Lowe's 1999 Annual Report Download - page 31

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The future minimum rental payments required under capital
and operating leases having initial or remaining noncancelable
lease terms in excess of one year are summarized as follows:
Operating Leases Capital Leases
Fiscal Year Real Estate Equipment Real Estate Equipment Total
(In Thousands)
2000 $ 150,268 $2,799 $ 56,036 $1,177 $ 210,280
2001 148,211 2,312 56,115 797 207,435
2002 143,669 1,346 56,115 342 201,472
2003 142,426 18 56,115 257 198,816
2004 142,038 — 56,298 46 198,382
Later Years 1,808,808 — 653,410 — 2,462,218
Total Minimum
Lease
Payments $2,535,420 $6,475 $934,089 $2,619 $3,478,603
Total Minimum
Capital Lease
Payments $936,708
Less Amount
Representing Interest 450,892
Present Value of Minimum
Lease Payments 485,816
Less Current Maturities 15,312
Present Value of Minimum
Lease Payments, Less
Current Maturities $470,504
Rental expenses under operating leases for real estate and
equipment were $144.0, $113.3 and $87.5 million in 1999,
1998 and 1997, respectively.
Note 11 – Employee Retirement Plans
The Company’s contribution to its Employee Stock Owner-
ship 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. Contributions are allocated to partici-
pants based on their eligible compensation relative to total
eligible compensation. Contributions may be made in cash or
shares of the Company’s common stock and are usually made in
the following year. ESOP expense for 1999, 1998 and 1997 was
$84.7, $84.4 and $67.4 million, respectively. At January 28,
2000, the ESOP held approximately 7.4% of the outstanding
common stock of the Company.
The Board of Directors determines contributions to the
Company’s Employee Savings and Investment Plan (ESIP) each
year based upon a matching formula applied to employee contri-
butions. All employees are eligible to participate in the ESIP on the
first day of the month following completion of one year of
employment. Company contributions to the ESIP for 1999, 1998
and 1997 were $11.5, $10.6 and $8.7 million, respectively. The
Company’s common stock is an investment option for partici-
pants in the ESIP. Shares held in the ESIP are voted by the trustee
as directed by an administrative committee of the ESIP.
Note 12 – Income Taxes
1999 1998 1997
Statutory Rate Reconciliation
Statutory Federal
Income Tax Rate 35.0% 35.0% 35.0%
State Income Taxes – Net
of Federal Tax Benefit 2.8 2.3 2.2
Other, Net (1.1) (0.8) (1.2)
Effective Tax Rate 36.7% 36.5% 36.0%
(In Thousands) Components of Income Tax Provision
Current
Federal $334,239 $251,848 $188,899
State 43,626 26,918 18,679
Total Current 377,865 278,766 207,578
Deferred
Federal 10,321 7,305 6,975
State 2,136 921 1,048
Total Deferred 12,457 8,226 8,023
Total Income
Tax Provision $390,322 $286,992 $215,601
The tax effect of cumulative temporary differences and
carryforwards that gave rise to the deferred tax assets and
liabilities and the related valuation allowance at January 28,
2000 and January 29, 1999 is as follows (in thousands):
January 28, 2000
Assets Liabilities Total
Excess Property and
Store Closing Costs $28,033 — $ 28,033
Insurance 15,839 — 15,839
Depreciation — $(228,707) (228,707)
Other, Net 47,216 (9,060) 38,156
Less Valuation Allowance — — —
Total $91,088 $(237,767) $(146,679)
January 29, 1999
Assets Liabilities Total
Excess Property and
Store Closing Costs $20,046 — $ 20,046
Insurance 17,036 — 17,036
Depreciation — $(195,241) (195,241)
Other, Net 37,579 (8,239) 29,340
Less Valuation Allowance (4,739) — (4,739)
Total $69,922 $(203,480) $(133,558)
The valuation allowance decreased $4,739,000 in 1999,
increased $66,000 in 1998, and decreased $316,000 in 1997.