Effective February 4, 2018, we adopted Revenue from Contracts with Customers (ASC Topic 606) as required. We adopted the new standard using the full retrospective method. The standard eliminated the transaction and industry specific revenue recognition guidance under prior U.S. GAAP and replaced it with a principles-based approach for revenue recognition and disclosures. Under the standard, revenue is recognized when a customer obtains control of promised goods or services in an amount that reflects the consideration the entity expects to receive in exchange for those goods or services.

Net sales includes revenue from the sale of merchandise and shipping revenues. Net sales are recognized when merchandise is received by the customer and we have fulfilled all performance obligations. We do not have any sales that are recorded as commissions.

The following table summarizes net sales by line of business for the periods ended November 3, 2018 and October 28, 2017:

	Three Months Ended				Nine Months Ended
(Dollars in Millions)	November 3, 2018		October 28, 2017		November 3, 2018		October 28, 2017
Women's	$	1,287	$	1,276	$	3,982	$	3,883
Men's		925		890		2,668		2,550
Home		719		713		2,090		2,035
Children's		650		640		1,569		1,534
Footwear		465		473		1,334		1,288
Accessories		323		320		989		984
Net Sales	$	4,369	$	4,312	$	12,632	$	12,274

We maintain various rewards programs whereby customers earn rewards based on their spending and other promotional activities. The rewards are typically in the form of dollar off discounts which can be used on future purchases. These programs create performance obligations which require us to defer a portion of the original sale until the rewards are redeemed. Sales are recorded net of returns. At the end of each reporting period, we record a reserve based on historical return rates and patterns which reverses sales that we expect to be returned in the following period. Revenue from the sale of Kohl's gift cards is recognized when the gift card is redeemed. Liabilities for performance obligations resulting from our rewards programs, return reserves, and unredeemed gift cards and merchandise return cards totaled $337 million as of November 3, 2018, $422 million as of February 3, 2018 and $335 million as of October 28, 2017.

Net sales do not include sales tax as we are considered a pass-through conduit for collecting and remitting sales taxes.

Other revenue consists primarily of revenue from our credit card operations, unredeemed gift and merchandise return cards (breakage), and other non-merchandise revenues.

Revenue from credit card operations includes our share of the finance charges and interest fees, less charge-offs of the Kohl’s credit card pursuant to the Private Label Credit Card Program Agreement. Expenses related to our credit card operations are reported in SG&A.

Income from unredeemed gift cards and merchandise return cards (breakage) is recorded in proportion and over the time period the cards are actually redeemed.

The following tables summarize the impact of adoption of the new standard by financial statement line item:

Three Months Ended October 28, 2017 (Dollars in Millions, Except per Share Data)	As Previously Reported		New Standard Adjustment			Adjusted
Net sales	$	4,332	$	(20	)	$	4,312
Other revenue				255			255
Total revenue				235			4,567
Cost of merchandise sold		2,737		(10	)		2,727
Gross margin		1,595
Operating expenses:
Selling, general and administrative		1,095		245			1,340
Depreciation and amortization		243		-			243
Operating income		257		-			257
Interest expense, net		74		-			74
Income before income taxes		183		-			183
Provision for income taxes		66		-			66
Net income	$	117	$	-		$	117
Net income per share:
Basic	$	0.70	$	-		$	0.70
Diluted	$	0.70	$	-		$	0.70

Nine Months Ended October 28, 2017 (Dollars in Millions, Except per Share Data)	As Previously Reported		New Standard Adjustment			Adjusted
Net sales	$	12,319	$	(45	)	$	12,274
Other revenue				753			753
Total revenue				708			13,027
Cost of merchandise sold		7,693		(13	)		7,680
Gross margin		4,626
Operating expenses:
Selling, general and administrative		3,053		721			3,774
Depreciation and amortization		724		-			724
Operating income		849		-			849
Interest expense, net		225		-			225
Income before income taxes		624		-			624
Provision for income taxes		233		-			233
Net income	$	391	$	-		$	391
Net income per share:
Basic	$	2.33	$	-		$	2.33
Diluted	$	2.32	$	-		$	2.32

October 28, 2017 (Dollars in Millions)	As Previously Reported		New Standard Adjustment			Adjusted
Assets
Current assets:
Cash and cash equivalents	$	736	$	-		$	736
Merchandise inventories		4,632		-			4,632
Other		332		47			379
Total current assets		5,700		47			5,747
Property and equipment, net		7,974		-			7,974
Other assets		226		-			226
Total assets	$	13,900	$	47		$	13,947

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	2,113	$	-		$	2,113
Accrued liabilities		1,237		57			1,294
Income taxes payable		24		-			24
Current portion of capital lease and financing obligations		131		-			131
Total current liabilities		3,505		57			3,562
Long-term debt		2,796		-			2,796
Capital lease and financing obligations		1,622		-			1,622
Deferred income taxes		275		(3	)		272
Other long-term liabilities		673		-			673
Total shareholders’ equity		5,029		(7	)		5,022
Total liabilities and shareholders’ equity	$	13,900	$	47		$	13,947

February 3, 2018 (Dollars in Millions)	As Previously Reported		New Standard Adjustment			Adjusted
Assets
Current assets:
Cash and cash equivalents	$	1,308	$	-		$	1,308
Merchandise inventories		3,542		-			3,542
Other		481		49			530
Total current assets		5,331		49			5,380
Property and equipment, net		7,773		-			7,773
Other assets		236		-			236
Total assets	$	13,340	$	49		$	13,389

Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	1,271	$	-		$	1,271
Accrued liabilities		1,155		58			1,213
Income taxes payable		99		-			99
Current portion of capital lease and financing obligations		126		-			126
Total current liabilities		2,651		58			2,709
Long-term debt		2,797		-			2,797
Capital lease and financing obligations		1,591		-			1,591
Deferred income taxes		213		(2	)		211
Other long-term liabilities		662		-			662
Total shareholders’ equity		5,426		(7	)		5,419
Total liabilities and shareholders’ equity	$	13,340	$	49		$	13,389

The adoption of the new standard had no impact on our basic or diluted earnings per share or our net cash provided by (used in) operating, financing, or investing activities.