Target Corp. (TGT)

Analysis of Property, Plant and Equipment

Property, Plant and Equipment Accounting Policy

Property and equipment is depreciated using the straight-line method over estimated useful lives or lease terms if shorter. Target amortizes leasehold improvements purchased after the beginning of the initial lease term over the shorter of the assets' useful lives or a term that includes the original lease term, plus any renewals that are reasonably assured at the date the leasehold improvements are acquired. Depreciation and capital lease amortization expense for 2013, 2012 and 2011 was $2,198 million, $2,120 million and $2,107 million, respectively. For income tax purposes, accelerated depreciation methods are generally used. Repair and maintenance costs are expensed as incurred. Facility pre-opening costs, including supplies and payroll, are expensed as incurred.

Estimated Useful Lives Life (Years)
Buildings and improvements 8-39
Fixtures and equipment 2-15
Computer hardware and software 2-7

Long-lived assets are reviewed for impairment when events or changes in circumstances, such as a decision to relocate or close a store or make significant software changes, indicate that the asset's carrying value may not be recoverable. For asset groups classified as held for sale, the carrying value is compared to the fair value less cost to sell. Target estimates fair value by obtaining market appraisals, valuations from third party brokers or other valuation techniques. Impairments of $77 million, $37 million and $43 million in 2013, 2012 and 2011, respectively, were recorded in selling, general and administrative expenses on the Consolidated Statements of Income, primarily from completed or planned store closures and software changes.

Source: Target Corp., Annual Report

Property, Plant and Equipment Disclosure

Target Corp., Statement of Financial Position, Property, Plant and Equipment

USD $ in millions

 
    Feb 1, 2014 Feb 2, 2013 Jan 28, 2012 Jan 29, 2011 Jan 30, 2010 Jan 31, 2009
Land 6,234  6,206  6,122  5,928  5,793  5,767 
Buildings and improvements 30,356  28,653  26,837  23,081  22,152  20,430 
Fixtures and equipment 5,583  5,362  5,141  4,939  4,743  4,270 
Computer hardware and software 2,764  2,567  2,468  2,533  2,575  2,586 
Construction-in-progress 843  1,176  963  567  502  1,763 
Property and equipment, gross 45,780  43,964  41,531  37,048  35,765  34,816 
Accumulated depreciation (14,402) (13,311) (12,382) (11,555) (10,485) (9,060)
Property and equipment, net 31,378  30,653  29,149  25,493  25,280  25,756 

Source: Based on data from Target Corp. Annual Reports

Item Description The company
Land Carrying amount as of the balance sheet date of real estate held for productive use. This excludes land held for sale. Target Corp.'s land increased from 2012 to 2013 and from 2013 to 2014.
Buildings and improvements Carrying amount as of the balance sheet date of long-lived, depreciable assets that include building structures held for productive use including any addition, improvement, or renovation to the structure, such as interior masonry, interior flooring, electrical, and plumbing. Target Corp.'s buildings and improvements increased from 2012 to 2013 and from 2013 to 2014.
Fixtures and equipment Carrying amount at the balance sheet date for long-lived, depreciable asset commonly used in offices and stores. Examples include desks, chairs, and store fixtures. Target Corp.'s fixtures and equipment increased from 2012 to 2013 and from 2013 to 2014.
Construction-in-progress Carrying amount at the balance sheet date of long-lived asset under construction that include construction costs to date on capital projects that have not been completed and assets being constructed that are not ready to be placed into service. Target Corp.'s construction-in-progress increased from 2012 to 2013 but then declined significantly from 2013 to 2014.
Property and equipment, gross Carrying amount at the balance sheet date for long-lived physical assets used in the normal conduct of business and not intended for resale. This can include land, physical structures, machinery, vehicles, furniture, computer equipment, construction in progress, and similar items. Amount does not include depreciation. Target Corp.'s property and equipment, gross increased from 2012 to 2013 and from 2013 to 2014.
Property and equipment, net Tangible assets that are held by an entity for use in the production or supply of goods and services, for rental to others, or for administrative purposes and that are expected to provide economic benefit for more than one year; net of accumulated depreciation. Examples include land, buildings, and production equipment. Target Corp.'s property and equipment, net increased from 2012 to 2013 and from 2013 to 2014.

Property, Plant and Equipment Ratios (Summary)

Target Corp., Property, Plant and Equipment Ratios

 
    Feb 1, 2014 Feb 2, 2013 Jan 28, 2012 Jan 29, 2011 Jan 30, 2010 Jan 31, 2009
Average age 36.42% 35.25% 34.97% 37.13% 34.98% 31.19%
Estimated total useful life (years) 18 18 17 15 15 16
Estimated age, time elapsed since purchase (years) 7 6 6 6 5 5
Estimated remaining life (years) 11 12 11 9 10 11
Ratio Description The company
Average age As long as straight-line depreciation is used, this is an accurate estimate of asset age as a percentage of depreciable life. The relative age is a useful measure of whether the company's fixed asset base is old or new. Newer assets are likely to be more efficient. Target Corp.'s average age of depreciable property, plant and equipment deteriorated from 2012 to 2013 and from 2013 to 2014.
Estimated total useful life Over longer time periods, this ratio is a useful measure of company's depreciation policy and can be used for comparisons with competitors. Target Corp.'s estimated total useful life of depreciable property, plant and equipment increased from 2012 to 2013 and from 2013 to 2014.
Estimated time elapsed since purchase The approximate age in years of a company's fixed assets. Useful for comparison purposes. Target Corp.'s estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2012 to 2013 and from 2013 to 2014.
Estimated remaining life   Target Corp.'s estimated remaining life of depreciable property, plant and equipment increased from 2012 to 2013 but then slightly declined from 2013 to 2014.

Average Age

 
    Feb 1, 2014 Feb 2, 2013 Jan 28, 2012 Jan 29, 2011 Jan 30, 2010 Jan 31, 2009
  Selected Financial Data (USD $ in millions)
Accumulated depreciation 14,402  13,311  12,382  11,555  10,485  9,060 
Property and equipment, gross 45,780  43,964  41,531  37,048  35,765  34,816 
Land 6,234  6,206  6,122  5,928  5,793  5,767 
  Ratio
Average age1 36.42% 35.25% 34.97% 37.13% 34.98% 31.19%

2014 Calculations

1 Average age = 100 × Accumulated depreciation ÷ (Property and equipment, gross – Land)
= 100 × 14,402 ÷ (45,780 – 6,234) = 36.42%

Ratio Description The company
Average age As long as straight-line depreciation is used, this is an accurate estimate of asset age as a percentage of depreciable life. The relative age is a useful measure of whether the company's fixed asset base is old or new. Newer assets are likely to be more efficient. Target Corp.'s average age of depreciable property, plant and equipment deteriorated from 2012 to 2013 and from 2013 to 2014.

Estimated Total Useful Life

 
    Feb 1, 2014 Feb 2, 2013 Jan 28, 2012 Jan 29, 2011 Jan 30, 2010 Jan 31, 2009
  Selected Financial Data (USD $ in millions)
Property and equipment, gross 45,780  43,964  41,531  37,048  35,765  34,816 
Land 6,234  6,206  6,122  5,928  5,793  5,767 
Depreciation and capital lease amortization expense 2,198  2,120  2,107  2,060  1,999  1,804 
  Ratio
Estimated total useful life (years)1 18 18 17 15 15 16

2014 Calculations

1 Estimated total useful life (years) = (Property and equipment, gross – Land) ÷ Depreciation and capital lease amortization expense
= (45,780 – 6,234) ÷ 2,198 = 18

Ratio Description The company
Estimated total useful life Over longer time periods, this ratio is a useful measure of company's depreciation policy and can be used for comparisons with competitors. Target Corp.'s estimated total useful life of depreciable property, plant and equipment increased from 2012 to 2013 and from 2013 to 2014.

Estimated Age, Time Elapsed Since Purchase

 
    Feb 1, 2014 Feb 2, 2013 Jan 28, 2012 Jan 29, 2011 Jan 30, 2010 Jan 31, 2009
  Selected Financial Data (USD $ in millions)
Accumulated depreciation 14,402  13,311  12,382  11,555  10,485  9,060 
Depreciation and capital lease amortization expense 2,198  2,120  2,107  2,060  1,999  1,804 
  Ratio
Time elapsed since purchase (years)1 7 6 6 6 5 5

2014 Calculations

1 Time elapsed since purchase (years) = Accumulated depreciation ÷ Depreciation and capital lease amortization expense
= 14,402 ÷ 2,198 = 7

Ratio Description The company
Estimated time elapsed since purchase The approximate age in years of a company's fixed assets. Useful for comparison purposes. Target Corp.'s estimated time elapsed since purchase of depreciable property, plant and equipment deteriorated from 2012 to 2013 and from 2013 to 2014.

Estimated Remaining Life

 
    Feb 1, 2014 Feb 2, 2013 Jan 28, 2012 Jan 29, 2011 Jan 30, 2010 Jan 31, 2009
  Selected Financial Data (USD $ in millions)
Property and equipment, net 31,378  30,653  29,149  25,493  25,280  25,756 
Land 6,234  6,206  6,122  5,928  5,793  5,767 
Depreciation and capital lease amortization expense 2,198  2,120  2,107  2,060  1,999  1,804 
  Ratio
Estimated remaining life (years)1 11 12 11 9 10 11

2014 Calculations

1 Estimated remaining life (years) = (Property and equipment, net – Land) ÷ Depreciation and capital lease amortization expense
= (31,378 – 6,234) ÷ 2,198 = 11

Ratio Description The company
Estimated remaining life   Target Corp.'s estimated remaining life of depreciable property, plant and equipment increased from 2012 to 2013 but then slightly declined from 2013 to 2014.