TARGET CORPORATION Financial Summary
Third quarter 2022 included the following notable items:
•GAAP diluted earnings per share were$1.54 . •Adjusted diluted earnings per share were$1.54 . •Total revenue increased 3.4 percent, reflecting total sales growth of 3.3 percent and a 9.5 percent increase in other revenue. •Comparable sales increased 2.7 percent, driven by a 1.4 percent increase in traffic and a 1.3 percent increase in average transaction amount. •Comparable stores originated sales grew 3.2 percent. •Comparable digitally originated sales increased 0.3 percent. •Operating income of$1.0 billion was 49.2 percent lower than the comparable prior-year period, driven primarily by a decrease in gross margin, reflecting higher clearance and promotional markdown rates, inventory shrink, and higher freight and merchandise costs, partially offset by the benefit of retail price increases. See Business Environment and Gross Margin Rate sections below for additional information. Sales were$26.1 billion for the three months endedOctober 29, 2022 , an increase of$832 million , or 3.3 percent, from the comparable prior-year period. Cash flow provided by operating activities was$552 million for the nine months endedOctober 29, 2022 , compared with$5.6 billion for the nine months endedOctober 30, 2021 . The drivers of the operating cash flow decrease are described on page 21 . Earnings Per Share Three Months Ended Nine Months Ended October 30, October 30, October 29, 2022 2021 Change October 29, 2022 2021 Change GAAP diluted earnings per share$ 1.54 $ 3.04 (49.3) %$ 4.09 $ 10.87 (62.4) % Adjustments - (0.01) 0.03 (0.50) Adjusted diluted earnings per share$ 1.54 $ 3.03 (49.1) %$ 4.12 $ 10.37 (60.2) % Note: Amounts may not foot due to rounding. Adjusted diluted earnings per share (Adjusted EPS), a non-GAAP metric, excludes the impact of certain items. Management believes that Adjusted EPS is useful in providing period-to-period comparisons of the results of our operations. A reconciliation of non-GAAP financial measures to GAAP measures is provided on page 19 . We report after-tax return on invested capital (ROIC) because we believe ROIC provides a meaningful measure of our capital allocation effectiveness over time. For the trailing twelve months endedOctober 29, 2022 , after-tax ROIC was 14.6 percent, compared with 31.3 percent for the trailing twelve months ended October 30, 2021. The calculation of ROIC is provided on page 20 .
Business Environment
During the third quarter of 2022, we have continued to see soft trends in Discretionary categories (Apparel and Accessories, Hardlines, and Home Furnishings and Décor), which accelerated in October. We believe this is consistent with the broader industry trends. Our overall comparable sales increase reflects growth in our Frequency categories (Beauty and Household Essentials andFood and Beverage ), partially offset by sales decreases in our Discretionary categories. Our comparable sales performance also reflects the impact of retail price increases. Within the quarter, comparable sales grew 2.8 percent in August, 4.0 percent in September, and 0.9 percent in October. Notably, within October, we saw a significant change in the pace of sales, with an increase in comparable sales during the first week, followed by a decrease over the last three weeks of the month, driven by steeper declines in our Discretionary categories.
--------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents
FINANCIAL SUMMARY Index to Notes
Throughout the COVID-19 pandemic, the retail industry has experienced continued
disruption and volatility in the global supply chain. In response, we have
ordered import merchandise (which typically has longer lead times) earlier, and
added incremental holding capacity near U.S. ports to add flexibility in the
portions of the supply chain most affected by external volatility. During the
third quarter of 2022, port congestion, shipping container availability, and
other supply chain pressures have improved. This has resulted in inventory
arriving earlier than anticipated, which has resulted in increased costs of
managing elevated inventory levels. These factors, net of pricing actions we
have taken to address the impact of higher merchandise and freight costs, have
resulted in decreased profitability in the three and nine months ended October
29, 2022 , compared to the prior-year periods. We believe that the actions we
have taken reduce our risks and provide additional flexibility to focus on
serving guests in a rapidly changing environment. The Gross Margin Rate
analysis on page 17 and the Inventory section on page 21 provide
additional information.
Analysis of Results of Operations
Summary of Operating Income Three Months Ended Nine Months Ended
October 30, October 29, October 30,
(dollars in millions) October 29, 2022 2021 Change 2022 2021 Change
Sales $ 26,122 $ 25,290 3.3 % $ 76,605 $ 73,995 3.5 %
Other revenue 396 362 9.5 1,120 1,014 10.4
Total revenue 26,518 25,652 3.4 77,725 75,009 3.6
Cost of sales 19,680 18,206 8.1 58,283 52,202 11.6
Selling, general and
administrative expenses 5,219 4,859 7.4 14,983 14,217 5.4
Depreciation and amortization
(exclusive of depreciation
included in cost of sales) 597 577 3.6 1,770 1,739 1.8
Operating income $ 1,022 $ 2,010 (49.2) % $ 2,689 $ 6,851 (60.8) %
Rate Analysis Three Months Ended Nine Months Ended
October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021
Gross margin rate 24.7 % 28.0 % 23.9 % 29.5 %
SG&A expense rate 19.7 18.9 19.3 19.0
Depreciation and amortization expense rate
(exclusive of depreciation included in cost of
sales) 2.3 2.2 2.3 2.3
Operating income margin rate 3.9 7.8 3.5 9.1
Note: Gross margin rate is calculated as gross margin (sales less cost of sales) divided by sales. All other rates are calculated by dividing the applicable amount by total revenue.
Sales
Sales include all merchandise sales, net of expected returns, and our estimate of gift card breakage. We use comparable sales to evaluate the performance of our stores and digital channel sales by measuring the change in sales for a period over the comparable prior-year period of equivalent length. Comparable sales include all sales, except sales from stores open less than 13 months, digital acquisitions we have owned less than 13 months, stores that have been closed, and digital acquisitions that we no longer operate. Comparable sales measures vary across the retail industry. As a result, our comparable sales calculation is not necessarily comparable to similarly titled measures reported by other companies. Digitally originated sales include all sales initiated through mobile applications and our websites. Our stores fulfill the majority of digitally originated sales, including shipment from stores to guests, store Order Pickup or Drive Up, and delivery via Shipt. Digitally originated sales may also be fulfilled through our distribution centers, our vendors, or other third parties.TARGET CORPORATION [[Image Removed: tgt-20221029_g2.jpg]] Q3 2022 Form 10-Q 14
--------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents
ANALYSIS OF RESULTS OF OPERATIONS
Sales growth-from both comparable sales and new stores-represents an important
driver of our long-term profitability. We expect that comparable sales growth
will drive the majority of our total sales growth. We believe that our ability
to successfully differentiate our guests' shopping experience through a careful
combination of merchandise assortment, price, convenience, guest experience, and
other factors will, over the long-term, drive both increasing shopping frequency
(traffic) and the amount spent each visit (average transaction amount).
Comparable Sales Three Months Ended Nine Months Ended
October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021
Comparable sales change 2.7 % 12.7 % 2.9 % 14.4 %
Drivers of change in comparable sales
Number of transactions (traffic) 1.4 12.9 2.6 14.0
Average transaction amount 1.3 (0.2) 0.2 0.3
Comparable Sales by Channel Three Months Ended Nine Months Ended
October 29, 2022
3.2 % 9.7 % 2.6 % 11.9 %
Digitally originated comparable sales change 0.3 28.9 4.1 27.8
Sales by Channel Three Months Ended Nine Months Ended
October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021
Stores originated 82.9 % 82.4 % 82.3 % 82.3 %
Digitally originated 17.1 17.6 17.7 17.7
Total 100 % 100 % 100 % 100 %
Sales by Fulfillment Channel Three Months Ended Nine Months Ended
October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021
Stores 96.8 % 96.7 % 96.7 % 96.5 %
Other 3.2 3.3 3.3 3.5
Total 100 % 100 % 100 % 100 %
Note: Sales fulfilled by stores include in-store purchases and digitally originated sales fulfilled by shipping merchandise from stores to guests, Order Pickup, Drive Up, and Shipt.
Sales by Product Category Three Months Ended Nine Months Ended
October 29, 2022 October
30, 2021
17 % 17 % 17 % 18 %
Beauty and household essentials 29 28 28 27
Food and beverage 22 20 22 20
Hardlines 14 15 15 16
Home furnishings and décor 18 20 18 19
Total 100 % 100 % 100 % 100 %
Note 3 to the Financial Statements provides additional product category sales information. The collective interaction of a broad array of macroeconomic, competitive, and consumer behavioral factors, as well as sales mix and the transfer of sales to new stores, makes further analysis of sales metrics infeasible.
TARGET CORPORATION [[Image Removed: tgt-20221029_g2.jpg]] Q3 2022 Form 10-Q 15
--------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents
ANALYSIS OF RESULTS OF OPERATIONS
We monitor the percentage of purchases that are paid for using RedCards (RedCard Penetration) because our internal analysis has indicated that a meaningful portion of the incremental purchases on RedCards are also incremental sales forTarget . Guests receive a 5 percent discount on virtually all purchases when they use a RedCard atTarget . RedCard Penetration Three Months Ended Nine Months Ended October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021 Target Debit Card 10.8 % 11.7 % 11.2 % 11.8 % Target Credit Cards 8.8 8.9 8.8 8.7 Total RedCard Penetration 19.6 % 20.7 % 20.0 % 20.5 %
Note: Amounts may not foot due to rounding.
--------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents
ANALYSIS OF RESULTS OF OPERATIONS
Gross Margin Rate
[[Image Removed: tgt-20221029_g3.jpg]]
For the three months ended
•merchandising pressure, including
•higher clearance and promotional markdown rates, which were primarily in our
Discretionary categories;
•higher merchandise and freight costs, partially offset by the benefit of retail
price increases;
•higher inventory shrink;
•supply chain pressure related to increased compensation and headcount in our
distribution centers and costs of managing elevated inventory levels, including
the impact of early receipts; and
•favorable mix in the relative growth rates of higher and lower margin
categories.
[[Image Removed: tgt-20221029_g4.jpg]]
For the nine months ended
•merchandising pressure, including •higher clearance and promotional markdown rates, which were primarily the result of inventory impairments and other actions taken in our Discretionary categories; •higher merchandise and freight costs, partially offset by the benefit of retail price increases; •higher inventory shrink; and •supply chain pressure related to increased compensation and headcount in our distribution centers and costs of managing elevated inventory levels, including the impact of early receipts.
Business Environment on page 13 provides additional information.
--------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents
ANALYSIS OF RESULTS OF OPERATIONS
Selling, General, and Administrative Expense Rate
For the three months endedOctober 29, 2022 , our SG&A expense rate was 19.7 percent compared with 18.9 percent for the comparable prior-year period. For the nine months endedOctober 29, 2022 , our SG&A expense rate was 19.3 percent compared with 19.0 percent for the comparable prior-year period. For both the three and nine months endedOctober 29, 2022 , the rates reflected the net impact of cost increases across our business, including investments in hourly team member wages, partially offset by lower incentive compensation expense, compared to the comparable prior-year periods. Store Data Change in Number of Stores Three Months Ended Nine Months Ended October 29, 2022 October 30, 2021 October 29, 2022 October 30, 2021 Beginning store count 1,937 1,909 1,926 1,897 Opened 4 15 16 29 Closed - - (1) (2) Ending store count 1,941 1,924 1,941 1,924 Number of Stores and Number of Stores Retail Square Feet (a) Retail Square Feet October 29, 2022 January 29, 2022 October 30, 2021 October 29, 2022 January 29, 2022 October 30, 2021 170,000 or more sq. ft. 274 274 274 48,985 49,071 49,071 50,000 to 169,999 sq. ft. 1,522 1,516 1,515 190,739 190,205 190,116 49,999 or less sq. ft. 145 136 135 4,305 4,008 3,952 Total 1,941 1,926 1,924 244,029 243,284 243,139
(a)In thousands; reflects total square feet less office, distribution center, and vacant space.
Other Performance Factors Net Interest Expense Net interest expense was$125 million and$349 million for the three and nine months endedOctober 29, 2022 , respectively, compared with$105 million and$317 million in the comparable prior-year periods. The increase in net interest expense was primarily due to higher average debt and commercial paper levels for the three and nine months endedOctober 29, 2022 , compared with the prior-year periods. Net Other (Income) / Expense Net Other (Income) / Expense was$(12) million and$(35) million for the three and nine months endedOctober 29, 2022 , respectively, compared with$(6) million and$(356) million in the comparable prior-year periods. The nine months endedOctober 30, 2021 , included the$335 million pretax gain on theFebruary 2021 sale of Dermstore. Note 2 to the Financial Statements provides additional information. Provision for Income Taxes Our effective income tax rate for the three and nine months endedOctober 29, 2022 , was 21.6 percent and 19.8 percent, respectively, compared with 22.1 percent and 21.6 percent in the respective comparable prior-year periods. For the three and nine month periods, the decrease reflects lower pretax earnings resulting in a larger tax rate benefit from ongoing and discrete tax items in the current year, partially offset by the impacts of discrete tax benefits in the prior-year. Our effective tax rate is generally more volatile at lower amounts of pretax income because the impact of discrete, deductible, and nondeductible tax items and credits is greater.
--------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS Table of ContentsRECONCILIATION OF NON-GAAP FINANCIAL MEASURES Index to Notes
Reconciliation of Non-GAAP Financial Measures to GAAP Measures
To provide additional transparency, we have disclosed non-GAAP adjusted diluted earnings per share (Adjusted EPS). This metric excludes certain items presented below. We believe this information is useful in providing period-to-period comparisons of the results of our operations. This measure is not in accordance with, or an alternative to,U.S. GAAP. The most comparable GAAP measure is diluted earnings per share. Adjusted EPS should not be considered in isolation or as a substitution for analysis of our results as reported in accordance with GAAP. Other companies may calculate Adjusted EPS differently, limiting the usefulness of the measure for comparisons with other companies. Reconciliation of Non-GAAP Adjusted EPS Three Months Ended October 29, 2022 October 30, 2021 (millions, except per share data) Pretax Net of Tax Per Share Pretax Net of Tax Per Share GAAP diluted earnings per share$ 1.54 $ 3.04 Adjustments Other (a) $ - $ - $ -$ (9) $ (7) $ (0.01) Adjusted diluted earnings per share$ 1.54 $ 3.03 Reconciliation of Non-GAAP Adjusted EPS Nine Months Ended October 29, 2022 October 30, 2021 (millions, except per share data) Pretax Net of Tax Per Share Pretax Net of Tax Per Share GAAP diluted earnings per share$ 4.09 $ 10.87 Adjustments Gain on Dermstore sale $ - $ - $ -$ (335) $ (269) $ (0.54) Other (a) 20 15 0.03 27 20 0.04 Adjusted diluted earnings per share$ 4.12 $
10.37
Note: Amounts may not foot due to rounding. (a)Other items unrelated to current period operations, none of which were individually significant.
Earnings before interest expense and income taxes (EBIT) and earnings before
interest expense, income taxes, depreciation, and amortization (EBITDA) are
non-GAAP financial measures. We believe these measures provide meaningful
information about our operational efficiency compared with our competitors by
excluding the impact of differences in tax jurisdictions and structures, debt
levels, and, for EBITDA, capital investment. These measures are not in
accordance with, or an alternative to, GAAP. The most comparable GAAP measure is
net earnings. EBIT and EBITDA should not be considered in isolation or as a
substitution for analysis of our results as reported in accordance with GAAP.
Other companies may calculate EBIT and EBITDA differently, limiting the
usefulness of the measures for comparisons with other companies.
EBIT and EBITDA Three Months Ended Nine Months Ended
October 30, October 29, October 30,
(dollars in millions) October 29, 2022 2021 Change 2022 2021 Change
Net earnings $ 712 $ 1,488 (52.1) % $ 1,904 $ 5,402 (64.7) %
+ Provision for income taxes 197 423 (53.6) 471 1,488 (68.4)
+ Net interest expense 125 105 17.5 349 317 9.8
EBIT $ 1,034 $ 2,016 (48.7) % $ 2,724 $ 7,207 (62.2) %
+ Total depreciation and
amortization (a) 674 652 3.5 2,004 1,952 2.7
EBITDA $ 1,708 $ 2,668 (36.0) % $ 4,728 $ 9,159 (48.4) %
(a)Represents total depreciation and amortization, including amounts classified within Depreciation and Amortization and within Cost of Sales.
--------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS Table of ContentsRECONCILIATION OF NON-GAAP FINANCIAL MEASURES Index to Notes
We have also disclosed after-tax ROIC, which is a ratio based on GAAP information, with the exception of the add-back of operating lease interest to operating income. We believe this metric is useful in assessing the effectiveness of our capital allocation over time. Other companies may calculate ROIC differently, limiting the usefulness of the measure for comparisons with other companies.
After-Tax Return on
(dollars in millions)
Trailing Twelve Months
Numerator October 29, 2022 October 30, 2021
Operating income $ 4,784 $ 8,687
+ Net other income / (expense) 61 358
EBIT 4,845 9,045
+ Operating lease interest (a) 89 85
- Income taxes (b) 1,059 1,947
Net operating profit after taxes $ 3,875 $ 7,183
October 31,
Denominator October 29, 2022 October 30, 2021 2020
Current portion of long-term debt and other
borrowings $ 2,207
$ 1,176
+ Noncurrent portion of long-term debt 14,237 11,586 12,490 + Shareholders' investment 11,019 13,803 13,319 + Operating lease liabilities (c) 2,879 2,737 2,400 - Cash and cash equivalents 954 5,753 5,996 Invested capital$ 29,388 $ 23,549 $ 22,344 Average invested capital (d)$ 26,469
After-tax return on invested capital 14.6 % 31.3 % (a)Represents the add-back to operating income driven by the hypothetical interest expense we would incur if the property under our operating leases were owned or accounted for as finance leases. Calculated using the discount rate for each lease and recorded as a component of rent expense within SG&A. Operating lease interest is added back to operating income in the ROIC calculation to control for differences in capital structure between us and our competitors. (b)Calculated using the effective tax rates, which were 21.5 percent and 21.3 percent for the trailing twelve months endedOctober 29, 2022 , andOctober 30, 2021 , respectively. For the trailing twelve months endedOctober 29, 2022 , andOctober 30, 2021 , includes tax effect of$1.0 billion and$1.9 billion related to EBIT, and$19 million and$18 million , respectively, related to operating lease interest. (c)Total short-term and long-term operating lease liabilities included within Accrued and Other Current Liabilities and Noncurrent Operating Lease Liabilities, respectively. (d)Average based on the invested capital at the end of the current period and the invested capital at the end of the comparable prior period.
--------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents
ANALYSIS OF FINANCIAL CONDITION Index to Notes
Analysis of Financial Condition
Liquidity and Capital Resources
Capital Allocation
We follow a disciplined and balanced approach to capital allocation based on the following priorities, ranked in order of importance: first, we fully invest in opportunities to profitably grow our business, create sustainable long-term value, and maintain our current operations and assets; second, we maintain a competitive quarterly dividend and seek to grow it annually; and finally, we return any excess cash to shareholders by repurchasing shares within the limits of our credit rating goals. Our cash and cash equivalents balance was$954 million ,$5.9 billion , and$5.8 billion as ofOctober 29, 2022 ,January 29, 2022 , andOctober 30, 2021 , respectively. Our cash and cash equivalents balance includes short-term investments of$5.0 billion and$4.8 billion as ofJanuary 29, 2022 andOctober 30, 2021 , respectively. We had no short-term investments as ofOctober 29, 2022 . Our investment policy is designed to preserve principal and liquidity of our short-term investments. This policy allows investments in large money market funds or in highly rated direct short-term instruments that mature in 60 days or less. We also place dollar limits on our investments in individual funds or instruments. Operating Cash Flows Cash flows provided by operating activities were$552 million for the nine months endedOctober 29, 2022 , compared with$5.6 billion of cash flows provided by operating activities for the nine months endedOctober 30, 2021 . For the nine months endedOctober 29, 2022 , operating cash flows decreased as a result of lower earnings, increased inventory levels, and lower accounts payable leverage, compared with the nine months endedOctober 30, 2021 .
Inventory
Inventory was$17.1 billion as ofOctober 29, 2022 , compared with$13.9 billion and$15.0 billion atJanuary 29, 2022 , andOctober 30, 2021 , respectively. The increase over the balance as ofOctober 30, 2021 , primarily reflects the following: •our decision to move import merchandise receipt timing earlier due to expected supply chain volatility, coupled with recent decreases in shipping times, resulting in earlier-than-expected inventory receipts, •investments in our inventory position in our frequency categories (Food and Beverage and Beauty and Household Essentials), •lower-than-expected sales in our discretionary categories, partially offset by actions taken during the current year to reduce excess inventory in these categories, and •increases in unit costs across all of our categories.
The increase was amplified by unintentionally low inventory levels last year resulting from supply chain disruptions and high sell-through rates. The
Business Environmen t section on page 13 provides additional information.
Investing Cash Flows
Investing cash flows included capital investments of
--------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents
ANALYSIS OF FINANCIAL CONDITION Index to Notes
Dividends
We paid dividends totaling$497 million ($1.08 per share) and$1.3 billion ($2.88 per share) for the three and nine months endedOctober 29, 2022 , respectively, and$440 million ($0.90 per share) and$1.1 billion ($2.26 per share) for the three and nine months endedOctober 30, 2021 , respectively, a per share increase of 20.0 percent for the three month period and 27.4 percent for the nine month period. We declared dividends totaling$502 million ($1.08 per share) during the third quarter of 2022 and$439 million ($0.90 per share) during the third quarter of 2021, a per share increase of 20.0 percent. We have paid dividends every quarter since our 1967 initial public offering, and it is our intent to continue to do so in the future.
Share Repurchase
We returned$2.6 billion to shareholders through share repurchase during the nine months ended October 29, 2022. See Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds of this Quarterly Report on Form 10-Q and Note 8 to the Financial Statements for more information.
Financing
Our financing strategy is to ensure liquidity and access to capital markets, to maintain a balanced spectrum of debt maturities, and to manage our net exposure to floating interest rate volatility. Within these parameters, we seek to minimize our borrowing costs. Our ability to access the long-term debt and commercial paper markets has provided us with ample sources of liquidity. Our continued access to these markets depends on multiple factors, including the condition of debt capital markets, our operating performance, and maintaining strong credit ratings. As ofOctober 29, 2022 , our credit ratings were as follows: Credit Ratings Moody's Standard and Poor's Fitch Long-term debt A2 A A Commercial paper P-1 A-1 F1 If our credit ratings were lowered, our ability to access the debt markets, our cost of funds, and other terms for new debt issuances could be adversely impacted. Each of the credit rating agencies reviews its rating periodically, and there is no guarantee our current credit ratings will remain the same as described above. We have the ability to obtain short-term financing from time to time under our commercial paper program and credit facility. InOctober 2022 , we obtained a new committed$1.0 billion 364-day unsecured revolving credit facility that will expire inOctober 2023 . We also extended our existing committed$3.0 billion unsecured revolving credit facility, which now expires inOctober 2027 . Both credit facilities backstop our commercial paper program. No balances were outstanding under either credit facility at any time during 2021 or 2022. As ofOctober 29, 2022 , we had$2.1 billion outstanding under our commercial paper program. We did not have any balances outstanding under our commercial paper program as of October 30, 2021. Note 6 to the Financial Statements provides additional information. Most of our long-term debt obligations contain covenants related to secured debt levels. In addition to a secured debt level covenant, our credit facilities also contain a debt leverage covenant. We are, and expect to remain, in compliance with these covenants. Additionally, as ofOctober 29, 2022 , no notes or debentures contained provisions requiring acceleration of payment upon a credit rating downgrade, except that certain outstanding notes allow the note holders to put the notes to us if within a matter of months of each other we experience both (i) a change in control and (ii) our long-term credit ratings are either reduced and the resulting rating is non-investment grade, or our long-term credit ratings are placed on watch for possible reduction and those ratings are subsequently reduced and the resulting rating is non-investment grade. We believe our sources of liquidity, namely operating cash flows, credit facility capacity, and access to capital markets, will continue to be adequate to meet our contractual obligations, working capital and planned capital expenditures, finance anticipated expansion and strategic initiatives, fund debt maturities, pay dividends, and execute purchases under our share repurchase program for the foreseeable future.
--------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents
ANALYSIS OF FINANCIAL CONDITION Index to Notes
New Accounting Pronouncements
We do not expect any recently issued accounting pronouncements to have a material effect on our financial statements.
Forward-Looking Statements
This report contains forward-looking statements, which are based on our current assumptions and expectations. These statements are typically accompanied by the words "expect," "may," "could," "believe," "would," "might," "anticipates," or similar words. The principal forward-looking statements in this report include: our financial performance, statements regarding the adequacy of and costs associated with our sources of liquidity, the funding of debt maturities, the continued execution of our share repurchase program, our expected capital expenditures and new lease commitments, the expected compliance with debt covenants, the expected impact of new accounting pronouncements, our intentions regarding future dividends, the expected return on plan assets, the expected outcome of, and adequacy of our reserves for, claims, litigation and the resolution of tax matters, and changes in our assumptions and expectations. All such forward-looking statements are intended to enjoy the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, as amended. Although we believe there is a reasonable basis for the forward-looking statements, our actual results could be materially different. The most important factors which could cause our actual results to differ from our forward-looking statements are set forth in our description of risk factors included in Part I, Item 1A, Risk Factors of our Form 10-K for the fiscal year ended January 29, 2022, which should be read in conjunction with the forward-looking statements in this report. Forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update any forward-looking statement.
© Edgar Online, source
