Lowe's 2015 Annual Report Download - page 59

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March, June, September, and December of each year until maturity, beginning in December 2015. Interest on the 2025 and
2045 Notes is payable semiannually in arrears in March and September of each year until maturity, beginning in March 2016.
The discounts associated with these issuances, which include the underwriting and issuance discounts, are recorded in long-
term debt and are being amortized over the respective terms of the notes.
The indentures governing the notes issued in 2015, 2014, and 2013 contain a provision that allows the Company to redeem the
notes at any time, in whole or in part, at specified redemption prices plus accrued interest to the date of redemption, with the
exception of the 2019 Notes (issued in 2014) and the 2018 Notes (issued in 2015). We do not have the right to redeem the 2019
Notes or the 2018 Notes prior to maturity. The indentures also contain 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 (as defined in the
indentures) occurs. If elected under the change of control provisions, the repurchase of the notes will occur at a purchase price
of 101% of the principal amount, plus accrued and unpaid interest, if any, on such notes to the date of purchase. The indentures
governing the notes do not limit the aggregate principal amount of debt securities that the Company may issue and do not
require the Company to maintain specified financial ratios or levels of net worth or liquidity.
NOTE 7: Shareholders’ Equity
Authorized shares of preferred stock were 5.0 million ($5 par value) at January 29, 2016, and January 30, 2015, none of which
have been issued. The Board of Directors may issue the preferred stock (without action by shareholders) in one or more series,
having such voting rights, dividend and liquidation preferences, and such conversion and other rights as may be designated by
the Board of Directors at the time of issuance.
Authorized shares of common stock were 5.6 billion ($.50 par value) at January 29, 2016, and January 30, 2015.
The Company has a share repurchase program that is executed through purchases made from time to time either in the open
market or through private off-market transactions. Shares purchased under the repurchase program are retired and returned to
authorized and unissued status. On January 31, 2014, the Company’s Board of Directors authorized a $5.0 billion share
repurchase program with no expiration, which was announced on February 24, 2014. On March 20, 2015, the Company’s
Board of Directors authorized an additional $5.0 billion under the repurchase program with no expiration, which was
announced on the same day. As of January 29, 2016, the Company had $3.6 billion remaining under the program.
During the year ended January 29, 2016, the Company entered into Accelerated Share Repurchase (ASR) agreements with
third-party financial institutions to repurchase a total of 28.4 million shares of the Company’s common stock for $2.0 billion.
At inception, the Company paid the financial institutions using cash on hand and took initial delivery of shares. Under the
terms of the ASR agreements, upon settlement, the Company would either receive additional shares from the financial
institution or be required to deliver additional shares or cash to the financial institution. The Company controlled its election to
either deliver additional shares or cash to the financial institution and was subject to provisions which limited the number of
shares the Company would be required to deliver.
The final number of shares received upon settlement of each ASR agreement was determined with reference to the volume-
weighted average price of the Company’s common stock over the term of the ASR agreement. The initial repurchase of shares
under these agreements resulted in an immediate reduction of the outstanding shares used to calculate the weighted-average
common shares outstanding for basic and diluted earnings per share.
These ASR agreements were accounted for as treasury stock transactions and forward stock purchase contracts. 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 contracts were considered indexed to the Company’s
own stock and were classified as equity instruments.
During the year ended January 29, 2016, the Company also repurchased shares of its common stock through the open market
totaling 25.2 million shares for a cost of $1.8 billion.
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 restricted stock awards and performance share units.