LOWES COMPANIES INC [LOW] Filings

10-Q 1 low-20221028.htm FORM 10-Q low-20221028

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended October 28, 2022


☐			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)


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

1000 Lowes Blvd., Mooresville, North Carolina						28117
(Address of principal executive offices)						(Zip Code)

Registrant’s telephone number, including area 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. ☒ 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.

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 11/21/2022
Common Stock, $0.50 par value						604,702,575

LOWE’S COMPANIES, INC.

- TABLE OF CONTENTS -


			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: Debt	10
		Note 6: Derivative Instruments	11
		Note 7: Shareholders’ Deficit	12
		Note 8: Earnings Per Share	13

		Note 9: Income Taxes	13
		Note 10 : Supplemental Disclosure	14

		Report of Independent Registered Public Accounting Firm	15
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	24
	Item 4.	Controls and Procedures	24
PART II - Other Information			25
	Item 1.	Legal Proceedings	25
	Item 1A.	Risk Factors	25
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
	Item 6.	Exhibits	27
		Signature	28


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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, 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, the risk that asset impairment and deal-related transaction costs on the divestiture of the Canadian retail business could ultimately be greater than what we currently expect, 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, 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.


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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


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

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


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

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

Lowe’s Companies, Inc.

Consolidated Statements of Comprehensive Income (Unaudited)

In Millions, Except Percentage Data


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

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


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Lowe’s Companies, Inc.

Consolidated Balance Sheets (Unaudited)

In Millions, Except Par Value Data


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

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

Shareholders' deficit:
Preferred stock, $5 par value: Authorized – 5.0 million shares; Issued and outstanding – none	—		—		—
Common stock, $0.50 par value: Authorized – 5.6 billion shares; Issued and outstanding – 611 million, 686 million, and 670 million shares, respectively	305		343		335
Capital in excess of par value	—		—		—
Accumulated deficit	(13,313)		(1,913)		(5,115)
Accumulated other comprehensive income/(loss)	140		(6)		(36)
Total shareholders' deficit	(12,868)		(1,576)		(4,816)
Total liabilities and shareholders' deficit	$	46,973	$	49,400	$	44,640

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


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Lowe’s Companies, Inc.

Consolidated Statements of Shareholders’ Deficit (Unaudited)

In Millions


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

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

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

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


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	Three Months Ended October 29, 2021
	Common Stock			Capital in Excess of Par Value		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total
	Shares	Amount
Balance July 30, 2021	699	$	350	$	—	$	(460)	$	(65)	$	(175)
Net earnings	—	—		—		1,896		—		1,896
Other comprehensive income	—	—		—		—		59		59
Cash dividends declared, $0.80 per share	—	—		—		(551)		—		(551)
Share-based payment expense	—	—		50		—		—		50
Repurchases of common stock	(13)	(7)		(59)		(2,798)		—		(2,864)
Issuance of common stock under share-based payment plans	—	—		9		—		—		9
Balance October 29, 2021	686	$	343	$	—	$	(1,913)	$	(6)	$	(1,576)

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

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

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


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Lowe’s Companies, Inc.

Consolidated Statements of Cash Flows (Unaudited)

In Millions


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

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

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

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

Cash flows from financing activities:

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

Effect of exchange rate changes on cash	(32)		3

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

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


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Lowe’s Companies, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Note 1: Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements (unaudited) and notes to the condensed consolidated financial statements (unaudited) are presented in accordance with the rules and regulations of the Securities and Exchange Commission and do not include all the disclosures normally required in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The condensed consolidated financial statements (unaudited), in the opinion of management, contain all normal recurring adjustments necessary to present fairly the consolidated balance sheets as of October 28, 2022, and October 29, 2021, and the statements of earnings, comprehensive income, and shareholders’ deficit for the three and nine months ended October 28, 2022, and October 29, 2021, and cash flows for the nine months ended October 28, 2022, and October 29, 2021. The January 28, 2022, consolidated balance sheet was derived from the audited financial statements.

These interim condensed consolidated financial statements (unaudited) should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Lowe’s Companies, Inc. (the Company) Annual Report on Form 10-K for the fiscal year ended January 28, 2022 (the Annual Report). The financial results for the interim periods may not be indicative of the financial results for the entire fiscal year.

Canadian Retail Business Transaction

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

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

Accounting Pronouncements Not Yet Adopted

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

Recent accounting pronouncements pending adoption not discussed in this Form 10-Q or in the 2021 Form 10-K are either not applicable to the Company or are not expected to have a material impact on the Company.

Note 2: Revenue

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


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


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

A provision for anticipated merchandise returns is provided through a reduction of sales and cost of sales in the period that the related sales are recorded. The merchandise return reserve is presented on a gross basis, with a separate asset and liability included in the consolidated balance sheets. The balances and classification within the consolidated balance sheets for anticipated sales returns and the associated right of return assets are as follows:


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

Deferred revenue - retail and stored-value cards

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


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

Deferred revenue - Lowe’s protection plans

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


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


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


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Disaggregation of Revenues

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


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

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

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

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

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

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


(In millions)	Three Months Ended				Nine Months Ended
	October 28, 2022		October 29, 2021		October 28, 2022		October 29, 2021
United States	$	22,280	$	21,504	$	70,524	$	70,092
Canada	1,199		1,414		4,090		4,819
Net Sales	$	23,479	$	22,918	$	74,614	$	74,911

Note 3: Restricted Investments

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


(In millions)	October 28, 2022		October 29, 2021		January 28, 2022
Short-term restricted investments	$	464	$	552	$	271
Long-term restricted investments	63		213		199
Total restricted investments	$	527	$	765	$	470

Note 4: Fair Value Measurements

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

•Level 1 - inputs to the valuation techniques that are quoted prices in active markets for identical assets or liabilities

•Level 2 - inputs to the valuation techniques that are other than quoted prices but are observable for the assets or liabilities, either directly or indirectly

•Level 3 - inputs to the valuation techniques that are unobservable for the assets or liabilities

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

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis as of October 28, 2022, October 29, 2021, and January 28, 2022:


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


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

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

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


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

Forward interest rate swaps	Other assets	Level 2	—		20