using the Target 10K
REQUIREMENTS: Your report should be single-spaced in Times New Roman 12-point font with 1" margins on each side. All individuals in the group must be stated on the first page. Your report should consist of four pages: (1) A page of text, (2) professionally-formatted reformulated balance sheet (3) professionally-formatted reformulated income statement that separates operating & non-operating items (3) a professionally- formatted appendix that clearly shows your ratio calculations so that they can be re-performed by the grader. Note: if you do not show your work, you will not receive partial credit for incorrect answers. 1. Profitability analysis: Calculate the firm's DuPont Chart for fiscal 2017 and fiscal 2018. Note: Ignore discontinued operations (i.c., use income from continuing operations rather than net earnings). Discuss: How ROCE has changed over the last two years - and why. Including: Changes in net profit margin Changes in asset turnover Changes in leverage 2. Reformulation: Calculate Net operating profit after tax (NOPAT) & Net non-operating expenses (NNE) for the last three years. Calculate net operating assets (NOA), net non-operating obligations (NNO), and Equity for the last three years. When you reformulate the income statement, use income from continuing operations (disregarding the discontinued operations income) 3. Profitability analysis: Calculate the firm's Penman profitability chart for fiscal 2017 and fiscal 2018. Discuss: How Non-operating return and RNOA have changed over the last two years - and why, Why is the change in Non-operating leverage (in the Penman disaggregation) different from the change in Leverage (in the DuPont disaggregation) 2018 financial summary 2017 2016 2015 $73.717 $72,618 FINANCIAL RESULTS in milions) Sesic Other revenue Total revenue Cost of sales Selling general and administrative expenses (SGL) Depreciation and amortization exclusive of depreciation included in cost of sales) Operating income Net interest expenseld Not other Uncome) /expense el Earnings from continuing operations before income taxes Provision for income taxes it) Net earnings from continuing operations Discontinued operations, net of tax Net earnings / Boss) $74.433 923 75.356 53299 15.723 2.224 4,110 $71,786 928 72,714 51.125 15,140 2.225 4,224 $89.414 857 70,271 49.145 14,217 2,045 4,864 74.494 52.241 15.406 1.969 4.878 607 w 72,618 51,506 14,676 1,901 4,535 BB2 901 150 30 3,630 3.670 746 3,061 1.295 2.686 3,653 1,204 1.602 2.930 2,908 3 .321 (4,085) $11,636) 2.937 52,914 82,734 33.363 PER SHARE BASIC EARNINGS / ILOSS) PER SHARE Continuing operations Discontinued operations Net earnings / Doss) per share $5.54 $5.32 3.86 0.01 0.01 $5.55 5461 0.12 $4.73 $5.29 0.07 $5.35 16.44) $12.58 $5.32 P APARAP FRASER PAR PER SHARE BASIC EARNINGS / LOSS) PER SHARE Continuing operations Discontinued operations Net earnings/osal per share $4,61 55.54 0.01 5.55 55.32 0.01 $5.32 55.29 0.07 $5.35 3.86 18.44) 312.58) $4.73 $5.29 $5.25 0.01 0.07 $5.50 0.01 $5.51 $2.54 5458 0.12 $4.69 $2.35 33.83 16.381 $12.56) $1.99 55.29 $2.46 $5.31 $2.20 340,303 341,290 53.516 $11.275 $10.506 $11,297 $11.398 $10.267 $11,651 $38,724 $1,547 $12.591 $11.481 $10,915 $40.262 51.438 $12.780 59 752 $12.957 341,172 $1,786 $12.725 $11.205 $13.997 DILUTED EARNINGS / LOSS) PER SHARE Continuing operations Discontinued operations Net earnings/Bosal per share Cash dividends declared FINANCIAL POSITION n millions) Total assets Capital expenditures (a) Long-term debt, including current portional Net debt lahi Shareholders investment FINANCIAL RATIOS) Comparable sales growth 00 Gross margin of sales SGBA% of total revenue Operating income margin % of total revenuel OTHER Common shares outstanding in miliona Operating cash flow provided by continuing operations in milions Revenue per square foot XD Retail suare foot in thousands) il Square footage growth Total number of stores Total number of distribution centers al 2.1% 1.3% 5.0% 284% 20.0% 5.5% 1.3% 28.8% 20.8% 5.8% 10.51% 29.2% 20.2% 6.9% 20.7% 6.5% 20.0% 8.2% 5178 541,2 0801 5562 35337 35970 254 310 640.2 15.157 3302 230,063 12 230,502 239 530 230581 0.1% 230,355 00.1 1192 1.792 1.790 Sog Total number of stores lo Total number of distribution centers al WIZI 1.792 1.822 1.790 40 al Consisted of 53 weeks. (b) The financial summary data for fiscal years 2017, 2016, and 2015 reflect the adoption of Accounting Standards Update (ASU) No. 2014-09-Revenue from Contracts with Customers (Topic 606). The financial summary data for fiscal years 2017 and 2016 reflect the adoption of Accounting Standards Update (ASU) No. 2016-02-Leases (Topic 842). The financial summary data for fiscal year 2015 does not reflect adoption of Topic 842 and the financial summary data for fiscal 2014 does not reflect adoption of Topic 606 and Topic 842. Note 2 to the Consolidated Financial Statements in Form 10-K em 8provides additional information (c) The 2016 sales decline is primarily due to the December 2015 sale of our pharmacy and clinic businesses (Pharmacy Transaction to CVS Pharmacy, Inc. 2015 and 2014 sales include $3,815 million and $4.418 million respectively related to our former pharmacy and clinic businesses (dl Includes losses on early retirement of debt of $123 million $422 million, and $285 million for 2017, 2016, and 2014, respectively (e) For 2015, includes the gain on the sale of our pharmacy and clinic businesses For 2018 and 2017, includes $36 million and $343 million, respectively, of discrete tax benefits related to the Tax Cuts and Jobs Act enacted in December 2017 (al Represents amounts attributable to continuing operations. including current portion of long-term debt and other borrowings, net of short-term investments of $769 million $1,131 million $1,110 milion, $3,008 million and $1,520 million in 2018, 2017, 2016, 2015, and 2014, respectively. Management believes this measure is an indicator of our level of financial leverage because short-term investments are available to pay debt maturity obligations. For 2017 and earlier, only short-term investments held by US. entities were used to calculate net debt because amounts held by entities located outside the US were restricted for use 0 See definition of comparable sales in Form 10-K, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Represents revenue per square foot which is calculated using rolling four quarters average square feet. In 2017, revenue per square foot was calculated excluding the 53rd week in order to provide a more useful comparison to other years. Using total reported revenue for 2017 Gncluding the 53rd week) resulted in revenue per square foot of $303. The 2016 decrease is primarily due to the Pharmacy Transaction. Our former pharmacy and clinic businesses contributed approximately $16 to 2015 revenue per square foot. Revenue per square foot for 2014 does not include profit sharing under our credit card program agreement which was classified as a reduction of SG&A expenses prior to adoption of Topic 606. Consolidated Statements of Operations (millions, except per share data) $14.433 $71,786 414 75.350 72,714 70.271 53,200 51,125 Suling general and administrative expenses 15.723 15,140 14217 Deprecision and in vedere included in cost of 2.045 Operating income 4,110 at the incomale e n Earnings from continuing to before income 3.676 3.630 3.901 Provision for income Neaming from continuing operations Discontinued operations of 2007 2014 Basaris per share Coming one 154 1.01 14.73 Farming from continuing operation before income taxe Provision for income Net earnings from continuing operations Discontinued operations net of tax Net earning Bas ings per share Continuing operations Discontinued operations Diluted earnings per share Continuing operations Discontinued operations 0.01 Neting perse 55.51 Weighted average common shares outstanding Antidutive share Note: Por share amounts may not foot due to rounding See accompanying Notes to consolidated Facial Statements Refer to Note 2 regarding the adoption of new counting Standards for revenue recognition s , and pensions Consolidated Statements of Comprehensive Income Refer to Note 2 regarding the adoption new standards for even recognition lases and pensions Consolidated Statements of Financial Position (millions, except footnotes) February 2, 2019 February 3, 2018 ASA Cash and the Inventory 9497 1.597 Other current Total current 19519 12.540 Property and equipment 6.095 Buildings and improvements 29.240 5.912 5.623 Computer hardware and software 2.645 Construction-in-progress 440 Acumulated depreciation (16 Property and c ont.net Operating less Other noncurrent $41.200 Liabies and $1.556 Inventory 8.50 Tal current assets 1351 12.540 Property and equipment 6,054 . Buildings and improvements 29.240 28.131 Fixtures and equipment 5.912 Computer hardware and software 2.544 2.645 Construction progress 118.687 Property and c onnet 25.533 Openings 1.90 Other noncurs 1273 Totallets 1990 Labies and shareholders investment Accounts payable 89.784 38.677 Acord and other current 4201 4.094 Current portion of long-term debt and other borrowings 1053 Current 15 014 Long-term de and other borrowings 10.72 15,197 Noncurrent operating web 2.004 1994 Consolidated Statements of Cash Flows (millions) 2016 Ad Adidas Ad A d Operating activities at ang Coming from discontinued operations et of N oming operations 2.900 Ads to recond s to cash provided by operations Depresionando 2. Delored income Non and other Changes in operating accounts: Inventory Accounts payable Accrued and others Cash provided by operating activities-continuing operations 6.961 Cash provided by operating continued operations Deferred income taxes Loss on debetinguishment Noncash lowes/gins and other net Changes in operating accounts Inventory Others Accounts payable Accrued and others Cash provided by operating activities-continuing operations 5.970 Cash provided by opening video operations Cash provided by operations Investing activities Expenditures for property and equipment Proceeds from disposal of property and equipment Cash paid for acquisitions, net of cash assumed Other Investments Cash required for investing activities ,416 0.075) Financing activities Addition to long-term debt Reductions of long-term de 2.49 33 11.046 Sock optioner Cash required for financing activities 721 . Niet decreasel / increase in cash and cash equivalent (1.534 Cash and cash equivale at beginning of period 2.643 2,512 4,046 Cash and cash equivalent and of period 11.566 Supplement formation Interest of capitali st 3470 income taxes paid Lased sets obtained in exchange for new r elease Babes 10 L echarger weg 212 See companying Notes to cond enancial Statements terto Note 2 regarding the adoption of new accounting standards for oven recognition and pensions Consolidated Statements of Shareholders' Investment (millions) Additional Pa Capital Perind Earnings Accum Other Comprehensive AS A January 30, 2016 19 $12,005 Adoption of ASC Topic 842 LOS Mugs 2.734 Other comprehensive Consolidated Statements of Shareholders' Investment (millions) Sick Aditional Petained Acord Othe Comprehensive January 30.0 $8.190 Adoption of ASC Top 842 ) ange Other comprehensive Dividend declared Repurchase of 3.63 SI Jay 2017 $10.915 2014 Other comprehensive income D ed 350 (136 11026 Peccation of taxects to retained wings February 3, 2018 5.50 2.07 purchase of stock Stock options and awards January 26, 2017 510915 Not comings Other comprensive income Dividends declared 11.356 Repurchase of stock 15.02 023 Stock options and awards Reclassification of tax effects to renderings February 2018 55.858 50747) $11,651 Netings Other comprehensive lo Dividends declared 1134 - 1,3471 Repurchase of stock 0701 Stock options and awards February 2, 2019 5178 3 .042 $6.017 805) $11.297 2010 February 2011 andnuary 28, 2017 We declared 52.54, 52.46. and 236 dividendes por share for the twelve months anded February respectively See accompanying Notes to Consolidated Financial Statements Refer to Note 2 regarding the adoption of new accounting standards for revenue recognition and pensions REQUIREMENTS: Your report should be single-spaced in Times New Roman 12-point font with 1" margins on each side. All individuals in the group must be stated on the first page. Your report should consist of four pages: (1) A page of text, (2) professionally-formatted reformulated balance sheet (3) professionally-formatted reformulated income statement that separates operating & non-operating items (3) a professionally- formatted appendix that clearly shows your ratio calculations so that they can be re-performed by the grader. Note: if you do not show your work, you will not receive partial credit for incorrect answers. 1. Profitability analysis: Calculate the firm's DuPont Chart for fiscal 2017 and fiscal 2018. Note: Ignore discontinued operations (i.c., use income from continuing operations rather than net earnings). Discuss: How ROCE has changed over the last two years - and why. Including: Changes in net profit margin Changes in asset turnover Changes in leverage 2. Reformulation: Calculate Net operating profit after tax (NOPAT) & Net non-operating expenses (NNE) for the last three years. Calculate net operating assets (NOA), net non-operating obligations (NNO), and Equity for the last three years. When you reformulate the income statement, use income from continuing operations (disregarding the discontinued operations income) 3. Profitability analysis: Calculate the firm's Penman profitability chart for fiscal 2017 and fiscal 2018. Discuss: How Non-operating return and RNOA have changed over the last two years - and why, Why is the change in Non-operating leverage (in the Penman disaggregation) different from the change in Leverage (in the DuPont disaggregation) 2018 financial summary 2017 2016 2015 $73.717 $72,618 FINANCIAL RESULTS in milions) Sesic Other revenue Total revenue Cost of sales Selling general and administrative expenses (SGL) Depreciation and amortization exclusive of depreciation included in cost of sales) Operating income Net interest expenseld Not other Uncome) /expense el Earnings from continuing operations before income taxes Provision for income taxes it) Net earnings from continuing operations Discontinued operations, net of tax Net earnings / Boss) $74.433 923 75.356 53299 15.723 2.224 4,110 $71,786 928 72,714 51.125 15,140 2.225 4,224 $89.414 857 70,271 49.145 14,217 2,045 4,864 74.494 52.241 15.406 1.969 4.878 607 w 72,618 51,506 14,676 1,901 4,535 BB2 901 150 30 3,630 3.670 746 3,061 1.295 2.686 3,653 1,204 1.602 2.930 2,908 3 .321 (4,085) $11,636) 2.937 52,914 82,734 33.363 PER SHARE BASIC EARNINGS / ILOSS) PER SHARE Continuing operations Discontinued operations Net earnings / Doss) per share $5.54 $5.32 3.86 0.01 0.01 $5.55 5461 0.12 $4.73 $5.29 0.07 $5.35 16.44) $12.58 $5.32 P APARAP FRASER PAR PER SHARE BASIC EARNINGS / LOSS) PER SHARE Continuing operations Discontinued operations Net earnings/osal per share $4,61 55.54 0.01 5.55 55.32 0.01 $5.32 55.29 0.07 $5.35 3.86 18.44) 312.58) $4.73 $5.29 $5.25 0.01 0.07 $5.50 0.01 $5.51 $2.54 5458 0.12 $4.69 $2.35 33.83 16.381 $12.56) $1.99 55.29 $2.46 $5.31 $2.20 340,303 341,290 53.516 $11.275 $10.506 $11,297 $11.398 $10.267 $11,651 $38,724 $1,547 $12.591 $11.481 $10,915 $40.262 51.438 $12.780 59 752 $12.957 341,172 $1,786 $12.725 $11.205 $13.997 DILUTED EARNINGS / LOSS) PER SHARE Continuing operations Discontinued operations Net earnings/Bosal per share Cash dividends declared FINANCIAL POSITION n millions) Total assets Capital expenditures (a) Long-term debt, including current portional Net debt lahi Shareholders investment FINANCIAL RATIOS) Comparable sales growth 00 Gross margin of sales SGBA% of total revenue Operating income margin % of total revenuel OTHER Common shares outstanding in miliona Operating cash flow provided by continuing operations in milions Revenue per square foot XD Retail suare foot in thousands) il Square footage growth Total number of stores Total number of distribution centers al 2.1% 1.3% 5.0% 284% 20.0% 5.5% 1.3% 28.8% 20.8% 5.8% 10.51% 29.2% 20.2% 6.9% 20.7% 6.5% 20.0% 8.2% 5178 541,2 0801 5562 35337 35970 254 310 640.2 15.157 3302 230,063 12 230,502 239 530 230581 0.1% 230,355 00.1 1192 1.792 1.790 Sog Total number of stores lo Total number of distribution centers al WIZI 1.792 1.822 1.790 40 al Consisted of 53 weeks. (b) The financial summary data for fiscal years 2017, 2016, and 2015 reflect the adoption of Accounting Standards Update (ASU) No. 2014-09-Revenue from Contracts with Customers (Topic 606). The financial summary data for fiscal years 2017 and 2016 reflect the adoption of Accounting Standards Update (ASU) No. 2016-02-Leases (Topic 842). The financial summary data for fiscal year 2015 does not reflect adoption of Topic 842 and the financial summary data for fiscal 2014 does not reflect adoption of Topic 606 and Topic 842. Note 2 to the Consolidated Financial Statements in Form 10-K em 8provides additional information (c) The 2016 sales decline is primarily due to the December 2015 sale of our pharmacy and clinic businesses (Pharmacy Transaction to CVS Pharmacy, Inc. 2015 and 2014 sales include $3,815 million and $4.418 million respectively related to our former pharmacy and clinic businesses (dl Includes losses on early retirement of debt of $123 million $422 million, and $285 million for 2017, 2016, and 2014, respectively (e) For 2015, includes the gain on the sale of our pharmacy and clinic businesses For 2018 and 2017, includes $36 million and $343 million, respectively, of discrete tax benefits related to the Tax Cuts and Jobs Act enacted in December 2017 (al Represents amounts attributable to continuing operations. including current portion of long-term debt and other borrowings, net of short-term investments of $769 million $1,131 million $1,110 milion, $3,008 million and $1,520 million in 2018, 2017, 2016, 2015, and 2014, respectively. Management believes this measure is an indicator of our level of financial leverage because short-term investments are available to pay debt maturity obligations. For 2017 and earlier, only short-term investments held by US. entities were used to calculate net debt because amounts held by entities located outside the US were restricted for use 0 See definition of comparable sales in Form 10-K, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations Represents revenue per square foot which is calculated using rolling four quarters average square feet. In 2017, revenue per square foot was calculated excluding the 53rd week in order to provide a more useful comparison to other years. Using total reported revenue for 2017 Gncluding the 53rd week) resulted in revenue per square foot of $303. The 2016 decrease is primarily due to the Pharmacy Transaction. Our former pharmacy and clinic businesses contributed approximately $16 to 2015 revenue per square foot. Revenue per square foot for 2014 does not include profit sharing under our credit card program agreement which was classified as a reduction of SG&A expenses prior to adoption of Topic 606. Consolidated Statements of Operations (millions, except per share data) $14.433 $71,786 414 75.350 72,714 70.271 53,200 51,125 Suling general and administrative expenses 15.723 15,140 14217 Deprecision and in vedere included in cost of 2.045 Operating income 4,110 at the incomale e n Earnings from continuing to before income 3.676 3.630 3.901 Provision for income Neaming from continuing operations Discontinued operations of 2007 2014 Basaris per share Coming one 154 1.01 14.73 Farming from continuing operation before income taxe Provision for income Net earnings from continuing operations Discontinued operations net of tax Net earning Bas ings per share Continuing operations Discontinued operations Diluted earnings per share Continuing operations Discontinued operations 0.01 Neting perse 55.51 Weighted average common shares outstanding Antidutive share Note: Por share amounts may not foot due to rounding See accompanying Notes to consolidated Facial Statements Refer to Note 2 regarding the adoption of new counting Standards for revenue recognition s , and pensions Consolidated Statements of Comprehensive Income Refer to Note 2 regarding the adoption new standards for even recognition lases and pensions Consolidated Statements of Financial Position (millions, except footnotes) February 2, 2019 February 3, 2018 ASA Cash and the Inventory 9497 1.597 Other current Total current 19519 12.540 Property and equipment 6.095 Buildings and improvements 29.240 5.912 5.623 Computer hardware and software 2.645 Construction-in-progress 440 Acumulated depreciation (16 Property and c ont.net Operating less Other noncurrent $41.200 Liabies and $1.556 Inventory 8.50 Tal current assets 1351 12.540 Property and equipment 6,054 . Buildings and improvements 29.240 28.131 Fixtures and equipment 5.912 Computer hardware and software 2.544 2.645 Construction progress 118.687 Property and c onnet 25.533 Openings 1.90 Other noncurs 1273 Totallets 1990 Labies and shareholders investment Accounts payable 89.784 38.677 Acord and other current 4201 4.094 Current portion of long-term debt and other borrowings 1053 Current 15 014 Long-term de and other borrowings 10.72 15,197 Noncurrent operating web 2.004 1994 Consolidated Statements of Cash Flows (millions) 2016 Ad Adidas Ad A d Operating activities at ang Coming from discontinued operations et of N oming operations 2.900 Ads to recond s to cash provided by operations Depresionando 2. Delored income Non and other Changes in operating accounts: Inventory Accounts payable Accrued and others Cash provided by operating activities-continuing operations 6.961 Cash provided by operating continued operations Deferred income taxes Loss on debetinguishment Noncash lowes/gins and other net Changes in operating accounts Inventory Others Accounts payable Accrued and others Cash provided by operating activities-continuing operations 5.970 Cash provided by opening video operations Cash provided by operations Investing activities Expenditures for property and equipment Proceeds from disposal of property and equipment Cash paid for acquisitions, net of cash assumed Other Investments Cash required for investing activities ,416 0.075) Financing activities Addition to long-term debt Reductions of long-term de 2.49 33 11.046 Sock optioner Cash required for financing activities 721 . Niet decreasel / increase in cash and cash equivalent (1.534 Cash and cash equivale at beginning of period 2.643 2,512 4,046 Cash and cash equivalent and of period 11.566 Supplement formation Interest of capitali st 3470 income taxes paid Lased sets obtained in exchange for new r elease Babes 10 L echarger weg 212 See companying Notes to cond enancial Statements terto Note 2 regarding the adoption of new accounting standards for oven recognition and pensions Consolidated Statements of Shareholders' Investment (millions) Additional Pa Capital Perind Earnings Accum Other Comprehensive AS A January 30, 2016 19 $12,005 Adoption of ASC Topic 842 LOS Mugs 2.734 Other comprehensive Consolidated Statements of Shareholders' Investment (millions) Sick Aditional Petained Acord Othe Comprehensive January 30.0 $8.190 Adoption of ASC Top 842 ) ange Other comprehensive Dividend declared Repurchase of 3.63 SI Jay 2017 $10.915 2014 Other comprehensive income D ed 350 (136 11026 Peccation of taxects to retained wings February 3, 2018 5.50 2.07 purchase of stock Stock options and awards January 26, 2017 510915 Not comings Other comprensive income Dividends declared 11.356 Repurchase of stock 15.02 023 Stock options and awards Reclassification of tax effects to renderings February 2018 55.858 50747) $11,651 Netings Other comprehensive lo Dividends declared 1134 - 1,3471 Repurchase of stock 0701 Stock options and awards February 2, 2019 5178 3 .042 $6.017 805) $11.297 2010 February 2011 andnuary 28, 2017 We declared 52.54, 52.46. and 236 dividendes por share for the twelve months anded February respectively See accompanying Notes to Consolidated Financial Statements Refer to Note 2 regarding the adoption of new accounting standards for revenue recognition and pensions
