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								Six Months Ended
	August 4, 2023				July 29, 2022				August 4, 2023				July 29, 2022
Current Earnings	Amount		% Sales		Amount		% Sales		Amount		% Sales		Amount		% Sales
Net sales	$	24,956	100.00	%	$	27,476	100.00	%	$	47,304	100.00	%	$	51,135	100.00	%
Cost of sales	16,557		66.34		18,343		66.76		31,378		66.33		33,952		66.40
Gross margin	8,399		33.66		9,133		33.24		15,926		33.67		17,183		33.60
Expenses:
Selling, general and administrative	4,086		16.38		4,455		16.22		7,912		16.73		8,758		17.12
Depreciation and amortization	427		1.71		449		1.63		841		1.78		894		1.75
Operating income	3,886		15.57		4,229		15.39		7,173		15.16		7,531		14.73
Interest – net	341		1.36		264		0.96		689		1.45		507		0.99

Pre-tax earnings	3,545		14.21		3,965		14.43		6,484		13.71		7,024		13.74
Income tax provision	872		3.50		973		3.54		1,551		3.28		1,699		3.33
Net earnings	$	2,673	10.71	%	$	2,992	10.89	%	$	4,933	10.43	%	$	5,325	10.41	%


Weighted average common shares outstanding – basic	584				638				590				649
Basic earnings per common share	$	4.56			$	4.68			$	8.34			$	8.18
Weighted average common shares outstanding – diluted	585				639				591				651
Diluted earnings per common share	$	4.56			$	4.67			$	8.32			$	8.16

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								Six Months Ended
	August 4, 2023				July 29, 2022				August 4, 2023				July 29, 2022
	Amount		% Sales		Amount		% Sales		Amount		% Sales		Amount		% Sales
Net earnings	$	2,673	10.71	%	$	2,992	10.89	%	$	4,933	10.43	%	$	5,325	10.41	%
Foreign currency translation adjustments – net of tax	5		0.01		12		0.05		5		0.01		(5)		(0.02)
Cash flow hedges – net of tax	(3)		(0.01)		(38)		(0.14)		(6)		(0.02)		181		0.36
Other	—		—		(1)		—		—		—		(3)		0.01
Other comprehensive income/(loss)	2		—		(27)		(0.09)		(1)		(0.01)		173		0.35
Comprehensive income	$	2,675	10.71	%	$	2,965	10.80	%	$	4,932	10.42	%	$	5,498	10.76	%

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


	August 4, 2023		July 29, 2022		February 3, 2023
Assets
Current assets:
Cash and cash equivalents	$	3,494	$	1,482	$	1,348
Short-term investments	374		450		384
Merchandise inventory – net	17,422		19,329		18,532
Other current assets	946		1,406		1,178
Total current assets	22,236		22,667		21,442
Property, less accumulated depreciation	17,373		18,713		17,567
Operating lease right-of-use assets	3,650		4,158		3,518
Long-term investments	182		56		121
Deferred income taxes – net	230		104		250
Other assets	850		1,027		810
Total assets	$	44,521	$	46,725	$	43,708

Liabilities and shareholders' deficit
Current liabilities:
Short-term borrowings	$	—	$	—	$	499
Current maturities of long-term debt	592		121		585
Current operating lease liabilities	534		652		522
Accounts payable	10,333		12,631		10,524
Accrued compensation and employee benefits	1,026		1,227		1,109
Deferred revenue	1,566		1,968		1,603
Income taxes payable	91		330		1,181
Other current liabilities	3,470		3,437		3,488
Total current liabilities	17,612		20,366		19,511
Long-term debt, excluding current maturities	35,839		28,763		32,876
Noncurrent operating lease liabilities	3,611		4,069		3,512
Deferred revenue – Lowe's protection plans	1,231		1,169		1,201
Other liabilities	960		800		862
Total liabilities	59,253		55,167		57,962

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 – 582 million, 631 million, and 601 million shares, respectively	291		316		301
Capital in excess of par value	12		—		—
Accumulated deficit	(15,341)		(8,895)		(14,862)
Accumulated other comprehensive income	306		137		307
Total shareholders' deficit	(14,732)		(8,442)		(14,254)
Total liabilities and shareholders' deficit	$	44,521	$	46,725	$	43,708

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 August 4, 2023
	Common Stock			Capital in Excess of Par Value		Accumulated Deficit		Accumulated Other Comprehensive Income		Total
	Shares	Amount
Balance May 5, 2023	592	$	296	$	—	$	(15,310)	$	304	$	(14,710)

Net earnings	—	—		—		2,673		—		2,673
Other comprehensive income	—	—		—		—		2		2
Cash dividends declared, $1.10 per share	—	—		—		(641)		—		(641)
Share-based payment expense	—	—		58		—		—		58
Repurchases of common stock	(10)	(5)		(117)		(2,063)		—		(2,185)
Issuance of common stock under share-based payment plans	—	—		71		—		—		71
Balance August 4, 2023	582	$	291	$	12	$	(15,341)	$	306	$	(14,732)

	Six Months Ended August 4, 2023
	Common Stock			Capital in Excess of Par Value		Accumulated Deficit		Accumulated Other Comprehensive Income		Total
	Shares	Amount
Balance February 3, 2023	601	$	301	$	—	$	(14,862)	$	307	$	(14,254)

Net earnings	—	—		—		4,933		—		4,933
Other comprehensive loss	—	—		—		—		(1)		(1)
Cash dividends declared, $2.15 per share	—	—		—		(1,266)		—		(1,266)
Share-based payment expense	—	—		113		—		—		113
Repurchases of common stock	(21)	(11)		(176)		(4,146)		—		(4,333)
Issuance of common stock under share-based payment plans	2	1		75		—		—		76
Balance August 4, 2023	582	$	291	$	12	$	(15,341)	$	306	$	(14,732)


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	Three Months Ended July 29, 2022
	Common Stock			Capital in Excess of Par Value		Accumulated Deficit		Accumulated Other Comprehensive Income		Total
	Shares	Amount
Balance April 29, 2022	652	$	326	$	—	$	(7,367)	$	164	$	(6,877)
Net earnings	—	—		—		2,992		—		2,992
Other comprehensive loss	—	—		—		—		(27)		(27)
Cash dividends declared, $1.05 per share	—	—		—		(666)		—		(666)
Share-based payment expense	—	—		65		—		—		65
Repurchases of common stock	(22)	(11)		(137)		(3,854)		—		(4,002)
Issuance of common stock under share-based payment plans	1	1		72		—		—		73
Balance July 29, 2022	631	$	316	$	—	$	(8,895)	$	137	$	(8,442)

	Six Months Ended July 29, 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	—	—		—		5,325		—		5,325
Other comprehensive income	—	—		—		—		173		173
Cash dividends declared, $1.85 per share	—	—		—		(1,190)		—		(1,190)
Share-based payment expense	—	—		110		—		—		110
Repurchases of common stock	(41)	(20)		(183)		(7,915)		—		(8,118)
Issuance of common stock under share-based payment plans	2	1		73		—		—		74
Balance July 29, 2022	631	$	316	$	—	$	(8,895)	$	137	$	(8,442)

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


	Six Months Ended
	August 4, 2023		July 29, 2022
Cash flows from operating activities:
Net earnings	$	4,933	$	5,325
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	941		1,007
Noncash lease expense	241		273
Deferred income taxes	23		—
Asset impairment and loss on property – net	23		32

Gain on sale of business	(67)		—
Share-based payment expense	113		110
Changes in operating assets and liabilities:
Merchandise inventory – net	1,109		(1,728)
Other operating assets	224		(120)
Accounts payable	(191)		1,279
Deferred revenue	(6)		97
Other operating liabilities	(1,375)		(263)
Net cash provided by operating activities	5,968		6,012

Cash flows from investing activities:
Purchases of investments	(878)		(330)
Proceeds from sale/maturity of investments	811		290
Capital expenditures	(765)		(687)
Proceeds from sale of property and other long-term assets	17		19

Proceeds from sale of business	123		—
Other – net	(23)		(1)
Net cash used in investing activities	(715)		(709)

Cash flows from financing activities:
Net change in commercial paper	(499)		—
Net proceeds from issuance of debt	2,983		4,964
Repayment of debt	(45)		(799)
Proceeds from issuance of common stock under share-based payment plans	76		72
Cash dividend payments	(1,257)		(1,061)
Repurchases of common stock	(4,356)		(8,128)
Other – net	(9)		(2)
Net cash used in financing activities	(3,107)		(4,954)



Net increase in cash and cash equivalents	2,146		349
Cash and cash equivalents, beginning of period	1,348		1,133
Cash and cash equivalents, end of period	$	3,494	$	1,482

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 August 4, 2023, and July 29, 2022, and the statements of earnings, comprehensive income, and shareholders’ deficit for the three and six months ended August 4, 2023, and July 29, 2022, and cash flows for the six months ended August 4, 2023, and July 29, 2022. The February 3, 2023, 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 February 3, 2023 (the Annual Report). The financial results for the interim periods may not be indicative of the financial results for the entire fiscal year.

Accounting Pronouncements Not Yet Adopted

Recent accounting pronouncements pending adoption not discussed in this Form 10-Q or in the 2022 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						Six Months Ended
August 4, 2023			July 29, 2022			August 4, 2023			July 29, 2022
Products	$	24,035		$	26,477		$	45,605		$	49,360
Services	578			588			1,107			1,125
Other	343			411			592			650
Net sales	$	24,956		$	27,476		$	47,304		$	51,135

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	August 4, 2023		July 29, 2022		February 3, 2023
Anticipated sales returns	Other current liabilities	$	256	$	302	$	234
Right of return assets	Other current assets	149		183		139

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


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returned merchandise credits that have not yet been redeemed. Deferred revenue for retail and stored-value cards are as follows:


(In millions)	August 4, 2023		July 29, 2022		February 3, 2023
Retail deferred revenue	$	1,006	$	1,397	$	933
Stored-value cards deferred revenue	560		571		670
Deferred revenue	$	1,566	$	1,968	$	1,603

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)			August 4, 2023						July 29, 2022						February 3, 2023
Deferred revenue - Lowe’s protection plans			$	1,231					$	1,169					$	1,201


	Three Months Ended				Six Months Ended
(In millions)	August 4, 2023		July 29, 2022		August 4, 2023		July 29, 2022
Lowe’s protection plans deferred revenue recognized into sales	$	136	$	129	$	272	$	256
Lowe’s protection plans claim expenses	54		48		107		93

Disaggregation of Revenues

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


	Three Months Ended								Six Months Ended
	August 4, 2023				July 29, 2022				August 4, 2023				July 29, 2022
(In millions)	Net Sales		%		Net Sales		%		Net Sales		%		Net Sales		%
Home Décor 1	$	8,725	35.0	%	$	9,521	34.7	%	$	16,962	35.9	%	$	18,209	35.6	%
Hardlines 2	8,348		33.5		8,900		32.4		15,165		32.1		15,599		30.5
Building Products 3	7,245		29.0		8,347		30.4		14,032		29.7		16,116		31.5
Other	638		2.5		708		2.5		1,145		2.3		1,211		2.4
Total	$	24,956	100.0	%	$	27,476	100.0	%	$	47,304	100.0	%	$	51,135	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 Hardlines includes the following product categories: Hardware, Lawn & Garden, Seasonal & Outdoor Living, and Tools.

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

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


(In millions)	Three Months Ended						Six Months Ended
August 4, 2023			July 29, 2022			August 4, 2023			July 29, 2022
United States	$	24,956		$	25,817		$	47,304		$	48,243
Canada1	—			1,659			—			2,892
Net Sales	$	24,956		$	27,476		$	47,304		$	51,135

1 The Canadian retail business was sold on February 3, 2023.


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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)	August 4, 2023		July 29, 2022		February 3, 2023
Short-term restricted investments	$	374	$	450	$	384
Long-term restricted investments	182		56		100
Total restricted investments	$	556	$	506	$	484

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 August 4, 2023, July 29, 2022, and February 3, 2023:


			Fair Value Measurements at
(In millions)	Classification	Measurement Level	August 4, 2023		July 29, 2022		February 3, 2023
Available-for-sale debt securities:
U.S. Treasury securities	Short-term investments	Level 1	$	138	$	214	$	157
Money market funds	Short-term investments	Level 1	85		119		43
Certificates of deposit	Short-term investments	Level 1	72		4		40
Corporate debt securities	Short-term investments	Level 2	62		54		78
Commercial paper	Short-term investments	Level 2	17		35		52
Foreign government debt securities	Short-term investments	Level 2	—		14		14

Municipal obligations	Short-term investments	Level 2	—		10		—
U.S. Treasury securities	Long-term investments	Level 1	166		31		86
Corporate debt securities	Long-term investments	Level 2	14		23		12
Municipal obligations	Long-term investments	Level 2	2		2		2




Derivative instruments:
Forward interest rate swaps	Other current assets	Level 2	$	—	$	216	$	251



Fixed-to-floating interest rate swaps	Other liabilities	Level 2	92		56		88

Other financial instruments:
Contingent consideration	Long-term investments	Level 3	$	—	$	—	$	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, financial assets were classified within Level 1 of the fair value hierarchy. When quoted prices in active markets were not available, fair values for financial assets and liabilities classified within Level 2 were determined using pricing models, and the


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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.

The performance-based contingent consideration is related to the fiscal 2022 sale of the Canadian retail business and is classified as a Level 3 long-term investment. The Company determined the initial fair value of contingent consideration as of February 3, 2023, based on an income approach using an option pricing model, calculated using significant unobservable inputs such as total equity value, volatility, and expected term. Subsequent measurements of fair value of the contingent consideration are based on an income approach, which requires certain assumptions considering operating performance of the business and a risk-adjusted discount rate. Changes in the estimated fair value of the contingent consideration are recognized as gain or loss included within selling, general and administrative expense in the consolidated statements of earnings.

The rollforward of the fair value of contingent consideration for the three and six months ended August 4, 2023, is as follows:


	Three Months Ended		Six Months Ended
(In millions)	August 4, 2023		August 4, 2023
Beginning balance	$	—	$	21

Change in fair value	—		102
Proceeds received	—		(123)
Ending balance	$	—	$	—

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

During the three and six months ended August 4, 2023, and July 29, 2022, 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 7, 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:


	August 4, 2023				July 29, 2022				February 3, 2023
(In millions)	Carrying Amount		Fair Value		Carrying Amount		Fair Value		Carrying Amount		Fair Value
Unsecured notes (Level 1)	$	35,881	$	31,898	$	28,237	$	26,586	$	32,897	$	30,190
Mortgage notes (Level 2)	2		2		4		5		2		2
Long-term debt (excluding finance lease obligations)	$	35,883	$	31,900	$	28,241	$	26,591	$	32,899	$	30,192

Note 5: Accounts Payable

The Company has agreements with third parties to provide supplier finance programs which facilitate participating suppliers’ ability to finance payment obligations from the Company with designated third-party financial institutions. Participating suppliers may, at their sole discretion, make offers to finance one or more payment obligations of the Company prior to their scheduled due dates at a discounted price to participating financial institutions. The Company’s outstanding payment obligations that suppliers financed to participating financial institutions, which are included in accounts payable on the


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consolidated balance sheets, are as follows:


(In millions)						August 4, 2023						July 29, 2022						February 3, 2023
Financed payment obligations						$	1,475					$	2,320					$	2,257

Note 6: 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 as amended (2020 Credit Agreement), and the $2.0 billion five-year unsecured third amended and restated credit agreement entered into in December 2021, and as amended (Third Amended and Restated Credit Agreement). 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 August 4, 2023, and July 29, 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. As of February 3, 2023, there were $499 million of outstanding borrowings under the Company’s commercial paper program with a weighted average interest rate of 4.78%. There were no outstanding borrowings under the Company’s 2020 Credit Agreement or the Third Amended and Restated Credit Agreement as of February 3, 2023. Total combined availability under the 2020 Credit Agreement and the Third Amended and Restated Credit Agreement was $4.0 billion as of August 4, 2023.

Long-Term Debt

On March 30, 2023, the Company issued $3.0 billion of unsecured fixed rate notes (March 2023 Notes) as follows:


Principal Amount (in millions)		Maturity Date	Interest Rate	Discount (in millions)
$	1,000	April 2026	4.800%	$	3
$	1,000	July 2033	5.150%	$	4
$	500	July 2053	5.750%	$	5
$	500	April 2063	5.850%	$	5

Interest on the March 2023 Notes with April maturity dates is payable semiannually in arrears in April and October of each year until maturity. Interest on the March 2023 Notes with July maturity dates is payable semiannually in arrears in January and July of each year until maturity.

The indenture governing the March 2023 Notes contains 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 indenture also contains 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 March 2023 Notes does 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 7: 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)	August 4, 2023		July 29, 2022		February 3, 2023
Cash flow hedges:
Forward interest rate swap agreement notional amounts	$	—	$	2,065	$	1,290
Fair value hedges:
Fixed-to-floating interest rate swap agreement notional amounts	$	850	$	850	$	850


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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.

Cash Flow Hedges

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 amortized to interest expense over the term of the respective debt. In connection with the issuance of our March 2023 Notes, we settled forward interest rate swap contracts with a combined notional amount of $2.0 billion and received a payment of $247 million. The (loss)/gain from forward interest rate swap agreements, both settled and outstanding, designated as cash flow hedges recorded in other comprehensive income/(loss) and net earnings for the three and six months ended August 4, 2023, and July 29, 2022, including its line item in the financial statements, is as follows:


(In millions)	Three Months Ended						Six Months Ended
August 4, 2023			July 29, 2022			August 4, 2023			July 29, 2022
Other comprehensive income/(loss):
Cash flow hedges – net of tax benefit/(expense) of $1 million, $12 million, $3 million, and ($61) million, respectively	$	(3)		$	(34)		$	(6)		$	184
Net earnings:
Interest – net	$	4		$	—		$	7		$	(1)

Fair Value Hedges

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 8: 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. Any excess of cost over par value is charged to additional paid-in capital to the extent that a balance is present. Once additional paid-in capital is fully depleted, remaining excess of cost over par value is charged to accumulated deficit. As of August 4, 2023, the Company had $16.6 billion remaining in its share repurchase program.

During the six months ended August 4, 2023, the Company entered into Accelerated Share Repurchase (ASR) agreements with third-party financial institutions to repurchase a total of 8.4 million shares of the Company’s common stock for $1.8 billion. The terms of the ASR agreements entered into during the six months ended August 4, 2023, 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 2023	Q1 2023	$	750	3.1	0.7	3.8
Q2 2023	Q2 2023	1,000		3.9	0.7	4.6

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


	Three Months Ended			Six Months Ended
	August 4, 2023			August 4, 2023
(In millions)	Shares	Cost		Shares	Cost
Open market share repurchases	5.5	$	1,182	11.6	$	2,450


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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.

Total shares repurchased for the three and six months ended August 4, 2023, and July 29, 2022, were as follows:


	Three Months Ended
	August 4, 2023			July 29, 2022
(In millions)	Shares	Cost		Shares	Cost
Share repurchase program 1	10.1	$	2,182	21.5	$	4,000
Shares withheld from employees	—	3		0.1	2
Total share repurchases	10.1	$	2,185	21.6	$	4,002



	Six Months Ended
	August 4, 2023			July 29, 2022
(In millions)	Shares	Cost		Shares	Cost
Share repurchase program 1	20.0	$	4,200	40.1	$	8,000
Shares withheld from employees	0.7	133		0.6	119
Total share repurchases	20.7	$	4,333	40.7	$	8,119

1 Beginning January 1, 2023, share repurchases in excess of issuances are subject to a 1% excise tax, which is included as part of the cost basis of the shares acquired.

Note 9: 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 six months ended August 4, 2023, and July 29, 2022:


	Three Months Ended				Six Months Ended
(In millions, except per share data)	August 4, 2023		July 29, 2022		August 4, 2023		July 29, 2022
Basic earnings per common share:
Net earnings	$	2,673	$	2,992	$	4,933	$	5,325
Less: Net earnings allocable to participating securities	(7)		(9)		(13)		(17)
Net earnings allocable to common shares, basic	$	2,666	$	2,983	$	4,920	$	5,308
Weighted-average common shares outstanding	584		638		590		649
Basic earnings per common share	$	4.56	$	4.68	$	8.34	$	8.18
Diluted earnings per common share:
Net earnings	$	2,673	$	2,992	$	4,933	$	5,325
Less: Net earnings allocable to participating securities	(7)		(9)		(13)		(17)
Net earnings allocable to common shares, diluted	$	2,666	$	2,983	$	4,920	$	5,308
Weighted-average common shares outstanding	584		638		590		649
Dilutive effect of non-participating share-based awards	1		1		1		2
Weighted-average common shares, as adjusted	585		639		591		651
Diluted earnings per common share	$	4.56	$	4.67	$	8.32	$	8.16

Anti-dilutive securities excluded from diluted weighted-average common shares	0.5		1.3		0.5		0.5


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Note 10: Supplemental Disclosure

Net interest expense is comprised of the following:


	Three Months Ended				Six Months Ended
(In millions)	August 4, 2023		July 29, 2022		August 4, 2023		July 29, 2022
Long-term debt	$	368	$	257	$	711	$	487
Short-term borrowings	1		—		15		1
Lease obligations	6		7		12		14


Interest income	(35)		(5)		(51)		(7)
Interest capitalized	(1)		(1)		(2)		(2)
Interest on tax uncertainties	—		—		—		3
Other	2		6		4		11
Interest – net	$	341	$	264	$	689	$	507

Supplemental disclosures of cash flow information:


	Six Months Ended
(In millions)	August 4, 2023		July 29, 2022
Cash paid for interest, net of amount capitalized	$	716	$	436
Cash paid for income taxes – net	2,565		1,415
Non-cash investing and financing activities:
Leased assets obtained in exchange for new finance lease liabilities	$	22	$	32
Leased assets obtained in exchange for new operating lease liabilities 1	379		328

Cash dividends declared but not paid	641		666

1 Excludes $319 million of leases signed but not yet commenced as of August 4, 2023.


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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 August 4, 2023, and July 29, 2022, the related consolidated statements of earnings, comprehensive income, and shareholders’ deficit for the fiscal three-month and six-month periods ended August 4, 2023, and July 29, 2022, and cash flows for the fiscal six-month periods ended August 4, 2023, and July 29, 2022, 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 February 3, 2023, 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 27, 2023, 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 February 3, 2023, 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

August 30, 2023


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