Lowe's 2001 Annual Report Download - page 33

Lo we’s Co mpanies, Inc.
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NOTE 2 > MERGER
The Co mpany co mpleted its merger with Eagle Hardware & Garden,
Inc. ( Eagle) o n April 2, 1999. The transac tio n was structured as a
tax-free exchange o f the Co mpany’s co mmo n sto ck fo r Eag le’s co m-
mo n sto ck, and was acc o unted fo r as a po o ling o f interests. The
Co mpany incurred $24.4 millio n o f merger related co sts whic h were
charged to o peratio ns during the first quarter o f fiscal year 1999.
These co sts co nsisted of $15.7 millio n relating to the write-off o f
no nusable Eagle pro perties, $1.5 millio n fo r severance o bligatio ns
to fo rmer Eagle executives, and $7.2 millio n in direct merger co sts
such as acco unting, legal, investment banking and o ther miscella-
neo us fees.
NOTE 3 > I NVESTMENTS
The Co mpany’s investment securities are classified as available-fo r-
sale. The amortized co st, gro ss unrealized ho lding gains and lo ss-
es and fair values of the investments at February 1, 2002 and
February 2, 2001 are as fo llo ws:
February 1, 2002
Gro ss Gro ss
( In Tho usands) Amo rtized Unrealized Unre alized Fair
Type Co st Gains Lo sse s Value
Municipal Obligatio ns $ 8,664 $ 104 –$ 8,768
Money Market Preferred Sto ck 40,000 ––40,000
Co rpo rate No tes 4, 952 166 –5,118
Federal Agency No te 500 3 –503
Classified as Short-Term 54,116 273 –54,389
Municipal Obligatio ns 15, 980 488 –16,468
Co rpo rate No tes 4, 891 300 –5,192
Classified as Long-Term 20,871 788 –21,660
Total $74,987 $1,061 –$76,049
February 2, 2001
Gro ss Gro ss
( In Tho usands) Amo rtized Unrealized Unre alized Fair
Type Co st Gains Lo sse s Value
Municipal Obligatio ns $ 12,836 $ 51 $16 $ 12,871
Classified as Short-Term 12,836 51 16 12,871
Municipal Obligatio ns 23, 800 276 1 24,075
Federal Agency No te 500 10 –510
Co rpo rate No tes 9, 756 349 –10,105
Classified as Long-Term 34,056 635 1 34,690
Total $46,892 $686 $17 $47,561
The proc eeds fro m sales of available-fo r-sale securities were
$1.0, $8.6 and $17.1 millio n fo r 2001, 2000 and 1999, respec -
tively. Gro ss realized gains and lo sses o n the sale o f available- fo r-
sale securities were no t significant fo r any of the perio ds present-
ed. The municipal o blig atio ns and co rpo rate no tes classified as
lo ng- term at February 1, 2002 will mature in o ne to five years.
NOTE 4 > PROPERTY AND
ACCUMULATED DEPRECI ATI ON
Pro perty is summarized below by majo r class:
February 1, February 2,
( In Tho usands) 2002 20 01
Co st:
Land $2,622,803 $2,150,206
Buildings 4, 276,713 3,465, 163
Sto re, Distributio n and Office Equipment 3,106,099 2,623,822
Leaseho ld Impro vements 626,737 389,140
Total Cost 10,632,352 8,628,331
Accumulated De preciatio n and Amo rtizatio n ( 1,978,913) (1,593, 371)
Net Property $8,653,439 $7,034,960
The estimated depreciable lives, in years, o f the Co mpany’s
property are: buildings, 20 to 40; sto re, distributio n and o ffice
equipment, 3 to 10; leaseho ld impro vements, generally the life of
the related lease.
Net property includes $460.9 and $454.4 million in assets under
capital leases at February 1, 2002 and February 2, 2001, respec-
tively.
NOTE 5 > I MPAI RMENT AND
STORE CLOSI NG COSTS
When the Company’s management makes the decisio n to c lo se o r
relo cate a sto re, the carrying value of the related assets is evalu-
ated in relatio n to their expected future cash flo ws. Lo sses related
to impairment o f lo ng- lived assets to be dispo sed o f are reco gnized
when the expected future cash flo ws are less than the assets’ car-
rying value. If the carrying value o f the assets is greater than the
expected future cash flo ws, a pro vision is made fo r the impairment
of the assets based o n the excess of carrying value o ver fair value.
The fair value o f the assets is generally based o n internal o r exter-
nal appraisals and the Co mpany’s histo rical experience. Pro visions
fo r impairment and sto re clo sing co sts are included in selling, gen-
eral and administrative expenses.
The carrying amo unt o f clo sed sto re real estate is included in
o ther assets and amo unted to $81.6 and $76.4 millio n at February 1,
2002 and February 2, 2001, respectively.
When leased lo catio ns are clo sed o r beco me impaired, a liabil-
ity is reco gnized fo r the net present value of future lease o bliga-