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News Release

Lowe's Reports Record Earnings for the Fourth Quarter and Fiscal Year
- Fourth Quarter Total Sales Increased 17.9 Percent - - Fourth Quarter Earnings Per Share Increased 30.6 Percent to $0.64 - - Fourth Quarter Comparable Store Sales Increased 6.9 Percent - - Fiscal Year 2004 Total Sales Increased 18.2 Percent -

MOORESVILLE, N.C., Feb 23, 2005 /PRNewswire-FirstCall via COMTEX/ -- Lowe's Companies, Inc. (NYSE: LOW), the world's second largest home improvement retailer, today reported net earnings of $508 million for the quarter ended January 28, 2005, a 26.7 percent increase over the same period a year ago. Diluted earnings per share increased 30.6 percent to $0.64 from $0.49 in the fourth quarter of 2003. For the fiscal year ended January 28, 2005, net earnings grew 18.0 percent to $2.18 billion while diluted earnings per share increased 18.9 percent to $2.71.

(Logo: http://www.newscom.com/cgi-bin/prnh/20031205/LOWLOGO )

Sales for the quarter increased 17.9 percent to $8.55 billion, up from $7.25 billion in the fourth quarter of 2003. Comparable store sales for the fourth quarter increased 6.9 percent. For the year ended January 28, 2005, sales increased 18.2 percent to $36.5 billion. Comparable store sales increased 6.6 percent for fiscal 2004.

"The results our stores delivered in the fourth quarter highlighted a great year for Lowe's," commented Robert A. Niblock, Lowe's chairman, president and chief executive officer. "During the year we completed the successful rollout of our new installed sales model, enhanced our special order sales offering, and continued to improve our ability to serve commercial business customers.

"In addition, Lowe's invested over $400 million in our existing stores to ensure the bright, clean, inspirational shopping environment remains consistent across our entire chain," explained Niblock. "These initiatives, and a strong culture of customer service, will be the foundation of our future growth."

During the quarter, Lowe's opened 56 new stores. As of January 28, 2005, Lowe's operated 1,087 stores in 48 states representing 123.7 million square feet of retail selling space, a 13.8 percent increase over last year.

As required by Emerging Issues Task Force (EITF) Issue No. 04-8, The Effect of Contingently Convertible Debt on Diluted Earnings per Share, the company has included in its diluted earnings per share calculation shares associated with its contingently convertible debt issued in October 2001. As also required by EITF 04-8, the company has restated diluted earnings per share for all prior periods back to the issuance of this debt to conform to this new accounting standard. The effect of the adoption was to increase the number of shares used in the computation of diluted earnings per share by approximately 10 million shares in the affected periods.

The adoption of EITF 04-8 reduced earnings per share by $0.01 and $0.03 for our fiscal fourth quarter and year ended January 28, 2005, respectively. Earnings per share were reduced by $0.01 and $0.02 for our fiscal fourth quarter and year ending January 30, 2004, respectively.

Following disclosures by a number of public companies regarding adjustments to their accounting practices for leases, Lowe's has reviewed its accounting policies for leases. Subsequent to this review, the company, in consultation with its independent registered public accounting firm and following discussions with the audit committee of the board of directors, has concluded to restate Lowe's prior period financial statements to correct errors resulting from its accounting for leases. In the restatement, Lowe's has accelerated its depreciation expense for lease assets to generally align the depreciable lives of those assets with the initial lease term. Lowe's is also revising its calculation of rent expense (and the related deferred rent liability) for its ground leases by including in its straight line rent expense calculations any "rent holiday" period those ground leases allow while a Lowe's store is being constructed on the leased property. These non-cash charges will not have any impact on Lowe's historical or future cash flows, sales or comparable store sales. They also will not increase the amount of rent expense or depreciation over the term of the lease.

These changes to our accounting for leases reduced diluted earnings per share by less than $.01 in our fiscal fourth quarter and by $.02 in our fiscal year ended January 28, 2005. Restating our prior period financial statements reduced our diluted earnings per share by $.01 in our prior year fiscal fourth quarter and by $.04 in our prior fiscal year.

The effect of adopting EITF 04-8 and the adjustments made in the restatement to reflect the changes in our accounting for leases are reflected in the unaudited financial statements attached to this earnings release. The effect of both is also reflected in the net earnings and earnings per share information for all periods that is reported in this release.

A conference call to discuss fourth quarter 2004 operating results is scheduled for today (Wednesday, 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 http://www.Lowes.com/investor and clicking on Lowe's Fourth Quarter and Fiscal Year End 2004 Earnings Conference Call Webcast. A replay of the call will be archived on Lowes.com.

Lowe's Business Outlook

This outlook is based on current expectations and includes "forward- looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Although the company currently 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 2005 (comparisons to first quarter 2004)

    -- The company expects to open 28 new stores reflecting square footage
       growth of 13 to 14 percent

    -- Total sales are expected to increase approximately 15 percent

    -- The company expects to report a comparable store sales increase of 5 to
       6 percent

    -- Operating margin (defined as gross margin less SG&A and depreciation)
       is expected to increase approximately 130 basis points

    -- Store opening costs are expected to be approximately $23 million

    -- Diluted earnings per share of $0.75 to $0.77 are expected

    -- Lowe's first quarter ends on April 29, 2005 with operating results to
       be publicly released on Monday, May 16, 2005

Fiscal Year 2005 -- a 53-week Year (comparisons to fiscal year 2004 -- a 52-week year)

-- 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

    -- The company expects to report a comparable store sales increase of
       approximately 5 percent

    -- Operating margin (defined as gross margin less SG&A and depreciation)
       is expected to increase approximately 20 basis points

    -- Store opening costs are expected to be approximately $127 million

    -- Diluted earnings per share of $3.25 to $3.34 are expected for the
       fiscal year ending February 3, 2006

This news release includes "forward-looking statements" within the meaning the Private Securities Litigation Reform Act of 1995 (the "Act"). Statements of the company's expectations for sales growth, earnings and performance, capital expenditures, store openings, demand for services, and any statement of an assumption underlying any of the foregoing, constitute "forward-looking statements" under the Act. Although the company believes that the expectations, opinions, projections, and comments reflected in its forward- looking statements are reasonable, it can give no assurance that such statements will prove to be correct. A wide-variety of potential risks, uncertainties, and other factors could materially affect our ability to achieve the results expressed or implied by our forward-looking statements including, but not limited to, fluctuations in and the overall condition of the U.S. economy, environment affecting new store development, the company's ability to attract, train, and retain highly-qualified personnel, stability of costs and availability of sourcing channels, the company's ability to manage its growth and respond to competition, impact of regulatory and legal matters, and the company's ability to absorb lost sales resulting from unanticipated weather conditions. Additional information regarding these and other risks and uncertainties are provided in our periodic filings with the Securities and Exchange Commission. The forward-looking statements contained in this news release speak only as of the date of this release and the company does not assume any obligation to update any such statements.

With fiscal year 2004 sales of $36.5 billion, Lowe's Companies, Inc. is a FORTUNE(R) 50 company that serves approximately 11 million customers a week at more than 1,075 home improvement stores in 48 states. Based in Mooresville, N.C., the 59-year old company is the second-largest home improvement retailer in the world. For more information, visit Lowes.com.

Lowe's Companies, Inc.
     Consolidated Statements of Current and Retained Earnings
     In Millions, Except Per Share Data

                                           Three Months Ended
                                              As Previously
                                                Reported         As Restated
                          January 28, 2005  January 30, 2004  January 30, 2004
    Current Earnings      Amount   Percent  Amount   Percent  Amount   Percent

    Net sales             $8,550    100.00  $7,252    100.00  $7,252    100.00

    Cost of sales          5,561     65.04   4,931     68.00   4,931     68.00

    Gross margin           2,989     34.96   2,321     32.00   2,321     32.00

    Expenses:

    Selling, general and
     administrative        1,834     21.45   1,378     19.00   1,383     19.07

    Store opening costs       51      0.60      45      0.62      45      0.62

    Depreciation             236      2.76     203      2.80     208      2.87

    Interest                  43      0.50      45      0.62      45      0.62

    Total expenses         2,164     25.31   1,671     23.04   1,681     23.18

    Pre-tax earnings         825      9.65     650      8.96     640      8.82

    Income tax provision     317      3.71     249      3.43     245      3.37

    Earnings from
     continuing
     operations              508      5.94     401      5.53     395      5.45

    Earnings from
     discontinued
     operations, net
     of tax                   --      0.00       6      0.08       6      0.08

    Net earnings          $  508      5.94   $ 407      5.61   $ 401      5.53


    Weighted average
     shares
     outstanding
     - Basic                 773               787               787

    Basic earnings per
     share
    Continuing
     operations            $0.66             $0.51             $0.50
    Discontinued
     operations               --              0.01              0.01
    Basic earnings per
     share                 $0.66             $0.52             $0.51

    Weighted average
     shares
     outstanding
     - Diluted               805               819               819

    Diluted earnings
     per share
    Continuing
     operations            $0.64             $0.49             $0.48
    Discontinued
     operations               --              0.01              0.01
    Diluted earnings per
     share                 $0.64             $0.50             $0.49

    Cash dividends per
     share                 $0.04             $0.03             $0.03


    Retained Earnings
    Balance at beginning
     of period            $9,157            $7,293            $7,196
    Net earnings             508               407               401
    Cash dividends           (31)              (23)              (23)
    Balance at end of
     period               $9,634            $7,677            $7,574


     Lowe's Companies, Inc.
     Consolidated Statements of Current and Retained Earnings
     In Millions, Except Per Share Data

                                               Years Ended
                                              As Previously
                                                Reported        As Restated
                          January 28, 2005  January 30, 2004  January 30, 2004
    Current Earnings      Amount   Percent  Amount   Percent  Amount   Percent

    Net sales            $36,464    100.00 $30,838    100.00  $30,838   100.00

    Cost of sales         24,165     66.27  21,231     68.85   21,231    68.85

    Gross margin          12,299     33.73   9,607     31.15    9,607    31.15

    Expenses:

    Selling, general and
     administrative        7,562     20.74   5,543     17.97    5,578    18.09

    Store opening costs      123      0.34     128      0.42      128     0.42

    Depreciation             902      2.47     758      2.46      777     2.52

    Interest                 176      0.48     180      0.58      180     0.58

    Total expenses         8,763     24.03   6,609     21.43    6,663    21.61

    Pre-tax earnings       3,536      9.70   2,998      9.72    2,944     9.54

    Income tax provision   1,360      3.73   1,136      3.68    1,115     3.61

    Earnings from
     continuing
     operations            2,176      5.97   1,862      6.04    1,829     5.93

    Earnings from
     discontinued
     operations, net
     of tax                   --      0.00      15      0.05       15     0.05

    Net earnings          $2,176      5.97  $1,877      6.09   $1,844     5.98


    Weighted average
     shares
     outstanding
     - Basic                 777               785                785

    Basic earnings per
     share
    Continuing
     operations            $2.80             $2.37              $2.33
    Discontinued
     operations               --              0.02               0.02
    Basic earnings per
     share                 $2.80             $2.39              $2.35

    Weighted average
     shares
     outstanding
     - Diluted               808               816                816

    Diluted earnings per
     share
    Continuing
     operations            $2.71             $2.30              $2.26
    Discontinued
     operations               --              0.02               0.02
    Diluted earnings
     per share             $2.71             $2.32              $2.28

    Cash dividends
     per share             $0.15             $0.11              $0.11


    Retained Earnings
    Balance at beginning
     of period            $7,574            $5,887             $5,817
    Net earnings           2,176             1,877              1,844
    Cash dividends          (116)              (87)               (87)
    Balance at end of
     period               $9,634            $7,677             $7,574


     Lowe's Companies, Inc.
     Consolidated Statements of Earnings, Actual and Pro Forma (Unaudited)
     In Millions, Except Per Share Data

                                           Three Months Ended

                                                        Pro Forma  As Restated
                               Actual      Pro Forma    Adjusted*     Actual
                             January 28,  Adjustments* January 28, January 30,
    Current Earnings            2005                      2005         2004

    Net sales                  $8,550      $   --       $ 8,550      $ 7,252
    Cost of sales               5,561         246         5,807        4,931
    Gross margin                2,989        (246)        2,743        2,321
    Expenses:
    Selling, general
     and administrative         1,834        (250)        1,584        1,383
    Store opening costs            51          --            51           45
    Depreciation                  236          --           236          208
    Interest                       43          --            43           45
    Total expenses              2,164        (250)        1,914        1,681
    Pre-tax earnings              825           4           829          640
    Income tax provision          317           2           319          245
    Earnings from
     continuing operations        508           2           510          395
    Earnings from
     discontinued operations,
     net of tax                    --          --            --            6
    Net earnings               $  508      $    2       $   510      $   401


    Weighted average shares
     outstanding - Basic          773                       773          787
    Basic earnings per share:
    Continuing operations      $ 0.66      $  --        $  0.66      $  0.50
    Discontinued operations        --         --             --         0.01
    Basic earnings per share   $ 0.66      $  --        $  0.66      $  0.51

    Weighted average shares
     outstanding - Diluted        805                       805          819
    Diluted earnings per share:
    Continuing operations      $ 0.64      $  --        $  0.64      $  0.48
    Discontinued operations        --         --             --         0.01
    Diluted earnings per share $ 0.64      $  --        $  0.64      $  0.49

    *: Reflects the impact of EITF 02-16 on the Consolidated Statement of
       Earnings for the three months ended January 28, 2005.


                                                    Year Ended

                                                        Pro Forma  As Restated
                               Actual      Pro Forma    Adjusted*     Actual
                             January 28,  Adjustments* January 28, January 30,
    Current Earnings            2005                      2005         2004

    Net sales                  $36,464    $    --        $36,464     $30,838
    Cost of sales               24,165        941         25,106      21,231
    Gross margin                12,299       (941)        11,358       9,607
    Expenses:
    Selling, general
     and administrative          7,562     (1,151)         6,411       5,578
    Store opening costs            123         --            123         128
    Depreciation                   902         --            902         777
    Interest                       176         --            176         180
    Total expenses               8,763     (1,151)         7,612       6,663
    Pre-tax earnings             3,536        210          3,746       2,944
    Income tax provision         1,360         81          1,441       1,115
    Earnings from
     continuing operations       2,176        129          2,305       1,829
    Earnings from
     discontinued
     operations,
     net of tax                     --         --             --          15
    Net earnings               $ 2,176    $   129        $ 2,305     $ 1,844


    Weighted average shares
     outstanding - Basic           777                       777         785
    Basic earnings per share:
    Continuing operations      $  2.80    $  0.17        $  2.97     $  2.33
    Discontinued operations         --         --             --        0.02
    Basic earnings per share   $  2.80    $  0.17        $  2.97     $  2.35

    Weighted average shares
     outstanding - Diluted         808                       808         816
    Diluted earnings per share:
    Continuing operations      $  2.71    $  0.16        $  2.87     $  2.26
    Discontinued operations         --         --             --        0.02
    Diluted earnings per share $  2.71    $  0.16        $  2.87     $  2.28

    *: Reflects the impact of EITF 02-16 on the Consolidated Statement of
       Earnings for the year ended January 28, 2005.


     Lowe's Companies, Inc.
     Consolidated Balance Sheets
     In Millions, Except Par Value Data

                                                        As
                                                    Previously
                                                     Reported     As Restated
                                      January 28,   January 30,    January 30,
                                         2005          2004           2004
    Assets

       Current assets:
         Cash and cash equivalents     $   642        $   913        $   913
         Short-term investments            171            711            711
         Accounts receivable - net           9            146            146
         Merchandise inventory           5,982          4,584          4,584
         Deferred income taxes              95             59             62
         Other assets                       75            106            106

         Total current assets            6,974          6,519          6,522

         Property, less accumulated
          depreciation                  13,911         11,945         11,819
         Long-term investments             146            169            169
         Other assets                      178            241            241

         Total assets                  $21,209        $18,874        $18,751

    Liabilities and shareholders'
     equity

       Current liabilities:
         Current maturities of
          long-term debt               $   630        $    77        $    77
         Accounts payable                2,687          2,212          2,212
         Accrued salaries and wages        386            335            335
         Other current liabilities       2,016          1,576          1,576

         Total current liabilities       5,719          4,200          4,200

         Long-term debt, excluding
          current maturities             3,060          3,678          3,678
         Deferred income taxes             736            657            594
         Other long-term liabilities       159             30             63

         Total liabilities               9,674          8,565          8,535

       Shareholders' equity:
         Preferred stock - $5 par
          value, none issued                --             --             --
         Common stock - $.50 par value;
             Shares issued and
                  outstanding
              January 28,
               2005        774
              January 30,
               2004        787             387            394            394
         Capital in excess of par        1,514          2,237          2,247
         Retained earnings               9,634          7,677          7,574
         Accumulated other
          comprehensive income              --              1              1

         Total shareholders' equity     11,535         10,309         10,216

         Total liabilities and
          shareholders' equity         $21,209        $18,874        $18,751


     Lowe's Companies, Inc.
     Consolidated Statements of Cash Flows
     In Millions

                                                    Years Ended
                                                        As
                                                    Previously
                                                     Reported     As Restated
                                      January 28,   January 30,    January 30,
                                         2005          2004           2004
    Cash Flows From Operating
     Activities:
      Net earnings                    $ 2,176        $ 1,877        $ 1,844
      Earnings from discontinued
       operations, net of tax              --            (15)           (15)
      Earnings from
       continuing operations            2,176          1,862          1,829

         Adjustments to reconcile
          earnings from continuing
          operations
         to net cash provided by
          operating activities:
             Depreciation and
              amortization                920            781            800
             Deferred income taxes        119            178            157
             Loss on
              disposition/writedown
              of fixed and
              other assets                 21             31             31
             Stock-based compensation
              expense                      70             41             51
             Tax effect of
              stock options
              exercised                    23             31             31
             Changes in operating
              assets
              and liabilities:
               Accounts receivable
                - net                     125            (16)           (16)
               Merchandise
                inventory              (1,389)          (648)          (648)
               Other operating
                assets                     31            (10)           (10)
               Accounts payable           475            421            421
               Other operating
                liabilities               462            271            296
         Net cash provided by
          operating activities
          from continuing
          operations                    3,033          2,942          2,942

    Cash flows from investing
     activities:
         Decrease (Increase) in
          investment assets:
            Short-term
             investments                  690             86             86
            Purchases of long-term
             investments                 (156)          (381)          (381)
            Proceeds from
             sale/maturity
             of long-term
             investments                   28            193            193
         Increase in other long-term
          assets                          (14)           (95)           (95)
         Fixed assets acquired         (2,927)        (2,345)        (2,345)
         Proceeds from the sale
          of fixed and other
          long-term assets                122             45             45
         Net cash used in investing
          activities from continuing
          operations                   (2,257)        (2,497)        (2,497)

    Cash flows from financing
     activities:
         Net decrease in
          short-term borrowings            --            (50)           (50)
         Repayment of long-term debt      (82)           (29)           (29)
         Proceeds from employee stock
          purchase plan                    61             52             52
         Proceeds from stock options
          exercised                        90             97             97
         Cash dividend payments          (116)           (87)           (87)
         Repurchase of common stock    (1,000)            --             --
         Net cash used in financing
          activities from continuing
          operations                   (1,047)           (17)           (17)

    Net cash provided by discontinued
     operations                            --            112            112

    Net (decrease) increase in cash
     and cash equivalents                (271)           540            540
    Cash and cash equivalents,
     beginning of period                  913            373            373
    Cash and cash equivalents,
     end of period                       $642           $913           $913

SOURCE Lowe's Companies, Inc.

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