Lowe's 2001 Annual Report Download - page 36

Lo we’s Co mpanies, Inc. 34
NOTE 9 > EARNI NGS PER SHARE
Basic earning s per share ( EPS) excludes dilutio n and is co mputed
by dividing net earnings by the weighted- average number o f co m-
mo n shares o utstanding fo r the perio d. Diluted earnings per share
is calculated based o n the weighted average shares o f c o mmo n
sto ck as adjusted fo r the po tential dilutive effect of sto ck o ptio ns
and applicable co nvertible no tes as o f the balance sheet date. The
effect of the assumed co nversio n o f the $580.7 millio n Senio r
Co nvertible No tes, issued in Octo ber 2001, has been excluded fro m
diluted earnings per share fo r the year ended February 1, 2002
because none o f the co nditions that wo uld permit co nversio n had
been satisfied during the perio d ( see No te 7) . Fo llo wing is the rec-
o nciliatio n of EPS fo r 2001, 2000, and 1999.
( In Tho usands, Exce pt Per Share Data) 200 1 2000 1999
Basic Earnings per Share:
Net Earnings $ 1,023,262 $ 809,871 $ 672,795
Weig hted Average Shares
Outstanding 772,098 765,596 762,480
Basic Earning s per Share $ 1.33 $ $1.06 $ 0.88
Diluted Earnings per Share:
Net Earnings $ 1,023,262 $ 809,871 $ 672,795
Net Earnings Adjustment fo r
Interest o n Co nvertible De bt
Net o f Tax 9, 315 ––
Net Earnings, as Adjusted $ 1,032,577 $ 809,871 $ 672,795
Weig hted Average Shares
Outstanding 772,098 765,596 762,480
Dilutive Effect of Sto c k Options 6,559 3, 354 5,228
Dilutive Effect of Co nvertible Debt 15, 940 ––
Weighted Average Shares,
as Adjusted 794,597 768,950 767,708
Diluted Earnings per Share $ 1.30 $ 1.05 $ 0.88
NOTE 10 > SHAREHOLDERS’ EQUI TY
Autho rized shares o f co mmo n sto ck were 2.8 billio n at February 1,
2002 and February 2, 2001.
The Co mpany has five millio n autho rized shares of preferred
sto ck ( $5 par) , no ne of whic h have been issued. The Bo ard of
Directo rs may issue the preferred sto ck ( witho ut actio n by share-
ho lders) in o ne o r mo re series, having such vo ting rights, dividend
and liquidatio n preferences and such co nversio n and o ther rights as
may be designated by the Bo ard of Directo rs at the time o f issuance.
The Co mpany has a shareho lder rights plan, which pro vides fo r
a distributio n of 0.5 preferred share purchase rights o n each o ut-
standing share o f co mmo n sto ck. Purchase rights beco me distrib-
utable and exerc isable o nly if a perso n o r group acquires o r co m-
mences a tender offer fo r 15% o r mo re o f Lo we’s co mmo n sto ck.
Once exercisable, each 0.5 purchase right will entitle shareholders
( o ther than the acquiring perso n o r gro up) to buy o ne unit of a
series of preferred sto ck fo r $76.25; the price of the unit to the
acquiring perso n o r gro up in such event wo uld be $152.50. Each
unit is intended to be the eco no mic equivalent of o ne share of
co mmo n sto ck, and the plan was ado pted to act as a deterrent to
unso licited offers to acquire co ntro l of the Co mpany. The rights will
expire in 2008, unless the Co mpany redeems o r exchanges them
earlier.
The Co mpany has three sto ck incentive plans, referred to as the
“2001,” “1997, ” and “1994” Incentive Plans, under which incen-
tive and no n- qualified sto ck o ptio ns may be granted to key
emplo yees. No awards may be granted after 2011 under the 2001
plan, 2007 under the 1997 plan, and 2004 under the 1994 plan.
Sto ck o ptio ns generally have terms ranging fro m 5 to 10 years,
no rmally vest evenly o ver three years, and are assigned an exercise
price o f no t less than the fair market value o n the date o f grant.
At February 1, 2002, there were 25,844,880, 1,515,486, and
1,393,750 shares available fo r grants under the 2001, 1997, and
1994 plans, respectively.
Sto ck o ptio n info rmatio n related to the 2001, 1997, and 1994
Incentive Plans is summarized as fo llo ws: