UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

 

 

   

  

 

 

 

SIGNATURES

 

 

 
 

LOWE'S COMPANIES, INC.
EXHIBIT INDEX
 

                     99.1                  Press Release, dated May 19, 2003, announcing financial results for the Company's 
               quarter ended May 2, 2003.

 EXHIBIT 99.1

 May 19, 2003

 For 7:00 am EDT Release

 

 Contacts: Shareholders'/Analysts' Inquiries:                                                     Media Inquiries:

                   Paul Taaffe                                                                                             Chris Ahearn
                   336-658-5239                                                                                        336-658-7387

 

LOWE'S REPORTS RECORD EARNINGS FOR FIRST QUARTER

-- First Quarter Net Earnings Increased 21.7 Percent --

-- First Quarter Total Sales Increased 11.4 Percent --

WILKESBORO, N.C. - Lowe's Companies, Inc. (NYSE: LOW), the world's second largest home improvement retailer, today reported net earnings of $421 million for the quarter ended May 2, 2003, a 21.7 percent increase over the same period a year ago. Diluted earnings per share increased 20.5 percent to $0.53 from $0.44 in the first quarter of 2002.

Sales for the quarter increased 11.4 percent to $7.21 billion, up from $6.47 billion in the first quarter of 2002. Comparable store sales for the first quarter increased 0.1 percent.

"A strong housing market and improving consumer confidence continue to support the American conviction to invest in the home despite the effect of adverse weather and uncertain world events," commented Robert L. Tillman, Lowe's chairman and CEO. "In a society where home is increasingly the centerpiece of the American dream, Lowe's makes it easy for our customers to express their unique taste and style by providing compelling stores, knowledgeable service, and great products at guaranteed low prices."

During the quarter, Lowe's opened 21 new stores. As of May 2, 2003, Lowe's operated 875 stores in 45 states representing 97.2 million square feet of retail selling space, a 12.9 percent increase over last year.

A conference call to discuss first quarter 2003 operating results is scheduled for today (Monday, May 19) at 9:00 a.m. EDT. 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 and clicking on About Lowe's, Investor Information, Shareholder Services, Calendar of Events. A replay of the call will be archived on www.lowes.com for 7 days.

Comments Regarding Adoption of Emerging Issues Task Force Issue 02-16

Emerging Issues Task Force ("EITF") Issue 02-16, "Accounting by a Customer (including a Reseller) for Certain Consideration Received from a Vendor", was issued by the EITF in November 2002 with transition provisions subsequently issued in January 2003.  The January 2003 transition rules stated that this issue would apply to all agreements entered into or significantly modified after December 31, 2002.

As we have previously announced, our current accounting treatment for vendor provided funds is consistent with the provisions of this issue with the exception of cooperative advertising allowances or co-op.  We currently account for co-op as direct offsets against advertising expenses.  Under EITF 02-16, these types of funds can only be used to offset advertising expenses if the co-op funds are a reimbursement of a specific, identifiable and incremental cost incurred by Lowe's in selling the vendor's product.

We do not expect this issue to have a material impact on our fiscal 2003 financial statements since substantially all of our cooperative advertising allowance agreements for fiscal 2003 were entered into prior to December 31, 2002.

We have assessed the historic volume of co-op reimbursements that have been received in order to determine which of these reimbursements would meet the specific, identifiable and incremental criteria outlined under this issue and accordingly, qualify as a direct offset to advertising expense.  Based on our analysis of the impact on net income, and the administrative costs to identify and track reimbursements between those qualifying for expense offset and those requiring inventory cost reduction, we have elected to treat all co-op funds received from vendors as a reduction in the cost of inventory and recognize them as a reduction to cost of goods sold when the inventory is liquidated.  We estimate that the prospective change in the timing of income recognition will reduce fiscal 2004 EPS by approximately $0.12 per share.  Had our vendor agreements for fiscal 2003 not been entered into prior to December 31, 2002, we estimate that the reduction of EPS would be approximately $0.11 per share in fiscal 2003.

The adoption of this issue does not change the ultimate cash to be received under these agreements nor the timing of cash flows, only the timing of when it is reflected in net income. In short, this represents a change only in the timing of earnings recognition, not in the amount of earnings ultimately recognized over the terms of the agreements.

 

Lowe's Business Outlook

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.

Second Quarter 2003 (comparisons to second quarter 2002)

• The company expects to open 25 stores reflecting square footage growth of approximately 13 percent

• Total sales are expected to increase approximately 13 percent
• The company expects to report comparable store sales of 2 to 4 percent
• Operating margin (defined as gross margin less SG&A and depreciation) is expected to increase 20 to 30 basis points
• Store opening costs are expected to be approximately $23 million

• Diluted earnings per share of $0.68 to $0.70 are expected

• Lowe's second quarter ends on August 1, 2003 with operating results to be publicly released on Monday, August 18, 2003

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 14 to 15 percent for the year
• The company expects to report a comparable store sales increase of approximately 3 to 4 percent
• Operating margin (defined as gross margin less SG&A and depreciation) is expected to increase 20 to 30 basis points
• Store opening costs are expected to be approximately $140 million

• Diluted earnings per share of $2.16 to $2.20 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 875 home improvement stores in 45 states. In 2003, FORTUNE named Lowe's America's Most Admired Specialty Retailer. Based in Wilkesboro, 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 Statements of Current and Retained Earnings (Unaudited)
In Millions, Except Per Share Data
	Three Months Ended
	May 2, 2003			May 3, 2002
Current Earnings	Amount	Percent		Amount	Percent
Net sales	$ 7,211	100.00		$ 6,471	100.00
Cost of sales	4,973	68.96		4,548	70.29
Gross margin	2,238	31.04		1,923	29.71
Expenses:
Selling, general and administrative	1,314	18.22		1,141	17.64
Store opening costs	19	0.26		37	0.57
Depreciation	180	2.50		145	2.24
Interest	48	0.67		47	0.73
Total expenses	1,561	21.65		1,370	21.18
Pre-tax earnings	677	9.39		553	8.53
Income tax provision	256	3.55		207	3.19
Net earnings	$     421	5.84		$     346	5.34
Shares outstanding - Basic	783			777
Basic earnings per share	$     0.54			$     0.45
Shares outstanding - Diluted	802			798
Diluted earnings per share	$     0.53			$     0.44
Retained earnings
Balance at beginning of period	$  5,887			$   4,482
Net earnings	421			346
Cash dividends	(20)			(16)
Balance at end of period	$  6,288			$   4,812

 

Lowe's Companies, Inc.
Consolidated Balance Sheets
In Millions, Except Par Value Data
					(Unaudited)		(Unaudited)
					May 2,		May 3,		January 31,
					2003		2002		2003
Assets
Current assets:
Cash and cash equivalents					$  1,600		$  1,476		$  853
Short-term investments					77		48		273
Accounts receivable - net					189		193		172
Merchandise inventory					4,864		4,360		3,968
Deferred income taxes					72		97		58
Other current assets					251		267		244
Total current assets					7,053		6,441		5,568
Property, less accumulated
depreciation					10,545		8,992		10,352
Long-term investments					132		19		29
Other assets					170		159		160
Total assets					$ 17,900		$ 15,611		$ 16,109
Liabilities and shareholders' equity
Current liabilities:
Short-term borrowings					$ 50		$ 100		$ 50
Current maturities of long-term debt					30		60		29
Accounts payable					3,069		2,740		1,943
Employee retirement plans					27		136		88
Accrued salaries and wages					169		175		306
Other current liabilities					1,570		1,286		1,162
Total current liabilities					4,915		4,497		3,578
Long-term debt, excluding current maturities					3,733		3,736		3,736
Deferred income taxes					499		314		478
Other long-term liabilities					18		7		15
Total liabilities					9,165		8,554		7,807
Shareholders' equity
Preferred stock - $5 par value, none issued					-		-		-
Common stock - $.50 par value;
Shares issued and outstanding
May 2, 2003		783
May 3, 2002		777
January 31, 2003		782			392		389		391
Capital in excess of par value					2,055		1,856		2,023
Retained earnings					6,288		4,812		5,887
Accumulated other comprehensive income					-		-		1
Total shareholders' equity					8,735		7,057		8,302
Total liabilities and shareholders' equity					$ 17,900		$ 15,611		$ 16,109

 

Lowe's Companies, Inc.
Consolidated Statements of Cash Flows (Unaudited)
In Millions
		For the Three Months Ended
		May 3,		May 2,
		2003		2002
Cash Flows From Operating Activities:
Net Earnings		$ 421		$ 346
Adjustments to Reconcile Net Earnings to Net Cash
Provided By Operating Activities:
Depreciation and Amortization		184		150
Deferred Income Taxes		7		4
Loss on Disposition/Writedown of Fixed and Other Assets		7		9
Stock-Based Compensation Expense		5		-
Tax Effect of Stock Options Exercised		4		6
Changes in Operating Assets and Liabilities:
Accounts Receivable - Net		(17)		(27)
Merchandise Inventory		(896)		(749)
Other Operating Assets		(8)		(69)
Accounts Payable		1,126		1,026
Employee Retirement Plans		(61)		33
Other Operating Liabilities		274		445
Net Cash Provided by Operating Activities		1,046		1,174
Cash Flows from Investing Activities:
(Decrease) Increase in Investment Assets:
Short-Term Investments		206		10
Purchases of Long-Term Investments		(164)		(2)
Proceeds from Sale/Maturity of Long-Term Investments		47		-
Increase in Other Long-Term Assets		(16)		(9)
Fixed Assets Acquired		(392)		(501)
Proceeds from the Sale of Fixed and Other Long-Term Assets		19		4
Net Cash Used in Investing Activities		(300)		(498)
Cash Flows from Financing Activities:
Repayment of Long-Term Debt		(7)		(7)
Proceeds from Stock Options Exercised		28		24
Cash Dividend Payments		(20)		(16)
Net Cash Provided by Financing Activities		1		1
Net Increase (Decrease) in Cash and Cash Equivalents		747		677
Cash and Cash Equivalents, Beginning of Year		853		799
Cash and Cash Equivalents, End of Year		$ 1,600		$ 1,476