Lowe's 1999 Annual Report Download - page 28

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Debt maturities, exclusive of capital leases, for the next five
fiscal years are as follows (in millions): 2000, $45.3; 2001,
$26.1; 2002, $42.7; 2003, $11.3; 2004, $58.5.
The Company’s debentures, senior notes and medium term
notes contain certain financial covenants, including the mainte-
nance of specific financial ratios.
Notes:
1Real properties pledged as collateral for secured debt had net
book values at January 28, 2000, as follows: industrial revenue
bonds – $9.6 million, mortgage notes – $147.9 million and
other notes – $7.3 million.
2With certain restrictions, the floating rate demand industrial
revenue bonds can be converted to a fixed interest rate based
on a fixed interest index at the Company’s option.
3Approximately 37% of these Medium Term Notes may be put
at the option of the holder on either the tenth or twentieth
anniversary date of the issue. None of these notes are currently
putable.
Note 7 – Financial Instruments
Cash and cash equivalents, accounts receivable, short-term
borrowings, trade accounts payable, and accrued liabilities are
reflected in the financial statements at cost which approximates
fair value. Short and long-term investments, classified as available-
for-sale securities, are reflected in the financial statements at fair
value. 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 assump-
tions and/or estimation methodologies may have a material
effect on the estimated fair value amounts. The fair value of the
Company’s interest rate swap is insignificant. The fair value of
the Company’s long-term debt is as follows:
January 28, 2000 January 29, 1999
Carrying Fair Carrying Fair
(In Thousands) Amount Value Amount Value
Liabilities:
Long-Term Debt $1,786,487 $2,024,274 $1,472,171 $1,618,008
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 8 – 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 co nvertible debt, as applicable. Following is the reco nciliation
of EPS for 1999, 1998, and 1997.
(In Thousands, Except Per Share Data)
1999 1998 1997
Basic Earnings
per Share:
Net Earnings $672,795 $500,374 $383,030
Weighted Average
Shares Outstanding 381,240 370,812 367,111
Basic Earnings per Share $1.76 $1.35 $1.04
Diluted Earnings
per Share:
Net Earnings $672,795 $500,374 $383,030
Net Earnings Adjustment
for Convertible Debt — 3,589 3,675
Net Earnings,
as Adjusted $672,795 $503,963 $386,705
Weighted Average
Shares Outstanding 381,240 370,812 367,111
Dilutive Effect of
Stock Options 2,614 1,954 459
Dilutive Effect of
Convertible Debt — 2,985 3,062
Weighted Average
Shares, as Adjusted 383,854 375,751 370,632
Diluted Earnings
per Share $1.75 $1.34 $1.04
Note 9 – Shareholders’ Equity
Authorized shares of common stock were 1.4 billion at
January 28, 2000 and January 29, 1999.
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 pro-
vides 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
commencing the tender offer. The rights will expire in 2008,
unless the Company redeems or exchanges them earlier.
The Company has two stock incentive plans, referred to as