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 28, 2022				October 29, 2021				October 28, 2022				October 29, 2021
Current Earnings	Amount		% Sales		Amount		% Sales		Amount		% Sales		Amount		% Sales
Net sales	$	23,479	100.00	%	$	22,918	100.00	%	$	74,614	100.00	%	$	74,911	100.00	%
Cost of sales	15,661		66.70		15,331		66.90		49,614		66.49		49,882		66.59
Gross margin	7,818		33.30		7,587		33.10		25,000		33.51		25,029		33.41
Expenses:
Selling, general and administrative	6,443		27.45		4,373		19.08		15,200		20.38		13,559		18.10
Depreciation and amortization	451		1.92		425		1.85		1,345		1.80		1,226		1.64
Operating income	924		3.93		2,789		12.17		8,455		11.33		10,244		13.67
Interest – net	295		1.25		223		0.97		802		1.07		650		0.86

Pre-tax earnings	629		2.68		2,566		11.20		7,653		10.26		9,594		12.81
Income tax provision	475		2.02		670		2.93		2,174		2.92		2,359		3.15
Net earnings	$	154	0.66	%	$	1,896	8.27	%	$	5,479	7.34	%	$	7,235	9.66	%


Weighted average common shares outstanding – basic	618				690				638				704
Basic earnings per common share	$	0.25			$	2.74			$	8.56			$	10.23
Weighted average common shares outstanding – diluted	620				692				640				706
Diluted earnings per common share	$	0.25			$	2.73			$	8.53			$	10.21

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 28, 2022				October 29, 2021				October 28, 2022				October 29, 2021
	Amount		% Sales		Amount		% Sales		Amount		% Sales		Amount		% Sales
Net earnings	$	154	0.66	%	$	1,896	8.27	%	$	5,479	7.34	%	$	7,235	9.66	%
Foreign currency translation adjustments – net of tax	(168)		(0.72)		19		0.08		(173)		(0.23)		78		0.10
Cash flow hedges – net of tax	170		0.72		41		0.18		352		0.47		56		0.07
Other	1		—		(1)		—		(3)		—		(4)		—
Other comprehensive income	3		—		59		0.26		176		0.24		130		0.17
Comprehensive income	$	157	0.66	%	$	1,955	8.53	%	$	5,655	7.58	%	$	7,365	9.83	%

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 28, 2022		October 29, 2021		January 28, 2022
Assets
Current assets:
Cash and cash equivalents	$	3,192	$	6,121	$	1,133
Short-term investments	464		552		271
Merchandise inventory – net	19,817		16,685		17,605
Other current assets	1,518		1,491		1,051
Total current assets	24,991		24,849		20,060
Property, less accumulated depreciation	17,275		18,925		19,071
Operating lease right-of-use assets	3,512		4,161		4,108
Long-term investments	63		213		199
Deferred income taxes – net	301		220		164
Other assets	831		1,032		1,038
Total assets	$	46,973	$	49,400	$	44,640

Liabilities and shareholders' deficit
Current liabilities:
Short-term borrowings	$	—	$	1,000	$	—
Current maturities of long-term debt	609		1,352		868
Current operating lease liabilities	651		573		636
Accounts payable	12,249		11,334		11,354
Accrued compensation and employee benefits	1,405		1,353		1,561
Deferred revenue	1,736		1,954		1,914
Other current liabilities	4,226		3,268		3,335
Total current liabilities	20,876		20,834		19,668
Long-term debt, excluding current maturities	32,904		23,881		23,859
Noncurrent operating lease liabilities	4,048		4,136		4,021
Deferred revenue – Lowe's protection plans	1,184		1,119		1,127
Other liabilities	829		1,006		781
Total liabilities	59,841		50,976		49,456

Shareholders' deficit:
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 – 611 million, 686 million, and 670 million shares, respectively	305		343		335
Capital in excess of par value	—		—		—
Accumulated deficit	(13,313)		(1,913)		(5,115)
Accumulated other comprehensive income/(loss)	140		(6)		(36)
Total shareholders' deficit	(12,868)		(1,576)		(4,816)
Total liabilities and shareholders' deficit	$	46,973	$	49,400	$	44,640

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


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Lowe’s Companies, Inc.

Consolidated Statements of Shareholders’ Deficit (Unaudited)

In Millions


	Three Months Ended October 28, 2022
	Common Stock			Capital in Excess of Par Value		Accumulated Deficit		Accumulated Other Comprehensive Income		Total
	Shares	Amount
Balance July 29, 2022	631	$	316	$	—	$	(8,895)	$	137	$	(8,442)

Net earnings	—	—		—		154		—		154
Other comprehensive income	—	—		—		—		3		3
Cash dividends declared, $1.05 per share	—	—		—		(643)		—		(643)
Share-based payment expense	—	—		51		—		—		51
Repurchases of common stock	(20)	(11)		(64)		(3,929)		—		(4,004)
Issuance of common stock under share-based payment plans	—	—		13		—		—		13
Balance October 28, 2022	611	$	305	$	—	$	(13,313)	$	140	$	(12,868)

	Nine Months Ended October 28, 2022
	Common Stock			Capital in Excess of Par Value		Accumulated Deficit		Accumulated Other Comprehensive (Loss)/Income		Total
	Shares	Amount
Balance January 28, 2022	670	$	335	$	—	$	(5,115)	$	(36)	$	(4,816)

Net earnings	—	—		—		5,479		—		5,479
Other comprehensive income	—	—		—		—		176		176
Cash dividends declared, $2.90 per share	—	—		—		(1,833)		—		(1,833)
Share-based payment expense	—	—		161		—		—		161
Repurchases of common stock	(61)	(31)		(247)		(11,844)		—		(12,122)
Issuance of common stock under share-based payment plans	2	1		86		—		—		87
Balance October 28, 2022	611	$	305	$	—	$	(13,313)	$	140	$	(12,868)


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	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)

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 28, 2022		October 29, 2021
Cash flows from operating activities:
Net earnings	$	5,479	$	7,235
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	1,509		1,388
Noncash lease expense	403		383
Deferred income taxes	(252)		96
Asset impairment and loss on property – net	2,113		25

Share-based payment expense	165		169
Changes in operating assets and liabilities:
Merchandise inventory – net	(2,308)		(446)
Other operating assets	20		(130)
Accounts payable	921		436
Deferred revenue	(117)		444
Other operating liabilities	205		(421)
Net cash provided by operating activities	8,138		9,179

Cash flows from investing activities:
Purchases of investments	(659)		(2,325)
Proceeds from sale/maturity of investments	597		2,261
Capital expenditures	(1,090)		(1,256)
Proceeds from sale of property and other long-term assets	37		94

Other – net	—		(134)
Net cash used in investing activities	(1,115)		(1,360)

Cash flows from financing activities:

Net proceeds from issuance of debt	9,667		4,972
Repayment of debt	(831)		(595)
Proceeds from issuance of common stock under share-based payment plans	86		72
Cash dividend payments	(1,727)		(1,433)
Repurchases of common stock	(12,127)		(8,999)
Other – net	—		(408)
Net cash used in financing activities	(4,932)		(6,391)

Effect of exchange rate changes on cash	(32)		3

Net increase in cash and cash equivalents	2,059		1,431
Cash and cash equivalents, beginning of period	1,133		4,690
Cash and cash equivalents, end of period	$	3,192	$	6,121

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 consolidated balance sheets as of October 28, 2022, and October 29, 2021, and the statements of earnings, comprehensive income, and shareholders’ deficit for the three and nine months ended October 28, 2022, and October 29, 2021, and cash flows for the nine months ended October 28, 2022, and October 29, 2021. The January 28, 2022, 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 28, 2022 (the Annual Report). The financial results for the interim periods may not be indicative of the financial results for the entire fiscal year.

Canadian Retail Business Transaction

On November 3, 2022, the Company entered into a definitive agreement to sell its Canadian retail business to Sycamore Partners for $400 million in cash, and certain additional deferred consideration. The Canadian retail business operates or services the corporate and independent dealer-owned stores in a number of complementary formats under different banners, which include RONA, Lowe’s Canada, Réno-Dépôt, and Dick’s Lumber. The decision to sell the business was made as part of the Company’s strategy to simplify its business model and focus on the U.S. home improvement business.

During the three months ended October 28, 2022, the Company recorded $2.1 billion of long-lived asset impairment within selling, general and administrative expenses (SG&A) in the consolidated statements of earnings, which reflects the full carrying value of the long-lived assets of the Canadian retail business. The transaction is expected to close in early calendar 2023, subject to customary closing conditions and regulatory approvals, at which point the Company expects additional deal-related transaction costs of approximately $300 million, inclusive of loss on sale and other closing costs. This amount is based on current estimates and is subject to change upon closing.

Accounting Pronouncements Not Yet Adopted

In September 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2022-04, Liabilities – Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations. The ASU requires disclosure about an entity’s use of supplier finance programs, including the key terms of the program, amount of obligations outstanding at the end of the reporting period, and a rollforward of activity within the program during the period. The ASU is effective for the Company in fiscal 2023, except for the disclosure of rollforward information, which is effective for fiscal 2024, with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statement disclosures.

Recent accounting pronouncements pending adoption not discussed in this Form 10-Q or in the 2021 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.


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


(In millions)	Three Months Ended						Nine Months Ended
October 28, 2022			October 29, 2021			October 28, 2022			October 29, 2021
Products	$	22,511		$	21,755		$	71,872		$	71,655
Services	568			597			1,692			1,805
Other	400			566			1,050			1,451
Net sales	$	23,479		$	22,918		$	74,614		$	74,911

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 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 28, 2022		October 29, 2021		January 28, 2022
Anticipated sales returns	Other current liabilities	$	302	$	315	$	245
Right of return assets	Other current assets	183		191		151

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 28, 2022		October 29, 2021		January 28, 2022
Retail deferred revenue	$	1,168	$	1,446	$	1,285
Stored-value cards deferred revenue	568		508		629
Deferred revenue	$	1,736	$	1,954	$	1,914

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 28, 2022						October 29, 2021						January 28, 2022
Deferred revenue - Lowe’s protection plans			$	1,184					$	1,119					$	1,127


	Three Months Ended				Nine Months Ended
(In millions)	October 28, 2022		October 29, 2021		October 28, 2022		October 29, 2021
Lowe’s protection plans deferred revenue recognized into sales	$	133	$	123	$	389	$	359
Lowe’s protection plans claim expenses	40		45		134		142


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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 28, 2022				October 29, 2021				October 28, 2022				October 29, 2021
(In millions)	Net Sales		%		Net Sales		%		Net Sales		%		Net Sales		%
Home Décor 1	$	8,629	36.8	%	$	8,586	37.5	%	$	26,000	34.8	%	$	26,051	34.8	%
Building Products 2	8,186		34.9		7,608		33.2		25,166		33.7		24,239		32.4
Hardlines 3	5,967		25.4		6,050		26.4		21,553		28.9		22,840		30.5
Other	697		2.9		674		2.9		1,895		2.6		1,781		2.3
Total	$	23,479	100.0	%	$	22,918	100.0	%	$	74,614	100.0	%	$	74,911	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 28, 2022			October 29, 2021			October 28, 2022			October 29, 2021
United States	$	22,280		$	21,504		$	70,524		$	70,092
Canada	1,199			1,414			4,090			4,819
Net Sales	$	23,479		$	22,918		$	74,614		$	74,911

Note 3: 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 28, 2022		October 29, 2021		January 28, 2022
Short-term restricted investments	$	464	$	552	$	271
Long-term restricted investments	63		213		199
Total restricted investments	$	527	$	765	$	470

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 28, 2022, October 29, 2021, and January 28, 2022:


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			Fair Value Measurements at
(In millions)	Classification	Measurement Level	October 28, 2022		October 29, 2021		January 28, 2022


Available-for-sale debt securities:
U.S. Treasury securities	Short-term investments	Level 1	$	216	$	134	$	75
Money market funds	Short-term investments	Level 1	133		140		120
Corporate debt securities	Short-term investments	Level 2	51		45		8
Commercial paper	Short-term investments	Level 2	43		102		30
Foreign government debt securities	Short-term investments	Level 2	14		21		14

Certificates of deposit	Short-term investments	Level 1	7		100		14
Municipal obligations	Short-term investments	Level 2	—		10		10
U.S. Treasury securities	Long-term investments	Level 1	31		129		132
Corporate debt securities	Long-term investments	Level 2	30		66		50
Municipal obligations	Long-term investments	Level 2	2		3		3

Foreign government debt securities	Long-term investments	Level 2	—		15		14


Derivative instruments:
Forward interest rate swaps	Other current assets	Level 2	$	303	$	34	$	66

Forward interest rate swaps	Other assets	Level 2	—		20		48

Fixed-to-floating interest rate swaps	Other liabilities	Level 2	98		7		21

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 28, 2022, the Company’s only significant assets or liabilities measured at fair value on a nonrecurring basis subsequent to their initial recognition were certain long-lived assets as further described below.

The Company reviews the carrying amounts of long-lived assets whenever certain events or changes in circumstances indicate that the carrying amounts may not be recoverable. When evaluating long-lived assets for impairment, the asset group is generally at an individual location level, as that is the lowest level for which cash flows are identifiable. Cash flows for individual locations do not include an allocation of corporate overhead. The Company evaluates long-lived assets for triggering events on a quarterly basis to determine when assets may not be recoverable. An impairment loss is recognized when the carrying amount of the asset (disposal) group is not recoverable and exceeds its fair value. The Company estimates the fair values of assets subject to long-lived asset impairment based on the Company’s own judgments about the assumptions that market participants would use in pricing the assets and on observable market data, when available. The Company classifies these fair value measurements as Level 3.

During the three months ended October 28, 2022, the Company determined it was more likely than not that the assets within the Canadian retail business would be sold or otherwise disposed of significantly before the end of their previously estimated useful lives, and these assets were evaluated for recoverability. Based on the proposed transaction, the Company reconsidered the appropriate asset grouping of long-lived assets attributable to the Company’s Canadian locations given the change in the Company’s expectations regarding use and disposition of its associated assets. The Company determined the total Canadian retail business (Canada asset group) to be the appropriate asset group for which the long-lived assets should be evaluated, as this represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. The carrying value of the Canada asset group includes substantially all assets and liabilities of the Canadian retail business, including accounts receivable, inventory, property, operating and finance lease right-of-use assets, definite-lived intangible assets, operating liabilities including accounts payable and accrued compensation, and operating and finance lease liabilities. A market approach of orderly transaction under current market conditions was used in determining the


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estimated fair value of the Canada asset group, which was based on the proposed transaction price, inclusive of deferred consideration. The estimated fair value of the Canada asset group was determined to be $421 million. As a result, the Company recorded $2.1 billion of long-lived asset impairment within SG&A in the consolidated statements of earnings, which reflects the full carrying value of the long-lived assets of the Canada asset group.

The following table presents the Company’s impairment losses resulting from non-financial assets measured at estimated fair value on a nonrecurring basis included in earnings for the three and nine months ended October 28, 2022:


	Impairment Losses
	Three Months Ended		Nine Months Ended
(In millions)	October 28, 2022			October 28, 2022
Assets-held-for-use:
Canadian retail business:
Property, less accumulated depreciation	$	1,258		$	1,258
Operating lease right-of-use assets	621			621
Other assets	182			182
Other	7			35


Total	$	2,068		$	2,096

During the three and nine months ended October 29, 2021, 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, short-term borrowings, accounts payable, and long-term debt and are reflected in the financial statements at cost. With the exception of long-term debt, cost approximates fair value for these items due to their short-term nature. As further described in Note 6, certain long-term debt is associated with a fair value hedge and the changes in fair value of the hedged debt is included in the carrying value of long-term debt on the consolidated balance sheets. 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 28, 2022				October 29, 2021				January 28, 2022
(In millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value
Unsecured notes (Level 1)	$	32,886	$	27,879	$	24,567	$	27,101	$	24,056	$	25,425
Mortgage notes (Level 2)	4		4		5		5		5		5
Long-term debt (excluding finance lease obligations)	$	32,890	$	27,883	$	24,572	$	27,106	$	24,061	$	25,430

Note 5: Debt

Commercial Paper Program

The Company’s commercial paper program is supported by the $2.0 billion five-year unsecured revolving credit agreement entered into in March 2020, and amended in December 2021, (2020 Credit Agreement) and the $2.0 billion five-year unsecured third amended and restated credit agreement (Third Amended and Restated Credit Agreement) entered into in December 2021. The amounts available to be drawn under the 2020 Credit Agreement and the Third Amended and Restated Credit Agreement are reduced by the amount of borrowings under the commercial paper program. As of October 28, 2022, October 29, 2021, and January 28, 2022, there were no outstanding borrowings under the Company’s commercial paper program, the 2020 Credit Agreement, or the Third Amended and Restated Credit Agreement. Total combined availability under the 2020 Credit Agreement and the Third Amended and Restated Credit Agreement was $4.0 billion as of October 28, 2022.


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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 was scheduled to mature in April 2022, but was repaid early in January 2022. There was $1.0 billion in outstanding borrowings under the 2021 Term Loan as of October 29, 2021, with an interest rate of 0.79%.

Long-Term Debt

On September 8, 2022, the Company issued $4.8 billion of unsecured fixed rate notes (September 2022 Notes) as follows:


Principal Amount (in millions)		Maturity Date	Interest Rate	Discount (in millions)
$	1,000	September 2025	4.400%	$	3
$	1,250	April 2033	5.000%	$	9
$	1,500	April 2053	5.625%	$	18
$	1,000	September 2062	5.800%	$	16

On March 24, 2022, the Company issued $5.0 billion of unsecured fixed rate notes (March 2022 Notes) as follows:


Principal Amount (in millions)		Maturity Date	Interest Rate	Discount (in millions)
$	750	April 2027	3.350%	$	3
$	1,500	April 2032	3.750%	$	7
$	1,500	April 2052	4.250%	$	14
$	1,250	April 2062	4.450%	$	12

Interest on the September 2022 Notes and March 2022 Notes (collectively, the 2022 Notes) with April maturity dates is payable semiannually in arrears in April and October of each year until maturity. Interest on the September 2022 Notes with September maturity dates is payable semiannually in arrears in March and September of each year until maturity.

The indentures governing the 2022 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 2022 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 6: Derivative 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 28, 2022		October 29, 2021		January 28, 2022
Cash flow hedges:
Forward interest rate swap agreement notional amounts	$	1,210	$	2,370	$	2,560
Fair value hedges:
Fixed-to-floating interest rate swap agreement notional amounts	$	850	$	700	$	850

See Note 4 for the gross fair values of the Company’s material 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.


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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, net of tax effects, in the consolidated statements of comprehensive income and is amortized to interest expense over the term of the respective debt. In connection with the issuance of our March 2022 Notes, we settled forward interest rate swap contracts with a combined notional amount of $1.5 billion and received a payment of $143 million. In connection with the issuance of our September 2022 Notes, we settled forward interest rate swap contracts with a combined notional amount of $1.3 billion and received a payment of $136 million. The gain/(loss) from forward interest rate swap agreements, both settled and outstanding, designated as cash flow hedges recorded in other comprehensive income and net earnings for the three and nine months ended October 28, 2022, and October 29, 2021, including its line item in the financial statements, is as follows:


(In millions)	Three Months Ended						Nine Months Ended
October 28, 2022			October 29, 2021			October 28, 2022			October 29, 2021
Other comprehensive income:
Cash flow hedges – net of tax expense of $55 million, $15 million, $116 million, and $19 million, respectively	$	166		$	45		$	350		$	57
Net earnings:
Interest – net	$	1		$	(3)		$	—		$	(8)

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 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.

Note 7: Shareholders’ Deficit

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 28, 2022, the Company had $7.7 billion remaining in its share repurchase program.

During the nine months ended October 28, 2022, the Company entered into Accelerated Share Repurchase (ASR) agreements with third-party financial institutions to repurchase a total of 24.6 million shares of the Company’s common stock for $4.8 billion. The terms of each ASR agreement entered into during the nine months ended October 28, 2022, are as follows (in millions):


Agreement Execution Date	Agreement Settlement Date	ASR Agreement Amount		Initial Shares Delivered at Inception	Additional Shares Delivered at Settlement	Total Shares Delivered
Q1 2022	Q1 2022	$	750	2.8	0.6	3.4
Q2 2022	Q2 2022	1,750		7.5	2.1	9.6
Q3 2022	Q3 2022	2,250		8.3	3.3	11.6

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


	Three Months Ended			Nine Months Ended
	October 28, 2022			October 28, 2022
(In millions)	Shares	Cost		Shares	Cost
Open market share repurchases	8.9	$	1,750	36.0	$	7,250

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 28, 2022, and October 29, 2021, were as follows:


	Three Months Ended
	October 28, 2022			October 29, 2021
(In millions)	Shares	Cost		Shares	Cost
Share repurchase program	20.5	$	4,000	13.6	$	2,858
Shares withheld from employees	—	3		0.1	5
Total share repurchases	20.5	$	4,003	13.7	$	2,863



	Nine Months Ended
	October 28, 2022			October 29, 2021
(In millions)	Shares	Cost		Shares	Cost
Share repurchase program	60.6	$	12,000	46.5	$	8,990
Shares withheld from employees	0.6	122		0.4	79
Total share repurchases	61.2	$	12,122	46.9	$	9,069

Note 8: 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 28, 2022, and October 29, 2021:


	Three Months Ended				Nine Months Ended
(In millions, except per share data)	October 28, 2022		October 29, 2021		October 28, 2022		October 29, 2021
Basic earnings per common share:
Net earnings	$	154	$	1,896	$	5,479	$	7,235
Less: Net earnings allocable to participating securities	(2)		(7)		(17)		(28)
Net earnings allocable to common shares, basic	$	152	$	1,889	$	5,462	$	7,207
Weighted-average common shares outstanding	618		690		638		704
Basic earnings per common share	$	0.25	$	2.74	$	8.56	$	10.23
Diluted earnings per common share:
Net earnings	$	154	$	1,896	$	5,479	$	7,235
Less: Net earnings allocable to participating securities	(2)		(7)		(17)		(28)
Net earnings allocable to common shares, diluted	$	152	$	1,889	$	5,462	$	7,207
Weighted-average common shares outstanding	618		690		638		704
Dilutive effect of non-participating share-based awards	2		2		2		2
Weighted-average common shares, as adjusted	620		692		640		706
Diluted earnings per common share	$	0.25	$	2.73	$	8.53	$	10.21

Anti-dilutive securities excluded from diluted weighted-average common shares	0.6		0.3		0.5		0.2

Note 9: Income Taxes - The Company’s effective income tax rates were 75.5% and 28.4% for the three and nine months ended October 28, 2022, respectively, and 26.1% and 24.6% for the three and nine months ended October 29, 2021, respectively. The increase in the effective tax rate for the three and nine months ended October 28, 2022, is primarily due to an increase in the valuation allowance for deferred taxes related to the long-lived asset impairment associated with RONA inc.

Enactment of the Inflation Reduction Act

On August 16, 2022, the U.S. government enacted the Inflation Reduction Act (IRA) which, among other changes, created a new 15% corporate alternative minimum tax based on adjusted financial statement income, which is effective for the Company beginning February 4, 2023, and imposes a 1% excise tax on net share repurchases after December 31, 2022. The Company does not expect the corporate alternative minimum tax will have a significant impact on the Company’s consolidated financial statements. Any excise tax incurred on share repurchases will be recognized as part of the cost basis of the shares acquired and not reported as part of income tax provision in the consolidated statements of earnings.


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Income Tax Relief

On October 5, 2022, the Internal Revenue Service announced that businesses in certain states, including North Carolina, affected by Hurricane Ian would receive tax relief by postponing certain tax-payment deadlines. Under this relief, the Company’s quarterly federal estimated income tax payments originally due by October 15, 2022 and January 15, 2023, can be deferred until February 15, 2023. As of October 28, 2022, the Company deferred $600 million of federal income taxes payable originally due on October 15, 2022, which is included in other current liabilities in the consolidated balance sheet.

Note 10: Supplemental Disclosure

Net interest expense is comprised of the following:


	Three Months Ended				Nine Months Ended
(In millions)	October 28, 2022		October 29, 2021		October 28, 2022		October 29, 2021
Long-term debt	$	295	$	210	$	782	$	615
Lease obligations	7		7		21		22
Short-term borrowings	4		2		5		3

Interest income	(14)		(3)		(21)		(10)
Interest capitalized	(1)		(1)		(3)		(2)
Interest on tax uncertainties	—		2		3		1
Other	4		6		15		21
Interest – net	$	295	$	223	$	802	$	650

Supplemental disclosures of cash flow information:


	Nine Months Ended
(In millions)	October 28, 2022		October 29, 2021
Cash paid for interest, net of amount capitalized	$	909	$	762
Cash paid for income taxes – net	1,540		2,189
Non-cash investing and financing activities:
Leased assets obtained in exchange for new finance lease liabilities	$	46	$	76
Leased assets obtained in exchange for new operating lease liabilities 1	465		670

Cash dividends declared but not paid	643		551

1 Excludes $819 million of leases signed but not yet commenced as of October 28, 2022.


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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 28, 2022, and October 29, 2021, the related consolidated statements of earnings, comprehensive income, and shareholders’ deficit, for the fiscal three-month and nine-month periods ended October 28, 2022, and October 29, 2021, and cash flows for the fiscal nine-month periods ended October 28, 2022, and October 29, 2021, 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 28, 2022, and the related consolidated statements of earnings, comprehensive income, shareholders’ deficit, and cash flows for the fiscal year then ended (not presented herein); and in our report dated March 21, 2022, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of January 28, 2022, 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 23, 2022


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