Note: Use income from continuing operations rather than net income. 1. Credit Risk. Calculate the following ratios for the last three years: Operating margin (EBIT/SALES), EBITDA coverage, CFO to total debt, Debt to equity. Do you notice a trend in operating margin? What drives the trend? Does the change signal more or less credit risk? Did EBITDA coverage increase or decrease in fiscal 2018 relative to fiscal 2017? Why? Does the change signal more or less credit risk? Did CFO to total debt increase or decrease in fiscal 2018 relative to fiscal 2017? Why? Does the change signal more or less credit risk? Did Debt to Equity increase or decrease in fiscal 2018 relative to fiscal 2017? Why? Does the change signal more or less risk? Consolidated Statements of Operations $ 2018 74,433 $ 923 75,356 53,299 15,723 2,224 4,110 461 (27) 3,676 746 2,930 7 2,937 $ 2017 A3 Adved 71.786 $ 928 72.714 51,125 15.140 2.225 4,224 653 (59) 3.630 722 2,908 6 2,914 $ 2016 A8 Agusted 69,414 857 70,271 49,145 14,217 2,045 4,864 991 3,961 1,295 2,666 68 2,734 $ (millions, except per share data) Sales Other revenue Total revenue Cost of sales Selling, general and administrative expenses Depreciation and amortization (exclusive of depreciation included in cost of sales) Operating income Net interest expense Net other (income) / expense Earnings from continuing operations before income taxes Provision for income taxes Net earnings from continuing operations Discontinued operations, net of tax Net earnings Basic earnings per share Continuing operations Discontinued operations Net earnings per share Diluted earnings per share Continuing operations Discontinued operations Net earnings per share Weighted average common shares outstanding Basic Diluted Antidilutive shares Note: Per share amounts may not foot due to rounding. See accompanying Notes to Consolidated Financial Statements. Refer to Note 2 regarding the adoption of new accounting standards for revenue recognition, leases, and pensions. $ $ 5.54 $ 0.01 5.55 $ 5.32 0.01 4.61 0.12 4.73 $ 5.32 $ $ 5.50 $ 0.01 5.51 $ 5.29 $ 0.01 5.29 $ 4.55 0.12 4.69 $ 528.6 5332 546.8 550.3 4.1 577.6 582.5 0.1 35 Consolidated Statements of Comprehensive Income 2018 2017 As Adjusted (a) 2,914 $ 2016 As Adjusted (a) 2,734 2,937 $ (millions) Net earnings Other comprehensive (loss)/income, net of tax Pension and other benefit liabilities, net of tax Currency translation adjustment and cash flow hedges, net of tax Other comprehensive (loss)/income Comprehensive income 2 6 (52) (6) (58) 2,879 (13) 4 (9) 2,725 8 $ $ 2,922 $ See accompanying Notes to Consolidated Financial Statements. (a) Refer to Note 2 regarding the adoption of new accounting standards for revenue recognition, leases, and pensions. Consolidated Statements of Financial Position February 3, 2018 A8 Adivated $ 2.643 8,597 1,300 12,540 6,096 28,131 5.623 2,645 440 (18,398) 24,536 1,884 1,343 40.303 February 2, (millions, except footnotes) 2019 Assets Cash and cash equivalents $ 1,556 Inventory 9,497 Other current assets 1,466 Total current assets 12,519 Property and equipment Land 6,084 Buildings and improvements 29,240 Fixtures and equipment 5,912 Computer hardware and software 2,544 Construction-in-progress 460 Accumulated depreciation (18,687) Property and equipment, net 25,533 Operating lease assets 1.965 Other noncurrent assets 1,273 Total assets $ 41,290 $ Liabilities and shareholders' investment Accounts payable $ 9,761 Accrued and other current liabilities 4,201 Current portion of long-term debt and other borrowings 1.052 Total current liabilities 15,014 Long-term debt and other borrowings 10,223 Noncurrent operating lease abilities 2,004 Deferred income taxes 972 Other noncurrent liabilities 1,780 Total noncurrent liabilities 14,979 Shareholders' investment Common stock 43 Additional paid-in capital 6,042 Retained earnings 6,017 Accumulated other comprehensive loss (805) Total shareholders' Investment 11,297 Total liabilities and shareholders' investment $ 41,290 $ Common Stock Authorized 6,000,000,000 shares, $0.0833 par value; 517,761,600 shares issued and outstanding at February 2, 2019, 541,681,670 shares issued and outstanding at February 3, 2018. Preferred Stock Authorized 5,000,000 shares. $0.01 par value; no shares were issued or outstanding at February 2, 2019 or February 3, 2018. See accompanying Notes to Consolidated Financial Statements. $ 8,677 4,094 281 13,052 11, 117 1,924 693 1,866 15,600 45 5.858 6,495 (747) 11,651 40,303 is Refer to Note 2 renarding the adoption of new accounting standards for revenue reconition legges and panaiona Consolidated Statements of Cash Flows 2018 2017 As Adusted 2016 As Adjusted $ 2,837 $ s 2.814 G 2,909 2,731 69 2,9301 2,5ki 2,474 132 322 2 476 112 (188) 123 200 2,318 113 40 95 293 (800) (2981) 1,127 B9 5,970 3 6,973 (343) (156) 1.307 419 6,961 74 8,935 (168) (294) 5,337 107 5.444 (milians) Operating activities Net eaminge Earnings from discontinued operations, not of tax Net samings from continung operations Adjustments to reconcile net earnings to cash provided by operations: Depreciation and amortization Share-based compensation expense Deferrad income taxes Loes on debt extinguishment Noncash losses i gains, and other, ret Changes in operating accounts: Inventory Char ansets Accounts payable Accrued and ather liabilities Cash provided by operating activities-continuing operations Cash provided by operating activities-discontinued operations Cash provided by operations Investing activities Expenditures for property and ecuiment Proceeds from disposal of property and equipment Cash paid for acquisitions, net of cash assumed Other investments Cash required for investing activities Financing activities Additions to long-term debt Reductions of long-term debt Dividends pald Repurchase of stock Stock option exercises Cash required for financing act Milies Nel decrease increase in cash and cash equivalents Cash and cash equivalents at beginning of parod Cash and cash equivalents at end of period Supplemental Information Interest paid, net of capitalized interest Income taxes paid Leased assets ablained in exchange for new financu lease liabilities Leased assets obtained in exchange for new operating lese labilities 11.547) 48 (3,516) B5 - 15 (3,416) 12.533) 31 (518) (55) (3.075) 28 (1.473) - (281) (1.335) (2,124) 739 (2,192) 11,338) (1.046) 103 13,729) 131 2,512 2.543 1,877 (2,849) 11,348) (3,708) 221 15,505) (1,534) 4,046 2.512 (3,544) (1,087) 2,643 1,55i S $ S 476 S 373 130 246 878 $ 934 139 212 999 1.514 252 144 See accompanying Notes to Consolidated Financial Statements, Refer to Note 2 regarding the adoption of new accounting standards for revenue recognition, Isases, and pensions. Note: Use income from continuing operations rather than net income. 1. Credit Risk. Calculate the following ratios for the last three years: Operating margin (EBIT/SALES), EBITDA coverage, CFO to total debt, Debt to equity. Do you notice a trend in operating margin? What drives the trend? Does the change signal more or less credit risk? Did EBITDA coverage increase or decrease in fiscal 2018 relative to fiscal 2017? Why? Does the change signal more or less credit risk? Did CFO to total debt increase or decrease in fiscal 2018 relative to fiscal 2017? Why? Does the change signal more or less credit risk? Did Debt to Equity increase or decrease in fiscal 2018 relative to fiscal 2017? Why? Does the change signal more or less risk? Consolidated Statements of Operations $ 2018 74,433 $ 923 75,356 53,299 15,723 2,224 4,110 461 (27) 3,676 746 2,930 7 2,937 $ 2017 A3 Adved 71.786 $ 928 72.714 51,125 15.140 2.225 4,224 653 (59) 3.630 722 2,908 6 2,914 $ 2016 A8 Agusted 69,414 857 70,271 49,145 14,217 2,045 4,864 991 3,961 1,295 2,666 68 2,734 $ (millions, except per share data) Sales Other revenue Total revenue Cost of sales Selling, general and administrative expenses Depreciation and amortization (exclusive of depreciation included in cost of sales) Operating income Net interest expense Net other (income) / expense Earnings from continuing operations before income taxes Provision for income taxes Net earnings from continuing operations Discontinued operations, net of tax Net earnings Basic earnings per share Continuing operations Discontinued operations Net earnings per share Diluted earnings per share Continuing operations Discontinued operations Net earnings per share Weighted average common shares outstanding Basic Diluted Antidilutive shares Note: Per share amounts may not foot due to rounding. See accompanying Notes to Consolidated Financial Statements. Refer to Note 2 regarding the adoption of new accounting standards for revenue recognition, leases, and pensions. $ $ 5.54 $ 0.01 5.55 $ 5.32 0.01 4.61 0.12 4.73 $ 5.32 $ $ 5.50 $ 0.01 5.51 $ 5.29 $ 0.01 5.29 $ 4.55 0.12 4.69 $ 528.6 5332 546.8 550.3 4.1 577.6 582.5 0.1 35 Consolidated Statements of Comprehensive Income 2018 2017 As Adjusted (a) 2,914 $ 2016 As Adjusted (a) 2,734 2,937 $ (millions) Net earnings Other comprehensive (loss)/income, net of tax Pension and other benefit liabilities, net of tax Currency translation adjustment and cash flow hedges, net of tax Other comprehensive (loss)/income Comprehensive income 2 6 (52) (6) (58) 2,879 (13) 4 (9) 2,725 8 $ $ 2,922 $ See accompanying Notes to Consolidated Financial Statements. (a) Refer to Note 2 regarding the adoption of new accounting standards for revenue recognition, leases, and pensions. Consolidated Statements of Financial Position February 3, 2018 A8 Adivated $ 2.643 8,597 1,300 12,540 6,096 28,131 5.623 2,645 440 (18,398) 24,536 1,884 1,343 40.303 February 2, (millions, except footnotes) 2019 Assets Cash and cash equivalents $ 1,556 Inventory 9,497 Other current assets 1,466 Total current assets 12,519 Property and equipment Land 6,084 Buildings and improvements 29,240 Fixtures and equipment 5,912 Computer hardware and software 2,544 Construction-in-progress 460 Accumulated depreciation (18,687) Property and equipment, net 25,533 Operating lease assets 1.965 Other noncurrent assets 1,273 Total assets $ 41,290 $ Liabilities and shareholders' investment Accounts payable $ 9,761 Accrued and other current liabilities 4,201 Current portion of long-term debt and other borrowings 1.052 Total current liabilities 15,014 Long-term debt and other borrowings 10,223 Noncurrent operating lease abilities 2,004 Deferred income taxes 972 Other noncurrent liabilities 1,780 Total noncurrent liabilities 14,979 Shareholders' investment Common stock 43 Additional paid-in capital 6,042 Retained earnings 6,017 Accumulated other comprehensive loss (805) Total shareholders' Investment 11,297 Total liabilities and shareholders' investment $ 41,290 $ Common Stock Authorized 6,000,000,000 shares, $0.0833 par value; 517,761,600 shares issued and outstanding at February 2, 2019, 541,681,670 shares issued and outstanding at February 3, 2018. Preferred Stock Authorized 5,000,000 shares. $0.01 par value; no shares were issued or outstanding at February 2, 2019 or February 3, 2018. See accompanying Notes to Consolidated Financial Statements. $ 8,677 4,094 281 13,052 11, 117 1,924 693 1,866 15,600 45 5.858 6,495 (747) 11,651 40,303 is Refer to Note 2 renarding the adoption of new accounting standards for revenue reconition legges and panaiona Consolidated Statements of Cash Flows 2018 2017 As Adusted 2016 As Adjusted $ 2,837 $ s 2.814 G 2,909 2,731 69 2,9301 2,5ki 2,474 132 322 2 476 112 (188) 123 200 2,318 113 40 95 293 (800) (2981) 1,127 B9 5,970 3 6,973 (343) (156) 1.307 419 6,961 74 8,935 (168) (294) 5,337 107 5.444 (milians) Operating activities Net eaminge Earnings from discontinued operations, not of tax Net samings from continung operations Adjustments to reconcile net earnings to cash provided by operations: Depreciation and amortization Share-based compensation expense Deferrad income taxes Loes on debt extinguishment Noncash losses i gains, and other, ret Changes in operating accounts: Inventory Char ansets Accounts payable Accrued and ather liabilities Cash provided by operating activities-continuing operations Cash provided by operating activities-discontinued operations Cash provided by operations Investing activities Expenditures for property and ecuiment Proceeds from disposal of property and equipment Cash paid for acquisitions, net of cash assumed Other investments Cash required for investing activities Financing activities Additions to long-term debt Reductions of long-term debt Dividends pald Repurchase of stock Stock option exercises Cash required for financing act Milies Nel decrease increase in cash and cash equivalents Cash and cash equivalents at beginning of parod Cash and cash equivalents at end of period Supplemental Information Interest paid, net of capitalized interest Income taxes paid Leased assets ablained in exchange for new financu lease liabilities Leased assets obtained in exchange for new operating lese labilities 11.547) 48 (3,516) B5 - 15 (3,416) 12.533) 31 (518) (55) (3.075) 28 (1.473) - (281) (1.335) (2,124) 739 (2,192) 11,338) (1.046) 103 13,729) 131 2,512 2.543 1,877 (2,849) 11,348) (3,708) 221 15,505) (1,534) 4,046 2.512 (3,544) (1,087) 2,643 1,55i S $ S 476 S 373 130 246 878 $ 934 139 212 999 1.514 252 144 See accompanying Notes to Consolidated Financial Statements, Refer to Note 2 regarding the adoption of new accounting standards for revenue recognition, Isases, and pensions
