Lowe's 2001 Annual Report Download - page 38

Lo we’s Co mpanies, Inc. 36
The fair value o f each o ptio n grant is estimated o n the date o f
grant using the Black-Scho les o ptio n- pricing mo del with the
assumptio ns listed belo w.
2001 2000 1999
Weighted average fair value per option $ 17.39 $ 11.57 $ 13.03
Assumptio ns used:
Weig hted ave rage expected vo latility 41.1% 37.7% 38.1%
Weig hted ave rage expected dividend yield 0. 23% 0.41% 0.52%
Weig hted ave rage risk-free interest rate 4. 58% 5.15% 6.24%
Weig hted ave rage expected life, in years 7.0 7.0 7.0
The Co mpany repo rts co mprehensive inco me in its co nso lidated
statement o f shareho lders’ equity. Co mprehensive inco me repre-
sents changes in shareholders’ equity fro m no n- o wner so urces. Fo r
the three years ended February 1, 2002, unrealized ho lding gains
( lo sses) o n available-fo r-sale securities were the o nly items of
o ther co mprehensive inco me fo r the Co mpany. The fo llo wing
schedule summarizes the activity in o ther co mprehensive inco me
fo r the years ended February 1, 2002 and February 2, 2001:
2001 2000
––– ––– – ––– – ––– – ––– ––– – ––– – ––– –––– ––– – ––– – ––– –––– ––– – ––– – ––– –––– ––– – ––– – ––– – –––– ––– – ––– – ––– ––– – ––– – ––– – ––– ––– – ––– – ––– – ––– ––– – ––– – ––– –
After
Pre-Tax Tax Tax After
Gain ( Expe nse) / Gain/ Pre - Tax Tax Tax
( In Tho usands) ( Lo ss) Be nefit ( Lo ss) Gain Expense Gain
Unrealize d net
ho lding gains/
lo sses arising
during the year $353 $( 124) $229 $1,319 $( 445) $874
Less: Rec lassificatio n
adjustment fo r
gains/ lo sses inc luded
in net earnings ( 16) 6 ( 10) 5 (2) 3
Unrealized net
gains/ losses on
available-for-sale
securities, net of
reclassification
adjustment $369 $( 130) $239 $1,314 $( 443) $871
NOTE 11 > LEASES
The Co mpany leases certain sto re facilities under ag reements with
o riginal terms generally of 20 years. Certain lease agreements co n-
tain rent escalatio n clauses that are c harged to rent expense o n a
straight- line basis. Some agreements also pro vide fo r co ntingent
rental based o n sales perfo rmance in excess o f specified minimums.
In fiscal years 2001, 2000, and 1999, co ntingent rentals have been
no minal. The leases usually co ntain provisio ns fo r fo ur renewal
o ptio ns o f five years each. Certain equipment is also leased by the
Co mpany under agreements ranging fro m two to five years. These
agreements typically co ntain renewal o ptio ns pro viding fo r a rene-
go tiatio n o f the lease, at the Co mpany’s o ptio n, based o n the fair
market value at that time.
The future minimum rental payments required under capital and
o perating leases having initial o r remaining noncancelable lease
terms in excess of o ne year are summarized as fo llo ws:
( In Tho usands) Operat ing Leases Capital Leases
––– ––– – ––– – ––– – ––– ––– – ––– – ––– –––– ––– – ––– – ––– –––– ––– – ––– – –– –– –––– ––– – ––– – ––– –––– ––– – ––– – ––– ––– – ––– – ––– – ––– ––– – ––
Fiscal Ye ar Real Estate Equipment Real Estate Equipment To tal
2002 $ 187, 276 $ 429 $ 56,842 $ 2,503 $ 247,050
2003 192,328 41 56, 795 2,303 251,467
2004 186,976 4 56,978 1,944 245,902
2005 181,349 –56,993 182 238,524
2006 177,237 –56,993 42 234, 272
Later Years 2, 065,727 –559,958 –2, 625,685
Total Minimum
Lease
Payments $2,990,893 $474 $844,559 $6,974 $3,842,900
Total Minimum
Capital Lease
Payments $ 851,533
Less Amo unt
Re presenting Inte rest 384,777
Present Value of Minimum
Lease Payments 466,756
Less Current Maturities 18,938
Present Value of Minimum
Lease Payments,
Less Current Maturities $ 447,818
Rental expenses under o perating leases fo r real estate and
equipment were $188.2, $161.9 and $144.0 millio n in 2001, 2000
and 1999, respectively.
The Co mpany has three o perating lease agreements whereby
lesso rs have co mmitted to purchase land, fund c o nstructio n co sts
and lease pro perties to the Co mpany. The initial lease terms are five
years with two five-year renewal o ptio ns. One initial term expires
in 2005 and the two remaining initial lease terms expire in 2006.
The agreements co ntain guaranteed residual values up to a po rtio n
of the properties’ o riginal co st and purchase o ptio ns at o riginal co st
fo r all pro perties under the agreements. The agreements co ntain
certain restrictive co venants which include maintenance of specif-
ic financial ratio s, amo ng o thers. The Co mpany has financed fo ur
regio nal distributio n c enters, two o f which are under co nstructio n,
and 14 retail sto res thro ugh these lease agreements. To tal co m-
mitments under these o perating lease agreements as o f February 1,
2002 and February 2, 2001 were $329.4 and $236.1 millio n, respec-