DuPont Analysis 2019 2018 (Profitability) Net Profit Margin % Net Earnings $xxx.xox $11,242 XX.XX% 10.20% 10.28 % Total Sales Revenue $54,392 Sxxx,xxx X (Efficiency) Total Assets Turnover Ratio net earnings Sxxx xxx $11,242 XX.XX Bog. Yt. Amt End. Y. Art. 2.44 2.19 times average total assets Averago $51,236 Sxoxoxxx Sxxx.xxx Sxxxxx X (Leverage) Assets-to-Equity Ratio Sxxx.xxx XX.XX Average N/A to 1 N/A Sxxx.xxx The Assets-to-Equity Ratio and the Return on Equity % are grayed out because the ratios are N/A for 2018 and 2019. Home Depot had negative Stockholders' Equity for 2018 and 2019, which makes these ratios meaningless. Stockholders' Equity was negative due to a large amount of repurchases of Common Stock Return on Equity % $xxx.xxx N/A 96 N/A % XX.XX% Sxxx.xxx Return on Assets 2019 2018 Return on Assets % total assets Sxxx.xxx $51.236 XXXX% 21.9496 25.12 % Sxxxxxx 2019 2018 Gross Profit Margin % Sxxx, XXX % 34.34 % XXXX% $xxx.xxx Operating Profit Margin % $xxx, xxx % XX.XX% 14.35 % Sxxx.xxx Net Profit Margin % Sxxx, xxx 1% 10.28 % XX.XX% $XXX.XXX Home Formulas Data Review View Insert Page Layout X fx C20 Accounts Receivable Turnover Ratio round TH For de Yt DYRA my 65.68 Foto S Round Number of Days Salos In Recalvables Days in a Year (385) Accounts Receivable Tumover Ratio day 8.50 Average Unction to Form calculate be Inventory Turnover Ratio ROUTE YA EN VAN 533 Secon Number of Days' Sales in Inventory Days in a Year (365) Inventory Tumover Ratio To you lating Pound Gro places 6848 . For our walinday Accounts Payable Turnover Ratio Yohan YA 9.47 Number of Days Purchases in Accounts Payable Dayama Year (66) Account Payable Tumover Ratio Cash.ro Cash Cycle B40 of Days' Sasinary Days Purchase AC Payable Nature of Destiny Nur Dini Cash-to-Cash Days 29.94 15 2019 Assalto YA 437 2019 2018 Debt % $xxx, xxx % XX.XX% 104.27 % Sxxx.xxx Debt-to-Equity Ratio Sxxx.xxx N/A to 1 XX.XX N/A Sxxx.xxx Times Interest Earned Ratio $xxx XXX Earnings before interest and taxes 14.85 Interest Expense times XX.XX Sxxx,xxx 2019 2018 Working Capital Sxxx, XXX Working Capital $1,813 Current Ratio Sxxx, xxx to 1 1.11 XX.XX $xxx.xxx (Acid Test Ratio) Quick Ratio Sxxx.xxx Cash and Near-Cash Assets to 1 0.22 XX.XX Sxxx XXX (Quality of Income Ratio) Cash Flow to Net Income Ratio 2019 2018 Sxox xox to 1 1.17 XXXX Sxxx.xxx (Cash Flow Adequacy Ratio) Cash Flow to Capital Expenditures Ratio Sxxcx x x to 1 Net Cash Paid to Purchase PP&E 5.41 XX.XX $xx.xxx Free Cash Flow Sxxx XXX Net Cash Paid to Purchase PP&E Free Cash Flow $5,925 2019 2018 Dividend Payout % $xx, xx % 42.30% XK XX Sxx, xox Year-End Closing Market Price of 1 Common Share The Year-End Closing Market Price of 1 share of HD's Common Stock is not given in HD's annual report. The Year-End Closing Market Price is used in the two calculations below The last day in HD's 2019 fiscal year was Sunday, Feb. 2. 2020. HD's common stock trades on the New York Stock Exchange (NYSE) and the NYSE is not open on weekends. Thus HD's year-end closing price is as of Friday, Jan 31, 2020. On Jan. 31. 2020. HD's common stock closed at $228.10. Enter that price in the box below. 2019 Year-End Closing Market Price of 1 Common Share: 2019 2018 (PE Ratio) Price-Earnings Ratio times 18.85 Basic Earnings Per Share XX.XX Dividend Yield % Cash Dividends per share % 2.23 % XXX 2017 1> Which fiscal year had the highest Operating Income in terms of total dollars? 1*** only one answar 1 .2019 2018 2017 2> Which fiscal year had the highest Total Operating Expenses as a % of Net Sales? [*x* only one answer 2019 2018 2017 35 Based on Gross Profit as a % of Net Sales, rank the fiscal years 2019, 2018, and 2017 in terms of which year had the highest. Place a "1" in the box of the highest year, a "2" in the box of the second highest year, etc. 2019 2018 2017 4> Which fiscal year had the highest Net Earnings as a % of Net Sales? 1 "xonly one answer 2019 2018 2017 22. Horizontal Analysis of the income Statement (Pg. 3) 1> Rank the following items in terms of which had the largest % increase from Fiscal 2017 to Fiscal 2018. Place a "1" in the box of the largest, a "2" in the box of the second largest, etc. Not Sales Cost of Sales Operating Incomo Net Earnings 2> Rank the following items in terms of which had the largest % increase from Fiscal 2018 to Fiscal 2019. Place a "1" in the box of the largest, a "2" in the box of the second largest, etc. Net Sales Operating Incomo Cost of Sales Net Earnings 3> True or False? In terms of % Change, Basic Earnings Per Share grew more than Net Earnings from Fiscal 2018 to Fiscal 2019, L"*" only one answer True False 4> True or False? In terms of % Change, from Fiscal 2018 to Fiscal 2019 Total Operating Expenses increased more than Net Sales * only one answer True False 5>True or False? In terms of % Change, Cost of Sales had a smaller increase than Net Sales from Fiscal 2018 to Fiscal 2019 "X" only one in wer! True False 3. Varden Analysis of the Balance Sheet(Pg. 4) 1> For fiscal year 2018, mnk the following assets in terms of which was the largest as a % of Total Assets Plaon a '1' in the box of the largest, a "2" in the box of the second largest, eto. Canh and Cash Equivalente Receivable Merchandise ventre Net Property and Equipment 2> For fiscal year 2019. rank the following items in terms of which was the largest as a % of Total Liabilities and Stockholders' Equity. Place a '1' in the box of the largest a "2" in the box of the second largest, etc. Long-Term Debt, excluding Accounts Payable current installmenta Pald-in Cape Reine Earning 4. Horizontal Analysis of the Balance Sheet (Pg. 5) 1 Rank the following items in terms of which had the largest % increase from Fiscal 2018 to Fiscal 2019. Place a *1 in the box of the largest, a "2" in the box of the second largest, etc. Merchandise Lore-Term Debt, excluding Inventories Accounts Payable current installments Reisid Ering 2> Rank the following items in terms of which had the largest Dolar Increase from Fiscal 2018 to Fiscal 2019. Place a "1 in the box of the largest, a "2 in the box of the second largest, etc. Merchandise LongTerm Debl, excluding Inventories Accounts Payable irrent installments Retired Earning 5. DuPont Analysis Return on Assets Ratio (Pg. 6) 1> True or False? Profitability increased from Fiscal 2018 to Fiscal 2019? x only one answer True False 2 True or Falso? Efficiency noreased from Fiscal 2018 to Fiscal 2019? x only one answer True False 3Which fiscal year has the highest Return on Assets %? IX only one answer 2019 2018 6. Profitability Indicators (P-77 1 Which focul year. 2019 or 2018. had higher profitability based on Gross Profit Margin % and Net Profit Margin %? xomy one answer 2019 2018 7. Efficiency Indicators (Pg.8) 1> Based on both of the Accounts Receivable Efficiency Indicators, in which fiscal year, 2019 or 2018, did Home Depot more efficiently manage the Accounts Receivable asset? ["x" only one answer .2019 2018 > Based on both of the inventory Efficiency Indicators, in which fiscal year, 2019 or 2018, did Home Depot have an item in inventory for the shortest amount of time? 1 x only one answer 2019 2018 3) Based on the Number of Days' Purchases in Accounts Payable, in which fiscal year, 2019 or 2018, did Home Depot hold on to its cash longer before paying the cash to vendors? [*** only one answer 2019 2018 4> Which fiscal year, 2019 or 2018, had the better Cash-to-Cash Cycle? f'x* only one answer 2019 2018 5> In which fiscal year, 2019 or 2018, did Home Depot have the better Fixed Asset Tumover Ratio? I'x* only one answer 2019 2018 8. Leverage Indicators (at year-end) Interest Coverage (Pg. 9) 1> Based on the Debt %, who had the greatest claim to Home Depot's assets in Fiscal 2019? [*** only one answer) Creditors Shareholders 2 True or False? In Fiscal 2019 more than half of Home Depot's Total Assets were financed with debt? FX only one answer True False 3> Based on the Times Interest Earned Ratio, were the creditors' interest payments more secure in Fiscal 2019 or Fiscal 2018? Ex only one answor! 2019 2018 9. Liquidity Indicators (Pg. 10) 1> Based on Working Capital and the Current Ratio da Liquidity increase or decrease from Fiscal 2018 to Fiscal 2019? Ex only one answer Liquidity Increased Liquidity Decreased 10. Statement of Cash Flows indicators (Pg. 11) 1> True or False? By looking at the Cash Flow to Capital Expenditure Ratio it can be seen that Home Depot was able to internally fund the purchases of Fixed Assets in Fiscal 2019 and in Fiscal 2018. ["x" only one answer False True 2> In which fiscal year, 2019 or 2018, did Home Depot have more Free Cash Flow? ["x" only one answer 2019 2018 11. Equity Investor Indicators (Pg. 1> True or False? Based on the Dividend Payout % it can be seen that Home Depot paid out a larger percent of Net Income, in the form of Cash Dividends, in Fiscal 2019 than in Fiscal 2018. ["x" only one answer True False 2> Based on the Price Earnings Ratio, in which fiscal year, 2019 or 2018, did investors place a higher value on Home Depot's earings? ("x" only one answer 2019 2018 3> Based on the Dividend Yield %, in which fiscal year, 2019 or 2018. did an investor in Home Depot's Common Stock earn a higher return from the cash dividends she received on her Home Depot Common Stock? I "x" only one answer 2019 2018 THE HOME DEPOT, INC. CONSOLIDATED BALANCE SHEETS Fary 2020 Freya In illis, except for share date Assets Current assets: Cash and cash equivalent Receivables, net Merchandise inventories Other current assets Total current assets Net property and equipment Operating lease right-of-use assets Goodwill Other assets Total assets 2,133 2,106 14.531 1,040 19,810 22.770 5595 2.254 807 51 236 $ 1,778 1.836 13.925 890 18.528 22 375 2252 847 44 003 Liabilities and Stockholders' Equity Current liabilities: Short-term debt Accounts payable Accrued salaries and related expenses Sales taxes payable Deferred revenue Income taxes payable Current installments of long-term debt Current operating lease liabilities Other accrued expenses Total current liabilities Long-term debt, excluding current installments Long-term operating lease abilities Deferred income taxes Other long-term liabilities Total liabilities 1 339 7,755 1.506 656 1.782 11 1,056 974 $ 7.787 1494 605 2.116 55 1,839 828 2677 18.375 28.670 5.066 706 1.535 54352 2.611 16.716 25.807 491 1867 45.881 Common slock, par value $0.05 authorized: 10,000 shares: issued: 1786 shares at February 2 2020 and 1,782 shares at February 3, 2019, outstanding: 1,077 shares at February 2, 2020 and 1.105 shares at February 3, 2019 Paid-in capital Retained earnings Accumulated other comprehensive loss Treasury stock, at cost, 709 shares at February 2. 2020 and 677 shares at February 3, 2019 Total stockholders (deficit) equity Total liabilities and stockholders' equity 89 11.001 51729 739) 89 10.578 46,423 165,196) (3.116) 51238 5 158.196) (1.878) 44.003 5 Per com os ponderance Fiscal 2018 108,203 $ 71,043 37,160 Fiscal 2017 100,904 66,548 34,356 THE HOME DEPOT, INC. CONSOLIDATED STATEMENTS OF EARNINGS Fiscal In millions, except par share data 2019 Net sales $ 110,225 $ Cost of sales 72,653 Gross profit 37,572 Operating expenses: Selling general and administrative 19,740 Depreciation and amortization 1,989 Impairment loss Total operating expenses 21,729 Operating income 15,843 Interest and other (income) expense: Interest and investment income (73) Interest expense 1,201 Other Interest and other, net 1,128 Earnings before provision for income taxes 14,715 Provision for income taxes 3,473 Net earnings 11,242 $ 17,864 1,811 19,513 1,870 247 21.630 15,530 19,675 14,681 (74) 1,057 (93) 1,051 16 974 14,556 3,435 11,121 $ 983 13,698 5,068 8.630 Basic weighted average common shares Basic earnings per share 1,093 10.29 $ 1,137 9.78 $ 1,178 7.33 Diluted weighted average common shares Diluted eamings per share 1.097 10.25$ 1,143 9.73 $ 1,184 7.29 Fiscal 2019 and fiscal 2017 include 52 weeks Fiscar 2018 includes 53 weeks Sed accompanying notes to solde ted Mancatatements Fiscal 2019 11.2425 Fiscal 2018 11.121 $ Fiscal 2017 8,630 53 311 In millions Net earnings Other comprehensive income (loss): Foreign currency translation adjustments Cash flow hedges, net of tax Other Total other comprehensive income (loss) Comprehensive income 8 3 64 11,306 $ (267) 53 8 (206) 10,915$ (1) (9) 301 8.931 Fiscal 2019 and fiscal 2017 include 52 weeks. Fiscal 2018 includes 53 weeks. THE HOME DEPOT, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY in millions Fiscal 2019 Fiscal Fiscal Common Stock: Balance at beginning of year Shares issued under employee stock plans Balance at end of year 89 $ 89 $ 88 1 89 89 89 Paid-in Capital Balance at beginning of year Shares issued under employee stock plans Stock-based compensation expense Balance at end of year 10,578 172 251 11,001 10,192 104 282 10,578 9,787 132 273 10,192 39.935 35,519 Retained Earnings: Balance at beginning of year Cumulative effect of accounting changes Net eamings Cash dividends Other Balance at end of year 46,423 26 11.242 (5,958) 75 11.121 (4.704) 8,630 (4.212) 2) 39,935 51.729 46423 (566) (867) (772) (31) 53 8 3 311 (1) Accumulated Other Comprehensive Income (Loss): Balance at beginning of year Cumulative effect of accounting changes Foreign currency translation adjustments Cash flow hedges, net of tax Other Balance at end of year Treasury Stock: Balance at beginning of year Repurchases of common stock Balance at end of year Total stockholders' (deficit) equity (267) 53 8 (772) (739) (566) (58.196) (7.000) (65.196) (3.116) $ (48,196) (10,000) (58.196) (1.878) S (40,194) (8.002) (48,196) 1,454 $ Fiscal 2019 and focal 2017 include 52 weeks Fiscal 2018 includes 53 woes See accompanying notes to consolidated financial statements In mana Fine Fiscal 2017 11,121 $ 8,630 2,062 273 2,152 282 247 33 (1.244) (257) 743 80 (42) 139 (84) (10) 352 128 29 92 420 12.031 26 (103) 13,038 CONSOLIDATED STATEMENTS OF CASH FLOWS Fecal 2010 Cash Flowe from Operating Activities: Net earnings $ 11 242 $ Reconciliation of net earings to net cash provided by operating activities: Depreciation and amortization 2.298 Stock-based compensation expense 251 Impairment loss Changes in receivables.net (170) Changes in merchandise inventories (593) Changes in other current assets (135) Changes in accounts payable and accrued expenses 68 Changes in deferred revenue 334 Changes in income taxes payable 44 Changes in deferred income taxes 202 Other operating activities 184 Net cash provided by operating activities 13,723 Cash Flows from Investing Activities: Capital expenditures (2.678) Payments for businesses acquired, net Proceeds from sales of property and equipment 37 Other investing activities (12) Net cash used in investing activities (2.653 Cash Flows from Financing Activities: (Repayments of) proceeds from short-term debt, net (365) Proceeds from long-term debt, net of discounts and premiums 3.420 Repayments of long-term deb! (1.070) Repurchases of common stock (6,965) Proceeds from sales of common stock 280 Cash dividends (5.958) Other financing activities (176 Net cash used in financing activities (10.834) Change in cash and cash equivalents 236 Effect of exchange rate changes on cash and cash equivalents Cash and cash equivalents at beginning of year 1.778 Cash and cash equivalents at end of year $ 2.133 $ Supplemental Disclosures: Cash paid for income taxes 3220 $ Cash paid for interest, net of interest capitalized 1,112 Non-cash capital expenditures 136 (1.897) (374) (2.442) (21) 33 14 (2.416) (4) (2.228 (220) 3.466 (1,209) (9,963) 236 (4.704) (26) (12.420 (1.798) (19) 3.595 1.778 S 850 2.991 (543) (8.000) 255 (4.212) (211) (8.870) 933 124 2.538 3,595 119 3,774 $ 1,035 248 4.732 991 150 2019 The assets of each of our operating segments primarly consist of net property and equipment and merchandise Inventorles. Long-Hived assets, classified by geography, follow: In millions February 2. February 3, January 28, 2020 2018 Long-lived assets - in the U.S. 20,302 $ 19,930 $ 19,526 Long-lived assets - outside the U.S. 2,468 2.445 2,549 Total long-lived assets $ 22.770 $ 22 375 5 22.075 No sales to an individual customer accounted for more than 10% of revenue during any of the last three fiscal years. Net sales, classified by geography, follow: Fiscal Fiscal Fiscal In millions 2019 2018 2017 Net sales - In the U.S. 101,333 $ 99,386 5 92.413 Net sales - outside the U.S. 8,892 8,817 8.491 Net sales 110,225 $ 108,203 $ 100,904 Net sales by products and services follow: Fiscal Fiscal Fiscal In millions 2019 2018 2017 Net sales - products $ 105.1945 102.933 $ 95,956 Net sales - services 5,031 5,270 4 948 Net sales $ 110,225 $ 108,203 $ 100.904 Major product lines and the related merchandising departments (and related services) folow: Major Product Line Merchandising Departments Building Materials Building Materials, Electrical Lighting. Lumber, Milwork, and Plumbing Dcor Appliances, Decor/Storage, Flooring, Kitchen and Bath, and Paint I Hardlines Hardware, Indoor Garden Outdoor Garden, and Tools During the first quarter of fiscal 2019, we combined the Electrical and Lighting merchandising departments into one department, Electrical Lighting, and we renamed the Dcor merchandising department to Dcor/Storage. These changes had no impact on our net sales presentations. Nel sales by major product lines (and related services) follow. Fiscal Fiscal Fiscal 2019 in millions 2018 2017 $ Building Materials 39,338 $ 37296 39,883 $ Dcor 37.390 36 273 33 593 Hardlines 33,497 32.047 30,015 $ Nel sales 110,225 $ 100.904 108 203 $ Note: Not salos for certain merchandising dopartments wore reclassified in the first quarter of fiscal 2019. As a result prioryear amounts have been rodas fod to conform with the contar presentation 78 Plecal Fiscal Fiscal 2019 2018 Net 2017 % of dollars in millons Net Sales Net Sales % of Met Sales of Net Sales Sales Ne Sales Appliances 9,852 8.9% 9,027 83% 8,167 8.1% Building Materials 7.712 7.0 7,770 72 7266 72 Decor Storage 3,758 3.4 3,583 33 3,175 3.1 Electrical/Lighting 9.844 8.9 9,941 92 9,441 9.4 Flooring 7443 6.8 7,494 6.9 6,992 6.9 Hardware 6,381 5.8 6,203 5.7 5,878 5.8 Indoor Garden 10,989 10.0 10,450 9.7 9,785 9.7 Kitchen and Bath 7,717 7.0 7,728 7.1 7275 7.2 Lumber 7,894 7.2 8,393 7.8 7,797 7.7 Millwork 5,757 5.2 5,757 5.3 5,382 5.3 Outdoor Garden 7.564 6.9 7.259 6.7 6,984 6.9 Paint 8,620 7.8 8,441 7,984 7.9 Plumbing 8.131 7.4 8,022 74 7410 7.3 Tools 8,563 7.8 8,135 7.5 7,368 7.3 Total $ 110,225 100.0% $ 108,203 100.0% 5 100,904 100.0% Note: Certain percentagos may not sum to total due to runding Naties for cortan marchandising departments were recessed in fiscal 2019. As a resut prior year net sales have been reclassified to conform with the current your presentation. Prior your percort of net sales data also reflects the new classifications 3. PROPERTY AND LEASES Net Property and Equipment The components of net property and equipment folow. February 2 February 3 in millions 2020 2019 Land 8,390 $ 8,363 Buildings 18.432 18,199 Furniture, fixtures, and equipment 13,666 12.460 Leasehold improvements 1.789 1.705 Construction in progress 1,005 820 Finance leases 1,578 1,392 Property and equipment, at cost 44,860 42939 Less accumulated depreciation and finance lease amortization 22.090 20,564 Net property and equipment $ 22.770 $ 22.375 Depreciation and finance lease amortization expense, including depreciation expense induded in cost of sales follows Fiscal Fiscal Fiscal in millions 2019 2018 2017 Depreciation and finance lease amortization expense 2.223 $ 2,0765 1983 S PVC COLOD secured rate on a quarterly basis and update the weighted average discount rate accordingly. Lease terms and discount rates follow: Pobrusy 2 2020 Weighted Average Remaining Lease Term (Years): Operating leases 10 Finance leasen 12 Weighted Average Discount Rate: Operating lenses 3.1% Finance leases 10.4% The approximate future minimum lease payments under operating and finance leases at February 2, 2020 follow: In millions Operating Finance Lease Lastes Fiscal 2020 955 $ 172 Fiscal 2021 875 171 Fiscal 2022 772 170 Fiscal 2023 677 164 Fiscal 2024 579 148 Thereafter 2.822 948 Total lease payments 6,680 1.773 Less imputed interest 786 608 Present value of lense liabilities 5.694 $ 1.165 Note: Amounts presented do not include payments relating to mese duded from the consolidated bice sheeb part of transition actions adopted upon implementation of Topic 842 Additional we have excluded approximately 519 Mon of sundiscounted bis hat have not yet commenced. These bases will commence between 2020 and 2021 wth fase form of one to 20 years The approximate future minimum lease payments under capital and operating bases at February 3, 2019 and accounted for under previous lease guidance follow Operating Capit Leases Fiscal 2019 976 $ 150 Fiscal 2020 912 167 Fiscal 2021 792 143 Fiscal 2022 682 142 Fiscal 2023 584 137 Thereafter 3.090 970 7036 1.709 Less imputed interest 660 Net present value of capitalease obligations 1,019 Less current installments 57 Long-term capital lense obligations, excluding current installments 992 in ons Lenses Other lease information follows for fiscal 2019: Fiscal 2019 92 748 In millions Cash paid for amounts included in the measurement of lease labilities: Operating cash flows - Operating leases 1,003 Operating cash flows - finance leases Financing cash flows - finance leases 70 Lease assets obtained in exchange for new operating lease liabilities Lease assets obtained in exchange for new finance lease liabilities 186 4. DEBT AND DERIVATIVE INSTRUMENTS Short-Term Debt We have commercial paper programs with an aggregate borrowing capacity of $3.0 billion. All of our short-term borrowings in fiscal 2019 and fiscal 2018 were under these commercial paper programs. In connection with these programs, we have back-up credit facilities with a consortium of banks for borrowings up to $3.0 billion, which consist of a 364-day $1.0 billion credit faciity and a five-year $2.0 billion credit facility, which expires in December 2022. In December 2019, we completed the renewal of our 364-day $1.0 billion credit facility, extending the maturity from December 2019 to December 2020. Certain information on our commercial paper programs follows: February 2, February 3, dollars in millions Weighted average interest rate 1.56% 2.41% Balance outstanding at fiscal year-end $ $ 1,339 Maximum amount outstanding at any month-end $ 2,097 $ 2264 Average daily short-term borrowings $ 624 $ I 2020 2019 974 621 Principal Amount 2013 in millions 2.00% Senior notes due June 2019 Floating rate senior notes due June 2020 180% Senior notes due June 2020 3.95% Senior notes due September 2020 4 40% Senior notes due April 2021 2.00% Senior notes due April 2021 Floating rate senior notes due March 2022 3.25% Senior notes due March 2022 2.625% Senior notes due June 2022 2.70% Senior notes due April 2023 3.75% Senior notes due February 2024 3.35% Senior notes due September 2025 3.00% Senior notes due April 2026 2.125% Senior notes due September 2026 280% Senior notes due September 2027 3.90% Senior notes due December 2028 2.95% Senior notes due June 2029 5.875% Senior notes due December 2036 540% Senior notes due September 2040 5.95% Senior notes due April 2041 4.20% Senior notes due April 2043 4.875% Senior notes due February 2044 440% Senior notes due March 2045 4 25% Senior notes due April 2046 I 3.90% Senior notes due June 2047 4.50% Senior notes due December 2048 3.125% Senior notes due December 2049 3.50% Senior notes due September 2056 Total senior notes Finance lease obligations, payable in varying installments through January 31, 2055 Total long-term debt Less current installments of long-term debt Long-term debt, excluding current installments Interest Payable Semi-annually Quarterly Semi-annually Semi-annually Semi-annually Semi-annually Quarterly Semi-annually Semi-annually Semi-annually Semi-annually Semi-annually Semi-annually Semi-annually Semi-annually Semi-annually Semi-annually Semi-annually Semi-annually Semi-annually Semi-annually Semi-annually Semi-annually Semi-annually Semi-annually Semi-annually Semi-annually Semi-annually 500 750 500 1,000 1,350 300 700 1.250 1,000 1,100 1,000 1,300 1,000 1.000 1.000 1.750 3,000 500 1.000 1.000 1.000 1.000 1,600 1,150 1,500 1.250 1.000 29.500 Camying Amount February 2 February 3, 2020 999 500 499 750 749 506 499 999 999 1,348 1,345 299 299 698 696 1.246 1.245 998 997 1,095 1,094 996 995 1,290 1.288 989 987 1,007 981 1,059 1.005 1,797 2.953 2.951 495 495 989 989 989 989 979 979 978 977 1,585 1.585 1.144 738 1,462 1.462 1,221 972 972 29,344 26.814 $ 1.165 30.509 1.839 28.670 $ 1.049 27.863 1,056 26.807 January 20 20 Issuance. In January, we issued two tranches of senior notes The first tranche consisted of $750 million of 2 95% senior notes due June 15, 2029 (the 2029 notes') at a premium of $32 million. The 2029 notes form a single series with the Company's 51.0 billion 2.95% senior Provision for Income Taxes Our earnings before the provision for income taxes follow: In millions U.S. Foreign Total Fiscal 2019 13.770 S 945 14.715$ Fiscal 2018 13,456 $ 1,100 14,556 $ Fiscal 2017 12,682 1,016 13,698 Our provision for income taxes follows: 2019 2018 Fiscal 2017 1 4 in millions Fiscal Fiscal Current: Federal 2,370 $ 2,495 $ 4,128 State 572 544 499 Foreign 340 372 331 Total current 3,282 3,411 4,958 Deferred: Federal 259 67 (67) State (72) 89 Foreign (44) 88 Total deferred 191 24 110 Provision for income taxes $ 3.473 $ 3,435 5,068 Our combined federal, state, and foreign effective tax rates follow: I Fiscal Combined federal, state, and foreign effective tax rates 23.6% 23.6% 37.0% The reconciliation of our provision for income taxes at the federal statutory rates of 21% for fiscal 2019, 21% for fiscal 2018, and approximately 34% for fiscal 2017 to the actual tax expense follows: Fiscal Fiscal in millions Income taxes at federal statutory rate 3.090 $ 3.057 S 4,648 State income taxes, net of federal income tax benefit 395 443 369 Tax on mandatory deemed repatriation (62) Othernet (12) (3) (349) Total 3,473 $ 3.435 $ 5,068 Fiscal 2019 Fiscal 2018 2017 Fiscal 2017 2019 2018 400 $ Deferred Taxes The tax effects of temporary differences that give rise to significant portions of our deferred tax assets and deferred tax liabilities follow: February 2, 2020 February 3, 2019 in millions Assets: Deferred compensation Accrued self-insurance liabilities State income taxes Non-deductible reserves Net operating losses Lease liabilities Other Total deferred tax assets Valuation allowance Total deferred tax assets after valuation allowance 169 $ 285 100 156 70 1,536 135 2,451 183 298 96 231 17 116 941 2,451 941 (26) Liabilities: Merchandise inventories (9) Property and equipment (1.107) (893) Goodwill and other intangibles (195) (179) Right-of-use assets (1.458) Other (232) (230) Total deferred tax liabilities (3.018) (1,311) Net deferred tax liabilities $ (567) $ (370) Our noncurrent deferred tax assets and noncurrent deferred tax liabilities, netted by tax jurisdiction, follow: February 2, February 3, in millions Other assets 139 $ 121 Deferred income taxes (706) (491) Net deferred tax liabilities (567) $ (370) We believe that the realization of the deferred tax assets is more likely than not, based upon the expectation that wo will generate the necessary taxable income in future periods At February 2, 2020, wo had foderal , state, and foreign net operating loss carryforwards available to reduce future taxable income, expiring at various dates beginning in 2020 to 2038. We have concluded that it is more likely than 2020 2019 Fiscal 2018 637 91 $ Fiscal 2017 659 74 15 Reconciliations of the beginning and ending amount of our gross unrecognized tax benefits follow: Fiscal in millions 2019 Unrecognized tax benefits balance at beginning of fiscal year 494 5 Additions based on tax positions related to the current year 96 Additions for tax positions of prior years 82 100 Reductions for tax positions of prior years (147) (245) (93) Reductions due to settlements (13) (66) (1) Reductions due to lapse of statute of limitations (39) (23) (17) Unrecognized tax benefits balance at end of fiscal year $ 473 $ 494 $ 637 Unrecognized tax benefits that if recognized would affect our annual effective income tax rate on net earnings were $407 million at February 2, 2020: $398 million at February 3, 2019; and $483 million at January 28, 2018 Interest and Penalties Net adjustments to accruals for interest and penalties associated with uncertain tax positions resulted in a benefit of $14 million in fiscal 2019, a benefit of $33 million in fiscal 2018 and expenses of $24 million in fiscal 2017. Interest and penalties are included in interest expense and SG&A, respectively. Our total accrued interest and penalties follow. 1 February 2 February 3, in milions 87 $ Total accrued interest and penalties 2020 2019 101 (55 Stock Rollforward Areconciliation of the number of shares of our common stock flows: in one Fle Flacal Paul 2010 Common stock: Balance at beginning of year 1,782 1,780 1,778 Shares maued under employee stock plans 2 Balance at end of year 1,788 1,782 1,780 Treasury stock: Balance et beginning of year (677) (522) (573) Repurchases of common stock (32) 149 Balance at end of year (709) (677) (822) Shares outstanding at end of year 1077 1.105 1.158 Annual per share cash dividends follow: Fiscal Fiscal Fiscal 2010 2017 Cash dividends per share $ 5.44 $ 4.12 5 3.56 Accelerated Share Repurchase Agreements We enter into ASR agreements from time to time with third-party financial institutions to repurchase shares of our common stock. Under an ASR agreement, we pay a specfied amount to the financial institution and receive an Initial delivery of shares. This initial delivery of shares represents the minimum number of shares that we may receive under the agreement. Upon settlement of the ASR agreement, the financial institution delivers additional shares, with the final number of shares delivered determined with reference to the volume weighted average price per share of our common stock over the term of the agreement, less a negotiated discount. The transactions are accounted for as equity transactions and are included in treasury stock when the shares are received, at which time there is an immediate reduction in the weighted average common shares calculation for basic and diluted earnings per share. The terms of each ASR agreement entered into during the last three fiscal years, structured as outlined above. follow (in millions) $ Agnement Date Q2 2017 Q3 2017 Q1 2018 Q2 2018 Q3 2019 Settlement Date 02 2017 04 2017 Q2 2018 Q3 2018 04 2019 Agreement Amount 1.650 1.200 750 1.600 820 Initial Shares Delivered 9.7 6.7 3.4 7.1 32 Additional Shares Delivered 11 0.7 0.8 1.0 0.4 Total Shares Delwered 10.8 7.4 42 8.1 3.6 7. FAIR VALUE MEASUREMENTS The fair value of an asset is considered to be the price at which the asset could be sold in an orderly transaction between unrelated knowledgeable and willing parties. Alability fair value is defined as the amount that would be paid to transfer the liability to a new obligor, rather than the mount that would be paid to settle the ability with the creditor Assets and liabilities recorded at forvaluare measured using a three ber far value Nerarchy, which prioritizes the inputs used in measuring lar value 06 Far Value at February 2, 2020 Using Quoted Prices in Active Markets for Significant Significant Identical Observable Unobservable Assets Inputs Inputs Level 1) (Level 2) (Level 3) 133 $ Fair Valueet February 2, 2018 Using Quoted Prices In Active Markets for Significant Significant Identical Observable Unobservable Assets Inputs Inputs (Level 1) (Level 2) Level 3) 138 5 in millions Derivative agreements - assets Derivative agreements - liabilities Total 133 $ 127 $ Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis The carrying amounts of cash and cash equivalents, receivables, short-term debt, and accounts payable approximate fair value due to the short-term maturities of these financial instruments. Long-lived assets and other intangible assets are subject to nonrecurring fair value measurement for the assessment of impairment or as the result of business acquisitions. In the third quarter of fiscal 2019, we completed our annual assessment of the recoverability of goodwil for our U.S. Canada and Mexico reporting units. The fair values of these reporting units were estimated using the present value of expected future discounted cash flows through unobservable inputs (Level 3), and the fair value exceeded the carrying value for each respective reporting unit. Accordingly, no impairment charges related to goodwill were recorded for these reporting units. Including goodwill as described above, we did not have any material assets or liabilities that were measured at far value on a nonrecurring basis as of February 2, 2020 or February 3, 2019. respectively. The aggregate fair values and carrying values of our senior notes follow: February 2, February 3. 2020 2019 Fair Value Carrying Fak Value Carrying (Level 1) Value (Level 1) Value 34,102 S 29.344 $ 28,348 S 26,814 in millions Senior notes S Fiscal 2017 The per share weighted average fair value of stock options granted and the assumptions used in determining fair value at the date of grant using the Black-Scholes option-prieing model follow: Fiscal Piscal Fiscal 2019 2018 2017 Per share welghted average fair value 27.33 32 28 2185 Risk-free Interest rate 22% 2.7% 1.9% Assumed volatility 19.8% 21.3% 19.4% Assumed dividend yield 2.9% 2.3% 24% Assumed Ilves of options 5 years 5 years 5 years The total intrinsic value of stock options exercised follow. Fiscal Fiscal In millions 2019 2018 Total intrinsic value of stock options exercised 241 $ 138 $ 223 A summary of stock option activity by number of shares and weighted average exercise price follows: Weighted Number of Average shares in thousands Shares Exercise Price Outstanding at beginning of year 6,380 $ 91.78 Granted 519 190.66 Exercised (1,649) 58.65 Forfeited (38) 17025 Outstanding at end of year 5,212 111.54 Shares of common stock issued from stock option exercises are made available from authorized and unissued common stock or treasury stock. Details regarding outstanding and exercisable stock options at February 2, 2020 follow Weighted Weighted shares in thousands dollars in milions, except for per share Number of Average Average Shares Remaining Life Exercise Price Outstanding 5,212 $ 5 years $ 111.54 Exercisable 3,260 4 years 84.06 amounts Intrinsic Value 607 470 Fiscal Fiscal Fiscal 2019 2018 2017 Deferred shares granted to non-employee directors 22,000 26,000 27,000 Stock-Based Compensation Activity. A summary of restricted stock, performance shares, and restricted stock unit activity follows: Weighted Average Number of Grant Date shares in thousands Fair Value Norvested at beginning of year 4.242 $ 150.51 Granted 1,652 186.56 Vested (1,597) 134 28 Forfeited (322) 168.09 Nonvested at end of year 3.975 170.58 Shares Stock-based compensation expense, net of estimated forfetures follows: Fiscal Fiscal Fiscal in million 2012 2018 2017 Stock-based compensation expense, net 251 $ 2825 273 At February 2, 2020, there was $379 million of unamorteed stock-based compensation expense, which is expected to be recognized over a weighted average period of two years. The total far value of restricted stock performance shares and restricted stock units that vested during the fiscal year follow in millions Total fair value vested Fiscal 2019 303 5 Fiscal 2013 367 $ Fiscal 2017 I 309 $ Employee Stock Purchase Plans 3. EMPLOYEE BENEFIT PLANS Wednorrhea w the $ 2.311 OC NES hey GSE AE SE Code Der w 0 1 34 2. 10 VIE 24 nam 0 200 100 Arnary and 100 GOT 1 WEGHTED AVERAGE COMMON SHARES 13. BUSQUENT EVENTS TheCOVO 200 w . dan an www WWW . Wied 11. COMMITMENTS AND CONTINENCIES Athena NEW