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Target Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 21, 2012 11:05AM
Target Corp. (TGT) filed Quarterly Report for the period ended 2012-10-27.
Highlight of Business Operations:The amount remaining on unamortized hedged debt valuation gains from terminated or de-designated interest rate swaps that will be amortized into earnings over the remaining lives of the underlying debt totaled $84 million, $111 million and $122 million, at October 27, 2012, January 28, 2012 and October 29, 2011, respectively.
The total change in fair value for contracts indexed to our own common stock recognized in earnings was pretax income of $3 million and $6 million for the three months ended October 27, 2012 and October 29, 2011, and pretax income of $18 million and $3 million for the nine months ended October 27, 2012 and October 29, 2011, respectively. For the nine months ended October 27, 2012 and October 29, 2011, we invested $19 million and $44 million, respectively, in such investment instruments, and this activity is included in the Consolidated Statements of Cash Flows within other investing activities. Adjusting our position in these investment vehicles may involve repurchasing shares of Target common stock when settling the forward contracts as described in Note 10. The settlement dates of these instruments are regularly renegotiated with the counterparty.
Consolidated revenues were $16,929 million for the three months ended October 27, 2012, an increase of $527 million or 3.2 percent from the same period in the prior year. Consolidated earnings before interest expense and income taxes for third quarter 2012 increased by $107 million or 10.1 percent from third quarter 2011 to $1,164 million. Cash flow provided by operations was $3,348 million and $2,975 million for the nine months ended October 27, 2012 and October 29, 2011, respectively. Diluted earnings per share in the third quarter increased 17.6 percent to $0.96 from $0.82 in the same period a year ago. Adjusted diluted earnings per share, which we believe is useful in providing period-to-period comparisons of the results of our U.S. operations, increased 4.3 percent to $0.90 in third quarter 2012 from $0.86 in the same period a year ago.
Our effective income tax rate for the three and nine months ended October 27, 2012 was 34.5 percent and 35.2 percent, respectively, down from 35.3 percent and 36.1 percent for the three and nine months ended October 29, 2011, respectively. This change is primarily due to an increase in the benefit related to the favorable resolution of various income tax matters of $25 million and $57 million, respectively, in the three and nine months ended October 27, 2012, compared with $6 million and $15 million in the comparable prior year periods. These benefits were partially offset by the unfavorable impact of increased losses in Canada, which are taxed at lower rates than our U.S. earnings.
(a) Represents interest expense, net of interest income, not included in U.S. Credit Card Segment profit. For the three and nine months ended October 27, 2012, U.S. Credit Card Segment profit included $3 million and $8 million of interest expense on nonrecourse debt collateralized by credit card receivables, compared with $18 million and $55 million in the respective prior year periods. These amounts, along with other net interest expense, equal consolidated GAAP net interest expense.
Stocks Discussed: TGT,