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• | Minor changes to the timing of recognition of revenues related to gift cards and loyalty programs; |
• | Changes to certain immaterial revenues that are currently reported on a gross basis, to be reported on a net basis (with no change in timing of recognition) with consequently no impacts to earnings; and |
• | The balance sheet presentation of our sales returns reserve, which will be shown as a separate asset and liability versus the current net presentation. |
• | ASU 2015-11, Inventory: Simplifying the Measurement of Inventory. The adoption did not have a material impact on our results of operations, cash flows or financial position. |
• | ASU 2016-09, Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting. Excess tax benefits and tax deficiencies are now recognized in our provision for income taxes as a discrete event rather than as a component of stockholders’ equity. In addition, we elected to account for forfeitures as they occur. The cumulative effect of this policy change amounted to $12 million, net of tax, and was recorded as a reduction to our retained earnings opening balance. Finally, we elected to present the Condensed Consolidated Statements of Cash Flows on a retrospective transition method, and prior periods have been adjusted to present excess tax benefits as cash flows from operating activities. |
• | ASU 2016-15, Statement of Cash Flows: Classification of Certain Cash Receipts and Cash Payments, and ASU 2016-18, Statement of Cash Flows: Restricted Cash. The retrospective adoption increased our beginning and ending cash balance within our statement of cash flows. The adoption had no other material impacts to our cash flow statement and had no impact on our results of operations or financial position. |
October 29, 2016 Reported | ASU 2016-09 Adjustment | ASU 2016-15 Adjustment | ASU 2016-18 Adjustment | October 29, 2016 Adjusted | |||||||||||||||
Operating activities | |||||||||||||||||||
Other, net | $ | (34 | ) | $ | 12 | $ | — | $ | — | $ | (22 | ) | |||||||
Changes in operating assets and liabilities: | |||||||||||||||||||
Receivables | 80 | — | (1 | ) | — | 79 | |||||||||||||
Merchandise inventories | (1,370 | ) | — | 1 | — | (1,369 | ) | ||||||||||||
Total cash provided by operating activities | 1,395 | 12 | — | — | 1,407 | ||||||||||||||
Investing activities | |||||||||||||||||||
Change in restricted assets | (8 | ) | — | — | 8 | — | |||||||||||||
Total cash used in investing activities | (856 | ) | — | — | 8 | (848 | ) | ||||||||||||
Financing activities | |||||||||||||||||||
Other, net | 20 | (12 | ) | — | — | 8 | |||||||||||||
Total cash used in financing activities | (1,187 | ) | (12 | ) | — | — | (1,199 | ) | |||||||||||
Decrease in cash, cash equivalents and restricted cash | (635 | ) | — | — | 8 | (627 | ) | ||||||||||||
Cash, cash equivalents and restricted cash at beginning of period | 1,976 | — | — | 185 | 2,161 | ||||||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 1,341 | $ | — | $ | — | $ | 193 | $ | 1,534 |
October 28, 2017 | January 28, 2017 | October 29, 2016 | |||||||||
Cash and cash equivalents | $ | 1,103 | $ | 2,240 | $ | 1,341 | |||||
Restricted cash included in Other current assets | 197 | 193 | 193 | ||||||||
Total cash, cash equivalents and restricted cash | $ | 1,300 | $ | 2,433 | $ | 1,534 |
|
Three Months Ended | Nine Months Ended | ||||||||||||||
October 28, 2017 | October 29, 2016 | October 28, 2017 | October 29, 2016 | ||||||||||||
Gain from discontinued operations before income tax expense | $ | 1 | $ | 2 | $ | 1 | $ | 28 | |||||||
Income tax expense | — | — | — | 7 | |||||||||||
Net gain from discontinued operations | $ | 1 | $ | 2 | $ | 1 | $ | 21 |
|
• | Quoted prices for similar assets or liabilities in active markets; |
• | Quoted prices for identical or similar assets or liabilities in non-active markets; |
• | Inputs other than quoted prices that are observable for the asset or liability; and |
• | Inputs that are derived principally from or corroborated by other observable market data. |
Fair Value Hierarchy | Fair Value at | ||||||||||||
October 28, 2017 | January 28, 2017 | October 29, 2016 | |||||||||||
ASSETS | |||||||||||||
Cash and cash equivalents | |||||||||||||
Money market funds | Level 1 | $ | 84 | $ | 290 | $ | 97 | ||||||
Time deposits | Level 2 | — | 15 | 11 | |||||||||
Short-term investments | |||||||||||||
Commercial paper | Level 2 | 588 | 349 | 250 | |||||||||
Time deposits | Level 2 | 1,649 | 1,332 | 1,527 | |||||||||
Other current assets | |||||||||||||
Money market funds | Level 1 | 8 | 7 | 3 | |||||||||
Commercial paper | Level 2 | 60 | 60 | 60 | |||||||||
Foreign currency derivative instruments | Level 2 | 5 | 2 | 5 | |||||||||
Interest rate swap derivative instruments | Level 2 | 3 | — | — | |||||||||
Time deposits | Level 2 | 100 | 100 | 100 | |||||||||
Other assets | |||||||||||||
Marketable securities that fund deferred compensation | Level 1 | 98 | 96 | 96 | |||||||||
Interest rate swap derivative instruments | Level 2 | — | 13 | 13 | |||||||||
LIABILITIES | |||||||||||||
Accrued liabilities | |||||||||||||
Foreign currency derivative instruments | Level 2 | 5 | 3 | 3 | |||||||||
Long-term liabilities | |||||||||||||
Interest rate swap derivative instruments | Level 2 | 3 | — | — |
Impairments | Remaining Net Carrying Value(1) | ||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
October 28, 2017 | October 29, 2016 | October 28, 2017 | October 29, 2016 | October 28, 2017 | October 29, 2016 | ||||||||||||||||||
Property and equipment (non-restructuring) | $ | 2 | $ | 8 | $ | 8 | $ | 16 | $ | — | $ | — | |||||||||||
Property and equipment (restructuring)(2) | — | 1 | — | 8 | — | — | |||||||||||||||||
Total | $ | 2 | $ | 9 | $ | 8 | $ | 24 | $ | — | $ | — |
(1) | Remaining net carrying value approximates fair value. Because assets subject to long-lived asset impairment are not measured at fair value on a recurring basis, certain fair value measurements presented in the table may reflect values at earlier measurement dates and may no longer represent the fair values at October 28, 2017, and October 29, 2016. |
(2) | See Note 5, Restructuring Charges, for additional information. |
|
October 28, 2017 | January 28, 2017 | October 29, 2016 | |||||||||
Goodwill | $ | 425 | $ | 425 | $ | 425 | |||||
Intangible assets included in Other assets | 18 | 18 | 18 |
October 28, 2017 | January 28, 2017 | October 29, 2016 | |||||||||||||||||||||
Gross Carrying Amount | Cumulative Impairment | Gross Carrying Amount | Cumulative Impairment | Gross Carrying Amount | Cumulative Impairment | ||||||||||||||||||
Goodwill | $ | 1,100 | $ | 675 | $ | 1,100 | $ | 675 | $ | 1,100 | $ | 675 |
|
Three Months Ended | Nine Months Ended | ||||||||||||||
October 28, 2017 | October 29, 2016 | October 28, 2017 | October 29, 2016 | ||||||||||||
Renew Blue Phase 2 | $ | — | $ | 1 | $ | — | $ | 26 | |||||||
Canadian brand consolidation | (2 | ) | (2 | ) | (3 | ) | (1 | ) | |||||||
Renew Blue(1) | — | 1 | 3 | 4 | |||||||||||
Other restructuring activities(2) | — | 1 | — | 1 | |||||||||||
Total restructuring charges | $ | (2 | ) | $ | 1 | $ | — | $ | 30 |
(1) | Represents activity related to our remaining vacant space liability, primarily in our International segment, for our Renew Blue restructuring program, which began in the fourth quarter of fiscal 2013. We may continue to incur immaterial adjustments to the liability for changes in sublease assumptions or potential lease buyouts. In addition, lease payments for vacated stores will continue until leases expire or are terminated. The remaining vacant space liability was $11 million at October 28, 2017. |
(2) | Represents activity related to our remaining vacant space liability for U.S. large-format store closures in fiscal 2013. We may continue to incur immaterial adjustments to the liability for changes in sublease assumptions or potential lease buyouts. In addition, lease payments for vacated stores will continue until leases expire or are terminated. The remaining vacant space liability was $7 million at October 28, 2017. |
Domestic | |||||||||||||||||||
Three Months Ended | Nine Months Ended | Cumulative Amount | |||||||||||||||||
October 28, 2017 | October 29, 2016 | October 28, 2017 | October 29, 2016 | October 28, 2017 | |||||||||||||||
Property and equipment impairments | $ | — | $ | 1 | $ | — | $ | 8 | $ | 8 | |||||||||
Termination benefits | — | — | — | 18 | 18 | ||||||||||||||
Total restructuring charges | $ | — | $ | 1 | $ | — | $ | 26 | $ | 26 |
Termination Benefits | |||
Balances at January 30, 2016 | $ | — | |
Charges | 19 | ||
Cash payments | (16 | ) | |
Adjustments(1) | (2 | ) | |
Balances at October 29, 2016 | $ | 1 |
(1) | Adjustments to termination benefits represent changes in retention assumptions. |
International | |||||||||||||||||||
Three Months Ended | Nine Months Ended | Cumulative Amount | |||||||||||||||||
October 28, 2017 | October 29, 2016 | October 28, 2017 | October 29, 2016 | October 28, 2017 | |||||||||||||||
Inventory write-downs | $ | — | $ | — | $ | — | $ | — | $ | 3 | |||||||||
Property and equipment impairments | — | — | — | — | 30 | ||||||||||||||
Tradename impairment | — | — | — | — | 40 | ||||||||||||||
Termination benefits | — | — | — | — | 25 | ||||||||||||||
Facility closure and other costs | (2 | ) | (2 | ) | (3 | ) | (1 | ) | 102 | ||||||||||
Total restructuring charges | $ | (2 | ) | $ | (2 | ) | $ | (3 | ) | $ | (1 | ) | $ | 200 |
Termination Benefits | Facility Closure and Other Costs | Total | |||||||||
Balances at January 28, 2017 | $ | — | $ | 34 | $ | 34 | |||||
Cash payments | — | (14 | ) | (14 | ) | ||||||
Adjustments(1) | — | (3 | ) | (3 | ) | ||||||
Changes in foreign currency exchange rates | — | 1 | 1 | ||||||||
Balances at October 28, 2017 | $ | — | $ | 18 | $ | 18 | |||||
Balances at January 30, 2016 | $ | 2 | $ | 64 | $ | 66 | |||||
Charges | — | 1 | 1 | ||||||||
Cash payments | (2 | ) | (29 | ) | (31 | ) | |||||
Adjustments(1) | — | (2 | ) | (2 | ) | ||||||
Changes in foreign currency exchange rates | — | 3 | 3 | ||||||||
Balances at October 29, 2016 | $ | — | $ | 37 | $ | 37 |
(1) | Adjustments to facility closure and other costs represent changes in sublease assumptions. |
|
October 28, 2017 | January 28, 2017 | October 29, 2016 | |||||||||
2018 Notes | $ | 500 | $ | 500 | $ | 500 | |||||
2021 Notes | 650 | 650 | 650 | ||||||||
Interest rate swap valuation adjustments | — | 13 | 13 | ||||||||
Subtotal | 1,150 | 1,163 | 1,163 | ||||||||
Debt discounts and issuance costs | (3 | ) | (5 | ) | (5 | ) | |||||
Financing lease obligations | 158 | 177 | 180 | ||||||||
Capital lease obligations | 24 | 30 | 29 | ||||||||
Total long-term debt | 1,329 | 1,365 | 1,367 | ||||||||
Less: current portion | 545 | 44 | 43 | ||||||||
Total long-term debt, less current portion | $ | 784 | $ | 1,321 | $ | 1,324 |
|
October 28, 2017 | January 28, 2017 | October 29, 2016 | |||||||||||||||||||||
Assets | Liabilities | Assets | Liabilities | Assets | Liabilities | ||||||||||||||||||
Derivatives designated as net investment hedges(1) | $ | 3 | $ | 5 | $ | 2 | $ | 2 | $ | 4 | $ | 3 | |||||||||||
Derivatives designated as interest rate swaps(2) | 3 | 3 | 13 | — | 13 | — | |||||||||||||||||
No hedge designation (foreign exchange forward contracts)(1) | 2 | — | — | 1 | 1 | — | |||||||||||||||||
Total | $ | 8 | $ | 8 | $ | 15 | $ | 3 | $ | 18 | $ | 3 |
(1) | The fair value is recorded in Other current assets or Accrued liabilities. |
(2) | As of October 28, 2017, the fair value of the interest rate swaps related to our 2018 Notes is recorded in Other current assets or Accrued liabilities, while the interest rate swaps related to our 2021 Notes is recorded in Other assets or Long-term liabilities. For all previous periods, the fair value is recorded in Other assets or Long-term liabilities. |
Three Months Ended | Nine Months Ended | ||||||||||||||
October 28, 2017 | October 29, 2016 | October 28, 2017 | October 29, 2016 | ||||||||||||
Derivatives designated as net investment hedges | |||||||||||||||
Pre-tax gain (loss) recognized in OCI | $ | 8 | $ | 6 | $ | (3 | ) | $ | (10 | ) | |||||
Derivatives designated as interest rate swaps | |||||||||||||||
Gain (loss) recognized within Interest expense | |||||||||||||||
Interest rate swap gain | $ | 16 | $ | 14 | $ | 13 | $ | 12 | |||||||
Long-term debt loss | (16 | ) | (14 | ) | (13 | ) | (12 | ) | |||||||
Net impact | $ | — | $ | — | $ | — | $ | — | |||||||
No hedge designation (foreign exchange forward contracts) | |||||||||||||||
Gain (loss) recognized within Selling, general and administrative expenses | $ | 2 | $ | 1 | $ | (1 | ) | $ | (2 | ) |
October 28, 2017 | January 28, 2017 | October 29, 2016 | |||||||||
Derivatives designated as net investment hedges | $ | 240 | $ | 205 | $ | 203 | |||||
Derivatives designated as interest rate swaps | 1,150 | 750 | 750 | ||||||||
No hedge designation (foreign exchange forward contracts) | 64 | 43 | 59 | ||||||||
Total | $ | 1,454 | $ | 998 | $ | 1,012 |
|
Foreign Currency Translation | |||
Balances at July 29, 2017 | $ | 321 | |
Foreign currency translation adjustments | (17 | ) | |
Balances at October 28, 2017 | $ | 304 | |
Balances at January 28, 2017 | $ | 279 | |
Foreign currency translation adjustments | 25 | ||
Balances at October 28, 2017 | $ | 304 | |
Balances at July 30, 2016 | $ | 296 | |
Foreign currency translation adjustments | (19 | ) | |
Balances at October 29, 2016 | $ | 277 | |
Balances at January 30, 2016 | $ | 271 | |
Foreign currency translation adjustments | 6 | ||
Balances at October 29, 2016 | $ | 277 |
|
Three Months Ended | Nine Months Ended | ||||||||||||||
October 28, 2017 | October 29, 2016 | October 28, 2017 | October 29, 2016 | ||||||||||||
Total cost of shares repurchased | |||||||||||||||
Open market(1) | $ | 366 | $ | 206 | $ | 1,147 | $ | 483 | |||||||
Settlement of January 2016 ASR(2) | — | — | — | 45 | |||||||||||
Total | $ | 366 | $ | 206 | $ | 1,147 | $ | 528 | |||||||
Average price per share | |||||||||||||||
Open market | $ | 57.14 | $ | 37.67 | $ | 52.35 | $ | 33.52 | |||||||
Settlement of January 2016 ASR(2) | $ | — | $ | — | $ | — | $ | 28.55 | |||||||
Average | $ | 57.14 | $ | 37.67 | $ | 52.35 | $ | 33.03 | |||||||
Number of shares repurchased and retired | |||||||||||||||
Open market(1) | 6.4 | 5.5 | 21.9 | 14.4 | |||||||||||
Settlement of January 2016 ASR(2) | — | — | — | 1.6 | |||||||||||
Total | 6.4 | 5.5 | 21.9 | 16.0 |
(1) | As of October 28, 2017, $17 million, or 0.3 million shares, in trades remained unsettled. As of October 29, 2016, $11 million, or 0.3 million shares, in trades remained unsettled. The liability for unsettled trades is included in Accrued liabilities in the Condensed Consolidated Balance Sheets. |
(2) | See Note 7, Shareholders' Equity, in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended January 28, 2017, for additional information regarding the January 2016 ASR. |
|
Three Months Ended | Nine Months Ended | ||||||||||||||
October 28, 2017 | October 29, 2016 | October 28, 2017 | October 29, 2016 | ||||||||||||
Domestic | $ | 8,491 | $ | 8,192 | $ | 24,675 | $ | 23,910 | |||||||
International | 829 | 753 | 2,113 | 2,011 | |||||||||||
Total revenue | $ | 9,320 | $ | 8,945 | $ | 26,788 | $ | 25,921 |
Three Months Ended | Nine Months Ended | ||||||||||||||
October 28, 2017 | October 29, 2016 | October 28, 2017 | October 29, 2016 | ||||||||||||
Domestic | $ | 345 | $ | 298 | $ | 959 | $ | 959 | |||||||
International | 5 | 14 | 12 | 14 | |||||||||||
Total operating income | 350 | 312 | 971 | 973 | |||||||||||
Other income (expense) | |||||||||||||||
Gain on sale of investments | — | — | — | 2 | |||||||||||
Investment income and other | 12 | 8 | 30 | 22 | |||||||||||
Interest expense | (20 | ) | (16 | ) | (57 | ) | (54 | ) | |||||||
Earnings from continuing operations before income tax expense | $ | 342 | $ | 304 | $ | 944 | $ | 943 |
October 28, 2017 | January 28, 2017 | October 29, 2016 | |||||||||
Domestic | $ | 13,140 | $ | 12,496 | $ | 13,115 | |||||
International | 1,645 | 1,360 | 1,427 | ||||||||
Total assets | $ | 14,785 | $ | 13,856 | $ | 14,542 |
|
|
October 29, 2016 Reported | ASU 2016-09 Adjustment | ASU 2016-15 Adjustment | ASU 2016-18 Adjustment | October 29, 2016 Adjusted | |||||||||||||||
Operating activities | |||||||||||||||||||
Other, net | $ | (34 | ) | $ | 12 | $ | — | $ | — | $ | (22 | ) | |||||||
Changes in operating assets and liabilities: | |||||||||||||||||||
Receivables | 80 | — | (1 | ) | — | 79 | |||||||||||||
Merchandise inventories | (1,370 | ) | — | 1 | — | (1,369 | ) | ||||||||||||
Total cash provided by operating activities | 1,395 | 12 | — | — | 1,407 | ||||||||||||||
Investing activities | |||||||||||||||||||
Change in restricted assets | (8 | ) | — | — | 8 | — | |||||||||||||
Total cash used in investing activities | (856 | ) | — | — | 8 | (848 | ) | ||||||||||||
Financing activities | |||||||||||||||||||
Other, net | 20 | (12 | ) | — | — | 8 | |||||||||||||
Total cash used in financing activities | (1,187 | ) | (12 | ) | — | — | (1,199 | ) | |||||||||||
Decrease in cash, cash equivalents and restricted cash | (635 | ) | — | — | 8 | (627 | ) | ||||||||||||
Cash, cash equivalents and restricted cash at beginning of period | 1,976 | — | — | 185 | 2,161 | ||||||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 1,341 | $ | — | $ | — | $ | 193 | $ | 1,534 |
October 28, 2017 | January 28, 2017 | October 29, 2016 | |||||||||
Cash and cash equivalents | $ | 1,103 | $ | 2,240 | $ | 1,341 | |||||
Restricted cash included in Other current assets | 197 | 193 | 193 | ||||||||
Total cash, cash equivalents and restricted cash | $ | 1,300 | $ | 2,433 | $ | 1,534 |
|
Three Months Ended | Nine Months Ended | ||||||||||||||
October 28, 2017 | October 29, 2016 | October 28, 2017 | October 29, 2016 | ||||||||||||
Gain from discontinued operations before income tax expense | $ | 1 | $ | 2 | $ | 1 | $ | 28 | |||||||
Income tax expense | — | — | — | 7 | |||||||||||
Net gain from discontinued operations | $ | 1 | $ | 2 | $ | 1 | $ | 21 |
|
Fair Value Hierarchy | Fair Value at | ||||||||||||
October 28, 2017 | January 28, 2017 | October 29, 2016 | |||||||||||
ASSETS | |||||||||||||
Cash and cash equivalents | |||||||||||||
Money market funds | Level 1 | $ | 84 | $ | 290 | $ | 97 | ||||||
Time deposits | Level 2 | — | 15 | 11 | |||||||||
Short-term investments | |||||||||||||
Commercial paper | Level 2 | 588 | 349 | 250 | |||||||||
Time deposits | Level 2 | 1,649 | 1,332 | 1,527 | |||||||||
Other current assets | |||||||||||||
Money market funds | Level 1 | 8 | 7 | 3 | |||||||||
Commercial paper | Level 2 | 60 | 60 | 60 | |||||||||
Foreign currency derivative instruments | Level 2 | 5 | 2 | 5 | |||||||||
Interest rate swap derivative instruments | Level 2 | 3 | — | — | |||||||||
Time deposits | Level 2 | 100 | 100 | 100 | |||||||||
Other assets | |||||||||||||
Marketable securities that fund deferred compensation | Level 1 | 98 | 96 | 96 | |||||||||
Interest rate swap derivative instruments | Level 2 | — | 13 | 13 | |||||||||
LIABILITIES | |||||||||||||
Accrued liabilities | |||||||||||||
Foreign currency derivative instruments | Level 2 | 5 | 3 | 3 | |||||||||
Long-term liabilities | |||||||||||||
Interest rate swap derivative instruments | Level 2 | 3 | — | — |
Impairments | Remaining Net Carrying Value(1) | ||||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
October 28, 2017 | October 29, 2016 | October 28, 2017 | October 29, 2016 | October 28, 2017 | October 29, 2016 | ||||||||||||||||||
Property and equipment (non-restructuring) | $ | 2 | $ | 8 | $ | 8 | $ | 16 | $ | — | $ | — | |||||||||||
Property and equipment (restructuring)(2) | — | 1 | — | 8 | — | — | |||||||||||||||||
Total | $ | 2 | $ | 9 | $ | 8 | $ | 24 | $ | — | $ | — |
(1) | Remaining net carrying value approximates fair value. Because assets subject to long-lived asset impairment are not measured at fair value on a recurring basis, certain fair value measurements presented in the table may reflect values at earlier measurement dates and may no longer represent the fair values at October 28, 2017, and October 29, 2016. |
(2) | See Note 5, Restructuring Charges, for additional information. |
|
October 28, 2017 | January 28, 2017 | October 29, 2016 | |||||||||
Goodwill | $ | 425 | $ | 425 | $ | 425 | |||||
Intangible assets included in Other assets | 18 | 18 | 18 |
October 28, 2017 | January 28, 2017 | October 29, 2016 | |||||||||||||||||||||
Gross Carrying Amount | Cumulative Impairment | Gross Carrying Amount | Cumulative Impairment | Gross Carrying Amount | Cumulative Impairment | ||||||||||||||||||
Goodwill | $ | 1,100 | $ | 675 | $ | 1,100 | $ | 675 | $ | 1,100 | $ | 675 |
|
Three Months Ended | Nine Months Ended | ||||||||||||||
October 28, 2017 | October 29, 2016 | October 28, 2017 | October 29, 2016 | ||||||||||||
Renew Blue Phase 2 | $ | — | $ | 1 | $ | — | $ | 26 | |||||||
Canadian brand consolidation | (2 | ) | (2 | ) | (3 | ) | (1 | ) | |||||||
Renew Blue(1) | — | 1 | 3 | 4 | |||||||||||
Other restructuring activities(2) | — | 1 | — | 1 | |||||||||||
Total restructuring charges | $ | (2 | ) | $ | 1 | $ | — | $ | 30 |
(1) | Represents activity related to our remaining vacant space liability, primarily in our International segment, for our Renew Blue restructuring program, which began in the fourth quarter of fiscal 2013. We may continue to incur immaterial adjustments to the liability for changes in sublease assumptions or potential lease buyouts. In addition, lease payments for vacated stores will continue until leases expire or are terminated. The remaining vacant space liability was $11 million at October 28, 2017. |
(2) | Represents activity related to our remaining vacant space liability for U.S. large-format store closures in fiscal 2013. We may continue to incur immaterial adjustments to the liability for changes in sublease assumptions or potential lease buyouts. In addition, lease payments for vacated stores will continue until leases expire or are terminated. The remaining vacant space liability was $7 million at October 28, 2017. |
Domestic | |||||||||||||||||||
Three Months Ended | Nine Months Ended | Cumulative Amount | |||||||||||||||||
October 28, 2017 | October 29, 2016 | October 28, 2017 | October 29, 2016 | October 28, 2017 | |||||||||||||||
Property and equipment impairments | $ | — | $ | 1 | $ | — | $ | 8 | $ | 8 | |||||||||
Termination benefits | — | — | — | 18 | 18 | ||||||||||||||
Total restructuring charges | $ | — | $ | 1 | $ | — | $ | 26 | $ | 26 |
Termination Benefits | |||
Balances at January 30, 2016 | $ | — | |
Charges | 19 | ||
Cash payments | (16 | ) | |
Adjustments(1) | (2 | ) | |
Balances at October 29, 2016 | $ | 1 |
(1) | Adjustments to termination benefits represent changes in retention assumptions. |
International | |||||||||||||||||||
Three Months Ended | Nine Months Ended | Cumulative Amount | |||||||||||||||||
October 28, 2017 | October 29, 2016 | October 28, 2017 | October 29, 2016 | October 28, 2017 | |||||||||||||||
Inventory write-downs | $ | — | $ | — | $ | — | $ | — | $ | 3 | |||||||||
Property and equipment impairments | — | — | — | — | 30 | ||||||||||||||
Tradename impairment | — | — | — | — | 40 | ||||||||||||||
Termination benefits | — | — | — | — | 25 | ||||||||||||||
Facility closure and other costs | (2 | ) | (2 | ) | (3 | ) | (1 | ) | 102 | ||||||||||
Total restructuring charges | $ | (2 | ) | $ | (2 | ) | $ | (3 | ) | $ | (1 | ) | $ | 200 |
Termination Benefits | Facility Closure and Other Costs | Total | |||||||||
Balances at January 28, 2017 | $ | — | $ | 34 | $ | 34 | |||||
Cash payments | — | (14 | ) | (14 | ) | ||||||
Adjustments(1) | — | (3 | ) | (3 | ) | ||||||
Changes in foreign currency exchange rates | — | 1 | 1 | ||||||||
Balances at October 28, 2017 | $ | — | $ | 18 | $ | 18 | |||||
Balances at January 30, 2016 | $ | 2 | $ | 64 | $ | 66 | |||||
Charges | — | 1 | 1 | ||||||||
Cash payments | (2 | ) | (29 | ) | (31 | ) | |||||
Adjustments(1) | — | (2 | ) | (2 | ) | ||||||
Changes in foreign currency exchange rates | — | 3 | 3 | ||||||||
Balances at October 29, 2016 | $ | — | $ | 37 | $ | 37 |
(1) | Adjustments to facility closure and other costs represent changes in sublease assumptions. |
|
October 28, 2017 | January 28, 2017 | October 29, 2016 | |||||||||
2018 Notes | $ | 500 | $ | 500 | $ | 500 | |||||
2021 Notes | 650 | 650 | 650 | ||||||||
Interest rate swap valuation adjustments | — | 13 | 13 | ||||||||
Subtotal | 1,150 | 1,163 | 1,163 | ||||||||
Debt discounts and issuance costs | (3 | ) | (5 | ) | (5 | ) | |||||
Financing lease obligations | 158 | 177 | 180 | ||||||||
Capital lease obligations | 24 | 30 | 29 | ||||||||
Total long-term debt | 1,329 | 1,365 | 1,367 | ||||||||
Less: current portion | 545 | 44 | 43 | ||||||||
Total long-term debt, less current portion | $ | 784 | $ | 1,321 | $ | 1,324 |
|
October 28, 2017 | January 28, 2017 | October 29, 2016 | |||||||||||||||||||||
Assets | Liabilities | Assets | Liabilities | Assets | Liabilities | ||||||||||||||||||
Derivatives designated as net investment hedges(1) | $ | 3 | $ | 5 | $ | 2 | $ | 2 | $ | 4 | $ | 3 | |||||||||||
Derivatives designated as interest rate swaps(2) | 3 | 3 | 13 | — | 13 | — | |||||||||||||||||
No hedge designation (foreign exchange forward contracts)(1) | 2 | — | — | 1 | 1 | — | |||||||||||||||||
Total | $ | 8 | $ | 8 | $ | 15 | $ | 3 | $ | 18 | $ | 3 |
(1) | The fair value is recorded in Other current assets or Accrued liabilities. |
(2) | As of October 28, 2017, the fair value of the interest rate swaps related to our 2018 Notes is recorded in Other current assets or Accrued liabilities, while the interest rate swaps related to our 2021 Notes is recorded in Other assets or Long-term liabilities. For all previous periods, the fair value is recorded in Other assets or Long-term liabilities. |
Three Months Ended | Nine Months Ended | ||||||||||||||
October 28, 2017 | October 29, 2016 | October 28, 2017 | October 29, 2016 | ||||||||||||
Derivatives designated as net investment hedges | |||||||||||||||
Pre-tax gain (loss) recognized in OCI | $ | 8 | $ | 6 | $ | (3 | ) | $ | (10 | ) | |||||
Derivatives designated as interest rate swaps | |||||||||||||||
Gain (loss) recognized within Interest expense | |||||||||||||||
Interest rate swap gain | $ | 16 | $ | 14 | $ | 13 | $ | 12 | |||||||
Long-term debt loss | (16 | ) | (14 | ) | (13 | ) | (12 | ) | |||||||
Net impact | $ | — | $ | — | $ | — | $ | — | |||||||
No hedge designation (foreign exchange forward contracts) | |||||||||||||||
Gain (loss) recognized within Selling, general and administrative expenses | $ | 2 | $ | 1 | $ | (1 | ) | $ | (2 | ) |
October 28, 2017 | January 28, 2017 | October 29, 2016 | |||||||||
Derivatives designated as net investment hedges | $ | 240 | $ | 205 | $ | 203 | |||||
Derivatives designated as interest rate swaps | 1,150 | 750 | 750 | ||||||||
No hedge designation (foreign exchange forward contracts) | 64 | 43 | 59 | ||||||||
Total | $ | 1,454 | $ | 998 | $ | 1,012 |
|
Foreign Currency Translation | |||
Balances at July 29, 2017 | $ | 321 | |
Foreign currency translation adjustments | (17 | ) | |
Balances at October 28, 2017 | $ | 304 | |
Balances at January 28, 2017 | $ | 279 | |
Foreign currency translation adjustments | 25 | ||
Balances at October 28, 2017 | $ | 304 | |
Balances at July 30, 2016 | $ | 296 | |
Foreign currency translation adjustments | (19 | ) | |
Balances at October 29, 2016 | $ | 277 | |
Balances at January 30, 2016 | $ | 271 | |
Foreign currency translation adjustments | 6 | ||
Balances at October 29, 2016 | $ | 277 |
|
Three Months Ended | Nine Months Ended | ||||||||||||||
October 28, 2017 | October 29, 2016 | October 28, 2017 | October 29, 2016 | ||||||||||||
Total cost of shares repurchased | |||||||||||||||
Open market(1) | $ | 366 | $ | 206 | $ | 1,147 | $ | 483 | |||||||
Settlement of January 2016 ASR(2) | — | — | — | 45 | |||||||||||
Total | $ | 366 | $ | 206 | $ | 1,147 | $ | 528 | |||||||
Average price per share | |||||||||||||||
Open market | $ | 57.14 | $ | 37.67 | $ | 52.35 | $ | 33.52 | |||||||
Settlement of January 2016 ASR(2) | $ | — | $ | — | $ | — | $ | 28.55 | |||||||
Average | $ | 57.14 | $ | 37.67 | $ | 52.35 | $ | 33.03 | |||||||
Number of shares repurchased and retired | |||||||||||||||
Open market(1) | 6.4 | 5.5 | 21.9 | 14.4 | |||||||||||
Settlement of January 2016 ASR(2) | — | — | — | 1.6 | |||||||||||
Total | 6.4 | 5.5 | 21.9 | 16.0 |
(1) | As of October 28, 2017, $17 million, or 0.3 million shares, in trades remained unsettled. As of October 29, 2016, $11 million, or 0.3 million shares, in trades remained unsettled. The liability for unsettled trades is included in Accrued liabilities in the Condensed Consolidated Balance Sheets. |
(2) | See Note 7, Shareholders' Equity, in the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended January 28, 2017, for additional information regarding the January 2016 ASR. |
|
Three Months Ended | Nine Months Ended | ||||||||||||||
October 28, 2017 | October 29, 2016 | October 28, 2017 | October 29, 2016 | ||||||||||||
Domestic | $ | 8,491 | $ | 8,192 | $ | 24,675 | $ | 23,910 | |||||||
International | 829 | 753 | 2,113 | 2,011 | |||||||||||
Total revenue | $ | 9,320 | $ | 8,945 | $ | 26,788 | $ | 25,921 |
Three Months Ended | Nine Months Ended | ||||||||||||||
October 28, 2017 | October 29, 2016 | October 28, 2017 | October 29, 2016 | ||||||||||||
Domestic | $ | 345 | $ | 298 | $ | 959 | $ | 959 | |||||||
International | 5 | 14 | 12 | 14 | |||||||||||
Total operating income | 350 | 312 | 971 | 973 | |||||||||||
Other income (expense) | |||||||||||||||
Gain on sale of investments | — | — | — | 2 | |||||||||||
Investment income and other | 12 | 8 | 30 | 22 | |||||||||||
Interest expense | (20 | ) | (16 | ) | (57 | ) | (54 | ) | |||||||
Earnings from continuing operations before income tax expense | $ | 342 | $ | 304 | $ | 944 | $ | 943 |
October 28, 2017 | January 28, 2017 | October 29, 2016 | |||||||||
Domestic | $ | 13,140 | $ | 12,496 | $ | 13,115 | |||||
International | 1,645 | 1,360 | 1,427 | ||||||||
Total assets | $ | 14,785 | $ | 13,856 | $ | 14,542 |
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