Shareholders' Equity

12 Months Ended

Jan. 31, 2020

Stockholders' Equity Note [Abstract]

Shareholders’ Equity

Authorized shares of preferred stock were 5.0 million ($5 par value) at January 31, 2020 and February 1, 2019, none of which have been issued. The Board of Directors may issue the preferred stock (without action by shareholders) in one or more series, having such voting rights, dividend and liquidation preferences, and such conversion and other rights as may be designated by the Board of Directors at the time of issuance.

Authorized shares of common stock were 5.6 billion ($0.50 par value) at January 31, 2020 and February 1, 2019.

The Company has a share repurchase program that is executed through purchases made from time to time either in the open market or through private off-market transactions. Shares purchased under the repurchase program are retired and returned to authorized and unissued status. On December 12, 2018, the Company’s Board of Directors authorized a $10.0 billion share repurchase under the program with no expiration, which was announced the same day. As of January 31, 2020, the Company had $9.7 billion remaining under the program.

During the year ended January 31, 2020, the Company entered into Accelerated Share Repurchase (ASR) agreements with third-party financial institutions to repurchase a total of 17.2 million shares of the Company’s common stock for $1.7 billion. At inception, the Company paid the financial institutions using cash on hand and took initial delivery of shares. Under the terms of the ASR agreements, upon settlement, the Company would either receive additional shares from the financial institution or be required to deliver additional shares or cash to the financial institution. The Company controlled its election to either deliver additional shares or cash to the financial institution and was subject to provisions which limited the number of shares the Company would be required to deliver.

The final number of shares received upon settlement of each ASR agreement was determined with reference to the volume-weighted average price of the Company’s common stock over the term of the ASR agreement. The initial repurchase of shares under these agreements resulted in an immediate reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted earnings per share.

These ASR agreements were accounted for as treasury stock transactions and forward stock purchase contracts. The par value of the shares received was recorded as a reduction to common stock with the remainder recorded as a reduction to capital in excess of par value and retained earnings. The forward stock purchase contracts were considered indexed to the Company’s own stock and were classified as equity instruments.

The terms of each ASR agreement entered into during the last three fiscal years, structured as outlined above, follow (in millions):



Agreement Execution Date	ASR Settlement Date	ASR Agreement Amount		Minimum Notional Amount¹		Maximum Notional Amount¹		Cash Payment Received at Settlement¹		Initial Shares Delivered	Additional Shares Delivered at Settlement	Total Shares Delivered
Q1 2017	Q1 2017	$	500	$	—	$	—	$	—	5.3	0.8	6.1
Q2 2017	Q2 2017	500		—		—		—		5.2	1.2	6.4
Q3 2017	Q3 2017	250		—		—		—		2.9	0.3	3.2
Q2 2018	Q2 2018	550		—		—		—		4.8	0.8	5.6
Q3 2018	Q3 2018	310		—		—		—		2.5	0.3	2.8
Q4 2018	Q1 2019	270		—		—		—		2.6	0.3	2.9
Q1 2019	Q1 2019	350		350		500		150		2.9	0.3	3.2
Q2 2019	Q2 2019	990		990		1,410		420		8.9	1.0	9.9
Q3 2019	Q3 2019	397		350		500		103		2.8	0.8	3.6

The Company entered into variable notional ASR agreements with third-party financial institutions to repurchase between a minimum notional amount and a maximum notional amount. At inception of each transaction, the Company paid the maximum notional amount and received shares. When the Company finalized each transaction, it received additional shares as well as a cash payment from the third-party financial institution equal to the difference between the prepayment amount (maximum notional amount) and the final notional amount.

During the year ended January 31, 2020, the Company also repurchased shares of its common stock through the open market totaling 23.8 million shares for a cost of $2.6 billion.

The Company also withholds shares from employees to satisfy either the exercise price of stock options exercised or the statutory withholding tax liability resulting from the vesting of restricted stock awards and performance share units.

Shares repurchased for 2019, 2018 and 2017 were as follows:



	2019			2018			2017
(In millions)	Shares	Cost ¹		Shares	Cost ¹		Shares	Cost ¹
Share repurchase program	41.0	$	4,288	31.2	$	2,999	39.1	$	3,133
Shares withheld from employees	0.3	37		0.5	46		0.5	41
Total share repurchases	41.3	$	4,325	31.7	$	3,045	39.6	$	3,174

Reductions of $4.1 billion, $2.8 billion, and $2.9 billion were recorded to retained earnings, after capital in excess of par value was depleted, for 2019, 2018, and 2017, respectively.