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2/18/00 - LOWE'S REPORTS 51% INCREASE IN FOURTH QUARTER NET EARNINGS FOURTH QUARTER DILUTED EARNINGS PER SHARE INCREASED 50
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WILKESBORO, N.C., Feb 18, 2000 /PRNewswire via COMTEX/ -- Lowe's Companies, Inc. (NYSE: LOW), the world's second largest home improvement retailer, today reported net earnings of $148.9 million for the quarter ended January 28, 2000, a 51 percent increase over the same period a year ago. Diluted earnings per share increased 50 percent to $0.39 from $0.26 in the fourth quarter of 1998. For the fiscal year ended January 28, 2000, net earnings grew 38 percent to $689.8 million while diluted earnings per share increased 34 percent to $1.79, excluding the one-time charge of $0.04 per share for costs related to the merger with Eagle Hardware & Garden, Inc. ("Eagle") on April 2, 1999.

Sales for the quarter increased 20 percent to $3.79 billion, up from $3.17 billion in the fourth quarter of 1998. Sales at the company's comparable stores increased 6.2 percent during the quarter. For the fiscal year ended January 28, 2000, sales increased 19 percent to $15.91 billion. Comparable store sales increased 6.2 percent in fiscal 1999.

Fourth quarter comparable store sales were negatively impacted by the inclement winter weather experienced in several states. Through mid-January, comparable store sales were in excess of 7.5 percent. Snow and ice in the last two weeks of January, particularly in North Carolina, South Carolina and Virginia, had a significant impact on the reported fourth quarter comp number.

"Despite the forces of mother nature, we had a great fourth quarter and a great 1999," commented Robert L. Tillman, Lowe's chairman and CEO. "We opened our first stores west of the Rocky Mountains, successfully integrated the Eagle stores into Lowe's operating systems, and coupled a strong sales quarter with phenomenal earnings performance. Congratulations to our over 80,000 associates whose dedication to superior customer service made this performance possible!"

As announced in the third quarter, Lowe's has elected to change its method of determining the cost of inventories from the last-in, first-out (LIFO) method to the first-in, first-out (FIFO) method. As a result, prior year numbers included in this release have been restated under the FIFO method of accounting in accordance with generally accepted accounting principles. No earnings restatement is needed for the current fiscal year since no LIFO adjustment was incurred this year.

Also, because Lowe's merger with Eagle is accounted for as a pooling of interests, prior year results included in this release have been restated to reflect the combined results of both companies.

During the quarter, Lowe's opened 31 new stores and relocated 5 stores. The company also opened a remodeled Eagle location under the Lowe's name. As of January 28, 2000, Lowe's operates 576 stores in 37 states. Retail square footage grew to 57.0 million, a 19 percent increase over the same period a year ago.

This news release may include "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 trends, the availability of real estate for expansion and its successful development, fluctuations in prices and availability of commodities, unanticipated increases in competition with home improvement chains, adverse weather conditions that affect sales, not fully realized cost savings from the Eagle merger, and greater than anticipated costs associated with the integration of the two businesses.
Lowe's Companies, Inc.
Consolidated Statements of Current and Retained Earnings
In Thousands, Except Per Share Data


Quarter Ended
January 28, 2000 January 29, 1999
Current Earnings Amount Percent Amount Percent

Net sales $3,789,269 100.00 $3,168,821 100.00

Cost of sales 2,692,612 71.06 2,294,441 72.41

Gross margin 1,096,657 28.94 874,380 27.59

Expenses:

Selling, general and
administrative 710,862 18.76 591,439 18.66

Store opening costs 39,051 1.03 27,878 0.88

Depreciation 91,276 2.41 76,456 2.41

Interest 20,528 0.54 21,210 0.67

Nonrecurring merger
costs -- -- -- --

Total expenses 861,717 22.74 716,983 22.62

Pre-tax earnings 234,940 6.20 157,397 4.97

Income tax provision 86,008 2.27 58,479 1.85

Net earnings $ 148,932 3.93 $ 98,918 3.12

Shares outstanding -
Basic 382,351 371,729

Basic earnings per
share $ 0.39 $ 0.27

Shares outstanding -
Diluted 384,772 376,724

Diluted earnings per
share $ 0.39 $ 0.26


Retained Earnings
Balance at beginning
of period $2,626,367 $2,048,335
Net earnings 148,932 98,918
Cash dividends (13,335) (10,526)
Balance at end of
period $2,761,964 $2,136,727


Year Ended
January 28, 2000 January 29, 1999
Current Earnings Amount Percent Amount Percent

Net sales $15,905,595 100.00 $13,330,540 100.00

Cost of sales 11,525,013 72.46 9,756,645 73.19

Gross margin 4,380,582 27.54 3,573,895 26.81

Expenses:

Selling, general
and administrative 2,772,428 17.43 2,341,410 17.56

Store opening costs 98,448 0.62 75,571 0.57

Depreciation 337,359 2.12 288,607 2.17

Interest 84,852 0.54 80,941 0.61

Nonrecurring merger
costs 24,378 0.15 -- --

Total expenses 3,317,465 20.86 2,786,529 20.91

Pre-tax earnings 1,063,117 6.68 787,366 5.90

Income tax provision 390,322 2.45 286,992 2.15

Net earnings $ 672,795 4.23 $ 500,374 3.75

Shares outstanding -
Basic 381,240 370,812

Basic earnings per
share $ 1.76 $ 1.35

Shares outstanding -
Diluted 383,854 375,751

Diluted earnings per
share $ 1.75 $ 1.34


Retained Earnings
Balance at beginning
of period $ 2,136,727 $ 1,677,524
Net earnings 672,795 500,374
Cash dividends (47,558) (41,171)
Balance at end of
period $2,761,964 $ 2,136,727



Lowe's Companies, Inc.
Consolidated Balance Sheets
In Thousands

January 28, % January 29, %
2000 Total 1999 Total

Assets
Current Assets:
Cash and Cash
Equivalents $ 491,122 5.5% $ 228,874 3.2%
Short-Term Investments 77,670 0.9 20,343 0.3
Accounts Receivable
- Net 147,901 1.6 143,928 2.0
Merchandise Inventory 2,812,361 31.2 2,384,700 33.6
Deferred Income Taxes 53,145 0.6 41,814 0.6
Other Current Assets 127,342 1.4 47,201 0.7
Total Current Assets 3,709,541 41.2 2,866,860 40.4
Property, Less Accumulated
Depreciation 5,177,222 57.5 4,085,798 57.7
Long-Term Investments 31,114 0.3 28,716 0.4
Other Assets 94,446 1.0 105,508 1.5
Total Assets $9,012,323 100.0% $7,086,882 100.0%

Liabilities and Shareholders' Equity
Current Liabilities:
Short-Term
Borrowings $ 92,475 1.0% $ 117,075 1.7%
Current Maturities of
Long-Term Debt 59,908 0.7 107,893 1.5
Accounts Payable 1,566,946 17.4 1,220,543 17.2
Employee Retirement
Plans 101,946 1.1 85,466 1.2
Accrued Salaries and
Wages 164,003 1.8 123,545 1.7
Other Current
Liabilities 400,676 4.5 269,734 3.8
Total Current
Liabilities 2,385,954 26.5 1,924,256 27.1
Long-Term Debt,
Excluding Current
Maturities 1,726,579 19.2 1,364,278 19.3
Deferred Income Taxes 199,824 2.2 175,372 2.5
Other Long-Term
Liabilities 4,495 0.0 3,209 0.0
Total Liabilities 4,316,852 47.9 3,467,115 48.9

Shareholders' Equity:
Preferred Stock
- $5 Par Value,
none issued -- --
Common Stock
- $.50 Par Value;
Issued and Outstanding
January 28, 2000
382,359
January 29, 1999
374,388 191,179 2.1 187,194 2.6
Capital in Excess of
Par 1,755,616 19.5 1,325,816 18.7
Retained Earnings 2,761,964 30.6 2,136,727 30.2
Unearned Compensation
-Restricted Stock
Awards (12,868) (0.1) (30,387) (0.4)
Accumulated Other
Comprehensive Income (420) 0.0 417 0.0
Total Shareholders'
Equity 4,695,471 52.1 3,619,767 51.1
Total Liabilities and
Shareholders'
Equity $9,012,323 100.0% $7,086,882 100.0%


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

January 28, January 29, January 30,
2000 1999 1998
Cash Flows From Operating Activities:
Net Earnings $672,795 $500,374 $383,030
Adjustments to Reconcile Net
Earnings to Net Cash Provided
By Operating Activities:
Depreciation 337,359 288,607 255,694
Amortization of Original
Issue Discount 463 445 192
Increase in Deferred Income
Taxes 13,439 8,226 8,024
Loss on Disposition/Writedown
of Fixed and Other Assets 51,520 24,018 14,263
Changes in Operating Assets
and Liabilities:
Accounts Receivable - Net (3,973) (25,520) (846)
Merchandise Inventory (427,661) (399,660) (130,246)
Other Operating Assets (77,704) (7,937) 7,346
Accounts Payable 346,403 184,660 57,658
Employee Retirement Plans 76,024 75,675 61,860
Other Operating Liabilities 182,223 92,757 33,999
Net Cash Provided by Operating
Activities 1,170,888 741,645 690,974

Cash Flows from Investing Activities:
(Increase) Decrease in Investment Assets:
Short-Term Investments (50,998) 19,848 57,103
Purchases of Long-Term
Investments (12,413) (19,866) (15,384)
Proceeds from Sale/Maturity of
Long-Term Investments 2,531 2,644 4,811
Increase in Other Long-Term
Assets (36,643) (21,723) (9,940)
Fixed Assets Acquired (1,472,348) (1,078,107) (826,246)
Proceeds from the Sale of
Fixed and Other Long-Term
Assets 67,837 38,202 31,183
Net Cash Used in Investing
Activities (1,502,034) (1,059,002) (758,473)

Cash Flows from Financing Activities:
Net Increase (Decrease) in
Short-Term Borrowings (24,600) 18,971 17,199
Long-Term Debt Borrowings 394,588 328,159 310,795
Repayment of Long-Term Debt (108,309) (23,318) (36,252)
Proceeds from Stock Offering 348,300 -- --
Proceeds from Stock Options
Exercised 30,973 14,473 1,988
Cash Dividend Payments (47,558) (50,757) (28,653)
Net Cash Provided by Financing
Activities 593,394 287,528 265,077

Net Increase (Decrease) in Cash
and Cash Equivalents 262,248 (29,829) 187,578
Cash and Cash Equivalents,
Beginning of Year 228,874 258,703 61,125
Cash and Cash Equivalents,
End of Year $491,122 $228,874 $258,703


Supplemental Information:

STORE PERFORMANCE PERSPECTIVE

In 1992, Lowe's began a more detailed reporting on the transformation from a chain of small, contractor-oriented stores to a family of modern, home- improvement warehouses. In the fourth quarter of 1999, the transformation is nearly complete as the Large stores contributed 91% of sales and 91% of operating profits. The following tables are intended to assist in understanding the impact of that transformation.
Store Group Categories, presented in these tables, are defined as follows:
1. Yards : Focused Contractor Yards
2. Small : Average of 18,000 square feet
3. Medium : Average of 54,000 square feet
4. Large : Average of more than 100,000 square feet.
All stores in excess of 80,000 square feet.

Large store sales are reported on both a comparable (same-store) basis and new (open less than fourteen months) basis. A relocated store is removed from the comparable store computation until the fourteenth month following its grand opening.
Fourth Quarter 1999

Table 1: Store Group Unit Totals, End of Fourth Quarter


1999 1998 1997
% of % of % of
Total Units Total Units Total Units
Yards 6% 32 6% 32 7% 32

Small 3% 20 6% 31 10% 49

Medium 6% 37 11% 58 16% 76

Large Comp 60% 342 55% 287 48% 228

Large New 25% 145 22% 112 19% 92

Total 100% 576 100% 520 100% 477


Table 2: Sales & Operating Profits* by Store Group, Fourth Quarter

1999 1998 1997
Sales O.P.* Sales O.P.* Sales O.P.*
Yards 3% 2% 3% 3% 3% 3%

Small 1% 1% 3% 2% 5% 5%

Medium 5% 6% 9% 13% 14% 21%

Large Comp 68% 82% 64% 73% 57% 65%

Large New 23% 9% 21% 9% 21% 6%

Total 100% 100% 100% 100% 100% 100%


*Operating Profits before corporate expense and intercompany charges, interest, and income taxes.

Lowe's Companies, Inc. is the second largest retailer of home improvement products in the world, serving nearly five million do-it-yourself retail and commercial business customers weekly through 576 stores in 37 states. Headquartered in Wilkesboro, N.C., the 53-year old company employs over 80,000 people. More information on the company is available on Lowe's web site at www.lowes.com .

SOURCE Lowe's Companies, Inc.
(C) 2000 PR Newswire. All rights reserved.
http://www.prnewswire.com
-0-
CONTACT: shareholders, analysts, Marshall Croom, 336-658-4022, or Carson
Anderson, 336-658-4385, or media, Brian Peace, 336-658-4170, all of Lowe's
Companies, Inc.

WEB PAGE: http://www.lowes.com

GEOGRAPHY: North Carolina

INDUSTRY CODE: REA






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