Item 1. Financial Statements

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Item 1. Financial Statements

Lowe’s Companies, Inc.

Consolidated Statements of Earnings (Unaudited)

In Millions, Except Per Share and Percentage Data


	Three Months Ended								Nine Months Ended
	October 29, 2021				October 30, 2020				October 29, 2021				October 30, 2020
Current Earnings	Amount		% Sales		Amount		% Sales		Amount		% Sales		Amount		% Sales
Net sales	$	22,918	100.00	%	$	22,309	100.00	%	$	74,911	100.00	%	$	69,286	100.00	%
Cost of sales	15,331		66.90		15,009		67.28		49,882		66.59		46,170		66.64
Gross margin	7,587		33.10		7,300		32.72		25,029		33.41		23,116		33.36
Expenses:
Selling, general and administrative	4,373		19.08		4,770		21.38		13,559		18.10		13,985		20.18
Depreciation and amortization	425		1.85		355		1.59		1,226		1.64		1,008		1.46
Operating income	2,789		12.17		2,175		9.75		10,244		13.67		8,123		11.72
Interest – net	223		0.97		221		0.99		650		0.86		644		0.93
Loss on extinguishment of debt	—		—		1,060		4.75		—		—		1,060		1.53
Pre-tax earnings	2,566		11.20		894		4.01		9,594		12.81		6,419		9.26
Income tax provision	670		2.93		202		0.91		2,359		3.15		1,562		2.25
Net earnings	$	1,896	8.27	%	$	692	3.10	%	$	7,235	9.66	%	$	4,857	7.01	%


Weighted average common shares outstanding – basic	690				752				704				753
Basic earnings per common share	$	2.74			$	0.92			$	10.23			$	6.42
Weighted average common shares outstanding – diluted	692				754				706				754
Diluted earnings per common share	$	2.73			$	0.91			$	10.21			$	6.41

See accompanying notes to the consolidated financial statements (unaudited).

Lowe’s Companies, Inc.

Consolidated Statements of Comprehensive Income (Unaudited)

In Millions, Except Percentage Data


	Three Months Ended								Nine Months Ended
	October 29, 2021				October 30, 2020				October 29, 2021				October 30, 2020
	Amount		% Sales		Amount		% Sales		Amount		% Sales		Amount		% Sales
Net earnings	$	1,896	8.27	%	$	692	3.10	%	$	7,235	9.66	%	$	4,857	7.01	%
Foreign currency translation adjustments – net of tax	19		0.08		18		0.08		78		0.10		(27)		(0.04)
Cash flow hedges – net of tax	41		0.18		24		0.11		56		0.07		(84)		(0.12)
Other	(1)		—		(2)		(0.01)		(4)		—		2		—
Other comprehensive income/(loss)	59		0.26		40		0.18		130		0.17		(109)		(0.16)
Comprehensive income	$	1,955	8.53	%	$	732	3.28	%	$	7,365	9.83	%	$	4,748	6.85	%

See accompanying notes to the consolidated financial statements (unaudited).


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Lowe’s Companies, Inc.

Consolidated Balance Sheets (Unaudited)

In Millions, Except Par Value Data


	October 29, 2021		October 30, 2020		January 29, 2021
Assets
Current assets:
Cash and cash equivalents	$	6,121	$	8,249	$	4,690
Short-term investments	552		1,852		506
Merchandise inventory – net	16,685		15,712		16,193
Other current assets	1,491		1,103		937
Total current assets	24,849		26,916		22,326
Property, less accumulated depreciation	18,925		18,798		19,155
Operating lease right-of-use assets	4,161		3,823		3,832
Long-term investments	213		202		200
Deferred income taxes – net	220		241		340
Other assets	1,032		900		882
Total assets	$	49,400	$	50,880	$	46,735

Liabilities and shareholders' (deficit)/equity
Current liabilities:
Short-term borrowings	$	1,000	$	—	$	—
Current maturities of long-term debt	1,352		609		1,112
Current operating lease liabilities	573		530		541
Accounts payable	11,334		12,759		10,884
Accrued compensation and employee benefits	1,353		1,117		1,350
Deferred revenue	1,954		1,614		1,608
Other current liabilities	3,268		2,935		3,235
Total current liabilities	20,834		19,564		18,730
Long-term debt, excluding current maturities	23,881		21,185		20,668
Noncurrent operating lease liabilities	4,136		3,907		3,890
Deferred revenue – Lowe's protection plans	1,119		1,007		1,019
Other liabilities	1,006		1,144		991
Total liabilities	50,976		46,807		45,298

Shareholders' (deficit)/equity:
Preferred stock, $5 par value: Authorized – 5.0 million shares; Issued and outstanding – none	—		—		—
Common stock, $0.50 par value: Authorized – 5.6 billion shares; Issued and outstanding – 686 million, 752 million, and 731 million shares, respectively	343		376		366
Capital in excess of par value	—		—		90
(Accumulated deficit)/retained earnings	(1,913)		3,942		1,117
Accumulated other comprehensive loss	(6)		(245)		(136)
Total shareholders' (deficit)/equity	(1,576)		4,073		1,437
Total liabilities and shareholders' (deficit)/equity	$	49,400	$	50,880	$	46,735

See accompanying notes to the consolidated financial statements (unaudited).


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Lowe’s Companies, Inc.

Consolidated Statements of Shareholders’ (Deficit)/Equity (Unaudited)

In Millions


	Three Months Ended October 29, 2021
	Common Stock			Capital in Excess of Par Value		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total
	Shares	Amount
Balance July 30, 2021	699	$	350	$	—	$	(460)	$	(65)	$	(175)

Net earnings	—	—		—		1,896		—		1,896
Other comprehensive income	—	—		—		—		59		59
Cash dividends declared, $0.80 per share	—	—		—		(551)		—		(551)
Share-based payment expense	—	—		50		—		—		50
Repurchases of common stock	(13)	(7)		(59)		(2,798)		—		(2,864)
Issuance of common stock under share-based payment plans	—	—		9		—		—		9
Balance October 29, 2021	686	$	343	$	—	$	(1,913)	$	(6)	$	(1,576)

	Nine Months Ended October 29, 2021
	Common Stock			Capital in Excess of Par Value		Retained Earnings/ (Accumulated Deficit)		Accumulated Other Comprehensive Loss		Total
	Shares	Amount
Balance January 29, 2021	731	$	366	$	90	$	1,117	$	(136)	$	1,437

Net earnings	—	—		—		7,235		—		7,235
Other comprehensive income	—	—		—		—		130		130
Cash dividends declared, $2.20 per share	—	—		—		(1,544)		—		(1,544)
Share-based payment expense	—	—		163		—		—		163
Repurchases of common stock	(46)	(24)		(324)		(8,721)		—		(9,069)
Issuance of common stock under share-based payment plans	1	1		71		—		—		72
Balance October 29, 2021	686	$	343	$	—	$	(1,913)	$	(6)	$	(1,576)


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	Three Months Ended October 30, 2020
	Common Stock			Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss		Total
	Shares	Amount
Balance July 31, 2020	756	$	378	$	129	$	4,134	$	(285)	$	4,356
Net earnings	—	—		—		692		—		692
Other comprehensive income	—	—		—		—		40		40
Cash dividends declared, $0.60 per share	—	—		—		(452)		—		(452)
Share-based payment expense	—	—		39		—		—		39
Repurchases of common stock	(4)	(2)		(187)		(432)		—		(621)
Issuance of common stock under share-based payment plans	—	—		19		—		—		19
Balance October 30, 2020	752	$	376	$	—	$	3,942	$	(245)	$	4,073

	Nine Months Ended October 30, 2020
	Common Stock			Capital in Excess of Par Value		Retained Earnings		Accumulated Other Comprehensive Loss		Total
	Shares	Amount
Balance January 31, 2020	763	$	381	$	—	$	1,727	$	(136)	$	1,972

Net earnings	—	—		—		4,857		—		4,857
Other comprehensive loss	—	—		—		—		(109)		(109)
Cash dividends declared, $1.70 per share	—	—		—		(1,284)		—		(1,284)
Share-based payment expense	—	—		103		—		—		103
Repurchases of common stock	(13)	(6)		(203)		(1,358)		—		(1,567)
Issuance of common stock under share-based payment plans	2	1		100		—		—		101
Balance October 30, 2020	752	$	376	$	—	$	3,942	$	(245)	$	4,073

See accompanying notes to the consolidated financial statements (unaudited).


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Lowe’s Companies, Inc.

Consolidated Statements of Cash Flows (Unaudited)

In Millions


	Nine Months Ended
	October 29, 2021		October 30, 2020
Cash flows from operating activities:
Net earnings	$	7,235	$	4,857
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	1,388		1,152
Noncash lease expense	383		356
Deferred income taxes	96		5
Loss on property and other assets – net	25		114
Loss on extinguishment of debt	—		1,060
Share-based payment expense	169		107
Changes in operating assets and liabilities:
Merchandise inventory – net	(446)		(2,545)
Other operating assets	(130)		147
Accounts payable	436		5,099
Deferred revenue	444		508
Other operating liabilities	(421)		625
Net cash provided by operating activities	9,179		11,485

Cash flows from investing activities:
Purchases of investments	(2,325)		(2,548)
Proceeds from sale/maturity of investments	2,261		1,032
Capital expenditures	(1,256)		(1,172)
Proceeds from sale of property and other long-term assets	94		60

Other – net	(134)		(24)
Net cash used in investing activities	(1,360)		(2,652)

Cash flows from financing activities:
Net change in commercial paper	—		(941)
Net proceeds from issuance of debt	4,972		7,929
Repayment of debt	(595)		(5,582)
Proceeds from issuance of common stock under share-based payment plans	72		102
Cash dividend payments	(1,433)		(1,252)
Repurchases of common stock	(8,999)		(1,528)
Other – net	(408)		(32)
Net cash used in financing activities	(6,391)		(1,304)

Effect of exchange rate changes on cash	3		4

Net increase in cash and cash equivalents	1,431		7,533
Cash and cash equivalents, beginning of period	4,690		716
Cash and cash equivalents, end of period	$	6,121	$	8,249

See accompanying notes to the consolidated financial statements (unaudited).


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Lowe’s Companies, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Note 1: Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements (unaudited) and notes to the condensed consolidated financial statements (unaudited) are presented in accordance with the rules and regulations of the Securities and Exchange Commission and do not include all the disclosures normally required in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The condensed consolidated financial statements (unaudited), in the opinion of management, contain all normal recurring adjustments necessary to present fairly the financial position as of October 29, 2021, and October 30, 2020, and the results of operations, comprehensive income, and shareholders’ (deficit)/equity for the three and nine months ended October 29, 2021, and October 30, 2020, and cash flows for the nine months ended October 29, 2021, and October 30, 2020. The January 29, 2021 consolidated balance sheet was derived from the audited financial statements.

These interim condensed consolidated financial statements (unaudited) should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Lowe’s Companies, Inc. (the Company) Annual Report on Form 10-K for the fiscal year ended January 29, 2021 (the Annual Report). The financial results for the interim periods may not be indicative of the financial results for the entire fiscal year.

Reclassifications

Certain prior period amounts have been reclassified to conform to current period presentation as follows: the reclassification of excess property from other assets to property, less accumulated depreciation on the consolidated balance sheet as of October 30, 2020, and the separate disclosure of changes in deferred revenue within operating activities on the consolidated statement of cash flows for the nine months ended October 30, 2020.

Accounting Pronouncements Not Yet Adopted

In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-04, Reference Rate Reform (Topic 848): Facilitation of Effects of Reference Rate Reform on Financial Reporting. The ASU, and subsequent clarifications, provide practical expedients for contract modification accounting related to the transition away from the London Interbank Offered Rate (LIBOR) and other interbank offering rates to alternative reference rates. The expedients are applicable to contract modifications made and hedging relationships entered into on or before December 31, 2022. The Company intends to use the expedients where needed for reference rate transition. The Company continues to evaluate this standard update and does not currently expect a material impact to the Company’s financial statements or disclosures.

Recent accounting pronouncements pending adoption not discussed in this Form 10-Q or in the 2020 Form 10-K are either not applicable to the Company or are not expected to have a material impact on the Company.

Note 2: Revenue - Net sales consists primarily of revenue, net of sales tax, associated with contracts with customers for the sale of goods and services in amounts that reflect consideration the Company is entitled to in exchange for those goods and services.

The following table presents the Company’s sources of revenue:


(In millions)	Three Months Ended						Nine Months Ended
October 29, 2021			October 30, 2020			October 29, 2021			October 30, 2020
Products	$	21,755		$	21,342		$	71,655		$	66,724
Services	597			552			1,805			1,459
Other	566			415			1,451			1,103
Net sales	$	22,918		$	22,309		$	74,911		$	69,286

A provision for anticipated merchandise returns is provided through a reduction of sales and cost of sales in the period that the related sales are recorded. The merchandise return reserve is presented on a gross basis, with a separate asset and liability


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included in the consolidated balance sheets. The balances and classification within the consolidated balance sheets for anticipated sales returns and the associated right of return assets are as follows:


(In millions)	Classification	October 29, 2021		October 30, 2020		January 29, 2021
Anticipated sales returns	Other current liabilities	$	315	$	281	$	252
Right of return assets	Other current assets	191		180		164

Deferred revenue - retail and stored-value cards

Retail deferred revenue consists of amounts received for which customers have not yet taken possession of the merchandise or for which installation has not yet been completed. The majority of revenue for goods and services is recognized in the quarter following revenue deferral. Stored-value cards deferred revenue includes outstanding stored-value cards such as gift cards and returned merchandise credits that have not yet been redeemed. Deferred revenue for retail and stored-value cards are as follows:


(In millions)	October 29, 2021		October 30, 2020		January 29, 2021
Retail deferred revenue	$	1,446	$	1,175	$	1,046
Stored-value cards deferred revenue	508		439		562
Deferred revenue	$	1,954	$	1,614	$	1,608

Deferred revenue - Lowe’s protection plans

The Company defers revenues for its separately-priced long-term extended protection plan contracts (Lowe’s protection plans) and recognizes revenue on a straight-line basis over the respective contract term. Expenses for claims are recognized in cost of sales when incurred.


(In millions)			October 29, 2021						October 30, 2020						January 29, 2021
Deferred revenue - Lowe’s protection plans			$	1,119					$	1,007					$	1,019


	Three Months Ended				Nine Months Ended
(In millions)	October 29, 2021		October 30, 2020		October 29, 2021		October 30, 2020
Lowe’s protection plans deferred revenue recognized into sales	$	123	$	106	$	359	$	314
Lowe’s protection plans claim expenses	45		43		142		121


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Disaggregation of Revenues

The following table presents the Company’s net sales disaggregated by merchandise division:


	Three Months Ended								Nine Months Ended
	October 29, 2021				October 30, 2020				October 29, 2021				October 30, 2020
(In millions)	Net Sales		%		Net Sales		%		Net Sales		%		Net Sales		%
Home Décor 1	$	8,585	37.5	%	$	8,168	36.6	%	$	26,057	34.8	%	$	23,846	34.4	%
Building Products 2	7,569		33.0		7,607		34.1		24,111		32.2	%	21,559		31.1	%
Hardlines 3	6,093		26.6		6,029		27.0		22,961		30.6	%	22,512		32.5	%
Other	671		2.9		505		2.3		1,782		2.4	%	1,369		2.0	%
Total	$	22,918	100.0	%	$	22,309	100.0	%	$	74,911	100.0	%	$	69,286	100.0	%

Note: Merchandise division net sales for the prior period have been reclassified to conform to the current period presentation.

1 Home Décor includes the following product categories: Appliances, Décor, Flooring, Kitchens & Bath, and Paint

2 Building Products includes the following product categories: Building Materials, Electrical, Lighting, Lumber, Millwork, and Rough Plumbing

3 Hardlines includes the following product categories: Hardware, Lawn & Garden, Seasonal & Outdoor Living, and Tools

The following table presents the Company’s net sales disaggregated by geographical area:


(In millions)	Three Months Ended						Nine Months Ended
October 29, 2021			October 30, 2020			October 29, 2021			October 30, 2020
United States	$	21,504		$	20,832		$	70,092		$	65,153
Canada	1,414			1,477			4,819			4,133
Net Sales	$	22,918		$	22,309		$	74,911		$	69,286

Note 3: Investments

Available-for-sale debt securities are recorded at fair value, and unrealized gains and losses are recorded, net of tax, as a component of accumulated other comprehensive loss. Net unrealized gains on available-for-sale debt securities as of October 29, 2021, October 30, 2020, and January 29, 2021, were not material. Refer to Note 4 for the fair value of the Company’s available-for-sale debt securities by investment type.

Held to maturity securities are U.S. Treasury bills which the Company has the ability and intent to hold until maturity and are stated at amortized cost. Gross unrecognized holding gains and losses on the Company’s held-to-maturity securities were not material for the period ended October 30, 2020.

The Company’s investments are as follows:


(In millions)	October 29, 2021		October 30, 2020		January 29, 2021
Short-term investments:
Available-for-sale debt securities	$	552	$	702	$	506
Held-to-maturity securities	—		1,150		—
Total short-term investments	$	552	$	1,852	$	506
Long-term investments:
Available-for-sale debt securities	$	213	$	202	$	200
Total long-term investments	$	213	$	202	$	200


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Restricted Investments

Short-term and long-term investments include restricted balances pledged as collateral primarily for the Lowe’s protection plans program and are as follows:


(In millions)	October 29, 2021		October 30, 2020		January 29, 2021
Short-term restricted investments	$	552	$	402	$	506
Long-term restricted investments	213		202		200
Total restricted investments	$	765	$	604	$	706

Note 4: Fair Value Measurements - Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative guidance for fair value measurements establishes a three-level hierarchy, which encourages an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of the hierarchy are defined as follows:

Level 1 - inputs to the valuation techniques that are quoted prices in active markets for identical assets or liabilities
Level 2 - inputs to the valuation techniques that are other than quoted prices but are observable for the assets or liabilities, either directly or indirectly
Level 3 - inputs to the valuation techniques that are unobservable for the assets or liabilities

Assets and Liabilities that are Measured at Fair Value on a Recurring Basis

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis as of October 29, 2021, October 30, 2020, and January 29, 2021:


		Fair Value Measurements at
(In millions)	Measurement Level	October 29, 2021		October 30, 2020		January 29, 2021
Assets:
Short-term investments:
Available-for-sale debt securities
Money market funds	Level 1	$	140	$	96	$	109
U.S Treasury securities	Level 1	134		220		223
Commercial paper	Level 2	102		—		97
Certificates of deposit	Level 1	100		300		—
Corporate debt securities	Level 2	45		49		47
Foreign government debt securities	Level 2	21		—		—
Municipal obligations	Level 2	10		—		—
Agency securities	Level 2	—		37		30
Total short-term investments		$	552	$	702	$	506
Other current assets:
Derivative instruments
Forward interest rate swaps	Level 2	$	34	$	—	$	—
Total other current assets		$	34	$	—	$	—
Long-term investments:
Available-for-sale debt securities
U.S. Treasury securities	Level 1	$	129	$	140	$	129
Corporate debt securities	Level 2	66		52		58
Foreign government debt securities	Level 2	15		—		—
Municipal obligations	Level 2	3		10		13



Total long-term investments		$	213	$	202	$	200


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		Fair Value Measurements at
(In millions)	Measurement Level	October 29, 2021		October 30, 2020		January 29, 2021
Other assets:
Derivative instruments
Forward interest rate swaps	Level 2	$	20	$	—	$	4

Total other assets		$	20	$	—	$	4

Liabilities:
Other current liabilities:
Derivative instruments
Forward interest rate swaps	Level 2	$	—	$	9	$	8
Total other current liabilities		$	—	$	9	$	8
Other liabilities:
Derivative instruments
Fixed-to-floating interest rate swaps	Level 2	$	7	$	—	$	—
Forward interest rate swaps	Level 2	—		5		—
Total other liabilities		$	7	$	5	$	—

There were no transfers between Levels 1, 2, or 3 during any of the periods presented.

When available, quoted prices were used to determine fair value. When quoted prices in active markets were available, investments were classified within Level 1 of the fair value hierarchy. When quoted prices in active markets were not available, fair values were determined using pricing models, and the inputs to those pricing models were based on observable market inputs. The inputs to the pricing models were typically benchmark yields, reported trades, broker-dealer quotes, issuer spreads, and benchmark securities, among others.

Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis

During the three and nine months ended October 29, 2021, and October 30, 2020, the Company had no material measurements of assets and liabilities at fair value on a nonrecurring basis subsequent to their initial recognition.

Other Fair Value Disclosures

The Company’s financial assets and liabilities not measured at fair value on a recurring basis include cash and cash equivalents, accounts receivable, held-to-maturity securities, short-term borrowings, accounts payable, and long-term debt and are reflected in the financial statements at cost. As further described in Note 8, certain long-term debt is associated with a fair value hedge and the changes in fair value of the hedged debt is included in long-term debt on the consolidated balance sheets. With the exception of long-term debt, cost approximates fair value for these items due to their short-term nature. The fair values of the Company’s unsecured notes were estimated using quoted market prices. The fair values of the Company’s mortgage notes were estimated using discounted cash flow analyses, based on the future cash outflows associated with these arrangements and discounted using the applicable incremental borrowing rate.

Carrying amounts and the related estimated fair value of the Company’s long-term debt, excluding finance lease obligations, are as follows:


	October 29, 2021				October 30, 2020				January 29, 2021
(In millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value
Unsecured notes (Level 1)	$	24,567	$	27,101	$	21,119	$	24,340	$	21,121	$	24,349
Mortgage notes (Level 2)	5		5		5		5		5		5
Long-term debt (excluding finance lease obligations)	$	24,572	$	27,106	$	21,124	$	24,345	$	21,126	$	24,354


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Note 5: Goodwill and Intangible Assets - Goodwill and intangible assets resulting from acquisitions are recorded within other assets on the consolidated balance sheets and are evaluated for impairment annually on the first day of the fourth quarter or whenever events or changes in circumstances indicate that it is more likely than not that the carrying amount may not be recoverable.

The carrying amount of goodwill as well as the gross carrying amount and accumulated amortization of intangible assets consist of the following:


	October 29, 2021				October 30, 2020				January 29, 2021
(In millions)	Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Goodwill	$	311	$	—	$	311	$	—	$	311	$	—

Definite-lived intangible assets:
Customer-related 1	$	347	$	(85)	$	368	$	(93)	$	372	$	(99)
Trademarks and trade names 1	269		(130)		255		(91)		264		(119)
Other	1		(1)		12		(12)		12		(11)
Total definite-lived intangible assets	$	617	$	(216)	$	635	$	(196)	$	648	$	(229)

Indefinite-lived intangible assets:
Trademark 2	$	134	$	—	$	—	$	—	$	—	$	—
Total intangible assets	$	751	$	(216)	$	635	$	(196)	$	648	$	(229)

1 Certain definite-lived intangible assets are denominated in a foreign currency and subject to translation.

2 In April 2021, the Company acquired the STAINMASTER*®* brand for total consideration of $134 million, which was determined to have an indefinite life.

Note 6: Short-Term Borrowings

Commercial Paper Program

The $1.02 billion five-year unsecured revolving credit agreement entered into in March 2020 (2020 Credit Agreement) and the $1.98 billion five-year unsecured second amended and restated credit agreement (Second Amended and Restated Credit Agreement) entered into in September 2018 support the Company’s commercial paper program. The amounts available to be drawn under the 2020 Credit Agreement and the Second Amended and Restated Credit Agreement are reduced by the amount of borrowings under the commercial paper program. As of October 29, 2021, October 30, 2020, and January 29, 2021, there were no outstanding borrowings under the Company’s commercial paper program, the 2020 Credit Agreement, or the Second Amended and Restated Credit Agreement. Total combined availability under the 2020 Credit Agreement and the Second Amended and Restated Credit Agreement was $3.0 billion as of October 29, 2021.

Other Short-Term Borrowings

In April 2021, the Company entered into a $1.0 billion unsecured 364-day term loan facility (2021 Term Loan), which has a maturity date of April 21, 2022. There was $1.0 billion in outstanding borrowings under the 2021 Term Loan as of October 29, 2021, with a weighted average interest rate of 0.79%.

Note 7: Long-Term Debt - On September 20, 2021, the Company issued $2.0 billion of unsecured fixed rate notes (September 2021 Notes) as follows:


Principal Amount (in millions)		Maturity Date	Interest Rate	Discount (in millions)
$	1,000	September 2028	1.700%	$	6
$	1,000	September 2041	2.800%	$	10


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On March 31, 2021, the Company issued $2.0 billion of unsecured fixed rate notes (March 2021 Notes) as follows:


Principal Amount (in millions)		Maturity Date	Interest Rate	Discount (in millions)
$	1,500	April 2031	2.625%	$	7
$	500	April 2051	3.500%	$	5

Interest on the September 2021 Notes is payable semiannually in arrears in March and September of each year until maturity. Interest on the March 2021 Notes is payable semiannually in arrears in April and October of each year until maturity.

The indentures governing the September 2021 Notes and March 2021 Notes (collectively, the 2021 Notes) contain a provision that allows the Company to redeem these notes at any time, in whole or in part, at specified redemption prices, plus accrued and unpaid interest, if any, up to, but excluding, the date of redemption. The indentures also contain a provision that allows the holders of the notes to require the Company to repurchase all or any part of their notes if a change of control triggering event occurs. If elected under the change of control provisions, the repurchase of the notes will occur at a purchase price of 101% of the principal amount, plus accrued and unpaid interest, if any, on such notes up to, but excluding, the date of purchase. The indentures governing the 2021 Notes do not limit the aggregate principal amount of debt securities that the Company may issue and does not require the Company to maintain specified financial ratios or levels of net worth or liquidity.

Note 8: Derivative Instruments

Derivatives Designated as Hedging Instruments

The Company utilizes forward interest rate swap agreements to hedge its exposure to changes in benchmark interest rates on forecasted debt issuances. The Company also utilizes fixed-to-floating interest rate swap agreements as fair value hedges on certain debt. The notional amounts for the Company’s material derivative instruments are as follows:


(In millions)	October 29, 2021		October 30, 2020		January 29, 2021
Cash flow hedges:
Forward interest rate swap agreement notional amounts	$	2,370	$	638	$	638
Fair value hedges:
Fixed-to-floating interest rate swap agreement notional amounts	$	700	$	—	$	—

See Note 4 for the gross fair values of the Company’s outstanding derivative financial instruments and corresponding fair value classifications. The cash flows related to settlement of the Company’s hedging derivative financial instruments are classified in the consolidated statements of cash flows based on the nature of the underlying hedged items.

The Company accounts for the forward interest rate swap contracts as cash flow hedges, thus the effective portion of gains and losses resulting from changes in fair value are recognized in other comprehensive income/(loss), net of tax effects, in the consolidated statements of comprehensive income and is recognized in earnings when the underlying hedged transaction impacts the consolidated statements of earnings. A summary of the gain/(loss) on forward interest rate swap derivatives designated as cash flow hedges recorded in other comprehensive income/(loss) and earnings for the three and nine months ended October 29, 2021, and October 30, 2020, including its line item in the financial statements, is as follows:


(In millions)	Three Months Ended						Nine Months Ended
October 29, 2021			October 30, 2020			October 29, 2021			October 30, 2020
Other comprehensive income/(loss)
Cash flow hedges – net of tax (expense)/benefit of ($15) million, ($7) million, ($19) million, and $28 million, respectively	$	45		$	22		$	57		$	(85)
Net earnings
Interest – net	$	3		$	3		$	8		$	7

The Company accounts for the fixed-to-floating interest rate swap agreements as fair value hedges using the shortcut method of accounting under which the hedges are assumed to be perfectly effective. Thus, the change in fair value of the derivative


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instruments offsets the change in fair value on the hedged debt, and there is no net impact in the consolidated statements of earnings from the fair value of the derivatives.

Other Derivatives Not Designated as Hedging Instruments

The Company occasionally utilizes derivative financial instruments that aren’t designated under hedge accounting to manage certain business risks. In October 2020, the Company completed cash tender offers to purchase and retire an aggregate principal amount of $3.0 billion in outstanding notes. To hedge the economic risk of changes in value of the 2020 cash tender offers prior to the pricing date, the Company entered into reverse treasury lock derivative contracts with a combined notional amount of $2.0 billion. Upon the pricing of the 2020 cash tender offers, the Company settled the reverse treasury lock derivative contracts and made a payment to its counterparty for $26 million, which is included in loss on extinguishment of debt in the consolidated statements of earnings for the three and nine months ended October 30, 2020. The cash flows related to these contracts are included within financing activities in the accompanying consolidated statements of cash flows*.*

Note 9: Shareholders’ (Deficit)/Equity - The Company has a share repurchase program that is executed through purchases made from time to time either in the open market, which may be made under pre-set trading plans meeting the requirements of Rule 10b5-1(c) of the Securities Exchange Act of 1934, or through private off-market transactions. Shares purchased under the repurchase program are returned to authorized and unissued status. As of October 29, 2021, the Company had $10.7 billion remaining in its share repurchase program.

In February 2021, the Company entered into an Accelerated Share Repurchase (ASR) agreement with a third-party financial institution to repurchase $2.0 billion of the Company’s common stock. In May 2021, the Company entered into a variable notional ASR agreement with a third-party financial institution to repurchase $2.1 billion of the Company’s common stock. In August 2021, the Company entered into a variable notional ASR agreement with a third-party financial institution to repurchase $1.6 billion of the Company’s common stock. The terms of the ASR agreements entered into during the nine months ended October 29, 2021, are as follows (in millions):


Agreement Execution Date	Agreement Settlement Date	ASR Agreement Amount		Minimum Notional Amount 1		Maximum Notional Amount 1		Cash Payment Received at Settlement 1		Initial Shares Delivered at Inception	Additional Shares Delivered at Settlement	Total Shares Delivered
Q1 2021	Q1 2021	$	2,000	$	—	$	—	$	—	10.7	0.2	10.9
Q2 2021	Q2 2021	2,132		1,750		2,500		368		7.2	4.0	11.2
Q3 2021 2	Q3 2021	1,592		1,500		2,000		408		5.9	1.7	7.6

1 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.

2 For the variable notional ASR agreement entered during the third quarter, the cash payment received at settlement of $408 million was reflected as a receivable in other current assets in the consolidated balance sheet as of October 29, 2021, and other financing – net in the consolidated statement of cash flows for the nine months ended October 29, 2021. The balance was received in cash from the third-party financial institution subsequent to the end of the third quarter.

In addition, the Company repurchased shares of its common stock through the open market as follows:


	Three Months Ended			Nine Months Ended
	October 29, 2021			October 29, 2021
(In millions)	Shares	Cost		Shares	Cost
Open market share repurchases	6.0	$	1,266	16.8	$	3,266

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 share-based awards.


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Total shares repurchased for the three and nine months ended October 29, 2021, and October 30, 2020, were as follows:


	Three Months Ended
	October 29, 2021			October 30, 2020
(In millions)	Shares	Cost 1		Shares	Cost
Share repurchase program	13.6	$	2,858	3.6	$	617
Shares withheld from employees	0.1	5		—	4
Total share repurchases	13.7	$	2,863	3.6	$	621

1 Reductions of $2.8 billion and $431 million were recorded to (accumulated deficit)/retained earnings, after capital in excess of par value was depleted, for the three months ended October 29, 2021, and October 30, 2020, respectively.



	Nine Months Ended
	October 29, 2021			October 30, 2020
(In millions)	Shares	Cost 1		Shares	Cost 1
Share repurchase program	46.5	$	8,990	13.2	$	1,557
Shares withheld from employees	0.4	79		0.1	10
Total share repurchases	46.9	$	9,069	13.3	$	1,567

1 Reductions of $8.7 billion and $1.4 billion were recorded to (accumulated deficit)/retained earnings, after capital in excess of par value was depleted, for the nine months ended October 29, 2021 and October 30, 2020, respectively.

Note 10: Earnings Per Share - The Company calculates basic and diluted earnings per common share using the two-class method. The following table reconciles earnings per common share for the three and nine months ended October 29, 2021, and October 30, 2020:


	Three Months Ended				Nine Months Ended
(In millions, except per share data)	October 29, 2021		October 30, 2020		October 29, 2021		October 30, 2020
Basic earnings per common share:
Net earnings	$	1,896	$	692	$	7,235	$	4,857
Less: Net earnings allocable to participating securities	(7)		(3)		(28)		(20)
Net earnings allocable to common shares, basic	$	1,889	$	689	$	7,207	$	4,837
Weighted-average common shares outstanding	690		752		704		753
Basic earnings per common share	$	2.74	$	0.92	$	10.23	$	6.42
Diluted earnings per common share:
Net earnings	$	1,896	$	692	$	7,235	$	4,857
Less: Net earnings allocable to participating securities	(7)		(3)		(28)		(20)
Net earnings allocable to common shares, diluted	$	1,889	$	689	$	7,207	$	4,837
Weighted-average common shares outstanding	690		752		704		753
Dilutive effect of non-participating share-based awards	2		2		2		1
Weighted-average common shares, as adjusted	692		754		706		754
Diluted earnings per common share	$	2.73	$	0.91	$	10.21	$	6.41

Anti-dilutive securities excluded from diluted weighted-average common shares	0.3		0.3		0.2		0.1

Note 11: Income Taxes - The Company’s effective income tax rates were 26.1% and 24.6% for the three and nine months ended October 29, 2021, respectively, and 22.6% and 24.3% for the three and nine months ended October 30, 2020, respectively. The increase in the effective tax rate for the three months ended October 29, 2021, is primarily due to lower projected earnings in fiscal 2021 for the Company’s RONA inc. entity in Canada, which has a full valuation allowance against its deferred tax assets, and a favorable discrete item related to excess tax benefits of stock compensation in the third quarter of 2020.


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Note 12: Supplemental Disclosure

Net interest expense is comprised of the following:


	Three Months Ended				Nine Months Ended
(In millions)	October 29, 2021		October 30, 2020		October 29, 2021		October 30, 2020
Long-term debt	$	210	$	213	$	615	$	610
Lease obligations	7		8		22		25
Short-term borrowings	2		1		3		13

Interest income	(3)		(6)		(10)		(18)
Interest capitalized	(1)		—		(2)		—
Interest on tax uncertainties	2		—		1		—
Other	6		5		21		14
Interest – net	$	223	$	221	$	650	$	644

Supplemental disclosures of cash flow information:


	Nine Months Ended
(In millions)	October 29, 2021		October 30, 2020
Cash paid for interest, net of amount capitalized	$	762	$	750
Cash paid for income taxes – net	$	2,189	$	1,357
Non-cash investing and financing activities:
Leased assets obtained in exchange for new finance lease liabilities	$	76	$	55
Leased assets obtained in exchange for new operating lease liabilities 1	$	670	$	355

Cash dividends declared but not paid	$	551	$	452

1 Excludes $357 million of leases signed but not yet commenced as of October 29, 2021.


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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of Lowe’s Companies, Inc.

Results of Review of Interim Financial Information

We have reviewed the accompanying consolidated balance sheets of Lowe’s Companies, Inc. and subsidiaries (the “Company”) as of October 29, 2021 and October 30, 2020, the related consolidated statements of earnings, comprehensive income, shareholders’ (deficit)/equity, for the fiscal three-month and nine-month periods ended October 29, 2021 and October 30, 2020, and cash flows for the fiscal nine-month periods ended October 29, 2021 and October 30, 2020, and the related notes (collectively referred to as the “interim financial information”). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of January 29, 2021, and the related consolidated statements of earnings, comprehensive income, shareholders’ equity, and cash flows for the fiscal year then ended (not presented herein); and in our report dated March 22, 2021, we expressed an unqualified opinion on those consolidated financial statements and included an explanatory paragraph regarding the adoption of Financial Accounting Standards Board Accounting Standards Update 2016-02, Leases (Topic 842). In our opinion, the information set forth in the accompanying consolidated balance sheet as of January 29, 2021, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Basis for Review Results

This interim financial information is the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our review in accordance with standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

/s/ DELOITTE & TOUCHE LLP

Charlotte, North Carolina

November 24, 2021


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