LOWE'S FORM 10-Q 5-4-2007
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
|
For
the quarterly period ended May 4,
2007
|
Commission
file number 1-7898
|
LOWE'S COMPANIES,
INC.
|
(Exact
name of registrant as specified in its
charter)
|
NORTH
CAROLINA
|
56-0578072
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
1000
Lowe's Blvd., Mooresville, NC
|
28117
|
(Address
of principal executive offices)
|
(Zip
Code)
|
|
|
Registrant's
telephone number, including area code
|
(704)
758-1000
|
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.
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
one):
Large
accelerated filer x
|
Accelerated
filer o
|
Non-accelerated
filer o
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date.
CLASS
|
|
OUTSTANDING
AT JUNE 1, 2007
|
Common
Stock, $.50 par value
|
|
1,505,036,108
|
Item
1. Financial Statements
Lowe's
Companies, Inc.
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Consolidated
Balance Sheets
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In
Millions, Except Par Value Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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(Unaudited)
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|
(Unaudited)
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May
4, 2007
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|
May
5, 2006
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|
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February
2, 2007
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
629
|
|
$
|
1,140
|
|
$
|
364
|
|
Short-term investments
|
|
|
|
571
|
|
|
517
|
|
|
432
|
|
Merchandise inventory - net
|
|
|
|
8,501
|
|
|
7,817
|
|
|
7,144
|
|
Deferred income taxes - net
|
|
|
|
201
|
|
|
175
|
|
|
161
|
|
Other current assets
|
|
|
|
155
|
|
|
139
|
|
|
213
|
|
|
|
|
|
|
|
|
|
|
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Total current assets
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|
|
|
10,057
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|
9,788
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|
|
8,314
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|
|
|
|
|
|
|
|
|
|
|
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Property, less accumulated depreciation
|
|
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|
19,187
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|
|
16,760
|
|
|
18,971
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|
Long-term investments
|
|
|
|
406
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|
|
277
|
|
|
165
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|
Other assets
|
|
|
|
319
|
|
|
203
|
|
|
317
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|
|
|
|
|
|
|
|
|
|
|
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Total assets
|
|
|
$
|
29,969
|
|
$
|
27,028
|
|
$
|
27,767
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|
|
|
|
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|
|
|
|
|
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Liabilities
and shareholders' equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings
|
|
|
$
|
-
|
|
$
|
-
|
|
$
|
23
|
|
Current maturities of long-term debt
|
|
|
|
92
|
|
|
33
|
|
|
88
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|
Accounts payable
|
|
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|
5,211
|
|
|
4,553
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|
|
3,524
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|
Accrued salaries and wages
|
|
|
|
377
|
|
|
377
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|
|
425
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|
Self-insurance liabilities
|
|
|
|
661
|
|
|
613
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|
|
650
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|
Deferred revenue
|
|
|
|
851
|
|
|
853
|
|
|
731
|
|
Other current liabilities
|
|
|
|
1,429
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|
|
1,551
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|
|
1,098
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|
|
|
|
|
|
|
|
|
|
|
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|
Total current liabilities
|
|
|
|
8,621
|
|
|
7,980
|
|
|
6,539
|
|
|
|
|
|
|
|
|
|
|
|
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Long-term debt, excluding current maturities
|
|
|
|
4,306
|
|
|
3,446
|
|
|
4,325
|
|
Deferred income taxes - net
|
|
|
|
657
|
|
|
717
|
|
|
735
|
|
Other long-term liabilities
|
|
|
|
659
|
|
|
304
|
|
|
443
|
|
|
|
|
|
|
|
|
|
|
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Total liabilities
|
|
|
|
14,243
|
|
|
12,447
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|
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12,042
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Shareholders' equity:
|
|
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|
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Preferred stock - $5 par value, none issued
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-
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-
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-
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Common stock - $.50 par value;
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Shares issued and outstanding
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May 4,
2007
|
1,506
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|
|
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|
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|
May 5,
2006
|
1,555
|
|
|
|
|
|
|
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February 2, 2007
|
1,525
|
|
|
753
|
|
|
778
|
|
|
762
|
|
Capital in excess of par value
|
|
|
|
-
|
|
|
816
|
|
|
102
|
|
Retained earnings
|
|
|
|
14,968
|
|
|
12,985
|
|
|
14,860
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|
Accumulated other comprehensive income
|
|
|
|
5
|
|
|
2
|
|
|
1
|
|
|
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|
|
|
|
|
|
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Total shareholders'
equity
|
|
|
|
15,726
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|
|
14,581
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|
15,725
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|
|
|
|
|
|
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|
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|
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Total liabilities and shareholders' equity
|
|
|
$
|
29,969
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|
$
|
27,028
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|
$
|
27,767
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|
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Consolidated
Statements of Current and Retained Earnings
(Unaudited)
|
|
|
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In
Millions, Except Per Share Data
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May
4, 2007
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May
5, 2006
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Current
Earnings
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|
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Amount
|
|
|
Percent
|
|
|
Amount
|
|
|
Percent
|
|
Net
sales
|
|
$
|
12,172
|
|
|
100.00
|
|
$
|
11,921
|
|
|
100.00
|
|
|
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|
|
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|
Cost
of sales
|
|
|
7,913
|
|
|
65.01
|
|
|
7,752
|
|
|
65.03
|
|
|
|
|
|
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Gross
margin
|
|
|
4,259
|
|
|
34.99
|
|
|
4,169
|
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|
34.97
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|
|
|
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Expenses:
|
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|
|
|
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Selling,
general and administrative
|
|
|
2,685
|
|
|
22.06
|
|
|
2,467
|
|
|
20.69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Store
opening costs
|
|
|
12
|
|
|
0.10
|
|
|
25
|
|
|
0.21
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
323
|
|
|
2.65
|
|
|
274
|
|
|
2.30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
- net
|
|
|
47
|
|
|
0.39
|
|
|
35
|
|
|
0.30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Total
expenses
|
|
|
3,067
|
|
|
25.20
|
|
|
2,801
|
|
|
23.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Pre-tax
earnings
|
|
|
1,192
|
|
|
9.79
|
|
|
1,368
|
|
|
11.47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
tax provision
|
|
|
453
|
|
|
3.72
|
|
|
527
|
|
|
4.41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
$
|
739
|
|
|
6.07
|
|
$
|
841
|
|
|
7.06
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding - basic
|
|
|
1,510
|
|
|
|
|
|
1,557
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share
|
|
$
|
0.49
|
|
|
|
|
$
|
0.54
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding - diluted
|
|
|
1,540
|
|
|
|
|
|
1,590
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share
|
|
$
|
0.48
|
|
|
|
|
$
|
0.53
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
dividends per share
|
|
$
|
0.05
|
|
|
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained
Earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at beginning of period
|
|
$
|
14,860
|
|
|
|
|
$
|
12,191
|
|
|
|
|
Cumulative
effect adjustment (Note 7)
|
|
|
(8
|
)
|
|
|
|
|
-
|
|
|
|
|
Net
earnings
|
|
|
739
|
|
|
|
|
|
841
|
|
|
|
|
Cash
dividends
|
|
|
(75
|
)
|
|
|
|
|
(47
|
)
|
|
|
|
Share
repurchases
|
|
|
(548
|
)
|
|
|
|
|
-
|
|
|
|
|
Balance
at end of period
|
|
$
|
14,968
|
|
|
|
|
$
|
12,985
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Statements of Cash Flows (Unaudited)
|
|
|
|
|
|
In
Millions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
|
|
May
4, 2007
|
|
May
5, 2006
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
739
|
|
$
|
841
|
|
Adjustments to reconcile net earnings to net cash provided
|
|
|
|
|
|
|
|
by operating
activities:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
345
|
|
|
290
|
|
Deferred income taxes
|
|
|
40
|
|
|
(38
|
)
|
Loss on disposition/writedown of fixed and other assets
|
|
|
4
|
|
|
8
|
|
Share-based payment expense
|
|
|
22
|
|
|
11
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
Merchandise inventory - net
|
|
|
(1,357
|
)
|
|
(1,182
|
)
|
Other operating assets
|
|
|
63
|
|
|
(17
|
)
|
Accounts payable
|
|
|
1,687
|
|
|
1,721
|
|
Other operating liabilities
|
|
|
596
|
|
|
476
|
|
Net cash provided by operating activities
|
|
|
2,139
|
|
|
2,110
|
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
Purchases of short-term investments
|
|
|
(257
|
)
|
|
(146
|
)
|
Proceeds from sale/maturity of short-term investments
|
|
|
117
|
|
|
143
|
|
Purchases of long-term investments
|
|
|
(244
|
)
|
|
(72
|
)
|
Proceeds from sale/maturity of long-term investments
|
|
|
5
|
|
|
26
|
|
Increase in other long-term assets
|
|
|
(13
|
)
|
|
(3
|
)
|
Fixed assets acquired
|
|
|
(707
|
)
|
|
(732
|
)
|
Proceeds from the sale of fixed and other long-term assets
|
|
|
14
|
|
|
9
|
|
Net cash used in investing activities
|
|
|
(1,085
|
)
|
|
(775
|
)
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
Net decrease in short-term borrowings
|
|
|
(23
|
)
|
|
-
|
|
Proceeds from issuance of long-term debt
|
|
|
3
|
|
|
-
|
|
Repayment of long-term debt
|
|
|
(16
|
)
|
|
(7
|
)
|
Proceeds from issuance of common stock from stock options
exercised
|
|
|
21
|
|
|
33
|
|
Cash dividend payments
|
|
|
(75
|
)
|
|
(47
|
)
|
Repurchase of common stock
|
|
|
(700
|
)
|
|
(600
|
)
|
Excess tax benefits of share-based payments
|
|
|
1
|
|
|
3
|
|
Net cash used in financing activities
|
|
|
(789
|
)
|
|
(618
|
)
|
|
|
|
|
|
|
|
|
Net
increase in cash and cash equivalents
|
|
|
265
|
|
|
717
|
|
Cash
and cash equivalents, beginning of period
|
|
|
364
|
|
|
423
|
|
Cash
and cash equivalents, end of period
|
|
$
|
629
|
|
$
|
1,140
|
|
|
|
|
|
|
|
|
|
Notes
to Consolidated Financial Statements (Unaudited)
Note
1: Basis
of Presentation
- The
accompanying consolidated financial statements (unaudited) and notes to
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. The consolidated financial statements
(unaudited), in the opinion of management, contain all adjustments necessary
to
present fairly the financial position as of May 4, 2007 and May 5, 2006,
and the
results of operations and cash flows for the three months ended May 4, 2007
and
May 5, 2006.
These
interim consolidated financial statements (unaudited) should be read in
conjunction with the audited consolidated financial statements and notes
thereto
included in the Lowe's Companies, Inc. (the Company) Annual Report on Form
10-K
for the fiscal year ended February 2, 2007 (the Annual Report). The
financial results for the interim periods may not be indicative of the financial
results for the entire fiscal year.
Certain
prior period amounts have been reclassified to conform to current
classifications.
Note
2: Restricted Investment Balances - Short-term
and long-term investments include restricted balances pledged as collateral
for
letters of credit for the Company’s extended warranty program and for a portion
of the Company’s casualty insurance and installed sales program liabilities.
Restricted balances included in short-term investments were $228 million
at May 4, 2007, $158 million at May 5, 2006, and $248 million at February
2,
2007. Restricted balances included in long-term investments were $32
million at May 4, 2007, $48 million at May 5, 2006, and $32 million at February
2, 2007.
Note
3: Property -
Property is shown net of accumulated depreciation of
$6.5 billion at
May 4,
2007, $5.3 billion at May 5, 2006, and $6.1 billion at February 2,
2007.
Note
4: Shareholders’ Equity - The Company repurchased 22.0
million and 17.9 million common shares under the share repurchase program
during
the first three months of fiscal 2007 and 2006, respectively. The total
cost of the share repurchases was $700 million (of which $548 million was
recorded as a reduction in retained earnings after capital in excess of par
value was depleted) and $600 million, respectively. As of May 4, 2007, the
Company had remaining authorization under the share repurchase program of
$789
million. Subsequently, on May 25, 2007, the Company’s Board of Directors
authorized up to an additional $3 billion in share repurchases and extended
the
period of the share repurchase program through fiscal 2009.
During
the first three months of fiscal 2007, holders of $5 million principal amount,
$4 million carrying amount, of the Company’s convertible notes issued in
February 2001 exercised their right to convert the notes into approximately
172,000 shares of the Company’s common stock at the rate of 32.896 shares per
note. During the first three months of fiscal 2006, holders of $65 million
principal amount, $45 million carrying amount, of the Company’s convertible
notes issued in February 2001 exercised their right to convert the notes
into
2.1 million shares of the Company’s common stock at the rate of 32.896 shares
per note.
During
the first three months of fiscal 2007 and 2006, holders of an insignificant
number of the Company’s senior convertible notes issued in October 2001
exercised their right to convert the notes into shares of the Company’s common
stock at the rate of 34.424 shares per note.
Note
5: Comprehensive Income - Comprehensive income
represents changes in shareholders’ equity from non-owner sources and is
comprised primarily of net earnings plus or minus unrealized gains or losses
on
available-for-sale equity securities, as well as foreign currency translation
adjustments. Comprehensive income totaled $743 million and $842 million,
compared to net earnings of $739 million and $841 million for the three months
ended May 4, 2007 and May 5, 2006, respectively.
Note
6: Accounting for Share-Based Payment - During the three months ended
May 4, 2007, the Company granted under its 2006 Long-Term Incentive Plan
1.8
million stock options with a weighted-average grant date fair value per
share of
$8.20, as well as 1.7 million restricted stock awards and 0.6 million
performance-based restricted stock awards each with a weighted-average
grant
date fair value per share of $32.21. See Note 9 to the consolidated financial
statements in the Annual Report for additional information regarding general
terms and methods of valuation for stock options and restricted stock awards.
Performance-based
restricted stock awards are valued at the market price of a share of
the
Company’s common stock on the date of grant. In general, these awards vest at
the end of a three-year service period from the date of grant only if
the
performance goal specified in the performance-based restricted stock
agreement
is achieved. The performance goal is based on targeted Company average
return on
non-cash assets, as such term is defined in the performance-based restricted
stock agreement. These awards are expensed on a straight-line basis over
the
requisite service period, based on the probability of achieving the performance
goal. The Company uses historical data to estimate the timing and amount
of
forfeitures.
Total
unrecognized share-based payment expense for all share-based payment
plans was
$157 million at May 4, 2007, of which $54 million is expected to be recognized
in 2007, $58 million in 2008, $35 million in 2009 and $10 million thereafter.
This results in these amounts being recognized over a weighted-average
period of
1.3 years.
Note
7: Accounting for Uncertainty in Income Taxes - The Company adopted
Financial Accounting Standards Board (FASB) Interpretation (FIN) No.
48,
“Accounting for Uncertainty in Income Taxes”, effective February
3, 2007. As a result of the implementation, the Company recognized an
$8 million
net increase to the reserves for uncertain tax positions. This increase
was
accounted for as a cumulative effect adjustment and recognized as a reduction
in
beginning retained earnings in the consolidated balance sheet (unaudited).
Including the cumulative effect adjustment, the Company had approximately
$214
million of total unrecognized tax benefits (including penalties and interest)
as
of February 3, 2007. Of this total, $56 million (net of the federal benefit
on
state issues) represents the amount of unrecognized tax benefits that,
if
recognized, would favorably impact the effective income tax rate in any
future
periods. The remaining $158 million represents the amount of unrecognized
tax
benefits for which the ultimate deductibility is certain, but for which
there is
uncertainty about the timing of deductibility. The timing of such
deductibility would not impact the effective tax rate. The Company does
not
expect any changes in unrecognized tax benefits over the next twelve
months to
have a significant impact on the results of operations or the financial
position
of the Company.
The
Company is subject to U.S. federal and foreign income tax, as well as income
tax
in multiple state and local jurisdictions. The Company has substantially
concluded all U.S. federal income tax matters for fiscal years through
2003. The
Company has substantially concluded all material state, local, and foreign
income tax matters for fiscal years through 2002.
The
Company includes interest related to tax issues as part of net interest
in the
consolidated financial statements (unaudited). The Company records any
applicable penalties related to tax issues within the income tax provision.
The
Company had $21 million accrued for interest and $7 million accrued for
penalties as of February 3, 2007.
Note
8: Earnings Per Share
- Basic
earnings per share (EPS) excludes dilution and is computed by dividing the
applicable net earnings by the weighted-average number of common shares
outstanding for the period. Diluted earnings per share is calculated based
on the weighted-average shares of common stock as adjusted for the potential
dilutive effect of share-based awards and convertible notes as of the balance
sheet date. The following table reconciles EPS for the three months ended
May 4, 2007 and May 5, 2006.
|
|
Three
Months Ended
|
|
(In
millions, except per share data)
|
|
May
4, 2007
|
|
May
5, 2006
|
|
Basic
earnings per share:
|
|
|
|
|
|
|
|
Net
earnings
|
|
$
|
739
|
|
$
|
841
|
|
Weighted-average
shares outstanding
|
|
|
1,510
|
|
|
1,557
|
|
Basic
earnings per share
|
|
$
|
0.49
|
|
$
|
0.54
|
|
Diluted
earnings per share:
|
|
|
|
|
|
|
|
Net
earnings
|
|
$
|
739
|
|
$
|
841
|
|
Net
earnings adjustment for interest on convertible notes, net of
tax
|
|
|
1
|
|
|
1
|
|
Net
earnings, as adjusted
|
|
$
|
740
|
|
$
|
842
|
|
Weighted-average
shares outstanding
|
|
|
1,510
|
|
|
1,557
|
|
Dilutive
effect of share-based awards
|
|
|
9
|
|
|
9
|
|
Dilutive
effect of convertible notes
|
|
|
21
|
|
|
24
|
|
Weighted-average
shares, as adjusted
|
|
|
1,540
|
|
|
1,590
|
|
Diluted
earnings per share
|
|
$
|
0.48
|
|
$
|
0.53
|
|
Stock
options to purchase 7.9 million and 8.2 million shares of common stock for
the
three month periods ended May 4, 2007 and May 5, 2006, respectively, were
excluded from the computation of diluted earnings per share because their effect
would have been anti-dilutive.
Note
9: Supplemental Disclosure
Net
interest expense is comprised of the following:
|
|
Three
Months Ended
|
|
(In
millions)
|
|
May
4, 2007
|
|
May
5, 2006
|
|
Long-term
debt
|
|
$
|
55
|
|
$
|
41
|
|
Capitalized
leases
|
|
|
8
|
|
|
9
|
|
Interest
income
|
|
|
(11
|
)
|
|
(13
|
)
|
Interest
capitalized
|
|
|
(4
|
)
|
|
(5
|
)
|
Other
|
|
|
(1
|
)
|
|
3
|
|
Net
interest expense
|
|
$
|
47
|
|
$
|
35
|
|
Supplemental
disclosures of cash flow information:
|
|
Three
Months Ended
|
|
(In
millions)
|
|
May
4, 2007
|
|
May
5, 2006
|
|
Cash
paid for interest, net of amount capitalized
|
|
$
|
90
|
|
$
|
69
|
|
Cash
paid for income taxes
|
|
$
|
78
|
|
$
|
228
|
|
Non-cash
investing and financing activities:
|
|
|
|
|
|
|
|
Non-cash
fixed asset acquisitions, including assets acquired under capital
lease
|
|
$
|
19
|
|
$
|
11
|
|
Conversions
of long-term debt to equity
|
|
$
|
4
|
|
$
|
46
|
|
Note
10: Recent Accounting Pronouncements - In
September 2006, the FASB issued Statement of Financial Accounting Standards
(SFAS) No. 157, “Fair Value Measurements.” The Statement provides a single
definition of fair value, together with a framework for measuring it, and
requires additional disclosure about the use of fair value to measure assets
and
liabilities. SFAS No. 157 also emphasizes that fair value is a market-based
measurement, not an entity-specific measurement, and sets out a fair value
hierarchy with the highest priority being quoted prices in active markets.
Under the Statement, fair value measurements are required to be disclosed
by level within that hierarchy. The Statement is effective for financial
statements issued for fiscal years beginning after November 15, 2007, and
interim periods within those fiscal years. The Company is currently
evaluating the effect of SFAS No. 157 on its consolidated financial
statements.
In
February 2007, the FASB issued SFAS 159, “The Fair Value Option for Financial
Assets and Financial Liabilities.” The Statement provides entities with an
option to measure many financial instruments and certain other items at fair
value, including available-for-sale securities previously accounted for under
SFAS No. 115, “Accounting for Certain Investments in Debt and Equity
Securities.” Under this Statement, unrealized gains and losses on items
for which the fair value option has been elected will be reported in earnings
at
each subsequent reporting period. The Statement is effective for fiscal
years beginning after November 15, 2007. The Company is currently
evaluating the effect of SFAS No. 159 on its consolidated financial
statements.
To
the
Board of Directors and Shareholders of Lowe’s Companies, Inc.
Mooresville,
North Carolina
We
have
reviewed the accompanying consolidated balance sheets of Lowe’s Companies, Inc.
and subsidiaries (the “Company”) as of May 4, 2007 and May 5, 2006, and the
related consolidated statements of current and retained earnings and of cash
flows for the fiscal three-month periods then ended. These interim financial
statements are the responsibility of the Company’s management.
We
conducted our reviews in accordance with standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It
is
substantially less in scope than an audit conducted in accordance with
the standards of the Public Company Accounting Oversight Board (United
States), the objective of which is the expression of an opinion regarding
the
financial statements taken as a whole. Accordingly, we do not express such
an
opinion.
Based
on
our reviews, we are not aware of any material modifications that should be
made
to such consolidated interim financial statements for them to be in conformity
with accounting principles generally accepted in the United States of
America.
We
have
previously audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated balance sheet
of
the Company as of February 2, 2007, and the related consolidated statements
of
earnings, shareholders’ equity, and cash flows for the year then ended (not
presented herein); and in our report dated April 3, 2007, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying consolidated balance sheet
of
Lowe’s Companies, Inc. and subsidiaries as of February 2, 2007 is fairly stated,
in all material respects, in relation to the consolidated balance sheet from
which it has been derived.
/s/
DELOITTE & TOUCHE LLP
Charlotte,
North Carolina
June
5,
2007
Item
2.
FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This
discussion and analysis summarizes the significant factors affecting our
consolidated operating results, liquidity and capital resources during
the three
month periods ended May 4, 2007 and May 5, 2006. This discussion and analysis
should be read in conjunction with the consolidated financial statements
and
notes to the consolidated financial statements that are included in our
Annual
Report on Form 10-K for the fiscal year ended February 2, 2007 (the Annual
Report), as well as the consolidated financial statements (unaudited) and
notes
to the consolidated financial statements (unaudited) contained in this
report.
CRITICAL
ACCOUNTING POLICIES AND ESTIMATES
The
following discussion and analysis of the financial condition and results
of
operations are based on the consolidated financial statements (unaudited)
and
notes to consolidated financial statements (unaudited) contained in this
report
that have been prepared 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. The preparation of these financial statements requires us to make
estimates that affect the reported amounts of assets, liabilities, sales
and
expenses, and related disclosures of contingent assets and liabilities. We
base
these estimates on historical results and various other assumptions believed
to
be reasonable, all of which form the basis for making estimates concerning
the
carrying values of assets and liabilities that are not readily available
from
other sources. Actual results may differ from these estimates.
Our
significant accounting polices are described in Note 1 to the consolidated
financial statements presented in the Annual Report. Our critical accounting
policies and estimates are described in Management’s Discussion and Analysis of
Financial Condition and Results of Operations in the Annual Report. Our
significant and critical accounting policies have not changed significantly
since the filing of our Annual Report.
OPERATIONS
The
following tables set forth the percentage relationship to net sales of each
line
item of the consolidated statements of earnings, as well as the percentage
change in dollar amounts from the prior period. These tables should be read
in
conjunction with the following discussion and analysis and the consolidated
financial statements (unaudited), including the related notes to the
consolidated financial statements (unaudited).
|
|
Three
Months Ended
|
|
Basis
Point Increase / (Decrease) in Percentage of Net Sales from
Prior
Period
|
|
Percentage
Increase / (Decrease) in Dollar Amounts from Prior
Period
|
|
|
|
May
4, 2007
|
|
May
5, 2006
|
|
2007
vs. 2006
|
|
2007
vs. 2006
|
|
Net
sales
|
|
|
100.00
|
%
|
|
100.00
|
%
|
|
N/A
|
|
|
2
|
%
|
Gross
margin
|
|
|
34.99
|
|
|
34.97
|
|
|
2
|
|
|
2
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative
|
|
|
22.06
|
|
|
20.69
|
|
|
137
|
|
|
9
|
|
Store
opening costs
|
|
|
0.10
|
|
|
0.21
|
|
|
(11
|
)
|
|
(52
|
)
|
Depreciation
|
|
|
2.65
|
|
|
2.30
|
|
|
35
|
|
|
18
|
|
Interest
- net
|
|
|
0.39
|
|
|
0.30
|
|
|
9
|
|
|
33
|
|
Total
expenses
|
|
|
25.20
|
|
|
23.50
|
|
|
170
|
|
|
9
|
|
Pre-tax
earnings
|
|
|
9.79
|
|
|
11.47
|
|
|
(168
|
)
|
|
(13
|
)
|
Income
tax provision
|
|
|
3.72
|
|
|
4.41
|
|
|
(69
|
)
|
|
(14
|
)
|
Net
earnings
|
|
|
6.07
|
%
|
|
7.06
|
%
|
|
(99
|
)
|
|
(12
|
)%
|
|
|
Three
Months Ended
|
|
Other
Metrics
|
|
May
4, 2007
|
|
May
5, 2006
|
|
Comparable
store sales changes (1)
|
|
|
(6.3
|
)%
|
|
5.7
|
%
|
Customer
transactions (in millions)
|
|
|
178
|
|
|
169
|
|
Average
ticket (2)
|
|
$
|
68.22
|
|
$
|
70.74
|
|
At
end of period:
|
|
|
|
|
|
|
|
Number
of stores
|
|
|
1,400
|
|
|
1,258
|
|
Sales
floor square feet (in millions)
|
|
|
159
|
|
|
143
|
|
Average
store size square feet (in thousands)
|
|
|
113
|
|
|
114
|
|
(1) We
define a comparable store as a store that has been open longer than 13 months.
A
store that is identified for relocation is no longer considered comparable
one
month prior to its relocation. The relocated store must then remain open longer
than 13 months to be considered comparable.
(2)
We
define average ticket as net sales divided by number of customer
transactions.
The
challenging sales environment we experienced in the second half of fiscal
2006
continued in the first quarter of fiscal 2007. The U.S. housing market
continued
to correct in certain key markets, driven by over-valuation and the resulting
price correction. The general concern or lackluster consumer sentiment
over the
current conditions has stretched beyond these structurally weak markets.
As a
result, this magnified the slow down in home buying, the resulting housing
turnover, and home improvement activities. Additionally, adverse weather
across
most of the U.S. in early April negatively impacted our results for the
first
quarter of 2007.
Despite
the difficult sales environment, we continued to focus on managing the
business
for the long-term. Our operational priorities, with regard to our stores,
include a continued focus on delivering great customer service, re-invigorating
our Specialty Sales initiatives, increasing store productivity, recruiting
the
right people to fuel our growth and enhancing our sales culture.
We
implemented our “Customer-Focused” program in 1999, and continue to refine it
every year. This program measures each store’s performance relative to five key
components of customer satisfaction, which include selling skills, delivery,
installed sales, checkout and phone answering. In the first quarter of
2007, our
customer satisfaction score improved approximately 100 basis points from
the
prior year, and we improved in all five key components. We also have
active and
ongoing training programs to provide coaching to associates to enhance
customer
interactions and to prepare all levels of store management for their
next
assignment. As a result, we had more than 7,000 employees trained and
prepared
for new responsibilities, including approximately 3,000 employees ready
to
become department managers and approximately 250 employees trained and
ready to
become store managers. In addition, according to independent measures,
our close
rate improved in 13 of 20 product categories in the first quarter of
2007 while
our total store close rate increased 100 basis points compared to a year
ago
driven in part by our ongoing training efforts.
Net
Sales - Sales
for
the first quarter were $12.2 billion, representing a 2% increase over
the first
quarter of 2006. The increase was driven by our store expansion program,
which
added 142 new stores during the last four quarters. However, a challenging
sales
environment and difficult weather patterns led to a decline in comparable
store
sales of 6.3% for the quarter. Total customer transactions increased
6% compared
to the first quarter of 2006, while average ticket decreased 4% to $68.22.
Comparable store customer transactions decreased 2% compared to the first
quarter of 2006, while comparable store average ticket decreased 4%.
The
external factors we described the past several quarters continued to
weigh on
our sales performance in the first quarter of 2007, and the sales environment
remained challenging. Our results suggest that many home improvement
customers
continued to take a cautious approach to spending in the markets that
were most
exposed to a slowdown in the housing market, including California and
areas in
the Northeast. Additionally, we faced difficult prior year comparisons
in
hurricane-affected regions, including the Gulf Coast and certain markets
in
Florida. The Gulf Coast areas most impacted by hurricanes Katrina and
Rita
reported negative 23% comparable store sales. Lumber and plywood cost
deflation
continued to impact sales results in the first quarter of 2007, but prices
appeared to be stabilizing as producers closed mills and regulated supply.
Additionally, our sales performance in outdoor
categories,
including nursery, seasonal living, outdoor power equipment and lawn &
landscape products were disproportionately impacted by unusually cold and
wet
weather in the majority of the U.S. in early April.
Reflective
of the difficult sales environment, we experienced comparable store sales
increases in only two of our 20 product categories in the first quarter of
2007.
The categories that performed above our average comparable store sales change
for the first quarter included rough plumbing, hardware, rough electrical,
paint, lighting, home organization, nursery, lawn & landscape products,
fashion plumbing, appliances and home environment. In addition, tools performed
at approximately the overall corporate average comparable store sales change
for
the first quarter of 2007. Despite the external pressures that affected the
total home improvement market, we continued to gain unit market share in
17 of
our 20 product categories during the first calendar quarter, according to
independent third-party measures.
Hesitancy
among many home improvement customers to take on big-ticket projects led
to
mixed results for our Specialty Sales initiatives, which include Installed
Sales, Special Order Sales, and Commercial Business Customer sales. Our
Commercial Business Customer sales continued to grow faster than the Company
average, and we have seen relative strength across all categories for these
customers. However, our Special Order Sales and Installed Sales, which strongly
outperformed total company sales in the first quarter of 2006, collectively
performed only slightly better than total company sales in the first quarter
of
2007.
Gross
Margin - Gross
margin as a percentage of sales increased two basis points over the first
quarter of 2006. The increase was driven primarily by leverage of 27 basis
points associated with the mix of products sold. This was offset by de-leverage
of eight basis points in inventory shrink as a percentage of sales, attributable
to softer sales and the write-off of live goods that were damaged due to
the
unseasonable weather during the first two weeks of April. Additionally, with
lower sales volumes, we experienced de-leverage of approximately 10 basis
points
attributable to distribution and transportation costs, as well as start-up
costs
for our new distribution facilities, including our regional distribution
center
in Rockford, Illinois.
SG&A
-
SG&A de-leveraged 137 basis points versus the prior year, driven primarily
by store payroll. For the first quarter, store payroll de-leveraged 93 basis
points, primarily a result of the weak sales environment. Our stores utilized
our staffing model and maintained base coverage, which created short-term
pressure on earnings but was the right decision in the long-term in order
to
maintain the high service levels that customers have come to expect from
Lowe’s.
In addition, rent, property taxes, utilities and other fixed expenses
de-leveraged due to the comparable store sales decline. Share-based payment
expense de-leveraged nine basis points compared to the first quarter of 2006
which included a $10 million favorable impact from the adoption of SFAS 123(R),
“Accounting for Share-Based Payment.” The de-leverage in store payroll and fixed
expenses was offset by leverage of 20 basis points in incentive compensation
in
the first quarter.
Store
Opening Costs - Store
opening costs, which include payroll and supply costs incurred prior to store
opening as well as grand opening advertising costs, totaled $12 million and
$25
million in the first quarters of 2007 and 2006, respectively. Because store
opening costs are expensed as incurred, the timing of expense recognition
fluctuates based on the timing of store openings. We opened 15 new stores
in the
first quarter of 2007, compared to the opening of 24 stores in the first
quarter
of 2006. Store opening costs for stores opened during the quarter averaged
approximately $0.7 million per store in the first quarter of 2007 and $1.1
million in the first quarter of 2006. The
decrease in average opening costs per store was driven by higher average
payroll
costs in the first quarter of 2006 resulting from stores opening in higher
cost
markets.
Depreciation
- Depreciation
de-leveraged 35 basis points as a percentage of sales in the first quarter
of
2007 compared to 2006. This de-leverage was driven by the opening of 142
new
stores over the past four quarters and negative comparable store sales. At
May
4, 2007, we owned 86% of our stores, compared to 84% at May 5, 2006, which
includes stores on leased land. Property, less accumulated depreciation,
totaled
$19.2 billion at May 4, 2007, an increase of 14.5% from $16.8 billion at
May 5,
2006. This increase resulted primarily from our store expansion program.
Interest
-
Interest de-leveraged nine basis points as a percentage of sales, primarily
due
to additional expense as a result of the October 2006 $1 billion debt
issuance.
Income
Tax Provision - Our
effective income tax rate was 38.0% and 38.5% for the first quarter of 2007
and
2006, respectively. Our
effective income tax rate was 37.9% for fiscal 2006 as disclosed in our Annual
Report.
LIQUIDITY
AND CAPITAL RESOURCES
Our
primary sources of liquidity are cash flows from operating activities and
our $1
billion senior credit facility that expires in July 2009. Net cash provided
by
operating activities totaled $2.1 billion for both the three month periods
ended
May 4, 2007 and May 5, 2006. Working capital at May 4, 2007 was $1.4 billion
compared to $1.8 billion at May 5, 2006 and February 2, 2007. The decrease
in
working capital from the first quarter of 2006 primarily resulted from
greater
share repurchases, partially offset by the $1 billion debt issuance in
October
2006.
The
primary component of net cash used in investing activities continues to
be
opening new stores, investing in existing stores through resets and
remerchandising, and investing in our distribution center and information
technology infrastructure. Cash acquisitions of fixed assets were $707
million
and $732 million for the three month periods ended May 4, 2007 and May
5, 2006,
respectively. At May 4, 2007, we operated 1,400 stores in 49 states with
159
million square feet of retail selling space, representing an 11% increase
over
the retail selling space at May 5, 2006.
Net
cash used in financing activities was $789 million and $618 million for
the
three month periods ended May 4, 2007 and May 5, 2006, respectively. The
change
in cash flows from financing activities was primarily the result of greater
share repurchases under our share repurchase program compared to the first
quarter of 2006, an increase in the amount of dividends paid per share
from
$0.03 in the first quarter of 2006 to $0.05 in the first quarter of 2007,
and
the repayment of short-term borrowings. The
ratio
of debt to equity plus debt was 21.9%, 19.3% and 22.0% as of May 4, 2007,
May 5,
2006 and February 2, 2007, respectively.
Our
2007
capital budget is $4.6 billion, inclusive of approximately $300 million
of lease
commitments, resulting in a planned net cash outflow of $4.3 billion in
2007. Actual capital expenditures through the first quarter of 2007 and
amounts forecasted through the end of fiscal 2007 are consistent with the
2007
budgeted amount. Approximately 81% of this planned commitment is for store
expansion and new distribution centers. Expansion plans for 2007 consist
of 150 to 160 stores, including three relocations of older stores. This
planned expansion is expected to increase sales floor square footage by
approximately 11%. Approximately 99% of the 2007 projects will be owned,
which includes approximately 28% that will be ground-leased properties.
As
of May
4, 2007, we owned and operated 12 regional distribution centers (RDCs).
We
opened an RDC in Rockford, Illinois in the first quarter of 2007. We
expect to open an additional RDC in Lebanon, Oregon in the second quarter
of
2007, and are planning for an additional RDC in fiscal 2008. As of May 4,
2007, we also operated 14 flatbed distribution centers (FDCs) for the handling
of lumber, building materials and other long-length items. We owned 12 of
these FDCs and we leased two FDCs. We opened an FDC in Port of Stockton,
California in the first quarter of 2007 and expect to open an additional
FDC in
the second half of 2007.
We
have a
$1 billion senior credit facility that expires in July 2009. The facility
is
available to support our $1 billion commercial paper program and for direct
borrowings. Borrowings made are priced based upon market conditions at
the time
of funding in accordance with the terms of the senior credit facility.
The
senior credit facility contains certain restrictive covenants, which include
maintenance of a debt leverage ratio as defined by the facility. We were
in
compliance with those covenants at May 4, 2007. Fifteen banking institutions
are
participating in the $1 billion senior credit facility. As of May 4, 2007,
there
were no outstanding borrowings under the facility or under our commercial
paper
program.
From
their issuance through the end of the first quarter of 2007, principal
amounts
of $973 million, or approximately 97%, of our February 2001 convertible
notes
had converted from debt to equity. Of this total, $5 million and $65 million
in
principal amounts were converted in the three months ended May 4, 2007
and May
5, 2006, respectively.
Holders
of the senior convertible notes, issued in October 2001, may convert their
notes
into 34.424 shares of the company’s common stock only if: the closing share
price of the company’s common stock reaches specified thresholds, or the credit
rating of the notes is below a specified level, or the notes are called
for
redemption, or specified corporate transactions representing a change in
control
have occurred. There is no indication that we will not be able to maintain
the
minimum investment grade rating. From their issuance
through
the end of the first quarter of 2007, an insignificant amount of the senior
convertible notes had converted from debt to equity. During the fourth quarter
of 2006, our closing share prices reached the specified threshold such that
the
senior convertible notes became convertible at the option of each holder
into
shares of common stock in the first quarter of 2007. Through May 4, 2007,
holders could elect to convert each such note into 34.424 shares of common
stock. During the first quarter of 2007, our closing share prices again reached
the specified threshold such that the senior convertible notes would become
convertible at the option of each holder into shares of common stock in the
second quarter of 2007. Cash interest payments on the senior convertible
notes
ceased in October 2006. We may redeem for cash all or a portion of the notes
at
any time, at a price equal to the sum of the issue price plus accrued original
issue discount on the redemption date.
Our
debt
ratings at May 4, 2007, were as follows:
Current
Debt Ratings
|
S&P
|
Moody’s
|
Fitch
|
Commercial
paper
|
A1
|
P1
|
F1+
|
Senior
debt
|
A+
|
A1
|
A+
|
Outlook
|
Stable
|
Stable
|
Stable
|
We
believe that net cash provided by operating activities and financing activities
will be adequate for our expansion plans and other operating requirements
over
the next 12 months. However, the availability of funds through the issuance
of
commercial paper and new debt could be adversely affected due to a debt
rating
downgrade or a deterioration of certain financial ratios. There are no
provisions in any agreement that would require early cash settlement of
existing
debt or leases as a result of a downgrade in our debt rating or a decrease
in
our stock price.
During
the first quarter of 2007, we repurchased 22.0 million shares under the
share
repurchase program at a total cost of $700 million. As of May 4, 2007,
we had
remaining authorization of $789 million. Subsequently, on May 25, 2007,
the
Board of Directors authorized up to an additional $3 billion in share
repurchases and extended the period of the share repurchase program through
fiscal 2009.
On
May
25, 2007, the Board of Directors declared a quarterly cash dividend of
$0.08 per
share, which represents a 60% increase.
OFF-BALANCE
SHEET ARRANGEMENTS
Other
than in connection with executing operating leases, we do not have any
off-balance sheet financing that has, or is reasonably likely to have, a
material, current or future effect on our financial condition, cash flows,
results of operations, liquidity, capital expenditures or capital
resources.
CONTRACTUAL
OBLIGATIONS AND COMMERCIAL COMMITMENTS
We
adopted FIN 48, “Accounting for Uncertainty in Income Taxes”, effective February
3, 2007. As of the date of adoption, our reserve for uncertain tax positions
(including penalties and interest) was approximately $214 million. In the
three
months ended May 4, 2007, the reserve for uncertain tax positions decreased
$77
million (including penalties and interest), partially offset by an adjustment
to
deferred taxes of $72 million. At May 4, 2007, approximately $8 million
of the
reserve for uncertain tax positions (including penalties and interest)
was
classified as a current liability. At this time, we are unable to make a
reasonably reliable estimate of the timing of payments in individual years
beyond 12 months due to uncertainties in the timing of the effective settlement
of tax positions.
There
have been no other material changes in our contractual obligations and
commercial commitments other than in the ordinary course of business since
the
end of fiscal 2006. Refer to the Annual Report for additional information
regarding our contractual obligations and commercial commitments.
COMPANY
OUTLOOK
Second
Quarter
As
of May
21, 2007, the
date
of
our
first quarter 2007 earnings release, we
expected to open 26 stores during the second quarter of fiscal 2007, which
ends
on August 3, 2007, reflecting square footage growth of approximately
11%.
Total sales were expected to increase 6% to 7%. Comparable store sales
were
expected to decline 1% to 3%. We expected diluted earnings per share of
$0.62 to
$0.64. All comparisons are with the second quarter of fiscal 2006.
Fiscal
2007
As
of May
21, 2007, the
date
of our first quarter 2007 earnings release, we
expected to open 150 to 160 stores during fiscal 2007, which ends on February
1,
2008, reflecting total square footage growth of approximately 11%. Total
sales
were expected to increase approximately 7% for the year. Comparable store
sales
were expected to decline 1% to 2%. We expected diluted earnings per share
of
$1.99 to $2.03. All comparisons are with fiscal 2006.
FORWARD-LOOKING
STATEMENTS
This
Form
10-Q contains “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995 (the “Act”). All statements other than
those reciting historic fact are statements that could be “forward-looking
statements” under the Act. Such forward-looking statements are found in, among
other places, “Management’s Discussion and Analysis of Financial Condition and
Results of Operations.” Statements containing words such as “expects,” “plans,”
“strategy,” “projects,” “believes,” “opportunity,” “anticipates,” “desires,” and
similar expressions are intended to highlight or indicate “forward-looking
statements.” Although we believe that the expectations, opinions, projections,
and comments reflected in our forward-looking statements are reasonable,
we can
give no assurance that such statements will prove to be correct. A wide
variety
of potential risks, uncertainties, and other factors could materially affect
our
ability to achieve the results expressed or implied by our forward-looking
statements including, but not limited to, changes in domestic economic
conditions, such as interest rate and currency fluctuations, fuel and other
energy costs, slower growth in personal income, declining housing turnover,
inflation or deflation of commodity prices and other factors which can
negatively affect our customers, as well as our ability to: (i) respond
to a
greater than expected downturn in the housing industry and the level of
repairs,
remodeling, and additions to existing homes, as well as general reduction
in
commercial building activity; (ii) secure, develop, and otherwise implement
new
technologies and processes designed to enhance our efficiency and
competitiveness; (iii) attract, train, and retain highly-qualified associates;
(iv) locate, secure, and successfully develop new sites for store development
particularly in major metropolitan markets; (v) respond to fluctuations
in the
prices and availability of services, supplies, and products; (vi) respond
to the
growth and impact of competition; (vii) address legal and regulatory
developments; and (viii) respond to unanticipated weather conditions that
could
adversely affect sales. For more information about these and other risks
and
uncertainties that we are exposed to, you should read the “Risk Factors”
included in our Annual Report on Form 10-K to the United Stated Securities
and
Exchange Commission and the description of material changes, if any, in
those
“Risk Factors” included in our Quarterly Reports on Form
10-Q.
The
forward-looking statements contained in this Form 10-Q are based upon data
available as of the date of this report or other specified date and speak
only
as of such date. We expressly disclaim any obligation to update or revise
any
forward-looking statement, whether as a result of new information, change
in
circumstances, future events, or otherwise.
The
Company's market risk has not changed materially since February 2, 2007.
The
Company's management, with the participation of the Chief Executive Officer
and
Chief Financial Officer, has evaluated the effectiveness of the Company’s
“disclosure controls and procedures”, (as such term is defined in
Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as
amended, (the “Exchange Act”)). Based upon their evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that, as of May 4, 2007, the
Company’s disclosure controls and procedures were effective for the purpose of
ensuring that the information required to be disclosed in the reports that
the
Company files or submits under the Exchange Act with the Securities and Exchange
Commission (the “SEC”) (1) is recorded, processed, summarized and reported
within the time periods specified in the SEC’s rules and forms, and (2) is
accumulated and communicated to the Company’s management, including its
principal executive and principal financial officers, as appropriate to allow
timely decisions regarding required disclosure.
In
addition, no change in the Company’s internal control over financial reporting
occurred during the fiscal quarter ended May 4, 2007 that has materially
affected, or is reasonably likely to materially affect, the Company’s internal
control over financial reporting.
Part
II - OTHER INFORMATION
There
have been no material changes in our risk factors from those disclosed in our
Annual Report on Form 10-K.
Issuer
Purchases of Equity Securities
|
|
|
|
|
|
|
|
|
|
(In
millions, except average price
paid per share)
|
|
Total
Number of Shares Purchased (1)
|
|
Average
Price Paid per Share
|
|
Total
Number of Shares Purchased as Part of Publicly Announced Plans
or Programs
|
|
Dollar
Value of Shares that May Yet Be Purchased Under the Plans or Programs
(2)
|
|
|
|
|
|
|
|
|
|
|
|
February
3, 2007 – March 2, 2007
|
|
|
2.9
|
|
$
|
32.72
|
|
|
2.8
|
|
$
|
1,399
|
|
March
3, 2007 – April 6, 2007
|
|
|
19.2
|
|
|
31.72
|
|
|
19.2
|
|
|
789
|
|
April
7, 2007 – May 4, 2007
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
789
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
of May 4, 2007
|
|
|
22.1
|
|
$
|
31.85
|
|
|
22
|
|
$
|
789
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
During
the first quarter of fiscal 2007, the Company repurchased an aggregate
of
21,978,789 shares of its common stock pursuant to the share repurchase
program (the Program). The total number of shares purchased also
includes a nominal amount of shares repurchased from employees to
satisfy
either the exercise price of certain stock options or their tax liability
upon the vesting of restricted
shares.
|
(2) |
The
Company will continue implementing the Program through purchases
made from
time to time either in the open market or through private transactions,
in
accordance with SEC regulations. On May 25, 2007, the Company’s Board of
Directors authorized up to an additional $3 billion in share repurchases
and extended the period of the Program through fiscal 2009, bringing
the
total remaining authorization to approximately $3.8 billion.
|
Exhibit
10.1 - Form
of
Lowe's Companies, Inc Performance-Based Restricted Stock Agreements for Robert
A. Niblock, Larry D. Stone and Gregory M. Bridgeford
Exhibit
10.2 - Form of Lowe's Companies, Inc Performance-Based Restricted Stock
Agreements for all Key Employees other than Robert A. Niblock, Larry D. Stone
and Gregory M. Bridgeford
Exhibit
10.3 - Lowe’s
Companies Employee Stock Purchase Plan - Stock Options For Everyone, as amended
through May 25, 2007 (incorporated herein by reference to Appendix B to Lowe’s
Companies, Inc.’s Proxy Statement on Schedule 14A, as filed on April 12, 2007,
File No. 001-07898).
Exhibit
15.1 - Deloitte & Touche LLP Letter re unaudited interim financial
information
Exhibit
31.1 - Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the
Securities Exchange Act of 1934, as amended
Exhibit
31.2 - Certification Pursuant to Rules 13a-14(a) and 15d-14(a) under the
Securities Exchange Act of 1934, as amended
Exhibit
32.1 - Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit
32.2 - Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
|
|
|
|
|
LOWE'S
COMPANIES, INC.
|
|
|
|
June
5, 2007
Date
|
|
/s/Matthew
V. Hollifield
Matthew
V. Hollifield
Senior
Vice President and Chief Accounting
Officer
|
Exhibit
No.
|
|
Description
|
|
|
|
10.1
|
|
Form
of Lowe's Companies, Inc Performance-Based Restricted Stock Agreements
for
Robert A. Niblock, Larry D. Stone and Gregory M.
Bridgeford
|
|
|
|
10.2
|
|
Form
of Lowe's Companies, Inc Performance-Based Restricted Stock Agreements
for
all Key Employees other than Robert A. Niblock, Larry D. Stone
and Gregory
M. Bridgeford
|
|
|
|
10.3
|
|
Lowe’s
Companies Employee Stock Purchase Plan - Stock Options For Everyone,
as
amended through May 25, 2007 (incorporated herein by reference
to Appendix
B to Lowe’s Companies, Inc.’s Proxy Statement on Schedule 14A, as filed on
April 12, 2007, File No. 001-07898).
|
|
|
|
15.1
|
|
Deloitte
& Touche LLP Letter re unaudited interim financial
information
|
|
|
|
31.1
|
|
Certification
Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities
Exchange
Act of 1934, as amended
|
|
|
|
31.2
|
|
Certification
Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities
Exchange
Act of 1934, as amended
|
|
|
|
32.1
|
|
Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002
|
|
|
|
32.2
|
|
Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002
|