☒
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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North Carolina
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56-0578072
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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1000 Lowe’s Blvd.
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Mooresville
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North Carolina
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28117
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(Address of principal executive offices)
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(Zip Code)
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Registrant’s telephone number, including area code
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(704)
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758-1000
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, par value $0.50 per share
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LOW
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New York Stock Exchange
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Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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CLASS
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OUTSTANDING AT 3/20/2020
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Common Stock, $0.50 par value
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754,948,648
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Document
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Parts Into Which Incorporated
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Portions of the Proxy Statement for Lowe’s 2020 Annual Meeting of Shareholders
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Part III
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Name
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Age
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Title
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Marvin R. Ellison
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55
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President and Chief Executive Officer since July 2018; Chairman of the Board and Chief Executive Officer, J.C. Penney Company, Inc. (a department store retailer), 2016 - May 2018; Chief Executive Officer, J.C. Penney Company, Inc., 2015 - 2016; President, J.C. Penney Company, Inc., 2014 - 2015; Executive Vice President - U.S. Stores, The Home Depot, Inc. (a home improvement retailer) 2008 - 2014.
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William P. Boltz
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57
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Executive Vice President, Merchandising since August 2018; President and CEO, Chervon North America (a global power tool supplier), 2015-2018; President and owner of The Boltz Group, LLC (a retail consulting firm), 2013 - 2015; Senior Vice President, Merchandising, The Home Depot, Inc. (a home improvement retailer), 2006 - 2012.
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David M. Denton
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54
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Executive Vice President and Chief Financial Officer since November 2018; Executive Vice President and Chief Financial Officer, CVS Health Corporation (a pharmacy innovation company), 2010 – November 2018.
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Donald E. Frieson
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61
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Executive Vice President, Supply Chain since August 2018; Executive Vice President, Operations, Sam’s Club (a general merchandise retailer), 2014 - 2017; Senior Vice President, Replenishment, Planning and Real Estate, Sam’s Club, 2012 - 2014.
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Seemantini Godbole
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50
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Executive Vice President, Chief Information Officer since November 2018; Senior Vice President, Technology and Digital, Target Corporation (a department store retailer), January 2017 – November 2018; Vice President, Technology and Digital, Target Corporation, 2013 – December 2016.
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Ross W. McCanless
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62
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Executive Vice President, General Counsel and Corporate Secretary since 2017; Chief Legal Officer, Secretary and Chief Compliance Officer, 2016 - 2017; General Counsel, Secretary and Chief Compliance Officer, 2015 - 2016; Chief Legal Officer, Extended Stay America, Inc. (a hotel operating company) and ESH Hospitality, Inc. (a hotel real estate investment company), 2013 - 2014.
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Joseph M. McFarland III
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50
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Executive Vice President, Stores since August 2018; Executive Vice President and Chief Customer Officer, J.C. Penney Company, Inc. (a department store retailer), March 2018 – August 2018; Executive Vice President, Stores, J.C. Penney Company, Inc., 2016 – March 2018; Divisional President, The Home Depot, Inc. (a home improvement retailer), 2007 – 2015.
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Marisa F. Thalberg
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50
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Executive Vice President, Chief Brand and Marketing Officer since February 2020; Global Chief Brand Officer, Taco Bell Corporation (a fast-food company), January 2018 - February 2020; Chief Marketing Officer, Taco Bell Corporation, January 2016 - January 2018; Chief Brand Engagement Officer, Taco Bell Corporation, May 2015 - January 2016; Vice President, Corporate Digital and Content Marketing Worldwide, The Estee Lauder Companies (a beauty products company), 2007 - May 2015.
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Jennifer L. Weber
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53
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Executive Vice President, Chief Human Resources Officer since 2016; Executive Vice President, External Affairs and Strategic Policy, Duke Energy Corporation (an electric power company), 2014 – 2016. Executive Vice President and Chief Human Resources Officer, Duke Energy Corporation, 2011 - 2014.
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1/30/2015
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1/29/2016
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2/3/2017
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2/2/2018
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2/1/2019
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1/31/2020
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||||||||||||
Lowe’s
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$
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100.00
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$
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107.38
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$
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111.78
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$
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157.69
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$
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153.89
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$
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187.74
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S&P 500
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100.00
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99.33
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120.26
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147.48
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147.40
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179.17
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||||||
S&P Retail Index
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$
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100.00
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$
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115.56
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$
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134.42
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$
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189.60
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$
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203.54
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$
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243.26
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Total Number of
Shares Purchased 1
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Average Price
Paid per Share
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Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs 2
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Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs 2
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November 2, 2019 – November 29, 2019
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1,639,183
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$
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115.11
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1,639,183
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$
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10,138,558,200
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November 30, 2019 – January 3, 2020
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2,545,679
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118.34
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2,545,047
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9,837,384,381
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January 4, 2020 – January 31, 2020
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1,493,160
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120.62
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1,492,237
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9,657,384,423
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As of January 31, 2020
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5,678,022
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$
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118.01
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5,676,467
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$
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9,657,384,423
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1
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The total number of shares purchased includes shares withheld from employees to satisfy either the exercise price of stock options or the statutory withholding tax liability upon the vesting of share-based awards.
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2
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On December 12, 2018, the Company announced that its Board of Directors authorized an additional $10.0 billion of share repurchases, in addition to the $5.0 billion of share repurchases authorized by the Board of Directors in January 2018, with no expiration.
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Selected Statement of Earnings Data
(In millions, except per share data)
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2019
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20181
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2017
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20162, 3
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2015
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Net sales
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$
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72,148
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$
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71,309
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$
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68,619
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$
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65,017
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$
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59,074
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Gross margin
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22,943
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22,908
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22,434
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21,674
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19,933
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Operating income
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6,314
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4,018
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6,586
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5,846
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4,971
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Net earnings
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4,281
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2,314
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3,447
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3,093
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2,546
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Basic earnings per common share
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5.49
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2.84
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4.09
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3.48
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2.73
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Diluted earnings per common share
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5.49
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2.84
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4.09
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3.47
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2.73
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Dividends per share
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$
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2.13
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$
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1.85
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$
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1.58
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$
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1.33
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$
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1.07
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Selected Balance Sheet Data
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Total assets4
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$
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39,471
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$
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34,508
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$
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35,291
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$
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34,408
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$
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31,266
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Long-term debt, excluding current maturities
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$
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16,768
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$
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14,391
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$
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15,564
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$
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14,394
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$
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11,545
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1
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Effective February 3, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606), and all related amendments, using the modified retrospective method. Therefore, results for reporting periods beginning after February 2, 2018 are presented under ASU 2014-09, while comparative prior period amounts have not been restated and continue to be presented under accounting standards in effect in those periods.
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2
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Fiscal 2016 contained 53 weeks, while all other years contained 52 weeks.
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3
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Fiscal 2016 includes the acquisition of RONA inc.
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4
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Effective February 2, 2019, the Company adopted ASU 2016-02, Leases (Topic 842), and all related amendments, using the optional transition approach to not restate comparative periods and recognized the cumulative impact of adoption in the opening balance of retained earnings. Therefore, results for reporting periods beginning after February 1, 2019 are presented under ASU 2016-02, while comparative prior period amounts have not been restated and continue to be presented under accounting standards in effect in those periods.
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•
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•
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•
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•
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•
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•
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Basis Point Increase / (Decrease) in Percentage of Net Sales from Prior Year
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Percentage Increase / (Decrease) in Dollar Amounts from Prior Year
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2019
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2018
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2019 vs. 2018
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2019 vs. 2018
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Net sales
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100.00%
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100.00%
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N/A
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1.2
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%
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Gross margin
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31.80
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32.12
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(32
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)
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0.2
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Expenses:
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Selling, general and administrative
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21.30
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24.41
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(311
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)
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(11.7
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)
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Depreciation and amortization
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1.75
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2.07
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(32
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)
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(14.5
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)
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Operating income
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8.75
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|
5.64
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311
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57.1
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Interest - net
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0.96
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|
0.88
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8
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10.6
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Pre-tax earnings
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7.79
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4.76
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|
303
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65.7
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Income tax provision
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1.86
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|
1.52
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|
34
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|
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24.3
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Net earnings
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5.93%
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|
3.24%
|
|
269
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|
|
85.0
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%
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|
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|
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||
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Basis Point Increase / (Decrease) in Percentage of Net Sales from Prior Year
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Percentage Increase / (Decrease) in Dollar Amounts from Prior Year
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||||
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2018
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2017
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2018 vs. 2017
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2018 vs. 2017
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Net sales
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100.00%
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|
100.00%
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N/A
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|
|
3.9
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%
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Gross margin
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32.12
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|
32.69
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(57
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)
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2.1
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Expenses:
|
|
|
|
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Selling, general and administrative
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24.41
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|
21.04
|
|
337
|
|
|
20.6
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Depreciation and amortization
|
2.07
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|
2.05
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|
2
|
|
|
5.2
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|
Operating income
|
5.64
|
|
9.60
|
|
(396
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)
|
|
(39.0
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)
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Interest - net
|
0.88
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|
0.92
|
|
(4
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)
|
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(1.3
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)
|
Loss on extinguishment of debt
|
—
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|
0.68
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|
(68
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)
|
|
(100.0
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)
|
Pre-tax earnings
|
4.76
|
|
8.00
|
|
(324
|
)
|
|
(38.2
|
)
|
Income tax provision
|
1.52
|
|
2.98
|
|
(146
|
)
|
|
(47.1
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)
|
Net earnings
|
3.24%
|
|
5.02%
|
|
(178
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)
|
|
(32.9
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)%
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Other Metrics
|
2019
|
|
2018
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|
2017
|
||||||
Comparable sales increase 1
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2.6
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%
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2.4
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%
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|
4.0
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%
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Total customer transactions (in millions)
|
921
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|
941
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|
953
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Average ticket 2
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$
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78.36
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$
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75.79
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$
|
72.00
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At end of year:
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Number of stores
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1,977
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|
2,015
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|
2,152
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Sales floor square feet (in millions)
|
208
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|
209
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|
|
215
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Average store size selling square feet (in thousands) 3
|
105
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|
104
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|
|
100
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Return on average assets 4
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10.8
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%
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|
6.4
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%
|
|
9.5
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%
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Return on average shareholders’ equity 5
|
153.4
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%
|
|
43.8
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%
|
|
59.2
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%
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Net earnings to average debt and equity 6
|
17.2
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%
|
|
9.0
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%
|
|
13.0
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%
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Return on invested capital 6
|
19.9
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%
|
|
11.2
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%
|
|
16.0
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%
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1
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A comparable location is defined as a retail location that has been open longer than 13 months. A location that is identified for relocation is no longer considered comparable in the month of its relocation. The relocated location must then remain open longer than 13 months to be considered comparable. A location we have decided to exit is no longer considered comparable as of the beginning of the month in which we announce its exit. Acquired locations are included in the comparable sales calculation beginning in the first full month following the first anniversary of the date of the acquisition. Comparable sales include online sales, which positively impacted fiscal 2019, fiscal 2018 and fiscal 2017 by approximately 25 basis points, 80 basis points and 120 basis points, respectively.
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2
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Average ticket is defined as net sales divided by the total number of customer transactions.
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3
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Average store size selling square feet is defined as sales floor square feet divided by the number of stores open at the end of the period. The average Lowe’s-branded home improvement store has approximately 112,000 square feet of retail selling space.
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4
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Return on average assets is defined as net earnings divided by average total assets for the last five quarters.
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5
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Return on average shareholders’ equity is defined as net earnings divided by average shareholders’ equity for the last five quarters.
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6
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Return on invested capital is calculated using a non-GAAP financial measure. Net earnings to average debt and equity is the most comparable GAAP ratio. See below for additional information and reconciliations of non-GAAP measures.
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(In millions, except percentage data)
|
2019
|
|
2018
|
|
2017
|
||||||
Calculation of Return on Invested Capital
|
|
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|
||||||
Numerator
|
|
|
|
|
|
||||||
Net earnings
|
$
|
4,281
|
|
|
$
|
2,314
|
|
|
$
|
3,447
|
|
Plus:
|
|
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|
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|
||||||
Interest expense - net
|
691
|
|
|
624
|
|
|
633
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|
|||
Operating lease interest
|
195
|
|
|
206
|
|
|
209
|
|
|||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
464
|
|
|||
Provision for income taxes
|
1,342
|
|
|
1,080
|
|
|
2,042
|
|
|||
Lease adjusted net operating profit
|
6,509
|
|
|
4,224
|
|
|
6,795
|
|
|||
Less:
|
|
|
|
|
|
||||||
Income tax adjustment 1
|
1,554
|
|
|
1,344
|
|
|
2,528
|
|
|||
Lease adjusted net operating profit after tax
|
$
|
4,955
|
|
|
$
|
2,880
|
|
|
$
|
4,267
|
|
|
|
|
|
|
|
||||||
Denominator
|
|
|
|
|
|
||||||
Average debt and equity 2
|
$
|
24,950
|
|
|
$
|
25,713
|
|
|
$
|
26,610
|
|
Net earnings to average debt and equity
|
17.2
|
%
|
|
9.0
|
%
|
|
13.0
|
%
|
|||
Return on invested capital
|
19.9
|
%
|
|
11.2
|
%
|
|
16.0
|
%
|
1
|
Income tax adjustment is defined as net operating profit multiplied by the effective tax rate, which was 23.9%, 31.8%, and 37.2% for 2019, 2018, and 2017, respectively.
|
2
|
Average debt and equity is defined as average current year and prior year ending debt, including current maturities, short-term borrowings, and operating lease liabilities, plus the average current year and prior year ending total equity.
|
•
|
Prior to the beginning of fiscal 2019, the Company announced its intention to exit its Mexico retail operations and had planned to sell the operating business. However, in the first quarter of fiscal 2019, after an extensive market evaluation, the decision was made to instead sell the assets of the business. That decision resulted in an $82 million tax benefit in the first quarter, which was partially offset by $12 million of pre-tax operating costs associated with the exit and ongoing wind-down of the Mexico retail operations. During the second quarter of fiscal 2019, the Company recognized additional pre-tax operating losses of $14 million. For the third quarter, the pre-tax operating losses for the Mexico retail operations were insignificant. For the fourth quarter, the Company recognized additional pre-tax operating losses of $9 million. Total pre-tax operating costs and charges for fiscal year 2019 were $35 million (Mexico adjustments), and;
|
•
|
During the third quarter of fiscal 2019, the Company began a strategic review of its Canadian operations, and as a result, recognized pre-tax charges of $53 million associated with long-lived asset impairment. During the fourth quarter, the Company made the decision to close 34 under-performing stores and take additional actions to improve future performance and profitability of its Canadian operations. As a result of these actions, in the fourth quarter of fiscal 2019, the Company recognized pre-tax operating costs and charges of $176 million, consisting of inventory liquidation, accelerated depreciation and amortization, severance, and other costs, as well as a net $26 million impact to income tax expense related to income tax valuation allowance. Total pre-tax operating costs and charges for fiscal year 2019 were $230 million (2019 Canada restructuring).
|
•
|
During the fourth quarter of fiscal 2018, the Company recorded $952 million of goodwill impairment associated with its Canadian operations (Canadian goodwill impairment);
|
•
|
On August 17, 2018, the Company committed to exit its Orchard Supply Hardware operations. As a result, the Company recognized pre-tax charges of $230 million during the second quarter of fiscal 2018 associated with long lived asset impairment and discontinued projects. During the third quarter of fiscal 2018, the Company recognized pre-tax charges of $123 million associated with accelerated depreciation and amortization, severance and lease obligations. During the fourth quarter of fiscal 2018, the Company recognized additional pre-tax charges of $208 million primarily related to lease obligations. Total pre-tax charges for fiscal year 2018 were $561 million (Orchard Supply Hardware charges);
|
•
|
On October 31, 2018, the Company committed to close 20 under-performing stores across the U.S. and 31 locations in Canada, including 27 under-performing stores. As a result, the Company recognized pre-tax charges of $121 million during the third quarter of fiscal 2018 associated with long-lived asset impairment and severance obligations. During the fourth quarter of fiscal 2018, the company recognized additional pre-tax charges of $150 million, primarily associated with severance and lease obligation costs, as well as accelerated depreciation. Total pre-tax charges for fiscal year 2018 were $271 million (U.S. and Canada closing charges);
|
•
|
As previously discussed above, on November 20, 2018, the Company announced its plans to exit retail operations in Mexico and was exploring strategic alternatives. During the third quarter, $22 million of long-lived asset impairment was recognized on certain assets in Mexico as a result of the strategic evaluation. During the fourth quarter, an additional $222 million of impairment was recognized. Total pre-tax charges for fiscal year 2018 were $244 million (Mexico impairment charges);
|
•
|
During the third quarter of fiscal 2018, the Company identified certain non-core activities within its U.S. home improvement business to exit, including Alacrity Renovation Services and Iris Smart Home. As a result, during the third quarter of 2018, the Company recognized pre-tax charges of $14 million associated with long-lived asset impairment and inventory write-down. During the fourth quarter of fiscal 2018, the Company recognized additional pre-tax charges of $32 million. Total pre-tax charges for fiscal year 2018 were $46 million (Non-core activities charges), and;
|
•
|
During the fourth quarter of fiscal 2018, the Company recorded a pre-tax charge of $13 million, associated with severance costs due to the elimination of the Project Specialists Interiors position (Project Specialists Interiors charge).
|
|
2019
|
|
2018
|
||||||||||||||||
|
Pre-Tax Earnings
|
|
Tax
|
|
Net Earnings
|
|
Pre-Tax Earnings
|
|
Tax
|
|
Net Earnings
|
||||||||
Diluted earnings per share, as reported
|
|
|
|
|
$
|
5.49
|
|
|
|
|
|
|
$
|
2.84
|
|
||||
Non-GAAP Adjustments - per share impacts
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
2019 Canada restructuring
|
0.29
|
|
|
0.02
|
|
|
0.31
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Mexico adjustments
|
0.05
|
|
|
(0.11
|
)
|
|
(0.06
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||
Canadian goodwill impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
1.17
|
|
|
(0.03
|
)
|
|
1.14
|
|
||
Orchard Supply Hardware charges
|
—
|
|
|
—
|
|
|
—
|
|
|
0.68
|
|
|
(0.17
|
)
|
|
0.51
|
|
||
U.S. & Canada charges
|
—
|
|
|
—
|
|
|
—
|
|
|
0.33
|
|
|
(0.08
|
)
|
|
0.25
|
|
||
Mexico impairment charges
|
—
|
|
|
—
|
|
|
—
|
|
|
0.30
|
|
|
0.01
|
|
|
0.31
|
|
||
Non-core activities charges
|
—
|
|
|
—
|
|
|
—
|
|
|
0.06
|
|
|
(0.02
|
)
|
|
0.04
|
|
||
Project Specialists Interiors charge
|
—
|
|
|
—
|
|
|
—
|
|
|
0.02
|
|
|
—
|
|
|
0.02
|
|
||
Adjusted diluted earnings per share
|
|
|
|
|
$
|
5.74
|
|
|
|
|
|
|
$
|
5.11
|
|
(In millions)
|
2019
|
|
2018
|
||||
Interest expense, net of amount capitalized
|
$
|
706
|
|
|
$
|
642
|
|
Amortization of original issue discount and loan costs
|
12
|
|
|
10
|
|
||
Interest income
|
(27
|
)
|
|
(28
|
)
|
||
Interest - net
|
$
|
691
|
|
|
$
|
624
|
|
(In millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Net cash provided by operating activities
|
$
|
4,296
|
|
|
$
|
6,193
|
|
|
$
|
5,065
|
|
(In millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Net cash used in investing activities
|
$
|
(1,369
|
)
|
|
$
|
(1,080
|
)
|
|
$
|
(1,441
|
)
|
|
2019
|
|
2018
|
|
2017
|
|||
Existing store investments ¹
|
80
|
%
|
|
60
|
%
|
|
50
|
%
|
Strategic initiatives ²
|
10
|
%
|
|
20
|
%
|
|
10
|
%
|
New stores, new corporate facilities and international 3
|
10
|
%
|
|
20
|
%
|
|
40
|
%
|
Total capital expenditures
|
100
|
%
|
|
100
|
%
|
|
100
|
%
|
1
|
Includes merchandising resets, facility repairs, replacements of IT and store equipment, among other specific efforts.
|
2
|
Represents investments related to our strategic focus areas aimed at improving customers’ experience and driving improved performance.
|
3
|
Represents expenditures primarily related to land purchases, buildings, and personal property for new store projects and new corporate facilities projects, as well as expenditures related to our international operations.
|
|
|
2020
|
|
Existing store investments
|
|
70
|
%
|
Strategic initiatives
|
|
15
|
%
|
New stores, new corporate facilities and international
|
|
15
|
%
|
(In millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Net cash used in financing activities
|
$
|
(2,735
|
)
|
|
$
|
(5,124
|
)
|
|
$
|
(3,607
|
)
|
(In millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Net proceeds from issuance of short-term debt
|
$
|
1,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Net change in commercial paper
|
$
|
220
|
|
|
$
|
(415
|
)
|
|
$
|
625
|
|
(In millions, except for interest rate data)
|
2019
|
|
2018
|
|
2017
|
||||||
Net change in commercial paper
|
$
|
220
|
|
|
$
|
(415
|
)
|
|
$
|
625
|
|
Amount outstanding at year-end
|
$
|
941
|
|
|
$
|
722
|
|
|
$
|
1,137
|
|
Maximum amount outstanding at any month-end
|
$
|
1,364
|
|
|
$
|
892
|
|
|
$
|
1,137
|
|
Weighted-average interest rate of commercial paper outstanding
|
2.10
|
%
|
|
2.81
|
%
|
|
1.85
|
%
|
(In millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Net proceeds from issuance of long-term debt
|
$
|
2,972
|
|
|
$
|
—
|
|
|
$
|
2,968
|
|
Repayment of long-term debt
|
$
|
(1,113
|
)
|
|
$
|
(326
|
)
|
|
$
|
(2,849
|
)
|
(In millions, except per share data)
|
2019
|
|
2018
|
|
2017
|
||||||
Total amount paid for share repurchases
|
$
|
4,313
|
|
|
$
|
3,037
|
|
|
$
|
3,192
|
|
Total number of shares repurchased
|
41.2
|
|
|
31.6
|
|
|
39.9
|
|
|||
Average price paid per share
|
$
|
104.68
|
|
|
$
|
96.18
|
|
|
$
|
80.01
|
|
(In millions, except per share data and percentage data)
|
2019
|
|
2018
|
|
2017
|
||||||
Total cash dividend payments
|
$
|
1,618
|
|
|
$
|
1,455
|
|
|
$
|
1,288
|
|
Dividends paid per share
|
$
|
2.06
|
|
|
$
|
1.78
|
|
|
$
|
1.52
|
|
Dividend payout ratio
|
38
|
%
|
|
63
|
%
|
|
37
|
%
|
Debt Ratings
|
S&P
|
|
Moody’s
|
Commercial Paper
|
A-2
|
|
P-2
|
Senior Debt
|
BBB+
|
|
Baa1
|
Outlook
|
Stable
|
|
Stable
|
|
Payments Due by Period
|
||||||||||||||||||
Contractual Obligations
(in millions)
|
Total
|
|
|
Less Than 1 Year
|
|
|
1-3 Years
|
|
|
4-5 Years
|
|
|
After 5 Years
|
|
|||||
Long-term debt (principal amounts, excluding discount and debt issuance costs)
|
$
|
16,812
|
|
|
$
|
500
|
|
|
$
|
1,790
|
|
|
$
|
951
|
|
|
$
|
13,571
|
|
Long-term debt (interest payments)
|
10,673
|
|
|
667
|
|
|
1,250
|
|
|
1,163
|
|
|
7,593
|
|
|||||
Finance lease obligations 1, 2
|
864
|
|
|
104
|
|
|
212
|
|
|
196
|
|
|
352
|
|
|||||
Operating leases 1
|
5,662
|
|
|
624
|
|
|
1,345
|
|
|
1,087
|
|
|
2,606
|
|
|||||
Purchase obligations 3
|
1,174
|
|
|
723
|
|
|
440
|
|
|
11
|
|
|
—
|
|
|||||
Total contractual obligations
|
$
|
35,185
|
|
|
$
|
2,618
|
|
|
$
|
5,037
|
|
|
$
|
3,408
|
|
|
$
|
24,122
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Amount of Commitment Expiration by Period
|
||||||||||||||||||
Commercial Commitments
(in millions)
|
Total
|
|
|
Less Than 1 Year
|
|
|
1-3 Years
|
|
|
4-5 Years
|
|
|
After 5 Years
|
|
|||||
Letters of Credit 4
|
$
|
61
|
|
|
$
|
60
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
1
|
Amounts do not include taxes, common area maintenance, insurance, or contingent rent because these amounts have historically been insignificant.
|
2
|
Amounts include imputed interest.
|
3
|
Purchase obligations include agreements to purchase goods or services that are enforceable, are legally binding, and specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Our purchase obligations include firm commitments related to certain marketing and information technology programs, as well as purchases of merchandise inventory.
|
4
|
Letters of credit are issued primarily for insurance and construction contracts.
|
Table of Contents
|
|
|
Page No.
|
•
|
We tested the effectiveness of controls over vendor funds, including management’s controls over the accrual and recording of vendor funds as a reduction to the cost of inventory or cost of sales in accordance with the terms of the vendor agreements.
|
•
|
We selected a sample of vendor funds and recalculated the amount earned using the terms of the vendor agreement, including the amount recorded as a reduction to the cost of inventory and/or the amount recorded as a reduction to cost of sales.
|
•
|
We selected a sample of vendor funds and confirmed the amount earned and terms of the agreement directly with the vendor.
|
|
Fiscal Years Ended
|
|||||||||||||||||||
|
January 31, 2020
|
|
February 1, 2019
|
|
February 2, 2018
|
|||||||||||||||
Current Earnings
|
Amount
|
|
% Sales
|
|
|
Amount
|
|
% Sales
|
|
|
Amount
|
|
% Sales
|
|
||||||
Net sales
|
$
|
72,148
|
|
|
100.00
|
%
|
|
$
|
71,309
|
|
|
100.00
|
%
|
|
$
|
68,619
|
|
|
100.00
|
%
|
Cost of sales
|
49,205
|
|
|
68.20
|
|
|
48,401
|
|
|
67.88
|
|
|
46,185
|
|
|
67.31
|
|
|||
Gross margin
|
22,943
|
|
|
31.80
|
|
|
22,908
|
|
|
32.12
|
|
|
22,434
|
|
|
32.69
|
|
|||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Selling, general and administrative
|
15,367
|
|
|
21.30
|
|
|
17,413
|
|
|
24.41
|
|
|
14,444
|
|
|
21.04
|
|
|||
Depreciation and amortization
|
1,262
|
|
|
1.75
|
|
|
1,477
|
|
|
2.07
|
|
|
1,404
|
|
|
2.05
|
|
|||
Operating income
|
6,314
|
|
|
8.75
|
|
|
4,018
|
|
|
5.64
|
|
|
6,586
|
|
|
9.60
|
|
|||
Interest - net
|
691
|
|
|
0.96
|
|
|
624
|
|
|
0.88
|
|
|
633
|
|
|
0.92
|
|
|||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
464
|
|
|
0.68
|
|
|||
Pre-tax earnings
|
5,623
|
|
|
7.79
|
|
|
3,394
|
|
|
4.76
|
|
|
5,489
|
|
|
8.00
|
|
|||
Income tax provision
|
1,342
|
|
|
1.86
|
|
|
1,080
|
|
|
1.52
|
|
|
2,042
|
|
|
2.98
|
|
|||
Net earnings
|
$
|
4,281
|
|
|
5.93
|
%
|
|
$
|
2,314
|
|
|
3.24
|
%
|
|
$
|
3,447
|
|
|
5.02
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Basic earnings per common share
|
$
|
5.49
|
|
|
|
|
$
|
2.84
|
|
|
|
|
$
|
4.09
|
|
|
|
|||
Diluted earnings per common share
|
$
|
5.49
|
|
|
|
|
$
|
2.84
|
|
|
|
|
$
|
4.09
|
|
|
|
|||
Cash dividends per share
|
$
|
2.13
|
|
|
|
|
$
|
1.85
|
|
|
|
|
$
|
1.58
|
|
|
|
|
Fiscal Years Ended
|
|||||||||||||||||||
|
January 31, 2020
|
|
February 1, 2019
|
|
February 2, 2018
|
|||||||||||||||
|
Amount
|
|
% Sales
|
|
|
Amount
|
|
% Sales
|
|
|
Amount
|
|
% Sales
|
|
||||||
Net earnings
|
$
|
4,281
|
|
|
5.93
|
%
|
|
$
|
2,314
|
|
|
3.24
|
%
|
|
$
|
3,447
|
|
|
5.02
|
%
|
Foreign currency translation adjustments - net of tax
|
94
|
|
|
0.13
|
|
|
(221
|
)
|
|
(0.30
|
)
|
|
251
|
|
|
0.37
|
|
|||
Other
|
(21
|
)
|
|
(0.03
|
)
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Other comprehensive income/(loss)
|
73
|
|
|
0.10
|
|
|
(220
|
)
|
|
(0.30
|
)
|
|
251
|
|
|
0.37
|
|
|||
Comprehensive income
|
$
|
4,354
|
|
|
6.03
|
%
|
|
$
|
2,094
|
|
|
2.94
|
%
|
|
$
|
3,698
|
|
|
5.39
|
%
|
|
|
|
January 31, 2020
|
|
February 1, 2019
|
||||
|
|||||||||
Assets
|
|
|
|
|
|
||||
Current assets:
|
|
|
|
|
|
||||
Cash and cash equivalents
|
|
|
$
|
716
|
|
|
$
|
511
|
|
Short-term investments
|
|
|
160
|
|
|
218
|
|
||
Merchandise inventory - net
|
|
|
13,179
|
|
|
12,561
|
|
||
Other current assets
|
|
|
1,263
|
|
|
938
|
|
||
Total current assets
|
|
|
15,318
|
|
|
14,228
|
|
||
Property, less accumulated depreciation
|
|
|
18,669
|
|
|
18,432
|
|
||
Operating lease right-of-use assets
|
|
|
3,891
|
|
|
—
|
|
||
Long-term investments
|
|
|
372
|
|
|
256
|
|
||
Deferred income taxes - net
|
|
|
216
|
|
|
294
|
|
||
Goodwill
|
|
|
303
|
|
|
303
|
|
||
Other assets
|
|
|
702
|
|
|
995
|
|
||
Total assets
|
|
|
$
|
39,471
|
|
|
$
|
34,508
|
|
|
|
|
|
|
|
||||
Liabilities and shareholders’ equity
|
|
|
|
|
|
||||
Current liabilities:
|
|
|
|
|
|
||||
Short-term borrowings
|
|
|
$
|
1,941
|
|
|
$
|
722
|
|
Current maturities of long-term debt
|
|
|
597
|
|
|
1,110
|
|
||
Current operating lease liabilities
|
|
|
501
|
|
|
—
|
|
||
Accounts payable
|
|
|
7,659
|
|
|
8,279
|
|
||
Accrued compensation and employee benefits
|
|
|
684
|
|
|
662
|
|
||
Deferred revenue
|
|
|
1,219
|
|
|
1,299
|
|
||
Other current liabilities
|
|
|
2,581
|
|
|
2,425
|
|
||
Total current liabilities
|
|
|
15,182
|
|
|
14,497
|
|
||
Long-term debt, excluding current maturities
|
|
|
16,768
|
|
|
14,391
|
|
||
Noncurrent operating lease liabilities
|
|
|
3,943
|
|
|
—
|
|
||
Deferred revenue - extended protection plans
|
|
|
894
|
|
|
827
|
|
||
Other liabilities
|
|
|
712
|
|
|
1,149
|
|
||
Total liabilities
|
|
|
37,499
|
|
|
30,864
|
|
||
|
|
|
|
|
|
||||
Commitments and contingencies
|
|
|
|
|
|
||||
|
|
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
|
|
||||
Preferred stock - $5 par value, none issued
|
|
|
—
|
|
|
—
|
|
||
Common stock - $0.50 par value;
|
|
|
|
|
|
|
|
||
Shares issued and outstanding
|
|
|
|
|
|
||||
January 31, 2020
|
763
|
|
|
|
|
||||
February 1, 2019
|
801
|
|
381
|
|
|
401
|
|
||
Capital in excess of par value
|
|
|
—
|
|
|
—
|
|
||
Retained earnings
|
|
|
1,727
|
|
|
3,452
|
|
||
Accumulated other comprehensive loss
|
|
|
(136
|
)
|
|
(209
|
)
|
||
Total shareholders’ equity
|
|
|
1,972
|
|
|
3,644
|
|
||
Total liabilities and shareholders’ equity
|
|
|
$
|
39,471
|
|
|
$
|
34,508
|
|
|
|
|
|
|
|
|
Common Stock
|
|
Capital in Excess
of Par Value |
|
Retained Earnings
|
|
Accumulated Other Comprehensive
Income/(Loss) |
|
Total Shareholders’
Equity |
|||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||
Balance February 3, 2017
|
866
|
|
|
$
|
433
|
|
|
$
|
—
|
|
|
$
|
6,241
|
|
|
$
|
(240
|
)
|
|
$
|
6,434
|
|
Net earnings
|
|
|
|
|
|
|
3,447
|
|
|
|
|
3,447
|
|
|||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
251
|
|
|
251
|
|
|||||||||
Cash dividends declared, $1.58 per share
|
|
|
|
|
|
|
(1,324
|
)
|
|
|
|
(1,324
|
)
|
|||||||||
Share-based payment expense
|
|
|
|
|
99
|
|
|
|
|
|
|
99
|
|
|||||||||
Repurchase of common stock
|
(40
|
)
|
|
(20
|
)
|
|
(215
|
)
|
|
(2,939
|
)
|
|
|
|
(3,174
|
)
|
||||||
Issuance of common stock under share-based payment plans
|
4
|
|
|
2
|
|
|
138
|
|
|
|
|
|
|
140
|
|
|||||||
Balance February 2, 2018
|
830
|
|
|
$
|
415
|
|
|
$
|
22
|
|
|
$
|
5,425
|
|
|
$
|
11
|
|
|
$
|
5,873
|
|
Cumulative effect of accounting change
|
|
|
|
|
|
|
33
|
|
|
|
|
33
|
|
|||||||||
Net earnings
|
|
|
|
|
|
|
2,314
|
|
|
|
|
2,314
|
|
|||||||||
Other comprehensive loss
|
|
|
|
|
|
|
|
|
(220
|
)
|
|
(220
|
)
|
|||||||||
Cash dividends declared, $1.85 per share
|
|
|
|
|
|
|
(1,500
|
)
|
|
|
|
(1,500
|
)
|
|||||||||
Share-based payment expense
|
|
|
|
|
74
|
|
|
|
|
|
|
74
|
|
|||||||||
Repurchase of common stock
|
(32
|
)
|
|
(16
|
)
|
|
(209
|
)
|
|
(2,820
|
)
|
|
|
|
(3,045
|
)
|
||||||
Issuance of common stock under share-based payment plans
|
3
|
|
|
2
|
|
|
113
|
|
|
|
|
|
|
115
|
|
|||||||
Balance February 1, 2019
|
801
|
|
|
$
|
401
|
|
|
$
|
—
|
|
|
$
|
3,452
|
|
|
$
|
(209
|
)
|
|
$
|
3,644
|
|
Cumulative effect of accounting change
|
|
|
|
|
|
|
(263
|
)
|
|
|
|
(263
|
)
|
|||||||||
Net earnings
|
|
|
|
|
|
|
4,281
|
|
|
|
|
4,281
|
|
|||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
73
|
|
|
73
|
|
|||||||||
Cash dividends declared, $2.13 per share
|
|
|
|
|
|
|
(1,653
|
)
|
|
|
|
(1,653
|
)
|
|||||||||
Share-based payment expense
|
|
|
|
|
98
|
|
|
|
|
|
|
98
|
|
|||||||||
Repurchase of common stock
|
(41
|
)
|
|
(21
|
)
|
|
(214
|
)
|
|
(4,090
|
)
|
|
|
|
(4,325
|
)
|
||||||
Issuance of common stock under share-based payment plans
|
3
|
|
|
1
|
|
|
116
|
|
|
|
|
|
|
117
|
|
|||||||
Balance January 31, 2020
|
763
|
|
|
$
|
381
|
|
|
$
|
—
|
|
|
$
|
1,727
|
|
|
$
|
(136
|
)
|
|
$
|
1,972
|
|
|
Fiscal Years Ended
|
||||||||||
|
January 31, 2020
|
|
February 1, 2019
|
|
February 2, 2018
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net earnings
|
$
|
4,281
|
|
|
$
|
2,314
|
|
|
$
|
3,447
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
1,410
|
|
|
1,607
|
|
|
1,540
|
|
|||
Noncash lease expense
|
468
|
|
|
—
|
|
|
—
|
|
|||
Deferred income taxes
|
177
|
|
|
(151
|
)
|
|
53
|
|
|||
Loss on property and other assets - net
|
117
|
|
|
630
|
|
|
40
|
|
|||
Impairment of goodwill
|
—
|
|
|
952
|
|
|
—
|
|
|||
Loss on extinguishment of debt
|
—
|
|
|
—
|
|
|
464
|
|
|||
Loss/(gain) on cost method and equity method investments
|
12
|
|
|
9
|
|
|
(82
|
)
|
|||
Share-based payment expense
|
98
|
|
|
74
|
|
|
99
|
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||||||
Merchandise inventory – net
|
(600
|
)
|
|
(1,289
|
)
|
|
(791
|
)
|
|||
Other operating assets
|
(376
|
)
|
|
(110
|
)
|
|
250
|
|
|||
Accounts payable
|
(637
|
)
|
|
1,720
|
|
|
(92
|
)
|
|||
Other operating liabilities
|
(654
|
)
|
|
437
|
|
|
137
|
|
|||
Net cash provided by operating activities
|
4,296
|
|
|
6,193
|
|
|
5,065
|
|
|||
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Purchases of investments
|
(743
|
)
|
|
(1,373
|
)
|
|
(981
|
)
|
|||
Proceeds from sale/maturity of investments
|
695
|
|
|
1,393
|
|
|
1,114
|
|
|||
Capital expenditures
|
(1,484
|
)
|
|
(1,174
|
)
|
|
(1,123
|
)
|
|||
Proceeds from sale of property and other long-term assets
|
163
|
|
|
76
|
|
|
45
|
|
|||
Acquisition of business - net
|
—
|
|
|
—
|
|
|
(509
|
)
|
|||
Other – net
|
—
|
|
|
(2
|
)
|
|
13
|
|
|||
Net cash used in investing activities
|
(1,369
|
)
|
|
(1,080
|
)
|
|
(1,441
|
)
|
|||
|
|
|
|
|
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Net change in commercial paper
|
220
|
|
|
(415
|
)
|
|
625
|
|
|||
Net proceeds from issuance of debt
|
3,972
|
|
|
—
|
|
|
2,968
|
|
|||
Repayment of long-term debt
|
(1,113
|
)
|
|
(326
|
)
|
|
(2,849
|
)
|
|||
Proceeds from issuance of common stock under share-based payment plans
|
118
|
|
|
114
|
|
|
139
|
|
|||
Cash dividend payments
|
(1,618
|
)
|
|
(1,455
|
)
|
|
(1,288
|
)
|
|||
Repurchase of common stock
|
(4,313
|
)
|
|
(3,037
|
)
|
|
(3,192
|
)
|
|||
Other – net
|
(1
|
)
|
|
(5
|
)
|
|
(10
|
)
|
|||
Net cash used in financing activities
|
(2,735
|
)
|
|
(5,124
|
)
|
|
(3,607
|
)
|
|||
|
|
|
|
|
|
||||||
Effect of exchange rate changes on cash
|
1
|
|
|
(12
|
)
|
|
13
|
|
|||
|
|
|
|
|
|
||||||
Net increase/(decrease) in cash and cash equivalents, including cash classified within current assets held for sale
|
193
|
|
|
(23
|
)
|
|
30
|
|
|||
Less: Net increase/(decrease) in cash classified within current assets held for sale
|
12
|
|
|
(54
|
)
|
|
—
|
|
|||
Net increase/(decrease) in cash and cash equivalents
|
205
|
|
|
(77
|
)
|
|
30
|
|
|||
Cash and cash equivalents, beginning of year
|
511
|
|
|
588
|
|
|
558
|
|
|||
Cash and cash equivalents, end of year
|
$
|
716
|
|
|
$
|
511
|
|
|
$
|
588
|
|
(In millions)
|
2019
|
|
|
2018
|
|
|
2017
|
|
|||
Goodwill, balance at beginning of year
|
$
|
303
|
|
|
$
|
1,307
|
|
|
$
|
1,082
|
|
Acquisitions 1
|
—
|
|
|
—
|
|
|
160
|
|
|||
Impairment
|
—
|
|
|
(952
|
)
|
|
—
|
|
|||
Other adjustments 2
|
—
|
|
|
(52
|
)
|
|
65
|
|
|||
Goodwill, balance at end of year
|
$
|
303
|
|
|
$
|
303
|
|
|
$
|
1,307
|
|
1
|
Goodwill recorded for 2017 acquisitions relates to Maintenance Supply Headquarters. See Note 3 for additional information regarding this acquisition.
|
2
|
Other adjustments primarily consist of changes in the goodwill balance as a result of foreign currency translation.
|
|
January 31, 2020
|
|
February 1, 2019
|
||||||||||||
(In millions)
|
Gross Carrying Amount
|
|
|
Cumulative Impairment
|
|
|
Gross Carrying Amount
|
|
|
Cumulative Impairment
|
|
||||
Goodwill
|
$
|
1,302
|
|
|
$
|
(999
|
)
|
|
$
|
1,302
|
|
|
$
|
(999
|
)
|
(In millions)
|
January 31, 2020
|
|
|
February 1, 2019
|
|
||
Self-insurance liabilities
|
$
|
501
|
|
|
$
|
378
|
|
Accrued dividends
|
420
|
|
|
385
|
|
||
Accrued interest
|
221
|
|
|
184
|
|
||
Sales return reserve
|
194
|
|
|
194
|
|
||
Sales tax liabilities
|
153
|
|
|
179
|
|
||
Accrued property taxes
|
104
|
|
|
108
|
|
||
Other
|
988
|
|
|
997
|
|
||
Total
|
$
|
2,581
|
|
|
$
|
2,425
|
|
•
|
Products - Revenue from products primarily relates to in-store and online merchandise purchases, which are recognized at the point in time when the customer obtains control of the merchandise. This occurs at the time of in-store purchase or delivery of the product to the customer. 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.
|
•
|
Services - Revenues from services primarily relate to professional installation services the Company provides through subcontractors related to merchandise purchased by a customer. In certain instances, installation services include materials provided by the subcontractor, and both product and installation are included in service revenue. The Company recognizes revenue associated with services as they are rendered, and the majority of services are completed within one week from initiation.
|
Cost of Sales
|
|
Selling, General and Administrative
|
n Total cost of products sold, including:
- Purchase costs, net of vendor funds;
- Freight expenses associated with moving merchandise inventories from vendors to selling locations;
- Costs associated with operating the Company’s distribution network, including payroll and benefit costs and occupancy costs;
- Depreciation of assets associated with the Company’s distribution network;
n Costs of installation services provided;
n Costs associated with shipping and handling to customers, as well as directly from vendors to customers by third parties;
n Depreciation of assets used in delivering product to customers;
n Costs associated with inventory shrinkage and obsolescence;
n Costs of services performed under the extended protection plan.
|
|
n Payroll and benefit costs for retail and corporate employees;
n Occupancy costs of retail and corporate facilities;
n Advertising;
n Third-party, in-store service costs;
n Tender costs, including bank charges, costs associated with credit card interchange fees;
n Costs associated with self-insured plans, and premium costs for stop-loss coverage and fully insured plans;
n Long-lived asset impairment losses, gains/losses on disposal of assets, and exit costs;
n Other administrative costs, such as supplies, and travel and entertainment.
|
(In millions)
|
|
Years Ended
|
||||||||||
|
January 31, 2020
|
|
February 1, 2019
|
|
February 2, 2018
|
|||||||
Products
|
|
$
|
68,377
|
|
|
$
|
67,197
|
|
|
$
|
65,421
|
|
Services
|
|
2,112
|
|
|
2,539
|
|
|
2,469
|
|
|||
Other
|
|
1,659
|
|
|
1,573
|
|
|
729
|
|
|||
Net sales
|
|
$
|
72,148
|
|
|
$
|
71,309
|
|
|
$
|
68,619
|
|
|
|
Years Ended
|
||||||||||||||||
|
|
January 31, 2020
|
|
February 1, 2019
|
|
February 2, 2018
|
||||||||||||
(In millions)
|
|
Total Sales
|
|
%
|
|
Total Sales
|
|
%
|
|
Total Sales
|
|
%
|
||||||
Home Décor ¹
|
|
$
|
25,867
|
|
|
36
|
|
$
|
25,261
|
|
|
35
|
|
$
|
24,521
|
|
|
36
|
Building Products ²
|
|
23,018
|
|
|
32
|
|
22,992
|
|
|
32
|
|
22,033
|
|
|
32
|
|||
Hardlines ³
|
|
21,235
|
|
|
29
|
|
20,382
|
|
|
29
|
|
19,715
|
|
|
29
|
|||
Other
|
|
2,028
|
|
|
3
|
|
2,674
|
|
|
4
|
|
2,350
|
|
|
3
|
|||
Total
|
|
$
|
72,148
|
|
|
100
|
|
$
|
71,309
|
|
|
100
|
|
$
|
68,619
|
|
|
100
|
1
|
Home Décor includes the following product categories: Appliances, Décor, Flooring, Kitchens & Bath, and Paint.
|
2
|
Building Products includes the following product categories: Lighting, Lumber & Building Materials, Millwork, and Rough Plumbing & Electrical.
|
3
|
Hardlines includes the following product categories: Hardware, Lawn & Garden, Seasonal & Outdoor Living, and Tools.
|
(In millions)
|
|
Years Ended
|
||||||||||
|
January 31, 2020
|
|
February 1, 2019
|
|
February 2, 2018
|
|||||||
United States
|
|
$
|
67,147
|
|
|
$
|
65,872
|
|
|
$
|
63,263
|
|
International
|
|
5,001
|
|
|
5,437
|
|
|
5,356
|
|
|||
Net Sales
|
|
$
|
72,148
|
|
|
$
|
71,309
|
|
|
$
|
68,619
|
|
(In millions)
|
June 23, 2017
|
||
Allocation:
|
|
||
Cash acquired
|
$
|
4
|
|
Merchandise inventory
|
68
|
|
|
Other current assets
|
36
|
|
|
Property
|
12
|
|
|
Goodwill
|
160
|
|
|
Other assets
|
260
|
|
|
Accounts payable
|
(18
|
)
|
|
Other current liabilities
|
(9
|
)
|
|
Net assets acquired
|
$
|
513
|
|
Leases
(In millions)
|
Classification
|
January 31, 2020
|
||
Assets
|
|
|
||
Operating lease assets
|
Operating lease right-of-use assets
|
$
|
3,891
|
|
Finance lease assets
|
Property, less accumulated depreciation 1
|
555
|
|
|
Total lease assets
|
|
4,446
|
|
|
|
|
|
||
Liabilities
|
|
|
||
Current
|
|
|
||
Operating
|
Current operating lease liabilities
|
501
|
|
|
Finance
|
Current maturities of long-term debt
|
72
|
|
|
Noncurrent
|
|
|
||
Operating
|
Noncurrent operating lease liabilities
|
3,943
|
|
|
Finance
|
Long-term debt, excluding current maturities
|
612
|
|
|
Total lease liabilities
|
|
$
|
5,128
|
|
1
|
Finance lease assets are recorded net of accumulated amortization of $42 million as of January 31, 2020.
|
Lease Cost
(In millions)
|
Year Ended
January 31, 2020
|
||
Finance lease cost
|
|
||
Amortization of leased assets
|
$
|
45
|
|
Interest on lease liabilities
|
30
|
|
|
Operating lease cost 1
|
674
|
|
|
Variable lease cost
|
224
|
|
|
Total lease cost
|
$
|
973
|
|
1
|
Includes short-term leases and sublease income, which are immaterial.
|
Maturity of lease liabilities
(In millions)
|
Operating Leases 1
|
Finance
Leases 2
|
Total
|
||||||
2020
|
$
|
624
|
|
$
|
104
|
|
$
|
728
|
|
2021
|
662
|
|
104
|
|
766
|
|
|||
2022
|
684
|
|
107
|
|
791
|
|
|||
2023
|
588
|
|
102
|
|
690
|
|
|||
2024
|
498
|
|
94
|
|
592
|
|
|||
After 2024
|
2,606
|
|
352
|
|
2,958
|
|
|||
Total lease payments
|
5,662
|
|
863
|
|
6,525
|
|
|||
Less: interest 3
|
(1,218
|
)
|
(179
|
)
|
(1,397
|
)
|
|||
Present value of lease liabilities 4
|
$
|
4,444
|
|
$
|
684
|
|
$
|
5,128
|
|
1
|
Operating lease payments include $279 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $265 million of minimum lease payments for leases signed but not yet commenced.
|
2
|
Finance lease payments include $11 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $45 million of minimum lease payments for leases signed but not yet commenced.
|
3
|
Calculated using the lease-specific incremental borrowing rate.
|
4
|
Includes the current portion of $501 million for operating leases and $72 million for finance leases.
|
Lease Term and Discount Rate
|
January 31, 2020
|
|
Weighted-average remaining lease term (years)
|
|
|
Operating leases
|
10.25
|
|
Finance leases
|
9.06
|
|
Weighted-average discount rate
|
|
|
Operating leases
|
4.10
|
%
|
Finance leases
|
5.64
|
%
|
Other Information
(In millions)
|
Year Ended
January 31, 2020
|
||
Cash paid for amounts included in the measurement of lease liabilities
|
|
||
Operating cash flows used for operating leases
|
$
|
825
|
|
Operating cash flows used for finance leases
|
30
|
|
|
Financing cash flows used for finance leases
|
57
|
|
|
Leased assets obtained in exchange for new finance lease liabilities
|
329
|
|
|
Leased assets obtained in exchange for new operating lease liabilities
|
551
|
|
|
February 1, 2019
|
||||||||||
Fiscal Year
(In millions) |
Operating Leases
|
|
Capitalized Lease Obligations
|
|
Total
|
||||||
2019
|
$
|
595
|
|
|
$
|
133
|
|
|
$
|
728
|
|
2020
|
605
|
|
|
87
|
|
|
692
|
|
|||
2021
|
564
|
|
|
90
|
|
|
654
|
|
|||
2022
|
519
|
|
|
87
|
|
|
606
|
|
|||
2023
|
473
|
|
|
86
|
|
|
559
|
|
|||
Later years
|
2,609
|
|
|
783
|
|
|
3,392
|
|
|||
Total minimum lease payments
|
$
|
5,365
|
|
|
$
|
1,266
|
|
|
$
|
6,631
|
|
Less amount representing interest
|
|
|
(492
|
)
|
|
|
|||||
Present value of minimum lease payments
|
|
|
774
|
|
|
|
|||||
Less current maturities
|
|
|
(65
|
)
|
|
|
|||||
Present value of minimum lease payments, less current maturities
|
|
|
$
|
709
|
|
|
|
•
|
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
|
|
|
|
Fair Value Measurements at
|
||||||
(In millions)
|
Measurement Level
|
|
January 31, 2020
|
|
|
February 1, 2019
|
|
||
Available-for-sale debt securities:
|
|
|
|
|
|
||||
Money market funds
|
Level 1
|
|
$
|
105
|
|
|
$
|
207
|
|
Corporate debt securities
|
Level 2
|
|
23
|
|
|
1
|
|
||
Agency securities
|
Level 2
|
|
19
|
|
|
10
|
|
||
U.S. Treasury securities
|
Level 1
|
|
13
|
|
|
—
|
|
||
Total short-term investments
|
|
|
$
|
160
|
|
|
$
|
218
|
|
Available-for-sale debt securities:
|
|
|
|
|
|
||||
U.S. Treasury securities
|
Level 1
|
|
$
|
280
|
|
|
$
|
—
|
|
Corporate debt securities
|
Level 2
|
|
62
|
|
|
191
|
|
||
Agency securities
|
Level 2
|
|
30
|
|
|
65
|
|
||
Total long-term investments
|
|
|
$
|
372
|
|
|
$
|
256
|
|
|
January 31, 2020
|
February 1, 2019
|
||||||||||||
(In millions)
|
Fair Value Measurements
|
|
Impairment Losses
|
Fair Value Measurements
|
|
Impairment Losses
|
||||||||
Assets-held-for-use:
|
|
|
|
|
|
|
||||||||
Operating locations
|
$
|
46
|
|
|
$
|
(62
|
)
|
$
|
473
|
|
|
$
|
(331
|
)
|
Assets-held-for-sale:
|
|
|
|
|
|
|
||||||||
Mexico operating locations
|
—
|
|
|
—
|
|
79
|
|
|
(222
|
)
|
||||
Goodwill (Note 1)
|
—
|
|
|
—
|
|
2,851
|
|
|
(952
|
)
|
||||
Total
|
$
|
46
|
|
|
$
|
(62
|
)
|
$
|
3,403
|
|
|
$
|
(1,505
|
)
|
|
January 31, 2020
|
|
February 1, 2019
|
||||||||||||
(In millions)
|
Carrying Amount
|
|
Fair Value
|
|
Carrying Amount
|
|
Fair Value
|
||||||||
Unsecured notes (Level 1)
|
$
|
16,648
|
|
|
$
|
18,808
|
|
|
$
|
14,721
|
|
|
$
|
14,473
|
|
Mortgage notes (Level 2)
|
5
|
|
|
6
|
|
|
6
|
|
|
6
|
|
||||
Long-term debt (excluding finance and capitalized lease obligations)
|
$
|
16,653
|
|
|
$
|
18,814
|
|
|
$
|
14,727
|
|
|
$
|
14,479
|
|
(In millions)
|
Estimated
Depreciable Lives, In Years |
|
January 31, 2020
|
|
February 1, 2019
|
||||
Cost:
|
|
|
|
|
|
||||
Land
|
N/A
|
|
$
|
7,200
|
|
|
$
|
7,196
|
|
Buildings and building improvements
|
5-40
|
|
17,862
|
|
|
18,052
|
|
||
Equipment
|
2-15
|
|
10,377
|
|
|
10,090
|
|
||
Construction in progress
|
N/A
|
|
506
|
|
|
525
|
|
||
Total cost
|
|
|
35,945
|
|
|
35,863
|
|
||
Accumulated depreciation
|
|
|
(17,276
|
)
|
|
(17,431
|
)
|
||
Property, less accumulated depreciation
|
|
|
$
|
18,669
|
|
|
$
|
18,432
|
|
|
Year Ended
|
||
(In millions)
|
January 31, 2020
|
||
Long-lived asset impairment
|
53
|
|
|
Accelerated depreciation and amortization
|
23
|
|
|
Severance costs
|
17
|
|
|
Other closing costs
|
15
|
|
|
Total
|
$
|
108
|
|
|
Year Ended
|
||
(In millions)
|
February 1, 2019
|
||
Lease obligation costs for closed locations
|
$
|
217
|
|
Long-lived asset impairment
|
206
|
|
|
Accelerated depreciation and amortization
|
103
|
|
|
Discontinued project write-offs
|
24
|
|
|
Severance costs
|
11
|
|
|
Total
|
$
|
561
|
|
|
Year Ended
|
||
(In millions)
|
February 1, 2019
|
||
Long-lived asset impairment
|
$
|
90
|
|
Lease obligation costs for closed locations
|
89
|
|
|
Accelerated depreciation and amortization
|
50
|
|
|
Severance costs
|
32
|
|
|
Discontinued project write-offs
|
10
|
|
|
Total
|
$
|
271
|
|
|
Year Ended
|
||
(In millions)
|
February 1, 2019
|
||
Long-lived asset impairment
|
$
|
244
|
|
Total
|
$
|
244
|
|
|
Year Ended
|
||
(In millions)
|
February 1, 2019
|
||
Other closing costs
|
$
|
34
|
|
Severance costs
|
16
|
|
|
Long-lived asset impairment
|
9
|
|
|
Total
|
$
|
59
|
|
(In millions)
|
Lease obligations
|
||
Accrual for exit activities, balance at February 2, 2018
|
$
|
60
|
|
Additions to the accrual - net
|
365
|
|
|
Cash payments
|
(86
|
)
|
|
Adjustments 1
|
22
|
|
|
Accrual for exit activities, balance at February 1, 2019
|
$
|
361
|
|
ASU 2016-02 adoption impact 2
|
(168
|
)
|
|
Cash payments
|
(43
|
)
|
|
Adjustments 1
|
(62
|
)
|
|
Accrual for exit activities, balance at January 31, 2020
|
$
|
88
|
|
1
|
Adjustments represents lease terminations and changes in estimates around sublease assumptions.
|
2
|
Upon adoption of ASU 2016-02, Leases (Topic 842), rent liabilities previously recognized in connection with leases were included in the determination of right-of-use assets at transition.
|
Debt Category
(In millions) |
Weighted-Average Interest Rate at January 31, 2020
|
|
January 31, 2020
|
|
February 1, 2019
|
|||||
Secured debt:
|
|
|
|
|
|
|||||
Mortgage notes due through fiscal 2027 1
|
5.23
|
%
|
|
$
|
5
|
|
|
$
|
6
|
|
Unsecured debt:
|
|
|
|
|
|
|||||
Notes due through fiscal 2024
|
3.70
|
%
|
|
3,232
|
|
|
4,278
|
|
||
Notes due fiscal 2025-2029
|
3.57
|
%
|
|
5,749
|
|
|
4,256
|
|
||
Notes due fiscal 2035-2039
|
5.96
|
%
|
|
897
|
|
|
897
|
|
||
Notes due fiscal 2040-2044
|
4.82
|
%
|
|
1,757
|
|
|
1,757
|
|
||
Notes due fiscal 2045-2049
|
3.89
|
%
|
|
5,013
|
|
|
3,533
|
|
||
Finance or capitalized lease obligations due through fiscal 2037
|
|
|
712
|
|
|
774
|
|
|||
Total long-term debt
|
|
|
17,365
|
|
|
15,501
|
|
|||
Less current maturities
|
|
|
(597
|
)
|
|
(1,110
|
)
|
|||
Long-term debt, excluding current maturities
|
|
|
$
|
16,768
|
|
|
$
|
14,391
|
|
1
|
Real properties with an aggregate book value of $16 million were pledged as collateral at January 31, 2020, for secured debt.
|
Issue Date
|
|
Principal Amount (in millions)
|
|
Maturity Date
|
|
Fixed vs. Floating
|
|
Interest Rate
|
|
Discount (in millions)
|
||||
April 2019
|
|
$
|
1,500
|
|
|
April 2029
|
|
Fixed
|
|
3.650%
|
|
$
|
9
|
|
April 2019
|
|
$
|
1,500
|
|
|
April 2049
|
|
Fixed
|
|
4.550%
|
|
$
|
19
|
|
Issue Date
|
|
Principal Amount (in millions)
|
|
Maturity Date
|
|
Fixed vs. Floating
|
|
Interest Rate
|
|
Discount (in millions)
|
||||
May 2017
|
|
$
|
1,500
|
|
|
May 2027
|
|
Fixed
|
|
3.100%
|
|
$
|
9
|
|
May 2017
|
|
$
|
1,500
|
|
|
May 2047
|
|
Fixed
|
|
4.050%
|
|
$
|
23
|
|
Agreement Execution Date
|
ASR Settlement Date
|
ASR Agreement Amount
|
Minimum Notional Amount1
|
Maximum Notional Amount1
|
Cash Payment Received at Settlement1
|
Initial Shares Delivered
|
Additional Shares Delivered at Settlement
|
Total Shares Delivered
|
|||||||||||
Q1 2017
|
Q1 2017
|
$
|
500
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
5.3
|
|
0.8
|
|
6.1
|
|
Q2 2017
|
Q2 2017
|
500
|
|
—
|
|
—
|
|
—
|
|
5.2
|
|
1.2
|
|
6.4
|
|
||||
Q3 2017
|
Q3 2017
|
250
|
|
—
|
|
—
|
|
—
|
|
2.9
|
|
0.3
|
|
3.2
|
|
||||
Q2 2018
|
Q2 2018
|
550
|
|
—
|
|
—
|
|
—
|
|
4.8
|
|
0.8
|
|
5.6
|
|
||||
Q3 2018
|
Q3 2018
|
310
|
|
—
|
|
—
|
|
—
|
|
2.5
|
|
0.3
|
|
2.8
|
|
||||
Q4 2018
|
Q1 2019
|
270
|
|
—
|
|
—
|
|
—
|
|
2.6
|
|
0.3
|
|
2.9
|
|
||||
Q1 2019
|
Q1 2019
|
350
|
|
350
|
|
500
|
|
150
|
|
2.9
|
|
0.3
|
|
3.2
|
|
||||
Q2 2019
|
Q2 2019
|
990
|
|
990
|
|
1,410
|
|
420
|
|
8.9
|
|
1.0
|
|
9.9
|
|
||||
Q3 2019
|
Q3 2019
|
397
|
|
350
|
|
500
|
|
103
|
|
2.8
|
|
0.8
|
|
3.6
|
|
1
|
The Company entered into variable notional ASR agreements with third-party financial institutions to repurchase between a minimum notional amount and a maximum notional amount. At inception of each transaction, the Company paid the maximum notional amount and received shares. When the Company finalized each transaction, it received additional shares as well as a cash payment from the third-party financial institution equal to the difference between the prepayment amount (maximum notional amount) and the final notional amount.
|
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
(In millions)
|
Shares
|
|
|
Cost 1
|
|
|
Shares
|
|
|
Cost 1
|
|
|
Shares
|
|
|
Cost 1
|
|
|||
Share repurchase program
|
41.0
|
|
|
$
|
4,288
|
|
|
31.2
|
|
|
$
|
2,999
|
|
|
39.1
|
|
|
$
|
3,133
|
|
Shares withheld from employees
|
0.3
|
|
|
37
|
|
|
0.5
|
|
|
46
|
|
|
0.5
|
|
|
41
|
|
|||
Total share repurchases
|
41.3
|
|
|
$
|
4,325
|
|
|
31.7
|
|
|
$
|
3,045
|
|
|
39.6
|
|
|
$
|
3,174
|
|
1
|
Reductions of $4.1 billion, $2.8 billion, and $2.9 billion were recorded to retained earnings, after capital in excess of par value was depleted, for 2019, 2018, and 2017, respectively.
|
|
2019
|
|
2018
|
|
2017
|
||||||
Weighted-average assumptions used:
|
|
|
|
|
|
||||||
Expected volatility
|
23.0
|
%
|
|
23.3
|
%
|
|
23.6
|
%
|
|||
Dividend yield
|
1.73
|
%
|
|
1.71
|
%
|
|
1.68
|
%
|
|||
Risk-free interest rate
|
2.28
|
%
|
|
2.71
|
%
|
|
2.14
|
%
|
|||
Expected term, in years
|
6.38
|
|
|
6.58
|
|
|
6.43
|
|
|||
|
|
|
|
|
|
||||||
Weighted-average grant date fair value
|
$
|
23.66
|
|
|
$
|
21.12
|
|
|
$
|
18.30
|
|
|
Shares
(In thousands) |
|
Weighted-Average Exercise Price Per Share
|
|
Weighted-Average Remaining Term (In years)
|
|
Aggregate Intrinsic Value (In thousands)
|
|||||
Outstanding at February 1, 2019
|
2,691
|
|
|
$
|
70.87
|
|
|
|
|
|
||
Granted
|
683
|
|
|
108.95
|
|
|
|
|
|
|||
Canceled, forfeited or expired
|
(189
|
)
|
|
95.79
|
|
|
|
|
|
|||
Exercised
|
(842
|
)
|
|
54.04
|
|
|
|
|
|
|||
Outstanding at January 31, 2020
|
2,343
|
|
|
$
|
86.01
|
|
|
7.42
|
|
$
|
70,977
|
|
Vested and expected to vest at January 31, 20201
|
2,263
|
|
|
$
|
85.29
|
|
|
7.36
|
|
$
|
70,136
|
|
Exercisable at January 31, 2020
|
1,287
|
|
|
$
|
72.86
|
|
|
6.28
|
|
$
|
55,834
|
|
1
|
Includes outstanding vested options as well as outstanding nonvested options after a forfeiture rate is applied.
|
|
Shares
(In thousands) |
|
Weighted-Average Grant-Date Fair Value Per Share
|
|||
Nonvested at February 1, 2019
|
1,790
|
|
|
$
|
81.16
|
|
Granted
|
1,136
|
|
|
109.04
|
|
|
Vested
|
(570
|
)
|
|
72.26
|
|
|
Canceled or forfeited
|
(359
|
)
|
|
90.86
|
|
|
Nonvested at January 31, 2020
|
1,997
|
|
|
$
|
97.81
|
|
|
2019
|
|
2018
|
||
Weighted-average assumptions used:
|
|
|
|
||
Expected volatility
|
24.1
|
%
|
|
22.8
|
%
|
Dividend yield
|
1.89
|
%
|
|
1.77
|
%
|
Risk-free interest rate
|
2.28
|
%
|
|
2.36
|
%
|
Expected term, in years
|
2.84
|
|
|
2.81
|
|
|
Units
(In thousands)1 |
|
Weighted-Average Grant-Date Fair Value Per Unit
|
|||
Nonvested at February 1, 2019
|
613
|
|
|
$
|
83.83
|
|
Granted
|
249
|
|
|
115.93
|
|
|
Vested
|
(171
|
)
|
|
77.75
|
|
|
Canceled or forfeited
|
(122
|
)
|
|
92.50
|
|
|
Nonvested at January 31, 2020
|
569
|
|
|
$
|
97.86
|
|
¹
|
The number of units presented is based on achieving the targeted performance goals as defined in the performance share unit agreements. As of January 31, 2020, the maximum number of nonvested units that could vest under the provisions of the agreements was 0.7 million for the RONCAA awards and 0.4 million for the ROIC awards.
|
|
Shares
(In thousands) |
|
Weighted-Average Grant-Date Fair Value Per Share
|
|||
Nonvested at February 1, 2019
|
329
|
|
|
$
|
74.95
|
|
Granted
|
452
|
|
|
103.40
|
|
|
Vested
|
(82
|
)
|
|
67.62
|
|
|
Canceled or forfeited
|
(193
|
)
|
|
88.57
|
|
|
Nonvested at January 31, 2020
|
506
|
|
|
$
|
96.39
|
|
|
2019
|
|
2018
|
|
2017
|
|||
Statutory federal income tax rate 1
|
21.0
|
%
|
|
21.0
|
%
|
|
33.7
|
%
|
State income taxes, net of federal tax benefit
|
4.1
|
|
|
4.8
|
|
|
2.9
|
|
Valuation allowance
|
1.3
|
|
|
—
|
|
|
(0.6
|
)
|
Goodwill impairment
|
—
|
|
|
5.5
|
|
|
—
|
|
Mexico impairment
|
(1.4
|
)
|
|
1.5
|
|
|
—
|
|
Other, net
|
(1.1
|
)
|
|
(1.0
|
)
|
|
1.2
|
|
Effective tax rate
|
23.9
|
%
|
|
31.8
|
%
|
|
37.2
|
%
|
1
|
The Company utilized a blended rate in 2017 due to the Tax Cuts and Job Act enacted on December 22, 2017.
|
(In millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Current:
|
|
|
|
|
|
||||||
Federal
|
$
|
935
|
|
|
$
|
963
|
|
|
$
|
1,734
|
|
State
|
268
|
|
|
274
|
|
|
252
|
|
|||
Total current 1
|
1,203
|
|
|
1,237
|
|
|
1,986
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Federal
|
121
|
|
|
(102
|
)
|
|
60
|
|
|||
State
|
18
|
|
|
(55
|
)
|
|
(4
|
)
|
|||
Total deferred 1
|
139
|
|
|
(157
|
)
|
|
56
|
|
|||
Total income tax provision
|
$
|
1,342
|
|
|
$
|
1,080
|
|
|
$
|
2,042
|
|
1
|
Amounts applicable to foreign income taxes were insignificant for all periods presented.
|
(In millions)
|
January 31, 2020
|
|
February 1, 2019
|
||||
Deferred tax assets:
|
|
|
|
||||
Self-insurance
|
$
|
260
|
|
|
$
|
252
|
|
Share-based payment expense
|
30
|
|
|
31
|
|
||
Deferred rent
|
—
|
|
|
58
|
|
||
Operating lease liabilities
|
1,377
|
|
|
—
|
|
||
Mexico impairment
|
—
|
|
|
74
|
|
||
Capital loss carryforwards
|
225
|
|
|
223
|
|
||
Net operating losses
|
273
|
|
|
239
|
|
||
Other, net
|
131
|
|
|
119
|
|
||
Total deferred tax assets
|
2,296
|
|
|
996
|
|
||
Valuation allowance
|
(561
|
)
|
|
(569
|
)
|
||
Net deferred tax assets
|
1,735
|
|
|
427
|
|
||
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
||||
Operating lease assets
|
(1,198
|
)
|
|
—
|
|
||
Property
|
(293
|
)
|
|
(76
|
)
|
||
Other, net
|
(28
|
)
|
|
(57
|
)
|
||
Total deferred tax liabilities
|
(1,519
|
)
|
|
(133
|
)
|
||
|
|
|
|
||||
Net deferred tax asset
|
$
|
216
|
|
|
$
|
294
|
|
(In millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Unrecognized tax benefits, beginning of year
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
6
|
|
Additions for tax positions of prior years
|
2
|
|
|
10
|
|
|
—
|
|
|||
Reductions for tax positions of prior years
|
(3
|
)
|
|
—
|
|
|
(2
|
)
|
|||
Settlements
|
(5
|
)
|
|
—
|
|
|
(1
|
)
|
|||
Reductions due to a lapse in applicable statute of limitations
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||
Unrecognized tax benefits, end of year
|
$
|
4
|
|
|
$
|
10
|
|
|
$
|
—
|
|
(In millions, except per share data)
|
2019
|
|
2018
|
|
2017
|
||||||
Basic earnings per common share:
|
|
|
|
|
|
||||||
Net earnings attributable to Lowe's Companies, Inc.
|
$
|
4,281
|
|
|
$
|
2,314
|
|
|
$
|
3,447
|
|
Less: Net earnings allocable to participating securities
|
(13
|
)
|
|
(7
|
)
|
|
(11
|
)
|
|||
Net earnings allocable to common shares, basic
|
$
|
4,268
|
|
|
$
|
2,307
|
|
|
$
|
3,436
|
|
Weighted-average common shares outstanding
|
777
|
|
|
811
|
|
|
839
|
|
|||
Basic earnings per common share
|
$
|
5.49
|
|
|
$
|
2.84
|
|
|
$
|
4.09
|
|
Diluted earnings per common share:
|
|
|
|
|
|
||||||
Net earnings attributable to Lowe's Companies, Inc.
|
$
|
4,281
|
|
|
$
|
2,314
|
|
|
$
|
3,447
|
|
Less: Net earnings allocable to participating securities
|
(13
|
)
|
|
(7
|
)
|
|
(11
|
)
|
|||
Net earnings allocable to common shares, diluted
|
$
|
4,268
|
|
|
$
|
2,307
|
|
|
$
|
3,436
|
|
Weighted-average common shares outstanding
|
777
|
|
|
811
|
|
|
839
|
|
|||
Dilutive effect of non-participating share-based awards
|
1
|
|
|
1
|
|
|
1
|
|
|||
Weighted-average common shares, as adjusted
|
778
|
|
|
812
|
|
|
840
|
|
|||
Diluted earnings per common share
|
$
|
5.49
|
|
|
$
|
2.84
|
|
|
$
|
4.09
|
|
(In millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Long-term debt
|
$
|
668
|
|
|
$
|
582
|
|
|
$
|
582
|
|
Lease obligations
|
30
|
|
|
58
|
|
|
56
|
|
|||
Interest income
|
(27
|
)
|
|
(28
|
)
|
|
(16
|
)
|
|||
Interest capitalized
|
(1
|
)
|
|
(3
|
)
|
|
(5
|
)
|
|||
Interest on tax uncertainties
|
—
|
|
|
3
|
|
|
(3
|
)
|
|||
Other
|
21
|
|
|
12
|
|
|
19
|
|
|||
Interest - net
|
$
|
691
|
|
|
$
|
624
|
|
|
$
|
633
|
|
(In millions)
|
2019
|
|
2018
|
|
2017
|
||||||
Cash paid for interest, net of amount capitalized
|
$
|
671
|
|
|
$
|
635
|
|
|
$
|
654
|
|
Cash paid for income taxes, net
|
$
|
1,423
|
|
|
$
|
1,316
|
|
|
$
|
1,673
|
|
Non-cash investing and financing activities:
|
|
|
|
|
|
||||||
Non-cash property acquisitions1
|
$
|
441
|
|
|
$
|
44
|
|
|
$
|
97
|
|
Cash dividends declared but not paid
|
$
|
420
|
|
|
$
|
385
|
|
|
$
|
340
|
|
|
2019
|
|
2018
|
|
2017
|
|||||||||||||||
(Dollars in millions)
|
Total Sales
|
|
%
|
|
Total Sales
|
|
%
|
|
Total Sales
|
|
%
|
|||||||||
Appliances
|
$
|
9,989
|
|
|
14
|
%
|
|
$
|
9,485
|
|
|
13
|
%
|
|
$
|
8,687
|
|
|
13
|
%
|
Lumber & Building Materials
|
9,745
|
|
|
14
|
|
|
9,767
|
|
|
14
|
|
|
8,978
|
|
|
13
|
|
|||
Seasonal & Outdoor Living
|
6,890
|
|
|
10
|
|
|
6,669
|
|
|
9
|
|
|
6,479
|
|
|
9
|
|
|||
Lawn & Garden
|
6,459
|
|
|
9
|
|
|
6,133
|
|
|
9
|
|
|
5,905
|
|
|
9
|
|
|||
Rough Plumbing & Electrical
|
6,224
|
|
|
9
|
|
|
6,164
|
|
|
9
|
|
|
5,937
|
|
|
9
|
|
|||
Kitchens & Bath
|
5,433
|
|
|
7
|
|
|
5,582
|
|
|
8
|
|
|
5,576
|
|
|
8
|
|
|||
Tools
|
4,420
|
|
|
6
|
|
|
4,218
|
|
|
6
|
|
|
4,033
|
|
|
6
|
|
|||
Millwork
|
4,192
|
|
|
6
|
|
|
4,050
|
|
|
6
|
|
|
3,975
|
|
|
6
|
|
|||
Paint
|
4,125
|
|
|
6
|
|
|
3,962
|
|
|
6
|
|
|
3,955
|
|
|
6
|
|
|||
Flooring
|
3,877
|
|
|
5
|
|
|
3,898
|
|
|
5
|
|
|
3,964
|
|
|
6
|
|
|||
Hardware
|
3,467
|
|
|
5
|
|
|
3,362
|
|
|
5
|
|
|
3,298
|
|
|
5
|
|
|||
Lighting
|
2,857
|
|
|
4
|
|
|
3,011
|
|
|
4
|
|
|
3,143
|
|
|
5
|
|
|||
Décor
|
2,443
|
|
|
3
|
|
|
2,333
|
|
|
3
|
|
|
2,339
|
|
|
3
|
|
|||
Other
|
2,027
|
|
|
2
|
|
|
2,675
|
|
|
3
|
|
|
2,350
|
|
|
2
|
|
|||
Net sales
|
$
|
72,148
|
|
|
100
|
%
|
|
$
|
71,309
|
|
|
100
|
%
|
|
$
|
68,619
|
|
|
100
|
%
|
|
2019
|
||||||||||||||
(In millions, except per share data)
|
First 1
|
|
Second 2
|
|
Third 3
|
|
Fourth 4
|
||||||||
Net sales
|
$
|
17,741
|
|
|
$
|
20,992
|
|
|
$
|
17,388
|
|
|
$
|
16,027
|
|
Gross margin
|
5,581
|
|
|
6,740
|
|
|
5,640
|
|
|
4,981
|
|
||||
Net earnings
|
1,046
|
|
|
1,676
|
|
|
1,049
|
|
|
509
|
|
||||
Basic earnings per common share
|
1.31
|
|
|
2.14
|
|
|
1.36
|
|
|
0.67
|
|
||||
Diluted earnings per common share
|
$
|
1.31
|
|
|
$
|
2.14
|
|
|
$
|
1.36
|
|
|
$
|
0.66
|
|
|
|
|
|
|
|
|
|
||||||||
|
2018
|
||||||||||||||
(In millions, except per share data)
|
First
|
|
Second 5
|
|
Third 6
|
|
Fourth 7
|
||||||||
Net sales
|
$
|
17,360
|
|
|
$
|
20,888
|
|
|
$
|
17,415
|
|
|
$
|
15,647
|
|
Gross margin
|
5,748
|
|
|
6,885
|
|
|
5,377
|
|
|
4,898
|
|
||||
Net earnings/(loss)
|
988
|
|
|
1,520
|
|
|
629
|
|
|
(824
|
)
|
||||
Basic earnings/(loss) per common share
|
1.19
|
|
|
1.86
|
|
|
0.78
|
|
|
(1.03
|
)
|
||||
Diluted earnings/(loss) per common share
|
$
|
1.19
|
|
|
$
|
1.86
|
|
|
$
|
0.78
|
|
|
$
|
(1.03
|
)
|
1
|
The first quarter of fiscal 2019 includes pre-tax operating losses of $12 million associated with the exit and ongoing wind-down of the Mexico retail operations.
|
2
|
The second quarter of fiscal 2019 includes pre-tax operating losses of $14 million associated with the exit and ongoing wind-down of the Mexico retail operations.
|
3
|
The third quarter of fiscal 2019 includes pre-tax charges totaling $53 million related to long-lived asset impairments associated with the Company’s strategic review of its Canadian operations, as well as pre-tax operating losses of $9 million associated with the exit and ongoing wind-down of the Mexico retail operations.
|
4
|
The fourth quarter of fiscal 2019 includes pre-tax operating costs and charges totaling $176 million related to inventory liquidation, accelerated depreciation and amortization, severance, and other costs associated with the Company’s decision to close 34 under-performing stores and take additional actions to improve future performance and profitability of its Canadian operations.
|
5
|
The second quarter of fiscal 2018 includes pre-tax charges totaling $230 million related to long lived asset impairments and discontinued projects associated with the Company’s decision to close all Orchard Supply Hardware locations.
|
6
|
The third quarter of fiscal 2018 includes the following pre-tax charges: $123 million related to accelerated depreciation and amortization, severance and lease obligation costs associated with the Company’s decision to close all Orchard Supply Hardware locations; $121 million related to long-lived asset impairment and severance costs associated with the Company’s decision to close 20 U.S. stores and 31 stores and other locations in Canada; $22 million related to long-lived asset impairments associated with the Company’s decision to exit its Mexico retail operations; and $14 million associated with long-lived asset impairments and inventory write-down related to the Company’s decision to exit certain non-core activities within its U.S. Home Improvement business.
|
7
|
The fourth quarter of fiscal 2018 includes the following pre-tax charges: $952 million of goodwill impairment associated with the Company’s Canadian operations; $222 million related to impairments associated with the Company’s decision to exit its Mexico retail operations; $208 million related primarily to lease obligation costs associated with the Company’s decision to close all Orchard Supply Hardware locations; $150 million related to accelerated depreciation, severance and lease obligation costs associated with the Company’s decision to close 20 U.S. stores and 31 stores and other locations in Canada; $32 million related to the Company’s decision to exit certain non-core activities within its U.S. home improvement business; and $13 million related of severance costs associated with the elimination of the Project Specialists Interiors position.
|
|
|
Page No.
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
(In millions)
|
Balance at beginning of period
|
|
|
Charges to costs
and expenses
|
|
|
|
|
Deductions
|
|
|
|
|
Balance at end of period
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
January 31, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Reserve for loss on obsolete inventory
|
$
|
78
|
|
|
$
|
27
|
|
|
1
|
|
$
|
—
|
|
|
|
|
$
|
105
|
|
Reserve for inventory shrinkage
|
222
|
|
|
533
|
|
|
|
|
(511
|
)
|
|
2
|
|
244
|
|
||||
Reserve for sales returns
|
194
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
194
|
|
||||
Deferred tax valuation allowance
|
569
|
|
|
—
|
|
|
|
|
(8
|
)
|
|
4
|
|
561
|
|
||||
Self-insurance liabilities
|
953
|
|
|
1,711
|
|
|
|
|
(1,560
|
)
|
|
5
|
|
1,104
|
|
||||
Reserve for exit activities
|
361
|
|
|
—
|
|
|
|
|
(273
|
)
|
|
7
|
|
88
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
February 1, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Reserve for loss on obsolete inventory
|
$
|
77
|
|
|
$
|
1
|
|
|
1
|
|
$
|
—
|
|
|
|
|
$
|
78
|
|
Reserve for inventory shrinkage
|
212
|
|
|
478
|
|
|
|
|
(468
|
)
|
|
2
|
|
222
|
|
||||
Reserve for sales returns
|
71
|
|
|
123
|
|
|
3
|
|
—
|
|
|
|
|
194
|
|
||||
Deferred tax valuation allowance
|
475
|
|
|
94
|
|
|
4
|
|
—
|
|
|
|
|
569
|
|
||||
Self-insurance liabilities
|
890
|
|
|
1,530
|
|
|
|
|
(1,467
|
)
|
|
5
|
|
953
|
|
||||
Reserve for exit activities
|
60
|
|
|
384
|
|
|
|
|
(83
|
)
|
|
6
|
|
361
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
February 2, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Reserve for loss on obsolete inventory
|
$
|
59
|
|
|
$
|
18
|
|
|
1
|
|
$
|
—
|
|
|
|
|
$
|
77
|
|
Reserve for inventory shrinkage
|
189
|
|
|
456
|
|
|
|
|
(433
|
)
|
|
2
|
|
212
|
|
||||
Reserve for sales returns
|
71
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
71
|
|
||||
Deferred tax valuation allowance
|
578
|
|
|
—
|
|
|
|
|
(103
|
)
|
|
4
|
|
475
|
|
||||
Self-insurance liabilities
|
831
|
|
|
1,547
|
|
|
|
|
(1,488
|
)
|
|
5
|
|
890
|
|
||||
Reserve for exit activities
|
66
|
|
|
19
|
|
|
|
|
(25
|
)
|
|
6
|
|
60
|
|
1
|
Represents the net increase in the required reserve based on the Company’s evaluation of obsolete inventory.
|
2
|
Represents the actual inventory shrinkage experienced at the time of physical inventories.
|
3
|
Represents the net increase in the required reserve based on the Company’s evaluation of anticipated merchandise returns. The Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606), effective February 3, 2018. Under ASU 2014-09, the sales returns reserve is presented on a gross basis, with a separate asset and liability in the consolidated balance sheet. Reporting periods prior to the adoption of ASU 2014-09 reflect the sales returns reserve on a net basis. For fiscal year 2018, the net increase in the reserve is primarily due to the change from net presentation to gross presentation related to the adoption of the revenue recognition standard, as well as changes in the Company’s evaluation of anticipated merchandise returns.
|
4
|
Represents an increase/(decrease) in the required reserve based on the Company’s evaluation of deferred tax assets.
|
5
|
Represents claim payments for self-insured claims.
|
6
|
Represents lease payments, net of sublease income.
|
7
|
Primarily represents the elimination of exit activity reserves related to rent liabilities upon adoption of ASU 2016-02, Leases (Topic 842), as of February 2, 2019.
|
Exhibit Number
|
|
|
|
Incorporated by Reference
|
||||||
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
2.1
|
|
|
10-K
|
|
001-07898
|
|
2.1
|
|
March 29, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
3.1
|
|
|
10-Q
|
|
001-07898
|
|
3.1
|
|
September 1, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
3.2
|
|
|
8-K
|
|
001-07898
|
|
3.1
|
|
January 28, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
4.1
|
|
|
8-K
|
|
001-07898
|
|
4.1
|
|
December 15, 1995
|
|
|
|
|
|
|
|
|
|
|
|
|
4.2
|
|
|
8-K
|
|
001-07898
|
|
4.2
|
|
February 20, 1998
|
|
|
|
|
|
|
|
|
|
|
|
|
4.3
|
|
|
10-K
|
|
001-07898
|
|
10.13
|
|
April 19, 1999
|
|
|
|
|
|
|
|
|
|
|
|
|
4.4
|
|
|
10-K
|
|
001-07898
|
|
10.19
|
|
April 19, 1999
|
|
|
|
|
|
|
|
|
|
|
|
|
4.5
|
|
|
10-K
|
|
001-07898
|
|
4.5
|
|
April 3, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
4.6
|
|
|
S-3 (POSASR)
|
|
333-137750
|
|
4.5
|
|
October 10, 2006
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit Number
|
|
|
|
Incorporated by Reference
|
||||||
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
4.7
|
|
|
8-K
|
|
001-07898
|
|
4.1
|
|
September 11, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
4.8
|
|
|
8-K
|
|
001-07898
|
|
4.1
|
|
April 15, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
4.9
|
|
|
8-K
|
|
001-07898
|
|
4.1
|
|
November 22, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
4.10
|
|
|
8-K
|
|
001-07898
|
|
4.1
|
|
November 23, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
4.11
|
|
|
8-K
|
|
001-07898
|
|
4.1
|
|
April 23, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit Number
|
|
|
|
Incorporated by Reference
|
||||||
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
4.12
|
|
|
8-K
|
|
001-07898
|
|
4.1
|
|
September 11, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
4.13
|
|
|
8-K
|
|
001-07898
|
|
4.1
|
|
September 10, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
4.14
|
|
|
8-K
|
|
001-07898
|
|
4.1
|
|
September 16, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
4.15
|
|
|
8-K
|
|
001-07898
|
|
4.1
|
|
April 20, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
4.16
|
|
|
8-K
|
|
001-07898
|
|
4.1
|
|
May 3, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit Number
|
|
|
|
Incorporated by Reference
|
||||||
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
4.17
|
|
|
8-K
|
|
001-07898
|
|
4.2
|
|
April 5, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
4.18
|
|
|
8-K
|
|
001-07898
|
|
10.1
|
|
September 12, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
4.19
|
|
|
8-K
|
|
001-07898
|
|
10.1
|
|
September 9, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
4.20
|
|
|
8-K
|
|
001-07898
|
|
10.1
|
|
January 9, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
4.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1
|
|
|
10-Q
|
|
001-07898
|
|
10.1
|
|
December 2, 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
10.2
|
|
|
10-K
|
|
001-07898
|
|
10.21
|
|
March 30, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
10.3
|
|
|
DEF 14A
|
|
001-07898
|
|
Appendix B
|
|
April 13, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
10.4
|
|
|
S-8
|
|
333-34631
|
|
4.2
|
|
August 29, 1997
|
|
|
|
|
|
|
|
|
|
|
|
|
10.5
|
|
|
10-K
|
|
001-07898
|
|
10.16
|
|
April 19, 1999
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit Number
|
|
|
|
Incorporated by Reference
|
||||||
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
10.6
|
|
|
10-K
|
|
001-07898
|
|
10.17
|
|
April 19, 1999
|
|
|
|
|
|
|
|
|
|
|
|
|
10.7
|
|
|
10-K
|
|
001-07898
|
|
10.25
|
|
March 29, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
10.8
|
|
|
10-K
|
|
001-07898
|
|
10.22
|
|
March 31, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
10.9
|
|
|
10-Q
|
|
001-07898
|
|
10.2
|
|
December 12, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
10.10
|
|
|
10-K
|
|
001-07898
|
|
10.10
|
|
March 29, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
10.11
|
|
|
10-K
|
|
001-07898
|
|
10.11
|
|
March 29, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
10.12
|
|
|
10-Q
|
|
001-07898
|
|
10.1
|
|
December 1, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
10.13
|
|
|
10-Q
|
|
001-07898
|
|
10.1
|
|
September 4, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
10.14
|
|
|
10-Q
|
|
001-07898
|
|
10.1
|
|
December 3, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
10.15
|
|
|
10-K
|
|
001-07898
|
|
10.1
|
|
March 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
10.16
|
|
|
10-K
|
|
001-07898
|
|
10.16
|
|
April 4, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
10.17
|
|
|
10-Q
|
|
001-07898
|
|
10.1
|
|
June 4, 2004
|
|
|
|
|
|
|
|
|
|
|
|
|
10.18
|
|
|
10-Q
|
|
001-07898
|
|
10.1
|
|
December 12, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
10.19
|
|
|
10-Q
|
|
001-07898
|
|
10.2
|
|
December 1, 2010
|
|
|
|
|
|
|
|
|
|
|
|
|
10.20
|
|
|
8-K
|
|
001-07898
|
|
10.1
|
|
June 3, 2005
|
|
|
|
|
|
|
|
|
|
|
|
|
10.21
|
|
|
10-Q
|
|
001-07898
|
|
10.1
|
|
September 3, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit Number
|
|
|
|
Incorporated by Reference
|
||||||
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
10.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.23
|
|
|
DEF 14A
|
|
001-07898
|
|
Appendix C
|
|
April 11, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
10.24
|
|
|
10-Q
|
|
001-07898
|
|
10.1
|
|
June 6, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
10.25
|
|
|
8-K
|
|
001-07898
|
|
10.1
|
|
May 22, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
10.26
|
|
|
10-Q
|
|
001-07898
|
|
10.2
|
|
September 4, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
10.27
|
|
|
10-Q
|
|
001-07898
|
|
10.3
|
|
September 4, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
10.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.29
|
|
|
10-Q
|
|
001-07898
|
|
10.2
|
|
June 3, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
10.30
|
|
|
10-Q
|
|
001-07898
|
|
10.6
|
|
June 3, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
10.31
|
|
|
10-Q
|
|
001-07898
|
|
10.7
|
|
September 4, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
10.32
|
|
|
10-Q
|
|
001-07898
|
|
10.9
|
|
September 4, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
10.33
|
|
|
10-Q
|
|
001-07898
|
|
10.6
|
|
December 6, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
Exhibit Number
|
|
|
|
Incorporated by Reference
|
||||||
|
Exhibit Description
|
|
Form
|
|
File No.
|
|
Exhibit
|
|
Filing Date
|
|
10.34
|
|
|
10-K
|
|
001-07898
|
|
10.43
|
|
April 2, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
21.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
99.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document.‡
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.‡
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document.‡
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document.‡
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document.‡
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document.‡
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Exhibit Number
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Incorporated by Reference
|
||||||
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Exhibit Description
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Form
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File No.
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Exhibit
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Filing Date
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104
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Cover Page Interactive Data File (formatted as Inline XBRL document and included in Exhibit 101).‡
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(1)
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Schedules have been omitted pursuant to Item 601 (b)(2) of Regulation S-K. Lowe’s Companies, Inc. agrees to furnish supplementally to the Securities and Exchange Commission a copy of any omitted schedule upon request.
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||||||||
*
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Indicates a management contract or compensatory plan or arrangement.
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||||||||
‡
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Filed herewith.
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†
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Furnished herewith.
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LOWE’S COMPANIES, INC.
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|
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(Registrant)
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|
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March 23, 2020
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|
By: /s/ Marvin R. Ellison
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Date
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Marvin R. Ellison
President and Chief Executive Officer
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|
|
|
March 23, 2020
|
|
By: /s/ David M. Denton
|
Date
|
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David M. Denton
Executive Vice President, Chief Financial Officer
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/s/ Richard W. Dreiling
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Chairman of the Board
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March 23, 2020
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Richard W. Dreiling
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Date
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/s/ Marvin R. Ellison
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President,
Chief Executive Officer and Director
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March 23, 2020
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Marvin R. Ellison
|
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Date
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/s/ Raul Alvarez
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Director
|
March 23, 2020
|
Raul Alvarez
|
|
Date
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|
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/s/ David H. Batchelder
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Director
|
March 23, 2020
|
David H. Batchelder
|
|
Date
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|
|
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/s/ Angela F. Braly
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Director
|
March 23, 2020
|
Angela F. Braly
|
|
Date
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|
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/s/ Sandra B. Cochran
|
Director
|
March 23, 2020
|
Sandra B. Cochran
|
|
Date
|
|
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/s/ Laurie Z. Douglas
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Director
|
March 23, 2020
|
Laurie Z. Douglas
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|
Date
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|
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/s/ James H. Morgan
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Director
|
March 23, 2020
|
James H. Morgan
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|
Date
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/s/ Brian C. Rogers
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Director
|
March 23, 2020
|
Brian C. Rogers
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|
Date
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/s/ Bertram L. Scott
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Director
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March 23, 2020
|
Bertram L. Scott
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|
Date
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/s/ Lisa W. Wardell
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Director
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March 23, 2020
|
Lisa W. Wardell
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|
Date
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|
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/s/ Eric C. Wiseman
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Director
|
March 23, 2020
|
Eric C. Wiseman
|
|
Date
|
•
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|
|
In the case of an annual meeting, not earlier than the close of business on the 150th calendar day nor later than the close of business on the 120th calendar day prior to the first anniversary of the preceding year’s annual meeting; provided, however, that if the date of the annual meeting is more than 30 calendar days before or more than 60 calendar days after such anniversary date, or if no annual meeting was held in the preceding year, then to be timely, the shareholder notice must be received no earlier than the close of business on the 120th calendar day prior to such annual meeting and not later than the close of business on the later of the 90th calendar day prior to such annual meeting or, if the first public announcement of the date of such annual meeting is less than 100 calendar days prior to the date of such annual meeting, the 10th calendar day following the calendar day on which public announcement of the date of such meeting is first made; and
|
•
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|
|
In the case of a special meeting, not earlier than the close of business on the 150th calendar day prior to such special meeting and not later than the close of business on the later of the 120th calendar day prior to such special meeting or the 10th calendar day following the day on which public announcement of the date of the special meeting is first made by us.
|
TABLE OF CONTENTS
|
||||
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Article I INTRODUCTION AND PURPOSE
|
1
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|
||
Article II DEFINITIONS
|
1
|
|
||
Article III ADMINISTRATION
|
5
|
|
||
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Section 3.1
|
Committee Authority
|
5
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Section 3.2
|
Delegation of Authority
|
6
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Section 3.3
|
Indemnification
|
6
|
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Article IV ELIGIBILITY
|
6
|
|
||
Article V STOCK SUBJECT TO PLAN; AWARD LIMITATIONS
|
7
|
|
||
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Section 5.1
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Sources of Shares Issued
|
7
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Section 5.2
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Aggregate Limit
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7
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Section 5.3
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Awards Made and Plan Terms in Effect Prior to the Effective Date
|
7
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Section 5.4
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Share Counting
|
7
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Section 5.5
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Award Limitations-Employees
|
7
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Section 5.6
|
Award Limitations-Nonemployee Directors
|
8
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Article VI OPTIONS
|
8
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|
||
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Section 6.1
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Award
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8
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Section 6.2
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Option Price
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8
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Section 6.3
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Maximum Option Period
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8
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Section 6.4
|
Ten Percent Shareholders
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8
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Section 6.5
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Limit for Incentive Stock Options
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8
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Section 6.6
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Exercise
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8
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Section 6.7
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Payment
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9
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Section 6.8
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Disposition of Stock
|
9
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Article VII SARS
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9
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|
||
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Section 7.1
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Award
|
9
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Section 7.2
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Initial Value
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9
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Section 7.3
|
Maximum SAR Period
|
9
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Section 7.4
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Exercise
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9
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Section 7.5
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Settlement
|
9
|
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Article VIII STOCK AWARDS
|
10
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|
||
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Section 8.1
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Award
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10
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Section 8.2
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Vesting
|
10
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Section 8.3
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Performance Objectives
|
10
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Section 8.4
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Shareholder Rights
|
11
|
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Article IX PERFORMANCE SHARE AWARDS
|
11
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|
||
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Section 9.1
|
Award
|
11
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Section 9.2
|
Earning the Award
|
11
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Section 9.3
|
Payment
|
12
|
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Article X PROVISIONS APPLICABLE TO AWARDS GENERALLY
|
12
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|
||
|
Section 10.1
|
Recoupment of Awards
|
12
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Section 10.2
|
Limits on Transfer
|
12
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Section 10.3
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Share Certificates
|
12
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Section 10.4
|
Acceleration upon a Change in Control
|
12
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Section 10.5
|
Acceleration for Other Reasons
|
12
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Section 10.6
|
Effect of Acceleration
|
13
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Section 10.7
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Termination of Employment
|
13
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Section 10.8
|
Form of Payment for Awards
|
13
|
|
Article XI ADJUSTMENT UPON CHANGE IN COMMON STOCK
|
13
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|
||
Article XII COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES
|
14
|
|
||
Article XIII GENERAL PROVISIONS
|
14
|
|
||
|
Section 13.1
|
Effect on Employment and Service
|
14
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|
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Section 13.2
|
Unfunded Plan
|
14
|
|
|
Section 13.3
|
Rules of Construction
|
14
|
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Section 13.4
|
No Rights to Awards
|
15
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|
|
Section 13.5
|
No Shareholder Rights
|
15
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|
Section 13.6
|
Withholding
|
15
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|
|
Section 13.7
|
Foreign Employees
|
15
|
|
|
Section 13.8
|
Severability
|
15
|
|
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Section 13.9
|
Compliance with Code Section 409A
|
15
|
|
|
Section 13.10
|
Governing Law
|
16
|
|
Article XIV AMENDMENT, MODIFICATION, AND TERMINATION
|
16
|
|
||
|
Section 14.1
|
Amendment, Modification, and Termination
|
16
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|
|
Section 14.2
|
Awards Previously Granted
|
16
|
|
Article XV DURATION OF PLAN
|
18
|
|
Percentage of Shares
|
Date of Vesting
|
[]%
|
[]
|
|
LOWE’S COMPANIES, INC.
By:
Date of Grant:
Accepted by Grantee:
|
1.
|
Grant of Shares. The Company hereby grants to Grantee the Shares indicated on Page 1, subject to the restrictions and the other terms and conditions set forth in the Plan, in this Restricted Stock Award Agreement (this “Agreement”) and any applicable recoupment or “clawback” policies of the Company, as in effect from time to time. Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Plan.
|
2.
|
Vesting of Shares. As of the Date of Grant, the Shares shall be “Unvested Shares” and fully forfeitable. The Unvested Shares shall become “Vested Shares” as of the earliest to occur of the following (the period prior to such vesting being referred to herein as the “Vesting Period”):
|
(a)
|
As of the Date of Vesting specified on Page 1;
|
(b)
|
On the date of termination of Grantee’s employment with the Company and its Subsidiaries by reason of Grantee’s death, Disability or Retirement; or
|
(c)
|
On the date of termination of Grantee’s employment with the Company and its Subsidiaries by the Company without Cause or by Grantee’s resignation for Good Reason, in either case within twelve (12) months after the occurrence of a Change in Control.
|
3.
|
Share Transfer Restrictions. “Non-transferable Shares” means those Shares that are subject to the transfer restrictions imposed under this Section 3 which restrictions have not expired or terminated. Non-transferable Shares may not be sold, transferred, exchanged, assigned, pledged, hypothecated or otherwise encumbered.
|
(a)
|
On the Date of Vesting specified on Page 1;
|
(b)
|
On the date of termination of Grantee’s employment with the Company and its Subsidiaries by reason of Grantee’s death or Disability; or
|
(c)
|
On the date of termination of Grantee’s employment with the Company and its Subsidiaries by the Company without Cause or by Grantee’s resignation for Good Reason, in either case within twelve (12) months after the occurrence of a Change in Control.
|
4.
|
Delivery of Shares. The Shares will be registered in the name of Grantee as of the Date of Grant and will be held by the Company during the Non-transferable Period in certificated or uncertificated form. If a certificate for Non-transferable Shares is issued during the Non-transferable Period, such certificate shall be registered in the name of Grantee and shall bear a legend in substantially the following form (in addition to any legend required under applicable state securities laws):
|
5.
|
Voting and Dividend Rights. Grantee, as beneficial owner of the Shares, shall have full voting and dividend rights with respect to the Shares during and after the Vesting Period and Non-transferable Period. If Grantee forfeits any rights Grantee may have under this Agreement, Grantee shall no longer have any rights as a shareholder with respect to the Shares or any interest therein and Grantee shall no longer be entitled to receive dividends on such Shares. In the event that for any reason Grantee shall have received dividends upon such Shares after such forfeiture, Grantee shall repay to the Company an amount equal to such dividends.
|
6.
|
Competing Activity. If Grantee engages in any Competing Activity during Grantee’s employment with the Company or a Subsidiary or within 2 years after the termination of Grantee’s employment with the Company or its Subsidiaries for any reason, (i) Grantee shall forfeit all of Grantee’s right, title and interest in and to any Unvested Shares or Non-transferable Shares as of the time of the Grantee’s engaging in such Competing Activity and such Shares shall revert to the Company immediately following such event of forfeiture, and (ii) Grantee shall remit, upon demand by the Company, the “Repayment Amount” (as defined in the following sentence), with respect to any Shares that were granted to Grantee under the terms of this Agreement.
|
7.
|
No Solicitation of Employees. During Grantee’s employment with the Company or any of its subsidiaries and until the date that is 2 years after date of termination for any reason, Grantee will not, directly or indirectly, solicit or encourage any person who was an employee of the Company or any of its subsidiaries during Grantee’s employment or during the 2 years immediately prior to Grantee’s date of termination (“Protected Employee”), to leave employment with the Company or any of its subsidiaries or assist in any way with the hiring of any Protected Employee by any future employer, person or other entity including but not limited to referral, identification for potential employment, recommendation, interview, or direct or indirect supervision.
|
8.
|
No Solicitation of Customers or Vendors. During Grantee’s employment with the Company or any of its subsidiaries and until the date that is 2 years after date of termination for any reason, Grantee will not, directly or indirectly, solicit the business of the Company’s customers or vendors who were customers or vendors during the 2 years immediately prior to Grantee’s date of termination to divert their business away from or otherwise interfere with the business relationships of the Company with its customers and/or vendors on Grantee’s behalf or on behalf of any other entity or person.
|
9.
|
Injunctive Relief. Grantee agrees that the provisions herein are important to and of material consideration to the Company and that the Company considers that monetary damages alone are an inadequate remedy to the Company for any breach of the provisions hereof. Grantee further stipulates that, upon any material breach by Grantee of the provisions herein the Company shall be entitled to injunctive relief against Grantee from a court having personal jurisdiction of Grantee. This section shall not be deemed to limit the legal and equitable remedies available to the Company or to limit the nature and extent of any claim by the Company for damages caused by Grantee for breach of this Agreement.
|
10.
|
No Right of Continued Employment. Nothing in this Agreement shall interfere with or limit in any way the right of the Company or any Subsidiary to terminate Grantee’s employment at any time, nor confer upon Grantee any right to continue in the employ of the Company or any Subsidiary.
|
11.
|
Payment of Taxes.
|
(a)
|
Upon issuance of the Shares hereunder, Grantee may make an election to be taxed upon such award under Section 83(b) of the Code. To effect such election, Grantee may file an appropriate election with Internal Revenue Service within thirty (30) days after award of the Shares and otherwise in accordance with applicable Treasury Regulations.
|
(b)
|
At the end of the Vesting Period, the Company will automatically withhold a number of Shares having a fair market value equal to an amount up to the maximum statutory rate to satisfy federal, state, local and foreign taxes (including Grantee’s FICA obligation), unless Grantee notifies the Company thirty (30) days prior to the expiration and termination of the Vesting Period that he or she will satisfy his or her tax withholding obligations in cash.
|
(c)
|
In the event Grantee chooses to satisfy Grantee’s tax withholding obligations in cash and complies with the above notification requirement, Grantee will, no later than the date as of which any amount related to the Shares first becomes includable in Grantee’s gross taxable income for federal income tax purposes, pay to the Company, or make other arrangements satisfactory to the Committee regarding payment of, any federal, state and local taxes of any kind (including Grantee’s FICA obligation) required by law to be withheld with respect to such amount.
|
12.
|
Amendment. The Committee may amend or terminate this Agreement without the consent of Grantee; provided, however, that such amendment or termination shall not, without Grantee’s consent, reduce or diminish the value of this award determined as if it had been fully vested (i.e., as if all restrictions on the Shares hereunder had expired) on the date of such amendment or termination.
|
13.
|
Plan Controls. The terms contained in the Plan, including without limitation the antidilution adjustment provisions, are incorporated into and made a part of this Agreement, and this Agreement shall be governed by and construed in accordance with the Plan. In the event of any actual or alleged conflict between the provisions of the Plan and the provisions of this Agreement, the provisions of the Plan shall be controlling and determinative.
|
14.
|
Successors. This Agreement shall be binding upon any successor of the Company, in accordance with the terms of this Agreement and the Plan.
|
15.
|
Severability. If any one or more of the provisions contained in this Agreement are invalid, illegal or unenforceable, the other provisions of this Agreement will be construed and enforced as if the invalid, illegal or unenforceable provision had never been included.
|
16.
|
Notice. Notices and communications under this Agreement must be in writing and either personally delivered or sent by registered or certified United States mail, return receipt requested, postage prepaid. Notices to the Company must be addressed to:
|
17.
|
Governing Law and Venue. This Agreement shall be governed by the laws of the State of North Carolina other than its choice of laws provisions to the extent that such provisions would require or permit the application of the laws of a state other than North Carolina. Each of the Parties to this Agreement consents to submit to the personal jurisdiction and venue of the Charlotte Division of the U.S. District Court for the Western District of North Carolina, or if federal jurisdiction is not available, the North Carolina Superior Court in any action or proceeding arising out of or relating to this Agreement and specifically waives any right to attempt to deny or defeat personal jurisdiction of the U.S. District Court for the Western District of North Carolina or the North Carolina Superior Court by motion or request for leave from any such court. Each of the Parties further waives any right to seek change of venue from such Court due to inconvenient forum or other similar justification and will pay to the other Parties the costs associated with responding to or otherwise opposing any motion or request for such relief.
|
NAME AND DOING BUSINESS AS:
|
|
STATE OR JURISDICTION OF INCORPORATION
|
|
|
|
Lowe’s Home Centers, LLC
|
|
North Carolina
|
RONA inc.
|
|
Canada
|
Lowe’s Companies Canada ULC
|
|
Canada
|
|
|
|
All other subsidiaries were omitted pursuant to Item 601(21)(ii) of Regulation S-K under the Securities and Exchange Act of 1934, as amended.
|
Description
|
Registration
Statement Number
|
|
|
Form S-3 ASR
|
|
Lowe’s Stock Advantage Direct Stock Purchase Plan
|
333-220388
|
Debt Securities, Preferred Stock, Common Stock
|
333-226983
|
|
|
Form S-8
|
|
Lowe’s 401(k) Plan
|
33-29772
|
Lowe’s Companies, Inc. Directors’ Stock Incentive Plan
|
33-54497
|
Lowe’s Companies, Inc. 1994 Incentive Plan
|
33-54499
|
Lowe’s Companies, Inc. 1997 Incentive Plan
|
333-34631
|
Lowe’s Companies, Inc. Directors’ Stock Option Plan
|
333-89471
|
Lowe’s Companies Benefit Restoration Plan
|
333-97811
|
Lowe’s Companies Cash Deferral Plan
|
333-114435
|
Lowe’s Companies, Inc. 2006 Long-Term Incentive Plan
|
333-138031; 333-196513
|
Lowe’s Companies Employee Stock Purchase Plan - Stock Options for Everyone
|
333-36096; 333-143266; 333-181950
|
|
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
March 23, 2020
|
|
/s/ Marvin R. Ellison
|
Date
|
|
Marvin R. Ellison
President and Chief Executive Officer
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.
|
March 23, 2020
|
|
/s/ David M. Denton
|
Date
|
|
David M. Denton
Executive Vice President, Chief Financial Officer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
3.
|
The following new Section 19(b) shall be added to the Plan:
|
(1)
|
Effective as of December 31, 2019 (or such other date established by Lowe's, the “Merger Date”), the Maintenance Supply Headquarters, LP 401(k) Plan (the "MSH Plan") is merged with and made a part of the Plan. In such regard, and as a part of the merger, on the Plan Merger Date the trust maintained for the MSH Plan shall become a part of the trust maintained for the Plan, and the transferred assets of the MSH Plan shall thereupon become assets of the Plan. Upon consummation of the merger on the Merger Date and thereafter (a) the Plan shall be the successor in interest to, and shall have and assume all liabilities of, the MSH Plan, (b) no further contributions shall be made to, and no further benefits shall accrue under, the MSH Plan for any period after the Merger Date and (c) all substantive provisions of the Plan
|
(2)
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An Employee's prior service with (A) Maintenance Supply Headquarters, LP, (B) MSH, LLC, (C) Central Wholesalers, Inc., or (D) Central Wholesalers, LLC shall be counted, to the extent required by law, for purposes of participation under the Plan, and such Employee's Service under the Plan shall not be less than their years of service under the MSH Plan as of the Merger Date. Any Employee who was eligible to participate in the MSH Plan on or before December 31, 2019 shall be immediately eligible to participate in the Plan and make Salary Deferral Contributions and receive Company Matching Contributions as of January 1, 2020, regardless of the eligibility requirements under Sections 3(a)(3) and 3(b)(3) of the Plan.
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(3)
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All nonvested participant accounts under the MSH Plan, including accounts of terminated employees, shall automatically become 100% vested as of the Merger Date.
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(4)
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Following the Merger Date, (A) a Participant may withdraw all or any amount from the Participant’s Rollover Account in the MSH Plan that is transferred to a Rollover Account in the Plan, and earnings on such amount after the Merger Date, at any time, and (B) a Participant may withdraw all or any amount from the Participant’s vested accounts under the MSH Plan that are transferred to accounts in the Plan, and earnings on such amounts after the Merger Date, upon becoming Disabled. Any withdrawals pursuant to this paragraph must be made in accordance with procedures established by the Committee.
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(5)
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All applicable beneficiary designations, spousal consents, and other elections (other than investment elections) and designations made by participants or others under the MSH Plan shall continue
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LOWE’S COMPANIES, INC.
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By: /s/ Jennifer L. Weber
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