Lowe's 2004 Annual Report Download - page 43

Lowe’s 2004 Annual Report Page 41
The tax effect of cumulative temporary differences that gave rise to
the deferred tax assets and liabilities at January 28, 2005, and January
30, 2004, is as follows:
January 28, 2005
(In Millions) Assets Liabilities Total
Excess Property and
Store Closing Costs $ 19 $ – $ 19
Self-Insurance 37 – 37
Depreciation – (776) (776)
Rent 26 – 26
Vacation Accrual 7 – 7
Allowance for Sales Returns 43 – 43
Stock-Based Compensation
Expense 28 – 28
Other, Net 19 (44) (25)
Total $ 179 $ (820) $ (641)
January 30, 2004
(In Millions) Assets Liabilities Total
Excess Property and
Store Closing Costs $ 22 $ – $ 22
Self-Insurance 31 – 31
Depreciation – (625) (625)
Rent 13 – 13
Vacation Accrual 5 – 5
Allowance for Sales Returns 32 – 32
Stock-Based Compensation
Expense 2 – 2
Other, Net 17 (29) (12)
Total $ 122 $ (654) $ (532)
Given the consistent profitability of past operations, the Company
believes that the deferred tax assets will be recovered and that no
valuation allowance is necessary.
The tax balances and income tax expense recognized by the
Company are based on management’s interpretation of the current tax
laws of multiple tax jurisdictions. Income tax expense reflects the
Company’s best estimates and assumptions regarding the level of
future taxable income and interpretation of current tax laws.
Tax authorities periodically audit the Company’s income tax
returns. These audits include a review of the Company’s tax filing
positions, including the timing and amount of income and deductions
in various tax jurisdictions. In evaluating liabilities associated with its
various tax filing positions, the Company has accrued for probable lia-
bilities resulting from tax assessments by tax authorities. The amounts
accrued were not material to the Company’s consolidated financial
statements in any of the years presented.
NOTE 16 Commitments and
contingencies
The Company is a defendant in legal proceedings considered to be in
the normal course of business, none of which, singularly or collective-
ly, are believed to have a risk of having a material impact on the
Company’s financial statements. In evaluating liabilities associated
with its various legal proceedings, the Company has accrued for prob-
able liabilities associated with these matters. The amounts accrued
were not material to the Company’s consolidated financial statements
in any of the years presented.
As of January 28, 2005, the Company had non-cancelable commit-
ments related to purchases of property and construction of buildings,
as well as commitments related to certain marketing and information
technology programs of $450 million. Payments under these commit-
ments are scheduled to be made as follows: 2005, $377 million; 2006,
$34 million; 2007, $22 million; 2008, $6 million; 2009, $2 million;
thereafter, $9 million.
NOTE 17 Other information
Net interest expense is comprised of the following:
(In Millions) 2004 2003 2002
Long-Term Debt $ 159 $ 162 $ 163
Mortgage Interest 3 4 5
Capitalized Leases 38 39 40
Short-Term Debt – – 1
Amortization of Original Issue
Discount and Loan Costs 20 19 19
Interest Income (16) (18) (21)
Interest Capitalized (28) (26) (25)
Net Interest Expense $ 176 $ 180 $ 182
Supplemental Disclosures of Cash Flow Information:
(In Millions) 2004 2003 2002
Cash Paid for Interest
(Net of Amount Capitalized) $ 174 $ 179 $ 186
Cash Paid for Income Taxes $ 1,192 $ 926 $ 695
Noncash Investing and Financing Activities:
Noncash Fixed Asset Acquisitions,
Including Assets Acquired Under
Capital Lease $ 133 $ 102 $ 39
Common Stock Issued to ESOP – – 79
Notes Received in Exchange for Sale
of Real Estate $ – $ – $ 4