other borrowings | 2,483 | 3,036 | 1,124 | ||||||||||||
| Nonrecourse debt collateralized by credit card receivables | - | 750 | 189 | ||||||||||||
| Total current liabilities | 12,446 | 14,287 | 10,838 | ||||||||||||
| Unsecured debt and other borrowings | 13,467 | 13,447 | 10,640 | ||||||||||||
| Nonrecourse debt collateralized by credit card receivables | 1,500 | 250 | 3,776 | ||||||||||||
| Deferred income taxes | 1,209 | 1,191 | 916 | ||||||||||||
| Other noncurrent liabilities | 1,690 | 1,634 | 1,596 | ||||||||||||
| Total noncurrent liabilities | 17,866 | 16,522 | 16,928 | ||||||||||||
| Shareholders' investment | |||||||||||||||
| Common stock | 55 | 56 | 57 | ||||||||||||
| Additional paid-in capital | 3,595 | 3,487 | 3,345 | ||||||||||||
| Retained earnings | 12,854 | 12,959 | 12,398 | ||||||||||||
| Accumulated other comprehensive loss | |||||||||||||||
| Pension and other benefit liabilities | (610 | ) | (624 | ) | (532 | ) | |||||||||
| Currency translation adjustment and cash flow hedges | (31 | ) | (57 | ) | (38 | ) | |||||||||
| Total shareholders' investment | 15,863 | 15,821 | 15,230 | ||||||||||||
| Total liabilities and shareholders' investment | $ | 46,175 | $ | 46,630 | $ | 42,996 | |||||||||
| Common shares outstanding | 661.1 | 669.3 | 689.0 | ||||||||||||
| Subject to reclassification | |||||||||||||||
| TARGET CORPORATION | ||||||||||
| Consolidated Statements of Cash Flows | ||||||||||
| Three Months Ended | ||||||||||
| April 28, | April 30, | |||||||||
| (millions) (unaudited) | 2012 | 2011 | ||||||||
| Operating activities | ||||||||||
| Net earnings | $ | 697 | $ | 689 | ||||||
| Reconciliation to cash flow | ||||||||||
| Depreciation and amortization | 529 | 512 | ||||||||
| Share-based compensation expense | 25 | 21 | ||||||||
| Deferred income taxes | 7 | 100 | ||||||||
| Bad debt expense | 52 | 12 | ||||||||
| Non-cash (gains)/losses and other, net | 2 | 19 | ||||||||
| Changes in operating accounts: | ||||||||||
| Accounts receivable originated at Target | 142 | 149 | ||||||||
| Inventory | 248 | (99 | ) | |||||||
| Other current assets | 88 | 84 | ||||||||
| Other noncurrent assets | (3 | ) | 14 | |||||||
| Accounts payable | (566 | ) | (330 | ) | ||||||
| Accrued and other current liabilities | 28 | (103 | ) | |||||||
| Other noncurrent liabilities | 58 | (16 | ) | |||||||
| Cash flow provided by operations | 1,307 | 1,052 | ||||||||
| Investing activities | ||||||||||
| Expenditures for property and equipment | (829 | ) | (632 | ) | ||||||
| Proceeds from disposal of property and equipment | 1 | 1 | ||||||||
| Change in accounts receivable originated at third parties | 185 | 271 | ||||||||
| Other investments | (16 | ) | (10 | ) | ||||||
| Cash flow required for investing activities | (659 | ) | (370 | ) | ||||||
| Financing activities | ||||||||||
| Additions to short-term debt | 450 | - | ||||||||
| Additions to long-term debt | 500 | - | ||||||||
| Reductions of long-term debt | (1,005 | ) | - | |||||||
| Dividends paid | (201 | ) | (174 | ) | ||||||
| Repurchase of stock | (592 | ) | (812 | ) | ||||||
| Stock option exercises and related tax benefit | 82 | 16 | ||||||||
| Other | (2 | ) | - | |||||||
| Cash flow required for financing activities | (768 | ) | (970 | ) | ||||||
| Effect of exchange rate changes on cash and cash equivalents | 1 | - | ||||||||
| Net decrease in cash and cash equivalents | (119 | ) | (288 | ) | ||||||
| Cash and cash equivalents at beginning of period | 794 | 1,712 | ||||||||
| Cash and cash equivalents at end of period | $ | 675 | $ | 1,424 | ||||||
| Subject to reclassification | ||||||||||
| TARGET CORPORATION | ||||||||||||
| U.S. Retail Segment | ||||||||||||
| U.S. Retail Segment Results | Three Months Ended | |||||||||||
| April 28, | April 30, | |||||||||||
| (millions) (unaudited) | 2012 | 2011 | Change | |||||||||
| Sales | $ | 16,537 | $ | 15,580 | 6.1 | % | ||||||
| Cost of sales | 11,541 | 10,838 | 6.5 | |||||||||
| Gross margin | 4,996 | 4,742 | 5.4 | |||||||||
| SG&A expenses(a) | 3,293 | 3,173 | 3.8 | |||||||||
| EBITDA | 1,703 | 1,569 | 8.5 | |||||||||
| Depreciation and amortization | 504 | 507 | (0.7 | ) | ||||||||
| EBIT | $ | 1,199 | $ | 1,062 | 12.9 | % | ||||||
EBITDA is earnings before interest expense, income taxes, depreciation
and amortization.
EBIT is earnings before interest expense and
income taxes.
(a) Loyalty
program charges were $65 million and $49 million for the three months
ended April 28, 2012 and April 30, 2011, respectively. In all periods,
these amounts were recorded as reductions to SG&A expenses within the
U.S. Retail Segment and increases to operations and marketing expenses
within the U.S. Credit Card Segment.
| U.S. Retail Segment Rate Analysis | Three Months Ended | |||||||
| April 28, | April 30, | |||||||
| (unaudited) | 2012 | 2011 | ||||||
| Gross margin rate | 30.2 | % | 30.4 | % | ||||
| SG&A expense rate | 19.9 | 20.4 | ||||||
| EBITDA margin rate | 10.3 | 10.1 | ||||||
| Depreciation and amortization expense rate | 3.0 | 3.3 | ||||||
| EBIT margin rate | 7.3 | 6.8 | ||||||
| Rate analysis metrics are computed by dividing the applicable amount by sales. | ||||||||
| Comparable-Store Sales | Three Months Ended | |||||||
| April 28, | April 30, | |||||||
| (unaudited) | 2012 | 2011 | ||||||
| Comparable-store sales change | 5.3 | % | 2.0 | % | ||||
| Drivers of change in comparable-store sales: | ||||||||
| Number of transactions | 2.0 | 0.4 | ||||||
| Average transaction amount | 3.2 | 1.6 | ||||||
| Units per transaction | 0.6 | 4.4 | ||||||
| Selling price per unit | 2.6 | (2.6 | ) | |||||
| The comparable-store sales increases or decreases above are calculated by comparing sales in fiscal year periods with comparable prior-year periods of equivalent length. | ||||||||
| REDcard Penetration | Three Months Ended | |||||||
| April 28, | April 30, | |||||||
| (unaudited) | 2012 | 2011 | ||||||
| Target Credit Cards | 7.1 | % | 5.9 | % | ||||
| Target Debit Cards | 4.5 | 1.7 | ||||||
| Total Store REDcard Penetration | 11.6 | % | 7.6 | % | ||||
| Represents the percentage of Target store sales that are paid for using REDcards. | ||||||||
| Number of Stores and Retail Square Feet | Number of Stores | Retail Square Feet(a) | ||||||||||||||||
| April 28, | January 28, | April 30, | April 28, | January 28, | April 30, | |||||||||||||
| (unaudited) | 2012 | 2012 | 2011 | 2012 | 2012 | 2011 | ||||||||||||
| Target general merchandise stores | 521 | 637 | 953 | 62,464 | 76,999 | 116,462 | ||||||||||||
| Expanded food assortment stores | 992 | 875 | 550 | 128,885 | 114,219 | 73,253 | ||||||||||||
| SuperTarget stores | 251 | 251 | 252 | 44,503 | 44,503 | 44,681 | ||||||||||||
| Total | 1,764 | 1,763 | 1,755 | 235,852 | 235,721 | 234,396 | ||||||||||||
| (a) In thousands; reflects total square feet, less office, distribution center and vacant space. | ||||||||||||||||||
| Subject to reclassification | ||||||||||||||||||
| TARGET CORPORATION | ||||||||||||||||
| U.S. Credit Card Segment | ||||||||||||||||
| U.S. Credit Card Segment Results | Three Months Ended | Three Months Ended | ||||||||||||||
| April 28, 2012 | April 30, 2011 | |||||||||||||||
| Annualized | Annualized | |||||||||||||||
| (millions) (unaudited) | Amount | Rate(d) | Amount | Rate(d) | ||||||||||||
| Finance charge revenue | $ | 271 | 17.8 | % | $ | 292 | 18.1 | % | ||||||||
| Late fees and other revenue | 40 | 2.6 | 42 | 2.6 | ||||||||||||
| Third party merchant fees | 19 | 1.3 | 21 | 1.3 | ||||||||||||
| Total revenues | 330 | 21.7 | 355 | 22.0 | ||||||||||||
| Bad debt expense | 52 | 3.4 | 12 | 0.8 | ||||||||||||
| Operations and marketing expenses(a) | 133 | 8.8 | 125 | 7.8 | ||||||||||||
| Depreciation and amortization | 4 | 0.2 | 5 | 0.3 | ||||||||||||
| Total expenses | 189 | 12.4 | 142 | 8.8 | ||||||||||||
| EBIT | 141 | 9.3 | % | 213 | 13.2 | % | ||||||||||
|
Interest expense on nonrecourse debt collateralized by credit card receivables |
2 | 19 | ||||||||||||||
| Segment profit | $ | 139 | $ | 194 | ||||||||||||
|
Average gross credit card receivables funded by Target(b) |
$ | 4,886 | $ | 2,504 | ||||||||||||
| Segment pretax ROIC(c) | 11.4 | % | 30.9 | % | ||||||||||||
(a) See footnote (a) to our U.S. Retail Segment
Results table for an explanation of our loyalty program charges.
(b)
Amounts represent the portion of average gross credit card
receivables funded by Target. These amounts exclude $1,187 million for
the three months ended April 28, 2012, and $3,959 million for the three
months ended April 30, 2011, of average receivables funded by
nonrecourse debt collateralized by credit card receivables.
(c)
ROIC is return on invested capital, and this rate equals our
segment profit divided by average gross credit card 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 | ||||||||||||||||
| April 28, 2012 | April 30, 2011 | |||||||||||||||||
| Yield | Yield | |||||||||||||||||
| Amount | Annualized | Amount | Annualized | |||||||||||||||
| (unaudited) | (in millions) | Rate | (in millions) | Rate | ||||||||||||||
| EBIT | $ | 141 | 9.3 | % | (c) | $ | 213 | 13.2 | % | (c) | ||||||||
| LIBOR(a) | 0.2 | % | 0.2 | % | ||||||||||||||
| Spread to LIBOR(b) | $ | 137 | 9.1 | % | (c) | $ | 209 | 13.0 | % | (c) | ||||||||
(a) Balance-weighted one-month LIBOR.
(b) Spread
to LIBOR is a metric used to analyze the performance of our total credit
card portfolio because the majority of our portfolio earns finance
charge revenue at rates tied to the Prime Rate, and the interest rate on
all nonrecourse debt collateralized by credit card receivables is tied
to LIBOR.
(c) As an annualized percentage of
average gross credit card receivables.
| Receivables Rollforward Analysis | Three Months Ended | ||||||||||||||
| April 28, | April 30, | ||||||||||||||
| (millions) (unaudited) | 2012 | 2011 | Change | ||||||||||||
| Beginning gross credit card receivables | $ | 6,357 | $ | 6,843 | (7.1 | ) | % | ||||||||
| Charges at Target | 1,288 | 1,002 | 28.5 | ||||||||||||
| Charges at third parties | 1,139 | 1,251 | (9.0 | ) | |||||||||||
| Payments | (3,060 | ) | (3,001 | ) | 2.0 | ||||||||||
| Other | 219 | 191 | 14.9 | ||||||||||||
| Period-end gross credit card receivables | $ | 5,943 | $ | 6,286 | (5.4 | ) | % | ||||||||
| Average gross credit card receivables | $ | 6,073 | $ | 6,463 | (6.0 | ) | % | ||||||||
|
Accounts with three or more payments (60+ days) past due as a percentage of period-end gross credit card receivables |
2.7 | % | 3.3 | % | |||||||||||
|
Accounts with four or more payments (90+ days) past due as a percentage of period-end gross credit card receivables |
1.9 | % | 2.4 | % | |||||||||||
| Allowance for Doubtful Accounts | Three Months Ended | ||||||||||||||
| April 28, | April 30, | ||||||||||||||
| (millions) (unaudited) | 2012 | 2011 | Change | ||||||||||||
| Allowance at beginning of period | $ | 430 | $ | 690 | (37.7 | ) | % | ||||||||
| Bad debt expense | 52 | 12 | 323.4 | ||||||||||||
| Write-offs(a) | (127 | ) | (184 | ) | (31.4 | ) | |||||||||
| Recoveries(a) | 40 | 47 | (15.7 | ) | |||||||||||
| Allowance at end of period | $ | 395 | $ | 565 | (30.1 | ) | % | ||||||||
|
As a percentage of period-end gross credit card receivables |
6.6 | % | 9.0 | % | |||||||||||
|
Net write-offs as an annualized percentage of average gross credit card receivables |
5.7 | % | 8.5 | % | |||||||||||
(a) Write-offs include the principal amount of losses (excluding accrued and unpaid finance charges), and recoveries include current period collections on previously written-off balances. These amounts combined represent net write-offs.
Subject to reclassification
| TARGET CORPORATION | ||||||||||||||
| Canadian Segment | ||||||||||||||
| Canadian Segment Results | Three Months Ended | |||||||||||||
| April 28, | April 30, | |||||||||||||
| (millions) (unaudited) | 2012 | 2011 | Change | |||||||||||
| Sales | $ | - | $ | - | - | % | ||||||||
| Cost of sales | - | - | - | |||||||||||
| Gross margin | - | - | - | |||||||||||
| SG&A expenses(a) | 34 | 11 | 220.1 | |||||||||||
| EBITDA | (34 | ) | (11 | ) | 220.1 | |||||||||
| Depreciation and amortization(b) | 21 | - | - | |||||||||||
| EBIT | $ | (55 | ) | $ | (11 | ) | 417.7 | % | ||||||
|
|
||||||||||||||
EBITDA is earnings/(loss) before interest expense, income taxes,
depreciation and amortization.
EBIT is earnings/(loss) before
interest expense and income taxes.
(a) SG&A
expenses include start-up costs consisting primarily of compensation,
benefits and consulting expenses.
(b) Depreciation
and amortization results from depreciation of capital lease assets and
leasehold interests. For the three months ended April 28, 2012, the
lease payment obligation also gave rise to $20 million of interest
expense, recorded in our consolidated statement of operations. There was
no interest expense during the three months ended April 30, 2011.
Subject to reclassification
| TARGET CORPORATION | ||||||||||||||||||||||||||||
| Reconciliation of Non-GAAP Financial Measures | ||||||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||||
| April 28, | April 30, | |||||||||||||||||||||||||||
| (unaudited) | 2012 | 2011 | Change | |||||||||||||||||||||||||
| GAAP diluted earnings per share | $ | 1.04 | $ | 0.99 | 5.0 | % | ||||||||||||||||||||||
| Adjustments | 0.07 | - | ||||||||||||||||||||||||||
| Adjusted diluted earnings per share | $ | 1.11 | $ | 0.99 | 11.5 | % | ||||||||||||||||||||||
| A detailed reconciliation is provided below. | ||||||||||||||||||||||||||||
| (millions, except per share data) | U.S. | U.S. | Consolidated | |||||||||||||||||||||||||
| (unaudited) | Retail | Credit Card | Total U.S. | Canadian | Other | GAAP Total | ||||||||||||||||||||||
|
Three Months Ended April 28, 2012 |
||||||||||||||||||||||||||||
| Segment profit | $ | 1,199 | $ | 139 | $ | 1,338 | $ | (55 | ) | $ | - | $ | 1,283 | |||||||||||||||
| Other net interest expense(a) | 162 | 20 | - | 182 | ||||||||||||||||||||||||
| Earnings before income taxes | 1,176 | (75 | ) | - | 1,101 | |||||||||||||||||||||||
| Provision for income taxes(b) | 432 | (20 | ) | (8 | ) | (d) | 404 | |||||||||||||||||||||
| Net earnings | $ | 744 | $ | (55 | ) | $ | 8 | $ | 697 | |||||||||||||||||||
| Diluted earnings per share(c) | $ | 1.11 | $ | (0.08 | ) | $ | 0.01 | $ | 1.04 | |||||||||||||||||||
|
Three Months Ended April 30, 2011 |
||||||||||||||||||||||||||||
| Segment profit | $ | 1,062 | $ | 194 | $ | 1,256 | $ | (11 | ) | $ | - | $ | 1,245 | |||||||||||||||
| Other net interest expense(a) | 164 | - | - | 164 | ||||||||||||||||||||||||
| Earnings before income taxes | 1,092 | (11 | ) | - | 1,081 | |||||||||||||||||||||||
| Provision for income taxes(b) | 400 | (3 | ) | (5 | ) | (d) | 392 | |||||||||||||||||||||
| Net earnings | $ | 692 | $ | (8 | ) | $ | 5 | $ | 689 | |||||||||||||||||||
| Diluted earnings per share(c) | $ | 0.99 | $ | (0.01 | ) | $ | 0.01 | $ | 0.99 | |||||||||||||||||||
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Note: Our segment measure of profit is used by management to
evaluate the return on our investment and to make operating decisions.
To provide additional transparency, we have disclosed non-GAAP adjusted
diluted earnings per share, which excludes the impact of our planned
2013 Canadian market entry and favorable resolutions of various income
tax matters. We believe this information is useful in providing
period-to-period comparisons of the results of our U.S. operations. The
sum of the non-GAAP adjustments may not equal the total adjustment
amounts due to rounding.
(a) Represents
interest expense, net of interest income, not included in U.S. Credit
Card segment profit. For the three months ended April 28, 2012, U.S.
Credit Card segment profit included $2 million of interest expense on
nonrecourse debt collateralized by credit card receivables, compared
with $19 million in the respective prior year period. These amounts,
along with other net interest expense, equal consolidated GAAP net
interest expense.
(b) Taxes are allocated
to our business segments based on estimated income tax rates applicable
to the operations of the segment for the period.
(c)
Weighted average diluted shares outstanding were 672.4 million for
the three months ended April 28, 2012, and 697.4 million for the three
months ended April 30, 2011.
(d) Represents
the effect of the resolution of income tax matters.
Subject to reclassification