SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



ý☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



North Carolina						56-0578072
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

1000 ~~Lowe’s~~Lowes Blvd., Mooresville, NCNorth Carolina						28117
(Address of principal executive offices)						(Zip Code)

Registrant’s telephone number, including area ~~code~~code:						(704) 758-1000

Former name, former address and former fiscal year, if changed since last report: Not Applicable

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.50 per share	LOW	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ý☒Yes o☐ No

Indicate by check mark whether the registrant has submitted electronically, ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). ý☒Yes o☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o☐ Yes ý☒No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.



CLASS						OUTSTANDING AT ~~12/1/2017~~8/28/2023
Common Stock, $0.50 par value						~~829,760,597~~577,115,219

LOWE’S COMPANIES, INC.

- TABLE OF CONTENTS -

This Form 10-Q includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements including words such as “believe”, “expect”, “anticipate”, “plan”, “desire”, “project”, “estimate”, “intend”, “will”, “should”, “could”, “would”, “may”, “strategy”, “potential”, “opportunity”, “outlook”, “scenario”, “guidance”, and similar expressions are forward-looking statements. Forward-looking statements involve, among other things, expectations, projections, and assumptions about future financial and operating results, objectives (including objectives related to environmental, social, and governance matters), business outlook, priorities, sales growth, shareholder value, capital expenditures, cash flows, the housing market, the home improvement industry, demand for products and services, share repurchases, Lowe’s strategic initiatives, including those relating to acquisitions and dispositions and the impact of such transactions on our strategic and operational plans and financial results. Such statements involve risks and uncertainties and we can give no assurance that they will prove to be correct. Actual results may differ materially from those expressed or implied in such statements.

A wide variety of potential risks, uncertainties, and other factors could materially affect our ability to achieve the results either expressed or implied by these forward-looking statements including, but not limited to, changes in general economic conditions, such as volatility and/or lack of liquidity from time to time in U.S. and world financial markets and the consequent reduced availability and/or higher cost of borrowing to Lowe’s and its customers, slower rates of growth in real disposable personal income that could affect the rate of growth in consumer spending, inflation and its impacts on discretionary spending and on our costs, shortages, and other disruptions in the labor supply, interest rate and currency fluctuations, home price appreciation or decreasing housing turnover, age of housing stock, the availability of consumer credit and of mortgage financing, trade policy changes or additional tariffs, outbreaks of pandemics, fluctuations in fuel and energy costs, inflation or deflation of commodity prices, natural disasters, armed conflicts, acts of both domestic and international terrorism, and other factors that can negatively affect our customers.

Investors and others should carefully consider the foregoing factors and other uncertainties, risks and potential events including, but not limited to, those described in “Item 1A - Risk Factors” and “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates” in our most recent Annual Report on Form 10-K and as may be updated from time to time in our quarterly reports on Form 10-Q or other subsequent filings with the SEC. All such forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update these statements other than as required by law.

Part I - FINANCIAL INFORMATION

Item 1. Financial Statements

~~Lowe’s Companies, Inc.~~

~~Consolidated Balance Sheets~~

~~In Millions, Except Par Value Data~~

(Unaudited) (Unaudited)
November 3, 2017 October 28, 2016 February 3, 2017
Assets
Current assets:
Cash and cash equivalents $ 743
$ 960
$ 558
Short-term investments 85
123
100
Merchandise inventory - net 12,393
10,990
10,458
Other current assets 788
655
884
Total current assets 14,009
12,728
12,000
Property, less accumulated depreciation 19,818
20,037
19,949
Long-term investments 370
436
366
Deferred income taxes - net 347
331
222
Goodwill 1,327
1,034
1,082
Other assets 912
804
789
Total assets $ 36,783
$ 35,370
$ 34,408

Liabilities and equity
Current liabilities:
Short-term borrowings $ 171
$ —
$ 510
Current maturities of long-term debt 297
800
795
Accounts payable 8,903
7,836
6,651
Accrued compensation and employee benefits 808
704
790
Deferred revenue 1,404
1,258
1,253
Other current liabilities 2,155
2,035
1,975
Total current liabilities 13,738
12,633
11,974
Long-term debt, excluding current maturities 15,570
14,395
14,394
Deferred revenue - extended protection plans 794
745
763
Other liabilities 939
889
843
Total liabilities 31,041
28,662
27,974

Equity:
Preferred stock - $5 par value, none issued —
—
—
Common stock - $0.50 par value;
Shares issued and outstanding
November 3, 2017 831

October 28, 2016 873

February 3, 2017 866
415
437
433
Capital in excess of par value —
—
—
Retained earnings 5,289
6,376
6,241
Accumulated other comprehensive income/(loss) 38
(214 ) (240 )
Total Lowe’s Companies, Inc. shareholders’ equity 5,742
6,599
6,434
Noncontrolling interest —
109
—
Total equity 5,742
6,708
6,434
Total liabilities and equity $ 36,783
$ 35,370
$ 34,408

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

In Millions, Except Per Share and Percentage Data

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

In Millions, Except Percentage Data

See accompanying notes to the consolidated financial statements (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).


	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)

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

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~~consolidated balance sheets as of ~~November 3, 2017,~~August 4, 2023, and ~~October 28, 2016,~~July 29, 2022, and the ~~results~~statements of ~~operations,~~earnings, comprehensive income, and shareholders’ deficit for the three and ~~nine~~six months ended ~~November 3, 2017,~~August 4, 2023, and ~~October 28, 2016,~~July 29, 2022, and cash flows for the ~~nine~~six months ended ~~November~~August 4, 2023, and July 29, 2022. The February 3, ~~2017 and October 28, 2016.~~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, ~~2017~~2023 (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 presentation.~~

~~Accounting Pronouncements Recently Adopted~~

~~Effective February 4, 2017, the Company adopted Accounting Standards Update (ASU 2016-09),~~ ~~Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting~~. All excess tax benefits or deficiencies related to share-based payments are recognized in the provision for income taxes, which has increased the volatility within our provision for income taxes, as these amounts were previously reported within equity. As a result of the adoption, we have recognized $10 million and $34 million of excess tax benefits in our provision for income taxes for the three and nine months ended November 3, 2017, respectively. The recognition of these benefits contributed $0.01 and $0.04 to diluted earnings per share for the three and nine months ended November 3, 2017, respectively. Excess tax benefits were historically reflected as a financing activity in the statements of cash flows, and after adoption, are included within operating activities. Cash paid to tax authorities by the Company when directly withholding shares for tax purposes will continue to be classified as a financing activity in the statement of cash flows. Share-based payment expense will continue to reflect estimated forfeitures of share-based payment awards. The Company has adopted the applicable provisions of the ASU prospectively.

Accounting Pronouncements Not Yet Adopted

~~In January 2017,~~Recent accounting pronouncements pending adoption not discussed in this Form 10-Q or in the ~~Financial Accounting Standards Board (FASB) issued ASU 2017-04,~~ ~~Intangibles-Goodwill and Other (Topic 350). The ASU eliminates Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation~~2022 Form 10-K are either not applicable to the identified assets and liabilities of the reporting unit to measure goodwill impairment. Under the amendments in this update, a goodwill impairment test is performed by comparing the fair value of the reporting unit with its carrying amount. An impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. This ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The adoption of this guidance by the Company isor are not expected to have a material impact on ~~its consolidated financial statements.~~the Company.

~~In February 2016,~~

Net sales consists primarily of revenue, net of sales tax, associated with contracts with customers for the ~~FASB issued ASU 2016-02,~~ ~~Leases (Topic 842). The guidance~~sale of goods and services in ~~this ASU supersedes~~amounts that reflect consideration the ~~leasing guidance~~Company is entitled to in ~~Topic 840,~~ ~~Leases. Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet~~exchange for those ~~leases previously classified as operating leases. For leases~~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 ~~term~~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 ~~12 months~~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 ~~less, a lessee~~for which installation has not yet been completed. The majority of revenue for goods and services is ~~permitted to make an accounting policy election by class~~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 ~~to recognize lease assets~~yet been redeemed. Deferred revenue for retail and ~~lease liabilities. If a lessee makes this election, it should recognize lease expense~~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 ~~such leases generally~~its separately-priced long-term extended protection plan contracts (Lowe’s protection plans) and recognizes revenue on a straight-line basis over the ~~lease~~respective contract term. ~~This ASU is effective~~Expenses for ~~fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact~~claims are recognized in cost of ~~adopting this ASU on its consolidated~~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

~~financial statements but expects the ASU to have a material impact on its consolidated balance sheets, as a result~~


	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 ~~the requirement to recognize right-of-use assets and lease liabilities.~~Revenues

~~In May 2014, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers~~. The ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the ASU has expanded disclosure requirements regarding revenue. In August 2015, the FASB issued ASU 2015-14, which deferred the effective date of the ASU to fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2016. Companies may use either a full retrospective or a modified retrospective approach to adopt this ASU.

The Company continues to evaluate the impact of adopting this standard and its subsequent related amendments and interpretations. However, based on our assessment, which will be finalized in the fourth quarter of 2017, the Company does not expect the adoption of this standard to have a material impact on its consolidated financial statements. The Company has determined the adoption of the guidance will impact the timing of recognition of its stored value card breakage. Currently, breakage is recognized using the remote method and will be recognized using the proportional method upon adoption of the guidance. In addition, the Company expects a change in the presentation of the sales return reserve on the consolidated balance sheet, as it is currently reported on a net basis, as well as a change in the timing of how installation services are recognized. The Company is also evaluating principal versus agent conclusions as it relates to certain arrangements with third parties that could impact the presentation of revenue on a gross or net basis. The Company does not expect any significant modifications to existing systems or material changes in the Company’s internal controls over financial reporting. The adoption of the ASU will result in increased footnote disclosure requirements.

The Company plans to adopt this ASU in the first quarter of fiscal 2018, and based on its ongoing assessment of potential impacts to its consolidated financial statements, the Company expects to use a modified retrospective approach to adoption.

~~Note 2: Acquisitions -~~ On June 23, 2017, the Company completed its acquisition of Maintenance Supply Headquarters, a leading distributor of maintenance, repair and operations (MRO) products serving the multifamily housing industry. The aggregate purchase price of this acquisition was $513 million and is included in the investing section of the consolidated statements of cash flows, net of the cash acquired. The acquisition is expected to enable the Company to deepen and broaden its relationship with Pro customers and better serve their needs. Acquisition-related costs were expensed as incurred and were not significant.

The following table ~~summarizes~~presents the ~~preliminary purchase price allocation:~~Company’s net sales disaggregated by merchandise division:

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

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

(In millions) June 23, 2017
Allocation:
Cash acquired $ 4
Merchandise inventory - net 68
Other current assets 36
Property 12
Goodwill 160
Other assets 260
Accounts payable (18 )
Other current liabilities (9 )
Net assets acquired $ 513


7

~~Intangible assets acquired totaled $259 million, and include a trademark~~

Table of $34 million with a useful life of 15 years and a customer list of $225 million with a useful life of 20 years, each of which are included in other assets in the accompanying consolidated balance sheets. The goodwill of $160 million is primarily attributable to the synergies expected to arise after the acquisition and is deductible for tax purposes.Contents

~~Pro forma and historical financial information has not been provided as the acquisition was not material to the consolidated financial statements.~~

Note 3: ~~Investment in Australian Joint Venture -~~ ~~During~~Restricted Investments

Short-term and long-term investments include restricted balances pledged as collateral primarily for the ~~second quarter of fiscal 2017, the Company completed the sale of our interest in the Australian joint venture with Woolworths Limited~~Lowe’s protection plans program and received proceeds of $199 million, which is included in cash flows from investing activities in the accompanying consolidated statements of cash flows. The proceeds from the sale exceeded the carrying value of the investment and resulted in a gain of $96 million. The carrying value prior to the sale reflected the non-cash impairment charges taken in fiscal years 2015 and 2016. The gain is included in selling, general and administrative expense in the accompanying consolidated statements of current and retained earnings.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 ~~November 3, 2017, October 28, 2016,~~August 4, 2023, July 29, 2022, and February 3, ~~2017. The fair values of these instruments approximated amortized costs.~~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

Fair Value Measurements at
(In millions) Measurement Level November 3, 2017 October 28, 2016 February 3, 2017
Short-term investments:
Available-for-sale securities
Money market funds Level 1 $ 70
$ 28
$ 81
Certificates of deposit Level 1 15
55
15
Municipal obligations Level 2 —
37
4
Municipal floating rate obligations Level 2 —
3
—
Total short-term investments $ 85
$ 123
$ 100
Long-term investments:
Available-for-sale securities
Municipal floating rate obligations Level 2 $ 368
$ 430
$ 359
Certificates of deposit Level 1 2
2
2
Municipal obligations Level 2 —
4
5
Total long-term investments $ 370
$ 436
$ 366

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~~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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Table of Contents

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 ~~nine~~six months ended ~~November 3, 2017,~~August 4, 2023, and July 29, 2022, the Company had no ~~significant~~material measurements of assets and liabilities at fair value on a nonrecurring basis subsequent to their initial recognition. During the three and nine months ended October 28, 2016, 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, goodwill, and cost method investments, which were classified as

Level 3 fair value measurements. These non-cash impairment charges were included in selling, general and administrative expense in the accompanying consolidated statements of current and retained earnings.

The following table presents the Company’s non-financial assets measured at estimated fair value on a nonrecurring basis and the resulting impairment losses included in earnings for the three and nine months ended October 28, 2016. Because these assets are not measured at fair value on a recurring basis, certain fair value measurements presented in the table may reflect values at earlier measurement dates and may no longer represent the fair values at October 28, 2016.

Fair Value Measurements
Impairment Losses
(In millions) October 28, 2016
Three Months Ended October 28, 2016
Nine Months Ended October 28, 2016
Assets-held-for-use:
Operating locations $ 3
$ (31 ) $ (34 )
Goodwill —
(46 ) (46 )
Other assets:
Cost method investments 103
(290 ) (290 )
Total $ 106
$ (367 ) $ (370 )

Other Fair Value ~~of Financial Instruments~~Disclosures

The Company’s financial ~~instruments~~assets and liabilities not measured at fair value on a recurring basis include cash and cash equivalents, accounts receivable, short-term borrowings, accounts payable, ~~accrued liabilities~~ 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 ~~capitalized~~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

November 3, 2017 October 28, 2016 February 3, 2017
(In millions) Carrying Amount
Fair Value
Carrying Amount
Fair Value
Carrying Amount
Fair Value
Unsecured notes (Level 1) $ 14,958
$ 15,974
$ 14,318
$ 15,948
$ 14,321
$ 15,305
Mortgage notes (Level 2) 7
7
10
10
7
7
Long-term debt (excluding capitalized lease obligations) $ 14,965
$ 15,981
$ 14,328
$ 15,958
$ 14,328
$ 15,312

Note 5: ~~Restricted Investment Balances -~~ Short-term and long-term investments include restricted balances pledged as collateral primarily for the Company’s extended protection plan program. Restricted balances included in short-term investments were $70 million at November 3, 2017, $53 million at October 28, 2016, and $81 million at February 3, 2017.Accounts Payable

~~Restricted balances included in long-term investments were $332 million at November 3, 2017, $348 million at October 28, 2016, and $354 million at February 3, 2017.~~

~~Note 6: Property~~- ~~Property is shown net of accumulated depreciation of $17.1 billion at November 3, 2017,~~ ~~$17.1 billion~~ ~~at October 28, 2016, and~~ ~~$17.0 billion~~ ~~at February 3, 2017.~~

~~Note 7: Extended Protection Plans -~~The Company ~~sells separately-priced extended protection plan contracts under a Lowe’s-branded program for~~has agreements with third parties to provide supplier finance programs which facilitate participating suppliers’ ability to finance payment obligations from the Company is self-insured. The Company recognizes revenue from extended protection plan sales on a straight-line basis over the respective contract term. Extended protection plan contract terms primarily range fromwith designated third-party financial institutions. Participating suppliers may, at their sole discretion, make offers to finance one ~~to four years from the date of purchase~~ or ~~the end~~more payment obligations of the ~~manufacturer’s warranty, as applicable. Changes in deferred revenue for extended protection plan contracts are summarized as follows:~~

Three Months Ended Nine Months Ended
(In millions) November 3, 2017 October 28, 2016 November 3, 2017 October 28, 2016
Deferred revenue - extended protection plans, beginning of period $ 790
$ 744
$ 763
$ 729
Additions to deferred revenue 96
88
304
280
Deferred revenue recognized (92 ) (87 ) (273 ) (264 )
Deferred revenue - extended protection plans, end of period $ 794
$ 745
$ 794
$ 745

~~Incremental direct acquisition costs associated with the sale of extended protection plans are also deferred and recognized as expense on~~Company prior to their scheduled due dates at a straight-line basis over the respective contract term. Deferred costs associated with extended protection plan contracts were $19 million at November 3, 2017, $17 million at October 28, 2016, and $18 million at February 3, 2017.discounted price to participating financial institutions. The Company’s ~~extended protection plan deferred costs~~outstanding payment obligations that suppliers financed to participating financial institutions, which are included in ~~other assets (noncurrent)~~accounts payable on the ~~accompanying consolidated balance sheets. All other costs, such as costs~~

~~The liability for extended protection plan claims incurred is included in other current liabilities on the~~ 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

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 ~~not material in any~~$4.0 billion as of the periods presented. Expenses for claims are recognized when incurred and totaled $43 million and $119 million for the three and nine months ended November 3, 2017, respectively, and $39 million and $107 million for the three and nine months ended October 28, 2016, respectively.August 4, 2023.

~~Note 8:~~ Long-Term Debt - ~~During the first quarter of fiscal 2017,~~

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

Issue Date Principal Amount (in millions) Maturity Date Fixed vs. Floating Interest Rate Discount (in millions)
May 3, 2017 $ 1,500
May 2027 Fixed 3.100% $ 9
May 3, 2017 $ 1,500
May 2047 Fixed 4.050% $ 23

Interest on the ~~notes issued in 2017~~March 2023 Notes with April maturity dates is payable semiannually in arrears in ~~May~~April and ~~November~~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 ~~notes issued in 2017~~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 ~~indenture~~indentures governing the ~~notes~~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. ~~However, the indenture includes various restrictive covenants, none of which is expected~~

Note 7: Derivative Instruments

The Company utilizes forward interest rate swap agreements to ~~impact~~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 ~~liquidity or capital resources.~~material derivative instruments are as follows:

~~Also during~~


(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

See Note 4 for the ~~first quarter,~~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 ~~completed~~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 ~~cash tender offer to purchase and retire $1.6 billion~~ combined ~~aggregate principal~~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 ~~outstanding notes~~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)

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 ~~recognized a loss on extinguishment~~there is no net impact in the consolidated statements of ~~debt~~earnings from the fair value of ~~$464 million.~~the derivatives.

Note ~~9: Equity -~~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 ~~retired and~~ returned to authorized and unissued status. ~~On January 27, 2017,~~Any excess of cost over par value is charged to additional paid-in capital to the ~~Company’s Board~~extent that a balance is present. Once additional paid-in capital is fully depleted, remaining excess of ~~Directors authorized a $5.0 billion share repurchase program with no expiration, which was announced on the same day.~~cost over par value is charged to accumulated deficit. As of ~~November 3, 2017,~~August 4, 2023, the Company had ~~$2.1~~$16.6 billion remaining in its share repurchase program.

~~In March 2017,~~During the six months ended August 4, 2023, the Company entered into an Accelerated Share Repurchase (ASR) ~~agreement~~agreements with a third-party financial ~~institution~~institutions to repurchase ~~$500~~a total of 8.4 million of the Company’s common stock. At inception, pursuant to the agreement, the Company paid $500 million to the financial institution using cash on hand, and took delivery of 5.3 million shares. The Company finalized the transaction and received an additional 0.8 million shares ~~prior to the end of the first quarter.~~

In May 2017, the Company entered into an ASR agreement with a third-party financial institution to repurchase $500 million of the Company’s common stock. At inception, pursuant to the agreement, the Company paid $500 million to the financial institution using cash on hand, and took delivery of 5.2 million shares. The Company finalized the transaction and received an additional 1.2 million shares prior to the end of the second quarter.

In August 2017, the Company entered into an ASR agreement with a third-party financial institution to repurchase $250 million of the Company’s common stock. At inception, pursuant to the agreement, the Company paid $250 million to the financial institution using cash on hand, and took delivery of 2.9 million shares. The Company finalized the transaction and received an additional 0.3 million shares prior to the end of the third quarter.

Under the terms of each of the ASR agreements, upon settlement, the Company would either receive additional shares from the financial institution or be required to deliver additional shares or cash to the financial institution. The Company controlled its election to either deliver additional shares or cash to the financial institution and was subject to provisions which limited the number of shares the Company would be required to deliver.

~~The final number of shares received upon settlement of each of the ASR agreements was determined with reference to the volume-weighted average price~~ of the Company’s common stock ~~over the term of the respective ASR agreement.~~for $1.8 billion. The initial repurchase of shares under each of the agreements resulted in an immediate reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted earnings per share.

~~Each~~terms of the ASR agreements ~~was accounted for as a treasury stock transaction and forward stock purchase contract. The par value of~~entered into during the shares received was recorded as a reduction to common stock with the remainder recorded as a reduction to capital in excess of par value and retained earnings. The forward stock purchase contract was considered indexed to the Company’s own stock and was classified as an equity instrument.

~~During the three and nine~~six months ended ~~November 3, 2017,~~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 ~~also~~ repurchased shares of its common stock through the open market ~~totaling 3.2 million and 21.8 million shares, respectively, for a cost~~as follows:

Three Months Ended

Six Months Ended

August 4, 2023

(In millions)

Cost

Open market share repurchases

5.5

1,182

11.6

2,450

Table of ~~$250 million and $1.8 billion, respectively.~~Contents

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.

~~Shares~~Total shares repurchased for the three and ~~nine~~six months ended ~~November 3, 2017,~~August 4, 2023, and ~~October 28, 2016~~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.

Three Months Ended
November 3, 2017 October 28, 2016
(In millions) Shares

Cost ¹

Shares

Cost ¹

Share repurchase program 6.4
$ 500
8.3
$ 550
Shares withheld from employees 0.4
27
0.3
24
Total share repurchases 6.8
$ 527
8.6
$ 574

Nine Months Ended
November 3, 2017 October 28, 2016
(In millions) Shares

Cost ²

Shares

Cost ²

Share repurchase program 37.5
$ 3,000
39.0
$ 2,949
Shares withheld from employees 0.5
41
1.1
77
Total share repurchases 38.0
$ 3,041
40.1
$ 3,026

~~Reductions of $2.9 billion and $2.8 billion were recorded to retained earnings, after capital in excess of par value was depleted, for the nine months endedNovember 3, 2017 and October 28, 2016, respectively.~~

Note ~~10:~~9: Earnings Per Share-

The Company calculates basic and diluted earnings per common share using the two-class method. Under the two-class method, net earnings are allocated to each class of common stock and participating security as if all of the net earnings for the period had been distributed. The Company’s participating securities consist of share-based

~~payment awards that contain a nonforfeitable right to receive dividends and, therefore, are considered to participate in undistributed earnings with common shareholders.~~

Basic earnings per common share excludes dilution and is calculated by dividing net earnings allocable to common shares by the weighted-average number of common shares outstanding for the period. Diluted earnings per common share is calculated by dividing net earnings allocable to common shares by the weighted-average number of common shares as of the balance sheet date, as adjusted for the potential dilutive effect of non-participating share-based awards. The following table reconciles earnings per common share for the three and ~~nine~~six months ended ~~November 3, 2017~~August 4, 2023, and ~~October 28, 2016:~~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

Three Months Ended Nine Months Ended
(In millions, except per share data) November 3, 2017 October 28, 2016 November 3, 2017 October 28, 2016
Basic earnings per common share:
Net earnings attributable to Lowe’s Companies, Inc. $ 872
$ 378
$ 2,893
$ 2,428
Less: Net earnings allocable to participating securities (2 ) (2 ) (10 ) (9 )
Net earnings allocable to common shares, basic $ 870
$ 376
$ 2,883
$ 2,419
Weighted-average common shares outstanding 831
873
843
884
Basic earnings per common share $ 1.05
$ 0.43
$ 3.42
$ 2.74
Diluted earnings per common share:

Net earnings attributable to Lowe’s Companies, Inc. $ 872
$ 378
$ 2,893
$ 2,428
Less: Net earnings allocable to participating securities (2 ) (2 ) (10 ) (9 )
Net earnings allocable to common shares, diluted $ 870
$ 376
$ 2,883
$ 2,419
Weighted-average common shares outstanding 831
873
843
884
Dilutive effect of non-participating share-based awards 1
1
1
2
Weighted-average common shares, as adjusted 832
874
844
886
Diluted earnings per common share $ 1.05
$ 0.43
$ 3.42
$ 2.73


						12

~~Stock options to purchase 1.0 million shares~~

Table of common stock were anti-dilutive for the three and nine months ended November 3, 2017. Stock options to purchase 1.1 million and 0.9 million shares of common stock were anti-dilutive for the three and nine months ended October 28, 2016, respectively.Contents

~~Note 11: Income Taxes~~- The Company’s effective income tax rates were 37.1% and 51.2% for the three months ended November 3, 2017 and October 28, 2016, respectively. The lower effective income tax rate for the three months ended November 3, 2017 was primarily attributable to the non-cash impairment charge associated with our investment in the Australian joint venture, which was recognized during the third quarter of fiscal 2016. The loss was considered capital in nature and, since no capital gains were identified through which the Company could utilize this loss, a full deferred tax valuation allowance was established. As a result, the loss did not result in a tax benefit.

Our effective income tax rates were 36.3% and 40.6% for the nine months ended November 3, 2017 and October 28, 2016, respectively. The lower effective income tax rate for the nine months ended November 3, 2017 was primarily attributable to the non-cash impairment charge associated with our investment in the Australian joint venture, and from the sale of this investment during the second quarter of fiscal 2017, which did not result in tax expense due to the reduction of the previously established deferred tax valuation allowance. The lower effective income tax rate for the nine months ended November 3, 2017 was also driven by the recognition of excess tax benefits related to share-based payments after the adoption of ASU 2016-09. See Note 1 to the consolidated financial statements included herein for more information regarding ASU 2016-09.

Note ~~12:~~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

Three Months Ended Nine Months Ended
(In millions) November 3, 2017 October 28, 2016 November 3, 2017 October 28, 2016
Long-term debt $ 146
$ 151
$ 438
$ 437
Capitalized lease obligations 14
13
41
40
Interest income (2 ) (4 ) (10 ) (10 )
Interest capitalized (2 ) (1 ) (4 ) (3 )
Interest on tax uncertainties —
—
(1 ) 2
Other 4
4
15
20
Interest - net $ 160
$ 163
$ 479
$ 486

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.

Nine Months Ended
(In millions) November 3, 2017 October 28, 2016
Cash paid for interest, net of amount capitalized $ 610
$ 588
Cash paid for income taxes - net $ 1,322
$ 1,657
Non-cash investing and financing activities:
Non-cash property acquisitions, including assets acquired under capital lease $ 91
$ 72
Cash dividends declared but not paid $ 341
$ 306


13

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

~~Mooresville, North Carolina~~

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 ~~November 3, 2017~~August 4, 2023, and ~~October 28, 2016, and~~July 29, 2022, the related consolidated statements of ~~current~~earnings, comprehensive income, and ~~retained earnings, and comprehensive income~~shareholders’ deficit for the fiscal three-month and ~~nine-month~~six-month periods ended ~~November 3, 2017~~August 4, 2023, and ~~October 28, 2016,~~July 29, 2022, and of cash flows for the fiscal ~~nine-month~~six-month periods ended ~~November 3, 2017~~August 4, 2023, and ~~October 28, 2016. These consolidated~~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 ~~statements are~~information for it to be in conformity with accounting principles generally accepted in the ~~responsibility~~United States of ~~the Company’s management.~~America.

We ~~conducted our reviews~~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 ~~Public Company Accounting Oversight Board (United States),~~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.

Based on our reviews, we are not aware of any material modifications that should be made to such consolidated interim financial statements for them 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), the consolidated balance sheet of the Company as of February 3, 2017, 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 April 3, 2017, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet of the Company as of February 3, 2017 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ DELOITTE & TOUCHE LLP

Charlotte, North Carolina

~~December 5, 2017~~August 30, 2023


						14

Table of Contents

Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion and analysis summarizes the significant factors affecting our consolidated operating results, liquidity and capital resources during the three and ~~nine~~six months ended ~~November 3, 2017,~~August 4, 2023, and ~~October 28, 2016.~~July 29, 2022. This discussion and analysis should be read in conjunction with the consolidated financial statements and notes to the consolidated financial statements that are included in our Annual Report on Form 10-K for the fiscal year ended February 3, ~~2017~~2023 (the Annual Report), as well as the consolidated financial statements (unaudited) and notes to the consolidated financial statements (unaudited) contained in this report. Unless otherwise specified, all comparisons made are to the corresponding period of ~~2016.~~fiscal 2022. In fiscal ~~2017,~~2023, there is a one week shift as a result of the 53rd week in fiscal ~~2016.~~2022. For the purposes of the following discussion, comparable ~~store~~ sales, comparable ~~store~~customer transactions, and comparable average ticket ~~and comparable store customer transactions~~ are based upon the comparable ~~13 week periods.~~13-week and 26-week periods from fiscal 2022. This discussion and analysis is presented in ~~six~~four sections:

•Executive Overview

•Operations

•Financial Condition, Liquidity and Capital Resources

~~Off-Balance Sheet Arrangements~~

~~Contractual Obligations and Commercial Commitments~~

•Critical Accounting Policies and Estimates

EXECUTIVE OVERVIEW

Net sales ~~and~~in the second quarter of fiscal 2023 declined 9.2% to $25.0 billion compared to net ~~earnings increased~~sales of $27.5 billion in the second quarter of fiscal 2022. Prior year sales included $1.7 billion generated by our Canadian retail business, which was sold in the fourth quarter of fiscal 2022. Comparable sales for the ~~third~~second quarter of ~~2017~~fiscal 2023 decreased 1.6%, consisting of a 1.9% decrease in comparable customer transactions, partially offset by ~~6.5%~~a comparable average ticket increase of 0.3%. Net earnings in the second quarter of fiscal 2023 were $2.7 billion, which represents a decrease of 10.7% compared to ~~$16.8 billion and 130.3% to $872 million, respectively.~~the second quarter of fiscal 2022. Diluted earnings per common share ~~increased 144.2%~~were $4.56 in the ~~third~~second quarter of ~~2017~~fiscal 2023 compared to ~~$1.05 from $0.43~~$4.67 in the ~~third~~second quarter of fiscal 2022.

For the ~~prior year. Diluted earnings per common share in the third quarter~~first six months of ~~2017 increased 19.3%~~fiscal 2023, cash flows from ~~adjusted diluted earnings per share of $0.88 in the same period of the prior year (see discussion of non-GAAP financial measures beginning on page 17).~~operating activities were approximately $6.0 billion, with $765 million used for capital expenditures. Continuing to deliver on our commitment to return excess cash to shareholders, ~~during the third quarter~~we repurchased $2.2 billion of ~~2017, we~~common stock and paid ~~$344~~$624 million in dividends ~~and repurchased $500 million of common stock through our share repurchase program.~~during the three months ended August 4, 2023.

~~During the third~~Second quarter ~~of 2017, all U.S. regions generated~~fiscal 2023 comparable sales ~~increases as~~declined 1.6%, driven by lumber commodity deflation and continued macroeconomic pressure affecting Do-It-Yourself (DIY) consumer discretionary spending. Despite lumber deflation, we drove increased traffic in-store and online with compelling messaging and integrated omni-channel experiences, while continuing to capitalize on a supportive macro-economic backdrop and customers’ continued desire to invest in their homes. In addition, all product categories generatedexperienced positive comparable sales growth with ~~particular strength~~our Pro customers, which reflects the success of our expanded national and private brands, MVPs Pro Rewards and Partnership ProgramTM, and enhanced online capabilities.

We drove positive online comparable sales in ~~Lumber & Building Materials, Appliances,~~the second quarter as we continue to improve our omnichannel experience. Our associates leverage our omnichannel investments, including mobile devices and ~~Rough Plumbing & Electrical. We continued~~order picking carts with mobile printers, to ~~see strong demand from the~~reduce picking time for online orders. For those customers seeking expedited delivery, we launched a new same-day delivery option nationwide for eligible orders placed on Lowes.com and our mobile app. This capability enables product to be delivered directly to Pro ~~customer for~~job sites and consumer homes within hours of ordering.

Also during the quarter, we expanded our rural framework to approximately 300 stores, including scaling our store-within-a-store concept with ~~comparable sales above the company average.~~

~~Hurricanes Harvey and Irma positively impacted third quarter comparable sales by approximately 140 basis points.~~Petco®. Our ~~merchants, vendors, logistics, and store teams were able to~~ work together seamlessly to ensure customers had the right products to protect and repair their homes. Our teams sent over 11,000 truckloads of product to impacted areas supporting both DIY and Pro customers as they prepared for the storms and worked to repair properties afterward. We also added Account Executive Pro Services (AEPs) to the Texas and Florida markets to support the incremental demand from Pro customers.

~~We continued to build upon our strong foundation with the Pro customer by continuing~~ to optimize our ~~product and service offerings to better serve their unique needs. During the quarter, we continued~~rural stores is part of our broader localization strategy to drive ~~Pro awareness through Pro-exclusive offers, digital focus on LowesForPros.com,~~market share gains and increase inventory productivity and operating margin.

The growth initiatives embedded in our ~~growing Pro services team. The addition of Maintenance Supply Headquarters (MSH) and Central Wholesalers, Inc. further expanded our capabilities~~Total Home strategy should enable us to ~~serve the multi-family housing industry through enhanced product and service offerings~~grow market share, while ~~strengthening our platform with both new and existing Pro customers.~~

In addition, we continued to execute on our strategic priorities during the quarter, including leveraging our omni-channel capabilities to help customers achieve project results. We also continue to leverage our investments in Lowes.com to provide an upgraded online shopping experience by delivering an optimized mobile experience, improved product and content recommendations, refined search algorithms, optimized assortment informed by digital line reviews and expanded product views, including video content. We are working to further advance our online platform making it easier for customers to engage with our in-home Project Specialists and request services online, as well as working to centralize our process for providing installation quotes, allowing for greater efficiency and a more consistent customer experience.

Looking ahead, we plan to build upon our strong foundation by developing capabilities to anticipate and support customers’ evolving needs and continue to focus on strengthening our operating discipline and execution. We look forward to the introduction of Craftsman products in-store and online beginning in the second half of 2018. We believe this partnership with Stanley Black & Decker strengthens our ability to deliver on customer expectations across many product categories and will allow both DIY and Pro customers greater access to high quality, value-oriented product offerings for their next home improvement project.navigating near-term market uncertainty. We also remain ~~committed~~focused on improving productivity through our Perpetual Productivity Improvement (PPI) initiatives, which give us the agility to ~~balancing our promotional strategy~~adapt and manage expenses through periods of unpredictable demand. We believe the combination of these growth and productivity initiatives in conjunction with our pricing optimization efforts to improve profitability, and we will further leverage our new store leadership model and make investments in customer-facing hours in order to capitalize upon strong traffic trendsdisciplined capital allocation strategy positions us to deliver ~~an improved customer experience.~~meaningful long-term shareholder value.


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OPERATIONS

The following ~~tables set~~table sets forth the percentage relationship to net sales of each line item of the consolidated statements of ~~current and retained~~ earnings (unaudited), as well as the percentage change in dollar amounts from the prior period. ~~These tables~~This table should be read in conjunction with the following discussion and analysis and the consolidated financial statements (unaudited), including the related notes to the consolidated financial statements (unaudited).


	Three Months Ended				Basis Point Increase/(Decrease) in Percentage of Net Sales from Prior Period	Percentage Increase/(Decrease) in Dollar Amounts from Prior Period
	August 4, 2023		July 29, 2022		2023 vs. 2022	2023 vs. 2022
Net sales	100.00	%	100.00	%	N/A	(9.2)	%
Gross margin	33.66		33.24		42	(8.0)
Expenses:
Selling, general and administrative	16.38		16.22		16	(8.3)
Depreciation and amortization	1.71		1.63		8	(4.9)
Operating income	15.57		15.39		18	(8.1)
Interest – net	1.36		0.96		40	29.2

Pre-tax earnings	14.21		14.43		(22)	(10.6)
Income tax provision	3.50		3.54		(4)	(10.3)
Net earnings	10.71	%	10.89	%	(18)	(10.7)	%



	Six Months Ended				Basis Point Increase/(Decrease) in Percentage of Net Sales from Prior Period	Percentage Increase/(Decrease) in Dollar Amounts from Prior Period
	August 4, 2023		July 29, 2022		2023 vs. 2022	2023 vs. 2022
Net sales	100.00	%	100.00	%	N/A	(7.5)	%
Gross margin	33.67		33.60		7	(7.3)
Expenses:
Selling, general and administrative	16.73		17.12		(39)	(9.7)
Depreciation and amortization	1.78		1.75		3	(5.9)
Operating income	15.16		14.73		43	(4.7)
Interest – net	1.45		0.99		46	35.9

Pre-tax earnings	13.71		13.74		(3)	(7.7)
Income tax provision	3.28		3.33		(5)	(8.7)
Net earnings	10.43	%	10.41	%	2	(7.4)	%

The following table sets forth key metrics utilized by management in assessing business performance. This table should be read in conjunction with the following discussion and analysis and the consolidated financial statements (unaudited), including the related notes to the consolidated financial statements (unaudited).

Three Months Ended Basis Point Increase / (Decrease) in Percentage of Net Sales from Prior Period
Percentage Increase / (Decrease) in Dollar Amounts from Prior Period
November 3, 2017 October 28, 2016 2017 vs. 2016
2017 vs. 2016
Net sales 100.00 % 100.00 % N/A
6.5 %
Gross margin 34.07
34.35
(28 ) 5.7
Expenses:
Selling, general and administrative 22.71
25.94
(323 ) (6.7 )
Depreciation and amortization 2.13
2.44
(31 ) (6.8 )
Operating income 9.23
5.97
326
64.7
Interest - net 0.96
1.04
(8 ) (2.1 )
Pre-tax earnings 8.27
4.93
334
78.8
Income tax provision 3.07
2.52
55
29.7
Net earnings 5.20 % 2.41 % 279
130.3 %

During the three months ended August 4, 2023, the Company adjusted its comparable sales metric to exclude days affected by national outages with its third-party credit and debit processor in the prior year. By excluding the days impacted by the outages, and the corresponding days in the comparable periods, comparable sales decreased by approximately 10 basis points and five basis points for the three and six months ended August 4, 2023, respectively, and increased by approximately 30 basis points and 10 basis points for the three and six months ended July 29, 2022, respectively.

Nine Months Ended Basis Point Increase / (Decrease) in Percentage of Net Sales from Prior Period
Percentage Increase / (Decrease) in Dollar Amounts from Prior Period
November 3, 2017 October 28, 2016 2017 vs. 2016
2017 vs. 2016
Net sales 100.00 % 100.00 % N/A
7.9 %
Gross margin 34.23
34.59
(36 ) 6.8
Expenses:
Selling, general and administrative 21.87
23.02
(115 ) 2.4
Depreciation and amortization 2.03
2.27
(24 ) (3.2 )
Operating income 10.33
9.30
103
19.9
Interest - net 0.91
0.99
(8 ) (1.4 )
Loss on extinguishment of debt 0.87
—
87
100.0
Pre-tax earnings 8.55
8.31
24
11.1
Income tax provision 3.10
3.37
(27 ) (0.6 )
Net earnings 5.45 % 4.94 % 51
19.1 %

Three Months Ended Nine Months Ended
Other Metrics November 3, 2017 October 28, 2016 November 3, 2017 October 28, 2016
Comparable sales increase ¹
5.7 % 2.7 % 4.0 % 3.9 %
Total customer transactions (in millions) ²
231
229
742
718
Average ticket ^{2, 3}
$ 72.63
$ 68.65
$ 71.59
$ 68.59
At end of period:
Number of stores 2,144
2,119

Sales floor square feet (in millions) 214
213

Average store size selling square feet (in thousands) ⁴
100
100

Return on invested capital ⁵
19.5 % 13.6 %


			¹			~~A comparable location is defined as a location that has been open longer than 13 months.A location that is identified for relocation is no longer considered comparable in the month of its relocation.The relocated location must then remain open longer than 13 months to be considered comparable.~~A location we have decided to close is no longer considered comparable as of the beginning of the month in which we announce its closing. Acquired locations are included in the comparable sales calculation beginning in the first full month following the first anniversary of the date of the acquisition. Comparable sales include online sales, which positively impacted third quarter fiscal 2017 comparable sales by approximately 95 basis points and fiscal 2017 comparable sales by approximately 105 basis points. The comparable store sales calculation included in the preceding table was calculated using comparable 13-week and 39-week periods, respectively. 16


² Table of Contents	~~In fiscal 2017, there was a one week shift as a result of the 53~~^rd ~~week in fiscal 2016.~~


³	~~Average ticket is defined as net sales divided by the total number of customer transactions.~~


⁴	Average store size selling square feet is defined as sales floor square feet divided by the number of stores open at the end of the period. The average Lowe’s-branded home improvement store has approximately 112,000 square feet of retail selling space.


⁵	~~Return on invested capital is a non-GAAP financial measure.See below for additional information and a reconciliation to the most comparable GAAP measure.~~


	Three Months Ended						Six Months Ended
Other Metrics	August 4, 2023			July 29, 2022			August 4, 2023			July 29, 2022
Comparable sales decrease 1	(1.6)		%	(0.3)		%	(2.9)		%	(2.1)		%
Total customer transactions (in millions)	244			268			458			494
Average ticket 2	$	102.35		$	102.45		$	103.33		$	103.41
At end of period:
Number of stores	1,742			1,969
Sales floor square feet (in millions)	195			208
Average store size selling square feet (in thousands) 3	112			106
Net earnings to average debt and shareholders’ deficit 4	23.7		%	31.4		%
Return on invested capital 4	27.8		%	34.5		%

1 A comparable location is defined as a retail location that has been open longer than 13 months.A location that is identified for relocation is no longer considered comparable in the month of its relocation.The relocated location must then remain open longer than 13 months to be considered comparable.A location we decide to close is no longer considered comparable as of the beginning of the month in which we announce its closing. Operating locations which are sold are included in comparable sales until the date of sale. Comparable sales are presented on a transacted basis when tender is accepted from a customer. Comparable sales include online sales, which impacted second quarter fiscal 2023 and fiscal 2022 comparable sales by approximately 70 basis points and 55 basis points, respectively, and year-to-date fiscal 2023 and fiscal 2022 comparable sales by approximately 65 basis points and 25 basis points, respectively. The comparable store sales calculation included in the preceding table was calculated using comparable 13-week and 26-week periods.

2 Average ticket is defined as net sales divided by the total number of customer transactions.

3 Average store size selling square feet is defined as sales floor square feet divided by the number of stores open at the end of the period. The average Lowe’s-branded home improvement store has approximately 112,000 square feet of retail selling space.

4 Return on invested capital is calculated using a non-GAAP financial measure. Net earnings to average debt and shareholders’ deficit is the most comparable GAAP ratio. As of August 4, 2023, return on invested capital was negatively impacted 750 basis points as a result of the sale of the Canadian retail business. See below for additional information and reconciliations of non-GAAP measures.

Non-GAAP Financial Measures

~~Adjusted Diluted Earnings Per Share~~

Adjusted diluted earnings per share is considered a non-GAAP financial measure. The Company believes this non-GAAP financial measure provides useful insight for analysts and investors in evaluating what management considers the Company’s core financial performance. Adjusted diluted earnings per share excludes the impact of certain discrete items, as further described below, not contemplated in Lowe’s 2017 and 2016 original business outlooks. Unless otherwise noted, the income tax effect of these adjustments is calculated using the marginal rates for the respective periods.

~~In the third quarter of 2016, the company recognized $462 million of non-cash pre-tax charges which included the following:~~

~~$290 million impairment resulting from the wind down of our investment in the Australian joint venture with Woolworths Limited (Woolworths).~~

$96 million related to a write-off for projects that were canceled as part of the company’s ongoing review of strategic initiatives in an effort to focus on critical projects that will drive desired outcomes.

~~$76 million related to goodwill and long-lived asset impairments associated with the company’s Orchard Supply Hardware (Orchard) operations as part of a strategic reassessment of this business.~~

Adjusted diluted earnings per share should not be considered an alternative to, or more meaningful indicator of, the Company’s diluted earnings per common share as prepared in accordance with GAAP. The Company’s methods of determining this non-GAAP financial measure may differ from the method used by other companies for this or similar non-GAAP financial measures. Accordingly, these non-GAAP measures may not be comparable to the measures used by other companies.

Three Months Ended
November 3, 2017 October 28, 2016
Pre-Tax Earnings Tax Net Earnings Pre-Tax Earnings Tax Net Earnings
Diluted earnings per share, as reported $ 1.05
$ 0.43
Non-GAAP adjustments - per share impacts
Australian joint venture impairment —
—
—
0.33
—
0.33
Project write-offs —
—
—
0.11
(0.04 ) 0.07
Orchard Supply Hardware goodwill and long-lived asset impairment —
—
—
0.09
(0.04 ) 0.05
Adjusted diluted earnings per share $ 1.05
$ 0.88

Return on Invested Capital

Return on Invested Capital (ROIC) is calculated using a non-GAAP financial measure. ~~We believe~~Management believes ROIC is a meaningful metric for analysts and investors ~~because it measures~~as a measure of how effectively the Company ~~uses~~is using capital to generate ~~profits.~~

~~We define ROIC as trailing four quarters’ net operating profit after tax divided by the average of ending debt and equity for the last five quarters.~~financial returns. Although ROIC is a common financial metric, numerous methods exist for calculating ROIC. Accordingly, the method used by our management ~~to calculate ROIC~~ may differ from the methods used by other ~~companies use to calculate their ROIC.~~companies. We encourage you to understand the methods used by another company to calculate ~~its~~ ROIC before comparing its ROIC to ours.

We ~~consider return on~~define ROIC as the rolling 12 months’ lease adjusted net operating profit after tax (Lease adjusted NOPAT) divided by the average of current year and prior year ending debt and ~~equity~~shareholders’ deficit. Lease adjusted NOPAT is a non-GAAP financial measure, and net earnings is considered to be the ~~financial measure computed in accordance with GAAP that is the~~ most ~~directly~~ comparable GAAP financial ~~measure to ROIC. The difference between these two measures is that ROIC adjusts net earnings to exclude tax adjusted non-operating income/(expense).~~

measure. The calculation of ROIC, together with a reconciliation of net earnings to ~~the calculation of return on average debt and equity, the most comparable GAAP financial measure,~~Lease adjusted NOPAT, is as follows:

For the Periods Ended
(In millions, except percentage data) November 3, 2017 October 28, 2016
Calculation of Return on Invested Capital
Numerator ¹

Net earnings $ 3,556
$ 2,441
Plus:
Interest expense - net 639
630
Loss on extinguishment of debt 464
—
Provision for income taxes 2,099
1,945
Net operating profit 6,758
5,016
Less:
Income tax adjustment ²
2,509
2,066
Net operating profit after tax $ 4,249
$ 2,950
Effective tax rate 37.1 % 44.3 %
Denominator
Average debt and equity ³
$ 21,806
$ 21,725
Return on invested capital 19.5 % 13.6 %

Calculation of Return on Average Debt and Equity
Numerator ¹

Net earnings $ 3,556
$ 2,441
Denominator
Average debt and equity ³
$ 21,806
$ 21,725
Return on average debt and equity 16.3 % 11.2 %


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Table of Contents

^{For the Periods Ended
(In millions, except percentage data) August 4, 2023 July 29, 2022
Calculation of Return on Invested Capital
Numerator
Net Earnings $ 6,044 $ 8,427
Plus:
Interest expense – net 1,305 966
Operating lease interest 158 159
Provision for income taxes 2,452 2,776
Lease adjusted net operating profit 9,959 12,328
Less:
Income tax adjustment 1 2,874 3,055
Lease adjusted net operating profit after tax $ 7,085 $ 9,273
Denominator
Average debt and shareholders’ deficit 2 $ 25,504 $ 26,849
Net earnings to average debt and shareholders’ deficit 23.7 % 31.4 %
Return on invested capital 3 27.8 % 34.5 %}

1 ~~Amounts used in the calculation of the numerator are based on the trailing four quarters.~~

²Income tax adjustment is defined as lease adjusted net operating profit multiplied by the effective tax ~~rate.~~


³	~~Average debt and equity is defined as average debt, including current maturities and short-term borrowings, plus total equity for the last five quarters.~~

rate, which was 28.9% and 24.8% for the periods ended August 4, 2023, and July 29, 2022, respectively.

2Average debt and shareholders’ deficit is defined as average current year and prior year ending debt, including current maturities, short-term borrowings, and operating lease liabilities, plus the average current year and prior year ending total shareholders’ deficit.

3 For the period ended August 4, 2023, return on invested capital was negatively impacted 750 basis points as a result of the sale of the Canadian retail business.

Results of Operations

Net Sales – Net sales in the ~~third~~second quarter of ~~2017 increased 6.5%~~2023 decreased 9.2% to ~~$16.8~~$25.0 billion. The ~~increase~~decrease in total sales was primarily driven ~~primarily~~ by anthe sale of the Canadian retail business in fiscal 2022, which generated $1.7 billion of net sales in the second quarter of 2022. Comparable sales declined 1.6% over the same period, consisting of a 1.9% decline in comparable customer transactions, partially offset by a 0.3% increase in comparable average ticket. Total sales also declined approximately $335 million due to the ~~acquisitions~~timing shift in our fiscal calendar, in which the second quarter of ~~Maintenance Supply Headquarters~~fiscal 2023 (a 52-week year) included one less week of spring and ~~Central Wholesalers, Inc.,~~one more week of summer than fiscal 2022 (a 53-week year).

During the second quarter of 2023, we experienced comparable sales increases in six of 14 product categories, led by Building Materials, Lawn & Garden, and ~~new stores partially offset~~Seasonal & Outdoor Living. Strength in Building Materials reflects continued growth with our Pro customers. Lawn & Garden and Seasonal & Outdoor Living benefited from delayed seasonal sales from the first quarter due to the late start to spring weather. Although our lowest comparable sales were in Lumber due to significant commodity deflation, the highest unit sales increases were also in this category, demonstrating strong Pro customer demand.

Net sales decreased 7.5% to $47.3 billion for the first six months of 2023 compared to 2022. The decrease in total sales was primarily driven by the ~~calendar shift from~~sale of the 53^rd ~~week~~Canadian retail business in fiscal ~~2016.~~2022, which generated $2.9 billion of net sales in the first six months of 2022. Comparable sales ~~increased 5.7%~~also declined 2.9% over the same period, driven by a ~~4.8% increase~~2.9% decline in comparable customer transactions, while comparable average ticket ~~and a 0.9% increase in comparable customer transactions. Acquisitions and new stores contributed 0.7% and 0.5% to sales growth, respectively, while~~was flat.

Gross Margin – For the ~~calendar week shift negatively impacted sales 0.4% for the third~~second quarter of ~~2017.~~

During the third quarter of 2017, all product categories experienced comparable sales increases, with comparable sales increases above the company average in Lumber & Building Materials, Appliances, and Rough Plumbing & Electrical. Lumber & Building Materials benefited from an increased demand for hurricane-related products such as plywood, pressure-treated lumber, fencing, shingles, drywall, and insulation, an increase in Pro customer demand, and inflation. Strong brand and service advantages in Appliances, as well as our continued investment in customer experience both in-store and online, drove double-digit comparable sales during the quarter. We also achieved strong comparable sales in Rough Plumbing & Electrical driven by continued improvements in brand relevance and demand from the Pro customer.

Net sales increased 7.9% to $53.1 billion for the first nine months of 2017 compared to 2016. RONA represented 2.6% of the sales growth. Comparable sales increased 4.0% over the same period, primarily driven by a 3.9% increase in comparable average ticket and a 0.1% increase in customer transactions.

~~Gross Margin –~~ ~~For the third quarter of 2017,~~2023, gross margin ~~decreased 28 basis points~~ as a percentage of ~~sales. Gross~~sales increased 42 basis points. The gross margin ~~was negatively impacted~~increase for the quarter is driven by ~~25 basis points due to competitive actions~~lower transportation costs, favorable product mix, and ~~20 basis points due to mix of products sold. These were~~productivity initiatives, partially offset by ~~approximately 25 basis points of leverage as we cycled the inclusion of purchase price adjustments in the prior year related to RONA’s opening balance sheet primarily~~higher costs associated with ~~inventory, as well as~~ the ~~mix~~expansion of ~~the RONA business.~~our supply chain network.

Gross margin as a percentage of sales ~~decreased 36~~increased seven basis points in the first ~~nine~~six months of ~~2017~~2023 compared to ~~2016~~2022 primarily due to the same factors that impacted gross margin infor the ~~third~~second quarter.


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Table of Contents

SG&A – For the ~~third~~second quarter of ~~2017,~~2023, SG&A expense ~~leveraged 323~~deleveraged 16 basis points as a percentage of sales compared to the ~~third~~second quarter of ~~2016. This was~~2022 primarily ~~driven by 184 basis points of leverage~~ due to fixed cost pressure compared to lower sales, which was partially offset by the ~~prior year non-cash impairment charge related to the investment in the Australian joint venture, 61 basis points~~benefit of leverage associated with the prior year write-off of canceled technology-enabled projects, and 48 basis points of leverage associated with goodwill and long-lived asset impairments related to Orchard operations recorded in the prior year. In addition, operating salaries leveraged 27 basis points as we streamlined our store leadership model.a legal settlement.

SG&A expense as a percentage of sales leveraged ~~115~~39 basis points inas a percentage of sales for the first ~~nine~~six months of ~~2017~~2023 compared to ~~2016. This was driven~~2022 primarily ~~by 77 basis points of leverage attributable~~due to ~~the prior year non-cash impairment charge~~legal settlements and the ~~current year~~gain on contingent consideration associated with the fiscal 2022 sale of ~~our interest in~~ the Australian joint venture, 35 basis points of leverage in operating salaries, 19 basis points of leverage due to the prior year write-off of canceled technology-enabled projects, and 15 basis points of leverage associated with goodwill and long-lived asset impairments related to Orchard operations recorded in the prior year. These wereCanadian retail business, partially offset by ~~15 basis points of deleverage primarily due~~fixed cost pressure compared to ~~the prior year settlement of the foreign currency option contract entered into in advance of the RONA acquisition and 11 basis points of deleverage in risk insurance.~~lower sales.

Depreciation and Amortization – Depreciation and amortization ~~leveraged 31~~deleveraged eight basis points as a percentage of sales for the ~~third~~second quarter of ~~2017~~2023 compared to the prior year primarily due to the increase in sales and assets becoming fully depreciated, partially offset by incremental expense due to the acquisition of Maintenance Supply Headquarters. Property, less accumulated depreciation, decreased to $19.8 billion at November 3, 2017, compared to $20.0 billion at October 28, 2016. As of November 3, 2017 and October 28, 2016, we owned 78% and 79% of our stores, respectively, which included stores on leased land.2022.

Depreciation and amortization ~~leveraged 24~~deleveraged three basis points as a percentage of sales for the first ~~nine~~six months of ~~2017~~2023 compared to ~~2016~~2022.

Interest – Net – Net interest expense for the second quarter of 2023 deleveraged 40 basis points primarily due to interest expense related to the issuance of unsecured notes over the past year, partially offset by interest income on our cash equivalents and short-term investments.

Net interest expense for the first six months of 2023 deleveraged 46 basis points primarily due to the same factors that impacted ~~depreciation and amortization for the third quarter.~~

~~Interest – Net~~ ~~– Interest~~interest expense for the third quarter and first nine months of 2017 decreased primarily as a result of the cash tender offer to purchase and retire $1.6 billion aggregate principal amount of our outstanding notes and the payoff of scheduled debts at maturity. These were partially offset by the issuance of unsecured notes in April 2016 and May 2017, respectively.second quarter.

~~Loss on Extinguishment of Debt~~ ~~– During the first quarter of 2017, we repurchased and retired $1.6 billion aggregate principal amount of our outstanding debt resulting in a loss on extinguishment of debt of $464 million.~~

Income Tax Provision – Our effective income tax rates were ~~37.1%~~24.6% and ~~51.2%~~24.5% for the three months ended ~~November 3, 2017~~August 4, 2023 and October 28, 2016, respectively. During the third quarter of 2016, the Company recognized a non-cash impairment charge associated with our investment in the Australian joint venture. The loss was considered capital in natureJuly 29, 2022, respectively, and since no capital gains were identified through which the Company could utilize this loss, a full deferred tax valuation allowance was established. As a result, the loss did not result in a tax benefit.

~~Our effective income tax rates were 36.3%~~23.9% and ~~40.6%~~24.2% for the ~~nine~~six months ended ~~November 3, 2017~~August 4, 2023 and ~~October 28, 2016,~~July 29, 2022, respectively. The lower effective income tax rate for the nine months ended November 3, 2017 was primarily attributable to the non-cash impairment charge associated with our investment in the Australian joint venture, and from the sale of this investment during the second quarter of fiscal 2017, which did not result in tax expense due to the reduction of the previously established deferred tax valuation allowance.

During 2017, we adopted ASU 2016-09 regarding improvements to employee share-based accounting requiring entities to recognize excess tax benefits and deficiencies within income taxes. Previously, excess tax benefits and certain tax deficiencies were recorded within equity. This change resulted in a favorable discrete item for the nine months ended November 3, 2017, and reduced our effective income tax rate by 76 basis points.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Sources of Liquidity

Cash flows from operations, combined with our continued access to capital markets on both a short-term and long-term basis, as needed, remain adequate to fund our operations, make strategic investments to support long-term growth, and return excess cash to shareholders in the form of dividends and share repurchases. We believe these sources of liquidity will continue to support our business for the next twelve months. As of August 4, 2023, we held $3.5 billion of cash and cash equivalents, as well as $4.0 billion in undrawn capacity on our revolving credit facilities.

Cash Flows Provided by Operating Activities


	Six Months Ended
(In millions)	August 4, 2023		July 29, 2022
Net cash provided by operating activities	$	5,968	$	6,012

~~The following table summarizes our cash flow activities for the nine months ended November 3, 2017 and October 28, 2016:~~

Nine Months Ended
(In millions) November 3, 2017 October 28, 2016
Net cash provided by (used in):
Operating activities 5,372
5,269
Investing activities (1,072 ) (3,052 )
Financing activities (4,130 ) (1,656 )

Cash flows from operating activities continued to provide the primary source of our liquidity. The ~~increase~~decrease in net cash provided by operating activities for the ~~nine~~six months ended ~~November 3, 2017, versus~~August 4, 2023, compared to the ~~nine~~six months ended ~~October 28, 2016,~~July 29, 2022, was driven primarily by ~~an increase~~timing of income tax payments and a decline in net earnings, ~~adjusted for non‐cash expenses~~ partially offset by changes in working capital. Other operating liabilities decreased operating cash flows by $1.4 billion during the first six months of fiscal 2023. This decrease is primarily driven by the payment of our third and fourth quarter fiscal 2022 estimated federal tax payments that were deferred until the first quarter of fiscal 2023 under the income tax relief announced by the Internal Revenue Service for businesses located in states impacted by Hurricane Ian. Inventory increased operating cash flows by approximately $1.1 billion. Inventory declined in the current year as we continue to manage inventory replenishment in line with sales trends.

~~The decrease~~Cash Flows Used in ~~net~~Investing Activities


	Six Months Ended
(In millions)	August 4, 2023		July 29, 2022
Net cash used in investing activities	$	(715)	$	(709)

Net cash used in investing activities primarily consists of transactions related to capital expenditures.


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Table of Contents

Capital expenditures

Our capital expenditures generally consist of investments in our strategic initiatives to enhance our ability to serve customers, improve existing stores, and support expansion plans. The following table provides our capital expenditures for the ~~nine~~six months ended ~~November 3, 2017, versus~~August 4, 2023, and July 29, 2022:


	Six Months Ended
(In millions)	August 4, 2023		July 29, 2022
Existing store investments 1	$	570	$	495
Strategic initiatives 2	170		103
New stores and corporate facilities 3	25		89
Total capital expenditures	$	765	$	687

1Includes merchandising resets, facility repairs, replacements of IT and store equipment, among other specific efforts.

2Represents investments related to our strategic focus areas aimed at improving customers’ experience and driving improved performance in the ~~nine months ended October 28, 2016, was driven~~near and long term.

3Represents expenditures primarily ~~by a decrease~~related to land purchases, buildings, and personal property for new store and corporate facilities projects.

For fiscal 2023, our guidance for capital expenditures is up to $2.0 billion.

Cash Flows Used in cash used to acquire businesses and a decrease in purchases of investments and derivative instruments, partially offset by a decrease in proceeds from the sale/maturity of investments and derivative instruments. We used $509 million to acquire Maintenance Supply Headquarters during the first nine months of 2017 compared to $2.3 billion to acquire RONA during the first nine months of 2016.Financing Activities


	Six Months Ended
(In millions)	August 4, 2023		July 29, 2022
Net cash used in financing activities	$	(3,107)	$	(4,954)

~~The increase in~~

Net cash used in financing activities ~~for~~primarily consists of transactions related to our long-term debt, share repurchases, and cash dividend payments.

Total Debt

During the ~~nine~~six months ended November 3, 2017, versus the nine months ended October 28, 2016, was driven primarily by the completion of a cash tender offer in May 2017, a decrease in net proceeds from the issuance of long-term debt, and an increase in repayments of short-term borrowings. We paid approximately $2.0 billion to purchase $1.6 billion of our higher coupon notes prior to maturity in connection with the cash tender offer. WeAugust 4, 2023, we issued $3.0 billion of unsecured notes, the proceeds of which were designated for general corporate purposes.

Our commercial paper program is supported by the 2020 Credit Agreement and the Third Amended and Restated Credit Agreement. The amounts available to ~~fund~~be drawn under the ~~tender offer~~2020 Credit Agreement and ~~finance current year maturities (see Note 8 to~~ the ~~consolidated financial statements included herein for additional information). In April 2016, we issued $3.3 billion~~Third Amended and Restated Credit Agreement are reduced by the amount of ~~unsecured notes to fund the acquisition of RONA.~~

~~Sources of Liquidity~~

~~Liquidity is provided primarily by~~borrowings under our ~~cash flows from operations, short-term borrowing facilities, and long-term debt.~~

We have a $1.75 billion unsecured revolving credit agreement with a syndicate of banks that expires in November 2021. Subject to obtaining commitments from the lenders and satisfying other conditions specified in the credit agreement, we may increase the aggregate availability by an additional $500 million. The credit facility supportscommercial paper program. There were no outstanding borrowings under our commercial paper program, 2020 Credit Agreement, or the Third Amended and ~~has a $500 million letter~~Restated Credit Agreement as of ~~credit sublimit. Letters~~August 4, 2023. Total combined availability under the 2020 Credit Agreement and the Third Amended and Restated Credit Agreement as of ~~credit issued pursuant to~~August 4, 2023 was $4.0 billion.

The 2020 Credit Agreement and the ~~credit facility reduce the amount available for borrowing under its terms. Borrowings made are unsecured~~Third Amended and ~~priced at fixed rates based upon market conditions at the time of funding in accordance with the terms of the credit facility. The credit agreement contains~~Restated Credit Agreement contain customary representations, warranties, and ~~covenants for a transaction of this type.~~covenants. We were in compliance with those covenants at ~~November 3, 2017.~~ August 4, 2023.

The following table includes additional information related to our debt for the six months ended August 4, 2023, and July 29, 2022:


	Six Months Ended
(In millions)	August 4, 2023		July 29, 2022
Net proceeds from issuance of debt	$	2,983	$	4,964
Repayment of debt	(45)		(799)
Net change in commercial paper	(499)		—
Maximum commercial paper outstanding at any period	2,195		1,361


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Table of Contents

Share Repurchases

We have an ongoing share repurchase program, authorized by the Company’s Board of Directors, that is executed through purchases made from time to time either in the open market or through private off-market transactions. We also withhold shares from employees to satisfy tax withholding liabilities. Shares repurchased are retired and returned to authorized and unissued status. The following table provides, on a settlement date basis, the total number of shares repurchased, average price paid per share, and the total cash used to repurchase shares for the six months ended August 4, 2023, and July 29, 2022:


	Six Months Ended
(In millions, except per share data)	August 4, 2023		July 29, 2022
Total amount paid for share repurchases	$	4,356	$	8,128
Total number of shares repurchased	21.0		40.7
Average price paid per share	$	207.60	$	199.61

As of ~~November 3, 2017, there were $171 million of outstanding borrowings~~August 4, 2023, we had $16.6 billion remaining available under our share repurchase program with no expiration date.

Dividends

Dividends are paid in the ~~commercial paper program and no outstanding borrowings or letters of credit under~~quarter immediately following the ~~credit facility.~~quarter in which they are declared. Dividends paid per share increased from $1.60 per share for the six months ended July 29, 2022, to $2.10 per share for the six months ended August 4, 2023.

Capital Resources

We expect to continue to have access to the capital markets on both ~~short-~~a short-term and long-term ~~bases~~basis when needed for liquidity purposes by issuing commercial paper or new long-term debt. The availability and the borrowing costs of these funds could be adversely affected, however, by a downgrade of our debt ratings or a deterioration of certain financial ratios. The table below reflects our debt ratings by Standard & Poor’s (S&P) and Moody’s as of ~~December 5, 2017,~~August 30, 2023, which we are disclosing to enhance understanding of our sources of liquidity and the effect of our ratings on our cost of funds. ~~Although we currently do not expect a downgrade in~~Our debt ratings have enabled, and should continue to enable, us to refinance our debt ~~ratings, our~~as it becomes due at favorable rates in capital markets. Our commercial paper and senior debt ratings may be subject to revision or withdrawal at any time by the assigning rating organization, and each rating should be evaluated independently of any other rating.



Debt Ratings	S&P	Moody’s
Commercial Paper	A-2	P-2
Senior Debt	A-BBB+	A3Baa1
Senior Debt Outlook	Stable	Stable

We believe that net cash provided by operating and financing activities will be adequate not only for our operating requirements, but also for investments in our existing stores and distribution facilities, investments in information technology, expansion plans, acquisitions, if any, and to return cash to shareholders through both dividends and share repurchases over the next 12 months. There are no provisions in any agreements that would require early cash settlement of existing debt or leases as a result of a downgrade in our debt rating or a decrease in our stock price. ~~In addition, we do not believe it will be necessary to repatriate significant cash and cash equivalents and short-term investments held in foreign affiliates to fund domestic operations.~~

~~Cash Requirements~~

~~Capital expenditures~~

Our fiscal 2017 capital forecast is approximately $1.2 billion. Investments in our existing stores, including investments in remerchandising, store equipment, and technology, are expected to account for approximately 45% of net cash outflow. Our expansion plans are expected to account for approximately 30% of planned net cash outflow. Approximately 20% of planned net cash outflow is for corporate programs, including investments to enhance the customer experience, as well as enhancements to the corporate infrastructure. Other planned capital expenditures, accounting for approximately 5% of planned net cash outflow, are for investments in our existing distribution network.

~~Debt and capital~~

Unsecured debt of $250 million is scheduled to mature in September 2018. See Note 8 to the consolidated financial statements included herein for additional information regarding long-term debt, including fiscal year 2017 financing activities.

We have an ongoing share repurchase program, authorized by the Company’s Board of Directors, which is executed through purchases made from time to time either in the open market or through private off-market transactions. Shares purchased under the share repurchase program are retired and returned to authorized and unissued status. As of November 3, 2017, we had $2.1 billion remaining available under our share repurchase program with no expiration date. Our fiscal year 2017 guidance assumes approximately $3.5 billion in share repurchases for the fiscal year. See Note 9 to the consolidated financial statements included herein for additional information regarding share repurchases.

Dividends declared during the third quarter of 2017 totaled $341 million. Our dividend payment dates are established such that dividends are paid in the quarter immediately following the quarter in which they are declared.

~~OFF-BALANCE SHEET ARRANGEMENTS~~

Other than in connection with executing operating leases, we do not have any off-balance sheet financing that has, or is reasonably likely to have, a material, current or future effect on our financial condition, cash flows, results of operations, liquidity, capital expenditures or capital resources.

~~CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS~~

During the first quarter of 2017, we issued $3.0 billion of unsecured notes in the ordinary course of business and used the proceeds from this issuance to repurchase $1.6 billion of unsecured debt before maturity. We also repaid $750 million of debt maturities during the first nine months of 2017. The table below summarizes our contractual obligations relating to long-term debt, excluding capitalized lease obligations, at November 3, 2017. Interest payments included in the table below are calculated based on the rates in effect at November 3, 2017. The unsecured notes are further described in Note 8 to the consolidated financial statements included herein.

Payments Due by Period
(In millions) Total
Less Than 1 Year
1-3 Years
4-5 Years
After 5 Years
Long-term debt (principal amounts, excluding discounts and debt issuance costs) $ 15,115
$ 251
$ 1,551
$ 1,786
$ 11,527
Long-term debt (interest payments) 9,350
576
1,111
1,013
6,650
Total $ 24,465
$ 827
$ 2,662
$ 2,799
$ 18,177

As of November 3, 2017, there were no other material changes to our contractual obligations and commercial commitments outside the ordinary course of business since the end of 2016. Refer to the Annual Report for additional information regarding our contractual obligations and commercial commitments.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our significant accounting policies are described in Note 1 to the consolidated financial statements presented in the Annual Report. Our critical accounting policies and estimates are described in “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Annual Report. Our significant and critical accounting policies and estimates have not changed significantly since the filing of the Annual Report.

~~FORWARD-LOOKING STATEMENTS~~

This Form 10-Q includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements including words such as “believe,” “expect,” “anticipate,” “plan,” “desire,” “project,” “estimate,” “intend,” “will,” “should,” “could,” “would,” “may,” “strategy,” “potential,” “opportunity,” and similar expressions are forward-looking statements. Forward-looking statements involve estimates, expectations, projections, goals, forecasts, assumptions, risks and uncertainties. Forward-looking statements include, but are not limited to, statements about future financial and operating results, Lowe’s plans, objectives, business outlook, priorities, expectations and intentions, expectations for sales growth, comparable sales, earnings and performance, shareholder value, capital expenditures, cash flows, the housing market, the home improvement industry, demand for services, share repurchases, Lowe’s strategic initiatives, including those relating to acquisitions by Lowe’s and the expected impact of such transactions on our strategic and operational plans and financial results, and any statement of an assumption underlying any of the foregoing and other statements that are not historical facts. Although we believe that the expectations, opinions, projections and comments reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and we can give no assurance that such statements will prove to be correct. Actual results may differ materially from those expressed or implied in such statements.

A wide variety of potential risks, uncertainties and other factors could materially affect our ability to achieve the results either expressed or implied by these forward-looking statements including, but not limited to, changes in general economic conditions, such as the rate of unemployment, interest rate and currency fluctuations, fuel and other energy costs, slower growth in personal income, changes in consumer spending, changes in the rate of housing turnover, the availability of consumer credit and of mortgage financing, inflation or deflation of commodity prices, and other factors that can negatively affect our customers, as well as our ability to: (i) respond to adverse trends in the housing industry, a reduced rate of growth in household formation, and slower rates of growth in housing renovation and repair activity, as well as uneven recovery in commercial building activity; (ii) secure, develop, and otherwise implement new technologies and processes necessary to realize the benefits of our strategic initiatives focused on omni-channel sales and marketing presence and enhance our efficiency; (iii) attract, train, and retain highly-qualified associates; (iv) manage our business effectively as we adapt our operating model to meet the changing expectations of our customers; (v) maintain, improve, upgrade and protect our critical information systems from data security breaches, ransomware and other cyber threats; (vi) respond to fluctuations in the prices and availability of services, supplies, and products; (vii) respond to the growth and impact of competition; (viii) address changes in existing or new laws or regulations that affect consumer credit, employment/labor, trade, product safety, transportation/logistics, energy costs, health care, tax or environmental issues; (ix) positively and effectively manage our public image and reputation and respond appropriately to unanticipated failures to maintain a high level of product and service quality that could result in a negative impact on customer confidence and adversely affect sales; and (x) effectively manage our relationships with selected suppliers of brand name products and key vendors and service providers, including third-party installers. In addition, we could experience impairment losses if either the actual results of our operating stores are not consistent with the assumptions and judgments we have made in estimating future cash flows and determining asset fair values, or we are required to reduce the carrying amount of our investment in certain unconsolidated entities. With respect to acquisitions, potential risks include the effect of such transactions on Lowe’s and the target company’s strategic relationships, operating results and businesses

generally; our ability to integrate personnel, labor models, financial, IT and other systems successfully; disruption of our ongoing business and distraction of management; hiring additional management and other critical personnel; increasing the scope, geographic diversity, and complexity of our operations; significant integration costs or unknown liabilities; and failure to realize the expected benefits of the transaction. For more information about these and other risks and uncertainties that we are exposed to, you should read “Item 1A - Risk Factors” and “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates” included in our most recent Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the SEC) and the description of material changes thereto, if any, included in our Quarterly Reports on Form 10-Q or subsequent filings with the SEC.

The forward-looking statements contained in this Form 10-Q are expressly qualified in their entirety by the foregoing cautionary statements. The foregoing list of important factors that may affect future results is not exhaustive. When relying on forward-looking statements to make decisions, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. All such forward-looking statements are based upon data available as of the date of this Form 10-Q or other specified date and speak only as of such date. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf about any of the matters covered in this Form 10-Q are qualified by these cautionary statements and the risk factors disclosed in “Item 1A - Risk Factors” in the Annual Report and the description of material changes thereto, if any, included in our Quarterly Reports on Form 10-Q or subsequent filings with the SEC. We expressly disclaim any obligation to update or revise any forward-looking statement, whether as a result of new information, change in circumstances, future events or otherwise, except as may be required by law.

Item 3. - Quantitative and Qualitative Disclosures about Market Risk

The Company is exposed to certain market risks, including changes in ~~foreign currency exchange rates related to our international operations,~~ interest rates and commodity prices. The Company’s market risks have not changed materially from ~~that~~those disclosed in the Annual Report for the fiscal year ended February 3, ~~2017.~~2023.


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Item 4. - Controls and Procedures

The Company’s management, with the participation of the Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of the Company’s “disclosure controls and procedures,” (as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the Exchange Act)). Based upon their evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that, as of ~~November 3, 2017,~~August 4, 2023, the Company’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the SEC (1) is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

~~In addition, no~~The Company is undergoing a multi-year technology transformation which includes updating and modernizing our merchandise selling system, as well as certain accounting and finance systems. These updates are expected to continue for the next few years, and management will continue to evaluate the design and implementation of the Company’s internal controls over financial reporting as the transformation continues. No change in the Company’s internal control over financial reporting occurred during the quarter ended ~~November 3, 2017,~~August 4, 2023, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.


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Table of Contents

Part II – OTHER INFORMATION

Item 1. - Legal Proceedings

~~The~~In addition to the matter referenced in our annual report on Form 10-K for the fiscal year ended February 3, 2023, the Company is from time to time a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. With respect to such lawsuits, claims and proceedings, the Company records reserves when it is probable a liability has been incurred and the amount of loss can be reasonably estimated. The Company does not believe that any of these proceedings, individually or in the aggregate, would be expected to have a material adverse effect on its results of operations, financial position or cash flows. The Company maintains liability insurance for certain risks that are subject to certain self-insurance limits.

Item 1A. - Risk Factors

There have been no material changes in the Company’s risk factors from those disclosed in Part I, “Item ~~1A -~~1A. Risk Factors” in our Annual Report filed with the ~~Annual Report.~~SEC on March 27, 2023.

Item 2. - Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

The following table sets forth information with respect to purchases of the Company’s common stock on a trade date basis made during the ~~third~~three months ended August 4, 2023:


	Total Number of Shares Purchased 1	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs 2	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs 2, 3
May 6, 2023 - June 2, 2023 4	6,474,323	$	212.42	6,470,714	$	17,208,764,263
June 3, 2023 - July 7, 2023	2,971,519	217.04		2,961,820	16,566,000,487
July 8, 2023 - August 4, 2023 4	661,646	217.86		661,498	16,566,000,487
As of August 4, 2023	10,107,488	$	214.14	10,094,032	$	16,566,000,487

1The total number of shares repurchased includes shares withheld from employees to satisfy either the exercise price of stock options or the statutory withholding tax liability upon the vesting of share-based awards.

2On December 7, 2022, the Company announced that its Board of Directors authorized an additional $15.0 billion of share repurchases, in addition to the $13.0 billion of share repurchases authorized by the Board of Directors in December 2021, with no expiration.

3Beginning January 1, 2023, the Company’s share repurchases in excess of issuances are subject to a 1% excise tax enacted by the Inflation Reduction Act. Any excise tax incurred on share repurchases is recognized as part of the cost basis of the shares acquired in the consolidated statements of shareholders’ deficit.

4In May 2023, the Company entered into an Accelerated Share Repurchase (ASR) agreement with a third-party financial institution to repurchase the Company’s common stock. At inception, pursuant to the agreement, the Company paid $1.0 billion to the financial institution and received an initial delivery of 3.9 million shares. In August, prior to the end of the second quarter, the Company finalized the transaction and received an additional 0.7 million shares. The average price paid per share in settlement of ~~fiscal 2017:~~the ASR agreement included in the table above was determined with reference to the volume-weighted average price of the Company’s common stock over the term of the ASR agreement. See Note 8 to the consolidated financial statements included herein for additional information regarding share repurchases.

Item 5. - Other Information

During the three months ended August 4, 2023, none of the Company’s directors or executive officers adopted or terminated any contract, instruction, or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement” (as those terms are defined in Regulation S-K, Item 408).

Total Number of Shares Purchased ¹

Average Price Paid per Share

Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ²

Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs ²

August 5, 2017 - September 1, 2017 ³
4,638,797
$ 77.21
4,638,074
$ 2,197,136,831
September 2, 2017 - October 6, 2017 1,161,732
78.65
823,328
2,132,162,709
October 7, 2017 - November 3, 2017 ³
963,108
79.95
962,287
2,076,164,467
As of November 3, 2017 6,763,637
$ 77.84
6,423,689
$ 2,076,164,467


¹ 23			The total number of shares repurchased includes shares withheld from employees to satisfy either the exercise price of stock options or the statutory withholding tax liability upon the vesting of share-based awards.


²

Table of Contents

~~On January 27, 2017, the Company’s Board of Directors authorized a $5.0 billion share repurchase program with no expiration, which was announced on the same day.~~

In August 2017, the Company entered into an Accelerated Share Repurchase (ASR) agreement with a third-party financial institution to repurchase $250 million of the Company’s common stock. Pursuant to the agreement, the Company paid $250 million to the financial institution and received an initial delivery of 2.9 million shares. In November 2017, prior to the end of the third quarter of 2017, the Company finalized the transaction and received an additional 0.3 million shares. The average price paid per share in settlement of the ASR agreement included in the table above was determined with reference to the volume-weighted average price of the Company’s common stock over the term of the ASR agreement. See Note 9~~to the consolidated financial statements included herein for additional information regarding share repurchases.~~

Item 6. - Exhibits

Exhibit
Number

Incorporated by Reference

Exhibit Description

Form

File No.

Exhibit

Filing Date

3.1

Restated Charter of Lowe’s Companies, Inc.

10-Q

001-07898

3.1

September 1, 2009

3.2

Bylaws of Lowe’s Companies, Inc., as amended and restated November 11, 2022.

8-K

001-07898

3.1

November 16, 2022

10.1

Form of Lowe’s Companies, Inc. Deferred Stock Unit Agreement for Nonemployee Directors.*‡

15.1

Deloitte & Touche LLP Letter re Unaudited Interim Financial Information.‡

31.1

Certification of Principal Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.‡

31.2

Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.‡

32.1

Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.†

32.2

Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.†

101.INS

Inline XBRL Instance Document – the XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.‡

101.SCH

Inline XBRL Taxonomy Extension Schema Document.‡

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document.‡

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document.‡

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document.‡

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document.‡

104

Cover Page Interactive Data File (formatted as Inline XBRL document and included in Exhibit 101).‡

Indicates a management contract or compensatory plan or arrangement.

‡

Filed herewith.

†

Furnished herewith.

Exhibit
Number
Incorporated by Reference
Exhibit Description Form File No. Exhibit Filing Date

3.1
Restated Charter of Lowe’s Companies, Inc.
10-Q 001-07898 3.1 September 1, 2009

3.2
Bylaws of Lowe’s Companies, Inc., as amended and restated May 27, 2016.
8-K 001-07898 3.1 May 31, 2016

12.1
Statement re Computation of Ratio of Earnings to Fixed Charges.‡

15.1
Deloitte & Touche LLP Letter re Unaudited Interim Financial Information.‡

31.1
Certification of Principal Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.‡

31.2
Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.‡

32.1
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.†

32.2
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.†

101.INS XBRL Instance Document.‡

101.SCH XBRL Taxonomy Extension Schema Document.‡

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document.‡

101.DEF XBRL Taxonomy Extension Definition Linkbase Document.‡

101.LAB XBRL Taxonomy Extension Label Linkbase Document.‡

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document.‡

‡ Filed herewith.
† Furnished herewith.


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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		LOWE’S COMPANIES, INC.
		(Registrant)

August 30, 2023		~~LOWE’S COMPANIES, INC.~~By: /s/ Dan C. Griggs, Jr.
Date		~~(Registrant)~~

~~December 5, 2017~~	~~By: /s/ Matthew V. Hollifield~~
~~Date~~	~~Matthew V. Hollifield~~ Dan C. Griggs, Jr. Senior Vice President, Tax and Chief Accounting Officer


25


						Page No.
Forward-Looking Statements						ii
PART I - Financial Information						1
			Item 1.		Financial Statements	1
					Consolidated Statements of Earnings	1
					Consolidated Statements of Comprehensive Income	1
					Consolidated Balance Sheets	2
					Consolidated Statements of Shareholders’ Deficit	3
					Consolidated Statements of Cash Flows	5
					Notes to Consolidated Financial Statements	6
					Note 1: Summary of Significant Accounting Policies	6
					Note 2: Revenue	6
					Note 3: Restricted Investments	8
					Note 4: Fair Value Measurements	8
					Note 5: Accounts Payable	9
					Note 6: Debt	10
					Note 7: Derivative Instruments	10
					Note 8: Shareholders’ Deficit	11
					Note 9: Earnings Per Share	12


~~PART I - Financial Information~~			~~Page No.~~

	~~Item 1.~~	~~Financial Statements~~

		~~Consolidated Balance Sheets — November 3, 2017 (Unaudited), October 28, 2016 (Unaudited) and February 3, 2017~~Note 10: Supplemental Disclosure		313

					~~Consolidated Statements of Current and Retained Earnings (Unaudited) — Three and nine months ended November 3, 2017 and October 28, 2016~~	4

		~~Consolidated Statements of Comprehensive Income (Unaudited) — Three and nine months ended November 3, 2017 and October 28, 2016~~	4

		~~Consolidated Statements of Cash Flows (Unaudited) — Nine months ended November 3, 2017 and October 28, 2016~~	5

		~~Notes to Consolidated Financial Statements (Unaudited)~~	6

		Report of Independent Registered Public Accounting Firm	14

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		15

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk		2421

	Item 4.	Controls and Procedures		2422

PART II - Other Information			23

	Item 1.	Legal Proceedings		2523

	Item 1A.	Risk Factors		2523

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		2523

	Item 6.5.	~~Exhibits~~Other Information		2623
			Item 6.		Exhibits	24
					Signature	2725



o☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



		(Unaudited)		(Unaudited)
		November 3, 2017		October 28, 2016			February 3, 2017
Assets
Current assets:
Cash and cash equivalents		$	743	$	960		$	558
Short-term investments		85		123			100
Merchandise inventory - net		12,393		10,990			10,458
Other current assets		788		655			884
Total current assets		14,009		12,728			12,000
Property, less accumulated depreciation		19,818		20,037			19,949
Long-term investments		370		436			366
Deferred income taxes - net		347		331			222
Goodwill		1,327		1,034			1,082
Other assets		912		804			789
Total assets		$	36,783	$	35,370		$	34,408

Liabilities and equity
Current liabilities:
Short-term borrowings		$	171	$	—		$	510
Current maturities of long-term debt		297		800			795
Accounts payable		8,903		7,836			6,651
Accrued compensation and employee benefits		808		704			790
Deferred revenue		1,404		1,258			1,253
Other current liabilities		2,155		2,035			1,975
Total current liabilities		13,738		12,633			11,974
Long-term debt, excluding current maturities		15,570		14,395			14,394
Deferred revenue - extended protection plans		794		745			763
Other liabilities		939		889			843
Total liabilities		31,041		28,662			27,974

Equity:
Preferred stock - $5 par value, none issued		—		—			—
Common stock - $0.50 par value;
Shares issued and outstanding
November 3, 2017	831
October 28, 2016	873
February 3, 2017	866	415		437			433
Capital in excess of par value		—		—			—
Retained earnings		5,289		6,376			6,241
Accumulated other comprehensive income/(loss)		38		(214		)	(240		)
Total Lowe’s Companies, Inc. shareholders’ equity		5,742		6,599			6,434
Noncontrolling interest		—		109			—
Total equity		5,742		6,708			6,434
Total liabilities and equity		$	36,783	$	35,370		$	34,408


	Three Months Ended								Nine Months Ended									Three Months Ended								Six Months Ended
	November 3, 2017				October 28, 2016				November 3, 2017				October 28, 2016					August 4, 2023				July 29, 2022				August 4, 2023				July 29, 2022
Current Earnings	Amount			% Sales	Amount			% Sales	Amount			% Sales	Amount			% Sales	Current Earnings	Amount		% Sales		Amount		% Sales		Amount		% Sales		Amount		% Sales
Net sales	$	16,770		100.00	$	15,739		100.00	$	53,125		100.00	$	49,233		100.00	Net sales	$	24,956	100.00	%	$	27,476	100.00	%	$	47,304	100.00	%	$	51,135	100.00	%
Cost of sales	11,057			65.93	10,332			65.65	34,942			65.77	32,201			65.41	Cost of sales	16,557		66.34		18,343		66.76		31,378		66.33		33,952		66.40
Gross margin	5,713			34.07	5,407			34.35	18,183			34.23	17,032			34.59	Gross margin	8,399		33.66		9,133		33.24		15,926		33.67		17,183		33.60
Expenses:																	Expenses:
Selling, general and administrative	3,808			22.71	4,084			25.94	11,615			21.87	11,340			23.02	Selling, general and administrative	4,086		16.38		4,455		16.22		7,912		16.73		8,758		17.12
Depreciation and amortization	358			2.13	384			2.44	1,080			2.03	1,115			2.27	Depreciation and amortization	427		1.71		449		1.63		841		1.78		894		1.75
Operating income	1,547			9.23	939			5.97	5,488			10.33	4,577			9.30	Operating income	3,886		15.57		4,229		15.39		7,173		15.16		7,531		14.73
Interest - net	160			0.96	163			1.04	479			0.91	486			0.99
Loss on extinguishment of debt	—			—	—			—	464			0.87	—			—
Interest – net																	Interest – net	341		1.36		264		0.96		689		1.45		507		0.99

Pre-tax earnings	1,387			8.27	776			4.93	4,545			8.55	4,091			8.31	Pre-tax earnings	3,545		14.21		3,965		14.43		6,484		13.71		7,024		13.74
Income tax provision	515			3.07	397			2.52	1,652			3.10	1,661			3.37	Income tax provision	872		3.50		973		3.54		1,551		3.28		1,699		3.33
Net earnings	$	872		5.20	$	379		2.41	$	2,893		5.45	$	2,430		4.94	Net earnings	$	2,673	10.71	%	$	2,992	10.89	%	$	4,933	10.43	%	$	5,325	10.41	%


Weighted average common shares outstanding - basic	831				873				843				884
Weighted average common shares outstanding – basic																	Weighted average common shares outstanding – basic	584				638				590				649
Basic earnings per common share	$	1.05			$	0.43			$	3.42			$	2.74			Basic earnings per common share	$	4.56			$	4.68			$	8.34			$	8.18
Weighted average common shares outstanding - diluted	832				874				844				886
Weighted average common shares outstanding – diluted																	Weighted average common shares outstanding – diluted	585				639				591				651
Diluted earnings per common share	$	1.05			$	0.43			$	3.42			$	2.73			Diluted earnings per common share	$	4.56			$	4.67			$	8.32			$	8.16
Cash dividends per share	$	0.41			$	0.35			$	1.17			$	0.98

Retained Earnings
Balance at beginning of period	$	5,253			$	6,839			$	6,241			$	7,593
Net earnings attributable to Lowe’s Companies, Inc.	872				378				2,893				2,428
Cash dividends declared	(341		)		(306		)		(984		)		(865		)
Share repurchases	(495		)		(535		)		(2,861		)		(2,780		)
Balance at end of period	$	5,289			$	6,376			$	5,289			$	6,376


	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)



(In millions)	June 23, 2017
Allocation:
Cash acquired	$	4
Merchandise inventory - net	68
Other current assets	36
Property	12
Goodwill	160
Other assets	260
Accounts payable	(18		)
Other current liabilities	(9		)
Net assets acquired	$	513



	Fair Value Measurements		Impairment Losses
(In millions)	October 28, 2016		Three Months Ended October 28, 2016			Nine Months Ended October 28, 2016
Assets-held-for-use:
Operating locations	$	3	$	(31	)	$	(34	)
Goodwill	—		(46		)	(46		)
Other assets:
Cost method investments	103		(290		)	(290		)
Total	$	106	$	(367	)	$	(370	)



Issue Date	Principal Amount (in millions)		Maturity Date	Fixed vs. Floating	Interest Rate	Discount (in millions)
May 3, 2017	$	1,500	May 2027	Fixed	3.100%	$	9
May 3, 2017	$	1,500	May 2047	Fixed	4.050%	$	23


¹	Reductions of $495 million and $535 million were recorded to retained earnings, after capital in excess of par value was depleted, for the three months ended November 3, 2017 and October 28, 2016, respectively.



	Three Months Ended				Basis Point Increase / (Decrease) in Percentage of Net Sales from Prior Period		Percentage Increase / (Decrease) in Dollar Amounts from Prior Period
	November 3, 2017		October 28, 2016		2017 vs. 2016		2017 vs. 2016
Net sales	100.00	%	100.00	%	N/A		6.5	%
Gross margin	34.07		34.35		(28	)	5.7
Expenses:
Selling, general and administrative	22.71		25.94		(323	)	(6.7	)
Depreciation and amortization	2.13		2.44		(31	)	(6.8	)
Operating income	9.23		5.97		326		64.7
Interest - net	0.96		1.04		(8	)	(2.1	)
Pre-tax earnings	8.27		4.93		334		78.8
Income tax provision	3.07		2.52		55		29.7
Net earnings	5.20	%	2.41	%	279		130.3	%



	For the Periods Ended
(In millions, except percentage data)	November 3, 2017			October 28, 2016
Calculation of Return on Invested Capital
Numerator ¹
Net earnings	$	3,556		$	2,441
Plus:
Interest expense - net	639			630
Loss on extinguishment of debt	464			—
Provision for income taxes	2,099			1,945
Net operating profit	6,758			5,016
Less:
Income tax adjustment ²	2,509			2,066
Net operating profit after tax	$	4,249		$	2,950
Effective tax rate	37.1		%	44.3		%
Denominator
Average debt and equity ³	$	21,806		$	21,725
Return on invested capital	19.5		%	13.6		%

Calculation of Return on Average Debt and Equity
Numerator ¹
Net earnings	$	3,556		$	2,441
Denominator
Average debt and equity ³	$	21,806		$	21,725
Return on average debt and equity	16.3		%	11.2		%



	Payments Due by Period
(In millions)	Total		Less Than 1 Year		1-3 Years		4-5 Years		After 5 Years
Long-term debt (principal amounts, excluding discounts and debt issuance costs)	$	15,115	$	251	$	1,551	$	1,786	$	11,527
Long-term debt (interest payments)	9,350		576		1,111		1,013		6,650
Total	$	24,465	$	827	$	2,662	$	2,799	$	18,177



	Total Number of Shares Purchased ¹	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ²	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs ²
August 5, 2017 - September 1, 2017 ³	4,638,797	$	77.21	4,638,074	$	2,197,136,831
September 2, 2017 - October 6, 2017	1,161,732	78.65		823,328	2,132,162,709
October 7, 2017 - November 3, 2017 ³	963,108	79.95		962,287	2,076,164,467
As of November 3, 2017	6,763,637	$	77.84	6,423,689	$	2,076,164,467