Lowe's 1998 Annual Report Download

Download and view the complete annual report

Please find the complete 1998 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

Low e’s 1998
Annual Report
Low e’s 1998
Annual Report

Table of contents

  • Page 1
    Low e's 1998 Annual Report

  • Page 2
    .... Our st ock is list ed on t he New York St ock Exchange, t he Pacif ic St ock Exchange and t he London St ock Exchange w it h shares t rading under t he t icker symbol LOW. Contents Letter to Shareholders ...1 Lowe's Knows...4 Board of Directors...12 Lowe's Executive Management ...13 Disclosure...

  • Page 3
    ... were Lowe's and our shareholders. We topped $12 billion in enhanced this past year. These sales, an increase of 21% over programs focused on Installed last year, while serving more than Sales, Special Order Sales and four million customers weekly. the Commercial Business We opened 76 new stores in...

  • Page 4
    ... work for Lowe's We invested the time and resources to redesign our customers. CBC's also value our " Ready to Go" fax and SOS system, to make it faster, easier, friendlier and phone ordering, as well as delivery within 24 hours. significantly more reliable. In June, we installed Special We marketed...

  • Page 5
    ... source for Kobalt TM Tools, which, our customers say, are an unbeatable value for the price. Another Lowe's " exclusive" is a feature that's invisible to our customers, but benefits them every day. Lowe's cutting-edge distribution system provides efficient, direct product distribution to our stores...

  • Page 6
    ... quickly. Retail customers say it's added peace of mind and that they appreciate having a skilled professional at Lowe's who can explain their projects in detail. The Lowe's Pros program was introduced in the third quarter of 1998 in the plumbing, electrical, paint and hardware departments. Because...

  • Page 7
    ... to tackle a big project. In 1998, we responded by rolling out a comprehensive Installed Sales program to address their needs. We have a network of reliable, experienced professionals in each market to install Lowe's products for our customers - carpet, cabinets, plumbing fixtures and more - making...

  • Page 8
    ... by its commitment to meeting customers' changing needs. We understand that each customer is unique and their needs vary and change over the years. Our Special Order Sales program now offers time-saving solutions for today's busy families, while our Installation Services help emptynesters - among...

  • Page 9
    ...value in the services and products we offer. Additionally, we recognize the need to provide " one-stop shopping" for our busy customers, supplying them with the right products and accurate assistance to efficiently complete a project. The 1998 rollout of Kobalt TM Tools, our professionalquality line...

  • Page 10
    ..., we'll be building additional RDC's to support our growing store base. In 1999, we'll open 80 to 85 new stores and continue to build upon Lowe's traditions of unbeatable value and superior customer service. We look forward to serving each customer as the most important customer of the day. 8

  • Page 11
    ... or even a member of Lowe's Executive Management. Job opportunities are posted in every store and shared monthly via our Company newsletter, Scanner, as well as being listed on our company-wide intranet website, WKLN. We believe that investing in our employees enhances job satisfaction and leads to...

  • Page 12
    ... programs that benefit the families in those communities. In 1998, we pledged $1 million as a Gold-level sponsor of the 1999 Special Olympics World Games. Beyond our financial commitment, we have set aside time for our employees to volunteer at the Games, and have contributed building materials...

  • Page 13
    Eagle Hardw are & Garden in Bellevue, WA Low e's St ores Tot al M arket Pot ent ial Dollars in Billions Home Center M arket Building Contractor Home Ow ner R & R* $45.0 44.1 43.0 41.8 40.7 39.9 37.5 37.8 37.3 38.0 35.6 33.0 31.6 35.7 25.4 15.6 New Housing 2003e 2002e 2001e 2000e 1999e 1998e 1997...

  • Page 14
    ... Chairman of the Board, President and Chief Executive Officer, Metropolitan Life Insurance Company, New York, N.Y. 2* ,4 Robert L. Strickland Former Chairman of the Board, Lowe's Companies, Inc., North Wilkesboro, N.C. 1,3 Special thanks to those retiring from Lowe's Board of Directors on May 28...

  • Page 15
    ... in the number of new housing starts, the level of repairs, remodeling and additions to existing homes, commercial building activity, and the availability and cost of financing. An economic downturn can impact sales because much of our inventory is purchased for discretionary projects, which can...

  • Page 16
    ... Report To 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 29, 1999 and January 30, 1998, and the related consolidated statements of earnings, shareholders' equity...

  • Page 17
    ... inventory assortment, everyday competitive prices, and an emphasis on customer service. The following table presents sales and store information: 1998 Sales (in millions) Sales Increases Comparable Store Sales Increases At end of year: Stores Sales Floor Square Feet (in millions) Average Store...

  • Page 18
    ...2, 1999. The transaction was valued at approximately $1 billion, structured as a tax-free exchange of the Company's common stock for Eagle's common stock, and accounted for as a pooling of interests. Summary, co mbined co mpany, pro fo rma financial info rmatio n fo r 1998, 1997 and 1996 is included...

  • Page 19
    ... and Human Resources, General Ledger, Accounts Payable, Forecasting and Replenishment, and Supply Services. All of these new systems are Year 2000 compliant. At January 29, 1999, the Company's conversion of internally developed legacy systems was completed with certification testing planned to...

  • Page 20
    ...000 square feet. Further, Large store sales are reported on both a comparable (same store) basis and new (open less than a year) basis. A relocated store is removed from the comparable store computation until it has been open at least 12 months. Table 1 Store Group Unit Totals, Annual Average 1998...

  • Page 21
    ...484 1.03 1.03 .11 3.5% $ 292,150 $ $ $ .87 .86 .10 3.4% Diluted Earnings Per Share Cash Dividends Per Share See accompanying notes to consolidated financial statements. Low e's Sales Grow th $ Billions 15 Low e's Earnings Grow th $ Millions 500 400 12 300 9 200 6 100 Fiscal Yr. Fiscal Yr...

  • Page 22
    Consolidated Balance Sheets In Thousands January 29, 1999 % Total January 30, 1998 % Total Assets Current Assets: Cash and Cash Equivalents Short-Term Investments (Note 2) Accounts Receivable - Net (Note 4) Merchandise Inventory Other Current Assets (Note 1) $ 222,709 20,343 143,928 2,104,845...

  • Page 23
    ... Gain on Available-for-Sale Securities Total Comprehensive Income Cash Dividends Stock Issued to ESOP (Note 10) Conversion of 3% Notes Shares Issued to Directors Unearned Compensation - Restricted Stock Awards (Note 8) 740 372 2,430 21,794 8 1,214 10,896 4 Capital in Excess of Par Value $516,369...

  • Page 24
    ...: Depreciation Amortization of Original Issue Discount Increase in Deferred Income Taxes 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...

  • Page 25
    ... label credit card are not reflected in receivables. Under an agreement with Monogram Credit Card Bank of Georgia (the Bank), a wholly owned subsidiary of General Electric Capital Corporation, consumer credit is extended directly to customers by the Bank and all credit program related services...

  • Page 26
    ... and administrative expenses. The estimated realizable value of closed store real estate is included in other assets and amounted to $62.3 and $45.4 million at January 29, 1999 and January 30, 1998, respectively. Advertising - Costs associated with advertising are charged to operations as incurred...

  • Page 27
    ... are based upon commercial paper rates plus 21 basis points. At January 29, 1999 and January 30, 1998, respectively, there were $92.5 and $98.1 million outstanding under this credit and security agreement and $132.1 and $105.3 million of the Company's accounts receivable were pledged as collateral...

  • Page 28
    ... by the Board of Directors at the time of issuance of the preferred shares. The Company has a shareholder rights plan, which provides for a dividend distribution of one preferred share purchase right on each outstanding share of common stock. Each purchase right will entitle shareholders to buy one...

  • Page 29
    ... 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, generally three years. The final value was the average closing price of a share of common stock during the last month of the performance...

  • Page 30
    .... Certain equipment is also leased by the Company under agreements ranging from two to five years. These agreements typically contain renewal options providing for a renegotiation of the lease, at the Company's option, based on the fair market value at that time. In August 1998, the Company entered...

  • Page 31
    ... 470,280 12,952 Present Value of Minimum Lease Payments, Less Current Maturities $457,328 Rental expenses under operating leases for real estate and equipment were $89.3, $65.4 and $59.2 million in 1998, 1997 and 1996, respectively. Note 10, Employee Retirement Plans: The Co mpany's co...

  • Page 32
    ...Taxes Noncash Investing and Financing Activities: Fixed Assets Acquired Under Capital Leases Termination of 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...

  • Page 33
    ...133 1996 % Total Sales $ 908 793 1,008 1,014 803 619 636 664 448 584 511 420 192 Product Category Fashion Plumbing & Electrical Tools Building Materials Lumber Outdoor Hardlines Major Appliances/Kitchens Hardware Millwork Floors, Windows & Walls Rough Plumbing & Electrical Paint & Sundries Nursery...

  • Page 34
    ... 223,560 .72 .70 .09 Selected Balance Sheet Data: Total Assets Long-Term Debt, Excluding Current Maturities $1,283...Sales Gross Margin Net Earnings Basic Earnings Per Share Diluted Earnings Per Share * LIFO Adjustment: 1998 - The total LIFO effect for the year was a credit of $29.0 million. A credit...

  • Page 35
    ...Dividend $.028 .028 .028 $.028 Low $14 14 16 $15 11/16 5/16 3/16 13/16 Dividend $.025 .025 .025 $.028 Monthly Stock Price and Trading Volume* Fiscal 1998 Shares Traded...for-1 stock split to shareholders of record on June 12, 1998, as applicable. High-Low Stock Price $60 $50 $40 ...

  • Page 36
    .../31/97 100.00% 26.50 .01 8/1/97 100.00% 26.15 (.11) 5/2/97 100.00% 26.09 (.11) Net Sales FIFO Gross Margin LIFO (Charge) Credit LIFO Gross Margin Expenses: S,G & A Store Opening Costs Depreciation Interest 28.10 18.32 .86 2.47 .68 27.04 17.40 .68 2.29 .60 26.36 15.91 .44...

  • Page 37
    ... Dividend Reinvesting Agent EquiServe Trust Company, N.A. P.O. Box 8218 Boston, MA 02266-8218 800-633-4236 Low e's Common Stock Ticker Symbol: LOW Listed: New York Stock Exchange 20 Broad Street New York, NY 10005 Pacific Stock Exchange 301 Pine Street San Francisco, CA 94104 London Stock Exchange...

  • Page 38
    ...Dividends 18 Cash Dividends 8.4 19 Earnings Retained 19 Earnings Retained NM 20 Shareholders' 20 Shareholders' Equity Equity 25.5% Financial Financial Ratios Ratios 2 2 21 Asset Turnover 21 Asset Turnover 3 22 on Return on Sales3 22 Return Sales 23 on Return on4 Assets4 23 Return Assets 24 on Return...

  • Page 39
    ... earnings plus depreciation and interest. Asset Turnover - Sales divided by Beginning Assets. Return on Sales - Net Earnings divided by Sales. Return on Assets - Net Earnings divided by Beginning Assets. Return on Shareholders' Equity - Net Earnings divided by Beginning Equity. Stock price source...

  • Page 40