Lowe's 2005 Annual Report Download - page 27

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CONTRACTUAL฀OBLIGATIONS฀AND฀COMMERCIAL฀COMMITMENTS
The฀following฀table฀summarizes฀our฀significant฀contractual฀obligations฀and฀
commercial฀commitments:
฀ Payments฀Due฀by฀Period
Contractual฀Obligations฀ ฀ Less฀than฀ 1-3฀ 4-5฀ After฀5฀
(In฀millions)฀ ฀ Total฀ 1฀year฀ years฀ years฀ years
Long-term฀debt฀฀
฀ ฀(principal฀and฀฀
interest฀amounts,฀฀
excluding฀discount)฀ $฀฀ 6,038฀ $฀ ฀฀176฀ $฀฀ ฀390฀ $฀ ฀฀793฀ $฀4,679
Capital฀lease฀obligations1฀ 628฀ 59฀ 118฀ 116฀ 335
Operating฀leases1฀ 4,918฀ 279฀ 561฀ 556฀ 3,522
Purchase฀obligations2฀ 1,554฀ 650฀ 486฀ 414฀ 4
Subtotal฀–฀฀
฀ ฀contractual฀obligations฀ $฀13,138฀ $฀1,164฀ $1,555฀ $฀1,879฀ $฀8,540
฀ Amount฀of฀Commitment฀Expiration฀by฀Period
Commercial฀Commitments฀ ฀ Less฀than฀ 1-3฀ 4-5฀ After฀5฀
(In฀millions)฀ ฀ Total฀ 1฀year฀ years฀ years฀ years
Letters฀of฀credit3฀ $฀฀ ฀ ฀316฀ $฀฀ ฀315฀ $฀฀ ฀ ฀ ฀1฀ $฀฀ ฀ ฀ ฀–฀ $฀฀ ฀ ฀ ฀–
Total฀contractual฀฀
฀ ฀obligations฀and฀฀
commercial฀฀
commitments฀ $ ฀ 13,454฀ $ ฀ 1,479฀ $ ฀ 1,556฀ $ ฀ 1,879฀ $ ฀ 8,540
1฀฀Amounts฀do฀not฀include฀taxes,฀common฀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฀of฀credit฀are฀issued฀for฀the฀purchase฀of฀import฀merchandise฀inventories,฀real฀estate฀and฀construction฀
contracts,฀and฀insurance฀programs.
COMPANY฀OUTLOOK
Our฀2005฀fiscal฀year฀contained฀53฀weeks.฀Fiscal฀2006฀annual฀and฀fourth฀quarter฀
comparisons฀will฀be฀negatively฀impacted฀by฀52-฀versus฀53-week฀and฀13-฀versus฀
14-week฀comparisons,฀respectively.฀In฀addition,฀our฀2006฀quarterly฀comparisons฀
will฀be฀impacted฀by฀a฀shift฀in฀comparable฀weeks฀to฀2005.฀This฀week฀shift฀posi-
tively฀impacts฀first฀quarter฀and฀is฀offset฀by฀negative฀impacts฀in฀the฀second฀and฀
fourth฀quarters.฀Our฀2006฀guidance฀contemplates฀these฀factors.
฀ As฀of฀February฀27,฀2006,฀the฀date฀of฀our฀fourth฀quarter฀2005฀earnings฀
release,฀we฀expected฀to฀open฀155฀stores฀during฀2006,฀resulting฀in฀total฀square฀
footage฀growth฀of฀approximately฀12%.฀We฀expected฀total฀sales฀to฀increase฀
13-14%฀and฀comparable฀store฀sales฀to฀increase฀5-6%.฀Operating฀margin,฀
defined฀as฀gross฀margin฀less฀SG&A฀and฀depreciation,฀was฀expected฀to฀increase฀
approximately฀20฀basis฀points.฀In฀addition,฀store฀opening฀costs฀were฀expected฀
to฀be฀approximately฀$130฀million.฀Diluted฀earnings฀per฀share฀of฀$4.03฀to฀$4.13฀
were฀expected฀for฀the฀fiscal฀year฀ending฀February฀2,฀2007.
QUANTITATIVE฀AND฀QUALITATIVE฀DISCLOSURES฀฀
ABOUT฀MARKET฀RISK
Our฀primary฀market฀risk฀exposure฀is฀the฀potential฀loss฀arising฀from฀the฀impact฀
of฀changing฀interest฀rates฀on฀long-term฀debt.฀Our฀policy฀is฀to฀monitor฀the฀inter-
est฀rate฀risks฀associated฀with฀this฀debt,฀and฀we฀believe฀any฀significant฀risks฀
could฀be฀offset฀by฀accessing฀variable฀rate฀instruments฀available฀through฀our฀
lines฀of฀credit.฀The฀following฀tables฀summarize฀our฀market฀risks฀associated฀
with฀long-term฀debt,฀excluding฀capital฀leases฀and฀other.฀The฀tables฀present฀
principal฀cash฀outflows฀and฀related฀interest฀rates฀by฀year฀of฀maturity,฀excluding฀
unamortized฀original฀issue฀discounts฀as฀of฀February฀3,฀2006,฀and฀January฀28,฀
2005.฀Variable฀interest฀rates฀are฀based฀on฀the฀weighted-average฀rates฀of฀the฀
portfolio฀at฀the฀end฀of฀the฀year฀presented.฀The฀fair฀values฀included฀below฀were฀
determined฀using฀quoted฀market฀rates฀or฀interest฀rates฀that฀are฀currently฀
available฀to฀us฀on฀debt฀with฀similar฀terms฀and฀remaining฀maturities.
Long-Term฀Debt฀Maturities฀by฀Fiscal฀Year
February฀3,฀2006
฀ ฀ ฀ ฀ ฀ ฀ Average฀ ฀ Average฀
฀ ฀ ฀ ฀ ฀ Fixed฀ Interest฀ Variable฀ Interest฀
(Dollars฀in฀millions)฀ Rate฀ Rate฀ Rate฀ Rate
2006฀฀ ฀ ฀ $฀฀฀ ฀ ฀ 5฀ 7.58%฀ $฀2฀ 5.82%
2007฀฀ ฀ ฀ 59฀ 7.25฀ 2฀ 5.82
2008฀฀ ฀ ฀ 6฀ 7.86฀ –฀ –
2009฀฀ ฀ ฀ 1฀ 7.51฀ –฀ –
2010฀฀ ฀ ฀ 501฀ 8.25฀ –฀ –
Thereafter฀ ฀ 2,692฀ 4.70%฀ –฀ –
Total฀ ฀ ฀ ฀ $฀3,264฀ ฀ $฀4
Fair฀value฀ ฀ $฀3,574฀ ฀ $฀4
Long-Term฀Debt฀Maturities฀by฀Fiscal฀Year
January฀28,฀2005
฀ ฀ ฀ ฀ ฀ ฀ Average฀ ฀ Average฀
฀ ฀ ฀ ฀ ฀ Fixed฀ Interest฀ Variable฀ Interest฀
(Dollars฀in฀millions)฀ Rate฀ Rate฀ Rate฀ Rate
2005฀฀ ฀ ฀ $฀฀฀ 605฀ 7.31%฀ $฀3฀ 3.84%
2006฀฀ ฀ ฀ 5฀ 7.58฀ 2฀ 3.84
2007฀฀ ฀ ฀ 59฀ 7.25฀ 2฀ 3.84
2008฀฀ ฀ ฀ 6฀ 7.86฀ –฀ –
2009฀฀ ฀ ฀ 1฀ 7.52฀ –฀ –
Thereafter฀ ฀ 3,025฀ 4.49%฀ –฀ –
Total฀ ฀ ฀ ฀ $฀3,701฀ ฀ $฀7
Fair฀value฀ ฀ $฀3,967฀ ฀ $฀7