Document and Entity Information
Document and Entity Information - USD ($) $ in Billions | 12 Months Ended | ||
Feb. 02, 2018 | Mar. 29, 2018 | Aug. 04, 2017 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | LOWES COMPANIES INC | ||
Entity Central Index Key | 60,667 | ||
Document Type | 10-K | ||
Document Period End Date | Feb. 2, 2018 | ||
Amendment Flag | false | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Current Fiscal Year End Date | --02-02 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 65.6 | ||
Entity Common Stock, Shares Outstanding | 825,766,281 |
Consolidated Statements of Earn
Consolidated Statements of Earnings - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2018 | Feb. 03, 2017 | Jan. 29, 2016 | |
Consolidated Statements of Earnings | |||
Net sales | $ 68,619 | $ 65,017 | $ 59,074 |
Cost of sales | 45,210 | 42,553 | 38,504 |
Gross margin | 23,409 | 22,464 | 20,570 |
Expenses: | |||
Selling, general and administrative | 15,376 | 15,129 | 14,105 |
Depreciation and amortization | 1,447 | 1,489 | 1,494 |
Operating income | 6,586 | 5,846 | 4,971 |
Interest - net | 633 | 645 | 552 |
Loss on extinguishment of debt | 464 | 0 | 0 |
Pre-tax earnings | 5,489 | 5,201 | 4,419 |
Income tax provision | 2,042 | 2,108 | 1,873 |
Net earnings | $ 3,447 | $ 3,093 | $ 2,546 |
Basic earnings per common share | $ 4.09 | $ 3.48 | $ 2.73 |
Diluted earnings per common share | 4.09 | 3.47 | 2.73 |
Cash dividends per share | $ 1.58 | $ 1.33 | $ 1.07 |
Consolidated Statements of Ear3
Consolidated Statements of Earnings (Percents) | 12 Months Ended | ||
Feb. 02, 2018 | Feb. 03, 2017 | Jan. 29, 2016 | |
Consolidated Statements of Earnings | |||
Net sales | 100.00% | 100.00% | 100.00% |
Cost of sales | 65.89% | 65.45% | 65.18% |
Gross margin | 34.11% | 34.55% | 34.82% |
Expenses: | |||
Selling, general and administrative | 22.40% | 23.27% | 23.88% |
Depreciation and amortization | 2.11% | 2.29% | 2.53% |
Operating income | 9.60% | 8.99% | 8.41% |
Interest - net | 0.92% | 0.99% | 0.93% |
Loss on extinguishment of debt | 0.68% | 0.00% | 0.00% |
Pre-tax earnings | 8.00% | 8.00% | 7.48% |
Income tax provision | 2.98% | 3.24% | 3.17% |
Net earnings | 5.02% | 4.76% | 4.31% |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2018 | Feb. 03, 2017 | Jan. 29, 2016 | |
Consolidated Statements of Comprehensive Income | |||
Net earnings | $ 3,447 | $ 3,093 | $ 2,546 |
Foreign currency translation adjustments - net of tax | 251 | 154 | (291) |
Other comprehensive income/(loss) | 251 | 154 | (291) |
Comprehensive income | $ 3,698 | $ 3,247 | $ 2,255 |
Consolidated Statements of Com5
Consolidated Statements of Comprehensive Income (Percents) | 12 Months Ended | ||
Feb. 02, 2018 | Feb. 03, 2017 | Jan. 29, 2016 | |
Consolidated Statements of Comprehensive Income | |||
Net earnings | 5.02% | 4.76% | 4.31% |
Foreign currency translation adjustments - net of tax | 0.37% | 0.23% | (0.49%) |
Other comprehensive income/(loss) | 0.37% | 0.23% | (0.49%) |
Comprehensive income | 5.39% | 4.99% | 3.82% |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Feb. 02, 2018 | Feb. 03, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 588 | $ 558 |
Short-term investments | 102 | 100 |
Merchandise inventory - net | 11,393 | 10,458 |
Other current assets | 689 | 884 |
Total current assets | 12,772 | 12,000 |
Property, less accumulated depreciation | 19,721 | 19,949 |
Long-term investments | 408 | 366 |
Deferred income taxes - net | 168 | 222 |
Goodwill | 1,307 | 1,082 |
Other assets | 915 | 789 |
Total assets | 35,291 | 34,408 |
Current liabilities: | ||
Short-term borrowings | 1,137 | 510 |
Current maturities of long-term debt | 294 | 795 |
Accounts payable | 6,590 | 6,651 |
Accrued compensation and employee benefits | 747 | 790 |
Deferred revenue | 1,378 | 1,253 |
Other current liabilities | 1,950 | 1,975 |
Total current liabilities | 12,096 | 11,974 |
Long-term debt, excluding current maturities | 15,564 | 14,394 |
Deferred revenue - extended protection plans | 803 | 763 |
Other liabilities | 955 | 843 |
Total liabilities | 29,418 | 27,974 |
Commitments and contingencies | ||
Shareholders' equity: | ||
Preferred stock - $5 par value, none issued | 0 | 0 |
Common stock - $.50 par value; Shares issued and outstanding 830 at February 2, 2018 and 866 at February 3, 2017, respectively | 415 | 433 |
Capital in excess of par value | 22 | 0 |
Retained earnings | 5,425 | 6,241 |
Accumulated other comprehensive income/(loss) | 11 | (240) |
Total shareholders' equity | 5,873 | 6,434 |
Total liabilities and shareholders' equity | $ 35,291 | $ 34,408 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Feb. 02, 2018 | Feb. 03, 2017 |
Shareholders' equity: | ||
Preferred stock, par value | $ 5 | $ 5 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value | $ 0.50 | $ 0.50 |
Common stock, shares issued | 830,000,000 | 866,000,000 |
Common stock, shares outstanding | 830,000,000 | 866,000,000 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) shares in Millions, $ in Millions | Total | Total Lowe’s Companies, Inc. Shareholders’ Equity | Common Stock | Capital in Excess of Par Value | Retained Earnings | Accumulated Other Comprehensive Income/(Loss) | Noncontrolling Interest | |
Balance at Jan. 30, 2015 | $ 9,968 | $ 9,968 | $ 480 | $ 0 | $ 9,591 | $ (103) | $ 0 | |
Balance, shares at Jan. 30, 2015 | 960 | |||||||
Comprehensive Income | ||||||||
Net earnings | 2,546 | 2,546 | 2,546 | |||||
Other comprehensive income/(loss) | (291) | (291) | (291) | |||||
Tax effect of non-qualified stock options exercised and restricted stock vested | 61 | 61 | 61 | |||||
Cash dividends declared, $1.58, $1.33, and $1.07 per share for 2017, 2016, and 2015, respectively | (991) | (991) | (991) | |||||
Share-based payment expense | 112 | 112 | 112 | |||||
Repurchase of common stock | (3,878) | (3,878) | $ (27) | (298) | (3,553) | |||
Repurchase of common stock, shares | (54) | |||||||
Issuance of common stock under share-based payment plans, value | 127 | 127 | $ 2 | 125 | ||||
Issuance of common stock under share-based payment plans, shares | 4 | |||||||
Balance at Jan. 29, 2016 | 7,654 | 7,654 | $ 455 | 0 | 7,593 | (394) | 0 | |
Balance, shares at Jan. 29, 2016 | 910 | |||||||
Comprehensive Income | ||||||||
Net earnings | 3,093 | 3,091 | 3,091 | 2 | ||||
Other comprehensive income/(loss) | 154 | 154 | 154 | |||||
Tax effect of non-qualified stock options exercised and restricted stock vested | 57 | 57 | 57 | |||||
Cash dividends declared, $1.58, $1.33, and $1.07 per share for 2017, 2016, and 2015, respectively | (1,169) | (1,169) | (1,169) | |||||
Share-based payment expense | 104 | 104 | 104 | |||||
Repurchase of common stock | $ (3,577) | [1] | (3,577) | $ (24) | (279) | (3,274) | ||
Repurchase of common stock, shares | (47.7) | (48) | ||||||
Issuance of common stock under share-based payment plans, value | $ 138 | 138 | $ 2 | 136 | ||||
Issuance of common stock under share-based payment plans, shares | 4 | |||||||
Noncontrolling interest resulting from acquisition | 109 | 0 | 109 | |||||
Dividends paid to noncontrolling interest holders | (2) | 0 | (2) | |||||
Purchase of noncontrolling interest | (127) | (18) | (18) | (109) | ||||
Balance at Feb. 03, 2017 | $ 6,434 | 6,434 | $ 433 | 0 | 6,241 | (240) | 0 | |
Balance, shares at Feb. 03, 2017 | 866 | 866 | ||||||
Comprehensive Income | ||||||||
Net earnings | $ 3,447 | 3,447 | 3,447 | |||||
Other comprehensive income/(loss) | 251 | 251 | 251 | |||||
Cash dividends declared, $1.58, $1.33, and $1.07 per share for 2017, 2016, and 2015, respectively | (1,324) | (1,324) | (1,324) | |||||
Share-based payment expense | 99 | 99 | 99 | |||||
Repurchase of common stock | $ (3,174) | [1] | (3,174) | $ (20) | (215) | (2,939) | ||
Repurchase of common stock, shares | (39.6) | (40) | ||||||
Issuance of common stock under share-based payment plans, value | $ 140 | 140 | $ 2 | 138 | ||||
Issuance of common stock under share-based payment plans, shares | 4 | |||||||
Balance at Feb. 02, 2018 | $ 5,873 | $ 5,873 | $ 415 | $ 22 | $ 5,425 | $ 11 | $ 0 | |
Balance, shares at Feb. 02, 2018 | 830 | 830 | ||||||
[1] | Reductions of $2.9 billion and $3.3 billion were recorded to retained earnings, after capital in excess of par value was depleted, for 2017 and 2016, respectively. |
Consolidated Statements of Sha9
Consolidated Statements of Shareholders' Equity (Parenthetical) - $ / shares | 12 Months Ended | ||
Feb. 02, 2018 | Feb. 03, 2017 | Jan. 29, 2016 | |
Consolidated Statements of Stockholders' Equity | |||
Cash dividends declared per share | $ 1.58 | $ 1.33 | $ 1.07 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2018 | Feb. 03, 2017 | Jan. 29, 2016 | |
Cash flows from operating activities: | |||
Net earnings | $ 3,447 | $ 3,093 | $ 2,546 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||
Depreciation and amortization | 1,540 | 1,590 | 1,587 |
Deferred income taxes | 53 | 28 | (68) |
Loss on property and other assets - net | 40 | 143 | 30 |
Loss on extinguishment of debt | 464 | 0 | 0 |
(Gain) loss on cost method and equity method investments | (82) | 302 | 594 |
Share-based payment expense | 99 | 90 | 117 |
Changes in operating assets and liabilities: | |||
Merchandise inventory - net | (791) | (178) | (582) |
Other operating assets | 250 | (183) | (34) |
Accounts payable | (92) | 653 | 524 |
Other operating liabilities | 137 | 79 | 70 |
Net cash provided by operating activities | 5,065 | 5,617 | 4,784 |
Cash flows from investing activities: | |||
Purchases of investments | (981) | (1,192) | (934) |
Proceeds from sale/maturity of investments | 1,114 | 1,254 | 884 |
Capital expenditures | (1,123) | (1,167) | (1,197) |
Contributions to equity method investments - net | 0 | 0 | (125) |
Proceeds from sale of property and other long-term assets | 45 | 37 | 57 |
Purchases of derivative instruments | 0 | (103) | 0 |
Proceeds from settlement of derivative instruments | 0 | 179 | 0 |
Acquisition of business - net | (509) | (2,356) | 0 |
Other - net | 13 | (13) | (28) |
Net cash used in investing activities | (1,441) | (3,361) | (1,343) |
Cash flows from financing activities: | |||
Net change in short-term borrowings | 625 | 466 | 43 |
Net proceeds from issuance of long-term debt | 2,968 | 3,267 | 1,718 |
Repayment of long-term debt | (2,849) | (1,173) | (552) |
Proceeds from issuance of common stock under share-based payment plans | 139 | 139 | 125 |
Cash dividend payments | (1,288) | (1,121) | (957) |
Repurchase of common stock | (3,192) | (3,595) | (3,925) |
Other - net | (10) | (75) | 55 |
Net cash used in financing activities | (3,607) | (2,092) | (3,493) |
Effect of exchange rate changes on cash | 13 | (11) | (9) |
Net increase/(decrease) in cash and cash equivalents | 30 | 153 | (61) |
Cash and cash equivalents, beginning of year | 558 | 405 | 466 |
Cash and cash equivalents, end of year | $ 588 | $ 558 | $ 405 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Feb. 02, 2018 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | NOTE 1 : Summary of Significant Accounting Policies Lowe’s Companies, Inc. and subsidiaries (the Company) is the world’s second-largest home improvement retailer and operated 2,152 stores in the United States, Canada, and Mexico at February 2, 2018 . Below are those accounting policies considered by the Company to be significant. Fiscal Year - The Company’s fiscal year ends on the Friday nearest the end of January. Fiscal years 2017 and 2015 each contained 52 weeks and fiscal 2016 contained 53 weeks. All references herein for the years 2017 , 2016 , and 2015 represent the fiscal years ended February 2, 2018 , February 3, 2017 , and January 29, 2016 , respectively. Principles of Consolidation - The consolidated financial statements include the accounts of the Company and its wholly-owned or controlled operating subsidiaries. All intercompany accounts and transactions have been eliminated. Foreign Currency - The functional currencies of the Company’s international subsidiaries are generally the local currencies of the countries in which the subsidiaries are located. Foreign currency denominated assets and liabilities are translated into U.S. dollars using the exchange rates in effect at the balance sheet date. Results of operations and cash flows are translated using the average exchange rates throughout the period. The effect of exchange rate fluctuations on translation of assets and liabilities is included as a component of shareholders’ equity in accumulated other comprehensive income/loss. Gains and losses from foreign currency transactions are included in selling, general and administrative (SG&A) expense. Use of Estimates - The preparation of the Company’s financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates that affect the reported amounts of assets, liabilities, sales and expenses, and related disclosures of contingent assets and liabilities. The Company bases these estimates on historical results and various other assumptions believed to be reasonable, all of which form the basis for making estimates concerning the carrying values of assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates. Cash and Cash Equivalents - Cash and cash equivalents include cash on hand, demand deposits, and short-term investments with original maturities of three months or less when purchased. Cash and cash equivalents are carried at amortized cost on the consolidated balance sheets. The majority of payments due from financial institutions for the settlement of credit card and debit card transactions process within two business days and are, therefore, classified as cash and cash equivalents. Investments - Investments generally consist of money market funds, municipal obligations, certificates of deposit, and municipal floating rate obligations, all of which are classified as available-for-sale. Available-for-sale securities are recorded at fair value, and unrealized gains and losses are recorded, net of tax, as a component of accumulated other comprehensive income/loss. Gross unrealized gains and losses were insignificant at February 2, 2018 and February 3, 2017 . The proceeds from sales of available-for-sale securities were $523 million , $505 million , and $394 million for 2017 , 2016 , and 2015 , respectively. Gross realized gains and losses on the sale of available-for-sale securities were not significant for any of the periods presented. Investments with a stated maturity date of one year or less from the balance sheet date or that are expected to be used in current operations are classified as short-term investments. All other investments are classified as long-term. Investments classified as long-term at February 2, 2018 , will mature in one to 37 years, based on stated maturity dates. The Company classifies as investments restricted balances primarily pledged as collateral for the Company’s extended protection plan program. Restricted balances included in short-term investments were $86 million at February 2, 2018 , and $81 million at February 3, 2017 . Restricted balances included in long-term investments were $381 million at February 2, 2018 , and $354 million at February 3, 2017 . Merchandise Inventory - The majority of the Company’s inventory is stated at the lower of cost and net realizable value using the first-in, first-out method of inventory accounting. Inventory for certain subsidiaries representing approximately 10% and 8% of the consolidated inventory balances as of February 2, 2018 and February 3, 2017 , respectively, are stated at lower of cost and net realizable value using other inventory methods, including the weighted average cost method and the retail inventory method. The cost of inventory includes certain costs associated with the preparation of inventory for resale, including distribution center costs, and is net of vendor funds. The Company records an inventory reserve for the anticipated loss associated with selling inventories below cost. This reserve is based on management’s current knowledge with respect to inventory levels, sales trends, and historical experience. Management does not believe the Company’s merchandise inventories are subject to significant risk of obsolescence in the near term, and management has the ability to adjust purchasing practices based on anticipated sales trends and general economic conditions. However, changes in consumer purchasing patterns could result in the need for additional reserves. The Company also records an inventory reserve for the estimated shrinkage between physical inventories. This reserve is based primarily on actual shrink results from previous physical inventories. Changes in the estimated shrink reserve are made based on the timing and results of physical inventories. The Company receives funds from vendors in the normal course of business, principally as a result of purchase volumes, sales, early payments, or promotions of vendors’ products. Generally, these vendor funds do not represent the reimbursement of specific, incremental, and identifiable costs incurred by the Company to sell the vendor’s product. Therefore, the Company treats these funds as a reduction in the cost of inventory, and are recognized as a reduction of cost of sales when the inventory is sold. Funds that are determined to be reimbursements of specific, incremental, and identifiable costs incurred to sell vendors’ products are recorded as an offset to the related expense. The Company develops accrual rates for vendor funds based on the provisions of the agreements in place. Due to the complexity and diversity of the individual vendor agreements, the Company performs analyses and reviews historical trends throughout the year and confirms actual amounts with select vendors to ensure the amounts earned are appropriately recorded. Amounts accrued throughout the year could be impacted if actual purchase volumes differ from projected annual purchase volumes, especially in the case of programs that provide for increased funding when graduated purchase volumes are met. Credit Programs - The Company has an agreement with Synchrony Bank (Synchrony), formerly GE Capital Retail, under which Synchrony purchases at face value commercial business accounts receivable originated by the Company and services these accounts. This agreement expires in December 2023, unless terminated sooner by the parties. The Company primarily accounts for these transfers as sales of the accounts receivable. When the Company transfers its commercial business accounts receivable, it retains certain interests in those receivables, including the funding of a loss reserve and its obligation related to Synchrony’s ongoing servicing of the receivables sold. Any gain or loss on the sale is determined based on the previous carrying amounts of the transferred assets allocated at fair value between the receivables sold and the interests retained. Fair value is based on the present value of expected future cash flows, taking into account the key assumptions of anticipated credit losses, payment rates, late fee rates, Synchrony’s servicing costs, and the discount rate commensurate with the uncertainty involved. Due to the short-term nature of the receivables sold, changes to the key assumptions would not materially impact the recorded gain or loss on the sales of receivables or the fair value of the retained interests in the receivables. Total commercial business accounts receivable sold to Synchrony were $3.1 billion in 2017 , $2.8 billion in 2016 , and $2.6 billion in 2015 . The Company recognized losses of $39 million in 2017 , $32 million in 2016 , and $36 million in 2015 on these receivable sales as SG&A expense, which primarily relates to the fair value of obligations related to servicing costs that are remitted to Synchrony monthly. At February 2, 2018 and February 3, 2017 , the fair value of the retained interests was determined based on the present value of expected future cash flows and was insignificant. Sales generated through the Company’s proprietary credit cards are not reflected in receivables. Under an agreement with Synchrony, credit is extended directly to customers by Synchrony. All credit program-related services are performed and controlled directly by Synchrony. The Company has the option, but no obligation, to purchase the receivables at the end of the agreement in December 2023. Tender costs, including amounts associated with accepting the Company’s proprietary credit cards, are included in SG&A expense in the consolidated statements of earnings. The total portfolio of receivables held by Synchrony, including both receivables originated by Synchrony from the Company’s proprietary credit cards and commercial business accounts receivable originated by the Company and sold to Synchrony, approximated $10.2 billion at February 2, 2018 , and $9.6 billion at February 3, 2017 . Property and Depreciation - Property is recorded at cost. Costs associated with major additions are capitalized and depreciated. Capital assets are expected to yield future benefits and have original useful lives which exceed one year. The total cost of a capital asset generally includes all applicable sales taxes, delivery costs, installation costs, and other appropriate costs incurred by the Company, including interest in the case of self-constructed assets. Upon disposal, the cost of properties and related accumulated depreciation is removed from the accounts, with gains and losses reflected in SG&A expense in the consolidated statements of earnings. Property consists of land, buildings and building improvements, equipment, and construction in progress. Buildings and building improvements includes owned buildings, as well as buildings under capital lease and leasehold improvements. Equipment primarily includes store racking and displays, computer hardware and software, forklifts, vehicles, and other store equipment . Depreciation is provided over the estimated useful lives of the depreciable assets. Assets are depreciated using the straight-line method. Leasehold improvements and assets under capital lease are depreciated over the shorter of their estimated useful lives or the term of the related lease, which may include one or more option renewal periods where failure to exercise such options would result in an economic penalty in such amount that renewal appears, at the inception of the lease, to be reasonably assured. During the term of a lease, if leasehold improvements are placed in service significantly after the inception of the lease, the Company depreciates these leasehold improvements over the shorter of the useful life of the leasehold assets or a term that includes lease renewal periods deemed to be reasonably assured at the time the leasehold improvements are placed into service. The amortization of these assets is included in depreciation expense in the consolidated financial statements. Long-Lived Asset Impairment/Exit Activities - The carrying amounts of long-lived assets are reviewed whenever certain events or changes in circumstances indicate that the carrying amounts may not be recoverable. A potential impairment has occurred for long-lived assets held-for-use if projected future undiscounted cash flows expected to result from the use and eventual disposition of the assets are less than the carrying amounts of the assets. An impairment loss is recorded for long-lived assets held-for-use when the carrying amount of the asset is not recoverable and exceeds its fair value. Excess properties that are expected to be sold within the next 12 months and meet the other relevant held-for-sale criteria are classified as long-lived assets held-for-sale. Excess properties consist primarily of retail outparcels and property associated with relocated or closed locations. An impairment loss is recorded for long-lived assets held-for-sale when the carrying amount of the asset exceeds its fair value less cost to sell. A long-lived asset is not depreciated while it is classified as held-for-sale. For long-lived assets to be abandoned, the Company considers the asset to be disposed of when it ceases to be used. Until it ceases to be used, the Company continues to classify the asset as held-for-use and tests for potential impairment accordingly. If the Company commits to a plan to abandon a long-lived asset before the end of its previously estimated useful life, its depreciable life is re-evaluated. Impairment losses are included in SG&A expense in the consolidated statements of earnings. Fair value measurements associated with long-lived asset impairments are further described in Note 4 to the consolidated financial statements. When locations under operating leases are closed, a liability is recognized for the fair value of future contractual obligations, including future minimum lease payments, property taxes, utilities, common area maintenance, and other ongoing expenses, net of estimated sublease income and other recoverable items. When the Company commits to an exit plan and communicates that plan to affected employees, a liability is recognized in connection with one-time employee termination benefits. Subsequent changes to the liabilities, including a change resulting from a revision to either the timing or the amount of estimated cash flows, are recognized in the period of change. Expenses associated with exit activities are included in SG&A expense in the consolidated statement of earnings. Amounts accrued for exit activities were not material for any of the periods presented. Goodwill - Goodwill is the excess of the purchase price over the fair value of identifiable assets acquired, less liabilities assumed, in a business combination. The Company reviews goodwill for impairment at the reporting unit level, which is one level below the operating segment level. Goodwill is not amortized but is evaluated for impairment at least annually on the first day of the fourth quarter or whenever events or changes in circumstances indicate that it is more likely than not that the carrying amount may not be recoverable. The evaluation begins with a qualitative assessment to determine whether a quantitative impairment test is necessary. If, after assessing qualitative factors, we determine it is more likely than not that the fair value of the reporting unit is less than the carrying amount, then the two-step goodwill impairment test is necessary. The first step of the goodwill impairment test used to identify potential impairment compares the fair value of a reporting unit with its carrying amount, including goodwill. Fair value represents the price a market participant would be willing to pay in a potential sale of the reporting unit and is based on discounted future cash flows. If the fair value exceeds carrying value, then no goodwill impairment has occurred. If the carrying value of the reporting unit exceeds its fair value, a second step is required to measure possible goodwill impairment loss. The second step includes hypothetically valuing the tangible and intangible assets and liabilities of the reporting unit as if the reporting unit had been acquired in a business combination. Then, the implied fair value of the reporting unit’s goodwill is compared to the carrying value of that goodwill. If the carrying value of the reporting unit’s goodwill exceeds the implied fair value of the goodwill, an impairment loss is recognized in an amount equal to the excess, not to exceed the carrying value. A reporting unit is an operating segment or a business unit one level below that operating segment, for which discrete financial information is prepared and regularly reviewed by segment management. Goodwill is allocated to the following reporting units: U.S. Home Improvement, Orchard Supply Hardware (Orchard), Canada - Retail, and Canada - Distribution. The changes in the carrying amount of goodwill for 2017 , 2016 , and 2015 were as follows: (In millions) 2017 2016 2015 Goodwill, balance at beginning of year $ 1,082 $ 154 $ 154 Acquisitions 1 160 1,015 — Impairment — (46 ) — Other adjustments 2 65 (41 ) — Goodwill, balance at end of year $ 1,307 $ 1,082 $ 154 1 Goodwill recorded for 2017 acquisitions relates to Maintenance Supply Headquarters. Goodwill recorded for 2016 acquisitions primarily relates to RONA. See Note 2 for additional information regarding these acquisitions. 2 Other adjustments primarily consist of changes in the goodwill balance as a result of foreign currency translation. During the third quarter of fiscal year 2016, due to a strategic reassessment of the Orchard operations, the Company determined potential indicators of impairment within the reporting unit existed, and quantitatively evaluated the Orchard reporting unit for impairment. The Company classified this fair value measurement as Level 3. See Note 4 for additional information on the Company’s fair value measurements. The Company performed a discounted cash flow analysis for the Orchard reporting unit. The discounted cash flow model included management assumptions for expected sales growth, expansion plans, capital expenditures, and overall operational forecasts. The analysis led to the conclusion that the goodwill allocated to the Orchard reporting unit had no implied value. Accordingly, the full carrying value of $46 million relating to Orchard goodwill was impaired during the third quarter of 2016. Gross carrying amounts and cumulative goodwill impairment losses are as follows: February 2, 2018 February 3, 2017 (In millions) Gross Carrying Amount Cumulative Impairment Gross Carrying Amount Cumulative Impairment Goodwill $ 1,354 $ (47 ) $ 1,129 $ (47 ) Equity Method Investments - The Company’s investments in certain unconsolidated entities are accounted for under the equity method. The balance of these investments is included in other assets (noncurrent) in the accompanying consolidated balance sheets. The balance is increased to reflect the Company’s capital contributions and equity in earnings of the investees. The balance is decreased for its equity in losses of the investees, for distributions received that are not in excess of the carrying amount of the investments, and for any other than temporary impairment losses recognized. Equity method investments were not significant as of February 2, 2018 and February 3, 2017 . The Company’s equity in earnings and losses of the investees are included in SG&A expense, and were not significant for any of the periods presented. Equity method investments are evaluated for impairment whenever events or changes in circumstances indicate that a decline in value has occurred that is other than temporary. Evidence considered in this evaluation includes, but would not necessarily be limited to, the financial condition and near-term prospects of the investee, recent operating trends and forecasted performance of the investee, market conditions in the geographic area or industry in which the investee operates and the Company’s strategic plans for holding the investment in relation to the period of time expected for an anticipated recovery of its carrying value. Investments that are determined to have a decline in value deemed to be other than temporary are written down to estimated fair value. The Company’s other than temporary impairment losses are included in SG&A expense, and were not significant for 2017 and 2016 . See Note 3 for additional information on the other than temporary impairment loss the Company recognized in 2015 , related to its investment in the Australian joint venture. Leases - For lease agreements that provide for escalating rent payments or free-rent occupancy periods, the Company recognizes rent expense on a straight-line basis over the non-cancellable lease term and option renewal periods where failure to exercise such options would result in an economic penalty in such amount that renewal appears, at the inception of the lease, to be reasonably assured. The lease term commences on the date that the Company takes possession of or controls the physical use of the property. Deferred rent is included in other liabilities (noncurrent) on the consolidated balance sheets. When the Company renegotiates and amends a lease to extend the non-cancellable lease term prior to the date at which it would have been required to exercise or decline a term extension option, the amendment is treated as a new lease. The new lease begins on the date the lease amendment is entered into and ends on the last date of the non-cancellable lease term, as adjusted to include any option renewal periods where failure to exercise such options would result in an economic penalty in such amount that renewal appears, at the inception of the lease amendment, to be reasonably assured. The new lease is classified as operating or capital under the authoritative guidance through use of assumptions regarding residual value, economic life, incremental borrowing rate, and fair value of the leased asset(s) as of the date of the amendment. Accounts Payable - The Company has an agreement with a third party to provide an accounts payable tracking system which facilitates participating suppliers’ ability to finance payment obligations from the Company with designated third-party financial institutions. Participating suppliers may, at their sole discretion, make offers to finance one or more payment obligations of the Company prior to their scheduled due dates at a discounted price to participating financial institutions. The Company’s goal in entering into this arrangement is to capture overall supply chain savings, in the form of pricing, payment terms, or vendor funding, created by facilitating suppliers’ ability to finance payment obligations at more favorable discount rates, while providing them with greater working capital flexibility. The Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not impacted by suppliers’ decisions to finance amounts under this arrangement. However, the Company’s right to offset balances due from suppliers against payment obligations is restricted by this arrangement for those payment obligations that have been financed by suppliers. The Company’s outstanding payment obligation placed on the accounts payable tracking system were $1.6 billion as of February 2, 2018 and February 3, 2017 , and participating suppliers had financed $1.1 billion and $1.0 billion , respectively, of those payment obligations to participating financial institutions. Other Current Liabilities - Other current liabilities on the consolidated balance sheets consist of: (In millions) February 2, 2018 February 3, 2017 Self-insurance liabilities $ 347 $ 327 Accrued dividends 340 304 Accrued interest 184 194 Sales tax liabilities 144 210 Accrued property taxes 109 108 Other 826 832 Total $ 1,950 $ 1,975 Self-Insurance - The Company is self-insured for certain losses relating to workers’ compensation, automobile, property, and general and product liability claims. The Company has insurance coverage to limit the exposure arising from these claims. The Company is also self-insured for certain losses relating to extended protection plan and medical and dental claims. Self-insurance claims filed and claims incurred but not reported are accrued based upon management’s estimates of the discounted ultimate cost for self-insured claims incurred using actuarial assumptions followed in the insurance industry and historical experience. Although management believes it has the ability to reasonably estimate losses related to claims, it is possible that actual results could differ from recorded self-insurance liabilities. The total self-insurance liability, including the current and non-current portions, was $890 million and $831 million at February 2, 2018 , and February 3, 2017 , respectively. The Company provides surety bonds issued by insurance companies to secure payment of workers’ compensation liabilities as required in certain states where the Company is self-insured. Outstanding surety bonds relating to self-insurance were $238 million and $243 million at February 2, 2018 , and February 3, 2017 , respectively. Income Taxes - The Company establishes deferred income tax assets and liabilities for temporary differences between the tax and financial accounting bases of assets and liabilities. The tax effects of such differences are reflected in the consolidated balance sheets at the enacted tax rates expected to be in effect when the differences reverse. A valuation allowance is recorded to reduce the carrying amount of deferred tax assets if it is more likely than not that all or a portion of the asset will not be realized. The tax balances and income tax expense recognized by the Company are based on management’s interpretation of the tax statutes of multiple jurisdictions. The Company establishes a liability for tax positions for which there is uncertainty as to whether or not the position will be ultimately sustained. The Company includes interest related to tax issues as part of net interest on the consolidated financial statements. The Company records any applicable penalties related to tax issues within the income tax provision. Shareholders’ Equity - The Company has a share repurchase program that is executed through purchases made from time to time either in the open market or through private market transactions. Shares purchased under the repurchase program are retired and returned to authorized and unissued status. Any excess of cost over par value is charged to additional paid-in capital to the extent that a balance is present. Once additional paid-in capital is fully depleted, remaining excess of cost over par value is charged to retained earnings. Revenue Recognition - The Company recognizes revenues, net of sales tax, when sales transactions occur and customers take possession of the merchandise. A provision for anticipated merchandise returns is provided through a reduction of sales and cost of sales in the period that the related sales are recorded. Revenues from product installation services are recognized when the installation is completed. Deferred revenues associated with amounts received for which customers have not yet taken possession of merchandise or for which installation has not yet been completed were $831 million and $755 million at February 2, 2018 , and February 3, 2017 , respectively. Revenues from stored-value cards, which include gift cards and returned merchandise credits, are deferred and recognized when the cards are redeemed. The liability associated with outstanding stored-value cards was $547 million and $498 million at February 2, 2018 , and February 3, 2017 , respectively, and these amounts are included in deferred revenue on the consolidated balance sheets. The Company recognizes income from unredeemed stored-value cards at the point at which redemption becomes remote. The Company’s stored-value cards have no expiration date or dormancy fees. Therefore, to determine when redemption is remote, the Company analyzes an aging of the unredeemed cards based on the date of last stored-value card use. The amount of revenue recognized from unredeemed stored-value cards for which redemption was deemed remote was not significant for 2017 , 2016 , and 2015 . Extended Protection Plans - The Company sells separately-priced extended protection plan contracts under a Lowe’s-branded program for which the Company is ultimately 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: (In millions) 2017 2016 2015 Deferred revenue - extended protection plans, beginning of year $ 763 $ 729 $ 730 Additions to deferred revenue 408 387 350 Deferred revenue recognized (368 ) (353 ) (351 ) Deferred revenue - extended protection plans, end of year $ 803 $ 763 $ 729 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 $19 million and $18 million at February 2, 2018 , and February 3, 2017 , respectively. 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 years presented. Expenses for claims are recognized when incurred and totaled $161 million , $141 million , and $127 million for 2017 , 2016 , and 2015 , respectively. Cost of Sales and Selling, General and Administrative Expenses - The following lists the primary costs classified in each major expense category: Cost of Sales Selling, General and Administrative n Total cost of products sold, including: - Purchase costs, net of vendor funds; - Freight expenses associated with moving merchandise inventories from vendors to selling locations; - Costs associated with operating the Company’s distribution network, including payroll and benefit costs and occupancy costs; n Costs of installation services provided; n Costs associated with delivery of products directly from vendors to customers by third parties; n Costs associated with inventory shrinkage and obsolescence; n Costs of services performed under the extended protection plan. n Payroll and benefit costs for retail and corporate employees; n Occupancy costs of retail and corporate facilities; n Advertising; n Costs associated with delivery of products from stores and distribution centers to customers; n Third-party, in-store service costs; n Tender costs, including bank charges, costs associated with credit card interchange fees and amounts associated with accepting the Company’s proprietary credit cards; n Costs associated with self-insured plans, and premium costs for stop-loss coverage and fully insured plans; n Long-lived asset impairment losses and gains/losses on disposal of assets; n Other administrative costs, such as supplies, and travel and entertainment. Advertising - Costs associated with advertising are charged to expense as incurred. Advertising expenses were $968 million , $893 million , and $769 million in 2017 , 2016 , and 2015 , respectively. Shipping and Handling Costs - The Company includes shipping and handling costs relating to the delivery of products directly from vendors to customers by third parties in cost of sales. Shipping and handling costs, which include third-party delivery costs, salaries, and vehicle operations expenses relating to the delivery of products from stores and distribution centers to customers, are classified as SG&A expense. Shipping and handling costs included in SG&A expense were $841 million , $700 million and $607 million in 2017 , 2016 , and 2015 , respectively. Store Opening Costs - Costs of opening new or relocated retail stores, which include payroll and supply costs incurred prior to store opening and grand opening advertising costs, are charged to expense |
Acquisitions
Acquisitions | 12 Months Ended |
Feb. 02, 2018 | |
Acquisitions | |
Acquisitions | NOTE 2 : Acquisitions Maintenance Supply Headquarters On June 23, 2017, the Company completed its acquisition of Maintenance Supply Headquarters, a leading distributor of maintenance, repair and operations (MRO) products serving the multifamily housing industry. The acquisition is expected to enable the Company to deepen and broaden its relationship with Pro customers and better serve their needs. The aggregate cash purchase price of this acquisition was $513 million and is included in the investing section of the consolidated statements of cash flows, net of the cash acquired. Acquisition-related costs were expensed as incurred and were not significant. The following table summarizes the preliminary purchase price allocation: (In millions) June 23, 2017 Allocation: Cash acquired $ 4 Merchandise inventory 68 Other current assets 36 Property 12 Goodwill 160 Other assets 260 Accounts payable (18 ) Other current liabilities (9 ) Net assets acquired $ 513 Intangible assets acquired totaled $259 million , and include a trademark of $34 million with a useful life of 15 years and a customer list of $225 million with a useful life of 20 years , each of which are included in other assets in the accompanying consolidated balance sheets. The goodwill of $160 million is primarily attributable to the synergies expected to arise after the acquisition and is deductible for tax purposes. Pro forma and historical financial information has not been provided as the acquisition was not material to the consolidated financial statements. RONA On May 20, 2016, the Company acquired all of the issued and outstanding common shares of RONA for C$24 per share in cash. In addition, as part of the transaction, borrowings under RONA’s revolving credit facility were settled in full at the closing of the acquisition, and the facility was eliminated. Total cash consideration to acquire the equity and settle the debt was C$3.1 billion ( $2.4 billion ) and is included in the investing section of the consolidated statements of cash flows. RONA is one of Canada’s largest retailers and distributors of hardware, building materials, home renovation, and gardening products. The acquisition is expected to enable the Company to accelerate its growth strategy by significantly expanding its presence in the Canadian home improvement market. Acquisition-related costs were expensed as incurred and were not significant. The following represents the aggregate purchase price allocation which includes purchase accounting adjustments made during the measurement period: (In millions) May 20, 2016 Purchase price: Cash paid to common shareholders $ 1,999 Cash paid to debt holders 368 Total cash paid $ 2,367 Allocation: Cash acquired $ 83 Accounts receivable 260 Merchandise inventory 814 Property 897 Goodwill 971 Other assets 437 Other current liabilities (619 ) Long-term liabilities (367 ) Noncontrolling interest (109 ) Net assets acquired $ 2,367 The intangible assets acquired totaled $310 million , and include trademarks of $204 million with a weighted average useful life of 15 years and dealer relationships of $106 million with a weighted average useful life of 20 years , which are included in other assets in the accompanying consolidated balance sheets. The goodwill of $971 million is primarily attributable to the synergies expected to arise after the acquisition. Goodwill of approximately $107 million is expected to be deductible for tax purposes. The transaction included the assumption by Lowe’s of unsecured debentures held by RONA of approximately C$118 million ( $91 million ) as of the acquisition date. The debentures matured and were settled in October 2016. As of the acquisition date, 6.9 million preferred shares of RONA remained outstanding. The total fair value of the shares and Lowe’s corresponding noncontrolling interest was $109 million , which was determined based on the closing market price of RONA’s preferred shares on the acquisition date. During the fourth fiscal quarter of 2016, the Company acquired all of the remaining noncontrolling interest in RONA by paying RONA’s preferred shareholders approximately $127 million , which represented an $18 million premium in excess of the carrying amount of the noncontrolling interest. See Note 12 to the consolidated financial statements for information regarding the impact of this transaction to the Company’s earnings per share calculation. Pro forma and historical financial information has not been provided as the acquisition was not material to the consolidated financial statements. In addition, net earnings attributable to the noncontrolling interest was not significant for any of the reporting periods presented. |
Investment in Australian Joint
Investment in Australian Joint Venture | 12 Months Ended |
Feb. 02, 2018 | |
Investment in Australian Joint Venture | |
Investment in Australian Joint Venture | NOTE 3 : Investment in Australian Joint Venture In the fourth quarter of fiscal year 2015, the Company announced its decision to exit the Australian joint venture investment with Woolworths Limited (Woolworths) and recorded a $530 million impairment of its equity method investment due to a determination that there was a decrease in value that was other than temporary. The Company owned a one-third share in the joint venture, Hydrox Holdings Pty Ltd. (Hydrox), which operated Masters Home Improvement stores and Home Timber and Hardware Group’s retail stores and wholesale distribution in Australia. As a result of this decision to exit, Woolworths was required to purchase the Company’s one-third share at its fair value as of January 18, 2016. The process for the two parties agreeing on fair value is prescribed in the Joint Venture Agreement. The $530 million non-cash impairment charge recorded in fiscal 2015 was based on the Company’s estimate of the value of its portion of the overall joint venture fair value as of January 18, 2016. During the third quarter of fiscal year 2016, Woolworths claimed a unilateral termination of the joint venture agreement, and executed other agreements to initiate the wind down of Hydrox without the Company’s approval as required under the joint venture agreement. Due to this, Lowe’s concluded that under applicable accounting standards, the investment should be accounted for as a cost method investment going forward. As a result of this determination, accumulated foreign currency translation adjustments of $208 million were reclassified from accumulated other comprehensive loss into the carrying value of the cost method investment. In addition, the unilateral actions of Woolworths to begin the liquidation of Hydrox, represented a triggering event requiring the Company to evaluate the cost method investment for impairment. Management determined that the requirements for determining impairment were met, and leveraged wind down cash flow projections in determining the estimated fair value of the entity as of October 28, 2016. The value was determined using an income approach based upon the expected future cash flows generated from the settlement of assets and liabilities inclusive of inventory, property, payables, lease liabilities and employee entitlements. As a result, the Company recorded a $290 million non-cash impairment charge during the third quarter of fiscal 2016 to reflect its estimated portion of the overall joint venture fair value in wind down. The Company classified this fair value measurement as Level 3. See Note 4 for additional information on the Company’s fair value measurements. Following the impairment recorded in the third quarter of fiscal 2016, the Company considered the amount due under the joint venture agreement, which was based on the fair value as of January 18, 2016 on a going concern basis, to exceed the recorded amount of the investment, which was based on an estimated current fair value in wind down. This claim for additional value under the joint venture agreement above and beyond any amounts expected to be received through the wind down process, represented a contingent asset whereby the Company would recognize any amounts as they were realized. During the second quarter of fiscal 2017, the Company completed the sale of our interest in the Australian joint venture with Woolworths and received proceeds of $199 million , which is included in cash flows from investing activities in the accompanying consolidated statements of cash flows. The proceeds from the sale exceeded the carrying value of the investment and resulted in a gain of $96 million . The carrying value prior to the sale reflected the non-cash impairment charges taken in fiscal years 2015 and 2016. The gain is included in selling, general and administrative expense in the accompanying consolidated statements of current and retained earnings. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Feb. 02, 2018 | |
Fair Value Measurements | |
Fair Value Measurements | NOTE 4 : 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 Company’s available-for-sale securities represented the only significant assets measured at fair value on a recurring basis for the fiscal years ended February 2, 2018 and February 3, 2017 . The following table presents the Company’s financial assets measured at fair value on a recurring basis. The fair values of these instruments approximated amortized costs. Fair Value Measurements at (In millions) Measurement Level February 2, 2018 February 3, 2017 Available-for-sale securities: Money market funds Level 1 $ 86 $ 81 Certificates of deposit Level 1 16 15 Municipal obligations Level 2 — 4 Total short-term investments $ 102 $ 100 Available-for-sale securities: Municipal floating rate obligations Level 2 $ 407 $ 359 Certificates of deposit Level 1 1 2 Municipal obligations Level 2 — 5 Total long-term investments $ 408 $ 366 There were no transfers between Levels 1, 2 or 3 during any of the periods presented. When available, quoted prices were used to determine fair value. When quoted prices in active markets were available, investments were classified within Level 1 of the fair value hierarchy. When quoted prices in active markets were not available, fair values were determined using pricing models, and the inputs to those pricing models were based on observable market inputs. The inputs to the pricing models were typically benchmark yields, reported trades, broker-dealer quotes, issuer spreads and benchmark securities, among others. Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis For the fiscal year ended February 2, 2018 , the Company had no significant measurements of assets and liabilities at fair value on a nonrecurring basis subsequent to their initial recognition. For the fiscal year ended February 3, 2017 , the Company’s only significant assets or liabilities measured at fair value on a nonrecurring basis subsequent to their initial recognition were goodwill (see Note 1 to the consolidated financial statements included herein for additional information regarding this fair value measurement), certain cost method investments (see Note 3 to the consolidated financial statements included herein for additional information regarding this fair value measurement), and certain long-lived assets. Long-lived assets The Company reviews the carrying amounts of long-lived assets whenever certain events or changes in circumstances indicate that the carrying amounts may not be recoverable. With input from retail store operations, the Company’s accounting and finance personnel that organizationally report to the chief financial officer, assess the performance of retail stores quarterly against historical patterns and projections of future profitability for evidence of possible impairment. An impairment loss is recognized when the carrying amount of the asset (disposal) group is not recoverable and exceeds its fair value. The Company estimated the fair values of assets subject to long-lived asset impairment based on the Company’s own judgments about the assumptions that market participants would use in pricing the assets and on observable market data, when available. The Company classified these fair value measurements as Level 3. In the determination of impairment for operating locations, the Company determined the fair values of individual operating locations using an income approach, which required discounting projected future cash flows. When determining the stream of projected future cash flows associated with an individual operating location, management made assumptions, incorporating local market conditions and inputs from retail store operations, the highest and best use, and about key variables including the following unobservable inputs: sales growth rates, gross margin, controllable expenses, such as payroll and occupancy expense, and asset residual values. In order to calculate the present value of those future cash flows, the Company discounted cash flow estimates at a rate commensurate with the risk that selected market participants would assign to the cash flows. In general, the selected market participants represented a group of other retailers with a location footprint similar in size to the Company’s. In the determination of impairment for excess properties held-for-use and held-for-sale, which consisted of retail outparcels and property associated with relocated or closed locations, the fair values were determined using a market approach based on estimated selling prices. The Company determined the estimated selling prices by obtaining information from property brokers or appraisers in the specific markets being evaluated or negotiated non-binding offers to purchase. The information obtained from property brokers or appraisers included comparable sales of similar assets and assumptions about demand in the market for these assets. The following table presents the Company’s assets measured at estimated fair value on a nonrecurring basis and the resulting impairment losses included in earnings, excluding costs to sell for excess properties held-for-sale. Because these assets subject to impairment were not measured at fair value on a recurring basis, certain fair value measurements presented in the table may reflect values at earlier measurement dates and may no longer represent the fair values at February 3, 2017 . Fair Value Measurements - Nonrecurring Basis February 3, 2017 (In millions) Fair Value Measurements Impairment Losses Assets-held-for-use: Operating locations $ 3 $ (34 ) Excess properties 18 (9 ) Goodwill (Note 1) — (46 ) Other assets: Cost method investments (Note 3) 103 (290 ) Total $ 124 $ (379 ) 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: February 2, 2018 February 3, 2017 (In millions) Carrying Amount Fair Value Carrying Amount Fair Value Unsecured notes (Level 1) $ 14,961 $ 15,608 $ 14,321 $ 15,305 Mortgage notes (Level 2) 6 7 7 7 Long-term debt (excluding capitalized lease obligations) $ 14,967 $ 15,615 $ 14,328 $ 15,312 |
Property and Accumulated Deprec
Property and Accumulated Depreciation | 12 Months Ended |
Feb. 02, 2018 | |
Property and Accumulated Depreciation | |
Property and Accumulated Depreciation | NOTE 5 : Property and Accumulated Depreciation Property is summarized by major class in the following table: (In millions) Estimated February 2, 2018 February 3, 2017 Cost: Land N/A $ 7,414 $ 7,329 Buildings and building improvements 5-40 18,521 18,147 Equipment 2-15 10,475 10,978 Construction in progress N/A 530 464 Total cost 36,940 36,918 Accumulated depreciation (17,219 ) (16,969 ) Property, less accumulated depreciation $ 19,721 $ 19,949 Included in net property are assets under capital lease of $724 million , less accumulated depreciation of $273 million , at February 2, 2018 , and $696 million , less accumulated depreciation of $269 million , at February 3, 2017 . The related amortization expense for assets under capital lease is included in depreciation expense. The Company recognized depreciation expense of $1.4 billion in 2017 and $1.5 billion in 2016 and 2015 . |
Short-Term Borrowings
Short-Term Borrowings | 12 Months Ended |
Feb. 02, 2018 | |
Short-Term Borrowings | |
Short-Term Borrowings | NOTE 6 : Short-Term Borrowings The Company has a $1.75 billion unsecured revolving credit agreement (the 2016 Credit Facility) with a syndicate of banks that expires in November 2021 . Subject to obtaining commitments from the lenders and satisfying other conditions specified in the 2016 Credit Facility, we may increase the aggregate availability by an additional $500 million . The 2016 Credit Facility supports our commercial paper program. Borrowings under our commercial paper program reduce the amount available for borrowing under its terms. The 2016 Credit Facility contains customary representations, warranties, and covenants for a transaction of this type. The Company was in compliance with those covenants at February 2, 2018 . Outstanding borrowings under the Company’s commercial paper program were $1.1 billion , with a weighted average interest rate of 1.85% , as of February 2, 2018 , and $510 million , with a weighted average interest rate of 1.01% , as of February 3, 2017 . There were no outstanding borrowings under the 2016 Credit Facility as of February 2, 2018 or February 3, 2017 . |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
Feb. 02, 2018 | |
Long-Term Debt | |
Long-Term Debt | NOTE 7 : Long-Term Debt Debt Category Weighted-Average Interest Rate at February 2, 2018 February 2, 2018 February 3, 2017 Secured debt: Mortgage notes due through fiscal 2027 1 5.38 % $ 6 $ 7 Unsecured debt: Notes due through fiscal 2022 3.05 % 3,577 4,324 Notes due fiscal 2023-2027 3.17 % 4,636 3,143 Notes due fiscal 2028-2032 6.67 % 563 696 Notes due fiscal 2033-2037 5.96 % 897 1,536 Notes due fiscal 2038-2042 4.95 % 1,119 1,731 Notes due fiscal 2043-2047 4.08 % 4,169 2,891 Capitalized lease obligations due through fiscal 2041 891 861 Total long-term debt 15,858 15,189 Less current maturities (294 ) (795 ) Long-term debt, excluding current maturities $ 15,564 $ 14,394 1 Real properties with an aggregate book value of $26 million were pledged as collateral at February 2, 2018 , for secured debt. Debt maturities, exclusive of unamortized original issue discounts, unamortized debt issuance costs, and capitalized lease obligations, for the next five years and thereafter are as follows: 2018, $251 million ; 2019, $1.1 billion ; 2020, $500 million ; 2021, $1.0 billion ; 2022, $765 million ; thereafter, $11.5 billion . The Company’s unsecured notes are issued under indentures that generally have similar terms and, therefore, have been grouped by maturity date for presentation purposes in the table above. The notes contain certain restrictive covenants, none of which are expected to impact the Company’s capital resources or liquidity. The Company was in compliance with all covenants of these agreements at February 2, 2018 . Unsecured notes issued during 2015 were as follows: Issue Date Principal Amount (in millions) Maturity Date Fixed vs. Floating Interest Rate Discount (in millions) September 2015 $ 250 September 2018 Floating Floating $ 1 September 2015 $ 750 September 2025 Fixed 3.375% $ 8 September 2015 $ 750 September 2045 Fixed 4.375% $ 24 The floating rate notes issued in 2015 will bear interest at a floating rate, reset quarterly, equal to the three-month LIBOR plus 0.600% ( 2.174% as of February 2, 2018). Interest on these floating rate notes is payable quarterly in arrears in March, June, September, and December of each year until maturity. Interest on the fixed rate notes issued in 2015 is payable semiannually in arrears in March and September of each year until maturity. Unsecured notes issued during 2016 were as follows: Issue Date Principal Amount (in millions) Maturity Date Fixed vs. Floating Interest Rate Discount (in millions) April 2016 $ 250 April 2019 Floating Floating $ 1 April 2016 $ 350 April 2019 Fixed 1.150% $ 1 April 2016 $ 1,350 April 2026 Fixed 2.500% $ 12 April 2016 $ 1,350 April 2046 Fixed 3.700% $ 19 The floating rate notes issued in 2016 will bear interest at a floating rate, reset quarterly, equal to the three-month LIBOR plus 0.240% ( 1.960% as of February 2, 2018). Interest on these floating rate notes is payable quarterly in arrears in April, July, October, and January of each year until maturity. Interest on the fixed rate notes issued in 2016 is payable semiannually in arrears in April and October of each year until maturity. Unsecured notes issued during 2017 were as follows: Issue Date Principal Amount (in millions) Maturity Date Fixed vs. Floating Interest Rate Discount (in millions) May 2017 $ 1,500 May 2027 Fixed 3.100% $ 9 May 2017 $ 1,500 May 2047 Fixed 4.050% $ 23 Interest on the notes issued in 2017 is payable semiannually in arrears in May and November of each year until maturity. The discounts associated with these issuances, which include the underwriting and issuance discounts, are recorded in long-term debt and are being amortized over the respective terms of the notes using the effective interest method. The indentures governing the fixed rate notes issued in 2017, 2016, and 2015, contain a provision that allows the Company to redeem the notes at any time, in whole or in part, at specified redemption prices plus accrued interest to the date of redemption. We do not have the right to redeem the floating rate notes issued in 2016 and 2015 prior to maturity. The indentures also contain a provision that allows the holders of the 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 indentures) 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 on such notes to the date of purchase, if any. The indentures governing the notes do not limit the aggregate principal amount of debt securities that the Company may issue and do 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. During 2017, the Company completed a cash tender offer to purchase and retire $1.6 billion combined aggregate principal amount of its outstanding notes and recognized a loss on extinguishment of debt of $464 million . |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Feb. 02, 2018 | |
Shareholders' Equity | |
Shareholders' Equity | NOTE 8 : Shareholders’ Equity Authorized shares of preferred stock were 5.0 million ( $5 par value) at February 2, 2018 , and February 3, 2017 , none of which have been issued. The Board of Directors may issue the preferred stock (without action by shareholders) in one or more series, having such voting rights, dividend and liquidation preferences, and such conversion and other rights as may be designated by the Board of Directors at the time of issuance. Authorized shares of common stock were 5.6 billion ( $.50 par value) at February 2, 2018 , and February 3, 2017 . The Company has a share repurchase program that is executed through purchases made from time to time either in the open market or through private off-market transactions. Shares purchased under the repurchase program are retired and returned to authorized and unissued status. On January 27, 2017, the Company’s Board of Directors authorized a $5.0 billion share repurchase under the program with no expiration, which was announced on the same day. On January 26, 2018, the Company’s Board of Directors authorized an additional $5.0 billion share repurchase under the program with no expiration, which was announced on the same day. As of February 2, 2018 , the Company had $6.9 billion remaining under the program. During the year ended February 2, 2018 , the Company entered into Accelerated Share Repurchase (ASR) agreements with third-party financial institutions to repurchase a total of 15.7 million shares of the Company’s common stock for $1.3 billion . At inception, the Company paid the financial institutions using cash on hand and took initial delivery of shares. Under the terms of the ASR agreements, upon settlement, the Company would either receive additional shares from the financial institution or be required to deliver additional shares or cash to the financial institution. The Company controlled its election to either deliver additional shares or cash to the financial institution and was subject to provisions which limited the number of shares the Company would be required to deliver. The final number of shares received upon settlement of each ASR agreement was determined with reference to the volume-weighted average price of the Company’s common stock over the term of the ASR agreement. The initial repurchase of shares under these agreements resulted in an immediate reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted earnings per share. These ASR agreements were accounted for as treasury stock transactions and forward stock purchase contracts. The par value of the shares received was recorded as a reduction to common stock with the remainder recorded as a reduction to capital in excess of par value and retained earnings. The forward stock purchase contracts were considered indexed to the Company’s own stock and were classified as equity instruments. During the year ended February 2, 2018 , the Company also repurchased shares of its common stock through the open market totaling 23.4 million shares for a cost of $1.8 billion . 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 restricted stock awards and performance share units. Shares repurchased for 2017 and 2016 were as follows: 2017 2016 (In millions) Shares Cost 1 Shares Cost 1 Share repurchase program 39.1 $ 3,133 46.7 $ 3,500 Shares withheld from employees 0.5 41 1.0 77 Total share repurchases 39.6 $ 3,174 47.7 $ 3,577 1 Reductions of $2.9 billion and $3.3 billion were recorded to retained earnings, after capital in excess of par value was depleted, for 2017 and 2016 , respectively. |
Accounting for Share-Based Paym
Accounting for Share-Based Payments | 12 Months Ended |
Feb. 02, 2018 | |
Accounting for Share-Based Payments | |
Accounting for Share-Based Payments | NOTE 9 : Accounting for Share-Based Payments Overview of Share-Based Payment Plans The Company has a number of active and inactive equity incentive plans (the Incentive Plans) under which the Company has been authorized to grant share-based awards to key employees and non-employee directors. The Company also has an employee stock purchase plan (the ESPP) that allows employees to purchase Company shares at a discount through payroll deductions. All of these plans contain a nondiscretionary anti-dilution provision that is designed to equalize the value of an award as a result of any stock dividend, stock split, recapitalization, or any other similar equity restructuring. A total of 199.0 million shares have been previously authorized for grant to key employees and non-employee directors under all of the Company’s Incentive Plans, but only 80.0 million of those shares were authorized for grants of share-based awards under the Company’s currently active Incentive Plans. In addition, a total of 70.0 million shares have been previously authorized for purchases by employees participating in the ESPP. At February 2, 2018 , there were 33.5 million shares remaining available for grants under the currently active Incentive Plans and 21.9 million shares remaining available for purchases under the ESPP. The Company recognized share-based payment expense within SG&A expense in the consolidated statements of earnings of $99 million , $90 million , and $117 million in 2017 , 2016 and 2015 respectively. The total associated income tax benefit recognized was $31 million , $29 million and $38 million in 2017 , 2016 and 2015 , respectively. Total unrecognized share-based payment expense for all share-based payment plans was $118 million at February 2, 2018 , of which $69 million will be recognized in 2018, $43 million in 2019 and $6 million thereafter. This results in these amounts being recognized over a weighted-average period of 1.7 years . For all share-based payment awards, the expense recognized has been adjusted for estimated forfeitures where the requisite service is not expected to be provided. Estimated forfeiture rates are developed based on the Company’s analysis of historical forfeiture data for homogeneous employee groups. General terms and methods of valuation for the Company’s share-based awards are as follows: Stock Options Stock options have terms of seven or 10 years, with one-third of each grant vesting each year for three years , and are assigned an exercise price equal to the closing market price of a share of the Company’s common stock on the date of grant. Options are expensed on a straight-line basis over the grant vesting period, which is considered to be the requisite service period. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. When determining expected volatility, the Company considers the historical volatility of the Company’s stock price, as well as implied volatility. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant, based on the options’ expected term. The expected term of the options is based on the Company’s evaluation of option holders’ exercise patterns and represents the period of time that options are expected to remain unexercised. The Company uses historical data to estimate the timing and amount of forfeitures. The weighted average assumptions used in the Black-Scholes option-pricing model and weighted-average grant date fair value for options granted in 2017 , 2016 , and 2015 are as follows: 2017 2016 2015 Weighted-average assumptions used: Expected volatility 23.6 % 24.0 % 31.3 % Dividend yield 1.68 % 1.66 % 1.69 % Risk-free interest rate 2.14 % 1.42 % 1.99 % Expected term, in years 6.43 6.44 7.00 Weighted-average grant date fair value $ 18.30 $ 15.00 $ 20.27 The total intrinsic value of options exercised, representing the difference between the exercise price and the market price on the date of exercise, was approximately $77 million , $73 million and $68 million in 2017 , 2016 and 2015 , respectively. Transactions related to stock options for the year ended February 2, 2018 are summarized as follows: Shares Weighted-Average Exercise Price Per Share Weighted-Average Remaining Term (In years) Aggregate Intrinsic Value (In thousands) Outstanding at February 3, 2017 4,239 $ 49.84 Granted 394 82.44 Canceled, forfeited or expired (131 ) 67.55 Exercised (1,687 ) 37.72 Outstanding at February 2, 2018 2,815 $ 60.84 7.14 $ 114,479 Vested and expected to vest at February 2, 2018 1 2,764 $ 60.54 7.10 $ 113,200 Exercisable at February 2, 2018 1,784 $ 52.55 6.29 $ 87,318 1 Includes outstanding vested options as well as outstanding nonvested options after a forfeiture rate is applied. Restricted Stock Awards Restricted stock awards are valued at the market price of a share of the Company’s common stock on the date of grant. In general, these awards vest at the end of a three -year period from the date of grant and are expensed on a straight-line basis over that period, which is considered to be the requisite service period. The Company uses historical data to estimate the timing and amount of forfeitures. The weighted-average grant-date fair value per share of restricted stock awards granted was $82.41 , $71.35 and $69.44 in 2017 , 2016 , and 2015 , respectively. The total fair value of restricted stock awards vesting was approximately $71 million , $151 million and $144 million in 2017 , 2016 and 2015 , respectively. Transactions related to restricted stock awards for the year ended February 2, 2018 are summarized as follows: Shares Weighted-Average Grant-Date Fair Value Per Share Nonvested at February 3, 2017 2,681 $ 64.22 Granted 473 82.41 Vested (910 ) 53.87 Canceled or forfeited (348 ) 67.03 Nonvested at February 2, 2018 1,896 $ 73.21 Deferred Stock Units Deferred stock units are valued at the market price of a share of the Company’s common stock on the date of grant. For non-employee Directors, these awards vest immediately and are expensed on the grant date. During 2017 , 2016 and 2015 , each non-employee Director was awarded a number of deferred stock units determined by dividing the annual award amount by the fair market value of a share of the Company’s common stock on the award date and rounding up to the next 100 units. The annual award amount used to determine the number of deferred stock units granted to each Director was $175,000 for 2017 , and $150,000 for 2016 and 2015 . During 2017 , 22,000 deferred stock units were granted and immediately vested for non-employee Directors. The weighted-average grant-date fair value per share of deferred stock units granted was $80.22 , $80.35 and $69.98 in 2017 , 2016 and 2015 , respectively. The total fair value of deferred stock units vested was $1.8 million in 2017 , and $1.5 million in 2016 and 2015 . During 2017 , no fully vested deferred stock units were released as a result of termination of service. At February 2, 2018 , there were 0.4 million deferred stock units outstanding, all of which were vested. Performance Share Units The Company issues performance share units classified as equity awards. Expense is recognized on a straight-line basis over the requisite service period, based on the probability of achieving the performance condition, with changes in expectations recognized as an adjustment to earnings in the period of the change. Compensation cost is not recognized for performance share units that do not vest because service or performance conditions are not satisfied and any previously recognized compensation cost is reversed. Performance share units do not have dividend rights. The Company uses historical data to estimate the timing and amount of forfeitures. The Company’s performance share units are classified as equity and contain performance and service conditions that must be satisfied for an employee to earn the right to benefit from the award. The performance condition is primarily based on the achievement of the Company’s target return on non-cash average assets (RONCAA). These awards are valued at the market price of a share of the Company’s common stock on the date of grant less the present value of dividends expected during the requisite service period. In fiscal 2016, the Company began issuing performance share units that contain a market condition modifier, in addition to having a performance and service condition. The performance condition for these awards continues to be based primarily on the achievement of the Company’s RONCAA targets. The market condition is based on the Company’s total shareholder return (TSR) compared to the median TSR of companies listed in the S&P 500 Index over a three year performance period. The Company used a Monte-Carlo simulation to determine the grant date fair value for these awards, which takes into consideration the possible outcomes pertaining to the TSR market condition. The weighted-average assumptions used in the Monte Carlo simulations for these awards granted in 2017 and 2016 are as follows: 2017 2016 Weighted-average assumptions used: Expected volatility 20.8 % 21.4 % Dividend yield 1.62 % 1.53 % Risk-free interest rate 1.46 % 0.88 % Expected term, in years 2.83 2.82 In general, 0% to 200% of the Company’s performance share units vest at the end of a three year service period from the date of grant based upon achievement of the performance condition, or a combination of the performance and market conditions, specified in the performance share unit agreement. The weighted-average grant-date fair value per unit of performance share units classified as equity awards granted was $91.50 , $77.58 and $71.52 in 2017 , 2016 and 2015 , respectively. The total fair value of performance share units vesting was approximately $31 million , $24 million , and $25 million in 2017 , 2016 , and 2015 , respectively. Transactions related to performance share units classified as equity awards for the year ended February 2, 2018 are summarized as follows: Units 1 Weighted-Average Grant-Date Fair Value Per Unit Nonvested at February 3, 2017 723 $ 65.30 Granted 273 91.50 Vested (253 ) 47.29 Canceled or forfeited (45 ) 77.42 Nonvested at February 2, 2018 698 $ 81.31 ¹ The number of units presented is based on achieving the targeted performance goals as defined in the performance share unit agreements. As of February 2, 2018 , the maximum number of nonvested units that could vest under the provisions of the agreements was 1.3 million for the RONCAA awards. Restricted Stock Units Restricted stock units do not have dividend rights and are valued at the market price of a share of the Company’s common stock on the date of grant less the present value of dividends expected during the requisite service period. In general, these awards vest at the end of a three -year period from the date of grant and are expensed on a straight-line basis over that period, which is considered to be the requisite service period. The Company uses historical data to estimate the timing and amount of forfeitures. The weighted-average grant-date fair value per share of restricted stock units granted was $75.44 , $67.26 and $66.24 in 2017 , 2016 and 2015 , respectively. The total fair value of restricted stock units vesting was approximately $5.6 million , $7.7 million , and $3.5 million in 2017 , 2016 and 2015 , respectively. Transactions related to restricted stock units for the year ended February 2, 2018 are summarized as follows: Shares Weighted-Average Grant-Date Fair Value Per Share Nonvested at February 3, 2017 323 $ 62.85 Granted 85 75.44 Vested (72 ) 50.42 Canceled or forfeited (59 ) 66.29 Nonvested at February 2, 2018 277 $ 69.21 ESPP The purchase price of the shares under the ESPP equals 85% of the closing price on the date of purchase. The Company’s share-based payment expense per share is equal to 15% of the closing price on the date of purchase. The ESPP is considered a liability award and is measured at fair value at each reporting date, and the share-based payment expense is recognized over the six-month offering period. The Company issued 1.1 million shares of common stock in 2017 and 1.3 million shares of common stock in 2016 and 2015 and recognized $13 million , $15 million , and $14 million of share-based payment expense pursuant to the plan in 2017, 2016, and 2015, respectively. |
Employee Retirement Plans
Employee Retirement Plans | 12 Months Ended |
Feb. 02, 2018 | |
Employee Retirement Plans | |
Employee Retirement Plans | NOTE 10 : Employee Retirement Plans The Company maintains a defined contribution retirement plan for eligible employees (the 401(k) Plan). Eligible employees may participate in the 401(k) Plan six months after their original date of service. Eligible employees hired or rehired prior to November 1, 2012, were automatically enrolled in the 401(k) Plan at a contribution rate of 1% of their pre-tax annual compensation unless they elected otherwise. Eligible employees hired or rehired November 1, 2012, or later must make an active election to participate in the 401(k) Plan. The Company makes contributions to the 401(k) Plan each payroll period, based upon a matching formula applied to employee deferrals (the Company Match). Participants are eligible to receive the Company Match pursuant to the terms of the 401(k) Plan. The Company Match varies based on how much the employee elects to defer up to a maximum of 4.25% of eligible compensation. The Company Match is invested identically to employee contributions and is immediately vested. The Company maintains a Benefit Restoration Plan to supplement benefits provided under the 401(k) Plan to participants whose benefits are restricted as a result of certain provisions of the Internal Revenue Code of 1986. This plan provides for employee salary deferrals and employer contributions in the form of a Company Match. The Company maintains a non-qualified deferred compensation program called the Lowe’s Cash Deferral Plan. This plan is designed to permit certain employees to defer receipt of portions of their compensation, thereby delaying taxation on the deferral amount and on subsequent earnings until the balance is distributed. This plan does not provide for Company contributions. The Company recognized expense associated with these employee retirement plans of $174 million , $180 million and $155 million in 2017 , 2016 and 2015 , respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Feb. 02, 2018 | |
Income Taxes | |
Income Taxes | NOTE 11 : Income Taxes The following is a reconciliation of the federal statutory tax rate to the effective tax rate: 2017 2016 2015 Statutory federal income tax rate 1 33.7 % 35.0 % 35.0 % State income taxes, net of federal tax benefit 2.9 3.6 3.6 Valuation allowance - Australian joint venture (0.6 ) 2.0 4.2 Other, net 1.2 (0.1 ) (0.4 ) Effective tax rate 37.2 % 40.5 % 42.4 % 1 The Company utilized a blended rate in 2017 due to the Tax Cuts and Job Act enacted on December 22, 2017. The components of the income tax provision are as follows: (In millions) 2017 2016 2015 Current: Federal $ 1,734 $ 1,824 $ 1,688 State 252 275 248 Total current 1 1,986 2,099 1,936 Deferred: Federal 60 6 (59 ) State (4 ) 3 (4 ) Total deferred 1 56 9 (63 ) Total income tax provision $ 2,042 $ 2,108 $ 1,873 1 Amounts applicable to foreign income taxes were insignificant for all periods presented. The tax effects of cumulative temporary differences that gave rise to the deferred tax assets and liabilities were as follows: (In millions) February 2, 2018 February 3, 2017 Deferred tax assets: Self-insurance $ 238 $ 352 Share-based payment expense 36 69 Deferred rent 66 78 Impairment of investment — 381 Capital loss carryforwards 225 — Net operating losses 213 174 Other, net 124 175 Total deferred tax assets 902 1,229 Valuation allowance (475 ) (578 ) Net deferred tax assets 427 651 Deferred tax liabilities: Property (264 ) (417 ) Other, net (23 ) (34 ) Total deferred tax liabilities (287 ) (451 ) Net deferred tax asset $ 140 $ 200 On December 22, 2017, the U.S. government enacted the Tax Cuts and Job Act (Tax Act). Among other provisions, the Tax Act lowered the corporate federal income tax rate from 35% to 21%, and effectively changed the U.S. corporate income tax system from a worldwide tax system to a territorial tax system. In addition, the Tax Act established a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries and added a new provision for a tax on global intangible low-taxed income (GILTI). The Company has made an accounting policy election to record the U.S. income tax effect of future GILTI inclusions in the period in which they arise. The Tax Act could be amended or subjected to technical correction, which could change the financial impacts recorded at February 2, 2018, or expected to be recorded in future periods. Also on December 22, 2017, the Securities and Exchange Commission issued Staff Accounting Bulletin (SAB 118) which provided guidance on accounting for the impact of the Tax Act. SAB 118 provides for a measurement period, that cannot extend beyond one year from the law’s enactment date, to determine and report a provisional impact of certain income tax effects of the Tax Act that were incomplete under ASC 740 as of year-end. As a result of the Tax Act, the Company utilized a blended statutory tax rate of 33.7% for 2017 in accordance with Section 15 of the Internal Revenue Code. This blended rate resulted in a tax benefit of $58 million for the year. The Company recorded a $56 million provisional tax expense for the measurement of its U.S. net deferred tax assets at the newly enacted corporate rate and a $22 million provisional tax expense for the one-time transition tax on unrepatriated earnings of foreign subsidiaries. While the Company made reasonable estimates of the impact of the reduction in the corporate rate and the deemed repatriation transition tax, the final impact may differ due to subsequent legislative action changes in interpretations and assumptions as well as the issuance of additional guidance from the Internal Revenue Service and state taxing authorities. The Company will continue to gather additional information to determine the concluding impact. As of February 2, 2018, the Company reported a deferred tax asset of $225 million , for the capital loss realized in 2017 for U.S. federal income tax purposes related to the exit from the Company’s joint venture investment in Australia. Since no present or future capital gains have been identified through which the asset can be realized, the Company has a full valuation allowance against the deferred tax asset. For U.S. federal tax purposes, this loss has a five-year carryforward period expiring at the end of fiscal 2022. As of February 3, 2017, the Company reported a deferred tax asset and full valuation allowance of $381 million related to its intention to exit the Company’s joint venture investment in Australia. In December 2016, the U.S. Treasury Department and the U.S. Internal Revenue Service issued final and temporary regulations under Internal Revenue Code Section 987 (the Regulations). The Regulations provide guidance on the taxation of foreign currency gains and losses arising from qualified business units that operate in a currency other than the currency of their owner. As a result of the newly enacted guidance, net deferred tax assets were reduced by $11 million in 2017 and $33 million in 2016. The Company operates as a branch in various foreign jurisdictions and cumulatively has incurred net operating losses of $720 million and $640 million as of February 2, 2018 , and February 3, 2017 , respectively. These net operating losses are subject to expiration in 2018 through 2037 . Deferred tax assets have been established for these foreign net operating losses in the accompanying consolidated balance sheets. Given the uncertainty regarding the realization of the foreign net deferred tax assets, the Company recorded cumulative valuation allowances of $234 million and $197 million as of February 2, 2018 , and February 3, 2017 , respectively. A reconciliation of the beginning and ending balances of unrecognized tax benefits is as follows: (In millions) 2017 2016 2015 Unrecognized tax benefits, beginning of year $ 6 $ 3 $ 7 Additions for tax positions of prior years — 3 — Reductions for tax positions of prior years (2 ) — (2 ) Settlements (1 ) — (2 ) Reductions due to a lapse in applicable statute of limitations (3 ) — — Unrecognized tax benefits, end of year $ — $ 6 $ 3 The amounts of unrecognized tax benefits that, if recognized, would favorably impact the effective tax rate were $5 million as of February 3, 2017, and $2 million as of January 29, 2016. The Company recognized $3 million of interest income, $2 million of interest expense, and $1 million of interest income related to uncertain tax positions during 2017 , 2016 , and 2015 , respectively. The Company had no accrued interest related to uncertain tax positions as of February 2, 2018 and $3 million as of February 3, 2017 . Penalties recognized related to uncertain tax positions were insignificant for 2017 , 2016 , and 2015 . Accrued penalties were also insignificant as of February 2, 2018 and February 3, 2017 . The Company is subject to examination by various foreign and domestic taxing authorities. There are ongoing U.S. state audits covering tax years 2011 to 2016 . An audit of the Company’s Canadian operations by the Canada Revenue Agency for fiscal years 2012 and 2013 is on-going. The Company remains subject to income tax examinations for international income taxes for fiscal years 2012 through 2016 . The Company believes appropriate provisions for all outstanding issues have been made for all jurisdictions and all open years. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Feb. 02, 2018 | |
Earnings Per Share | |
Earnings Per Share | Note 12 : 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 2017 , 2016 and 2015 : (In millions, except per share data) 2017 2016 2015 Basic earnings per common share: Net earnings attributable to Lowe's Companies, Inc. $ 3,447 $ 3,091 $ 2,546 Less: Net earnings allocable to participating securities (11 ) (11 ) (12 ) Less: Premium paid to acquire noncontrolling interest — (18 ) — Net earnings allocable to common shares, basic $ 3,436 $ 3,062 $ 2,534 Weighted-average common shares outstanding 839 880 927 Basic earnings per common share $ 4.09 $ 3.48 $ 2.73 Diluted earnings per common share: Net earnings attributable to Lowe's Companies, Inc. $ 3,447 $ 3,091 $ 2,546 Less: Net earnings allocable to participating securities (11 ) (11 ) (12 ) Less: Premium paid to acquire noncontrolling interest — (18 ) — Net earnings allocable to common shares, diluted $ 3,436 $ 3,062 $ 2,534 Weighted-average common shares outstanding 839 880 927 Dilutive effect of non-participating share-based awards 1 1 2 Weighted-average common shares, as adjusted 840 881 929 Diluted earnings per common share $ 4.09 $ 3.47 $ 2.73 As discussed in Note 2 to the consolidated financial statements, the Company paid RONA’s preferred shareholders a premium to acquire the remaining noncontrolling interest in RONA during the fourth quarter of fiscal 2016. The premium paid was accounted for as a capital transaction and as such, no loss was recognized in the Company’s consolidated financial statements. However, the premium paid represents a return on investment to RONA’s preferred shareholders and is not available to common shareholders. Therefore, the premium paid to acquire the remaining noncontrolling interest is reflected in the table above as a deduction from net earnings to compute net earnings allocable to common shares. Stock options to purchase 0.5 million , 1.0 million and 0.3 million shares of common stock for 2017 , 2016 and 2015 , respectively, were excluded from the computation of diluted earnings per common share because their effect would have been anti-dilutive. |
Leases
Leases | 12 Months Ended |
Feb. 02, 2018 | |
Leases | |
Leases | NOTE 13 : Leases The Company leases facilities and land for certain facilities under agreements with original terms generally of 20 years . The leases generally contain provisions for four to six renewal options of five years each. Some lease agreements also provide for contingent rentals based on sales performance in excess of specified minimums or on changes in the consumer price index. Contingent rentals were not significant for any of the periods presented. The Company subleases certain properties that are not used in its operations. Sublease income was not significant for any of the periods presented. The future minimum rental payments required under operating leases and capitalized lease obligations having initial or remaining non-cancelable lease terms in excess of one year are summarized as follows: (In millions) Operating Leases Capitalized Lease Obligations Total 2018 $ 666 $ 108 $ 774 2019 626 166 792 2020 573 88 661 2021 526 91 617 2022 476 87 563 Later years 2,970 951 3,921 Total minimum lease payments $ 5,837 $ 1,491 $ 7,328 Less amount representing interest (600 ) Present value of minimum lease payments 891 Less current maturities (45 ) Present value of minimum lease payments, less current maturities $ 846 Rental expenses under operating leases were $626 million , $549 million and $473 million in 2017 , 2016 and 2015 , respectively, and were recognized within SG&A expense. Excluded from these amounts are rental expenses associated with closed locations which were recognized as exit costs in the period of closure. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Feb. 02, 2018 | |
Commitments and Contingencies | |
Commitments and Contingencies | NOTE 14 : Commitments and Contingencies The Company is, from time to time, party to various legal proceedings considered to be in the normal course of business, none of which, individually or in the aggregate, are expected to be material to the Company’s financial statements. In evaluating liabilities associated with its various legal proceedings, the Company has accrued for probable liabilities associated with these matters. The amounts accrued were not material to the Company’s consolidated financial statements in any of the years presented. Reasonably possible losses for any of the individual legal proceedings which have not been accrued were not material to the Company’s consolidated financial statements. As of February 2, 2018 , the Company had non-cancelable commitments of $1.1 billion related to certain marketing and information technology programs, and purchases of merchandise inventory. Payments under these commitments are scheduled to be made as follows: 2018, $537 million ; 2019, $318 million ; 2020, $160 million ; 2021, $51 million ; 2022, $3 million ; thereafter, $0 million . At February 2, 2018 , the Company held standby and documentary letters of credit issued under banking arrangements which totaled $63 million . The majority of the Company’s letters of credit were issued for insurance contracts. |
Related Parties
Related Parties | 12 Months Ended |
Feb. 02, 2018 | |
Related Parties | |
Related Parties | NOTE 15 : Related Parties A member of the Company’s Board of Directors also serves on the Board of Directors of a vendor that provides branded consumer packaged goods to the Company. The Company purchased products from this vendor in the amount of $149 million in 2017 , $124 million in 2016 , and $153 million in 2015 . Amounts payable to this vendor were insignificant at February 2, 2018 and February 3, 2017 . A member of the Company’s Board of Directors also serves on the Board of Directors of a vendor that provides certain services to the Company related to health and welfare benefit plans. The Company made payments to this vendor in the amount of $14 million in 2017 , $59 million in 2016 , and $58 million in 2015 . Amounts payable to this vendor were insignificant at February 2, 2018 and February 3, 2017 . |
Other Information
Other Information | 12 Months Ended |
Feb. 02, 2018 | |
Other Information | |
Other Information | NOTE 16 : Other Information Net interest expense is comprised of the following: (In millions) 2017 2016 2015 Long-term debt $ 582 $ 583 $ 505 Capitalized lease obligations 56 53 42 Interest income (16 ) (12 ) (4 ) Interest capitalized (5 ) (4 ) (3 ) Interest on tax uncertainties (3 ) 2 (1 ) Other 19 23 13 Interest - net $ 633 $ 645 $ 552 Supplemental disclosures of cash flow information: (In millions) 2017 2016 2015 Cash paid for interest, net of amount capitalized $ 654 $ 619 $ 535 Cash paid for income taxes, net $ 1,673 $ 2,217 $ 2,055 Non-cash investing and financing activities: Non-cash property acquisitions, including assets acquired under capital lease $ 97 $ 86 $ 102 Cash dividends declared but not paid $ 340 $ 304 $ 255 Sales by product category: 2017 2016 2015 (Dollars in millions) Total Sales % Total Sales % Total Sales % Lumber & Building Materials $ 9,508 14 % $ 8,505 13 % $ 7,007 12 % Appliances 7,696 11 7,037 11 6,477 11 Seasonal & Outdoor Living 7,165 10 6,996 11 6,623 11 Tools & Hardware 6,713 10 6,359 10 5,686 10 Fashion Fixtures 6,429 9 6,303 10 5,806 10 Rough Plumbing & Electrical 6,149 9 5,741 9 5,203 9 Paint 5,321 8 5,183 8 4,742 8 Millwork 5,308 8 5,236 8 4,957 8 Lawn & Garden 5,251 8 5,109 8 4,732 8 Flooring 4,363 6 4,227 6 3,887 7 Kitchens 3,644 5 3,532 5 3,276 5 Other 1,072 2 789 1 678 1 Totals $ 68,619 100 % $ 65,017 100 % $ 59,074 100 % |
Derivative Instruments
Derivative Instruments | 12 Months Ended |
Feb. 02, 2018 | |
Derivative Instruments | |
Derivative Instruments | NOTE 17 : Derivative Instruments In February 2016, the Company entered into an option to purchase 3.2 billion Canadian dollars in order to manage the foreign currency exchange rate risk on the consideration to be paid for the RONA acquisition. This option contract was not accounted for as a hedging instrument, and gains and losses resulting from changes in fair value and settlement were included in selling, general and administrative expense in the accompanying consolidated statements of current and retained earnings. The cash flows related to this option were included within investing activities in the accompanying consolidated statements of cash flows. The premium paid for the foreign currency exchange option contract was $103 million . The option contract was settled during the second quarter of fiscal year 2016 for $179 million , resulting in a total realized gain of $76 million for the year ended February 3, 2017. The Company’s other derivative instruments, and related activity, were not material in any of the periods presented. |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Accounts and Reserves | 12 Months Ended |
Feb. 02, 2018 | |
Valuation and Qualifying Accounts & Reserves | |
Schedule II - Valuation and Qualifying Accounts and Reserves | 2. Financial Statement Schedule SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (In millions) Balance at beginning of period Charges to costs and expenses Deductions Balance at end of period February 2, 2018: Reserve for loss on obsolete inventory $ 59 $ 18 1 $ — $ 77 Reserve for inventory shrinkage 189 456 (433 ) 2 212 Reserve for sales returns 71 — — 71 Deferred tax valuation allowance 578 — (103 ) 4 475 Self-insurance liabilities 831 1,547 (1,488 ) 5 890 Reserve for exit activities 66 19 (25 ) 6 60 February 3, 2017: Reserve for loss on obsolete inventory $ 46 $ 13 1 $ — $ 59 Reserve for inventory shrinkage 171 397 (379 ) 2 189 Reserve for sales returns 66 5 3 — 71 Deferred tax valuation allowance 447 131 4 — 578 Self-insurance liabilities 883 1,418 (1,470 ) 5 831 Reserve for exit activities 67 47 (48 ) 6 66 January 29, 2016: Reserve for loss on obsolete inventory $ 52 $ — $ (6 ) 1 $ 46 Reserve for inventory shrinkage 162 345 (336 ) 2 171 Reserve for sales returns 65 1 3 — 66 Deferred tax valuation allowance 170 277 4 — 447 Self-insurance liabilities 905 1,357 (1,379 ) 5 883 Reserve for exit activities 53 34 (20 ) 6 67 1 Represents the net increase/(decrease) in the required reserve based on the Company’s evaluation of obsolete inventory. 2 Represents the actual inventory shrinkage experienced at the time of physical inventories. 3 Represents the net increase in the required reserve based on the Company’s evaluation of anticipated merchandise returns. 4 Represents an increase/(decrease) in the required reserve based on the Company’s evaluation of deferred tax assets. 5 Represents claim payments for self-insured claims. 6 Represents lease payments, net of sublease income. |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Feb. 02, 2018 | |
Summary of Significant Accounting Policies | |
Fiscal Year | Fiscal Year - The Company’s fiscal year ends on the Friday nearest the end of January. Fiscal years 2017 and 2015 each contained 52 weeks and fiscal 2016 contained 53 weeks. All references herein for the years 2017 , 2016 , and 2015 represent the fiscal years ended February 2, 2018 , February 3, 2017 , and January 29, 2016 , respectively. |
Principles of Consolidation | Principles of Consolidation - The consolidated financial statements include the accounts of the Company and its wholly-owned or controlled operating subsidiaries. All intercompany accounts and transactions have been eliminated. |
Foreign Currency | Foreign Currency - The functional currencies of the Company’s international subsidiaries are generally the local currencies of the countries in which the subsidiaries are located. Foreign currency denominated assets and liabilities are translated into U.S. dollars using the exchange rates in effect at the balance sheet date. Results of operations and cash flows are translated using the average exchange rates throughout the period. The effect of exchange rate fluctuations on translation of assets and liabilities is included as a component of shareholders’ equity in accumulated other comprehensive income/loss. Gains and losses from foreign currency transactions are included in selling, general and administrative (SG&A) expense. |
Use of Estimates | Use of Estimates - The preparation of the Company’s financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates that affect the reported amounts of assets, liabilities, sales and expenses, and related disclosures of contingent assets and liabilities. The Company bases these estimates on historical results and various other assumptions believed to be reasonable, all of which form the basis for making estimates concerning the carrying values of assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents - Cash and cash equivalents include cash on hand, demand deposits, and short-term investments with original maturities of three months or less when purchased. Cash and cash equivalents are carried at amortized cost on the consolidated balance sheets. The majority of payments due from financial institutions for the settlement of credit card and debit card transactions process within two business days and are, therefore, classified as cash and cash equivalents. |
Investments | Investments - Investments generally consist of money market funds, municipal obligations, certificates of deposit, and municipal floating rate obligations, all of which are classified as available-for-sale. Available-for-sale securities are recorded at fair value, and unrealized gains and losses are recorded, net of tax, as a component of accumulated other comprehensive income/loss. Gross unrealized gains and losses were insignificant at February 2, 2018 and February 3, 2017 . The proceeds from sales of available-for-sale securities were $523 million , $505 million , and $394 million for 2017 , 2016 , and 2015 , respectively. Gross realized gains and losses on the sale of available-for-sale securities were not significant for any of the periods presented. Investments with a stated maturity date of one year or less from the balance sheet date or that are expected to be used in current operations are classified as short-term investments. All other investments are classified as long-term. Investments classified as long-term at February 2, 2018 , will mature in one to 37 years, based on stated maturity dates. The Company classifies as investments restricted balances primarily pledged as collateral for the Company’s extended protection plan program. Restricted balances included in short-term investments were $86 million at February 2, 2018 , and $81 million at February 3, 2017 . Restricted balances included in long-term investments were $381 million at February 2, 2018 , and $354 million at February 3, 2017 . |
Merchandise Inventory | Merchandise Inventory - The majority of the Company’s inventory is stated at the lower of cost and net realizable value using the first-in, first-out method of inventory accounting. Inventory for certain subsidiaries representing approximately 10% and 8% of the consolidated inventory balances as of February 2, 2018 and February 3, 2017 , respectively, are stated at lower of cost and net realizable value using other inventory methods, including the weighted average cost method and the retail inventory method. The cost of inventory includes certain costs associated with the preparation of inventory for resale, including distribution center costs, and is net of vendor funds. The Company records an inventory reserve for the anticipated loss associated with selling inventories below cost. This reserve is based on management’s current knowledge with respect to inventory levels, sales trends, and historical experience. Management does not believe the Company’s merchandise inventories are subject to significant risk of obsolescence in the near term, and management has the ability to adjust purchasing practices based on anticipated sales trends and general economic conditions. However, changes in consumer purchasing patterns could result in the need for additional reserves. |
Merchandise Inventory, Shrink Reserve | The Company also records an inventory reserve for the estimated shrinkage between physical inventories. This reserve is based primarily on actual shrink results from previous physical inventories. Changes in the estimated shrink reserve are made based on the timing and results of physical inventories. |
Merchandise Inventory, Vendor Funds | The Company receives funds from vendors in the normal course of business, principally as a result of purchase volumes, sales, early payments, or promotions of vendors’ products. Generally, these vendor funds do not represent the reimbursement of specific, incremental, and identifiable costs incurred by the Company to sell the vendor’s product. Therefore, the Company treats these funds as a reduction in the cost of inventory, and are recognized as a reduction of cost of sales when the inventory is sold. Funds that are determined to be reimbursements of specific, incremental, and identifiable costs incurred to sell vendors’ products are recorded as an offset to the related expense. The Company develops accrual rates for vendor funds based on the provisions of the agreements in place. Due to the complexity and diversity of the individual vendor agreements, the Company performs analyses and reviews historical trends throughout the year and confirms actual amounts with select vendors to ensure the amounts earned are appropriately recorded. Amounts accrued throughout the year could be impacted if actual purchase volumes differ from projected annual purchase volumes, especially in the case of programs that provide for increased funding when graduated purchase volumes are met. |
Credit Programs | Credit Programs - The Company has an agreement with Synchrony Bank (Synchrony), formerly GE Capital Retail, under which Synchrony purchases at face value commercial business accounts receivable originated by the Company and services these accounts. This agreement expires in December 2023, unless terminated sooner by the parties. The Company primarily accounts for these transfers as sales of the accounts receivable. When the Company transfers its commercial business accounts receivable, it retains certain interests in those receivables, including the funding of a loss reserve and its obligation related to Synchrony’s ongoing servicing of the receivables sold. Any gain or loss on the sale is determined based on the previous carrying amounts of the transferred assets allocated at fair value between the receivables sold and the interests retained. Fair value is based on the present value of expected future cash flows, taking into account the key assumptions of anticipated credit losses, payment rates, late fee rates, Synchrony’s servicing costs, and the discount rate commensurate with the uncertainty involved. Due to the short-term nature of the receivables sold, changes to the key assumptions would not materially impact the recorded gain or loss on the sales of receivables or the fair value of the retained interests in the receivables. Total commercial business accounts receivable sold to Synchrony were $3.1 billion in 2017 , $2.8 billion in 2016 , and $2.6 billion in 2015 . The Company recognized losses of $39 million in 2017 , $32 million in 2016 , and $36 million in 2015 on these receivable sales as SG&A expense, which primarily relates to the fair value of obligations related to servicing costs that are remitted to Synchrony monthly. At February 2, 2018 and February 3, 2017 , the fair value of the retained interests was determined based on the present value of expected future cash flows and was insignificant. Sales generated through the Company’s proprietary credit cards are not reflected in receivables. Under an agreement with Synchrony, credit is extended directly to customers by Synchrony. All credit program-related services are performed and controlled directly by Synchrony. The Company has the option, but no obligation, to purchase the receivables at the end of the agreement in December 2023. Tender costs, including amounts associated with accepting the Company’s proprietary credit cards, are included in SG&A expense in the consolidated statements of earnings. The total portfolio of receivables held by Synchrony, including both receivables originated by Synchrony from the Company’s proprietary credit cards and commercial business accounts receivable originated by the Company and sold to Synchrony, approximated $10.2 billion at February 2, 2018 , and $9.6 billion at February 3, 2017 . |
Property and Depreciation | Property and Depreciation - Property is recorded at cost. Costs associated with major additions are capitalized and depreciated. Capital assets are expected to yield future benefits and have original useful lives which exceed one year. The total cost of a capital asset generally includes all applicable sales taxes, delivery costs, installation costs, and other appropriate costs incurred by the Company, including interest in the case of self-constructed assets. Upon disposal, the cost of properties and related accumulated depreciation is removed from the accounts, with gains and losses reflected in SG&A expense in the consolidated statements of earnings. Property consists of land, buildings and building improvements, equipment, and construction in progress. Buildings and building improvements includes owned buildings, as well as buildings under capital lease and leasehold improvements. Equipment primarily includes store racking and displays, computer hardware and software, forklifts, vehicles, and other store equipment . Depreciation is provided over the estimated useful lives of the depreciable assets. Assets are depreciated using the straight-line method. Leasehold improvements and assets under capital lease are depreciated over the shorter of their estimated useful lives or the term of the related lease, which may include one or more option renewal periods where failure to exercise such options would result in an economic penalty in such amount that renewal appears, at the inception of the lease, to be reasonably assured. During the term of a lease, if leasehold improvements are placed in service significantly after the inception of the lease, the Company depreciates these leasehold improvements over the shorter of the useful life of the leasehold assets or a term that includes lease renewal periods deemed to be reasonably assured at the time the leasehold improvements are placed into service. The amortization of these assets is included in depreciation expense in the consolidated financial statements. |
Long-Lived Asset Impairment | Long-Lived Asset Impairment/Exit Activities - The carrying amounts of long-lived assets are reviewed whenever certain events or changes in circumstances indicate that the carrying amounts may not be recoverable. A potential impairment has occurred for long-lived assets held-for-use if projected future undiscounted cash flows expected to result from the use and eventual disposition of the assets are less than the carrying amounts of the assets. An impairment loss is recorded for long-lived assets held-for-use when the carrying amount of the asset is not recoverable and exceeds its fair value. Excess properties that are expected to be sold within the next 12 months and meet the other relevant held-for-sale criteria are classified as long-lived assets held-for-sale. Excess properties consist primarily of retail outparcels and property associated with relocated or closed locations. An impairment loss is recorded for long-lived assets held-for-sale when the carrying amount of the asset exceeds its fair value less cost to sell. A long-lived asset is not depreciated while it is classified as held-for-sale. For long-lived assets to be abandoned, the Company considers the asset to be disposed of when it ceases to be used. Until it ceases to be used, the Company continues to classify the asset as held-for-use and tests for potential impairment accordingly. If the Company commits to a plan to abandon a long-lived asset before the end of its previously estimated useful life, its depreciable life is re-evaluated. Impairment losses are included in SG&A expense in the consolidated statements of earnings. Fair value measurements associated with long-lived asset impairments are further described in Note 4 to the consolidated financial statements. |
Exit Activities | When locations under operating leases are closed, a liability is recognized for the fair value of future contractual obligations, including future minimum lease payments, property taxes, utilities, common area maintenance, and other ongoing expenses, net of estimated sublease income and other recoverable items. When the Company commits to an exit plan and communicates that plan to affected employees, a liability is recognized in connection with one-time employee termination benefits. Subsequent changes to the liabilities, including a change resulting from a revision to either the timing or the amount of estimated cash flows, are recognized in the period of change. Expenses associated with exit activities are included in SG&A expense in the consolidated statement of earnings. Amounts accrued for exit activities were not material for any of the periods presented. |
Goodwill | Goodwill - Goodwill is the excess of the purchase price over the fair value of identifiable assets acquired, less liabilities assumed, in a business combination. The Company reviews goodwill for impairment at the reporting unit level, which is one level below the operating segment level. Goodwill is not amortized but is evaluated for impairment at least annually on the first day of the fourth quarter or whenever events or changes in circumstances indicate that it is more likely than not that the carrying amount may not be recoverable. The evaluation begins with a qualitative assessment to determine whether a quantitative impairment test is necessary. If, after assessing qualitative factors, we determine it is more likely than not that the fair value of the reporting unit is less than the carrying amount, then the two-step goodwill impairment test is necessary. The first step of the goodwill impairment test used to identify potential impairment compares the fair value of a reporting unit with its carrying amount, including goodwill. Fair value represents the price a market participant would be willing to pay in a potential sale of the reporting unit and is based on discounted future cash flows. If the fair value exceeds carrying value, then no goodwill impairment has occurred. If the carrying value of the reporting unit exceeds its fair value, a second step is required to measure possible goodwill impairment loss. The second step includes hypothetically valuing the tangible and intangible assets and liabilities of the reporting unit as if the reporting unit had been acquired in a business combination. Then, the implied fair value of the reporting unit’s goodwill is compared to the carrying value of that goodwill. If the carrying value of the reporting unit’s goodwill exceeds the implied fair value of the goodwill, an impairment loss is recognized in an amount equal to the excess, not to exceed the carrying value. A reporting unit is an operating segment or a business unit one level below that operating segment, for which discrete financial information is prepared and regularly reviewed by segment management. Goodwill is allocated to the following reporting units: U.S. Home Improvement, Orchard Supply Hardware (Orchard), Canada - Retail, and Canada - Distribution. During the third quarter of fiscal year 2016, due to a strategic reassessment of the Orchard operations, the Company determined potential indicators of impairment within the reporting unit existed, and quantitatively evaluated the Orchard reporting unit for impairment. The Company classified this fair value measurement as Level 3. See Note 4 for additional information on the Company’s fair value measurements. The Company performed a discounted cash flow analysis for the Orchard reporting unit. The discounted cash flow model included management assumptions for expected sales growth, expansion plans, capital expenditures, and overall operational forecasts. The analysis led to the conclusion that the goodwill allocated to the Orchard reporting unit had no implied value. Accordingly, the full carrying value of $46 million relating to Orchard goodwill was impaired during the third quarter of 2016. |
Equity Method Investments | Equity Method Investments - The Company’s investments in certain unconsolidated entities are accounted for under the equity method. The balance of these investments is included in other assets (noncurrent) in the accompanying consolidated balance sheets. The balance is increased to reflect the Company’s capital contributions and equity in earnings of the investees. The balance is decreased for its equity in losses of the investees, for distributions received that are not in excess of the carrying amount of the investments, and for any other than temporary impairment losses recognized. Equity method investments were not significant as of February 2, 2018 and February 3, 2017 . The Company’s equity in earnings and losses of the investees are included in SG&A expense, and were not significant for any of the periods presented. Equity method investments are evaluated for impairment whenever events or changes in circumstances indicate that a decline in value has occurred that is other than temporary. Evidence considered in this evaluation includes, but would not necessarily be limited to, the financial condition and near-term prospects of the investee, recent operating trends and forecasted performance of the investee, market conditions in the geographic area or industry in which the investee operates and the Company’s strategic plans for holding the investment in relation to the period of time expected for an anticipated recovery of its carrying value. Investments that are determined to have a decline in value deemed to be other than temporary are written down to estimated fair value. The Company’s other than temporary impairment losses are included in SG&A expense, and were not significant for 2017 and 2016 . See Note 3 for additional information on the other than temporary impairment loss the Company recognized in 2015 , related to its investment in the Australian joint venture. |
Leases | Leases - For lease agreements that provide for escalating rent payments or free-rent occupancy periods, the Company recognizes rent expense on a straight-line basis over the non-cancellable lease term and option renewal periods where failure to exercise such options would result in an economic penalty in such amount that renewal appears, at the inception of the lease, to be reasonably assured. The lease term commences on the date that the Company takes possession of or controls the physical use of the property. Deferred rent is included in other liabilities (noncurrent) on the consolidated balance sheets. When the Company renegotiates and amends a lease to extend the non-cancellable lease term prior to the date at which it would have been required to exercise or decline a term extension option, the amendment is treated as a new lease. The new lease begins on the date the lease amendment is entered into and ends on the last date of the non-cancellable lease term, as adjusted to include any option renewal periods where failure to exercise such options would result in an economic penalty in such amount that renewal appears, at the inception of the lease amendment, to be reasonably assured. The new lease is classified as operating or capital under the authoritative guidance through use of assumptions regarding residual value, economic life, incremental borrowing rate, and fair value of the leased asset(s) as of the date of the amendment. |
Accounts Payable | Accounts Payable - The Company has an agreement with a third party to provide an accounts payable tracking system which facilitates participating suppliers’ ability to finance payment obligations from the Company with designated third-party financial institutions. Participating suppliers may, at their sole discretion, make offers to finance one or more payment obligations of the Company prior to their scheduled due dates at a discounted price to participating financial institutions. The Company’s goal in entering into this arrangement is to capture overall supply chain savings, in the form of pricing, payment terms, or vendor funding, created by facilitating suppliers’ ability to finance payment obligations at more favorable discount rates, while providing them with greater working capital flexibility. The Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not impacted by suppliers’ decisions to finance amounts under this arrangement. However, the Company’s right to offset balances due from suppliers against payment obligations is restricted by this arrangement for those payment obligations that have been financed by suppliers. The Company’s outstanding payment obligation placed on the accounts payable tracking system were $1.6 billion as of February 2, 2018 and February 3, 2017 , and participating suppliers had financed $1.1 billion and $1.0 billion , respectively, of those payment obligations to participating financial institutions. |
Self-Insurance | Self-Insurance - The Company is self-insured for certain losses relating to workers’ compensation, automobile, property, and general and product liability claims. The Company has insurance coverage to limit the exposure arising from these claims. The Company is also self-insured for certain losses relating to extended protection plan and medical and dental claims. Self-insurance claims filed and claims incurred but not reported are accrued based upon management’s estimates of the discounted ultimate cost for self-insured claims incurred using actuarial assumptions followed in the insurance industry and historical experience. Although management believes it has the ability to reasonably estimate losses related to claims, it is possible that actual results could differ from recorded self-insurance liabilities. The total self-insurance liability, including the current and non-current portions, was $890 million and $831 million at February 2, 2018 , and February 3, 2017 , respectively. The Company provides surety bonds issued by insurance companies to secure payment of workers’ compensation liabilities as required in certain states where the Company is self-insured. Outstanding surety bonds relating to self-insurance were $238 million and $243 million at February 2, 2018 , and February 3, 2017 , respectively. |
Income Taxes | Income Taxes - The Company establishes deferred income tax assets and liabilities for temporary differences between the tax and financial accounting bases of assets and liabilities. The tax effects of such differences are reflected in the consolidated balance sheets at the enacted tax rates expected to be in effect when the differences reverse. A valuation allowance is recorded to reduce the carrying amount of deferred tax assets if it is more likely than not that all or a portion of the asset will not be realized. The tax balances and income tax expense recognized by the Company are based on management’s interpretation of the tax statutes of multiple jurisdictions. The Company establishes a liability for tax positions for which there is uncertainty as to whether or not the position will be ultimately sustained. The Company includes interest related to tax issues as part of net interest on the consolidated financial statements. The Company records any applicable penalties related to tax issues within the income tax provision. |
Shareholders' Equity | Shareholders’ Equity - The Company has a share repurchase program that is executed through purchases made from time to time either in the open market or through private market transactions. Shares purchased under the repurchase program are retired and returned to authorized and unissued status. Any excess of cost over par value is charged to additional paid-in capital to the extent that a balance is present. Once additional paid-in capital is fully depleted, remaining excess of cost over par value is charged to retained earnings. |
Revenue Recognition | Revenue Recognition - The Company recognizes revenues, net of sales tax, when sales transactions occur and customers take possession of the merchandise. A provision for anticipated merchandise returns is provided through a reduction of sales and cost of sales in the period that the related sales are recorded. Revenues from product installation services are recognized when the installation is completed. Deferred revenues associated with amounts received for which customers have not yet taken possession of merchandise or for which installation has not yet been completed were $831 million and $755 million at February 2, 2018 , and February 3, 2017 , respectively. Revenues from stored-value cards, which include gift cards and returned merchandise credits, are deferred and recognized when the cards are redeemed. The liability associated with outstanding stored-value cards was $547 million and $498 million at February 2, 2018 , and February 3, 2017 , respectively, and these amounts are included in deferred revenue on the consolidated balance sheets. The Company recognizes income from unredeemed stored-value cards at the point at which redemption becomes remote. The Company’s stored-value cards have no expiration date or dormancy fees. Therefore, to determine when redemption is remote, the Company analyzes an aging of the unredeemed cards based on the date of last stored-value card use. The amount of revenue recognized from unredeemed stored-value cards for which redemption was deemed remote was not significant for 2017 , 2016 , and 2015 . |
Extended Protection Plans | Extended Protection Plans - The Company sells separately-priced extended protection plan contracts under a Lowe’s-branded program for which the Company is ultimately 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. 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 $19 million and $18 million at February 2, 2018 , and February 3, 2017 , respectively. 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 years presented. Expenses for claims are recognized when incurred and totaled $161 million , $141 million , and $127 million for 2017 , 2016 , and 2015 , respectively. |
Cost of Sales | Cost of Sales n Total cost of products sold, including: - Purchase costs, net of vendor funds; - Freight expenses associated with moving merchandise inventories from vendors to selling locations; - Costs associated with operating the Company’s distribution network, including payroll and benefit costs and occupancy costs; n Costs of installation services provided; n Costs associated with delivery of products directly from vendors to customers by third parties; n Costs associated with inventory shrinkage and obsolescence; n Costs of services performed under the extended protection plan. |
Selling, General and Administrative | Selling, General and Administrative n Payroll and benefit costs for retail and corporate employees; n Occupancy costs of retail and corporate facilities; n Advertising; n Costs associated with delivery of products from stores and distribution centers to customers; n Third-party, in-store service costs; n Tender costs, including bank charges, costs associated with credit card interchange fees and amounts associated with accepting the Company’s proprietary credit cards; n Costs associated with self-insured plans, and premium costs for stop-loss coverage and fully insured plans; n Long-lived asset impairment losses and gains/losses on disposal of assets; n Other administrative costs, such as supplies, and travel and entertainment. |
Advertising | Advertising - Costs associated with advertising are charged to expense as incurred. Advertising expenses were $968 million , $893 million , and $769 million in 2017 , 2016 , and 2015 , respectively. |
Shipping and Handling Costs | Shipping and Handling Costs - The Company includes shipping and handling costs relating to the delivery of products directly from vendors to customers by third parties in cost of sales. Shipping and handling costs, which include third-party delivery costs, salaries, and vehicle operations expenses relating to the delivery of products from stores and distribution centers to customers, are classified as SG&A expense. Shipping and handling costs included in SG&A expense were $841 million , $700 million and $607 million in 2017 , 2016 , and 2015 , respectively. |
Store Opening Costs | Store Opening Costs - Costs of opening new or relocated retail stores, which include payroll and supply costs incurred prior to store opening and grand opening advertising costs, are charged to expense as incurred. |
Comprehensive Income | Comprehensive Income - The Company reports comprehensive income in its consolidated statements of comprehensive income and consolidated statements of shareholders’ equity. Comprehensive income represents changes in shareholders’ equity from non-owner sources and is comprised of net earnings adjusted primarily for foreign currency translation adjustments. Net foreign currency translation gains, net of tax, classified in accumulated other comprehensive income were $11 million at February 2, 2018 . Net foreign currency translation losses, net of tax, classified in accumulated other comprehensive loss were $240 million , and $394 million at February 3, 2017 and January 29, 2016 , respectively. |
Segment Information | Segment Information - The Company’s home improvement retail operations represent a single reportable segment. Key operating decisions are made at the Company level in order to maintain a consistent retail store presentation. The Company’s home improvement retail and hardware stores sell similar products and services, use similar processes to sell those products and services, and sell their products and services to similar classes of customers. In addition, the Company’s operations exhibit similar long-term economic characteristics. The amounts of long-lived assets and net sales outside of the U.S. were approximately 9.8% and 7.8% , respectively, at February 2, 2018 . The amounts of long-lived assets and net sales outside of the U.S. were approximately 8.7% and 5.7% , respectively, at February 3, 2017 . The amounts of long-lived assets and net sales outside of the U.S. were not significant at January 29, 2016 . |
Recent Accounting Pronouncements | Accounting Pronouncements Recently Adopted - Effective February 4, 2017, the Company adopted Accounting Standards Update (ASU 2016-09), Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting . All excess tax benefits or deficiencies related to share-based payments are recognized in the provision for income taxes, which has increased the volatility within our provision for income taxes, as these amounts were previously reported within equity. As a result of the adoption, we have recognized $37 million of excess tax benefits in our provision for income taxes for the fiscal year ended February 2, 2018. The recognition of these benefits contributed $0.04 to diluted earnings per share for the fiscal year ended February 2, 2018. Excess tax benefits were historically reflected as a financing activity in the statements of cash flows, and after adoption, are included within operating activities. Cash paid to tax authorities by the Company when directly withholding shares for tax purposes continues to be classified as a financing activity in the statement of cash flows. Share-based payment expense continues to reflect estimated forfeitures of share-based payment awards. The Company has adopted the applicable provisions of the ASU prospectively. Accounting Pronouncements Not Yet Adopted - In January 2017, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2017-04, Intangibles-Goodwill and Other (Topic 350) . The ASU eliminates Step 2 of the goodwill impairment test, which requires determining the fair value of assets acquired or liabilities assumed in a business combination. Under the amendments in this update, a goodwill impairment test is performed by comparing the fair value of the reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. This ASU is effective for annual periods beginning after December 15, 2019, and interim periods within those annual periods, 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 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 but expects the ASU to have a material impact on its financial position, as a result of the requirement to recognize right-of-use assets and lease liabilities on the Company’s consolidated balance sheets. 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 addition, the ASU has expanded disclosure requirements regarding revenue. 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 will adopt this ASU in the first quarter of fiscal 2018, using a modified retrospective approach to adoption. Based on the Company’s assessment of the standard and its subsequent related amendments and interpretations, the standard will not materially affect our consolidated financial statements. The Company has determined the adoption of the guidance will impact the timing of recognition of its stored value card breakage. Currently, breakage is recognized using the remote method and will be recognized using the proportional method upon adoption of the guidance. The Company will also change the presentation of the sales return reserve on the consolidated balance sheet, as it is currently reported on a net basis, as well as change the timing of how installation services are recognized. In addition, the Company has evaluated its principal versus agent conclusions relating to certain arrangements with third parties and concluded there are no significant changes impacting the presentation of revenue on a gross or net basis. The Company is currently still evaluating any impacts the standard has relating to the classification of profit sharing income earned in connection with our private label credit card programs which is currently included in SG&A. The Company has not identified any significant modifications to existing systems or material changes in the Company’s internal controls over financial reporting. The adoption of the ASU will result in increased footnote disclosure requirements. |
Summary of Significant Accoun30
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Feb. 02, 2018 | |
Summary of Significant Accounting Policies | |
Changes in the carrying amount of goodwill | The changes in the carrying amount of goodwill for 2017 , 2016 , and 2015 were as follows: (In millions) 2017 2016 2015 Goodwill, balance at beginning of year $ 1,082 $ 154 $ 154 Acquisitions 1 160 1,015 — Impairment — (46 ) — Other adjustments 2 65 (41 ) — Goodwill, balance at end of year $ 1,307 $ 1,082 $ 154 |
Gross carrying amounts and cumulative goodwill impairment losses | Gross carrying amounts and cumulative goodwill impairment losses are as follows: February 2, 2018 February 3, 2017 (In millions) Gross Carrying Amount Cumulative Impairment Gross Carrying Amount Cumulative Impairment Goodwill $ 1,354 $ (47 ) $ 1,129 $ (47 ) |
Other current liabilities | Other Current Liabilities - Other current liabilities on the consolidated balance sheets consist of: (In millions) February 2, 2018 February 3, 2017 Self-insurance liabilities $ 347 $ 327 Accrued dividends 340 304 Accrued interest 184 194 Sales tax liabilities 144 210 Accrued property taxes 109 108 Other 826 832 Total $ 1,950 $ 1,975 |
Changes in deferred revenue for extended protection plan contracts | Changes in deferred revenue for extended protection plan contracts are summarized as follows: (In millions) 2017 2016 2015 Deferred revenue - extended protection plans, beginning of year $ 763 $ 729 $ 730 Additions to deferred revenue 408 387 350 Deferred revenue recognized (368 ) (353 ) (351 ) Deferred revenue - extended protection plans, end of year $ 803 $ 763 $ 729 |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Feb. 02, 2018 | |
Maintenance Supply Headquarters [Member] | |
Acquisitions | |
Acquisitions | The following table summarizes the preliminary purchase price allocation: (In millions) June 23, 2017 Allocation: Cash acquired $ 4 Merchandise inventory 68 Other current assets 36 Property 12 Goodwill 160 Other assets 260 Accounts payable (18 ) Other current liabilities (9 ) Net assets acquired $ 513 |
RONA inc [Member] | |
Acquisitions | |
Acquisitions | The following represents the aggregate purchase price allocation which includes purchase accounting adjustments made during the measurement period: (In millions) May 20, 2016 Purchase price: Cash paid to common shareholders $ 1,999 Cash paid to debt holders 368 Total cash paid $ 2,367 Allocation: Cash acquired $ 83 Accounts receivable 260 Merchandise inventory 814 Property 897 Goodwill 971 Other assets 437 Other current liabilities (619 ) Long-term liabilities (367 ) Noncontrolling interest (109 ) Net assets acquired $ 2,367 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Feb. 02, 2018 | |
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. The fair values of these instruments approximated amortized costs. Fair Value Measurements at (In millions) Measurement Level February 2, 2018 February 3, 2017 Available-for-sale securities: Money market funds Level 1 $ 86 $ 81 Certificates of deposit Level 1 16 15 Municipal obligations Level 2 — 4 Total short-term investments $ 102 $ 100 Available-for-sale securities: Municipal floating rate obligations Level 2 $ 407 $ 359 Certificates of deposit Level 1 1 2 Municipal obligations Level 2 — 5 Total long-term investments $ 408 $ 366 There were no transfers between Levels 1, 2 or 3 during any of the periods presented. |
Fair value measurements - nonrecurring basis | The following table presents the Company’s assets measured at estimated fair value on a nonrecurring basis and the resulting impairment losses included in earnings, excluding costs to sell for excess properties held-for-sale. Because these assets subject to impairment were not measured at fair value on a recurring basis, certain fair value measurements presented in the table may reflect values at earlier measurement dates and may no longer represent the fair values at February 3, 2017 . Fair Value Measurements - Nonrecurring Basis February 3, 2017 (In millions) Fair Value Measurements Impairment Losses Assets-held-for-use: Operating locations $ 3 $ (34 ) Excess properties 18 (9 ) Goodwill (Note 1) — (46 ) Other assets: Cost method investments (Note 3) 103 (290 ) Total $ 124 $ (379 ) |
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: February 2, 2018 February 3, 2017 (In millions) Carrying Amount Fair Value Carrying Amount Fair Value Unsecured notes (Level 1) $ 14,961 $ 15,608 $ 14,321 $ 15,305 Mortgage notes (Level 2) 6 7 7 7 Long-term debt (excluding capitalized lease obligations) $ 14,967 $ 15,615 $ 14,328 $ 15,312 |
Property and Accumulated Depr33
Property and Accumulated Depreciation (Tables) | 12 Months Ended |
Feb. 02, 2018 | |
Property and Accumulated Depreciation | |
Property and Accumulated Depreciation | Property is summarized by major class in the following table: (In millions) Estimated February 2, 2018 February 3, 2017 Cost: Land N/A $ 7,414 $ 7,329 Buildings and building improvements 5-40 18,521 18,147 Equipment 2-15 10,475 10,978 Construction in progress N/A 530 464 Total cost 36,940 36,918 Accumulated depreciation (17,219 ) (16,969 ) Property, less accumulated depreciation $ 19,721 $ 19,949 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 12 Months Ended |
Feb. 02, 2018 | |
Long-Term Debt | |
Long-Term Debt | Debt Category Weighted-Average Interest Rate at February 2, 2018 February 2, 2018 February 3, 2017 Secured debt: Mortgage notes due through fiscal 2027 1 5.38 % $ 6 $ 7 Unsecured debt: Notes due through fiscal 2022 3.05 % 3,577 4,324 Notes due fiscal 2023-2027 3.17 % 4,636 3,143 Notes due fiscal 2028-2032 6.67 % 563 696 Notes due fiscal 2033-2037 5.96 % 897 1,536 Notes due fiscal 2038-2042 4.95 % 1,119 1,731 Notes due fiscal 2043-2047 4.08 % 4,169 2,891 Capitalized lease obligations due through fiscal 2041 891 861 Total long-term debt 15,858 15,189 Less current maturities (294 ) (795 ) Long-term debt, excluding current maturities $ 15,564 $ 14,394 1 Real properties with an aggregate book value of $26 million were pledged as collateral at February 2, 2018 , for secured debt. |
Schedule of unsecured notes issued in fiscal 2015 | Unsecured notes issued during 2015 were as follows: Issue Date Principal Amount (in millions) Maturity Date Fixed vs. Floating Interest Rate Discount (in millions) September 2015 $ 250 September 2018 Floating Floating $ 1 September 2015 $ 750 September 2025 Fixed 3.375% $ 8 September 2015 $ 750 September 2045 Fixed 4.375% $ 24 |
Schedule of unsecured notes issued in fiscal 2016 | Unsecured notes issued during 2016 were as follows: Issue Date Principal Amount (in millions) Maturity Date Fixed vs. Floating Interest Rate Discount (in millions) April 2016 $ 250 April 2019 Floating Floating $ 1 April 2016 $ 350 April 2019 Fixed 1.150% $ 1 April 2016 $ 1,350 April 2026 Fixed 2.500% $ 12 April 2016 $ 1,350 April 2046 Fixed 3.700% $ 19 |
Schedule of unsecured notes issued in fiscal 2017 | Unsecured notes issued during 2017 were as follows: Issue Date Principal Amount (in millions) Maturity Date Fixed vs. Floating Interest Rate Discount (in millions) May 2017 $ 1,500 May 2027 Fixed 3.100% $ 9 May 2017 $ 1,500 May 2047 Fixed 4.050% $ 23 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 12 Months Ended |
Feb. 02, 2018 | |
Shareholders' Equity | |
Schedule of share repurchases | Shares repurchased for 2017 and 2016 were as follows: 2017 2016 (In millions) Shares Cost 1 Shares Cost 1 Share repurchase program 39.1 $ 3,133 46.7 $ 3,500 Shares withheld from employees 0.5 41 1.0 77 Total share repurchases 39.6 $ 3,174 47.7 $ 3,577 1 Reductions of $2.9 billion and $3.3 billion were recorded to retained earnings, after capital in excess of par value was depleted, for 2017 and 2016 , respectively. |
Accounting for Share-Based Pa36
Accounting for Share-Based Payments (Tables) | 12 Months Ended |
Feb. 02, 2018 | |
Accounting for Share-Based Payments | |
Schedule of Option Pricing Assumptions | The weighted average assumptions used in the Black-Scholes option-pricing model and weighted-average grant date fair value for options granted in 2017 , 2016 , and 2015 are as follows: 2017 2016 2015 Weighted-average assumptions used: Expected volatility 23.6 % 24.0 % 31.3 % Dividend yield 1.68 % 1.66 % 1.69 % Risk-free interest rate 2.14 % 1.42 % 1.99 % Expected term, in years 6.43 6.44 7.00 Weighted-average grant date fair value $ 18.30 $ 15.00 $ 20.27 |
Schedule of Stock Option Activity | Transactions related to stock options for the year ended February 2, 2018 are summarized as follows: Shares Weighted-Average Exercise Price Per Share Weighted-Average Remaining Term (In years) Aggregate Intrinsic Value (In thousands) Outstanding at February 3, 2017 4,239 $ 49.84 Granted 394 82.44 Canceled, forfeited or expired (131 ) 67.55 Exercised (1,687 ) 37.72 Outstanding at February 2, 2018 2,815 $ 60.84 7.14 $ 114,479 Vested and expected to vest at February 2, 2018 1 2,764 $ 60.54 7.10 $ 113,200 Exercisable at February 2, 2018 1,784 $ 52.55 6.29 $ 87,318 1 Includes outstanding vested options as well as outstanding nonvested options after a forfeiture rate is applied. |
Schedule of Restricted Stock Awards Activity | Transactions related to restricted stock awards for the year ended February 2, 2018 are summarized as follows: Shares Weighted-Average Grant-Date Fair Value Per Share Nonvested at February 3, 2017 2,681 $ 64.22 Granted 473 82.41 Vested (910 ) 53.87 Canceled or forfeited (348 ) 67.03 Nonvested at February 2, 2018 1,896 $ 73.21 |
Schedule of Performance Share Units Pricing Assumptions | The weighted-average assumptions used in the Monte Carlo simulations for these awards granted in 2017 and 2016 are as follows: 2017 2016 Weighted-average assumptions used: Expected volatility 20.8 % 21.4 % Dividend yield 1.62 % 1.53 % Risk-free interest rate 1.46 % 0.88 % Expected term, in years 2.83 2.82 |
Schedule of Performance Share Units Activity | Transactions related to performance share units classified as equity awards for the year ended February 2, 2018 are summarized as follows: Units 1 Weighted-Average Grant-Date Fair Value Per Unit Nonvested at February 3, 2017 723 $ 65.30 Granted 273 91.50 Vested (253 ) 47.29 Canceled or forfeited (45 ) 77.42 Nonvested at February 2, 2018 698 $ 81.31 ¹ The number of units presented is based on achieving the targeted performance goals as defined in the performance share unit agreements. As of February 2, 2018 , the maximum number of nonvested units that could vest under the provisions of the agreements was 1.3 million for the RONCAA awards. |
Schedule of Restricted Stock Unit Activity | Transactions related to restricted stock units for the year ended February 2, 2018 are summarized as follows: Shares Weighted-Average Grant-Date Fair Value Per Share Nonvested at February 3, 2017 323 $ 62.85 Granted 85 75.44 Vested (72 ) 50.42 Canceled or forfeited (59 ) 66.29 Nonvested at February 2, 2018 277 $ 69.21 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Feb. 02, 2018 | |
Income Taxes | |
Effective Income Tax Rate Reconciliation | The following is a reconciliation of the federal statutory tax rate to the effective tax rate: 2017 2016 2015 Statutory federal income tax rate 1 33.7 % 35.0 % 35.0 % State income taxes, net of federal tax benefit 2.9 3.6 3.6 Valuation allowance - Australian joint venture (0.6 ) 2.0 4.2 Other, net 1.2 (0.1 ) (0.4 ) Effective tax rate 37.2 % 40.5 % 42.4 % 1 The Company utilized a blended rate in 2017 due to the Tax Cuts and Job Act enacted on December 22, 2017. |
Components of Income Tax Provision | The components of the income tax provision are as follows: (In millions) 2017 2016 2015 Current: Federal $ 1,734 $ 1,824 $ 1,688 State 252 275 248 Total current 1 1,986 2,099 1,936 Deferred: Federal 60 6 (59 ) State (4 ) 3 (4 ) Total deferred 1 56 9 (63 ) Total income tax provision $ 2,042 $ 2,108 $ 1,873 1 Amounts applicable to foreign income taxes were insignificant for all periods presented. |
Deferred Tax Assets and Liabilities | The tax effects of cumulative temporary differences that gave rise to the deferred tax assets and liabilities were as follows: (In millions) February 2, 2018 February 3, 2017 Deferred tax assets: Self-insurance $ 238 $ 352 Share-based payment expense 36 69 Deferred rent 66 78 Impairment of investment — 381 Capital loss carryforwards 225 — Net operating losses 213 174 Other, net 124 175 Total deferred tax assets 902 1,229 Valuation allowance (475 ) (578 ) Net deferred tax assets 427 651 Deferred tax liabilities: Property (264 ) (417 ) Other, net (23 ) (34 ) Total deferred tax liabilities (287 ) (451 ) Net deferred tax asset $ 140 $ 200 |
Unrecognized Tax Benefits Reconciliation | A reconciliation of the beginning and ending balances of unrecognized tax benefits is as follows: (In millions) 2017 2016 2015 Unrecognized tax benefits, beginning of year $ 6 $ 3 $ 7 Additions for tax positions of prior years — 3 — Reductions for tax positions of prior years (2 ) — (2 ) Settlements (1 ) — (2 ) Reductions due to a lapse in applicable statute of limitations (3 ) — — Unrecognized tax benefits, end of year $ — $ 6 $ 3 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Feb. 02, 2018 | |
Earnings Per Share | |
Schedule of earnings per share, basic and diluted | The following table reconciles earnings per common share for 2017 , 2016 and 2015 : (In millions, except per share data) 2017 2016 2015 Basic earnings per common share: Net earnings attributable to Lowe's Companies, Inc. $ 3,447 $ 3,091 $ 2,546 Less: Net earnings allocable to participating securities (11 ) (11 ) (12 ) Less: Premium paid to acquire noncontrolling interest — (18 ) — Net earnings allocable to common shares, basic $ 3,436 $ 3,062 $ 2,534 Weighted-average common shares outstanding 839 880 927 Basic earnings per common share $ 4.09 $ 3.48 $ 2.73 Diluted earnings per common share: Net earnings attributable to Lowe's Companies, Inc. $ 3,447 $ 3,091 $ 2,546 Less: Net earnings allocable to participating securities (11 ) (11 ) (12 ) Less: Premium paid to acquire noncontrolling interest — (18 ) — Net earnings allocable to common shares, diluted $ 3,436 $ 3,062 $ 2,534 Weighted-average common shares outstanding 839 880 927 Dilutive effect of non-participating share-based awards 1 1 2 Weighted-average common shares, as adjusted 840 881 929 Diluted earnings per common share $ 4.09 $ 3.47 $ 2.73 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Feb. 02, 2018 | |
Leases | |
Future minimum lease payments | The future minimum rental payments required under operating leases and capitalized lease obligations having initial or remaining non-cancelable lease terms in excess of one year are summarized as follows: (In millions) Operating Leases Capitalized Lease Obligations Total 2018 $ 666 $ 108 $ 774 2019 626 166 792 2020 573 88 661 2021 526 91 617 2022 476 87 563 Later years 2,970 951 3,921 Total minimum lease payments $ 5,837 $ 1,491 $ 7,328 Less amount representing interest (600 ) Present value of minimum lease payments 891 Less current maturities (45 ) Present value of minimum lease payments, less current maturities $ 846 |
Other Information (Tables)
Other Information (Tables) | 12 Months Ended |
Feb. 02, 2018 | |
Other Information | |
Net interest expense | Net interest expense is comprised of the following: (In millions) 2017 2016 2015 Long-term debt $ 582 $ 583 $ 505 Capitalized lease obligations 56 53 42 Interest income (16 ) (12 ) (4 ) Interest capitalized (5 ) (4 ) (3 ) Interest on tax uncertainties (3 ) 2 (1 ) Other 19 23 13 Interest - net $ 633 $ 645 $ 552 |
Supplemental disclosures of cash flow information | Supplemental disclosures of cash flow information: (In millions) 2017 2016 2015 Cash paid for interest, net of amount capitalized $ 654 $ 619 $ 535 Cash paid for income taxes, net $ 1,673 $ 2,217 $ 2,055 Non-cash investing and financing activities: Non-cash property acquisitions, including assets acquired under capital lease $ 97 $ 86 $ 102 Cash dividends declared but not paid $ 340 $ 304 $ 255 |
Sales by product category | Sales by product category: 2017 2016 2015 (Dollars in millions) Total Sales % Total Sales % Total Sales % Lumber & Building Materials $ 9,508 14 % $ 8,505 13 % $ 7,007 12 % Appliances 7,696 11 7,037 11 6,477 11 Seasonal & Outdoor Living 7,165 10 6,996 11 6,623 11 Tools & Hardware 6,713 10 6,359 10 5,686 10 Fashion Fixtures 6,429 9 6,303 10 5,806 10 Rough Plumbing & Electrical 6,149 9 5,741 9 5,203 9 Paint 5,321 8 5,183 8 4,742 8 Millwork 5,308 8 5,236 8 4,957 8 Lawn & Garden 5,251 8 5,109 8 4,732 8 Flooring 4,363 6 4,227 6 3,887 7 Kitchens 3,644 5 3,532 5 3,276 5 Other 1,072 2 789 1 678 1 Totals $ 68,619 100 % $ 65,017 100 % $ 59,074 100 % |
Summary of Significant Accoun41
Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2018 | Feb. 03, 2017 | Jan. 29, 2016 | |
Changes in the carrying amount of goodwill | |||
Goodwill, balance at beginning of year | $ 1,082 | $ 154 | $ 154 |
Acquisitions | 160 | 1,015 | 0 |
Impairment | 0 | (46) | 0 |
Other adjustments | 65 | (41) | 0 |
Goodwill, balance at end of year | 1,307 | 1,082 | 154 |
Gross carrying amounts and cumulative goodwill impairment losses | |||
Goodwill, gross carrying amount | 1,354 | 1,129 | |
Goodwill, cumulative impairment | (47) | (47) | |
Other Current Liabilities | |||
Self-insurance liabilities | 347 | 327 | |
Accrued dividends | 340 | 304 | 255 |
Accrued interest | 184 | 194 | |
Sales tax liabilities | 144 | 210 | |
Accrued property taxes | 109 | 108 | |
Other | 826 | 832 | |
Total | 1,950 | 1,975 | |
Changes in deferred revenue for extended protection plan contracts | |||
Deferred revenue - extended protection plans, beginning of year | 763 | 729 | 730 |
Additions to deferred revenue | 408 | 387 | 350 |
Deferred revenue recognized | (368) | (353) | (351) |
Deferred revenue - extended protection plans, end of year | $ 803 | $ 763 | $ 729 |
Summary of Significant Accoun42
Summary of Significant Accounting Policies (Details Textual) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Feb. 02, 2018USD ($)location$ / shares | Feb. 03, 2017USD ($)$ / shares | Jan. 29, 2016USD ($)$ / shares | |
Summary of Significant Accounting Policies | |||
Number of stores | location | 2,152 | ||
Percentage of inventory valued using methods other than FIFO | 10.00% | 8.00% | |
Accounts receivable sold | $ 3,100 | $ 2,800 | $ 2,600 |
Loss on receivable sales | (39) | (32) | (36) |
Credit program receivables held by Synchrony | 10,200 | 9,600 | |
Goodwill impairment loss | 0 | 46 | 0 |
Payables placed on tracking system | 1,600 | 1,600 | |
Payables financed by participating suppliers | 1,100 | 1,000 | |
Total self insurance liability | 890 | 831 | |
Outstanding surety bonds relating to self-insurance | 238 | 243 | |
Deferred revenue from undelivered products and installation | 831 | 755 | |
Outstanding stored-value cards | 547 | 498 | |
Deferred costs associated with extended protection plan contracts | 19 | 18 | |
Expenses for claims incurred | 161 | 141 | 127 |
Advertising expenses | 968 | 893 | 769 |
Shipping and handling costs included in SG&A expense | 841 | 700 | 607 |
Foreign currency translation gain (loss), net of tax | $ 11 | $ (240) | (394) |
Long-lived assets held outside of the U.S. as a percentage of total long-lived assets | 9.80% | 8.70% | |
Net sales outside of the U.S. as a percentage of total sales | 7.80% | 5.70% | |
Investments | |||
Proceeds from sales of available-for-sale securities | $ 523 | $ 505 | 394 |
Restricted balances included in short-term investments | 86 | 81 | |
Restricted balances included in long-term investments | 381 | 354 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Income tax provision | $ 2,042 | $ 2,108 | $ 1,873 |
Diluted earnings per common share | $ / shares | $ 4.09 | $ 3.47 | $ 2.73 |
Minimum [Member] | |||
Investments | |||
Maturity date of long-term investments | 1 year | ||
Maximum [Member] | |||
Investments | |||
Maturity date of long-term investments | 37 years | ||
Accounting Standards Update 2016-09 [Member] | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Income tax provision | $ (37) | ||
Diluted earnings per common share | $ / shares | $ 0.04 |
Acquisitions (Details)
Acquisitions (Details) $ in Millions, $ in Billions | Jun. 23, 2017USD ($) | May 20, 2016CAD ($) | May 20, 2016USD ($) | Feb. 02, 2018USD ($) | Feb. 03, 2017USD ($) | Jan. 29, 2016USD ($) | Jan. 30, 2015USD ($) |
Allocation: | |||||||
Goodwill | $ 1,307 | $ 1,082 | $ 154 | $ 154 | |||
Maintenance Supply Headquarters [Member] | |||||||
Purchase price: | |||||||
Total cash paid | $ 513 | ||||||
Allocation: | |||||||
Cash acquired | 4 | ||||||
Merchandise inventory | 68 | ||||||
Other current assets | 36 | ||||||
Property | 12 | ||||||
Goodwill | 160 | ||||||
Other assets | 260 | ||||||
Accounts payable | (18) | ||||||
Other current liabilities | (9) | ||||||
Net assets acquired | $ 513 | ||||||
RONA inc [Member] | |||||||
Purchase price: | |||||||
Cash paid to common shareholders | $ 1,999 | ||||||
Cash paid to debt holders | 368 | ||||||
Total cash paid | $ 3.1 | 2,367 | |||||
Allocation: | |||||||
Cash acquired | 83 | ||||||
Accounts receivable | 260 | ||||||
Merchandise inventory | 814 | ||||||
Property | 897 | ||||||
Goodwill | 971 | ||||||
Other assets | 437 | ||||||
Other current liabilities | (619) | ||||||
Long-term liabilities | (367) | ||||||
Noncontrolling interest | (109) | ||||||
Net assets acquired | $ 2,367 |
Acquisitions (Details Textual)
Acquisitions (Details Textual) $ / shares in Units, $ in Millions, $ in Millions | Jun. 23, 2017USD ($) | May 20, 2016CAD ($)$ / shares | May 20, 2016USD ($) | Feb. 02, 2018USD ($) | Feb. 03, 2017USD ($) | May 20, 2016USD ($) | Jan. 29, 2016USD ($) | Jan. 30, 2015USD ($) |
Business Acquisition [Line Items] | ||||||||
Goodwill | $ 1,307 | $ 1,082 | $ 154 | $ 154 | ||||
Maintenance Supply Headquarters [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Cash consideration | $ 513 | |||||||
Intangible assets acquired | 259 | |||||||
Goodwill | 160 | |||||||
Goodwill expected to be tax deductible | 160 | |||||||
Maintenance Supply Headquarters [Member] | Trademarks [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Intangible assets acquired | $ 34 | |||||||
Weighted average useful life | 15 years | |||||||
Maintenance Supply Headquarters [Member] | Customer Lists [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Intangible assets acquired | $ 225 | |||||||
Weighted average useful life | 20 years | |||||||
RONA inc [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Cash consideration | $ 3,100 | $ 2,367 | ||||||
Intangible assets acquired | $ 310 | |||||||
Goodwill | 971 | |||||||
Goodwill expected to be tax deductible | 107 | |||||||
RONA inc [Member] | Unsecured Debentures [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Current liabilities assumed | $ 118 | 91 | ||||||
RONA inc [Member] | Trademarks [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Intangible assets acquired | 204 | |||||||
Weighted average useful life | 15 years | 15 years | ||||||
RONA inc [Member] | Dealer Relationships [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Intangible assets acquired | $ 106 | |||||||
Weighted average useful life | 20 years | 20 years | ||||||
RONA inc [Member] | Common Class A [Member] | ||||||||
Business Acquisition [Line Items] | ||||||||
Business acquisition, share price | $ / shares | $ 24 |
Acquisitions (Details Textual 1
Acquisitions (Details Textual 1) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||
Feb. 03, 2017 | Feb. 02, 2018 | Feb. 03, 2017 | Jan. 29, 2016 | May 20, 2016 | |
Noncontrolling Interest [Line Items] | |||||
Premium paid to acquire noncontrolling interest | $ 0 | $ 18 | $ 0 | ||
RONA inc [Member] | RONA inc [Member] | |||||
Noncontrolling Interest [Line Items] | |||||
Payments to acquire remaining noncontrolling interest | $ 127 | ||||
RONA inc [Member] | Noncontrolling Interest | RONA inc [Member] | |||||
Noncontrolling Interest [Line Items] | |||||
Preferred shares outstanding | 6.9 | ||||
Noncontrolling interest, amount represented by preferred stock | $ 109 | ||||
Premium paid to acquire noncontrolling interest | $ 18 |
Investment in Australian Join46
Investment in Australian Joint Venture (Details) - USD ($) $ in Millions | 12 Months Ended | |
Feb. 03, 2017 | Jan. 29, 2016 | |
Schedule of Equity Method Investments [Line Items] | ||
Other comprehensive loss, foreign currency translation reclassification adjustment from AOCI, realized upon loss of significant influence | $ 208 | |
Hydrox Holdings Pty Ltd. [Member] | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity method investment impairment losses | $ 530 |
Investment in Australian Join47
Investment in Australian Joint Venture (Details 1) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2018 | Feb. 03, 2017 | Jan. 29, 2016 | |
Schedule of Cost-method Investments [Line Items] | |||
Cost method investments impairment loss | $ 290 | ||
Proceeds from sale/maturity of investments | $ 1,114 | 1,254 | $ 884 |
Hydrox Holdings Pty Ltd. [Member] | |||
Schedule of Cost-method Investments [Line Items] | |||
Cost method investments impairment loss | $ 290 | ||
Proceeds from sale/maturity of investments | 199 | ||
Cost method investments, realized gains | $ 96 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Fair Value, Measurements, Recurring [Member] - Estimate of Fair Value [Member] - USD ($) $ in Millions | Feb. 02, 2018 | Feb. 03, 2017 |
Short-term Investments [Member] | ||
Available-for-sale Securities | ||
Fair value | $ 102 | $ 100 |
Short-term Investments [Member] | Money Market Funds [Member] | Fair Value (Level 1) [Member] | ||
Available-for-sale Securities | ||
Fair value | 86 | 81 |
Short-term Investments [Member] | Certificates of Deposit [Member] | Fair Value (Level 1) [Member] | ||
Available-for-sale Securities | ||
Fair value | 16 | 15 |
Short-term Investments [Member] | Municipal Obligations [Member] | Fair Value (Level 2) [Member] | ||
Available-for-sale Securities | ||
Fair value | 0 | 4 |
Long-term Investments [Member] | ||
Available-for-sale Securities | ||
Fair value | 408 | 366 |
Long-term Investments [Member] | Certificates of Deposit [Member] | Fair Value (Level 1) [Member] | ||
Available-for-sale Securities | ||
Fair value | 1 | 2 |
Long-term Investments [Member] | Municipal Obligations [Member] | Fair Value (Level 2) [Member] | ||
Available-for-sale Securities | ||
Fair value | 0 | 5 |
Long-term Investments [Member] | Municipal Floating Rate Obligations [Member] | Fair Value (Level 2) [Member] | ||
Available-for-sale Securities | ||
Fair value | $ 407 | $ 359 |
Fair Value Measurements (Deta49
Fair Value Measurements (Details 1) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2018 | Feb. 03, 2017 | Jan. 29, 2016 | |
Assets held-for-use | |||
Goodwill impairment loss | $ 0 | $ (46) | $ 0 |
Other assets | |||
Cost method investments impairment loss | (290) | ||
Fair Value, Measurements, Nonrecurring [Member] | |||
Fair Value Disclosures | |||
Asset impairment charges | (379) | ||
Fair Value, Measurements, Nonrecurring [Member] | Operating Locations [Member] | |||
Assets held-for-use | |||
Long-lived asset impairment losses | (34) | ||
Fair Value, Measurements, Nonrecurring [Member] | Excess Properties [Member] | |||
Assets held-for-use | |||
Long-lived asset impairment losses | (9) | ||
Fair Value, Measurements, Nonrecurring [Member] | Estimate of Fair Value [Member] | Fair Value (Level 3) [Member] | |||
Fair Value Disclosures | |||
Fair value measurement | 124 | ||
Assets held-for-use | |||
Goodwill, fair value measurement | 0 | ||
Other assets | |||
Cost method investments, fair value measurement | 103 | ||
Fair Value, Measurements, Nonrecurring [Member] | Estimate of Fair Value [Member] | Fair Value (Level 3) [Member] | Operating Locations [Member] | |||
Assets held-for-use | |||
Fair value measurement | 3 | ||
Fair Value, Measurements, Nonrecurring [Member] | Estimate of Fair Value [Member] | Fair Value (Level 3) [Member] | Excess Properties [Member] | |||
Assets held-for-use | |||
Fair value measurement | $ 18 |
Fair Value Measurements (Deta50
Fair Value Measurements (Details 2) - USD ($) $ in Millions | Feb. 02, 2018 | Feb. 03, 2017 |
Financial Instruments | ||
Long-term debt carrying value (excluding capitalized lease obligations) | $ 14,967 | $ 14,328 |
Unsecured Notes [Member] | ||
Financial Instruments | ||
Long-term debt carrying value (excluding capitalized lease obligations) | 14,961 | 14,321 |
Mortgage Notes [Member] | ||
Financial Instruments | ||
Long-term debt carrying value (excluding capitalized lease obligations) | 6 | 7 |
Estimate of Fair Value [Member] | ||
Financial Instruments | ||
Long-term debt fair value (excluding capitalized lease obligations) | 15,615 | 15,312 |
Estimate of Fair Value [Member] | Unsecured Notes [Member] | Fair Value (Level 1) [Member] | ||
Financial Instruments | ||
Long-term debt fair value (excluding capitalized lease obligations) | 15,608 | 15,305 |
Estimate of Fair Value [Member] | Mortgage Notes [Member] | Fair Value (Level 2) [Member] | ||
Financial Instruments | ||
Long-term debt fair value (excluding capitalized lease obligations) | $ 7 | $ 7 |
Property and Accumulated Depr51
Property and Accumulated Depreciation (Details) | 12 Months Ended |
Feb. 02, 2018 | |
Buildings and Building Improvements [Member] | Minimum [Member] | |
Estimated Depreciable Lives, In Years | |
Estimated depreciable lives, in years | 5 years |
Buildings and Building Improvements [Member] | Maximum [Member] | |
Estimated Depreciable Lives, In Years | |
Estimated depreciable lives, in years | 40 years |
Equipment [Member] | Minimum [Member] | |
Estimated Depreciable Lives, In Years | |
Estimated depreciable lives, in years | 2 years |
Equipment [Member] | Maximum [Member] | |
Estimated Depreciable Lives, In Years | |
Estimated depreciable lives, in years | 15 years |
Property and Accumulated Depr52
Property and Accumulated Depreciation (Details 1) - USD ($) $ in Millions | Feb. 02, 2018 | Feb. 03, 2017 |
Cost: | ||
Land | $ 7,414 | $ 7,329 |
Buildings and building improvements | 18,521 | 18,147 |
Equipment | 10,475 | 10,978 |
Construction in progress | 530 | 464 |
Total cost | 36,940 | 36,918 |
Accumulated depreciation | (17,219) | (16,969) |
Property, less accumulated depreciation | $ 19,721 | $ 19,949 |
Property and Accumulated Depr53
Property and Accumulated Depreciation (Details Textual) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2018 | Feb. 03, 2017 | Jan. 29, 2016 | |
Capital Leases: | |||
Assets under capital lease, cost | $ 724 | $ 696 | |
Assets under capital lease, accumulated depreciation | 273 | 269 | |
Depreciation expense | |||
Depreciation expense | $ 1,400 | $ 1,500 | $ 1,500 |
Short-Term Borrowings (Details)
Short-Term Borrowings (Details) - USD ($) | 12 Months Ended | |
Feb. 02, 2018 | Feb. 03, 2017 | |
Short-Term Borrowings | ||
Amount outstanding under the commercial paper program | $ 1,100,000,000 | $ 510,000,000 |
Weighted average interest rate of short-term borrowings | 1.85% | 1.01% |
Revolving Credit Facility [Member] | ||
Short-Term Borrowings | ||
Maximum borrowing capacity | $ 1,750,000,000 | |
Expiration date | Nov. 30, 2021 | |
Optional increase in borrowing capacity | $ 500,000,000 | |
Amount outstanding under the credit facility | $ 0 | $ 0 |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) $ in Millions | Feb. 02, 2018 | Feb. 03, 2017 | |
Long-Term Debt | |||
Total long-term debt | $ 15,858 | $ 15,189 | |
Less current maturities | (294) | (795) | |
Long-term debt, excluding current maturities | $ 15,564 | 14,394 | |
Secured Debt [Member] | Mortgage notes due through fiscal 2027 | |||
Long-Term Debt | |||
Weighted-average interest rate | [1] | 5.38% | |
Total long-term debt | [1] | $ 6 | 7 |
Unsecured Debt [Member] | Notes due through fiscal 2022 | |||
Long-Term Debt | |||
Weighted-average interest rate | 3.05% | ||
Total long-term debt | $ 3,577 | 4,324 | |
Unsecured Debt [Member] | Notes due in fiscal 2023 - 2027 | |||
Long-Term Debt | |||
Weighted-average interest rate | 3.17% | ||
Total long-term debt | $ 4,636 | 3,143 | |
Unsecured Debt [Member] | Notes due in fiscal 2028 - 2032 | |||
Long-Term Debt | |||
Weighted-average interest rate | 6.67% | ||
Total long-term debt | $ 563 | 696 | |
Unsecured Debt [Member] | Notes due in fiscal 2033 - 2037 | |||
Long-Term Debt | |||
Weighted-average interest rate | 5.96% | ||
Total long-term debt | $ 897 | 1,536 | |
Unsecured Debt [Member] | Notes due in fiscal 2038 - 2042 | |||
Long-Term Debt | |||
Weighted-average interest rate | 4.95% | ||
Total long-term debt | $ 1,119 | 1,731 | |
Unsecured Debt [Member] | Notes due in fiscal 2043 - 2047 | |||
Long-Term Debt | |||
Weighted-average interest rate | 4.08% | ||
Total long-term debt | $ 4,169 | 2,891 | |
Unsecured Debt [Member] | Capitalized lease obligations due through fiscal 2041 | |||
Long-Term Debt | |||
Total long-term debt | $ 891 | $ 861 | |
[1] | Real properties with an aggregate book value of $26 million were pledged as collateral at February 2, 2018, for secured debt. |
Long-Term Debt (Details 1)
Long-Term Debt (Details 1) - USD ($) $ in Millions | May 31, 2017 | Apr. 30, 2016 | Sep. 30, 2015 | Feb. 02, 2018 |
2018 Floating Rate Notes Issued in 2015 [Member] | ||||
Long-Term Debt | ||||
Unsecured notes, issue date | Sep. 30, 2015 | |||
Unsecured notes, issued | $ 250 | |||
Unsecured notes, maturity date | Sep. 30, 2018 | |||
Unsecured notes, interest rate | 2.174% | |||
Unamortized discount | $ 1 | |||
Unsecured notes, description of variable rate basis | three-month LIBOR | |||
Unsecured notes, basis spread on variable rate | 0.60% | |||
2025 Fixed Rate Notes Issued in 2015 [Member] | ||||
Long-Term Debt | ||||
Unsecured notes, issue date | Sep. 30, 2015 | |||
Unsecured notes, issued | $ 750 | |||
Unsecured notes, maturity date | Sep. 30, 2025 | |||
Unsecured notes, interest rate | 3.375% | |||
Unamortized discount | $ 8 | |||
2045 Fixed Rate Notes Issued in 2015 [Member] | ||||
Long-Term Debt | ||||
Unsecured notes, issue date | Sep. 30, 2015 | |||
Unsecured notes, issued | $ 750 | |||
Unsecured notes, maturity date | Sep. 30, 2045 | |||
Unsecured notes, interest rate | 4.375% | |||
Unamortized discount | $ 24 | |||
2019 Floating Rate Notes Issued in 2016 [Member] | ||||
Long-Term Debt | ||||
Unsecured notes, issue date | Apr. 30, 2016 | |||
Unsecured notes, issued | $ 250 | |||
Unsecured notes, maturity date | Apr. 30, 2019 | |||
Unsecured notes, interest rate | 1.96% | |||
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 Issued in 2016 [Member] | ||||
Long-Term Debt | ||||
Unsecured notes, issue date | Apr. 30, 2016 | |||
Unsecured notes, issued | $ 350 | |||
Unsecured notes, maturity date | Apr. 30, 2019 | |||
Unsecured notes, interest rate | 1.15% | |||
Unamortized discount | $ 1 | |||
2026 Fixed Rate Notes Issued in 2016 [Member] | ||||
Long-Term Debt | ||||
Unsecured notes, issue date | Apr. 30, 2016 | |||
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 Issued in 2016 [Member] | ||||
Long-Term Debt | ||||
Unsecured notes, issue date | Apr. 30, 2016 | |||
Unsecured notes, issued | $ 1,350 | |||
Unsecured notes, maturity date | Apr. 30, 2046 | |||
Unsecured notes, interest rate | 3.70% | |||
Unamortized discount | $ 19 | |||
2027 Fixed Rate Notes Issued in 2017 [Member] | ||||
Long-Term Debt | ||||
Unsecured notes, issue date | May 31, 2017 | |||
Unsecured notes, issued | $ 1,500 | |||
Unsecured notes, maturity date | May 31, 2027 | |||
Unsecured notes, interest rate | 3.10% | |||
Unamortized discount | $ 9 | |||
2047 Fixed Rate Notes Issued in 2017 [Member] | ||||
Long-Term Debt | ||||
Unsecured notes, issue date | May 31, 2017 | |||
Unsecured notes, issued | $ 1,500 | |||
Unsecured notes, maturity date | May 31, 2047 | |||
Unsecured notes, interest rate | 4.05% | |||
Unamortized discount | $ 23 |
Long-Term Debt (Details Textual
Long-Term Debt (Details Textual) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2018 | Feb. 03, 2017 | Jan. 29, 2016 | |
Additional Long-Term Debt (Textuals) | |||
Debt maturities, exclusive of unamortized discounts and capitalized lease obligations, 2018 | $ 251 | ||
Debt maturities, exclusive of unamortized discounts and capitalized lease obligations, 2019 | 1,100 | ||
Debt maturities, exclusive of unamortized discounts and capitalized lease obligations, 2020 | 500 | ||
Debt maturities, exclusive of unamortized discounts and capitalized lease obligations, 2021 | 1,000 | ||
Debt maturities, exclusive of unamortized discounts and capitalized lease obligations, 2022 | 765 | ||
Debt maturities, exclusive of unamortized discounts and capitalized lease obligations, after five years | 11,500 | ||
Debt instrument, repurchased face amount | 1,600 | ||
Loss on extinguishment of debt | 464 | $ 0 | $ 0 |
Mortgage notes due through fiscal 2027 | |||
Additional Long-Term Debt (Textuals) | |||
Real properties pledged as collateral | $ 26 | ||
2015, 2016, and 2017 Combined Notes [Member] | |||
Additional Long-Term Debt (Textuals) | |||
Debt instrument, redemption price under change of control provisions, percentage | 101.00% |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - USD ($) shares in Millions, $ in Millions | 12 Months Ended | |||||
Feb. 02, 2018 | Feb. 03, 2017 | Jan. 29, 2016 | ||||
Shareholders' Equity | ||||||
Reduction in retained earnings | $ 2,900 | $ 3,300 | ||||
Share Repurchases | ||||||
Share repurchases, value | $ 3,174 | [1] | $ 3,577 | [1] | $ 3,878 | |
Share repurchases, shares | 39.6 | 47.7 | ||||
Share Repurchase Program [Member] | ||||||
Share Repurchases | ||||||
Share repurchases, value | [1] | $ 3,133 | $ 3,500 | |||
Share repurchases, shares | 39.1 | 46.7 | ||||
Shares Withheld from Employees [Member] | ||||||
Share Repurchases | ||||||
Share repurchases, value | [1] | $ 41 | $ 77 | |||
Share repurchases, shares | 0.5 | 1 | ||||
[1] | Reductions of $2.9 billion and $3.3 billion were recorded to retained earnings, after capital in excess of par value was depleted, for 2017 and 2016, respectively. |
Shareholders' Equity (Details T
Shareholders' Equity (Details Textual) - USD ($) | 12 Months Ended | |||||||
Feb. 02, 2018 | Feb. 03, 2017 | Jan. 29, 2016 | Jan. 26, 2018 | Jan. 27, 2017 | ||||
Shareholders' Equity | ||||||||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | ||||||
Preferred stock, par value | $ 5 | $ 5 | ||||||
Preferred stock, shares issued | 0 | 0 | ||||||
Common stock, shares authorized | 5,600,000,000 | 5,600,000,000 | ||||||
Common stock, par value | $ 0.50 | $ 0.50 | ||||||
Share Repurchases | ||||||||
Share repurchases, shares | 39,600,000 | 47,700,000 | ||||||
Share repurchases, value | $ 3,174,000,000 | [1] | $ 3,577,000,000 | [1] | $ 3,878,000,000 | |||
Share Repurchase Program [Member] | ||||||||
Share Repurchases | ||||||||
Share repurchases, shares | 39,100,000 | 46,700,000 | ||||||
Share repurchases, value | [1] | $ 3,133,000,000 | $ 3,500,000,000 | |||||
Remaining share repurchases authorization, value | $ 6,900,000,000 | |||||||
January 27, 2017 Share Repurchase Authorization [Member] | ||||||||
Share Repurchases | ||||||||
Share repurchases authorized, value | $ 5,000,000,000 | |||||||
January 26, 2018 Share Repurchase Authorization [Member] | ||||||||
Share Repurchases | ||||||||
Share repurchases authorized, value | $ 5,000,000,000 | |||||||
Accelerated Share Repurchase Agreement Purchases [Member] | ||||||||
Share Repurchases | ||||||||
Share repurchases, shares | 15,700,000 | |||||||
Share repurchases, value | $ 1,300,000,000 | |||||||
Open Market Purchases [Member] | ||||||||
Share Repurchases | ||||||||
Share repurchases, shares | 23,400,000 | |||||||
Share repurchases, value | $ 1,800,000,000 | |||||||
[1] | Reductions of $2.9 billion and $3.3 billion were recorded to retained earnings, after capital in excess of par value was depleted, for 2017 and 2016, respectively. |
Accounting for Share-Based Pa60
Accounting for Share-Based Payments (Details) - Employee Stock Option [Member] - $ / shares | 12 Months Ended | ||
Feb. 02, 2018 | Feb. 03, 2017 | Jan. 29, 2016 | |
Weighted-average assumptions used: | |||
Weighted-average expected volatility | 23.60% | 24.00% | 31.30% |
Weighted-average dividend yield | 1.68% | 1.66% | 1.69% |
Weighted-average risk-free interest rate | 2.14% | 1.42% | 1.99% |
Weighted-average expected term | 6 years 5 months 5 days | 6 years 5 months 9 days | 7 years |
Stock options granted, weighted-average grant-date fair value per share | $ 18.30 | $ 15 | $ 20.27 |
Accounting for Share-Based Pa61
Accounting for Share-Based Payments (Details 1) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Feb. 02, 2018USD ($)$ / sharesshares | ||
Shares | ||
Outstanding, beginning balance, shares | shares | 4,239 | |
Stock options granted | shares | 394 | |
Stock options canceled, forfeited, or expired | shares | (131) | |
Stock options exercised | shares | (1,687) | |
Outstanding, ending balance, shares | shares | 2,815 | |
Stock options vested and expected to vest, shares | shares | 2,764 | [1] |
Stock options exercisable | shares | 1,784 | |
Weighted-Average Exercise Price Per Share | ||
Outstanding, beginning balance, weighted-average exercise price per share | $ / shares | $ 49.84 | |
Stock options granted, weighted-average exercise price per share | $ / shares | 82.44 | |
Stock options canceled, forfeited, or expired, weighted-average exercise price per share | $ / shares | 67.55 | |
Stock options exercised, weighted-average exercise price per share | $ / shares | 37.72 | |
Outstanding, ending balance, weighted-average exercise price per share | $ / shares | 60.84 | |
Stock options vested and expected to vest, weighted-average exercise price per share | $ / shares | 60.54 | [1] |
Stock options exercisable, weighted-average exercise price per share | $ / shares | $ 52.55 | |
Options, Additional Disclosures | ||
Outstanding, weighted-average remaining term | 7 years 1 month 21 days | |
Outstanding, ending balance, aggregate intrinsic value | $ | $ 114,479 | |
Stock options vested and expected to vest, weighted-average remaining term | 7 years 1 month 6 days | [1] |
Stock options vested and expected to vest, aggregate intrinsic value | $ | $ 113,200 | [1] |
Stock options exercisable, weighted-average remaining term | 6 years 3 months 15 days | |
Stock options exercisable, aggregate intrinsic value | $ | $ 87,318 | |
[1] | Includes outstanding vested options as well as outstanding nonvested options after a forfeiture rate is applied. |
Accounting for Share-Based Pa62
Accounting for Share-Based Payments (Details 2) - $ / shares shares in Thousands | 12 Months Ended | |||
Feb. 02, 2018 | Feb. 03, 2017 | Jan. 29, 2016 | ||
Restricted Stock Awards [Member] | ||||
Number of Shares or Units | ||||
Nonvested, beginning balance, shares | 2,681 | |||
Granted, shares | 473 | |||
Vested, shares | (910) | |||
Canceled or forfeited, shares | (348) | |||
Nonvested, ending balance, shares | 1,896 | 2,681 | ||
Weighted-Average Grant Date Fair Value | ||||
Nonvested, beginning balance, weighted-average grant-date fair value per share | $ 64.22 | |||
Granted, weighted-average grant-date fair value per share | 82.41 | $ 71.35 | $ 69.44 | |
Vested, weighted-average grant-date fair value per share | 53.87 | |||
Cancelled or forfeited, weighted-average grant-date fair value per share | 67.03 | |||
Nonvested, ending balance, weighted-average grant-date fair value per share | $ 73.21 | $ 64.22 | ||
Performance Share Units [Member] | ||||
Weighted-average assumptions used: | ||||
Weighted-average expected volatility | 20.80% | 21.40% | ||
Weighted-average dividend yield | 1.62% | 1.53% | ||
Weighted-average risk-free interest rate | 1.46% | 0.88% | ||
Weighted-average expected term | 2 years 9 months 29 days | 2 years 9 months 26 days | ||
Number of Shares or Units | ||||
Nonvested, beginning balance, shares | [1] | 723 | ||
Granted, shares | [1] | 273 | ||
Vested, shares | [1] | (253) | ||
Canceled or forfeited, shares | [1] | (45) | ||
Nonvested, ending balance, shares | [1] | 698 | 723 | |
Weighted-Average Grant Date Fair Value | ||||
Nonvested, beginning balance, weighted-average grant-date fair value per share | $ 65.30 | |||
Granted, weighted-average grant-date fair value per share | 91.50 | $ 77.58 | 71.52 | |
Vested, weighted-average grant-date fair value per share | 47.29 | |||
Cancelled or forfeited, weighted-average grant-date fair value per share | 77.42 | |||
Nonvested, ending balance, weighted-average grant-date fair value per share | $ 81.31 | $ 65.30 | ||
Restricted Stock Units [Member] | ||||
Number of Shares or Units | ||||
Nonvested, beginning balance, shares | 323 | |||
Granted, shares | 85 | |||
Vested, shares | (72) | |||
Canceled or forfeited, shares | (59) | |||
Nonvested, ending balance, shares | 277 | 323 | ||
Weighted-Average Grant Date Fair Value | ||||
Nonvested, beginning balance, weighted-average grant-date fair value per share | $ 62.85 | |||
Granted, weighted-average grant-date fair value per share | 75.44 | $ 67.26 | $ 66.24 | |
Vested, weighted-average grant-date fair value per share | 50.42 | |||
Cancelled or forfeited, weighted-average grant-date fair value per share | 66.29 | |||
Nonvested, ending balance, weighted-average grant-date fair value per share | $ 69.21 | $ 62.85 | ||
[1] | The number of units presented is based on achieving the targeted performance goals as defined in the performance share unit agreements. As of February 2, 2018, the maximum number of nonvested units that could vest under the provisions of the agreements was 1.3 million for the RONCAA awards. |
Accounting for Share-Based Pa63
Accounting for Share-Based Payments (Details Textual) - USD ($) | 12 Months Ended | |||
Feb. 02, 2018 | Feb. 03, 2017 | Jan. 29, 2016 | ||
Accounting for Share-Based Payments | ||||
Share-based payment expense | $ 99,000,000 | $ 90,000,000 | $ 117,000,000 | |
Tax benefit related to share-based payment expense | 31,000,000 | 29,000,000 | 38,000,000 | |
Unrecognized share-based payment expense | 118,000,000 | |||
Unrecognized share-based payment expense to be recognized in 2018 | 69,000,000 | |||
Unrecognized share-based payment expense to be recognized in 2019 | 43,000,000 | |||
Unrecognized share-based payment expense to be recognized after 2019 | $ 6,000,000 | |||
Weighted-average recognition period | 1 year 8 months 12 days | |||
Stock Incentive Plans [Member] | ||||
Accounting for Share-Based Payments | ||||
Shares authorized for grant under all plans | 199,000,000 | |||
Shares authorized for grant under active plans | 80,000,000 | |||
Remaining shares available for grant under active plans | 33,500,000 | |||
Employee Stock Option [Member] | ||||
Accounting for Share-Based Payments | ||||
Requisite service period | 3 years | |||
Percentage of each grant vesting each year | 33.33% | |||
Total intrinsic value of options exercised | $ 77,000,000 | 73,000,000 | 68,000,000 | |
Employee Stock Option [Member] | Minimum [Member] | ||||
Accounting for Share-Based Payments | ||||
Contractual term | 7 years | |||
Employee Stock Option [Member] | Maximum [Member] | ||||
Accounting for Share-Based Payments | ||||
Contractual term | 10 years | |||
Restricted Stock Awards [Member] | ||||
Accounting for Share-Based Payments | ||||
Requisite service period | 3 years | |||
Awards granted | 473,000 | |||
Total fair value of awards vested | $ 71,000,000 | $ 151,000,000 | $ 144,000,000 | |
Awards vested | 910,000 | |||
Weighted-average grant-date fair value of awards granted in the period | $ 82.41 | $ 71.35 | $ 69.44 | |
Deferred Stock Units [Member] | ||||
Accounting for Share-Based Payments | ||||
Awards granted | 22,000 | |||
Total fair value of awards vested | $ 1,800,000 | $ 1,500,000 | $ 1,500,000 | |
Deferred stock units released | 0 | |||
Vested outstanding awards | 400,000 | |||
Weighted-average grant-date fair value of awards granted in the period | $ 80.22 | $ 80.35 | $ 69.98 | |
Annual award amount | $ 175,000 | $ 150,000 | $ 150,000 | |
Performance Share Units [Member] | ||||
Accounting for Share-Based Payments | ||||
Requisite service period | 3 years | |||
Awards granted | [1] | 273,000 | ||
Total fair value of awards vested | $ 31,000,000 | $ 24,000,000 | $ 25,000,000 | |
Awards vested | [1] | 253,000 | ||
Weighted-average grant-date fair value of awards granted in the period | $ 91.50 | $ 77.58 | $ 71.52 | |
Number of units that could vest | 1,300,000 | |||
Performance Share Units [Member] | Minimum [Member] | ||||
Accounting for Share-Based Payments | ||||
Percentage of awards that could vest at end of vesting period | 0.00% | |||
Performance Share Units [Member] | Maximum [Member] | ||||
Accounting for Share-Based Payments | ||||
Percentage of awards that could vest at end of vesting period | 200.00% | |||
Restricted Stock Units [Member] | ||||
Accounting for Share-Based Payments | ||||
Requisite service period | 3 years | |||
Awards granted | 85,000 | |||
Total fair value of awards vested | $ 5,600,000 | $ 7,700,000 | $ 3,500,000 | |
Awards vested | 72,000 | |||
Weighted-average grant-date fair value of awards granted in the period | $ 75.44 | $ 67.26 | $ 66.24 | |
Employee Stock Purchase Plan [Member] | ||||
Accounting for Share-Based Payments | ||||
Shares authorized for grant under active plans | 70,000,000 | |||
Remaining shares available for grant under active plans | 21,900,000 | |||
Purchase price of shares (percentage) | 85.00% | |||
Share-based payment expense (percentage) | 15.00% | |||
Shares issued | 1,100,000 | 1,300,000 | 1,300,000 | |
Accounting for Share-Based Payments | ||||
Share-based payment expense | $ 13,000,000 | $ 15,000,000 | $ 14,000,000 | |
[1] | The number of units presented is based on achieving the targeted performance goals as defined in the performance share unit agreements. As of February 2, 2018, the maximum number of nonvested units that could vest under the provisions of the agreements was 1.3 million for the RONCAA awards. |
Employee Retirement Plans (Deta
Employee Retirement Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2018 | Feb. 03, 2017 | Jan. 29, 2016 | |
Employee Retirement Plans | |||
Contribution percentage for employees automatically enrolled in the 401k plan hired prior to November 1, 2012 | 1.00% | ||
Maximum company match | 4.25% | ||
Service requirement to receive company match | 6 months | ||
Employee retirement plan expense | $ 174 | $ 180 | $ 155 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2018 | Feb. 03, 2017 | Jan. 29, 2016 | |
Effective Income Tax Rate Reconciliation | |||
Statutory federal income tax rate | 33.70% | 35.00% | 35.00% |
State income taxes, net of federal tax benefit | 2.90% | 3.60% | 3.60% |
Valuation allowance - Australian joint venture | (0.60%) | 2.00% | 4.20% |
Other, net | 1.20% | (0.10%) | (0.40%) |
Effective tax rate | 37.20% | 40.50% | 42.40% |
Current: | |||
Federal | $ 1,734 | $ 1,824 | $ 1,688 |
State | 252 | 275 | 248 |
Total current | 1,986 | 2,099 | 1,936 |
Deferred: | |||
Federal | 60 | 6 | (59) |
State | (4) | 3 | (4) |
Total deferred | 56 | 9 | (63) |
Total income tax provision | 2,042 | 2,108 | 1,873 |
Deferred tax assets: | |||
Self-insurance | 238 | 352 | |
Share-based payment expense | 36 | 69 | |
Deferred rent | 66 | 78 | |
Impairment of investment | 0 | 381 | |
Capital loss carryforwards | 225 | 0 | |
Net operating losses | 213 | 174 | |
Other, net | 124 | 175 | |
Total deferred tax assets | 902 | 1,229 | |
Valuation allowance | (475) | (578) | |
Net deferred tax assets | 427 | 651 | |
Deferred tax liabilities: | |||
Property | (264) | (417) | |
Other, net | (23) | (34) | |
Total deferred tax liabilities | (287) | (451) | |
Net deferred tax asset | 140 | 200 | |
Unrecognized Tax Benefits Reconciliation | |||
Unrecognized tax benefits, beginning of year | 6 | 3 | 7 |
Additions for tax positions of prior years | 0 | 3 | 0 |
Reductions for tax positions of prior years | (2) | 0 | (2) |
Settlements | (1) | 0 | (2) |
Reductions due to a lapse in applicable statute of limitations | (3) | 0 | 0 |
Unrecognized tax benefits, end of year | $ 0 | $ 6 | $ 3 |
Income Taxes (Details Textual)
Income Taxes (Details Textual) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2018 | Feb. 03, 2017 | Jan. 29, 2016 | |
Effect Of Tax Cuts And Jobs Act, Accounting Incomplete, Provisional | |||
Statutory federal income tax rate | 33.70% | 35.00% | 35.00% |
Tax Cuts and Jobs Act, Incomplete Accounting, Change in Tax Rate, Provisional Income Tax Expense (Benefit) | $ (58) | ||
Tax Cuts and Jobs Act, Incomplete Accounting, Change in Tax Rate, Deferred Tax Asset, Provisional Income Tax Expense | 56 | ||
Tax Cuts and Jobs Act, Incomplete Accounting, Transition Tax for Accumulated Foreign Earnings, Provisional Income Tax Expense | 22 | ||
Components of Income Tax Provision | |||
Reduction to net deferred tax assets as a result of Internal Revenue Code Section 987 | $ 11 | $ 33 |
Income Taxes - Australian Joint
Income Taxes - Australian Joint Venture (Details Textual) - USD ($) $ in Millions | Feb. 02, 2018 | Feb. 03, 2017 |
Valuation Allowance [Line Items] | ||
Deferred tax assets, capital loss carryforwards | $ 225 | $ 0 |
Deferred tax assets, tax deferred expense, reserves and accruals, impairment of investment | 0 | 381 |
Deferred tax assets, valuation allowance | 475 | 578 |
Hydrox Holdings Pty Ltd. [Member] | ||
Valuation Allowance [Line Items] | ||
Deferred tax assets, capital loss carryforwards | 225 | |
Deferred tax assets, tax deferred expense, reserves and accruals, impairment of investment | 381 | |
Deferred tax assets, valuation allowance | $ 225 | $ 381 |
Income Taxes - Operating Loss C
Income Taxes - Operating Loss Carryforwards (Details Textual) - USD ($) $ in Millions | 12 Months Ended | |
Feb. 02, 2018 | Feb. 03, 2017 | |
Net Operating Loss Carryforwards | ||
Deferred tax assets cumulative valuation allowance recorded | $ 475 | $ 578 |
Foreign Country [Member] | ||
Net Operating Loss Carryforwards | ||
Cumulative net operating losses | 720 | 640 |
Deferred tax assets cumulative valuation allowance recorded | $ 234 | $ 197 |
Foreign Country [Member] | Earliest Tax Year [Member] | ||
Net Operating Loss Carryforwards | ||
Range of expiration dates of net operating losses | Dec. 31, 2018 | |
Foreign Country [Member] | Latest Tax Year [Member] | ||
Net Operating Loss Carryforwards | ||
Range of expiration dates of net operating losses | Dec. 31, 2037 |
Income Taxes - Income Tax Uncer
Income Taxes - Income Tax Uncertainties (Details Textual) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2018 | Feb. 03, 2017 | Jan. 29, 2016 | |
Unrecognized Tax Benefits | |||
Unrecognized tax benefits that would impact effective tax rate | $ 5 | $ 2 | |
Interest income (expense) recognized on uncertain tax positions | $ 3 | (2) | $ 1 |
Accrued interest on uncertain tax positions | $ 0 | $ 3 | |
Canada Revenue Agency [Member] | Earliest Tax Year [Member] | |||
Income Taxes | |||
Years under taxing authority examination | 2,012 | ||
Canada Revenue Agency [Member] | Latest Tax Year [Member] | |||
Income Taxes | |||
Years under taxing authority examination | 2,013 | ||
US state audits [Member] | Earliest Tax Year [Member] | |||
Income Taxes | |||
Years under taxing authority examination | 2,011 | ||
US state audits [Member] | Latest Tax Year [Member] | |||
Income Taxes | |||
Years under taxing authority examination | 2,016 | ||
Foreign Country [Member] | Earliest Tax Year [Member] | |||
Income Taxes | |||
Years subject to income tax examinations | 2,012 | ||
Foreign Country [Member] | Latest Tax Year [Member] | |||
Income Taxes | |||
Years subject to income tax examinations | 2,016 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 12 Months Ended | ||
Feb. 02, 2018 | Feb. 03, 2017 | Jan. 29, 2016 | |
Basic earnings per common share: | |||
Net earnings attributable to Lowe's Companies, Inc. | $ 3,447 | $ 3,091 | $ 2,546 |
Less: Net earnings allocable to participating securities | (11) | (11) | (12) |
Less: Premium paid to acquire noncontrolling interest | 0 | (18) | 0 |
Net earnings allocable to common shares, basic | $ 3,436 | $ 3,062 | $ 2,534 |
Weighted-average common shares outstanding | 839 | 880 | 927 |
Basic earnings per common share | $ 4.09 | $ 3.48 | $ 2.73 |
Diluted earnings per common share: | |||
Net earnings attributable to Lowe's Companies, Inc. | $ 3,447 | $ 3,091 | $ 2,546 |
Less: Net earnings allocable to participating securities | (11) | (11) | (12) |
Less: Premium paid to acquire noncontrolling interest | 0 | (18) | 0 |
Net earnings allocable to common shares, diluted | $ 3,436 | $ 3,062 | $ 2,534 |
Weighted-average common shares outstanding | 839 | 880 | 927 |
Dilutive effect of non-participating share-based awards | 1 | 1 | 2 |
Weighted-average common shares, as adjusted | 840 | 881 | 929 |
Diluted earnings per common share | $ 4.09 | $ 3.47 | $ 2.73 |
Earnings Per Share (Details Tex
Earnings Per Share (Details Textual) - shares shares in Millions | 12 Months Ended | ||
Feb. 02, 2018 | Feb. 03, 2017 | Jan. 29, 2016 | |
Earnings Per Share | |||
Anti-dilutive securities | 0.5 | 1 | 0.3 |
Leases (Details)
Leases (Details) $ in Millions | Feb. 02, 2018USD ($) |
Operating Leases, Future Minimum Payments Due | |
2,018 | $ 666 |
2,019 | 626 |
2,020 | 573 |
2,021 | 526 |
2,022 | 476 |
Later years | 2,970 |
Total minimum lease payments | 5,837 |
Capitalized Lease Obligations, Future Minimum Payments Due | |
2,018 | 108 |
2,019 | 166 |
2,020 | 88 |
2,021 | 91 |
2,022 | 87 |
Later years | 951 |
Total minimum lease payments | 1,491 |
Less amount representing interest | (600) |
Present value of minimum lease payments | 891 |
Less current maturities | (45) |
Present value of minimum lease payments, less current maturities | 846 |
Operating and Capitalized Lease Obligations, Total, Future Minimum Payments Due | |
2,018 | 774 |
2,019 | 792 |
2,020 | 661 |
2,021 | 617 |
2,022 | 563 |
Later years | 3,921 |
Total minimum lease payments | $ 7,328 |
Leases (Details Textual)
Leases (Details Textual) $ in Millions | 12 Months Ended | ||
Feb. 02, 2018USD ($)count | Feb. 03, 2017USD ($) | Jan. 29, 2016USD ($) | |
Leases | |||
Lease term, store facilities and land | 20 years | ||
Renewal options included in lease agreements, minimum | 4 | ||
Renewal options included in lease agreements, maximum | 6 | ||
Duration of lease renewal options | 5 years | ||
Operating leases, rent expense | $ | $ 626 | $ 549 | $ 473 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Feb. 02, 2018USD ($) |
Commitments and Contingencies | |
Non-cancelable commitments | $ 1,100 |
Non-cancelable commitments due 2018 | 537 |
Non-cancelable commitments due 2019 | 318 |
Non-cancelable commitments due 2020 | 160 |
Non-cancelable commitments due 2021 | 51 |
Non-cancelable commitments due 2022 | 3 |
Non-cancelable commitments after 2022 | 0 |
Standby and documentary letters of credit outstanding | $ 63 |
Related Parties (Details)
Related Parties (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2018 | Feb. 03, 2017 | Jan. 29, 2016 | |
Consumer Packaged Goods Vendor [Member] | |||
Related Party Transactions | |||
Related party purchases | $ 149 | $ 124 | $ 153 |
Health and Welfare Benefit Plans Vendor [Member] | |||
Related Party Transactions | |||
Related party purchases | $ 14 | $ 59 | $ 58 |
Other Information (Details)
Other Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2018 | Feb. 03, 2017 | Jan. 29, 2016 | |
Net interest expense | |||
Long-term debt | $ 582 | $ 583 | $ 505 |
Capitalized lease obligations | 56 | 53 | 42 |
Interest income | (16) | (12) | (4) |
Interest capitalized | (5) | (4) | (3) |
Interest on tax uncertainties | 3 | (2) | 1 |
Other | 19 | 23 | 13 |
Interest - net | 633 | 645 | 552 |
Supplemental disclosures of cash flow information | |||
Cash paid for interest, net of amount capitalized | 654 | 619 | 535 |
Cash paid for income taxes, net | 1,673 | 2,217 | 2,055 |
Non-cash investing and financing activities: | |||
Non-cash property acquisitions, including assets acquired under capital lease | 97 | 86 | 102 |
Cash dividends declared but not paid | $ 340 | $ 304 | $ 255 |
Other Information (Details 1)
Other Information (Details 1) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 02, 2018 | Feb. 03, 2017 | Jan. 29, 2016 | |
Sales by Product Category | |||
Total sales | $ 68,619 | $ 65,017 | $ 59,074 |
Percentage of total sales | 100.00% | 100.00% | 100.00% |
Lumber & Building Materials [Member] | |||
Sales by Product Category | |||
Total sales | $ 9,508 | $ 8,505 | $ 7,007 |
Percentage of total sales | 14.00% | 13.00% | 12.00% |
Appliances [Member] | |||
Sales by Product Category | |||
Total sales | $ 7,696 | $ 7,037 | $ 6,477 |
Percentage of total sales | 11.00% | 11.00% | 11.00% |
Seasonal & Outdoor Living [Member] | |||
Sales by Product Category | |||
Total sales | $ 7,165 | $ 6,996 | $ 6,623 |
Percentage of total sales | 10.00% | 11.00% | 11.00% |
Tools & Hardware [Member] | |||
Sales by Product Category | |||
Total sales | $ 6,713 | $ 6,359 | $ 5,686 |
Percentage of total sales | 10.00% | 10.00% | 10.00% |
Fashion Fixtures [Member] | |||
Sales by Product Category | |||
Total sales | $ 6,429 | $ 6,303 | $ 5,806 |
Percentage of total sales | 9.00% | 10.00% | 10.00% |
Rough Plumbing & Electrical [Member] | |||
Sales by Product Category | |||
Total sales | $ 6,149 | $ 5,741 | $ 5,203 |
Percentage of total sales | 9.00% | 9.00% | 9.00% |
Paint [Member] | |||
Sales by Product Category | |||
Total sales | $ 5,321 | $ 5,183 | $ 4,742 |
Percentage of total sales | 8.00% | 8.00% | 8.00% |
Millwork [Member] | |||
Sales by Product Category | |||
Total sales | $ 5,308 | $ 5,236 | $ 4,957 |
Percentage of total sales | 8.00% | 8.00% | 8.00% |
Lawn & Garden [Member] | |||
Sales by Product Category | |||
Total sales | $ 5,251 | $ 5,109 | $ 4,732 |
Percentage of total sales | 8.00% | 8.00% | 8.00% |
Flooring [Member] | |||
Sales by Product Category | |||
Total sales | $ 4,363 | $ 4,227 | $ 3,887 |
Percentage of total sales | 6.00% | 6.00% | 7.00% |
Kitchens [Member] | |||
Sales by Product Category | |||
Total sales | $ 3,644 | $ 3,532 | $ 3,276 |
Percentage of total sales | 5.00% | 5.00% | 5.00% |
Other [Member] | |||
Sales by Product Category | |||
Total sales | $ 1,072 | $ 789 | $ 678 |
Percentage of total sales | 2.00% | 1.00% | 1.00% |
Derivative Instruments (Details
Derivative Instruments (Details) $ in Millions, $ in Billions | Feb. 29, 2016USD ($) | Jul. 29, 2016USD ($) | Feb. 02, 2018USD ($) | Feb. 03, 2017USD ($) | Jan. 29, 2016USD ($) | Feb. 29, 2016CAD ($) |
Derivatives, Fair Value [Line Items] | ||||||
Payments for derivative instrument, investing activities | $ 0 | $ 103 | $ 0 | |||
Proceeds from derivative instrument, investing activities | $ 0 | 179 | $ 0 | |||
Foreign Exchange Option [Member] | Not Designated as Hedging Instrument [Member] | ||||||
Derivatives, Fair Value [Line Items] | ||||||
Derivative asset, notional amount | $ 3.2 | |||||
Payments for derivative instrument, investing activities | $ 103 | |||||
Proceeds from derivative instrument, investing activities | $ 179 | |||||
Gain on derivative, net | $ 76 |
Schedule II - Valuation and Q79
Schedule II - Valuation and Qualifying Accounts and Reserves (Details) - USD ($) $ in Millions | 12 Months Ended | ||||||
Feb. 02, 2018 | Feb. 03, 2017 | Jan. 29, 2016 | |||||
Reserve for loss on obsolete inventory | |||||||
Movement in Valuation Allowances and Reserves | |||||||
Balance at beginning of period | $ 59 | $ 46 | $ 52 | ||||
Charges to costs and expenses | 18 | [1] | 13 | [1] | 0 | ||
Deductions | 0 | 0 | (6) | [1] | |||
Balance at end of period | 77 | 59 | 46 | ||||
Reserve for inventory shrinkage | |||||||
Movement in Valuation Allowances and Reserves | |||||||
Balance at beginning of period | 189 | 171 | 162 | ||||
Charges to costs and expenses | 456 | 397 | 345 | ||||
Deductions | [2] | (433) | (379) | (336) | |||
Balance at end of period | 212 | 189 | 171 | ||||
Reserve for sales returns | |||||||
Movement in Valuation Allowances and Reserves | |||||||
Balance at beginning of period | 71 | 66 | 65 | ||||
Charges to costs and expenses | 0 | 5 | [3] | 1 | [3] | ||
Deductions | 0 | 0 | 0 | ||||
Balance at end of period | 71 | 71 | 66 | ||||
Deferred tax valuation allowance | |||||||
Movement in Valuation Allowances and Reserves | |||||||
Balance at beginning of period | 578 | 447 | 170 | ||||
Charges to costs and expenses | 0 | 131 | [4] | 277 | [4] | ||
Deductions | (103) | [4] | 0 | 0 | |||
Balance at end of period | 475 | 578 | 447 | ||||
Self-insurance liabilities | |||||||
Movement in Valuation Allowances and Reserves | |||||||
Balance at beginning of period | 831 | 883 | 905 | ||||
Charges to costs and expenses | 1,547 | 1,418 | 1,357 | ||||
Deductions | [5] | (1,488) | (1,470) | (1,379) | |||
Balance at end of period | 890 | 831 | 883 | ||||
Reserve for exit activities | |||||||
Movement in Valuation Allowances and Reserves | |||||||
Balance at beginning of period | 66 | 67 | 53 | ||||
Charges to costs and expenses | 19 | 47 | 34 | ||||
Deductions | [6] | (25) | (48) | (20) | |||
Balance at end of period | $ 60 | $ 66 | $ 67 | ||||
[1] | Represents the net increase/(decrease) in the required reserve based on the Company’s evaluation of obsolete inventory. | ||||||
[2] | Represents the actual inventory shrinkage experienced at the time of physical inventories. | ||||||
[3] | Represents the net increase in the required reserve based on the Company’s evaluation of anticipated merchandise returns. | ||||||
[4] | Represents an increase/(decrease) in the required reserve based on the Company’s evaluation of deferred tax assets. | ||||||
[5] | Represents claim payments for self-insured claims. | ||||||
[6] | Represents lease payments, net of sublease income. |