Lowe's 2012 Annual Report Download - page 59

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NOTE 4: Property and Accumulated Depreciation
Property is summarized by major class in the following table:
(In millions)
Estimated
Depreciable
Lives, In
Years
February 1,
2013
February 3,
2012
Cost:
Land .............................................................................. N/A $ 6,986 $ 6,936
Buildings and building improvements .......................... 5-40 16,968 16,640
Equipment ..................................................................... 3-15 9,780 9,835
Construction in progress ............................................... N/A 932 921
Total cost ..................................................................... 34,666 34,332
Accumulated depreciation ............................................ (13,189) (12,362)
Property, less accumulated depreciation .................. $ 21,477 $ 21,970
Included in net property are assets under capital lease of $706 million, less accumulated depreciation of $418 million, at
February 1, 2013, and $654 million, less accumulated depreciation of $384 million, at February 3, 2012. The related
amortization expense for assets under capital lease is included in depreciation expense.
NOTE 5: Exit Activities
When locations under operating leases are closed, the Company recognizes a liability for the fair value of future contractual
obligations, including future minimum lease payments, property taxes, utilities, common area maintenance and other
ongoing expenses, net of estimated sublease income and other recoverable items. During 2012, the Company relocated one
store subject to an operating lease. During 2011, the Company closed 13 stores subject to operating leases, which included
one store that was relocated.
The Company recognizes a liability in connection with one-time employee termination benefits when the Company
commits to an exit plan and communicates that plan to the affected employees. During 2011, the Company announced the
closing of 27 stores, which required the accrual of one-time termination benefits.
Subsequent changes to the liabilities, including a change resulting from a revision to either the timing or the amount of
estimated cash flows, are recognized in the period of change. Changes to the accrual for exit activities for 2012 and 2011
are summarized as follows:
(In millions) 2012 2011
Accrual for exit activities, balance at beginning of period ........... $ 86 $ 12
Additions to the accrual - net ........................................................ 11 98
Cash payments .............................................................................. (22) (24 )
Accrual for exit activities, balance at end of period...................... $ 75 $ 86
Included in the accrual for exit activities for 2011 are charges associated with one-time employee termination benefits of
$15 million. There were no charges associated with one-time employee termination benefits for 2012.
NOTE 6: Short-Term Borrowings and Lines of Credit
The Company has a $1.75 billion senior credit facility that expires in October 2016. The senior credit facility supports the
Company’s commercial paper program and 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 its terms. Borrowings made are unsecured and
are priced at fixed 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 as of February
1, 2013. Thirteen banking institutions are participating in the senior credit facility. As of February 1, 2013 and February 3,
2012, there were no outstanding borrowings or letters of credit under the senior credit facility and no outstanding
borrowings under the Company’s commercial paper program.