Kohl's (KSS) 10-Q 3 Jun 16 2016 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Apr. 30, 2016	May. 28, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	KOHLS CORP
Entity Central Index Key	885,639
Current Fiscal Year End Date	--01-28
Entity Filer Category	Large Accelerated Filer
Trading Symbol	KSS
Document Type	10-Q
Document Period End Date	Apr. 30, 2016
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		183,709,242

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Apr. 30, 2016	Jan. 30, 2016	May. 02, 2015
Current assets:
Cash and cash equivalents	$ 423	$ 707	$ 1,195
Merchandise inventories	4,084	4,038	4,165
Other	348	331	338
Total current assets	4,855	5,076	5,698
Property and equipment, net	8,230	8,308	8,518
Long-term investments	2,800	2,800	3,100
Other assets	219	222	237
Total assets	13,304	13,606	14,453
Current liabilities:
Accounts payable	1,346	1,251	1,645
Accrued liabilities	1,126	1,206	1,140
Income taxes payable	48	130	87
Current portion of capital lease and financing obligations	127	127	113
Total current liabilities	2,647	2,714	2,985
Long-term debt	2,793	2,792	2,780
Capital lease and financing obligations	1,770	1,789	1,840
Deferred income taxes	239	257	275
Other long-term liabilities	558	563	556
Shareholders’ equity:
Common stock	4	4	4
Paid-in capital	2,961	2,944	2,897
Treasury stock, at cost	(9,906)	(9,769)	(8,909)
Accumulated other comprehensive loss	(16)	(17)	(19)
Retained earnings	12,254	12,329	12,044
Total shareholders’ equity	5,297	5,491	6,017
Total liabilities and shareholders’ equity	$ 13,304	$ 13,606	$ 14,453

CONSOLIDATED STATEMENTS OF INCO

CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Millions	3 Months Ended
	Apr. 30, 2016	May. 02, 2015
Net sales	$ 3,972	$ 4,123
Cost of merchandise sold	2,560	2,600
Gross margin	1,412	1,523
Operating expenses:
Selling, general and administrative	1,008	1,016
Depreciation and amortization	234	227
Impairments, store closing and other costs	64	0
Operating income	106	280
Interest expense, net	79	84
Income before income taxes	27	196
Provision for income taxes	10	69
Net income	$ 17	$ 127
Net income per share:
Basic (in dollars per share)	$ 0.09	$ 0.64
Diluted (in dollars per share)	0.09	0.63
Dividends declared and paid per share	$ 0.50	$ 0.45

CONSOLIDATED STATEMENT OF CHANG

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) shares in Millions, $ in Millions	Total	Common Stock	Paid-In Capital	Treasury Stock	Accumulated Other Comprehensive Income (Loss)	Retained Earnings [Member]
Long-term Debt, Fair Value	$ 2,800
Beginning Balance (in shares) at Jan. 30, 2016		370		(184)
Beginning Balance at Jan. 30, 2016	5,491	$ 4	$ 2,944	$ (9,769)	$ (17)	$ 12,329
Comprehensive income (loss)	18				1
Net income	17					17
Stock options and awards, (in shares)		2		0
Stock options and awards	5		17
Stock Issued During Period, Value, Stock Options Exercised				$ (12)
Dividends paid ($0.50 per common share)	(91)		0	$ 1		(92)
Treasury stock purchases, (in shares)				(3)
Treasury stock purchases	(126)			$ (126)
Ending Balance (in shares) at Apr. 30, 2016		372		(187)
Ending Balance at Apr. 30, 2016	5,297	$ 4	$ 2,961	$ (9,906)	$ (16)	$ 12,254
Long-term Debt, Fair Value	$ 2,800

CONSOLIDATED STATEMENT OF CHAN5

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares shares in Millions	3 Months Ended
	Apr. 30, 2016	May. 02, 2015
Dividends declared and paid per share	$ 0.50	$ 0.45
Treasury Stock
Stock Issued During Period Shares Stock Options Exercised And Restricted Stock Grants	0

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	3 Months Ended
	Apr. 30, 2016	May. 02, 2015
Operating activities
Net income	$ 17	$ 127
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	234	227
Share-based compensation	12	14
Excess tax benefits from share-based compensation	0	(9)
Deferred income taxes	(18)	(23)
Other non-cash revenues and expenses	7	10
Impairments, store closing and other costs	64	0
Changes in operating assets and liabilities:
Merchandise inventories	(44)	(349)
Other current and long-term assets	(15)	28
Accounts payable	95	134
Accrued and other long-term liabilities	(125)	(69)
Income taxes	(87)	12
Net cash provided by operating activities	140	102
Investing activities
Acquisition of property and equipment	(177)	(176)
Other	3	1
Net cash used in investing activities	(174)	(175)
Financing activities
Treasury stock purchases	(126)	(147)
Shares withheld for taxes on vested restricted shares	(12)	(18)
Dividends paid	(91)	(90)
Capital lease and financing obligation payments	(31)	(27)
Proceeds from stock option exercises	6	134
Excess tax benefits from share-based compensation	0	9
Proceeds from financing obligations	4	0
Net cash used in financing activities	(250)	(139)
Net decrease in cash and cash equivalents	(284)	(212)
Cash and cash equivalents at beginning of period	707	1,407
Cash and cash equivalents at end of period	423	1,195
Supplemental information
Interest paid, net of capitalized interest	50	63
Income taxes paid	126	84
Non-cash investing and financing activities
Property and equipment acquired through additional liabilities	$ 9	$ 10

Basis of Presentation

Basis of Presentation	3 Months Ended
	Apr. 30, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Business and Summary of Accounting Policies	Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for fiscal year end consolidated financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For further information, refer to the consolidated financial statements and related footnotes included in our Annual Report on Form 10-K for the fiscal year ended January 30, 2016 (Commission File No. 1-11084) as filed with the Securities and Exchange Commission on March 18, 2016. Due to the seasonality of our business, results for any quarter are not necessarily indicative of the results that may be achieved for a full fiscal year. We operate as a single business unit. In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers (Topic 606)", which supersedes the revenue recognition requirements in Accounting Standards Codification ("ASC") No. 605, "Revenue Recognition". In August 2015, the FASB issued ASU 2015-14, "Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date", which defers the effective date of ASU 2014-09 for all entities by one year. The original ASU is based on the principle that revenue is recognized 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. This ASU is effective in the first quarter of 2018. It will change the way we account for sales returns, our loyalty program and certain promotional programs. Based on current estimates, we do not expect this ASU to have a material impact on our financial statements and, therefore, we expect to use the modified retrospective method to adopt the standard. In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)". The core principle of the standard is that a lessee should recognize the assets and liabilities that arise from leases. A lessee should recognize in its statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. We will be required to adopt the new standard in the first quarter of 2019. We are currently evaluating the impact this new standard will have on our financial statements. During 2015, we adopted ASU No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs (Subtopic 835-30)" which requires us to present debt issuance costs on the balance sheet as a direct deduction from the related debt liability rather than as an asset. We also adopted ASU No. 2015-17, "Balance Sheet Classification of Deferred Taxes (Topic 740)" which requires us to present deferred tax liabilities and assets as non-current in our balance sheet and corrected the presentation of certain other tax assets and liabilities. The following table summarizes changes to our May 2, 2015 balance sheet: (Dollars in Millions) Prior Classification Current Classification Debt issuance costs Other current and long-term assets Long-term debt $ 13 Deferred taxes Current deferred tax asset Long-term deferred tax liability 129 Deferred taxes Long-term deferred tax liability Other long-term assets 32 Deferred taxes Other long-term liabilities Long-term deferred tax liability 14

Debt

Debt	3 Months Ended
	Apr. 30, 2016
Debt [Abstract]
Debt	Debt Long-term debt consists of the following unsecured senior debt: April 30, 2016 Outstanding Maturity Effective Rate Coupon Rate Outstanding January 30, 2016 May 2, 2015 (Dollars in Millions) 2021 4.81 % 4.00 % $ 650 $ 650 $ 650 2023 3.25 % 3.25 % 350 350 350 2023 4.78 % 4.75 % 300 300 300 2025 4.25 % 4.25 % 650 650 — 2029 7.36 % 7.25 % 99 99 200 2033 6.05 % 6.00 % 166 166 300 2037 6.89 % 6.88 % 150 150 350 2045 5.57 % 5.55 % 450 450 — 2017 — — — — 650 4.88 % 2,815 2,815 2,800 Unamortized debt discount (5 ) (5 ) (7 ) Deferred financing costs (17 ) (18 ) (13 ) Long-term debt $ 2,793 $ 2,792 $ 2,780 ASC No. 820, "Fair Value Measurements and Disclosures", requires fair value measurements be classified in various pricing categories. Our long-term debt is classified as Level 1, financial instruments with unadjusted, quoted prices listed on active market exchanges. The estimated fair value of our long-term debt was $2.8 billion at both April 30, 2016 and January 30, 2016 and $3.1 billion at May 2, 2015.

Stock-Based Compensation

Stock-Based Compensation	3 Months Ended
	Apr. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Disclosure of Compensation Related Costs, Share-based Payments [Text Block]	Stock-Based Compensation The following table summarizes our stock-based compensation activity for the three months ended April 30, 2016 : Stock Options Nonvested Stock Awards Performance Share Units (Shares and Units in Thousands) Shares Weighted Average Exercise Price Shares Weighted Average Grant Date Fair Value Units Weighted Average Grant Date Fair Value Balance at beginning of period 3,076 $ 52.65 2,211 $ 57.37 347 $ 67.53 Granted — — 1,132 46.97 4 67.47 Exercised/vested (145 ) 41.82 (646 ) 56.61 — — Forfeited/expired (127 ) 58.47 (113 ) 55.95 (32 ) 67.98 Balance at end of period 2,804 $ 52.94 2,584 $ 53.06 319 $ 67.49

Contingencies

Contingencies	3 Months Ended
	Apr. 30, 2016
Commitments and Contingencies Disclosure [Abstract]
Contingencies	Contingencies We are subject to certain legal proceedings and claims arising out of the conduct of our business. In the opinion of management, the outcome of these proceedings and litigation will not have a material adverse impact on our consolidated financial statements.

Net Income Per Section

Net Income Per Section	3 Months Ended
	Apr. 30, 2016
Net Income Per Section [Abstract]
Earnings Per Share	Net Income Per Share The following table summarizes our basic and diluted net income per share calculations: Three Months Ended (Dollar and Shares in Millions) April 30, May 2, Numerator—Net income $ 17 $ 127 Denominator—Weighted average shares: Basic 183 200 Impact of dilutive stock-based awards 1 2 Diluted 184 202 Antidilutive shares 4 —

Debt (Tables)

Debt (Tables)	3 Months Ended
	Apr. 30, 2016
Debt Disclosure [Abstract]
Components of long-term debt	Long-term debt consists of the following unsecured senior debt: April 30, 2016 Outstanding Maturity Effective Rate Coupon Rate Outstanding January 30, 2016 May 2, 2015 (Dollars in Millions) 2021 4.81 % 4.00 % $ 650 $ 650 $ 650 2023 3.25 % 3.25 % 350 350 350 2023 4.78 % 4.75 % 300 300 300 2025 4.25 % 4.25 % 650 650 — 2029 7.36 % 7.25 % 99 99 200 2033 6.05 % 6.00 % 166 166 300 2037 6.89 % 6.88 % 150 150 350 2045 5.57 % 5.55 % 450 450 — 2017 — — — — 650 4.88 % 2,815 2,815 2,800 Unamortized debt discount (5 ) (5 ) (7 ) Deferred financing costs (17 ) (18 ) (13 ) Long-term debt $ 2,793 $ 2,792 $ 2,780

Stock-Based Compensation (Table

Stock-Based Compensation (Tables)	3 Months Ended
	Apr. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award [Table Text Block]	The following table summarizes our stock-based compensation activity for the three months ended April 30, 2016 : Stock Options Nonvested Stock Awards Performance Share Units (Shares and Units in Thousands) Shares Weighted Average Exercise Price Shares Weighted Average Grant Date Fair Value Units Weighted Average Grant Date Fair Value Balance at beginning of period 3,076 $ 52.65 2,211 $ 57.37 347 $ 67.53 Granted — — 1,132 46.97 4 67.47 Exercised/vested (145 ) 41.82 (646 ) 56.61 — — Forfeited/expired (127 ) 58.47 (113 ) 55.95 (32 ) 67.98 Balance at end of period 2,804 $ 52.94 2,584 $ 53.06 319 $ 67.49

Net Income Per Section Net Inco

Net Income Per Section Net Income Per Section (Tables)	3 Months Ended
	Apr. 30, 2016
Net Income Per Section [Abstract]
Basic and diluted net income per share calculation	The following table summarizes our basic and diluted net income per share calculations: Three Months Ended (Dollar and Shares in Millions) April 30, May 2, Numerator—Net income $ 17 $ 127 Denominator—Weighted average shares: Basic 183 200 Impact of dilutive stock-based awards 1 2 Diluted 184 202 Antidilutive shares 4 —

Basis of Presentation (Narrativ

Basis of Presentation (Narrative) (Details) - USD ($) $ in Millions	Apr. 30, 2016	Jan. 30, 2016	May. 02, 2015
Basis of Presentation (Narrative) [Abstract]
Debt Issuance Cost Reclass			$ 13
Deferred Finance Costs, Net	$ 17	$ 18	13
Deferred Tax Reclass			129
Deferred Tax Asset Reclass			32
FIN 48 Reclass			$ 14

Debt - Components of Long Term

Debt - Components of Long Term Debt (Details) - USD ($) $ in Millions	Apr. 30, 2016	Jan. 30, 2016	May. 02, 2015
Debt Instrument [Line Items]
Long-term Debt, Fair Value	$ 2,800	$ 2,800	$ 3,100
Unamortized debt discount	5	5	7
Deferred Finance Costs, Net	(17)	(18)	(13)
Long-term debt	$ 2,793	2,792	2,780
Senior Notes
Debt Instrument [Line Items]
Effective Rate	5.00%
Total senior debt	$ 2,815	2,815	2,800
Senior Notes | Senior Notes Due 2017
Debt Instrument [Line Items]
Effective Rate	0.00%
Debt Instrument, Interest Rate, Stated Percentage	0.00%
Total senior debt	$ 0	0	650
Senior Notes | Senior Notes Due Two Thousand And Twenty One [Member]
Debt Instrument [Line Items]
Effective Rate	5.00%
Debt Instrument, Interest Rate, Stated Percentage	4.00%
Total senior debt	$ 650	650	650
Senior Notes | Senior Notes Due 2023
Debt Instrument [Line Items]
Effective Rate	3.00%
Debt Instrument, Interest Rate, Stated Percentage	3.00%
Total senior debt	$ 350	350	350
Senior Notes | Senior Notes Due Twenty Twenty Three [Member]
Debt Instrument [Line Items]
Effective Rate	5.00%
Debt Instrument, Interest Rate, Stated Percentage	5.00%
Total senior debt	$ 300	300	300
Senior Notes | Senior Notes Due Twenty Twenty Five [Member]
Debt Instrument [Line Items]
Effective Rate	4.00%
Debt Instrument, Interest Rate, Stated Percentage	4.00%
Total senior debt	$ 650	650	0
Senior Notes | Senior Notes Due 2029
Debt Instrument [Line Items]
Effective Rate	7.00%
Debt Instrument, Interest Rate, Stated Percentage	7.00%
Total senior debt	$ 99	99	200
Senior Notes | Senior Notes Due 2033
Debt Instrument [Line Items]
Effective Rate	6.00%
Debt Instrument, Interest Rate, Stated Percentage	6.00%
Total senior debt	$ 166	166	300
Senior Notes | Senior Notes Due 2037
Debt Instrument [Line Items]
Effective Rate	7.00%
Debt Instrument, Interest Rate, Stated Percentage	7.00%
Total senior debt	$ 150	150	350
Senior Notes | Senior Notes Due 2045
Debt Instrument [Line Items]
Effective Rate	6.00%
Debt Instrument, Interest Rate, Stated Percentage	6.00%
Total senior debt	$ 450	$ 450	$ 0

Fair Value Measurements (Narrat

Fair Value Measurements (Narrative) (Details) - USD ($) $ in Millions	Apr. 30, 2016	Jan. 30, 2016	May. 02, 2015	Jan. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and Cash Equivalents, at Carrying Value	$ 423	$ 707	$ 1,195	$ 1,407
Long-term Debt, Excluding Current Maturities	2,793	2,792	2,780
Long Term Investments Fair Value	$ 2,800	$ 2,800	$ 3,100

Stock-Based Compensation - Summ

Stock-Based Compensation - Summary of Stock Based Compensation Grants (Details) - $ / shares shares in Thousands	3 Months Ended
	Apr. 30, 2016	Jan. 30, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number	2,584	2,211
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Number of Outstanding Options		3,076
Restricted shares and units granted, excluding shares earned in lieu of cash dividends	1,132
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 46.97
Granted performance restricted share units	4
Performance Restricted Shares Fair Value, Granted	$ 67.47
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range, Outstanding Options, Weighted Average Exercise Price		$ 52.65
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period	145
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price	$ 41.82
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period	127
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	2,804
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price	$ 52.94
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value	$ 53.06	$ 57.37
Performance restricted shares units, beginning		347
Performance Restricted Shares, Fair Value Beginning		$ 67.53
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period	646
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Weighted Average Grant Date Fair Value	$ 56.61
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period	113
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested Options Forfeited, Weighted Average Grant Date Fair Value	$ 55.95
Forfeited performance restricted share units	(32)
Performance Restricted Shares Fair Value, Forfeited	$ 67.98
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period, Weighted Average Exercise Price	$ 58.47
Performance restricted shares units, ending	319
Performance Restricted Shares, Fair Value Ending	$ 67.49

Stock-Based Compensation Perfor

Stock-Based Compensation Performance Share Unit Activity (Details) - $ / shares shares in Thousands	3 Months Ended
	Apr. 30, 2016	Jan. 30, 2016
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Performance Restricted Shares, Fair Value Beginning		$ 67.53
Granted performance restricted share units	4
Performance Restricted Shares Fair Value, Granted	$ 67.47
Forfeited performance restricted share units	(32)
Performance Restricted Shares Fair Value, Forfeited	$ 67.98
Performance restricted shares units, ending	319
Performance Restricted Shares, Fair Value Ending	$ 67.49

Net Income Per Section Net In20

Net Income Per Section Net Income Per Section (Details) - USD ($) shares in Millions, $ in Millions	3 Months Ended
	Apr. 30, 2016	May. 02, 2015
Net Income Per Section [Abstract]
Net income	$ 17	$ 127
Basic	183	200
Impact of dilutive stock-based awards	1	2
Diluted	184	202
Antidilutive shares	4	0

Store Closures (Details)

Store Closures (Details) - USD ($)	3 Months Ended
	Apr. 30, 2016	May. 02, 2015	Jul. 30, 2016
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Incurred Cost	$ 53,000,000
Severance and other store closure costs	11,000,000
Impairments, store closing and other costs	$ 64,000,000	$ 0
Minimum [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Expected Cost			$ 105
Minimum [Member]
Restructuring Cost and Reserve [Line Items]
Restructuring and Related Cost, Expected Cost			$ 110