Under the terms of the program agreement, Target will continue to earn a substantial portion of the profits generated by the credit card portfolio. Beginning with first quarter 2013, Target will no longer report a Credit Card segment and the income from the profit-sharing arrangement, net of account servicing expenses, will be recognized as an offset to SG&A expense in a new U.S. Segment.Target continues to expect that net income from the portfolio profit-sharing arrangement, combined with the benefit of debt reduction and share repurchase resulting from deployment of proceeds from the sale, will result in mild dilution to Target’s adjusted earnings per share in the first 12 months following closing*. Specifically, Target expects that in the 12 months following closing its adjusted earnings per share will be approximately 10 cents lower compared with a scenario in which Target continued to fund its portfolio. Based on its forecast for income from profit sharing combined with the expected benefit from share repurchase and interest savings, Target expects that the adjusted EPS impact of this transaction will become neutral over time. The company expects to provide additional detail on the impact of the sale and debt tender offers on its 2013 financial results following final settlement of the debt tender offers, which is expected to occur in first quarter 2013.
|*Target calculates adjusted earnings per share to measure the results from operations in its U.S. businesses. Accordingly, adjusted earnings per share excludes the impact of Target’s Canadian Segment and other non-segment expenses related to its Canadian market entry.|
About TargetMinneapolis-based Target Corporation (NYSE: TGT) serves guests at 1,787 stores – 1,784 in the United States and three in Canada -- and at Target.com. Since 1946, Target has given 5 percent of its profit through community grants and programs; today, that giving equals more than $4 million a week. For more information about Target’s commitment to corporate responsibility, visit Target.com/corporateresponsibility.For more information, visit Target.com/Pressroom.