Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Oct. 28, 2018 | Nov. 30, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | HD Supply Holdings, Inc. | |
Entity Central Index Key | 1,573,097 | |
Document Type | 10-Q | |
Document Period End Date | Oct. 28, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --02-03 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 178,112,256 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (HD Supply Holdings, Inc.) - USD ($) shares in Thousands, $ in Millions | 3 Months Ended | 9 Months Ended | |||
Oct. 28, 2018 | Oct. 29, 2017 | Oct. 28, 2018 | Oct. 29, 2017 | ||
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | |||||
Net Sales | $ 1,612 | $ 1,370 | $ 4,601 | $ 3,938 | |
Cost of sales | 983 | 828 | 2,798 | 2,373 | |
Gross Profit | 629 | 542 | 1,803 | 1,565 | |
Operating expenses: | |||||
Selling, general and administrative | 391 | 336 | 1,147 | 1,008 | |
Depreciation and amortization | 25 | 21 | 72 | 63 | |
Restructuring | 3 | 9 | 3 | ||
Total operating expenses | 416 | 360 | 1,228 | 1,074 | |
Operating Income | 213 | 182 | 575 | 491 | |
Interest expense | 32 | 36 | 101 | 134 | |
Interest (income) | (1) | (1) | (1) | ||
Loss on extinguishment & modification of debt | 69 | 78 | 69 | 81 | |
Income from Continuing Operations Before Provision for Income Taxes | 112 | 69 | 406 | 277 | |
Provision for income taxes | 30 | 23 | 105 | 92 | |
Income from Continuing Operations | 82 | 46 | 301 | 185 | |
Income from discontinued operations, net of tax | 406 | 1 | 794 | ||
Net Income | 82 | 452 | 302 | 979 | |
Other comprehensive income (loss): | |||||
Foreign currency translation adjustment | 1 | 2 | (1) | ||
Unrealized loss on cash flow hedge, net of tax of $1, $-, $1, and $- | (4) | (4) | |||
Total Comprehensive Income | $ 78 | $ 453 | $ 300 | $ 978 | |
Weighted Average Common Shares Outstanding (thousands) | |||||
Basic (in shares) | 182,730 | 185,651 | 183,349 | 194,704 | |
Diluted (in shares) | 183,579 | 186,652 | 184,192 | 196,258 | |
Basic Earnings Per Share: | |||||
Income from Continuing Operations (in dollars per share) | [1] | $ 0.45 | $ 0.25 | $ 1.64 | $ 0.95 |
Income from Discontinued Operations (in dollars per share) | [1] | 2.19 | 0.01 | 4.08 | |
Net Income (in dollars per share) | [1] | 0.45 | 2.43 | 1.65 | 5.03 |
Diluted Earnings Per Share: | |||||
Income from Continuing Operations (in dollars per share) | [1] | 0.45 | 0.25 | 1.63 | 0.94 |
Income from Discontinued Operations (in dollars per share) | [1] | 2.18 | 0.01 | 4.05 | |
Net Income (in dollars per share) | [1] | $ 0.45 | $ 2.42 | $ 1.64 | $ 4.99 |
[1] | May not foot due to rounding. |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Parenthetical) (HD Supply Holdings, Inc.) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Oct. 28, 2018 | Oct. 29, 2017 | Oct. 28, 2018 | |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | |||
Unrealized loss on cash flow hedge, tax | $ 1 | $ 1 | $ 1 |
CONSOLIDATED BALANCE SHEETS (HD
CONSOLIDATED BALANCE SHEETS (HD Supply Holdings, Inc.) - USD ($) $ in Millions | Oct. 28, 2018 | Jan. 28, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 52 | $ 558 |
Receivables, less allowance for doubtful accounts of $19 and $12 | 860 | 612 |
Inventories | 803 | 674 |
Other current assets | 46 | 31 |
Total current assets | 1,761 | 1,875 |
Property and equipment, net | 356 | 325 |
Goodwill | 1,993 | 1,807 |
Intangible assets, net | 197 | 91 |
Deferred tax asset | 94 | 205 |
Other assets | 17 | 15 |
Total assets | 4,418 | 4,318 |
Current liabilities: | ||
Accounts payable | 483 | 377 |
Accrued compensation and benefits | 105 | 95 |
Current installments of long-term debt | 11 | 11 |
Other current liabilities | 261 | 138 |
Total current liabilities | 860 | 621 |
Long-term debt, excluding current installments | 1,888 | 2,090 |
Other liabilities | 70 | 141 |
Total liabilities | 2,818 | 2,852 |
Stockholders' equity: | ||
Common stock, par value $0.01; 1 billion shares authorized; 181.4 million and 185.7 million shares issued and outstanding at October 28, 2018 and January 28, 2018, respectively | 2 | 2 |
Paid-in capital | 4,055 | 4,029 |
Accumulated deficit | (1,663) | (1,966) |
Accumulated other comprehensive loss | (20) | (17) |
Treasury stock, at cost, 23.2 and 18.2 million shares at July 29, 2018 and January 28, 2018, respectively | (774) | (582) |
Total stockholders' equity | 1,600 | 1,466 |
Total liabilities and stockholders' equity | $ 4,418 | $ 4,318 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (HD Supply Holdings, Inc.) - USD ($) shares in Millions, $ in Millions | Oct. 28, 2018 | Jan. 28, 2018 |
Receivables | ||
Receivables, allowance for doubtful accounts (in dollars) | $ 19 | $ 12 |
Common stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 1,000 | 1,000 |
Common stock, shares issued | 181.4 | 185.7 |
Common stock, shares outstanding | 181.4 | 185.7 |
Treasury stock | ||
Treasury stock, shares | 23.2 | 18.2 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (HD Supply Holdings, Inc.) - USD ($) $ in Millions | 9 Months Ended | |
Oct. 28, 2018 | Oct. 29, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 302 | $ 979 |
Reconciliation of net income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 78 | 73 |
Provision for uncollectibles | 9 | 6 |
Non-cash interest expense | 15 | 11 |
Payment of discounts upon extinguishment of debt | (4) | (6) |
Loss on extinguishment of debt | 69 | 81 |
Stock-based compensation expense | 19 | 19 |
Deferred income taxes | 97 | 316 |
(Gain) on sales of businesses, net | (930) | |
Other | (1) | |
Changes in assets and liabilities, net of the effects of acquisitions & dispositions: | ||
(Increase) decrease in receivables | (204) | (249) |
(Increase) decrease in inventories | (94) | (116) |
(Increase) decrease in other current assets | (3) | 1 |
(Increase) decrease in other assets | 1 | |
Increase (decrease) in accounts payable and accrued liabilities | 95 | 132 |
Increase (decrease) in other long-term liabilities | 1 | 2 |
Net cash provided by (used in) operating activities | 379 | 320 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Capital expenditures | (79) | (65) |
Proceeds from sales of property and equipment | 2 | |
Proceeds from sales of businesses, net | 2,450 | |
Payments for businesses acquired, net of cash acquired | (362) | |
Net cash provided by (used in) investing activities | (441) | 2,387 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from issuance of common stock under employee benefit plans | 7 | 37 |
Purchase of treasury shares | (166) | (555) |
Tax withholdings on stock-based awards | (6) | |
Borrowings of long-term debt | 930 | 113 |
Repayments of long-term debt | (1,240) | (1,526) |
Borrowings on long-term revolver debt | 100 | 624 |
Repayments on long-term revolver debt | (49) | (989) |
Debt issuance costs | (18) | (26) |
Other financing activities | (2) | 1 |
Net cash provided by (used in) financing activities | (444) | (2,321) |
Increase (decrease) in cash and cash equivalents | (506) | 386 |
Cash and cash equivalents at beginning of period | 558 | 75 |
Cash and cash equivalents at end of period | $ 52 | $ 461 |
CONSOLIDATED STATEMENTS OF OP_3
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (HD Supply, Inc.) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Oct. 28, 2018 | Oct. 29, 2017 | Oct. 28, 2018 | Oct. 29, 2017 | |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | ||||
Net Sales | $ 1,612 | $ 1,370 | $ 4,601 | $ 3,938 |
Cost of sales | 983 | 828 | 2,798 | 2,373 |
Gross Profit | 629 | 542 | 1,803 | 1,565 |
Operating expenses: | ||||
Selling, general and administrative | 391 | 336 | 1,147 | 1,008 |
Depreciation and amortization | 25 | 21 | 72 | 63 |
Restructuring | 3 | 9 | 3 | |
Total operating expenses | 416 | 360 | 1,228 | 1,074 |
Operating Income | 213 | 182 | 575 | 491 |
Interest expense | 32 | 36 | 101 | 134 |
Interest (income) | (1) | (1) | (1) | |
Loss on extinguishment & modification of debt | 69 | 78 | 69 | 81 |
Income from Continuing Operations Before Provision for Income Taxes | 112 | 69 | 406 | 277 |
Provision for income taxes | 30 | 23 | 105 | 92 |
Income from Continuing Operations | 82 | 46 | 301 | 185 |
Income from discontinued operations, net of tax | 406 | 1 | 794 | |
Net Income | 82 | 452 | 302 | 979 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustment | 1 | 2 | (1) | |
Unrealized gain (loss) on derivatives, net of tax of $1, $-, $1, and $- | (4) | (4) | ||
Total Comprehensive Income | 78 | 453 | 300 | 978 |
HD Supply, Inc. (Total HDS) | ||||
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | ||||
Net Sales | 1,612 | 1,370 | 4,601 | 3,938 |
Cost of sales | 983 | 828 | 2,798 | 2,373 |
Gross Profit | 629 | 542 | 1,803 | 1,565 |
Operating expenses: | ||||
Selling, general and administrative | 391 | 336 | 1,147 | 1,008 |
Depreciation and amortization | 25 | 21 | 72 | 63 |
Restructuring | 3 | 9 | 3 | |
Total operating expenses | 416 | 360 | 1,228 | 1,074 |
Operating Income | 213 | 182 | 575 | 491 |
Interest expense | 32 | 36 | 101 | 134 |
Interest (income) | (1) | (1) | (1) | |
Loss on extinguishment & modification of debt | 69 | 78 | 69 | 81 |
Income from Continuing Operations Before Provision for Income Taxes | 112 | 69 | 406 | 277 |
Provision for income taxes | 30 | 23 | 105 | 92 |
Income from Continuing Operations | 82 | 46 | 301 | 185 |
Income from discontinued operations, net of tax | 406 | 1 | 794 | |
Net Income | 82 | 452 | 302 | 979 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustment | 1 | 2 | (1) | |
Unrealized gain (loss) on derivatives, net of tax of $1, $-, $1, and $- | (4) | (4) | ||
Total Comprehensive Income | $ 78 | $ 453 | $ 300 | $ 978 |
CONSOLIDATED STATEMENTS OF OP_4
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Parenthetical) (HD Supply, Inc.) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Oct. 28, 2018 | Oct. 29, 2017 | Oct. 28, 2018 | |
Unrealized gain (loss) on cash flow hedge, tax | $ 1 | $ 1 | $ 1 |
HD Supply, Inc. (Total HDS) | |||
Unrealized gain (loss) on cash flow hedge, tax | $ 1 | $ 1 |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (HD Supply, Inc.) - USD ($) $ in Millions | Oct. 28, 2018 | Jan. 28, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 52 | $ 558 |
Receivables, less allowance for doubtful accounts of $19 and $12 | 860 | 612 |
Inventories | 803 | 674 |
Other current assets | 46 | 31 |
Total current assets | 1,761 | 1,875 |
Property and equipment, net | 356 | 325 |
Goodwill | 1,993 | 1,807 |
Intangible assets, net | 197 | 91 |
Deferred tax asset | 94 | 205 |
Other assets | 17 | 15 |
Total assets | 4,418 | 4,318 |
Current liabilities: | ||
Accounts payable | 483 | 377 |
Accrued compensation and benefits | 105 | 95 |
Current installments of long-term debt | 11 | 11 |
Other current liabilities | 261 | 138 |
Total current liabilities | 860 | 621 |
Long-term debt, excluding current installments | 1,888 | 2,090 |
Other liabilities | 70 | 141 |
Total liabilities | 2,818 | 2,852 |
Stockholders' equity: | ||
Common stock, par value $0.01; authorized 1,000 shares; issued and outstanding 1,000 shares at October 28, 2018 and January 28, 2018 | 2 | 2 |
Paid-in capital | 4,055 | 4,029 |
Accumulated deficit | (1,663) | (1,966) |
Accumulated other comprehensive loss | (20) | (17) |
Total stockholders' equity | 1,600 | 1,466 |
Total liabilities and stockholders' equity | 4,418 | 4,318 |
HD Supply, Inc. (Total HDS) | ||
Current assets: | ||
Cash and cash equivalents | 45 | 558 |
Receivables, less allowance for doubtful accounts of $19 and $12 | 860 | 612 |
Inventories | 803 | 674 |
Other current assets | 46 | 31 |
Total current assets | 1,754 | 1,875 |
Property and equipment, net | 356 | 325 |
Goodwill | 1,993 | 1,807 |
Intangible assets, net | 197 | 91 |
Deferred tax asset | 94 | 205 |
Other assets | 17 | 15 |
Total assets | 4,411 | 4,318 |
Current liabilities: | ||
Accounts payable | 483 | 377 |
Accrued compensation and benefits | 105 | 95 |
Current installments of long-term debt | 11 | 11 |
Other current liabilities | 241 | 138 |
Total current liabilities | 840 | 621 |
Long-term debt, excluding current installments | 1,888 | 2,090 |
Other liabilities | 70 | 141 |
Total liabilities | 2,798 | 2,852 |
Stockholders' equity: | ||
Paid-in capital | 3,137 | 3,290 |
Accumulated deficit | (1,504) | (1,807) |
Accumulated other comprehensive loss | (20) | (17) |
Total stockholders' equity | 1,613 | 1,466 |
Total liabilities and stockholders' equity | $ 4,411 | $ 4,318 |
CONSOLIDATED BALANCE SHEETS (_3
CONSOLIDATED BALANCE SHEETS (Parenthetical) (HD Supply, Inc.) - USD ($) $ in Millions | Oct. 28, 2018 | Jan. 28, 2018 |
Receivables | ||
Receivables, allowance for doubtful accounts (in dollars) | $ 19 | $ 12 |
Common stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued | 181,400,000 | 185,700,000 |
Common stock, shares outstanding | 181,400,000 | 185,700,000 |
HD Supply, Inc. (Total HDS) | ||
Receivables | ||
Receivables, allowance for doubtful accounts (in dollars) | $ 19 | $ 12 |
Common stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 1,000 | 1,000 |
Common stock, shares issued | 1,000 | 1,000 |
Common stock, shares outstanding | 1,000 | 1,000 |
CONSOLIDATED STATEMENTS OF CA_2
CONSOLIDATED STATEMENTS OF CASH FLOWS (HD Supply, Inc.) - USD ($) $ in Millions | 9 Months Ended | |
Oct. 28, 2018 | Oct. 29, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 302 | $ 979 |
Reconciliation of net income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 78 | 73 |
Provision for uncollectibles | 9 | 6 |
Non-cash interest expense | 15 | 11 |
Payment of discounts upon extinguishment of debt | (4) | (6) |
Loss on extinguishment of debt | 69 | 81 |
Stock-based compensation expense | 19 | 19 |
Deferred income taxes | 97 | 316 |
(Gain) on sales of businesses, net | (930) | |
Other | (1) | |
Changes in assets and liabilities, net of the effects of acquisitions & dispositions: | ||
(Increase) decrease in receivables | (204) | (249) |
(Increase) decrease in inventories | (94) | (116) |
(Increase) decrease in other current assets | (3) | 1 |
(Increase) decrease in other assets | 1 | |
Increase (decrease) in accounts payable and accrued liabilities | 95 | 132 |
Increase (decrease) in other long-term liabilities | 1 | 2 |
Net cash provided by (used in) operating activities | 379 | 320 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Capital expenditures | (79) | (65) |
Proceeds from sales of property and equipment | 2 | |
Proceeds from sales of businesses, net | 2,450 | |
Payments for businesses acquired, net of cash acquired | (362) | |
Net cash provided by (used in) investing activities | (441) | 2,387 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Borrowings of long-term debt | 930 | 113 |
Repayments of long-term debt | (1,240) | (1,526) |
Borrowings on long-term revolver debt | 100 | 624 |
Repayments on long-term revolver debt | (49) | (989) |
Debt issuance costs | (18) | (26) |
Other financing activities | (2) | 1 |
Net cash provided by (used in) financing activities | (444) | (2,321) |
Increase (decrease) in cash and cash equivalents | (506) | 386 |
Cash and cash equivalents at beginning of period | 558 | 75 |
Cash and cash equivalents at end of period | 52 | 461 |
HD Supply, Inc. (Total HDS) | ||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | 302 | 979 |
Reconciliation of net income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 78 | 73 |
Provision for uncollectibles | 9 | 6 |
Non-cash interest expense | 15 | 11 |
Payment of discounts upon extinguishment of debt | (4) | (6) |
Loss on extinguishment of debt | 69 | 81 |
Stock-based compensation expense | 19 | 19 |
Deferred income taxes | 97 | 316 |
(Gain) on sales of businesses, net | (930) | |
Other | (1) | |
Changes in assets and liabilities, net of the effects of acquisitions & dispositions: | ||
(Increase) decrease in receivables | (204) | (249) |
(Increase) decrease in inventories | (94) | (116) |
(Increase) decrease in other current assets | (3) | 1 |
(Increase) decrease in other assets | 1 | |
Increase (decrease) in accounts payable and accrued liabilities | 95 | 132 |
Increase (decrease) in other long-term liabilities | 1 | 2 |
Net cash provided by (used in) operating activities | 379 | 320 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Capital expenditures | (79) | (65) |
Proceeds from sales of property and equipment | 2 | |
Proceeds from sales of businesses, net | 2,450 | |
Payments for businesses acquired, net of cash acquired | (362) | |
Net cash provided by (used in) investing activities | (441) | 2,387 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Equity distribution to Parent | (172) | (516) |
Borrowings of long-term debt | 930 | 113 |
Repayments of long-term debt | (1,240) | (1,526) |
Borrowings on long-term revolver debt | 100 | 624 |
Repayments on long-term revolver debt | (49) | (989) |
Debt issuance costs | (18) | (26) |
Other financing activities | (2) | 1 |
Net cash provided by (used in) financing activities | (451) | (2,319) |
Increase (decrease) in cash and cash equivalents | (513) | 388 |
Cash and cash equivalents at beginning of period | 558 | 73 |
Cash and cash equivalents at end of period | $ 45 | $ 461 |
NATURE OF BUSINESS AND BASIS OF
NATURE OF BUSINESS AND BASIS OF PRESENTATION | 9 Months Ended |
Oct. 28, 2018 | |
NATURE OF BUSINESS AND BASIS OF PRESENTATION | |
NATURE OF BUSINESS AND BASIS OF PRESENTATION | NOTE 1 — NATURE OF BUSINESS AND BASIS OF PRESENTATION Nature of Business HD Supply Holdings, Inc. (‘‘Holdings’’) indirectly owns all of the outstanding common stock of HD Supply, Inc. (“HDS”). Holdings, together with its direct and indirect subsidiaries, including HDS ("HD Supply" or the "Company"), is one of the largest industrial distribution companies in North America. The Company specializes in two distinct market sectors: Maintenance, Repair & Operations and Specialty Construction. Through approximately 270 branches and 44 distribution centers in the U.S. and Canada, the Company serves these markets with an integrated go-to-market strategy. HD Supply has approximately 11,000 associates delivering localized, customer-tailored products, services and expertise. The Company serves approximately 500,000 customers, which include contractors, maintenance professionals, industrial businesses, and government entities. HD Supply’s broad range of end-to-end product lines and services includes approximately 650,000 stock-keeping units ("SKUs") of quality, name-brand and proprietary-brand products as well as value-add services supporting the entire life-cycle of a project from construction to maintenance, repair and operations. HD Supply is managed primarily on a product line basis and reports results of operations in two reportable segments. The reportable segments are Facilities Maintenance and Construction & Industrial. In addition, the consolidated financial statements include Corporate and Eliminations, which is comprised of enterprise-wide functional departments. Basis of Presentation In management’s opinion, the unaudited financial information for the interim periods presented includes all adjustments necessary for a fair statement of the results of operations, financial position, and cash flows. All adjustments are of a normal recurring nature unless otherwise disclosed. Revenues, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be the same as those for the full year. For a more complete discussion of the Company’s significant accounting policies and other information, you should read this report in conjunction with the Company’s annual report on Form 10-K for the year ended January 28, 2018, which includes all disclosures required by generally accepted accounting principles in the United States of America (“GAAP”). F iscal Year HD Supply’s fiscal year is a 52- or 53-week period ending on the Sunday nearest to January 31. The fiscal year ending February 3, 2019 ("fiscal 2018") includes 53 weeks and the fiscal year ended January 29, 2018 (“fiscal 2017”) includes 52 weeks. The three months ended October 28, 2018 (“third quarter 2018”) and October 29, 2017 ("third quarter 2017”) both include 13 weeks. The nine months ended October 28, 2018 and October 29, 2017 both include 39 weeks. Principles of Consolidation The consolidated financial statements of Holdings present the results of operations, financial position and cash flows of Holdings and its wholly-owned subsidiaries, including HDS. The consolidated financial statements of HDS present the results of operations, financial position and cash flows of HDS and its wholly-owned subsidiaries. All material intercompany balances and transactions are eliminated. Results of operations of businesses acquired are included from their respective dates of acquisition. The results of operations of all discontinued operations have been separately reported as discontinued operations for all periods presented. Estimates Management has made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities, and reported amounts of revenues and expenses in preparing these consolidated financial statements in conformity with GAAP. Actual results could differ from these estimates. Self-Insurance HD Supply has a high-deductible insurance program for most losses related to general liability, product liability, environmental liability, automobile liability, workers’ compensation, and is self-insured for certain legal claims and medical claims, while maintaining per employee stop-loss coverage. The expected ultimate cost for claims incurred as of the balance sheet date is not discounted and is recognized as a liability. Self-insurance losses for claims filed and claims incurred but not reported are accrued based upon estimates of the aggregate liability for uninsured claims using loss development factors and actuarial assumptions followed in the insurance industry and historical loss development experience. At October 28, 2018 and January 28, 2018, self-insurance reserves totaled approximately $55 million and $51 million, respectively. |
ACQUISITIONS
ACQUISITIONS | 9 Months Ended |
Oct. 28, 2018 | |
ACQUISITIONS | |
ACQUISITION | NOTE 2 — ACQUISITIONS HD Supply enters into strategic acquisitions from time to time to expand into new markets, new platforms, and new geographies in an effort to better service existing customers and attract new ones. In accordance with the acquisition method of accounting under Accounting Standards Codification (“ASC”) 805, “Business Combinations” (“ASC 805”), the results of acquisitions completed by HD Supply are reflected in the Company’s consolidated financial statements from the date of acquisition forward. On March 5, 2018, the Company completed the acquisition of A.H. Harris Construction Supply (“A.H. Harris”) for a purchase price of approximately $362 million, net of cash acquired and subject to a final working capital adjustment. A.H. Harris is a leading specialty construction distributor serving the northeast and mid-Atlantic regions. This acquisition expands Construction & Industrial’s market presence in the northeastern United States. In accordance with ASC 805, the Company provisionally recorded the following assets and liabilities at fair value as of the date of the A.H. Harris acquisition: $186 million in goodwill, $123 million in definite-lived intangible assets, $12 million in property & equipment, $57 million in net working capital, and $17 million in deferred tax liabilities. The total amount of goodwill expected to be deductible for tax purposes is $19 million. The definite-lived intangible assets are comprised of $110 million in customer relationships and $13 million of trade names that will be amortized over a period of 12 years and 5 years, respectively. From March 5, 2018 to October 28, 2018, A.H. Harris generated approximately $277 million in Net sales. During third quarter 2018 and the first nine months of fiscal 2018, the Company incurred approximately $2 million and $5 million of costs, respectively, related to the acquisition and integration of A.H. Harris. The Company expects to incur a total of $8 million to $10 million of acquisition and integration costs during fiscal 2018. |
DISCONTINUED OPERATIONS
DISCONTINUED OPERATIONS | 9 Months Ended |
Oct. 28, 2018 | |
DISCONTINUED OPERATIONS | |
DISCONTINUED OPERATIONS | NOTE 3 — DISCONTINUED OPERATIONS In August 2017, the Company completed the sale of its Waterworks business. In accordance with ASC 205-20, “Discontinued Operations” and Accounting Standards Update (“ASU”) 2014-08, “Reporting discontinued operations and disclosure of disposals of components of an entity,” the results of Waterworks are classified as a discontinued operation. The presentation of discontinued operations includes revenues and expenses of the discontinued operations and gain/loss on the disposition of businesses, net of tax, as one line item on the Consolidated Statements of Operations and Comprehensive Income. All Consolidated Statements of Operations and Comprehensive Income presented have been revised to reflect this presentation. In the nine months ended October 29, 2017, the Company recognized a gain on the sale of the Waterworks business of approximately $725 million, net of tax of $202 million. In connection with presenting the Waterworks business unit as a discontinued operation in the second quarter of fiscal 2017, a net deferred tax asset of $323 million and corresponding income tax benefit for the difference in the Company’s stock basis versus its book carrying value of the Waterworks subsidiary was recorded in the second quarter of fiscal 2017. Upon recording the gain on the sale of Waterworks in the third quarter of fiscal 2017, the Company recognized a tax expense in discontinued operations, which included $323 million related to utilizing the deferred tax asset originally recorded in the second quarter of fiscal 2017. In October 2017, the Company recognized a $3 million gain due to the expiration of indemnification for tax positions related to the Canadian operations of the Power Solutions business whose sale was completed by the Company in October 2015. The following table provides additional detail related to the results of operations of the discontinued operations (amounts in millions): Three Months Ended Nine Months Ended October 28, 2018 October 29, 2017 October 28, 2018 October 29, 2017 Net sales $ — $ 10 $ — $ 1,413 Cost of sales — 8 — 1,100 Gross Profit — 2 — 313 Operating expenses: Selling, general and administrative — 1 — 198 Depreciation and amortization — — — 6 Total operating expenses — 1 — 204 Operating Income — 1 — 109 (Gain) Loss on sales of businesses, net — (934) (1) (930) Other (Income) expense, net — 1 — 1 Income before provision for income taxes — 934 1 1,038 Provision (benefit) for income taxes — 528 — 244 Income from discontinued operations, net of tax $ — $ 406 $ 1 $ 794 The following table provides additional detail related to the net cash provided by operating and investing activities of the discontinued operations (amounts in millions): Nine Months Ended October 28, 2018 October 29, 2017 Net cash flows provided by operating activities $ — $ 28 Cash flows from investing activities: Capital expenditures — (5) Proceeds from sales of businesses, net — 2,450 Proceeds from sales of property and equipment, net — 2 Net cash flows provided by (used in) investing activities $ — $ 2,447 |
DEBT
DEBT | 9 Months Ended |
Oct. 28, 2018 | |
DEBT | |
DEBT | NOTE 4 — DEBT HDS’s long-term debt as of October 28, 2018 and January 28, 2018 consisted of the following (dollars in millions): October 28, 2018 January 28, 2018 Outstanding Interest Outstanding Interest Principal Rate % (1) Principal Rate % (1) Senior ABL Facility due 2022 $ 105 3.61 $ 58 2.86 Term B-3 Loans due 2021 — — 534 3.94 Term B-4 Loans due 2023 — — 544 4.19 Term B-5 Loans due 2023 1,070 4.03 — — October 2018 Senior Unsecured Notes due 2026 750 5.375 — — April 2016 Senior Unsecured Notes due 2024 — — 1,000 5.75 Total gross long-term debt $ 1,925 $ 2,136 Less unamortized discount (4) (6) Less unamortized deferred financing costs (22) (29) Total net long-term debt $ 1,899 $ 2,101 Less current installments (11) (11) Total net long-term debt, excluding current installments $ 1,888 $ 2,090 (1) Represents the stated rate of interest, without including the effect of discounts or premiums. 2018 Refinancing Transactions On October 22, 2018, HDS entered into a Sixth Amendment (the "Sixth Amendment") to the credit agreement governing HDS's existing Senior Term Facility, as defined below. Pursuant to the Sixth Amendment, HDS amended its existing Senior Term Facility, to, among other things, refinance all the outstanding term loans in an aggregate principal of $530 million due August 2021 (the "Term B-3 Loans") and an aggregate principal of $540 million due October 2023 (the "Term B-4 Loans") with a new tranche of term loans (the "Term B-5 Loans") in an original aggregate principal of $1,070 million. Pursuant to the Sixth Amendment, the Term B-5 Loans bear interest at the rate of LIBOR plus 1.75% or base rate plus 0.75%. The Term B-5 Loans amortize in equal quarterly installments in aggregate annual amounts equal to 1.00% of the original principal amount and will mature on October 17, 2023. The Sixth Amendment also provides for a prepayment premium equal to 1.00% of the aggregate principal of the applicable Term Loans, as defined below, being prepaid if, on or prior to April 22, 2019, the Company enters into certain repricing transactions. In connection with the Sixth Amendment, the Company paid approximately $5 million in consent fees. The consent fees are reflected as deferred financing costs in the Consolidated Balance Sheets and will be amortized into interest expense over the term of the loans. The Company incurred a modification and extinguishment charge of approximately $5 million, which includes financing fees and other costs of approximately $3 million and the write-off of approximately $2 million of a portion of the related unamortized discount and deferred financing costs, in accordance with ASC 470-50, "Debt - Modifications and Extinguishments." On October 11, 2018, HDS issued $750 million of 5.375% Senior Unsecured Notes due 2026 (the "October 2018 Senior Unsecured Notes") at par. HDS received approximately $741 million in proceeds, net of transaction fees. The transaction fees of $9 million are reflected as deferred financing costs in the Consolidated Balance Sheets and will be amortized into interest expense over the term of the October 2018 Senior Unsecured Notes. HDS used the net proceeds from the October 2018 Senior Unsecured Notes issuance, together with available cash and borrowings on HDS's Senior Asset Based Lending Facility due 2022 (the "Senior ABL Facility"), to redeem all of the outstanding $1,000 million aggregate principal of the 5.75% Senior Unsecured Notes due 2024 (the "April 2016 Senior Unsecured Notes"), pay a $56 million make-whole premium calculated in accordance with the terms of the indenture governing such notes and pay $28 million of accrued but unpaid interest. As a result, the Company incurred a $64 million loss on extinguishment of the debt, which includes the $56 million make-whole premium and write-off of $8 million of unamortized deferred financing costs, in accordance with ASC 470-50, "Debt -- Modifications and Extinguishments." Senior Credit Facilities Senior ABL Facility The Senior ABL Facility provides for senior secured revolving loans and letters of credit of up to a maximum aggregate principal amount of $1,000 million (subject to availability under a borrowing base). Extensions of credit under the Senior ABL Facility are limited by a borrowing base calculated periodically based on specified percentages of the value of eligible inventory and eligible accounts receivable, subject to certain reserves and other adjustments. A portion of the Senior ABL Facility is available for letters of credit and swingline loans. As of October 28, 2018, HDS had $868 million of Excess Availability (as defined in the Senior ABL Facility agreement) under the Senior ABL Facility (after giving effect to the borrowing base limitations and approximately $27 million in letters of credit issued and including $175 million of borrowings available on qualifying cash balances). As of October 28, 2018, approximately $45 million of the outstanding borrowings on the Senior ABL Facility are Canadian borrowings. At HDS's option, the interest rates applicable to the loans under the Senior ABL Facility are based (i) in the case of U.S. dollar-denominated loans, either at London Interbank Offered Rate (“LIBOR”) plus an applicable margin, or Prime Rate plus an applicable margin and (ii) in the case of Canadian dollar-denominated loans, either the banker’s acceptance (“BA”) rate plus an applicable margin, or the Canadian Prime Rate plus an applicable margin. The margins applicable for each elected interest rate are subject to a pricing grid, as defined in the agreement governing the Senior ABL Facility, based on average Excess Availability for the previous fiscal quarter. The Senior ABL Facility also contains a letter of credit fee computed at a rate per annum equal to the Applicable Margin (as defined in the Senior ABL Facility agreement) then in effect for LIBOR Loans and an unused commitment fee subject to a pricing grid, included in the agreement governing the Senior ABL Facility, based on Excess Availability. The Senior ABL Facility also permits HDS to add one or more incremental term loan facilities to be included in the Senior ABL Facility or one or more revolving credit facility commitments to be included in the Senior ABL Facility. Senior Term Loan Facility HDS’s Senior Term Facility (the “Senior Term Facility”) consists of a senior secured term loan facility (the ‘‘Term Loan Facility,’’ and the term loans thereunder, the ‘‘Term Loans’’) providing for Term Loans in an original aggregate principal amount of $1,070 million. The Term B-5 Loans will mature on October 17, 2023. The Term B-5 Loans amortize in equal quarterly installments in aggregate annual amounts equal to 1.00% of the original principal amount of the Term Loans with the balance payable at the maturity date. The Term B-5 Loans bear interest at the applicable margin for borrowings of 1.75% for LIBOR borrowings and 0.75% for base rate borrowings. For additional information on our Senior ABL Facility or Senior Term Facility (collectively, the “Senior Credit Facilities”), including guarantees and security, please refer to the Notes to the Consolidated Financial Statements of our Form 10-K for the fiscal year ended January 28, 2018. Unsecured Notes 5.375% Senior Unsecured Notes due 2026 HDS issued $750 million aggregate principal amount of the October 2018 Senior Unsecured Notes under an Indenture, dated as of October 11, 2018 (the "October 2018 Senior Unsecured Notes Indenture") among HDS, certain subsidiaries of HDS as guarantors (the "Subsidiary Guarantors") and the Trustee. The October 2018 Senior Unsecured Notes bear interest at a rate of 5.375% per annum and will mature on October 15, 2026. Interest is paid semi‑annually on April 15 th and October 15 th of each year with the first interest payment due April 15, 2019. The October 2018 Senior Unsecured Notes are unsecured senior indebtedness of HDS and rank equal in right of payment with all of HDS's existing and future senior indebtedness, senior in right of payment to all of HDS's existing and future subordinated indebtedness, and effectively subordinated to all of HDS's existing and future secured indebtedness, including, without limitation, indebtedness under the Senior Credit Facilities, to the extent of the value of the collateral securing each indebtedness. The October 2018 Senior Unsecured Notes are guaranteed, on a senior unsecured basis, by each of HDS's direct and indirect domestic existing and future subsidiaries that is a wholly owned domestic subsidiary (other than certain excluded subsidiaries), and by each other domestic subsidiary that is a borrower under the Senior ABL Facility or that guarantees HDS's obligations under any credit facility or capital market securities. These guarantees are subject to release under customary circumstances as stipulated in the October 2018 Senior Unsecured Notes Indenture. Redemption HDS may redeem the October 2018 Senior Unsecured Notes, in whole or in part, at any time (1) prior to October 15, 2021, at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the redemption date, plus the applicable make-whole premium set forth in the October 2018 Senior Unsecured Notes Indenture and (2) on and after October 15, 2021, at the applicable redemption price set forth below (expressed as a percentage of principal amount), plus accrued and unpaid interest, if any, to the relevant redemption date, if redeemed during the 12-month period commencing on October 15 of the year set forth below. Year Percentage 2021 102.688 % 2022 101.344 % 2022 and thereafter 100.000 % In addition, at any time prior to October 15, 2021, HDS may redeem on one or more occasions up to 40% of the aggregate principal amount of the October 2018 Senior Unsecured Notes with the proceeds of certain equity offerings at a redemption price of 105.375% of the principal amount in respect of the October 2018 Senior Unsecured Notes being redeemed, plus accrued and unpaid interest to the redemption date, provided, however, that if the October 2018 Senior Unsecured Notes are redeemed, an aggregate principal amount of the October 2018 Senior Unsecured Notes equal to at least 50% of the original aggregate principal amount of October 2018 Senior Unsecured Notes must remain outstanding immediately after each such redemption of October 2018 Senior Unsecured Notes. 5.75% Senior Unsecured Notes due 2024 HDS's April 2016 Senior Unsecured Notes bore interest at a rate of 5.75% per annum with a maturity date of April 15, 2024. Interest was paid semi-annually in arrears on April 15th and October 15th of each year, prior to the October 11, 2018 redemption of all of the outstanding $1,000 million aggregate principal amount of the April 2016 Senior Unsecured Notes. Debt covenants HDS’s outstanding debt agreements contain various restrictive covenants including, but not limited to, limitations on the incurrence of additional indebtedness and dividend payments and restrictions on the use of proceeds from asset dispositions. As of October 28, 2018, HDS was in compliance with all such covenants that were in effect on such date. |
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS | 9 Months Ended |
Oct. 28, 2018 | |
DERIVATIVE INSTRUMENTS | |
DERIVATIVE INSTRUMENTS | NOTE 5 — DERIVATIVE INSTRUMENTS Hedge Strategy and Accounting Policy The Company enters into derivative financial instruments for hedging purposes. In hedging the exposure to variable cash flows on forecasted transactions, deferral accounting is applied when the derivative reduces the risk of the underlying hedged item effectively as a result of high inverse correlation with the value of the underlying exposure. If a derivative instrument either initially fails or later ceases to meet the criteria for deferral accounting, any subsequent gains or losses are recognized currently in income. Cash flows resulting from derivative financial instruments are classified in the same category as the cash flows from the items being hedged. Cash Flow Hedge On October 24, 2018, the Company entered into an interest rate swap agreement with a notional amount of $750 million, designated as a cash flow hedge in accordance with ASC 815, “Derivatives and Hedging”, to hedge the variability of cash flows in interest payments associated with the Company’s variable-rate debt. The interest rate swap agreement swaps a LIBOR rate for a fixed rate of 3.07% and matures on October 17, 2023. The swap effectively converts a portion of the Company’s Term B-5 Loans from a rate of LIBOR plus 1.75% to a 4.82% fixed rate. As of October 28, 2018, the fair value of the Company’s interest rate swap was a liability of $5 million and was classified as an other liability in the Consolidated Balance Sheet. Changes in the fair value of interest rate swap agreements designated as cash flow hedges are recorded as a component of Accumulated Other Comprehensive Income (Loss) (“OCI”) within Stockholders’ Equity in the Consolidated Balance Sheets and are reclassified into earnings in the same period or periods during which the hedged transactions affect earnings. As of October 28, 2018, Accumulated OCI related to the interest rate swap agreement was a net unrealized loss of approximately $4 million, net of tax. The first monthly settlement will occur on November 30, 2018. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Oct. 28, 2018 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | NOTE 6 — FAIR VALUE MEASUREMENTS The fair value measurements and disclosure principles of GAAP (ASC 820, “Fair Value Measurements and Disclosures”) define fair value, establish a framework for measuring fair value and provide disclosure requirements about fair value measurements. These principles define a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 — Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly; Level 3 — Unobservable inputs in which little or no market activity exists. As of October 28, 2018 and January 28, 2018, the fair value measurement of the financial liability associated with the Company’s interest rate swap contract was $5 million and zero, respectively. The Company utilized Level 2 inputs, as defined in the fair value hierarchy, to measure the fair value of the interest rate swap. See “Note 5 – Derivative Instruments” for further information on the Company’s interest rate swap contract. The Company’s financial instruments that are not reflected at fair value on the Consolidated Balance Sheets were as follows as of October 28, 2018 and January 28, 2018 (amounts in millions): As of October 28, 2018 As of January 28, 2018 Recorded Estimated Recorded Estimated Amount (1) Fair Value Amount (1) Fair Value Senior ABL Facility $ 105 $ 105 $ 58 $ 57 Term Loans and Notes 1,820 1,806 2,078 2,158 Total $ 1,925 $ 1,911 $ 2,136 $ 2,215 (1) These amounts do not include accrued interest; accrued interest is classified as Other current liabilities in the accompanying Consolidated Balance Sheets. These amounts do not include any related discounts, premiums, or deferred financing costs. The Company utilized Level 2 inputs, as defined in the fair value hierarchy, to measure the fair value of the long-term debt. Management’s fair value estimates were based on quoted prices for recent trades of HDS’s long-term debt, recent similar credit facilities initiated by companies with like credit quality in similar industries, quoted prices for similar instruments, and inquiries with certain investment communities. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Oct. 28, 2018 | |
INCOME TAXES | |
INCOME TAXES | NOTE 7 — INCOME TAXES For the nine months ended October 28, 2018, the Company’s combined federal, state, and foreign effective tax rate for continuing operations was 25.9%. The effective rate for continuing operations for the nine months ended October 29, 2017 was 33.2%. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law making significant changes to the Internal Revenue Code. The Tax Act lowered the Company’s federal statutory rate from 35% to 21%. The Company’s effective tax rate will vary based on a variety of factors, including overall profitability, the geographical mix of income before taxes and the related tax rates in the jurisdictions where it operates, restructuring and other one-time charges, as well as discrete events, such as settlements of future audits. As of October 28, 2018 and January 28, 2018, the Company’s unrecognized tax benefits in accordance with the income taxes principles of GAAP (ASC 740, “Income Taxes”) were $16 million. The Company’s ending net accrual for interest and penalties related to unrecognized tax benefits as of October 28, 2018 and January 28, 2018 was zero. As of October 28, 2018 and January 28, 2018, the Company’s valuation allowance on its U.S. deferred tax assets was approximately $7 million. Each reporting period, the Company assesses available positive and negative evidence and estimates if sufficient future taxable income will be generated to utilize the existing deferred tax assets. As of July 29, 2018, the Company completed its evaluation of its indefinite reinvestment assertion as a result of the Tax Act and has asserted that its Canadian earnings are permanently reinvested until such time that the Canadian borrowings under the Senior ABL Facility, which was initially drawn on during fiscal 2016, are paid off. No provision for U.S. federal and state income taxes or foreign withholding taxes has been made in the Company’s current year consolidated financial statements for those non-U.S. subsidiaries whose earnings are considered to be permanently reinvested. |
BASIC AND DILUTED WEIGHTED AVER
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES | 9 Months Ended |
Oct. 28, 2018 | |
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES | |
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES | NOTE 8—BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES The following basic and diluted weighted average common shares information is provided for Holdings. The reconciliation of basic to diluted weighted average common shares for the three and nine months ended October 28, 2018 and October 29, 2017 was as follows (in thousands): Three Months Ended Nine Months Ended October 28, 2018 October 29, 2017 October 28, 2018 October 29, 2017 Weighted-average common shares 182,730 185,651 183,349 194,704 Effect of potentially dilutive stock plan securities 849 1,001 843 1,554 Diluted weighted-average common shares 183,579 186,652 184,192 196,258 Stock plan securities excluded from dilution (1) 1,460 2,414 1,900 1,966 (1) Represents securities not included in the computation of diluted earnings per share because their effect would have been anti-dilutive. Stock plan securities consist of securities (stock options, restricted stock, restricted stock units, and performance share units) granted under Holdings’ stock-based compensation plans. |
SUPPLEMENTAL BALANCE SHEET AND
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION | 9 Months Ended |
Oct. 28, 2018 | |
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION | |
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION | NOTE 9 — SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION Receivables Receivables as of October 28, 2018 and January 28, 2018 consisted of the following (amounts in millions): October 28, 2018 January 28, 2018 Trade receivables, net of allowance for doubtful accounts $ 774 $ 540 Vendor rebate receivables 68 58 Other receivables 18 14 Total receivables, net $ 860 $ 612 Other Current Liabilities Other current liabilities as of October 28, 2018 and January 28, 2018 consisted of the following (amounts in millions): HD Supply Holdings, Inc. HD Supply, Inc. October 28, 2018 January 28, 2018 October 28, 2018 January 28, 2018 Corporate headquarters financing liability $ 87 $ — $ 87 $ — Accrued non-income taxes 42 27 42 27 Unsettled share repurchases 20 — — — Refund liability (1) 16 — 16 — Accrued interest 3 21 3 21 Other 93 90 93 90 Total other current liabilities $ 261 $ 138 $ 241 $ 138 (1) This amount represents the Company’s sales return estimate as of October 28, 2018 classified as a Current liability within the Consolidated Balance Sheet as required per ASC 606, Revenue from Contracts with Customers. The sales return estimate as of January 28, 2018 was approximately $12 million and was classified within Net receivables within the Consolidated Balance Sheet. Supplemental Cash Flow Information Cash paid for interest in the nine months ended October 28, 2018 and October 29, 2017 was $103 million and $148 million, respectively. During the nine months ended October 28, 2018 and October 29, 2017, the Company paid $4 million and $6 million , respectively, of original issue discounts related to the extinguishment of debt. Cash paid for income taxes, net of refunds, in the nine months ended October 28, 2018 and October 29, 2017 was approximately $9 million and $27 million, respectively. Cash paid for income taxes in the nine months ended October 29, 2017 includes $13 million in taxes paid related to the sale of the Waterworks business. During the nine months ended October 28, 2018, HDS executed a cash equity distribution of $172 million to Holdings, via HDS’s direct parent, HDS Holding Corporation. The equity distribution from HDS and return of capital recognized by Holdings were eliminated in consolidation of Holdings and its wholly-owned subsidiaries, including HDS. On August 25, 2017, Holdings’ Board of Directors authorized the Company to enter into a share repurchase program for the repurchase of up to an aggregate amount of $500 million of Holdings’ common stock. During the nine months ended October 28, 2018, under this plan, Holdings repurchased 4,682,396 shares of its common stock for approximately $178 million. In combination with the 2014 authorized share repurchase plan (utilizing proceeds from employee stock option exercises), Holdings repurchased a total of 4,847,933 shares of its common stock during the nine months ended October 28, 2018 for approximately $185 million. Significant Non-Cash Transactions Build-to-Suit Lease In February 2016, the Company entered into a build-to-suit arrangement for a leadership development and headquarters facility in Atlanta, Georgia, which began construction in 2016. In accordance with ASC 840, “Leases,” for build-to-suit arrangements where the Company is involved in the construction of structural improvements prior to the commencement of the lease or takes some level of construction risk, the Company is considered the owner of the assets and land during the construction period. Accordingly, during construction activities, the Company recorded a Construction in progress asset within Property and equipment and a corresponding financing liability on the Consolidated Balance Sheet for construction costs incurred by the landlord. The lease commenced in February 2018, with the leased asset and corresponding financing liability valued at $87 million each. In accordance with the sale and leaseback criteria of GAAP, the build-to-suit arrangement and subsequent lease failed to qualify as a sale. Therefore, the transaction is accounted for as a financing arrangement, whereby both the leased asset and the financing liability remain on the Company’s Consolidated Balance Sheet. The asset is depreciated as if the Company is the legal owner and rental payments are allocated between interest expense and principal repayment of the financing liability. In April 2018, the Company exercised its option to purchase the leased asset in February 2019 for $87 million. As a result, the financing liability is classified as a Current liability within the Consolidated Balance Sheet. |
RESTRUCTURING ACTIVITIES
RESTRUCTURING ACTIVITIES | 9 Months Ended |
Oct. 28, 2018 | |
RESTRUCTURING ACTIVITIES | |
RESTRUCTURING ACTIVITIES | NOTE 10 - RESTRUCTURING ACTIVITIES Fiscal 2017 Plan As a result of the sale of the Waterworks business in fiscal 2017, management evaluated the Company’s alignment and functional support strategies. During fiscal 2017, the Company initiated a restructuring plan that included reducing workforce personnel, realigning talent, and closing a Construction & Industrial branch. In addition, the Company relocated its headquarters in first quarter 2018. During the three and nine months ended October 28, 2018, the Company recognized zero and $9 million, respectively, of restructuring charges, primarily related to property lease obligations upon exiting the Company’s previous headquarters location, and, to a lesser extent, severance and other employee-related costs. During fiscal 2017, the Company recognized $6 million of restructuring charges under this plan. Activities under this plan were completed in the second quarter of fiscal 2018 and no further charges are expected under this plan. As of October 28, 2018, remaining unpaid costs associated with the restructuring plan are immaterial. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Oct. 28, 2018 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 11 — COMMITMENTS AND CONTINGENCIES Legal Matters On July 10, 2017 and August 8, 2017, shareholders filed putative class action complaints in the U.S. District Court for the Northern District of Georgia, alleging that HD Supply and certain senior members of its management (collectively, the “defendants”) made certain false or misleading public statements in violation of the federal securities laws between November 9, 2016 and June 5, 2017, inclusive (the “original securities complaints”). Subsequently, the two securities cases were consolidated, and, on November 16, 2017, the lead plaintiffs appointed by the Court filed a Consolidated Amended Class Action Complaint (the “Amended Complaint”) against the defendants on behalf of all persons other than defendants who purchased or otherwise acquired the Company’s common stock between November 9, 2016 and June 5, 2017, inclusive. The Amended Complaint alleges that defendants made certain false or misleading public statements, primarily relating to the Company’s progress in addressing certain supply chain disruption issues encountered in the Company’s Facilities Maintenance business unit. The Amended Complaint asserts claims against the defendants under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, and seeks class certification under the Federal Rules of Civil Procedure, as well as unspecified monetary damages, pre-judgment and post-judgment interest, and attorneys’ fees and other costs. On September 19, 2018, the Court granted in part and denied in part Defendants’ motion to dismiss. The matter is now in discovery. On August 8, 2017, two shareholder derivative complaints were filed naming the Company as a “nominal defendant” and certain members of its senior management and board of directors (collectively, the “individual defendants”) as defendants. The complaints generally allege that the individual defendants caused the Company to issue false and misleading statements concerning the Company’s business, operations, and financial prospects, including misrepresentations regarding operating leverage and supply chain corrective actions. The complaints assert claims against the individual defendants under Section 14(a) of the Securities Exchange Act of 1934, and allege breaches of fiduciary duties, unjust enrichment, corporate waste, and insider selling. The complaints assert a claim to recover any damages sustained by the Company as a result of the individual defendants’ allegedly wrongful actions, seek certain actions by the Company to modify its corporate governance and internal procedures, and seek to recover attorneys’ fees and other costs. On October 22, 2018, upon joint motion of the parties, the Court entered an order continuing the continued conditional stay of proceedings and administratively closing the matter until after any summary judgment motion filed in the securities litigation is adjudicated. On August 29, 2018, a shareholder derivative complaint was filed in Delaware Chancery Court naming the Company as a “nominal defendant” and certain members of its senior management and board of directors (collectively, the “individual defendants”) as defendants. The complaint generally alleges that the individual defendants caused the Company to issue false and misleading statements concerning the Company’s business, operations, and financial prospects, including misrepresentations regarding supply chain corrective actions. The complaint asserts various common law breach of fiduciary duty claims against the individual defendants and claims of unjust enrichment and insider selling. The complaint seeks to recover any damages sustained by the Company as a result of the individual defendants’ allegedly wrongful actions, seeks certain actions by the Company to modify its corporate governance and internal procedures, and seeks to recover attorneys’ fees and other costs. Defendants moved to dismiss the complaint on November 2, 2018. That motion is pending. The Company intends to defend these lawsuits vigorously. Given the stage of the complaints and the claims and issues presented in the above matters, the Company cannot reasonably estimate at this time the possible loss or range of loss, if any, that may arise from these unresolved lawsuits. HD Supply is involved in various legal proceedings arising in the normal course of its business. The Company establishes reserves for litigation and similar matters when those matters present loss contingencies that it determines to be both probable and reasonably estimable in accordance with ASC 450, “Contingencies.” In the opinion of management, based on current knowledge, all reasonably estimable and probable matters are believed to be adequately reserved for or covered by insurance and are not expected to have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows. For all other matters management believes the possibility of losses from such matters is not probable, the potential loss from such matters is not reasonably estimable, or such matters are of such kind or involve such amounts that would not have a material adverse effect on the consolidated financial position, results of operations or cash flows of the Company if disposed of unfavorably. For material matters that are reasonably possible and reasonably estimable, including matters that are probable and estimable but for which the amount that is reasonably possible is in excess of the amount that the Company has accrued for, management has estimated the aggregate range of potential loss as $0 to $10 million. If a material loss is probable or reasonably possible, and in either case estimable, the Company has considered it in the analysis and it is included in the discussion set forth above. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Oct. 28, 2018 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | NOTE 12 — SEGMENT INFORMATION HD Supply’s operating segments are based on management structure and internal reporting. Each segment offers different products and services to the end customer, except for Corporate, which provides general corporate overhead support. The Company determines its reportable segments in accordance with the principles of segment reporting within ASC 280, “Segment Reporting.” For purposes of evaluation under these segment reporting principles, the Chief Operating Decision Maker for HD Supply assesses HD Supply’s ongoing performance, based on the periodic review and evaluation of Net sales, Adjusted EBITDA and certain other measures for each of the operating segments. HD Supply has two reportable segments, each of which is presented below: · Facilities Maintenance— Facilities Maintenance distributes maintenance, repair and operations products, provides value-add services and fabricates custom products to multifamily, hospitality, healthcare and institutional facilities. · Construction & Industrial- Construction & Industrial distributes specialized hardware, tools, engineered materials and safety products to non-residential and residential contractors. Construction & Industrial also offers light remodeling and construction supplies, kitchen and bath cabinets, windows, plumbing materials, electrical equipment and other products, primarily to small remodeling contractors and trade professionals. In addition to the reportable segments, the Company’s consolidated financial results include Corporate. Corporate incurs costs related to the Company’s centralized support functions, which are comprised of finance, information technology, human resources, legal, supply chain and other support services. All Corporate overhead costs are allocated to the reportable segments. Eliminations include the adjustments necessary to eliminate intercompany transactions. The following tables present Net sales, Adjusted EBITDA, and other measures for both of the reportable segments and total continuing operations for the periods indicated (amounts in millions): Total Facilities Construction Continuing Maintenance & Industrial Eliminations Operations Three Months Ended October 28, 2018 Net sales $ 810 $ 803 $ (1) $ 1,612 Adjusted EBITDA 149 99 — 248 Depreciation (1) & Software Amortization 10 12 — 22 Other Intangible Amortization 2 3 — 5 Three Months Ended October 29, 2017 Net sales $ 754 $ 617 $ (1) $ 1,370 Adjusted EBITDA 144 70 — 214 Depreciation (1) & Software Amortization 9 10 — 19 Other Intangible Amortization 1 2 — 3 Nine Months Ended October 28, 2018 Net sales $ 2,353 $ 2,250 $ (2) $ 4,601 Adjusted EBITDA 422 262 — 684 Depreciation (1) & Software Amortization 28 34 — 62 Other Intangible Amortization 6 10 — 16 Nine Months Ended October 29, 2017 Net sales $ 2,205 $ 1,737 $ (4) $ 3,938 Adjusted EBITDA 397 182 — 579 Depreciation (1) & Software Amortization 26 31 — 57 Other Intangible Amortization 6 3 — 9 (1) Depreciation includes amounts recorded within Cost of sales in the Consolidated Statements of Operations. Reconciliation to Consolidated Financial Statements Three Months Ended Nine Months Ended October 28, 2018 October 29, 2017 October 28, 2018 October 29, 2017 Total Adjusted EBITDA $ 248 $ 214 $ 684 $ 579 Depreciation and amortization (1) 27 22 78 66 Stock-based compensation 7 7 19 19 Restructuring — 3 9 3 Acquisition and integration costs (2) 2 — 5 — Other (1) — (2) — Operating income 213 182 575 491 Interest expense 32 36 101 134 Interest (income) — (1) (1) (1) Loss on extinguishment & modification of debt (3) 69 78 69 81 Income from Continuing Operations Before Provision for Income Taxes 112 69 406 277 Provision for income taxes 30 23 105 92 Income from continuing operations 82 46 301 185 Income from discontinued operations, net of tax — 406 1 794 Net income $ 82 $ 452 $ 302 $ 979 (1) Depreciation and amortization includes amounts recorded within Cost of sales in the Consolidated Statements of Operations. (2) Represents the cost incurred in the acquisition and integration of A.H. Harris Construction Supplies. (3) Represents the loss on extinguishment of debt including premium paid to repurchase or call the debt as well as the write-off of unamortized deferred financing costs, original issue discount, and other assets or liabilities associated with such debt. Also includes the costs of debt modifications. On March 5, 2018, the Company completed the acquisition of A.H. Harris for a purchase price of approximately $362 million, net of cash acquired. The acquisition reduced total assets of the Corporate reportable segment by the purchase price and increased total assets of the Construction & Industrial reportable segment by approximately $414 million. |
SUBSIDIARY GUARANTORS
SUBSIDIARY GUARANTORS | 9 Months Ended |
Oct. 28, 2018 | |
SUBSIDIARY GUARANTORS | |
SUBSIDIARY GUARANTORS | NOTE 13—SUBSIDIARY GUARANTORS HDS (the "Debt Issuer") has outstanding October 2018 Senior Unsecured Notes, which are guaranteed by the Subsidiary Guarantors. The Subsidiary Guarantors are direct or indirect wholly-owned domestic subsidiaries of HDS. The subsidiaries of HDS that do not guarantee the October 2018 Senior Unsecured Notes (the "Non-guarantor Subsidiaries") are direct or indirect wholly-owned subsidiaries of HDS and primarily include HDS's operations in Canada. The Debt Issuer’s payment obligations under the October 2018 Senior Unsecured Notes are jointly and severally guaranteed by the Subsidiary Guarantors and all guarantees are full and unconditional. These guarantees are subject to release under the circumstances as described below: (i) (ii) (iii) (iv) In addition, HDS has the right, upon 30 days' notice to the applicable trustee, to cause any Subsidiary Guarantor that has not guaranteed payment of any indebtedness of HDS or any Subsidiary Guarantor under all other indebtedness and is not a borrower under the Senior ABL Facility to be unconditionally released from all obligations under its Subsidiary Guarantee, and such Subsidiary Guarantee shall thereupon terminate and be discharged and of no further force or effect. HDS has included the accompanying Condensed Consolidating Financial Statements in accordance with Rule 3-10(f) of SEC Regulation S-X. The following supplemental financial information sets forth, on a consolidating basis under the equity method of accounting, the condensed statements of operations and comprehensive income, the condensed balance sheets and the condensed cash flow statements for the Debt Issuer, for the Subsidiary Guarantors and the Non-guarantor Subsidiaries and total consolidated Debt Issuer and subsidiaries (amounts in millions). CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME Three Months Ended October 28, 2018 Non- Debt Subsidiary Guarantor Consolidating Total Issuer Guarantors Subsidiaries Adjustments HDS Net Sales $ — $ 1,573 $ 40 $ (1) $ 1,612 Cost of sales — 963 21 (1) 983 Gross Profit — 610 19 — 629 Operating expenses: Selling, general and administrative 16 362 13 — 391 Depreciation and amortization 5 19 1 — 25 Restructuring — — — — — Total operating expenses 21 381 14 — 416 Operating Income (Loss) (21) 229 5 — 213 Interest expense 30 1 — 1 32 Interest (income) — 1 — (1) — Loss on extinguishment & modification of debt 69 — — — 69 Net (earnings) of equity affiliates (230) — — 230 — Income from Continuing Operations Before Provision for Income Taxes 110 227 5 (230) 112 Provision for income taxes 28 2 — — 30 Income from Continuing Operations 82 225 5 (230) 82 Income from discontinued operations, net of tax — — — — — Net Income $ 82 $ 225 $ 5 $ (230) $ 82 Other comprehensive income (loss): Foreign currency translation adjustment — — — — — Unrealized (loss) on derivatives, net of tax of $1 (4) — (4) 4 (4) Total Comprehensive Income $ 78 $ 225 $ 1 $ (226) $ 78 Three Months Ended October 29, 2017 Non- Debt Subsidiary Guarantor Consolidating Total Issuer Guarantors Subsidiaries Adjustments HDS Net Sales $ — $ 1,333 $ 37 $ — $ 1,370 Cost of sales — 808 20 — 828 Gross Profit — 525 17 — 542 Operating expenses: Selling, general and administrative 22 303 11 — 336 Depreciation and amortization 4 17 — — 21 Restructuring 2 1 — 3 Total operating expenses 28 321 11 — 360 Operating Income (Loss) (28) 204 6 — 182 Interest expense 43 33 — (40) 36 Interest (income) (33) (8) — 40 (1) Loss on extinguishment & modification of debt 78 — — — 78 Net (earnings) of equity affiliates (189) — — 189 — Income from Continuing Operations Before Provision for Income Taxes 73 179 6 (189) 69 Provision for income taxes 24 (2) 1 — 23 Income from Continuing Operations 49 181 5 (189) 46 Income from discontinued operations, net of tax 403 — 3 — 406 Net Income $ 452 $ 181 $ 8 $ (189) $ 452 Other comprehensive income (loss): Foreign currency translation adjustment 1 — 1 (1) 1 Unrealized (loss) on derivatives, net of tax of $- — — — — — Total Comprehensive Income $ 453 $ 181 $ 9 $ (190) $ 453 Nine Months Ended October 28, 2018 Non- Debt Subsidiary Guarantor Consolidating Total Issuer Guarantors Subsidiaries Adjustments HDS Net Sales $ — $ 4,485 $ 118 $ (2) $ 4,601 Cost of sales — 2,737 63 (2) 2,798 Gross Profit — 1,748 55 — 1,803 Operating expenses: Selling, general and administrative 53 1,053 41 — 1,147 Depreciation and amortization 14 57 1 — 72 Restructuring 5 4 — — 9 Total operating expenses 72 1,114 42 — 1,228 Operating Income (Loss) (72) 634 13 — 575 Interest expense 103 22 1 (25) 101 Interest (income) (22) (4) — 25 (1) Loss on extinguishment & modification of debt 69 — — — 69 Net (earnings) of equity affiliates (620) — — 620 — Income from Continuing Operations Before Provision for Income Taxes 398 616 12 (620) 406 Provision for income taxes 97 6 2 — 105 Income from Continuing Operations 301 610 10 (620) 301 Income from discontinued operations, net of tax 1 — — — 1 Net Income $ 302 $ 610 $ 10 $ (620) $ 302 Other comprehensive income (loss): Foreign currency translation adjustment 2 — 2 (2) 2 Unrealized gain (loss) on derivatives, net of tax of $1 (4) — (4) 4 (4) Total Comprehensive Income $ 300 $ 610 $ 8 $ (618) $ 300 Nine Months Ended October 29, 2017 Non- Debt Subsidiary Guarantor Consolidating Total Issuer Guarantors Subsidiaries Adjustments HDS Net Sales $ — $ 3,834 $ 105 $ (1) $ 3,938 Cost of sales — 2,317 57 (1) 2,373 Gross Profit — 1,517 48 — 1,565 Operating expenses: Selling, general and administrative 64 908 36 — 1,008 Depreciation and amortization 11 51 1 — 63 Restructuring 2 1 — — 3 Total operating expenses 77 960 37 — 1,074 Operating Income (Loss) (77) 557 11 — 491 Interest expense 155 99 1 (121) 134 Interest (income) (99) (23) — 121 (1) Loss on extinguishment & modification of debt 81 — — — 81 Net (earnings) of equity affiliates (583) — — 583 — Income from Continuing Operations Before Provision for Income Taxes 369 481 10 (583) 277 Provision for income taxes 90 — 2 — 92 Income from Continuing Operations 279 481 8 (583) 185 Income from discontinued operations, net of tax 700 91 3 — 794 Net Income $ 979 $ 572 $ 11 $ (583) $ 979 Other comprehensive income (loss): Foreign currency translation adjustment (1) — (1) 1 (1) Unrealized (loss) on derivatives, net of tax of $- — — — — — Total Comprehensive Income $ 978 $ 572 $ 10 $ (582) $ 978 CONDENSED CONSOLIDATING BALANCE SHEETS As of October 28, 2018 Non- Debt Subsidiary Guarantor Consolidating Total Issuer Guarantors Subsidiaries Adjustments HDS ASSETS Current assets: Cash and cash equivalents $ 22 $ 20 $ 3 $ — $ 45 Receivables, net 3 832 25 — 860 Inventories — 782 21 — 803 Intercompany receivables — 1 — (1) — Other current assets 16 30 — — 46 Total current assets 41 1,665 49 (1) 1,754 Property and equipment, net 151 202 3 — 356 Goodwill — 1,993 — — 1,993 Intangible assets, net — 196 1 — 197 Deferred tax asset 174 — 2 (82) 94 Investment in subsidiaries 4,292 — — (4,292) — Intercompany notes receivable 189 1,193 — (1,382) — Other assets 18 4 — (5) 17 Total assets $ 4,865 $ 5,253 $ 55 $ (5,762) $ 4,411 LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIT) Current liabilities: Accounts payable $ 10 $ 457 $ 16 $ — $ 483 Accrued compensation and benefits 36 66 3 — 105 Current installments of long-term debt 11 — — — 11 Intercompany payables — — 1 (1) — Other current liabilities 110 124 7 — 241 Total current liabilities 167 647 27 (1) 840 Long-term debt, excluding current installments 1,843 9 45 (9) 1,888 Deferred tax liabilities — 82 — (82) — Intercompany notes payable (1) 1,193 189 — (1,382) — Other liabilities 50 16 1 3 70 Total liabilities 3,253 943 73 (1,471) 2,798 Stockholder’s equity (deficit) 1,612 4,310 (18) (4,291) 1,613 Total liabilities and stockholder’s equity (deficit) $ 4,865 $ 5,253 $ 55 $ (5,762) $ 4,411 (1) During the nine months ended October 28, 2018, the Parent completed a non-cash debt contribution to the Guarantor Subsidiaries of approximately $958 million. As of January 28, 2018 Non- Debt Subsidiary Guarantor Consolidating Total Issuer Guarantors Subsidiaries Adjustments HDS ASSETS Current assets: Cash and cash equivalents $ 539 $ 15 $ 4 $ — $ 558 Receivables, net 7 584 21 — 612 Inventories — 654 20 — 674 Intercompany receivables — 2 — (2) — Other current assets 15 15 1 — 31 Total current assets 561 1,270 46 (2) 1,875 Property and equipment, net 152 170 3 — 325 Goodwill — 1,807 — — 1,807 Intangible assets, net — 90 1 — 91 Deferred tax asset 264 — 2 (61) 205 Investment in subsidiaries 2,811 — — (2,811) — Intercompany notes receivable 1,005 1,083 — (2,088) — Other assets 12 3 — — 15 Total assets $ 4,805 $ 4,423 $ 52 $ (4,962) $ 4,318 LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIT) Current liabilities: Accounts payable $ 11 $ 353 $ 13 $ — $ 377 Accrued compensation and benefits 34 57 4 — 95 Current installments of long-term debt 11 — — — 11 Intercompany payables — — 2 (2) — Other current liabilities 43 88 7 — 138 Total current liabilities 99 498 26 (2) 621 Long-term debt, excluding current installments 2,032 — 58 — 2,090 Deferred tax liabilities — 61 — (61) — Intercompany notes payable 1,083 1,005 — (2,088) — Other liabilities 125 16 — — 141 Total liabilities 3,339 1,580 84 (2,151) 2,852 Stockholder's equity (deficit) 1,466 2,843 (32) (2,811) 1,466 Total liabilities and stockholder’s equity (deficit) $ 4,805 $ 4,423 $ 52 $ (4,962) $ 4,318 CONDENSED CONSOLIDATING CASH FLOW STATEMENTS Nine Months Ended October 28, 2018 Non- Debt Subsidiary Guarantor Consolidating Total Issuer Guarantors Subsidiaries Adjustments HDS Net cash flows from operating activities $ 366 $ 4 $ 9 $ — $ 379 Cash flows from investing activities Capital expenditures (20) (58) (1) — (79) Payments for businesses acquired, net — — (362) — (362) Proceeds from sales of property and equipment — — — — — Purchases of investments (7) — — 7 — Investments in equity affiliates (1) (365) — (3) 368 — Proceeds from (payments of) intercompany notes — 46 — (46) — Net cash flows from investing activities $ (392) $ (12) $ (366) $ 329 $ (441) Cash flows from financing activities Equity contribution (distribution) (1) (172) 3 365 (368) (172) Borrowings of (repayments of) intercompany notes (46) — — 46 — Borrowings of long-term debt 930 10 — (10) 930 Repayments of long-term debt (1,240) — — — (1,240) Borrowings on long-term revolver debt 90 — 10 — 100 Repayments on long-term revolver debt (30) — (19) — (49) Debt issuance costs (18) — — — (18) Other financing activities (5) — — 3 (2) Net cash flows from financing activities (491) 13 356 (329) (451) Effect of exchange rates on cash — — — — — Net increase (decrease) in cash & cash equivalents $ (517) $ 5 $ (1) $ — $ (513) Cash and cash equivalents at beginning of period 539 15 4 — 558 Cash and cash equivalents at end of period $ 22 $ 20 $ 3 $ — $ 45 (1) During the nine months ended October 28, 2018, the Parent completed a cash contribution of approximately $365 million to a Non-Guarantor Subsidiary to execute the purchase of A.H. Harris. Subsequent to the acquisition, the A.H. Harris entities became Guarantor Subsidiaries. Nine Months Ended October 29, 2017 Non- Debt Subsidiary Guarantor Consolidating Total Issuer Guarantors Subsidiaries Adjustments HDS Net cash flows from operating activities $ 260 $ 55 $ 5 $ — $ 320 Cash flows from investing activities Capital expenditures (18) (47) — — (65) Proceeds from sale of property and equipment — 2 — — 2 Proceeds from sales of businesses, net 2,450 — 2,450 Proceeds from (payments of) intercompany notes — (12) — 12 — Net cash flows from investing activities $ 2,432 $ (57) $ — $ 12 $ 2,387 Cash flows from financing activities Equity contribution (516) — — — (516) Borrowings of (repayments of) intercompany notes 12 — — (12) — Borrowings of long-term debt 113 113 Repayments of long-term debt (1,526) — — — (1,526) Borrowings on long-term revolver debt 621 — 3 — 624 Repayments on long-term revolver debt (981) — (8) — (989) Debt issuance costs (26) — — — (26) Other financing activities 1 — — — 1 Net cash flows from financing activities (2,302) — (5) (12) (2,319) Effect of exchange rates on cash — — — — — Net increase (decrease) in cash & cash equivalents $ 390 $ (2) $ — $ — $ 388 Cash and cash equivalents at beginning of period 51 17 5 — 73 Cash and cash equivalents at end of period $ 441 $ 15 $ 5 $ — $ 461 |
REVENUE
REVENUE | 9 Months Ended |
Oct. 28, 2018 | |
REVENUE | |
REVENUE | NOTE 14 — REVENUE The Company’s revenues are earned from contracts with customers. Contracts include written agreements, as well as arrangements that are implied by customary practices or law. The Company adopted the provisions of ASC 606, Revenue from Contracts with Customers, and related amendments (“ASC 606”) using the modified retrospective method on January 29, 2018 (the first day of fiscal 2018). The Company concluded that most of its contracts with customers consist of a single performance obligation to transfer promised goods or services and therefore are not impacted by the adoption of ASC 606. The adoption of ASC 606 impacted the Company’s method of recognizing certain installation income, which was generally recognized when the customer order was fully installed. ASC 606 requires installation income to be recognized as each performance obligation within a contract is completed. The Company’s installation contracts are typically completed in less than 90 days. Due to the seasonal nature of the Company’s installation business, recognized revenue could shift between quarters within the year. The adoption of ASC 606 did not have a material impact on the Company’s financial position, results of operations or cash flows. As such, the Company did not make any adjustments to its financial position upon adoption. Nature of Products and Services Both Facilities Maintenance and Construction & Industrial serve unique end markets. Facilities Maintenance offers products that serve the maintenance, repair and operations (“MRO”) end market as well as value-added services. Construction & Industrial offers products used broadly across both the residential and non-residential construction end markets as well as light remodeling supplies for small remodeling contractors and trade professionals. For additional information regarding the nature of products and services offered by the Company’s reportable segments, see “Description of segments” within Item 2 of this report on Form 10-Q. Revenue Recognition The Company recognizes revenue, net of allowances for returns and discounts and any taxes collected from the customer, when an identified performance obligation is satisfied by the transfer of control of promised products or services to the customer. The Company ships products to customers by internal fleet and third-party carriers. Transfer of control to the customer for products generally occurs at the point of destination (i.e., upon transfer of title and risk of loss of product). Transfer of control to the customer for services occurs when the customer has the right to direct the use of and obtain substantially all the remaining benefits of the asset that is created or enhanced from the service. The Company accounts for shipping and handling costs associated with outbound freight as a fulfillment cost. Such costs are included in Selling, general and administrative expenses. Disaggregation of Revenue The Company elected to disaggregate the revenue of Facilities Maintenance by its demand types: MRO and Property Improvement, and Construction & Industrial by its end markets: Non-Residential Construction, Residential Construction, and Other. The Company believes this disaggregation appropriately meets the objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The table below represents disaggregated revenue for Facilities Maintenance and Construction & Industrial with Inter-segment eliminations (amounts in millions): Three Months Ended Nine Months Ended October 28, 2018 October 29, 2017 October 28, 2018 October 29, 2017 Facilities Maintenance Maintenance, Repair, and Operations $ 718 $ 668 $ 2,076 $ 1,954 Property Improvement 92 86 277 251 Total Facilities Maintenance Net Sales 810 754 2,353 2,205 Construction & Industrial Non-Residential Construction 569 405 1,567 1,131 Residential Construction 189 169 553 489 Other 45 43 130 117 Total Construction & Industrial Net Sales 803 617 2,250 1,737 Inter-segment Eliminations (1) (1) (2) (4) Total HD Supply Net Sales $ 1,612 $ 1,370 $ 4,601 $ 3,938 Contract Balances The timing of satisfaction of identified performance obligations may differ from the timing of invoicing to customers for certain installation contracts, which may result in the recognition of a contract asset or liability. The Company records a contract asset when it recognizes revenue prior to invoicing, or a contract liability when revenue is recognized subsequent to invoicing. Contract assets are reclassified as accounts receivable upon invoicing and contract liabilities are relieved upon recognition of revenue. As of October 28, 2018, the Company’s contract assets and contract liabilities, which are included in Other Current Assets and Other Current Liabilities, respectively, within the Consolidated Balance Sheets, are not material. Payment terms and conditions vary by contract type, although terms generally include a requirement for payment within 45 days. As such, in instances where the timing of revenue recognition differs from the timing of invoicing, the Company has concluded that its contracts with customers do not include a significant financing component because customer payments for goods and services are received in less than one year. All remaining performance obligations as of October 28, 2018 are not material. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Oct. 28, 2018 | |
RECENT ACCOUNTING PRONOUNCEMENTS | |
RECENT ACCOUNTING PRONOUNCEMENTS | NOTE 15—RECENT ACCOUNTING PRONOUNCEMENTS Recently Adopted Accounting Pronouncements Derivatives and Hedging -- In August 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities." This update expands and refines hedge accounting for both nonfinancial and financial risk components and reduces complexity in fair value hedges of interest rate risk. It eliminates the requirement to separately measure and report hedge ineffectiveness and generally requires the entire change in the fair value of a hedging instrument to be presented in the same income statement line as the hedged item. It also eases certain documentation and assessment requirements and modifies the accounting for components excluded from assessment of hedge effectiveness. In addition, the new guidance requires expanded disclosures as it pertains to the effect of hedging on individual income statement lines, including the effects of components excluded from the assessment of effectiveness. ASU 2017-12 is effective for annual and interim periods beginning after December 15, 2018 with early adoption permitted. Companies with cash flow or net investment hedges existing at the date of adoption are required to apply the amendments in this update on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The amended presentation and disclosure guidance is required only prospectively. The Company adopted this guidance on January 29, 2018 (the first day of fiscal 2018) with no adjustment to retained earnings. Stock Compensation -- In May 2017, the FASB issued ASU No . 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting” (“ASU 2017‑09”). This update provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. ASU 2017-09 is effective for annual and interim periods beginning after December 15, 2017. The amendments in this update are required to be applied prospectively to awards modified on or after the adoption date. The Company adopted this guidance on January 29, 2018 (the first day of fiscal 2018) with no impact to the Company's financial position, results of operations or cash flows. Business Combinations -- In January 2017, the FASB issued ASU No. 2017-01, "Business Combinations (Topic 805): Clarifying the Definition of a Business" ("ASU 2017-01"). This update clarifies the definition of a business with the objective of adding guidance to assist companies to evaluate whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. ASU 2017-01 is effective for annual and interim periods beginning after December 15, 2017. The amendments in this update are required to be applied prospectively with no required disclosure at the transition date. The Company adopted this guidance on January 29, 2018 (the first day of fiscal 2018) with no material impact to the Company’s financial position, results of operations or cash flows. Statement of Cash Flows – In November 2016, the FASB issued ASU No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash” (“ASU 2016-18”). The new guidance is intended to reduce diversity in practice by adding or clarifying guidance on classification and presentation of changes in restricted cash on the statement of cash flows. ASU 2016-18 is effective for annual and interim periods beginning after December 15, 2017. The amendments in this update are required to be applied retrospectively to all periods presented. The Company adopted this guidance retrospectively on January 29, 2018 (the first day of fiscal 2018) with no material impact on the Company’s financial position, results of operations or cash flows. On a prospective basis, ASU 2016-18 will only impact the Company’s financial position and cash flows to the extent it has restricted cash. Income Taxes –In October 2016, the FASB issued ASU No. 2016-16, “Income Taxes (Topic 740): Intra-entity Transfers of Assets Other than Inventory” (“ASU 2016-16”). The new guidance is intended to improve the accounting for intra-entity transfers of assets other than inventory by requiring recognition of income tax consequences of intra-entity transfers of assets other than inventory when the transfer occurs. ASU 2016-16 is effective for annual and interim periods beginning after December 15, 2017. The amendments in this update were required to be applied on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. The Company adopted this guidance on January 29, 2018 (the first day of fiscal 2018) with no adjustment to retained earnings. Statement of Cash Flows – In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Clarification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). The new guidance is intended to reduce diversity in practice related to certain cash receipts and payments in the statement of cash flows by adding or clarifying guidance on eight specific cash flow issues. ASU 2016-15 is effective for annual and interim periods beginning after December 15, 2017. The amendments in this update were required to be applied retrospectively to all periods presented, unless deemed impracticable, in which case, prospective application was permitted. The Company adopted this guidance retrospectively on January 29, 2018 (the first day of fiscal 2018) with no revision to prior periods. Revenue recognition – In May 2014, the FASB issued ASU No. 2014-09, “Revenue from contracts with customers” (“ASU 2014-09”), amended by ASU 2016-10, “Revenue from contracts with customers (Topic 606): Identifying Performance Obligations and Licensing,” ASU 2016-12, “Revenue from contracts with customers (Topic 606): Narrow-Scope Improvements and Practical Expedients,” ASU 2016-20, “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers,” ASU 2017-13, “Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842),” and ASU 2017-14, “Income Statement-Reporting Comprehensive Income (Topic 220), Revenue Recognition (Topic 605), and Revenue from Contracts with Customers (Topic 606).” The amended guidance outlines a single comprehensive revenue model for entities to use in accounting for revenue arising from contracts with customers. The guidance supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that “an entity recognizes revenue to depict the transfer of promised 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.” The update requires significant additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. Entities have the option of using either a full retrospective or modified approach to adopt the guidance. In July 2015, the FASB provided a one-year delay in the effective date of ASU 2014-09, to be effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period, and a permission to early adopt for annual and interim periods beginning after December 15, 2016. The Company adopted ASU 2014-09, as well as other clarifications and technical guidance issued by the FASB related to this new revenue standard on January 29, 2018 (the first day of fiscal 2018) using the modified retrospective method. See “Note 14, Revenue” for the Company’s revenue accounting policies and disclosures. Recently Issued Accounting Pronouncements Not Yet Adopted Cloud Computing Arrangements – In August 2018, the FASB issued ASU No. 2018-15, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract (a consensus of the FASB Emerging Issues Task Force)” (“ASU 2018-15”). The new guidance aligns the requirements for capitalizing implementation costs in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The update also provides for additional disclosure requirements regarding the nature of an entity’s hosting arrangements that are service contracts. The ASU is effective for annual and interim periods beginning after December 15, 2019. Early adoption is permitted in any interim period. The amendments in this update should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is currently evaluating the impact of adopting ASU 2018-15. Goodwill – In January 2017, the FASB issued ASU No. 2017-04, “Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment” (“ASU 2017-04”). The new guidance eliminates the requirement to calculate the implied fair value of goodwill to measure a goodwill impairment charge. Instead, entities will record an impairment charge based on the excess of a reporting unit’s carrying amount over its fair value. The ASU is effective for annual and interim impairment tests performed in periods beginning after December 15, 2019. Early adoption is permitted for annual and interim goodwill impairment testing dates after January 1, 2017. The amendments in this update should be applied on a prospective basis. The adoption of ASU 2017-04 is not expected to have a material impact on the Company’s financial position, results of operations or cash flows. Financial Instruments -- In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments -- Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" ("ASU 2016-13"). The amended guidance modifies the measurement of expected credit losses of certain financial instruments, including trade receivables. The amended guidance also prescribes additional disclosure requirements for certain financial instruments. ASU 2016-13 is effective for annual and interim periods beginning after December 15, 2019. Early adoption is permitted for annual and interim periods beginning after December 15, 2018. It is to be adopted using a modified retrospective approach. The Company is currently evaluating the impact of adopting ASU 2016-13. Leases – In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”), amended by ASU 2017-13, “Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842),” ASU 2018-01, “Leases (Topic 842)-Land Easement Practical Expedient for Transition to Topic 842,” ASU 2018-10, “Codification Improvements to Topic 842, Leases,” and ASU 2018-11, “Leases (Topic 842) – Targeted Improvements.” The amended guidance requires companies to recognize all leases as assets and liabilities for the rights and obligations created by leased assets on the consolidated balance sheet. ASU 2016-02 is effective for annual and interim periods beginning after December 15, 2018. Early adoption is permitted. Prior to ASU 2018-11, a modified retrospective transition was required for financing or operating leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements. ASU 2018-11 allows entities an additional transition method to the existing requirements whereby an entity could adopt the provisions of ASU 2016-02 by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption without adjustment to the financial statements for periods prior to adoption. The Company expects the adoption of ASU 2016-02 will have a material impact on the consolidated balance sheets related to recording right-of-use assets and corresponding lease liabilities. The Company is currently in the process of evaluating the impact of adoption on the consolidated statements of operations and cash flows, but does not expect the impact to be material and will represent a timing difference in recognition of lease expense over the lease term of certain lease contracts. The Company does not expect the adoption of ASU 2016-02 to have an impact on its debt covenant compliance under its current debt and indenture agreements. |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 9 Months Ended |
Oct. 28, 2018 | |
SUBSEQUENT EVENT | |
SUBSEQUENT EVENT | NOTE 16—SUBSEQUENT EVENT On November 30, 2018, the Company’s Board of Directors authorized a new share repurchase program for the repurchase of up to an aggregate $500 million of its common stock. The Company will conduct repurchases under the share repurchase program in the open market and through broker negotiated purchases in compliance with Rule 10b5-1 and Rule 10b-18 of the Securities Exchange Act of 1934, and subject to market conditions, restrictive covenants contained in existing debt agreements, applicable legal requirements, and other relevant factors. This share repurchase program does not obligate the Company to acquire any particular amount of its common stock, and it may be terminated at any time at the Company’s discretion. As of November 30, 2018, the Company has approximately $656 million remaining under its new and previous share repurchase authorizations. |
NATURE OF BUSINESS AND BASIS _2
NATURE OF BUSINESS AND BASIS OF PRESENTATION (Policies) | 9 Months Ended |
Oct. 28, 2018 | |
NATURE OF BUSINESS AND BASIS OF PRESENTATION | |
Nature of Business | Nature of Business HD Supply Holdings, Inc. (‘‘Holdings’’) indirectly owns all of the outstanding common stock of HD Supply, Inc. (“HDS”). Holdings, together with its direct and indirect subsidiaries, including HDS ("HD Supply" or the "Company"), is one of the largest industrial distribution companies in North America. The Company specializes in two distinct market sectors: Maintenance, Repair & Operations and Specialty Construction. Through approximately 270 branches and 44 distribution centers in the U.S. and Canada, the Company serves these markets with an integrated go-to-market strategy. HD Supply has approximately 11,000 associates delivering localized, customer-tailored products, services and expertise. The Company serves approximately 500,000 customers, which include contractors, maintenance professionals, industrial businesses, and government entities. HD Supply’s broad range of end-to-end product lines and services includes approximately 650,000 stock-keeping units ("SKUs") of quality, name-brand and proprietary-brand products as well as value-add services supporting the entire life-cycle of a project from construction to maintenance, repair and operations. HD Supply is managed primarily on a product line basis and reports results of operations in two reportable segments. The reportable segments are Facilities Maintenance and Construction & Industrial. In addition, the consolidated financial statements include Corporate and Eliminations, which is comprised of enterprise-wide functional departments. |
Basis of Presentation | Basis of Presentation In management’s opinion, the unaudited financial information for the interim periods presented includes all adjustments necessary for a fair statement of the results of operations, financial position, and cash flows. All adjustments are of a normal recurring nature unless otherwise disclosed. Revenues, expenses, assets and liabilities can vary during each quarter of the year. Therefore, the results and trends in these interim financial statements may not be the same as those for the full year. For a more complete discussion of the Company’s significant accounting policies and other information, you should read this report in conjunction with the Company’s annual report on Form 10-K for the year ended January 28, 2018, which includes all disclosures required by generally accepted accounting principles in the United States of America (“GAAP”). |
Fiscal Year | F iscal Year HD Supply’s fiscal year is a 52- or 53-week period ending on the Sunday nearest to January 31. The fiscal year ending February 3, 2019 ("fiscal 2018") includes 53 weeks and the fiscal year ended January 29, 2018 (“fiscal 2017”) includes 52 weeks. The three months ended October 28, 2018 (“third quarter 2018”) and October 29, 2017 ("third quarter 2017”) both include 13 weeks. The nine months ended October 28, 2018 and October 29, 2017 both include 39 weeks. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements of Holdings present the results of operations, financial position and cash flows of Holdings and its wholly-owned subsidiaries, including HDS. The consolidated financial statements of HDS present the results of operations, financial position and cash flows of HDS and its wholly-owned subsidiaries. All material intercompany balances and transactions are eliminated. Results of operations of businesses acquired are included from their respective dates of acquisition. The results of operations of all discontinued operations have been separately reported as discontinued operations for all periods presented. |
Estimates | Estimates Management has made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities, and reported amounts of revenues and expenses in preparing these consolidated financial statements in conformity with GAAP. Actual results could differ from these estimates. |
Self-Insurance | Self-Insurance HD Supply has a high-deductible insurance program for most losses related to general liability, product liability, environmental liability, automobile liability, workers’ compensation, and is self-insured for certain legal claims and medical claims, while maintaining per employee stop-loss coverage. The expected ultimate cost for claims incurred as of the balance sheet date is not discounted and is recognized as a liability. Self-insurance losses for claims filed and claims incurred but not reported are accrued based upon estimates of the aggregate liability for uninsured claims using loss development factors and actuarial assumptions followed in the insurance industry and historical loss development experience. At October 28, 2018 and January 28, 2018, self-insurance reserves totaled approximately $55 million and $51 million, respectively. |
DISCONTINUED OPERATIONS (Tables
DISCONTINUED OPERATIONS (Tables) | 9 Months Ended |
Oct. 28, 2018 | |
DISCONTINUED OPERATIONS | |
Schedule of results of operations of discontinued operations | The following table provides additional detail related to the results of operations of the discontinued operations (amounts in millions): Three Months Ended Nine Months Ended October 28, 2018 October 29, 2017 October 28, 2018 October 29, 2017 Net sales $ — $ 10 $ — $ 1,413 Cost of sales — 8 — 1,100 Gross Profit — 2 — 313 Operating expenses: Selling, general and administrative — 1 — 198 Depreciation and amortization — — — 6 Total operating expenses — 1 — 204 Operating Income — 1 — 109 (Gain) Loss on sales of businesses, net — (934) (1) (930) Other (Income) expense, net — 1 — 1 Income before provision for income taxes — 934 1 1,038 Provision (benefit) for income taxes — 528 — 244 Income from discontinued operations, net of tax $ — $ 406 $ 1 $ 794 The following table provides additional detail related to the net cash provided by operating and investing activities of the discontinued operations (amounts in millions): Nine Months Ended October 28, 2018 October 29, 2017 Net cash flows provided by operating activities $ — $ 28 Cash flows from investing activities: Capital expenditures — (5) Proceeds from sales of businesses, net — 2,450 Proceeds from sales of property and equipment, net — 2 Net cash flows provided by (used in) investing activities $ — $ 2,447 |
DEBT (Tables)
DEBT (Tables) | 9 Months Ended |
Oct. 28, 2018 | |
DEBT | |
Schedule of long-term debt | HDS’s long-term debt as of October 28, 2018 and January 28, 2018 consisted of the following (dollars in millions): October 28, 2018 January 28, 2018 Outstanding Interest Outstanding Interest Principal Rate % (1) Principal Rate % (1) Senior ABL Facility due 2022 $ 105 3.61 $ 58 2.86 Term B-3 Loans due 2021 — — 534 3.94 Term B-4 Loans due 2023 — — 544 4.19 Term B-5 Loans due 2023 1,070 4.03 — — October 2018 Senior Unsecured Notes due 2026 750 5.375 — — April 2016 Senior Unsecured Notes due 2024 — — 1,000 5.75 Total gross long-term debt $ 1,925 $ 2,136 Less unamortized discount (4) (6) Less unamortized deferred financing costs (22) (29) Total net long-term debt $ 1,899 $ 2,101 Less current installments (11) (11) Total net long-term debt, excluding current installments $ 1,888 $ 2,090 (1) Represents the stated rate of interest, without including the effect of discounts or premiums. |
October 2018 Senior Unsecured Notes | |
DEBT | |
Schedule of notes redemption on and after October 15, 2021, at the applicable redemption price set forth below (expressed as a percentage of principal amount) | Year Percentage 2021 102.688 % 2022 101.344 % 2022 and thereafter 100.000 % |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Oct. 28, 2018 | |
FAIR VALUE MEASUREMENTS | |
Schedule of financial instruments that are not reflected at fair value on the balance sheet | The Company’s financial instruments that are not reflected at fair value on the Consolidated Balance Sheets were as follows as of October 28, 2018 and January 28, 2018 (amounts in millions): As of October 28, 2018 As of January 28, 2018 Recorded Estimated Recorded Estimated Amount (1) Fair Value Amount (1) Fair Value Senior ABL Facility $ 105 $ 105 $ 58 $ 57 Term Loans and Notes 1,820 1,806 2,078 2,158 Total $ 1,925 $ 1,911 $ 2,136 $ 2,215 (1) These amounts do not include accrued interest; accrued interest is classified as Other current liabilities in the accompanying Consolidated Balance Sheets. These amounts do not include any related discounts, premiums, or deferred financing costs. |
BASIC AND DILUTED WEIGHTED AV_2
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES (Tables) | 9 Months Ended |
Oct. 28, 2018 | |
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES | |
Schedule of reconciliation of basic to diluted weighted average common shares | The reconciliation of basic to diluted weighted average common shares for the three and nine months ended October 28, 2018 and October 29, 2017 was as follows (in thousands): Three Months Ended Nine Months Ended October 28, 2018 October 29, 2017 October 28, 2018 October 29, 2017 Weighted-average common shares 182,730 185,651 183,349 194,704 Effect of potentially dilutive stock plan securities 849 1,001 843 1,554 Diluted weighted-average common shares 183,579 186,652 184,192 196,258 Stock plan securities excluded from dilution (1) 1,460 2,414 1,900 1,966 (1) Represents securities not included in the computation of diluted earnings per share because their effect would have been anti-dilutive. |
SUPPLEMENTAL BALANCE SHEET AN_2
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION (Tables) | 9 Months Ended |
Oct. 28, 2018 | |
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION | |
Schedule of receivables | Receivables as of October 28, 2018 and January 28, 2018 consisted of the following (amounts in millions): October 28, 2018 January 28, 2018 Trade receivables, net of allowance for doubtful accounts $ 774 $ 540 Vendor rebate receivables 68 58 Other receivables 18 14 Total receivables, net $ 860 $ 612 |
Schedule of other current liabilities | Other current liabilities as of October 28, 2018 and January 28, 2018 consisted of the following (amounts in millions): HD Supply Holdings, Inc. HD Supply, Inc. October 28, 2018 January 28, 2018 October 28, 2018 January 28, 2018 Corporate headquarters financing liability $ 87 $ — $ 87 $ — Accrued non-income taxes 42 27 42 27 Unsettled share repurchases 20 — — — Refund liability (1) 16 — 16 — Accrued interest 3 21 3 21 Other 93 90 93 90 Total other current liabilities $ 261 $ 138 $ 241 $ 138 (1) This amount represents the Company’s sales return estimate as of October 28, 2018 classified as a Current liability within the Consolidated Balance Sheet as required per ASC 606, Revenue from Contracts with Customers. The sales return estimate as of January 28, 2018 was approximately $12 million and was classified within Net receivables within the Consolidated Balance Sheet. |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Oct. 28, 2018 | |
SEGMENT INFORMATION | |
Schedule of net sales, Adjusted EBITDA, and other measures for each of the reportable segments and total continuing operations | The following tables present Net sales, Adjusted EBITDA, and other measures for both of the reportable segments and total continuing operations for the periods indicated (amounts in millions): Total Facilities Construction Continuing Maintenance & Industrial Eliminations Operations Three Months Ended October 28, 2018 Net sales $ 810 $ 803 $ (1) $ 1,612 Adjusted EBITDA 149 99 — 248 Depreciation (1) & Software Amortization 10 12 — 22 Other Intangible Amortization 2 3 — 5 Three Months Ended October 29, 2017 Net sales $ 754 $ 617 $ (1) $ 1,370 Adjusted EBITDA 144 70 — 214 Depreciation (1) & Software Amortization 9 10 — 19 Other Intangible Amortization 1 2 — 3 Nine Months Ended October 28, 2018 Net sales $ 2,353 $ 2,250 $ (2) $ 4,601 Adjusted EBITDA 422 262 — 684 Depreciation (1) & Software Amortization 28 34 — 62 Other Intangible Amortization 6 10 — 16 Nine Months Ended October 29, 2017 Net sales $ 2,205 $ 1,737 $ (4) $ 3,938 Adjusted EBITDA 397 182 — 579 Depreciation (1) & Software Amortization 26 31 — 57 Other Intangible Amortization 6 3 — 9 (1) Depreciation includes amounts recorded within Cost of sales in the Consolidated Statements of Operations. |
Schedule of reconciliation of adjusted EBITDA to income (loss) from continuing operations | Three Months Ended Nine Months Ended October 28, 2018 October 29, 2017 October 28, 2018 October 29, 2017 Total Adjusted EBITDA $ 248 $ 214 $ 684 $ 579 Depreciation and amortization (1) 27 22 78 66 Stock-based compensation 7 7 19 19 Restructuring — 3 9 3 Acquisition and integration costs (2) 2 — 5 — Other (1) — (2) — Operating income 213 182 575 491 Interest expense 32 36 101 134 Interest (income) — (1) (1) (1) Loss on extinguishment & modification of debt (3) 69 78 69 81 Income from Continuing Operations Before Provision for Income Taxes 112 69 406 277 Provision for income taxes 30 23 105 92 Income from continuing operations 82 46 301 185 Income from discontinued operations, net of tax — 406 1 794 Net income $ 82 $ 452 $ 302 $ 979 (1) Depreciation and amortization includes amounts recorded within Cost of sales in the Consolidated Statements of Operations. (2) Represents the cost incurred in the acquisition and integration of A.H. Harris Construction Supplies. (3) Represents the loss on extinguishment of debt including premium paid to repurchase or call the debt as well as the write-off of unamortized deferred financing costs, original issue discount, and other assets or liabilities associated with such debt. Also includes the costs of debt modifications. |
SUBSIDIARY GUARANTORS (Tables)
SUBSIDIARY GUARANTORS (Tables) | 9 Months Ended |
Oct. 28, 2018 | |
SUBSIDIARY GUARANTORS | |
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME Three Months Ended October 28, 2018 Non- Debt Subsidiary Guarantor Consolidating Total Issuer Guarantors Subsidiaries Adjustments HDS Net Sales $ — $ 1,573 $ 40 $ (1) $ 1,612 Cost of sales — 963 21 (1) 983 Gross Profit — 610 19 — 629 Operating expenses: Selling, general and administrative 16 362 13 — 391 Depreciation and amortization 5 19 1 — 25 Restructuring — — — — — Total operating expenses 21 381 14 — 416 Operating Income (Loss) (21) 229 5 — 213 Interest expense 30 1 — 1 32 Interest (income) — 1 — (1) — Loss on extinguishment & modification of debt 69 — — — 69 Net (earnings) of equity affiliates (230) — — 230 — Income from Continuing Operations Before Provision for Income Taxes 110 227 5 (230) 112 Provision for income taxes 28 2 — — 30 Income from Continuing Operations 82 225 5 (230) 82 Income from discontinued operations, net of tax — — — — — Net Income $ 82 $ 225 $ 5 $ (230) $ 82 Other comprehensive income (loss): Foreign currency translation adjustment — — — — — Unrealized (loss) on derivatives, net of tax of $1 (4) — (4) 4 (4) Total Comprehensive Income $ 78 $ 225 $ 1 $ (226) $ 78 Three Months Ended October 29, 2017 Non- Debt Subsidiary Guarantor Consolidating Total Issuer Guarantors Subsidiaries Adjustments HDS Net Sales $ — $ 1,333 $ 37 $ — $ 1,370 Cost of sales — 808 20 — 828 Gross Profit — 525 17 — 542 Operating expenses: Selling, general and administrative 22 303 11 — 336 Depreciation and amortization 4 17 — — 21 Restructuring 2 1 — 3 Total operating expenses 28 321 11 — 360 Operating Income (Loss) (28) 204 6 — 182 Interest expense 43 33 — (40) 36 Interest (income) (33) (8) — 40 (1) Loss on extinguishment & modification of debt 78 — — — 78 Net (earnings) of equity affiliates (189) — — 189 — Income from Continuing Operations Before Provision for Income Taxes 73 179 6 (189) 69 Provision for income taxes 24 (2) 1 — 23 Income from Continuing Operations 49 181 5 (189) 46 Income from discontinued operations, net of tax 403 — 3 — 406 Net Income $ 452 $ 181 $ 8 $ (189) $ 452 Other comprehensive income (loss): Foreign currency translation adjustment 1 — 1 (1) 1 Unrealized (loss) on derivatives, net of tax of $- — — — — — Total Comprehensive Income $ 453 $ 181 $ 9 $ (190) $ 453 Nine Months Ended October 28, 2018 Non- Debt Subsidiary Guarantor Consolidating Total Issuer Guarantors Subsidiaries Adjustments HDS Net Sales $ — $ 4,485 $ 118 $ (2) $ 4,601 Cost of sales — 2,737 63 (2) 2,798 Gross Profit — 1,748 55 — 1,803 Operating expenses: Selling, general and administrative 53 1,053 41 — 1,147 Depreciation and amortization 14 57 1 — 72 Restructuring 5 4 — — 9 Total operating expenses 72 1,114 42 — 1,228 Operating Income (Loss) (72) 634 13 — 575 Interest expense 103 22 1 (25) 101 Interest (income) (22) (4) — 25 (1) Loss on extinguishment & modification of debt 69 — — — 69 Net (earnings) of equity affiliates (620) — — 620 — Income from Continuing Operations Before Provision for Income Taxes 398 616 12 (620) 406 Provision for income taxes 97 6 2 — 105 Income from Continuing Operations 301 610 10 (620) 301 Income from discontinued operations, net of tax 1 — — — 1 Net Income $ 302 $ 610 $ 10 $ (620) $ 302 Other comprehensive income (loss): Foreign currency translation adjustment 2 — 2 (2) 2 Unrealized gain (loss) on derivatives, net of tax of $1 (4) — (4) 4 (4) Total Comprehensive Income $ 300 $ 610 $ 8 $ (618) $ 300 Nine Months Ended October 29, 2017 Non- Debt Subsidiary Guarantor Consolidating Total Issuer Guarantors Subsidiaries Adjustments HDS Net Sales $ — $ 3,834 $ 105 $ (1) $ 3,938 Cost of sales — 2,317 57 (1) 2,373 Gross Profit — 1,517 48 — 1,565 Operating expenses: Selling, general and administrative 64 908 36 — 1,008 Depreciation and amortization 11 51 1 — 63 Restructuring 2 1 — — 3 Total operating expenses 77 960 37 — 1,074 Operating Income (Loss) (77) 557 11 — 491 Interest expense 155 99 1 (121) 134 Interest (income) (99) (23) — 121 (1) Loss on extinguishment & modification of debt 81 — — — 81 Net (earnings) of equity affiliates (583) — — 583 — Income from Continuing Operations Before Provision for Income Taxes 369 481 10 (583) 277 Provision for income taxes 90 — 2 — 92 Income from Continuing Operations 279 481 8 (583) 185 Income from discontinued operations, net of tax 700 91 3 — 794 Net Income $ 979 $ 572 $ 11 $ (583) $ 979 Other comprehensive income (loss): Foreign currency translation adjustment (1) — (1) 1 (1) Unrealized (loss) on derivatives, net of tax of $- — — — — — Total Comprehensive Income $ 978 $ 572 $ 10 $ (582) $ 978 |
CONDENSED CONSOLIDATING BALANCE SHEETS | CONDENSED CONSOLIDATING BALANCE SHEETS As of October 28, 2018 Non- Debt Subsidiary Guarantor Consolidating Total Issuer Guarantors Subsidiaries Adjustments HDS ASSETS Current assets: Cash and cash equivalents $ 22 $ 20 $ 3 $ — $ 45 Receivables, net 3 832 25 — 860 Inventories — 782 21 — 803 Intercompany receivables — 1 — (1) — Other current assets 16 30 — — 46 Total current assets 41 1,665 49 (1) 1,754 Property and equipment, net 151 202 3 — 356 Goodwill — 1,993 — — 1,993 Intangible assets, net — 196 1 — 197 Deferred tax asset 174 — 2 (82) 94 Investment in subsidiaries 4,292 — — (4,292) — Intercompany notes receivable 189 1,193 — (1,382) — Other assets 18 4 — (5) 17 Total assets $ 4,865 $ 5,253 $ 55 $ (5,762) $ 4,411 LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIT) Current liabilities: Accounts payable $ 10 $ 457 $ 16 $ — $ 483 Accrued compensation and benefits 36 66 3 — 105 Current installments of long-term debt 11 — — — 11 Intercompany payables — — 1 (1) — Other current liabilities 110 124 7 — 241 Total current liabilities 167 647 27 (1) 840 Long-term debt, excluding current installments 1,843 9 45 (9) 1,888 Deferred tax liabilities — 82 — (82) — Intercompany notes payable (1) 1,193 189 — (1,382) — Other liabilities 50 16 1 3 70 Total liabilities 3,253 943 73 (1,471) 2,798 Stockholder’s equity (deficit) 1,612 4,310 (18) (4,291) 1,613 Total liabilities and stockholder’s equity (deficit) $ 4,865 $ 5,253 $ 55 $ (5,762) $ 4,411 (1) During the nine months ended October 28, 2018, the Parent completed a non-cash debt contribution to the Guarantor Subsidiaries of approximately $958 million. As of January 28, 2018 Non- Debt Subsidiary Guarantor Consolidating Total Issuer Guarantors Subsidiaries Adjustments HDS ASSETS Current assets: Cash and cash equivalents $ 539 $ 15 $ 4 $ — $ 558 Receivables, net 7 584 21 — 612 Inventories — 654 20 — 674 Intercompany receivables — 2 — (2) — Other current assets 15 15 1 — 31 Total current assets 561 1,270 46 (2) 1,875 Property and equipment, net 152 170 3 — 325 Goodwill — 1,807 — — 1,807 Intangible assets, net — 90 1 — 91 Deferred tax asset 264 — 2 (61) 205 Investment in subsidiaries 2,811 — — (2,811) — Intercompany notes receivable 1,005 1,083 — (2,088) — Other assets 12 3 — — 15 Total assets $ 4,805 $ 4,423 $ 52 $ (4,962) $ 4,318 LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIT) Current liabilities: Accounts payable $ 11 $ 353 $ 13 $ — $ 377 Accrued compensation and benefits 34 57 4 — 95 Current installments of long-term debt 11 — — — 11 Intercompany payables — — 2 (2) — Other current liabilities 43 88 7 — 138 Total current liabilities 99 498 26 (2) 621 Long-term debt, excluding current installments 2,032 — 58 — 2,090 Deferred tax liabilities — 61 — (61) — Intercompany notes payable 1,083 1,005 — (2,088) — Other liabilities 125 16 — — 141 Total liabilities 3,339 1,580 84 (2,151) 2,852 Stockholder's equity (deficit) 1,466 2,843 (32) (2,811) 1,466 Total liabilities and stockholder’s equity (deficit) $ 4,805 $ 4,423 $ 52 $ (4,962) $ 4,318 |
CONDENSED CONSOLIDATING CASH FLOW STATEMENTS | CONDENSED CONSOLIDATING CASH FLOW STATEMENTS Nine Months Ended October 28, 2018 Non- Debt Subsidiary Guarantor Consolidating Total Issuer Guarantors Subsidiaries Adjustments HDS Net cash flows from operating activities $ 366 $ 4 $ 9 $ — $ 379 Cash flows from investing activities Capital expenditures (20) (58) (1) — (79) Payments for businesses acquired, net — — (362) — (362) Proceeds from sales of property and equipment — — — — — Purchases of investments (7) — — 7 — Investments in equity affiliates (1) (365) — (3) 368 — Proceeds from (payments of) intercompany notes — 46 — (46) — Net cash flows from investing activities $ (392) $ (12) $ (366) $ 329 $ (441) Cash flows from financing activities Equity contribution (distribution) (1) (172) 3 365 (368) (172) Borrowings of (repayments of) intercompany notes (46) — — 46 — Borrowings of long-term debt 930 10 — (10) 930 Repayments of long-term debt (1,240) — — — (1,240) Borrowings on long-term revolver debt 90 — 10 — 100 Repayments on long-term revolver debt (30) — (19) — (49) Debt issuance costs (18) — — — (18) Other financing activities (5) — — 3 (2) Net cash flows from financing activities (491) 13 356 (329) (451) Effect of exchange rates on cash — — — — — Net increase (decrease) in cash & cash equivalents $ (517) $ 5 $ (1) $ — $ (513) Cash and cash equivalents at beginning of period 539 15 4 — 558 Cash and cash equivalents at end of period $ 22 $ 20 $ 3 $ — $ 45 (1) During the nine months ended October 28, 2018, the Parent completed a cash contribution of approximately $365 million to a Non-Guarantor Subsidiary to execute the purchase of A.H. Harris. Subsequent to the acquisition, the A.H. Harris entities became Guarantor Subsidiaries. Nine Months Ended October 29, 2017 Non- Debt Subsidiary Guarantor Consolidating Total Issuer Guarantors Subsidiaries Adjustments HDS Net cash flows from operating activities $ 260 $ 55 $ 5 $ — $ 320 Cash flows from investing activities Capital expenditures (18) (47) — — (65) Proceeds from sale of property and equipment — 2 — — 2 Proceeds from sales of businesses, net 2,450 — 2,450 Proceeds from (payments of) intercompany notes — (12) — 12 — Net cash flows from investing activities $ 2,432 $ (57) $ — $ 12 $ 2,387 Cash flows from financing activities Equity contribution (516) — — — (516) Borrowings of (repayments of) intercompany notes 12 — — (12) — Borrowings of long-term debt 113 113 Repayments of long-term debt (1,526) — — — (1,526) Borrowings on long-term revolver debt 621 — 3 — 624 Repayments on long-term revolver debt (981) — (8) — (989) Debt issuance costs (26) — — — (26) Other financing activities 1 — — — 1 Net cash flows from financing activities (2,302) — (5) (12) (2,319) Effect of exchange rates on cash — — — — — Net increase (decrease) in cash & cash equivalents $ 390 $ (2) $ — $ — $ 388 Cash and cash equivalents at beginning of period 51 17 5 — 73 Cash and cash equivalents at end of period $ 441 $ 15 $ 5 $ — $ 461 |
REVENUE (Tables)
REVENUE (Tables) | 9 Months Ended |
Oct. 28, 2018 | |
REVENUE | |
Schedule of Facilities Maintenance and Construction & Industrial with Inter-segment eliminations | The table below represents disaggregated revenue for Facilities Maintenance and Construction & Industrial with Inter-segment eliminations (amounts in millions): Three Months Ended Nine Months Ended October 28, 2018 October 29, 2017 October 28, 2018 October 29, 2017 Facilities Maintenance Maintenance, Repair, and Operations $ 718 $ 668 $ 2,076 $ 1,954 Property Improvement 92 86 277 251 Total Facilities Maintenance Net Sales 810 754 2,353 2,205 Construction & Industrial Non-Residential Construction 569 405 1,567 1,131 Residential Construction 189 169 553 489 Other 45 43 130 117 Total Construction & Industrial Net Sales 803 617 2,250 1,737 Inter-segment Eliminations (1) (1) (2) (4) Total HD Supply Net Sales $ 1,612 $ 1,370 $ 4,601 $ 3,938 |
NATURE OF BUSINESS AND BASIS _3
NATURE OF BUSINESS AND BASIS OF PRESENTATION - Nature of Business (Details) | 9 Months Ended |
Oct. 28, 2018segmentproductcategorycustomeritememployee | |
Nature of Business | |
Number of distinct market sectors in which entity specializes | category | 2 |
Number of associates | employee | 11,000 |
Number of customers | customer | 500,000 |
Number of SKUs offered | product | 650,000 |
Number of reportable segments | segment | 2 |
U.S. and Canada | |
Nature of Business | |
Number of branches | 270 |
Number of distribution centers | 44 |
NATURE OF BUSINESS AND BASIS _4
NATURE OF BUSINESS AND BASIS OF PRESENTATION - Fiscal Year (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Oct. 28, 2018 | Oct. 29, 2017 | Oct. 28, 2018 | Oct. 29, 2017 | Feb. 03, 2019 | Jan. 28, 2018 | |
Length of fiscal year (in days) | 371 days | 364 days | ||||
Length of fiscal quarter (in days) | 91 days | 91 days | 273 days | 273 days | ||
Minimum | ||||||
Length of fiscal year (in days) | 364 days | |||||
Maximum | ||||||
Length of fiscal year (in days) | 371 days |
NATURE OF BUSINESS AND BASIS _5
NATURE OF BUSINESS AND BASIS OF PRESENTATION - Self-Insurance (Details) - USD ($) $ in Millions | Oct. 28, 2018 | Jan. 28, 2018 |
NATURE OF BUSINESS AND BASIS OF PRESENTATION | ||
Self-insurance reserves | $ 55 | $ 51 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) - USD ($) $ in Millions | Mar. 05, 2018 | Oct. 28, 2018 | Oct. 29, 2017 | Oct. 28, 2018 | Oct. 28, 2018 | Oct. 29, 2017 | Feb. 03, 2019 | Jan. 28, 2018 |
ACQUISITIONS | ||||||||
Goodwill | $ 1,993 | $ 1,993 | $ 1,993 | $ 1,807 | ||||
Net sales | 1,612 | $ 1,370 | 4,601 | $ 3,938 | ||||
A.H. Harris | ||||||||
ACQUISITIONS | ||||||||
Purchase price, net of cash acquired | $ 362 | |||||||
Goodwill | 186 | |||||||
Definite-lived intangible assets | 123 | |||||||
Property & equipment | 12 | |||||||
Net working capital | 57 | |||||||
Deferred tax liabilities | 17 | |||||||
Goodwill expected to be deductible for tax purposes | 19 | |||||||
Costs related to acquisition and integration | $ 2 | $ 5 | ||||||
A.H. Harris | Forecast | Minimum | ||||||||
ACQUISITIONS | ||||||||
Costs related to acquisition and integration | $ 8 | |||||||
A.H. Harris | Forecast | Maximum | ||||||||
ACQUISITIONS | ||||||||
Costs related to acquisition and integration | $ 10 | |||||||
A.H. Harris | Customer relationships | ||||||||
ACQUISITIONS | ||||||||
Definite-lived intangible assets | $ 110 | |||||||
Estimated amortization periods | 12 years | |||||||
A.H. Harris | Trade names | ||||||||
ACQUISITIONS | ||||||||
Definite-lived intangible assets | $ 13 | |||||||
Estimated amortization periods | 5 years | |||||||
A.H. Harris | ||||||||
ACQUISITIONS | ||||||||
Net sales | $ 277 |
DISCONTINUED OPERATIONS - Resul
DISCONTINUED OPERATIONS - Results of Operations (Details) - USD ($) $ in Millions | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Oct. 31, 2017 | Oct. 28, 2018 | Oct. 29, 2017 | Jul. 30, 2017 | Oct. 28, 2018 | Oct. 29, 2017 | |
DISCONTINUED OPERATIONS | ||||||
Income tax expense (benefit) | $ 30 | $ 23 | $ 105 | $ 92 | ||
Operating expenses: | ||||||
Income from discontinued operations, net of tax | 406 | 1 | 794 | |||
Discontinued operations | ||||||
Results of operations of the discontinued operations | ||||||
Net sales | 10 | 1,413 | ||||
Cost of sales | 8 | 1,100 | ||||
Gross Profit | 2 | 313 | ||||
Operating expenses: | ||||||
Selling, general and administrative | 1 | 198 | ||||
Depreciation and amortization | 6 | |||||
Total operating expenses | 1 | 204 | ||||
Operating Income | 1 | 109 | ||||
(Gain) Loss on sales of businesses, net | (934) | (1) | (930) | |||
Other (Income) expense, net | 1 | 1 | ||||
Income before provision for income taxes | 934 | 1 | 1,038 | |||
Provision (benefit) for income taxes | 528 | 244 | ||||
Income from discontinued operations, net of tax | 406 | $ 1 | 794 | |||
Discontinued operations | Waterworks business | ||||||
DISCONTINUED OPERATIONS | ||||||
Gain on sale of business | 725 | |||||
Tax effect of gain on sale of business | $ 202 | |||||
Net deferred tax asset | $ 323 | |||||
Income tax expense (benefit) | $ 323 | $ (323) | ||||
Discontinued operations | Power solutions | ||||||
DISCONTINUED OPERATIONS | ||||||
Gain due to the expiration of indemnification for tax positions | $ 3 |
DISCONTINUED OPERATIONS - Net C
DISCONTINUED OPERATIONS - Net Cash Provided by Operating Activities and Investing Activities (Details) $ in Millions | 9 Months Ended |
Oct. 29, 2017USD ($) | |
Cash flows from investing activities | |
Proceeds from sales of businesses, net | $ 2,450 |
Proceeds from sales of property and equipment, net | 2 |
Discontinued operations | |
Net cash provided by operating and investing activities of the discontinued operations | |
Net cash flows provided by operating activities | 28 |
Cash flows from investing activities | |
Capital expenditures | (5) |
Proceeds from sales of businesses, net | 2,450 |
Proceeds from sales of property and equipment, net | 2 |
Net cash flows provided by (used in) investing activities | $ 2,447 |
DEBT - Gross Long-term Debt - O
DEBT - Gross Long-term Debt - Outstanding Principal - Tabular Disclosure (Details) - USD ($) $ in Millions | Oct. 28, 2018 | Jan. 28, 2018 |
DEBT | ||
Total gross long-term debt | $ 1,925 | $ 2,136 |
HDS (Debt Issuer) | Secured debt | Credit facility | Senior ABL Facility due 2022 | ||
DEBT | ||
Total gross long-term debt | 105 | 58 |
HDS (Debt Issuer) | Secured debt | Credit facility | Term B-3 Loans due 2021 | ||
DEBT | ||
Total gross long-term debt | 534 | |
HDS (Debt Issuer) | Secured debt | Credit facility | Term B-4 Loans due 2023 | ||
DEBT | ||
Total gross long-term debt | 544 | |
HDS (Debt Issuer) | Secured debt | Credit facility | Term B-5 Loans due 2023 | ||
DEBT | ||
Total gross long-term debt | 1,070 | |
HDS (Debt Issuer) | Unsecured debt | October 2018 Senior Unsecured Notes | ||
DEBT | ||
Total gross long-term debt | $ 750 | |
HDS (Debt Issuer) | Unsecured debt | April 2016 Senior Unsecured Notes | ||
DEBT | ||
Total gross long-term debt | $ 1,000 |
DEBT - Gross Long-term Debt - I
DEBT - Gross Long-term Debt - Interest Rate - Tabular Disclosure (Details) - HDS (Debt Issuer) | Oct. 28, 2018 | Oct. 11, 2018 | Jan. 28, 2018 |
Secured debt | Credit facility | Senior ABL Facility due 2022 | |||
DEBT | |||
Interest rate, rate at end of period (as a percent) | 3.61% | 2.86% | |
Secured debt | Credit facility | Term B-3 Loans due 2021 | |||
DEBT | |||
Interest rate, rate at end of period (as a percent) | 3.94% | ||
Secured debt | Credit facility | Term B-4 Loans due 2023 | |||
DEBT | |||
Interest rate, rate at end of period (as a percent) | 4.19% | ||
Secured debt | Credit facility | Term B-5 Loans due 2023 | |||
DEBT | |||
Interest rate, rate at end of period (as a percent) | 4.03% | ||
Unsecured debt | October 2018 Senior Unsecured Notes | |||
DEBT | |||
Interest rate, stated rate (as a percent) | 5.375% | 5.375% | |
Unsecured debt | April 2016 Senior Unsecured Notes | |||
DEBT | |||
Interest rate, stated rate (as a percent) | 5.75% | 5.75% |
DEBT - Total Net Long-term Debt
DEBT - Total Net Long-term Debt - Tabular Disclosure (Details) - USD ($) $ in Millions | Oct. 28, 2018 | Jan. 28, 2018 |
DEBT | ||
Total gross long-term debt | $ 1,925 | $ 2,136 |
Less unamortized discount | (4) | (6) |
Less unamortized deferred financing costs | (22) | (29) |
Total net long-term debt | $ 1,899 | $ 2,101 |
DEBT - Total Long-term Debt, Ex
DEBT - Total Long-term Debt, Excluding Current Installments - Tabular Disclosure (Details) - USD ($) $ in Millions | Oct. 28, 2018 | Jan. 28, 2018 |
DEBT | ||
Total net long-term debt | $ 1,899 | $ 2,101 |
Less current installments | (11) | (11) |
Total net long-term debt, excluding current installments | $ 1,888 | $ 2,090 |
DEBT - 2018 Refinancing Transac
DEBT - 2018 Refinancing Transactions (Details) - USD ($) $ in Millions | Oct. 22, 2018 | Oct. 11, 2018 | Oct. 28, 2018 | Oct. 29, 2017 | Oct. 28, 2018 | Oct. 29, 2017 | Jan. 28, 2018 |
DEBT | |||||||
Accrued but unpaid interest | $ 103 | $ 148 | |||||
Loss on extinguishment of debt | $ 69 | $ 78 | 69 | $ 81 | |||
HDS (Debt Issuer) | Secured debt | Credit facility | Term Loan Facility | |||||||
DEBT | |||||||
Aggregate principal amount | $ 1,070 | $ 1,070 | |||||
HDS (Debt Issuer) | Secured debt | Credit facility | Term B-3 Loans due 2021 | |||||||
DEBT | |||||||
Original aggregate principal refinanced | $ 530 | ||||||
HDS (Debt Issuer) | Secured debt | Credit facility | Term B-4 Loans due 2023 | |||||||
DEBT | |||||||
Original aggregate principal refinanced | 540 | ||||||
HDS (Debt Issuer) | Secured debt | Credit facility | Term B-5 Loans due 2023 | |||||||
DEBT | |||||||
Aggregate principal amount | $ 1,070 | ||||||
Amortization of debt, aggregate annual amounts as a percentage of original principal amount (as a percent) | 1.00% | 1.00% | 1.00% | ||||
Percentage of prepayment premium | 1.00% | ||||||
Consent fees | $ 5 | ||||||
Modification and extinguishment charge | 5 | ||||||
Financing fees and other costs | 3 | ||||||
Write-off of unamortized deferred financing costs | $ 2 | ||||||
HDS (Debt Issuer) | Unsecured debt | October 2018 Senior Unsecured Notes | |||||||
DEBT | |||||||
Aggregate principal amount | $ 750 | ||||||
Interest rate, stated rate (as a percent) | 5.375% | 5.375% | 5.375% | ||||
Proceeds from debt, net of transaction fees | $ 741 | ||||||
Transaction fees reflected as deferred financing costs | $ 9 | ||||||
HDS (Debt Issuer) | Unsecured debt | April 2016 Senior Unsecured Notes | |||||||
DEBT | |||||||
Interest rate, stated rate (as a percent) | 5.75% | 5.75% | |||||
Redemption of outstanding principal of long-term debt | $ 1,000 | ||||||
Payment of make-whole premium on debt | 56 | ||||||
Accrued but unpaid interest | 28 | ||||||
Loss on extinguishment of debt | 64 | ||||||
Write-off of unamortized deferred financing costs | $ 8 | ||||||
LIBOR | HDS (Debt Issuer) | Secured debt | Credit facility | Term B-5 Loans due 2023 | |||||||
DEBT | |||||||
Percentage added to reference rate (as a percent) | 1.75% | 1.75% | |||||
Base | HDS (Debt Issuer) | Secured debt | Credit facility | Term B-5 Loans due 2023 | |||||||
DEBT | |||||||
Percentage added to reference rate (as a percent) | 0.75% | 0.75% |
DEBT - Senior ABL Facility (Det
DEBT - Senior ABL Facility (Details) $ in Millions | 9 Months Ended | |
Oct. 28, 2018USD ($)facility | Jan. 28, 2018USD ($) | |
DEBT | ||
Outstanding borrowings | $ 1,925 | $ 2,136 |
Secured debt | HDS (Debt Issuer) | Credit facility | Senior ABL Facility | ||
DEBT | ||
Aggregate principal amount | 1,000 | |
Line of credit facility, Excess Availability for borrowing | 868 | |
Letter of credit facility outstanding | 27 | |
Line of credit facility, available for borrowing on qualifying cash balances | $ 175 | |
The minimum number of incremental term loan facilities permitted to be included in the Senior ABL Facility | facility | 1 | |
The minimum number of revolving credit facility commitments permitted to be included in the Senior ABL Facility | facility | 1 | |
Canada | Secured debt | HDS (Debt Issuer) | Credit facility | Senior ABL Facility | ||
DEBT | ||
Outstanding borrowings | $ 45 |
DEBT - Senior Term Loan Facilit
DEBT - Senior Term Loan Facility (Details) - USD ($) $ in Millions | Oct. 23, 2018 | Oct. 22, 2018 | Oct. 28, 2018 |
HDS (Debt Issuer) | Secured debt | Credit facility | Term Loan Facility | |||
DEBT | |||
Aggregate principal amount | $ 1,070 | ||
HDS (Debt Issuer) | Secured debt | Credit facility | Term B-5 Loans due 2023 | |||
DEBT | |||
Aggregate principal amount | $ 1,070 | ||
Amortization of debt, aggregate annual amounts as a percentage of original principal amount (as a percent) | 1.00% | 1.00% | |
LIBOR | Term B-5 Loans due 2023 | Derivatives designated as hedging instruments | Interest rate swap | Cash flow hedges | |||
DEBT | |||
Percentage added to reference rate (as a percent) | 1.75% | ||
LIBOR | HDS (Debt Issuer) | Secured debt | Credit facility | Term B-5 Loans due 2023 | |||
DEBT | |||
Percentage added to reference rate (as a percent) | 1.75% | 1.75% | |
Base | HDS (Debt Issuer) | Secured debt | Credit facility | Term B-5 Loans due 2023 | |||
DEBT | |||
Percentage added to reference rate (as a percent) | 0.75% | 0.75% |
DEBT - 5.375% Senior Unsecured
DEBT - 5.375% Senior Unsecured Notes due 2026 (Details) - HDS (Debt Issuer) - Unsecured debt - October 2018 Senior Unsecured Notes - USD ($) $ in Millions | 9 Months Ended | |
Oct. 28, 2018 | Oct. 11, 2018 | |
DEBT | ||
Aggregate principal amount | $ 750 | |
Note issued, interest rate | 5.375% | 5.375% |
Prior to October 15, 2021 | ||
DEBT | ||
Optional prepayment price percentage | 100.00% | |
Percentage limit on amount that can be redeemed | 40.00% | |
Prepayment percentage price as a percent of the principal, with proceeds from certain equity offerings | 105.375% | |
Threshold percentage for debt that must remain after each redemption | 50.00% | |
2,021 | ||
DEBT | ||
Optional prepayment price percentage | 102.688% | |
2,022 | ||
DEBT | ||
Optional prepayment price percentage | 101.344% | |
2022 and thereafter | ||
DEBT | ||
Optional prepayment price percentage | 100.00% |
DEBT - 5.75% Senior Unsecured N
DEBT - 5.75% Senior Unsecured Notes due 2024 (Details) - HDS (Debt Issuer) - Unsecured debt - April 2016 Senior Unsecured Notes - USD ($) $ in Millions | Oct. 11, 2018 | Oct. 28, 2018 | Jan. 28, 2018 |
DEBT | |||
Interest rate, stated rate (as a percent) | 5.75% | 5.75% | |
Redemption of outstanding principal amount of long-term debt | $ 1,000 | ||
Prior to the October 11, 2018 | |||
DEBT | |||
Redemption of outstanding principal amount of long-term debt | $ 1,000 |
DERIVATIVE INSTRUMENTS (Details
DERIVATIVE INSTRUMENTS (Details) - USD ($) $ in Millions | Oct. 23, 2018 | Oct. 28, 2018 | Oct. 28, 2018 | Oct. 24, 2018 |
DERIVATIVE INSTRUMENTS | ||||
Net unrealized loss, net of tax | $ 4 | $ 4 | ||
Derivatives designated as hedging instruments | Interest rate swap | Cash flow hedges | ||||
DERIVATIVE INSTRUMENTS | ||||
Notional amount of derivative liability | $ 750 | |||
Fixed interest rate percentage | 3.07% | |||
Net unrealized loss, net of tax | 4 | |||
Derivatives designated as hedging instruments | Interest rate swap | Cash flow hedges | Other long-term liabilities | ||||
DERIVATIVE INSTRUMENTS | ||||
Cash flow hedge liabilities at fair value | $ 5 | $ 5 | ||
Derivatives designated as hedging instruments | Interest rate swap | Cash flow hedges | Term B-5 Loans due 2023 | ||||
DERIVATIVE INSTRUMENTS | ||||
Effective interest rate percentage | 4.82% | |||
Derivatives designated as hedging instruments | Interest rate swap | Cash flow hedges | LIBOR | Term B-5 Loans due 2023 | ||||
DERIVATIVE INSTRUMENTS | ||||
Percentage added to reference rate (as a percent) | 1.75% |
FAIR VALUE MEASUREMENTS - Fair
FAIR VALUE MEASUREMENTS - Fair value on consolidated balance sheets (Details) - USD ($) $ in Millions | Oct. 28, 2018 | Jan. 28, 2018 |
Recorded Amount | ||
Financial instruments not reflected at fair value on the balance sheet | ||
Senior ABL Facility | $ 105 | $ 58 |
Term Loans and Notes | 1,820 | 2,078 |
Total | 1,925 | 2,136 |
Estimated Fair Value | Significant Other Observable Inputs (Level 2) | ||
Financial instruments not reflected at fair value on the balance sheet | ||
Senior ABL Facility | 105 | 57 |
Term Loans and Notes | 1,806 | 2,158 |
Total | 1,911 | 2,215 |
Interest rate swap | Significant Other Observable Inputs (Level 2) | ||
Financial instruments not reflected at fair value on the balance sheet | ||
Fair value measurement of the financial liability | $ 5 | $ 0 |
INCOME TAXES - Tax items (Detai
INCOME TAXES - Tax items (Details) - USD ($) $ in Millions | 9 Months Ended | 10 Months Ended | 11 Months Ended | ||
Oct. 28, 2018 | Oct. 29, 2017 | Oct. 28, 2018 | Dec. 22, 2017 | Jan. 28, 2018 | |
Combined federal, state and foreign effective tax rate for continuing operations (benefit) | 25.90% | 33.20% | |||
Federal statutory rate | 21.00% | 35.00% | |||
Unrecognized tax benefits | $ 16 | $ 16 | $ 16 | ||
Net accrual for interest and penalties related to unrecognized tax benefits | 0 | 0 | 0 | ||
Deferred tax assets, valuation allowance | 7 | $ 7 | $ 7 | ||
U.S Federal | |||||
Provision for income tax | 0 | ||||
State | |||||
Provision for income tax | 0 | ||||
Foreign | |||||
Provision for income tax | $ 0 |
BASIC AND DILUTED WEIGHTED AV_3
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES - Reconciliation of Basic to Diluted Weighted Average Common Shares (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 28, 2018 | Oct. 29, 2017 | Oct. 28, 2018 | Oct. 29, 2017 | |
Reconciliation of basic to diluted weighted-average common shares | ||||
Weighted-average common shares | 182,730 | 185,651 | 183,349 | 194,704 |
Effect of potentially dilutive stock plan securities | 849 | 1,001 | 843 | 1,554 |
Diluted weighted-average common shares | 183,579 | 186,652 | 184,192 | 196,258 |
BASIC AND DILUTED WEIGHTED AV_4
BASIC AND DILUTED WEIGHTED AVERAGE COMMON SHARES - Anti-dilutive Securities (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 28, 2018 | Oct. 29, 2017 | Oct. 28, 2018 | Oct. 29, 2017 | |
Anti-dilutive securities | ||||
Stock plan securities excluded from dilution | 1,460 | 2,414 | 1,900 | 1,966 |
SUPPLEMENTAL BALANCE SHEET AN_3
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION - Receivables (Details) - USD ($) $ in Millions | Oct. 28, 2018 | Jan. 28, 2018 |
Receivables | ||
Trade receivables, net of allowance for doubtful accounts | $ 774 | $ 540 |
Vendor rebate receivables | 68 | 58 |
Other receivables | 18 | 14 |
Total receivables, net | $ 860 | $ 612 |
SUPPLEMENTAL BALANCE SHEET AN_4
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION - Other Current Liabilities (Details) - USD ($) $ in Millions | Oct. 28, 2018 | Feb. 28, 2018 | Jan. 28, 2018 |
Other Current Liabilities | |||
Corporate headquarters financing liability | $ 87 | $ 87 | |
Accrued non-income taxes | 42 | $ 27 | |
Unsettled share repurchases | 20 | ||
Refund liability | 16 | ||
Accrued interest | 3 | 21 | |
Other | 93 | 90 | |
Total other current liabilities | 261 | 138 | |
Estimated sales return | 12 | ||
HD Supply, Inc. (Total HDS) | |||
Other Current Liabilities | |||
Corporate headquarters financing liability | 87 | ||
Accrued non-income taxes | 42 | 27 | |
Refund liability | 16 | ||
Accrued interest | 3 | 21 | |
Other | 93 | 90 | |
Total other current liabilities | $ 241 | $ 138 |
SUPPLEMENTAL BALANCE SHEET AN_5
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION - Supplemental Cash Flow Information (Details) - USD ($) $ in Millions | 9 Months Ended | |
Oct. 28, 2018 | Oct. 29, 2017 | |
Supplemental Cash Flow Information | ||
Cash paid for interest | $ 103 | $ 148 |
Cash paid for income taxes, net of refunds | 9 | 27 |
HDS (Debt Issuer) | Credit facility | Term B-1 Loans due 2021 | Secured debt | ||
Supplemental Cash Flow Information | ||
Cash paid for interest | $ 4 | 6 |
Waterworks | ||
Supplemental Cash Flow Information | ||
Cash paid for income taxes, net of refunds | $ 13 |
SUPPLEMENTAL BALANCE SHEET AN_6
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION - Stock Repurchase Information (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Oct. 28, 2018 | Oct. 29, 2017 | Aug. 25, 2017 | |
HD Supply, Inc. (Total HDS) | |||
Supplemental Cash Flow Information | |||
Cash equity distribution | $ 172 | $ 516 | |
Share Repurchase Program of June 2017 | Common Stock | Maximum | |||
Supplemental Cash Flow Information | |||
Authorized share repurchase amount | $ 500 | ||
Share Repurchase Program of August 2017 | Common Stock | |||
Supplemental Cash Flow Information | |||
Repurchase of common stock (in shares) | 4,682,396 | ||
Repurchase of common stock | $ 178 | ||
Share Repurchase Program of 2017 and 2014 | Common Stock | |||
Supplemental Cash Flow Information | |||
Repurchase of common stock (in shares) | 4,847,933 | ||
Repurchase of common stock | $ 185 |
SUPPLEMENTAL BALANCE SHEET AN_7
SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION - Build-to-Suit Lease (Details) - USD ($) $ in Millions | Oct. 28, 2018 | Feb. 28, 2018 |
Build-to-Suit Lease | ||
Financing liability, current | $ 87 | $ 87 |
RESTRUCTURING ACTIVITIES - Fisc
RESTRUCTURING ACTIVITIES - Fiscal 2017 Plan (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Oct. 28, 2018 | Oct. 29, 2017 | Oct. 28, 2018 | Oct. 29, 2017 | Jan. 28, 2018 | Jul. 29, 2018 | |
Restructuring activities | ||||||
Restructuring charges | $ 3 | $ 9 | $ 3 | |||
Sale of business | Fiscal 2017 Restructuring Plan | Waterworks | ||||||
Restructuring activities | ||||||
Restructuring charges | $ 0 | $ 9 | $ 6 | |||
Expected further restructuring charges | $ 0 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Legal Matters (Details) $ in Millions | Oct. 28, 2018USD ($) | Aug. 08, 2017complaint |
Legal Matters | ||
Number of shareholder derivative complaints | complaint | 2 | |
Minimum | ||
Legal Matters | ||
Estimated aggregate potential loss | $ 0 | |
Maximum | ||
Legal Matters | ||
Estimated aggregate potential loss | $ 10 |
SEGMENT INFORMATION - General I
SEGMENT INFORMATION - General Information (Details) | 9 Months Ended |
Oct. 28, 2018segment | |
SEGMENT INFORMATION | |
Number of reportable segments | 2 |
SEGMENT INFORMATION - Net Sales
SEGMENT INFORMATION - Net Sales for Each Reportable Segment (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Oct. 28, 2018 | Oct. 29, 2017 | Oct. 28, 2018 | Oct. 29, 2017 | |
SEGMENT INFORMATION | ||||
Net sales | $ 1,612 | $ 1,370 | $ 4,601 | $ 3,938 |
Eliminations | ||||
SEGMENT INFORMATION | ||||
Net sales | (1) | (1) | (2) | (4) |
Facilities Maintenance | Reportable segment | ||||
SEGMENT INFORMATION | ||||
Net sales | 810 | 754 | 2,353 | 2,205 |
Construction & Industrial | Reportable segment | ||||
SEGMENT INFORMATION | ||||
Net sales | $ 803 | $ 617 | $ 2,250 | $ 1,737 |
SEGMENT INFORMATION - Adjusted
SEGMENT INFORMATION - Adjusted EBITDA, Depreciation & Software Amortization, Other Intangible Amortization for Each Reportable Segment (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Oct. 28, 2018 | Oct. 29, 2017 | Oct. 28, 2018 | Oct. 29, 2017 | |
SEGMENT INFORMATION | ||||
Adjusted EBITDA | $ 248 | $ 214 | $ 684 | $ 579 |
Depreciation & Software Amortization | 22 | 19 | 62 | 57 |
Other Intangible Amortization | 5 | 3 | 16 | 9 |
Facilities Maintenance | Reportable segment | ||||
SEGMENT INFORMATION | ||||
Adjusted EBITDA | 149 | 144 | 422 | 397 |
Depreciation & Software Amortization | 10 | 9 | 28 | 26 |
Other Intangible Amortization | 2 | 1 | 6 | 6 |
Construction & Industrial | Reportable segment | ||||
SEGMENT INFORMATION | ||||
Adjusted EBITDA | 99 | 70 | 262 | 182 |
Depreciation & Software Amortization | 12 | 10 | 34 | 31 |
Other Intangible Amortization | $ 3 | $ 2 | $ 10 | $ 3 |
SEGMENT INFORMATION - Reconcili
SEGMENT INFORMATION - Reconciliation to Consolidated Financial Statements (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Oct. 28, 2018 | Oct. 29, 2017 | Oct. 28, 2018 | Oct. 29, 2017 | |
SEGMENT INFORMATION | ||||
Total Adjusted EBITDA | $ 248 | $ 214 | $ 684 | $ 579 |
Depreciation and amortization | 27 | 22 | 78 | 66 |
Stock-based compensation | 7 | 7 | 19 | 19 |
Restructuring | 3 | 9 | 3 | |
Acquisition and integration costs | 2 | 5 | ||
Other | (1) | (2) | ||
Operating Income | 213 | 182 | 575 | 491 |
Interest expense | 32 | 36 | 101 | 134 |
Interest (income) | (1) | (1) | (1) | |
Loss on extinguishment & modification of debt | 69 | 78 | 69 | 81 |
Income from Continuing Operations Before Provision for Income Taxes | 112 | 69 | 406 | 277 |
Provision for income taxes | 30 | 23 | 105 | 92 |
Income from Continuing Operations | 82 | 46 | 301 | 185 |
Income from discontinued operations, net of tax | 406 | 1 | 794 | |
Net Income | $ 82 | $ 452 | $ 302 | $ 979 |
SEGMENT INFORMATION - Acquisiti
SEGMENT INFORMATION - Acquisition of A.H. Harris (Details) - A.H. Harris $ in Millions | Mar. 05, 2018USD ($) |
SEGMENT INFORMATION | |
Purchase price, net of cash acquired | $ 362 |
Reportable segment | Construction & Industrial | |
SEGMENT INFORMATION | |
Purchase price, net of cash acquired | 362 |
Increased (Decreased) in total assets by acquisition | $ 414 |
SUBSIDIARY GUARANTORS - General
SUBSIDIARY GUARANTORS - General Information (Details) | 9 Months Ended |
Oct. 28, 2018 | |
HDS (Debt Issuer) | |
SUBSIDIARY GUARANTORS | |
Period of notice to the applicable trustee to cause Subsidiary Guarantor to be released from Subsidiary Guarantee | 30 days |
SUBSIDIARY GUARANTORS - CONDENS
SUBSIDIARY GUARANTORS - CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Oct. 28, 2018 | Oct. 29, 2017 | Oct. 28, 2018 | Oct. 29, 2017 | |
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | ||||
Net Sales | $ 1,612 | $ 1,370 | $ 4,601 | $ 3,938 |
Cost of sales | 983 | 828 | 2,798 | 2,373 |
Gross Profit | 629 | 542 | 1,803 | 1,565 |
Operating expenses: | ||||
Selling, general and administrative | 391 | 336 | 1,147 | 1,008 |
Depreciation and amortization | 25 | 21 | 72 | 63 |
Restructuring | 3 | 9 | 3 | |
Total operating expenses | 416 | 360 | 1,228 | 1,074 |
Operating Income (Loss) | 213 | 182 | 575 | 491 |
Interest expense | 32 | 36 | 101 | 134 |
Interest (income) | (1) | (1) | (1) | |
Loss on extinguishment & modification of debt | 69 | 78 | 69 | 81 |
Income from Continuing Operations Before Provision for Income Taxes | 112 | 69 | 406 | 277 |
Provision for income taxes | 30 | 23 | 105 | 92 |
Income from Continuing Operations | 82 | 46 | 301 | 185 |
Income from discontinued operations, net of tax | 406 | 1 | 794 | |
Net Income | 82 | 452 | 302 | 979 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustment | 1 | 2 | (1) | |
Unrealized gain (loss) on derivatives, net of tax of $1, $-, $1, and $- | (4) | (4) | ||
Total Comprehensive Income | 78 | 453 | 300 | 978 |
Unrealized gain (loss) on cash flow hedge, tax | 1 | 1 | 1 | |
Consolidating Adjustments | ||||
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | ||||
Net Sales | (1) | (2) | (1) | |
Cost of sales | (1) | (2) | (1) | |
Operating expenses: | ||||
Interest expense | 1 | (40) | (25) | (121) |
Interest (income) | (1) | 40 | 25 | 121 |
Net (earnings) of equity affiliates | 230 | 189 | 620 | 583 |
Income from Continuing Operations Before Provision for Income Taxes | (230) | (189) | (620) | (583) |
Income from Continuing Operations | (230) | (189) | (620) | (583) |
Net Income | (230) | (189) | (620) | (583) |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustment | (1) | (2) | 1 | |
Unrealized gain (loss) on derivatives, net of tax of $1, $-, $1, and $- | 4 | 4 | ||
Total Comprehensive Income | (226) | (190) | (618) | (582) |
HDS (Debt Issuer) | Reportable Legal Entities | ||||
Operating expenses: | ||||
Selling, general and administrative | 16 | 22 | 53 | 64 |
Depreciation and amortization | 5 | 4 | 14 | 11 |
Restructuring | 2 | 5 | 2 | |
Total operating expenses | 21 | 28 | 72 | 77 |
Operating Income (Loss) | (21) | (28) | (72) | (77) |
Interest expense | 30 | 43 | 103 | 155 |
Interest (income) | (33) | (22) | (99) | |
Loss on extinguishment & modification of debt | 69 | 78 | 69 | 81 |
Net (earnings) of equity affiliates | (230) | (189) | (620) | (583) |
Income from Continuing Operations Before Provision for Income Taxes | 110 | 73 | 398 | 369 |
Provision for income taxes | 28 | 24 | 97 | 90 |
Income from Continuing Operations | 82 | 49 | 301 | 279 |
Income from discontinued operations, net of tax | 403 | 1 | 700 | |
Net Income | 82 | 452 | 302 | 979 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustment | 1 | 2 | (1) | |
Unrealized gain (loss) on derivatives, net of tax of $1, $-, $1, and $- | (4) | (4) | ||
Total Comprehensive Income | 78 | 453 | 300 | 978 |
Subsidiary Guarantors | Reportable Legal Entities | ||||
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | ||||
Net Sales | 1,573 | 1,333 | 4,485 | 3,834 |
Cost of sales | 963 | 808 | 2,737 | 2,317 |
Gross Profit | 610 | 525 | 1,748 | 1,517 |
Operating expenses: | ||||
Selling, general and administrative | 362 | 303 | 1,053 | 908 |
Depreciation and amortization | 19 | 17 | 57 | 51 |
Restructuring | 1 | 4 | 1 | |
Total operating expenses | 381 | 321 | 1,114 | 960 |
Operating Income (Loss) | 229 | 204 | 634 | 557 |
Interest expense | 1 | 33 | 22 | 99 |
Interest (income) | 1 | (8) | (4) | (23) |
Income from Continuing Operations Before Provision for Income Taxes | 227 | 179 | 616 | 481 |
Provision for income taxes | 2 | (2) | 6 | |
Income from Continuing Operations | 225 | 181 | 610 | 481 |
Income from discontinued operations, net of tax | 91 | |||
Net Income | 225 | 181 | 610 | 572 |
Other comprehensive income (loss): | ||||
Total Comprehensive Income | 225 | 181 | 610 | 572 |
Non-Guarantor Subsidiaries | Reportable Legal Entities | ||||
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | ||||
Net Sales | 40 | 37 | 118 | 105 |
Cost of sales | 21 | 20 | 63 | 57 |
Gross Profit | 19 | 17 | 55 | 48 |
Operating expenses: | ||||
Selling, general and administrative | 13 | 11 | 41 | 36 |
Depreciation and amortization | 1 | 1 | 1 | |
Total operating expenses | 14 | 11 | 42 | 37 |
Operating Income (Loss) | 5 | 6 | 13 | 11 |
Interest expense | 1 | 1 | ||
Income from Continuing Operations Before Provision for Income Taxes | 5 | 6 | 12 | 10 |
Provision for income taxes | 1 | 2 | 2 | |
Income from Continuing Operations | 5 | 5 | 10 | 8 |
Income from discontinued operations, net of tax | 3 | 3 | ||
Net Income | 5 | 8 | 10 | 11 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustment | 1 | 2 | (1) | |
Unrealized gain (loss) on derivatives, net of tax of $1, $-, $1, and $- | (4) | (4) | ||
Total Comprehensive Income | 1 | 9 | 8 | 10 |
HD Supply, Inc. (Total HDS) | ||||
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | ||||
Net Sales | 1,612 | 1,370 | 4,601 | 3,938 |
Cost of sales | 983 | 828 | 2,798 | 2,373 |
Gross Profit | 629 | 542 | 1,803 | 1,565 |
Operating expenses: | ||||
Selling, general and administrative | 391 | 336 | 1,147 | 1,008 |
Depreciation and amortization | 25 | 21 | 72 | 63 |
Restructuring | 3 | 9 | 3 | |
Total operating expenses | 416 | 360 | 1,228 | 1,074 |
Operating Income (Loss) | 213 | 182 | 575 | 491 |
Interest expense | 32 | 36 | 101 | 134 |
Interest (income) | (1) | (1) | (1) | |
Loss on extinguishment & modification of debt | 69 | 78 | 69 | 81 |
Income from Continuing Operations Before Provision for Income Taxes | 112 | 69 | 406 | 277 |
Provision for income taxes | 30 | 23 | 105 | 92 |
Income from Continuing Operations | 82 | 46 | 301 | 185 |
Income from discontinued operations, net of tax | 406 | 1 | 794 | |
Net Income | 82 | 452 | 302 | 979 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustment | 1 | 2 | (1) | |
Unrealized gain (loss) on derivatives, net of tax of $1, $-, $1, and $- | (4) | (4) | ||
Total Comprehensive Income | 78 | 453 | $ 300 | $ 978 |
Unrealized gain (loss) on cash flow hedge, tax | $ 1 | $ 1 |
SUBSIDIARY GUARANTORS - CONDE_2
SUBSIDIARY GUARANTORS - CONDENSED CONSOLIDATING BALANCE SHEETS (Details) - USD ($) $ in Millions | 9 Months Ended | |
Oct. 28, 2018 | Jan. 28, 2018 | |
Current assets: | ||
Cash and cash equivalents | $ 52 | $ 558 |
Receivables, net | 860 | 612 |
Inventories | 803 | 674 |
Other current assets | 46 | 31 |
Total current assets | 1,761 | 1,875 |
Property and equipment, net | 356 | 325 |
Goodwill | 1,993 | 1,807 |
Intangible assets, net | 197 | 91 |
Deferred tax asset | 94 | 205 |
Other assets | 17 | 15 |
Total assets | 4,418 | 4,318 |
Current liabilities: | ||
Accounts payable | 483 | 377 |
Accrued compensation and benefits | 105 | 95 |
Current installments of long-term debt | 11 | 11 |
Other current liabilities | 261 | 138 |
Total current liabilities | 860 | 621 |
Long-term debt, excluding current installments | 1,888 | 2,090 |
Other liabilities | 70 | 141 |
Total liabilities | 2,818 | 2,852 |
Stockholders' equity (deficit) | 1,600 | 1,466 |
Total liabilities and stockholders' equity | 4,418 | 4,318 |
HD Supply, Inc. (Total HDS) | ||
Current assets: | ||
Cash and cash equivalents | 45 | 558 |
Receivables, net | 860 | 612 |
Inventories | 803 | 674 |
Other current assets | 46 | 31 |
Total current assets | 1,754 | 1,875 |
Property and equipment, net | 356 | 325 |
Goodwill | 1,993 | 1,807 |
Intangible assets, net | 197 | 91 |
Deferred tax asset | 94 | 205 |
Other assets | 17 | 15 |
Total assets | 4,411 | 4,318 |
Current liabilities: | ||
Accounts payable | 483 | 377 |
Accrued compensation and benefits | 105 | 95 |
Current installments of long-term debt | 11 | 11 |
Other current liabilities | 241 | 138 |
Total current liabilities | 840 | 621 |
Long-term debt, excluding current installments | 1,888 | 2,090 |
Other liabilities | 70 | 141 |
Total liabilities | 2,798 | 2,852 |
Stockholders' equity (deficit) | 1,613 | 1,466 |
Total liabilities and stockholders' equity | 4,411 | 4,318 |
Reportable Legal Entities | HDS (Debt Issuer) | ||
Current assets: | ||
Cash and cash equivalents | 22 | 539 |
Receivables, net | 3 | 7 |
Other current assets | 16 | 15 |
Total current assets | 41 | 561 |
Property and equipment, net | 151 | 152 |
Deferred tax asset | 174 | 264 |
Investment in subsidiaries | 4,292 | 2,811 |
Intercompany notes receivable | 189 | 1,005 |
Other assets | 18 | 12 |
Total assets | 4,865 | 4,805 |
Current liabilities: | ||
Accounts payable | 10 | 11 |
Accrued compensation and benefits | 36 | 34 |
Current installments of long-term debt | 11 | 11 |
Other current liabilities | 110 | 43 |
Total current liabilities | 167 | 99 |
Long-term debt, excluding current installments | 1,843 | 2,032 |
Intercompany notes payable | 1,193 | 1,083 |
Other liabilities | 50 | 125 |
Total liabilities | 3,253 | 3,339 |
Stockholders' equity (deficit) | 1,612 | 1,466 |
Total liabilities and stockholders' equity | 4,865 | 4,805 |
Reportable Legal Entities | Subsidiary Guarantors | ||
Current assets: | ||
Cash and cash equivalents | 20 | 15 |
Receivables, net | 832 | 584 |
Inventories | 782 | 654 |
Intercompany receivables | 1 | 2 |
Other current assets | 30 | 15 |
Total current assets | 1,665 | 1,270 |
Property and equipment, net | 202 | 170 |
Goodwill | 1,993 | 1,807 |
Intangible assets, net | 196 | 90 |
Intercompany notes receivable | 1,193 | 1,083 |
Other assets | 4 | 3 |
Total assets | 5,253 | 4,423 |
Current liabilities: | ||
Accounts payable | 457 | 353 |
Accrued compensation and benefits | 66 | 57 |
Other current liabilities | 124 | 88 |
Total current liabilities | 647 | 498 |
Long-term debt, excluding current installments | 9 | |
Deferred tax liabilities | 82 | 61 |
Intercompany notes payable | 189 | 1,005 |
Other liabilities | 16 | 16 |
Total liabilities | 943 | 1,580 |
Stockholders' equity (deficit) | 4,310 | 2,843 |
Total liabilities and stockholders' equity | 5,253 | 4,423 |
Non-cash debt contribution | 958 | |
Reportable Legal Entities | Non-Guarantor Subsidiaries | ||
Current assets: | ||
Cash and cash equivalents | 3 | 4 |
Receivables, net | 25 | 21 |
Inventories | 21 | 20 |
Other current assets | 1 | |
Total current assets | 49 | 46 |
Property and equipment, net | 3 | 3 |
Intangible assets, net | 1 | 1 |
Deferred tax asset | 2 | 2 |
Total assets | 55 | 52 |
Current liabilities: | ||
Accounts payable | 16 | 13 |
Accrued compensation and benefits | 3 | 4 |
Intercompany payables | 1 | 2 |
Other current liabilities | 7 | 7 |
Total current liabilities | 27 | 26 |
Long-term debt, excluding current installments | 45 | 58 |
Other liabilities | 1 | |
Total liabilities | 73 | 84 |
Stockholders' equity (deficit) | (18) | (32) |
Total liabilities and stockholders' equity | 55 | 52 |
Consolidating Adjustments | ||
Current assets: | ||
Intercompany receivables | (1) | (2) |
Total current assets | (1) | (2) |
Deferred tax asset | (82) | (61) |
Investment in subsidiaries | (4,292) | (2,811) |
Intercompany notes receivable | (1,382) | (2,088) |
Other assets | (5) | |
Total assets | (5,762) | (4,962) |
Current liabilities: | ||
Intercompany payables | (1) | (2) |
Total current liabilities | (1) | (2) |
Long-term debt, excluding current installments | (9) | |
Deferred tax liabilities | (82) | (61) |
Intercompany notes payable | (1,382) | (2,088) |
Other liabilities | 3 | |
Total liabilities | (1,471) | (2,151) |
Stockholders' equity (deficit) | (4,291) | (2,811) |
Total liabilities and stockholders' equity | $ (5,762) | $ (4,962) |
SUBSIDIARY GUARANTORS - CONDE_3
SUBSIDIARY GUARANTORS - CONDENSED CONSOLIDATING CASH FLOW STATEMENTS (Details) - USD ($) $ in Millions | 9 Months Ended | |
Oct. 28, 2018 | Oct. 29, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net cash flows from operating activities | $ 379 | $ 320 |
Cash flows from investing activities | ||
Capital expenditures | (79) | (65) |
Payments for businesses acquired, net | (362) | |
Proceeds from sales of property and equipment | 2 | |
Proceeds from sales businesses, net | 2,450 | |
Net cash provided by (used in) investing activities | (441) | 2,387 |
Cash flows from financing activities | ||
Borrowings of long-term debt | 930 | 113 |
Repayments of long-term debt | (1,240) | (1,526) |
Borrowings on long-term revolver debt | 100 | 624 |
Repayments on long-term revolver debt | (49) | (989) |
Debt issuance costs | (18) | (26) |
Other financing activities | (2) | 1 |
Net cash provided by (used in) financing activities | (444) | (2,321) |
Increase (decrease) in cash and cash equivalents | (506) | 386 |
Cash and cash equivalents at beginning of period | 558 | 75 |
Cash and cash equivalents at end of period | 52 | 461 |
HD Supply, Inc. (Total HDS) | ||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net cash flows from operating activities | 379 | 320 |
Cash flows from investing activities | ||
Capital expenditures | (79) | (65) |
Payments for businesses acquired, net | (362) | |
Proceeds from sales of property and equipment | 2 | |
Proceeds from sales businesses, net | 2,450 | |
Net cash provided by (used in) investing activities | (441) | 2,387 |
Cash flows from financing activities | ||
Equity contribution (distribution) | (172) | (516) |
Borrowings of long-term debt | 930 | 113 |
Repayments of long-term debt | (1,240) | (1,526) |
Borrowings on long-term revolver debt | 100 | 624 |
Repayments on long-term revolver debt | (49) | (989) |
Debt issuance costs | (18) | (26) |
Other financing activities | (2) | 1 |
Net cash provided by (used in) financing activities | (451) | (2,319) |
Increase (decrease) in cash and cash equivalents | (513) | 388 |
Cash and cash equivalents at beginning of period | 558 | 73 |
Cash and cash equivalents at end of period | 45 | 461 |
Reportable Legal Entities | HDS (Debt Issuer) | ||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net cash flows from operating activities | 366 | 260 |
Cash flows from investing activities | ||
Capital expenditures | (20) | (18) |
Proceeds from sales businesses, net | 2,450 | |
Purchases of investments | (7) | |
Investments in equity affiliates | (365) | |
Net cash provided by (used in) investing activities | (392) | 2,432 |
Cash flows from financing activities | ||
Equity contribution (distribution) | (172) | (516) |
Borrowings of (repayments of) intercompany notes | (46) | 12 |
Borrowings of long-term debt | 930 | 113 |
Repayments of long-term debt | (1,240) | (1,526) |
Borrowings on long-term revolver debt | 90 | 621 |
Repayments on long-term revolver debt | (30) | (981) |
Debt issuance costs | (18) | (26) |
Other financing activities | (5) | 1 |
Net cash provided by (used in) financing activities | (491) | (2,302) |
Increase (decrease) in cash and cash equivalents | (517) | 390 |
Cash and cash equivalents at beginning of period | 539 | 51 |
Cash and cash equivalents at end of period | 22 | 441 |
Reportable Legal Entities | Subsidiary Guarantors | ||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net cash flows from operating activities | 4 | 55 |
Cash flows from investing activities | ||
Capital expenditures | (58) | (47) |
Proceeds from sales of property and equipment | 2 | |
Proceeds from (payments of) intercompany notes | 46 | (12) |
Net cash provided by (used in) investing activities | (12) | (57) |
Cash flows from financing activities | ||
Equity contribution (distribution) | 3 | |
Borrowings of long-term debt | 10 | |
Net cash provided by (used in) financing activities | 13 | |
Increase (decrease) in cash and cash equivalents | 5 | (2) |
Cash and cash equivalents at beginning of period | 15 | 17 |
Cash and cash equivalents at end of period | 20 | 15 |
Reportable Legal Entities | Non-Guarantor Subsidiaries | ||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net cash flows from operating activities | 9 | 5 |
Cash flows from investing activities | ||
Capital expenditures | (1) | |
Payments for businesses acquired, net | (362) | |
Investments in equity affiliates | (3) | |
Net cash provided by (used in) investing activities | (366) | |
Cash flows from financing activities | ||
Equity contribution (distribution) | 365 | |
Borrowings on long-term revolver debt | 10 | 3 |
Repayments on long-term revolver debt | (19) | (8) |
Net cash provided by (used in) financing activities | 356 | (5) |
Increase (decrease) in cash and cash equivalents | (1) | |
Cash and cash equivalents at beginning of period | 4 | 5 |
Cash and cash equivalents at end of period | 3 | 5 |
Cash contribution | 365 | |
Consolidating Adjustments | ||
Cash flows from investing activities | ||
Purchases of investments | 7 | |
Investments in equity affiliates | 368 | |
Proceeds from (payments of) intercompany notes | (46) | 12 |
Net cash provided by (used in) investing activities | 329 | 12 |
Cash flows from financing activities | ||
Equity contribution (distribution) | (368) | |
Borrowings of (repayments of) intercompany notes | 46 | (12) |
Borrowings of long-term debt | (10) | |
Other financing activities | 3 | |
Net cash provided by (used in) financing activities | $ (329) | $ (12) |
REVENUE (Details)
REVENUE (Details) | 9 Months Ended |
Oct. 28, 2018 | |
Minimum | |
Disaggregation of Revenue | |
Payment terms and conditions | 45 days |
ASU No. 2014-09 | Maximum | |
Disaggregation of Revenue | |
Duration of installation contract | 90 days |
REVENUE - Disaggregation of Rev
REVENUE - Disaggregation of Revenue (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Oct. 28, 2018 | Oct. 29, 2017 | Oct. 28, 2018 | Oct. 29, 2017 | |
Disaggregation of Revenue | ||||
Net Sales | $ 1,612 | $ 4,601 | ||
Inter-segment Eliminations | ||||
Disaggregation of Revenue | ||||
Net Sales | (1) | (2) | ||
Facilities Maintenance | ||||
Disaggregation of Revenue | ||||
Net Sales | 810 | 2,353 | ||
Facilities Maintenance | Maintenance, Repair, and Operations | ||||
Disaggregation of Revenue | ||||
Net Sales | 718 | 2,076 | ||
Facilities Maintenance | Property Improvement | ||||
Disaggregation of Revenue | ||||
Net Sales | 92 | 277 | ||
Construction & Industrial | ||||
Disaggregation of Revenue | ||||
Net Sales | 803 | 2,250 | ||
Construction & Industrial | Non-Residential Construction | ||||
Disaggregation of Revenue | ||||
Net Sales | 569 | 1,567 | ||
Construction & Industrial | Residential Construction | ||||
Disaggregation of Revenue | ||||
Net Sales | 189 | 553 | ||
Construction & Industrial | Other | ||||
Disaggregation of Revenue | ||||
Net Sales | $ 45 | $ 130 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | ||||
Disaggregation of Revenue | ||||
Net Sales | $ 1,370 | $ 3,938 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | Inter-segment Eliminations | ||||
Disaggregation of Revenue | ||||
Net Sales | (1) | (4) | ||
Calculated under Revenue Guidance in Effect before Topic 606 | Facilities Maintenance | ||||
Disaggregation of Revenue | ||||
Net Sales | 754 | 2,205 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | Facilities Maintenance | Maintenance, Repair, and Operations | ||||
Disaggregation of Revenue | ||||
Net Sales | 668 | 1,954 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | Facilities Maintenance | Property Improvement | ||||
Disaggregation of Revenue | ||||
Net Sales | 86 | 251 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | Construction & Industrial | ||||
Disaggregation of Revenue | ||||
Net Sales | 617 | 1,737 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | Construction & Industrial | Non-Residential Construction | ||||
Disaggregation of Revenue | ||||
Net Sales | 405 | 1,131 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | Construction & Industrial | Residential Construction | ||||
Disaggregation of Revenue | ||||
Net Sales | 169 | 489 | ||
Calculated under Revenue Guidance in Effect before Topic 606 | Construction & Industrial | Other | ||||
Disaggregation of Revenue | ||||
Net Sales | $ 43 | $ 117 |
REVENUE - Practical Expedient (
REVENUE - Practical Expedient (Details) | 9 Months Ended |
Oct. 28, 2018 | |
REVENUE | |
Practical expedient of significant financing component | true |
RECENT ACCOUNTING PRONOUNCEME_2
RECENT ACCOUNTING PRONOUNCEMENTS (Details) $ in Millions | Jan. 29, 2018USD ($) |
ASU No. 2016-16 | |
Recently Adopted Accounting Pronouncements | |
Cumulative-effect adjustment to retained earnings | $ 0 |
SUBSEQUENT EVENT (Details)
SUBSEQUENT EVENT (Details) - Subsequent Event - Common Stock $ in Millions | Nov. 30, 2018USD ($) |
SUBSEQUENT EVENT | |
Authorized share repurchase amount | $ 500 |
Remaining new and previous share repurchase amount | $ 656 |