Lowe's 1999 Annual Report Download

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Lowe’s
19 9 9
Annual
Report

Table of contents

  • Page 1
    Lowe's 1999 Annual Report

  • Page 2
    ...-it-yourself and commercial business customers weekly through more than 576 stores in 37 states. At the beginning of 2000, our retail square footage totaled approximately 57 million square feet. Headquartered in Wilkesboro, NC, the 54-year-old company employs more than 80,000 people. Lowe's has been...

  • Page 3
    ... (DIY) industry potential. And Low e's is just beginning to penetrate these markets. In Bob Tillman Chairman and Chief Executive Officer 1999, w e entered, for example, Los Angeles and Philadelphia. In 2000, w e'll begin expansion in M iami, Phoenix and Detroit w ith plans for Boston, New York and...

  • Page 4
    ...75 percent of our scheduled 125 new store openings in 2001. Successful entry into major metropolitan markets is essential to our grow th plans. To ensure that these new stores flourish along w ith existing Low e's locations, Low e's management in 1999 implemented a new strategy for long-term success...

  • Page 5
    ... hy last year w e created new avenues through w hich w e can better serve our customers. We developed relationship programs such as Low e's Garden Club, Low e's Woodw orker's Club and Low e's Kids Clinics to show customers that w e share their enthusiasm for home improvement. M oving forw ard, these...

  • Page 6
    ...for higher-quality products that add convenience to their lives. Lowe's views these factors as prime reasons to expand and improve our Installed Sales, Special Order Sales, and Commercial Business Customer programs in anticipation of greater sales potential. In addition to growing sales, these three...

  • Page 7
    Broad product offerings, next-day delivery and installation services position Lowe's as a leading retailer of appliances. Reliabilt doors are one of Lowe's many exclusive brands offering quality and value to our customers. Lowe's lawn and garden department features fashionable patio furniture and ...

  • Page 8
    A graphical representation of Lowe's growth in market coverage from 1990 through the end of fiscal 2000. The Low e's sign goes up on one of our new est stores. 6

  • Page 9
    ...Colorado Delaware Georgia Idaho Indiana Kansas Louisiana Massachusetts Mississippi Montana New Jersey New York Ohio Oregon South Carolina Texas Virginia West Virginia 1 8 7 4 28 2 22 3 12 1 9 1 3 11 48 1 30 53 41 12 40 states, 653 stores Breaking New Ground Lowe's aggressive square footage growth...

  • Page 10
    Scenes from the 1999 Special Olympics World Games. Lowe's sponsorship contributed to the success of the event. 8

  • Page 11
    ...of the inventory flowing to our stores, keeping in-stock levels high, resulting in greater sales volume per store. The Special Olympics World Games was the largest sporting event in the world in 1999. Athletes and fans from 150 countries convened in Raleigh, NC for the Games. Lowe's was a corporate...

  • Page 12
    ...4,000 special order appliances. Using this same technology we will roll-out, in the second quarter of 2000, e-commerce capabilities to our web site (www.lowes.com). The initial product offering will be directed toward expanding our relationship with our established Commercial Business Customers. As...

  • Page 13
    ... from customers. Product selection has been scrutinized to ensure that Lowe's offers an adequate supply of products at each price point. Although the average age of our large store base is relatively young, Lowe's- like all successful retailers- thrives on continuously improving product presentation...

  • Page 14
    ... Fulton, Carol Farmer Robert L. Tillman Chairman of the Board, President and Chief Executive Officer Lowe's Companies, Inc. 3* Leonard L. Berry, Ph.D. Professor of Marketing and Director of the Center for Retailing Studies, Texas A&M University, College Station, Tex. 1,4 Peter C. Brow ning President...

  • Page 15
    ... our everyday competitive pricing strategy and provide the products that customers want depends on our vendors providing a reliable supply of inventory at competitive prices. • On a short-term basis, weather may impact sales of product groups like lawn and garden, lumber, and building materials...

  • Page 16
    ...communicated throughout the Company, and the careful selection, training and development of its people. Internal auditors monitor the operation of the internal control system and report findings and recommendations to management and the Board of Directors, and corrective actions are taken to address...

  • Page 17
    ...everyday competitive prices and an emphasis on customer service. The following table presents sales and store information: 1999 Sales (in millions) Sales Increases Comparable Store Sales Increases At end of year: Stores Sales Floor Square Feet (in millions) Average Store Size Net Selling Square Feet...

  • Page 18
    ... year. Working capital at January 28, 2000 was $1.3 billion compared to $942.6 million at January 29, 1999. The primary component of net cash used in investing activities co ntinues to be new sto re facilities in co nnection with the Company's expansion plan. Cash acquisitions of fixed assets were...

  • Page 19
    ... new computer equipment over the past six years. The Company continuously makes investments in technology in order to improve customer service and the availability of information to management. certain mortgages. Variable rates on mortgages, totaling $25 million, are being swapped for a fixed rate...

  • Page 20
    ... Yards 2. Small : Average of 18,000 square feet 3. Medium : Average of 54,000 square feet 4. Large : Average of more than 100,000 square feet All stores in excess of 80,000 square feet Large store sales are reported on both a comparable (same store) basis and new (open less than fourteen months...

  • Page 21
    ...1.35 1.34 0.12 3.8% $ $ $ $ 383,030 1.04 1.04 0.11 3.5% Diluted Earnings Per Share Cash Dividends Per Share See accompanying notes to consolidated financial statements. Low e's Sales Grow th $ Billions 20 800 Low e's Earnings Grow th $ Millions 700 15 600 500 10 400 300 5 200 0 Fiscal Yr...

  • Page 22
    ...,716 105,508 40.4 57.7 0.4 1.5 Total Assets Liabilities and Shareholders' Equity Current Liabilities: Short-Term Borrowings (Note 5) Current Maturities of Long-Term Debt (Note 6) Accounts Payable Employee Retirement Plans (Note 11) Accrued Salaries and W ages Other Current Liabilities $9,012,323...

  • Page 23
    ... Loss on Available-for-Sale Securities (Note 9) Total Comprehensive Income Tax Effect of Non-qualified Stock Options Exercised Cash Dividends Common Stock Offering Stock Options Exercised (Note 9) Stock Issued to ESOP (Note 11) Shares Issued to Directors (Note 9) Unearned Compensation - Restricted...

  • Page 24
    ... 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 Plans Other Operating Liabilities...

  • 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
    ... Hardware & Garden, Inc. (Eagle) on April 2, 1999. The transaction was structured as a tax-free exchange of the Company's common stock for Eagle's common stock, and was accounted for as a pooling of interests. Lowe's issued .64 shares of common stock for each share of Eagle outstanding common stock...

  • Page 27
    ... Buildings Store, Distribution and Office Equipment Leasehold Improvements 2,147,532 293,945 1,777,621 234,681 $1,488,896 2,516,951 $1,051,458 2,049,533 Total Cost Accumulated Depreciation and Amortization 6,447,324 (1,270,102) 5,113,293 (1,027,495) A $100 million revolving credit and security...

  • Page 28
    ... 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...

  • Page 29
    ...share. The Directors' Stock Option Plan is intended to replace the Directors' Stock Incentive Plan which expired on May 29, 1998. This Plan provided that, at the first Board meeting following each annual meeting of shareholders, the Company would issue each non-employee Director 500 shares of common...

  • Page 30
    ...Company applies APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations in accounting for its stock option plans. Accordingly, no compensation expense has been recognized for stock-based compensation where the option price of the stock approximated the fair market...

  • Page 31
    ...38,156 - Note 11 - Employee Retirement Plans The Company's contribution to its Employee Stock Ownership Plan (ESOP) is determined annually by the Board of Directors. The ESOP generally covers all Lowe's employees after completion of one year of employment and 1,000 hours of service during that year...

  • Page 32
    ...967) 1998 1997 Outdoor Hardlines Appliances Lumber Nursery & Gardening Products Floors, W indows & W alls Millwork Paint & Sundries Rough Plumbing & Electrical Cabinets & Furniture Other Net Interest Expense $84,852 $80,941 $71,615 Supplemental Disclosures of Cash Flow Information: 1999 (In...

  • Page 33
    Quarterly Review of Performance (Unaudited) Earnings Statement In Thousands, Except Per Share ... 26.37 18.08 .39 2.19 .69 - Net Sales Gross Margin Expenses: S,G & A Store Opening Costs Depreciation Interest Nonrecurring Merger Costs Total Expenses Pre-Tax Earnings Income Tax Provision 22.74 6.20 36...

  • Page 34
    ... .030 .030 $.035 High $36 45 42 $58 7/32 1/8 1/4 5/16 Dividend $.028 .030 .030 $.030 Low $16 16 16 $20 3/16 27/32 31/32 25/32 Dividend $.028 .028 .028 $.028 Monthly Stock Price and Trading Volume* Fiscal 1999 Shares Traded 33,832,400 33,955,800 35,475,300 25,997,800 23,311,700 19,669...

  • Page 35
    ...effective June 29, 1992, (which had the net effect of a 2-for-1 stock split). A 2-for-1 stock split, effective April 4, 1994. A 2-for-1 stock split, effective June 29, 1998. â- â- â- â- â- â- Low e's Stock Splits and Stock Dividends Since 1961 120 shrs. 240 shrs. 30 shrs. 60 shrs. 18...

  • Page 36
    ... of Stores 2 Square Footage 3 Number of Employees 4 Customer Transactions (In Thousands) 5 Average Purchase Comparative Income Statements (In Thousands) 6 Sales 7 Depreciation 8 Store Restructuring 9 Operating Income1 10 Pre-Tax Earnings 11 Income Tax Provision 12 Net Earnings 13 Cash Dividends 14...

  • Page 37
    ...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 NM = not meaningful CGR = compound growth rate 5 6 Credits: Design: Henry Church, Winston-Salem, NC Feature...

  • Page 38
    ... Sheet Data: Total Assets Long-Term Debt, Excluding Current Maturities $1,726,579 $1,364,278 $1,191,406 $ 875,754 $ 967,725 $9,012,323 $7,086,882 $5,861,790 $4,999,566 $3,967,337 Selected Quarterly Data First 1999 Net Sales Gross Margin Net Earnings Basic Earnings Per Share Diluted Earnings Per...

  • Page 39
    ...Box 1111 North Wilkesboro, NC 28656 Street: 1605 Curtis Bridge Road Wilkesboro, NC 28697 E-Mail: [email protected] Web: http://www.lowes.com Annual M eeting Date May 26, 2000 at 10:00 AM Lowe's Corporate Offices Wilkesboro, NC Low e's Common Stock Ticker Symbol: LOW Listed: New York Stock Exchange...

  • Page 40
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