Kohl's (KSS) 10-K 19 Mar 10 2010 FY Annual report Financial data

Statement Of Financial Position

Statement Of Financial Position Classified (USD $)
In Millions	Jan. 30, 2010	Jan. 31, 2009
Current assets:
Cash and cash equivalents	$2,267	$643
Merchandise inventories	2,923	2,799
Deferred income taxes	73	74
Other	222	212
Total current assets	5,485	3,728
Property and equipment, net	7,018	6,984
Long-term investments	321	333
Favorable lease rights, net	204	201
Other assets	132	117
Total assets	13,160	11,363
Current liabilities:
Accounts payable	1,188	881
Accrued liabilities	1,002	841
Income taxes payable	184	105
Current portion of capital leases	16	17
Total current liabilities	2,390	1,844
Long-term debt and capital leases	2,052	2,053
Deferred income taxes	377	320
Other long-term liabilities	488	407
Shareholders' equity:
Common stock-$0.01 par value, 800 million shares authorized, 353 million and 351 million shares issued	4	4
Paid-in capital	2,085	1,971
Treasury stock, at cost, 46 million shares	(2,639)	(2,638)
Accumulated other comprehensive loss	(36)	(46)
Retained earnings	8,439	7,448
Total shareholders' equity	7,853	6,739
Total liabilities and shareholders' equity	$13,160	$11,363

1_Statement Of Financial Positi

Statement Of Financial Position Classified (Parenthetical) (USD $)
Share data in Millions, except Per Share data	Jan. 30, 2010	Jan. 31, 2009
Common stock, par value	0.01	0.01
Common stock, shares authorized	800	800
Common stock, shares issued	353	351
Treasury stock, shares	46	46

Statement Of Income

Statement Of Income (USD $)
In Millions, except Per Share data	12 Months Ended Jan. 30, 2010	12 Months Ended Jan. 31, 2009	12 Months Ended Feb. 02, 2008
Net sales	$17,178	$16,389	$16,474
Cost of merchandise sold (exclusive of depreciation shown separately below)	10,680	10,334	10,460
Gross margin	6,498	6,055	6,014
Operating expenses:
Selling, general, and administrative	4,144	3,936	3,697
Depreciation and amortization	590	541	452
Preopening expenses	52	42	61
Operating income	1,712	1,536	1,804
Other expense (income):
Interest expense	134	132	82
Interest income	(10)	(21)	(20)
Income before income taxes	1,588	1,425	1,742
Provision for income taxes	597	540	658
Net income	$991	$885	$1,084
Net income per share:
Basic	3.25	2.89	3.41
Diluted	3.23	2.89	3.39

Statement Of Shareholders Equit

Statement Of Shareholders Equity And Other Comprehensive Income (USD $)
In Millions	Common Stock	Paid-In Capital	Treasury Stock	Accumulated Other Comprehensive Gain (Loss)	Retained Earnings	Total
Beginning Balance at Feb. 03, 2007	$3	$1,749	($1,628)	$0	$5,479	$5,603
Beginning Balance (in shares) at Feb. 03, 2007	349
Net income					1,084	1,084
Other comprehensive income (loss):
Exercise of stock options (in shares)	2
Exercise of stock options	1	97				98
Net income tax impact from stock option activity		6				6
Share-based compensation expense		59				59
Treasury stock purchases			(748)			(748)
Ending Balance (in shares) at Feb. 02, 2008	351
Ending Balance at Feb. 02, 2008	4	1,911	(2,376)	0	6,563	6,102
Net income					885	885
Other comprehensive income (loss):
Unrealized gain (loss) on investments, net of tax of $6 in 2009 and $29 in 2008				(46)		(46)
Total comprehensive income						839
Exercise of stock options		5				5
Net income tax impact from stock option activity		(6)				(6)
Share-based compensation expense		61				61
Treasury stock purchases			(262)			(262)
Ending Balance (in shares) at Jan. 31, 2009	351
Ending Balance at Jan. 31, 2009	4	1,971	(2,638)	(46)	7,448	6,739
Net income					991	991
Other comprehensive income (loss):
Unrealized gain (loss) on investments, net of tax of $6 in 2009 and $29 in 2008				10		10
Total comprehensive income						1,001
Exercise of stock options (in shares)	2
Exercise of stock options		51				51
Net income tax impact from stock option activity		(6)				(6)
Share-based compensation expense		69				69
Treasury stock purchases			(1)			(1)
Ending Balance (in shares) at Jan. 30, 2010	353
Ending Balance at Jan. 30, 2010	$4	$2,085	($2,639)	($36)	$8,439	$7,853

2_Statement Of Shareholders Equ

Statement Of Shareholders Equity And Other Comprehensive Income (Parenthetical) (USD $)
In Millions	12 Months Ended Jan. 30, 2010	12 Months Ended Jan. 31, 2009
Unrealized gain (loss) on investments, tax	$6	($29)

Statement Of Cash Flows Indirec

Statement Of Cash Flows Indirect (USD $)
In Millions	12 Months Ended Jan. 30, 2010	12 Months Ended Jan. 31, 2009	12 Months Ended Feb. 02, 2008
Operating activities
Net income	$991	$885	$1,084
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization, including debt discount and deferred financing fees	591	543	453
Share-based compensation expense	64	55	54
Excess tax benefits from share-based compensation expense	3	0	(6)
Deferred income taxes	52	84	(12)
Other non-cash revenues and expenses	51	47	34
Changes in operating assets and liabilities:
Merchandise inventories	(119)	60	(275)
Other current and long-term assets	(13)	(40)	(78)
Accounts payable	306	48	(98)
Accrued and other long-term liabilities	234	42	152
Income taxes	74	(26)	(103)
Net cash provided by operating activities	2,234	1,698	1,205
Investing activities
Acquisition of property and equipment and favorable lease rights	(666)	(1,014)	(1,542)
Purchases of investments in auction rate securities	0	(53)	(6,521)
Sales of investments in auction rate securities	28	93	6,441
Other	(2)	11	26
Net cash used in investing activities	(640)	(963)	(1,596)
Financing activities
Treasury stock purchases	(1)	(262)	(748)
Capital lease payments	(17)	(16)	(20)
Proceeds from issuance of debt, net of deferred financing costs	0	0	989
Proceeds from stock option exercises	51	5	98
Excess tax benefits from share-based compensation expense	(3)	0	6
Net cash provided by (used in) financing activities	30	(273)	325
Net change in cash and cash equivalents	1,624	462	(66)
Cash and cash equivalents at beginning of year	643	181	247
Cash and cash equivalents at end of year	$2,267	$643	$181

Business and Summary of Account

Business and Summary of Accounting Policies
	12 Months Ended Jan. 30, 2010
Business and Summary of Accounting Policies	1. Business and Summary of Accounting Policies Business As of January30, 2010, Kohls Corporation operated 1,058 family-oriented department stores that feature exclusive and national brand apparel, footwear, accessories, soft home products and housewares targeted to middle-income customers. Our stores are located in 49 states. Our authorized capital stock consists of 800million shares of $0.01 par value common stock and 10million shares of $0.01 par value preferred stock. Consolidation The consolidated financial statements include the accounts of Kohls Corporation and its subsidiaries including Kohls Department Stores, Inc., its primary operating company. All intercompany accounts and transactions have been eliminated. Accounting Period Our fiscal year ends on the Saturday closest to January31. Unless otherwise noted, references to years in this report relate to fiscal years, rather than to calendar years. Fiscal year 2009 (2009) ended on January30, 2010. Fiscal year 2008 (2008) ended on January31, 2009. Fiscal year 2007 (2007) ended on February2, 2008. Fiscal 2009, 2008 and 2007 were 52-week years. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Reclassifications Certain reclassifications have been made to the prior period Consolidated Balance Sheets and Statements of Cash Flows to conform to the 2009 presentation. Cash and Cash Equivalents In addition to money market investments, cash equivalents include commercial paper with an original maturity of three months or less. We carry these investments at cost which approximates fair value. Also included in cash and cash equivalents are amounts due from credit card transactions with settlement terms of less than five days. Credit and debit card receivables included within cash were $68 million at January30, 2010 and $71 million at January31, 2009. Long-term Investments Long-term investments consist primarily of investments in auction rate securities (ARS) which are classified as available-for-sale securities and recorded at market. Merchandise Inventories Merchandise inventories are valued at the lower of cost or market with cost determined on the first-in, first-out (FIFO) basis using the retail inventory method (RIM). Under RIM, the valuation of inventory at cost and the resulting gross margins are calculated by applying a cost-to-retail ratio to the retail value inventory. RIM is an averaging method that has been widely used in the retail industry due to its practicality. The use of RIM will result in inventory being valued at the lower of cost or market since permanent markdowns are currently taken as a reduction of the retail value of inventory. We record an additional reserve when the future estimated selling price is less than cost. Property and Equipment Property and equipment consist of the following: Jan. 30,

Long-term Investments

Long-term Investments
	12 Months Ended Jan. 30, 2010
Long-term Investments	2. Long-term Investments As of January30, 2010, the par value of our long-term investments was $380 million and the estimated fair value was $321 million.Our auction rate securities (ARS) portfolio consists entirely of highly-rated, insured student loan backed securities. Substantially all of the principal and interest is insured by the federal government and the remainder is insured by highly-rated insurance companies. Approximately $224 million of our ARS (at fair value) are rated AAA by Moodys, Standard Poors and/or Fitch Ratings. Beginning in February 2008, liquidity issues in the global credit markets resulted in the failure of auctions for all of our ARS. A failed auction occurs when the amount of securities submitted for sale in the auction exceeds the amount of purchase bids.As a result, holders are unable to liquidate their investment through the auction. A failed auction is not a default of the debt instrument, but does set a new interest rate in accordance with the terms of the debt instrument. A failed auction limits liquidity for holders until there is a successful auction or until such time as another market for ARS develops. ARS are generally callable by the issuer at any time. Scheduled auctions continue to be held until the ARS matures or is called. To date, we have collected all interest payable on outstanding ARS when due and expect to continue to do so in the future. At this time, we have no reason to believe that any of the underlying issuers of our ARS or their insurers are presently at risk or that the reduced liquidity has had a significant impact on the underlying credit quality of the assets backing our ARS. While the auction failures limit our ability to liquidate these investments, we do not believe these failures will have any significant impact on our ability to fund ongoing operations and growth initiatives. We intend to hold these ARS until maturity or until we can liquidate them at par value. Based on our other sources of liquidity, we do not believe we will be required to sell them before recovery of par value. Therefore, impairment charges are considered temporary and have been included in Accumulated Other Comprehensive Loss within our Consolidated Balance Sheets at January30, 2010 and January31, 2009. In certain cases, holding the investments until recovery may mean until maturity, which ranges from 2015 to 2056.The weighted-average maturity date is 2036. As a result of the persistent failed auctions and the uncertainty of when these investments could be successfully liquidated at par, we have recorded all of our ARS as Long-term Investments within the Consolidated Balance Sheet. ASC No.820, Fair Value Measurements and Disclosures, requires fair value measurements be classified and disclosed in one of the following three categories: Level1: Financial instruments with unadjusted, quoted prices listed on active market exchanges. Level 2: Financial instruments lacking unadjusted, quoted prices from active market exchanges, including over-the-counter traded financial instruments.The prices for the financial instruments are determined using prices for recently traded fina

Debt

Debt
	12 Months Ended Jan. 30, 2010
Debt	3. Debt Long-term debt consists of the following: Maturing Rate Jan. 30, 2010 Jan. 31, 2009 ($ in Millions) Non-callable and unsecured senior debt: 2011 6.59 % $ 400 $ 400 2017 6.31 % 650 650 2029 7.36 % 200 200 2033 6.05 % 300 300 2037 6.89 % 350 350 Total senior debt 6.55 % 1,900 1,900 Capital lease obligations 174 177 Unamortized debt discount (6 ) (7 ) Less current portion (16 ) (17 ) Long-term debt and capital leases $ 2,052 $ 2,053 Based on quoted market prices (Level 1per ASC No.820, Fair Value Measurements and Disclosures), the estimated fair value of our senior debt was approximately $2.1 billion at January30, 2010 and $1.6 billion at January31, 2009. We have various facilities upon which we may draw funds, including a $900 million senior unsecured revolving facility and two demand notes with aggregate availability of $50 million. Depending on the type of advance under these facilities, amounts borrowed bear interest at competitive bid rates; LIBOR plus a margin, depending on our long-term unsecured debt ratings; or the agent banks base rate. The $900 million revolving facility expires in October 2011. The co-leads of this facility, The Bank of New York Mellon and Bank of America, have each committed $100 million. The remaining 12 lenders have each committed between $30 and $130 million. There were no draws on these facilities during 2009. Weighted-average borrowings under these facilities were $40 million during 2008. Our debt agreements contain various covenants including limitations on additional indebtedness and certain financial tests. As of January30, 2010, we were in compliance with all covenants of the debt agreements. We also have outstanding trade letters of credit and stand-by letters of credit totaling approximately $37 million at January30, 2010, issued under uncommitted lines with two banks. Interest payments, net of amounts capitalized, were $133 million for 2009, $145 million for 2008 and $59 million for 2007.

Commitments

Commitments
	12 Months Ended Jan. 30, 2010
Commitments	4. Commitments We lease certain property and equipment. Rent expense is recognized on a straight-line basis over the expected lease term. The lease term begins on the date we become legally obligated for the rent payments or we take possession of the building or land for initial setup of fixtures and merchandise or land improvements, whichever is earlier. The lease term includes cancelable option periods where failure to exercise such options would result in an economic penalty. Failure to exercise such options would result in the recognition of accelerated depreciation expense of the related assets. Rent expense charged to operations was $498 million for 2009, $448 million for 2008 and $417 million for 2007. Rent expense includes contingent rents, which are based on sales, of $2 million for 2009, $3 million for 2008 and $4 million for 2007. In addition, we are often required to pay real estate taxes, insurance and maintenance costs. These items are not included in the rent expenses listed above. Many store leases include multiple renewal options, exercisable at our option, that generally range from two additional five-year periods to eight ten-year periods. Assets held under capital leases are included in property and equipment and depreciated over the term of the lease. Assets under capital leases consist of the following: Jan.30, 2010 Jan.31, 2009 (In Millions) Buildings and improvements $ 214 $ 209 Equipment 27 24 Less accumulated depreciation (89 ) (74 ) $ 152 $ 159 Depreciation expense related to capital leases totaled $21 million for 2009, $19 million for 2008 and $14 million for 2007. Future minimum lease payments at January30, 2010, are as follows: Capital Leases Operating Leases (In Millions) Fiscal Year: 2010 $ 28 $ 479 2011 27 470 2012 24 461 2013 20 457 2014 18 460 Thereafter 160 8,711 277 $ 11,038 Less amount representing interest 103 Present value of lease payments $ 174

Benefit Plans

Benefit Plans
	12 Months Ended Jan. 30, 2010
Benefit Plans	5. Benefit Plans We have an Employee Stock Ownership Plan (ESOP) for the benefit of our non-management associates. Contributions are made at the discretion of the Board of Directors. ESOP expenses totaled $17 million for 2009, $8 million for 2008 and $19 million for 2007. Shares of our stock held by the ESOP are included as shares outstanding for purposes of the net income per share computations. We also have a defined contribution savings plan covering all full-time and certain part-time associates. Participants in this plan may invest up to 25% of their base compensation, subject to certain statutory limits. Through 2009, we matched 100% of the first 3% of each participants contribution. We also make defined annual contributions for all qualifying associates based on a percentage of qualifying payroll earnings. Defined contribution plan expense, net of forfeitures, was $37 million for 2009, $30 million for 2008 and $25 million for 2007. We also offer a non-qualified deferred compensation plan to a group of executives which provides for pre-tax compensation deferrals up to 100% of salary and/or bonus. Deferrals and credited investment returns are 100% vested. The expense for 2009, 2008, and 2007 was immaterial.

Income Taxes

Income Taxes
	12 Months Ended Jan. 30, 2010
Income Taxes	6. Income Taxes Deferred income taxes consist of the following: Jan.30, 2010 Jan.31, 2009 (In Millions) Deferred tax liabilities: Property and equipment $ 653 $ 560 Deferred tax assets: Merchandise inventories 36 38 Accrued and other liabilities, including stock options 190 166 Accrued step rent liability 100 81 Unrealized loss on auction rate securities 23 29 349 314 $ 304 $ 246 The components of the provision for income taxes are as follows: 2009 2008 2007 (In Millions) Current federal $ 480 $ 411 $ 604 Current state 59 45 66 Deferred federal 53 76 (11 ) Deferred state 5 8 (1 ) $ 597 $ 540 $ 658 Amounts paid for income taxes $ 470 $ 471 $ 709 The provision for income taxes differs from the amount that would be provided by applying the statutory U.S. corporate tax rate due to the following items: 2009 2008 2007 Provision at statutory rate 35.0 % 35.0 % 35.0 % State income taxes, net of federal tax benefit 2.9 3.1 3.2 Tax-exempt interest income (0.3 ) (0.2 ) (0.4 ) Provision for income taxes 37.6 % 37.9 % 37.8 % We have analyzed filing positions in all of the federal and state jurisdictions where we are required to file income tax returns, as well as all open tax years in thesejurisdictions.The only federal returns subject to examination are for the 2003 through 2009 tax years. State returns subject to examination are generally for the 2003 through 2009 tax years. Certain states have proposed adjustments which we are currently appealing. If we do not prevail on our appeals, we do not anticipate that the adjustments would result in a material change in our financial position. A reconciliation of the beginning and ending gross amount of unrecognized tax benefits is as follows: 2009 2008 (In Millions) Balance at beginning of year $ 92 $ 81 Increases due to: Tax positions taken in prior years 5 Tax positions taken in current year 20 16 Decreases due to: Tax positions taken in prior years (8 ) (4 ) Settlements with taxing authorities (13 ) (1 ) Lapse of applicable statute of limitations (7 ) Balance at end of year $ 89 $ 92 Not included in the unrecognized tax benefits reconciliation above are gross unrecognized accrued interest and penalties of $25 million at January30, 2010 and $23 million at January31, 2009. Interest and penalty expense was $4 million for 2009 and $6 million for 2008. Our total unrecognized tax benefits that, if recognized, would affect our effective tax rate were $59 million as of January30, 2010 and $60 million as of January31, 2009.

Stock-Based Compensation

Stock-Based Compensation
	12 Months Ended Jan. 30, 2010
Stock-Based Compensation	7. Stock-Based Compensation We currently grant share-based compensation pursuant to our 1997 Stock Option Plan for Outside Directors and our 2003 Long-Term Compensation Plan, which provides for the granting of various forms of equity-based awards, including nonvested stock and options to purchase shares of our common stock, to officers and key employees. Annual grants of stock options and nonvested stock are made in the first quarter of the subsequent fiscal year. Grants to newly-hired and promoted employees and other discretionary grants are made periodically throughout the remainder of the year. We also have outstanding options which were granted to officers and key employees under our 1992 and 1994 Long-Term Compensation Plans. The following table summarizes the number of options and nonvested stock authorized and available for grant as of January30, 2010: 1997Plan 2003Plan Total (In Thousands) Options and nonvested stock: Authorized 400 31,000 31,400 Available for grant 105 14,632 14,737 Options and nonvested stock that are surrendered or terminated without issuance of shares are available for future grants. Stock options The majority of stock options granted to employees prior to 2009 vest in four equal annual installments. Remaining stock options vest in five to seven equal annual installments. Outside directors stock options are typically granted upon a directors election or re-election to our Board of Directors and vest over the term to which the director was elected, generally one year. Options granted to employees after 2005 have a term of seven years. Outstanding options granted to employees prior to 2006 have a term of up to 15 years. Options granted to directors have a term of 10 years. All stock options have an exercise price equal to the fair market value of the common stock on the date of grant. The fair value of each option award is estimated using a Black-Scholes option valuation model and the following assumptions: 2009 2008 2007 Dividend yield 0 % 0 % 0 % Volatility 42.8 % 36.6 % 30.4 % Risk-free interest rate 1.8 % 2.5 % 4.7 % Expected life in years 5.4 5.3 5.2 Weighted average fair value at grant date $ 17.68 $ 15.52 $ 26.33 The dividend yield represents the expected dividends on our stock for the expected term of the option. The expected volatility assumption is based on the historical volatility of our stock. The risk-free interest rate for periods within the life of the option is based on a blend of U.S. Treasury bond rates. We use historical data to estimate the expected life of the option and the period of time that options granted are expected to be outstanding. The following table summarizes our stock option activity for 2009, 2008, and 2007: 2009 2008 2007 Shares Weighted Average Exercise Price Shares Weighted Average Exercise Price Shares Weighted Average Exercise Price (Shares in Thousands) Balance at beginning of year

Contingencies

Contingencies
	12 Months Ended Jan. 30, 2010
Contingencies	8. Contingencies We are involved in various legal matters arising in the normal course of business. In the opinion of management, the outcome of such proceedings and litigation will not have a material adverse impact on our financial position or results of operations.

Quarterly Financial Information

Quarterly Financial Information (Unaudited)
	12 Months Ended Jan. 30, 2010
Quarterly Financial Information (Unaudited)	9. Quarterly Financial Information (Unaudited) 2009 First Second Third Fourth (In Millions, Except Per Share Data) Net sales $ 3,638 $ 3,806 $ 4,051 $ 5,682 Gross margin $ 1,368 $ 1,520 $ 1,539 $ 2,070 Net income $ 137 $ 229 $ 193 $ 431 Basic shares 305 305 305 306 Basic net income per share $ 0.45 $ 0.76 $ 0.63 $ 1.41 Diluted shares 306 306 308 308 Diluted net income per share $ 0.45 $ 0.75 $ 0.63 $ 1.40 2008 First Second Third Fourth (In Millions, Except Per Share Data) Net sales $ 3,624 $ 3,725 $ 3,804 $ 5,235 Gross margin $ 1,335 $ 1,475 $ 1,423 $ 1,822 Net income $ 153 $ 236 $ 160 $ 336 Basic shares 309 306 305 305 Basic net income per share $ 0.50 $ 0.77 $ 0.53 $ 1.10 Diluted shares 309 307 305 305 Diluted net income per share $ 0.49 $ 0.77 $ 0.52 $ 1.10 Due to changes in stock prices during the year and timing of issuance of shares, the sum of quarterly net income per share may not equal the annual net income per share.

Related Party

Related Party
	12 Months Ended Jan. 30, 2010
Related Party	10. Related Party One of our directors is also a shareholder of a law firm which performs legal services for us. We have agreements with Blackhawk Network, Inc. (Blackhawk) pursuant to which Blackhawk distributes our prepaid gift cards for sale in various retail outlets and, beginning in 2008, to which we will sell prepaid gift cards for other retailers in our stores. We pay Blackhawk a fee for Kohls gift cards which are sold at other retailers and receive a fee for selling gift cards for other retailers in our stores. Blackhawk is a subsidiary of Safeway Stores, Inc. (Safeway) and one of our directors is Chairman, President and Chief Executive Officer of Safeway. The agreements were entered into in the ordinary course of our business, and our director was not involved in any negotiations. Blackhawk is a leading provider of gift card marketing services in the retail industry, and Safeway has confirmed that the terms of our agreements with Blackhawk are substantially similar to the terms of Blackhawks agreements with other similarly situated national retailers.

Document Information

Document Information
	12 Months Ended Jan. 30, 2010
Document Type	10-K
Amendment Flag	false
Document Period End Date	2010-01-30

Entity Information

Entity Information (USD $)
	12 Months Ended Jan. 30, 2010	Mar. 10, 2010	Aug. 01, 2009
Trading Symbol	KSS
Entity Registrant Name	KOHLS CORPORATION
Entity Central Index Key	0000885639
Current Fiscal Year End Date	--01-30
Entity Well-known Seasoned Issuer	Yes
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		306,974,796
Entity Public Float			$14,800,000,000