Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Nov. 03, 2017 | Dec. 01, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | LOWES COMPANIES INC | |
Entity Central Index Key | 60,667 | |
Document Type | 10-Q | |
Document Period End Date | Nov. 3, 2017 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --02-02 | |
Entity Well-known Seasoned Issuer | Yes | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 829,760,597 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Nov. 03, 2017 | Feb. 03, 2017 | Oct. 28, 2016 |
Current assets: | |||
Cash and cash equivalents | $ 743 | $ 558 | $ 960 |
Short-term investments | 85 | 100 | 123 |
Merchandise inventory - net | 12,393 | 10,458 | 10,990 |
Other current assets | 788 | 884 | 655 |
Total current assets | 14,009 | 12,000 | 12,728 |
Property, less accumulated depreciation | 19,818 | 19,949 | 20,037 |
Long-term investments | 370 | 366 | 436 |
Deferred income taxes - net | 347 | 222 | 331 |
Goodwill | 1,327 | 1,082 | 1,034 |
Other assets | 912 | 789 | 804 |
Total assets | 36,783 | 34,408 | 35,370 |
Current liabilities: | |||
Short-term borrowings | 171 | 510 | 0 |
Current maturities of long-term debt | 297 | 795 | 800 |
Accounts payable | 8,903 | 6,651 | 7,836 |
Accrued compensation and employee benefits | 808 | 790 | 704 |
Deferred revenue | 1,404 | 1,253 | 1,258 |
Other current liabilities | 2,155 | 1,975 | 2,035 |
Total current liabilities | 13,738 | 11,974 | 12,633 |
Long-term debt, excluding current maturities | 15,570 | 14,394 | 14,395 |
Deferred revenue - extended protection plans | 794 | 763 | 745 |
Other liabilities | 939 | 843 | 889 |
Total liabilities | 31,041 | 27,974 | 28,662 |
Equity: | |||
Preferred stock - $5 par value, none issued | 0 | 0 | 0 |
Common stock - $0.50 par value; Shares issued and outstanding 831 at November 3, 2017, 873 at October 28, 2016, and 866 at February 3, 2017 | 415 | 433 | 437 |
Capital in excess of par value | 0 | 0 | 0 |
Retained earnings | 5,289 | 6,241 | 6,376 |
Accumulated other comprehensive income/(loss) | 38 | (240) | (214) |
Total Lowe's Companies, Inc. shareholders' equity | 5,742 | 6,434 | 6,599 |
Noncontrolling interest | 0 | 0 | 109 |
Total equity | 5,742 | 6,434 | 6,708 |
Total liabilities and equity | $ 36,783 | $ 34,408 | $ 35,370 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Nov. 03, 2017 | Feb. 03, 2017 | Oct. 28, 2016 |
Equity: | |||
Preferred stock, par value | $ 5 | $ 5 | $ 5 |
Preferred stock, shares issued | 0 | 0 | 0 |
Common stock, par value | $ 0.50 | $ 0.50 | $ 0.50 |
Common stock, shares issued | 831,000,000 | 866,000,000 | 873,000,000 |
Common stock, shares outstanding | 831,000,000 | 866,000,000 | 873,000,000 |
Consolidated Statements of Curr
Consolidated Statements of Current and Retained Earnings (Unaudited) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Nov. 03, 2017 | Oct. 28, 2016 | Nov. 03, 2017 | Oct. 28, 2016 | |
Current Earnings | ||||
Net sales | $ 16,770 | $ 15,739 | $ 53,125 | $ 49,233 |
Cost of sales | 11,057 | 10,332 | 34,942 | 32,201 |
Gross margin | 5,713 | 5,407 | 18,183 | 17,032 |
Expenses: | ||||
Selling, general and administrative | 3,808 | 4,084 | 11,615 | 11,340 |
Depreciation and amortization | 358 | 384 | 1,080 | 1,115 |
Operating income | 1,547 | 939 | 5,488 | 4,577 |
Interest - net | 160 | 163 | 479 | 486 |
Loss on extinguishment of debt | 0 | 0 | 464 | 0 |
Pre-tax earnings | 1,387 | 776 | 4,545 | 4,091 |
Income tax provision | 515 | 397 | 1,652 | 1,661 |
Net earnings | $ 872 | $ 379 | $ 2,893 | $ 2,430 |
Weighted-average common shares outstanding - basic | 831 | 873 | 843 | 884 |
Basic earnings per common share | $ 1.05 | $ 0.43 | $ 3.42 | $ 2.74 |
Weighted-average common shares outstanding - diluted | 832 | 874 | 844 | 886 |
Diluted earnings per common share | $ 1.05 | $ 0.43 | $ 3.42 | $ 2.73 |
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 |
Consolidated Statements of Cur5
Consolidated Statements of Current and Retained Earnings (Percents) (Unaudited) | 3 Months Ended | 9 Months Ended | ||
Nov. 03, 2017 | Oct. 28, 2016 | Nov. 03, 2017 | Oct. 28, 2016 | |
Current Earnings | ||||
Net sales | 100.00% | 100.00% | 100.00% | 100.00% |
Cost of sales | 65.93% | 65.65% | 65.77% | 65.41% |
Gross margin | 34.07% | 34.35% | 34.23% | 34.59% |
Expenses: | ||||
Selling, general and administrative | 22.71% | 25.94% | 21.87% | 23.02% |
Depreciation and amortization | 2.13% | 2.44% | 2.03% | 2.27% |
Operating income | 9.23% | 5.97% | 10.33% | 9.30% |
Interest - net | 0.96% | 1.04% | 0.91% | 0.99% |
Loss on extinguishment of debt | 0.00% | 0.00% | 0.87% | 0.00% |
Pre-tax earnings | 8.27% | 4.93% | 8.55% | 8.31% |
Income tax provision | 3.07% | 2.52% | 3.10% | 3.37% |
Net earnings | 5.20% | 2.41% | 5.45% | 4.94% |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Nov. 03, 2017 | Oct. 28, 2016 | Nov. 03, 2017 | Oct. 28, 2016 | |
Comprehensive Income | ||||
Net earnings | $ 872 | $ 379 | $ 2,893 | $ 2,430 |
Foreign currency translation adjustments - net of tax | 173 | 152 | 278 | 179 |
Other comprehensive income | 173 | 152 | 278 | 179 |
Comprehensive income | $ 1,045 | $ 531 | $ 3,171 | $ 2,609 |
Consolidated Statements of Com7
Consolidated Statements of Comprehensive Income (Percents) (Unaudited) | 3 Months Ended | 9 Months Ended | ||
Nov. 03, 2017 | Oct. 28, 2016 | Nov. 03, 2017 | Oct. 28, 2016 | |
Comprehensive Income | ||||
Net earnings | 5.20% | 2.41% | 5.45% | 4.94% |
Foreign currency translation adjustments - net of tax | 1.03% | 0.97% | 0.52% | 0.36% |
Other comprehensive income | 1.03% | 0.97% | 0.52% | 0.36% |
Comprehensive income | 6.23% | 3.38% | 5.97% | 5.30% |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions | 9 Months Ended | |
Nov. 03, 2017 | Oct. 28, 2016 | |
Cash flows from operating activities: | ||
Net earnings | $ 2,893 | $ 2,430 |
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||
Depreciation and amortization | 1,148 | 1,190 |
Deferred income taxes | (118) | (72) |
Loss on property and other assets - net | 21 | 130 |
Loss on extinguishment of debt | 464 | 0 |
(Gain) loss on cost method and equity method investments | (86) | 300 |
Share-based payment expense | 78 | 71 |
Changes in operating assets and liabilities: | ||
Merchandise inventory - net | (1,783) | (718) |
Other operating assets | 186 | 32 |
Accounts payable | 2,251 | 1,859 |
Other operating liabilities | 318 | 47 |
Net cash provided by operating activities | 5,372 | 5,269 |
Cash flows from investing activities: | ||
Purchases of investments | (680) | (1,018) |
Proceeds from sale/maturity of investments | 870 | 987 |
Capital expenditures | (787) | (820) |
Proceeds from sale of property and other long-term assets | 21 | 28 |
Purchases of derivative instruments | 0 | (103) |
Proceeds from settlement of derivative instruments | 0 | 179 |
Acquisition of business - net | (509) | (2,284) |
Other - net | 13 | (21) |
Net cash used in investing activities | (1,072) | (3,052) |
Cash flows from financing activities: | ||
Net change in short-term borrowings | (340) | (44) |
Net proceeds from issuance of long-term debt | 2,968 | 3,267 |
Repayment of long-term debt | (2,836) | (1,146) |
Proceeds from issuance of common stock under share-based payment plans | 87 | 88 |
Cash dividend payments | (947) | (815) |
Repurchase of common stock | (3,054) | (3,054) |
Other - net | (8) | 48 |
Net cash used in financing activities | (4,130) | (1,656) |
Effect of exchange rate changes on cash | 15 | (6) |
Net increase in cash and cash equivalents | 185 | 555 |
Cash and cash equivalents, beginning of period | 558 | 405 |
Cash and cash equivalents, end of period | $ 743 | $ 960 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Nov. 03, 2017 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 1 : Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements (unaudited) and notes to the 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 consolidated financial statements (unaudited), in the opinion of management, contain all adjustments necessary to present fairly the financial position as of November 3, 2017 , and October 28, 2016 , and the results of operations, comprehensive income for the three and nine months ended November 3, 2017 , and October 28, 2016 , and cash flows for the nine months ended November 3, 2017 and October 28, 2016 . These interim 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 (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, 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 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 is not expected to have a material impact on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases . Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for those leases previously classified as operating leases. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. This ASU is effective 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 of adopting this ASU on its consolidated financial statements but expects the ASU to have a material impact on its consolidated balance sheets, as a result of the requirement to recognize right-of-use assets and lease liabilities. 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. |
Acquisitions
Acquisitions | 9 Months Ended |
Nov. 03, 2017 | |
Acquisitions | |
Acquisitions | 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 the preliminary purchase price allocation: (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 Intangible assets acquired totaled $259 million , and include a trademark 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. Pro forma and historical financial information has not been provided as the acquisition was not material to the consolidated financial statements. |
Investment in Australian Joint
Investment in Australian Joint Venture | 9 Months Ended |
Nov. 03, 2017 | |
Investment in Australian Joint Venture | |
Investment in Australian Joint Venture | Note 3 : Investment in Australian Joint Venture - During the second quarter of fiscal 2017, the Company completed the sale of our interest in the Australian joint venture with Woolworths Limited 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. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Nov. 03, 2017 | |
Fair Value Measurements | |
Fair Value Measurements | 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 measured at fair value on a recurring basis as of November 3, 2017 , October 28, 2016 , and February 3, 2017 . The fair values of these instruments approximated amortized costs. 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 were classified within Level 1 of the fair value hierarchy. When quoted prices in active markets were not available, fair values were determined using pricing models, and the inputs to those pricing models were based on observable market inputs. The inputs to the pricing models were typically benchmark yields, reported trades, broker-dealer quotes, issuer spreads and benchmark securities, among others. Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis During the three and nine months ended November 3, 2017 , the Company had no significant 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 ) Fair Value of Financial Instruments The Company’s financial instruments 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. 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 lease obligations, are as follows: 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 |
Restricted Investment Balances
Restricted Investment Balances | 9 Months Ended |
Nov. 03, 2017 | |
Restricted Investment Balances | |
Restricted Investment Balances | 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 . 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 . |
Property
Property | 9 Months Ended |
Nov. 03, 2017 | |
Property | |
Property | 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 . |
Extended Protection Plans
Extended Protection Plans | 9 Months Ended |
Nov. 03, 2017 | |
Extended Protection Plans | |
Extended Protection Plans | Note 7 : Extended Protection Plans - The Company sells separately-priced extended protection plan contracts under a Lowe’s-branded program for which 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 from one to four years from the date of purchase or the end 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 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 . The Company’s extended protection plan deferred costs are included in other assets (noncurrent) on the accompanying consolidated balance sheets. All other costs, such as costs of services performed under the contract, general and administrative expenses, and advertising expenses are expensed as incurred. The liability for extended protection plan claims incurred is included in other current liabilities on the consolidated balance sheets and was not material in any 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. |
Long-Term Debt
Long-Term Debt | 9 Months Ended |
Nov. 03, 2017 | |
Long-Term Debt | |
Long-Term Debt | Note 8 : Long-Term Debt - During the first quarter of fiscal 2017, the Company issued $3.0 billion of unsecured notes as follows: 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 is payable semiannually in arrears in May and November of each year until maturity. The indenture governing the notes issued in 2017 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, to 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 to the date of purchase. The indenture governing the 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 to impact the Company’s liquidity or capital resources. Also during the first quarter, the Company completed a cash tender offer to purchase and retire $1.6 billion combined aggregate principal amount of its outstanding notes and recognized a loss on extinguishment of debt of $464 million . |
Equity
Equity | 9 Months Ended |
Nov. 03, 2017 | |
Equity | |
Equity | Note 9 : Equity - 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, the Company’s Board of Directors authorized a $5.0 billion share repurchase program with no expiration, which was announced on the same day. As of November 3, 2017 , the Company had $2.1 billion remaining in its share repurchase program. In March 2017, the Company entered into an Accelerated Share Repurchase (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 5.3 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. 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 of the ASR agreements was accounted for as a treasury stock transaction and forward stock purchase contract. The par value of 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 months ended November 3, 2017 , 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 of $250 million and $1.8 billion , respectively. 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 repurchased for the three and nine months ended November 3, 2017 , and October 28, 2016 were as follows: 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 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. 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 2 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 ended November 3, 2017 and October 28, 2016 , respectively. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Nov. 03, 2017 | |
Earnings Per Share | |
Earnings Per Share | Note 10 : 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 months ended November 3, 2017 and October 28, 2016 : 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 Stock options to purchase 1.0 million shares 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. |
Income Taxes
Income Taxes | 9 Months Ended |
Nov. 03, 2017 | |
Income Taxes | |
Income Taxes | 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. |
Supplemental Disclosure
Supplemental Disclosure | 9 Months Ended |
Nov. 03, 2017 | |
Supplemental Disclosure | |
Supplemental Disclosure | Note 12 : Supplemental Disclosure Net interest expense is comprised of the following: 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: 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 |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Nov. 03, 2017 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements (unaudited) and notes to the 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 consolidated financial statements (unaudited), in the opinion of management, contain all adjustments necessary to present fairly the financial position as of November 3, 2017 , and October 28, 2016 , and the results of operations, comprehensive income for the three and nine months ended November 3, 2017 , and October 28, 2016 , and cash flows for the nine months ended November 3, 2017 and October 28, 2016 . These interim 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 (the Annual Report). The financial results for the interim periods may not be indicative of the financial results for the entire fiscal year. |
Reclassifications | Reclassifications Certain prior period amounts have been reclassified to conform to current presentation. |
Recent Accounting Pronouncements | 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, 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 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 is not expected to have a material impact on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . The guidance in this ASU supersedes the leasing guidance in Topic 840, Leases . Under the new guidance, lessees are required to recognize lease assets and lease liabilities on the balance sheet for those leases previously classified as operating leases. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. This ASU is effective 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 of adopting this ASU on its consolidated financial statements but expects the ASU to have a material impact on its consolidated balance sheets, as a result of the requirement to recognize right-of-use assets and lease liabilities. 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. |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Nov. 03, 2017 | |
Acquisitions | |
Acquisitions | The following table summarizes the preliminary purchase price allocation: (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 (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Nov. 03, 2017 | |
Fair Value Measurements | |
Fair value measurements - recurring basis | The following table presents the Company’s financial assets measured at fair value on a recurring basis as of November 3, 2017 , October 28, 2016 , and February 3, 2017 . The fair values of these instruments approximated amortized costs. 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. |
Fair value measurements - nonrecurring basis | 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 ) |
Fair value of financial instruments | Carrying amounts and the related estimated fair value of the Company’s long-term debt, excluding capitalized lease obligations, are as follows: 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 |
Extended Protection Plans (Tabl
Extended Protection Plans (Tables) | 9 Months Ended |
Nov. 03, 2017 | |
Extended Protection Plans | |
Changes in deferred revenue for extended protection plan contracts | 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 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 9 Months Ended |
Nov. 03, 2017 | |
Long-Term Debt | |
Schedule of unsecured notes issued in fiscal 2017 | During the first quarter of fiscal 2017, the Company issued $3.0 billion of unsecured notes as follows: 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 |
Equity (Tables)
Equity (Tables) | 9 Months Ended |
Nov. 03, 2017 | |
Equity | |
Schedule of share repurchases | Shares repurchased for the three and nine months ended November 3, 2017 , and October 28, 2016 were as follows: 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 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. 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 2 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 ended November 3, 2017 and October 28, 2016 , respectively. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Nov. 03, 2017 | |
Earnings Per Share | |
Schedule of earnings per share, basic and diluted | The following table reconciles earnings per common share for the three and nine months ended November 3, 2017 and October 28, 2016 : 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 |
Supplemental Disclosure (Tables
Supplemental Disclosure (Tables) | 9 Months Ended |
Nov. 03, 2017 | |
Supplemental Disclosure | |
Net interest expense | Net interest expense is comprised of the following: 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 | Supplemental disclosures of cash flow information: 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 |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Nov. 03, 2017 | Oct. 28, 2016 | Nov. 03, 2017 | Oct. 28, 2016 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Income tax provision | $ 515 | $ 397 | $ 1,652 | $ 1,661 |
Diluted earnings per common share | $ 1.05 | $ 0.43 | $ 3.42 | $ 2.73 |
Accounting Standards Update 2016-09 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Income tax provision | $ (10) | $ (34) | ||
Diluted earnings per common share | $ 0.01 | $ 0.04 |
Acquisitions (Details)
Acquisitions (Details) - USD ($) $ in Millions | Nov. 03, 2017 | Jun. 23, 2017 | Feb. 03, 2017 | Oct. 28, 2016 |
Allocation: | ||||
Goodwill | $ 1,327 | $ 1,082 | $ 1,034 | |
Maintenance Supply Headquarters | ||||
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 |
Acquisitions (Details Textual)
Acquisitions (Details Textual) - Maintenance Supply Headquarters $ in Millions | Jun. 23, 2017USD ($) |
Business Acquisition [Line Items] | |
Consideration transferred | $ 513 |
Intangible assets acquired | 259 |
Goodwill expected to be tax deductible | 160 |
Trademark | |
Business Acquisition [Line Items] | |
Intangible assets acquired | $ 34 |
Useful life of intangible assets acquired | 15 years |
Customer List | |
Business Acquisition [Line Items] | |
Intangible assets acquired | $ 225 |
Useful life of intangible assets acquired | 20 years |
Investment in Australian Join32
Investment in Australian Joint Venture (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Aug. 04, 2017 | Nov. 03, 2017 | Oct. 28, 2016 | |
Investment in Australian Joint Venture | |||
Proceeds from sale/maturity of investments | $ 870 | $ 987 | |
Hydrox Holdings Pty Ltd. | |||
Investment in Australian Joint Venture | |||
Proceeds from sale/maturity of investments | $ 199 | ||
Cost method investments, realized gains | $ 96 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Fair Value, Measurements, Recurring - Estimate of Fair Value - USD ($) $ in Millions | Nov. 03, 2017 | Feb. 03, 2017 | Oct. 28, 2016 |
Short-term Investments | |||
Assets, Fair Value Disclosure | |||
Available-for-sale securities, fair value | $ 85 | $ 100 | $ 123 |
Short-term Investments | Money Market Funds | Fair Value (Level 1) | |||
Assets, Fair Value Disclosure | |||
Available-for-sale securities, fair value | 70 | 81 | 28 |
Short-term Investments | Certificates Of Deposit | Fair Value (Level 1) | |||
Assets, Fair Value Disclosure | |||
Available-for-sale securities, fair value | 15 | 15 | 55 |
Short-term Investments | Municipal Obligations | Fair Value (Level 2) | |||
Assets, Fair Value Disclosure | |||
Available-for-sale securities, fair value | 0 | 4 | 37 |
Short-term Investments | Municipal Floating Rate Obligations | Fair Value (Level 2) | |||
Assets, Fair Value Disclosure | |||
Available-for-sale securities, fair value | 0 | 0 | 3 |
Long-term Investments | |||
Assets, Fair Value Disclosure | |||
Available-for-sale securities, fair value | 370 | 366 | 436 |
Long-term Investments | Certificates Of Deposit | Fair Value (Level 1) | |||
Assets, Fair Value Disclosure | |||
Available-for-sale securities, fair value | 2 | 2 | 2 |
Long-term Investments | Municipal Obligations | Fair Value (Level 2) | |||
Assets, Fair Value Disclosure | |||
Available-for-sale securities, fair value | 0 | 5 | 4 |
Long-term Investments | Municipal Floating Rate Obligations | Fair Value (Level 2) | |||
Assets, Fair Value Disclosure | |||
Available-for-sale securities, fair value | $ 368 | $ 359 | $ 430 |
Fair Value Measurements (Deta34
Fair Value Measurements (Details 1) - Fair Value, Measurements, Nonrecurring [Member] $ in Millions | 3 Months Ended | 9 Months Ended |
Oct. 28, 2016USD ($) | Oct. 28, 2016USD ($) | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Asset impairment charges | $ (367) | $ (370) |
Goodwill | ||
Goodwill impairment loss | (46) | (46) |
Other assets | ||
Cost method investment impairment loss | (290) | (290) |
Operating Locations | ||
Assets held-for-use | ||
Long-lived asset impairment losses | (31) | (34) |
Estimate of Fair Value | Fair Value (Level 3) | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Assets, fair value measurement | 106 | 106 |
Goodwill | ||
Goodwill, fair value measurement | 0 | 0 |
Other assets | ||
Cost method investment, fair value measurement | 103 | 103 |
Estimate of Fair Value | Fair Value (Level 3) | Operating Locations | ||
Assets held-for-use | ||
Fair value measurement | $ 3 | $ 3 |
Fair Value Measurements (Deta35
Fair Value Measurements (Details 2) - USD ($) $ in Millions | Nov. 03, 2017 | Feb. 03, 2017 | Oct. 28, 2016 |
Financial Instruments | |||
Long-term debt carrying value (excluding capitalized lease obligations) | $ 14,965 | $ 14,328 | $ 14,328 |
Unsecured Notes | |||
Financial Instruments | |||
Long-term debt carrying value (excluding capitalized lease obligations) | 14,958 | 14,321 | 14,318 |
Mortgage Notes | |||
Financial Instruments | |||
Long-term debt carrying value (excluding capitalized lease obligations) | 7 | 7 | 10 |
Estimate of Fair Value | |||
Financial Instruments | |||
Long-term debt fair value (excluding capitalized lease obligations) | 15,981 | 15,312 | 15,958 |
Estimate of Fair Value | Unsecured Notes | Fair Value (Level 1) | |||
Financial Instruments | |||
Long-term debt fair value (excluding capitalized lease obligations) | 15,974 | 15,305 | 15,948 |
Estimate of Fair Value | Mortgage Notes | Fair Value (Level 2) | |||
Financial Instruments | |||
Long-term debt fair value (excluding capitalized lease obligations) | $ 7 | $ 7 | $ 10 |
Restricted Investment Balances
Restricted Investment Balances (Details) - USD ($) $ in Millions | Nov. 03, 2017 | Feb. 03, 2017 | Oct. 28, 2016 |
Restricted Investment Balances | |||
Restricted balances included in short-term investments | $ 70 | $ 81 | $ 53 |
Restricted balances included in long-term investments | $ 332 | $ 354 | $ 348 |
Property (Details)
Property (Details) - USD ($) $ in Billions | Nov. 03, 2017 | Feb. 03, 2017 | Oct. 28, 2016 |
Property | |||
Accumulated depreciation | $ 17.1 | $ 17 | $ 17.1 |
Extended Protection Plans (Deta
Extended Protection Plans (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Nov. 03, 2017 | Oct. 28, 2016 | Nov. 03, 2017 | Oct. 28, 2016 | |
Changes in deferred revenue for extended protection plan contracts | ||||
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 |
Extended Protection Plans (De39
Extended Protection Plans (Details Textual) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Nov. 03, 2017 | Oct. 28, 2016 | Nov. 03, 2017 | Oct. 28, 2016 | Feb. 03, 2017 | |
Extended Protection Plans | |||||
Deferred costs associated with extended protection plan contracts | $ 19 | $ 17 | $ 19 | $ 17 | $ 18 |
Expenses for claims incurred | $ 43 | $ 39 | $ 119 | $ 107 |
Long-Term Debt (Details)
Long-Term Debt (Details) $ in Millions | 3 Months Ended |
May 05, 2017USD ($) | |
Long-Term Debt | |
Unsecured notes, issued | $ 3,000 |
2027 Fixed Rate Notes | |
Long-Term Debt | |
Unsecured notes, issued | $ 1,500 |
Unsecured notes, maturity date | May 31, 2027 |
Unsecured notes, interest rate | 3.10% |
Unamortized discount | $ 9 |
2047 Fixed Rate Notes | |
Long-Term Debt | |
Unsecured notes, issued | $ 1,500 |
Unsecured notes, maturity date | May 31, 2047 |
Unsecured notes, interest rate | 4.05% |
Unamortized discount | $ 23 |
Long-Term Debt (Details Textual
Long-Term Debt (Details Textual) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Nov. 03, 2017 | May 05, 2017 | Oct. 28, 2016 | Nov. 03, 2017 | Oct. 28, 2016 | |
Long-Term Debt | |||||
Debt instrument, repurchased face amount | $ 1,600 | ||||
Loss on extinguishment of debt | $ 0 | $ 464 | $ 0 | $ 464 | $ 0 |
2017 Debt Issuance | |||||
Long-Term Debt | |||||
Debt instrument, redemption price, percentage | 101.00% |
Equity (Details)
Equity (Details) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
Nov. 03, 2017 | Oct. 28, 2016 | Nov. 03, 2017 | Oct. 28, 2016 | |||||
Equity | ||||||||
Reduction in retained earnings | $ 495 | $ 535 | $ 2,861 | $ 2,780 | ||||
Share Repurchases | ||||||||
Share repurchases, value | $ 527 | [1] | $ 574 | [1] | $ 3,041 | [2] | $ 3,026 | [2] |
Share repurchases, shares | 6.8 | 8.6 | 38 | 40.1 | ||||
Share Repurchase Program | ||||||||
Share Repurchases | ||||||||
Share repurchases, value | $ 500 | [1] | $ 550 | [1] | $ 3,000 | [2] | $ 2,949 | [2] |
Share repurchases, shares | 6.4 | 8.3 | 37.5 | 39 | ||||
Shares Withheld from Employees | ||||||||
Share Repurchases | ||||||||
Share repurchases, value | $ 27 | [1] | $ 24 | [1] | $ 41 | [2] | $ 77 | [2] |
Share repurchases, shares | 0.4 | 0.3 | 0.5 | 1.1 | ||||
[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. | |||||||
[2] | Reductions of $2.9 billion and $2.8 billion were recorded to retained earnings, after capital in excess of par value was depleted, for the nine months ended November 3, 2017 and October 28, 2016, respectively. |
Equity (Details Textual)
Equity (Details Textual) - USD ($) shares in Millions | Aug. 31, 2017 | May 31, 2017 | Mar. 31, 2017 | Nov. 03, 2017 | Aug. 04, 2017 | May 05, 2017 | Oct. 28, 2016 | Nov. 03, 2017 | Oct. 28, 2016 | Jan. 27, 2017 | ||||
Share Repurchases | ||||||||||||||
Share repurchases, value | $ 527,000,000 | [1] | $ 574,000,000 | [1] | $ 3,041,000,000 | [2] | $ 3,026,000,000 | [2] | ||||||
Share repurchases, shares | 6.8 | 8.6 | 38 | 40.1 | ||||||||||
Cash used to repurchase shares | $ 3,054,000,000 | $ 3,054,000,000 | ||||||||||||
Share Repurchase Program | ||||||||||||||
Share Repurchases | ||||||||||||||
Share repurchases, value | $ 500,000,000 | [1] | $ 550,000,000 | [1] | $ 3,000,000,000 | [2] | $ 2,949,000,000 | [2] | ||||||
Share repurchases, shares | 6.4 | 8.3 | 37.5 | 39 | ||||||||||
Remaining share repurchases authorization, value | $ 2,100,000,000 | $ 2,100,000,000 | ||||||||||||
January 27, 2017 Share Repurchase Authorization | ||||||||||||||
Share Repurchases | ||||||||||||||
Share repurchases authorized, value | $ 5,000,000,000 | |||||||||||||
March 2017 Accelerated Share Repurchase Agreement Purchases | ||||||||||||||
Share Repurchases | ||||||||||||||
Share repurchases, value | $ 500,000,000 | |||||||||||||
Share repurchases, shares | 5.3 | 0.8 | ||||||||||||
Cash used to repurchase shares | $ 500,000,000 | |||||||||||||
May 2017 Accelerated Share Repurchase Agreement Purchases | ||||||||||||||
Share Repurchases | ||||||||||||||
Share repurchases, value | $ 500,000,000 | |||||||||||||
Share repurchases, shares | 5.2 | 1.2 | ||||||||||||
Cash used to repurchase shares | $ 500,000,000 | |||||||||||||
August 2017 Accelerated Share Repurchase Agreement Purchases | ||||||||||||||
Share Repurchases | ||||||||||||||
Share repurchases, value | $ 250,000,000 | |||||||||||||
Share repurchases, shares | 2.9 | 0.3 | ||||||||||||
Cash used to repurchase shares | $ 250,000,000 | |||||||||||||
Open market purchases | ||||||||||||||
Share Repurchases | ||||||||||||||
Share repurchases, value | $ 250,000,000 | $ 1,800,000,000 | ||||||||||||
Share repurchases, shares | 3.2 | 21.8 | ||||||||||||
[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. | |||||||||||||
[2] | Reductions of $2.9 billion and $2.8 billion were recorded to retained earnings, after capital in excess of par value was depleted, for the nine months ended November 3, 2017 and October 28, 2016, respectively. |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Nov. 03, 2017 | Oct. 28, 2016 | Nov. 03, 2017 | Oct. 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 |
Earnings Per Share (Details Tex
Earnings Per Share (Details Textual) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Nov. 03, 2017 | Oct. 28, 2016 | Nov. 03, 2017 | Oct. 28, 2016 | |
Earnings Per Share | ||||
Anti-dilutive securities | 1 | 1.1 | 1 | 0.9 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | 9 Months Ended | ||
Nov. 03, 2017 | Oct. 28, 2016 | Nov. 03, 2017 | Oct. 28, 2016 | |
Income Taxes | ||||
Effective income tax rate | 37.10% | 51.20% | 36.30% | 40.60% |
Supplemental Disclosure (Detail
Supplemental Disclosure (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Nov. 03, 2017 | Oct. 28, 2016 | Nov. 03, 2017 | Oct. 28, 2016 | |
Net interest expense | ||||
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 | 0 | 0 | (1) | 2 |
Other | 4 | 4 | 15 | 20 |
Interest - net | $ 160 | $ 163 | $ 479 | $ 486 |
Supplemental Disclosure (Deta48
Supplemental Disclosure (Details 1) - USD ($) $ in Millions | 9 Months Ended | |
Nov. 03, 2017 | Oct. 28, 2016 | |
Supplemental disclosures of cash flow information | ||
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 |