Lowe's 2013 Annual Report Download - page 54

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46
NOTE 4: Property and Accumulated Depreciation
Property is summarized by major class in the following table:
(In millions)
Estimated
Depreciable
Lives, In Years
January 31, 2014
February 1, 2013
Cost:
Land
N/A
$
7,016
$
6,986
Buildings and building improvements
5-40
17,161
16,968
Equipment
3-15
10,063
9,780
Construction in progress
N/A
834
932
Total cost
35,074
34,666
Accumulated depreciation
(14,240
)
(13,189
)
Property, less accumulated depreciation
$
20,834
$
21,477
Included in net property are assets under capital lease of $732 million, less accumulated depreciation of $455 million, at
January 31, 2014, and $706 million, less accumulated depreciation of $418 million, at February 1, 2013. The related
amortization expense for assets under capital lease is included in depreciation expense.
NOTE 5: Acquisitions
On August 30, 2013, the Company acquired the majority of the assets of Orchard Supply Hardware (Orchard), a neighborhood
hardware and backyard store, primarily located in densely populated markets in California, for approximately $207 million in
cash and assumed liabilities. The acquisition provides a smaller store format that allows additional opportunities for
growth. Acquisition-related costs were expensed as incurred and were not significant. The aggregate purchase price of this
acquisition was preliminarily allocated as follows:
(In millions)
August 30, 2013
Purchase Price:
Cash paid
$
207
Allocation:
Cash acquired
4
Merchandise inventory
154
Property
181
Amortizable intangible assets:
Trade name
8
Other assets
36
Goodwill
46
Current liabilities assumed
(95
)
Long-term liabilities assumed
(127
)
Total
$
207
The trade name acquired has a useful life of 10 years. The goodwill of $46 million is primarily attributable to the synergies
expected to arise after the acquisition. Goodwill is expected to be deductible for tax purposes. Pro forma and historical
financial information has not been provided as the acquisition was not material to the consolidated financial statements.
NOTE 6: 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 2013, the Company relocated two stores
subject to operating leases. In 2012, the Company relocated one store subject to an operating lease.