Lowe's 1997 Annual Report Download

Download and view the complete annual report

Please find the complete 1997 Lowe's annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 40

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40

Table of contents

  • Page 1

  • Page 2
    ... the home improvement, home decor, and home construction markets from approximately 450 stores located primarily in the eastern half of the United States. At the beginning of 1998, our employees numbered nearly 60,000 and our retail sales space totaled approximately 36.5 million square feet. Lowe...

  • Page 3
    ...) which accounted for 85% of our total 36.5 million square feet of selling space. We have been completing new store projects (including relocations) at a rate of more than one per week. In 1997 we opened 42 new stores in new markets, taking Lowe's product assortment and customer service to millions...

  • Page 4
    ... feedback has been Lowe's Gold Advisory Board. Gold Card holders are customers who have earned a substantial credit line and shop our stores frequently. At least once every month, we randomly select a market and invite a group of these special customers to join a Lowe's district manager and members...

  • Page 5
    ...attention to commercial business customers, that group of professionals to whom the Baby Boomers are delegating so many home projects. We are also making our stores more productive through traffic-sensitive staffing schedules and improved systems for ordering and delivery. We have recently added new...

  • Page 6
    "How Can We Help You Today?" 4

  • Page 7
    .... There's a world of options out there for anyone with money to spend on home improvement projects. Consumers can shop at hardware stores, appliance dealers, lumber yards, carpet stores, and garden centers, not to mention catalog shopping and the Internet. Surrounded by alternatives, Lowe's has to...

  • Page 8
    ... flooring installation can require special skills and tools. I don't keep a carpet stretcher in my hall closet; do you? And mistakes can be costly." It's not surprising, therefore, that in a survey conducted by the Home Improvement Research Institute (HIRI), nearly a third of home center customers...

  • Page 9
    ... as kitchen cabinets, water heaters, garbage disposals, storm doors, garage doors and openers, ceiling fans, and lighting fixtures. These expanded installed sales programs were tested in our Dallas and Atlanta markets, where they proved very popular with customers. With their children leaving home...

  • Page 10
    ... days, we'd better deliver. " As an added benefit, this initiative will increase turnover and reduce Lowe's investment in inventory." Speedy delivery has always been important to Lowe's commercial business customers, the professionals who perform a growing number of services for homeowners. These...

  • Page 11
    ... we can increase our share of their business. And we're doing that." " It's not that we need to do a lot of new things," says Greg Wessling, Senior VP and General Merchandise Manager - Functional Products. " We're doing the same things, but differently. Take the way we sell lumber: to homeowners, we...

  • Page 12
    ... at the same low price. Again, we're not doing anything different-just different ly." At the Commercial Sales desk in every Lowe's store, experienced and enthusiastic personnel are assigned specifically to serve commercial business customers. They set up business payment plans, prepare Ready-To...

  • Page 13
    ... instance, chain link fencing is Low e's Tot al M arket Pot ent ial Dollars in Billions Early in t he morning, Low e's commercial business cust omers gat her t o pick up orders and discuss new product off erings at Low e's Commercial Sales desk. Home Center M arket Building Contractor Home Ow ner...

  • Page 14
    ... centralized. Headed by Senior VP Bill Irons, Lowe's Management Information Services (MIS) gathers point-of-sale customer information from all Lowe's compass points. " They're developing new ways to help us make informed decisions," says Bill Warden, Chief Administrative Officer. " In the jargon of...

  • Page 15
    ... company's grow th. He w as Chairman of the Board of Directors from 1978 until passing the gavel to Bob Tillman in January 1998, and he remains an active member of the board. of inflation comes calling, money is a house of straw; wealth is a house of bricks. Even without a career in building supply...

  • Page 16
    ... Corporation (Retail Chain), M inneapolis, M inn. (M r. Andres retired in September 1985.) John M . Belk Director since 1986, age 78. Chairman of Audit Committee, M ember of Governance Committee of the Company. Chairman of the Board, Belk Stores Services, Inc. (Retail Department Stores), Charlotte...

  • Page 17
    ... Low e's as an innovative force in building supply retailing. He grew w ith the Company and retired as a managing director in 1983, remaining on the board as a regular member until 1997. His outstanding career inspires thousands of Low e's employees to this day. Russell D. Long is one of Louisiana...

  • Page 18
    ... new housing starts, the level of repairs, remodeling and additions to existing homes, commercial building activity, and the availabilty and cost of financing. An economic downturn can adversely affect sales because much of the Company's products are purchased by consumers for discretionary projects...

  • Page 19
    ...the Board of Directors and Shareholders of Lowe' s Companies, Inc. We have audited the accompanying consolidated balance sheets of Lowe's Companies, Inc. and subsidiaries as of January 30, 1998 and J anuary 31, 1997, and the related consolidated statements of earnings, shareholders' equity, and cash...

  • Page 20
    ... of outstanding convertible debt to common stock. OPERATIONS The Company's sales were $10.1 billion during 1997, an 18% increase over 1996 sales of $8.6 billion. Sales for 1996 were 22% higher than 1995 levels. Comparable store sales increased 4% in 1997. Large store (stores exceeding 80,000 square...

  • Page 21
    ... and 1995, the Company acquired fixed assets (primarily new store facilities) under capital leases of $32.7, $182.7 and $96.9 million, respectively. At January 30, 1998, the Company has a $300 million revolving credit facility with a syndicate of ten banks, available lines of credit aggregating $206...

  • Page 22
    ... of which will increase sales floor square footage by approximately 20% . Approximately 30% of the 1998 projects will be leased and 70% will be owned. Additionally, the Company has entered into an agreement with a lessor to build a 1.17 million square foot distribution center in Pennsylvania which...

  • Page 23
    ... continues and offers a means of increasing market share by providing exceptional value to a new customer base. Store group categories, presented in these two tables, are defined as follows: 1. Yards : Focused Contractor Yards 2. Small : Average of 19,000 square feet 3. Medium : Average of 58,000...

  • Page 24
    ...3.5% $ 292,150 167,599 3.4% $ 226,027 160,377 3.2% Basic Earnings Per Share Diluted Earnings Per Share Cash Dividends Per Share See accompanying notes to consolidated financial statements. $ $ $ 2.05 2.05 .22 $ $ $ 1.74 1.71 .21 $ $ $ 1.41 1.36 .19 Low e's Sales Grow th $ Billions 12 10...

  • Page 25
    ...851,466 2,494,396 35,615 53,477 41.7 56.3 0.8 1.2 Total Assets Liabilities and Shareholders' Equity Current Liabilities: Short-Term Notes Payable Accounts Payable Employee Retirement Plans (Note 10) Accrued Salaries and W ages Other Current Liabilities (Note 4) $5,219,277 100.0% $4,434,954 100...

  • Page 26
    Consolidated Statements of Shareholders' Equity In Thousands Common Stock Shares Amount Balance January 31, 1995 Net Earnings Tax Effect of Non-qualified Stock Options Exercised Cash Dividends Stock Options Exercised (Note 8) Stock Issued to ESOP (Note 10) Conversion of 3% Notes Shares Issued to ...

  • Page 27
    ... Issue Discount Increase in Deferred Income Taxes (Gain) Loss on Disposition/W ritedown of Fixed and Other Assets Changes in Operating Assets and Liabilities: Accounts Receivable - Net Merchandise Inventory Other Operating Assets Accounts Payable Employee Retirement Plans Other Operating Liabilities...

  • Page 28
    ...General Electric Capital Corporation, consumer credit is extended directly to customers by the Bank and all credit program related services are performed directly by the Bank. Merchandise Inventory - Inventory is stated at the lower of cost or market. In an effort to more closely match cost of sales...

  • Page 29
    ... a leased location closes, a provision is provided for the present value of future lease obligations, net of anticipated sublease income. The estimated realizable value of closed store real estate is included in other assets. Advertising - Costs associated with advertising are charged to operations...

  • Page 30
    ... Company's commercial paper program and for short-term borrowings. Facility fees ranging from .06% to .075% are paid on the unused amount of these facilities. At January 30, 1998, there were no borrowings outstanding under this revolving credit facility. Several banks have extended lines of credit...

  • Page 31
    ... notes to the financial statements. Basic EPS excludes dilution and is computed by dividing net earnings by the weightedaverage number of common shares outstanding for the period. Diluted EPS is similar to fully diluted EPS pursuant to Accounting Principles Board (APB) Opinion No. 15. Following is...

  • Page 32
    ... entitles the participant to receive the excess of the final value of the unit over the fair market value of a share of common stock on the first day of the performance period. The final value is the average closing price of a share of common stock during the last month of the performance period...

  • Page 33
    ... Present Value of Minimum Lease Payments, Less Current Maturities $433,673 Rental expenses under operating leases for real estate and equipment were $65.4 million, $59.2 million and $54.1 million in 1997, 1996 and 1995, respectively. Note 10, Employee Retirement Plans: The Company's contribution...

  • Page 34
    ... $77,858 Noncash Investing and Financing Activities: Fixed Assets Acquired Under Capital Leases Common Stock Issued to ESOP (Note 10) Common Stock Issued to Executives and Directors, net of Unearned Compensation Conversion of Debt to Common Stock Notes Received in Exchange for Property Notes Issued...

  • Page 35
    ....18 $ 1993 $4,538,001 131,786 .89 .89 .16 Selected Income Statement Data: Net Sales Net Earnings Basic Earnings Per Share Diluted Earnings Per Share Cash Dividends Per Share Selected Balance Sheet Data: Total Assets Long-Term Debt, Including Current Maturities $1,058,048 $ 789,904 $ 880,310 $ 708...

  • Page 36
    ... 38 3/4 37 5/8 35 1/2 $31 5/8 Fiscal 1996 Shares Traded 11,750,100 13,173,100 22,577,000 16,221,300 17,061,200 16,017,600 16,408,800 18,599,100 9,774,900 16,788,200 8,351,100 21,062,400 High-Low Stock Price Sources: The Wall Street J ournal, Dow J ones Business Information Services, Bloomberg 34

  • Page 37
    ....00% 25.83 (.02) 7/31/96 100.00% 25.79 (.22) 4/30/96 100.00% 25.23 (.24) Net Sales FIFO Gross Margin LIFO (Charge) Credit LIFO Gross Margin Expenses: S,G & A Store Opening Costs Depreciation Employee Retirement Plans Interest 27.70 17.64 1.12 2.72 .72 .72 26.51 16.60 .90 2.39 .62 .59 26.04 15...

  • Page 38
    ...Shareholders' Equity Financial Ratios 20 Asset Turnover 2 21 Return on Sales3 22 Return on Assets4 23 Return on Shareholders' Equity5 Comparative Balance Sheets (Thousands) 24 Total Current Assets 25 Cash and Short-Term Investments 26 Accounts Receivable - Net 27 Inventories (Lower of Cost or Market...

  • Page 39
    ... by Sales. Return on Assets - Net Earnings divided by Beginning Assets. Return on Shareholders' Equity - Net Earnings divided by Beginning Equity. Stock price source: The Wall Street Journal 5 6 NM = not meaningful CGR = compound growth rate 120,000 120,000 $ .04 - - - - - Credits: Design...

  • Page 40
    ..., Jr. Executive Vice President, Chief Administrative Officer, Secretary (336) 658-4497 Dividend Reinvesting Agent Wachovia Shareholder Services P.O. Box 8218 Boston, M A 02266-8218 (800) 633-4236 Dividend History Low e's has paid a cash dividend each quarter since becoming a public company in 1961.