Lowe's 2013 Annual Report Download - page 30

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Sources of Liquidity
In addition to our cash flows from operations, liquidity is provided by our short-term borrowing facilities. We have a $1.75
billion senior credit facility that expires in October 2016. The senior credit facility supports our 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. We
were in compliance with those covenants at January 31, 2014. Thirteen banking institutions are participating in the senior
credit facility. At January 31, 2014 we had $386 million of outstanding borrowings under the commercial paper program and
no letters of credit under the senior credit facility.
We expect to continue to have access to the capital markets on both short-term and long-term bases when needed for liquidity
purposes by issuing commercial paper or new long-term debt. The availability and the borrowing costs of these funds could be
adversely affected, however, by a downgrade of our debt ratings or a deterioration of certain financial ratios. The table below
reflects our debt ratings by Standard & Poor’s (S&P) and Moody’s as of March 31, 2014, which we are disclosing to enhance
understanding of our sources of liquidity and the effect of our ratings on our cost of funds. Although we currently do not
expect a downgrade in our debt ratings, our commercial paper and senior debt ratings may be subject to revision or withdrawal
at any time by the assigning rating organization, and each rating should be evaluated independently of any other rating.
Debt Ratings
S&P
Moody’s
Commercial Paper
A-2
P-2
Senior Debt
A-
A3
Outlook
Stable
Stable
We believe that net cash provided by operating and financing activities will be adequate not only for our operating
requirements, but also for investments in information technology, investments in our existing stores, expansion plans and
acquisitions, if any, and to return cash to shareholders through both dividends and share repurchases over the next 12
months. There are no provisions in any agreements that would require early cash settlement of existing debt or leases as a
result of a downgrade in our debt rating or a decrease in our stock price. In addition, we do not have a significant amount of
cash held in foreign affiliates that is unavailable to fund domestic operations.
Cash Requirements
Capital expenditures
Our fiscal 2014 capital budget is approximately $1.25 billion, inclusive of approximately $50 million of lease commitments,
resulting in a planned net cash outflow of $1.2 billion. Investments in our existing stores are expected to account for
approximately 40% of net cash outflow including investments in store equipment, resets and remerchandising. Approximately
30% of the planned net cash outflow is for investments in corporate infrastructure, including enhancements in information
technology. Our expansion plans for 2014 consist of approximately 15 new home improvement stores and five new Orchard
stores. Nine of the home improvement stores and none of the Orchard stores are expected to be owned. Approximately 13%
of the new home improvement stores are expected to be on leased land. Store expansion will account for approximately 30%
of the planned net cash outflow.
Debt and capital
In September 2013, we issued $1.0 billion of unsecured notes in two tranches: $500 million of 3.875% notes maturing in
September 2023 and $500 million of 5.0% notes maturing in September 2043. The 2023 and 2043 notes were issued at
discounts of approximately $5 million and $9 million, respectively. Interest on these notes is payable semiannually in arrears in
March and September of each year until maturity, beginning in March 2014.
The discounts associated with these issuances, which include the underwriting and issuance discounts, are recorded in long-
term debt and are being amortized over the respective terms of the notes.
Dividends declared during fiscal 2013 totaled $741 million. Our dividend payment dates are established such that dividends
are paid in the quarter immediately following the quarter in which they are declared. The dividend declared in the fourth
quarter of 2013 was paid in fiscal 2014 and totaled $186 million.