Target Corporation (simply known as Target) is an American retailing company that was founded in Minneapolis, Minnesota in 1902 as the Dayton Dry Goods Company. In 1962, the company opened its first Target store in nearby Roseville. Target grew and eventually became the largest division of Dayton Hudson Corporation, culminating in the company changing its name to Target Corporation in 2000. As of May 2010, the company has opened stores in every state except Vermont, operating as Target or SuperTarget.
Target is the second largest discount retailer in the United States, behind Walmart.[6][7] The company is ranked at number 30 on the Fortune 500 as of 2010, and is a component of the Standard & Poor's 500 index. The company licenses its bullseye trademark to Wesfarmers, owners of the separate Target Australia chain.
On January 13, 2011, Target announced its expansion into Canada. Target will operate 100 to 150 stores in Canada by 2013, through its purchase of leaseholds from the Canadian chain Zellers.

iscal 2007, a 52 week period, was a year of slower sales and earnings growth for Target than in our recent past. Net earnings increased 2.2 percent to $2,849 million, and on this same basis, diluted earnings per share rose 3.9 percent to $3.33. Sales increased 6.2 percent, including comparable-store sales (as defined below) growth of 3.0 percent. The shorter fiscal year in 2007 adversely impacted sales growth by 1.9 percentage points but had no impact on comparable-store sales growth. The combination of retail and credit card operations produced earnings before interest expense and income taxes of $5,272 million, an increase of 4.0 percent from 2006.

Net cash provided by operating activities was $4,125 million for 2007. During 2007 we repurchased 46.2 million shares of our common stock for a total investment of $2,642 million. Additionally, we paid dividends of $442 million and invested $331 million in call options on our own common stock. We also opened 118 new stores in 2007, or 103 stores net of 14 relocations and one closing.

Management’s Discussion and Analysis is based on our Consolidated Financial Statements in Item 8, Supplemental Data.


Latest Full Context Quarter Ending Date
2010/10

Gross Profit Margin
30.8%

EBIT Margin
7.6%

EBITDA Margin
10.7%

Pre-Tax Profit Margin
6.5%

Interest Coverage
6.5

Current Ratio
1.6

Quick Ratio
0.6

Leverage Ratio
3.0

Receivables Turnover
10.3

Inventory Turnover
4.9

Asset Turnover
1.5

Revenue to Assets
1.5

ROE from Total Operations
19.0%

Return on Invested Capital
9.2%

Return on Assets
6.3%

Debt/Common Equity Ratio
1.05

Price/Book Ratio (Price/Equity)
2.58

Book Value per Share
$21.01

Total Debt/ Equity
1.11

Long-Term Debt to Total Capital
0.51

SG&A as % of Revenue
20.1%

R&D as % of Revenue
0.0%

Receivables per Day Sales
$32.04

Days CGS in Inventory
74

Working Capital per Share
$9.26

Cash per Share
$0.83

Cash Flow per Share
$6.92

Free Cash Flow per Share
$4.59

Tangible Book Value per Share
$21.01

Price/Cash Flow Ratio
7.8

Price/Free Cash Flow Ratio
11.8

Price/Tangible Book Ratio
2.58

Most recent data

5-Year Averages
Return on Equity
17.2%

Return on Assets
6.2%

Return on Invested Capital
9.1%

Gross Profit Margin
32.4%

Pre-Tax Profit Margin
6.7%

Post-Tax Profit Margin
4.2%

Net Profit Margin (Total Operations)
4.2%

R&D as a % of Sales
0.0%

SG&A as a % of Sales
21.9%

Debt/Equity Ratio
0.88

Total Debt/Equity Ratio
0.98


Income Statement

Operating Revenue (Revenue/Sales) 15,605,000 15,532,000 15,593,000 20,181,000

Total Revenues 15,605,000 15,532,000 15,593,000 20,181,000

Cost of Sales 10,760,000 10,507,000 10,692,000 14,350,000

Cost of Sales with Depreciation 10,760,000 10,507,000 10,692,000 14,350,000

Gross Margin 4,845,000 5,025,000 4,901,000 5,831,000

Gross Operating Profit 4,845,000 5,025,000 4,901,000 5,831,000

Selling, Gen. & Administrative Expense 3,345,000 3,263,000 3,143,000 3,673,000

Operating Income 967,000 1,266,000 1,242,000 1,622,000

Operating Income b/f Depreciation (EBITDA) 1,500,000 1,762,000 1,758,000 2,158,000

Depreciation 533,000 496,000 516,000 536,000

Depreciation Unreconciled 533,000 496,000 516,000 536,000

Operating Income After Depreciation 967,000 1,266,000 1,242,000 1,622,000

Interest Income 1,000 1,000 1,000 *

Other Income, Net (1,000) * * *


All numbers in thousands


Total Income Avail for Interest Expense (EBIT) 967,000 1,267,000 1,243,000 1,622,000

Interest Expense 194,000 186,000 188,000 213,000

Pre-tax Income (EBT) 773,000 1,081,000 1,055,000 1,409,000

Income Taxes 238,000 402,000 384,000 473,000

Income before Income Taxes 773,000 1,081,000 1,055,000 1,409,000

Net Income from Continuing Operations 535,000 679,000 671,000 936,000

Net Income from Total Operations 535,000 679,000 671,000 936,000

Total Net Income 535,000 679,000 671,000 936,000

Normalized Income 535,000 679,000 671,000 936,000

Net Income Available for Common 535,000 679,000 671,000 936,000


Income Statement - Year-to-Date
Revenues Year-to-Date 46,729,000 31,124,000 15,593,000 65,357,000

Income Year-to-Date fr. Total Ops. 1,885,000 1,350,000 671,000 2,488,000
Liquidity and Capital Resources
Our financial condition remains strong. In assessing our financial condition, we consider factors such as cash flows provided by operations, capital expenditures and debt service obligations. Cash flow provided by operations was $4,125 million in 2007 compared with $4,862 million in 2006, primarily due to significantly greater growth in Target Visa accounts receivable and an investment in inventory growth, net of accounts payable.

We continue to fund our growth and execute our share repurchase program through a combination of internally generated funds and debt financing.

Our year-end gross receivables were $8,624 million compared with $6,711 million in 2006, an increase of 28.5 percent. This growth was driven by many factors, including a product change from proprietary Target Cards to higher-limit Target Visa cards for a group of higher credit-quality Target Card Guests and the impact of an industry-wide decline in payment rates. Average receivables in 2007 increased 18.1 percent. Given the significant rate of growth of receivables in 2007, we expect that our average receivables balance during the first half of 2008 will be significantly greater than that in 2007. Additionally, absent product changes for additional Target Card holders in 2008, we expect that our year end 2008 receivable balance will rise only modestly.

Year-end inventory levels increased $525 million, or 8.4 percent, reflecting the natural increase required to support additional square footage and comparable-store sales growth. This growth was partially funded by an increase in accounts payable over the same period.

During 2007, we repurchased 46.2 million shares of our common stock for a total cash investment of $2,642 million ($57.24 per share). Of these repurchases, 26.5 million shares of our common stock for a total cash investment of $1,445 million ($54.64 per share) were made under a $10 billion share repurchase plan authorized by our Board of Directors in November 2007. We intend to complete this new share repurchase program within approximately three years through open market transactions and other means. Under the right combination of business results, liquidity and share price, we would expect to complete half, or more, of this new program by the end of 2008. The remaining shares repurchased in 2007 were under the prior program. Under the prior program that was originally approved in June 2004 and amended in November 2005 and June 2007, we repurchased a total of 90.7 million shares of our common stock for a total investment of $4,646 million ($51.20 per share) from June 2004 through November 2007. Additionally, in the fourth quarter of 2007, we purchased and sold a series of call options at a net cost of $331 million on 30 million shares of our common stock. The options expire in the first and second quarters of 2008. Refer to Note 24 for further details of these instruments.

In 2006 we repurchased 19.5 million shares for a total investment of $977 million ($50.16 per share). During 2007 and 2006 some of the shares repurchased were delivered upon the settlement of prepaid forward contracts. The details of prepaid forward contract settlements and our long positions in prepaid forward contracts have been provided in Note 24 and Note 26.

In 2007 we declared dividends of $.54 per share totaling $454 million, an increase of 14.6 percent over 2006. In 2006 we declared dividends of $.46 per share totaling $396 million, an increase of 18.6 percent over 2005. We have paid dividends every quarter since our first dividend was declared following our 1967 initial public offering, and it is our intent to continue to do so in the future.

We believe that cash flows from operations, together with current levels of cash and cash equivalents, proceeds from borrowings and/or the potential sale of some or all of our receivables, will be sufficient in 2008 to fund planned capital expenditures, dividends, share repurchases, growth in receivables, maturities of long-term debt, seasonal inventory buildup and other cash requirements.

Our financing strategy is to ensure liquidity and access to capital markets, to manage our net exposure to floating interest rate volatility and to maintain a balanced spectrum of debt maturities. Within these parameters, we seek to minimize our cost of borrowing.

Maintaining strong investment-grade debt ratings is a key part of our strategy. Our debt ratings as of February 2, 2008 were as follows:

Debt Ratings Moody’s Standard and Poor’s Fitch
Long-term debt A2 A+ A
Commercial paper P-1 A-1 F1
Securitized receivables Aaa AAA n/a
As described in Note 18, during 2007 we issued $6,750 million of long-term debt, and we issued $1,900 million of Variable Funding Certificates backed by credit card receivables through the Target Credit Card Master Trust. As of February 2, 2008, $1,500 million of the Variable Funding Certificates were outstanding. Further liquidity is provided by a committed $2 billion unsecured revolving credit facility obtained through a group of banks in April 2007, which will expire in April 2012. No balances were outstanding at any time during 2007 or 2006 under this or previously existing revolving credit facilities. Most of our long-term debt obligations contain covenants related to secured debt levels. In addition to a secured debt level covenant, our credit facility also contains a debt leverage covenant. We are, and expect to remain, in compliance with these covenants. At February 2, 2008, no notes or debentures contained provisions requiring acceleration of payment upon a debt rating downgrade, except that certain outstanding notes allow the note holders to put the notes to us if within a matter of months of each other we experience both (a) a change in control and (b) our long-term debt ratings are either reduced and the resulting rating is non-investment grade, or our longterm debt ratings are placed on watch for possible reduction and those ratings are subsequently reduced and the resulting rating is non-investment grade.

Our interest coverage ratio represents the ratio of pre-tax earnings before fixed charges (interest expense and the interest portion of rent expense) to fixed charges. Our interest coverage ratio calculated as prescribed by Securities and Exchange Commission (SEC) rules was 6.4x, 7.1x, and 7.2x in 2007, 2006 and 2005, respectively.

PERIOD ENDING 10/2010 07/2010 04/2010 01/2010

Balance Sheet - Assets

Cash and Equivalents 587,000 568,000 563,000 583,000

Marketable Securities 349,000 972,000 1,015,000 1,617,000

Accounts Receivable 5,955,000 6,137,000 6,330,000 6,966,000

Receivables 5,955,000 6,137,000 6,330,000 6,966,000

Other Inventories 9,550,000 7,728,000 7,249,000 7,179,000

Inventories 9,550,000 7,728,000 7,249,000 7,179,000

Other Current Assets 1,905,000 1,840,000 2,065,000 2,079,000

Total Current Assets 18,346,000 17,245,000 17,222,000 18,424,000

Land & Improvements 5,891,000 5,845,000 5,803,000 5,793,000

Building & Improvements 23,101,000 22,568,000 22,332,000 22,152,000

Machinery, Furniture & Equipment 4,908,000 4,602,000 4,597,000 4,743,000

Construction in Progress 448,000 772,000 497,000 502,000

Other Fixed Assets 2,461,000 2,432,000 2,428,000 2,575,000

Total Fixed Assets 36,809,000 36,219,000 35,657,000 35,765,000

Gross Fixed Assets (Plant, Prop. & Equip.) 36,809,000 36,219,000 35,657,000 35,765,000

Accumulated Depreciation & Depletion 11,219,000 10,818,000 10,445,000 10,485,000

Net Fixed Assets (Net PP&E) 25,590,000 25,401,000 25,212,000 25,280,000

Other Non-Current Assets 1,013,000 1,009,000 889,000 829,000

Total Non-Current Assets 26,603,000 26,410,000 26,101,000 26,109,000

Total Assets 44,949,000 43,655,000 43,323,000 44,533,000


Balance Sheet - Liabilities, Stockholders Equity

Accounts Payable 7,761,000 6,228,000 6,150,000 6,511,000

Short Term Debt 850,000 815,000 864,000 1,696,000

Accrued Liabilities 3,179,000 3,057,000 3,183,000 3,120,000

Total Current Liabilities 11,790,000 10,100,000 10,197,000 11,327,000

Long Term Debt 15,680,000 15,737,000 14,794,000 15,118,000

Deferred Income Taxes 814,000 740,000 916,000 835,000

Other Non-Current Liabilities 1,786,000 1,810,000 1,819,000 1,906,000

Total Non-Current Liabilities 18,280,000 18,287,000 17,529,000 17,859,000

Total Liabilities 30,070,000 28,387,000 27,726,000 29,186,000

Common Stock Equity 14,879,000 15,268,000 15,597,000 15,347,000

Common Par 59,000 60,000 62,000 62,000

Additional Paid In Capital 3,128,000 3,085,000 3,010,000 2,919,000

Retained Earnings 12,254,000 12,690,000 13,098,000 12,947,000

Other Equity Adjustments (562,000) (567,000) (573,000) (581,000)

Total Capitalization 30,559,000 31,005,000 30,391,000 30,465,000

Total Equity 14,879,000 15,268,000 15,597,000 15,347,000

Total Liabilities & Stock Equity 44,949,000 43,655,000 43,323,000 44,533,000

Cash Flow 4,902,000 4,807,000 4,704,000 4,511,000

Working Capital 6,556,000 7,145,000 7,025,000 7,097,000

Free Cash Flow 813,000 585,000 625,000 3,656,000

Invested Capital 30,559,000 31,005,000 30,391,000 30,465,000


* = Data not available
 
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