NOTE 8: Shareholders’ Equity

Authorized shares of preferred stock were 5.0 million ($5 par value) at February 2, 2018, and February 3, 2017, 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 ($.50 par value) at February 2, 2018, and February 3, 2017.

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 January 27, 2017, the Company’s Board of Directors authorized a $5.0 billion share repurchase under the program with no expiration, which was announced on the same day. On January 26, 2018, the Company’s Board of Directors authorized an additional $5.0 billion share repurchase under the program with no expiration, which was announced on the same day. As of February 2, 2018, the Company had $6.9 billion remaining under the program.

During the year ended February 2, 2018, the Company entered into Accelerated Share Repurchase (ASR) agreements with third-party financial institutions to repurchase a total of 15.7 million shares of the Company’s common stock for $1.3 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.

During the year ended February 2, 2018, the Company also repurchased shares of its common stock through the open market totaling 23.4 million shares for a cost of $1.8 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 2017 and 2016 were as follows:



	2017			2016
(In millions)	Shares	Cost ¹		Shares	Cost ¹
Share repurchase program	39.1	$	3,133	46.7	$	3,500
Shares withheld from employees	0.5	41		1.0	77
Total share repurchases	39.6	$	3,174	47.7	$	3,577


¹	Reductions of $2.9 billion and $3.3 billion were recorded to retained earnings, after capital in excess of par value was depleted, for 2017 and 2016, respectively.