Lowe's 1998 Annual Report Download - page 28

Note 6, Financial Instruments:
The following are financial instruments whose estimated fair value amounts are different from their carrying amounts.
Estimated fair values have been determined using available market information and appropriate valuation methodologies.
However, considerable judgment is necessarily required in interpreting market data to develop the estimates of fair value.
Accordingly, the estimates presented herein are not necessarily indicative of the amounts that the Company could realize
in a current market exchange. The use of different market assumptions and/or estimation methodologies may have a material
effect on the estimated fair value amounts.
January 29, 1999 January 30, 1998
Carrying Fair Carrying Fair
(In Thousands) Amount Value Amount Value
Liabilities:
Long-Term Debt $1,382,111 $1,525,208 $1,058,048 $1,146,434
Long-term debt – Interest rates that are currently available to the Company for issuance of debt with similar terms and
remaining maturities are used to estimate fair value for debt issues that are not quoted on an exchange.
Note 7, Earnings Per Share:
Basic earnings per share (EPS) excludes dilution and is computed by dividing net earnings by the weighted-average number
of common shares outstanding for the period. Diluted EPS includes the dilutive effects of common stock equivalents and
convertible debt, as applicable. Following is the reconciliation of EPS for 1998, 1997 and 1996.
(In Thousands, Except Per Share Data)
1998 1997 1996
Basic Earnings per Share:
Net Earnings $482,422 $357,484 $292,150
Weighted Average Shares Outstanding 352,104 348,554 335,199
Basic Earnings per Share $1.37 $1.03 $ .87
Diluted Earnings per Share:
Net Earnings $482,422 $357,484 $292,150
Interest (After Taxes) on Convertible Debt — — 3,620
Net Earnings, as Adjusted $482,422 $357,484 $295,770
Weighted Average Shares Outstanding 352,104 348,554 335,199
Dilutive Effect of Stock Options 1,691 205 158
Dilutive Effect of Convertible Debt — — 10,012
Weighted Average Shares, as Adjusted 353,795 348,759 345,369
Diluted Earnings per Share $1.36 $1.03 $ .86
Note 8, Shareholders’ Equity:
Authorized shares of common stock were 1.4 billion at January 29, 1999 and 700 million at January 30, 1998 and
January 31, 1997.
The Company has 5 million authorized shares of preferred stock ($5 par), none of which have been issued. The preferred
stock may be issued by the Board of Directors (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 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 unit of a newly
authorized series of preferred stock for $152.50. Each unit is intended to be the equivalent of one share of common stock. The
purchase rights will be exercisable only if a person or group acquires or commences a tender offer for 15% or more of Lowe’s
common stock. The purchase rights are not exercisable or transferable by the person or group acquiring the stock or commenc-
ing the tender offer. The rights will expire on September 9, 2008, unless the Company redeems or exchanges them earlier.
The Company has two stock incentive plans, referred to as the “1994” and “1997” Incentive Plans, under which incentive
and non-qualified stock options, stock appreciation rights, restricted stock awards and incentive awards may be granted to key
employees. No awards may be granted after January 31, 2004 under the 1994 plan and 2007 under the 1997 plan. Stock
options generally have terms ranging from 5 to 10 years, vest evenly over 3 years and are assigned an exercise price of not
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