
	1st Quarter	2nd Quarter	3rd Quarter	4th Quarter (1)	Fiscal Year

Sales
2018	2,025	1,782	1,860	2,272	$	7,939
2017	2,001	1,701	1,870	2,210	$	7,782
Gross margin (2)
2018	666	539	588	735	$	2,528
2017	680	503	580	693	$	2,456
Operating profit (3)
2018	224	112	144	219	$	699
2017	268	72	155	76	$	571
Net income/(loss) (4), (5), (6), (7)
2018	165	88	130	158	$	541
2017	180	51	102	(49)	$	284
Basic earnings per share (8)
2018	1.39	0.76	1.14	1.40	$	4.68
2017	1.37	0.39	0.81	(0.40)	$	2.23
Diluted earnings per share (8)
2018	1.38	0.75	1.14	1.39	$	4.66
2017	1.36	0.39	0.81	(0.40)	$	2.22

(1)

The fourth quarter of 2017 represents the 14 weeks ended February 3, 2018.

(2)

Gross margin represents sales less cost of sales. Cost of sales includes: the cost of merchandise, freight, distribution costs including related depreciation expense, shipping and handling, occupancy and buyers’ compensation. Occupancy costs include rent, common area maintenance charges, real estate taxes, general maintenance, and utilities.

(3)

Operating profit represents income before income taxes, interest (income)/expense, net, and non-operating income.

(4)

Charges of $12 million, $3 million, $2 million, and $1 million were recorded during the first, second, third, and fourth quarters of 2018, respectively. Of these amounts, $13 million represented adjustments to the estimated cost of the pension plan reformation and interest. Professional fees of $5 million were incurred during 2018 related to the plan reformation. During the second and fourth quarters of 2017, the Company recorded pre-tax charges of $50 million and $128 million, respectively, related to its U.S. retirement plan litigation. See Note 22, Legal Proceedings for further information.

(5)

During the third quarter of 2017, the Company recorded a pre-tax charge of $13 million associated with the reorganization and the reduction in staff taken to improve efficiency. See Note 3, Litigation and Other Charges for further information.

(6)

During the fourth quarters of 2018 and 2017, the Company recorded pre-tax non-cash impairment charges totaling $19 million and $20 million, respectively. See Note 3, Litigation and Other Charges for further information.

(7)

During the fourth quarter of 2017, the Company recorded a provisional $99 million tax liability for the mandatory deemed repatriation of foreign sourced net earnings and a corresponding change in our permanent reinvestment assertion under ASC 740‑30. During second, third, and fourth quarters 2018, the Company recorded benefits of $1 million, $23 million, and $4 million from the completion of the accounting for the Tax Act. See Note 17, Income Taxes for further information.

(8)

Quarterly income per share amounts do not total to the annual amount due to changes in weighted-average shares outstanding during the year. Additionally, stock options and other potentially dilutive common shares were excluded from the computation of diluted earnings per common share for the quarter ended February 3, 2018 as the Company reported a net loss.