Lowe's 2001 Annual Report Download - page 24

22
Lo we’s Co mpanies, Inc.
$2.2 billio n fo r 2001. This co mpares to $2.3 billio n and $1.5 bil-
lio n fo r 2000 and 1999, respectively. Retail selling space as of
February 1, 2002 increased 19% o ver the selling space as of
February 2, 2001. The February 2, 2001 selling space to tal o f 67.8
millio n square feet represents a 19% increase o ver 1999. Investing
activities also include no ncash transactio ns o f capital leases fo r
new sto re facilities and equipment, the result o f which is to
increase lo ng- term debt and property.
Cash flo ws pro vided by financing activities were $929.5 millio n
in 2001, $1.1 billio n in 2000 and $583.5 millio n in 1999. The cash
provided by financing ac tivities in 2001 primarily resulted fro m the
issuance o f $580.7 millio n agg reg ate principal amo unt of senior
co nvertible no tes due Octo ber 2021 and $1.005 billio n ag gregate
principal amo unt o f co nvertible no tes due February 2021. These
cash inflo ws were offset by a decrease in cash due to the payment
of $59.9 millio n in cash dividends, $63.8 millio n in scheduled debt
maturities and the repayment of $150 millio n in sho rt-term bo r-
ro wings. In 2000, cash pro vided by financing activities included
the issuanc e of $500 millio n princ ipal amo unt of 8.25% no tes due
June 2010 and $500 millio n princ ipal amo unt of 7.50% no tes due
December 2005. These pro ceeds were offset by a decrease in cash
of $53.5 millio n fro m c ash dividend payments and $61.3 millio n in
scheduled debt repayments. Majo r financing activities during 1999
included cash rec eived fro m the issuance of $400 millio n principal
amo unt o f 6.5% debentures due March 2029 and $348.3 millio n in
net pro ceeds fro m a co mmo n sto ck o ffering. These pro c eeds were
offset by cash dividend payments of $47.6 millio n and $108.3 mil-
lio n of scheduled debt repayments. The ratio o f lo ng- term debt to
equity plus lo ng- term debt was 36.2% , 33.3% and 27.6% as of the
fiscal years ended 2001, 2000, and 1999, respectively.
In Octo ber 2001, the Co mpany issued $580.7 millio n ag gregate
principal o f senio r co nvertible no tes at an issue price o f $861.03
per no te. Interest o n the no tes, at the rate o f .8610% per year o n
the principal amount at maturity, is payable semiannually in
arrears until Octo ber 2006. After that date, the Co mpany will no t
pay c ash interest o n the no tes prio r to maturity. Instead, in
Octo ber 2021, the maturity date o f the no tes, a ho lder will receive
$1,000 per no te, representing a yield to maturity of 1% . Ho lders
may co nvert their notes into 17.212 shares o f the Co mpany’s co m-
mo n sto ck, subject to adjustment, o nly if ( 1) the sale price o f the
Co mpany’s co mmo n sto ck reaches specified thresho lds, ( 2) the
credit rating o f the no tes is belo w a specified level, ( 3) the notes
are called fo r redemptio n, o r ( 4) specified co rpo rate transactio ns
have o cc urred. Ho lders may require the Co mpany to purchase all o r
a po rtio n of their no tes in Octo ber 2003 o r Octo ber 2006, at a price
of $861.03 per no te plus accrued cash interest, if any, o r in
Octo ber 2011, at a price of $905.06 per no te. The Co mpany may
cho o se to pay the purc hase price o f the no tes in cash o r co mmon
sto ck o r a co mbinatio n o f cash and co mmo n sto ck. In additio n, if
a change in co ntro l of the Co mpany o ccurs o n o r befo re Octo ber
2006, each ho lder may require the Co mpany to purchase fo r c ash
all o r a po rtio n of such ho lder’s no tes. The Co mpany may redeem
fo r cash all o r a po rtion of the no tes at any time o n o r after
Octo ber 2006, at a price equal to the sum o f the issue price plus
accrued o riginal issue disco unt and accrued cash interest, if any,
o n the redemptio n date. No ne of the co nditio ns that permitted
co nversio n were satisfied at February 1, 2002.
In February 2001, the Co mpany issued $1.005 billio n aggregate
principal o f co nvertible no tes at an issue price of $608.41 per no te.
Interest will no t be paid o n the no tes prio r to maturity in February
2021 at which time the ho lders will receive $1,000 per no te, rep-
resenting a yield to maturity of 2.5% . Ho lders may co nvert their
no tes at any time o n o r befo re the maturity date, unless the no tes
have been previously purchased o r redeemed, into 16.448 shares of
the Co mpany’s co mmo n sto ck per no te. Ho lders o f the no tes may
require the Co mpany to purc hase all o r a po rtio n of their no tes in
February 2004 at a price of $655.49 per no te o r in February 2011
at a price o f $780. 01 per no te. On either of these dates, the
Co mpany may cho o se to pay the purchase price of the no tes in cash
o r co mmo n sto ck, o r a co mbinatio n of cash and co mmo n sto c k. In
additio n, if a change in the co ntro l of the Co mpany o ccurs o n o r
befo re February 2004, each ho lder may require the Co mpany to pur-
chase, fo r cash, all o r a po rtio n of the ho lders’ no tes.
In August 2001, the Co mpany co mpleted an $800 millio n sen-
io r c redit facility. The facility is split into a $400 millio n five-year
tranche, expiring in Aug ust 2006 and a $400 millio n 364-day
tranche, expiring in Aug ust 2002, which is renewable annually. The
facility is used to suppo rt the Co mpany’s $800 millio n co mmercial
paper pro gram and fo r sho rt- term bo rrowing s. Any lo ans made are
priced based upo n market co nditions at the time o f funding in
acco rdance with the terms of the senio r c redit facility. The senio r
credit facility co ntains certain restrictive co venants which include
maintenance of specific financial ratio s, amo ng o thers. The
Co mpany was in co mpliance with these co venants at February 1,