February 23, 2004
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 FOURTH QUARTER
-- Fourth Quarter Net Earnings Increased 28 Percent --
-- Fourth Quarter Total Sales Increased 20 Percent --
MOORESVILLE, N.C. - Lowe's Companies, Inc. (NYSE: LOW), the world's second largest home improvement retailer, today reported
net earnings of $407 million for the quarter ended January 30, 2004, a 27.6 percent increase over the same period a year ago. Diluted earnings
per share increased 27.5 percent to $0.51 from $0.40 in the fourth quarter of 2002. For the year ended January 30, 2004, net earnings grew
27.6 percent to $1.88 billion while diluted earnings per share increased 26.5 percent to $2.34.
Sales for the quarter increased 20.1 percent to $7.25 billion, up from $6.04 billion in the fourth quarter of 2002. Comparable store sales for the
fourth quarter increased 7.3 percent. For the year ended January 30, 2004, sales increased 18.1 percent to $30.8 billion. Comparable store
sales increased 6.7 percent for fiscal 2003. All sales figures are from continuing operations and exclude sales from the Contractor Yard
On January 30, 2004, Lowe's completed the previously announced sale of 26 commodity-focused locations operating under the Contractor
Yard name. The Contractor Yard locations are reported as discontinued operations in the Consolidated Statements of Current and Retained
"This year's outstanding results are further evidence that Lowe's strategic course is a proven success," said Robert L. Tillman, Lowe's chairman
and CEO. "Our employees' diligent efforts led to what was among the best two-year performances in all of retail. We're confident we have
our finger on the pulse of consumer and business trends and will continue to build on our successful operating model to maintain our premier
position in retailing well into the future."
"Despite the weather-driven challenges we faced in the first quarter of 2003, our management team and dedicated employees kept their eye on
the ball and delivered an outstanding year on top of a phenomenal performance in 2002," explained Lowe's President Robert A. Niblock.
"We continue to see strong results from our metro-market expansion, and our up-the-continuum merchandising strategy and branding initiatives
continue to provide our customers the best products and services to meet their home improvement needs. The key ingredient in this formula
remains our outstanding customer service, which we continue to deliver in an aspirational store environment."
During the quarter, Lowe's opened 47 new stores, including one relocation. As of January 30, 2004, Lowe's operated 952 stores in 45 states
representing 108.8 million square feet of retail selling space, a 14.8 percent increase over last year.
A conference call to discuss fourth quarter and fiscal year 2003 operating results is scheduled for today (Monday, February 23) 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 Fourth Quarter and Fiscal Year 2003
Earnings Conference Call Webcast. A replay of the call will be archived on Lowes.com for 7 days.
Emerging Issues Task Force Issue 02-16 |
The impact of Emerging Issues Task Force ("EITF") Issue 02-16, "Accounting by a Customer (including a Reseller) for Certain Consideration Received from a Vendor", will be recognized in 2004 and modifies accounting for certain funds received from vendors.
Prior to 2004, funds from vendors for co-op advertising and in-store services were allowed to be treated as a direct offset to the associated
expense. EITF 02-16 requires retailers to treat certain of these funds as a reduction of cost of goods, recognizing the benefit when the
inventory is sold. There is no impact to the timing of when the funds are received from vendors or the associated cash flows, but there is an
impact to the timing of income recognition.
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.
First Quarter 2004 (comparisons to first quarter 2003)
The company expects to open 29 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
Including the estimated 200 basis point negative impact of adopting EITF 02-16, operating margin (defined as gross margin less SG&A
and depreciation) is expected to decline 130 to 140 basis points
Store opening costs are expected to be approximately $25 million
Including the estimated $0.13 negative impact of adopting EITF 02-16, diluted earnings per share of $0.52 to $0.54 are expected.
Excluding the impact of adopting the accounting change, diluted earnings per share of $0.65 to $0.67 would be expected.
Lowe's first quarter ends on April 30, 2004 with operating results to be publicly released on Monday, May 17, 2004
Fiscal Year 2004 (comparisons to fiscal year 2003)
The company expects to open 140 stores in 2004 reflecting total square footage growth of approximately 14 percent
Total sales are expected to increase approximately 17 percent for the year
The company expects to report a comparable store sales increase of 5 to 6 percent
Including the estimated 50 basis point negative impact of adopting EITF 02-16, operating margin (defined as gross margin less SG&A
and depreciation) is expected to decline 20 to 30 basis points
Store opening costs are expected to be approximately $137 million
Including the estimated $0.13 negative impact of adopting EITF 02-16, diluted earnings per share of $2.63 to $2.66 are expected for the
fiscal year ending January 28, 2005. Excluding the impact of adopting the accounting change, diluted earnings per share of $2.76
to $2.79 would be expected.
Fiscal Year 2005 (comparisons to fiscal year 2004)
The company expects to open 150 stores in 2005 reflecting total square footage growth of 13 to 14 percent
Total sales are expected to increase approximately 17 percent for the year
Operating margin (defined as gross margin less SG&A and depreciation) is expected to increase 40 to 60 basis points
Diluted earnings per share of $3.29 to $3.34 are expected for the fiscal year ending January 27, 2006
Additional supporting documents detailing the impact of discontinued operations and the effect of implementing EITF 02-16 can be found on
This news release includes statements, estimates or projections that constitute "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, changes in domestic 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.
We provide additional information regarding these and other risks and uncertainties in our filings with the Securities and Exchange Commission.
The forward-looking statements contained in this news release speak only as of this date and we do not assume any obligation to update them.
With fiscal year 2003 sales of $30.8 billion, Lowe's Companies, Inc. is a FORTUNE 100 company that serves approximately 10 million
customers a week at more than 950 home improvement stores in 45 states. In 2003, FORTUNE named Lowe's America's Most Admired
Specialty Retailer. Based in Mooresville, N.C., the 58-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 |
| January 30, 2004 | January 31, 2003 |
| Assets | | | | | |
| | Current assets: | | | | |
| Cash and cash equivalents | | | $ 1,446 | $ 853 |
| Short-term investments | | | 178 | 273 |
| Accounts receivable - net | | | 131 | 172 |
| Merchandise inventory | | | 4,584 | 3,968 |
| Deferred income taxes | | | 59 | 58 |
| Other assets | | | 289 | 244 |
| | | | | |
| Total current assets | | | 6,687 | 5,568 |
| | | | | |
| Property, less accumulated depreciation | | | 11,945 | 10,352 |
| Long-term investments | | | 169 | 29 |
| Other assets | | | 241 | 160 |
| | | | | |
| Total assets | | | $ 19,042 | $ 16,109 |
| | | | | |
| Liabilities and Shareholders' Equity | | | | |
| Current liabilities: | | | | |
| Short-term borrowings | | | $ - | $ 50 |
| Current maturities of long-term debt | | | 77 | 29 |
| Accounts payable | | | 2,366 | 1,943 |
| Employee retirement plans | | | 74 | 88 |
| Accrued salaries and wages | | | 335 | 306 |
| Other current liabilities | | | 1,516 | 1,162 |
| | | | | |
| Total current liabilities | | | 4,368 | 3,578 |
| | | | | |
| Long-term debt, excluding current maturities | | | 3,678 | 3,736 |
| Deferred income taxes | | | 657 | 478 |
| Other long-term liabilities | | | 30 | 15 |
| | | | | |
| Total liabilities | | | 8,733 | 7,807 |
| | | | | |
| Shareholders' equity: | | | | |
| Preferred stock - $5 par value, none issued | | | - | - |
| Common stock - $.50 par value; | | | | |
| Shares Issued and Outstanding | | | | |
| January 30, 2004 | 787 | | | | |
| January 31, 2003 | 782 | | | 394 | 391 |
| Capital in excess of par | | | 2,237 | 2,023 |
| Retained earnings | | | 7,677 | 5,887 |
| Accumulated other comprehensive income | | | 1 | 1 |
| | | | | |
| Total shareholders' equity | | | 10,309 | 8,302 |
| | | | | |
| Total liabilities and shareholders' equity | | | $ 19,042 | $ 16,109 |
| | | | | |
| |
Lowe's Companies, Inc.
Consolidated Statements of Current and Retained Earnings
In Millions, Except Per Share Data |
| | Three Months Ended | | Year Ended |
| | January 30, 2004 | January 31, 2003 | | January 30, 2004 | January 31, 2003 |
| Current Earnings | | Amount | Percent | Amount | Percent | | Amount | Percent | Amount | Percent |
| Net Sales | | $ 7,252 | 100.00 | $ 6,037 | 100.00 | | $ 30,838 | 100.00 | $ 26,112 | 100.00 |
| Cost of Sales | | 4,931 | 68.00 | 4,119 | 68.23 | | 21,231 | 68.85 | 18,164 | 69.56 |
| Gross Margin | | 2,321 | 32.00 | 1,918 | 31.77 | | 9,607 | 31.15 | 7,948 | 30.44 |
| Expenses: | | | | | | | | | | |
| Selling, general and administrative | | 1,378 | 19.00 | 1,151 | 19.07 | | 5,543 | 17.97 | 4,676 | 17.91 |
| Store opening costs | | 45 | 0.62 | 40 | 0.66 | | 128 | 0.42 | 129 | 0.49 |
| Depreciation | | 203 | 2.80 | 168 | 2.78 | | 758 | 2.46 | 622 | 2.38 |
| Interest | | 45 | 0.62 | 45 | 0.75 | | 180 | 0.58 | 182 | 0.70 |
| Total expenses | | 1,671 | 23.04 | 1,404 | 23.26 | | 6,609 | 21.43 | 5,609 | 21.48 |
| Pre-tax earnings | | 650 | 8.96 | 514 | 8.51 | | 2,998 | 9.72 | 2,339 | 8.96 |
| Income tax provision | | 249 | 3.43 | 197 | 3.26 | | 1,136 |
3.68 | 880 | 3.38 | | Earnings from continuing operations | | $ 401 | 5.53 | $ 317 | 5.25 | | $ 1,862 | 6.04 | $ 1,459 | 5.58 |
Earnings from discontinued operations, net of tax | | 6 | 0.08 | 2 | 0.03 | | 15 | 0.05 | 12 | 0.05 |
| | | | | | | | | | |
| Net earnings | | $ 407 | 5.61 | $ 319 | 5.28 | | $ 1,877 | 6.09 | $ 1,471 | 5.63 |
| | | | | | | | | | |
| Weighted average shares outstanding - Basic | | 787 | | 782 | | | 785 | | 779 | |
| | | | | | | | | | | |
| Basic earnings per share: | | | | | | | | | | |
| Continuing operations | | $ 0.51 | | $ 0.41 | | | $ 2.37 | | $ 1.87 | |
| Discontinued operations | | 0.01 | | - | | | 0.02 | | 0.02 | |
| Basic earnings per share | | $ 0.52 | | $ 0.41 | | | $ 2.39 | | $ 1.89 | |
| | | | | | | | | | | |
| Weighted average shares outstanding - Diluted | | 809 | | 801 | | | 806 | | 800 | |
| | | | | | | | | | | |
| Diluted earnings per share: | | | | | | | | | | |
| Continuing operations | | $ 0.50 | | $ 0.40 | | | $ 2.32 | | $ 1.83 | |
| Discontinued operations | | 0.01 | | - | | | 0.02 | | 0.02 | |
| Diluted earnings per share | | $ 0.51 | | $ 0.40 | | | $ 2.34 | | $ 1.85 | |
| | | | | | | | | | |
| Retained Earnings | | | | | | | | | | |
| Balance at beginning of period | | $ 7,293 | | $ 5,587 | | | $ 5,887 | | $ 4,482 | |
| Net earnings | | 407 | | 319 | | | 1,877 | | 1,471 | |
| Cash dividends | | (23) | | (19) | | | (87) | | (66) | |
| Balance at end of period | | $ 7,677 | | $ 5,887 | | | $ 7,677 | | $ 5,887 | |
Lowe's Companies, Inc.
Consolidated Statements of Cash Flows
In Millions |
| Year Ended On |
| January 30, 2004 | January 31, 2003 | February 1, 2002 |
| Cash Flows from Operating Activities: | | | | | |
| | Net Earnings | | | $ 1,877 | $ 1,471 | $ 1,023 |
| Earnings from discontinued operations, net of tax | | | (15) | (12) | (13) |
| Earnings from continuing operations | | | 1,862 | 1,459 | 1,010 |
| | | | | | |
| Adjustments to Reconcile Earnings from Continuing Operations to Net Cash Provided By Operating Activities: | | | | | |
| Depreciation and Amortization | | | 781 | 641 | 530 |
| Deferred Income Taxes | | | 178 | 208 | 42 |
| Loss on Disposition/Writedown of Fixed and Other Assets | | | 31 | 18 | 39 |
| Stock-based Compensation Expense | | | 41 | - | - |
| Tax Effect of Stock Options Exercised | | | 31 | 29 | 35 |
| Changes in Operating Assets and Liabilities: | | | | | |
| Accounts Receivable - Net | | | 2 | (9) | (5) |
| Merchandise Inventory | | | (648) | (357) | (326) |
| Other Operating Assets | | | (45) | (41) | (37) |
| Accounts Payable | | | 423 | 228 | 1 |
| Employee Retirement Plans | | | (14) | 40 | 114 |
| Other Operating Liabilities | | | 399 | 461 | 193 |
| Net Cash Provided by Operating Activities from Continuing Operations | | | 3,041 | 2,677 | 1,596 |
| | | | | | |
| Cash Flows from Investing Activities: | | | | | |
| Decrease (Increase) in Investment Assets: | | | | | |
| Short-Term Investments | | | 139 | (203) | (30) |
| Purchase of Long-Term Investments | | | (381) | (24) | (1) |
| Proceeds from Sale/Maturity of Long-Term Investments | | | 193 | - | 3 |
| Increase in Other Long-Term Assets | | | (95) | (33) | (14) |
| Fixed Assets Acquired | | | (2,444) | (2,359) | (2,196) |
| Proceeds from the Sale of Fixed and Other Long-Term Assets | | | 45 | 44 | 42 |
| Net Cash Used in Investing Activities from Continuing Operations | | | (2,543) | (2,575) | (2,196) |
| | | | | | |
| Cash Flows from Financing Activities: | | | | | |
| Net Decrease in Short-Term Borrowings | | | (50) | (50) | (150) |
| Long-Term Debt Borrowings | | | - | - | 1,087 |
| Repayment of Long-Term Debt | | | (29) | (63) | (63) |
| Proceeds from Employee Stock Purchase Plan | | | 51 | 50 | 38 |
| Proceeds from Stock Options Exercised | | | 97 | 65 | 77 |
| Cash Dividend Payments | | | (86) | (66) | (60) |
| Net Cash (Used in) Provided by Financing Activities from Continuing Operations | | | (17) | (64) | 929 |
| | | | | | |
| Net Cash Provided by Discontinued Operations | | | 112 | 16 | 14 |
| | | | | | |
| Net Increase in Cash and Cash Equivalents | | | 593 | 54 | 343 |
| Cash and Cash Equivalents, Beginning of Period | | | 853 | 799 | 456 |
| Cash and Cash Equivalents, End of Period | | | $ 1,446 | $ 853 | $ 799 |
| | | | | | | |
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