Lowe's 2005 Annual Report Download

Download and view the complete annual report

Please find the complete 2005 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

What฀Does฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀฀Have฀In฀Common฀With฀This฀Home?
2005฀ANNUAL฀REPORT

Table of contents

  • Page 1
    What฀Does Have฀In฀Common฀With฀This฀Home? 2005฀ANNUAL฀REPORT

  • Page 2
    ...and Commercial Business Customers each week through 1,234 stores in 49 states. Lowe's is the world's second-largest home improvement retailer and the 7th largest retailer in the U.S. Based in Mooresville, N.C., the 60-year-old company employs more than 185,000 people. Lowe's has been a publicly held...

  • Page 3
    A Solid Foundation...Room To Grow...And Endless Opportunities For Improvement. Whether it's our stores or your home, there's always opportunity for improvement. This continuous drive for improvement is what defines Lowe's as a retailer and as an organization.

  • Page 4
    ... closely with our vendor partners to add new products that inspire customers to improve their homes. Recent additions to our merchandising assortment include the introduction of Samsung high-efficiency digital kitchen appliances to our strong appliance offering and the addition of John Deere mowers...

  • Page 5
    ... meet customers' needs, and we're confident these programs will help drive our future performance. As a result, we recently created a new position, senior vice president of specialty sales, responsible for defining the strategies to grow our installed, special order and commercial sales businesses...

  • Page 6
    ... strategy give us confidence in our continued success. As we have been for the past 60 years, Lowe's is ready for the opportunities ahead. By anticipating consumers' needs, we will continue to operate great stores with the products, services, and solutions to help our customers create great homes...

  • Page 7
    ... into a room and see a new project, and we can look at our stores and envision an even better layout. It's why a homeowner asks 20 friends to weigh in on a paint color, and we ask millions of customers how we can serve them better... Working together, we are building great stores and great homes.

  • Page 8
    People Who Share

  • Page 9
    ... 12 million customers shopping our stores each week. Our 185,000 employees receive ongoing training to enhance their customer service skills and product knowledge. In addition, great benefits and rewarding career opportunities help us attract the outstanding employees who make our success possible...

  • Page 10
    Great Curb Appeal

  • Page 11
    ...customers receive assistance when needed. In addition, our informative in-store signage and our continued expansion of self-checkout improves the shopping experience and saves time for customers. Our Rapid Response Replenishment (R3) centralized distribution initiative has made replenishing products...

  • Page 12
    Inspiring Décor TRANSFORM YOUR BATHROOM INTO A SPA RETREAT Our years of experience can help you sort through the numerous features, finishes and design options to assist you in creating a restful haven in your home. Visit www.Lowes.com/bath to learn the art and science of creating a bathroom ...

  • Page 13
    ... Therma-Tru, superior quality wood stains from Cabot and high-performance Zodiaq® countertops by DuPont, made with natural quartz for strength and beauty. In 2005, we enhanced our product lineup with the addition of John Deere riding and walk-behind mowers, and Samsung digital kitchen appliances...

  • Page 14
    Open Floor Plan TAKE A BREAK - LET US DO THE WORK Lowe's provides expertly managed installation services in more than 40 categories, with customer satisfaction guaranteed. To explore the range of do-it-for-me services we offer, visit www.Lowes.com/installation today. Installed Sales Special Order...

  • Page 15
    ... changing needs of customers. Driven by the growing number of customers looking to Lowe's for professional assistance and complete home improvement solutions, we remain focused on enhancing our "Big 3" initiatives of Installed Sales, Special Order Sales and Commercial Business Customer sales. These...

  • Page 16
    ...than ever by opening an additional 150 stores in great locations, bringing the total number of Lowe's home improvement centers to 1,234 in 49 states. With each new Lowe's store, we are increasing awareness of the Lowe's brand and winning more loyal customers. Our expansion opportunity remains robust...

  • Page 17
    ... to quiet reï¬,ections, a beautiful deck is the perfect setting for almost any occasion. Lowe's can help you expand outdoors using our deck design tool, available at www.Lowes.com/deck to help you envision, plan and build the deck of your dreams. G R E AT S T O R E S G R E AT H O M E S 15

  • Page 18
    ... to serve our communities, neighbors and customers in ways that reï¬,ect our strong corporate values and the generosity of our employees. WHERE WE STAND Whether it's helping a region recover from a disaster or preventing one at a local senior center by installing new smoke detectors, Lowe's is...

  • Page 19
    ...฀of฀Shareholders'฀Equity Consolidated฀Statements฀of฀Cash฀Flows Notes฀to฀Consolidated฀Financial฀Statements Selected฀Financial฀Data Stock฀Performance,฀Stock฀Splits฀ and฀Stock฀Dividends Quarterly฀Review฀of฀Performance 10-Year฀Financial฀History "I฀am...

  • Page 20
    ...,฀providing฀easy-to-use฀customer฀interfaces,฀integrated฀design฀tools,฀and฀electronic฀product฀catalogs.฀Employees฀utilized฀our฀electronic฀catalog฀program฀to฀process฀over฀70%฀of฀our฀Special฀Order฀ Sales฀last฀year.฀This฀allows฀us฀to...

  • Page 21
    ...฀opportunity฀to฀capture฀significant฀ market฀share฀from฀direct฀competitors฀and฀other฀sales฀channels฀for฀our฀products฀ and฀expanding฀service฀offering.฀More฀than฀35%฀of฀the฀400฀approved฀projects฀ for฀our฀future฀expansion฀are฀located...

  • Page 22
    ...฀course฀of฀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...

  • Page 23
    ...store฀expansion฀and฀relocation฀program฀and฀continued฀growth฀in฀our฀three฀specialty฀sales฀initiatives฀ were฀key฀drivers฀of฀our฀sales฀increase฀in฀2005.฀We฀opened฀150฀stores฀in฀ 2005,฀including฀three฀relocations,฀and฀ended฀the฀year...

  • Page 24
    ...our฀product฀offering,฀as฀well฀as฀our฀focus฀on฀our฀Installed฀Sales฀initiative,฀which฀plays฀a฀key฀role฀ in฀driving฀cabinets฀&฀countertop฀sales. ฀ Outdoor฀power฀equipment฀delivered฀a฀high฀single-digit฀comparable฀store฀ sales฀increase...

  • Page 25
    ...฀cabinets฀&฀countertops.฀Inï¬,ation฀in฀lumber฀and฀ building฀material฀prices฀during฀the฀year฀favorably฀impacted฀comparable฀store฀ sales฀by฀approximately฀150฀basis฀points.฀We฀experienced฀comparable฀store฀ sales฀increases฀in฀every฀product...

  • Page 26
    ...฀ centers.฀We฀expect฀to฀open฀additional฀RDCs฀in฀Rockford,฀Illinois฀and฀Lebanon,฀ Oregon฀in฀2007.฀In฀addition,฀we฀plan฀to฀expand฀three฀existing฀distribution฀centers฀in฀Valdosta,฀Georgia;฀Statesville,฀North฀Carolina;฀and฀North฀Vernon...

  • Page 27
    ...฀area฀maintenance฀or฀insurance. 2฀฀ Represents฀contracts฀for฀purchases฀of฀merchandise฀inventory,฀property฀and฀construction฀of฀buildings,฀as฀ well฀as฀commitments฀related฀to฀certain฀marketing฀and฀information฀technology฀programs. 3฀฀ Letters...

  • Page 28
    ...expansion฀strategy. •฀฀ Our฀business฀is฀highly฀competitive,฀and฀as฀we฀build฀an฀increasing฀percentage฀ of฀our฀new฀stores฀in฀larger฀markets฀and฀utilize฀new฀sales฀channels฀such฀the฀ Internet,฀we฀may฀face฀new฀and฀additional฀forms...

  • Page 29
    ...internal฀control฀over฀ financial฀reporting. Charlotte,฀North฀Carolina April฀6,฀2006 Report฀of฀Independent฀Registered฀Public฀Accounting฀Firm To฀the฀Board฀of฀Directors฀and฀Shareholders฀of฀Lowe's฀Companies,฀Inc.฀ Mooresville,฀North฀Carolina We...

  • Page 30
    ...฀millions,฀except฀per฀share฀and฀percentage฀data)฀ Years฀ended฀on฀ Net฀sales฀(Note฀1)฀ Cost฀of฀sales฀(Note฀1)฀ Gross฀margin฀ Expenses: Selling,฀general฀and฀administrative฀(Notes฀1฀and฀5)฀ Store฀opening฀costs฀(Note฀1)฀ Depreciation...

  • Page 31
    ...฀(Notes฀1฀and฀3)฀ ฀ Accounts฀receivable฀-฀net฀(Note฀1)฀ ฀ Merchandise฀inventory฀-฀net฀(Note฀1)฀ ฀ Deferred฀income฀taxes฀-฀net฀(Note฀13)฀ ฀ Other฀assets฀ ฀ Total฀current฀assets฀ ฀ Property,฀less฀accumulated฀depreciation...

  • Page 32
    Lowe's฀Companies,฀Inc. Consolidated฀Statements฀of฀Shareholders'฀Equity ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ ฀ (In฀millions)฀ ฀ ฀ ฀ Common฀Stock฀ Shares฀ Amount฀ ฀ Capital฀in฀ Excess฀of฀ Par฀Value฀ ฀ ฀ Retained฀ Earnings฀ ...

  • Page 33
    Lowe's฀Companies,฀Inc. Consolidated฀Statements฀of฀Cash฀Flows ฀ Years฀ended฀on฀ (In฀millions)฀ ฀ February...employee฀stock฀purchase฀plan฀ ฀ Proceeds฀from฀stock฀options฀exercised฀ ฀ Cash฀dividend฀payments฀ ฀ Repurchase฀of฀common฀stock...

  • Page 34
    ...฀to฀customers฀by฀GE.฀All฀credit฀program-related฀services฀are฀performed฀ and฀controlled฀directly฀by฀GE.฀The฀Company฀has฀the฀option,฀but฀no฀obligation,฀ to฀purchase฀the฀receivables฀at฀the฀end฀of฀the฀agreement฀in฀December฀2009...

  • Page 35
    ...the฀period฀that฀the฀related฀sales฀are฀ recorded.฀Revenues฀from฀product฀installation฀services฀are฀recognized฀when฀the฀ installation฀is฀completed.฀Deferred฀revenues฀associated฀with฀amounts฀received฀ for฀which฀customers฀have฀not฀yet฀taken...

  • Page 36
    ...The฀Company฀receives฀funds฀from฀vendors฀in฀the฀normal฀ ฀ course฀of฀business฀for฀a฀variety฀of฀reasons,฀including฀purchase-volume-related฀ discounts฀and฀rebates,฀advertising฀allowances,฀reimbursement฀for฀third-party฀ in-store฀service฀related...

  • Page 37
    ...the฀way฀the฀Company฀manages฀its฀business.฀This฀ is฀due฀to฀the฀fact฀that฀the฀Company's฀home฀improvement฀retail฀stores฀sell฀similar฀products฀and฀services฀that฀exhibit฀similar฀economic฀characteristics,฀use฀ similar฀processes฀in฀selling...

  • Page 38
    ...locations฀are฀closed,฀a฀liability฀is฀recognized฀for฀the฀fair฀ value฀of฀future฀contractual฀obligations,฀including฀property฀taxes,฀utilities,฀and฀ common฀area฀maintenance,฀net฀of฀anticipated฀sublease฀income.฀The฀charge฀ for฀store฀closing...

  • Page 39
    ...฀in฀July฀2009.฀This฀facility฀is฀available฀to฀support฀the฀Company's฀ $1฀billion฀commercial฀paper฀program฀and฀for฀direct฀borrowings.฀Borrowings฀are฀ priced฀based฀upon฀market฀conditions฀at฀the฀time฀of฀funding฀in฀accordance฀with...

  • Page 40
    ...in฀2005.฀The฀Company฀granted฀ restricted฀stock฀awards฀of฀346,000฀shares฀with฀a฀per฀share฀weighted฀average฀ fair฀value฀of฀$56.75฀in฀2004.฀The฀Company฀also฀granted฀deferred฀stock฀units,฀ which฀represent฀non-vested฀stock,฀of฀550,000...

  • Page 41
    ...฀seven฀years฀and฀were฀assigned฀a฀price฀equal฀to฀the฀fair฀market฀value฀of฀ the฀Company's฀common฀stock฀on฀the฀date฀of฀grant.฀Since฀the฀amendment,฀each฀ ฀ The฀Company฀maintains฀a฀qualified฀Employee฀Stock฀Purchase฀Plan฀(ESPP...

  • Page 42
    ...฀actively฀employed฀for฀reasons฀of฀ hardship.฀In฀addition,฀participants฀with฀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...

  • Page 43
    ...-cancelable฀commitments฀ related฀to฀purchases฀of฀merchandise฀inventory,฀property฀and฀construction฀of฀ buildings,฀as฀well฀as฀commitments฀related฀to฀certain฀marketing฀and฀information฀ technology฀programs฀of฀$1.6฀billion.฀Payments฀under฀these...

  • Page 44
    ... Net฀sales฀ ฀ ฀ Gross฀margin฀ ฀ Net฀earnings฀ ฀ Basic฀earnings฀per฀share฀ Diluted฀earnings฀per฀share฀ Note:฀The฀selected฀financial฀data฀has฀been฀adjusted฀to฀present฀the฀2003฀disposal฀of฀the฀Contractor฀Yards฀as฀a฀discontinued...

  • Page 45
    ... Fashion฀plumbing฀฀ Tools Lighting Seasonal฀living฀ ฀ Hardware Lawn฀&฀landscape฀products฀ Cabinets฀&฀countertops฀ Outdoor฀power฀equipment฀ Rough฀plumbing฀ Rough฀electrical฀ Walls฀/฀windows฀ Home฀environment฀ Nursery Home฀organization฀ Other...

  • Page 46
    Lowe's฀Companies,฀Inc. Stock฀Performance฀(Unaudited) Quarterly฀Stock฀Price฀Range฀and฀Cash฀Dividend฀Payment High฀ $฀59.97฀ 67.01฀ 68.95฀ $฀69.70฀ Fiscal฀2005฀ Low฀ $฀50.72฀ 51.87฀ 57.83฀ $฀59.65฀ Dividend฀ $฀฀0.040฀ 0.060฀ 0.060฀ ...

  • Page 47
    Lowe's฀Companies,฀Inc. Quarterly฀Review฀of฀Performance฀(Unaudited) Earnings฀Statements (In฀millions,฀except฀per฀share... - 5.21% Quarter฀Ended฀ ฀ Net฀sales฀ ฀ ฀ Gross฀margin฀ ฀ Expenses: ฀ SG&A฀ ฀ ฀ ฀ Store฀opening฀costs฀ ฀ Depreciation฀ ...

  • Page 48
    Lowe's฀Companies,฀Inc. Financial฀History฀(Unaudited) 10-Y E A R ฀ FINA NC IA L฀ INFOR MAT ION Fiscal฀Years฀Ended฀On฀ Stores฀and฀people฀1 ฀ 1฀ Number฀of฀stores฀ ฀ 2฀ Square฀footage฀(in฀millions)฀ ฀ 3฀ Number฀of฀employees฀ ฀ 4฀ Customer...

  • Page 49
    ...฀on฀Shareholders'฀Equity:฀Net฀Earnings฀divided฀by฀฀ Beginning฀Equity 6฀฀ Certain฀amounts฀have฀been฀reclassified฀to฀conform฀to฀฀ current฀classification 7฀฀ Stock฀Price฀Source:฀The฀Wall฀Street฀Journal฀ *฀฀ Fiscal฀year฀contained...

  • Page 50
    ...Corporate฀Affairs Theresa฀A.฀Anderson Senior฀Vice฀President฀and฀General฀Merchandising฀Manager฀-฀Home฀and฀Outdoor฀Living K.฀Scott฀Plemmons Senior฀Vice฀President฀-฀Specialty฀Sales Maureen฀K.฀Ausura Senior฀Vice฀President฀-฀Human฀Resources...

  • Page 51
    ... Charlotte Suites Hotel Charlotte, North Carolina Stock Trading Information Lowe's common stock is listed on the New York Stock Exchange (Ticker Symbol: LOW) General Counsel Ross W. McCanless Senior Vice President, General Counsel & Secretary 704-758-1000 Independent Registered Public Accounting...

  • Page 52
    ... Mooresville, NC 28117 www.Lowes.com Lowe's Stores Regional Distribution Centers Existing Stores New Stores In 2005 Lowe's Vision Lowe's Vision is to be our Customers' first choice for home improvement in each and every market we serve. To earn our Customers' trust and meet their individual needs...