2019 Q1 Form 10-K Financial Statement

#000035495019000010 Filed on March 28, 2019

View on sec.gov

Income Statement

Concept 2019 Q1 2018 Q1 2017 Q4
Revenue $26.49B $23.88B $25.03B
YoY Change 10.92% 7.55% 8.08%
Cost Of Revenue $17.46B $15.79B $16.38B
YoY Change 10.6% 7.75% 8.38%
Gross Profit $9.027B $8.093B $8.648B
YoY Change 11.54% 7.15% 7.54%
Gross Profit Margin 34.08% 33.89% 34.56%
Selling, General & Admin $4.922B $4.440B $4.514B
YoY Change 10.86% 6.14% 5.47%
% of Gross Profit 54.53% 54.86% 52.2%
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $549.0M $529.0M $518.0M
YoY Change 3.78% 6.01% 4.44%
% of Gross Profit 6.08% 6.54% 5.99%
Operating Expenses $5.402B $4.904B $4.968B
YoY Change 10.15% 6.01% 5.21%
Operating Profit $3.625B $3.189B $3.680B
YoY Change 13.67% 8.95% 10.84%
Interest Expense -$249.0M -$246.0M $269.0M
YoY Change 1.22% 4.68% 9.35%
% of Operating Profit -6.87% -7.71% 7.31%
Other Income/Expense, Net -$16.00M -$247.0M
YoY Change 4.66%
Pretax Income $3.113B $2.943B $3.433B
YoY Change 5.78% 9.32% 11.32%
Income Tax $739.0M $1.037B $1.268B
% Of Pretax Income 23.74% 35.24% 36.94%
Net Earnings $2.344B $1.779B $2.165B
YoY Change 31.76% 2.01% 9.95%
Net Earnings / Revenue 8.85% 7.45% 8.65%
Basic Earnings Per Share $1.53 $1.85
Diluted Earnings Per Share $2.089M $1.52 $1.84
COMMON SHARES
Basic Shares Outstanding 1.104B shares 1.157B shares 1.168B shares
Diluted Shares Outstanding 1.174B shares

Balance Sheet

Concept 2019 Q1 2018 Q1 2017 Q4
SHORT-TERM ASSETS
Cash & Short-Term Investments $1.778B $3.595B $3.549B
YoY Change -50.54% 41.65% -1.11%
Cash & Equivalents $1.778B $3.595B $3.549B
Short-Term Investments
Other Short-Term Assets $890.0M $638.0M $548.0M
YoY Change 39.5% 4.93% 4.78%
Inventory $13.93B $12.75B $13.42B
Prepaid Expenses
Receivables $1.936B $1.952B $2.166B
Other Receivables $0.00 $0.00 $0.00
Total Short-Term Assets $18.53B $18.93B $19.68B
YoY Change -2.13% 6.82% 1.73%
LONG-TERM ASSETS
Property, Plant & Equipment $22.38B $22.08B $21.96B
YoY Change 1.36% 0.73% 0.55%
Goodwill $2.252B $2.275B $2.217B
YoY Change -1.01% 8.7% 5.82%
Intangibles
YoY Change
Long-Term Investments
YoY Change
Other Assets $847.0M $1.246B $1.164B
YoY Change -32.02% 0.89% -4.51%
Total Long-Term Assets $25.47B $25.60B $25.34B
YoY Change -0.48% 1.4% 0.74%
TOTAL ASSETS
Total Short-Term Assets $18.53B $18.93B $19.68B
Total Long-Term Assets $25.47B $25.60B $25.34B
Total Assets $44.00B $44.53B $45.02B
YoY Change -1.18% 3.64% 1.17%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $7.755B $7.244B $8.570B
YoY Change 7.05% 3.49% 6.41%
Accrued Expenses $4.773B $4.330B $4.182B
YoY Change 10.23% 3.42% 2.53%
Deferred Revenue $1.782B
YoY Change
Short-Term Debt $1.339B $1.559B $125.0M
YoY Change -14.11% 119.58%
Long-Term Debt Due $1.056B $1.202B $1.198B
YoY Change -12.15% 121.77% 120.63%
Total Short-Term Liabilities $16.72B $16.19B $16.00B
YoY Change 3.22% 14.58% 10.89%
LONG-TERM LIABILITIES
Long-Term Debt $26.81B $24.27B $24.27B
YoY Change 10.47% 8.58% 8.63%
Other Long-Term Liabilities $1.867B $2.174B $1.968B
YoY Change -14.12% 17.2% 6.03%
Total Long-Term Liabilities $1.867B $2.174B $1.968B
YoY Change -14.12% 17.2% 6.03%
TOTAL LIABILITIES
Total Short-Term Liabilities $16.72B $16.19B $16.00B
Total Long-Term Liabilities $1.867B $2.174B $1.968B
Total Liabilities $45.88B $43.08B $42.48B
YoY Change 6.51% 11.5% 9.26%
SHAREHOLDERS EQUITY
Retained Earnings $46.42B $39.94B $39.19B
YoY Change 16.25% 12.43% 13.24%
Common Stock $10.67B $10.28B $9.972B
YoY Change 3.75% 4.11% 2.63%
Preferred Stock
YoY Change
Treasury Stock (at cost) $58.20B $48.20B $45.99B
YoY Change 20.75% 19.91% 21.6%
Treasury Stock Shares 677.0M shares 622.0M shares 611.0M shares
Shareholders Equity -$1.878B $1.454B $2.543B
YoY Change
Total Liabilities & Shareholders Equity $44.00B $44.53B $45.02B
YoY Change -1.18% 3.64% 1.17%

Cashflow Statement

Concept 2019 Q1 2018 Q1 2017 Q4
OPERATING ACTIVITIES
Net Income $2.344B $1.779B $2.165B
YoY Change 31.76% 2.01% 9.95%
Depreciation, Depletion And Amortization $549.0M $529.0M $518.0M
YoY Change 3.78% 6.01% 4.44%
Cash From Operating Activities $3.129B $2.290B $1.879B
YoY Change 36.64% 22.85% 80.33%
INVESTING ACTIVITIES
Capital Expenditures -$731.0M -$543.0M -$508.0M
YoY Change 34.62% 14.08% 13.39%
Acquisitions
YoY Change
Other Investing Activities $8.000M -$109.0M $23.00M
YoY Change -107.34% -1462.5% 228.57%
Cash From Investing Activities -$723.0M -$652.0M -$485.0M
YoY Change 10.89% 39.32% 9.98%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -2.367B -1.617B -2.604B
YoY Change 46.38% -33.89% 159.62%
NET CHANGE
Cash From Operating Activities 3.129B 2.290B 1.879B
Cash From Investing Activities -723.0M -652.0M -485.0M
Cash From Financing Activities -2.367B -1.617B -2.604B
Net Change In Cash 39.00M 21.00M -1.210B
YoY Change 85.71% -102.0% 201.0%
FREE CASH FLOW
Cash From Operating Activities $3.129B $2.290B $1.879B
Capital Expenditures -$731.0M -$543.0M -$508.0M
Free Cash Flow $3.860B $2.833B $2.387B
YoY Change 36.25% 21.07% 60.2%

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<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:12px;text-align:left;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">Television and radio advertising production costs, along with media placement costs, are expensed when the advertisement first appears. Certain co-op advertising allowances are recorded as an offset against advertising expense.</font></div></div>
CY2019 us-gaap Description Of New Accounting Pronouncements Not Yet Adopted
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<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:8px;text-align:left;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;font-style:italic;font-weight:bold;">ASU No. 2018-15. </font><font style="font-family:Arial;font-size:10pt;">In August 2018, the FASB issued ASU No. 2018-15, "Intangibles &#8211; Goodwill and Other &#8211; Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract," which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. ASU No. 2018-15 is effective for us in the first quarter of fiscal 2020 and early adoption is permitted. We are evaluating the effect that ASU No. 2018-15 will have on our consolidated financial statements and related disclosures.</font></div><div style="line-height:120%;padding-bottom:8px;text-align:left;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;font-style:italic;font-weight:bold;">ASU No. 2018-02.</font><font style="font-family:Arial;font-size:10pt;"> In February 2018, the FASB issued ASU No. 2018-02, "Income Statement &#8211; Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income," which allows for an optional reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects as a result of the Tax Act. ASU No. 2018-02 is effective for us in the first quarter of fiscal 2019 and early adoption is permitted. Two transition methods are available: at the beginning of the period of adoption, or retrospective to each period in which the income tax effects of the Tax Act related to items remaining in accumulated other comprehensive income are recognized. We will adopt this standard in the first quarter of 2019, applying the adjustment at the beginning of the period of adoption. We have evaluated the effect that ASU No. 2018-02 will have on our consolidated financial statements and related disclosures and noted no material impact.</font></div><div style="line-height:120%;padding-bottom:8px;text-align:left;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;font-style:italic;font-weight:bold;">ASU No. 2017-12.</font><font style="font-family:Arial;font-size:10pt;"> In August 2017, the FASB issued ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities," which amends the hedge accounting recognition and presentation requirements. ASU No. 2017-12 eliminates the concept of recognizing periodic hedge ineffectiveness for cash flow and net investment hedges and allows an entity to apply the shortcut method to partial-term fair value hedges of interest rate risk. ASU No. 2017-12 is effective for us in the first quarter of fiscal 2019. Early adoption is permitted in any interim period after issuance of this update. We have evaluated the effect that ASU No. 2017-12 will have on our consolidated financial statements and related disclosures and noted no material impact.</font></div><div style="line-height:120%;padding-bottom:8px;text-align:left;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;font-style:italic;font-weight:bold;">ASU No. 2017-04.</font><font style="font-family:Arial;font-size:10pt;"> In January 2017, the FASB issued ASU No. 2017-04, "Intangibles&#8211;Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment," which simplifies how an entity is required to test goodwill for impairment. The amendments in ASU No. 2017-04 require goodwill impairment to be measured using the difference between the carrying amount and the fair value of the reporting unit and require the loss recognized to not exceed the total amount of goodwill allocated to that reporting unit. ASU No. 2017-04 should be applied on a prospective basis and is effective for our annual goodwill impairment tests beginning in the first quarter of fiscal 2020. Early adoption is permitted. We have evaluated the effect that ASU No. 2017-04 will have on our consolidated financial statements and related disclosures and noted no material impact.</font></div><div style="line-height:120%;padding-bottom:8px;text-align:left;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;font-style:italic;font-weight:bold;">ASU No. 2016-02.</font><font style="font-family:Arial;font-size:10pt;"> In February 2016, the FASB issued ASU No. 2016-02, "Leases (Topic 842)," which establishes a right-of-use model and requires an entity that is a lessee to recognize the right-of-use assets and liabilities arising from leases on its balance sheet. ASU No. 2016-02 also requires disclosures about the amount, timing, and uncertainty of cash flows arising from leases. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. This new standard is effective for us on February 4, 2019 (the &#8220;effective date&#8221;).</font></div><div style="line-height:120%;padding-bottom:8px;text-align:left;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">ASU No. 2016-02 was subsequently amended by ASU No. 2018-01, "Land Easement Practical Expedient for Transition to Topic 842"; ASU No. 2018-10, "Codification Improvements to Topic 842"; and ASU No. 2018-11, "Targeted Improvements". ASU 2016-02 and relevant updates require a modified retrospective transition, with the cumulative effect of transition, including initial recognition of lease assets and liabilities for existing operating leases as of (i) the effective date or (ii) the beginning of the earliest comparative period presented. These updates also provide a number of practical expedients for transition and implementation that will be elected.</font></div><div style="line-height:120%;padding-bottom:8px;text-align:left;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">We will adopt this standard using the modified retrospective method with a cumulative-effect adjustment to the opening balance of retained earnings as of the effective date. We plan to elect the package of practical expedients in transition, which permits us to not reassess our prior conclusions pertaining to lease identification, lease classification, and initial direct costs on leases that commenced prior to our adoption of the new standard. We do not expect to elect the use-of-hindsight or land easements transition practical expedients. Additionally, we will elect ongoing practical expedients including the option to not recognize right-of-use assets and lease liabilities related to leases with an original term of twelve months or less. </font></div><div style="line-height:120%;padding-bottom:8px;text-align:left;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">We believe that ASU 2016-02 will have a material impact on our consolidated balance sheet as a result of the requirement to recognize right-of-use assets and lease liabilities for our operating leases upon adoption. We estimate total assets and liabilities will increase approximately </font><font style="font-family:Arial;font-size:10pt;">$6 billion</font><font style="font-family:Arial;font-size:10pt;"> upon adoption. This estimate may change as the implementation is finalized as a result of changes to our lease portfolio prior to adoption. We do not believe that there will be a material impact to our results of operations, stockholders&#8217; equity, or cash flows upon adoption of ASU No. 2016-02.</font></div><div style="line-height:120%;padding-bottom:8px;text-align:left;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">We reviewed and selected a new lease accounting system and are currently accumulating and processing lease data into the system. We are continuing to evaluate our internal control framework, including implementing changes to our processes, controls, and systems in connection therewith, to determine any necessary changes upon adoption of ASU 2016-02.</font></div></div>
CY2019 us-gaap Revenue Recognition Sales Of Services
RevenueRecognitionSalesOfServices
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:8px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">.</font></div></div>
CY2019 us-gaap Fiscal Period
FiscalPeriod
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:8px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">Our fiscal year is a 52- or 53-week period ending on the Sunday nearest to January 31. Fiscal </font><font style="font-family:Arial;font-size:10pt;">2018</font><font style="font-family:inherit;font-size:10pt;"> </font><font style="font-family:Arial;font-size:10pt;">includes </font><font style="font-family:Arial;font-size:10pt;">53</font><font style="font-family:Arial;font-size:10pt;"> weeks compared to fiscal </font><font style="font-family:Arial;font-size:10pt;">2017</font><font style="font-family:Arial;font-size:10pt;"> and fiscal </font><font style="font-family:Arial;font-size:10pt;">2016</font><font style="font-family:Arial;font-size:10pt;">, both of which include </font><font style="font-family:Arial;font-size:10pt;">52</font><font style="font-family:Arial;font-size:10pt;"> weeks.</font></div></div>
CY2018 us-gaap Revenue Recognition Sales Of Services
RevenueRecognitionSalesOfServices
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:8px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">Net sales include services revenue generated through a variety of installation, home maintenance, and professional service programs. In these programs, the customer selects and purchases material for a project, and we provide or arrange professional installation. These programs are offered through our stores and in-home sales programs. Under certain programs, when we provide or arrange the installation of a project and the subcontractor provides material as part of the installation, both the material and labor are included in services revenue. We recognize this revenue when the service for the customer is complete. </font></div><div style="line-height:120%;padding-bottom:8px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">When we receive payment from customers before the customer has taken possession of the merchandise or the service has been performed, the amount received is recorded as deferred revenue until the sale or service is complete.</font></div></div>
CY2019 us-gaap Use Of Estimates
UseOfEstimates
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-bottom:8px;font-size:10pt;"><font style="font-family:Arial;font-size:10pt;">We have made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities, and reported amounts of revenues and expenses in preparing these financial statements in conformity with GAAP.&#160;Actual results could differ from these estimates.</font></div></div>

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