SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION

3 Months Ended

May 03, 2020

SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION

SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION

NOTE 8 — SUPPLEMENTAL BALANCE SHEET AND CASH FLOW INFORMATION

Receivables

Receivables as of May 3, 2020 and February 2, 2020 consisted of the following (amounts in millions):

	May 3, 2020		February 2, 2020
Trade receivables, net of allowance for credit losses	$	635	$	674
Vendor rebate receivables		38		65
Other receivables		17		15
Total receivables, net	$	690	$	754

Trade receivables arise primarily from sales on credit to customers. The Company establishes an allowance for credit losses to present the net amount of trade receivables expected to be collected. The allowance is determined using an estimation of loss rates based upon historical experience adjusted for factors that are relevant to determine the expected collectability of trade receivables. Some of these factors include macroeconomic conditions that correlate with historical loss experience, delinquency trends, aging behavior of trade receivables, and credit and liquidity quality indicators for certain industry groups, customer classes, or individual customers.

Other Current Liabilities

Other current liabilities as of May 3, 2020 and February 2, 2020 consisted of the following (amounts in millions):

	May 3, 2020		February 2, 2020
Accrued legal	$	50	$	50
Accrued non-income taxes		29		33
Accrued interest		3		13
Other		106		112
Total other current liabilities	$	188	$	208

As of May 3, 2020 and February 2, 2020, the $50 million legal accrual included in Other current liabilities is offset by a $50 million insurance recovery included in Other current assets and is related to litigation activities. For further information, see “Note 10, Commitments and Contingencies.”

Supplemental Cash Flow Information

Cash paid for interest in the three months ended May 3, 2020 and May 5, 2019 was $34 million and $37 million, respectively.

Cash paid for income taxes, net of refunds, in the three months ended May 3, 2020 and May 5, 2019 was approximately zero and $4 million, respectively.

During the three months ended May 3, 2020 and May 5, 2019, HDS executed equity cash distributions of $4 million and $14 million, respectively, to Holdings, via HDS’s direct parent, HDS Holding Corporation. The equity distribution from HDS and return of capital recognized by Holdings were eliminated in consolidation of Holdings and its wholly-owned subsidiaries, including HDS.

FICA Payment Deferral

The CARES Act allows employers to defer the payment of the employer share of Federal Insurance Contributions Act (“FICA”) taxes for the period from March 27, 2020 and ending December 31, 2020.  The deferred amount will be payable as follows:

● 50% of the deferred amount will be paid December 31, 2021

● Remaining 50% of the deferred amount will be paid December 31, 2022

In the three months ended May 3, 2020, the Company deferred FICA payments of $3 million under the CARES Act. The deferred payments are reflected in Other liabilities in the Consolidated Balance Sheets. The deferral had no impact on the Consolidated Statement of Operations and Comprehensive Income.

Share Repurchases

During fiscal 2014, Holdings’ Board of Directors authorized a share repurchase program to be funded from cash proceeds received from exercises of employee stock options (“April 2014 Plan”). This share repurchase program does not obligate Holdings to acquire any particular amount of common stock, and it may be terminated at any time at Holdings’ discretion. During November 2018 and March 2020, Holdings’ Board of Directors authorized two additional share repurchase programs for up to an aggregate amount of $500 million each of Holdings’ common stock (“November 2018 Plan" and "March 2020 Plan,” respectively). Holdings completed the repurchase of all $500 million of common stock authorized under the November 2018 Plan in January 2020. During first quarter 2020, Holdings chose to not purchase any shares under the March 2020 Plan, instead focusing on enhancing the Company’s liquidity position.

Holdings’ share repurchases under these plans for the three months ended May 3, 2020 and May 5, 2019 were as follows (dollars in millions):

	Three Months Ended
	May 3, 2020			May 5, 2019
	Number of	Cost of		Number of	Cost of
	Shares	Shares		Shares	Shares
March 2020 Plan	—	$	—	—	$	—
November 2018 Plan	—		—	170,419		7
April 2014 Plan	26,661		1	100,666		5
Total share repurchases	26,661	$	1	271,085	$	12