Lowe's Companies (LOW) 10-Q 1 Dec 09 2010 Q3 Quarterly report Financial data

Consolidated Balance Sheets

Consolidated Balance Sheets (USD $)
In Millions	Oct. 30, 2009	Jan. 30, 2009	Oct. 31, 2008
Assets
Cash and cash equivalents	$1,141	$245	$322
Short-term investments	509	416	445
Merchandise inventory - net	8,424	8,209	8,327
Deferred income taxes - net	205	166	230
Other current assets	213	215	197
Total current assets	10,492	9,251	9,521
Property, less accumulated depreciation	22,557	22,722	22,602
Long-term investments	864	253	466
Other assets	496	460	440
Total assets	34,409	32,686	33,029
Liabilities and Shareholders' Equity
Short-term borrowings	0	987	249
Current maturities of long-term debt	553	34	34
Accounts payable	5,046	4,109	4,831
Accrued compensation and employee benefits	558	434	516
Self-insurance liabilities	780	751	723
Deferred revenue	719	674	748
Other current liabilities	1,321	1,033	1,330
Total current liabilities	8,977	8,022	8,431
Long-term debt, excluding current maturities	4,524	5,039	5,044
Deferred income taxes - net	556	660	751
Other liabilities	933	910	846
Total liabilities	14,990	14,631	15,072
Preferred stock - $5 par value, none issued	0	0	0
Common stock - $.50 par value	739	735	734
Capital in excess of par value	398	277	215
Retained earnings	18,236	17,049	17,012
Accumulated other comprehensive income (loss)	46	(6)	(4)
Total shareholders' equity	19,419	18,055	17,957
Total liabilities and shareholders' equity	$34,409	$32,686	$33,029

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Par Value Disclosures) (USD $)
	Oct. 30, 2009	Jan. 30, 2009	Oct. 31, 2008
Shareholders' equity:
Preferred stock - $5 par value, none issued	5	5	5
Common stock - $.50 par value	0.5	0.5	0.5

Consolidated Balance Sheets (Sh

Consolidated Balance Sheets (Shares Issued and Oustanding Disclosures) (USD $)
Share data in Millions	Oct. 30, 2009	Jan. 30, 2009	Oct. 31, 2008
Shareholders' equity:
Preferred stock; shares issued and outstanding	0	0	0
Common stock; shares issued and outstanding	1,477	1,470	1,467

Consolidated Statements of Curr

Consolidated Statements of Current and Retained Earnings (USD $)
In Millions, unless otherwise specified	3 Months Ended Oct. 30, 2009	3 Months Ended Oct. 31, 2008	9 Months Ended Oct. 30, 2009	9 Months Ended Oct. 31, 2008
Current Earnings
Net sales	$11,375	$11,728	$37,052	$38,246
Cost of sales	7,485	7,743	24,143	25,113
Gross margin	3,890	3,985	12,909	13,133
Expenses:
Selling, general and administrative	2,872	2,726	8,924	8,464
Store opening costs	10	31	38	70
Depreciation	403	385	1,212	1,142
Interest - net	77	65	231	210
Total expenses	3,362	3,207	10,405	9,886
Pre-tax earnings	528	778	2,504	3,247
Income tax provision	184	290	926	1,214
Net earnings	344	488	1,578	2,033
Weighted average common shares outstanding - basic	1,466	1,459	1,464	1,456
Basic earnings per common share	0.23	0.33	1.07	1.39
Weighted average common shares outstanding - diluted	1,469	1,461	1,466	1,469
Diluted earnings per common share	0.23	0.33	1.07	1.38
Cash dividends per share	0.09	0.085	0.265	0.25
Retained Earnings
Balance at beginning of period	18,025	16,648	17,049	15,345
Net earnings	344	488	1,578	2,033
Cash dividends	(133)	(124)	(391)	(366)
Balance at end of period	$18,236	$17,012	$18,236	$17,012

1_Consolidated Statements of Cu

Consolidated Statements of Current and Retained Earnings (Percents) (USD $)
	3 Months Ended Oct. 30, 2009	3 Months Ended Oct. 31, 2008	9 Months Ended Oct. 30, 2009	9 Months Ended Oct. 31, 2008
Current Earnings
Net Sales	1	1	1	1
Cost of Sales	0.658	0.6602	0.6516	0.6566
Gross margin	0.342	0.3398	0.3484	0.3434
Expenses:
Selling, general and administrative	0.2525	0.2323	0.2409	0.2213
Store opening costs	0.0009	0.0027	0.001	0.0018
Depreciation	0.0354	0.0329	0.0327	0.0299
Interest - net	0.0068	0.0056	0.0062	0.0055
Total expenses	0.2956	0.2735	0.2808	0.2585
Pre-tax earnings	0.0464	0.0663	0.0676	0.0849
Income tax provision	0.0162	0.0247	0.025	0.0317
Net earnings	0.0302	0.0416	0.0426	0.0532

Consolidated Statements of Cash

Consolidated Statements of Cash Flows (USD $)
In Millions	9 Months Ended Oct. 30, 2009	9 Months Ended Oct. 31, 2008
Cash flows from operating activities:
Net earnings	$1,578	$2,033
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	1,303	1,232
Deferred income taxes	(142)	99
Loss on property and other assets - net	140	48
Loss on redemption of long-term debt	0	8
Share-based payment expense	78	79
Net changes in operating assets and liabilities:
Merchandise inventory - net	(203)	(725)
Other operating assets	(4)	77
Accounts payable	933	1,124
Other operating liabilities	684	383
Net cash provided by operating activities	4,367	4,358
Cash flows from investing activities:
Purchases of short-term investments	(283)	(179)
Proceeds from sale/maturity of short-term investments	397	265
Purchases of long-term investments	(1,204)	(1,097)
Proceeds from sale/maturity of long-term investments	380	837
Increase in other long-term assets	(19)	(53)
Property acquired	(1,414)	(2,539)
Proceeds from sale of property and other long-term assets	17	26
Net cash used in investing activities	(2,126)	(2,740)
Cash flows from financing activities:
Net decrease in short-term borrowings	(1,002)	(786)
Proceeds from issuance of long-term debt	3	13
Repayment of long-term debt	(27)	(564)
Proceeds from issuance of common stock under employee stock purchase plan	37	39
Proceeds from issuance of common stock from stock options exercised	22	94
Cash dividend payments	(391)	(366)
Repurchase of common stock	(4)	(8)
Excess tax benefits of share-based payments	0	1
Net cash used in financing activities	(1,362)	(1,577)
Effect of exchange rate changes on cash	17	0
Net increase in cash and cash equivalents	896	41
Cash and cash equivalents, beginning of period	245	281
Cash and cash equivalents, end of period	$1,141	$322

Basis of Presentation

Basis of Presentation
	9 Months Ended Oct. 30, 2009
Note to Consolidated Financial Statements
Basis of Presentation	Note 1: Basis of Presentation - The accompanying consolidated financial statements (unaudited) and notes to consolidated financial statements (unaudited) are presented in accordance with the rules and regulations of the Securities and Exchange Commission and do not include all the disclosures normally required in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America. The consolidated financial statements (unaudited), in the opinion of management, contain all adjustments necessary to present fairly the financial position as of October 30, 2009, and October 31, 2008, and the results of operations for the three and nine months ended October 30, 2009, and October 31, 2008, and cash flows for the nine months ended October 30, 2009 and October 31, 2008. The Company has evaluated subsequent events through December 1, 2009, the date the consolidated financial statements were issued.These interim consolidated financial statements (unaudited) should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Lowe's Companies, Inc. (the Company) Annual Report on Form 10-K for the fiscal year ended January 30, 2009 (the Annual Report). The financial results for the interim periods may not be indicative of the financial results for the entire fiscal year.

Fair Value Measurements and Fin

Fair Value Measurements and Financial Instruments
	9 Months Ended Oct. 30, 2009
Note to Consolidated Financial Statements
Fair Value Measurements and Financial Instruments	Note 2: Fair Value Measurements and Financial Instruments - Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative guidance for fair value measurements establishes a three-level hierarchy, which encourages an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of the hierarchy are defined as follows: Level 1 - inputs to the valuation techniques that are quoted prices in active markets for identical assets or liabilitiesLevel 2 - inputs to the valuation techniques that are other than quoted prices but are observable for the assets or liabilities, either directly or indirectlyLevel 3 - inputs to the valuation techniques that are unobservable for the assets or liabilitiesAssets and Liabilities that are Measured at Fair Value on a Recurring BasisThe following tables present the Companys financial assets measured at fair value on a recurring basis as of October 30, 2009, October 31, 2008, and January 30, 2009, classified by fair value hierarchy: Fair Value Measurements at Reporting Date Using Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (In millions) October 30, 2009 (Level 1) (Level 2) (Level 3) Short-term investments Available-for-sale securities $ 469 $ 98 $ 371 $ - Trading securities 40 40 - - Long-term investments Available-for-sale securities 864 - 864 - Fair Value Measurements at Reporting Date Using Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (In millions) October 31, 2008 (Level 1) (Level 2) (Level 3) Short-term investments Available-for-sale securities $ 412 $ 122 $ 290 $ - Trading securities 33 33 - - Long-term investments Available-for-sale securities 466 - 466 - Fair Value Measurements at Reporting Date Using Quoted Prices in Active Markets for Identical Assets Significant Other Observable Inputs Significant Unobservable Inputs (In millions) January 30, 2009 (Level 1) (Level 2) (Level 3) Short-term investments Available-for-sale securities $ 385 $ 81 $ 304 $ - Trading securities 31 31 - - Long-term investments Available-for-sale securities 253 - 253 - When available, quoted prices are used to determine fair value. When quoted prices in active markets are available, investments are classified within Level 1 of the fair value hierarchy. The Companys Level 1 investments primarily consist of investments in money market and mutual funds. When quoted prices in active markets are not available, fair values are determined using pricing models and the inputs to those pricing models are based on observable market inputs. The inputs to the pricing models are typically benchmark yields, reported trades, broker-dealer quotes, issuer spreads and benchmark securities, among others. The Companys Level 2 investments primarily

Restricted Investment Balances

Restricted Investment Balances
	9 Months Ended Oct. 30, 2009
Note to Consolidated Financial Statements
Restricted Investment Balances	Note 3: Restricted Investment Balances - Short-term and long-term investments include restricted balances pledged as collateral for letters of credit for the Companys extended warranty program and for a portion of the Companys casualty insurance and Installed Sales program liabilities. Restricted balances included in short-term investments were $233 million at October 30, 2009, $227 million at October 31, 2008, and $214 million at January 30, 2009. Restricted balances included in long-term investments were $147 million at October 30, 2009, $119 million at October 31, 2008, and $143 million at January 30, 2009.

Property

Property
	9 Months Ended Oct. 30, 2009
Note to Consolidated Financial Statements
Property	Note 4: Property - Property is shown net of accumulated depreciation of $9.7 billion at October 30, 2009, $8.5 billion at October 31, 2008, and $8.8 billion at January 30, 2009.

Extended Warranties

Extended Warranties
	9 Months Ended Oct. 30, 2009
Note to Consolidated Financial Statements
Extended Warranties	Note 5: Extended Warranties The Company sells separately-priced extended warranty contracts under a Lowes-branded program for which the Company is ultimately self-insured. The Company recognizes revenue from extended warranty sales on a straight-line basis over the respective contract term. Extended warranty contract terms primarily range from one to four years from the date of purchase or the end of the manufacturers warranty, as applicable. The Companys extended warranty deferred revenue is included in other liabilities (non-current) on the consolidated balance sheets. Changes in deferred revenue for extended warranty contracts are summarized as follows: Three Months Ended Nine Months Ended (In millions) October 30, 2009 October 31, 2008 October 30, 2009 October 31, 2008 Extended warranty deferred revenue, beginning of period $ 521 $ 456 $ 479 $ 407 Additions to deferred revenue 53 45 167 150 Deferred revenue recognized (39) (32) (111) (88) Extended warranty deferred revenue, end of period $ 535 $ 469 $ 535 $ 469 Incremental direct acquisition costs associated with the sale of extended warranties are also deferred and recognized as expense on a straight-line basis over the respective contract term. Deferred costs associated with extended warranty contracts were $143 million at October 30, 2009, $116 million at October 31, 2008, and $121 million at January 30, 2009. The Companys extended warranty deferred costs are included in other assets (non-current) on the consolidated balance sheets. All other costs, such as costs of services performed under the contract, general and administrative expenses and advertising expenses, are expensed as incurred.The liability for extended warranty claims incurred is included in self-insurance liabilities on the consolidated balance sheets. Changes in the liability for extended warranty claims are summarized as follows: Three Months Ended Nine Months Ended (In millions) October 30, 2009 October 31, 2008 October 30, 2009 October 31, 2008 Liability for extended warranty claims, beginning of period $ 21 $ 17 $ 17 $ 14 Accrual for claims incurred 19 15 49 40 Claim payments (17) (13) (43) (35) Liability for extended warranty claims, end of period $ 23 $ 19 $ 23 $ 19

Comprehensive Income

Comprehensive Income
	9 Months Ended Oct. 30, 2009
Note to Consolidated Financial Statements
Comprehensive Income	Note 6: Comprehensive Income - Comprehensive income represents changes in shareholders equity from non-owner sources and is comprised of net earnings plus or minus unrealized gains or losses on available-for-sale securities and foreign currency translation adjustments. The following table reconciles net earnings to comprehensive income for the three and nine months ended October 30, 2009, and October 31, 2008. Three Months Ended Nine Months Ended (In millions) October 30, 2009 October 31, 2008 October 30, 2009 October 31, 2008 Net earnings $ 344 $ 488 $ 1,578 $ 2,033 Foreign currency translation adjustments - (10) 51 (9) Net unrealized investment (losses) gains - (2) 2 (3) Comprehensive income $ 344 $ 476 $ 1,631 $ 2,021

Earnings Per Share

Earnings Per Share
	9 Months Ended Oct. 30, 2009
Note to Consolidated Financial Statements
Earnings Per Share	Note 7: Earnings Per Share Effective January 31, 2009, the Company adopted authoritative guidance issued by the FASB that states that all outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends participate in undistributed earnings with common shareholders and, therefore, need to be included in the earnings allocation in computing earnings per share under the two-class method. The retrospective application of the provisions of the guidance reduced previously reported basic earnings per common share by $0.01 for the nine months ended October 31, 2008. Under the two-class method, net earnings are reduced by the amount of dividends declared in the period for each class of common stock and participating security. The remaining undistributed earnings are then allocated to common stock and participating securities as if all of the net earnings for the period had been distributed. Basic earnings per common share excludes dilution and is calculated by dividing net earnings allocable to common shares by the weighted-average number of common shares outstanding for the period. Diluted earnings per common share is calculated by dividing net earnings allocable to common shares by the weighted-average number of common shares as of the balance sheet date, as adjusted for the potential dilutive effect of non-participating share-based awards and convertible notes. The following table reconciles earnings per common share for the three and nine months ended October 30, 2009, and October 31, 2008. Three Months Ended Nine Months Ended (In millions, except per share data) October 30, 2009 October 31, 2008 October 30, 2009 October 31, 2008 Basic earnings per common share: Net earnings $ 344 $ 488 $ 1,578 $ 2,033 Less: Net earnings allocable to participating securities (3) (2) (12) (11) Net earnings allocable to common shares $ 341 $ 486 $ 1,566 $ 2,022 Weighted-average common shares outstanding 1,466 1,459 1,464 1,456 Basic earnings per common share $ 0.23 $ 0.33 $ 1.07 $ 1.39 Diluted earnings per common share: Net earnings $ 344 $ 488 $ 1,578 $ 2,033 Net earnings adjustment for interest on convertible notes, net of tax - - - 2 Net earnings, as adjusted 344 488 1,578 2,035 Less: Net earnings allocable to participating securities (3) (2) (12) (11) Net earnings allocable to common shares $ 341 $ 486 $ 1,566 $ 2,024 Weighted-average common shares outstanding 1,466 1,459 1,464 1,456 Dilutive effect of non-participating share-based awards 3 2 2 2 Dilutive effect of convertible notes - - - 11 Weighted-average common shares, as adjusted 1,469 1,461 1,466 1,469 Diluted earnings per common share $ 0.23 $ 0.33 $ 1.07 $ 1.38 Stock options to purchase 18.0 million and 19.4 million shares of common stock were excluded from the computation of diluted earnings per common share because their effect would have been anti-dilutive for the three months ended October 30, 2009, and October 31, 2008, respectively. Stock options to purchase 21.5 million and 17.8 million shares of common stock were excl

Supplemental Disclosures

Supplemental Disclosures
	9 Months Ended Oct. 30, 2009
Note to Consolidated Financial Statements
Supplemental Disclosure	Note 8: Supplemental Disclosure Net interest expense is comprised of the following: Three Months Ended Nine Months Ended (In millions) October 30, 2009 October 31, 2008 October 30, 2009 October 31, 2008 Long-term debt $ 73 $ 73 $ 219 $ 219 Short-term borrowings - 2 2 9 Capitalized leases 7 7 21 24 Interest income (4) (11) (13) (32) Interest capitalized (4) (10) (12) (25) Other 5 4 14 15 Interest - net $ 77 $ 65 $ 231 $ 210 Supplemental disclosures of cash flow information: Nine Months Ended (In millions) October 30, 2009 October 31, 2008 Cash paid for interest, net of amount capitalized $ 284 $ 287 Cash paid for income taxes $ 788 $ 952 Non-cash investing and financing activities: Non-cash property acquisitions $ 47 $ 185 Change in equity method investments $ (3) $ (5) Conversions of long-term debt to equity $ - $ 1

Recent Accounting Pronouncement

Recent Accounting Pronouncements
	9 Months Ended Oct. 30, 2009
Note to Consolidated Financial Statements
Recent Accounting Pronouncements	Note 9: Recent Accounting Pronouncements In June 2009, the FASB issued authoritative guidance which amends the derecognition guidance on accounting for transfers of financial assets. The guidance is effective for financial asset transfers occurring in fiscal years beginning after November 15, 2009, and interim periods within those fiscal years. The Company does not expect the adoption of the guidance to have a material impact on its consolidated financial statements.In June 2009, the FASB issued authoritative guidance which amends the consolidation guidance for variable interest entities. The guidance is effective for fiscal years beginning after November 15, 2009, and interim periods within those fiscal years. The Company does not expect the adoption of the guidance to have a material impact on its consolidated financial statements.In October 2009, the FASB issued authoritative guidance on multiple-deliverable revenue arrangements, which addresses the unit of accounting for arrangements involving multiple deliverables. The guidance also addresses how arrangement consideration should be allocated to separate units of accounting, when applicable, and expands the disclosure requirements for multiple-deliverable arrangements. The guidance is effective for fiscal years beginning after June 15, 2010. The Company is currently evaluating the impact of the guidance on its consolidated financial statements.

Document and Entity Information

Document and Entity Information (USD $)
	9 Months Ended Oct. 30, 2009	Nov. 27, 2009	Aug. 01, 2008
Entity and document information
Entity registrant name	LOWES COMPANIES INC,
Entity central index key	0000060667
Document type	10-Q
Document period end date	2009-10-30
Amendment flag	false
Current fiscal year end date	--01-30
Entity well known seasoned issuer	Yes
Entity voluntary filers	No
Entity current reporting status	Yes
Entity filer category	Large Accelerated Filer
Entity public float			$22,800,000,000
Entity common stock shares outstanding		1,472,032,172