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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2021
or 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to  ______
Commission File Number 1-7898
LOWE’S COMPANIES, INC.
(Exact name of registrant as specified in its charter)
North Carolina56-0578072
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
1000 Lowes Blvd., Mooresville, North Carolina
28117
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code:
(704) 758-1000
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.50 per shareLOWNew York Stock Exchange

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

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes   No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
CLASSOUTSTANDING AT 5/25/2021
Common Stock, $0.50 par value706,890,137



LOWE’S COMPANIES, INC.
- TABLE OF CONTENTS -
Page No.
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 6.
i

Table of Contents
FORWARD-LOOKING STATEMENTS

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

A wide variety of potential risks, uncertainties, and other factors could materially affect our ability to achieve the results either expressed or implied by these forward-looking statements including, but not limited to, changes in general economic conditions, such as the rate of unemployment, interest rate and currency fluctuations, fuel and other energy costs, slower growth in personal income, changes in consumer spending, changes in the rate of housing turnover, the availability of consumer credit and of mortgage financing, changes in commodity prices, trade policy changes or additional tariffs, outbreaks of public health crises, such as the COVID-19 pandemic, availability and cost of goods from suppliers, and other factors that can negatively affect our customers.

Investors and others should carefully consider the foregoing factors and other uncertainties, risks and potential events including, but not limited to, those described in “Item 1A - Risk Factors” in our most recent Annual Report on Form 10-K and as may be updated from time to time in Item 1A in our quarterly reports on Form 10-Q or other subsequent filings with the SEC, and in “Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates” of this report on Form 10-Q. All such forward-looking statements speak only as of the date they are made, and we do not undertake any obligation to update these statements other than as required by law.

ii

Table of Contents
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Lowe’s Companies, Inc.
Consolidated Statements of Earnings (Unaudited)
In Millions, Except Per Share and Percentage Data
 Three Months Ended
 April 30, 2021May 1, 2020
Current EarningsAmount% SalesAmount% Sales
Net sales$24,422 100.00 %$19,675 100.00 %
Cost of sales16,292 66.71 13,162 66.90 
Gross margin8,130 33.29 6,513 33.10 
Expenses:
Selling, general and administrative4,494 18.40 4,196 21.32 
Depreciation and amortization391 1.60 326 1.66 
Operating income3,245 13.29 1,991 10.12 
Interest – net211 0.87 205 1.04 
Pre-tax earnings3,034 12.42 1,786 9.08 
Income tax provision 713 2.92 449 2.28 
Net earnings$2,321 9.50 %$1,337 6.80 %
Weighted average common shares outstanding basic
718 755 
Basic earnings per common share
$3.22 $1.76 
Weighted average common shares outstanding diluted
720 756 
Diluted earnings per common share
$3.21 $1.76 
See accompanying notes to the consolidated financial statements (unaudited).



Lowe’s Companies, Inc.
Consolidated Statements of Comprehensive Income (Unaudited)
In Millions, Except Percentage Data
 Three Months Ended
 April 30, 2021May 1, 2020
 Amount% SalesAmount% Sales
Net earnings$2,321 9.50 %$1,337 6.80 %
Foreign currency translation adjustments net of tax
102 0.41 (159)(0.82)
Cash flow hedges net of tax
24 0.10 (102)(0.52)
Other
(1) 4 0.03 
Other comprehensive income/(loss)125 0.51 (257)(1.31)
Comprehensive income$2,446 10.01 %$1,080 5.49 %
See accompanying notes to the consolidated financial statements (unaudited).
1

Table of Contents
Lowe’s Companies, Inc.
Consolidated Balance Sheets (Unaudited)
In Millions, Except Par Value Data
April 30,
2021
May 1,
2020
January 29,
2021
Assets
Current assets:
Cash and cash equivalents$6,692 $5,955 $4,690 
Short-term investments 454 201 506 
Merchandise inventory – net18,382 14,283 16,193 
Other current assets1,288 1,487 937 
Total current assets26,816 21,926 22,326 
Property, less accumulated depreciation 19,059 18,629 19,155 
Operating lease right-of-use assets3,886 3,876 3,832 
Long-term investments 197 300 200 
Deferred income taxes – net213 215 340 
Other assets1,029 886 882 
Total assets$51,200 $45,832 $46,735 
Liabilities and shareholders' equity
Current liabilities:
Short-term borrowings$ $1,000 $ 
Current maturities of long-term debt1,338 604 1,112 
Current operating lease liabilities551 506 541 
Accounts payable13,964 10,841 10,884 
Accrued compensation and employee benefits 1,312 982 1,350 
Deferred revenue2,022 1,212 1,608 
Other current liabilities3,705 3,180 3,235 
Total current liabilities22,892 18,325 18,730 
Long-term debt, excluding current maturities 21,906 20,200 20,668 
Noncurrent operating lease liabilities3,925 3,915 3,890 
Deferred revenue – extended protection plans1,050 915 1,019 
Other liabilities 982 761 991 
Total liabilities50,755 44,116 45,298 
Shareholders' equity:
Preferred stock, $5 par value: Authorized – 5.0 million shares; Issued and
   outstanding – none
   
Common stock, $0.50 par value: Authorized – 5.6 billion shares; Issued and
   outstanding – 715 million, 755 million, and 731 million shares, respectively
358 377 366 
Capital in excess of par value 10 90 
Retained earnings98 1,722 1,117 
Accumulated other comprehensive loss(11)(393)(136)
Total shareholders' equity445 1,716 1,437 
Total liabilities and shareholders' equity$51,200 $45,832 $46,735 
See accompanying notes to the consolidated financial statements (unaudited).
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Lowe’s Companies, Inc.
Consolidated Statements of Shareholders’ Equity (Unaudited)
In Millions
Three Months Ended April 30, 2021
Common StockCapital in Excess
of Par Value
Retained EarningsAccumulated Other
Comprehensive Loss
Total Shareholders’ Equity
SharesAmount
Balance January 29, 2021731 $366 $90 $1,117 $(136)$1,437 
Net earnings— — — 2,321 — 2,321 
Other comprehensive income— — — — 125 125 
Cash dividends declared, $0.60 per share
— — — (430)— (430)
Share-based payment expense — — 50 — — 50 
Repurchases of common stock (17)(9)(148)(2,910)— (3,067)
Issuance of common stock under share-based payment plans1 1 8 — — 9 
Balance April 30, 2021715 $358 $ $98 $(11)$445 
Three Months Ended May 1, 2020
Common StockCapital in Excess
of Par Value
Retained EarningsAccumulated Other
Comprehensive Loss
Total Shareholders’ Equity
SharesAmount
Balance January 31, 2020763 $381 $ $1,727 $(136)$1,972 
Net earnings— — — 1,337 — 1,337 
Other comprehensive loss— — — — (257)(257)
Cash dividends declared, $0.55 per share
— — — (415)— (415)
Share-based payment expense — — 23 — — 23 
Repurchases of common stock (10)(5)(15)(927)— (947)
Issuance of common stock under share-based payment plans2 1 2 — — 3 
Balance May 1, 2020755 $377 $10 $1,722 $(393)$1,716 
See accompanying notes to the consolidated financial statements (unaudited).

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Lowe’s Companies, Inc.
Consolidated Statements of Cash Flows (Unaudited)
In Millions
Three Months Ended
April 30, 2021May 1, 2020
Cash flows from operating activities:
Net earnings $2,321 $1,337 
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization443 373 
Noncash lease expense124 116 
Deferred income taxes110 46 
(Gain) loss on property and other assets – net(15)17 
Share-based payment expense54 27 
Changes in operating assets and liabilities:
Merchandise inventory – net(2,123)(1,183)
Other operating assets(343)(206)
Accounts payable 3,058 3,207 
Deferred revenue442 13 
Other operating liabilities421 703 
Net cash provided by operating activities4,492 4,450 
Cash flows from investing activities:
Purchases of investments(293)(70)
Proceeds from sale/maturity of investments347 107 
Capital expenditures(461)(328)
Proceeds from sale of property and other long-term assets64 25 
Other – net(134)(22)
Net cash used in investing activities(477)(288)
Cash flows from financing activities:
Net change in commercial paper (941)
Net proceeds from issuance of debt1,988 3,961 
Repayment of debt(543)(543)
Proceeds from issuance of common stock under share-based payment plans9 4 
Cash dividend payments(440)(420)
Repurchases of common stock(3,038)(966)
Other – net4 (3)
Net cash (used in) provided by financing activities(2,020)1,092 
Effect of exchange rate changes on cash7 (15)
Net increase in cash and cash equivalents2,002 5,239 
Cash and cash equivalents, beginning of period4,690 716 
Cash and cash equivalents, end of period$6,692 $5,955 
See accompanying notes to the consolidated financial statements (unaudited).
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Lowe’s Companies, Inc.
Notes to Consolidated Financial Statements (Unaudited)

Note 1: Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed consolidated financial statements (unaudited) and notes to the condensed consolidated financial statements (unaudited) are presented in accordance with the rules and regulations of the Securities and Exchange Commission and do not include all the disclosures normally required in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The condensed consolidated financial statements (unaudited), in the opinion of management, contain all normal recurring adjustments necessary to present fairly the financial position as of April 30, 2021, and May 1, 2020, and the results of operations, comprehensive income, shareholders’ equity, and cash flows for the three months ended April 30, 2021, and May 1, 2020. The January 29, 2021 consolidated balance sheet was derived from the audited financial statements.

These interim condensed consolidated financial statements (unaudited) should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Lowe’s Companies, Inc. (the Company) Annual Report on Form 10-K for the fiscal year ended January 29, 2021 (the Annual Report). The financial results for the interim periods may not be indicative of the financial results for the entire fiscal year.

Reclassifications

Certain prior period amounts have been reclassified to conform to current period presentation, including the reclassification of excess property from other assets to property, less accumulated depreciation on the consolidated balance sheets, and the separate disclosure of changes in deferred revenue within operating activities on the consolidated statements of cash flows.

Accounting Pronouncements Not Yet Adopted

In March 2020, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2020-04, Reference Rate Reform (Topic 848): Facilitation of Effects of Reference Rate Reform on Financial Reporting. The ASU, and subsequent clarifications, provide practical expedients for contract modification accounting related to the transition away from the London Interbank Offered Rate (LIBOR) and other interbank offering rates to alternative reference rates. The expedients are applicable to contract modifications made and hedging relationships entered into on or before December 31, 2022. The Company intends to use the expedients where needed for reference rate transition. The Company continues to evaluate this standard update and does not currently expect a material impact to the Company’s financial statements or disclosures.

Recent accounting pronouncements pending adoption not discussed in this Form 10-Q or in the 2020 Form 10-K are either not applicable to the Company or are not expected to have a material impact on the Company.

Note 2: Revenue - Net sales consists primarily of revenue, net of sales tax, associated with contracts with customers for the sale of goods and services in amounts that reflect consideration the Company is entitled to in exchange for those goods and services.

The following table presents the Company’s sources of revenue:
(In millions)Three Months Ended
April 30, 2021May 1, 2020
Products $23,522 $19,020 
Services579 399 
Other321 256 
Net sales$24,422 $19,675 

A provision for anticipated merchandise returns is provided through a reduction of sales and cost of sales in the period that the related sales are recorded.  The merchandise return reserve is presented on a gross basis, with a separate asset and liability included in the consolidated balance sheets. The balances and classification within the consolidated balance sheets for anticipated sales returns and the associated right of return assets are as follows:
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(In millions)ClassificationApril 30,
2021
May 1,
2020
January 29,
2021
Anticipated sales returnsOther current liabilities$374 $352 $252 
Right of return assetsOther current assets240 226 164 

Deferred revenue - retail and stored-value cards
Retail deferred revenue consists of amounts received for which customers have not yet taken possession of the merchandise or for which installation has not yet been completed. The majority of revenue for goods and services is recognized in the quarter following revenue deferral. Stored-value cards deferred revenue includes outstanding stored-value cards such as gift cards and returned merchandise credits that have not yet been redeemed. Deferred revenue for retail and stored-value cards are as follows:
(In millions)April 30,
2021
May 1,
2020
January 29,
2021
Retail deferred revenue$1,525 $774 $1,046 
Stored-value cards deferred revenue497 438 562 
Deferred revenue$2,022 $1,212 $1,608 
Deferred revenue - extended protection plans
The Company defers revenues for its separately-priced long-term extended protection plan contracts and recognizes revenue on a straight-line basis over the respective contract term. Expenses for claims are recognized in cost of sales when incurred.

(In millions)April 30,
2021
May 1,
2020
January 29,
2021
Deferred revenue - extended protection plans$1,050 $915 $1,019 
Three Months Ended
(In millions)April 30, 2021May 1, 2020
Extended protection plan deferred revenue recognized into sales$116 $107 
Extended protection plan claim expenses$54 $36 
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Disaggregation of Revenues

The following table presents the Company’s net sales disaggregated by merchandise division:
Three Months Ended
April 30, 2021May 1, 2020
(In millions)Net Sales%Net Sales%
Home Décor 1
$8,311 34 %$6,964 35 %
Building Products 2
7,904 32 5,959 30 
Hardlines 3
7,785 32 6,417 33 
Other422 2 335 2 
Total$24,422 100 %$19,675 100 %
Note: Merchandise division net sales for the prior period have been reclassified to conform to the current period presentation.
1    Home Décor includes the following product categories: Appliances, Décor, Flooring, Kitchens & Bath, and Paint
2    Building Products includes the following product categories: Building Materials, Electrical, Lighting, Lumber, Millwork, and Rough Plumbing
3    Hardlines includes the following product categories: Hardware, Lawn & Garden, Seasonal & Outdoor Living, and Tools

The following table presents the Company’s net sales disaggregated by geographical area:
(In millions)Three Months Ended
April 30, 2021May 1, 2020
United States$22,932 $18,760 
Canada1,490 915 
Net Sales$24,422 $19,675 

Note 3: Restricted Investments

Short-term and long-term investments include restricted balances pledged as collateral primarily for the Company’s extended protection plan program and are as follows:
(In millions)April 30, 2021May 1, 2020January 29, 2021
Short-term restricted investments$454 $201 $506 
Long-term restricted investments197 300 200 
Total restricted investments$651 $501 $706 

Note 4: Fair Value Measurements - Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative guidance for fair value measurements establishes a three-level hierarchy, which encourages an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of the hierarchy are defined as follows:
Level 1 - inputs to the valuation techniques that are quoted prices in active markets for identical assets or liabilities
Level 2 - inputs to the valuation techniques that are other than quoted prices but are observable for the assets or liabilities, either directly or indirectly
Level 3 - inputs to the valuation techniques that are unobservable for the assets or liabilities

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

The following table presents the Company’s financial assets and liabilities measured at fair value on a recurring basis as of April 30, 2021, May 1, 2020, and January 29, 2021:
Fair Value Measurements at
(In millions)Measurement LevelApril 30,
2021
May 1,
2020
January 29,
2021
Assets:
Short-term investments:
Available-for-sale debt securities
U.S Treasury securitiesLevel 1$190 $133 $223 
Corporate debt securitiesLevel 2148 28 47 
Money market fundsLevel 186 33 109 
Agency securitiesLevel 230 7 30 
Commercial paperLevel 2  97 
Total short-term investments$454 $201 $506 
Other current assets:
Derivative instruments
Forward interest rate swapsLevel 2$22 $ $ 
Total other current assets$22 $ $ 
Long-term investments:
Available-for-sale debt securities
U.S. Treasury securitiesLevel 1$128 $214 $129 
Corporate debt securitiesLevel 250 56 58 
Municipal obligationsLevel 213  13 
Agency securitiesLevel 26 30  
Total long-term investments$197 $300 $200 
Other assets:
Derivative instruments
Forward interest rate swapsLevel 2$ $ $4 
Total other assets$ $ $4 
Liabilities:
Other current liabilities:
Derivative instruments
Forward interest rate swapsLevel 2$ $15 $8 
Total other current liabilities$ $15 $8 
Other liabilities:
Derivative instruments
Forward interest rate swapsLevel 2$ $17 $ 
Total other liabilities$ $17 $ 

There were no transfers between Levels 1, 2, or 3 during any of the periods presented.

When available, quoted prices were used to determine fair value. When quoted prices in active markets were available, investments were classified within Level 1 of the fair value hierarchy. When quoted prices in active markets were not available, fair values were determined using pricing models, and the inputs to those pricing models were based on observable market inputs. The inputs to the pricing models were typically benchmark yields, reported trades, broker-dealer quotes, issuer spreads, and benchmark securities, among others.

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

During the three months ended April 30, 2021, and May 1, 2020, the Company had no material measurements of assets and liabilities at fair value on a nonrecurring basis subsequent to their initial recognition.

Other Fair Value Disclosures

The Company’s financial assets and liabilities not measured at fair value on a recurring basis include cash and cash equivalents, accounts receivable, held-to-maturity securities, short-term borrowings, accounts payable, and long-term debt and are reflected in the financial statements at cost. With the exception of long-term debt, cost approximates fair value for these items due to their short-term nature. The fair values of the Company’s unsecured notes were estimated using quoted market prices. The fair values of the Company’s mortgage notes were estimated using discounted cash flow analyses, based on the future cash outflows associated with these arrangements and discounted using the applicable incremental borrowing rate.

Carrying amounts and the related estimated fair value of the Company’s long-term debt, excluding finance lease obligations, are as follows:
April 30, 2021May 1, 2020January 29, 2021
(In millions)Carrying AmountFair ValueCarrying AmountFair ValueCarrying AmountFair Value
Unsecured notes (Level 1)$22,585 $24,774 $20,106 $23,209 $21,121 $24,349 
Mortgage notes (Level 2)5 5 5 5 5 5 
Long-term debt (excluding finance lease obligations)
$22,590 $24,779 $20,111 $23,214 $21,126 $24,354 

Note 5: Goodwill and Intangible Assets

Goodwill and intangible assets resulting from acquisitions are recorded within other assets on the consolidated balance sheets and are evaluated for impairment annually on the first day of the fourth quarter or whenever events or changes in circumstances indicate that it is more likely than not that the carrying amount may not be recoverable.

The carrying amount of goodwill as well as the gross carrying amount and accumulated amortization of intangible assets consist of the following:

April 30, 2021May 1, 2020January 29, 2021
(In millions)Gross
Carrying Amount
Accumulated
Amortization
Gross
Carrying Amount
Accumulated
Amortization
Gross
Carrying Amount
Accumulated
Amortization
Goodwill$311 $ $311 $ $311 $ 
Definite-lived intangible assets:
Customer-related$348 $(76)$362 $(84)$372 $(99)
Trademarks and trade names270 (124)245 (77)264 (119)
Other2 (1)12 (11)12 (11)
Total definite-lived intangible assets$620 $(201)$619 $(172)$648 $(229)
Indefinite-lived intangible assets:
Trademark 1
134 —  —  — 
Total intangible assets$754 $(201)$619 $(172)$648 $(229)
1 In April 2021, the Company acquired the STAINMASTER® brand for total consideration of $134 million, which was determined to have an indefinite life.


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Note 6: Short-Term Borrowings -
Commercial Paper Program
The $1.02 billion five-year unsecured revolving credit agreement entered into in March 2020 (2020 Credit Agreement) and the $1.98 billion five-year unsecured second amended and restated credit agreement (Second Amended and Restated Credit Agreement) entered into in September 2018 support the Company’s commercial paper program.  The amounts available to be drawn under the 2020 Credit Agreement and the Second Amended and Restated Credit Agreement are reduced by the amount of borrowings under the commercial paper program. As of April 30, 2021, January 29, 2021, and May 1, 2020, there were no outstanding borrowings under the Company’s commercial paper program, the 2020 Credit Agreement, or the Second Amended and Restated Credit Agreement. Total combined availability under the 2020 Credit Agreement and the Second Amended and Restated Credit Agreement was $3.0 billion as of April 30, 2021.
Other Short-Term Borrowings
In April 2021, the Company entered into a $1.0 billion unsecured 364-day term loan facility (2021 Term Loan), which has a maturity date of April 21, 2022. Borrowings under the 2021 Term Loan will bear interest, at the Company’s option, calculated according to a base rate or a Eurodollar rate, as the case may be, plus an applicable rate. The 2021 Term Loan contains customary representations, warranties and covenants for a transaction of this type. The Company was in compliance with those covenants at April 30, 2021. There were no outstanding borrowings under the 2021 Term Loan as of April 30, 2021.

Note 7: Long-Term Debt - On March 31, 2021, the Company issued $2.0 billion of unsecured fixed rate notes (2021 Notes) as follows:
Principal Amount
(in millions)
Maturity DateInterest RateDiscount
(in millions)
$1,500 April 20312.625%$7 
$500 April 20513.500%$5 

Interest on the 2021 Notes is payable semiannually in arrears in April and October of each year until maturity.

The indentures governing the 2021 Notes contain a provision that allows the Company to redeem these notes at any time, in whole or in part, at specified redemption prices, plus accrued and unpaid interest, if any, up to, but excluding, the date of redemption. The indenture also contains a provision that allows the holders of the notes to require the Company to repurchase all or any part of their notes if a change of control triggering event occurs. If elected under the change of control provisions, the repurchase of the notes will occur at a purchase price of 101% of the principal amount, plus accrued and unpaid interest, if any, on such notes up to, but excluding, the date of purchase. The indentures governing the 2021 Notes do not limit the aggregate principal amount of debt securities that the Company may issue and does not require the Company to maintain specified financial ratios or levels of net worth or liquidity.

Note 8: Derivative Instruments - The Company utilizes derivative financial instruments to hedge its exposure to changes in benchmark interest rates on forecasted debt issuances. The Company held forward interest rate swap agreements with notional amounts as follows:

(In millions)April 30,
2021
May 1,
2020
January 29,
2021
Forward interest rate swap agreement notional amounts$375 $638 $638 

See Note 4 for the gross fair values of the Company’s outstanding derivative financial instruments and corresponding fair value classifications. The cash flows related to forward interest rate swap agreements are included within operating activities in the accompanying consolidated statements of cash flows.

The Company accounts for these contracts as cash flow hedges, thus the effective portion of gains and losses resulting from changes in fair value are recognized in other comprehensive income/(loss), net of tax effects, in the consolidated statements of comprehensive income and is recognized in earnings when the underlying hedged transaction impacts the consolidated statements of earnings. A summary of the gain/(loss) on forward interest rate swap derivatives designated as cash flow hedges recorded in other comprehensive income/(loss) and earnings for the three months ended April 30, 2021, and May 1, 2020, including its line item in the financial statements, is as follows:
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(In millions)Three Months Ended
April 30, 2021May 1, 2020
Other comprehensive income/(loss)
Cash flow hedges – net of tax (expense)/benefit of ($9) million and $34 million,
   respectively
$27 $(104)
Net earnings
Interest – net$3 $1 

Note 9: Shareholders’ Equity - The Company has a share repurchase program that is executed through purchases made from time to time either in the open market, which may be made under pre-set trading plans meeting the requirements of Rule 10b5-1(c) of the Securities Exchange Act of 1934, or through private off-market transactions. Shares purchased under the repurchase program are retired and returned to authorized and unissued status. As of April 30, 2021, the Company had $16.7 billion remaining in its share repurchase program.

In February 2021, the Company entered into an Accelerated Share Repurchase (ASR) agreement with a third-party financial institution to repurchase $2.0 billion of the Company’s common stock. The terms of the ASR agreement entered into during the quarter are as follows (in millions):
Agreement Execution DateAgreement Settlement DateASR Agreement AmountInitial Shares Delivered at InceptionAdditional Shares Delivered at SettlementTotal Shares Delivered
Q1 2021Q1 2021$2,000 10.7 0.2 10.9

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

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

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

In addition, the Company repurchased shares of its common stock through the open market as follows:

Three Months Ended
April 30, 2021
(In millions)SharesCost
Open market share repurchases5.6$1,000 

The Company also withholds shares from employees to satisfy either the exercise price of stock options exercised or the statutory withholding tax liability resulting from the vesting of share-based awards.

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Shares repurchased for the three months ended April 30, 2021, and May 1, 2020, were as follows:
Three Months Ended
April 30, 2021May 1, 2020
(In millions)Shares
Cost 1
Shares
Cost 1
Share repurchase program16.5 $3,000 9.5 $940 
Shares withheld from employees0.3 67 0.1 7 
Total share repurchases16.8 $3,067 9.6 $947 
1 Reductions of $2.9 billion and $927 million were recorded to retained earnings, after capital in excess of par value was depleted, for the three months ended April 30, 2021 and May 1, 2020, respectively.
Note 10: Earnings Per Share - The Company calculates basic and diluted earnings per common share using the two-class method. The following table reconciles earnings per common share for the three months ended April 30, 2021, and May 1, 2020:
Three Months Ended
(In millions, except per share data)April 30, 2021May 1, 2020
Basic earnings per common share:
Net earnings
$2,321 $1,337 
Less: Net earnings allocable to participating securities
(9)(4)
Net earnings allocable to common shares, basic
$2,312 $1,333 
Weighted-average common shares outstanding
718 755 
Basic earnings per common share
$3.22 $1.76 
Diluted earnings per common share:
Net earnings
$2,321 $1,337 
Less: Net earnings allocable to participating securities
(9)(4)
Net earnings allocable to common shares, diluted
$2,312 $1,333 
Weighted-average common shares outstanding
718 755 
Dilutive effect of non-participating share-based awards
2 1 
Weighted-average common shares, as adjusted
720 756 
Diluted earnings per common share$3.21 $1.76 
Anti-dilutive securities excluded from diluted weighted-average common shares0.4 1.0 

Note 11: Income Taxes - The Company’s effective income tax rates were 23.5% and