Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Feb. 02, 2020 | Mar. 13, 2020 | Aug. 02, 2019 | |
Document Type | 10-K | ||
Document Period End Date | Feb. 2, 2020 | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Entity File Number | 001-35979 | ||
Entity Registrant Name | HD SUPPLY HOLDINGS, INC. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 26-0486780 | ||
Entity Address, Address Line One | 3400 Cumberland Boulevard SE | ||
Entity Address, City or Town | Atlanta | ||
Entity Address, State or Province | GA | ||
Entity Address, Postal Zip Code | 30339 | ||
City Area Code | 770 | ||
Local Phone Number | 852-9000 | ||
Title of 12(b) Security | HD Supply Holdings, Inc. | ||
Trading Symbol | HDS | ||
Security Exchange Name | NASDAQ | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 6,591,541,946 | ||
Entity Central Index Key | 0001573097 | ||
Current Fiscal Year End Date | --02-02 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
HD Supply Holdings, Inc. | |||
Entity Common Stock, Shares Outstanding | 161,984,157 | ||
HD Supply, Inc. (Total HDS) | |||
Entity File Number | 333-159809 | ||
Entity Registrant Name | HD SUPPLY, INC. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 75-2007383 | ||
Entity Address, Address Line One | 3400 Cumberland Boulevard SE | ||
Entity Address, City or Town | Atlanta | ||
Entity Address, State or Province | GA | ||
Entity Address, Postal Zip Code | 30339 | ||
City Area Code | 770 | ||
Local Phone Number | 852-9000 | ||
Entity Current Reporting Status | No | ||
Entity Interactive Data Current | Yes | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 1,000 | ||
Entity Central Index Key | 0001465254 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (HD Supply Holdings, Inc.) - USD ($) shares in Thousands, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Feb. 02, 2020 | Nov. 03, 2019 | Aug. 04, 2019 | May 05, 2019 | Feb. 03, 2019 | Oct. 28, 2018 | Jul. 29, 2018 | Apr. 29, 2018 | Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | |||||||||||
Net Sales | $ 1,385 | $ 1,644 | $ 1,624 | $ 1,493 | $ 1,446 | $ 1,612 | $ 1,600 | $ 1,389 | $ 6,146 | $ 6,047 | $ 5,121 |
Cost of sales | 3,743 | 3,672 | 3,088 | ||||||||
Gross Profit | 545 | 640 | 633 | 585 | 572 | 629 | 622 | 552 | 2,403 | 2,375 | 2,033 |
Operating expenses: | |||||||||||
Selling, general and administrative | 1,566 | 1,543 | 1,334 | ||||||||
Depreciation and amortization | 106 | 99 | 85 | ||||||||
Restructuring and separation | 8 | 9 | 6 | ||||||||
Total operating expenses | 1,680 | 1,651 | 1,425 | ||||||||
Operating Income | 723 | 724 | 608 | ||||||||
Interest expense | 110 | 130 | 166 | ||||||||
Interest income | (1) | (2) | |||||||||
Loss on extinguishment & modification of debt | 69 | 69 | 84 | ||||||||
Income from Continuing Operations Before Provision for Income Taxes | 613 | 526 | 360 | ||||||||
Provision for income taxes | 162 | 135 | 193 | ||||||||
Income from Continuing Operations | 78 | 131 | 135 | 107 | 90 | 82 | 130 | 89 | 451 | 391 | 167 |
Income from discontinued operations, net of tax | 1 | 2 | 1 | 1 | 3 | 803 | |||||
Net Income | $ 78 | $ 132 | $ 135 | $ 107 | $ 92 | $ 82 | $ 131 | $ 89 | 452 | 394 | 970 |
Other comprehensive income (loss): | |||||||||||
Foreign currency translation adjustment | 2 | (2) | |||||||||
Unrealized loss on cash flow hedge, net of tax of $8, $5, $- | (22) | (15) | |||||||||
Total Comprehensive Income | $ 430 | $ 381 | $ 968 | ||||||||
Weighted Average Common Shares Outstanding (thousands) | |||||||||||
Basic | 166,405 | 181,099 | 192,236 | ||||||||
Diluted | 166,989 | 181,929 | 193,668 | ||||||||
Basic Earnings Per Share(1): | |||||||||||
Income from Continuing Operations (in dollars per share) | $ 0.48 | $ 0.80 | $ 0.80 | $ 0.63 | $ 0.51 | $ 0.45 | $ 0.71 | $ 0.48 | $ 2.71 | $ 2.16 | $ 0.87 |
Income from Discontinued Operations (in dollars per share) | 0.01 | 0.01 | 0.01 | 0.01 | 0.02 | 4.18 | |||||
Net Income | 0.48 | 0.80 | 0.80 | 0.63 | 0.53 | 0.45 | 0.72 | 0.48 | 2.72 | 2.18 | 5.05 |
Diluted Earnings Per Share(1): | |||||||||||
Income from Continuing Operations (in dollars per share) | 0.48 | 0.79 | 0.79 | 0.63 | 0.51 | 0.45 | 0.71 | 0.48 | 2.70 | 2.15 | 0.86 |
Income from Discontinued Operations (in dollars per share) | 0.01 | 0.01 | 0.01 | 0.01 | 0.02 | 4.15 | |||||
Net Income | $ 0.48 | $ 0.80 | $ 0.79 | $ 0.63 | $ 0.52 | $ 0.45 | $ 0.71 | $ 0.48 | $ 2.71 | $ 2.17 | $ 5.01 |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Parenthetical) (HD Supply Holdings, Inc.) - USD ($) $ in Millions | 12 Months Ended | |
Feb. 02, 2020 | Feb. 03, 2019 | |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | ||
Unrealized loss on cash flow hedge, tax | $ 8 | $ 5 |
CONSOLIDATED BALANCE SHEETS (HD
CONSOLIDATED BALANCE SHEETS (HD Supply Holdings, Inc.) - USD ($) $ in Millions | Feb. 02, 2020 | Feb. 03, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 34 | $ 38 |
Receivables, less allowance for doubtful accounts of $19 and $18 | 754 | 732 |
Inventories | 771 | 766 |
Other current assets | 104 | 50 |
Total current assets | 1,663 | 1,586 |
Property and equipment, net | 391 | 370 |
Operating lease right of-use assets | 480 | |
Goodwill | 1,991 | 1,990 |
Intangible assets, net | 175 | 191 |
Deferred tax asset | 2 | 78 |
Other assets | 13 | 18 |
Total assets | 4,715 | 4,233 |
Current liabilities: | ||
Accounts payable | 414 | 367 |
Accrued compensation and benefits | 71 | 109 |
Current installments of long-term debt | 11 | 11 |
Current lease liabilities | 110 | |
Other current liabilities | 208 | 259 |
Total current liabilities | 814 | 746 |
Long-term debt, excluding current installments | 2,035 | 2,129 |
Deferred tax liabilities | 33 | |
Long-term lease liabilities | 383 | |
Other liabilities | 98 | 77 |
Total liabilities | 3,363 | 2,952 |
Stockholders' equity: | ||
Common stock, par value $0.01; 1 billion shares authorized; 161.4 million and 170.7 million shares issued and outstanding at February 2, 2020 and February 3, 2019, respectively | 2 | 2 |
Paid-in capital | 4,097 | 4,067 |
Accumulated deficit | (1,122) | (1,572) |
Accumulated other comprehensive loss | (52) | (30) |
Treasury stock, at cost, 44.1 million and 34.2 million shares at February 2, 2020 and February 3, 2019, respectively | (1,573) | (1,186) |
Total stockholders' equity | 1,352 | 1,281 |
Total liabilities and stockholders' equity | $ 4,715 | $ 4,233 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (HD Supply Holdings, Inc.) - USD ($) shares in Millions, $ in Millions | Feb. 02, 2020 | Feb. 03, 2019 |
Receivables | ||
Receivables, allowance for doubtful accounts (in dollars) | $ 19 | $ 18 |
Common stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 1,000 | 1,000 |
Common stock, shares issued | 161.4 | 170.7 |
Common stock, shares outstanding | 0 | 170.7 |
Treasury stock | ||
Treasury stock, shares | 44.1 | 34.2 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (HD Supply Holdings, Inc.) - USD ($) shares in Thousands, $ in Millions | Common Stock | Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Treasury Stock | Total |
Beginning balance at Jan. 29, 2017 | $ 2 | $ 3,962 | $ (2,969) | $ (15) | $ (20) | $ 960 |
Beginning balance (in shares) at Jan. 29, 2017 | 201,954 | (561) | ||||
Increase (decrease) in stockholders' equity | ||||||
Cumulative effect of accounting change | 56 | 56 | ||||
Net income | 970 | 970 | ||||
Foreign currency translation adjustment | (2) | (2) | ||||
Purchase of common stock | $ (584) | (584) | ||||
Purchase of common stock (in shares) | (18,236) | |||||
Shares issued under employee benefit plans | 41 | 41 | ||||
Shares issued under employee benefit plans (in shares) | 2,571 | |||||
Stock-based compensation | 26 | 26 | ||||
Share retirement | (23) | $ 23 | ||||
Share retirement (in shares) | (611) | 611 | ||||
Shares withheld for taxes (in shares) | (4) | |||||
Other | $ (1) | (1) | ||||
Ending balance at Jan. 28, 2018 | $ 2 | 4,029 | (1,966) | (17) | $ (582) | 1,466 |
Ending balance (in shares) at Jan. 28, 2018 | 203,914 | (18,190) | ||||
Increase (decrease) in stockholders' equity | ||||||
Net income | 394 | 394 | ||||
Foreign currency translation adjustment | 2 | 2 | ||||
Unrealized loss on cash flow hedge, net of tax of $8, $5, $- | (15) | (15) | ||||
Purchase of common stock | $ (597) | (597) | ||||
Purchase of common stock (in shares) | (15,787) | |||||
Shares issued under employee benefit plans | 13 | 13 | ||||
Shares issued under employee benefit plans (in shares) | 892 | |||||
Stock-based compensation | 26 | 26 | ||||
Shares withheld for taxes | $ (7) | (7) | ||||
Shares withheld for taxes (in shares) | (176) | |||||
Other | (1) | (1) | ||||
Ending balance at Feb. 03, 2019 | $ 2 | 4,067 | (1,572) | (30) | $ (1,186) | 1,281 |
Ending balance (in shares) at Feb. 03, 2019 | 204,806 | (34,153) | ||||
Increase (decrease) in stockholders' equity | ||||||
Cumulative effect of accounting change | (3) | (3) | ||||
Net income | 452 | 452 | ||||
Unrealized loss on cash flow hedge, net of tax of $8, $5, $- | (22) | (22) | ||||
Purchase of common stock | $ (384) | (384) | ||||
Purchase of common stock (in shares) | (9,860) | |||||
Shares issued under employee benefit plans | 7 | $ 2 | 9 | |||
Shares issued under employee benefit plans (in shares) | 667 | 71 | ||||
Stock-based compensation | 23 | 23 | ||||
Shares withheld for taxes | $ (5) | (5) | ||||
Shares withheld for taxes (in shares) | (129) | |||||
Other | 1 | 1 | ||||
Ending balance at Feb. 02, 2020 | $ 2 | $ 4,097 | $ (1,122) | $ (52) | $ (1,573) | $ 1,352 |
Ending balance (in shares) at Feb. 02, 2020 | 205,473 | (44,071) |
CONSOLIDATED STATEMENTS OF ST_2
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY ( Parenthetical) (HD Supply Holdings,Inc) - USD ($) $ in Millions | 12 Months Ended | |
Feb. 02, 2020 | Feb. 03, 2019 | |
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY | ||
Unrealized loss on cash flow hedge, tax | $ 8 | $ 5 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (HD Supply Holdings, Inc.) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income | $ 452 | $ 394 | $ 970 |
Reconciliation of net income to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 113 | 106 | 97 |
Provision for uncollectibles | 9 | 12 | 9 |
Non-cash interest expense | 6 | 17 | 16 |
Payment of discounts upon extinguishment of debt | (4) | (6) | |
Loss on extinguishment & modification of debt | 69 | 84 | |
Stock-based compensation expense | 23 | 26 | 26 |
Deferred income taxes | 119 | 122 | 407 |
(Gain) loss on sales of businesses, net | (934) | ||
Other | 3 | 2 | |
Changes in assets and liabilities, net of the effects of acquisitions & dispositions: | |||
(Increase) decrease in receivables | (27) | (79) | (173) |
(Increase) decrease in inventories | (4) | (59) | (127) |
(Increase) decrease in other current assets | (3) | (1) | 6 |
(Increase) decrease in other assets | (1) | (2) | |
Increase (decrease) in accounts payable and accrued liabilities | (12) | (18) | 125 |
Increase (decrease) in other long-term liabilities | (1) | 1 | |
Net cash provided by (used in) operating activities | 677 | 584 | 502 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Capital expenditures | (106) | (115) | (94) |
Payments for businesses acquired, net | (9) | (362) | |
Proceeds from sales of property and equipment | 3 | 2 | |
Proceeds from sales of businesses, net | 2,421 | ||
Net cash provided by (used in) investing activities | (112) | (477) | 2,329 |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Purchase of treasury shares | (385) | (596) | (584) |
Borrowings of long-term debt | 930 | 113 | |
Repayments of long-term debt | (11) | (1,243) | (1,529) |
Repayments of financing liabilities | (88) | ||
Borrowings on long-term revolver debt | 1,310 | 523 | 628 |
Repayments on long-term revolver debt | (1,397) | (229) | (995) |
Proceeds from issuance of common stock under employee benefit plans | 9 | 13 | 41 |
Tax withholdings on stock-based awards | (6) | (7) | |
Debt issuance and modification costs | (19) | (26) | |
Other financing activities | (1) | 1 | 4 |
Net cash provided by (used in) financing activities | (569) | (627) | (2,348) |
Increase (decrease) in cash and cash equivalents | (4) | (520) | 483 |
Cash and cash equivalents at beginning of period | 38 | 558 | 75 |
Cash and cash equivalents at end of period | $ 34 | $ 38 | $ 558 |
CONSOLIDATED STATEMENTS OF OP_3
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (HD Supply, Inc.) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | |||
Net Sales | $ 6,146 | $ 6,047 | $ 5,121 |
Cost of sales | 3,743 | 3,672 | 3,088 |
Gross Profit | 2,403 | 2,375 | 2,033 |
Operating expenses: | |||
Selling, general and administrative | 1,566 | 1,543 | 1,334 |
Depreciation and amortization | 106 | 99 | 85 |
Restructuring and separation | 8 | 9 | 6 |
Total operating expenses | 1,680 | 1,651 | 1,425 |
Operating Income | 723 | 724 | 608 |
Interest expense | 110 | 130 | 166 |
Interest income | (1) | (2) | |
Loss on extinguishment & modification of debt | 69 | 84 | |
Income from Continuing Operations Before Provision for Income Taxes | 613 | 526 | 360 |
Provision for income taxes | 162 | 135 | 193 |
Income from Continuing Operations | 451 | 391 | 167 |
Income from discontinued operations, net of tax | 1 | 3 | 803 |
Net Income | 452 | 394 | 970 |
Other comprehensive income (loss): | |||
Foreign currency translation adjustment | 2 | (2) | |
Unrealized loss on cash flow hedge, net of tax of $8, $5, $- | (22) | (15) | |
Total Comprehensive Income | 430 | 381 | 968 |
HD Supply, Inc. (Total HDS) | |||
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | |||
Net Sales | 6,146 | 6,047 | 5,121 |
Cost of sales | 3,743 | 3,672 | 3,088 |
Gross Profit | 2,403 | 2,375 | 2,033 |
Operating expenses: | |||
Selling, general and administrative | 1,566 | 1,543 | 1,334 |
Depreciation and amortization | 106 | 99 | 85 |
Restructuring and separation | 8 | 9 | 6 |
Total operating expenses | 1,680 | 1,651 | 1,425 |
Operating Income | 723 | 724 | 608 |
Interest expense | 110 | 130 | 166 |
Interest income | (1) | (2) | |
Loss on extinguishment & modification of debt | 69 | 84 | |
Income from Continuing Operations Before Provision for Income Taxes | 613 | 526 | 360 |
Provision for income taxes | 162 | 135 | 193 |
Income from Continuing Operations | 451 | 391 | 167 |
Income from discontinued operations, net of tax | 1 | 3 | 803 |
Net Income | 452 | 394 | 970 |
Other comprehensive income (loss): | |||
Foreign currency translation adjustment | 2 | (2) | |
Unrealized loss on cash flow hedge, net of tax of $8, $5, $- | (22) | (15) | |
Total Comprehensive Income | $ 430 | $ 381 | $ 968 |
CONSOLIDATED STATEMENTS OF OP_4
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Parenthetical) (HD Supply, Inc.) - USD ($) $ in Millions | 12 Months Ended | |
Feb. 02, 2020 | Feb. 03, 2019 | |
Unrealized gain (loss) on cash flow hedge | $ 8 | $ 5 |
HD Supply, Inc. (Total HDS) | ||
Unrealized gain (loss) on cash flow hedge | $ 8 | $ 5 |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (HD Supply, Inc.) - USD ($) $ in Millions | Feb. 02, 2020 | Feb. 03, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 34 | $ 38 |
Receivables, less allowance for doubtful accounts of $19 and $18 | 754 | 732 |
Inventories | 771 | 766 |
Other current assets | 104 | 50 |
Total current assets | 1,663 | 1,586 |
Property and equipment, net | 391 | 370 |
Operating lease right of-use assets | 480 | |
Goodwill | 1,991 | 1,990 |
Intangible assets, net | 175 | 191 |
Deferred tax asset | 2 | 78 |
Other assets | 13 | 18 |
Total assets | 4,715 | 4,233 |
Current liabilities: | ||
Accounts payable | 414 | 367 |
Accrued compensation and benefits | 71 | 109 |
Current installments of long-term debt | 11 | 11 |
Current lease liabilities | 110 | |
Other current liabilities | 208 | 259 |
Total current liabilities | 814 | 746 |
Long-term debt, excluding current installments | 2,035 | 2,129 |
Deferred tax liabilities | 33 | |
Long-term lease liabilities | 383 | |
Other liabilities | 98 | 77 |
Total liabilities | 3,363 | 2,952 |
Stockholders' equity: | ||
Common stock, par value $0.01; authorized 1,000 shares; issued and outstanding 1,000 shares at February 2, 2020 and February 3, 2019 | 2 | 2 |
Paid-in capital | 4,097 | 4,067 |
Accumulated deficit | (1,122) | (1,572) |
Accumulated other comprehensive loss | (52) | (30) |
Total stockholders' equity | 1,352 | 1,281 |
Total liabilities and stockholders' equity | 4,715 | 4,233 |
HD Supply, Inc. (Total HDS) | ||
Current assets: | ||
Cash and cash equivalents | 34 | 38 |
Receivables, less allowance for doubtful accounts of $19 and $18 | 754 | 732 |
Inventories | 771 | 766 |
Other current assets | 104 | 50 |
Total current assets | 1,663 | 1,586 |
Property and equipment, net | 391 | 370 |
Operating lease right of-use assets | 480 | |
Goodwill | 1,991 | 1,990 |
Intangible assets, net | 175 | 191 |
Deferred tax asset | 2 | 78 |
Other assets | 13 | 18 |
Total assets | 4,715 | 4,233 |
Current liabilities: | ||
Accounts payable | 414 | 367 |
Accrued compensation and benefits | 71 | 109 |
Current installments of long-term debt | 11 | 11 |
Current lease liabilities | 110 | |
Other current liabilities | 208 | 257 |
Total current liabilities | 814 | 744 |
Long-term debt, excluding current installments | 2,035 | 2,129 |
Deferred tax liabilities | 33 | |
Long-term lease liabilities | 383 | |
Other liabilities | 98 | 77 |
Total liabilities | 3,363 | 2,950 |
Stockholders' equity: | ||
Paid-in capital | 2,367 | 2,726 |
Accumulated deficit | (963) | (1,413) |
Accumulated other comprehensive loss | (52) | (30) |
Total stockholders' equity | 1,352 | 1,283 |
Total liabilities and stockholders' equity | $ 4,715 | $ 4,233 |
CONSOLIDATED BALANCE SHEETS (_3
CONSOLIDATED BALANCE SHEETS (Parenthetical) (HD Supply, Inc.) - USD ($) $ in Millions | Feb. 02, 2020 | Feb. 03, 2019 |
Receivables | ||
Receivables, allowance for doubtful accounts (in dollars) | $ 19 | $ 18 |
Common stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 161,400,000 | 170,700,000 |
Common stock, shares outstanding | 0 | 170,700,000 |
HD Supply, Inc. (Total HDS) | ||
Receivables | ||
Receivables, allowance for doubtful accounts (in dollars) | $ 19 | $ 18 |
Common stock | ||
Common stock, shares authorized | 1,000 | 1,000 |
Common stock, shares issued | 1,000 | 1,000 |
Common stock, shares outstanding | 1,000 | 1,000 |
CONSOLIDATED STATEMENTS OF ST_3
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (HD Supply, Inc.) - USD ($) shares in Thousands, $ in Millions | HD Supply, Inc. (Total HDS)Paid-in Capital | HD Supply, Inc. (Total HDS)Accumulated Deficit | HD Supply, Inc. (Total HDS)Accumulated Other Comprehensive Income (Loss) | HD Supply, Inc. (Total HDS) | Common Stock | Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total |
Beginning balance at Jan. 29, 2017 | $ 3,806 | $ (2,833) | $ (15) | $ 958 | $ 2 | $ 3,962 | $ (2,969) | $ (15) | $ 960 |
Beginning balance (in shares) at Jan. 29, 2017 | 201,954 | ||||||||
Increase (decrease) in stockholders' equity | |||||||||
Cumulative effect of accounting change | 56 | 56 | 56 | 56 | |||||
Equity distribution to Parent | (541) | (541) | |||||||
Stock-based compensation | 26 | 26 | 26 | 26 | |||||
Other | (1) | (1) | (1) | ||||||
Net income | 970 | 970 | 970 | 970 | |||||
Foreign currency translation adjustment | (2) | (2) | (2) | (2) | |||||
Ending balance at Jan. 28, 2018 | 3,290 | (1,807) | (17) | 1,466 | $ 2 | 4,029 | (1,966) | (17) | 1,466 |
Ending balance (in shares) at Jan. 28, 2018 | 203,914 | ||||||||
Increase (decrease) in stockholders' equity | |||||||||
Equity distribution to Parent | (590) | (590) | |||||||
Stock-based compensation | 26 | 26 | 26 | 26 | |||||
Other | (1) | (1) | |||||||
Net income | 394 | 394 | 394 | 394 | |||||
Unrealized loss on cash flow hedge, net of tax of $8 | (15) | (15) | (15) | (15) | |||||
Foreign currency translation adjustment | 2 | 2 | 2 | 2 | |||||
Ending balance at Feb. 03, 2019 | 2,726 | (1,413) | (30) | 1,283 | $ 2 | 4,067 | (1,572) | (30) | 1,281 |
Ending balance (in shares) at Feb. 03, 2019 | 204,806 | ||||||||
Increase (decrease) in stockholders' equity | |||||||||
Cumulative effect of accounting change | (3) | (3) | (3) | (3) | |||||
Equity distribution to Parent | (382) | (382) | |||||||
Stock-based compensation | 23 | 23 | 23 | 23 | |||||
Other | 1 | 1 | 1 | 1 | |||||
Net income | 452 | 452 | 452 | 452 | |||||
Unrealized loss on cash flow hedge, net of tax of $8 | (22) | (22) | (22) | (22) | |||||
Ending balance at Feb. 02, 2020 | $ 2,367 | $ (963) | $ (52) | $ 1,352 | $ 2 | $ 4,097 | $ (1,122) | $ (52) | $ 1,352 |
Ending balance (in shares) at Feb. 02, 2020 | 205,473 |
CONSOLIDATED STATEMENTS OF ST_4
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY ( Parenthetical) (HD Supply,Inc) - USD ($) $ in Millions | 12 Months Ended | |
Feb. 02, 2020 | Feb. 03, 2019 | |
Unrealized loss on cash flow hedge, tax | $ 8 | $ 5 |
HD Supply, Inc. (Total HDS) | ||
Unrealized loss on cash flow hedge, tax | $ 8 | $ 5 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (HD Supply, Inc.) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income | $ 452 | $ 394 | $ 970 |
Reconciliation of net income to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 113 | 106 | 97 |
Provision for uncollectibles | 9 | 12 | 9 |
Non-cash interest expense | 6 | 17 | 16 |
Payment of discounts upon extinguishment of debt | (4) | (6) | |
Loss on extinguishment & modification of debt | 69 | 84 | |
Stock-based compensation expense | 23 | 26 | 26 |
Deferred income taxes | 119 | 122 | 407 |
(Gain) loss on sales of businesses, net | (934) | ||
Other | 3 | 2 | |
Changes in assets and liabilities, net of the effects of acquisitions & dispositions: | |||
(Increase) decrease in receivables | (27) | (79) | (173) |
(Increase) decrease in inventories | (4) | (59) | (127) |
(Increase) decrease in other current assets | (3) | (1) | 6 |
(Increase) decrease in other assets | (1) | (2) | |
Increase (decrease) in accounts payable and accrued liabilities | (12) | (18) | 125 |
Increase (decrease) in other long-term liabilities | (1) | 1 | |
Net cash provided by (used in) operating activities | 677 | 584 | 502 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Capital expenditures | (106) | (115) | (94) |
Payments for businesses acquired, net | (9) | (362) | |
Proceeds from sales of property and equipment | 3 | 2 | |
Proceeds from sales of businesses, net | 2,421 | ||
Net cash provided by (used in) investing activities | (112) | (477) | 2,329 |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Equity distribution to Parent | (382) | (590) | (541) |
Borrowings of long-term debt | 930 | 113 | |
Repayments of long-term debt | (11) | (1,243) | (1,529) |
Repayments of financing liabilities | (88) | ||
Borrowings on long-term revolver debt | 1,310 | 523 | 628 |
Repayments on long-term revolver debt | (1,397) | (229) | (995) |
Debt issuance and modification costs | (19) | (26) | |
Other financing activities | (1) | 1 | 4 |
Net cash provided by (used in) financing activities | (569) | (627) | (2,348) |
Increase (decrease) in cash and cash equivalents | (4) | (520) | 483 |
Cash and cash equivalents at beginning of period | 38 | 558 | 75 |
Cash and cash equivalents at end of period | 34 | 38 | 558 |
HD Supply, Inc. (Total HDS) | |||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income | 452 | 394 | 970 |
Reconciliation of net income to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 113 | 106 | 97 |
Provision for uncollectibles | 9 | 12 | 9 |
Non-cash interest expense | 6 | 17 | 16 |
Payment of discounts upon extinguishment of debt | (4) | (6) | |
Loss on extinguishment & modification of debt | 69 | 84 | |
Stock-based compensation expense | 23 | 26 | 26 |
Deferred income taxes | 119 | 122 | 407 |
(Gain) loss on sales of businesses, net | (934) | ||
Other | 3 | 2 | |
Changes in assets and liabilities, net of the effects of acquisitions & dispositions: | |||
(Increase) decrease in receivables | (27) | (79) | (173) |
(Increase) decrease in inventories | (4) | (59) | (127) |
(Increase) decrease in other current assets | (3) | (1) | 6 |
(Increase) decrease in other assets | (1) | (2) | |
Increase (decrease) in accounts payable and accrued liabilities | (12) | (18) | 125 |
Increase (decrease) in other long-term liabilities | (1) | 1 | |
Net cash provided by (used in) operating activities | 677 | 584 | 502 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Capital expenditures | (106) | (115) | (94) |
Payments for businesses acquired, net | (9) | (362) | |
Proceeds from sales of property and equipment | 3 | 2 | |
Proceeds from sales of businesses, net | 2,421 | ||
Net cash provided by (used in) investing activities | (112) | (477) | 2,329 |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Equity distribution to Parent | (382) | (590) | (541) |
Borrowings of long-term debt | 930 | 113 | |
Repayments of long-term debt | (11) | (1,243) | (1,529) |
Repayments of financing liabilities | (88) | ||
Borrowings on long-term revolver debt | 1,310 | 523 | 628 |
Repayments on long-term revolver debt | (1,397) | (229) | (995) |
Debt issuance and modification costs | (19) | (26) | |
Other financing activities | (1) | 1 | 4 |
Net cash provided by (used in) financing activities | (569) | (627) | (2,346) |
Increase (decrease) in cash and cash equivalents | (4) | (520) | 485 |
Cash and cash equivalents at beginning of period | 38 | 558 | 73 |
Cash and cash equivalents at end of period | $ 34 | $ 38 | $ 558 |
NATURE OF BUSINESS AND SUMMARY
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Feb. 02, 2020 | |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1—NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business HD Supply Holdings, Inc. (“Holdings”) indirectly owns all of the outstanding common stock of HD Supply, Inc. (“HDS”). Holdings, together with its direct and indirect subsidiaries, including HDS (“HD Supply” or the “Company”), is one of the largest industrial distribution companies in North America. The Company specializes in two distinct market sectors: Maintenance, Repair & Operations and Specialty Construction. Through approximately 270 branches and 44 distribution centers, in the United States (“U.S.”) and Canada, the Company serves these markets with an integrated go-to-market strategy. HD Supply has approximately 11,500 associates delivering localized, customer-tailored products, services and expertise. The Company serves approximately 500,000 customers, which include contractors, maintenance professionals, home builders, industrial businesses, and government entities. HD Supply’s broad range of end-to-end product lines and services includes approximately 600,000 stock-keeping units (“SKUs”) of quality, name-brand and proprietary-brand products as well as value-add services supporting the entire life-cycle of a project from construction to maintenance, repair and operations. HD Supply is managed primarily on a product line basis and reports results of operations in two reportable segments: Facilities Maintenance and Construction & Industrial. In addition, the consolidated financial statements include Corporate and Eliminations, which is comprised of enterprise-wide functional departments. Principles of Consolidation The consolidated financial statements of HD Supply present the results of operations, financial position and cash flows of Holdings and its wholly-owned subsidiaries, including HDS. The consolidated financial statements of HDS present the results of operations, financial position and cash flows of HDS and its wholly-owned subsidiaries. All material intercompany balances and transactions are eliminated. Results of operations of businesses acquired are included from their respective dates of acquisition. The results of operations of all discontinued operations have been separately reported as discontinued operations for all periods presented. Fiscal Year The Company’s fiscal year is a 52 - or 53-week period ending on the Sunday nearest to January 31. The fiscal year ended February 2, 2020 (“fiscal 2019”) included 52 weeks. The fiscal year ended February 3, 2019 (“fiscal 2018”) included 53 weeks. The fiscal year ended January 29, 2018 (“fiscal 2017”) included 52 weeks. Estimates Management has made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities, and reported amounts of revenues and expenses in preparing these consolidated financial statements in conformity with accounting principles generally accepted in the U.S. (“GAAP”). Actual results could differ from these estimates. Cash and Cash Equivalents HD Supply considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. NOTE 1—NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Allowance for Doubtful Accounts Accounts receivable are evaluated for collectability based on numerous factors, including past transaction history with customers, their credit worthiness, and an assessment of lien and bond rights. An allowance for doubtful accounts is estimated as a percentage of aged receivables. This estimate is periodically adjusted when management becomes aware of a specific customer’s inability to meet its financial obligations (e.g., bankruptcy filing) or as a result of changes in historical collection patterns. Inventories Inventories consist primarily of finished goods and are carried at the lower of cost or net realizable value. The cost of substantially all inventories is determined by the moving or weighted average cost method. Inventory value is evaluated at each balance sheet date to ensure that it is carried at the lower of cost or net realizable value. This evaluation includes an analysis of historical physical inventory results, a review of excess and obsolete inventories based on inventory aging, and anticipated future demand. Periodically, perpetual inventory records are adjusted to reflect declines in net realizable value below inventory carrying cost. Consideration Received From Vendors HD Supply enters into agreements with many of its vendors providing for inventory purchase rebates (“vendor rebates”) upon achievement of specified volume purchasing levels. Vendor rebates are accrued as part of cost of sales for products sold based on progress towards earning the vendor rebates, taking into consideration cumulative purchases of inventory to date and projected purchases through the end of the year. An estimate of unearned vendor rebates is included in the carrying value of inventory at each period end for vendor rebates recognized on products not yet sold. At February 2, 2020 and February 3, 2019, vendor rebates due to HD Supply were $65 million and $57 million, respectively. These receivables are included in Receivables in the accompanying Consolidated Balance Sheets. Property and Equipment Property and equipment are recorded at cost and depreciated using the straight-line method based on the following estimated useful lives of the assets: Buildings 5 Transportation equipment 5 - 7 years Furniture, fixtures and equipment 3 - 10 years Capitalized Software Costs HD Supply capitalizes certain software costs, which are being amortized on a straight-line basis over the estimated useful lives of the software, generally three NOTE 1—NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Business Combinations, Goodwill, and Other Intangible Assets HD Supply allocates the purchase price paid for business acquisitions to identifiable tangible and intangible assets acquired and liabilities assumed based on their estimated fair value. The excess of the purchase price paid over the fair values of these identifiable assets and liabilities is allocated to goodwill. HD Supply does not amortize goodwill, but does assess the recoverability of goodwill on an annual basis or whenever events or circumstances indicate that it is “more likely than not” that the fair value of a reporting unit has dropped below its carrying value. The Company determines the fair values of its identified reporting units using a discounted cash flow (“DCF”) analysis and a market comparable method, with each method being equally weighted in the calculation. Determining fair value requires the exercise of significant judgment, including judgment about appropriate discount rates, the amount and timing of expected future cash flows, as well as relevant comparable company earnings multiples for the market comparable approach. There were no goodwill impairment charges recorded in fiscal 2019, fiscal 2018, or fiscal 2017. Impairment of Long-Lived Assets Long-lived assets, including property and equipment, are reviewed for possible impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. To analyze recoverability, undiscounted future cash flows over the remaining life of the asset are projected. If these projected cash flows are less than the carrying amount, an impairment loss is recognized to the extent the fair value of the asset less any costs of disposition is less than the carrying amount of the asset. Judgments regarding the existence of impairment indicators are based on market and operational performance. Evaluating potential impairment also requires estimates of future operating results and cash flows. Self-Insurance HD Supply has a high deductible insurance program for most losses related to general liability, product liability, environmental liability, automobile liability, workers’ compensation, and is self-insured for medical claims, while maintaining per employee stop loss coverage, and certain legal claims. The expected ultimate cost for claims incurred as of the balance sheet date is not discounted and is recognized as a liability. Self-insurance losses for claims filed and claims incurred but not reported are accrued based upon estimates of the aggregate liability for uninsured claims using loss development factors and actuarial assumptions followed in the insurance industry and historical loss development experience. At February 2, 2020 and February 3, 2019, self-insurance reserves totaled approximately $50 million and $49 million, respectively. Fair Value of Financial Instruments The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable, accrued compensation and benefits and other current liabilities approximate fair value due to the short-term nature of these financial instruments. The Company’s long-term financial assets and liabilities are recorded at historical costs. See “Note 8, Fair Value Measurements,” for information on the fair value of long-term financial instruments. NOTE 1—NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Revenue Recognition HD Supply recognizes revenue, net of allowances for returns and discounts and any taxes collected from the customer, when an identified performance obligation is satisfied by the transfer of control or promised products or services to the customer. HD Supply ships products to customers by internal fleet and third party carriers. Transfer of control to the customer for products generally occurs at the point of destination (i.e., upon transfer of title and risk of loss of products). Transfer of control for services occurs when the customer has the right to direct the use of and obtain substantially all of the remaining benefits of the asset that is created or enhanced from the service. Revenues related to services are recognized in the period the services are performed and totaled $48 million, $49 million, and $37 million in fiscal 2019, fiscal 2018, and fiscal 2017, respectively. Shipping and Handling Fees and Costs HD Supply includes shipping and handling fees billed to customers in Net sales. Shipping and handling costs associated with inbound freight are capitalized to inventories and relieved through Cost of sales as inventories are sold. Shipping and handling costs associated with outbound freight are accounted for as a fulfillment cost and included in Selling, general, and administrative expenses and totaled $119 million, $111 million, and $99 million in fiscal 2019, fiscal 2018, and fiscal 2017, respectively. Concentration of Credit Risk The majority of HD Supply’s sales are credit sales which are made primarily to customers whose ability to pay is dependent, in part, upon the economic strength of industries and the areas where they operate. Concentration of credit risk with respect to trade accounts receivable is limited by the large number of customers comprising HD Supply’s customer base. HD Supply performs ongoing credit evaluations of its customers. NOTE 1—NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Leases HD Supply evaluates each of its contracts at inception to determine if the arrangement is, or contains, a lease and the appropriate classification of each identified lease. A lease exists if the Company obtains substantially all of the economic benefits of, and has the right to control the use of, an asset for a period of time. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease agreement. ROU assets and associated liabilities are recognized at the commencement date of the lease based on the present value of fixed lease payments over the lease term. The lease commencement date is the date the Company has access to the property or control of the asset, which, in some cases, is prior to the commencement of lease payments. The Company considers termination or lease renewal options in the determination of the lease term when it is reasonably certain that the Company will exercise that option. The Company’s leases generally do not provide a readily determinable implicit borrowing rate. As such, the discount rate used to calculate present value is the Company’s collateralized incremental borrowing rate. The collateralized incremental borrowing rate for each lease varies in accordance with the lease term. Lease expense is recognized on a straight-line basis over the lease term beginning with the commencement date. The Company’s consolidated financial statements for fiscal 2019 are presented under ASC 842, Leases, while comparative periods presented have not been adjusted and continue to be reported in accordance with the previous standard, ASC 840, Leases. See “Note 9, Leases” for further information. Advertising Advertising costs are charged to expense as incurred. Advertising expenses were approximately $37 million, $37 million, and $33 million in fiscal 2019, fiscal 2018, and fiscal 2017, respectively. Income Taxes The Company provides for federal, state, and foreign income taxes currently payable, as well as for those deferred due to temporary differences between reporting income and expenses for financial statement purposes versus tax purposes. Federal, state and foreign tax benefits are recorded as a reduction of income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in income tax rates is recognized as income or expense in the period that includes the enactment date. The Company consists of corporations, limited liability companies and partnerships. All income tax expense of the Company is recorded in the accompanying Consolidated Statements of Operations and Comprehensive Income with the offset recorded through the Company’s current tax accounts, deferred tax accounts, or stockholder’s equity account as appropriate. NOTE 1—NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Comprehensive Income Comprehensive income includes Net income adjusted for certain revenues, expenses, gains and losses that are excluded from net income under GAAP. Adjustments to net income are for foreign currency translation adjustments and unrealized gains and losses on derivatives, to the extent they are accounted for as an effective hedge under ASC 815, Derivatives and Hedging. Foreign Currency Translation Assets and liabilities of foreign subsidiaries with a functional currency other than the U. S. dollar, primarily Canadian dollars, are translated into U.S. dollars at the current rate of exchange on the last day of the reporting period. Revenues and expenses are translated at a monthly average exchange rate and equity transactions are translated using either the actual exchange rate on the day of the transaction or a monthly average exchange rate. Derivative Financial Instruments When the Company enters into derivative financial instruments, it is for hedging purposes. In hedging the exposure to variable cash flows on forecasted transactions, deferral accounting is applied when the derivative reduces the risk of the underlying hedged item effectively as a result of high inverse correlation with the value of the underlying exposure. If a derivative instrument either initially fails or later ceases to meet the criteria for deferral accounting, any subsequent gains or losses are recognized currently in income. Cash flows resulting from derivative financial instruments are classified in the same category as the cash flows from the items being hedged. Stock-Based Compensation The HD Supply Holdings, Inc. Omnibus Incentive Plan, approved by Holdings’ stockholders on May 17, 2017, (the “Plan”) provides for stock-based awards to employees, consultants and directors, including stock options, stock purchase rights, restricted stock, restricted stock units, deferred stock units, performance shares, performance units, stock appreciation rights, dividend equivalents and other stock-based awards. The Plan is an amendment and restatement of the HD Supply Holdings, Inc. 2013 Omnibus Incentive Plan, which replaced and succeeded the HDS Investment Holding, Inc. Stock Incentive Plan (the “Stock Incentive Plan”), and, from and after June 26, 2013, no further awards may be made under the Stock Incentive Plan. The plans are accounted for under ASC 718, Compensation—Stock Compensation, (“ASC 718”) which requires the recognition of share-based compensation costs in the financial statements. The Company includes these costs in Selling, general, and administrative expense in the Consolidated Statements of Operations and Comprehensive Income. NOTE 1—NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Recently Adopted Accounting Pronouncements Leases – In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accountant Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), amended by ASU No. 2017-13, “Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842)“ (“ASU 2017-13”), ASU No. 2018-01, “Leases (Topic 842) – Land Easement Practical Expedient for Transition to Topic 842” (“ASU 2018-01”), ASU No. 2018-10, “Codification Improvements to Topic 842, Leases,” and ASU No. 2018-11, “Leases (Topic 842) – Targeted Improvements” (“ASU 2018-11”). The amended guidance requires companies to recognize all leases as assets and liabilities for the rights and obligations created by leased assets on the consolidated balance sheet. ASU No. 2016-02 also requires enhanced disclosures that provide more transparency and information to financial statement users about lease portfolios. ASU 2018-11 allows entities an additional transition method to the existing requirements whereby an entity could adopt the provisions of ASU 2016-02 by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption without adjustment to the financial statements for periods prior to adoption. The Company adopted this guidance on February 4, 2019 (the first day of fiscal 2019) using the cumulative adjustment transition method. See “Note 1, Nature of Business and Summary of Significant Accounting Policies“ and “Note 9, Leases” for the Company’s lease accounting policies and disclosures. Goodwill – In January 2017, the FASB issued ASU No. 2017-04, “Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). The new guidance eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. ASU 2017-04 is effective for annual and interim impairment tests performed in periods beginning after December 15, 2019. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. The amendments in this update should be applied on a prospective basis. The Company adopted ASU 2017-04 for its annual goodwill impairment test performed as of November 3, 2019 with no impact to its financial position, results of operations or cash flows. Recently Issued Accounting Pronouncements Not Yet Adopted Cloud Computing Arrangements NOTE 1—NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Financial Instruments |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Feb. 02, 2020 | |
ACQUISITIONS | |
ACQUISITIONS | NOTE 2—ACQUISITIONS HD Supply enters into strategic acquisitions from time to time to expand into new markets, new platforms, and new geographies in an effort to better service existing customers and attract new ones. In accordance with the acquisition method of accounting under ASC 805, Business Combinations, the results of the acquisitions are reflected in the Company’s consolidated financial statements from the date of acquisition forward. On March 5, 2018, the Company completed the acquisition of A.H. Harris Construction Supplies (“A.H. Harris”) for a purchase price of approximately $359 million, net of cash acquired and the final working capital settlement of approximately $3 million, which was received in the second quarter of fiscal 2019. A.H. Harris is a leading specialty construction distributor serving the northeast and mid-Atlantic regions. This acquisition expands Construction & Industrial’s market presence in the northeastern U.S. In accordance with ASC 805, the Company recorded the following assets and liabilities at fair value as of the date of the A.H. Harris acquisition: $182 million in goodwill, $123 million in definite-lived intangible assets, $12 million in property & equipment, $54 million in net working capital, and $10 million in deferred tax liabilities. The total amount of goodwill deductible for tax purposes is $19 million. The definite-lived intangible assets are comprised of $110 million in customer relationships and $13 million of trade names that will be amortized over a period of 12 years and 5 years, respectively. |
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS | 12 Months Ended |
Feb. 02, 2020 | |
DISCONTINUED OPERATIONS | |
DISCONTINUED OPERATIONS | NOTE 3—DISCONTINUED OPERATIONS In August 2017, the Company completed the sale of its Waterworks business and received cash proceeds of approximately $2.4 billion, net of transaction cost payments of approximately $38 million. Including the final working capital settlement of approximately $29 million in January 2018, the Company recognized a gain on the sale of the Waterworks business of approximately $732 million, net of tax of $197 million. Summary Financial Information In accordance with ASC 205-20, Discontinued Operations, and ASU 2014-08, Reporting discontinued operations and disclosure of disposals of components of an entity, the results of Waterworks operations and the gains/losses on sales of the businesses are classified as discontinued operations. The presentation of discontinued operations includes revenues and expenses of the discontinued operations and gain/loss on the disposition of businesses, net of tax, as one line item on the Consolidated Statements of Operations and Comprehensive Income. All Consolidated Statements of Operations and Comprehensive Income presented have been revised to reflect this presentation. NOTE 3—DISCONTINUED OPERATIONS (Continued) The following table provides additional detail related to the results of operations of the discontinued operations (amounts in millions): Fiscal Year Ended February 2, February 3, January 28, 2020 2019 2018 Net sales $ — $ — $ 1,413 Cost of sales — — 1,100 Gross Profit — — 313 Operating expenses: Selling, general and administrative (1) (2) 197 Depreciation and amortization — — 6 Restructuring — — — Total operating expenses (1) (2) 203 Operating Income 1 2 110 (Gain) loss on disposal of discontinued operations — — (934) Other (income) expense, net — — 1 Income before provision for income taxes 1 2 1,043 Provision (benefit) for income taxes — (1) 240 Income from discontinued operations, net of tax $ 1 $ 3 $ 803 The following table provides additional detail related to the net cash provided by (used in) operating and investing activities of the discontinued operations (amounts in millions): Fiscal Year Ended February 2, February 3, January 28, 2020 2019 2018 Net cash flows provided by (used in) operating activities $ — $ — $ 27 Cash flows from investing activities: Capital expenditures — — (5) Proceeds from sales of businesses, net — — 2,421 Proceeds from sales of property and equipment, net — — 2 Net cash flows provided by (used in) investing activities $ — $ — $ 2,418 |
RELATED PARTIES
RELATED PARTIES | 12 Months Ended |
Feb. 02, 2020 | |
RELATED PARTIES | |
RELATED PARTIES | NOTE 4—RELATED PARTIES In May 2015, an independent Board member of the Company acquired a minority interest in an HD Supply customer. HD Supply sold product to the customer totaling approximately $4 million, $5 million, and $3 million in fiscal 2019, fiscal 2018, and fiscal 2017, respectively. Management believes these transactions were conducted at prices that an unrelated third party would pay. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 12 Months Ended |
Feb. 02, 2020 | |
GOODWILL AND INTANGIBLE ASSETS | |
GOODWILL AND INTANGIBLE ASSETS | NOTE 5—GOODWILL AND INTANGIBLE ASSETS Goodwill The carrying amount of goodwill by reporting unit is as follows (amounts in millions): As of February 2, 2020 As of February 3, 2019 Gross Accumulated Net Gross Accumulated Net Goodwill Impairments Goodwill Goodwill Impairments Goodwill Facilities Maintenance $ 1,605 $ — $ 1,605 $ 1,603 $ — $ 1,603 Construction & Industrial-White Cap 365 (74) 291 366 (74) 292 Home Improvement Solutions 125 (30) 95 125 (30) 95 Total goodwill $ 2,095 $ (104) $ 1,991 $ 2,094 $ (104) $ 1,990 Goodwill represents the excess of purchase price over fair value of net assets acquired. HD Supply does not amortize goodwill, but does assess the recoverability of goodwill on an annual basis, in the fourth quarter of each fiscal year. If an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value, an interim impairment test would be performed between annual tests. HD Supply performed the annual goodwill impairment testing during the fourth quarter of fiscal 2019 (as of November 3, 2019). There was no indication of impairment in any of the Company’s reporting units in the fiscal 2019 annual test or in the fiscal 2018 and fiscal 2017 annual tests. The Company’s analysis was based, in part, on HD Supply’s expectation of future market conditions for each of the reporting units, as well as discount rates that would be used by market participants in an arms-length transaction. Future events could cause the Company to conclude that market conditions have declined to the extent that the Company’s goodwill could be impaired. Intangible Assets HD Supply’s intangible assets as of February 2, 2020 and February 3, 2019 consisted of the following (amounts in millions): As of February 2, 2020 As of February 3, 2019 Gross Accumulated Net Gross Accumulated Net Intangible Amortization Intangible Intangible Amortization Intangible Customer relationships $ 167 $ (52) $ 115 $ 159 $ (38) $ 121 Trade names 151 (91) 60 151 (81) 70 Total $ 318 $ (143) $ 175 $ 310 $ (119) $ 191 Amortization expense for continuing operations related to intangible assets was $23 million, $22 million, and $12 million in fiscal 2019, fiscal 2018, and fiscal 2017, respectively. Estimated future amortization expense for intangible assets recorded as of February 2, 2020 is $24 million, $24 million, $24 million, $19 million and $17 million, for fiscal years 2020 through 2024, respectively. |
DEBT
DEBT | 12 Months Ended |
Feb. 02, 2020 | |
DEBT | |
DEBT | NOTE 6—DEBT HDS’s long-term debt as of February 2, 2020 and February 3, 2019 consisted of the following (dollars in millions): February 2, 2020 February 3, 2019 Outstanding Interest Outstanding Interest Principal Rate %(1) Principal Rate %(1) Senior ABL Facility due 2022 $ 260 3.15 $ 348 3.83 Term B-5 Loans due 2023 1,057 3.40 1,067 4.25 October 2018 Senior Unsecured Notes due 2026 750 5.375 750 5.375 Total gross long-term debt $ 2,067 $ 2,165 Less unamortized discount (3) (4) Less unamortized deferred financing costs (18) (21) Total net long-term debt $ 2,046 $ 2,140 Less current installments (11) (11) Total net long-term debt, excluding current installments $ 2,035 $ 2,129 (1) Represents the stated rate of interest, without including the effect of discounts, premiums, or interest rate swap agreements. Senior Credit Facilities Asset Based Lending Facility The Senior Asset Based Lending Facility due 2022 (the “Senior ABL Facility”) provides for senior secured revolving loans and letters of credit of up to a maximum aggregate principal amount of $1,000 million (subject to availability under a borrowing base). Extensions of credit under the Senior ABL Facility will be limited by a borrowing base calculated periodically based on specified percentages of the value of eligible inventory and eligible accounts receivable, subject to certain reserves and other adjustments. As of February 2, 2020, HDS had $598 million of Excess Availability (as defined in the Senior ABL Facility agreement) under the Senior ABL Facility (after giving effect to the borrowing base limitations and approximately $24 million in letters of credit issued and including $4 million of borrowings available on qualifying cash balances). A portion of the Senior ABL Facility is available for letters of credit and swingline loans. The Senior ABL Facility also includes a sub -facility for loans and letters of credit in Canadian dollars. The Senior ABL Facility also permits HDS to add one or more incremental term loans, revolving or letter of credit facilities to be included in the Senior ABL Facility up to an aggregate maximum amount of $1,000 million for the total commitments under the Senior ABL Facility (including all incremental commitments). NOTE 6—DEBT (Continued) At HDS’s option, the interest rates applicable to the loans under the Senior ABL Facility are based (i) in the case of U.S. dollar-denominated loans, either at London Interbank Offered Rate (“LIBOR”) plus an applicable margin or Prime Rate plus an applicable margin and (ii) in the case of Canadian dollar-denominated loans, either the Banker’s Acceptance (“BA”) rate plus an applicable margin or the Canadian Prime Rate plus an applicable margin. The margins applicable for each elected interest rate are subject to a pricing grid, as defined in the agreement governing the Senior ABL Facility, based on average excess availability for the previous fiscal quarter. The Senior ABL Facility also contains a letter of credit fee computed at a rate per annum equal to the Applicable Margin (as defined in the Senior ABL Facility agreement) then in effect for LIBOR Loans and an unused commitment fee subject to a pricing grid, included in the agreement governing the Senior ABL Facility agreement, based on Excess Availability. Prepayments The Senior ABL Facility may be prepaid at HDS’s option at any time without premium or penalty and will be subject to mandatory prepayment if the outstanding Senior ABL Facility exceeds either the aggregate commitments with respect thereto or the current borrowing base, in an amount equal to such excess. Mandatory prepayments do not result in a permanent reduction of the lenders’ commitments under the Senior ABL Facility. Guarantees; Security The Senior ABL Facility is senior secured indebtedness of HDS and ranks equal in right of payment with all of HDS’s existing and future senior indebtedness and senior in right of payment to all of HDS’s existing and future subordinated indebtedness. HDS, and at HDS’s option, certain of HDS’s subsidiaries, including HDS Canada, Inc., a Canadian subsidiary (the “Canadian Borrower”), are the borrowers under the Senior ABL Facility. Each of HDS’s existing and future direct and indirect wholly-owned domestic subsidiaries, in each case to the extent permitted by applicable law, regulation and contractual provision and subject to certain exceptions (the “Subsidiary Guarantors”) guarantees HDS’s payment obligations under the Senior ABL Facility (and, in the case of Canadian obligations, each existing and future direct and indirect wholly-owned Canadian subsidiary, in each case to the extent permitted by applicable law, regulation and contractual provision and subject to certain exceptions (the “Canadian Guarantors”) guarantee the Canadian Borrower’s payment obligations under the Senior ABL Facility). HDS’s obligations under the Senior ABL Facility and the guarantees thereof are secured in favor of the U.S. ABL collateral agent (i) on a first-priority basis by substantially all accounts receivable, inventory and other related assets owned by HDS and each Subsidiary Guarantor and all proceeds thereof, in each case to the extent permitted by applicable law and subject to certain exceptions (the “ABL Priority Collateral”), subject to permitted liens, and (ii) (x) all of the capital stock of HDS, all capital stock of all domestic subsidiaries directly owned by HDS and the Subsidiary Guarantors and 65% of the capital stock of any foreign subsidiary held directly by HDS or any Subsidiary Guarantor (with foreign subsidiary holding companies being deemed foreign subsidiaries) and (y) substantially all tangible and intangible assets owned by HDS and each Subsidiary Guarantor, other than the ABL Priority Collateral, and all proceeds thereof, in each case to the extent permitted by applicable law and subject to certain exceptions (the “Cash Flow Priority Collateral” and, together with the ABL Priority Collateral, the “Collateral”); in each case, subject to the priority of liens among the Term Loan Facility (as defined below) and the Senior ABL Facility. NOTE 6—DEBT (Continued) The Canadian obligations under the Senior ABL Facility are also secured by liens on substantially all assets of the Canadian Borrower and the Canadian Guarantors, subject to certain exceptions. Covenants The Senior ABL Facility contains a number of covenants that, among other things, limit or restrict HDS’s ability and, in certain cases, HDS’s subsidiaries ability to make acquisitions, mergers, consolidations, dividends, and to prepay certain indebtedness, in each case to the extent any such transaction would reduce availability under the Senior ABL Facility below a specified amount. Furthermore, while these restrictions may, at times, limit the amount of dividends, distributions or intercompany transfers that HDS or a particular subsidiary guarantor may pay or make, as applicable, the Company believes that, as of February 2, 2020, it had no such limitations. In addition, if HDS’s specified excess availability (including an amount by which HDS’s borrowing base exceeds the existing commitments) under the Senior ABL Facility falls below the greater of $100 million and 10% of the lesser of (A) the Borrowing Base and (B) the Total Facility Commitment (a “Liquidity Event”), HDS will be required to maintain a Fixed Charge Coverage Ratio of at least 1.0:1.0, as defined in the credit agreement governing the Senior ABL Facility. The Senior ABL Facility also contains certain affirmative covenants, including financial and other reporting requirements. HDS is in compliance with all such covenants. Senior Term Loan Facility HDS’s Senior Term Facility (the “Senior Term Facility”) consists of a senior secured term loan facility (the “Term Loan Facility,” and the term loans thereunder, the “Term Loans”) providing for Term Loans in an original aggregate principal amount of $1,070 million (the “Term B-5 Loans”). The Term B-5 Loans will mature on October 17, 2023. The Term B-5 Loans On October 22, 2018, HDS entered into a Sixth Amendment (the “Sixth Amendment”) to the credit agreement governing HDS’s existing Senior Term Facility. In accordance with the Sixth Amendment, annual excess cash flow (“ECF”) provisions are applicable beginning with the fiscal year ending on February 3, 2019 (fiscal 2018) and each fiscal year thereafter. No payment was required to be offered for fiscal 2019 or fiscal 2018, in accordance with the ECF provisions. The Term Loan Facility is senior secured indebtedness of HDS and ranks equal in right of payment with all of HDS’s existing and future senior indebtedness and senior in right of payment to all of HDS’s existing and future subordinated indebtedness. The Term Loan Facility is guaranteed, on a senior secured basis, by the Subsidiary Guarantors. These guarantees are subject to release under customary circumstances. The guarantee of each Subsidiary Guarantor is a senior secured obligation of that Subsidiary Guarantor and ranks equal in right of payment with all existing and future senior indebtedness of that Subsidiary Guarantor and senior in right of payment to all existing and future subordinated indebtedness of such Subsidiary Guarantor. NOTE 6—DEBT (Continued) Collateral The Term Loan Facility and the related guarantees are secured by a first-priority security interest in substantially all of the tangible and intangible assets of HDS and the Subsidiary Guarantors (other than the ABL Priority Collateral, in which the Term Loan Facility and the related guarantees have a second priority security interest), including pledges of all Capital Stock of the Restricted Subsidiaries directly owned by HDS and the Subsidiary Guarantors (but only up to 65% of each series of Capital Stock of each direct foreign subsidiary owned by HDS or any Subsidiary Guarantor), subject to certain thresholds, exceptions and permitted liens, and excluding any Excluded Assets (as defined in the credit agreement governing the Term Loan Facility (the “Term Loan Credit Agreement”)) and Excluded Subsidiary Securities (as defined in the Term Loan Credit Agreement) (the “Cash Flow Priority Collateral”), subject to permitted liens. In addition, the Term Loan Facility and the related guarantees are secured by a second-priority security interest in the ABL Priority Collateral, subject to permitted liens. Guarantee HDS is the borrower under the Term Loan Facility. The Subsidiary Guarantors guarantee HDS’s payment obligations under the Term Loan Facility. HDS’s obligations under the Term Loan Facility and the guarantees thereof are secured in favor of the collateral agent by (i) all of the capital stock of HDS, all capital stock of all domestic subsidiaries directly owned by HDS and the Subsidiary Guarantors and 65% of the capital stock of any foreign subsidiary owned directly by HDS or any Subsidiary Guarantors (it being understood that a foreign subsidiary holding company will be deemed a foreign subsidiary) and (ii) substantially all other tangible and intangible assets owned by HDS and each Subsidiary Guarantor, in each case to the extent permitted by applicable law and subject to certain exceptions and subject to the priority of liens between the Term Loan Facility and the Senior ABL Facility. Covenants The Term Loan Facility contains a number of covenants that, among other things, limit the ability of HDS and its restricted subsidiaries, as described in the Term Loan Credit Agreement, to: incur more indebtedness; pay dividends, redeem stock or make other distributions; make investments; create restrictions on the ability of HDS’s restricted subsidiaries to pay dividends to HDS or make other intercompany transfers; create liens securing indebtedness; transfer or sell assets; merge or consolidate; enter into certain transactions with HDS’s affiliates; and prepay or amend the terms of certain indebtedness. Furthermore, while these restrictions may, at times, limit the amount of dividends, distributions or intercompany transfers that HDS or a particular subsidiary guarantor may pay or make, as applicable, the Company believes that, as of February 2, 2020, it had no such limitations. The Term Loan Facility also contains certain affirmative covenants, including financial and other reporting requirements. HDS is in compliance with all such covenants. NOTE 6—DEBT (Continued) Events of Default under the Senior ABL Facility and Term Loan Facility The Senior ABL Facility and Term Loan Facility also provide for customary events of default, including non-payment of principal, interest or fees, violation of covenants, material inaccuracy of representations or warranties, specified cross default and cross acceleration to other material indebtedness, certain bankruptcy events, certain ERISA events, material invalidity of guarantees or security interest, material judgments and changes of control. Unsecured Notes 5.375% Senior Unsecured Notes due 2026 HDS issued $750 million aggregate principal of 5.375% Senior Unsecured Notes due 2026 (the “October 2018 Senior Unsecured Notes”) under an Indenture, dated as of October 11, 2018 (the “October 2018 Senior Unsecured Notes Indenture”) among HDS, the Subsidiary Guarantors, and the Trustee. The October 2018 Senior Unsecured Notes bear interest at a rate of 5.375% per annum and will mature on October 15, 2026. Interest is paid semi-annually on April 15 th th The October 2018 Senior Unsecured Notes are unsecured senior indebtedness of HDS and rank equal in right of payment with all of HDS’s existing and future senior indebtedness, senior in right of payment to all of HDS’s existing and future subordinated indebtedness, and effectively subordinated to all of HDS’s existing and future secured indebtedness, including, without limitation, indebtedness under the Senior Credit Facilities, to the extent of the value of the collateral securing each indebtedness. The October 2018 Senior Unsecured Notes are structurally subordinated to all indebtedness and other liabilities of HDS’s non-guarantor subsidiaries, including all of HDS’s foreign subsidiaries. The October 2018 Senior Unsecured Notes are guaranteed, on a senior unsecured basis, by each of HDS’s direct and indirect domestic existing and future subsidiaries that is a wholly-owned domestic subsidiary (other than certain excluded subsidiaries), and by each domestic subsidiary that is a borrower under the Senior ABL Facility or that guarantees HDS’s obligation under any credit facility or capital market securities. These guarantees are subject to release under customary circumstances as stipulated in the October 2018 Senior Unsecured Notes Indenture. The October 2018 Senior Unsecured Notes and related guarantees have not been, and are not required to be, registered under the Securities Act of 1933, as amended, or the securities laws of any other jurisdiction. NOTE 6—DEBT (Continued) Redemption HDS may redeem the October 2018 Senior Unsecured Notes, in whole or in part, at any time (1) prior to October 15, 2021, at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date, plus the applicable make-whole premium set forth in the October 2018 Senior Unsecured Notes Indenture and (2) on and after October 15, 2021, at the applicable redemption price set forth below (expressed as a percentage of principal amount), plus accrued and unpaid interest, if any, to the relevant redemption date, if redeemed during the 12-month period commencing on October 15 of the year set forth below: Year Percentage 2021 102.688 % 2022 101.344 % 2023 and thereafter 100.000 % In addition, at any time prior to October 15, 2021, HDS may redeem on one or more occasions up to 40% of the aggregate principal amount of the October 2018 Senior Unsecured Notes with the proceeds of certain equity offerings at a redemption price of 105.375% of the principal amount in respect of the October 2018 Senior Unsecured Notes being redeemed, plus accrued and unpaid interest to the redemption date, provided, however, that if the October 2018 Senior Unsecured Notes are redeemed, an aggregate principal amount of the October 2018 Senior Unsecured Notes equal to at least 50% of the original aggregate principal amount of the October 2018 Senior Unsecured Notes must remain outstanding immediately after each such redemption of the October 2018 Senior Unsecured Notes. Debt Maturities Maturities of long-term debt outstanding, in principal amounts, at February 2, 2020 are summarized below (amounts in millions): Fiscal Year 2020 2021 2022 2023 2024 Thereafter Total Principal maturities $ 11 $ 11 $ 271 $ 1,024 $ — $ 750 $ 2,067 Fiscal 2018 and Fiscal 2017 Transactions Pursuant to the Sixth Amendment, HDS amended its existing Senior Term Facility, to, among other things, refinance all the outstanding term loans in an aggregate principal of $530 million due August 2021 (the “Term B-3 Loans”) and an aggregate principal of $540 million due October 2023 (the “Term B-4 Loans”) with the Term B-5 Loans in an original aggregate principal of $1,070 million. In connection with the Sixth Amendment, the Company paid approximately $5 million in consent fees. The consent fees are reflected as deferred financing costs in the Consolidated Balance Sheets and will be amortized into interest expense over the term of the loans. The Company incurred a modification and extinguishment charge of approximately $5 million, which includes financing fees and other costs of approximately $3 million and the write-off of approximately $2 million of a portion of the related unamortized discount and deferred financing costs, in accordance with ASC 470-50, Debt - Modifications and Extinguishments. NOTE 6—DEBT (Continued) On October 11, 2018, HDS issued the October 2018 Senior Unsecured Notes at par. HDS received approximately $741 million in proceeds, net of transaction fees. The transaction fees of $9 million are reflected as deferred financing costs in the Consolidated Balance Sheets and will be amortized into interest expense over the term of the October 2018 Senior Unsecured Notes. HDS used the net proceeds from the October 2018 Senior Unsecured Notes issuance, together with available cash and borrowings on HDS’s Senior ABL Facility, to redeem all of the outstanding $1,000 million aggregate principal of the 5.75% Senior Unsecured Notes due 2024 (the “April 2016 Senior Unsecured Notes”), pay a $56 million make-whole premium calculated in accordance with the terms of the indenture governing such notes and pay $28 million of accrued but unpaid interest. As a result, the Company incurred a $64 million loss on extinguishment of the debt, which includes the $56 million make-whole premium and write-off of $8 million of unamortized deferred financing costs, in accordance with ASC 470-50, Debt - Modifications and Extinguishments. On December 28, 2017, HDS reduced its U.S. borrowing capacity under its Senior ABL Facility by $500 million. The total borrowing capacity under the Senior ABL Facility is now $1,000 million (subject to availability under a borrowing base). As a result, the Company incurred a $3 million loss on extinguishment of debt for the write-off of unamortized deferred financing costs, in accordance with ASC 470-50, Debt - Modifications and Extinguishments. On September 1, 2017, HDS used a portion of the net proceeds from the sale of the Waterworks business to redeem all of the outstanding $1,250 million in aggregate principal amount of 5.25% Senior Secured First Priority Notes due 2021 (the “December 2014 First Priority Notes”) for an aggregate redemption price of approximately $1,325 million. The redemption price included an approximately $62 million make-whole premium calculated in accordance with terms of the indenture governing the December 2014 First Priority Notes (“the 2014 Indenture”) and $14 million of accrued but unpaid interest to the redemption date. In connection with the redemption, the 2014 Indenture, was satisfied and discharged and the liens securing the December 2014 First Priority Notes were released in accordance with the terms of the 2014 Indenture. As a result of the redemption, the Company incurred a $73 million loss on extinguishment of debt, which includes the $62 million make-whole premium and the write-off of $11 million of unamortized deferred financing costs, in accordance with ASC 470-50, Debt - Modifications and Extinguishments. On August 31, 2017, HDS entered into a Fifth Amendment (the “Fifth Amendment”) to the credit agreement governing HDS’s existing Term Loan Facility. Pursuant to the Fifth Amendment, HDS amended its existing Term Loan Facility to, among other things, (i) refinance all the outstanding term loans in an original aggregate principal amount of $842 million (the “Term B-1 Loans”) with a new tranche of term loans (the Term B-3 Loans) in an aggregate principal amount of $535 million, (ii) refinance all the outstanding term loans in an original aggregate principal of $550 million (the “Term B-2 Loans”) with a new tranche of term loans (the Term B-4 Loans) in an aggregate principal amount of $546 million, and (iii) amend the definition of “Permitted Payments” contained in the credit agreement to permit an additional category of Permitted Payments permitting Restricted Payments (as defined in the credit agreement) at any time in an aggregate amount not to exceed (x) $500,000,000 and (y) thereafter, upon full use of such capacity set forth in clause (x), an additional amount, if any, such that, after giving pro forma effect to such Restricted Payment, the Company’s Consolidated Total Leverage Ratio (as defined in the credit agreement) does not exceed 3.00 to 1.00. NOTE 6—DEBT (Continued) In connection with the Fifth Amendment, the Company paid approximately $1 million in consent fees and incurred a modification and extinguishment charge of approximately $3 million, which includes financing fees and other costs of approximately $1 million and the write-off of approximately $2 million of a portion of the related unamortized original issue discount and deferred financing costs, in accordance with ASC 470-50, Debt - Modifications and Extinguishments. On August 25, 2017, HDS entered into the Second Supplemental Indenture (the “Second Supplemental Indenture”) which governs the April 2016 Senior Unsecured Notes and amends and supplements the Indenture, dated as of April 11, 2016, as amended and supplemented by the First Supplemental Indenture, dated as of April 11, 2016 (together, the “2016 indenture”). Holders of a majority in aggregate principal amount of the outstanding April 2016 Senior Unsecured Notes consented to the proposed amendments included in the Second Supplemental Indenture. The Second Supplemental Indenture (a) amends the definition of “Permitted Payments” contained in the 2016 indenture to permit an additional category of Permitted Payments permitting Restricted Payments (as defined in the Indenture) at any time in an aggregate amount not to exceed (x) $500,000,000 and (y) thereafter, upon full use of such capacity set forth in clause (x), an additional amount, if any, such that, after giving pro forma effect to such Restricted Payment, the Company’s Consolidated Total Leverage Ratio (as defined in the Indenture) does not exceed 3.00 to 1.00; (b) increases the interest rate for the April 2016 Senior Unsecured Notes to 7.00% per annum commencing April 15, 2019, to the extent the April 2016 Senior Unsecured Notes remain outstanding after April 15, 2019; (c) amends the definition of “Net Available Cash” contained in the Indenture to provide that proceeds from the sale of the Waterworks business unit consummated on August 1, 2017 (other than proceeds to be applied to redeem the December 2014 First Priority Notes) shall be excluded and accordingly, the Company will not be required to apply the remaining net proceeds in accordance with the provision of the “Sale of Assets” covenant of the Indenture, and (d) amends the definition of “Consolidated EBITDA” contained in the 2016 indenture to provide that while the Company may continue to include in the calculation thereof projected cost savings, it may only do so with respect those realized as a result of actions taken or to be taken in connection with a purchase of assets from, or a sale of assets to, a third party (excluding the Waterworks Sale (as defined in the Second Supplemental Indenture)). As a result of entering into the Second Supplemental Indenture, the Company paid approximately $15 million in consent fees to holders of the outstanding April 2016 Senior Unsecured Notes, which were capitalized as deferred financing costs. Additionally, the Company incurred a modification charge of approximately $3 million for financing fees, in accordance with ASC 470-50, Debt - Modifications and Extinguishments. On April 18, 2017, HDS used cash and available borrowings under its Senior ABL Facility to repay $100 million aggregate principal of its Term B-1 Loans. As a result, the Company incurred a $2 million loss on extinguishment of debt, which included write-offs of unamortized original issue discount and unamortized deferred financing costs for $1 million each, in accordance with ASC 470-50, Debt - Modifications and Extinguishments. On April 5, 2017, HDS entered into a Third Amendment (the “Third Amendment”) to the credit agreement governing its existing Senior ABL Facility. The Third Amendment, among other things, reduced the applicable margin for borrowings under the Senior ABL Facility, reduced the applicable commitment fee, and extended the maturity date of the Senior ABL Facility until April 5, 2022. As a result, the Company recorded a $1 million loss on extinguishment of debt, in accordance with ASC 470-50, Debt - Modifications and Extinguishments, for the write-off of $1 million of unamortized deferred financing costs. |
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS | 12 Months Ended |
Feb. 02, 2020 | |
DERIVATIVE INSTRUMENTS | |
DERIVATIVE INSTRUMENTS | NOTE 7—DERIVATIVE INSTRUMENTS Cash Flow Hedge On October 24, 2018, the Company entered into an interest rate swap agreement with a notional amount of $750 million, designated as a cash flow hedge in accordance with ASC 815, Derivatives and Hedging, to hedge the variability of cash flows in interest payments associated with the Company’s variable-rate debt. The interest rate swap agreement swaps a LIBOR rate for a fixed rate of 3.07% and matures on October 17, 2023. The swap effectively converts $750 million of the Company’s Term B-5 Loans from a rate of LIBOR plus 1.75% to a 4.82% fixed rate. As of February 2, 2020 and February 3, 2019, the fair value of the Company’s interest rate swap was a liability of $50 million and $20 million, respectively, which was reflected as $12 million and $4 million in Other current liabilities and $38 million and $16 million in Other liabilities, respectively, in the Consolidated Balance Sheets. The Company utilized Level 2 inputs, as defined in the fair value hierarchy in “Note 8 – Fair Value Measurements.” Changes in the fair value of interest rate swap agreements designated as cash flow hedges are recorded as a component of Accumulated Other Comprehensive Income (“AOCI”) (Loss) within Stockholders’ Equity in the Consolidated Balance Sheets and are reclassified into earnings in the same period or periods during which the hedged transactions affect earnings. See “Note 11, Accumulated Other Comprehensive Income (Loss),” for further information. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Feb. 02, 2020 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | NOTE 8—FAIR VALUE MEASUREMENTS The fair value measurements and disclosure principles of GAAP (ASC 820, Fair Value Measurements and Disclosures) define fair value, establish a framework for measuring fair value and provide disclosure requirements about fair value measurements. These principles define a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 — Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly; Level 3 — Unobservable inputs in which little or no market activity exists. The Company’s financial instruments that are not reflected at fair value on the balance sheet were as follows as of February 2, 2020 and February 3, 2019 (amounts in millions): As of February 2, As of February 3, 2020 2019 Recorded Estimated Recorded Estimated Amount Fair Value Amount Fair Value Senior ABL Facility $ 260 $ 260 $ 348 $ 346 Term Loans and Notes 1,807 1,862 1,817 1,815 Total $ 2,067 $ 2,122 $ 2,165 $ 2,161 (1) These amounts do not include accrued interest; accrued interest is classified as other current liabilities in the accompanying Consolidated Balance Sheets. These amounts do not include any related discounts or deferred financing costs. NOTE 8—FAIR VALUE MEASUREMENTS (Continued) The Company utilized Level 2 inputs, as defined in the fair value hierarchy, to measure the fair value of the long-term debt. Management’s fair value estimates were based on quoted prices for recent trades of HDS’s long-term debt, recent similar credit facilities initiated by companies with like credit quality in similar industries, quoted prices for similar instruments, and inquiries with certain investment communities. |
LEASES
LEASES | 12 Months Ended |
Feb. 02, 2020 | |
LEASES | |
LEASES | NOTE 9—LEASES The Company adopted ASU No. 2016-02, Leases (Topic 842), and its related amendments (collectively, “ASC 842”) on February 4, 2019 (the first day of fiscal 2019) using the cumulative adjustment transition method. The standard requires lessees to recognize a ROU asset and lease liability for all leases. At adoption of ASC 842, the Company recognized ROU assets for operating leases of approximately $430 million and operating lease liabilities of approximately $447 million, the difference attributable to the reclassification of prepaid rent and accrued rent balances outstanding at adoption into the ROU assets and the cumulative adjustment recorded to the opening balance of retained earnings. The cumulative adjustment, net of tax, recorded to the opening balance of retained earnings was $3 million. The Company’s finance leases are not material. The adoption of ASC 842 did not have a material impact on the Company’s income statement. The Company’s consolidated financial statements for fiscal 2019 are presented under ASC 842, while comparative periods presented have not been adjusted and continue to be reported in accordance with the previous standard, ASC 840, Leases. The Company elected the package of practical expedients for existing contracts permitted under the transition guidance within ASC 842, which includes not reassessing lease classification of existing leases, the historical assessment of whether contracts are or contain leases, and the determination of initial direct costs. The Company did not elect the hindsight practical expedient. Lease Accounting Policies and Disclosures The Company determines if an agreement is, or contains, a lease upon inception. An agreement is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The right to control the use of an asset includes the right to obtain substantially all of the economic benefits of the underlying asset and the right to direct how and for what purpose the asset is used. The Company has operating leases for distribution centers, warehouses, office space, and transportation vehicles. The Company has an immaterial amount of financing leases for other equipment. Certain leases for real estate contain options to extend or terminate the lease. Determining the lease term and amount of lease payments to include in the calculation of the ROU asset and lease liability for leases containing options requires the use of judgment to determine whether the exercise of an option is reasonably certain, and if the option period and payments should be included in the calculation of the associated ROU asset and liability. In making this determination, the Company considers all relevant economic factors that would compel the Company to exercise or not exercise an option. NOTE 9—LEASES (Continued) Many of the Company’s real estate leases contain charges for common area maintenance or other miscellaneous expenses that are updated based on landlord estimates. The Company determined these charges are variable non-lease components and did not elect the practical expedient to combine with lease components. Additionally, many of the Company’s transportation equipment leases require additional payments based on the underlying usage of the assets. Certain lease agreements include rental payments adjusted annually based on changes in an inflation index. Due to the variable nature of these costs, the cash flows associated with these charges are expensed as incurred and not included in the lease payments used to determine the ROU asset and associated lease liability. ROU assets and associated lease liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. The Company’s leases generally do not provide a readily determinable implicit borrowing rate. As such, the discount rate used to calculate present value is the Company’s collateralized incremental borrowing rate. The collateralized incremental borrowing rate for each lease varies in accordance with the lease term. Lease expense is recognized on a straight-line basis over the lease term. The following components of lease expense are included in Selling, general, and administrative expenses on the Consolidated Statement of Operations (dollars in millions): Fiscal Year Ended February 2, 2020 Operating Lease Cost $ 142 Short-term Lease Cost 6 Variable Lease Cost 6 Sublease Income (5) Total Lease Cost $ 149 Lease costs associated with finance leases are not material. As of February 2, 2020, the weighted average remaining lease term for operating leases is 5.74 years and the weighted average discount rate is 4.76% . During the year ended February 2, 2020, the Company’s cash flows from operating activities included $144 million of cash payments for amounts included in the measurement of operating lease liabilities. During the year ended February 2, 2020, the Company obtained ROU assets of $173 million in exchange for operating lease liabilities. As of February 2, 2020, maturities of operating lease liabilities were as follows (amounts in millions): Fiscal Year 2020 2021 2022 2023 2024 Thereafter Total Operating Lease Payments 132 127 98 75 54 102 $ 588 Less imputed interest (95) Total Discounted Lease Liability $ 493 NOTE 9—LEASES (Continued) As of February 2, 2020, the Company has additional leases which have not yet commenced, but are anticipated to commence in fiscal 2020. Commencement occurs when the Company is granted access to the property, such as when leasehold improvements are completed by the lessor or a certificate of occupancy is obtained. The Company does not anticipate these leases will result in material ROU assets obtained in exchange for lease liabilities. Disclosure related to periods prior to adoption of ASC 842: Rental expense under operating leases was $142 million and $127 million in fiscal 2018 and fiscal 2017, respectively. As of February 3, 2019, future minimum aggregate rental payments under non-cancelable leases were as follows (amounts in millions): Fiscal Year 2019 2020 2021 2022 2023 Thereafter Total Operating Leases $ 140 104 88 61 42 78 $ 513 Corporate Headquarters In February 2016, the Company entered into a build-to-suit arrangement for a leadership development and headquarters facility in Atlanta, Georgia, which began construction in 2016. In accordance with ASC 840, for build-to-suit arrangements where the Company is involved in the construction of structural improvements prior to the commencement of the lease or takes some level of construction risk, the Company was considered the owner of the assets and land during the construction period. Accordingly, during construction activities, the Company recorded a Construction in progress asset within Property and equipment and a corresponding financing liability on the Consolidated Balance Sheet for construction costs incurred by the landlord. The lease commenced in February 2018, with the leased asset and corresponding financing liability valued at $87 million each. In accordance with the sale and leaseback criteria of GAAP, the build-to-suit arrangement and subsequent lease failed to qualify as a sale. Therefore, the transaction was accounted for as a financing arrangement, whereby both the leased asset and the financing liability remained on the Company’s Consolidated Balance Sheet. The asset was depreciated as if the Company was the legal owner and rental payments were allocated between interest expense and principal repayment of the financing liability. The Company exercised its option to purchase the leased asset, completing the purchase on February 4, 2019 for a total purchase price of $88 million. As the purchase option was executed on the first day of fiscal 2019, the Company did not recognize an ROU asset for the finance lease and a corresponding lease liability as part of the adoption of ASC 842 and excluded the future minimum rental payments from the commitment tables as of February 3, 2019, disclosed above. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Feb. 02, 2020 | |
INCOME TAXES | |
INCOME TAXES | NOTE 10—INCOME TAXES The components of Income from Continuing Operations before Provision for Income Taxes are as follows (amounts in millions): Fiscal Year Ended February 2, February 3, January 28, 2020 2019 2018 United States $ 603 $ 516 $ 352 Foreign 10 10 8 Total $ 613 $ 526 $ 360 The Provision for Income Taxes consisted of the following (amounts in millions): Fiscal Year Ended February 2 February 3, January 28, 2020 2019 2018 Current: Federal $ 29 $ — $ 5 State 12 8 3 Foreign 3 3 2 44 11 10 Deferred: Federal 98 108 186 State 20 16 (3) 118 124 183 Total $ 162 $ 135 $ 193 The Company’s combined federal, state and foreign effective tax rate for continuing operations for fiscal 2019, fiscal 2018, and fiscal 2017 was approximately 26.4%, 25.7%, and 53.6%, respectively. The Company’s effective tax rate will vary based on a variety of factors, including overall profitability, the geographical mix of income before taxes and the related tax rates in the jurisdictions where it operates, restructuring and other one-time charges, as well as discrete events, such as settlements of future audits. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law making significant changes to the Internal Revenue Code. The changes include, but are not limited to, a federal statutory rate reduction from 35% to 21 %, the elimination of U.S. federal alternative minimum tax, the transition of U.S. international taxation from a worldwide tax system to a territorial system and a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings. As a result of the Tax Act’s effective date for the change in tax rate of January 1, 2018, the Company’s federal statutory rate for fiscal 2017 was 33.9%. The Tax Act requires the Company, and other fiscal year taxpayers, to compute a blended statutory tax rate based on the ratio of the number of fiscal year days in calendar year 2017 at the 35% statutory rate versus the number of fiscal year days in calendar year 2018 at the new 21% statutory rate. NOTE 10—INCOME TAXES (Continued) The Company’s deferred tax assets and liabilities are measured at the enacted tax rate expected to apply when these temporary items are expected to be realized or settled. As a result of the reduction in the U.S. corporate income tax rate from 35% to 21% under the Tax Act, in fiscal 2017 the Company re-measured its U.S. deferred tax assets and liabilities and recognized a non-cash $72 million tax expense. The reconciliation of the provision for income taxes from continuing operations at the federal statutory rate of 21% to the actual tax provision for fiscal 2019 and fiscal 2018 and the federal statutory rate of 33.9% to the actual tax provision for fiscal 2017 is as follows (amounts in millions): Fiscal year Ended February 2, February 3, January 28, 2020 2019 2018 Income taxes at federal statutory rate $ 129 $ 110 $ 122 State income taxes, net of federal income tax benefit 34 24 13 Foreign rate differential — — (1) Valuation allowance (1) — 1 Adjustments to tax reserves (1) — (1) Tax Cuts and Jobs Act of 2017 — — 72 Excess tax benefits related to stock-based compensation(1) (2) (2) (16) Global Intangible Low-Tax Income 1 2 — Other, net 2 1 3 Total provision $ 162 $ 135 $ 193 (1) The adoption of ASU 2016-09 in fiscal 2017 requires excess tax benefits from share-based awards activity to be reflected as a reduction of the provision for income taxes, whereas they were previously recognized in Stockholders’ Equity. NOTE 10—INCOME TAXES (Continued) The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of February 2, 2020 and February 3, 2019 were as follows (amounts in millions): February 2, February 3, 2020 2019 Deferred Tax Assets: Accrued compensation $ 11 $ 12 Accrued self-insurance liabilities 10 9 Other accrued liabilities 11 13 Restructuring liabilities 6 7 Net operating loss carryforward 36 99 Fixed assets — 1 Allowance for doubtful accounts 4 4 Inventory 28 26 Tax credit carryforward 5 40 Cash flow hedge 13 5 Lease liabilities 127 — Valuation allowance (6) (7) Noncurrent deferred tax assets 245 209 Deferred Tax Liabilities: Prepaid expense $ (1) $ — Deferred financing costs (1) (2) Fixed assets (10) — Software costs (17) (11) Intangible assets (123) (118) Operating lease right-of-use assets (124) — Noncurrent deferred tax liabilities (276) (131) Deferred tax assets (liabilities), net $ (31) $ 78 During fiscal 2018, the Company completed the evaluation of its indefinite reinvestment assertion as a result of the Tax Act and has asserted that its Canadian earnings are permanently reinvested until such time that the Canadian borrowings under the Senior ABL Facility, which were initially drawn on during fiscal 2016, are paid off. No provision for U.S. federal and state income taxes or foreign withholding taxes has been made in the Company’s current year consolidated financial statements for those non-U.S. subsidiaries whose earnings are considered to be permanently reinvested. As of February 2, 2020, the Company had tax-effected state net operating loss carryforwards of $47 million, which expire in various years between fiscal 2020 and fiscal 2038. The Company also had approximately $5 million of tax-effected state tax credits which expire in various years between fiscal 2020 and fiscal 2028. NOTE 10—INCOME TAXES (Continued) The future utilization of the Company’s net operating loss carryforwards could be limited if the Company experiences an “ownership change,” as defined in Section 382 of the Internal Revenue Code of 1986, as amended. In general, an ownership change may result from transactions increasing the aggregate direct or indirect ownership of certain persons (or groups of persons) in the Company’s stock by more than 50 percentage points over a testing period (generally 3 years). Future direct or indirect changes in the ownership of the Company’s common stock, including sales or acquisitions of the Company’s common stock by stockholders and purchases and issuances of the Company’s common stock by the Company, some of which are not in our control, could result in an ownership change. Any resulting limitation on the use of the Company’s state net operating loss carryforwards could result in the payment of taxes above the amounts currently anticipated and have a negative effect on the Company’s future results of operations and financial position. Upon adoption of ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”) at the beginning of fiscal 2017, the Company recorded a $56 million cumulative-effect adjustment to retained earnings in order to recognize a deferred tax asset on the excess deduction for stock option exercises over the expense recorded for book purposes. In fiscal 2019, fiscal 2018, and fiscal 2017, the application of stock-based compensation guidance in ASU 2016-09 resulted in discrete tax benefits of $2 million, $2 million, and $16 million from the exercise and vesting of stock based awards, respectively. Prior to ASU 2016-09, deferred tax assets relating to tax benefits of employee stock option grants were reduced to reflect exercises in fiscal 2016. Some exercises resulted in tax deductions in excess of previously recorded benefits based on the option value at the time of grant (“windfalls”). Although these additional tax benefits, or windfalls, are reflected in the Company’s net operating loss carryforwards, pursuant to ASC 718, the additional tax benefit associated with the windfall is not recognized until the deduction reduces taxes payable. For fiscal 2019, the Company recorded zero net income tax expense related to discontinued operations. For fiscal 2018, the Company recorded a $1 million net income tax expense related to discontinued operations. Federal, state and foreign income taxes net current receivables total $18 million and $9 million as of fiscal 2019 and fiscal 2018, respectively. Accounting for uncertain tax positions The Company follows the GAAP guidance for uncertain tax positions within ASC 740, Income Taxes. ASC 740 requires application of a “more likely than not” threshold to the recognition and de-recognition of tax positions. It further requires that a change in judgment related to prior years’ tax positions be recognized in the quarter of such change. A reconciliation of the beginning and ending amount of unrecognized tax benefits for continuing operations for fiscal 2019, fiscal 2018, and fiscal 2017 is as follows (amounts in millions): Fiscal Year Ended February 2, February 3, January 28, 2020 2019 2018 Unrecognized Tax Benefits beginning of period $ 17 $ 16 $ 10 Gross increases for tax positions in current period 1 1 6 Gross decreases for tax positions in prior period (1) — — Unrecognized Tax Benefits end of period $ 17 $ 17 $ 16 NOTE 10—INCOME TAXES (Continued) The resolution of the unrecognized tax benefits could affect the annual effective income tax rate. The Company did not change its accrual for net interest and penalties related to unrecognized tax benefits in fiscal 2019, fiscal 2018, or fiscal 2017. The Company’s ending net accrual for interest and penalties related to unrecognized tax benefits at fiscal 2019, fiscal 2018, and fiscal 2017, was zero for each of the three periods, respectively. The Company’s accounting policy is to classify interest and penalties as components of income tax expense. The Company is subject to audits and examinations of its tax returns by tax authorities in various jurisdictions, including the Internal Revenue Service (“IRS”). Management regularly assesses the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of provisions for income taxes. Certain of the Company’s tax years from 2007 and forward remain open for audit by the IRS and various state governments. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 12 Months Ended |
Feb. 02, 2020 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | NOTE 11—ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Accumulated OCI (“AOCI”) consists of accumulated net unrealized gains or losses associated with foreign currency translation adjustments and the changes in the fair value of derivatives designated as cash flow hedges. The following table presents the balances and changes in AOCI, net of tax, by component for the periods indicated (amounts in millions): February 2, February 3, January 28, Foreign currency translation adjustment: Beginning balance $ (15) $ (17) $ (15) Other comprehensive income (loss) before reclassifications — 2 (2) Amounts reclassified from AOCI into earnings — — — Ending balance $ (15) $ (15) $ (17) Cash flow hedge, net of tax: Beginning balance $ (15) $ — $ — Other comprehensive income (loss) before reclassifications (28) (17) — Amounts reclassified from AOCI into earnings(1) 6 1 — Other — 1 — Ending balance, net of tax of $8 and $5 $ (22) $ (15) $ — Total ending balance of AOCI $ (52) $ (30) $ — (1) Unrealized loss reclassified into Interest expense. |
STOCK-BASED COMPENSATION AND EM
STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS | 12 Months Ended |
Feb. 02, 2020 | |
STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS | |
STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS | NOTE 12—STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS Stock-Based Compensation Plans The HD Supply Holdings, Inc. Employee Stock Purchase Plan (the “ESPP”) permits HD Supply’s eligible associates to purchase Holdings common stock at a discount on the closing stock price at the end of each offering period. Effective July 1, 2019, the ESPP was amended to increase the discount from 5% to 15%. There are two six shares, respectively, under the ESPP. In accordance with ASC 718, the Company recognized stock-based compensation expense for the 15% discount, but not the 5% discount, as it is considered de minimis. During fiscal 2019, the Company recognized less than $1 million in stock-based compensation expense related to the ESPP. As of February 2, 2020, approximately 2.1 million registered shares were available for issuance under the ESPP. The Plan provides for stock based awards to employees, consultants and directors, including stock options, stock purchase rights, restricted stock, restricted stock units, deferred stock units, performance shares, performance units, stock appreciation rights, dividend equivalents and other stock based awards. The Plan is an amendment and restatement of the HD Supply Holdings, Inc. 2013 Omnibus Incentive Plan, which replaced and succeeded the Stock Incentive Plan, and, from and after June 26, 2013, no further awards may be made under the Stock Incentive Plan. As of February 2, 2020, approximately 12.5 million registered shares were available for issuance under the Plan. The ratio at which awards are counted against the Plan’s authorized share pool is 2.30 to 1 for full value awards and 1 to 1 for option awards, and any shares returned to the pool are returned at the same ratio. Stock Options Under the terms of the Plan and the Stock Incentive Plan (collectively, the “HDS Plans”), non-qualified stock options are to carry exercise prices at, or above, the fair market value of Holdings’ stock on the date of the grant. The non-qualified stock options under the HDS Plans generally vest at the rate of 25% per year commencing on the first third tenth five NOTE 12—STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS (Continued) A summary of option activity under the HDS Plans is presented below (shares in thousands): Number of Weighted Average Shares Option Price Outstanding at January 29, 2017 4,163 $ 19.42 Granted 920 42.34 Exercised (2,308) 16.45 Forfeited (356) 34.43 Outstanding at January 28, 2018 2,419 $ 28.77 Granted 773 36.93 Exercised (476) 20.32 Forfeited (219) 37.68 Outstanding at February 3, 2019 2,497 $ 32.13 Granted 813 43.09 Exercised (264) 20.80 Forfeited (220) 28.33 Outstanding at February 2, 2020 2,826 $ 35.79 The total intrinsic value of options exercised was approximately $6 million, $9 million, and $51 million in fiscal 2019, fiscal 2018, and fiscal 2017, respectively. As of February 2, 2020, there were approximately 2.8 million stock options outstanding with a weighted-average remaining life of 7.1 years and an aggregate intrinsic value of approximately $17 million. As of February 2, 2020, there were approximately 1.1 million options exercisable with a weighted-average exercise price of $30.18, a weighted-average remaining life of 5.7 years and an aggregate intrinsic value of approximately $13 million. As of February 2, 2020, there were approximately 2.8 million options vested or expected to ultimately vest with a weighted-average exercise price of $35.70, a weighted-average remaining life of 7.1 years and an aggregate intrinsic value of approximately $17 million. The estimated fair value of the options when granted is amortized to expense over the options’ vesting or required service period. The fair value for these options was estimated by management, after considering a third-party valuation specialist’s assessment, at the date of grant based on the expected life of the option and historical exercise experience, using a Black-Scholes option pricing model with the following weighted-average assumptions: Fiscal Year Ended February 2, February 3, January 28, 2020 2019 2018 Risk-free interest rate 2.51 % 2.74 % 2.08 % Dividend yield 0.0 % 0.0 % 0.0 % Expected volatility factor 26.4 % 29.1 % 29.8 % Expected option life in years 6.25 6.25 6.25 NOTE 12—STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS (Continued) The risk free interest rate was determined based on an analysis of U.S. Treasury zero coupon market yields as of the date of the option grant for issues having expiration lives similar to the expected option life. The expected volatility was based on an analysis of the historical volatility of Holdings and HD Supply’s competitors over the expected life of the HD Supply options. These competitors’ volatilities were adjusted to reflect the leverage of HD Supply. As insufficient data exists to determine the historical life of options issued under the HDS Plans, the expected option life was determined based on the vesting schedule of the options and their contractual life taking into consideration the expected time in which the share price of Holdings would exceed the exercise price of the option. The weighted average fair value of each option granted during fiscal 2019 was $13.75. HD Supply recognized $8 million, $8 million, and $5 million of stock-based compensation expense related to stock options during fiscal 2019, fiscal 2018, and fiscal 2017, respectively. As of February 2, 2020, the unamortized compensation expense related to stock options was $14 million, which is expected to be recognized over a weighted-average period of 2.1 years. Restricted Stock, Restricted Stock Units, and Performance Awards Restricted stock awards (“RSAs”) and restricted stock unit awards (“RSUs”) granted under the Plan are settled by issuing shares of common stock at the vesting date. Generally, the RSAs and RSUs granted to employees vest on a pro rata basis on each of the first four five one five The Company also granted performance awards (“PAs”) under the Plan, the payout of which is dependent on the Company’s performance against target Cumulative Adjusted Earnings Per Share and Cumulative Free Cash Flow (as defined in the award agreements) over a three five NOTE 12—STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS (Continued) A summary of RSA, RSU, and PA activity under the HDS Plans is presented below (shares in thousands): Number of Weighted Average Shares Grant Date Fair Value Non-vested at January 29, 2017 1,550 $ 27.07 Granted 464 41.50 Vested (644) 27.51 Forfeited (301) 31.39 Non-vested at January 28, 2018 1,069 $ 32.02 Granted 491 37.23 Vested (570) 30.00 Forfeited (94) 35.63 Non-vested at February 3, 2019 896 $ 35.82 Granted 557 42.49 Vested (414) 34.68 Forfeited (115) 39.17 Non-vested at February 2, 2020 924 $ 39.93 The total fair value of RSAs, RSUs, and PAs vested during the year was $14 million, $17 million, and $18 million for fiscal 2019, fiscal 2018, and fiscal 2017, respectively. HD Supply recognized $14 million, $18 million, and $20 million of stock based compensation expense related to RSAs, RSUs, and PAs during fiscal 2019, fiscal 2018 and fiscal 2017, respectively. As of February 2, 2020, the unamortized compensation expense related to RSAs, RSUs, and PAs was $23 million, which is expected to be recognized over a weighted-average period of 1.8 years. Employee Benefit Plans HD Supply offers a comprehensive Health & Welfare Benefits Program which allows employees who satisfy certain eligibility requirements to choose among different levels and types of coverage. The Health & Welfare Benefits program provides employees healthcare coverage in which the employer and employee share costs. In addition, the program offers employees the opportunity to participate in various voluntary coverages, including flexible spending accounts. HD Supply maintains a 401(k) defined contribution plan that is qualified under Sections 401(a) and 501(a) of the Internal Revenue Code. Employees who satisfy the plan’s eligibility requirements may elect to contribute a portion of their compensation to the plan on a pre-tax basis. HD Supply matches a percentage of the employees’ contributions to the plan. Prior to January 1, 2019, a fixed matching contribution was made each pay period and an additional discretionary matching contribution was made for the plan after fiscal year end based on the Company’s financial results. Effective January 1, 2019, an increased fixed matching contribution is made each pay period and the discretionary match was eliminated. The matching contributions paid in fiscal 2019 include the discretionary matching contribution made for the 2018 plan year and the fixed pay period matching contributions for the 2019 plan year. HD Supply paid matching contributions of $24 million, $14 million, and $17 million during fiscal 2019, fiscal 2018, and fiscal 2017, respectively. |
BASIC AND DILUTED WEIGHTED-AVER
BASIC AND DILUTED WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING | 12 Months Ended |
Feb. 02, 2020 | |
BASIC AND DILUTED WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING | |
BASIC AND DILUTED WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING | NOTE 13—BASIC AND DILUTED WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING Basic earnings (loss) per common share is computed by dividing net income (loss) by the weighted-average common shares outstanding during the respective periods. Diluted earnings (loss) per common share is computed by dividing net income (loss) by the sum of the weighted-average common shares outstanding and all dilutive potential common shares outstanding during the respective periods. The following basic and diluted weighted-average common shares information is provided for Holdings. The reconciliation of basic to diluted weighted-average common shares outstanding for fiscal 2019, fiscal 2018, and fiscal 2017 is as follows (in thousands): Fiscal Year Ended February 2, February 3, January 28, 2020 2019 2018 Weighted-average common shares outstanding 166,405 181,099 192,236 Effect of potentially dilutive stock plan securities 584 830 1,432 Diluted weighted-average common shares outstanding 166,989 181,929 193,668 Stock plan securities excluded from dilution (1) 2,802 1,924 1,967 (1) Represents stock options, restricted stock, restricted stock units, and/or performance awards (collectively “stock plan securities”) not included in the computation of diluted earnings per share because their effect would have been anti-dilutive. |
SUPPLEMENTAL BALANCE SHEET AND
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION | 12 Months Ended |
Feb. 02, 2020 | |
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION | |
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION | NOTE 14—SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION Receivables Receivables as of February 2, 2020 and February 3, 2019 consisted of the following (amounts in millions): February 2, February 3, 2020 2019 Trade receivables, net of allowance for doubtful accounts $ 674 $ 657 Vendor rebate receivables 65 57 Other receivables 15 18 Total receivables, net $ 754 $ 732 NOTE 14—SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION (Continued) Property and Equipment Property and equipment as of February 2, 2020 and February 3, 2019 consisted of the following (amounts in millions): February 2, February 3, 2020 2019 Land $ 12 $ 14 Buildings and improvements 311 296 Transportation equipment 76 66 Furniture, fixtures and equipment 332 269 Capitalized software 302 258 Construction in progress 35 55 Property and equipment 1,068 958 Less accumulated depreciation & amortization (677) (588) Property and equipment, net $ 391 $ 370 Other Current Liabilities Other current liabilities as of February 2, 2020 and February 3, 2019 consisted of the following (amounts in millions): HD Supply Holdings, Inc. HD Supply, Inc. February 2, February 3, February 2, February 3, 2020 2019 2020 2019 Corporate headquarters financing liability(1) $ — $ 87 $ — $ 87 Accrued legal 50 1 50 1 Accrued non-income taxes 33 35 33 35 Accrued interest 13 14 13 14 Unsettled share repurchases — 2 — — Other 112 120 112 120 Total other current liabilities $ 208 $ 259 $ 208 $ 257 (1) This amount represented the financing liability for the Company’s corporate headquarters that was purchased on February 4, 2019. Please see “Note 9, Leases” for further information on the purchase of the Company’s corporate headquarters. NOTE 14—SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION (Continued) During fiscal 2019, the Company recorded a $50 million legal accrual related to litigation activities, offset by the recognition of a $50 million insurance recovery included in Other current assets. For further information, please see “Note 16, Commitments and Contingencies.” Supplemental Cash Flow Information Cash paid for interest in fiscal 2019, fiscal 2018, and fiscal 2017 was approximately $105 million, $121 million, and $159 million, respectively. During fiscal 2019, fiscal 2018, and fiscal 2017, the Company paid zero Cash paid for income taxes, net of refunds, in fiscal 2019, fiscal 2018, and fiscal 2017 was approximately $53 million, $13 million, and $29 million, respectively. Cash paid for income taxes in fiscal 2017 includes $13 million in taxes paid related to the sale of the Waterworks business. During fiscal 2019, fiscal 2018, and fiscal 2017, HDS executed equity cash distributions of $382 million, $590 million, and $541 million, respectively, to Holdings, via HDS’s direct parent, HDS Holding Corporation. The equity distributions from HDS and returns of capital recognized by Holdings were eliminated in consolidation of Holdings and its wholly-owned subsidiaries, including HDS. Share Repurchases During fiscal 2014, Holdings’ Board of Directors authorized a share repurchase program to be funded from cash proceeds received from exercises of employee stock options. This share repurchase program does not obligate Holdings to acquire any particular amount of common stock, and it may be terminated at any time at Holdings’ discretion. During fiscal 2017 and fiscal 2018, Holdings’ Board of Directors authorized three share repurchase programs, each up to an aggregate $500 million of Holdings’ common stock. As of February 2, 2020, the Company has completed the repurchase of all common stock authorized under each of the three $500 million share repurchase programs. Holdings’ share repurchases under these plans were as follows (dollars in millions): Fiscal Year 2019 Fiscal Year 2018 Fiscal Year 2017 Number Cost of Number Cost of Number Cost of November 2018 Plan 9,637,613 $ 375 3,313,797 $ 125 — — August 2017 Plan — — 12,159,013 459 1,150,699 $ 41 June 2017 Plan — — — — 15,940,337 500 April 2014 Plan 222,792 9 313,740 13 1,145,590 43 Total share repurchases 9,860,405 $ 384 15,786,550 $ 597 18,236,626 $ 584 |
RESTRUCTURING AND SEPARATION AC
RESTRUCTURING AND SEPARATION ACTIVITIES | 12 Months Ended |
Feb. 02, 2020 | |
RESTRUCTURING AND SEPARATION ACTIVITIES | |
RESTRUCTURING AND SEPARATION ACTIVITIES | NOTE 15—RESTRUCTURING AND SEPARATION ACTIVITIES Restructuring & Separation On September 24, 2019, the Company announced its intention to separate its Facilities Maintenance and Construction & Industrial businesses into two independent publicly traded companies with the separation expected to be completed by the middle of the fiscal year ended January 31, 2021 (“fiscal 2020”). In light of the current business environment and in order to begin the establishment of two separate standalone businesses, the Company made personnel changes and began assessing the separation process, resulting in the recognition of $8 million in restructuring and separation charges for fiscal 2019. These charges were primarily related to professional fees incurred to execute the separation, and to a lesser extent, severance and other employee-related costs. The Company is in the early stages of estimating total costs for the separation of the businesses. Restructuring and separation charges for fiscal 2019 were $8 million, which includes a reversal of approximately $2 million in restructuring charges for the favorable termination of the lease for the Company’s former corporate headquarters in the first quarter of fiscal 2019. As of February 2, 2020, remaining unpaid costs associated with these activities are immaterial. Fiscal 2017 Plan As a result of the sale of the Waterworks business in fiscal 2017, management evaluated the Company’s alignment and functional support strategies. During fiscal 2017, the Company initiated a restructuring plan that included reducing workforce personnel, realigning talent, and closing a Construction & Industrial branch. In addition, the Company relocated its headquarters in first quarter 2018. During fiscal 2018, the Company recognized $9 million of restructuring charges, primarily related to property lease obligations upon exiting the Company’s previous headquarters location, and, to a lesser extent, severance and other employee-related costs. During fiscal 2017, the Company recognized $6 million of restructuring charges under this plan. Activities under this plan were completed in the second quarter of fiscal 2018 and no further charges are expected under this plan. As of February 2, 2020 remaining unpaid costs associated with the restructuring plan are immaterial. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Feb. 02, 2020 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 16—COMMITMENTS AND CONTINGENCIES Purchase Obligations As of February 2, 2020, the Company has agreements in place with various vendors to purchase goods and services, primarily inventory, in the aggregate amount of $224 million. These purchase obligations are generally cancelable, but the Company has no intent to cancel. Payment of $217 million is due during fiscal 2020 with the remaining amount payable on information technology (“IT”) service contracts that extend through fiscal 2022. NOTE 16—COMMITMENTS AND CONTINGENCIES (Continued) Legal Matters On July 10, 2017 and August 8, 2017, stockholders filed putative class action complaints in the U.S. District Court for the Northern District of Georgia, alleging that HD Supply and certain senior members of its management (collectively, the “securities litigation defendants”) made certain false or misleading public statements in violation of the federal securities laws between November 9, 2016 and June 5, 2017, inclusive (the “original securities complaints”). Subsequently, the two securities cases were consolidated, and, on November 16, 2017, the lead plaintiffs appointed by the Court filed a Consolidated Amended Class Action Complaint (the “Amended Complaint”) against the securities litigation defendants on behalf of all persons other than the securities litigation defendants who purchased or otherwise acquired the Company’s common stock between November 9, 2016 and June 5, 2017, inclusive. The Amended Complaint alleges that the securities litigation defendants made certain false or misleading public statements, primarily relating to the Company’s progress in addressing certain supply chain disruption issues encountered in the Company’s Facilities Maintenance business unit. The Amended Complaint asserts claims against the securities litigation defendants under Sections 10(b) and 20(a) of the Exchange Act and SEC Rule 10b-5, and seeks class certification under the Federal Rules of Civil Procedure, as well as unspecified monetary damages, pre-judgment and post-judgment interest, and attorneys’ fees and other costs. On September 19, 2018, the Court granted in part and denied in part the securities litigation defendants’ motion to dismiss. On January 30, 2020, the parties executed a written stipulation and agreement to settle the litigation for a payment of $50 million, subject to court approval. On February 21, 2020, the Court approved the settlement on a preliminary basis and scheduled a final approval hearing for July 21, 2020. The full settlement amount is covered under the Company’s insurance policies. The Company and individual defendants continue to dispute the allegations in the complaints, and the settlement is without any admission of the allegations in the complaints. On August 8, 2017, two stockholder derivative complaints were filed in the U.S. District Court for the Northern District of Georgia, naming the Company as a “nominal defendant” and certain members of its senior management and board of directors as individual defendants. The complaints generally allege that the individual defendants caused the Company to issue false and misleading statements concerning the Company’s business, operations, and financial prospects, including misrepresentations regarding operating leverage and supply chain corrective actions. The complaints assert claims against the individual defendants under Section 14(a) of the Exchange Act, and allege breaches of fiduciary duties, unjust enrichment, corporate waste, and insider selling. The complaints assert a claim to recover any damages sustained by the Company as a result of the individual defendants’ allegedly wrongful actions, seek certain actions by the Company to modify its corporate governance and internal procedures, and seek to recover attorneys’ fees and other costs. On October 22, 2018, upon joint motion of the parties, the Court entered an order conditionally staying the proceedings and administratively closing the matter until after any summary judgment motion filed relating to the Amended Complaint is adjudicated. NOTE 16—COMMITMENTS AND CONTINGENCIES (Continued) On August 29, 2018, a stockholder derivative complaint was filed in Delaware Chancery Court naming the Company as a “nominal defendant” and certain members of its senior management and board of directors as individual defendants. The complaint generally alleges that the individual defendants caused the Company to issue false and misleading statements concerning the Company’s business, operations, and financial prospects, including misrepresentations regarding supply chain corrective actions. The complaint asserts various common law breach of fiduciary duty claims against the individual defendants and claims of unjust enrichment and insider selling. The complaint seeks to recover any damages sustained by the Company as a result of the individual defendants’ allegedly wrongful actions, seeks certain actions by the Company to modify its corporate governance and internal procedures, and seeks to recover attorneys’ fees and other costs. The individual defendants moved to dismiss the complaint on November 2, 2018. On January 14, 2019, upon joint motion of the parties, the Court entered an order conditionally staying the proceedings until after any summary judgment motions filed relating to the Amended Complaint is adjudicated. The Company intends to defend the derivative lawsuits vigorously. Given the stage of the complaints and the claims and issues presented, the Company cannot reasonably estimate at this time the possible loss or range of loss, if any, that may arise from these unresolved lawsuits. In March 2019, the Company received a subpoena from the U.S. Securities and Exchange Commission (“SEC”) requesting information and documents from calendar years 2016 and 2017 relating to, among other things, the Company’s Facilities Maintenance business unit and the allegations of the Amended Complaint described above. The Company has responded to the subpoena and intends to continue to cooperate with the SEC’s investigation. We cannot currently predict the timing or outcome of this ongoing investigation. HD Supply is involved in various legal proceedings arising in the normal course of its business. The Company establishes reserves for litigation and similar matters when those matters present loss contingencies that it determines to be both probable and reasonably estimable in accordance with ASC 450, “Contingencies.” In the opinion of management, based on current knowledge, all reasonably estimable and probable matters are believed to be adequately reserved for or covered by insurance and are not expected to have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows. For all other matters management believes the possibility of losses from such matters is not probable, the potential loss from such matters is not reasonably estimable, or such matters are of such kind or involve such amounts that would not have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company if disposed of unfavorably. For material matters with loss contingencies that are reasonably possible and reasonably estimable, including matters with loss contingencies that are probable and estimable but for which the amount that is reasonably possible is in excess of the amount that the Company has accrued for, management has estimated the aggregate range of potential loss as $0 to $10 million. If a material loss is probable or reasonably possible, and in either case estimable, the Company has considered it in the analysis and it is included in the discussion set forth above. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Feb. 02, 2020 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | NOTE 17—SEGMENT INFORMATION HD Supply’s operating segments are based on management structure and internal reporting. Each segment offers different products and services to the end customer, except for Corporate, which provides general corporate overhead support. The Company determines the reportable segments in accordance with the principles of segment reporting within ASC 280, Segment Reporting. For purposes of evaluation under these segment reporting principles, the Chief Operating Decision Maker for HD Supply assesses HD Supply’s ongoing performance, based on the periodic review and evaluation of Net sales, Adjusted EBITDA, and certain other measures for each of the operating segments. HD Supply has two reportable segments, each of which is presented below: ● Facilities Maintenance— Facilities Maintenance distributes maintenance, repair and operations (“MRO”) products, provides value-add services and fabricates custom products to multifamily, hospitality, healthcare and institutional facilities. ● Construction & Industrial —Construction & Industrial distributes concrete accessories and chemicals, specialized hardware, engineered materials and fasteners, tools, and safety products to non-residential and residential contractors. Construction & Industrial also offers light remodeling and construction supplies, kitchen and bath cabinets, windows, plumbing materials, electrical equipment and other products, primarily to small remodeling contractors and trade professionals. In addition to the reportable segments, the Company’s consolidated financial results include “Corporate and Eliminations.” Corporate incurs costs related to the Company’s centralized support functions, which are comprised of finance, IT, human resources, legal, supply chain and other support services. All Corporate overhead costs are allocated to the reportable segments. Eliminations include the adjustments necessary to eliminate intercompany transactions. The following tables present Net sales, Adjusted EBITDA, and certain other measures for each of the reportable segments and total continuing operations for the periods indicated (amounts in millions): Fiscal Year 2019 Total Facilities Construction & Corporate & Continuing Maintenance Industrial Eliminations Operations Net sales $ 3,130 $ 3,019 $ (3) $ 6,146 Adjusted EBITDA 546 327 — 873 Depreciation(1) & Software Amortization 46 44 — 90 Other Intangible Amortization 8 15 — 23 Total Assets(2) 2,760 1,578 377 4,715 Capital Expenditures(2) 48 42 16 106 NOTE 17—SEGMENT INFORMATION (Continued) Fiscal Year 2018 Total Facilities Construction & Corporate & Continuing Maintenance Industrial Eliminations Operations Net sales $ 3,089 $ 2,961 $ (3) $ 6,047 Adjusted EBITDA 546 325 — 871 Depreciation(1) & Software Amortization 40 44 — 84 Other Intangible Amortization 8 14 — 22 Total Assets(2) 2,481 1,358 394 4,233 Capital Expenditures(2) 58 31 26 115 Fiscal Year 2017 Total Facilities Construction & Corporate & Continuing Maintenance Industrial Eliminations Operations Net sales $ 2,847 $ 2,279 $ (5) $ 5,121 Adjusted EBITDA 499 232 — 731 Depreciation(1) & Software Amortization 36 42 — 78 Other Intangible Amortization 9 3 — 12 Total Assets(2) 2,390 877 1,051 4,318 Capital Expenditures(2) 22 34 38 94 (1) Depreciation includes amounts recorded within Cost of sales in the Consolidated Statements of Operations. (2) Total Assets and capital expenditures include amounts attributable to discontinued operations for the periods prior to the dispositions. NOTE 17—SEGMENT INFORMATION (Continued) Reconciliation to Consolidated Financial Statements Fiscal 2019 Fiscal 2018 Fiscal 2017 Total Adjusted EBITDA $ 873 $ 871 $ 731 Depreciation and amortization(1) 113 106 90 Stock-based compensation 23 26 26 Restructuring 8 9 6 Acquisition and integration costs(2) 5 6 — Other 1 — 1 Operating income 723 724 608 Interest expense 110 130 166 Interest income — (1) (2) Loss on extinguishment & modification of debt(3) — 69 84 Income from Continuing Operations Before Provision for Income Taxes 613 526 360 Provision for income taxes 162 135 193 Income from continuing operations $ 451 $ 391 $ 167 Income from discontinued operations, net of tax 1 3 803 Net income $ 452 $ 394 $ 970 (1) Depreciation includes amounts recorded within Cost of sales in the Consolidated Statements of Operations. (2) Represents the cost incurred in the acquisition and integration of business acquisitions, including A.H. Harris. (3) Represents the loss on extinguishment of debt including premium paid to repurchase or call the debt as well as the write-off of unamortized deferred financing costs, original issue discount, and other assets or liabilities associated with such debt. Also includes the costs of debt modifications. Net sales for HD Supply outside the U.S., primarily Canada, were $161 million, $157 million, and $146 million in fiscal 2019, fiscal 2018, and fiscal 2017, respectively. Long-lived assets of HD Supply outside the U.S., primarily Canada, were $20 million and $6 million as of February 2, 2020 and February 3, 2019, respectively. Long-lived assets as of February 2, 2020 includes $13 million of ROU lease assets recorded in accordance with ASC 842, Leases. |
REVENUE
REVENUE | 12 Months Ended |
Feb. 02, 2020 | |
REVENUE | |
REVENUE | NOTE 18—REVENUE The Company’s revenues are earned from contracts with customers. Contracts include written agreements, as well as arrangements that are implied by customary practices or law. Nature of Products and Services Both Facilities Maintenance and Construction & Industrial serve unique end markets. Facilities Maintenance offers products that serve the MRO end market as well as value-added services. Construction & Industrial offers products used broadly across both the residential and non-residential construction end markets as well as light remodeling supplies for small remodeling contractors and trade professionals. NOTE 18—REVENUE (Continued) Disaggregation of Revenue The Company elected to disaggregate the revenue of Facilities Maintenance by its demand types: MRO and Property Improvement, and Construction & Industrial by its end markets: Non-Residential Construction, Residential Construction, and Other. The Company believes this disaggregation appropriately meets the objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The prior periods’ revenue disaggregation for Construction & Industrial has been adjusted by an immaterial amount. The table below represents disaggregated revenue for Facilities Maintenance and Construction & Industrial with Inter-segment eliminations (amounts in millions): Fiscal Year Ended February 2, 2020 February 3, 2019 January 28, 2018 Facilities Maintenance Maintenance, Repair, and Operations $ 2,778 $ 2,734 $ 2,522 Property Improvement 352 355 325 Total Facilities Maintenance Net Sales 3,130 3,089 2,847 Construction & Industrial Non-Residential Construction 2,080 2,029 1,479 Residential Construction 746 748 643 Other 193 184 157 Total Construction & Industrial Net Sales 3,019 2,961 2,279 Inter-segment Eliminations (3) (3) (5) Total HD Supply Net Sales $ 6,146 $ 6,047 $ 5,121 Contract Balances The timing of satisfaction of identified performance obligations may differ from the timing of invoicing to customers for certain installation contracts, which may result in the recognition of a contract asset or liability. The Company records a contract asset when it recognizes revenue prior to invoicing, or a contract liability when revenue is recognized subsequent to invoicing. Contract assets are reclassified as accounts receivable upon invoicing and contract liabilities are relieved upon recognition of revenue. As of February 2, 2020, the Company’s contract assets and contract liabilities, which are included in Other Current Assets and Other Current Liabilities, respectively, within the Consolidated Balance Sheets, are not material. Payment terms and conditions vary by contract type, although terms generally include a requirement for payment within 45 days. As such, in instances where the timing of revenue recognition differs from the timing of invoicing, the Company has concluded that its contracts with customers do not include a significant financing component because customer payments for goods and services are received in less than one |
QUARTERLY FINANCIAL DATA (UNAUD
QUARTERLY FINANCIAL DATA (UNAUDITED) | 12 Months Ended |
Feb. 02, 2020 | |
QUARTERLY FINANCIAL DATA (UNAUDITED) | |
QUARTERLY FINANCIAL DATA (UNAUDITED) | NOTE 19—QUARTERLY FINANCIAL DATA (UNAUDITED) The following is a summary of the quarterly consolidated results of operations for the fiscal years ended February 2, 2020 and February 3, 2019 (amounts in millions): First Second Third Fourth Quarter Quarter Quarter Quarter TOTAL Fiscal 2019 Net sales $ 1,493 $ 1,624 $ 1,644 $ 1,385 $ 6,146 Gross profit 585 633 640 545 2,403 Income from continuing operations 107 135 131 78 451 Income from discontinued operations — — 1 — 1 Net income 107 135 132 78 452 Basic earnings per share(1) Income from continuing operations $ 0.63 $ 0.80 $ 0.80 $ 0.48 $ 2.71 Income from discontinued operations — — 0.01 — 0.01 Net income 0.63 0.80 0.80 0.48 2.72 Diluted earnings per share(1) Income from continuing operations $ 0.63 $ 0.79 $ 0.79 $ 0.48 $ 2.70 Income from discontinued operations — — 0.01 — 0.01 Net income 0.63 0.79 0.80 0.48 2.71 Fiscal 2018 Net sales $ 1,389 $ 1,600 $ 1,612 $ 1,446 $ 6,047 Gross profit 552 622 629 572 2,375 Income from continuing operations 89 130 82 90 391 Income from discontinued operations — 1 — 2 3 Net income 89 131 82 92 394 Basic earnings per share(1) Income from continuing operations $ 0.48 $ 0.71 $ 0.45 $ 0.51 $ 2.16 Income from discontinued operations — 0.01 — 0.01 0.02 Net income 0.48 0.72 0.45 0.53 2.18 Diluted earnings per share(1) Income from continuing operations $ 0.48 $ 0.71 $ 0.45 $ 0.51 $ 2.15 Income from discontinued operations — 0.01 — 0.01 0.02 Net income 0.48 0.71 0.45 0.52 2.17 (1) Basic and Diluted earnings per share are based on shares outstanding for Holdings. Quarterly earnings per share amounts may not foot due to rounding. In addition, quarterly earnings per share amounts may not add to full-year earnings per share amounts due to the difference in weighted-average common shares for the quarters versus the weighted-average common shares for the year. Income from continuing operations and Net income in the third quarter of fiscal 2018 includes a pre-tax loss on extinguishment and modification of debt of $69 million. |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 12 Months Ended |
Feb. 02, 2020 | |
SUBSEQUENT EVENT | |
SUBSEQUENT EVENT | NOTE 20 SUBSEQUENT EVENT On March 12, 2020, the Company’s Board of Directors authorized a new share repurchase program for the repurchase of up to an aggregate $500 million of its common stock. The Company will conduct repurchases under the share repurchase program in the open market and through broker negotiated purchases in compliance with Rule 10b5-1 and Rule 10b-18 of the Securities Exchange Act of 1934, and subject to market conditions, restrictive covenants contained in existing debt agreements, applicable legal requirements, and other relevant factors. This share repurchase program does not obligate the Company to acquire any particular amount of its common stock, and it may be terminated at any time at the Company’s discretion. |
SCHEDULE II - VALUATION AND QUA
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Feb. 02, 2020 | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | (c) SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS (Amounts in millions) Accounts Receivable Allowance for Doubtful Accounts: Acquisition or Doubtful Balance at Disposition of Charges to Accounts Balance at Beginning Business Expense / Written Other End of of Period Adjustment (Income) Off, Net Adjustments Period Fiscal Year ended: January 28, 2018 $ 13 (4) 8 (5) — $ 12 February 3, 2019 $ 12 2 12 (8) — $ 18 February 2, 2020 $ 18 — 9 (8) — $ 19 Deferred Tax Valuation Allowances: Balance at Charges to Balance at Beginning Expense End of of Period (Benefit) Period Fiscal Year ended: January 28, 2018 $ 5 2 $ 7 February 3, 2019 $ 7 — $ 7 February 2, 2020 $ 7 (1) $ 6 |
NATURE OF BUSINESS AND SUMMAR_2
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Feb. 02, 2020 | |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Nature of Business | Nature of Business HD Supply Holdings, Inc. (“Holdings”) indirectly owns all of the outstanding common stock of HD Supply, Inc. (“HDS”). Holdings, together with its direct and indirect subsidiaries, including HDS (“HD Supply” or the “Company”), is one of the largest industrial distribution companies in North America. The Company specializes in two distinct market sectors: Maintenance, Repair & Operations and Specialty Construction. Through approximately 270 branches and 44 distribution centers, in the United States (“U.S.”) and Canada, the Company serves these markets with an integrated go-to-market strategy. HD Supply has approximately 11,500 associates delivering localized, customer-tailored products, services and expertise. The Company serves approximately 500,000 customers, which include contractors, maintenance professionals, home builders, industrial businesses, and government entities. HD Supply’s broad range of end-to-end product lines and services includes approximately 600,000 stock-keeping units (“SKUs”) of quality, name-brand and proprietary-brand products as well as value-add services supporting the entire life-cycle of a project from construction to maintenance, repair and operations. HD Supply is managed primarily on a product line basis and reports results of operations in two reportable segments: Facilities Maintenance and Construction & Industrial. In addition, the consolidated financial statements include Corporate and Eliminations, which is comprised of enterprise-wide functional departments. |
Fiscal Year | Fiscal Year The Company’s fiscal year is a 52 - or 53-week period ending on the Sunday nearest to January 31. The fiscal year ended February 2, 2020 (“fiscal 2019”) included 52 weeks. The fiscal year ended February 3, 2019 (“fiscal 2018”) included 53 weeks. The fiscal year ended January 29, 2018 (“fiscal 2017”) included 52 weeks. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements of HD Supply present the results of operations, financial position and cash flows of Holdings and its wholly-owned subsidiaries, including HDS. The consolidated financial statements of HDS present the results of operations, financial position and cash flows of HDS and its wholly-owned subsidiaries. All material intercompany balances and transactions are eliminated. Results of operations of businesses acquired are included from their respective dates of acquisition. The results of operations of all discontinued operations have been separately reported as discontinued operations for all periods presented. |
Estimates | Estimates Management has made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities, and reported amounts of revenues and expenses in preparing these consolidated financial statements in conformity with accounting principles generally accepted in the U.S. (“GAAP”). Actual results could differ from these estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents HD Supply considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts Accounts receivable are evaluated for collectability based on numerous factors, including past transaction history with customers, their credit worthiness, and an assessment of lien and bond rights. An allowance for doubtful accounts is estimated as a percentage of aged receivables. This estimate is periodically adjusted when management becomes aware of a specific customer’s inability to meet its financial obligations (e.g., bankruptcy filing) or as a result of changes in historical collection patterns. |
Inventories | Inventories Inventories consist primarily of finished goods and are carried at the lower of cost or net realizable value. The cost of substantially all inventories is determined by the moving or weighted average cost method. Inventory value is evaluated at each balance sheet date to ensure that it is carried at the lower of cost or net realizable value. This evaluation includes an analysis of historical physical inventory results, a review of excess and obsolete inventories based on inventory aging, and anticipated future demand. Periodically, perpetual inventory records are adjusted to reflect declines in net realizable value below inventory carrying cost. |
Consideration Received From Vendors | Consideration Received From Vendors HD Supply enters into agreements with many of its vendors providing for inventory purchase rebates (“vendor rebates”) upon achievement of specified volume purchasing levels. Vendor rebates are accrued as part of cost of sales for products sold based on progress towards earning the vendor rebates, taking into consideration cumulative purchases of inventory to date and projected purchases through the end of the year. An estimate of unearned vendor rebates is included in the carrying value of inventory at each period end for vendor rebates recognized on products not yet sold. At February 2, 2020 and February 3, 2019, vendor rebates due to HD Supply were $65 million and $57 million, respectively. These receivables are included in Receivables in the accompanying Consolidated Balance Sheets. |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost and depreciated using the straight-line method based on the following estimated useful lives of the assets: Buildings 5 Transportation equipment 5 - 7 years Furniture, fixtures and equipment 3 - 10 years |
Capitalized Software Costs | Capitalized Software Costs HD Supply capitalizes certain software costs, which are being amortized on a straight-line basis over the estimated useful lives of the software, generally three |
Business Combinations, Goodwill, and Other Intangible Assets | Business Combinations, Goodwill, and Other Intangible Assets HD Supply allocates the purchase price paid for business acquisitions to identifiable tangible and intangible assets acquired and liabilities assumed based on their estimated fair value. The excess of the purchase price paid over the fair values of these identifiable assets and liabilities is allocated to goodwill. HD Supply does not amortize goodwill, but does assess the recoverability of goodwill on an annual basis or whenever events or circumstances indicate that it is “more likely than not” that the fair value of a reporting unit has dropped below its carrying value. The Company determines the fair values of its identified reporting units using a discounted cash flow (“DCF”) analysis and a market comparable method, with each method being equally weighted in the calculation. Determining fair value requires the exercise of significant judgment, including judgment about appropriate discount rates, the amount and timing of expected future cash flows, as well as relevant comparable company earnings multiples for the market comparable approach. There were no goodwill impairment charges recorded in fiscal 2019, fiscal 2018, or fiscal 2017. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets Long-lived assets, including property and equipment, are reviewed for possible impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. To analyze recoverability, undiscounted future cash flows over the remaining life of the asset are projected. If these projected cash flows are less than the carrying amount, an impairment loss is recognized to the extent the fair value of the asset less any costs of disposition is less than the carrying amount of the asset. Judgments regarding the existence of impairment indicators are based on market and operational performance. Evaluating potential impairment also requires estimates of future operating results and cash flows. |
Self-Insurance | Self-Insurance HD Supply has a high deductible insurance program for most losses related to general liability, product liability, environmental liability, automobile liability, workers’ compensation, and is self-insured for medical claims, while maintaining per employee stop loss coverage, and certain legal claims. The expected ultimate cost for claims incurred as of the balance sheet date is not discounted and is recognized as a liability. Self-insurance losses for claims filed and claims incurred but not reported are accrued based upon estimates of the aggregate liability for uninsured claims using loss development factors and actuarial assumptions followed in the insurance industry and historical loss development experience. At February 2, 2020 and February 3, 2019, self-insurance reserves totaled approximately $50 million and $49 million, respectively. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable, accrued compensation and benefits and other current liabilities approximate fair value due to the short-term nature of these financial instruments. The Company’s long-term financial assets and liabilities are recorded at historical costs. See “Note 8, Fair Value Measurements,” for information on the fair value of long-term financial instruments. |
Revenue Recognition | Revenue Recognition HD Supply recognizes revenue, net of allowances for returns and discounts and any taxes collected from the customer, when an identified performance obligation is satisfied by the transfer of control or promised products or services to the customer. HD Supply ships products to customers by internal fleet and third party carriers. Transfer of control to the customer for products generally occurs at the point of destination (i.e., upon transfer of title and risk of loss of products). Transfer of control for services occurs when the customer has the right to direct the use of and obtain substantially all of the remaining benefits of the asset that is created or enhanced from the service. Revenues related to services are recognized in the period the services are performed and totaled $48 million, $49 million, and $37 million in fiscal 2019, fiscal 2018, and fiscal 2017, respectively. |
Shipping and Handling Fees and Costs | Shipping and Handling Fees and Costs HD Supply includes shipping and handling fees billed to customers in Net sales. Shipping and handling costs associated with inbound freight are capitalized to inventories and relieved through Cost of sales as inventories are sold. Shipping and handling costs associated with outbound freight are accounted for as a fulfillment cost and included in Selling, general, and administrative expenses and totaled $119 million, $111 million, and $99 million in fiscal 2019, fiscal 2018, and fiscal 2017, respectively. |
Concentration of Credit Risk | Concentration of Credit Risk The majority of HD Supply’s sales are credit sales which are made primarily to customers whose ability to pay is dependent, in part, upon the economic strength of industries and the areas where they operate. Concentration of credit risk with respect to trade accounts receivable is limited by the large number of customers comprising HD Supply’s customer base. HD Supply performs ongoing credit evaluations of its customers. |
Leases | Leases HD Supply evaluates each of its contracts at inception to determine if the arrangement is, or contains, a lease and the appropriate classification of each identified lease. A lease exists if the Company obtains substantially all of the economic benefits of, and has the right to control the use of, an asset for a period of time. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease agreement. ROU assets and associated liabilities are recognized at the commencement date of the lease based on the present value of fixed lease payments over the lease term. The lease commencement date is the date the Company has access to the property or control of the asset, which, in some cases, is prior to the commencement of lease payments. The Company considers termination or lease renewal options in the determination of the lease term when it is reasonably certain that the Company will exercise that option. The Company’s leases generally do not provide a readily determinable implicit borrowing rate. As such, the discount rate used to calculate present value is the Company’s collateralized incremental borrowing rate. The collateralized incremental borrowing rate for each lease varies in accordance with the lease term. Lease expense is recognized on a straight-line basis over the lease term beginning with the commencement date. The Company’s consolidated financial statements for fiscal 2019 are presented under ASC 842, Leases, while comparative periods presented have not been adjusted and continue to be reported in accordance with the previous standard, ASC 840, Leases. See “Note 9, Leases” for further information. |
Advertising | Advertising Advertising costs are charged to expense as incurred. Advertising expenses were approximately $37 million, $37 million, and $33 million in fiscal 2019, fiscal 2018, and fiscal 2017, respectively. |
Income Taxes | Income Taxes The Company provides for federal, state, and foreign income taxes currently payable, as well as for those deferred due to temporary differences between reporting income and expenses for financial statement purposes versus tax purposes. Federal, state and foreign tax benefits are recorded as a reduction of income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in income tax rates is recognized as income or expense in the period that includes the enactment date. The Company consists of corporations, limited liability companies and partnerships. All income tax expense of the Company is recorded in the accompanying Consolidated Statements of Operations and Comprehensive Income with the offset recorded through the Company’s current tax accounts, deferred tax accounts, or stockholder’s equity account as appropriate. |
Comprehensive Income | Comprehensive Income Comprehensive income includes Net income adjusted for certain revenues, expenses, gains and losses that are excluded from net income under GAAP. Adjustments to net income are for foreign currency translation adjustments and unrealized gains and losses on derivatives, to the extent they are accounted for as an effective hedge under ASC 815, Derivatives and Hedging. |
Foreign Currency Translation | Foreign Currency Translation Assets and liabilities of foreign subsidiaries with a functional currency other than the U. S. dollar, primarily Canadian dollars, are translated into U.S. dollars at the current rate of exchange on the last day of the reporting period. Revenues and expenses are translated at a monthly average exchange rate and equity transactions are translated using either the actual exchange rate on the day of the transaction or a monthly average exchange rate. |
Derivative Financial Instruments | Derivative Financial Instruments When the Company enters into derivative financial instruments, it is for hedging purposes. In hedging the exposure to variable cash flows on forecasted transactions, deferral accounting is applied when the derivative reduces the risk of the underlying hedged item effectively as a result of high inverse correlation with the value of the underlying exposure. If a derivative instrument either initially fails or later ceases to meet the criteria for deferral accounting, any subsequent gains or losses are recognized currently in income. Cash flows resulting from derivative financial instruments are classified in the same category as the cash flows from the items being hedged. |
Stock-Based Compensation | Stock-Based Compensation The HD Supply Holdings, Inc. Omnibus Incentive Plan, approved by Holdings’ stockholders on May 17, 2017, (the “Plan”) provides for stock-based awards to employees, consultants and directors, including stock options, stock purchase rights, restricted stock, restricted stock units, deferred stock units, performance shares, performance units, stock appreciation rights, dividend equivalents and other stock-based awards. The Plan is an amendment and restatement of the HD Supply Holdings, Inc. 2013 Omnibus Incentive Plan, which replaced and succeeded the HDS Investment Holding, Inc. Stock Incentive Plan (the “Stock Incentive Plan”), and, from and after June 26, 2013, no further awards may be made under the Stock Incentive Plan. The plans are accounted for under ASC 718, Compensation—Stock Compensation, (“ASC 718”) which requires the recognition of share-based compensation costs in the financial statements. The Company includes these costs in Selling, general, and administrative expense in the Consolidated Statements of Operations and Comprehensive Income. |
Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements Not Yet Adopted | Recently Adopted Accounting Pronouncements Leases – In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accountant Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), amended by ASU No. 2017-13, “Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842)“ (“ASU 2017-13”), ASU No. 2018-01, “Leases (Topic 842) – Land Easement Practical Expedient for Transition to Topic 842” (“ASU 2018-01”), ASU No. 2018-10, “Codification Improvements to Topic 842, Leases,” and ASU No. 2018-11, “Leases (Topic 842) – Targeted Improvements” (“ASU 2018-11”). The amended guidance requires companies to recognize all leases as assets and liabilities for the rights and obligations created by leased assets on the consolidated balance sheet. ASU No. 2016-02 also requires enhanced disclosures that provide more transparency and information to financial statement users about lease portfolios. ASU 2018-11 allows entities an additional transition method to the existing requirements whereby an entity could adopt the provisions of ASU 2016-02 by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption without adjustment to the financial statements for periods prior to adoption. The Company adopted this guidance on February 4, 2019 (the first day of fiscal 2019) using the cumulative adjustment transition method. See “Note 1, Nature of Business and Summary of Significant Accounting Policies“ and “Note 9, Leases” for the Company’s lease accounting policies and disclosures. Goodwill – In January 2017, the FASB issued ASU No. 2017-04, “Intangibles — Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). The new guidance eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. ASU 2017-04 is effective for annual and interim impairment tests performed in periods beginning after December 15, 2019. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. The amendments in this update should be applied on a prospective basis. The Company adopted ASU 2017-04 for its annual goodwill impairment test performed as of November 3, 2019 with no impact to its financial position, results of operations or cash flows. Recently Issued Accounting Pronouncements Not Yet Adopted Cloud Computing Arrangements NOTE 1—NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Financial Instruments |
NATURE OF BUSINESS AND SUMMAR_3
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Feb. 02, 2020 | |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of property and equipment estimated useful lives | Buildings 5 Transportation equipment 5 - 7 years Furniture, fixtures and equipment 3 - 10 years |
DISCONTINUED OPERATIONS (Tables
DISCONTINUED OPERATIONS (Tables) | 12 Months Ended |
Feb. 02, 2020 | |
DISCONTINUED OPERATIONS | |
Schedule of results of operations of discontinued operations | The following table provides additional detail related to the results of operations of the discontinued operations (amounts in millions): Fiscal Year Ended February 2, February 3, January 28, 2020 2019 2018 Net sales $ — $ — $ 1,413 Cost of sales — — 1,100 Gross Profit — — 313 Operating expenses: Selling, general and administrative (1) (2) 197 Depreciation and amortization — — 6 Restructuring — — — Total operating expenses (1) (2) 203 Operating Income 1 2 110 (Gain) loss on disposal of discontinued operations — — (934) Other (income) expense, net — — 1 Income before provision for income taxes 1 2 1,043 Provision (benefit) for income taxes — (1) 240 Income from discontinued operations, net of tax $ 1 $ 3 $ 803 The following table provides additional detail related to the net cash provided by (used in) operating and investing activities of the discontinued operations (amounts in millions): Fiscal Year Ended February 2, February 3, January 28, 2020 2019 2018 Net cash flows provided by (used in) operating activities $ — $ — $ 27 Cash flows from investing activities: Capital expenditures — — (5) Proceeds from sales of businesses, net — — 2,421 Proceeds from sales of property and equipment, net — — 2 Net cash flows provided by (used in) investing activities $ — $ — $ 2,418 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Feb. 02, 2020 | |
GOODWILL AND INTANGIBLE ASSETS | |
Schedule of carrying amount of goodwill by reporting unit | The carrying amount of goodwill by reporting unit is as follows (amounts in millions): As of February 2, 2020 As of February 3, 2019 Gross Accumulated Net Gross Accumulated Net Goodwill Impairments Goodwill Goodwill Impairments Goodwill Facilities Maintenance $ 1,605 $ — $ 1,605 $ 1,603 $ — $ 1,603 Construction & Industrial-White Cap 365 (74) 291 366 (74) 292 Home Improvement Solutions 125 (30) 95 125 (30) 95 Total goodwill $ 2,095 $ (104) $ 1,991 $ 2,094 $ (104) $ 1,990 |
Schedule of components of intangible assets | HD Supply’s intangible assets as of February 2, 2020 and February 3, 2019 consisted of the following (amounts in millions): As of February 2, 2020 As of February 3, 2019 Gross Accumulated Net Gross Accumulated Net Intangible Amortization Intangible Intangible Amortization Intangible Customer relationships $ 167 $ (52) $ 115 $ 159 $ (38) $ 121 Trade names 151 (91) 60 151 (81) 70 Total $ 318 $ (143) $ 175 $ 310 $ (119) $ 191 |
DEBT (Tables)
DEBT (Tables) | 12 Months Ended |
Feb. 02, 2020 | |
DEBT | |
Schedule of long-term debt | HDS’s long-term debt as of February 2, 2020 and February 3, 2019 consisted of the following (dollars in millions): February 2, 2020 February 3, 2019 Outstanding Interest Outstanding Interest Principal Rate %(1) Principal Rate %(1) Senior ABL Facility due 2022 $ 260 3.15 $ 348 3.83 Term B-5 Loans due 2023 1,057 3.40 1,067 4.25 October 2018 Senior Unsecured Notes due 2026 750 5.375 750 5.375 Total gross long-term debt $ 2,067 $ 2,165 Less unamortized discount (3) (4) Less unamortized deferred financing costs (18) (21) Total net long-term debt $ 2,046 $ 2,140 Less current installments (11) (11) Total net long-term debt, excluding current installments $ 2,035 $ 2,129 (1) Represents the stated rate of interest, without including the effect of discounts, premiums, or interest rate swap agreements. |
Maturities of long-term debt outstanding | Maturities of long-term debt outstanding, in principal amounts, at February 2, 2020 are summarized below (amounts in millions): Fiscal Year 2020 2021 2022 2023 2024 Thereafter Total Principal maturities $ 11 $ 11 $ 271 $ 1,024 $ — $ 750 $ 2,067 |
October 2018 Senior Unsecured Notes due 2026 | |
DEBT | |
Schedule of notes redemption on and after October 15, 2021, at the applicable redemption price set forth below (expressed as a percentage of principal amount) | Year Percentage 2021 102.688 % 2022 101.344 % 2023 and thereafter 100.000 % |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Feb. 02, 2020 | |
FAIR VALUE MEASUREMENTS | |
Schedule of financial instruments that are not reflected at fair value on the balance sheet | The Company’s financial instruments that are not reflected at fair value on the balance sheet were as follows as of February 2, 2020 and February 3, 2019 (amounts in millions): As of February 2, As of February 3, 2020 2019 Recorded Estimated Recorded Estimated Amount Fair Value Amount Fair Value Senior ABL Facility $ 260 $ 260 $ 348 $ 346 Term Loans and Notes 1,807 1,862 1,817 1,815 Total $ 2,067 $ 2,122 $ 2,165 $ 2,161 (1) These amounts do not include accrued interest; accrued interest is classified as other current liabilities in the accompanying Consolidated Balance Sheets. These amounts do not include any related discounts or deferred financing costs. |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Feb. 02, 2020 | |
LEASES | |
Schedule of components of lease expense | The following components of lease expense are included in Selling, general, and administrative expenses on the Consolidated Statement of Operations (dollars in millions): Fiscal Year Ended February 2, 2020 Operating Lease Cost $ 142 Short-term Lease Cost 6 Variable Lease Cost 6 Sublease Income (5) Total Lease Cost $ 149 |
Schedule of maturities of operating lease liabilities | As of February 2, 2020, maturities of operating lease liabilities were as follows (amounts in millions): Fiscal Year 2020 2021 2022 2023 2024 Thereafter Total Operating Lease Payments 132 127 98 75 54 102 $ 588 Less imputed interest (95) Total Discounted Lease Liability $ 493 |
Schedule of future minimum rental payments under non-cancelable leases | As of February 3, 2019, future minimum aggregate rental payments under non-cancelable leases were as follows (amounts in millions): Fiscal Year 2019 2020 2021 2022 2023 Thereafter Total Operating Leases $ 140 104 88 61 42 78 $ 513 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Feb. 02, 2020 | |
INCOME TAXES | |
Components of Income from Continuing Operations before Provision for Income Taxes | The components of Income from Continuing Operations before Provision for Income Taxes are as follows (amounts in millions): Fiscal Year Ended February 2, February 3, January 28, 2020 2019 2018 United States $ 603 $ 516 $ 352 Foreign 10 10 8 Total $ 613 $ 526 $ 360 |
Provision for Income Taxes | The Provision for Income Taxes consisted of the following (amounts in millions): Fiscal Year Ended February 2 February 3, January 28, 2020 2019 2018 Current: Federal $ 29 $ — $ 5 State 12 8 3 Foreign 3 3 2 44 11 10 Deferred: Federal 98 108 186 State 20 16 (3) 118 124 183 Total $ 162 $ 135 $ 193 |
Reconciliation of the provision (benefit) for income taxes from continuing operations at the federal statutory rate of 35% to the actual tax provision (benefit) | The reconciliation of the provision for income taxes from continuing operations at the federal statutory rate of 21% to the actual tax provision for fiscal 2019 and fiscal 2018 and the federal statutory rate of 33.9% to the actual tax provision for fiscal 2017 is as follows (amounts in millions): Fiscal year Ended February 2, February 3, January 28, 2020 2019 2018 Income taxes at federal statutory rate $ 129 $ 110 $ 122 State income taxes, net of federal income tax benefit 34 24 13 Foreign rate differential — — (1) Valuation allowance (1) — 1 Adjustments to tax reserves (1) — (1) Tax Cuts and Jobs Act of 2017 — — 72 Excess tax benefits related to stock-based compensation(1) (2) (2) (16) Global Intangible Low-Tax Income 1 2 — Other, net 2 1 3 Total provision $ 162 $ 135 $ 193 (1) The adoption of ASU 2016-09 in fiscal 2017 requires excess tax benefits from share-based awards activity to be reflected as a reduction of the provision for income taxes, whereas they were previously recognized in Stockholders’ Equity. |
Significant portions of the deferred tax assets and deferred tax liabilities | The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of February 2, 2020 and February 3, 2019 were as follows (amounts in millions): February 2, February 3, 2020 2019 Deferred Tax Assets: Accrued compensation $ 11 $ 12 Accrued self-insurance liabilities 10 9 Other accrued liabilities 11 13 Restructuring liabilities 6 7 Net operating loss carryforward 36 99 Fixed assets — 1 Allowance for doubtful accounts 4 4 Inventory 28 26 Tax credit carryforward 5 40 Cash flow hedge 13 5 Lease liabilities 127 — Valuation allowance (6) (7) Noncurrent deferred tax assets 245 209 Deferred Tax Liabilities: Prepaid expense $ (1) $ — Deferred financing costs (1) (2) Fixed assets (10) — Software costs (17) (11) Intangible assets (123) (118) Operating lease right-of-use assets (124) — Noncurrent deferred tax liabilities (276) (131) Deferred tax assets (liabilities), net $ (31) $ 78 |
Reconciliation of the beginning and ending amount of unrecognized tax benefits for continuing operations | Fiscal Year Ended February 2, February 3, January 28, 2020 2019 2018 Unrecognized Tax Benefits beginning of period $ 17 $ 16 $ 10 Gross increases for tax positions in current period 1 1 6 Gross decreases for tax positions in prior period (1) — — Unrecognized Tax Benefits end of period $ 17 $ 17 $ 16 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 12 Months Ended |
Feb. 02, 2020 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | |
Schedule of changes in AOCI | The following table presents the balances and changes in AOCI, net of tax, by component for the periods indicated (amounts in millions): February 2, February 3, January 28, Foreign currency translation adjustment: Beginning balance $ (15) $ (17) $ (15) Other comprehensive income (loss) before reclassifications — 2 (2) Amounts reclassified from AOCI into earnings — — — Ending balance $ (15) $ (15) $ (17) Cash flow hedge, net of tax: Beginning balance $ (15) $ — $ — Other comprehensive income (loss) before reclassifications (28) (17) — Amounts reclassified from AOCI into earnings(1) 6 1 — Other — 1 — Ending balance, net of tax of $8 and $5 $ (22) $ (15) $ — Total ending balance of AOCI $ (52) $ (30) $ — (1) Unrealized loss reclassified into Interest expense. |
STOCK-BASED COMPENSATION AND _2
STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS (Tables) | 12 Months Ended |
Feb. 02, 2020 | |
STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS | |
Summary of option activity | A summary of option activity under the HDS Plans is presented below (shares in thousands): Number of Weighted Average Shares Option Price Outstanding at January 29, 2017 4,163 $ 19.42 Granted 920 42.34 Exercised (2,308) 16.45 Forfeited (356) 34.43 Outstanding at January 28, 2018 2,419 $ 28.77 Granted 773 36.93 Exercised (476) 20.32 Forfeited (219) 37.68 Outstanding at February 3, 2019 2,497 $ 32.13 Granted 813 43.09 Exercised (264) 20.80 Forfeited (220) 28.33 Outstanding at February 2, 2020 2,826 $ 35.79 |
Option pricing with weighted average assumptions | Fiscal Year Ended February 2, February 3, January 28, 2020 2019 2018 Risk-free interest rate 2.51 % 2.74 % 2.08 % Dividend yield 0.0 % 0.0 % 0.0 % Expected volatility factor 26.4 % 29.1 % 29.8 % Expected option life in years 6.25 6.25 6.25 |
Summary of RSA, RSU and PA activity | A summary of RSA, RSU, and PA activity under the HDS Plans is presented below (shares in thousands): Number of Weighted Average Shares Grant Date Fair Value Non-vested at January 29, 2017 1,550 $ 27.07 Granted 464 41.50 Vested (644) 27.51 Forfeited (301) 31.39 Non-vested at January 28, 2018 1,069 $ 32.02 Granted 491 37.23 Vested (570) 30.00 Forfeited (94) 35.63 Non-vested at February 3, 2019 896 $ 35.82 Granted 557 42.49 Vested (414) 34.68 Forfeited (115) 39.17 Non-vested at February 2, 2020 924 $ 39.93 |
BASIC AND DILUTED WEIGHTED-AV_2
BASIC AND DILUTED WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING (Tables) | 12 Months Ended |
Feb. 02, 2020 | |
BASIC AND DILUTED WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING | |
Schedule of reconciliation of basic to diluted weighted-average common shares | The reconciliation of basic to diluted weighted-average common shares outstanding for fiscal 2019, fiscal 2018, and fiscal 2017 is as follows (in thousands): Fiscal Year Ended February 2, February 3, January 28, 2020 2019 2018 Weighted-average common shares outstanding 166,405 181,099 192,236 Effect of potentially dilutive stock plan securities 584 830 1,432 Diluted weighted-average common shares outstanding 166,989 181,929 193,668 Stock plan securities excluded from dilution (1) 2,802 1,924 1,967 (1) Represents stock options, restricted stock, restricted stock units, and/or performance awards (collectively “stock plan securities”) not included in the computation of diluted earnings per share because their effect would have been anti-dilutive. |
SUPPLEMENTAL BALANCE SHEET AN_2
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION (Tables) | 12 Months Ended |
Feb. 02, 2020 | |
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION | |
Schedule of Receivables | Receivables as of February 2, 2020 and February 3, 2019 consisted of the following (amounts in millions): February 2, February 3, 2020 2019 Trade receivables, net of allowance for doubtful accounts $ 674 $ 657 Vendor rebate receivables 65 57 Other receivables 15 18 Total receivables, net $ 754 $ 732 |
Schedule of Property and Equipment | Property and equipment as of February 2, 2020 and February 3, 2019 consisted of the following (amounts in millions): February 2, February 3, 2020 2019 Land $ 12 $ 14 Buildings and improvements 311 296 Transportation equipment 76 66 Furniture, fixtures and equipment 332 269 Capitalized software 302 258 Construction in progress 35 55 Property and equipment 1,068 958 Less accumulated depreciation & amortization (677) (588) Property and equipment, net $ 391 $ 370 |
Schedule of other current liabilities | Other current liabilities as of February 2, 2020 and February 3, 2019 consisted of the following (amounts in millions): HD Supply Holdings, Inc. HD Supply, Inc. February 2, February 3, February 2, February 3, 2020 2019 2020 2019 Corporate headquarters financing liability(1) $ — $ 87 $ — $ 87 Accrued legal 50 1 50 1 Accrued non-income taxes 33 35 33 35 Accrued interest 13 14 13 14 Unsettled share repurchases — 2 — — Other 112 120 112 120 Total other current liabilities $ 208 $ 259 $ 208 $ 257 (1) This amount represented the financing liability for the Company’s corporate headquarters that was purchased on February 4, 2019. Please see “Note 9, Leases” for further information on the purchase of the Company’s corporate headquarters. |
Schedule of Holdings? share repurchases | Holdings’ share repurchases under these plans were as follows (dollars in millions): Fiscal Year 2019 Fiscal Year 2018 Fiscal Year 2017 Number Cost of Number Cost of Number Cost of November 2018 Plan 9,637,613 $ 375 3,313,797 $ 125 — — August 2017 Plan — — 12,159,013 459 1,150,699 $ 41 June 2017 Plan — — — — 15,940,337 500 April 2014 Plan 222,792 9 313,740 13 1,145,590 43 Total share repurchases 9,860,405 $ 384 15,786,550 $ 597 18,236,626 $ 584 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Feb. 02, 2020 | |
SEGMENT INFORMATION | |
Schedule of net sales, Adjusted EBITDA, and other measures for each of the reportable segments and total continuing operations | The following tables present Net sales, Adjusted EBITDA, and certain other measures for each of the reportable segments and total continuing operations for the periods indicated (amounts in millions): Fiscal Year 2019 Total Facilities Construction & Corporate & Continuing Maintenance Industrial Eliminations Operations Net sales $ 3,130 $ 3,019 $ (3) $ 6,146 Adjusted EBITDA 546 327 — 873 Depreciation(1) & Software Amortization 46 44 — 90 Other Intangible Amortization 8 15 — 23 Total Assets(2) 2,760 1,578 377 4,715 Capital Expenditures(2) 48 42 16 106 NOTE 17—SEGMENT INFORMATION (Continued) Fiscal Year 2018 Total Facilities Construction & Corporate & Continuing Maintenance Industrial Eliminations Operations Net sales $ 3,089 $ 2,961 $ (3) $ 6,047 Adjusted EBITDA 546 325 — 871 Depreciation(1) & Software Amortization 40 44 — 84 Other Intangible Amortization 8 14 — 22 Total Assets(2) 2,481 1,358 394 4,233 Capital Expenditures(2) 58 31 26 115 Fiscal Year 2017 Total Facilities Construction & Corporate & Continuing Maintenance Industrial Eliminations Operations Net sales $ 2,847 $ 2,279 $ (5) $ 5,121 Adjusted EBITDA 499 232 — 731 Depreciation(1) & Software Amortization 36 42 — 78 Other Intangible Amortization 9 3 — 12 Total Assets(2) 2,390 877 1,051 4,318 Capital Expenditures(2) 22 34 38 94 (1) Depreciation includes amounts recorded within Cost of sales in the Consolidated Statements of Operations. (2) Total Assets and capital expenditures include amounts attributable to discontinued operations for the periods prior to the dispositions. |
Schedule of reconciliation of adjusted EBITDA to income (loss) from continuing operations | Fiscal 2019 Fiscal 2018 Fiscal 2017 Total Adjusted EBITDA $ 873 $ 871 $ 731 Depreciation and amortization(1) 113 106 90 Stock-based compensation 23 26 26 Restructuring 8 9 6 Acquisition and integration costs(2) 5 6 — Other 1 — 1 Operating income 723 724 608 Interest expense 110 130 166 Interest income — (1) (2) Loss on extinguishment & modification of debt(3) — 69 84 Income from Continuing Operations Before Provision for Income Taxes 613 526 360 Provision for income taxes 162 135 193 Income from continuing operations $ 451 $ 391 $ 167 Income from discontinued operations, net of tax 1 3 803 Net income $ 452 $ 394 $ 970 (1) Depreciation includes amounts recorded within Cost of sales in the Consolidated Statements of Operations. (2) Represents the cost incurred in the acquisition and integration of business acquisitions, including A.H. Harris. (3) Represents the loss on extinguishment of debt including premium paid to repurchase or call the debt as well as the write-off of unamortized deferred financing costs, original issue discount, and other assets or liabilities associated with such debt. Also includes the costs of debt modifications. |
REVENUE (Tables)
REVENUE (Tables) | 12 Months Ended |
Feb. 02, 2020 | |
REVENUE | |
Schedule of Facilities Maintenance and Construction & Industrial with Inter-segment eliminations | The table below represents disaggregated revenue for Facilities Maintenance and Construction & Industrial with Inter-segment eliminations (amounts in millions): Fiscal Year Ended February 2, 2020 February 3, 2019 January 28, 2018 Facilities Maintenance Maintenance, Repair, and Operations $ 2,778 $ 2,734 $ 2,522 Property Improvement 352 355 325 Total Facilities Maintenance Net Sales 3,130 3,089 2,847 Construction & Industrial Non-Residential Construction 2,080 2,029 1,479 Residential Construction 746 748 643 Other 193 184 157 Total Construction & Industrial Net Sales 3,019 2,961 2,279 Inter-segment Eliminations (3) (3) (5) Total HD Supply Net Sales $ 6,146 $ 6,047 $ 5,121 |
QUARTERLY FINANCIAL DATA (UNA_2
QUARTERLY FINANCIAL DATA (UNAUDITED) (Tables) | 12 Months Ended |
Feb. 02, 2020 | |
QUARTERLY FINANCIAL DATA (UNAUDITED) | |
Summary of the quarterly consolidated results of operations | The following is a summary of the quarterly consolidated results of operations for the fiscal years ended February 2, 2020 and February 3, 2019 (amounts in millions): First Second Third Fourth Quarter Quarter Quarter Quarter TOTAL Fiscal 2019 Net sales $ 1,493 $ 1,624 $ 1,644 $ 1,385 $ 6,146 Gross profit 585 633 640 545 2,403 Income from continuing operations 107 135 131 78 451 Income from discontinued operations — — 1 — 1 Net income 107 135 132 78 452 Basic earnings per share(1) Income from continuing operations $ 0.63 $ 0.80 $ 0.80 $ 0.48 $ 2.71 Income from discontinued operations — — 0.01 — 0.01 Net income 0.63 0.80 0.80 0.48 2.72 Diluted earnings per share(1) Income from continuing operations $ 0.63 $ 0.79 $ 0.79 $ 0.48 $ 2.70 Income from discontinued operations — — 0.01 — 0.01 Net income 0.63 0.79 0.80 0.48 2.71 Fiscal 2018 Net sales $ 1,389 $ 1,600 $ 1,612 $ 1,446 $ 6,047 Gross profit 552 622 629 572 2,375 Income from continuing operations 89 130 82 90 391 Income from discontinued operations — 1 — 2 3 Net income 89 131 82 92 394 Basic earnings per share(1) Income from continuing operations $ 0.48 $ 0.71 $ 0.45 $ 0.51 $ 2.16 Income from discontinued operations — 0.01 — 0.01 0.02 Net income 0.48 0.72 0.45 0.53 2.18 Diluted earnings per share(1) Income from continuing operations $ 0.48 $ 0.71 $ 0.45 $ 0.51 $ 2.15 Income from discontinued operations — 0.01 — 0.01 0.02 Net income 0.48 0.71 0.45 0.52 2.17 (1) Basic and Diluted earnings per share are based on shares outstanding for Holdings. Quarterly earnings per share amounts may not foot due to rounding. In addition, quarterly earnings per share amounts may not add to full-year earnings per share amounts due to the difference in weighted-average common shares for the quarters versus the weighted-average common shares for the year. |
NATURE OF BUSINESS AND SUMMAR_4
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Nature of Business (Details) | 12 Months Ended |
Feb. 02, 2020categoryproductitememployeesegmentcustomer | |
Nature of Business | |
Number of distinct market sectors in which entity specializes | category | 2 |
Number of associates | employee | 11,500 |
Number of customers | customer | 500,000 |
Number of SKUs offered | product | 600,000 |
Number of reportable segments | segment | 2 |
U.S. and Canada | |
Nature of Business | |
Number of branches | 270 |
Number of distribution centers | 44 |
NATURE OF BUSINESS AND SUMMAR_5
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fiscal Year (Details) | 12 Months Ended | |||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | Jan. 29, 2017 | |
Length of fiscal year (in days) | 364 days | 371 days | 364 days | 364 days |
Minimum | ||||
Length of fiscal year (in days) | 364 days | |||
Maximum | ||||
Length of fiscal year (in days) | 371 days |
NATURE OF BUSINESS AND SUMMAR_6
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Consideration Received from Vendors (Details) - USD ($) $ in Millions | Feb. 02, 2020 | Feb. 03, 2019 |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Vendor rebates receivables | $ 65 | $ 57 |
NATURE OF BUSINESS AND SUMMAR_7
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment (Details) | 12 Months Ended |
Feb. 02, 2020 | |
Buildings and improvements | Minimum | |
Property and Equipment | |
Estimated useful life | 5 years |
Buildings and improvements | Maximum | |
Property and Equipment | |
Estimated useful life | 45 years |
Transportation equipment | Minimum | |
Property and Equipment | |
Estimated useful life | 5 years |
Transportation equipment | Maximum | |
Property and Equipment | |
Estimated useful life | 7 years |
Furniture, fixtures and equipment | Minimum | |
Property and Equipment | |
Estimated useful life | 3 years |
Furniture, fixtures and equipment | Maximum | |
Property and Equipment | |
Estimated useful life | 10 years |
NATURE OF BUSINESS AND SUMMAR_8
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Capitalized Software Costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
Capitalized Software Costs | |||
Property and equipment, net | $ 391 | $ 370 | |
Accumulated amortization | 677 | 588 | |
Amortization cost | $ 113 | 106 | $ 97 |
Capitalized software | |||
Capitalized Software Costs | |||
Estimated useful life | 3 years | ||
Property and equipment, net | $ 53 | 33 | |
Accumulated amortization | 249 | 225 | |
Amortization cost | $ 24 | $ 23 | $ 24 |
NATURE OF BUSINESS AND SUMMAR_9
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Goodwill (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Goodwill impairment charges | $ 0 | $ 0 | $ 0 |
NATURE OF BUSINESS AND SUMMA_10
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Self-Insurance (Details) - USD ($) $ in Millions | Feb. 02, 2020 | Feb. 03, 2019 |
Continuing Operations | ||
NATURE OF BUSINESS AND BASIS OF PRESENTATION | ||
Self-insurance reserves | $ 50 | $ 49 |
NATURE OF BUSINESS AND SUMMA_11
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Recognition (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
Revenues from services | $ 6,146 | ||
HD Supply, Inc. (Total HDS) | |||
Revenues from services | $ 48 | $ 49 | $ 37 |
NATURE OF BUSINESS AND SUMMA_12
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Shipping and Handling Fees and Costs (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Shipping and handling costs | $ 119 | $ 111 | $ 99 |
NATURE OF BUSINESS AND SUMMA_13
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Advertising (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
Advertising expenses | $ 37 | $ 37 | $ 33 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) - USD ($) $ in Millions | Mar. 05, 2018 | Nov. 03, 2019 | Feb. 02, 2020 | Feb. 03, 2019 |
ACQUISITIONS | ||||
Goodwill | $ 1,991 | $ 1,990 | ||
A.H. Harris | ||||
ACQUISITIONS | ||||
Purchase price, net of cash acquired | $ 359 | |||
Proceeds from working capital | $ 3 | |||
Goodwill | 182 | |||
Definite-lived intangible assets | 123 | |||
Property & equipment | 12 | |||
Net working capital | 54 | |||
Deferred tax liabilities | 10 | |||
Goodwill expected to be deductible for tax purposes | 19 | |||
A.H. Harris | Customer relationships | ||||
ACQUISITIONS | ||||
Definite-lived intangible assets | $ 110 | |||
Estimated amortization periods | 12 years | |||
A.H. Harris | Trade names | ||||
ACQUISITIONS | ||||
Definite-lived intangible assets | $ 13 | |||
Estimated amortization periods | 5 years |
DISCONTINUED OPERATIONS - Gener
DISCONTINUED OPERATIONS - General Information (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | ||
Jan. 31, 2018 | Aug. 31, 2017 | Feb. 03, 2019 | Jan. 28, 2018 | |
DISCONTINUED OPERATIONS | ||||
Proceeds from sales of businesses, net | $ 2,421 | |||
Discontinued operations | ||||
DISCONTINUED OPERATIONS | ||||
Proceeds from sales of businesses, net | 2,421 | |||
Pre-tax gain (loss) on disposal of discontinued operations | $ 934 | |||
Waterworks business | Discontinued operations | ||||
DISCONTINUED OPERATIONS | ||||
Proceeds from sales of businesses, net | $ 2,400 | |||
Transaction costs | $ 38 | |||
Working capital settlement | $ 29 | |||
Pre-tax gain (loss) on disposal of discontinued operations | $ 732 | |||
Tax effect of gain from disposal of discontinued operations | $ 197 |
DISCONTINUED OPERATIONS - Resul
DISCONTINUED OPERATIONS - Results of Operations (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||||
Nov. 03, 2019 | Feb. 03, 2019 | Jul. 29, 2018 | Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
Operating expenses: | ||||||
Income from discontinued operations, net of tax | $ 1 | $ 2 | $ 1 | $ 1 | $ 3 | $ 803 |
Discontinued operations | ||||||
Results of operations of the discontinued operations | ||||||
Net sales | 1,413 | |||||
Cost of sales | 1,100 | |||||
Gross Profit | 313 | |||||
Operating expenses: | ||||||
Selling, general and administrative | 1 | 2 | 197 | |||
Depreciation and amortization | 6 | |||||
Total operating expenses | (1) | (2) | 203 | |||
Operating Income | 1 | 2 | 110 | |||
(Gain) loss on disposal of discontinued operations | (934) | |||||
Other (Income) expense, net | 1 | |||||
Income before provision for income taxes | 1 | 2 | 1,043 | |||
Provision (benefit) for income taxes | (1) | 240 | ||||
Income from discontinued operations, net of tax | $ 1 | $ 3 | $ 803 |
DISCONTINUED OPERATIONS - Net C
DISCONTINUED OPERATIONS - Net Cash Provided by Operating Activities and Investing Activities (Details) - USD ($) $ in Millions | 12 Months Ended | |
Feb. 02, 2020 | Jan. 28, 2018 | |
Cash flows from investing activities: | ||
Proceeds from sales of businesses, net | $ 2,421 | |
Proceeds from sales of property and equipment, net | $ 3 | 2 |
Discontinued operations | ||
Net cash provided by operating and investing activities of the discontinued operations | ||
Net cash flows provided by (used in) operating activities | 27 | |
Cash flows from investing activities: | ||
Capital expenditures | (5) | |
Proceeds from sales of businesses, net | 2,421 | |
Proceeds from sales of property and equipment, net | 2 | |
Net cash flows provided by (used in) investing activities | $ 2,418 |
RELATED PARTIES - Sales (Detail
RELATED PARTIES - Sales (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
HDS Customer | HD Supply, Inc. (Total HDS) | Board member | |||
RELATED PARTIES | |||
Products sold | $ 4 | $ 5 | $ 3 |
GOODWILL AND INTANGIBLE ASSET_2
GOODWILL AND INTANGIBLE ASSETS - Goodwill - Carrying Amount by Reporting Unit (Details) - USD ($) $ in Millions | Feb. 02, 2020 | Feb. 03, 2019 | Mar. 05, 2018 |
Goodwill by reporting unit | |||
Gross Goodwill | $ 2,095 | $ 2,094 | |
Accumulated Impairments | (104) | (104) | |
Net Goodwill | 1,991 | 1,990 | |
A.H. Harris | |||
Goodwill by reporting unit | |||
Net Goodwill | $ 182 | ||
Reportable segment | Facilities Maintenance | |||
Goodwill by reporting unit | |||
Gross Goodwill | 1,605 | 1,603 | |
Net Goodwill | 1,605 | 1,603 | |
Reportable segment | Construction & Industrial - White Cap | |||
Goodwill by reporting unit | |||
Gross Goodwill | 365 | 366 | |
Accumulated Impairments | (74) | (74) | |
Net Goodwill | 291 | 292 | |
Corporate & Eliminations | Home Improvement Solutions | |||
Goodwill by reporting unit | |||
Gross Goodwill | 125 | 125 | |
Accumulated Impairments | (30) | (30) | |
Net Goodwill | $ 95 | $ 95 |
GOODWILL AND INTANGIBLE ASSET_3
GOODWILL AND INTANGIBLE ASSETS - Intangible Assets - Tabular Disclosure (Details) - USD ($) $ in Millions | Feb. 02, 2020 | Feb. 03, 2019 |
Intangible Assets | ||
Gross Intangible | $ 318 | $ 310 |
Accumulated Amortization | (143) | (119) |
Net Intangible | 175 | 191 |
Customer relationships | ||
Intangible Assets | ||
Gross Intangible | 167 | 159 |
Accumulated Amortization | (52) | (38) |
Net Intangible | 115 | 121 |
Trade names | ||
Intangible Assets | ||
Gross Intangible | 151 | 151 |
Accumulated Amortization | (91) | (81) |
Net Intangible | $ 60 | $ 70 |
GOODWILL AND INTANGIBLE ASSET_4
GOODWILL AND INTANGIBLE ASSETS - Intangible Assets - Amortization Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
GOODWILL AND INTANGIBLE ASSETS | |||
Amortization expense of intangible assets | $ 23 | $ 22 | $ 12 |
GOODWILL AND INTANGIBLE ASSET_5
GOODWILL AND INTANGIBLE ASSETS - Intangible Assets - Estimated Future Amortization Expense (Details) $ in Millions | Feb. 02, 2020USD ($) |
Estimated future amortization expense for continuing operations | |
2020 | $ 24 |
2021 | 24 |
2022 | 24 |
2023 | 19 |
2024 | $ 17 |
DEBT - 2018 Refinancing Transac
DEBT - 2018 Refinancing Transactions (Details) - USD ($) $ in Millions | Feb. 03, 2019 | Oct. 22, 2018 | Oct. 11, 2018 | Dec. 28, 2017 | Aug. 31, 2017 | Aug. 25, 2017 | Apr. 18, 2017 | Apr. 05, 2017 | Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | Apr. 15, 2019 |
DEBT | ||||||||||||
Modification and extinguishment charge | $ (69) | $ (84) | ||||||||||
Accrued but unpaid interest paid | $ 105 | 121 | 159 | |||||||||
Loss on extinguishment & modification of debt | $ 69 | $ 84 | ||||||||||
Secured debt | Credit facility | Term Loan Facility | ||||||||||||
DEBT | ||||||||||||
Write-off of unamortized deferred financing costs | $ 2 | |||||||||||
HDS | Senior ABL Facility due 2022 | ||||||||||||
DEBT | ||||||||||||
Loss on extinguishment & modification of debt | $ 3 | |||||||||||
HDS | Secured debt | Senior ABL Facility due 2022 | ||||||||||||
DEBT | ||||||||||||
Loss on extinguishment & modification of debt | $ 1 | |||||||||||
Write-off of unamortized deferred financing costs | $ 1 | |||||||||||
HDS | Secured debt | Term B-1 Loans due 2021 | ||||||||||||
DEBT | ||||||||||||
Aggregate principal amount | $ 842 | |||||||||||
HDS | Secured debt | October 2018 Senior Unsecured Notes due 2026 | ||||||||||||
DEBT | ||||||||||||
Interest rate, stated rate (as a percent) | 5.375% | 5.375% | 5.375% | |||||||||
HDS | Secured debt | Credit facility | Term Loan Facility | ||||||||||||
DEBT | ||||||||||||
Modification and extinguishment charge | (3) | |||||||||||
Write-off of financing fees and other costs | 1 | |||||||||||
Write-off of unamortized deferred financing costs | 2 | |||||||||||
HDS | Secured debt | Credit facility | Senior ABL Facility due 2022 | ||||||||||||
DEBT | ||||||||||||
Aggregate principal amount | $ 1,000 | |||||||||||
HDS | Secured debt | Credit facility | Term B-3 Loans due 2021 | ||||||||||||
DEBT | ||||||||||||
Aggregate principal amount | 535 | |||||||||||
HDS | Secured debt | Credit facility | Term B-1 Loans due 2021 | ||||||||||||
DEBT | ||||||||||||
Loss on extinguishment & modification of debt | $ 2 | |||||||||||
Write-off of unamortized deferred financing costs | $ 1 | |||||||||||
HDS | Secured debt | Credit facility | Term B-4 Loans due 2023 | ||||||||||||
DEBT | ||||||||||||
Aggregate principal amount | $ 546 | |||||||||||
Amortization of debt, aggregate annual amounts as a percentage of original principal amount (as a percent) | 1.00% | 1.00% | ||||||||||
HDS | Secured debt | Credit facility | Term B-5 Loans due 2023 | ||||||||||||
DEBT | ||||||||||||
Aggregate principal amount | $ 1,070 | $ 1,070 | ||||||||||
Amortization of debt, aggregate annual amounts as a percentage of original principal amount (as a percent) | 1.00% | 1.00% | ||||||||||
Consent fees | 5 | |||||||||||
Modification and extinguishment charge | (5) | |||||||||||
Write-off of financing fees and other costs | $ 3 | |||||||||||
HDS | Unsecured debt | October 2018 Senior Unsecured Notes due 2026 | ||||||||||||
DEBT | ||||||||||||
Aggregate principal amount | $ 750 | |||||||||||
Interest rate, stated rate (as a percent) | 5.375% | |||||||||||
Proceeds from debt, net of transaction fees | $ 741 | |||||||||||
Transaction fees reflected as deferred financing costs | $ 9 | |||||||||||
HDS | Unsecured debt | 5.75% April 2016 Senior Unsecured Notes due 2024 | ||||||||||||
DEBT | ||||||||||||
Interest rate, stated rate (as a percent) | 5.75% | 7.00% | ||||||||||
Redemption of outstanding principal of long-term debt | $ 1,000 | |||||||||||
Payment of make-whole premium on debt | 56 | |||||||||||
Accrued but unpaid interest paid | 28 | |||||||||||
Loss on extinguishment & modification of debt | $ 3 | |||||||||||
Write-off of unamortized deferred financing costs | 8 | |||||||||||
HDS | Unsecured debt | Credit facility | 5.75% April 2016 Senior Unsecured Notes due 2024 | ||||||||||||
DEBT | ||||||||||||
Loss on extinguishment & modification of debt | $ 64 | |||||||||||
LIBOR | HDS | Secured debt | Credit facility | Term B-5 Loans due 2023 | ||||||||||||
DEBT | ||||||||||||
Percentage added to reference rate (as a percent) | 1.75% | |||||||||||
Base | HDS | Secured debt | Credit facility | Term B-5 Loans due 2023 | ||||||||||||
DEBT | ||||||||||||
Percentage added to reference rate (as a percent) | 0.75% |
DEBT - Gross Long-term Debt - I
DEBT - Gross Long-term Debt - Interest Rate - Tabular Disclosure (Details) - HDS | Feb. 02, 2020 | Apr. 15, 2019 | Feb. 03, 2019 | Oct. 11, 2018 | Sep. 01, 2017 |
Secured debt | October 2018 Senior Unsecured Notes due 2026 | |||||
DEBT | |||||
Interest rate, stated rate (as a percent) | 5.375% | 5.375% | |||
Secured debt | 5.25% December 2014 Secured First Priority Notes due 2021 | |||||
DEBT | |||||
Interest rate, stated rate (as a percent) | 5.25% | ||||
Secured debt | Credit facility | Senior ABL Facility due 2022 | |||||
DEBT | |||||
Interest rate, rate at end of period (as a percent) | 3.15% | 3.83% | |||
Secured debt | Credit facility | Term B-5 Loans due 2023 | |||||
DEBT | |||||
Interest rate, rate at end of period (as a percent) | 3.40% | 4.25% | |||
Unsecured debt | October 2018 Senior Unsecured Notes due 2026 | |||||
DEBT | |||||
Interest rate, stated rate (as a percent) | 5.375% | ||||
Unsecured debt | 5.75% April 2016 Senior Unsecured Notes due 2024 | |||||
DEBT | |||||
Interest rate, stated rate (as a percent) | 7.00% | 5.75% |
DEBT - Gross Long-term Debt - O
DEBT - Gross Long-term Debt - Outstanding Principal - Tabular Disclosure (Details) - USD ($) $ in Millions | Feb. 02, 2020 | Feb. 03, 2019 |
DEBT | ||
Total gross long-term debt | $ 2,067 | $ 2,165 |
HDS | Secured debt | October 2018 Senior Unsecured Notes due 2026 | ||
DEBT | ||
Total gross long-term debt | 750 | 750 |
HDS | Secured debt | Credit facility | Senior ABL Facility due 2022 | ||
DEBT | ||
Total gross long-term debt | 260 | 348 |
HDS | Secured debt | Credit facility | Term B-3 Loans due 2021 | ||
DEBT | ||
Total gross long-term debt | 530 | |
HDS | Secured debt | Credit facility | Term B-4 Loans due 2023 | ||
DEBT | ||
Total gross long-term debt | 540 | |
HDS | Secured debt | Credit facility | Term B-5 Loans due 2023 | ||
DEBT | ||
Total gross long-term debt | $ 1,057 | $ 1,067 |
DEBT - Total Long-term Debt, Ex
DEBT - Total Long-term Debt, Excluding Current Installments - Tabular Disclosure (Details) - USD ($) $ in Millions | Feb. 02, 2020 | Feb. 03, 2019 |
DEBT | ||
Total net long-term debt | $ 2,046 | $ 2,140 |
Less current installments | (11) | (11) |
Total net long-term debt, excluding current installments | $ 2,035 | $ 2,129 |
DEBT - Senior ABL Facility (Det
DEBT - Senior ABL Facility (Details) $ in Millions | 12 Months Ended | ||
Feb. 02, 2020USD ($)facility | Feb. 03, 2019USD ($) | Dec. 28, 2017USD ($) | |
DEBT | |||
Outstanding borrowings | $ 2,067 | $ 2,165 | |
HDS | Senior ABL Facility due 2022 | |||
DEBT | |||
Line of credit facility, Excess Availability for borrowing | $ (1,000) | ||
Secured debt | HDS | Credit facility | Senior ABL Facility due 2022 | |||
DEBT | |||
Aggregate principal amount | 1,000 | ||
Line of credit facility, Excess Availability for borrowing | 598 | ||
Letter of credit facility outstanding | 24 | ||
Line of credit facility, available for borrowing on qualifying cash balances | $ 4 | ||
The minimum number of incremental term loan facilities permitted to be included in the Senior ABL Facility | facility | 1 | ||
The minimum number of revolving credit facility commitments permitted to be included in the Senior ABL Facility | facility | 1 | ||
Outstanding borrowings | $ 260 | $ 348 | |
Borrowing capacity including all incremental commitments | $ 1,000 | ||
Collateral pledged, percentage outstanding capital of any foreign subsidiary | 65.00% | ||
Excess availability amount that requires maintaining a fixed charge coverage ratio | $ 100 | ||
Percentage of lower of the borrowings base and the total facility commitments that requires maintaining a fixed charge coverage ratio | 10.00% | ||
Required fixed charge coverage ratio in event of Liquidity Event | 1 |
DEBT - Total Net Long-term Debt
DEBT - Total Net Long-term Debt - Tabular Disclosure (Details) - USD ($) $ in Millions | Feb. 02, 2020 | Feb. 03, 2019 |
DEBT | ||
Total gross long-term debt | $ 2,067 | $ 2,165 |
Less unamortized discount | (3) | (4) |
Less unamortized deferred financing costs | (18) | (21) |
Total net long-term debt | $ 2,046 | $ 2,140 |
DEBT - 5.375% Senior Unsecured
DEBT - 5.375% Senior Unsecured Notes due 2026 (Details) - Unsecured debt - October 2018 Senior Unsecured Notes due 2026 - USD ($) $ in Millions | 12 Months Ended | |
Feb. 02, 2020 | Oct. 11, 2018 | |
Prior to October 15, 2021 | ||
DEBT | ||
Threshold percentage for debt that must remain after each redemption | 50.00% | |
HDS | ||
DEBT | ||
Aggregate principal amount | $ 750 | |
Note issued, interest rate | 5.375% | |
HDS | Prior to October 15, 2021 | ||
DEBT | ||
Optional prepayment price percentage | 100.00% | |
Percentage limit on amount that can be redeemed | 40.00% | |
Prepayment percentage price as a percent of the principal, with proceeds from certain equity offerings | 105.375% | |
HDS | 2021 | ||
DEBT | ||
Optional prepayment price percentage | 102.688% | |
HDS | 2022 | ||
DEBT | ||
Optional prepayment price percentage | 101.344% | |
HDS | 2023 and thereafter | ||
DEBT | ||
Optional prepayment price percentage | 100.00% |
DEBT - Senior Term Loan Facilit
DEBT - Senior Term Loan Facility (Details) - HDS - Secured debt - Credit facility - USD ($) $ in Millions | Feb. 03, 2019 | Feb. 02, 2020 | Aug. 31, 2017 |
Term Loan Facility | |||
DEBT | |||
Excess cash flow provisions, prepayment offered | $ 0 | ||
Term B-5 Loans due 2023 | |||
DEBT | |||
Aggregate principal amount | $ 1,070 | ||
Amortization of debt, aggregate annual amounts as a percentage of original principal amount (as a percent) | 1.00% | ||
Term B-3 Loans due 2021 | |||
DEBT | |||
Aggregate principal amount | $ 535 | ||
Term B-4 Loans due 2023 | |||
DEBT | |||
Aggregate principal amount | $ 546 | ||
Amortization of debt, aggregate annual amounts as a percentage of original principal amount (as a percent) | 1.00% | ||
Senior ABL Facility due 2022 | |||
DEBT | |||
Aggregate principal amount | $ 1,000 | ||
Collateral pledged, percentage outstanding capital of any foreign subsidiary | 65.00% | ||
Term Loans Facility due 2021 | |||
DEBT | |||
Aggregate principal amount | $ 1,070 | ||
Collateral pledged, percentage outstanding capital of any foreign subsidiary | 65.00% | ||
LIBOR | Term B-5 Loans due 2023 | |||
DEBT | |||
Percentage added to reference rate (as a percent) | 1.75% | ||
Base | Term B-5 Loans due 2023 | |||
DEBT | |||
Percentage added to reference rate (as a percent) | 0.75% |
DEBT - 5.75% Senior Unsecured N
DEBT - 5.75% Senior Unsecured Notes due 2024 (Details) - HDS - Unsecured debt - 5.75% April 2016 Senior Unsecured Notes due 2024 - USD ($) $ in Millions | Oct. 11, 2018 | Apr. 15, 2019 |
DEBT | ||
Interest rate, stated rate (as a percent) | 5.75% | 7.00% |
Redemption of outstanding principal amount of long-term debt | $ 1,000 |
DEBT - Maturities of Long-term
DEBT - Maturities of Long-term Debt Outstanding (Details) - USD ($) $ in Millions | Feb. 02, 2020 | Feb. 03, 2019 |
Maturities of long-term debt outstanding | ||
2019 | $ 11 | |
2020 | 11 | |
2021 | 271 | |
2022 | 1,024 | |
Thereafter | 750 | |
Total | $ 2,067 | $ 2,165 |
DEBT - Fiscal 2016 Transactions
DEBT - Fiscal 2016 Transactions - (Details) - USD ($) $ in Millions | Sep. 01, 2017 | Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 |
DEBT | ||||
Interest Paid, Net | $ 105 | $ 121 | $ 159 | |
Loss on extinguishment & modification of debt | 69 | 84 | ||
Unamortized deferred financing costs | $ 18 | 21 | ||
Modification and extinguishment charge | $ (69) | $ (84) | ||
Secured debt | HDS | 5.25% December 2014 Secured First Priority Notes due 2021 | ||||
DEBT | ||||
Debt redeemed | $ 1,250 | |||
Interest rate, stated rate (as a percent) | 5.25% | |||
Aggregate redemption price of long term debt | $ 1,325 | |||
Interest Paid, Net | 14 | |||
Loss on extinguishment & modification of debt | $ 73 |
DEBT - Fiscal 2018 snf Fiscal 2
DEBT - Fiscal 2018 snf Fiscal 2017 Transactions (Details) | Oct. 22, 2018USD ($) | Oct. 11, 2018USD ($) | Dec. 28, 2017USD ($) | Sep. 01, 2017USD ($) | Aug. 31, 2017USD ($) | Aug. 25, 2017USD ($) | Apr. 18, 2017USD ($) | Apr. 05, 2017USD ($) | Feb. 03, 2019USD ($) | Jan. 28, 2018USD ($) | Feb. 02, 2020USD ($) | Apr. 15, 2019 |
DEBT | ||||||||||||
Loss on extinguishment and modification of debt | $ 69,000,000 | $ 84,000,000 | ||||||||||
Loss on extinguishment & modification of debt | 69,000,000 | $ 84,000,000 | ||||||||||
Unamortized original issue discount | 4,000,000 | $ 3,000,000 | ||||||||||
Unamortized deferred financing costs | $ 21,000,000 | 18,000,000 | ||||||||||
HDS | Senior ABL Facility due 2022 | ||||||||||||
DEBT | ||||||||||||
Debt redeemed | $ 500,000,000 | |||||||||||
Loss on extinguishment & modification of debt | $ 3,000,000 | |||||||||||
Secured debt | HDS | 5.25% December 2014 Secured First Priority Notes due 2021 | ||||||||||||
DEBT | ||||||||||||
Debt redeemed | $ 1,250,000,000 | |||||||||||
Aggregate redemption price of long term debt | 1,325,000,000 | |||||||||||
Loss on extinguishment & modification of debt | 73,000,000 | |||||||||||
Payment of make whole premium on debt | $ 62,000,000 | |||||||||||
Interest rate, stated rate (as a percent) | 5.25% | |||||||||||
Make-whole premium | $ 62,000,000 | |||||||||||
Write-off of unamortized deferred financing costs | $ 11,000,000 | |||||||||||
Secured debt | HDS | Term B-1 Loans due 2021 | ||||||||||||
DEBT | ||||||||||||
Payment of debt | $ 100,000,000 | |||||||||||
Aggregate principal amount | $ 842,000,000 | |||||||||||
Secured debt | HDS | Senior ABL Facility due 2022 | ||||||||||||
DEBT | ||||||||||||
Loss on extinguishment & modification of debt | $ 1,000,000 | |||||||||||
Write-off of unamortized deferred financing costs | $ 1,000,000 | |||||||||||
Unsecured debt | HDS | 5.75% April 2016 Senior Unsecured Notes due 2024 | ||||||||||||
DEBT | ||||||||||||
Consent fees paid | $ 15,000,000 | |||||||||||
Loss on extinguishment & modification of debt | $ 3,000,000 | |||||||||||
Payment of make whole premium on debt | $ 56,000,000 | |||||||||||
Interest rate, stated rate (as a percent) | 5.75% | 7.00% | ||||||||||
Write-off of unamortized deferred financing costs | $ 8,000,000 | |||||||||||
Maximum permitted debt payment allowed at a given time | $ 500,000,000 | |||||||||||
Unsecured debt | HDS | 5.75% April 2016 Senior Unsecured Notes due 2024 | Maximum | ||||||||||||
DEBT | ||||||||||||
Consolidated Total Leverage Ratio | 3 | |||||||||||
Unsecured debt | HDS | 5.75% April 2016 Senior Unsecured Notes due 2024 | Minimum | ||||||||||||
DEBT | ||||||||||||
Consolidated Total Leverage Ratio | 1 | |||||||||||
Credit facility | Secured debt | Term Loan Facility | ||||||||||||
DEBT | ||||||||||||
Write-off of unamortized deferred financing costs | $ 2,000,000 | |||||||||||
Credit facility | Secured debt | HDS | Term Loan Facility | ||||||||||||
DEBT | ||||||||||||
Consent fees paid | $ 1,000,000 | |||||||||||
Loss on extinguishment and modification of debt | 3,000,000 | |||||||||||
Write-off of financing fees and other costs | 1,000,000 | |||||||||||
Write-off of unamortized deferred financing costs | $ 2,000,000 | |||||||||||
Credit facility | Secured debt | HDS | Term Loan Facility | Maximum | ||||||||||||
DEBT | ||||||||||||
Consolidated Total Leverage Ratio | 3 | |||||||||||
Credit facility | Secured debt | HDS | Term Loan Facility | Minimum | ||||||||||||
DEBT | ||||||||||||
Consolidated Total Leverage Ratio | 1 | |||||||||||
Credit facility | Secured debt | HDS | Term B-1 Loans due 2021 | ||||||||||||
DEBT | ||||||||||||
Loss on extinguishment & modification of debt | 2,000,000 | |||||||||||
Write-off of unamortized deferred financing costs | 1,000,000 | |||||||||||
Write-off of unamortized original issue discount | $ 1,000,000 | |||||||||||
Credit facility | Secured debt | HDS | Term B-2 Loans due 2023 | ||||||||||||
DEBT | ||||||||||||
Aggregate principal amount | $ 550,000,000 | |||||||||||
Credit facility | Secured debt | HDS | Senior ABL Facility due 2022 | ||||||||||||
DEBT | ||||||||||||
Aggregate principal amount | $ 1,000,000,000 | |||||||||||
Credit facility | Unsecured debt | HDS | 5.75% April 2016 Senior Unsecured Notes due 2024 | ||||||||||||
DEBT | ||||||||||||
Loss on extinguishment & modification of debt | $ 64,000,000 |
DERIVATIVE INSTRUMENTS (Details
DERIVATIVE INSTRUMENTS (Details) - Derivatives designated as hedging instruments - Interest rate swap - Cash flow hedges - USD ($) $ in Millions | Oct. 23, 2018 | Feb. 02, 2020 | Feb. 03, 2019 | Oct. 24, 2018 |
DERIVATIVE INSTRUMENTS | ||||
Notional amount of derivative liability | $ 750 | |||
Fixed interest rate percentage | 3.07% | |||
Other long-term liabilities | ||||
DERIVATIVE INSTRUMENTS | ||||
Cash flow hedge liabilities at fair value | $ 50 | $ 20 | ||
Other current liabilities | ||||
DERIVATIVE INSTRUMENTS | ||||
Cash flow hedge liabilities at fair value | 12 | 4 | ||
Other liabilities | ||||
DERIVATIVE INSTRUMENTS | ||||
Cash flow hedge liabilities at fair value | $ 38 | $ 16 | ||
LIBOR | Term B-5 Loans due 2023 | ||||
DERIVATIVE INSTRUMENTS | ||||
Effective interest rate percentage | 4.82% | |||
Percentage added to reference rate (as a percent) | 1.75% |
FAIR VALUE MEASUREMENTS - Fair
FAIR VALUE MEASUREMENTS - Fair value on consolidated balance sheets (Details) - USD ($) $ in Millions | Feb. 02, 2020 | Feb. 03, 2019 |
Recorded Amount | ||
Financial instruments not reflected at fair value on the balance sheet | ||
Senior ABL Facility | $ 260 | $ 348 |
Term Loans and Notes | 1,807 | 1,817 |
Total | 2,067 | 2,165 |
Estimated Fair Value | Significant Other Observable Inputs (Level 2) | ||
Financial instruments not reflected at fair value on the balance sheet | ||
Senior ABL Facility | 260 | 346 |
Term Loans and Notes | 1,862 | 1,815 |
Total | $ 2,122 | $ 2,161 |
LEASES (Details)
LEASES (Details) - USD ($) $ in Millions | Feb. 04, 2019 | Feb. 02, 2020 | Jan. 28, 2018 |
LEASES | |||
ROU assets for operating leases | $ 430 | $ 480 | |
Operating lease liabilities | $ 447 | 493 | |
Cumulative-effect adjustment to retained earnings | $ (3) | $ 56 | |
Package of practical expedients | false | ||
Weighted average remaining lease term, operating leases | 5 years 8 months 26 days | ||
Weighted average discount rate, operating leases | 4.76% | ||
Operating leases: | |||
Operating Lease, Right-of-Use Asset | $ 430 | $ 480 | |
Cash paid for amounts included in measurement of liabilities: | |||
Operating cash flows from operating leases | 144 | ||
ROU assets obtained in exchange for lease liabilities | $ 173 | ||
ASU 2016-02 | |||
LEASES | |||
Cumulative-effect adjustment to retained earnings | $ 3 |
LEASES - Components of lease ex
LEASES - Components of lease expense (Details) $ in Millions | 12 Months Ended |
Feb. 02, 2020USD ($) | |
LEASES | |
Operating Lease Cost | $ 142 |
Short-term Lease Cost | 6 |
Variable Lease Cost | 6 |
Sublease Income | (5) |
Total Lease Cost | $ 149 |
LEASES - Maturities of Lease Li
LEASES - Maturities of Lease Liabilities (Details) - USD ($) $ in Millions | Feb. 02, 2020 | Feb. 04, 2019 |
Maturities of lease liabilities | ||
2020 | $ 132 | |
2021 | 127 | |
2022 | 98 | |
2023 | 75 | |
2024 | 54 | |
Thereafter | 102 | |
Operating Lease Payments | 588 | |
Less imputed interest | (95) | |
Total Discounted Lease Liability | $ 493 | $ 447 |
LEASES - Corporate headquarters
LEASES - Corporate headquarters (Details) - USD ($) $ in Millions | Feb. 04, 2019 | Feb. 28, 2018 |
LEASES | ||
Financing liability | $ 87 | |
Total purchase price | $ 88 |
LEASES - Periods prior to adopt
LEASES - Periods prior to adoption of ASU 842 (Details) - USD ($) $ in Millions | 12 Months Ended | |
Feb. 03, 2019 | Jan. 28, 2018 | |
LEASES | ||
Rental expense | $ 142 | $ 127 |
Future minimum aggregate rental payments under non-cancelable operating leases | ||
2019 | 140 | |
2020 | 104 | |
2021 | 88 | |
2022 | 61 | |
2023 | 42 | |
Thereafter | 78 | |
Total lease payments | $ 513 |
INCOME TAXES - Components of In
INCOME TAXES - Components of Income (Loss) from Continuing Operations before Provision (Benefits) for Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
Components of Income (Loss) from Continuing Operations before Provision (Benefit) for Income Taxes | |||
United States | $ 603 | $ 516 | $ 352 |
Foreign | 10 | 10 | 8 |
Income from Continuing Operations Before Provision for Income Taxes | $ 613 | $ 526 | $ 360 |
INCOME TAXES - Provision (Benef
INCOME TAXES - Provision (Benefit) for Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
Current: | |||
Federal | $ 29 | $ 5 | |
State | 12 | $ 8 | 3 |
Foreign | 3 | 3 | 2 |
Current Income Tax Expense (Benefit), Total | 44 | 11 | 10 |
Deferred: | |||
Federal | 98 | 108 | 186 |
State | 20 | 16 | (3) |
Total | 118 | 124 | 183 |
Total provision | $ 162 | $ 135 | $ 193 |
INCOME TAXES - Tax Rates (Detai
INCOME TAXES - Tax Rates (Details) | Dec. 22, 2017 | Dec. 21, 2017 | Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 |
INCOME TAXES | |||||
Combined federal, state and foreign effective tax rate for continuing operations (benefit) | 26.40% | 25.70% | 53.60% | ||
Federal statutory rate | 21.00% | 35.00% | 33.90% | ||
Actual tax provision | 21.00% | 21.00% |
INCOME TAXES - Tax Cuts and Job
INCOME TAXES - Tax Cuts and Jobs (Details) - USD ($) $ in Millions | Dec. 22, 2017 | Dec. 21, 2017 | Feb. 03, 2019 | Jan. 28, 2018 |
INCOME TAXES | ||||
Federal statutory rate | 21.00% | 35.00% | 33.90% | |
Re-measurement of deferred tax assets and liabilities | $ 72 |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of the Provision (Benefit) for Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
Reconciliation of the provision (benefit) for income taxes from continuing operations at the federal statutory rate | |||
Income taxes at federal statutory rate | $ 129 | $ 110 | $ 122 |
State income taxes, net of federal income tax benefit | 34 | 24 | 13 |
Foreign rate differential | (1) | ||
Valuation allowance | (1) | 1 | |
Adjustments to tax reserves | (1) | (1) | |
Tax Cuts and Jobs Act of 2017 | 47 | 72 | |
Excess tax benefits related to stock-based compensation | (2) | (2) | (16) |
Global Intangible Low-Tax Income | 1 | 2 | |
Other, net | 2 | 1 | 3 |
Total provision | $ 162 | $ 135 | $ 193 |
INCOME TAXES - Tax Effects of T
INCOME TAXES - Tax Effects of Temporary Differences that Give Rise to Significant Portions of Deferred Tax Assets, Net (Details) - USD ($) $ in Millions | Feb. 02, 2020 | Feb. 03, 2019 |
Deferred Tax Assets: | ||
Accrued compensation | $ 11 | $ 12 |
Accrued self-insurance liabilities | 10 | 9 |
Other accrued liabilities | 11 | 13 |
Restructuring liabilities | 6 | 7 |
Net operating loss carryforward | 36 | 99 |
Fixed assets | 1 | |
Allowance for doubtful accounts | 4 | 4 |
Inventory | 28 | 26 |
Tax credit carryforward | 5 | 40 |
Cash flow hedge | 13 | 5 |
Lease liabilities | 127 | |
Valuation allowance | (6) | (7) |
Noncurrent deferred tax assets | 245 | 209 |
Deferred Tax Liabilities: | ||
Prepaid expense | (1) | |
Deferred financing costs | (1) | (2) |
Fixed assets | (10) | |
Software costs | (17) | (11) |
Intangible assets | (123) | (118) |
Operating lease right-of-use assets | (124) | |
Noncurrent deferred tax liabilities | (276) | (131) |
Deferred tax assets (liabilities), net | $ 78 | |
Deferred tax assets (liabilities), net | $ (31) |
INCOME TAXES - Net Operating Lo
INCOME TAXES - Net Operating Loss Carryforwards (Details) - USD ($) $ in Millions | 12 Months Ended | |
Feb. 02, 2020 | Jan. 28, 2018 | |
Net operating loss carryforwards | ||
Tax-effected net operating loss carry forward | $ 47 | $ 72 |
State | ||
Net operating loss carryforwards | ||
Tax credit carry forward | $ 5 |
INCOME TAXES - Stock Compensati
INCOME TAXES - Stock Compensation (Details) - USD ($) $ in Millions | Jan. 30, 2017 | Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 |
Valuation allowance | ||||
Cumulative-effect adjustment to retained earnings | $ (3) | $ 56 | ||
Excess tax benefit on stock-based compensation expense | (2) | $ (2) | (16) | |
ASU No. 2016-09 | ||||
Valuation allowance | ||||
Cumulative-effect adjustment to retained earnings | $ 56 | |||
Excess tax benefit on stock-based compensation expense | $ 2 | $ 2 | $ 16 |
INCOME TAXES - Net Income Tax E
INCOME TAXES - Net Income Tax Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
Net income tax expense (benefit) | |||
Income tax expense (benefit) | $ 162 | $ 135 | $ 193 |
Discontinued Operation | |||
Net income tax expense (benefit) | |||
Income tax expense (benefit) | $ 0 | $ 1 |
INCOME TAXES - Net Current Rece
INCOME TAXES - Net Current Receivable (Payable) (Details) - USD ($) $ in Millions | Feb. 02, 2020 | Feb. 03, 2019 |
INCOME TAXES | ||
Federal, state and foreign income taxes net current receivable | $ 18 | $ 9 |
INCOME TAXES - Reconciliation_2
INCOME TAXES - Reconciliation of the Beginning and Ending Amount of Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
Reconciliation of beginning and ending amount of unrecognized tax benefits | |||
Unrecognized Tax Benefits beginning of period | $ 17 | $ 16 | $ 10 |
Gross increases for tax positions in current period | 1 | 1 | 6 |
Gross decreases for tax positions in prior period | (1) | ||
Unrecognized Tax Benefits end of period | $ 17 | $ 17 | $ 16 |
INCOME TAXES - Unrecognized Tax
INCOME TAXES - Unrecognized Tax Benefits and Interest and Penalties (Details) - USD ($) $ in Millions | Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 |
INCOME TAXES | |||
Net accrual for interest and penalties related to unrecognized tax benefits | $ 0 | $ 0 | $ 0 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
Changes in accumulated other comprehensive income (loss) | |||
Beginning balance | $ (30) | ||
Ending balance | (52) | (30) | |
Accumulated OCI, tax | 8 | 5 | |
Foreign currency translation adjustment | |||
Changes in accumulated other comprehensive income (loss) | |||
Beginning balance | (15) | (17) | (15) |
Other comprehensive income (loss) before reclassifications | 2 | (2) | |
Amounts reclassified from AOCI into earnings | |||
Ending balance | (15) | (15) | (17) |
Cash flow hedge, net of tax | |||
Changes in accumulated other comprehensive income (loss) | |||
Beginning balance | (15) | ||
Other comprehensive income (loss) before reclassifications | (28) | (17) | |
Amounts reclassified from AOCI into earnings | 6 | 1 | |
Other | 1 | ||
Ending balance | (22) | (15) | |
Accumulated OCI, tax | $ 8 | $ 5 |
STOCK-BASED COMPENSATION AND _3
STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS - Stock-Based Compensation Plans (Details) - ESPP $ in Millions | 12 Months Ended | ||
Feb. 02, 2020USD ($)periodshares | Feb. 03, 2019shares | Jan. 28, 2018shares | |
STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS | |||
Number of offering periods | period | 2 | ||
Offering period (in years) | 6 months | ||
Number of shares purchased by eligible associates (in shares) | 113,000 | 77,000 | 105,000 |
Recognized expense | 15.00% | ||
Not Recognized expense | 5.00% | ||
Stock-based compensation expense | $ | $ 1 | ||
Number of shares available for issuance (in shares) | 2,100,000 | ||
Minimum | |||
STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS | |||
Discount on the closing stock price (as a percent) | 5.00% | ||
Maximum | |||
STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS | |||
Discount on the closing stock price (as a percent) | 15.00% |
STOCK-BASED COMPENSATION AND _4
STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS - Employee Stock Purchase Plan (Details) - Plan shares in Millions | 12 Months Ended |
Feb. 02, 2020shares | |
STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS | |
Number of shares available for issuance (in shares) | 12.5 |
Authorized share return ratio | 1 |
Maximum | |
STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS | |
Authorized share ratio | 2.30 |
Minimum | |
STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS | |
Authorized share ratio | 1 |
STOCK-BASED COMPENSATION AND _5
STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS - Stock Options - General Disclosures (Details) - Stock options | 12 Months Ended |
Feb. 02, 2020 | |
Stock Options | |
Expiration period (in years) | 10 years |
Minimum age of an associate, non-qualified stock options may become non-forfeitable (in years) | 62 years |
Tenure of continuous service, non-qualified stock options may become non-forfeitable (in years) | 5 years |
Options vesting at a rate of 25% per year commencing on the first anniversary date of the grant | |
Stock Options | |
Vesting rate (as a percent) | 25.00% |
Vesting period (in years) | 1 year |
Options vesting at a rate of 100% commencing on the third anniversary date of the grant | |
Stock Options | |
Vesting rate (as a percent) | 100.00% |
Vesting period (in years) | 3 years |
STOCK-BASED COMPENSATION AND _6
STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS - Stock Option Activity (Details) - $ / shares shares in Thousands | 12 Months Ended | ||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
Number of Shares | |||
Outstanding, ending balance (in shares) | 2,800 | ||
Stock options | |||
Number of Shares | |||
Outstanding, beginning balance (in shares) | 2,497 | 2,419 | 4,163 |
Granted (in shares) | 813 | 773 | 920 |
Exercised (in shares) | (264) | (476) | (2,308) |
Forfeited (in shares) | (220) | (219) | (356) |
Outstanding, ending balance (in shares) | 2,826 | 2,497 | 2,419 |
Weighted Average Option Price | |||
Outstanding, beginning balance (in dollars per share) | $ 32.13 | $ 28.77 | $ 19.42 |
Granted (in dollars per share) | 43.09 | 36.93 | 42.34 |
Exercised (in dollars per share) | 20.80 | 20.32 | 16.45 |
Forfeited (in dollars per share) | 28.33 | 37.68 | 34.43 |
Outstanding, ending balance (in dollars per share) | $ 35.79 | $ 32.13 | $ 28.77 |
STOCK-BASED COMPENSATION AND _7
STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS - Stock Options - Additional Disclosures (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 12 Months Ended | |||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | Jan. 29, 2017 | |
Stock Options | ||||
Options outstanding (in shares) | 2,800 | |||
Stock options | ||||
Stock Options | ||||
Total intrinsic value of options exercised | $ 6 | $ 9 | $ 51 | |
Options outstanding (in shares) | 2,826 | 2,497 | 2,419 | 4,163 |
Options outstanding, weighted average remaining life (in years) | 7 years 1 month 6 days | |||
Options outstanding, aggregate intrinsic value | $ 17 | |||
Options exercisable (in shares) | 1,100 | |||
Options exercisable, weighted average exercise price (in dollars per share) | $ 30.18 | |||
Options exercisable, weighted average remaining life (in years) | 5 years 8 months 12 days | |||
Options exercisable, aggregate intrinsic value | $ 13 | |||
Options vested or expected to ultimately vest (in shares) | 2,800 | |||
Options vested or expected to ultimately vest, weighted average exercise price (in dollars per share) | $ 35.70 | |||
Options vested or expected to ultimately vest, weighted average remaining life (in years) | 7 years 1 month 6 days | |||
Options vested or expected to ultimately vest, aggregate intrinsic value | $ 17 |
STOCK-BASED COMPENSATION AND _8
STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS - Stock Options - Weighted Average Assumptions (Details) - Stock options | 12 Months Ended | ||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
Weighted-average assumptions | |||
Risk-free interest rate (as a percent) | 2.51% | 2.74% | 2.08% |
Dividend yield (as a percent) | 0.00% | 0.00% | 0.00% |
Expected volatility factor (as a percent) | 26.40% | 29.10% | 29.80% |
Expected option life in years | 6 years 3 months | 6 years 3 months | 6 years 3 months |
STOCK-BASED COMPENSATION AND _9
STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS - Stock Options - Additional General Disclosures (Details) - Stock options - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
Stock Options | |||
Option granted, weighted-average fair value (in dollars per share) | $ 13.75 | ||
Stock-based compensation expense | $ 8 | $ 8 | $ 5 |
Stock options, unamortized compensation expense | $ 14 | ||
Unamortized stock-based compensation expense, recognition period (in years) | 2 years 1 month 6 days |
STOCK-BASED COMPENSATION AND_10
STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS - Restricted Stock, Restricted Stock Units and Performance Awards - General Disclosures (Details) | 12 Months Ended |
Feb. 02, 2020 | |
RSAs | Employees | |
Restricted Stock and Restricted Stock Units | |
Vesting period (in years) | 4 years |
RSUs | Employees | |
Restricted Stock and Restricted Stock Units | |
Vesting period (in years) | 5 years |
RSUs | Board member | |
Restricted Stock and Restricted Stock Units | |
Vesting period (in years) | 1 year |
PAs | |
Restricted Stock and Restricted Stock Units | |
Minimum age of an associate, non-qualified stock options may become non-forfeitable (in years) | 62 years |
Tenure of continuous service, non-qualified stock options may become non-forfeitable (in years) | 5 years |
Period of performance cycle (in years) | 3 years |
PAs | Minimum | |
Restricted Stock and Restricted Stock Units | |
Payout range (as a percent) | 0.00% |
PAs | Maximum | |
Restricted Stock and Restricted Stock Units | |
Payout range (as a percent) | 200.00% |
RSAs and RSUs | |
Restricted Stock and Restricted Stock Units | |
Minimum age of an associate, non-qualified stock options may become non-forfeitable (in years) | 62 years |
Tenure of continuous service, non-qualified stock options may become non-forfeitable (in years) | 5 years |
STOCK-BASED COMPENSATION AND_11
STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS - Restricted Stock , Restricted Stock Units and Performance Awards Activity (Details) - RSA, RSU, and PA - $ / shares shares in Thousands | 12 Months Ended | ||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
Number of Shares | |||
Non-vested, beginning balance (in shares) | 896 | 1,069 | 1,550 |
Granted (in shares) | 557 | 491 | 464 |
Vested (in shares) | (414) | (570) | (644) |
Forfeited (in shares) | (115) | (94) | (301) |
Non-vested, ending balance (in shares) | 924 | 896 | 1,069 |
Weighted Average Grant Date Fair Value | |||
Non-vested, beginning balance (in dollars per shares) | $ 35.82 | $ 32.02 | $ 27.07 |
Granted (in dollars per share) | 42.49 | 37.23 | 41.50 |
Vested (in dollars per share) | 34.68 | 30 | 27.51 |
Forfeited (in dollars per share) | 39.17 | 35.63 | 31.39 |
Non-vested, ending balance (in dollars per shares) | $ 39.93 | $ 35.82 | $ 32.02 |
STOCK-BASED COMPENSATION AND_12
STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS - Employee Benefit Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
Employee Benefit Plans | |||
Defined contribution plan, annual matching contribution paid | $ 24 | $ 14 | $ 17 |
STOCK-BASED COMPENSATION AND_13
STOCK-BASED COMPENSATION AND EMPLOYEE BENEFIT PLANS - Restricted Stock, Restricted Stock Units and Performance Awards - Additional Disclosures (Details) - RSA, RSU, and PA - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
Restricted Stock and Restricted Stock Units | |||
Fair value of RSAs and RSUs | $ 14 | $ 17 | $ 18 |
Stock-based compensation expense | 14 | $ 18 | $ 20 |
Stock-based compensation expense expected to be recorded over the vesting period | $ 23 | ||
Unamortized stock-based compensation expense, recognition period (in years) | 1 year 9 months 18 days |
BASIC AND DILUTED WEIGHTED-AV_3
BASIC AND DILUTED WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING - Reconciliation of Basic to Diluted Weighted-Average Common Shares (Details) - shares shares in Thousands | 12 Months Ended | ||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
Reconciliation of basic to diluted weighted-average common shares | |||
Weighted-average common shares outstanding | 166,405 | 181,099 | 192,236 |
Effect of potentially dilutive stock plan securities | 584 | 830 | 1,432 |
Diluted weighted-average common shares outstanding | 166,989 | 181,929 | 193,668 |
BASIC AND DILUTED WEIGHTED-AV_4
BASIC AND DILUTED WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING - Anti-dilutive Securities (Details) - shares shares in Thousands | 12 Months Ended | ||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
Stock plan securities | |||
Anti-dilutive securities | |||
Stock plan securities excluded from dilution | 2,802 | 1,924 | 1,967 |
SUPPLEMENTAL BALANCE SHEET AN_3
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION - Receivables (Details) - USD ($) $ in Millions | Feb. 02, 2020 | Feb. 03, 2019 |
Receivables | ||
Trade receivables, net of allowance for doubtful accounts | $ 674 | $ 657 |
Vendor rebate receivables | 65 | 57 |
Other receivables | 15 | 18 |
Total receivables, net | $ 754 | $ 732 |
SUPPLEMENTAL BALANCE SHEET AN_4
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION - Property and Equipment (Details) - USD ($) $ in Millions | Feb. 02, 2020 | Feb. 03, 2019 |
Property and Equipment | ||
Property and equipment | $ 1,068 | $ 958 |
Less accumulated depreciation & amortization | (677) | (588) |
Property and equipment, net | 391 | 370 |
Land | ||
Property and Equipment | ||
Property and equipment | 12 | 14 |
Buildings and improvements | ||
Property and Equipment | ||
Property and equipment | 311 | 296 |
Transportation equipment | ||
Property and Equipment | ||
Property and equipment | 76 | 66 |
Furniture, fixtures and equipment | ||
Property and Equipment | ||
Property and equipment | 332 | 269 |
Capitalized software | ||
Property and Equipment | ||
Property and equipment | 302 | 258 |
Less accumulated depreciation & amortization | (249) | (225) |
Property and equipment, net | 53 | 33 |
Construction in progress | ||
Property and Equipment | ||
Property and equipment | $ 35 | $ 55 |
SUPPLEMENTAL BALANCE SHEET AN_5
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION - Other Current Liabilities (Details) - USD ($) $ in Millions | 12 Months Ended | |
Feb. 02, 2020 | Feb. 03, 2019 | |
Other Current Liabilities | ||
Corporate headquarters financing liability | $ 0 | $ 87 |
Accrued legal | 50 | 1 |
Accrued non-income taxes | 33 | 35 |
Accrued interest | 13 | 14 |
Unsettled share repurchases | 0 | 2 |
Other | 112 | 120 |
Total other current liabilities | 208 | 259 |
Litigation Settlement, Expense | 50 | |
Other current assets | ||
Other Current Liabilities | ||
Insurance recovery | 50 | |
HD Supply, Inc. (Total HDS) | ||
Other Current Liabilities | ||
Corporate headquarters financing liability | 87 | |
Accrued legal | 50 | 1 |
Accrued non-income taxes | 33 | 35 |
Accrued interest | 13 | 14 |
Other | 112 | 120 |
Total other current liabilities | $ 208 | $ 257 |
SUPPLEMENTAL BALANCE SHEET AN_6
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION - Supplemental Cash Flow Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
Supplemental Cash Flow Information | |||
Cash paid for interest | $ 105 | $ 121 | $ 159 |
Original issue discounts relating to extinguishment of debt | 4 | 6 | |
Cash paid for income taxes, net of refunds | 53 | 13 | 29 |
Cash equity distribution | 382 | 590 | 541 |
HDS | Credit facility | Term B-1 Loans due 2021 | Secured debt | |||
Supplemental Cash Flow Information | |||
Original issue discounts relating to extinguishment of debt | 0 | 4 | 6 |
HD Supply, Inc. (Total HDS) | |||
Supplemental Cash Flow Information | |||
Original issue discounts relating to extinguishment of debt | 4 | 6 | |
Cash equity distribution | $ 382 | $ 590 | 541 |
Waterworks | Sale of business | |||
Supplemental Cash Flow Information | |||
Amount paid in order to stop the accrual of interest on the Tentative Settlement amount | $ 13 |
SUPPLEMENTAL BALANCE SHEET AN_7
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION - Stock Repurchases (Details) $ in Millions | 12 Months Ended | ||
Feb. 02, 2020USD ($)itemshares | Feb. 03, 2019USD ($)itemshares | Jan. 28, 2018USD ($)itemshares | |
Share repurchases | |||
Cost of Shares | $ 384 | $ 597 | $ 584 |
Common Stock | |||
Share repurchases | |||
Number of share repurchase programs | item | 3 | 3 | 3 |
Authorized share repurchase amount | $ 500 | $ 500 | $ 500 |
Number of Shares | shares | 9,860,405 | 15,786,550 | 18,236,626 |
Cost of Shares | $ 384 | $ 597 | $ 584 |
Share Repurchase Program of November 2018 Plan | Common Stock | |||
Share repurchases | |||
Number of Shares | shares | 9,637,613 | 3,313,797 | 0 |
Cost of Shares | $ 375 | $ 125 | $ 0 |
Share Repurchase Program of August 2017 Plan | Common Stock | |||
Share repurchases | |||
Number of Shares | shares | 0 | 12,159,013 | 1,150,699 |
Cost of Shares | $ 0 | $ 459 | $ 41 |
Share Repurchase Program of June 2017 Plan | Common Stock | |||
Share repurchases | |||
Number of Shares | shares | 0 | 0 | 15,940,337 |
Cost of Shares | $ 0 | $ 0 | $ 500 |
Share Repurchase Program of April 2014 Plan | Common Stock | |||
Share repurchases | |||
Number of Shares | shares | 222,792 | 313,740 | 1,145,590 |
Cost of Shares | $ 9 | $ 13 | $ 43 |
RESTRUCTURING AND SEPARATION _2
RESTRUCTURING AND SEPARATION ACTIVITIES (Details) $ in Millions | Sep. 24, 2019item | Feb. 02, 2020USD ($) | Feb. 03, 2019USD ($) | Jan. 28, 2018USD ($) |
Restructuring activities | ||||
Restructuring charges | $ 8 | $ 9 | $ 6 | |
Separation of Facilities Maintenance and Construction and Industrial businesses | Separation of business | ||||
Restructuring activities | ||||
Number of companies after separation | item | 2 | |||
Restructuring charges | 8 | |||
Separation of Facilities Maintenance and Construction and Industrial businesses | Lease termination | ||||
Restructuring activities | ||||
Restructuring charges | 8 | |||
Reversal restructuring charges | $ 2 |
RESTRUCTURING ACTIVITIES - Fisc
RESTRUCTURING ACTIVITIES - Fiscal 2017 Plan (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
Restructuring activities | |||
Restructuring charges | $ 8 | $ 9 | $ 6 |
Sale of business | Fiscal 2017 Restructuring Plan | Waterworks | |||
Restructuring activities | |||
Restructuring charges | $ 9 | $ 6 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Purchase Obligations (Details) $ in Millions | Feb. 02, 2020USD ($) |
Purchase obligations | |
Aggregate purchase obligations | $ 224 |
Purchase obligations due during fiscal 2020 | $ 217 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES - Legal Matters (Details) $ in Millions | 12 Months Ended | |
Feb. 02, 2020USD ($) | Aug. 08, 2017complaint | |
Legal Matters | ||
Legal accrual related to litigation activities | $ 50 | |
Number of shareholder derivative complaints | complaint | 2 | |
Minimum | ||
Legal Matters | ||
Estimated aggregate potential loss | 0 | |
Maximum | ||
Legal Matters | ||
Estimated aggregate potential loss | $ 10 |
SEGMENT INFORMATION - General I
SEGMENT INFORMATION - General Information (Details) | 12 Months Ended |
Feb. 02, 2020segment | |
SEGMENT INFORMATION | |
Number of reportable segments | 2 |
SEGMENT INFORMATION - Net Sales
SEGMENT INFORMATION - Net Sales for Each Reportable Segment (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Feb. 02, 2020 | Nov. 03, 2019 | Aug. 04, 2019 | May 05, 2019 | Feb. 03, 2019 | Oct. 28, 2018 | Jul. 29, 2018 | Apr. 29, 2018 | Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
SEGMENT INFORMATION | |||||||||||
Net sales | $ 1,385 | $ 1,644 | $ 1,624 | $ 1,493 | $ 1,446 | $ 1,612 | $ 1,600 | $ 1,389 | $ 6,146 | $ 6,047 | $ 5,121 |
Corporate & Eliminations | |||||||||||
SEGMENT INFORMATION | |||||||||||
Net sales | (3) | (3) | (5) | ||||||||
Facilities Maintenance | Reportable segment | |||||||||||
SEGMENT INFORMATION | |||||||||||
Net sales | 3,130 | 3,089 | 2,847 | ||||||||
Construction & Industrial | Reportable segment | |||||||||||
SEGMENT INFORMATION | |||||||||||
Net sales | $ 3,019 | $ 2,961 | $ 2,279 |
SEGMENT INFORMATION - Adjusted
SEGMENT INFORMATION - Adjusted EBITDA, Depreciation & Software Amortization, Other Intangible Amortization for Each Reportable Segment (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
SEGMENT INFORMATION | |||
Adjusted EBITDA | $ 873 | $ 871 | $ 731 |
Depreciation & Software Amortization | 90 | 84 | 78 |
Other Intangible Amortization | 23 | 22 | 12 |
Facilities Maintenance | Reportable segment | |||
SEGMENT INFORMATION | |||
Adjusted EBITDA | 546 | 546 | 499 |
Depreciation & Software Amortization | 46 | 40 | 36 |
Other Intangible Amortization | 8 | 8 | 9 |
Construction & Industrial | Reportable segment | |||
SEGMENT INFORMATION | |||
Adjusted EBITDA | 327 | 325 | 232 |
Depreciation & Software Amortization | 44 | 44 | 42 |
Other Intangible Amortization | $ 15 | $ 14 | $ 3 |
SEGMENT INFORMATION - Total Ass
SEGMENT INFORMATION - Total Assets for Each Reportable Segment (Details) - USD ($) $ in Millions | Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 |
SEGMENT INFORMATION | |||
Assets | $ 4,715 | $ 4,233 | $ 4,318 |
Corporate & Eliminations | |||
SEGMENT INFORMATION | |||
Assets | 377 | 394 | 1,051 |
Facilities Maintenance | Reportable segment | |||
SEGMENT INFORMATION | |||
Assets | 2,760 | 2,481 | 2,390 |
Construction & Industrial | Reportable segment | |||
SEGMENT INFORMATION | |||
Assets | $ 1,578 | $ 1,358 | $ 877 |
SEGMENT INFORMATION - Capital E
SEGMENT INFORMATION - Capital Expenditures for Each Reportable Segment (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
SEGMENT INFORMATION | |||
Capital Expenditures | $ 106 | $ 115 | $ 94 |
Corporate & Eliminations | |||
SEGMENT INFORMATION | |||
Capital Expenditures | 16 | 26 | 38 |
Facilities Maintenance | Reportable segment | |||
SEGMENT INFORMATION | |||
Capital Expenditures | 48 | 58 | 22 |
Construction & Industrial | Reportable segment | |||
SEGMENT INFORMATION | |||
Capital Expenditures | $ 42 | $ 31 | $ 34 |
SEGMENT INFORMATION - Reconcili
SEGMENT INFORMATION - Reconciliation to Consolidated Financial Statements (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Feb. 02, 2020 | Nov. 03, 2019 | Aug. 04, 2019 | May 05, 2019 | Feb. 03, 2019 | Oct. 28, 2018 | Jul. 29, 2018 | Apr. 29, 2018 | Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
SEGMENT INFORMATION | |||||||||||
Total Adjusted EBITDA | $ 873 | $ 871 | $ 731 | ||||||||
Depreciation and amortization | 113 | 106 | 90 | ||||||||
Stock-based compensation | 23 | 26 | 26 | ||||||||
Restructuring and separation | 8 | 9 | 6 | ||||||||
Acquisition and integration costs | 5 | 6 | |||||||||
Other | 1 | 1 | |||||||||
Operating Income | 723 | 724 | 608 | ||||||||
Interest expense | 110 | 130 | 166 | ||||||||
Interest income | (1) | (2) | |||||||||
Loss on extinguishment & modification of debt | $ 69 | 69 | 84 | ||||||||
Income from Continuing Operations Before Provision for Income Taxes | 613 | 526 | 360 | ||||||||
Provision for income taxes | 162 | 135 | 193 | ||||||||
Income from Continuing Operations | $ 78 | $ 131 | $ 135 | $ 107 | $ 90 | 82 | $ 130 | $ 89 | 451 | 391 | 167 |
Income from discontinued operations, net of tax | 1 | 2 | 1 | 1 | 3 | 803 | |||||
Net income | $ 78 | $ 132 | $ 135 | $ 107 | $ 92 | $ 82 | $ 131 | $ 89 | $ 452 | $ 394 | $ 970 |
SEGMENT INFORMATION - Net Sal_2
SEGMENT INFORMATION - Net Sales Outside the United States (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Feb. 02, 2020 | Nov. 03, 2019 | Aug. 04, 2019 | May 05, 2019 | Feb. 03, 2019 | Oct. 28, 2018 | Jul. 29, 2018 | Apr. 29, 2018 | Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net Sales | $ 1,385 | $ 1,644 | $ 1,624 | $ 1,493 | $ 1,446 | $ 1,612 | $ 1,600 | $ 1,389 | $ 6,146 | $ 6,047 | $ 5,121 |
Foreign | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net Sales | $ 161 | $ 157 | $ 146 |
SEGMENT INFORMATION - Long-live
SEGMENT INFORMATION - Long-lived Assets Outside the United States (Details) - USD ($) $ in Millions | Feb. 02, 2020 | Feb. 04, 2019 | Feb. 03, 2019 |
Long-lived assets | |||
Long-lived assets | $ 391 | $ 370 | |
ROU assets for operating leases | 480 | $ 430 | |
Foreign | |||
Long-lived assets | |||
Long-lived assets | 20 | $ 6 | |
ROU assets for operating leases | $ 13 |
REVENUE - Disaggregation of Rev
REVENUE - Disaggregation of Revenue (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
Disaggregation of Revenue | |||
Net sales | $ 6,146 | ||
Inter-segment Eliminations | |||
Disaggregation of Revenue | |||
Net sales | (3) | ||
Facilities Maintenance | |||
Disaggregation of Revenue | |||
Net sales | 3,130 | ||
Facilities Maintenance | Maintenance, Repair, and Operations | |||
Disaggregation of Revenue | |||
Net sales | 2,778 | ||
Facilities Maintenance | Property Improvement | |||
Disaggregation of Revenue | |||
Net sales | 352 | ||
Construction & Industrial | |||
Disaggregation of Revenue | |||
Net sales | 3,019 | ||
Construction & Industrial | Non-Residential Construction | |||
Disaggregation of Revenue | |||
Net sales | 2,080 | ||
Construction & Industrial | Residential Construction | |||
Disaggregation of Revenue | |||
Net sales | 746 | ||
Construction & Industrial | Other | |||
Disaggregation of Revenue | |||
Net sales | $ 193 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | |||
Disaggregation of Revenue | |||
Net sales | $ 6,047 | $ 5,121 | |
Calculated under Revenue Guidance in Effect before Topic 606 | Inter-segment Eliminations | |||
Disaggregation of Revenue | |||
Net sales | (3) | (5) | |
Calculated under Revenue Guidance in Effect before Topic 606 | Facilities Maintenance | |||
Disaggregation of Revenue | |||
Net sales | 3,089 | 2,847 | |
Calculated under Revenue Guidance in Effect before Topic 606 | Facilities Maintenance | Maintenance, Repair, and Operations | |||
Disaggregation of Revenue | |||
Net sales | 2,734 | 2,522 | |
Calculated under Revenue Guidance in Effect before Topic 606 | Facilities Maintenance | Property Improvement | |||
Disaggregation of Revenue | |||
Net sales | 355 | 325 | |
Calculated under Revenue Guidance in Effect before Topic 606 | Construction & Industrial | |||
Disaggregation of Revenue | |||
Net sales | 2,961 | 2,279 | |
Calculated under Revenue Guidance in Effect before Topic 606 | Construction & Industrial | Non-Residential Construction | |||
Disaggregation of Revenue | |||
Net sales | 2,029 | 1,479 | |
Calculated under Revenue Guidance in Effect before Topic 606 | Construction & Industrial | Residential Construction | |||
Disaggregation of Revenue | |||
Net sales | 748 | 643 | |
Calculated under Revenue Guidance in Effect before Topic 606 | Construction & Industrial | Other | |||
Disaggregation of Revenue | |||
Net sales | $ 184 | $ 157 |
REVENUE - Payment terms and con
REVENUE - Payment terms and conditions (Details) | 12 Months Ended |
Feb. 02, 2020 | |
Minimum | |
Disaggregation of Revenue | |
Duration of installation contract | 45 days |
REVENUE - Practical Expedient (
REVENUE - Practical Expedient (Details) | 12 Months Ended |
Feb. 02, 2020 | |
REVENUE | |
Practical expedient of significant financing component | true |
QUARTERLY FINANCIAL DATA (UNA_3
QUARTERLY FINANCIAL DATA (UNAUDITED) - Tabular Disclosure (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Feb. 02, 2020 | Nov. 03, 2019 | Aug. 04, 2019 | May 05, 2019 | Feb. 03, 2019 | Oct. 28, 2018 | Jul. 29, 2018 | Apr. 29, 2018 | Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
QUARTERLY FINANCIAL DATA (UNAUDITED) | |||||||||||
Net Sales | $ 1,385 | $ 1,644 | $ 1,624 | $ 1,493 | $ 1,446 | $ 1,612 | $ 1,600 | $ 1,389 | $ 6,146 | $ 6,047 | $ 5,121 |
Gross profit | 545 | 640 | 633 | 585 | 572 | 629 | 622 | 552 | 2,403 | 2,375 | 2,033 |
Income from continuing operations | 78 | 131 | 135 | 107 | 90 | 82 | 130 | 89 | 451 | 391 | 167 |
Income from discontinued operations, net of tax | 1 | 2 | 1 | 1 | 3 | 803 | |||||
Net income | $ 78 | $ 132 | $ 135 | $ 107 | $ 92 | $ 82 | $ 131 | $ 89 | $ 452 | $ 394 | $ 970 |
Basic and diluted earnings (loss) per share: | |||||||||||
Income from continuing operations | $ 0.48 | $ 0.80 | $ 0.80 | $ 0.63 | $ 0.51 | $ 0.45 | $ 0.71 | $ 0.48 | $ 2.71 | $ 2.16 | $ 0.87 |
Income from discontinued operations | 0.01 | 0.01 | 0.01 | 0.01 | 0.02 | 4.18 | |||||
Net Income | 0.48 | 0.80 | 0.80 | 0.63 | 0.53 | 0.45 | 0.72 | 0.48 | 2.72 | 2.18 | 5.05 |
Diluted Earnings Per Share(1): | |||||||||||
Income from continuing operations | 0.48 | 0.79 | 0.79 | 0.63 | 0.51 | 0.45 | 0.71 | 0.48 | 2.70 | 2.15 | 0.86 |
Income from discontinued operations | 0.01 | 0.01 | 0.01 | 0.01 | 0.02 | 4.15 | |||||
Diluted earnings per share (in dollars per share) | $ 0.48 | $ 0.80 | $ 0.79 | $ 0.63 | $ 0.52 | $ 0.45 | $ 0.71 | $ 0.48 | $ 2.71 | $ 2.17 | $ 5.01 |
QUARTERLY FINANCIAL DATA (UNA_4
QUARTERLY FINANCIAL DATA (UNAUDITED) - Extinguishment of Debt (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Oct. 28, 2018 | Feb. 03, 2019 | Jan. 28, 2018 | |
QUARTERLY FINANCIAL DATA (UNAUDITED) | |||
Loss on extinguishment & modification of debt | $ 69 | $ 69 | $ 84 |
SUBSEQUENT EVENT (Details)
SUBSEQUENT EVENT (Details) $ in Millions | Mar. 12, 2020USD ($) |
Subsequent Event | |
SUBSEQUENT EVENT | |
Remaining new and previous share repurchase amount | $ 500 |
SCHEDULE II - VALUATION AND Q_2
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS - Accounts Receivable Allowance for Doubtful Accounts (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2020 | Feb. 03, 2019 | Jan. 28, 2018 | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | |||
Charges to Expense / (Income) | $ 9 | $ 12 | $ 9 |
HD Supply Holdings, Inc. | |||
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | |||
Balance at Beginning of Period | 18 | 12 | 13 |
Acquisition or Disposition of Business Adjustment | 2 | (4) | |
Charges to Expense / (Income) | 9 | 12 | 8 |
Doubtful Accounts Written Off, Net | (8) | (8) | (5) |
Balance at End of Period | $ 19 | $ 18 | $ 12 |
SCHEDULE II - VALUATION AND Q_3
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS - Deferred Tax Valuation Allowances (Details) - Deferred Tax Valuation Allowances - HD Supply Holdings, Inc. - USD ($) $ in Millions | 12 Months Ended | |
Feb. 02, 2020 | Jan. 28, 2018 | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | ||
Balance at Beginning of Period | $ 7 | $ 5 |
Charges to Expense (Benefit) | (1) | 2 |
Balance at End of Period | $ 6 | $ 7 |