Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jul. 29, 2016 | Aug. 26, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | LOWES COMPANIES INC | |
Entity Central Index Key | 60,667 | |
Document Type | 10-Q | |
Document Period End Date | Jul. 29, 2016 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --02-03 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 874,659,454 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Jul. 29, 2016 | Jan. 29, 2016 | Jul. 31, 2015 |
Current assets: | |||
Cash and cash equivalents | $ 1,988 | $ 405 | $ 901 |
Short-term investments | 168 | 307 | 188 |
Merchandise inventory - net | 10,604 | 9,458 | 9,704 |
Other current assets | 591 | 391 | 322 |
Total current assets | 13,351 | 10,561 | 11,115 |
Property, less accumulated depreciation | 20,274 | 19,577 | 19,751 |
Long-term investments | 604 | 222 | 412 |
Deferred income taxes - net | 250 | 241 | 254 |
Goodwill | 1,074 | 154 | 154 |
Other assets | 918 | 511 | 1,050 |
Total assets | 36,471 | 31,266 | 32,736 |
Current liabilities: | |||
Short-term borrowings | 0 | 43 | 0 |
Current maturities of long-term debt | 1,193 | 1,061 | 1,014 |
Accounts payable | 7,696 | 5,633 | 7,123 |
Accrued compensation and employee benefits | 750 | 820 | 667 |
Deferred revenue | 1,285 | 1,078 | 1,146 |
Other current liabilities | 2,259 | 1,857 | 2,191 |
Total current liabilities | 13,183 | 10,492 | 12,141 |
Long-term debt, excluding current maturities | 14,618 | 11,545 | 10,336 |
Deferred revenue - extended protection plans | 744 | 729 | 739 |
Other liabilities | 904 | 846 | 833 |
Total liabilities | 29,449 | 23,612 | 24,049 |
Equity: | |||
Preferred stock - $5 par value, none issued | 0 | 0 | 0 |
Common stock - $0.50 par value; Shares issued and outstanding 881 at July 29, 2016, 928 at July 31, 2015, and 910 at January 29, 2016 | 440 | 455 | 464 |
Capital in excess of par value | 0 | 0 | 0 |
Retained earnings | 6,839 | 7,593 | 8,533 |
Accumulated other comprehensive loss | (366) | (394) | (310) |
Total Lowe's Companies, Inc. shareholders' equity | 6,913 | 7,654 | 8,687 |
Noncontrolling interest | 109 | 0 | 0 |
Total equity | 7,022 | 7,654 | 8,687 |
Total liabilities and equity | $ 36,471 | $ 31,266 | $ 32,736 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jul. 29, 2016 | Jan. 29, 2016 | Jul. 31, 2015 |
Equity: | |||
Preferred stock, par value | $ 5 | $ 5 | $ 5 |
Preferred stock, shares issued | 0 | 0 | 0 |
Common stock, par value | $ 0.50 | $ 0.50 | $ 0.50 |
Common stock, shares issued | 881,000,000 | 910,000,000 | 928,000,000 |
Common stock, shares outstanding | 881,000,000 | 910,000,000 | 928,000,000 |
Consolidated Statements of Curr
Consolidated Statements of Current and Retained Earnings (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 29, 2016 | Jul. 31, 2015 | Jul. 29, 2016 | Jul. 31, 2015 | |
Current Earnings | ||||
Net sales | $ 18,260 | $ 17,348 | $ 33,494 | $ 31,478 |
Cost of sales | 11,972 | 11,367 | 21,868 | 20,486 |
Gross margin | 6,288 | 5,981 | 11,626 | 10,992 |
Expenses: | ||||
Selling, general and administrative | 3,871 | 3,634 | 7,265 | 7,047 |
Depreciation | 366 | 375 | 723 | 741 |
Interest - net | 166 | 133 | 323 | 267 |
Total expenses | 4,403 | 4,142 | 8,311 | 8,055 |
Pre-tax earnings | 1,885 | 1,839 | 3,315 | 2,937 |
Income tax provision | 718 | 713 | 1,264 | 1,138 |
Net earnings | $ 1,167 | $ 1,126 | $ 2,051 | $ 1,799 |
Weighted-average common shares outstanding - basic | 883 | 931 | 890 | 940 |
Basic earnings per common share | $ 1.32 | $ 1.20 | $ 2.29 | $ 1.90 |
Weighted-average common shares outstanding - diluted | 885 | 933 | 892 | 942 |
Diluted earnings per common share | $ 1.31 | $ 1.20 | $ 2.29 | $ 1.90 |
Cash dividends per share | $ 0.35 | $ 0.28 | $ 0.63 | $ 0.51 |
Retained Earnings | ||||
Balance at beginning of period | $ 7,074 | $ 9,085 | $ 7,593 | $ 9,591 |
Net earnings | 1,167 | 1,126 | 2,051 | 1,799 |
Cash dividends | (309) | (260) | (560) | (478) |
Share repurchases | (1,093) | (1,418) | (2,245) | (2,379) |
Balance at end of period | $ 6,839 | $ 8,533 | $ 6,839 | $ 8,533 |
Consolidated Statements of Cur5
Consolidated Statements of Current and Retained Earnings (Percents) (Unaudited) | 3 Months Ended | 6 Months Ended | ||
Jul. 29, 2016 | Jul. 31, 2015 | Jul. 29, 2016 | Jul. 31, 2015 | |
Current Earnings | ||||
Net sales | 100.00% | 100.00% | 100.00% | 100.00% |
Cost of sales | 65.56% | 65.53% | 65.29% | 65.08% |
Gross margin | 34.44% | 34.47% | 34.71% | 34.92% |
Expenses: | ||||
Selling, general and administrative | 21.20% | 20.94% | 21.69% | 22.39% |
Depreciation | 2.00% | 2.16% | 2.16% | 2.35% |
Interest - net | 0.91% | 0.77% | 0.96% | 0.85% |
Total expenses | 24.11% | 23.87% | 24.81% | 25.59% |
Pre-tax earnings | 10.33% | 10.60% | 9.90% | 9.33% |
Income tax provision | 3.94% | 4.11% | 3.78% | 3.62% |
Net earnings | 6.39% | 6.49% | 6.12% | 5.71% |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 29, 2016 | Jul. 31, 2015 | Jul. 29, 2016 | Jul. 31, 2015 | |
Comprehensive Income | ||||
Net earnings | $ 1,167 | $ 1,126 | $ 2,051 | $ 1,799 |
Foreign currency translation adjustments - net of tax | (56) | (229) | 27 | (207) |
Other comprehensive income/(loss) | (56) | (229) | 27 | (207) |
Comprehensive income | $ 1,111 | $ 897 | $ 2,078 | $ 1,592 |
Consolidated Statements of Com7
Consolidated Statements of Comprehensive Income (Percents) (Unaudited) | 3 Months Ended | 6 Months Ended | ||
Jul. 29, 2016 | Jul. 31, 2015 | Jul. 29, 2016 | Jul. 31, 2015 | |
Comprehensive Income | ||||
Net earnings | 6.39% | 6.49% | 6.12% | 5.71% |
Foreign currency translation adjustments - net of tax | (0.30%) | (1.32%) | 0.09% | (0.66%) |
Other comprehensive income/(loss) | (0.30%) | (1.32%) | 0.09% | (0.66%) |
Comprehensive income | 6.09% | 5.17% | 6.21% | 5.05% |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 6 Months Ended | |
Jul. 29, 2016 | Jul. 31, 2015 | |
Cash flows from operating activities: | ||
Net earnings | $ 2,051 | $ 1,799 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||
Depreciation and amortization | 778 | 791 |
Deferred income taxes | (25) | (102) |
(Gain)/Loss on property and other assets - net | (51) | 17 |
Loss on equity method investments | 5 | 31 |
Share-based payment expense | 49 | 57 |
Changes in operating assets and liabilities: | ||
Merchandise inventory - net | (310) | (804) |
Other operating assets | 84 | 27 |
Accounts payable | 1,723 | 2,005 |
Other operating liabilities | 324 | 343 |
Net cash provided by operating activities | 4,628 | 4,164 |
Cash flows from investing activities: | ||
Purchases of investments | (675) | (488) |
Proceeds from sale/maturity of investments | 431 | 366 |
Capital expenditures | (490) | (570) |
Contributions to equity method investments - net | 0 | (39) |
Proceeds from sale of property and other long-term assets | 17 | 20 |
Purchases of derivative instruments | (103) | 0 |
Proceeds from settlement of derivative instruments | 179 | 0 |
Acquisition of business - net | (2,284) | 0 |
Other - net | (9) | (25) |
Net cash used in investing activities | (2,934) | (736) |
Cash flows from financing activities: | ||
Net change in short-term borrowings | (44) | 0 |
Net proceeds from issuance of long-term debt | 3,267 | 0 |
Repayment of long-term debt | (495) | (31) |
Proceeds from issuance of common stock under share-based payment plans | 82 | 62 |
Cash dividend payments | (506) | (440) |
Repurchase of common stock | (2,454) | (2,629) |
Other - net | 40 | 50 |
Net cash used in financing activities | (110) | (2,988) |
Effect of exchange rate changes on cash | (1) | (5) |
Net increase in cash and cash equivalents | 1,583 | 435 |
Cash and cash equivalents, beginning of period | 405 | 466 |
Cash and cash equivalents, end of period | $ 1,988 | $ 901 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jul. 29, 2016 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 1: Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements (unaudited) and notes to the consolidated financial statements (unaudited) are presented in accordance with the rules and regulations of the Securities and Exchange Commission and do not include all the disclosures normally required in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The consolidated financial statements (unaudited), in the opinion of management, contain all adjustments necessary to present fairly the financial position as of July 29, 2016 and July 31, 2015 , the results of operations and comprehensive income for the three and six months ended July 29, 2016 and July 31, 2015 , and cash flows for the six months ended July 29, 2016 and July 31, 2015 . These interim consolidated financial statements (unaudited) should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Lowe’s Companies, Inc. (the Company) Annual Report on Form 10-K for the fiscal year ended January 29, 2016 (the Annual Report). The financial results for the interim periods may not be indicative of the financial results for the entire fiscal year. Reclassifications In the fourth quarter of fiscal year 2015, the Company elected to early adopt Accounting Standards Update (ASU) 2015-17, Balance Sheet Classification of Deferred Taxes , and ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs , and applied the new guidance on a retrospective basis. The adoption of ASU 2015-17 resulted in a reclassification of $254 million of current deferred tax assets to noncurrent deferred tax assets in the Company’s consolidated balance sheet as of July 31, 2015 . The adoption of ASU 2015-03 resulted in a reclassification of debt issuance costs of $9 million from noncurrent other assets to long-term debt, excluding current maturities in the Company’s consolidated balance sheet as of July 31, 2015 . Additionally, prior period amounts representing goodwill have been reclassified and separately noted in the Company’s consolidated balance sheets to conform to current presentation. Recent Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting . The ASU eliminates the APIC pool concept and requires that excess tax benefits and tax deficiencies be recorded in the income statement when awards are settled. The pronouncement also addresses simplifications related to statement of cash flows classification, accounting for forfeitures, and minimum statutory tax withholding requirements. This ASU is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted. The Company is currently evaluating the impact of adopting the ASU on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases . Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for those leases previously classified as operating leases. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. This ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Liabilities . The ASU requires, among other things, that entities measure equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) at fair value, with changes in fair value recognized in net income. Under this ASU, entities will no longer be able to recognize unrealized holding gains and losses on available-for-sale equity securities in other comprehensive income, and they will no longer be able to use the cost method of accounting for equity securities that do not have readily determinable fair values. The guidance for classifying and measuring investments in debt securities and loans is not impacted. ASU 2016-01 eliminates certain disclosure requirements related to financial instruments measured at amortized cost and adds disclosures related to the measurement categories of financial assets and financial liabilities. The guidance is effective for annual periods beginning after December 15, 2017. Early adoption is permitted for only certain portions of the ASU. The adoption of this guidance by the Company is not expected to have a material impact on its consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. The ASU requires entities using the first-in, first-out (FIFO) inventory costing method to subsequently value inventory at the lower of cost and net realizable value. The ASU defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This ASU requires prospective application and is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years, with early adoption permitted. The adoption of this guidance by the Company is not expected to have a material impact on its consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers . The ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14, which deferred the effective date of the ASU to fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2016. Companies may use either a full retrospective or a modified retrospective approach to adopt this ASU. The Company is currently evaluating the transition methods and the impact of this guidance, along with related amendments and interpretations, on its consolidated financial statements. |
Acquisitions
Acquisitions | 6 Months Ended |
Jul. 29, 2016 | |
Acquisitions | |
Acquisitions | Note 2 : Acquisitions - On May 20, 2016 , the Company acquired all of the issued and outstanding common shares of RONA inc. (RONA) for C$24 per share in cash. In addition, as part of the transaction, borrowings under RONA’s revolving credit facility were settled in full at the closing of the acquisition, and the facility was eliminated. Total cash consideration to acquire the equity and settle the debt was C$3.1 billion ( $2.4 billion ). RONA is one of Canada’s largest retailers and distributors of hardware, building materials, home renovation, and gardening products. The acquisition is expected to enable the Company to accelerate its growth strategy by significantly expanding its presence in the Canadian home improvement market. Acquisition-related costs were expensed as incurred and were not significant. The aggregate purchase price of this acquisition was preliminarily allocated as follows: (In millions) May 20, 2016 Purchase price: Cash paid $ 2,367 Allocation: Cash acquired 83 Accounts receivable 260 Merchandise inventory 817 Property 923 Amortizable intangible assets: Trademarks 203 Dealer relationships 106 Other assets 142 Goodwill 922 Current liabilities assumed (615 ) Long-term liabilities assumed (365 ) Noncontrolling interest (109 ) Total net assets acquired $ 2,367 The intangible assets acquired include trademarks of $203 million with a weighted average useful life of 15 years and dealer relationships of $106 million with a weighted average useful life of 20 years , which are included in other assets in the accompanying consolidated balance sheets. The goodwill of $922 million is primarily attributable to the synergies expected to arise after the acquisition. Due to the timing of the acquisition, the allocation of goodwill to reporting units has not yet been determined. Both the intangible assets and goodwill are not expected to be deductible for tax purposes. As of the acquisition date, 6.9 million preferred shares of RONA remained outstanding. The total fair value of the shares and Lowe’s corresponding noncontrolling interest was $109 million , which was determined based on the closing market price of RONA’s preferred shares on the acquisition date. The preferred shares consist of approximately 4.7 million Cumulative and Fixed 5-Year Rate Reset Series 6 Class A shares (Series 6 Shares) and approximately 2.2 million Cumulative and Variable 5-Year Rate Reset Series 7 Class A shares (Series 7 Shares). The Series 6 Shares are entitled to receive fixed cumulative preferential cash dividends when declared by the RONA Board of Directors, payable quarterly, based on an annually set dividend rate. The current rate for the Series 6 Shares is 3.324% . The Series 7 Shares are entitled to a floating rate of interest equal to the sum of the T-Bill Rate on the applicable floating rate calculation date, plus 2.65% (calculated on the basis of the actual number of days elapsed in such quarterly floating rate period divided by 365). The current rate for the Series 7 Shares is 3.200% . The payment of dividends for the preferred shares is expected to total approximately C$3.4 million in fiscal 2016. The preferred shares also include a liquidation preference for a voluntary or involuntary liquidation equal to the par or stated value of the shares ( C$25 per share) plus accrued and unpaid dividends. In addition, the transaction included the assumption by Lowe’s of unsecured debentures held by RONA. As of the acquisition date, the debentures were approximately C$118 million ( $91 million ) and are payable in October 2016. Pro forma and historical financial information has not been provided as the acquisition was not material to the consolidated financial statements. In addition, net earnings attributable to noncontrolling interest was not significant for any of the reporting periods presented. |
Fair Value Measurements
Fair Value Measurements | 6 Months Ended |
Jul. 29, 2016 | |
Fair Value Measurements | |
Fair Value Measurements | Note 3: Fair Value Measurements - Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative guidance for fair value measurements establishes a three-level hierarchy, which encourages an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of the hierarchy are defined as follows: • Level 1 - inputs to the valuation techniques that are quoted prices in active markets for identical assets or liabilities • Level 2 - inputs to the valuation techniques that are other than quoted prices but are observable for the assets or liabilities, either directly or indirectly • Level 3 - inputs to the valuation techniques that are unobservable for the assets or liabilities Assets and Liabilities that are Measured at Fair Value on a Recurring Basis The following table presents the Company’s financial assets measured at fair value on a recurring basis as of July 29, 2016 , July 31, 2015 , and January 29, 2016 : Fair Value Measurements at (In millions) Measurement Level July 29, 2016 July 31, 2015 January 29, 2016 Short-term investments: Available-for-sale securities Certificates of deposit Level 1 $ 95 $ 116 $ 56 Municipal obligations Level 2 42 12 38 Money market funds Level 1 25 57 192 Municipal floating rate obligations Level 2 6 3 21 Total short-term investments $ 168 $ 188 $ 307 Long-term investments: Available-for-sale securities Municipal floating rate obligations Level 2 $ 598 $ 402 $ 212 Municipal obligations Level 2 4 5 5 Certificates of deposit Level 1 2 5 5 Total long-term investments $ 604 $ 412 $ 222 There were no transfers between Levels 1, 2 or 3 during any of the periods presented. When available, quoted prices were used to determine fair value. When quoted prices in active markets were available, investments were classified within Level 1 of the fair value hierarchy. When quoted prices in active markets were not available, fair values were determined using pricing models, and the inputs to those pricing models were based on observable market inputs. The inputs to the pricing models were typically benchmark yields, reported trades, broker-dealer quotes, issuer spreads, and benchmark securities, among others. Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis During the three and six months ended July 29, 2016 and July 31, 2015 , the Company had no significant measurements of assets and liabilities at fair value on a nonrecurring basis subsequent to their initial recognition. Fair Value of Financial Instruments The Company’s financial instruments not measured at fair value on a recurring basis include cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities, and long-term debt and are reflected in the financial statements at cost. With the exception of long-term debt, cost approximates fair value for these items due to their short-term nature. The fair values of the Company’s unsecured notes were estimated using quoted market prices. The fair values of the Company’s mortgage notes were estimated using discounted cash flow analyses, based on the future cash outflows associated with these arrangements and discounted using the applicable incremental borrowing rate. Carrying amounts and the related estimated fair value of the Company’s long-term debt, excluding capitalized lease obligations, are as follows: July 29, 2016 July 31, 2015 January 29, 2016 (In millions) Carrying Amount Fair Value Carrying Amount 1 Fair Value Carrying Amount Fair Value Unsecured notes (Level 1) $ 14,956 $ 17,284 $ 10,854 $ 12,017 $ 12,073 $ 13,292 Mortgage notes (Level 2) 10 11 7 8 7 8 Long-term debt (excluding capitalized lease obligations) $ 14,966 $ 17,295 $ 10,861 $ 12,025 $ 12,080 $ 13,300 1 Carrying amounts as of July 31, 2015 have been retrospectively adjusted as a result of the Company’s adoption of ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, during the fourth quarter of fiscal 2015. The adoption of this accounting standard required reclassification of debt issuance costs from other assets to long-term debt, excluding current maturities. |
Restricted Investment Balances
Restricted Investment Balances | 6 Months Ended |
Jul. 29, 2016 | |
Restricted Investment Balances | |
Restricted Investment Balances | Note 4: Restricted Investment Balances - Short-term and long-term investments include restricted balances pledged as collateral primarily for the Company’s extended protection plan program. Restricted balances included in short-term investments were $60 million at July 29, 2016 , $67 million at July 31, 2015 , and $234 million at January 29, 2016 . Restricted balances included in long-term investments were $332 million at July 29, 2016 , $294 million at July 31, 2015 , and $202 million at January 29, 2016 . |
Property
Property | 6 Months Ended |
Jul. 29, 2016 | |
Property | |
Property | Note 5: Property - Property is shown net of accumulated depreciation of $16.8 billion at July 29, 2016 , $15.9 billion at July 31, 2015 , and $16.3 billion at January 29, 2016 . |
Extended Protection Plans
Extended Protection Plans | 6 Months Ended |
Jul. 29, 2016 | |
Extended Protection Plans | |
Extended Protection Plans | Note 6: Extended Protection Plans - The Company sells separately-priced extended protection plan contracts under a Lowe’s-branded program for which the Company is self-insured. The Company recognizes revenue from extended protection plan sales on a straight-line basis over the respective contract term. Extended protection plan contract terms primarily range from one to four years from the date of purchase or the end of the manufacturer’s warranty, as applicable. Changes in deferred revenue for extended protection plan contracts are summarized as follows: Three Months Ended Six Months Ended (In millions) July 29, 2016 July 31, 2015 July 29, 2016 July 31, 2015 Deferred revenue - extended protection plans, beginning of period $ 726 $ 727 $ 729 $ 730 Additions to deferred revenue 106 100 192 182 Deferred revenue recognized (88 ) (88 ) (177 ) (173 ) Deferred revenue - extended protection plans, end of period $ 744 $ 739 $ 744 $ 739 Incremental direct acquisition costs associated with the sale of extended protection plans are also deferred and recognized as expense on a straight-line basis over the respective contract term. Deferred costs associated with extended protection plan contracts were $18 million at July 29, 2016 , $24 million at July 31, 2015 , and $20 million at January 29, 2016 . The Company’s extended protection plan deferred costs are included in other assets in the accompanying consolidated balance sheets. All other costs, such as costs of services performed under the contract, general and administrative expenses, and advertising expenses are expensed as incurred. The liability for extended protection plan claims incurred is included in other current liabilities in the accompanying consolidated balance sheets and was not material in any of the periods presented. Expenses for claims are recognized when incurred and totaled $38 million and $68 million for the three and six months ended July 29, 2016 , respectively, and $30 million and $59 million for the three and six months ended July 31, 2015 , respectively. |
Long-Term Debt
Long-Term Debt | 6 Months Ended |
Jul. 29, 2016 | |
Long-Term Debt | |
Long-term Debt | Note 7 : Long-Term Debt - On April 20, 2016, the Company issued $3.30 billion of unsecured notes in four tranches: $250 million of floating rate notes maturing in April 2019 (the 2019 Floating Rate Notes); $350 million of 1.15% notes maturing in April 2019 (the 2019 Fixed Rate Notes); $1.35 billion of 2.50% notes maturing in April 2026 (the 2026 Fixed Rate Notes); and $1.35 billion of 3.70% notes maturing in April 2046 (the 2046 Fixed Rate Notes). The 2019 Fixed Rate Notes, the 2026 Fixed Rate Notes, the 2046 Fixed Rate Notes (collectively the Fixed Rate Notes), and the 2019 Floating Rate Notes were issued at discounts of approximately $1 million , $12 million , $19 million , and $1 million , respectively. The discounts associated with these issuances are included in long-term debt and are being amortized over the respective terms of the notes using the effective interest rate method. The 2019 Floating Rate Notes will bear interest at a floating rate, reset quarterly, equal to the three-month LIBOR plus 0.24% ( 0.92% as of July 29, 2016 ). Interest on the 2019 Floating Rate Notes is payable quarterly in arrears in April, July, October, and January of each year until maturity, beginning in July 2016. Interest on the Fixed Rate Notes is payable semiannually in arrears in April and October of each year until maturity, beginning in October 2016. The indenture governing the notes contains a provision that allows the Company to redeem the Fixed Rate Notes at any time, in whole or in part, at specified redemption prices, plus accrued and unpaid interest, to the date of redemption. We do not have the right to redeem the 2019 Floating Rate Notes prior to maturity. The indenture also contains a provision that allows the holders of the 2019 Floating Rate Notes and the Fixed Rate Notes to require the Company to repurchase all or any part of their notes if a change of control triggering event (as defined in the indenture) occurs. If elected under the change of control provisions, the repurchase of the notes will occur at a purchase price of 101% of the principal amount, plus accrued and unpaid interest, if any, on such notes to the date of purchase. The indenture governing the notes does not limit the aggregate principal amount of debt securities that the Company may issue and does not require the Company to maintain specified financial ratios or levels of net worth or liquidity. However, the indenture includes various restrictive covenants, none of which is expected to impact the Company’s liquidity or capital resources. |
Equity
Equity | 6 Months Ended |
Jul. 29, 2016 | |
Equity | |
Equity | Note 8 : Equity - The Company has a share repurchase program that is executed through purchases made from time to time either in the open market, which may be made under pre-set trading plans meeting the requirements of Rule 10b5-1(c) of the Securities Exchange Act of 1934, as amended, or through private off-market transactions. Shares purchased under the repurchase program are retired and returned to authorized and unissued status. On March 20, 2015, the Company’s Board of Directors authorized a $5.0 billion share repurchase program with no expiration, which was announced on the same day. As of July 29, 2016 , the Company had $1.2 billion remaining available under the share repurchase program. In February 2016, the Company entered into an Accelerated Share Repurchase (ASR) agreement with a third-party financial institution to repurchase $500 million of the Company’s common stock. At inception, pursuant to the agreement, the Company paid $500 million to the financial institution using cash on hand, and took delivery of 6.2 million shares. In May 2016, the Company finalized the transaction and received an additional 0.6 million shares. In May 2016, the Company entered into an ASR agreement with a third-party financial institution to repurchase $500 million of the Company’s common stock. At inception, pursuant to the agreement, the Company paid $500 million to the financial institution using cash on hand, and took delivery of 5.3 million shares. Subsequent to the end of the second fiscal quarter, in August 2016, the Company finalized the transaction and received an additional 1.0 million shares. Under the terms of the ASR agreements, upon settlement, the Company would either receive additional shares from the financial institution or be required to deliver additional shares or cash to the financial institution. The Company controlled its election to either deliver additional shares or cash to the financial institution and was subject to provisions which limited the number of shares the Company would be required to deliver. The final number of shares received upon settlement of each ASR agreement was determined with reference to the volume-weighted average price of the Company’s common stock over the term of the ASR agreement. The initial repurchase of shares under these agreements resulted in an immediate reduction of the outstanding shares used to calculate the weighted average common shares outstanding for basic and diluted earnings per share. The ASR agreements were accounted for as treasury stock transactions and forward stock purchase contracts. The par value of the shares received was recorded as a reduction to common stock with the remainder recorded as a reduction to capital in excess of par value and retained earnings. The forward stock purchase contracts were considered indexed to the Company’s own stock and were classified as equity instruments. During the three and six months ended July 29, 2016 , the Company also repurchased shares of its common stock through the open market totaling 8.9 million and 18.6 million shares, respectively, for a cost of $700 million and $1.4 billion , respectively. The Company also withholds shares from employees to satisfy either the exercise price of stock options exercised or the statutory withholding tax liability resulting from the vesting of share-based awards. Shares repurchased for the three and six months ended July 29, 2016 and July 31, 2015 were as follows: Three Months Ended July 29, 2016 July 31, 2015 (In millions) Shares Cost 1 Shares Cost 1 Share repurchase program 14.8 $ 1,200 19.4 $ 1,500 Shares withheld from employees — 1 — — Total share repurchases 14.8 $ 1,201 19.4 $ 1,500 1 Reductions of $1.1 billion and $1.4 billion were recorded to retained earnings, after capital in excess of par value was depleted, for the three months ended July 29, 2016 and July 31, 2015 , respectively. Six Months Ended July 29, 2016 July 31, 2015 (In millions) Shares Cost 2 Shares Cost 2 Share repurchase program 30.7 $ 2,399 33.0 $ 2,500 Shares withheld from employees 0.7 53 0.8 63 Total share repurchases 31.4 $ 2,452 33.8 $ 2,563 2 Reductions of $2.2 billion and $2.4 billion were recorded to retained earnings, after capital in excess of par value was depleted, for the six months ended July 29, 2016 and July 31, 2015 , respectively. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jul. 29, 2016 | |
Earnings Per Share | |
Earnings Per Share | Note 9: Earnings Per Share - The Company calculates basic and diluted earnings per common share using the two-class method. Under the two-class method, net earnings are allocated to each class of common stock and participating security as if all of the net earnings for the period had been distributed. The Company’s participating securities consist of share-based payment awards that contain a nonforfeitable right to receive dividends and, therefore, are considered to participate in undistributed earnings with common shareholders. Basic earnings per common share excludes dilution and is calculated by dividing net earnings allocable to common shares by the weighted-average number of common shares outstanding for the period. Diluted earnings per common share is calculated by dividing net earnings allocable to common shares by the weighted-average number of common shares as of the balance sheet date, as adjusted for the potential dilutive effect of non-participating share-based awards. The following table reconciles earnings per common share for the three and six months ended July 29, 2016 and July 31, 2015 . Three Months Ended Six Months Ended (In millions, except per share data) July 29, 2016 July 31, 2015 July 29, 2016 July 31, 2015 Basic earnings per common share: Net earnings $ 1,167 $ 1,126 $ 2,051 $ 1,799 Less: Net earnings allocable to participating securities (5 ) (5 ) (8 ) (9 ) Net earnings allocable to common shares, basic $ 1,162 $ 1,121 $ 2,043 $ 1,790 Weighted-average common shares outstanding 883 931 890 940 Basic earnings per common share $ 1.32 $ 1.20 $ 2.29 $ 1.90 Diluted earnings per common share: Net earnings $ 1,167 $ 1,126 $ 2,051 $ 1,799 Less: Net earnings allocable to participating securities (5 ) (5 ) (8 ) (9 ) Net earnings allocable to common shares, diluted $ 1,162 $ 1,121 $ 2,043 $ 1,790 Weighted-average common shares outstanding 883 931 890 940 Dilutive effect of non-participating share-based awards 2 2 2 2 Weighted-average common shares, as adjusted 885 933 892 942 Diluted earnings per common share $ 1.31 $ 1.20 $ 2.29 $ 1.90 Stock options to purchase 0.7 million and 0.8 million shares of common stock were anti-dilutive for the three and six months ended July 29, 2016 , respectively. No stock options were anti-dilutive for the three and six months ended July 31, 2015 . |
Supplemental Disclosure
Supplemental Disclosure | 6 Months Ended |
Jul. 29, 2016 | |
Supplemental Disclosure | |
Supplemental Disclosure | Note 10: Supplemental Disclosure Net interest expense is comprised of the following: Three Months Ended Six Months Ended (In millions) July 29, 2016 July 31, 2015 July 29, 2016 July 31, 2015 Long-term debt $ 152 $ 122 $ 286 $ 245 Capitalized lease obligations 15 11 27 21 Interest income (4 ) (2 ) (6 ) (2 ) Interest capitalized (1 ) — (2 ) (1 ) Interest on tax uncertainties — — 2 — Other 4 2 16 4 Interest - net $ 166 $ 133 $ 323 $ 267 Supplemental disclosures of cash flow information: Six Months Ended (In millions) July 29, 2016 July 31, 2015 Cash paid for interest, net of amount capitalized $ 298 $ 266 Cash paid for income taxes - net $ 1,028 $ 1,068 Non-cash investing and financing activities: Non-cash property acquisitions, including assets acquired under capital lease $ 47 $ 51 Cash dividends declared but not paid $ 309 $ 260 |
Derivative Instruments
Derivative Instruments | 6 Months Ended |
Jul. 29, 2016 | |
Derivative Instruments | |
Derivative Instruments | Note 11 : Derivative Instruments - In February 2016, the Company entered into an option to purchase 3.2 billion Canadian dollars in order to manage the foreign currency exchange rate risk on the consideration to be paid for the RONA acquisition. This option contract was not accounted for as a hedging instrument, and gains and losses resulting from changes in fair value and settlement were included in SG&A expense in the accompanying consolidated statements of current and retained earnings. The cash flows related to this option were included within investing activities in the accompanying consolidated statements of cash flows. The premium paid for the foreign currency exchange option contract was $103 million , and during the second quarter, the option contract was settled for $179 million . For the three months ended July 29, 2016, the Company recorded a loss of $84 million representing a decrease from the fair value recorded at April 29, 2016. For the six months ended July 29, 2016, the Company recorded a total realized gain of $76 million on the foreign currency exchange option contract. The Company’s other derivative instruments, and related activity, were not material in any of the periods presented. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jul. 29, 2016 | |
Subsequent Events | |
Subsequent Events | Note 12: Subsequent Events - In the fourth quarter of fiscal year 2015, the Company announced its decision to exit the Australian joint venture with Woolworths Limited (Woolworths) and recorded a $530 million impairment of our investment due to a determination that there was a decrease in value that was other than temporary. The Company owns a one-third share in the joint venture, Hydrox Holdings Pty Ltd. (Hydrox), which operates Masters Home Improvement stores and Home Timber and Hardware Group’s retail stores and wholesale distribution in Australia. As a result of this decision to exit, Woolworths is required to purchase the Company’s one-third share at an agreed upon fair value as of January 18, 2016. The process for the two parties agreeing on fair value is prescribed in a joint venture agreement (the Agreement). As of July 29, 2016, the Company and Woolworths have not reached agreement on this fair value. As of July 29, 2016, the Company’s equity investment in Hydrox had a total carrying value of $393 million in the consolidated balance sheet. On August 23, 2016, subsequent to quarter-end and without the Company’s approval, Woolworths claimed a unilateral termination of the Agreement and executed other agreements to initiate the wind down of Hydrox. In response to the actions taken by Woolworths, the Company has filed a motion requesting that the Federal Court of Australia appoint an administrator to oversee the equitable and orderly wind down of Hydrox. The ultimate wind down of Hydrox has been initiated during the Company’s third quarter and is expected to be completed prior to the end of fiscal 2016. As part of this, the Company will be required to reflect the impacts of the wind down activities on the carrying amount of its investment, which will result in the recognition of non-cash losses during the Company’s third quarter as additional clarity is received regarding amounts expected to be realized during the wind down of Hydrox. These non-cash losses will not exceed the current carrying value of the investment as of July 29, 2016. The Company will treat its claims for additional value under the Agreement, above and beyond any amounts expected to be received through the wind down process, as a contingent asset and will recognize these amounts as they are realized. |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jul. 29, 2016 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements (unaudited) and notes to the consolidated financial statements (unaudited) are presented in accordance with the rules and regulations of the Securities and Exchange Commission and do not include all the disclosures normally required in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The consolidated financial statements (unaudited), in the opinion of management, contain all adjustments necessary to present fairly the financial position as of July 29, 2016 and July 31, 2015 , the results of operations and comprehensive income for the three and six months ended July 29, 2016 and July 31, 2015 , and cash flows for the six months ended July 29, 2016 and July 31, 2015 . These interim consolidated financial statements (unaudited) should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Lowe’s Companies, Inc. (the Company) Annual Report on Form 10-K for the fiscal year ended January 29, 2016 (the Annual Report). The financial results for the interim periods may not be indicative of the financial results for the entire fiscal year. |
Reclassifications | Reclassifications In the fourth quarter of fiscal year 2015, the Company elected to early adopt Accounting Standards Update (ASU) 2015-17, Balance Sheet Classification of Deferred Taxes , and ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs , and applied the new guidance on a retrospective basis. The adoption of ASU 2015-17 resulted in a reclassification of $254 million of current deferred tax assets to noncurrent deferred tax assets in the Company’s consolidated balance sheet as of July 31, 2015 . The adoption of ASU 2015-03 resulted in a reclassification of debt issuance costs of $9 million from noncurrent other assets to long-term debt, excluding current maturities in the Company’s consolidated balance sheet as of July 31, 2015 . Additionally, prior period amounts representing goodwill have been reclassified and separately noted in the Company’s consolidated balance sheets to conform to current presentation. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In March 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting . The ASU eliminates the APIC pool concept and requires that excess tax benefits and tax deficiencies be recorded in the income statement when awards are settled. The pronouncement also addresses simplifications related to statement of cash flows classification, accounting for forfeitures, and minimum statutory tax withholding requirements. This ASU is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted. The Company is currently evaluating the impact of adopting the ASU on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases . Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for those leases previously classified as operating leases. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. This ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Liabilities . The ASU requires, among other things, that entities measure equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) at fair value, with changes in fair value recognized in net income. Under this ASU, entities will no longer be able to recognize unrealized holding gains and losses on available-for-sale equity securities in other comprehensive income, and they will no longer be able to use the cost method of accounting for equity securities that do not have readily determinable fair values. The guidance for classifying and measuring investments in debt securities and loans is not impacted. ASU 2016-01 eliminates certain disclosure requirements related to financial instruments measured at amortized cost and adds disclosures related to the measurement categories of financial assets and financial liabilities. The guidance is effective for annual periods beginning after December 15, 2017. Early adoption is permitted for only certain portions of the ASU. The adoption of this guidance by the Company is not expected to have a material impact on its consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. The ASU requires entities using the first-in, first-out (FIFO) inventory costing method to subsequently value inventory at the lower of cost and net realizable value. The ASU defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This ASU requires prospective application and is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years, with early adoption permitted. The adoption of this guidance by the Company is not expected to have a material impact on its consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers . The ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14, which deferred the effective date of the ASU to fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2016. Companies may use either a full retrospective or a modified retrospective approach to adopt this ASU. The Company is currently evaluating the transition methods and the impact of this guidance, along with related amendments and interpretations, on its consolidated financial statements. |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Jul. 29, 2016 | |
Acquisitions | |
Acquisitions | The aggregate purchase price of this acquisition was preliminarily allocated as follows: (In millions) May 20, 2016 Purchase price: Cash paid $ 2,367 Allocation: Cash acquired 83 Accounts receivable 260 Merchandise inventory 817 Property 923 Amortizable intangible assets: Trademarks 203 Dealer relationships 106 Other assets 142 Goodwill 922 Current liabilities assumed (615 ) Long-term liabilities assumed (365 ) Noncontrolling interest (109 ) Total net assets acquired $ 2,367 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 6 Months Ended |
Jul. 29, 2016 | |
Fair Value Measurements | |
Fair value measurements - recurring basis | The following table presents the Company’s financial assets measured at fair value on a recurring basis as of July 29, 2016 , July 31, 2015 , and January 29, 2016 : Fair Value Measurements at (In millions) Measurement Level July 29, 2016 July 31, 2015 January 29, 2016 Short-term investments: Available-for-sale securities Certificates of deposit Level 1 $ 95 $ 116 $ 56 Municipal obligations Level 2 42 12 38 Money market funds Level 1 25 57 192 Municipal floating rate obligations Level 2 6 3 21 Total short-term investments $ 168 $ 188 $ 307 Long-term investments: Available-for-sale securities Municipal floating rate obligations Level 2 $ 598 $ 402 $ 212 Municipal obligations Level 2 4 5 5 Certificates of deposit Level 1 2 5 5 Total long-term investments $ 604 $ 412 $ 222 There were no transfers between Levels 1, 2 or 3 during any of the periods presented. |
Fair value of financial instruments | Carrying amounts and the related estimated fair value of the Company’s long-term debt, excluding capitalized lease obligations, are as follows: July 29, 2016 July 31, 2015 January 29, 2016 (In millions) Carrying Amount Fair Value Carrying Amount 1 Fair Value Carrying Amount Fair Value Unsecured notes (Level 1) $ 14,956 $ 17,284 $ 10,854 $ 12,017 $ 12,073 $ 13,292 Mortgage notes (Level 2) 10 11 7 8 7 8 Long-term debt (excluding capitalized lease obligations) $ 14,966 $ 17,295 $ 10,861 $ 12,025 $ 12,080 $ 13,300 1 Carrying amounts as of July 31, 2015 have been retrospectively adjusted as a result of the Company’s adoption of ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, during the fourth quarter of fiscal 2015. The adoption of this accounting standard required reclassification of debt issuance costs from other assets to long-term debt, excluding current maturities. |
Extended Protection Plans (Tabl
Extended Protection Plans (Tables) | 6 Months Ended |
Jul. 29, 2016 | |
Extended Protection Plans | |
Changes in deferred revenue for extended protection plan contracts | Changes in deferred revenue for extended protection plan contracts are summarized as follows: Three Months Ended Six Months Ended (In millions) July 29, 2016 July 31, 2015 July 29, 2016 July 31, 2015 Deferred revenue - extended protection plans, beginning of period $ 726 $ 727 $ 729 $ 730 Additions to deferred revenue 106 100 192 182 Deferred revenue recognized (88 ) (88 ) (177 ) (173 ) Deferred revenue - extended protection plans, end of period $ 744 $ 739 $ 744 $ 739 |
Equity (Tables)
Equity (Tables) | 6 Months Ended |
Jul. 29, 2016 | |
Equity | |
Schedule of share repurchases | Shares repurchased for the three and six months ended July 29, 2016 and July 31, 2015 were as follows: Three Months Ended July 29, 2016 July 31, 2015 (In millions) Shares Cost 1 Shares Cost 1 Share repurchase program 14.8 $ 1,200 19.4 $ 1,500 Shares withheld from employees — 1 — — Total share repurchases 14.8 $ 1,201 19.4 $ 1,500 1 Reductions of $1.1 billion and $1.4 billion were recorded to retained earnings, after capital in excess of par value was depleted, for the three months ended July 29, 2016 and July 31, 2015 , respectively. Six Months Ended July 29, 2016 July 31, 2015 (In millions) Shares Cost 2 Shares Cost 2 Share repurchase program 30.7 $ 2,399 33.0 $ 2,500 Shares withheld from employees 0.7 53 0.8 63 Total share repurchases 31.4 $ 2,452 33.8 $ 2,563 2 Reductions of $2.2 billion and $2.4 billion were recorded to retained earnings, after capital in excess of par value was depleted, for the six months ended July 29, 2016 and July 31, 2015 , respectively. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jul. 29, 2016 | |
Earnings Per Share | |
Schedule of earnings per share, basic and diluted | The following table reconciles earnings per common share for the three and six months ended July 29, 2016 and July 31, 2015 . Three Months Ended Six Months Ended (In millions, except per share data) July 29, 2016 July 31, 2015 July 29, 2016 July 31, 2015 Basic earnings per common share: Net earnings $ 1,167 $ 1,126 $ 2,051 $ 1,799 Less: Net earnings allocable to participating securities (5 ) (5 ) (8 ) (9 ) Net earnings allocable to common shares, basic $ 1,162 $ 1,121 $ 2,043 $ 1,790 Weighted-average common shares outstanding 883 931 890 940 Basic earnings per common share $ 1.32 $ 1.20 $ 2.29 $ 1.90 Diluted earnings per common share: Net earnings $ 1,167 $ 1,126 $ 2,051 $ 1,799 Less: Net earnings allocable to participating securities (5 ) (5 ) (8 ) (9 ) Net earnings allocable to common shares, diluted $ 1,162 $ 1,121 $ 2,043 $ 1,790 Weighted-average common shares outstanding 883 931 890 940 Dilutive effect of non-participating share-based awards 2 2 2 2 Weighted-average common shares, as adjusted 885 933 892 942 Diluted earnings per common share $ 1.31 $ 1.20 $ 2.29 $ 1.90 |
Supplemental Disclosure (Tables
Supplemental Disclosure (Tables) | 6 Months Ended |
Jul. 29, 2016 | |
Supplemental Disclosure | |
Net interest expense | Net interest expense is comprised of the following: Three Months Ended Six Months Ended (In millions) July 29, 2016 July 31, 2015 July 29, 2016 July 31, 2015 Long-term debt $ 152 $ 122 $ 286 $ 245 Capitalized lease obligations 15 11 27 21 Interest income (4 ) (2 ) (6 ) (2 ) Interest capitalized (1 ) — (2 ) (1 ) Interest on tax uncertainties — — 2 — Other 4 2 16 4 Interest - net $ 166 $ 133 $ 323 $ 267 |
Supplemental disclosures of cash flow information | Supplemental disclosures of cash flow information: Six Months Ended (In millions) July 29, 2016 July 31, 2015 Cash paid for interest, net of amount capitalized $ 298 $ 266 Cash paid for income taxes - net $ 1,028 $ 1,068 Non-cash investing and financing activities: Non-cash property acquisitions, including assets acquired under capital lease $ 47 $ 51 Cash dividends declared but not paid $ 309 $ 260 |
Summary of Significant Accoun28
Summary of Significant Accounting Policies Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions | Jul. 29, 2016 | Jan. 29, 2016 | Jul. 31, 2015 |
New Accounting Pronouncement, Early Adoption [Line Items] | |||
Noncurrent deferred tax assets | $ 250 | $ 241 | $ 254 |
Noncurrent other assets | 918 | 511 | 1,050 |
Long-term debt, excluding current maturities | $ 14,618 | $ 11,545 | 10,336 |
New Accounting Pronouncement, Early Adoption, Effect [Member] | Accounting Standards Update 2015-17 [Member] | Restatement Adjustment [Member] | |||
New Accounting Pronouncement, Early Adoption [Line Items] | |||
Current deferred tax assets | (254) | ||
Noncurrent deferred tax assets | 254 | ||
New Accounting Pronouncement, Early Adoption, Effect [Member] | Accounting Standards Update 2015-03 [Member] | Restatement Adjustment [Member] | |||
New Accounting Pronouncement, Early Adoption [Line Items] | |||
Noncurrent other assets | (9) | ||
Long-term debt, excluding current maturities | $ 9 |
Acquisitions (Details)
Acquisitions (Details) $ in Millions, CAD in Billions | May 20, 2016CAD | May 20, 2016USD ($) | Jul. 29, 2016USD ($) | Jan. 29, 2016USD ($) | Jul. 31, 2015USD ($) |
Business Acquisition [Line Items] | |||||
Goodwill | $ 1,074 | $ 154 | $ 154 | ||
RONA inc [Member] | |||||
Business Acquisition [Line Items] | |||||
Cash paid | CAD 3.1 | $ 2,367 | |||
Cash acquired | 83 | ||||
Accounts receivable | 260 | ||||
Merchandise inventory | 817 | ||||
Property | 923 | ||||
Other assets | 142 | ||||
Goodwill | 922 | ||||
Current liabilities assumed | (615) | ||||
Long-term liabilities assumed | (365) | ||||
Noncontrolling interest | (109) | ||||
Total net assets acquired | 2,367 | ||||
RONA inc [Member] | Trademarks [Member] | |||||
Business Acquisition [Line Items] | |||||
Amortizable intangible assets | 203 | ||||
RONA inc [Member] | Dealer Relationships [Member] | |||||
Business Acquisition [Line Items] | |||||
Amortizable intangible assets | $ 106 |
Acquisitions (Details Textual)
Acquisitions (Details Textual) CAD / shares in Units, CAD in Millions, $ in Millions | May 20, 2016CADCAD / shares | May 20, 2016USD ($) | Jul. 29, 2016USD ($) | May 20, 2016USD ($) | Jan. 29, 2016USD ($) | Jul. 31, 2015USD ($) |
Business Acquisition [Line Items] | ||||||
Goodwill | $ 1,074 | $ 154 | $ 154 | |||
RONA inc [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Cash consideration | CAD 3,100 | $ 2,367 | ||||
Goodwill | $ 922 | |||||
Current liabilities assumed | 615 | |||||
RONA inc [Member] | Unsecured debentures [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Current liabilities assumed | CAD 118 | 91 | ||||
RONA inc [Member] | Trademarks [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets acquired | 203 | |||||
Weighted average useful life | 15 years | 15 years | ||||
RONA inc [Member] | Dealer Relationships [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Intangible assets acquired | $ 106 | |||||
Weighted average useful life | 20 years | 20 years | ||||
RONA inc [Member] | Common Class A [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Business acquisition, share price | CAD / shares | CAD 24 |
Acquisitions (Details Textual 1
Acquisitions (Details Textual 1) $ / shares in Units, shares in Millions, $ in Millions | 2 Months Ended | 8 Months Ended | ||||
Jul. 29, 2016$ / shares | Feb. 03, 2017USD ($) | May 20, 2016USD ($)shares | May 20, 2016CAD / shares | Jan. 29, 2016$ / shares | Jul. 31, 2015$ / shares | |
Noncontrolling Interest [Line Items] | ||||||
Preferred shares, par or stated value per share | $ / shares | $ 5 | $ 5 | $ 5 | |||
RONA inc [Member] | ||||||
Noncontrolling Interest [Line Items] | ||||||
Noncontrolling interest, amount represented by preferred stock | $ | $ 109 | |||||
Noncontrolling Interest [Member] | RONA inc [Member] | Preferred Class A [Member] | ||||||
Noncontrolling Interest [Line Items] | ||||||
Preferred shares outstanding | 6.9 | |||||
Preferred shares, par or stated value per share | CAD / shares | CAD 25 | |||||
Noncontrolling Interest [Member] | RONA inc [Member] | Preferred Class A [Member] | Scenario, Forecast [Member] | ||||||
Noncontrolling Interest [Line Items] | ||||||
Noncontrolling interest, dividends paid to noncontrolling interest holders | $ | $ 3.4 | |||||
Noncontrolling Interest [Member] | RONA inc [Member] | Series 6 Shares [Member] | ||||||
Noncontrolling Interest [Line Items] | ||||||
Preferred shares outstanding | 4.7 | |||||
Preferred shares, dividend rate, percentage | 3.324% | |||||
Noncontrolling Interest [Member] | RONA inc [Member] | Series 7 Shares [Member] | ||||||
Noncontrolling Interest [Line Items] | ||||||
Preferred shares outstanding | 2.2 | |||||
Preferred shares, dividend rate, percentage | 3.20% | |||||
Preferred shares, dividend rate, basis spread on variable rate | 2.65% |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Fair Value, Measurements, Recurring [Member] - Estimate of Fair Value [Member] - USD ($) $ in Millions | Jul. 29, 2016 | Jan. 29, 2016 | Jul. 31, 2015 |
Short-term Investments [Member] | |||
Assets, Fair Value Disclosure | |||
Available-for-sale securities, fair value | $ 168 | $ 307 | $ 188 |
Short-term Investments [Member] | Certificates Of Deposit [Member] | Fair Value (Level 1) [Member] | |||
Assets, Fair Value Disclosure | |||
Available-for-sale securities, fair value | 95 | 56 | 116 |
Short-term Investments [Member] | Municipal Obligations [Member] | Fair Value (Level 2) [Member] | |||
Assets, Fair Value Disclosure | |||
Available-for-sale securities, fair value | 42 | 38 | 12 |
Short-term Investments [Member] | Money Market Funds [Member] | Fair Value (Level 1) [Member] | |||
Assets, Fair Value Disclosure | |||
Available-for-sale securities, fair value | 25 | 192 | 57 |
Short-term Investments [Member] | Municipal Floating Rate Obligations [Member] | Fair Value (Level 2) [Member] | |||
Assets, Fair Value Disclosure | |||
Available-for-sale securities, fair value | 6 | 21 | 3 |
Long-term Investments [Member] | |||
Assets, Fair Value Disclosure | |||
Available-for-sale securities, fair value | 604 | 222 | 412 |
Long-term Investments [Member] | Certificates Of Deposit [Member] | Fair Value (Level 1) [Member] | |||
Assets, Fair Value Disclosure | |||
Available-for-sale securities, fair value | 2 | 5 | 5 |
Long-term Investments [Member] | Municipal Obligations [Member] | Fair Value (Level 2) [Member] | |||
Assets, Fair Value Disclosure | |||
Available-for-sale securities, fair value | 4 | 5 | 5 |
Long-term Investments [Member] | Municipal Floating Rate Obligations [Member] | Fair Value (Level 2) [Member] | |||
Assets, Fair Value Disclosure | |||
Available-for-sale securities, fair value | $ 598 | $ 212 | $ 402 |
Fair Value Measurements (Deta33
Fair Value Measurements (Details 1) - USD ($) $ in Millions | Jul. 29, 2016 | Jan. 29, 2016 | Jul. 31, 2015 |
Financial Instruments | |||
Long-term debt carrying value (excluding capitalized lease obligations) | $ 14,966 | $ 12,080 | $ 10,861 |
Unsecured Notes [Member] | |||
Financial Instruments | |||
Long-term debt carrying value (excluding capitalized lease obligations) | 14,956 | 12,073 | 10,854 |
Mortgage Notes [Member] | |||
Financial Instruments | |||
Long-term debt carrying value (excluding capitalized lease obligations) | 10 | 7 | 7 |
Estimate of Fair Value [Member] | |||
Financial Instruments | |||
Long-term debt fair value (excluding capitalized lease obligations) | 17,295 | 13,300 | 12,025 |
Estimate of Fair Value [Member] | Unsecured Notes [Member] | Fair Value (Level 1) [Member] | |||
Financial Instruments | |||
Long-term debt fair value (excluding capitalized lease obligations) | 17,284 | 13,292 | 12,017 |
Estimate of Fair Value [Member] | Mortgage Notes [Member] | Fair Value (Level 2) [Member] | |||
Financial Instruments | |||
Long-term debt fair value (excluding capitalized lease obligations) | $ 11 | $ 8 | $ 8 |
Restricted Investment Balances
Restricted Investment Balances (Details) - USD ($) $ in Millions | Jul. 29, 2016 | Jan. 29, 2016 | Jul. 31, 2015 |
Restricted Investment Balances | |||
Restricted balances included in short-term investments | $ 60 | $ 234 | $ 67 |
Restricted balances included in long-term investments | $ 332 | $ 202 | $ 294 |
Property (Details)
Property (Details) - USD ($) $ in Billions | Jul. 29, 2016 | Jan. 29, 2016 | Jul. 31, 2015 |
Property | |||
Accumulated depreciation | $ 16.8 | $ 16.3 | $ 15.9 |
Extended Protection Plans (Deta
Extended Protection Plans (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 29, 2016 | Jul. 31, 2015 | Jul. 29, 2016 | Jul. 31, 2015 | |
Changes in deferred revenue for extended protection plan contracts | ||||
Deferred revenue - extended protection plans, beginning of period | $ 726 | $ 727 | $ 729 | $ 730 |
Additions to deferred revenue | 106 | 100 | 192 | 182 |
Deferred revenue recognized | (88) | (88) | (177) | (173) |
Deferred revenue - extended protection plans, end of period | $ 744 | $ 739 | $ 744 | $ 739 |
Extended Protection Plans (De37
Extended Protection Plans (Details Textual) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jul. 29, 2016 | Jul. 31, 2015 | Jul. 29, 2016 | Jul. 31, 2015 | Jan. 29, 2016 | |
Extended Protection Plans | |||||
Deferred costs associated with extended protection plan contracts | $ 18 | $ 24 | $ 18 | $ 24 | $ 20 |
Expenses for claims incurred | $ 38 | $ 30 | $ 68 | $ 59 |
Long-Term Debt (Details)
Long-Term Debt (Details) - Unsecured Debt [Member] - USD ($) | Apr. 20, 2016 | Jul. 29, 2016 |
April 2016 Debt Issuance [Member] | ||
Long-Term Debt | ||
Unsecured notes, issued | $ 3,300,000,000 | |
Debt instrument, redemption price, percentage | 101.00% | |
2019 Floating Rate Notes [Member] | ||
Long-Term Debt | ||
Unsecured notes, issued | $ 250,000,000 | |
Unsecured notes, maturity date | Apr. 30, 2019 | |
Unsecured notes, interest rate | 0.92% | |
Unamortized discount | $ 1,000,000 | |
Unsecured notes, description of variable rate basis | three-month LIBOR | |
Unsecured notes, basis spread on variable rate | 0.24% | |
2019 Fixed Rate Notes [Member] | ||
Long-Term Debt | ||
Unsecured notes, issued | $ 350,000,000 | |
Unsecured notes, maturity date | Apr. 30, 2019 | |
Unsecured notes, interest rate | 1.15% | |
Unamortized discount | $ 1,000,000 | |
2026 Fixed Rate Notes [Member] | ||
Long-Term Debt | ||
Unsecured notes, issued | $ 1,350,000,000 | |
Unsecured notes, maturity date | Apr. 30, 2026 | |
Unsecured notes, interest rate | 2.50% | |
Unamortized discount | $ 12,000,000 | |
2046 Fixed Rate Notes [Member] | ||
Long-Term Debt | ||
Unsecured notes, issued | $ 1,350,000,000 | |
Unsecured notes, maturity date | Apr. 30, 2046 | |
Unsecured notes, interest rate | 3.70% | |
Unamortized discount | $ 19,000,000 |
Equity (Details)
Equity (Details) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||||||
Jul. 29, 2016 | Jul. 31, 2015 | Jul. 29, 2016 | Jul. 31, 2015 | |||||
Equity | ||||||||
Reduction in retained earnings | $ 1,093 | $ 1,418 | $ 2,245 | $ 2,379 | ||||
Share Repurchases | ||||||||
Share repurchases, value | $ 1,201 | [1] | $ 1,500 | [1] | $ 2,452 | [2] | $ 2,563 | [2] |
Share repurchases, shares | 14.8 | 19.4 | 31.4 | 33.8 | ||||
Share Repurchase Program [Member] | ||||||||
Share Repurchases | ||||||||
Share repurchases, value | $ 1,200 | [1] | $ 1,500 | [1] | $ 2,399 | [2] | $ 2,500 | [2] |
Share repurchases, shares | 14.8 | 19.4 | 30.7 | 33 | ||||
Shares Withheld from Employees [Member] | ||||||||
Share Repurchases | ||||||||
Share repurchases, value | $ 1 | [1] | $ 0 | [1] | $ 53 | [2] | $ 63 | [2] |
Share repurchases, shares | 0 | 0 | 0.7 | 0.8 | ||||
[1] | Reductions of $1.1 billion and $1.4 billion were recorded to retained earnings, after capital in excess of par value was depleted, for the three months ended July 29, 2016 and July 31, 2015, respectively. | |||||||
[2] | Reductions of $2.2 billion and $2.4 billion were recorded to retained earnings, after capital in excess of par value was depleted, for the six months ended July 29, 2016 and July 31, 2015, respectively. |
Equity (Details Textual)
Equity (Details Textual) - USD ($) shares in Millions | Aug. 31, 2016 | May 31, 2016 | Feb. 29, 2016 | Jul. 29, 2016 | Jul. 31, 2015 | Jul. 29, 2016 | Jul. 31, 2015 | Mar. 20, 2015 | ||||
Share Repurchases | ||||||||||||
Share repurchases, value | $ 1,201,000,000 | [1] | $ 1,500,000,000 | [1] | $ 2,452,000,000 | [2] | $ 2,563,000,000 | [2] | ||||
Share repurchases, shares | 14.8 | 19.4 | 31.4 | 33.8 | ||||||||
Cash used to repurchase shares | $ 2,454,000,000 | $ 2,629,000,000 | ||||||||||
Share Repurchase Program [Member] | ||||||||||||
Share Repurchases | ||||||||||||
Share repurchases, value | $ 1,200,000,000 | [1] | $ 1,500,000,000 | [1] | $ 2,399,000,000 | [2] | $ 2,500,000,000 | [2] | ||||
Share repurchases, shares | 14.8 | 19.4 | 30.7 | 33 | ||||||||
Remaining share repurchases authorization, value | $ 1,200,000,000 | $ 1,200,000,000 | ||||||||||
March 20, 2015 Share Repurchase Program [Member] | ||||||||||||
Share Repurchases | ||||||||||||
Share repurchases authorized, value | $ 5,000,000,000 | |||||||||||
February 2016 Accelerated Share Repurchase Agreement Purchases [Member] | ||||||||||||
Share Repurchases | ||||||||||||
Share repurchases, value | $ 500,000,000 | |||||||||||
Share repurchases, shares | 0.6 | 6.2 | ||||||||||
Cash used to repurchase shares | $ 500,000,000 | |||||||||||
May 2016 Accelerated Share Repurchase Agreement Purchases [Member] | ||||||||||||
Share Repurchases | ||||||||||||
Share repurchases, value | $ 500,000,000 | |||||||||||
Share repurchases, shares | 5.3 | |||||||||||
Cash used to repurchase shares | $ 500,000,000 | |||||||||||
May 2016 Accelerated Share Repurchase Agreement Purchases [Member] | Subsequent Event [Member] | ||||||||||||
Share Repurchases | ||||||||||||
Share repurchases, shares | 1 | |||||||||||
Open market purchases [Member] | ||||||||||||
Share Repurchases | ||||||||||||
Share repurchases, value | $ 700,000,000 | $ 1,400,000,000 | ||||||||||
Share repurchases, shares | 8.9 | 18.6 | ||||||||||
[1] | Reductions of $1.1 billion and $1.4 billion were recorded to retained earnings, after capital in excess of par value was depleted, for the three months ended July 29, 2016 and July 31, 2015, respectively. | |||||||||||
[2] | Reductions of $2.2 billion and $2.4 billion were recorded to retained earnings, after capital in excess of par value was depleted, for the six months ended July 29, 2016 and July 31, 2015, respectively. |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 29, 2016 | Jul. 31, 2015 | Jul. 29, 2016 | Jul. 31, 2015 | |
Basic earnings per common share: | ||||
Net earnings | $ 1,167 | $ 1,126 | $ 2,051 | $ 1,799 |
Less: Net earnings allocable to participating securities | (5) | (5) | (8) | (9) |
Net earnings allocable to common shares, basic | $ 1,162 | $ 1,121 | $ 2,043 | $ 1,790 |
Weighted-average common shares outstanding | 883 | 931 | 890 | 940 |
Basic earnings per common share | $ 1.32 | $ 1.20 | $ 2.29 | $ 1.90 |
Diluted earnings per common share: | ||||
Net earnings | $ 1,167 | $ 1,126 | $ 2,051 | $ 1,799 |
Less: Net earnings allocable to participating securities | (5) | (5) | (8) | (9) |
Net earnings allocable to common shares, diluted | $ 1,162 | $ 1,121 | $ 2,043 | $ 1,790 |
Weighted-average common shares outstanding | 883 | 931 | 890 | 940 |
Dilutive effect of non-participating share-based awards | 2 | 2 | 2 | 2 |
Weighted-average common shares, as adjusted | 885 | 933 | 892 | 942 |
Diluted earnings per common share | $ 1.31 | $ 1.20 | $ 2.29 | $ 1.90 |
Earnings Per Share (Details Tex
Earnings Per Share (Details Textual) - shares | 3 Months Ended | 6 Months Ended | ||
Jul. 29, 2016 | Jul. 31, 2015 | Jul. 29, 2016 | Jul. 31, 2015 | |
Earnings Per Share | ||||
Anti-dilutive securities | 700,000 | 0 | 800,000 | 0 |
Supplemental Disclosure (Detail
Supplemental Disclosure (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jul. 29, 2016 | Jul. 31, 2015 | Jul. 29, 2016 | Jul. 31, 2015 | |
Net interest expense | ||||
Long-term debt | $ 152 | $ 122 | $ 286 | $ 245 |
Capitalized lease obligations | 15 | 11 | 27 | 21 |
Interest income | (4) | (2) | (6) | (2) |
Interest capitalized | (1) | 0 | (2) | (1) |
Interest on tax uncertainties | 0 | 0 | 2 | 0 |
Other | 4 | 2 | 16 | 4 |
Interest - net | $ 166 | $ 133 | $ 323 | $ 267 |
Supplemental Disclosure (Deta44
Supplemental Disclosure (Details 1) - USD ($) $ in Millions | 6 Months Ended | |
Jul. 29, 2016 | Jul. 31, 2015 | |
Supplemental disclosures of cash flow information | ||
Cash paid for interest, net of amount capitalized | $ 298 | $ 266 |
Cash paid for income taxes, net | 1,028 | 1,068 |
Non-cash investing and financing activities: | ||
Non-cash property acquisitions, including assets acquired under capital lease | 47 | 51 |
Cash dividends declared but not paid | $ 309 | $ 260 |
Derivative Instruments (Details
Derivative Instruments (Details) $ in Millions, CAD in Billions | Feb. 29, 2016USD ($) | Jul. 29, 2016USD ($) | Jul. 29, 2016USD ($) | Jul. 31, 2015USD ($) | Feb. 29, 2016CAD |
Derivatives, Fair Value [Line Items] | |||||
Purchases of derivative instruments, investing activities | $ 103 | $ 0 | |||
Proceeds from derivative instruments, investing activities | 179 | $ 0 | |||
Foreign Exchange Option [Member] | Not Designated as Hedging Instrument [Member] | |||||
Derivatives, Fair Value [Line Items] | |||||
Derivative asset, notional amount | CAD | CAD 3.2 | ||||
Purchases of derivative instruments, investing activities | $ 103 | ||||
Proceeds from derivative instruments, investing activities | $ 179 | ||||
Gain (loss) on derivative, net | $ (84) | ||||
Total realized gain on derivative instruments | $ 76 |
Subsequent Events (Details)
Subsequent Events (Details) - Hydrox Holdings Pty Ltd. [Member] - USD ($) $ in Millions | 3 Months Ended | |
Jan. 29, 2016 | Jul. 29, 2016 | |
Subsequent Events | ||
Equity method investment impairment losses | $ 530 | |
Total carrying value of equity method investment | $ 393 |