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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended November 3, 2023
or
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☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ______ to ______
Commission File Number 1-7898
LOWE’S COMPANIES, INC.
(Exact name of registrant as specified in its charter)
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North Carolina | | 56-0578072 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification No.) |
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1000 Lowes Blvd., Mooresville, North Carolina | | 28117 |
(Address of principal executive offices) | | (Zip Code) |
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Registrant’s telephone number, including area code: | | (704) 758-1000 |
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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:
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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. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted 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 such files). ☒ Yes ☐ 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.
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Large accelerated filer | ☒ | | Accelerated filer | ☐ |
Non-accelerated filer | ☐ | | Smaller reporting company | ☐ |
| | | Emerging growth company | ☐ |
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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ 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 11/27/2023 |
Common Stock, $0.50 par value | | 575,112,600 |
LOWE’S COMPANIES, INC.
- TABLE OF CONTENTS -
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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”, “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 Statements of Earnings (Unaudited)
In Millions, Except Per Share and Percentage Data
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| Three Months Ended | | Nine Months Ended |
| November 3, 2023 | | October 28, 2022 | | November 3, 2023 | | October 28, 2022 |
Current Earnings | Amount | | % Sales | | Amount | | % Sales | | Amount | | % Sales | | Amount | | % Sales |
Net sales | $ | 20,471 | | | 100.00 | % | | $ | 23,479 | | | 100.00 | % | | $ | 67,775 | | | 100.00 | % | | $ | 74,614 | | | 100.00 | % |
Cost of sales | 13,580 | | | 66.34 | | | 15,661 | | | 66.70 | | | 44,958 | | | 66.33 | | | 49,614 | | | 66.49 | |
Gross margin | 6,891 | | | 33.66 | | | 7,818 | | | 33.30 | | | 22,817 | | | 33.67 | | | 25,000 | | | 33.51 | |
Expenses: | | | | | | | | | | | | | | | |
Selling, general and administrative | 3,761 | | | 18.37 | | | 6,443 | | | 27.45 | | | 11,673 | | | 17.23 | | | 15,200 | | | 20.38 | |
Depreciation and amortization | 434 | | | 2.12 | | | 451 | | | 1.92 | | | 1,275 | | | 1.88 | | | 1,345 | | | 1.80 | |
Operating income | 2,696 | | | 13.17 | | | 924 | | | 3.93 | | | 9,869 | | | 14.56 | | | 8,455 | | | 11.33 | |
Interest – net | 345 | | | 1.68 | | | 295 | | | 1.25 | | | 1,033 | | | 1.52 | | | 802 | | | 1.07 | |
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Pre-tax earnings | 2,351 | | | 11.49 | | | 629 | | | 2.68 | | | 8,836 | | | 13.04 | | | 7,653 | | | 10.26 | |
Income tax provision | 578 | | | 2.83 | | | 475 | | | 2.02 | | | 2,130 | | | 3.14 | | | 2,174 | | | 2.92 | |
Net earnings | $ | 1,773 | | | 8.66 | % | | $ | 154 | | | 0.66 | % | | $ | 6,706 | | | 9.90 | % | | $ | 5,479 | | | 7.34 | % |
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Weighted average common shares outstanding – basic | 576 | | | | | 618 | | | | | 585 | | | | | 638 | | | |
Basic earnings per common share | $ | 3.07 | | | | | $ | 0.25 | | | | | $ | 11.43 | | | | | $ | 8.56 | | | |
Weighted average common shares outstanding – diluted | 577 | | | | | 620 | | | | | 587 | | | | | 640 | | | |
Diluted earnings per common share | $ | 3.06 | | | | | $ | 0.25 | | | | | $ | 11.40 | | | | | $ | 8.53 | | | |
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See accompanying notes to the consolidated financial statements (unaudited).
Lowe’s Companies, Inc.
Consolidated Statements of Comprehensive Income (Unaudited)
In Millions, Except Percentage Data
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| Three Months Ended | | Nine Months Ended |
| November 3, 2023 | | October 28, 2022 | | November 3, 2023 | | October 28, 2022 |
| Amount | | % Sales | | Amount | | % Sales | | Amount | | % Sales | | Amount | | % Sales |
Net earnings | $ | 1,773 | | | 8.66 | % | | $ | 154 | | | 0.66 | % | | $ | 6,706 | | | 9.90 | % | | $ | 5,479 | | | 7.34 | % |
Foreign currency translation adjustments – net of tax | — | | | — | | | (168) | | | (0.72) | | | 5 | | | 0.01 | | | (173) | | | (0.23) | |
Cash flow hedges – net of tax | (4) | | | (0.01) | | | 170 | | | 0.72 | | | (10) | | | (0.02) | | | 352 | | | 0.47 | |
Other | — | | | — | | | 1 | | | — | | | — | | | — | | | (3) | | | — | |
Other comprehensive (loss)/income | (4) | | | (0.01) | | | 3 | | | — | | | (5) | | | (0.01) | | | 176 | | | 0.24 | |
Comprehensive income | $ | 1,769 | | | 8.65 | % | | $ | 157 | | | 0.66 | % | | $ | 6,701 | | | 9.89 | % | | $ | 5,655 | | | 7.58 | % |
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See accompanying notes to the consolidated financial statements (unaudited).
Lowe’s Companies, Inc.
Consolidated Balance Sheets (Unaudited)
In Millions, Except Par Value Data
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| | November 3, 2023 | | October 28, 2022 | | February 3, 2023 |
Assets | | | | | | |
Current assets: | | | | | | |
Cash and cash equivalents | | $ | 1,210 | | | $ | 3,192 | | | $ | 1,348 | |
Short-term investments | | 321 | | | 464 | | | 384 | |
Merchandise inventory – net | | 17,530 | | | 19,817 | | | 18,532 | |
Other current assets | | 907 | | | 1,518 | | | 1,178 | |
Total current assets | | 19,968 | | | 24,991 | | | 21,442 | |
Property, less accumulated depreciation | | 17,527 | | | 17,275 | | | 17,567 | |
Operating lease right-of-use assets | | 3,647 | | | 3,512 | | | 3,518 | |
Long-term investments | | 238 | | | 63 | | | 121 | |
Deferred income taxes – net | | 280 | | | 301 | | | 250 | |
Other assets | | 859 | | | 831 | | | 810 | |
Total assets | | $ | 42,519 | | | $ | 46,973 | | | $ | 43,708 | |
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Liabilities and shareholders' deficit | | | | | | |
Current liabilities: | | | | | | |
Short-term borrowings | | $ | — | | | $ | — | | | $ | 499 | |
Current maturities of long-term debt | | 544 | | | 609 | | | 585 | |
Current operating lease liabilities | | 533 | | | 651 | | | 522 | |
Accounts payable | | 9,914 | | | 12,249 | | | 10,524 | |
Accrued compensation and employee benefits | | 750 | | | 1,405 | | | 1,109 | |
Deferred revenue | | 1,499 | | | 1,736 | | | 1,603 | |
Income taxes payable | | 121 | | | 913 | | | 1,181 | |
Other current liabilities | | 3,135 | | | 3,313 | | | 3,488 | |
Total current liabilities | | 16,496 | | | 20,876 | | | 19,511 | |
Long-term debt, excluding current maturities | | 35,374 | | | 32,904 | | | 32,876 | |
Noncurrent operating lease liabilities | | 3,602 | | | 4,048 | | | 3,512 | |
Deferred revenue – Lowe's protection plans | | 1,228 | | | 1,184 | | | 1,201 | |
Other liabilities | | 966 | | | 829 | | | 862 | |
Total liabilities | | 57,666 | | | 59,841 | | | 57,962 | |
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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 – 575 million, 611 million, and 601 million shares, respectively | | 288 | | | 305 | | | 301 | |
Capital in excess of par value | | 7 | | | — | | | — | |
Accumulated deficit | | (15,744) | | | (13,313) | | | (14,862) | |
Accumulated other comprehensive income | | 302 | | | 140 | | | 307 | |
Total shareholders' deficit | | (15,147) | | | (12,868) | | | (14,254) | |
Total liabilities and shareholders' deficit | | $ | 42,519 | | | $ | 46,973 | | | $ | 43,708 | |
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See accompanying notes to the consolidated financial statements (unaudited).
Lowe’s Companies, Inc.
Consolidated Statements of Shareholders’ Deficit (Unaudited)
In Millions
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| Three Months Ended November 3, 2023 |
| Common Stock | | Capital in Excess of Par Value | | Accumulated Deficit | | Accumulated Other Comprehensive Income | | | | | | Total |
| Shares | | Amount | | | | | | |
Balance August 4, 2023 | 582 | | | $ | 291 | | | $ | 12 | | | $ | (15,341) | | | $ | 306 | | | | | | | $ | (14,732) | |
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Net earnings | — | | | — | | | — | | | 1,773 | | | — | | | | | | | 1,773 | |
Other comprehensive loss | — | | | — | | | — | | | — | | | (4) | | | | | | | (4) | |
Cash dividends declared, $1.10 per share | — | | | — | | | — | | | (633) | | | — | | | | | | | (633) | |
Share-based payment expense | — | | | — | | | 42 | | | — | | | — | | | | | | | 42 | |
Repurchases of common stock | (7) | | | (3) | | | (50) | | | (1,543) | | | — | | | | | | | (1,596) | |
Issuance of common stock under share-based payment plans | — | | | — | | | 3 | | | — | | | — | | | | | | | 3 | |
Balance November 3, 2023 | 575 | | | $ | 288 | | | $ | 7 | | | $ | (15,744) | | | $ | 302 | | | | | | | $ | (15,147) | |
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| Nine Months Ended November 3, 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) | |
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Net earnings | — | | | — | | | — | | | 6,706 | | | — | | | | | | | 6,706 | |
Other comprehensive loss | — | | | — | | | — | | | — | | | (5) | | | | | | | (5) | |
Cash dividends declared, $3.25 per share | — | | | — | | | — | | | (1,898) | | | — | | | | | | | (1,898) | |
Share-based payment expense | — | | | — | | | 155 | | | — | | | — | | | | | | | 155 | |
Repurchases of common stock | (28) | | | (14) | | | (226) | | | (5,690) | | | — | | | | | | | (5,930) | |
Issuance of common stock under share-based payment plans | 2 | | | 1 | | | 78 | | | — | | | — | | | | | | | 79 | |
Balance November 3, 2023 | 575 | | | $ | 288 | | | $ | 7 | | | $ | (15,744) | | | $ | 302 | | | | | | | $ | (15,147) | |
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| Three Months Ended October 28, 2022 |
| Common Stock | | Capital in Excess of Par Value | | Accumulated Deficit | | Accumulated Other Comprehensive Income | | | | | | Total |
| Shares | | Amount | | | | | | |
Balance July 29, 2022 | 631 | | | $ | 316 | | | $ | — | | | $ | (8,895) | | | $ | 137 | | | | | | | $ | (8,442) | |
Net earnings | — | | | — | | | — | | | 154 | | | — | | | | | | | 154 | |
Other comprehensive income | — | | | — | | | — | | | — | | | 3 | | | | | | | 3 | |
Cash dividends declared, $1.05 per share | — | | | — | | | — | | | (643) | | | — | | | | | | | (643) | |
Share-based payment expense | — | | | — | | | 51 | | | — | | | — | | | | | | | 51 | |
Repurchases of common stock | (20) | | | (11) | | | (64) | | | (3,929) | | | — | | | | | | | (4,004) | |
Issuance of common stock under share-based payment plans | — | | | — | | | 13 | | | — | | | — | | | | | | | 13 | |
Balance October 28, 2022 | 611 | | | $ | 305 | | | $ | — | | | $ | (13,313) | | | $ | 140 | | | | | | | $ | (12,868) | |
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| Nine Months Ended October 28, 2022 |
| Common Stock | | Capital in Excess of Par Value | | Accumulated Deficit | | Accumulated Other Comprehensive (Loss)/Income | | | | | | Total |
| Shares | | Amount | | | | | | |
Balance January 28, 2022 | 670 | | | $ | 335 | | | $ | — | | | $ | (5,115) | | | $ | (36) | | | | | | | $ | (4,816) | |
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Net earnings | — | | | — | | | — | | | 5,479 | | | — | | | | | | | 5,479 | |
Other comprehensive income | — | | | — | | | — | | | — | | | 176 | | | | | | | 176 | |
Cash dividends declared, $2.90 per share | — | | | — | | | — | | | (1,833) | | | — | | | | | | | (1,833) | |
Share-based payment expense | — | | | — | | | 161 | | | — | | | — | | | | | | | 161 | |
Repurchases of common stock | (61) | | | (31) | | | (247) | | | (11,844) | | | — | | | | | | | (12,122) | |
Issuance of common stock under share-based payment plans | 2 | | | 1 | | | 86 | | | — | | | — | | | | | | | 87 | |
Balance October 28, 2022 | 611 | | | $ | 305 | | | $ | — | | | $ | (13,313) | | | $ | 140 | | | | | | | $ | (12,868) | |
See accompanying notes to the consolidated financial statements (unaudited).
Lowe’s Companies, Inc.
Consolidated Statements of Cash Flows (Unaudited)
In Millions
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| Nine Months Ended |
| November 3, 2023 | | October 28, 2022 |
Cash flows from operating activities: | | | |
Net earnings | $ | 6,706 | | | $ | 5,479 | |
Adjustments to reconcile net earnings to net cash provided by operating activities: | | | |
Depreciation and amortization | 1,427 | | | 1,509 | |
Noncash lease expense | 370 | | | 403 | |
Deferred income taxes | (27) | | | (252) | |
Asset impairment and loss on property – net | 50 | | | 2,113 | |
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Gain on sale of business | (79) | | | — | |
Share-based payment expense | 160 | | | 165 | |
Changes in operating assets and liabilities: | | | |
Merchandise inventory – net | 1,002 | | | (2,308) | |
Other operating assets | 236 | | | 20 | |
Accounts payable | (610) | | | 921 | |
Deferred revenue | (77) | | | (117) | |
Other operating liabilities | (2,126) | | | 205 | |
Net cash provided by operating activities | 7,032 | | | 8,138 | |
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Cash flows from investing activities: | | | |
Purchases of investments | (1,283) | | | (659) | |
Proceeds from sale/maturity of investments | 1,215 | | | 597 | |
Capital expenditures | (1,344) | | | (1,090) | |
Proceeds from sale of property and other long-term assets | 29 | | | 37 | |
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Proceeds from sale of business | 100 | | | — | |
Other – net | (23) | | | — | |
Net cash used in investing activities | (1,306) | | | (1,115) | |
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Cash flows from financing activities: | | | |
Net change in commercial paper | (499) | | | — | |
Net proceeds from issuance of debt | 2,983 | | | 9,667 | |
Repayment of debt | (576) | | | (831) | |
Proceeds from issuance of common stock under share-based payment plans | 79 | | | 86 | |
Cash dividend payments | (1,899) | | | (1,727) | |
Repurchases of common stock | (5,937) | | | (12,127) | |
Other – net | (15) | | | — | |
Net cash used in financing activities | (5,864) | | | (4,932) | |
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Effect of exchange rate changes on cash | — | | | (32) | |
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Net (decrease)/increase in cash and cash equivalents | (138) | | | 2,059 | |
Cash and cash equivalents, beginning of period | 1,348 | | | 1,133 | |
Cash and cash equivalents, end of period | $ | 1,210 | | | $ | 3,192 | |
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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 consolidated balance sheets as of November 3, 2023, and October 28, 2022, and the statements of earnings, comprehensive income, and shareholders’ deficit for the three and nine months ended November 3, 2023, and October 28, 2022, and cash flows for the nine months ended November 3, 2023, and October 28, 2022. The February 3, 2023, consolidated balance sheet was derived from the audited financial statements.
These interim condensed consolidated financial statements (unaudited) should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Lowe’s Companies, Inc. (the Company) Annual Report on Form 10-K for the fiscal year ended February 3, 2023 (the Annual Report). The financial results for the interim periods may not be indicative of the financial results for the entire fiscal year.
Accounting Pronouncements Not Yet Adopted
In November 2023, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. All disclosure requirements under ASU 2023-07 are also required for public entities with a single reportable segment. The ASU is effective for the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2025, and subsequent interim periods, with early adoption permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and disclosures.
Recent accounting pronouncements pending adoption not discussed in this Form 10-Q or in the 2022 Form 10-K are either not applicable to the Company or are not expected to have a material impact on the Company.
Note 2: Revenue
Net sales consists primarily of revenue, net of sales tax, associated with contracts with customers for the sale of goods and services in amounts that reflect consideration the Company is entitled to in exchange for those goods and services.
The following table presents the Company’s sources of revenue:
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(In millions) | Three Months Ended | | Nine Months Ended |
November 3, 2023 | | October 28, 2022 | | November 3, 2023 | | October 28, 2022 |
Products | $ | 19,599 | | | $ | 22,511 | | | $ | 65,204 | | | $ | 71,872 | |
Services | 517 | | | 568 | | | 1,623 | | | 1,692 | |
Other | 355 | | | 400 | | | 948 | | | 1,050 | |
Net sales | $ | 20,471 | | | $ | 23,479 | | | $ | 67,775 | | | $ | 74,614 | |
A provision for anticipated merchandise returns is provided through a reduction of sales and cost of sales in the period that the related sales are recorded. The merchandise return reserve is presented on a gross basis, with a separate asset and liability included in the consolidated balance sheets. The balances and classification within the consolidated balance sheets for anticipated sales returns and the associated right of return assets are as follows:
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(In millions) | Classification | November 3, 2023 | | October 28, 2022 | | February 3, 2023 |
Anticipated sales returns | Other current liabilities | $ | 241 | | | $ | 302 | | | $ | 234 | |
Right of return assets | Other current assets | 140 | | | 183 | | | 139 | |
Deferred revenue - retail and stored-value cards
Retail deferred revenue consists of amounts received for which customers have not yet taken possession of the merchandise or for which installation has not yet been completed. The majority of revenue for goods and services is recognized in the quarter following revenue deferral. Stored-value cards deferred revenue includes outstanding stored-value cards such as gift cards and returned merchandise credits that have not yet been redeemed. Deferred revenue for retail and stored-value cards are as follows:
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(In millions) | November 3, 2023 | | October 28, 2022 | | February 3, 2023 |
Retail deferred revenue | $ | 984 | | | $ | 1,168 | | | $ | 933 | |
Stored-value cards deferred revenue | 515 | | | 568 | | | 670 | |
Deferred revenue | $ | 1,499 | | | $ | 1,736 | | | $ | 1,603 | |
Deferred revenue - Lowe’s protection plans
The Company defers revenues for its separately-priced long-term extended protection plan contracts (Lowe’s protection plans) and recognizes revenue on a straight-line basis over the respective contract term. Expenses for claims are recognized in cost of sales when incurred.
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(In millions) | November 3, 2023 | | October 28, 2022 | | February 3, 2023 |
Deferred revenue - Lowe’s protection plans | $ | 1,228 | | | $ | 1,184 | | | $ | 1,201 | |
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| Three Months Ended | | Nine Months Ended |
(In millions) | November 3, 2023 | | October 28, 2022 | | November 3, 2023 | | October 28, 2022 |
Lowe’s protection plans deferred revenue recognized into sales | $ | 139 | | | $ | 133 | | | $ | 411 | | | $ | 389 | |
Lowe’s protection plans claim expenses | 64 | | | 40 | | | 171 | | | 134 | |
Disaggregation of Revenues
The following table presents the Company’s net sales disaggregated by merchandise division:
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| Three Months Ended | | Nine Months Ended |
| November 3, 2023 | | October 28, 2022 | | November 3, 2023 | | October 28, 2022 |
(In millions) | Net Sales | | % | | Net Sales | | % | | Net Sales | | % | | Net Sales | | % |
Home Décor 1 | $ | 7,799 | | | 38.1 | % | | $ | 9,019 | | | 38.4 | % | | $ | 24,763 | | | 36.5 | % | | $ | 27,227 | | | 36.5 | % |
Building Products 2 | 6,812 | | | 33.3 | | | 7,854 | | | 33.4 | | | 20,990 | | | 31.0 | | | 24,135 | | | 32.3 | |
Hardlines 3 | 5,230 | | | 25.5 | | | 5,905 | | | 25.1 | | | 20,249 | | | 29.9 | | | 21,351 | | | 28.6 | |
Other | 630 | | | 3.1 | | | 702 | | | 3.1 | | | 1,773 | | | 2.6 | | | 1,901 | | | 2.6 | |
Total | $ | 20,471 | | | 100.0 | % | | $ | 23,479 | | | 100.0 | % | | $ | 67,775 | | | 100.0 | % | | $ | 74,614 | | | 100.0 | % |
Note: Merchandise division net sales for the prior period have been reclassified to conform to the current period presentation.
1 Home Décor includes the following product categories: Appliances, Décor, Flooring, Kitchens & Bath, and Paint.
2 Building Products includes the following product categories: Building Materials, Electrical, Lumber, Millwork, and Rough Plumbing.
3 Hardlines includes the following product categories: Hardware, Lawn & Garden, Seasonal & Outdoor Living, and Tools.
The following table presents the Company’s net sales disaggregated by geographical area: | | | | | | | | | | | | | | | | | | | | | | | |
(In millions) | Three Months Ended | | Nine Months Ended |
November 3, 2023 | | October 28, 2022 | | November 3, 2023 | | October 28, 2022 |
United States | $ | 20,471 | | | $ | 22,280 | | | $ | 67,775 | | | $ | 70,524 | |
Canada1 | — | | | 1,200 | | | — | | | 4,090 | |
Net sales | $ | 20,471 | | | $ | 23,479 | | | $ | 67,775 | | | $ | 74,614 | |
1 The Canadian retail business was sold on February 3, 2023.
Note 3: Restricted Investments
Short-term and long-term investments include restricted balances pledged as collateral primarily for the Lowe’s protection plans program and are as follows:
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(In millions) | | November 3, 2023 | | October 28, 2022 | | February 3, 2023 |
Short-term restricted investments | | $ | 321 | | | $ | 464 | | | $ | 384 | |
Long-term restricted investments | | 238 | | | 63 | | | 100 | |
Total restricted investments | | $ | 559 | | | $ | 527 | | | $ | 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, 2023, October 28, 2022, and February 3, 2023:
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| | | | Fair Value Measurements at |
(In millions) | Classification | Measurement Level | | November 3, 2023 | | October 28, 2022 | | February 3, 2023 |
Available-for-sale debt securities: | | | | | | | | |
U.S. Treasury securities | Short-term investments | Level 1 | | $ | 143 | | | $ | 216 | | | $ | 157 | |
Corporate debt securities | Short-term investments | Level 2 | | 62 | | | 51 | | | 78 | |
Money market funds | Short-term investments | Level 1 | | 49 | | | 133 | | | 43 | |
Certificates of deposit | Short-term investments | Level 1 | | 35 | | | 7 | | | 40 | |
Commercial paper | Short-term investments | Level 2 | | 30 | | | 43 | | | 52 | |
Municipal obligations | Short-term investments | Level 2 | | 2 | | | — | | | — | |
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Foreign government debt securities | Short-term investments | Level 2 | | — | | | 14 | | | 14 | |
U.S. Treasury securities | Long-term investments | Level 1 | | 215 | | | 31 | | | 86 | |
Corporate debt securities | Long-term investments | Level 2 | | 23 | | | 30 | | | 12 | |
Municipal obligations | Long-term investments | Level 2 | | — | | | 2 | | | 2 | |
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Derivative instruments: | | | | | | | | |
Forward interest rate swaps | Other current assets | Level 2 | | $ | — | | | $ | 303 | | | $ | 251 | |
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Fixed-to-floating interest rate swaps | Other liabilities | Level 2 | | 92 | | | 98 | | | 88 | |
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Other financial instruments: | | | | | | | | |
Contingent consideration | Long-term investments | Level 3 | | $ | — | | | $ | — | | | $ | 21 | |
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There were no transfers between Levels 1, 2, or 3 during any of the periods presented.
When available, quoted prices were used to determine fair value. When quoted prices in active markets were available, financial assets were classified within Level 1 of the fair value hierarchy. When quoted prices in active markets were not available, fair values for financial assets and liabilities classified within Level 2 were determined using pricing models, and the 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 expenses (SG&A) in the consolidated statements of earnings.
The rollforward of the fair value of contingent consideration for the three and nine months ended November 3, 2023, is as follows:
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| Three Months Ended | | Nine Months Ended |
(In millions) | November 3, 2023 | | November 3, 2023 |
Beginning balance | $ | — | | | $ | 21 | |
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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 months ended November 3, 2023, the Company had no 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, 2022, the Company’s only significant assets measured at fair value on a nonrecurring basis subsequent to their initial recognition were certain long-lived assets as further described below.
The Company reviews the carrying amounts of long-lived assets whenever certain events or changes in circumstances indicate that the carrying amounts may not be recoverable. When evaluating long-lived assets for impairment, the asset group is generally at an individual location level, as that is the lowest level for which cash flows are identifiable. Cash flows for individual locations do not include an allocation of corporate overhead. The Company evaluates long-lived assets for triggering events on a quarterly basis to determine when assets may not be recoverable. An impairment loss is recognized when the carrying amount of the asset (disposal) group is not recoverable and exceeds its fair value. The Company estimates the fair values of assets subject to long-lived asset impairment based on the Company’s own judgments about the assumptions that market participants would use in pricing the assets and on observable market data, when available. The Company classifies these fair value measurements as Level 3.
During the three months ended October 28, 2022, the Company determined it was more likely than not that the assets within the Canadian retail business would be sold or otherwise disposed of significantly before the end of their previously estimated useful lives, and these assets were evaluated for recoverability. Based on the proposed transaction, the Company reconsidered the appropriate asset grouping of long-lived assets attributable to the Company’s Canadian locations given the change in the Company’s expectations regarding use and disposition of its associated assets. The Company determined the total Canadian retail business (Canada asset group) to be the appropriate asset group for which the long-lived assets should be evaluated, as this represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other groups of assets and liabilities. The carrying value of the Canada asset group includes substantially all assets and liabilities of the Canadian retail business, including accounts receivable, inventory, property, operating and finance lease right-of-use assets, definite-lived intangible assets, operating liabilities including accounts payable and accrued compensation, and operating and finance lease liabilities. A market approach of an orderly transaction under current market conditions was used in determining the estimated fair value of the Canada asset group, which was based on the proposed transaction price, inclusive of performance-based contingent consideration. The estimated fair value of the Canada asset group was determined to be $421 million. As a result, the Company recorded $2.1 billion of long-lived asset impairment within SG&A in the consolidated statements of earnings, which reflected the full carrying value of the long-lived assets of the Canada asset group as of October 28, 2022.
The following table presents the Company’s impairment losses resulting from non-financial assets measured at estimated fair value on a nonrecurring basis included in earnings for the three and nine months ended October 28, 2022: | | | | | | | | | | | | | | | |
| | | Three Months Ended | | Nine Months Ended |
(In millions) | | | October 28, 2022 | | | October 28, 2022 | |
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Canada asset group: | | | | | | | |
Property, less accumulated depreciation | | | $ | 1,258 | | | $ | 1,258 | |
Operating lease right-of-use assets | | | 621 | | | 621 | |
Other assets | | | 182 | | | 182 | |
Other | | | 7 | | | 35 | |
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Total | | | $ | 2,068 | | | | $ | 2,096 | | |
Other Fair Value Disclosures
The Company’s financial assets and liabilities not measured at fair value on a recurring basis include cash and cash equivalents, accounts receivable, short-term borrowings, accounts payable, and long-term debt and are reflected in the financial statements at cost. With the exception of long-term debt, cost approximates fair value for these items due to their short-term nature. As further described in Note 7, certain long-term debt is associated with a fair value hedge and the changes in fair value of the hedged debt is included in the carrying value of long-term debt in the consolidated balance sheets. The fair values of the Company’s unsecured notes were estimated using quoted market prices. The fair values of the Company’s mortgage notes were estimated using discounted cash flow analyses, based on the future cash outflows associated with these arrangements and discounted using the applicable incremental borrowing rate.
Carrying amounts and the related estimated fair value of the Company’s long-term debt, excluding finance lease obligations, are as follows:
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| November 3, 2023 | | October 28, 2022 | | February 3, 2023 |
(In millions) | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value | | Carrying Amount | | Fair Value |
Unsecured notes (Level 1) | $ | 35,387 | | | $ | 30,207 | | | $ | 32,886 | | | $ | 27,879 | | | $ | 32,897 | | | $ | 30,190 | |
Mortgage notes (Level 2) | 2 | | | 2 | | | 4 | | | 4 | | | 2 | | | 2 | |
Long-term debt (excluding finance lease obligations) | $ | 35,389 | | | $ | 30,209 | | | $ | 32,890 | | | $ | 27,883 | | | $ | 32,899 | | | $ | 30,192 | |
Note 5: Accounts Payable
The Company has agreements with third parties to provide supplier finance programs which facilitate participating suppliers’ ability to finance payment obligations from the Company with designated third-party financial institutions. Participating suppliers may, at their sole discretion, make offers to finance one or more payment obligations of the Company prior to their scheduled due dates at a discounted price to participating financial institutions. The Company’s outstanding payment obligations that suppliers financed to participating financial institutions, which are included in accounts payable on the consolidated balance sheets, are as follows: | | | | | | | | | | | | | | | | | | | | |
(In millions) | | November 3, 2023 | | October 28, 2022 | | February 3, 2023 |
Financed payment obligations | | $ | 1,640 | | | $ | 2,635 | | | $ | 2,257 | |
Note 6: Debt
Commercial Paper Program
In September 2023, the Company entered into an amended and restated $2.0 billion five-year unsecured revolving credit agreement (2023 Credit Agreement), which amended and restated the Company’s $2.0 billion five-year unsecured revolving credit agreement entered into in March 2020, and as amended (2020 Credit Agreement), to extend the term until September 2028. The 2023 Credit Agreement, along with 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), support the Company’s commercial paper program. The amounts available to be drawn under the 2023 Credit Agreement and the Third Amended and Restated Credit Agreement are reduced by the amount of borrowings under the commercial paper program. As of November 3, 2023, there were no outstanding borrowings under the Company’s commercial paper program, the 2023 Credit Agreement, or the Third Amended and Restated Credit Agreement. As of October 28, 2022, there were no outstanding borrowings under the Company’s commercial paper program, the 2020 Credit Agreement, or the Third Amended and Restated Credit Agreement. 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 2023 Credit Agreement and the Third Amended and Restated Credit Agreement was $4.0 billion as of November 3, 2023.
Long-Term Debt
On March 30, 2023, the Company issued $3.0 billion of unsecured fixed rate notes (March 2023 Notes) as follows:
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Principal Amount (in millions) | | Maturity Date | | Interest Rate | | Discount (in millions) |
$ | 1,000 | | | April 2026 | | 4.800% | | $ | 3 | |
$ | 1,000 | | | July 2033 | | 5.150% | | $ | 4 | |
$ | 500 | | | July 2053 | | 5.750% | | $ | 5 | |
$ | 500 | | | April 2063 | | 5.850% | | $ | 5 | |
Interest on the March 2023 Notes with April maturity dates is payable semiannually in arrears in April and October of each year until maturity. Interest on the March 2023 Notes with July maturity dates is payable semiannually in arrears in January and July of each year until maturity.
The indenture governing the March 2023 Notes contains a provision that allows the Company to redeem these notes at any time, in whole or in part, at specified redemption prices, plus accrued and unpaid interest, if any, up to, but excluding, the date
of redemption. The indenture also contains a provision that allows the holders of the notes to require the Company to repurchase all or any part of their notes if a change of control triggering event occurs. If elected under the change of control provisions, the repurchase of the notes will occur at a purchase price of 101% of the principal amount, plus accrued and unpaid interest, if any, on such notes up to, but excluding, the date of purchase. The indenture governing the March 2023 Notes does not limit the aggregate principal amount of debt securities that the Company may issue and does not require the Company to maintain specified financial ratios or levels of net worth or liquidity.
Note 7: Derivative Instruments
The Company utilizes forward interest rate swap agreements to hedge its exposure to changes in benchmark interest rates on forecasted debt issuances. The Company also utilizes fixed-to-floating interest rate swap agreements as fair value hedges on certain debt. The notional amounts for the Company’s material derivative instruments are as follows:
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(In millions) | November 3, 2023 | | October 28, 2022 | | February 3, 2023 |
Cash flow hedges: | | | | | |
Forward interest rate swap agreement notional amounts | $ | — | | | $ | 1,210 | | | $ | 1,290 | |
Fair value hedges: | | | | | |
Fixed-to-floating interest rate swap agreement notional amounts | $ | 850 | | | $ | 850 | | | $ | 850 | |
See Note 4 for the gross fair values of the Company’s outstanding derivative financial instruments and corresponding fair value classifications. The cash flows related to settlement of the Company’s hedging derivative financial instruments are classified in the consolidated statements of cash flows based on the nature of the underlying hedged items.
Cash Flow Hedges
The Company accounts for the forward interest rate swap contracts as cash flow hedges, thus the effective portion of gains and losses resulting from changes in fair value are recognized in other comprehensive (loss)/income, net of tax effects, in the consolidated statements of comprehensive income and is amortized to interest expense over the term of the respective debt. In connection with the issuance of our March 2023 Notes, we settled forward interest rate swap contracts with a combined notional amount of $2.0 billion and received a payment of $247 million. The (loss)/gain from forward interest rate swap agreements, both settled and outstanding, designated as cash flow hedges recorded in other comprehensive (loss)/income and net earnings for the three and nine months ended November 3, 2023, and October 28, 2022, including its line item in the financial statements, is as follows:
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(In millions) | Three Months Ended | | Nine Months Ended |
November 3, 2023 | | October 28, 2022 | | November 3, 2023 | | October 28, 2022 |
Other comprehensive (loss)/income: | | | | | | | |
Cash flow hedges – net of tax benefit/(expense) of $1 million, ($55) million, $4 million, and ($116) million, respectively | $ | (4) | | | $ | 166 | | | $ | (10) | | | $ | 350 | |
Net earnings: | | | | | | | |
Interest – net | $ | 4 | | | $ | 1 | | | $ | 11 | | | $ | — | |
Fair Value Hedges
The Company accounts for the fixed-to-floating interest rate swap agreements as fair value hedges using the shortcut method of accounting under which the hedges are assumed to be perfectly effective. Thus, the change in fair value of the derivative instruments offsets the change in fair value on the hedged debt, and there is no net impact in the consolidated statements of earnings from the fair value of the derivatives.
Note 8: Shareholders’ Deficit
The Company has a share repurchase program that is executed through purchases made from time to time either in the open market, which may be made under pre-set trading plans meeting the requirements of Rule 10b5-1(c) of the Securities Exchange Act of 1934, or through private off-market transactions. Shares purchased under the repurchase program are returned to
authorized and unissued status. Any excess of cost over par value is charged to additional paid-in capital to the extent that a balance is present. Once additional paid-in capital is fully depleted, remaining excess of cost over par value is charged to accumulated deficit. As of November 3, 2023, the Company had $15.0 billion remaining in its share repurchase program.
During the nine months ended November 3, 2023, the Company entered into Accelerated Share Repurchase (ASR) agreements with third-party financial institutions to repurchase a total of 15.4 million shares of the Company’s common stock for $3.3 billion. The terms of the ASR agreements entered into during the nine months ended November 3, 2023, are as follows (in millions):
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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 |
Q3 2023 | Q3 2023 | 1,500 | | | | | 5.3 | | 1.7 | | 7.0 |
In addition, the Company repurchased shares of its common stock through the open market as follows:
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| Three Months Ended | | Nine Months Ended |
| November 3, 2023 | | November 3, 2023 |
(In millions) | Shares | | Cost | | Shares | | Cost |
Open market share repurchases | 0.3 | | $ | 95 | | | 11.9 | | | $ | 2,545 | |
The Company also withholds shares from employees to satisfy either the exercise price of stock options exercised or the statutory withholding tax liability resulting from the vesting of share-based awards.
Total shares repurchased for the three and nine months ended November 3, 2023, and October 28, 2022, were as follows:
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| Three Months Ended |
| November 3, 2023 | | October 28, 2022 |
(In millions) | Shares | | Cost | | Shares | | Cost |
Share repurchase program 1 | 7.3 | | | $ | 1,595 | | | 20.5 | | | $ | 4,000 | |
Shares withheld from employees | — | | | 1 | | | — | | | 3 | |
Total share repurchases | 7.3 | | | $ | 1,596 | | | 20.5 | | | $ | 4,003 | |
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| Nine Months Ended |
| November 3, 2023 | | October 28, 2022 |
(In millions) | Shares | | Cost | | Shares | | Cost |
Share repurchase program 1 | 27.3 | | | $ | 5,795 | | | 60.6 | | | $ | 12,000 | |
Shares withheld from employees | 0.7 | | | 135 | | | 0.6 | | | 122 | |
Total share repurchases | 28.0 | | | $ | 5,930 | | | 61.2 | | | $ | 12,122 | |
1 Beginning January 1, 2023, share repurchases in excess of issuances are subject to a 1% excise tax, which is included as part of the cost basis of the shares acquired.
Note 9: Earnings Per Share
The Company calculates basic and diluted earnings per common share using the two-class method. The following table reconciles earnings per common share for the three and nine months ended November 3, 2023, and October 28, 2022:
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| Three Months Ended | | Nine Months Ended |
(In millions, except per share data) | November 3, 2023 | | October 28, 2022 | | November 3, 2023 | | October 28, 2022 |
Basic earnings per common share: | | | | | | | |
Net earnings | $ | 1,773 | | | $ | 154 | | | $ | 6,706 | | | $ | 5,479 | |
Less: Net earnings allocable to participating securities | (4) | | | (2) | | | (18) | | | (17) | |
Net earnings allocable to common shares, basic | $ | 1,769 | | | $ | 152 | | | $ | 6,688 | | | $ | 5,462 | |
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| Three Months Ended | | Nine Months Ended |
(In millions, except per share data) | November 3, 2023 | | October 28, 2022 | | November 3, 2023 | | October 28, 2022 |
Weighted-average common shares outstanding | 576 | | | 618 | | | 585 | | | 638 | |
Basic earnings per common share | $ | 3.07 | | | $ | 0.25 | | | $ | 11.43 | | | $ | 8.56 | |
Diluted earnings per common share: | | | | | | | |
Net earnings | $ | 1,773 | | | $ | 154 | | | $ | 6,706 | | | $ | 5,479 | |
Less: Net earnings allocable to participating securities | (4) | | | (2) | | | (18) | | | (17) | |
Net earnings allocable to common shares, diluted | $ | 1,769 | | | $ | 152 | | | $ | 6,688 | | | $ | 5,462 | |
Weighted-average common shares outstanding | 576 | | | 618 | | | 585 | | | 638 | |
Dilutive effect of non-participating share-based awards | 1 | | | 2 | | | 2 | | | 2 | |
Weighted-average common shares, as adjusted | 577 | | | 620 | | | 587 | | | 640 | |
Diluted earnings per common share | $ | 3.06 | | | $ | 0.25 | | | $ | 11.40 | | | $ | 8.53 | |
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Anti-dilutive securities excluded from diluted weighted-average common shares | 0.6 | | | 0.6 | | | 0.5 | | | 0.5 | |
Note 10: Income Taxes
The Company’s effective income tax rates were 24.6% and 24.1% for the three and nine months ended November 3, 2023, respectively, and 75.5% and 28.4% for the three and nine months ended October 28, 2022, respectively. The decrease in the effective tax rate for the three months ended November 3, 2023, is primarily due to the prior year impact of the increase in the valuation allowance for deferred taxes related to the long-lived asset impairment associated with RONA inc.
Income Tax Relief
On October 5, 2022, the Internal Revenue Service announced that businesses in certain states, including North Carolina, affected by Hurricane Ian would receive tax relief by postponing certain tax-payment deadlines. Under this relief, the Company’s quarterly federal estimated income tax payments originally due by October 15, 2022 and January 15, 2023, were deferred until February 15, 2023. As of October 28, 2022, and February 3, 2023, the Company deferred $600 million and $1.2 billion, respectively, of federal income taxes payable, which are included in income taxes payable in the consolidated balance sheet.
Note 11: Supplemental Disclosure
Net interest expense is comprised of the following: | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended | | Nine Months Ended |
(In millions) | November 3, 2023 | | October 28, 2022 | | November 3, 2023 | | October 28, 2022 |
Long-term debt | $ | 365 | | | $ | 295 | | | $ | 1,075 | | | $ | 782 | |
Short-term borrowings | — | | | 4 | | | 15 | | | 5 | |
Lease obligations | 6 | | | 7 | | | 19 | | | 21 | |
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Interest income | (27) | | | (14) | | | (78) | | | (21) | |
Interest capitalized | (1) | | |