TARGET CORP | 2013 | FY | 3

Segment Reporting

Our segment measure of profit is used by management to evaluate the return on our investment and to make operating decisions.

Business Segment Results
2013
 
2012 (a)
 
2011
(millions)
U.S.

Canadian

Total

 
U.S.

Canadian

Total

 
U.S.

Canadian

Total

Sales
$
71,279

$
1,317

$
72,596

 
$
71,960

$
—

$
71,960

 
$
68,466

$
—

$
68,466

Cost of sales
50,039

1,121

51,160

 
50,568

—

50,568

 
47,860

—

47,860

Selling, general and administrative expenses (b)
14,285

910

15,196

 
13,759

272

14,031

 
13,079

74

13,153

Depreciation and amortization
1,996

227

2,223

 
2,044

97

2,142

 
2,084

48

2,131

Segment profit
$
4,959

$
(941
)
$
4,017

 
$
5,589

$
(369
)
$
5,219

 
$
5,443

$
(122
)
$
5,322

Gain on receivables transaction (c)
 

 

391

 
 

 

152

 
 

 

—

Reduction of beneficial interest asset (b)
 

 

(98
)
 
 

 

—

 
 

 

—

Other (d)
 
 
(64
)
 
 
 
—

 
 
 
—

Data Breach related costs, net of insurance receivable (e)
 
 
(17
)
 
 
 
—

 
 
 
—

Earnings before interest expense and income taxes
 
 
4,229

 
 
 
5,371

 
 
 
5,322

Net interest expense
 
 
1,126

 
 
 
762

 
 
 
866

Earnings before income taxes
 

 

$
3,103

 
 

 

$
4,609

 
 

 

$
4,456

Note: The sum of the segment amounts may not equal the total amounts due to rounding.
Note: Certain operating expenses are incurred on behalf of our Canadian Segment, but are included in our U.S. Segment because those costs are not allocated internally and generally come under the responsibility of our U.S. management team.
Note: Through fiscal 2012, we operated as three business segments: U.S. Retail, U.S. Credit Card and Canadian. Following the sale of our credit card receivables portfolio described in Note 6, we operate as two segments: U.S. and Canadian. Prior period segment results have been revised to reflect the combination of our historical U.S. Retail Segment and U.S. Credit Card Segment into one U.S. Segment.
(a) 
Consisted of 53 weeks.
(b) 
Our U.S. Segment includes all TD profit-sharing amounts in segment profit; however, under GAAP, some amounts received from TD reduce the beneficial interest asset and are not recorded in consolidated earnings. Segment SG&A expenses plus these amounts equal consolidated SG&A expenses.
(c) 
Represents the gain on receivables transaction recorded in our Consolidated Statements of Operations, plus, for 2012, the difference between bad debt expense and net write-offs for the fourth quarter. Refer to Note 6 for more information on our credit card receivables transaction.
(d) 
Includes a $23 million workforce-reduction charge primarily related to severance and benefits costs, a $22 million charge related to part-time team member health benefit changes, and $19 million in impairment charges related to certain parcels of undeveloped land.
(e) 
Refer to Note 17 for more information on Data Breach related costs.

Total Assets by Segment
 (millions)
February 1,
2014

February 2,
2013

U.S.
$
38,128

$
43,289

Canadian
6,254

4,722

Total segment assets
$
44,382

$
48,011

Unallocated assets (a)
171

152

Total assets
$
44,553

$
48,163

(a) 
At February 1, 2014, represents the beneficial interest asset of $127 million and insurance receivable related to the Data Breach of $44 million. At February 2, 2013, represents the net adjustment to eliminate our allowance for doubtful accounts and record our credit card receivables at lower of cost (par) or fair value.

Capital Expenditures by Segment
(millions)
2013

2012(a)

2011

U.S.
$
1,886

$
2,345

$
2,476

Canadian
1,567

932

1,892

Total
$
3,453

$
3,277

$
4,368

(a) 
Consisted of 53 weeks.

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