Target 2014 Annual Report Download - page 21

Earnings Per Share From
Continuing Operations 2014 2013 2012 (a)
Percent Change
2014/2013 2013/2012
GAAP diluted earnings per share
Adjustments
$ 3.83 $
0.44
4.20 $
0.18
5.00
(0.23)
(8.8)% (16.1)%
Adjusted diluted earnings per share $ 4.27 $ 4.38 $ 4.76 (2.6)% (7.9)%
Note: Adjusted diluted earnings per share from continuing operations (Adjusted EPS), a non-GAAP metric, excludes the impact of certain matters
not related to our routine retail operations and the impact of our discontinued Canadian operations. Management believes that Adjusted EPS is
meaningful to provide period-to-period comparisons of our operating results. A reconciliation of non-GAAP financial measures to GAAP measures
is provided on page 21.
(a) Consisted of 53 weeks.
Canada Exit
On January 14, 2015, following a comprehensive assessment of Canadian operations, our Board of Directors approved
a plan to discontinue operating stores in Canada. As a result of this decision, on January 15, 2015, Target Canada
Co. and certain other wholly owned subsidiaries of Target (collectively Canada Subsidiaries), filed for protection (the
Filing) under the Companies' Creditors Arrangement Act (CCAA) with the Ontario Superior Court of Justice in Toronto
(the Court). The Canada Subsidiaries comprise substantially all of our Canadian operations and our Canadian Segment.
The Canada Subsidiaries have commenced an orderly liquidation process and stores in Canada will remain open
during the liquidation. To assist with the exit plan, the Court approved the appointment of a monitor and certain other
financial advisors.
As a result of the Filing, we no longer have a controlling interest in the Canada Subsidiaries. For this reason, we
deconsolidated the Canada Subsidiaries effective January 15, 2015, resulting in a pretax impairment loss on
deconsolidation and other charges, collectively totaling $5.1 billion. The pretax loss on deconsolidation includes the
derecognition of the carrying amounts of the Canada Subsidiaries' assets, liabilities and accumulated other
comprehensive loss and the recording of our remaining interests at fair value.
Subsequent to deconsolidation, we will use the cost method to account for our equity investment in the Canada
Subsidiaries, which has been reflected as zero in our Consolidated Statement of Financial Position at January 31,
2015 based on the estimated fair value of the Canada Subsidiaries' net assets. Loans to and accounts receivable from
the Canada Subsidiaries are recorded at an estimated fair value of $326 million. Our ultimate cash recovery on these
claims is subject to the final liquidation value of the Canada Subsidiaries and could vary materially from our estimates.
Our Canada exit represents a strategic shift in our business. For this reason, our Canadian Segment results for all
periods prior to the January 15, 2015 deconsolidation and costs to exit are classified as discontinued operations.
We have recognized a tax benefit of $1.6 billion in discontinued operations, which primarily relates to the loss on our
investment in Canada and includes other tax benefits resulting from certain asset write-offs and liabilities paid or
accrued to facilitate the liquidation. We have realized the majority of these tax benefits in the first quarter of 2015 and
expect to realize substantially all of the remainder in 2015.
The recorded expenses include an accrual for the estimated probable loss related to claims that may be asserted
against us, primarily under guarantees in certain leases. Our probable loss estimate is based on the expectation that
claims will be asserted against us and negotiated settlements will be reached, and not on any determination that it is
probable we would be found liable were these claims to be litigated. Given the early stage of our exit and the Filing,
our estimates involve significant judgment and are based on currently available information, an assessment of the
validity of certain claims and estimated payments by the Canada Subsidiaries. We are not able to reasonably estimate
a range of possible losses in excess of the year-end accrual because there are significant factual and legal issues to
be resolved. We believe that it is reasonably possible that future changes to our estimates of loss and the ultimate
amount paid on these claims could be material to our results of operations in future periods. Any such losses would
be recorded in discontinued operations.
We expect to incur severance, legal and professional services expenses associated with our Canadian exit. We will
recognize these expenses within discontinued operations as services are received and liabilities are incurred. We
currently cannot predict the timing of such expenses and associated cash disbursements; however, we do not expect
these amounts to be material to our results in future periods.
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