Lowe's Companies (LOW) 10-Q 31 May 16 2016 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Apr. 29, 2016	May. 27, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	LOWES COMPANIES INC
Entity Central Index Key	60,667
Document Type	10-Q
Document Period End Date	Apr. 29, 2016
Amendment Flag	false
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q1
Current Fiscal Year End Date	--01-29
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		886,104,716

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Millions	Apr. 29, 2016	Jan. 29, 2016	May. 01, 2015
Current assets:
Cash and cash equivalents	$ 4,561	$ 405	$ 1,434
Short-term investments	174	307	95
Merchandise inventory - net	11,055	9,458	10,614
Other current assets	683	391	393
Total current assets	16,473	10,561	12,536
Property, less accumulated depreciation	19,463	19,577	19,892
Long-term investments	400	222	384
Deferred income taxes - net	154	241	160
Other assets	687	665	1,343
Total assets	37,177	31,266	34,315
Current liabilities:
Short-term borrowings	0	43	0
Current maturities of long-term debt	1,083	1,061	1,026
Accounts payable	8,821	5,633	8,023
Accrued compensation and employee benefits	615	820	555
Deferred revenue	1,233	1,078	1,153
Other current liabilities	2,369	1,857	2,213
Total current liabilities	14,121	10,492	12,970
Long-term debt, excluding current maturities	14,322	11,545	10,324
Deferred revenue - extended protection plans	726	729	727
Other liabilities	796	846	817
Total liabilities	29,965	23,612	24,838
Shareholders' equity:
Preferred stock - $5 par value, none issued	0	0	0
Common stock - $.50 par value; Shares issued and outstanding 894 at April 29, 2016, 947 at May 1, 2015, and 910 at January 29, 2016	447	455	473
Capital in excess of par value	0	0	0
Retained earnings	7,074	7,593	9,085
Accumulated other comprehensive loss	(309)	(394)	(81)
Total shareholders' equity	7,212	7,654	9,477
Total liabilities and shareholders' equity	$ 37,177	$ 31,266	$ 34,315

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - $ / shares	Apr. 29, 2016	Jan. 29, 2016	May. 01, 2015
Shareholders' equity:
Preferred stock, par value	$ 5	$ 5	$ 5
Preferred stock, shares issued	0	0	0
Common stock, par value	$ 0.50	$ 0.50	$ 0.50
Common stock, shares issued	894,000,000	910,000,000	947,000,000
Common stock, shares outstanding	894,000,000	910,000,000	947,000,000

Consolidated Statements of Curr

Consolidated Statements of Current and Retained Earnings (Unaudited) - USD ($) shares in Millions, $ in Millions	3 Months Ended
	Apr. 29, 2016	May. 01, 2015
Current Earnings
Net sales	$ 15,234	$ 14,129
Cost of sales	9,897	9,117
Gross margin	5,337	5,012
Expenses:
Selling, general and administrative	3,394	3,415
Depreciation	357	365
Interest - net	156	134
Total expenses	3,907	3,914
Pre-tax earnings	1,430	1,098
Income tax provision	546	425
Net earnings	$ 884	$ 673
Weighted-average common shares outstanding - basic	897	950
Basic earnings per common share	$ 0.98	$ 0.70
Weighted-average common shares outstanding - diluted	899	952
Diluted earnings per common share	$ 0.98	$ 0.70
Cash dividends per share	$ 0.28	$ 0.23
Retained Earnings
Balance at beginning of period	$ 7,593	$ 9,591
Net earnings	884	673
Cash dividends	(251)	(218)
Share repurchases	(1,152)	(961)
Balance at end of period	$ 7,074	$ 9,085

Consolidated Statements of Cur5

Consolidated Statements of Current and Retained Earnings (Percents) (Unaudited)	3 Months Ended
	Apr. 29, 2016	May. 01, 2015
Current Earnings
Net sales	100.00%	100.00%
Cost of sales	64.96%	64.53%
Gross margin	35.04%	35.47%
Expenses:
Selling, general and administrative	22.28%	24.16%
Depreciation	2.34%	2.59%
Interest - net	1.03%	0.95%
Total expenses	25.65%	27.70%
Pre-tax earnings	9.39%	7.77%
Income tax provision	3.59%	3.01%
Net earnings	5.80%	4.76%

Consolidated Statements of Comp

Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions	3 Months Ended
	Apr. 29, 2016	May. 01, 2015
Comprehensive Income
Net earnings	$ 884	$ 673
Foreign currency translation adjustments - net of tax	83	22
Other comprehensive income	83	22
Comprehensive income	$ 967	$ 695

Consolidated Statements of Com7

Consolidated Statements of Comprehensive Income (Percents) (Unaudited)	3 Months Ended
	Apr. 29, 2016	May. 01, 2015
Comprehensive Income
Net earnings	5.80%	4.76%
Foreign currency translation adjustments - net of tax	0.55%	0.16%
Other comprehensive income	0.55%	0.16%
Comprehensive income	6.35%	4.92%

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions	3 Months Ended
	Apr. 29, 2016	May. 01, 2015
Cash flows from operating activities:
Net earnings	$ 884	$ 673
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	383	391
Deferred income taxes	52	(38)
Loss on property and other assets - net	11	7
Loss on equity method investments	3	17
Share-based payment expense	25	29
Changes in operating assets and liabilities:
Merchandise inventory - net	(1,556)	(1,687)
Other operating assets	(186)	(48)
Accounts payable	3,169	2,893
Other operating liabilities	435	241
Net cash provided by operating activities	3,220	2,478
Cash flows from investing activities:
Purchases of investments	(310)	(65)
Proceeds from sale/maturity of investments	264	64
Capital expenditures	(208)	(232)
Contributions to equity method investments - net	0	(11)
Proceeds from sale of property and other long-term assets	11	3
Purchases of derivative instruments	(103)	0
Other - net	(3)	0
Net cash used in investing activities	(349)	(241)
Cash flows from financing activities:
Net decrease in short-term borrowings	(44)	0
Net proceeds from issuance of long-term debt	3,267	0
Repayment of long-term debt	(484)	(10)
Proceeds from issuance of common stock under share-based payment plans	20	21
Cash dividend payments	(255)	(222)
Repurchase of common stock	(1,253)	(1,109)
Other - net	33	50
Net cash provided by (used in) financing activities	1,284	(1,270)
Effect of exchange rate changes on cash	1	1
Net increase in cash and cash equivalents	4,156	968
Cash and cash equivalents, beginning of period	405	466
Cash and cash equivalents, end of period	$ 4,561	$ 1,434

Basis of Presentation

Basis of Presentation	3 Months Ended
	Apr. 29, 2016
Basis of Presentation
Basis of Presentation	Note 1: Basis of Presentation - The accompanying consolidated financial statements (unaudited) and notes to the consolidated financial statements (unaudited) are presented in accordance with the rules and regulations of the Securities and Exchange Commission and do not include all the disclosures normally required in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America. The consolidated financial statements (unaudited), in the opinion of management, contain all adjustments necessary to present fairly the financial position as of April 29, 2016 , and May 1, 2015 , and the results of operations, comprehensive income and cash flows for the three months ended April 29, 2016 , and May 1, 2015 . In the fourth quarter of fiscal year 2015, the Company elected to early adopt Accounting Standards Update (ASU) 2015-17, Balance Sheet Classification of Deferred Taxes , and ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs , and applied the new guidance on a retrospective basis. The adoption of ASU 2015-17 resulted in a reclassification of $255 million of current deferred tax assets and $95 million of noncurrent deferred tax liabilities to noncurrent deferred tax assets in the Company’s consolidated balance sheet as of May 1, 2015. The adoption of ASU 2015-03 resulted in a reclassification of debt issuance costs of $10 million from noncurrent other assets to long-term debt, excluding current maturities in the Company’s consolidated balance sheet as of May 1, 2015. These interim consolidated financial statements (unaudited) should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Lowe’s Companies, Inc. (the Company) Annual Report on Form 10-K for the fiscal year ended January 29, 2016 (the Annual Report). The financial results for the interim periods may not be indicative of the financial results for the entire fiscal year.

Fair Value Measurements

Fair Value Measurements	3 Months Ended
	Apr. 29, 2016
Fair Value Measurements
Fair Value Measurements	Note 2: Fair Value Measurements - Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative guidance for fair value measurements establishes a three-level hierarchy, which encourages an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of the hierarchy are defined as follows: • Level 1 - inputs to the valuation techniques that are quoted prices in active markets for identical assets or liabilities • Level 2 - inputs to the valuation techniques that are other than quoted prices but are observable for the assets or liabilities, either directly or indirectly • Level 3 - inputs to the valuation techniques that are unobservable for the assets or liabilities Assets and Liabilities that are Measured at Fair Value on a Recurring Basis The following table presents the Company’s financial assets measured at fair value on a recurring basis as of April 29, 2016 , May 1, 2015 , and January 29, 2016 : Fair Value Measurements at (In millions) Measurement Level April 29, 2016 May 1, 2015 January 29, 2016 Short-term investments: Available-for-sale securities Certificates of deposit Level 1 $ 97 $ 16 $ 56 Municipal obligations Level 2 34 20 38 Money market funds Level 1 28 59 192 Municipal floating rate obligations Level 2 15 — 21 Total short-term investments $ 174 $ 95 $ 307 Other current assets: Foreign exchange options 1 Level 2 $ 263 $ — $ — Long-term investments: Available-for-sale securities Municipal floating rate obligations Level 2 $ 392 $ 377 $ 212 Certificates of deposit Level 1 4 5 5 Municipal obligations Level 2 4 2 5 Total long-term investments $ 400 $ 384 $ 222 1 See Note 11 to the consolidated financial statements included herein for additional information regarding derivative instruments. There were no transfers between Levels 1, 2 or 3 during any of the periods presented. When available, quoted prices were used to determine fair value. When quoted prices in active markets were available, investments were classified within Level 1 of the fair value hierarchy. When quoted prices in active markets were not available, fair values were determined using pricing models, and the inputs to those pricing models were based on observable market inputs. The inputs to the pricing models were typically benchmark yields, foreign currency exchange rates, reported trades, broker-dealer quotes, issuer spreads and benchmark securities, among others. Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis During the three months ended April 29, 2016 and May 1, 2015 , the Company had no significant measurements of assets and liabilities at fair value on a nonrecurring basis subsequent to their initial recognition. Fair Value of Financial Instruments The Company’s financial instruments not measured at fair value on a recurring basis include cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities and long-term debt and are reflected in the financial statements at cost. With the exception of long-term debt, cost approximates fair value for these items due to their short-term nature. The fair values of the Company’s unsecured notes were estimated using quoted market prices. The fair values of the Company’s mortgage notes were estimated using discounted cash flow analyses, based on the future cash outflows associated with these arrangements and discounted using the applicable incremental borrowing rate. Carrying amounts and the related estimated fair value of the Company’s long-term debt, excluding capitalized lease obligations, are as follows: April 29, 2016 May 1, 2015 January 29, 2016 (In millions) Carrying Amount Fair Value Carrying Amount 1 Fair Value Carrying Amount Fair Value Unsecured notes (Level 1) $ 14,863 $ 16,532 $ 10,852 $ 12,231 $ 12,073 $ 13,292 Mortgage notes (Level 2) 7 8 16 17 7 8 Long-term debt (excluding capitalized lease obligations) $ 14,870 $ 16,540 $ 10,868 $ 12,248 $ 12,080 $ 13,300 1 Carrying amounts as of May 1, 2015 have been retrospectively adjusted as a result of the Company’s adoption of ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, during the fourth quarter of fiscal 2015. The adoption of this accounting standard required reclassification of debt issuance costs from other assets to long-term debt, excluding current maturities.

Restricted Investment Balances

Restricted Investment Balances	3 Months Ended
	Apr. 29, 2016
Restricted Investment Balances
Restricted Investment Balances	Note 3: Restricted Investment Balances - Short-term and long-term investments include restricted balances pledged as collateral primarily for the Company’s extended protection plan program. Restricted balances included in short-term investments were $70 million at April 29, 2016 , $74 million at May 1, 2015 , and $234 million at January 29, 2016 . Restricted balances included in long-term investments were $303 million at April 29, 2016 , $311 million at May 1, 2015 , and $202 million at January 29, 2016 .

Property

Property	3 Months Ended
	Apr. 29, 2016
Property
Property	Note 4: Property - Property is shown net of accumulated depreciation of $16.6 billion at April 29, 2016 , $15.8 billion at May 1, 2015 , and $16.3 billion at January 29, 2016 .

Extended Protection Plans

Extended Protection Plans	3 Months Ended
	Apr. 29, 2016
Extended Protection Plans
Extended Protection Plans	Note 5: Extended Protection Plans - The Company sells separately-priced extended protection plan contracts under a Lowe’s-branded program for which the Company is self-insured. The Company recognizes revenue from extended protection plan sales on a straight-line basis over the respective contract term. Extended protection plan contract terms primarily range from one to four years from the date of purchase or the end of the manufacturer’s warranty, as applicable. Changes in deferred revenue for extended protection plan contracts are summarized as follows: Three Months Ended (In millions) April 29, 2016 May 1, 2015 Deferred revenue - extended protection plans, beginning of period $ 729 $ 730 Additions to deferred revenue 86 82 Deferred revenue recognized (89 ) (85 ) Deferred revenue - extended protection plans, end of period $ 726 $ 727 Incremental direct acquisition costs associated with the sale of extended protection plans are also deferred and recognized as expense on a straight-line basis over the respective contract term. Deferred costs associated with extended protection plan contracts were $18 million at April 29, 2016 , $27 million at May 1, 2015 , and $20 million at January 29, 2016 . The Company’s extended protection plan deferred costs are included in other assets (noncurrent) on the consolidated balance sheets. All other costs, such as costs of services performed under the contract, general and administrative expenses, and advertising expenses are expensed as incurred. The liability for extended protection plan claims incurred is included in other current liabilities on the consolidated balance sheets and was not material in any of the periods presented. Expenses for claims are recognized when incurred and totaled $30 million and $29 million for the three months ended April 29, 2016 and May 1, 2015 , respectively.

Long-Term Debt

Long-Term Debt	3 Months Ended
	Apr. 29, 2016
Long-Term Debt
Long-term Debt	Note 6 : Long-Term Debt - On April 20, 2016, the Company issued $3.30 billion of unsecured notes in four tranches: $250 million of floating rate notes maturing in April 2019 (the 2019 Floating Rate Notes); $350 million of 1.15% notes maturing in April 2019 (the 2019 Fixed Rate Notes); $1.35 billion of 2.50% notes maturing in April 2026 (the 2026 Fixed Rate Notes); and $1.35 billion of 3.70% notes maturing in April 2046 (the 2046 Fixed Rate Notes and, together with the 2019 Fixed Rate Notes and the 2026 Fixed Rate Notes, the Fixed Rate Notes). The 2019 Floating Rate Notes, the 2019 Fixed Rate Notes, the 2026 Fixed Rate Notes, and the 2046 Fixed Rate Notes were issued at discounts of approximately $1 million , $1 million , $12 million , and $19 million , respectively. The discounts associated with these issuances are included in long-term debt and are being amortized over the respective terms of the notes using the effective interest rate method. The 2019 Floating Rate Notes will bear interest at a floating rate, reset quarterly, equal to the three-month LIBOR plus 0.24% ( 0.87% as of April 29, 2016 ). Interest on the 2019 Floating Rate Notes is payable quarterly in arrears in April, July, October, and January of each year until maturity, beginning in July 2016. Interest on the Fixed Rate Notes is payable semiannually in arrears in April and October of each year until maturity, beginning in October 2016. The indenture governing the Fixed Rate Notes contains a provision that allows the Company to redeem these notes at any time, in whole or in part, at specified redemption prices, plus accrued and unpaid interest, to the date of redemption. We do not have the right to redeem the 2019 Floating Rate Notes prior to maturity. The indenture also contains a provision that allows the holders of the 2019 Floating Rate Notes and the Fixed Rate Notes to require the Company to repurchase all or any part of their notes if a change of control triggering event (as defined in the indenture) occurs. If elected under the change of control provisions, the repurchase of the notes will occur at a purchase price of 101% of the principal amount, plus accrued and unpaid interest, if any, on such notes to the date of purchase. The indenture governing the notes does not limit the aggregate principal amount of debt securities that the Company may issue and does not require the Company to maintain specified financial ratios or levels of net worth or liquidity. However, the indenture includes various restrictive covenants, none of which is expected to impact the Company’s liquidity or capital resources.

Shareholders' Equity

Shareholders' Equity	3 Months Ended
	Apr. 29, 2016
Shareholders' Equity
Shareholders' Equity	Note 7 : Shareholders’ Equity - The Company has a share repurchase program that is executed through purchases made from time to time either in the open market, which may be made under pre-set trading plans meeting the requirements of Rule 10b5-1(c) of the Securities Exchange Act of 1934, or through private off-market transactions. Shares purchased under the repurchase program are retired and returned to authorized and unissued status. On March 20, 2015, the Company’s Board of Directors authorized a $5.0 billion share repurchase program with no expiration, which was announced on the same day. As of April 29, 2016 , the Company had $2.4 billion remaining in its share repurchase program. In February 2016, the Company entered into an Accelerated Share Repurchase (ASR) agreement with a third-party financial institution to repurchase $500 million of the Company’s common stock. At inception, pursuant to the agreement, the Company paid $500 million to the financial institution using cash on hand, and took delivery of 6.2 million shares. Subsequent to the end of the first fiscal quarter, in May 2016, the Company finalized the transaction and received an additional 0.6 million shares. Under the terms of the ASR agreement, upon settlement, the Company would either receive additional shares from the financial institution or be required to deliver additional shares or cash to the financial institution. The Company controlled its election to either deliver additional shares or cash to the financial institution and was subject to provisions which limited the number of shares the Company would be required to deliver. The final number of shares received upon settlement of the ASR agreement was determined with reference to the volume-weighted average price of the Company’s common stock over the term of the ASR agreement. The initial repurchase of shares under the agreement resulted in an immediate reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted earnings per share. The ASR agreement was accounted for as a treasury stock transaction and forward stock purchase contract. The par value of the shares received was recorded as a reduction to common stock with the remainder recorded as a reduction to capital in excess of par value and retained earnings. The forward stock purchase contract was considered indexed to the Company’s own stock and was classified as an equity instrument. During the three months ended April 29, 2016 , the Company also repurchased shares of its common stock through the open market totaling 9.7 million shares for a cost of $700 million . The Company also withholds shares from employees to satisfy either the exercise price of stock options exercised or the statutory withholding tax liability resulting from the vesting of share-based awards. Shares repurchased for the three months ended April 29, 2016 , and May 1, 2015 were as follows: Three Months Ended April 29, 2016 May 1, 2015 (In millions) Shares Cost 1 Shares Cost 1 Share repurchase program 15.9 $ 1,200 13.6 $ 1,000 Shares withheld from employees 0.7 52 0.8 62 Total share repurchases 16.6 $ 1,252 14.4 $ 1,062 1 Reductions of $1.2 billion and $961 million were recorded to retained earnings, after capital in excess of par value was depleted, for the three months ended April 29, 2016 and May 1, 2015 , respectively.

Earnings Per Share

Earnings Per Share	3 Months Ended
	Apr. 29, 2016
Earnings Per Share
Earnings Per Share	Note 8: Earnings Per Share - The Company calculates basic and diluted earnings per common share using the two-class method. Under the two-class method, net earnings are allocated to each class of common stock and participating security as if all of the net earnings for the period had been distributed. The Company’s participating securities consist of share-based payment awards that contain a nonforfeitable right to receive dividends and, therefore, are considered to participate in undistributed earnings with common shareholders. Basic earnings per common share excludes dilution and is calculated by dividing net earnings allocable to common shares by the weighted-average number of common shares outstanding for the period. Diluted earnings per common share is calculated by dividing net earnings allocable to common shares by the weighted-average number of common shares as of the balance sheet date, as adjusted for the potential dilutive effect of non-participating share-based awards. The following table reconciles earnings per common share for the three months ended April 29, 2016 , and May 1, 2015 . Three Months Ended (In millions, except per share data) April 29, 2016 May 1, 2015 Basic earnings per common share: Net earnings $ 884 $ 673 Less: Net earnings allocable to participating securities (4 ) (3 ) Net earnings allocable to common shares, basic $ 880 $ 670 Weighted-average common shares outstanding 897 950 Basic earnings per common share $ 0.98 $ 0.70 Diluted earnings per common share: Net earnings $ 884 $ 673 Less: Net earnings allocable to participating securities (4 ) (3 ) Net earnings allocable to common shares, diluted $ 880 $ 670 Weighted-average common shares outstanding 897 950 Dilutive effect of non-participating share-based awards 2 2 Weighted-average common shares, as adjusted 899 952 Diluted earnings per common share $ 0.98 $ 0.70 Stock options to purchase 0.8 million shares of common stock were anti-dilutive for the three months ended April 29, 2016 . No stock options were anti-dilutive for the three months ended May 1, 2015 .

Supplemental Disclosure

Supplemental Disclosure	3 Months Ended
	Apr. 29, 2016
Supplemental Disclosure
Supplemental Disclosure	Note 9: Supplemental Disclosure Net interest expense is comprised of the following: Three Months Ended (In millions) April 29, 2016 May 1, 2015 Long-term debt $ 134 $ 122 Capitalized lease obligations 11 11 Interest income (2 ) — Interest capitalized (1 ) (1 ) Interest on tax uncertainties 2 — Other 12 2 Interest - net $ 156 $ 134 Supplemental disclosures of cash flow information: Three Months Ended (In millions) April 29, 2016 May 1, 2015 Cash paid for interest, net of amount capitalized $ 259 $ 233 Cash paid for income taxes - net $ 52 $ 166 Non-cash investing and financing activities: Non-cash property acquisitions, including assets acquired under capital lease $ 17 $ 4 Cash dividends declared but not paid $ 251 $ 218

Recent Accounting Pronouncement

Recent Accounting Pronouncements	3 Months Ended
	Apr. 29, 2016
Recent Accounting Pronouncements
Recent Accounting Pronouncements	Note 10: Recent Accounting Pronouncements - In March 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting . The ASU eliminates the APIC pool concept and requires that excess tax benefits and tax deficiencies be recorded in the income statement when awards are settled. The pronouncement also addresses simplifications related to statement of cash flows classification, accounting for forfeitures, and minimum statutory tax withholding requirements. This ASU is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with early adoption permitted. The Company is currently evaluating the impact of adopting the ASU on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases . Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for those leases previously classified as operating leases. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. This ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Liabilities . The ASU requires, among other things, that entities measure equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) at fair value, with changes in fair value recognized in net income. Under this ASU, entities will no longer be able to recognize unrealized holding gains and losses on equity securities classified today as available-for-sale in other comprehensive income, and they will no longer be able to use the cost method of accounting for equity securities that do not have readily determinable fair values. The guidance for classifying and measuring investments in debt securities and loans is not impacted. ASU 2016-01 eliminates certain disclosure requirements related to financial instruments measured at amortized cost and adds disclosures related to the measurement categories of financial assets and financial liabilities. The guidance is effective for annual periods beginning after December 15, 2017. Early adoption is permitted for only certain portions of the ASU. The adoption of this guidance by the Company is not expected to have a material impact on its consolidated financial statements. In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. The ASU requires entities using the first-in, first-out (FIFO) inventory costing method to subsequently value inventory at the lower of cost and net realizable value. The ASU defines net realizable value as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This ASU requires prospective application and is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years, with early adoption permitted. The adoption of this guidance by the Company is not expected to have a material impact on its consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers . The ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14, which deferred the effective date of the ASU to fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2016. Companies may use either a full retrospective or a modified retrospective approach to adopt this ASU. The Company is currently evaluating the transition methods and the impact of the guidance, along with subsequent clarifying guidance, on its consolidated financial statements.

Derivative Instruments

Derivative Instruments	3 Months Ended
	Apr. 29, 2016
Derivative Instruments
Derivative Instruments	Note 11 : Derivative Instruments - During the quarter, the Company entered into a definitive agreement to acquire all of the issued and outstanding common shares of RONA inc. (RONA). To manage the foreign currency exchange rate risk on the consideration to be paid for the RONA acquisition, the Company entered into an option to purchase 3.2 billion Canadian dollars expiring November 1, 2016. The premium paid for this option of $103 million is shown within cash flows from investing activities in the consolidated statements of cash flows. This foreign exchange option contract is classified within other current assets in the consolidated balance sheet, and is carried at its fair value of $263 million at April 29, 2016. It is not accounted for as a hedging instrument, and gains and losses resulting from changes in fair value are included in SG&A expense in the consolidated statements of current and retained earnings. For the three months ended April 29, 2016, the Company recorded a net unrealized gain of $160 million . See Note 2 to the consolidated financial statements included herein for additional information regarding fair value of derivative instruments. In May 2016, subsequent to the end of the first quarter, the option contract was settled for $179 million , representing a decrease of $84 million from its fair value recorded at April 29, 2016. This decrease in value will be reflected as a loss in the second quarter and will offset the $160 million unrealized gain recorded in the first quarter, resulting in a total realized gain of $76 million on the foreign exchange option contract in fiscal 2016.

Subsequent Events

Subsequent Events	3 Months Ended
	Apr. 29, 2016
Subsequent Events
Subsequent Events	Note 12: Subsequent Events - On May 20, 2016, the Company acquired all of the issued and outstanding common shares of RONA for C$24 per share in cash, for a total transaction price of approximately C$3.2 billion , net of cash received and inclusive of debt assumed. RONA is one of Canada’s largest retailers and distributors of hardware, building materials, home renovation, and gardening products. The acquisition will enable the Company to accelerate its growth strategy by significantly expanding its presence in the Canadian home improvement market. Due to the limited time since the acquisition date, the Company has not yet completed the initial accounting for this business combination.

Fair Value Measurements (Tables

Fair Value Measurements (Tables)	3 Months Ended
	Apr. 29, 2016
Fair Value Measurements
Fair value measurements - recurring basis	The following table presents the Company’s financial assets measured at fair value on a recurring basis as of April 29, 2016 , May 1, 2015 , and January 29, 2016 : Fair Value Measurements at (In millions) Measurement Level April 29, 2016 May 1, 2015 January 29, 2016 Short-term investments: Available-for-sale securities Certificates of deposit Level 1 $ 97 $ 16 $ 56 Municipal obligations Level 2 34 20 38 Money market funds Level 1 28 59 192 Municipal floating rate obligations Level 2 15 — 21 Total short-term investments $ 174 $ 95 $ 307 Other current assets: Foreign exchange options 1 Level 2 $ 263 $ — $ — Long-term investments: Available-for-sale securities Municipal floating rate obligations Level 2 $ 392 $ 377 $ 212 Certificates of deposit Level 1 4 5 5 Municipal obligations Level 2 4 2 5 Total long-term investments $ 400 $ 384 $ 222 1 See Note 11 to the consolidated financial statements included herein for additional information regarding derivative instruments. There were no transfers between Levels 1, 2 or 3 during any of the periods presented.
Fair value of financial instruments	Carrying amounts and the related estimated fair value of the Company’s long-term debt, excluding capitalized lease obligations, are as follows: April 29, 2016 May 1, 2015 January 29, 2016 (In millions) Carrying Amount Fair Value Carrying Amount 1 Fair Value Carrying Amount Fair Value Unsecured notes (Level 1) $ 14,863 $ 16,532 $ 10,852 $ 12,231 $ 12,073 $ 13,292 Mortgage notes (Level 2) 7 8 16 17 7 8 Long-term debt (excluding capitalized lease obligations) $ 14,870 $ 16,540 $ 10,868 $ 12,248 $ 12,080 $ 13,300 1 Carrying amounts as of May 1, 2015 have been retrospectively adjusted as a result of the Company’s adoption of ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, during the fourth quarter of fiscal 2015. The adoption of this accounting standard required reclassification of debt issuance costs from other assets to long-term debt, excluding current maturities.

Extended Protection Plans (Tabl

Extended Protection Plans (Tables)	3 Months Ended
	Apr. 29, 2016
Extended Protection Plans
Changes in deferred revenue for extended protection plan contracts	Changes in deferred revenue for extended protection plan contracts are summarized as follows: Three Months Ended (In millions) April 29, 2016 May 1, 2015 Deferred revenue - extended protection plans, beginning of period $ 729 $ 730 Additions to deferred revenue 86 82 Deferred revenue recognized (89 ) (85 ) Deferred revenue - extended protection plans, end of period $ 726 $ 727

Shareholders' Equity (Tables)

Shareholders' Equity (Tables)	3 Months Ended
	Apr. 29, 2016
Shareholders' Equity
Schedule of share repurchases	Shares repurchased for the three months ended April 29, 2016 , and May 1, 2015 were as follows: Three Months Ended April 29, 2016 May 1, 2015 (In millions) Shares Cost 1 Shares Cost 1 Share repurchase program 15.9 $ 1,200 13.6 $ 1,000 Shares withheld from employees 0.7 52 0.8 62 Total share repurchases 16.6 $ 1,252 14.4 $ 1,062 1 Reductions of $1.2 billion and $961 million were recorded to retained earnings, after capital in excess of par value was depleted, for the three months ended April 29, 2016 and May 1, 2015 , respectively.

Earnings Per Share (Tables)

Earnings Per Share (Tables)	3 Months Ended
	Apr. 29, 2016
Earnings Per Share
Schedule of earnings per share, basic and diluted	The following table reconciles earnings per common share for the three months ended April 29, 2016 , and May 1, 2015 . Three Months Ended (In millions, except per share data) April 29, 2016 May 1, 2015 Basic earnings per common share: Net earnings $ 884 $ 673 Less: Net earnings allocable to participating securities (4 ) (3 ) Net earnings allocable to common shares, basic $ 880 $ 670 Weighted-average common shares outstanding 897 950 Basic earnings per common share $ 0.98 $ 0.70 Diluted earnings per common share: Net earnings $ 884 $ 673 Less: Net earnings allocable to participating securities (4 ) (3 ) Net earnings allocable to common shares, diluted $ 880 $ 670 Weighted-average common shares outstanding 897 950 Dilutive effect of non-participating share-based awards 2 2 Weighted-average common shares, as adjusted 899 952 Diluted earnings per common share $ 0.98 $ 0.70

Supplemental Disclosure (Tables

Supplemental Disclosure (Tables)	3 Months Ended
	Apr. 29, 2016
Supplemental Disclosure
Net interest expense	Net interest expense is comprised of the following: Three Months Ended (In millions) April 29, 2016 May 1, 2015 Long-term debt $ 134 $ 122 Capitalized lease obligations 11 11 Interest income (2 ) — Interest capitalized (1 ) (1 ) Interest on tax uncertainties 2 — Other 12 2 Interest - net $ 156 $ 134
Supplemental disclosures of cash flow information	Supplemental disclosures of cash flow information: Three Months Ended (In millions) April 29, 2016 May 1, 2015 Cash paid for interest, net of amount capitalized $ 259 $ 233 Cash paid for income taxes - net $ 52 $ 166 Non-cash investing and financing activities: Non-cash property acquisitions, including assets acquired under capital lease $ 17 $ 4 Cash dividends declared but not paid $ 251 $ 218

Basis of Presentation (Details)

Basis of Presentation (Details) - USD ($) $ in Millions	Apr. 29, 2016	Jan. 29, 2016	May. 01, 2015
New Accounting Pronouncement, Early Adoption [Line Items]
Noncurrent deferred tax assets	$ 154	$ 241	$ 160
Noncurrent other assets	687	665	1,343
Long-term debt, excluding current maturities	$ 14,322	$ 11,545	10,324
New Accounting Pronouncement, Early Adoption, Effect [Member] | Accounting Standards Update 2015-17 [Member] | Restatement Adjustment [Member]
New Accounting Pronouncement, Early Adoption [Line Items]
Current deferred tax assets			(255)
Noncurrent deferred tax liabilities			(95)
Noncurrent deferred tax assets			160
New Accounting Pronouncement, Early Adoption, Effect [Member] | Accounting Standards Update 2015-03 [Member] | Restatement Adjustment [Member]
New Accounting Pronouncement, Early Adoption [Line Items]
Noncurrent other assets			(10)
Long-term debt, excluding current maturities			$ 10

Fair Value Measurements (Detail

Fair Value Measurements (Details) - Fair Value, Measurements, Recurring [Member] - Estimate of Fair Value [Member] - USD ($) $ in Millions	Apr. 29, 2016	Jan. 29, 2016	May. 01, 2015
Short-term Investments [Member]
Assets, Fair Value Disclosure
Available-for-sale securities, fair value	$ 174	$ 307	$ 95
Short-term Investments [Member] | Certificates Of Deposit [Member] | Fair Value (Level 1) [Member]
Assets, Fair Value Disclosure
Available-for-sale securities, fair value	97	56	16
Short-term Investments [Member] | Municipal Obligations [Member] | Fair Value (Level 2) [Member]
Assets, Fair Value Disclosure
Available-for-sale securities, fair value	34	38	20
Short-term Investments [Member] | Money Market Funds [Member] | Fair Value (Level 1) [Member]
Assets, Fair Value Disclosure
Available-for-sale securities, fair value	28	192	59
Short-term Investments [Member] | Municipal Floating Rate Obligations [Member] | Fair Value (Level 2) [Member]
Assets, Fair Value Disclosure
Available-for-sale securities, fair value	15	21	0
Other Current Assets [Member] | Fair Value (Level 2) [Member]
Assets, Fair Value Disclosure
Foreign exchange options, fair value	263	0	0
Long-term Investments [Member]
Assets, Fair Value Disclosure
Available-for-sale securities, fair value	400	222	384
Long-term Investments [Member] | Certificates Of Deposit [Member] | Fair Value (Level 1) [Member]
Assets, Fair Value Disclosure
Available-for-sale securities, fair value	4	5	5
Long-term Investments [Member] | Municipal Obligations [Member] | Fair Value (Level 2) [Member]
Assets, Fair Value Disclosure
Available-for-sale securities, fair value	4	5	2
Long-term Investments [Member] | Municipal Floating Rate Obligations [Member] | Fair Value (Level 2) [Member]
Assets, Fair Value Disclosure
Available-for-sale securities, fair value	$ 392	$ 212	$ 377

Fair Value Measurements (Deta28

Fair Value Measurements (Details 1) - USD ($) $ in Millions	Apr. 29, 2016	Jan. 29, 2016	May. 01, 2015
Financial Instruments
Long-term debt carrying value (excluding capitalized lease obligations)	$ 14,870	$ 12,080	$ 10,868
Unsecured Notes [Member]
Financial Instruments
Long-term debt carrying value (excluding capitalized lease obligations)	14,863	12,073	10,852
Mortgage Notes [Member]
Financial Instruments
Long-term debt carrying value (excluding capitalized lease obligations)	7	7	16
Estimate of Fair Value [Member]
Financial Instruments
Long-term debt fair value (excluding capitalized lease obligations)	16,540	13,300	12,248
Estimate of Fair Value [Member] | Unsecured Notes [Member] | Fair Value (Level 1) [Member]
Financial Instruments
Long-term debt fair value (excluding capitalized lease obligations)	16,532	13,292	12,231
Estimate of Fair Value [Member] | Mortgage Notes [Member] | Fair Value (Level 2) [Member]
Financial Instruments
Long-term debt fair value (excluding capitalized lease obligations)	$ 8	$ 8	$ 17

Restricted Investment Balances

Restricted Investment Balances (Details) - USD ($) $ in Millions	Apr. 29, 2016	Jan. 29, 2016	May. 01, 2015
Restricted Investment Balances
Restricted balances included in short-term investments	$ 70	$ 234	$ 74
Restricted balances included in long-term investments	$ 303	$ 202	$ 311

Property (Details)

Property (Details) - USD ($) $ in Billions	Apr. 29, 2016	Jan. 29, 2016	May. 01, 2015
Property
Accumulated depreciation	$ 16.6	$ 16.3	$ 15.8

Extended Protection Plans (Deta

Extended Protection Plans (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 29, 2016	May. 01, 2015
Changes in deferred revenue for extended protection plan contracts
Deferred revenue - extended protection plans, beginning of period	$ 729	$ 730
Additions to deferred revenue	86	82
Deferred revenue recognized	(89)	(85)
Deferred revenue - extended protection plans, end of period	$ 726	$ 727

Extended Protection Plans (De32

Extended Protection Plans (Details Textual) - USD ($) $ in Millions	3 Months Ended
	Apr. 29, 2016	May. 01, 2015	Jan. 29, 2016
Extended Protection Plans
Deferred costs associated with extended protection plan contracts	$ 18	$ 27	$ 20
Expenses for claims incurred	$ 30	$ 29

Long-Term Debt (Details)

Long-Term Debt (Details) - Unsecured Debt [Member] - USD ($) $ in Millions	Apr. 20, 2016	Apr. 29, 2016
April 2016 Debt Issuance [Member]
Long-Term Debt
Unsecured notes, issued	$ 3,300
Debt instrument, redemption price, percentage	101.00%
2019 Floating Rate Notes [Member]
Long-Term Debt
Unsecured notes, issued	$ 250
Unsecured notes, maturity date	Apr. 30, 2019
Unsecured notes, interest rate		0.87%
Unamortized discount	$ 1
Unsecured notes, description of variable rate basis		three-month LIBOR
Unsecured notes, basis spread on variable rate	0.24%
2019 Fixed Rate Notes [Member]
Long-Term Debt
Unsecured notes, issued	$ 350
Unsecured notes, maturity date	Apr. 30, 2019
Unsecured notes, interest rate	1.15%
Unamortized discount	$ 1
2026 Fixed Rate Notes [Member]
Long-Term Debt
Unsecured notes, issued	$ 1,350
Unsecured notes, maturity date	Apr. 30, 2026
Unsecured notes, interest rate	2.50%
Unamortized discount	$ 12
2046 Fixed Rate Notes [Member]
Long-Term Debt
Unsecured notes, issued	$ 1,350
Unsecured notes, maturity date	Apr. 30, 2046
Unsecured notes, interest rate	3.70%
Unamortized discount	$ 19

Shareholders' Equity (Details)

Shareholders' Equity (Details) - USD ($) shares in Millions, $ in Millions		3 Months Ended
		Apr. 29, 2016	May. 01, 2015
Shareholders' Equity
Reduction in retained earnings		$ 1,152	$ 961
Share Repurchases
Share repurchases, value	[1]	$ 1,252	$ 1,062
Share repurchases, shares		16.6	14.4
Share Repurchase Program [Member]
Share Repurchases
Share repurchases, value	[1]	$ 1,200	$ 1,000
Share repurchases, shares		15.9	13.6
Shares Withheld from Employees [Member]
Share Repurchases
Share repurchases, value	[1]	$ 52	$ 62
Share repurchases, shares		0.7	0.8
[1]	Reductions of $1.2 billion and $961 million were recorded to retained earnings, after capital in excess of par value was depleted, for the three months ended April 29, 2016 and May 1, 2015, respectively.

Shareholders' Equity (Details T

Shareholders' Equity (Details Textual) - USD ($) shares in Millions		Feb. 29, 2016	May. 31, 2016	Apr. 29, 2016	May. 01, 2015	Mar. 20, 2015
Share Repurchases
Share repurchases, value	[1]			$ 1,252,000,000	$ 1,062,000,000
Share repurchases, shares				16.6	14.4
Cash used to repurchase shares				$ 1,253,000,000	$ 1,109,000,000
Share Repurchase Program [Member]
Share Repurchases
Share repurchases, value	[1]			$ 1,200,000,000	$ 1,000,000,000
Share repurchases, shares				15.9	13.6
Remaining share repurchases authorization, value				$ 2,400,000,000
March 20, 2015 Share Repurchase Program [Member]
Share Repurchases
Share repurchases authorized, value						$ 5,000,000,000
February 2016 Accelerated Share Repurchase Agreement Purchases [Member]
Share Repurchases
Share repurchases, value		$ 500,000,000
Share repurchases, shares		6.2
Cash used to repurchase shares		$ 500,000,000
February 2016 Accelerated Share Repurchase Agreement Purchases [Member] | Subsequent Event [Member]
Share Repurchases
Share repurchases, shares			0.6
Open market purchases [Member]
Share Repurchases
Share repurchases, value				$ 700,000,000
Share repurchases, shares				9.7
[1]	Reductions of $1.2 billion and $961 million were recorded to retained earnings, after capital in excess of par value was depleted, for the three months ended April 29, 2016 and May 1, 2015, respectively.

Earnings Per Share (Details)

Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended
	Apr. 29, 2016	May. 01, 2015
Basic earnings per common share:
Net earnings	$ 884	$ 673
Less: Net earnings allocable to participating securities	(4)	(3)
Net earnings allocable to common shares, basic	$ 880	$ 670
Weighted-average common shares outstanding	897	950
Basic earnings per common share	$ 0.98	$ 0.70
Diluted earnings per common share:
Net earnings	$ 884	$ 673
Less: Net earnings allocable to participating securities	(4)	(3)
Net earnings allocable to common shares, diluted	$ 880	$ 670
Weighted-average common shares outstanding	897	950
Dilutive effect of non-participating share-based awards	2	2
Weighted-average common shares, as adjusted	899	952
Diluted earnings per common share	$ 0.98	$ 0.70

Earnings Per Share (Details Tex

Earnings Per Share (Details Textual) - shares	3 Months Ended
	Apr. 29, 2016	May. 01, 2015
Earnings Per Share
Anti-dilutive securities	800,000	0

Supplemental Disclosure (Detail

Supplemental Disclosure (Details) - USD ($) $ in Millions	3 Months Ended
	Apr. 29, 2016	May. 01, 2015
Net interest expense
Long-term debt	$ 134	$ 122
Capitalized lease obligations	11	11
Interest income	(2)	0
Interest capitalized	(1)	(1)
Interest on tax uncertainties	2	0
Other	12	2
Interest - net	$ 156	$ 134

Supplemental Disclosure (Deta39

Supplemental Disclosure (Details 1) - USD ($) $ in Millions	3 Months Ended
	Apr. 29, 2016	May. 01, 2015
Supplemental disclosures of cash flow information
Cash paid for interest, net of amount capitalized	$ 259	$ 233
Cash paid for income taxes, net	52	166
Non-cash investing and financing activities:
Non-cash property acquisitions, including assets acquired under capital lease	17	4
Cash dividends declared but not paid	$ 251	$ 218

Derivative Instruments (Details

Derivative Instruments (Details) $ in Millions, CAD in Billions	1 Months Ended	3 Months Ended
	May. 31, 2016USD ($)	Apr. 29, 2016USD ($)	May. 01, 2015USD ($)	Apr. 29, 2016CAD	Apr. 29, 2016USD ($)
Derivatives, Fair Value [Line Items]
Purchases of derivative instruments, investing activities		$ 103	$ 0
Foreign Exchange Option [Member] | Not Designated as Hedging Instrument [Member]
Derivatives, Fair Value [Line Items]
Derivative asset, notional amount | CAD				CAD 3.2
Purchases of derivative instruments, investing activities		103
Gain (loss) on derivative, net		$ 160
Foreign Exchange Option [Member] | Not Designated as Hedging Instrument [Member] | Subsequent Event [Member]
Derivatives, Fair Value [Line Items]
Gain (loss) on derivative, net	$ (84)
Proceeds from derivative instruments, investing activities	179
Total realized gain on derivative instruments	$ 76
Foreign Exchange Option [Member] | Not Designated as Hedging Instrument [Member] | Other Current Assets [Member]
Derivatives, Fair Value [Line Items]
Derivative asset, fair value, gross asset					$ 263

Subsequent Events (Details)

Subsequent Events (Details) - Subsequent Event [Member] - RONA inc [Member] CAD / shares in Units, CAD in Billions	May. 20, 2016CADCAD / shares
Subsequent Events
Business Combination, Consideration Transferred | CAD	CAD 3.2
Common Class A [Member]
Subsequent Events
Business Acquisition, Share Price | CAD / shares	CAD 24