Lowe's 2010 Annual Report Download - page 44

40 LOWE’S 2010 ANNUAL REPORT
Short-term and long-term investments include restricted balances
pledged฀as฀collateral฀for฀the฀Company’s฀extended฀protection฀plan฀
program and for a portion of the Company’s casualty insurance and
Installed Sales program liabilities. Restricted balances included in
short-term฀investments฀were฀$102฀million฀at฀January฀28,฀2011฀and฀
$186฀million฀at฀January฀29,฀2010.฀Restricted฀balances฀included฀in฀
long-term฀investments฀were฀$260฀million฀at฀January฀28,฀2011,฀and฀
$202฀million฀at฀January฀29,฀2010.
NOTE 4 PROPERTY AND
ACCUMULATED DEPRECIATION
Property is summarized by major class in the following table:
Estimated
Depreciable January 28, January 29,
(In millions) Lives, In Years 2011 2010
Cost:
Land฀ ฀ N/A฀ $฀฀฀฀฀฀6,742฀฀ $฀ 6,519฀
Buildings and building
improvements 5-40 16,531 15,887
Equipment 3-15 9,142 8,826
Construction in progress N/A 930 1,036
Total cost 33,345 32,268
Accumulated depreciation (11,256) (9,769)
Property, less accumulated
depreciation $ 22,089 $22,499
Included in net property are assets under capital lease of
$567฀million,฀less฀accumulated฀depreciation฀of฀$353฀million,฀at฀
January฀28,฀2011,฀and฀$519฀million,฀less฀accumulated฀depreciation฀
of฀$333฀million,฀at฀January฀29,฀2010.
NOTE 5 SHORT-TERM BORROWINGS
AND LINES OF CREDIT
The฀Company฀has฀a฀$1.75฀billion฀senior฀credit฀facility฀that฀expires฀in฀
June 2012. The senior credit facility also supports the Company’s
commercial฀paper฀program.฀The฀senior฀credit฀facility฀has฀a฀$500฀million฀
letter of credit sublimit. Letters of credit issued pursuant to the senior
credit facility reduce the amount available for borrowing under the
senior credit facility. Borrowings made are unsecured and are priced
at฀xed฀rates฀based฀upon฀market฀conditions฀at฀the฀time฀of฀funding฀in฀
accordance with the terms of the senior credit facility. The senior credit
facility contains certain restrictive covenants, which include maintenance
of a debt leverage ratio as defined by the senior credit facility. The
Company was in compliance with those covenants at January 28,
2011. Seventeen banking institutions are participating in the senior
credit facility. As of January 28, 2011 and January 29, 2010, there
were no outstanding borrowings or letters of credit under the senior
credit facility and no outstanding borrowings under the commercial
paper program.
฀ The฀Company฀also฀has฀a฀Canadian฀dollar฀(C$)฀denominated฀credit฀
facility฀in฀the฀amount฀of฀C$50฀million฀that฀provides฀revolving฀credit฀
support for our Canadian operations. This uncommitted credit facility
provides the Company with the ability to make unsecured borrowings
which฀are฀priced฀at฀xed฀rates฀based฀upon฀market฀conditions฀at฀the฀
time of funding in accordance with the terms of the credit facility. As of
January 28, 2011 and January 29, 2010, there were no outstanding
borrowings฀under฀the฀C$฀credit฀facility.
NOTE 6 LONG-TERM DEBT
Weighted-Average
Debt Category Interest Rate at January 28, January 29,
(In millions) January 28, 2011 2011 2010
Secured debt: 1
Mortgage notes due
฀ scal฀2010-2018฀ 6.11%฀ $฀ ฀฀฀17฀ $฀ ฀฀฀35
Unsecured debt:
Notes due fiscal 2010-2015 5.31% 1,047 1,546
Notes due fiscal 2016-2020 4.40% 1,767 796
Notes due fiscal 2021-2025 3.87% 537 15
Notes due fiscal 2026-2030 6.76% 812 812
Notes due fiscal 2031-2035 5.50% 493 493
Notes due fiscal 2036-20402 6.16% 1,536 1,040
Capitalized lease obligations
due fiscal 2011 to 2035 364 343
Total long-term debt 6,573 5,080
Less current maturities (36) (552)
Long-term debt, excluding
current maturities $6,537 $4,528
1 Real properties with an aggregate book value of $52 million were pledged as collateral at January 28, 2011,
for secured debt.
2 Amount includes $100 million of notes issued in 1997 that may be put at the option of the holder on the
20th anniversary of the issue at par value. None of these notes are currently puttable.
฀ Debt฀maturities,฀exclusive฀of฀unamortized฀original฀issue฀discounts฀
and฀capitalized฀lease฀obligations,฀for฀the฀next฀ve฀years฀and฀thereafter฀
are฀as฀follows:฀2011,฀$1฀million;฀2012,฀$551฀million;฀2013,฀$1฀million;฀
2014,฀$1฀million;฀2015,฀$508฀million;฀thereafter,฀$5.2฀billion.฀
The Company’s unsecured notes are issued under indentures that
have generally similar terms and therefore have been grouped by maturity
date for presentation purposes in the table above. The notes contain
certain฀restrictive฀covenants,฀none฀of฀which฀is฀expected฀to฀impact฀the฀
Company’s capital resources or liquidity. The Company was in compli-
ance with all covenants of these agreements at January 28, 2011.
฀ In฀April฀2010,฀the฀Company฀issued฀$1.0฀billion฀of฀unsecured฀notes฀
in฀two฀tranches:฀$500฀million฀of฀4.625%฀notes฀maturing฀in฀April฀2020฀
(the฀2020฀notes)฀and฀$500฀million฀of฀5.8%฀notes฀maturing฀in฀April฀2040฀
(the 2040 notes). The 2020 and 2040 notes were issued at discounts
of฀approximately฀$3฀million฀and฀$5฀million,฀respectively.฀Interest฀on฀the฀
notes is payable semiannually in arrears in April and October of each
year until maturity.
฀ In฀November฀2010,฀the฀Company฀issued฀$1.0฀billion฀of฀unsecured฀
notes฀in฀two฀tranches:฀$475฀million฀of฀2.125%฀notes฀maturing฀in฀April฀
2016฀(the฀2016฀notes)฀and฀$525฀million฀of฀3.75%฀notes฀maturing฀in฀
April 2021 (the 2021 notes). The 2016 and 2021 notes were issued
at฀discounts฀of฀approximately฀$2฀million฀and฀$3฀million,฀respectively.฀
Interest on these notes is payable semiannually in arrears in April and
October of each year until maturity, beginning in April 2011.
The discount associated with these issuances is included in long-
term debt and is being amortized over the respective terms of the notes.