Segment Reporting

3 Months Ended

May 04, 2013

Segment Reporting

Segment Reporting

9. Segment Reporting

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 2, we operate as two segments: U.S. and Canadian. Our segment measure of profit is used by management to evaluate the return on our investment and to make operating decisions.

Business Segment Results	Three Months Ended May 4, 2013								Three Months Ended April 28, 2012
(millions)	U.S.		Canadian			Total			U.S.		Canadian			Total
Sales	$	16,620	$	86		$	16,706		$	16,537	$	—		$	16,537
Cost of sales	11,509		53			11,563			11,541		—			11,541
Selling, general and administrative expenses(a)	3,381		193			3,573			3,148		34			3,182
Depreciation and amortization	491		45			536			508		21			529
Segment profit	$	1,239	$	(205	)	$	1,034		$	1,340	$	(55	)	$	1,285
Gain on receivables transaction						391								—
Reduction of beneficial interest asset(a)						(17		)						—
Earnings before interest expense and income taxes						1,408								1,285
Net interest expense						629								184
Earnings before income taxes						$	779							$	1,101

Note: The sum of the segment amounts may not equal the total amounts due to rounding.

Note: 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) For the three months ended May 4, 2013, the U.S. Segment recognizes within SG&A all amounts related to the profit-sharing arrangement with TD and related servicing expenses. For purposes of consolidated results, a portion of the profit-sharing is recognized as a reduction to the beneficial interest asset. As a result, SG&A expenses for the U.S. and Canadian Segments of $3,573 million plus the reduction of the beneficial interest asset of $17 million equals consolidated SG&A expenses. For the three months ended April 28, 2012, the combination of SG&A expenses and credit card expenses, less credit card revenues, in our Consolidated Statements of Operations equals total SG&A as reported in our business segment results, as revised.

Total Assets by Segment (millions)	May 4, 2013		February 2, 2013		April 28, 2012
U.S.	$	38,591	$	43,289	$	42,597
Canadian	5,435		4,722		3,578
Total segment assets	44,026		48,011		46,175
Unallocated assets (a)	208		152		—
Total assets	$	44,234	$	48,163	$	46,175

Note: 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)  Represents the beneficial interest asset for the period ended May 4, 2013. For the period ended 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.