Lowe's 2001 Annual Report Download - page 39

Lo we’s Co mpanies, Inc.
37
tively. Outstanding advances under tho se co mmitments were
$201.1 and $167.7 millio n as o f February 1, 2002 and February 2,
2001. Payments related to these lease agreements have been
included in the minimum lease payments table abo ve.
NOTE 12 > EMPLOYEE RETI REMENT PLANS
The Co mpany's co ntributio n to its Emplo yee Sto ck Ownership Plan
( ESOP) is based o n a minimum co ntributio n that may be increased
based o n the attainment o f c ertain perfo rmance measures which
are subject to appro val by the Bo ard o f Directo rs. The ESOP gener-
ally co vers all Lowe's employees after co mpletion of o ne year o f
emplo yment and 1,000 ho urs of service during that year, with co n-
tributio ns vesting ratably o ver seven years. Emplo yees participat-
ing in the Plan, who are age 50 o r o lder with 10 o r mo re years of
servic e, are provided with a diversification o ptio n allo wing them to
transfer 50% of their shares in the Plan to the Co mpany’s 401( k)
Plan. Participating emplo yees, with at least 20 years of service,
may also elect to receive a o ne- time withdrawal of 50% o f their
balance. Once a participant reaches age 59 1/ 2, with seven o r more
years of service, they may elect to have their entire acco unt bal-
ance distributed to them. Co ntributio ns are allo cated to partic i-
pants based o n their eligible co mpensatio n relative to to tal eligi-
ble co mpensatio n. Co ntributio ns may be made in cash o r shares of
the Co mpany’s co mmo n sto ck and are usually made in the fo llo w-
ing year. ESOP expense fo r 2001, 2000 and 1999 was $119.2, $72.1
and $84.7 millio n, respectively. At February 1, 2002 the ESOP held
appro ximately 6.2% o f the o utstanding c o mmo n sto ck o f the
Co mpany. Co mpany shares held o n the participants behalf by the
Plan are vo ted by the participants.
The Co mpany’s co ntributio ns to the 401( k) plan are based upo n
a matching fo rmula applied to emplo yee co ntributio ns. Emplo yees
are eligible to participate in the 401( k) plan after co mpleting 90
days of co ntinuo us service. The Co mpany’s co ntributio ns to the
401( k) plan vest immediately in the participant’s acco unt. Co mpany
co ntributio ns to the 401( k) fo r 2001, 2000 and 1999 were $14.7,
$13.6 and $11.5 millio n, respectively. Participants are allo wed to
cho o se fro m a gro up of mutual funds in o rder to designate how bo th
emplo yer and emplo yee co ntributio ns are to be invested. The
Co mpany's co mmo n sto ck is also o ne o f the investment o ptio ns fo r
co ntributio ns to the plan. Co mpany shares held o n the participants
behalf by the Plan are voted by the participants.
NOTE 13 > I NCOME TAXES
2001 2000 1999
Statutory Rate Reconciliation
Statuto ry Fe deral Inco me Tax Rate 35.0% 35. 0% 35.0%
State Inco me Taxes—Net o f Federal
Tax Benefit 3. 0 2. 7 2.8
Other, Net ( 1. 0) ( 0.9) ( 1.1)
Effective Tax Rate 37.0% 36.8% 36.7%
( In Tho usands) Components of I ncome Tax Provision
Current
Federal $490,569 $398,335 $333,257
State 68,762 49,950 43,626
Total Current 559,331 448,285 376,883
Deferred
Federal 35,120 19,298 11,303
State 6, 538 3,986 2, 136
Total Deferred 41,658 23,284 13,439
Total I ncome Tax Provision $600,989 $471,569 $390,322
The tax effect of cumulative tempo rary differences that gave
rise to the deferred tax assets and liabilities at February 1, 2002
and February 2, 2001 is as fo llo ws ( in tho usands) :
February 1, 2002
( In Tho usands) Asse ts Liabilities To tal
Exce ss Pro perty and
Sto re Clo sing Co sts $ 27,856 –$ 27,856
Insurance 62,885 –62,885
De pre ciatio n –$ ( 33 0, 888 ) ( 33 0, 888 )
Vacatio n Acc rual 27, 160 –27,160
Sales Re turns 8,397 –8, 397
Other, Net 12,282 ( 19,885) (7,603)
Total $138,580 $ ( 350,773) $ ( 212,193)
February 2, 2001
( In Tho usands) Asse ts Liabilities To tal
Exce ss Pro perty and
Sto re Clo sing Co sts $ 20,879 –$ 20,879
Insurance 45,228 –45,228
De pre ciatio n –$ ( 27 2, 170 ) ( 27 2, 170 )
Vacatio n Acc rual 23, 220 –23,220
Sales Re turns 6,467 –6, 467
Other, Net 19,492 ( 13,522) 5,970
Total $115,286 $ ( 285,692) $ ( 170,406)