Lowe's 2004 Annual Report Download

Download and view the complete annual report

Please find the complete 2004 Lowe's annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 52

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52

Table of contents

  • Page 1

  • Page 2

  • Page 3
    ... Commercial Business Customers each week through 1,087 stores in 48 states. Lowe's is the world's second largest home improvement retailer and the 11th largest retailer in the U.S. »» Lowe's expansion continues, opening a new store on average every three days. The company's expansion plans include...

  • Page 4
    ... in Notes 1 and 11 to the consolidated financial statements. ** Sales figures are from continuing operations and exclude sales from Contractor Yard locations, which were sold in 2003. *** Basis points Sales Growth IN BILLIONS OF DOLLARS 35 Earnings Growth IN MILLIONS OF DOLLARS 2,200 2,000...

  • Page 5
    ... Installed Sales, Special Order Sales, and our focus on Commercial Business Customers. First, our Installed Sales business continues its rapid growth. Although we have installed products like kitchen cabinets, flooring, doors and windows for years, we completed the rollout of our new installed sales...

  • Page 6
    ... comp sales in 15 of 18 merchandising categories. We are encouraged by the fact that our business with this customer segment is growing across the store, not just in lumber and building materials. Increased convenience combined with great products, competitive prices and great customer service is...

  • Page 7
    ...the average Lowe's only had approximately 10,000 square feet of retail selling space, and more than 80 percent of our sales were lumber and building materials. While Lowe's had enjoyed a successful first four decades, by the mid '80s our customers and competitors were changing and the company needed...

  • Page 8
    ...across all regions. In our highly fragmented marketplace, where Lowe's and its largest competitor hold approximately 20 percent share of U.S. sales, our opportunity for growth remains robust. We are expanding at the rate of more than one new store every three days, Page 6 Lowe's 2004 Annual Report

  • Page 9
    ... help us stock each store with the market-specific products our customers want, maximizing sales and leveraging our inventory investment. Our commitment to new technology, on our stores' sales floor and in the back office, makes the shopping process easier for our customers and drives operational...

  • Page 10

  • Page 11
    ...them, each Lowe's store has professional-grade products, job-lot quantities and a commercial services desk staffed with knowledgeable employees. We also offer phone and fax-ahead ordering to help our Commercial Business Customers get what they need quickly at prices they expect from their partner in...

  • Page 12
    ... future store sites, Lowe's can profitably meet our customers' large metro markets to small markets needs from across the nation. In 2004, customers in Minneapolis, Milwaukee, Brooklyn and Brunswick, Maine, welcomed Lowe's to their communities for the first time. In total, we opened 140 new stores...

  • Page 13
    ...beginning our national expansion. Our regional distribution centers (RDC) are designed to serve our current stores and future expansion and meet the needs of each store's unique customer base. Each RDC is approximately one million square feet, about the size of 28 football fields. These state-of-the...

  • Page 14

  • Page 15
    ... our new installed sales model in each of our stores. The new model separates the product selling function from the installation project management, allowing our employees to concentrate on working with customers in the store, while an installed sales specialist becomes a customer's dedicated point...

  • Page 16
    ... we provide instill confidence, and our customers feel comfortable shopping in our wide aisles and well-lit stores. And our everyday low prices keep them coming back to Lowe's time after time. We added great new products and merchandising sets during 2004 that continued to enhance our offering to...

  • Page 17
    ... The new system empowers our employees with greater visibility of available inventory thanks to our dedicated SOS Express distribution center, allowing them to give customers immediate product availability information, firm expectations for delivery and faster fulfillment. Lowe's 2004 Annual Report...

  • Page 18

  • Page 19
    ... their hard work and for making customer ser vice a focus in each of our stores. We are also thankful for their continued generosity in their gifts of time and financial suppor t to enhance the communities where we do business and help those in need. Our focus on investing in the future of our...

  • Page 20
    ... and commercial business. In accordance with Statement of Financial Accounting Standards (SFAS) No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," we have reported the results of operations of the Contractor Yards in discontinued operations for fiscal years 2003 and 2002...

  • Page 21
    ... store commercial sales increases of twice the company average in fiscal 2004. Merchandising and Marketing Our key merchandising opportunities relate to appropriate product line design, branding and the use of imports. Product Line Design - We are focused on offering a rational mix of opening price...

  • Page 22
    ... assets business for a variety of reasons, including purchase-volume-related discounts and rebates, advertising allowances, reimbursements for third-party in-store service related costs, defective merchandise allowances and reimbursements for selling expenses and display costs. We use projected...

  • Page 23
    ... comparable store sales increases for every product category and all geographic regions due in part to the implementation of our merchandising and operations strategies previously discussed. Our specialty sales initiatives, which include Installed Sales, SOS and Commercial Business Customer sales...

  • Page 24
    ... category due to operational and merchandising initiatives implemented in 2003. During fiscal 2003, we experienced our strongest sales increases in lumber, building materials, outdoor power equipment, major appliances, paint, flooring and home organization. In addition, millwork, hardware...

  • Page 25
    ... of lumber, building materials and other long-length items. We expect to open three additional flatbed distribution centers in 2005. We believe that funds from operations and funds available from our credit facilities will be adequate to finance our expansion plans and other operating requirements...

  • Page 26
    ... buildings, as well as commitments related to certain marketing and information technology programs. 2 Letters of credit are issued for insurance programs, the purchase of import merchandise inventories and real estate and construction contracts. 2004 2005 2006 2007 2008 Thereafter Total Fair Value...

  • Page 27
    ...number of new housing starts, the level of repairs, remodeling and additions to existing homes, commercial building activity, and the availability and cost of financing. An economic downturn can impact sales because much of our inventory is purchased by our customers for their discretionary projects...

  • Page 28
    ... OF LOWE'S COMPANIES, INC. // MOORESVILLE, NORTH CAROLINA We have audited the accompanying consolidated balance sheets of Lowe's Companies, Inc. and subsidiaries (the "Company") as of January 28, 2005 and January 30, 2004, and the related consolidated statements of earnings, shareholders' equity...

  • Page 29
    Lowe's Companies, Inc. Consolidated Statements of Earnings (In Millions, Except Per Share and Percentage Data) Years Ended on January 28, 2005 % Sales January 30, 2004 As Restated (Note 2) % Sales January 31, 2003 As Restated (Note 2) % Sales Net Sales Cost of Sales Gross Margin Expenses: Selling, ...

  • Page 30
    ... Balance Sheets (In Millions, Except Par Value and Percentage Data) January 28, 2005 % Total January 30, 2004 As Restated (Note 2) % Total Assets Current Assets: Cash and Cash Equivalents (Note 1) Short-Term Investments (Note 4) Accounts Receivable - Net (Notes 1 and 5) Merchandise Inventory...

  • Page 31
    ...'s Companies, Inc. Consolidated Statements of Shareholders' Equity Common Stock Shares Amount Capital in Excess of Par Value Retained Earnings Accumulated Other Comprehensive Income Total Shareholders' Equity (In Millions) Balance February 1, 2002, As Restated (Note 2) Comprehensive Income: Net...

  • Page 32
    ... of Fixed and Other Assets Stock-Based Compensation Expense Tax Effect of Stock Options Exercised Changes in Operating Assets and Liabilities: Accounts Receivable - Net Merchandise Inventory Other Operating Assets Accounts Payable Other Operating Liabilities Net Cash Provided by Operating Activities...

  • Page 33
    ... The preparation of the Company's financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates that affect the reported amounts of assets, liabilities, sales and expenses and related disclosures of contingent...

  • Page 34
    ... and these amounts are included in other current liabilities in the accompanying consolidated balance sheets. Extended Warranties Beginning in 2003, Lowe's began selling separately priced extended warranty contracts under a new Lowe's-branded program for which the Company is the primary obligor. The...

  • Page 35
    ... shipment of products to customers by third parties in cost of sales. Shipping and handling costs, which include salaries and vehicle operations expenses relating to the delivery of products to customers by the Company, are classified as SG&A expenses. Shipping and Lowe's 2004 Annual Report Page 33

  • Page 36
    ...statements. The impact on previously reported net earnings of these other adjustments resulted in a decrease of $18 million and an increase of $38 million for fiscal years 2003 and 2002, respectively. The following tables summarize the effects of the restatement on the Company's consolidated balance...

  • Page 37
    ...on Sale of Contractor Yards Income Tax Provision Earnings from Discontinued Operations, Net of Tax $ 425 20 5 10 $ 15 $ 379 20 - 8 $ 12 Consolidated Statement of Earnings Year Ended On (In Millions, Except Per Share Data) January 31, 2003 As Previously Reported Adjustments January 31, 2003...

  • Page 38
    ...the parties, GE also purchases at face value new commercial business accounts receivable originated by the Company and services these accounts. These receivables arise primarily from sales of goods and services to the Company's Commercial Business Customers. The Company accounts for the transfers as...

  • Page 39
    ... 24 Long-Term Debt, Excluding Current Maturities 1 Real properties with an aggregate book value of $ 3,060 $ 3,678 Balance at February 1, 2002 Accrual for Store Closing Costs Lease Payments, Net of Sublease Income Balance at January 31, 2003 Accrual for Store Closing Costs Lease Payments, Net of...

  • Page 40
    ... 2003 2002 NOTE 10 Financial instruments Cash and cash equivalents, accounts receivable, short-term borrowings, trade accounts payable and accrued liabilities are reflected in the financial statements at cost which approximates fair value. Short and long-term investments, classified as available...

  • Page 41
    ... to the fair market value of the Company's common stock on the date of grant. Stock option information related to the Directors' Stock Option Plan is summarized as follows: Directors' Stock Option Plans Shares (In Thousands) Weighted-Average Exercise Price Per Share Outstanding at February 1, 2002...

  • Page 42
    ... 20 or more years of service, who have an Employee Stock Ownership Plan carryforward account balance within the 401(k) Plan, can elect to receive a one-time, in-service distribution of 50% of this account balance. The Company maintains a Benefit Restoration Plan (BRP) to provide benefits in addition...

  • Page 43
    ...179 $ 926 $ 186 $ 695 Noncash Investing and Financing Activities: Noncash Fixed Asset Acquisitions, Including Assets Acquired Under Capital Lease $ 133 Common Stock Issued to ESOP - Notes Received in Exchange for Sale of Real Estate $ - $ 102 - $ - $ 39 79 $ 4 Lowe's 2004 Annual Report Page 41

  • Page 44
    ... to the consolidated financial statements. 3 Certain amounts have been reclassified to conform to current classifications. 4 Amounts have been adjusted to reflect the implementation of EITF 04-8 discussed in Notes 1 and 11 to the consolidated financial statements. Page 42 Lowe's 2004 Annual Report

  • Page 45
    ... 2003 2002 2004 2003 2002 Product Category Total Sales % Total Sales % Total Sales % Product Category Total Sales % Total Sales % Total Sales % Appliances Lumber Seasonal Living Millwork Flooring Paint Nursery Tools Fashion Plumbing Lighting Building Materials...

  • Page 46
    ... 0.020 0.020 0.020 $ 0.025 120 240 480 * Adjusted for 2-for-1 stock split to shareholders of record on June 8, 2001, as applicable. Monthly Stock Price and Trading Volume Fiscal 2004 Shares Traded Fiscal 2003 Shares Traded High Low High Low February March April May June July August September...

  • Page 47
    ... $ Earnings Statement Changes - Changes from same quarter previous year, to nearest tenth percent Quarter Ended 1/28/05 Fiscal 2004 10/29/04 7/30/04 4/30/04 1/30/04 Fiscal 2003 10/31/03 8/1/03 5/2/03 Net Sales Gross Margin Expenses: SG&A Store Opening Costs Depreciation Interest Total Expenses Pre...

  • Page 48
    ...Ratios 1 21 Asset Turnover 4 22 Return on Sales 5 23 Return on Assets6 24 Return on Shareholders' Equity7 Comparative Balance Sheets (In Millions)1,8 25 Total Current Assets 26 Cash and Short-Term Investments 27 Accounts Receivable-Net 28 Merchandise Inventory 29 Other Current Assets 30 Fixed Assets...

  • Page 49
    ... per share amounts herein have been adjusted to reflect the implementation of EITF 04-8 during fiscal 2004, discussed in Notes 1 and 11 to the consolidated financial statements. herein reflect the Contractor Yards as a discontinued operation. Sales divided by Beginning Assets. on Sales: Net Earnings...

  • Page 50
    ... Merchandising Manager - Building Products Senior Vice President and Chief Information Officer Senior Vice President, Store Operations - West Gregory M. Bridgeford Executive Vice President - Business Development Robert F. Hull, Jr. Joseph M. Mabry, Jr. Executive Vice President and Chief Financial...

  • Page 51
    ... Responsibility Report, as well as other financial information. Written copies are available to shareholders on request. Lowe's and the gable design are registered trademarks of LF, LLC. Corporate Offices 1000 Lowe's Boulevard Mooresville, NC 28117 704-758-1000 Lowe's Website www.Lowes.com Stock...

  • Page 52
    Lowe's Companies, Inc. 1000 Lowe's Boulevard Mooresville, NC 28117 www.Lowes.com LOWES-AR-05