November 17, 2003
For 7:00 am EDT Release
| Contacts: | Shareholders'/Analysts' Inquiries: | Media Inquiries: |
| | Paul Taaffe | Chris Ahearn |
| | 704-758-2033 | 704-758-2304 |
LOWE'S REPORTS RECORD EARNINGS FOR THIRD QUARTER
-- Third Quarter Net Earnings Increased 33 Percent --
-- Third Quarter Total Sales Increased 24 Percent --
MOORESVILLE, N.C. - Lowe's Companies, Inc. (NYSE: LOW), the world's second largest home improvement retailer, today reported
net earnings of $452 million for the quarter ended October 31, 2003, a 33.3 percent increase over the same period a year ago. Diluted
earnings per share increased 30.2 percent to $0.56 from $0.43 in the third quarter of 2002. For the nine months ended October 31, 2003,
net earnings grew 27.5 percent to $1.47 billion while diluted earnings per share increased 26.9 percent to $1.84.
Sales for the quarter increased 23.5 percent to $7.92 billion, up from $6.41 billion in the third quarter of 2002. Comparable store sales for
the third quarter increased by 12.4 percent. For the nine months ended October 31, 2003, sales increased 17.4 percent to $23.9 billion.
Comparable store sales increased 6.5 percent in the first nine months of 2003.
"We achieved the strongest comparable store sales growth in Lowe's modern history as a result of our many internal sales and operational
initiatives," said Robert L. Tillman, Lowe's chairman and CEO. "We've experienced balanced performance across all of our product
categories and across all regions of the country as American consumers remain committed to enhancing the enjoyment of their homes.
That commitment is readily apparent in the results our stores have delivered this year."
"Our robust sales results clearly reflect the focus and discipline of our stores and highlight the flexibility of Lowe's centralized model to drive
sales in an increasingly strong economic environment," added Lowe's President Robert A. Niblock. "Our employees excelled during this
above-plan sales environment and continued to ensure customer service is our top priority. Additionally, our logistics and distribution
infrastructure allowed us to effectively manage inventory and keep our stores in stock with the great merchandise our customers desire."
During the quarter, Lowe's opened 38 new stores, including two relocations. As of October 31, 2003, Lowe's operated 932 stores in
45 states representing 103.7 million square feet of retail selling space, a 14.2 percent increase over last year.
A conference call to discuss third quarter 2003 operating results is scheduled for today (Monday, November 17) at 9:00 a.m. EST.
Please dial 888-817-4020 (international callers dial 706-679-3245) to participate. A webcast of the call will take place simultaneously and
can be accessed by visiting Lowe's website at www.Lowes.com/investor and clicking on Lowe's Third Quarter 2003 Earnings Conference
Call Webcast. A replay of the call will be archived on Lowes.com for 7 days.
This outlook is based on current expectations and includes "forward-looking statements" within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. Although the company believes that comments reflected in such forward-looking statements are
reasonable, it can give no assurance that such expectations will prove to be correct.
Fourth Quarter 2003 (comparisons to fourth quarter 2002)
The company expects to open 47 stores reflecting square footage growth of approximately 15 percent
Total sales are expected to increase 18 to 19 percent
The company expects to report comparable store sales of 6 to 7 percent
Operating margin (defined as gross margin less SG&A and depreciation) is expected to be flat to slightly positive as a percent to sales
Store opening costs are expected to be approximately $49 million
Diluted earnings per share of $0.48 to $0.49 are expected
Lowe's fourth quarter ends on January 30, 2004 with operating results to be publicly released on Monday, February 23, 2004
Fiscal Year 2003 (comparisons to fiscal year 2002)
The company expects to open 130 stores in 2003 reflecting total square footage growth of approximately 15 percent
Total sales are expected to increase approximately 18 percent for the year
The company expects to report a comparable store sales increase of 6 to 7 percent
Operating margin (defined as gross margin less SG&A and depreciation) is expected to increase approximately 50 basis points
Store opening costs are expected to be approximately $132 million
Diluted earnings per share of $2.32 to $2.33 are expected for the fiscal year ending January 30, 2004
This news release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act. Although the company believes that comments reflected in such forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to be correct. Possible risks and uncertainties regarding these statements include, but are not
limited to, the direction of general economic conditions, the availability of real estate for expansion and its successful development, particularly
in major metropolitan markets, the availability of sufficient labor to facilitate growth, fluctuations in prices and availability of product,
unanticipated impact of competition, legal or regulatory developments, and weather conditions that affect sales.
With fiscal year 2002 sales of $26.5 billion, Lowe's Companies, Inc. is a FORTUNE 100 company that serves approximately nine million
customers a week at more than 925 home improvement stores in 45 states. In 2003, FORTUNE named Lowe's America's Most Admired
Specialty Retailer. Based in Mooresville, N.C., the 57-year old company is the second-largest home improvement retailer in the world. For
more information, visit Lowes.com
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Lowe's Companies, Inc.
Consolidated Balance Sheets
In Millions, Except Par Value Data |
| (Unaudited) October 31, 2003 | (Unaudited) November 1, 2002 | January 31, 2003 |
| Assets | | | | | | | |
| | Current assets: | | | | | | |
| Cash and cash equivalents | | | | $ 1,196 | $ 1,305 | $ 853 |
| Short-term investments | | | | 126 | 92 | 273 |
| Accounts receivable - net | | | | 208 | 187 | 172 |
| Merchandise inventory | | | | 5,006 | 4,151 | 3,968 |
| Deferred income taxes | | | | 81 | 110 | 58 |
| Other assets | | | | 285 | 179 | 244 |
| | | | | | | |
| Total current assets | | | | 6,902 | 6,024 | 5,568 |
| | | | | | | |
| Property, less accumulated depreciation | | | | 11,425 | 9,648 | 10,352 |
| Long-term investments | | | | 119 | 10 | 29 |
| Other assets | | | | 229 | 129 | 160 |
| | | | | | | |
| Total assets | | | | $ 18,675 | $ 15,811 | $ 16,109 |
| | | | | | | |
| Liabilities and Shareholders' Equity | | | | | | |
| Current liabilities: | | | | | | |
| Short-term borrowings | | | | $ - | $ 50 | $ 50 |
| Current maturities of long-term debt | | | | 77 | 39 | 29 |
| Accounts payable | | | | 2,542 | 2,046 | 1,943 |
| Employee retirement plans | | | | 53 | 66 | 88 |
| Accrued salaries and wages | | | | 283 | 295 | 306 |
| Other current liabilities | | | | 1,568 | 1,291 | 1,162 |
| | | | | | | |
| Total current liabilities | | | | 4,523 | 3,787 | 3,578 |
| | | | | | | |
| Long-term debt, excluding current maturities | | | | 3,681 | 3,739 | 3,736 |
| Deferred income taxes | | | | 588 | 318 | 478 |
| Other long-term liabilities | | | | 21 | 9 | 15 |
| | | | | | | |
| Total liabilities | | | | 8,813 | 7,853 | 7,807 |
| | | | | | | |
| Shareholders' equity: | | | | | | |
| Preferred stock - $5 par value, none issued | | | | - | - | - |
| Common stock - $.50 par value; | | | | | | |
| Shares Issued and Outstanding | | | | | | |
| October 31, 2003 | 786 | | | | | | |
| November 1, 2002 | 781 | | | | | | |
| January 31, 2003 | 782 | | | | 393 | 390 | 391 |
| Capital in excess of par | | | | 2,176 | 1,981 | 2,023 |
| Retained earnings | | | | 7,293 | 5,587 | 5,887 |
| Accumulated other comprehensive income | | | | - | - | 1 |
| | | | | | | |
| Total shareholders' equity | | | | 9,862 | 7,958 | 8,302 |
| | | | | | | |
| Total liabilities and shareholders' equity | | | | $ 18,675 | $ 15,811 | $ 16,109 |
| | | | | | | |
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Lowe's Companies, Inc.
Consolidated Statements of Current and Retained Earnings (Unaudited)
In Millions, Except Per Share Data |
| |
| | Three Months Ended | | Nine Months Ended |
| | October 31, 2003 | November 1, 2002 | | October 31, 2003 | November 1, 2002 |
| Current Earnings | | Amount | Percent | Amount | Percent | | Amount | Percent | Amount | Percent |
| Net Sales | | $ 7,924 | 100.00 | $ 6,415 | 100.00 | | $ 23,909 | 100.00 | $ 20,373 | 100.00 |
| Cost of Sales | | 5,460 | 68.90 | 4,450 | 69.36 | | 16,560 | 69.26 | 14,283 | 70.11 |
| Gross Margin | | 2,464 | 31.10 | 1,965 | 30.64 | | 7,349 | 30.74 | 6,090 | 29.89 |
| Expenses: | | | | | | | | | | |
| Selling, general and administrative | | 1,466 | 18.50 | 1,192 | 18.59 | | 4,212 | 17.62 | 3,567 | 17.51 |
| Store opening costs | | 37 | 0.47 | 28 | 0.43 | | 82 | 0.34 | 88 | 0.43 |
| Depreciation | | 193 | 2.44 | 159 | 2.48 | | 557 | 2.33 | 458 | 2.25 |
| Interest | | 42 | 0.53 | 44 | 0.69 | | 136 | 0.57 | 137 | 0.67 |
| Total expenses | | 1,738 | 21.94 | 1,423 | 22.19 | | 4,987 | 20.86 | 4,250 | 20.86 |
| Pre-tax earnings | | 726 | 9.16 | 542 | 8.45 | | 2,362 | 9.88 | 1,840 | 9.03 |
| Income tax provision | | 274 | 3.46 | 203 | 3.16 | | 893 |
3.74 | 688 | 3.38 | | Net earnings | | $ 452 | 5.70 | $ 339 | 5.29 | | $ 1,469 | 6.14 | $ 1,152 | 5.65 |
| | | | | | | | | | |
| Weighted average shares outstanding - Basic | | 786 | | 781 | | | 784 | | 779 | |
| Basic earnings per share | | $ 0.58 | | $ 0.44 | | | $ 1.87 | | $ 1.48 | |
| Weighted average shares outstanding - Diluted | | 808 | | 801 | | | 805 | | 800 | |
| Diluted earnings per share | | $ 0.56 | | $ 0.43 | | | $ 1.84 | | $ 1.45 | |
| | | | | | | | | | |
| Retained Earnings | | | | | | | | | | |
| Balance at beginning of period | | $ 6,865 | | $ 5,263 | | | $ 5,887 | | $ 4,482 | |
| Net earnings | | 452 | | 339 | | | 1,469 | | 1,152 | |
| Cash dividends | | (24) | | (15) | | | (63) | | (47) | |
| Balance at end of period | | $ 7,293 | | $ 5,587 | | | $ 7,293 | | $ 5,587 | |
| |
Lowe's Companies, Inc.
Consolidated Statements of Cash Flows (Unaudited)
In Millions |
| Nine Months Ended |
| October 31, 2003 | November 1, 2002 |
| Cash Flows from Operating Activities: | | | | | |
| | Net Earnings | | | | $ 1,469 | $ 1,152 |
| Adjustments to Reconcile Net Earnings to Net Cash Provided By Operating Activities: | | | | | |
| Depreciation and Amortization | | | | 571 | 472 |
| Deferred Income Taxes | | | | 87 | (4) |
| Loss on Disposition/Writedown of Fixed and Other Assets | | | | 23 | 17 |
| Stock-based Compensation Expense | | | | 28 | - |
| Tax Effect of Stock Options Exercised | | | | 21 | 20 |
| Changes in Operating Assets and Liabilities: | | | | | |
| Accounts Receivable - Net | | | | (36) | (21) |
| Merchandise Inventory | | | | (1,038) | (540) |
| Other Operating Assets | | | | (41) | 19 |
| Accounts Payable | | | | 599 | 331 |
| Employee Retirement Plans | | | | (35) | 16 |
| Other Operating Liabilities | | | | 389 | 573 |
| Net Cash Provided by Operating Activities | | | | 2,037 | 2,035 |
| | | | | | |
| Cash Flows from Investing Activities: | | | | | |
| Decrease (Increase) in Investment Assets: | | | | | |
| Short-Term Investments | | | | 144 | (24) |
| Purchase of Long-Term Investments | | | | (282) | (2) |
| Proceeds from Sale/Maturity of Long-Term Investments | | | | 189 | - |
| Increase in Other Long-Term Assets | | | | (87) | (22) |
| Fixed Assets Acquired | | | | (1,685) | (1,449) |
| Proceeds from the Sale of Fixed and Other Long-Term Assets | | | | 50 | 29 |
| Net Cash Used in Investing Activities | | | | (1,671) | (1,468) |
| | | | | | |
| Cash Flows from Financing Activities: | | | | | |
| Net Decrease in Short-Term Borrowings | | | | (50) | (50) |
| Repayment of Long-Term Debt | | | | (21) | (45) |
| Proceeds from Employee Stock Purchase Plan | | | | 25 | 23 |
| Proceeds from Stock Options Exercised | | | | 86 | 58 |
| Cash Dividend Payments | | | | (63) | (47) |
| Net Cash Used in Financing Activities | | | | (23) | (61) |
| | | | | | |
| Net Increase in Cash and Cash Equivalents | | | | 343 | 506 |
| Cash and Cash Equivalents, Beginning of Period | | | | 853 | 799 |
| Cash and Cash Equivalents, End of Period | | | | $ 1,196 | $ 1,305 |
| | | | | | | |
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