<PAGE> -1-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended August 1, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-7898
LOWE'S COMPANIES, INC.
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-0578072
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. BOX 1111, NORTH WILKESBORO, N.C. 28656
(Address of principal executive offices)
(Zip Code)
(910)658-4000
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No .
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at August 1, 1997
Common Stock, $.50 par value 174,534,256
15
TOTAL PAGES
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LOWE'S COMPANIES, INC.
- - INDEX -
PART I - Financial Information: Page No.
Consolidated Balance Sheets - August 1, 1997,
July 31, 1996 and January 31, 1997 3
Consolidated Statements of Current and
Retained Earnings - three months and six months
ended August 1, 1997 and July 31, 1996 4
Consolidated Statements of Cash Flows - six
months ended August 1, 1997 and July 31, 1996 5
Notes to Consolidated Financial Statements 6-8
Management's Discussion and Analysis of Results
of Operations and Financial Condition 9-11
Independent Accountants' Report 12
PART II - Other Information 13-14
Item 4 - Submission of Matters to a Vote of Security Holders
Item 6 (a) - Exhibits
Item 6 (b) - Reports on Form 8-K
EXHIBIT INDEX
Exhibit 11 Computation of per share earnings 15
<PAGE> -3-
Consolidated Balance Sheets
Lowe's Companies, Inc. and Subsidiary Companies
Dollars in thousands
<TABLE>
<CAPTION>
August 1, July 31, January 31,
1997 1996 1997
<S> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 35,673 $ 104,966 $ 40,387
Short-term investments 135,826 57,148 30,103
Accounts receivable - net 149,547 143,279 117,562
Merchandise inventory 1,748,931 1,452,715 1,605,880
Other assets 66,063 67,990 57,534
Total current assets 2,136,040 1,826,098 1,851,466
Property, less accumulated
depreciation 2,719,711 2,124,568 2,494,396
Long-term investments 30,328 24,016 35,615
Other assets 49,742 57,043 53,477
Total assets $4,935,821 $4,031,725 $4,434,954
Liabilities and Shareholders' Equity
Current liabilities:
Short-term borrowings $ 84,375 $ 25,034 $ 80,905
Current maturities of
long-term debt 11,750 9,792 22,566
Accounts payable 966,432 773,175 914,167
Employee retirement plans 59,822 44,527 60,770
Accrued salaries and wages 61,588 76,681 71,662
Other current liabilities 278,871 229,409 198,461
Total current liabilities 1,462,838 1,158,618 1,348,531
Long-term debt, excluding
current maturities 934,329 693,649 767,338
Deferred income taxes 105,708 91,809 101,609
Total liabilities 2,502,875 1,944,076 2,217,478
Shareholders' equity
Preferred stock - $5 par value,
none issued - - -
Common stock - $.50 par value;
Issued and Outstanding
August 1, 1997 174,310,291
July 31, 1996 172,597,431
January 31, 1997 173,403,639 87,155 86,299 86,702
Capital in excess of par 937,348 875,606 903,661
Retained earnings 1,423,699 1,133,216 1,245,888
Unearned compensation-restricted
stock awards (15,287) (7,016) (18,434)
Unrealized gain(loss) on available-
for-sale securities 31 (456) (341)
Total shareholders' equity 2,432,946 2,087,649 2,217,476
Total liabilities and
shareholders' equity $4,935,821 $4,031,725 $4,434,954
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> -4-
Consolidated Statements of Current and Retained Earnings
Lowe's Companies, Inc. and Subsidiary Companies
Dollars In Thousands, Except Per Share Data
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
August 1, 1997 July 31, 1996 August 1, 1997 July 31, 1996
Current Earnings Amount Percent Amount Percent Amount Percent Amount Percent
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $2,808,086 100.00 $2,459,008 100.00 $5,208,840 100.00 $4,365,506 100.00
Cost of sales 2,076,993 73.96 1,830,216 74.43 3,854,044 73.99 3,260,214 74.68
Gross margin 731,093 26.04 628,792 25.57 1,354,796 26.01 1,105,292 25.32
Expenses:
Selling, general
and administrative 427,844 15.24 361,915 14.73 840,062 16.13 680,893 15.60
Store opening costs 12,289 0.44 12,560 0.51 20,541 0.39 25,053 0.57
Depreciation 58,569 2.09 47,767 1.94 115,282 2.21 92,402 2.12
Employee retirement plans 19,459 0.69 17,051 0.69 38,721 0.74 30,722 0.70
Interest 16,005 0.57 12,115 0.49 33,290 0.63 25,304 0.58
Total expenses 534,166 19.03 451,408 18.36 1,047,896 20.12 854,374 19.57
Pre-tax earnings 196,927 7.01 177,384 7.21 306,900 5.89 250,918 5.75
Income tax provision 70,431 2.51 63,105 2.56 110,021 2.11 89,577 2.05
Net earnings $126,496 4.50 $114,279 4.65 $196,879 3.78 $161,341 3.70
Shares outstanding
(weighted average) 174,121 163,363 173,821 162,264
Earnings per common & common
equivalent share $0.73 $0.70 $1.13 $0.99
Earnings per common share -
assuming full dilution $0.73 $0.67 $1.13 $0.96
Retained Earnings
Balance at beginning
of period $1,306,755 $1,027,462 1,245,888 988,447
Net earnings 126,496 114,279 196,879 161,341
Cash dividends (9,552) (8,525) (19,068) (16,572)
Balance at end of period $1,423,699 $1,133,216 $1,423,699 $1,133,216
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> -5-
Consolidated Statements of Cash Flows
Lowe's Companies, Inc. and Subsidiary Companies
Dollars in Thousands
<TABLE>
<CAPTION>
For the six months ended
August 1, July 31,
1997 1996
<S> <C> <C>
Cash Flows From Operating Activities:
Net Earnings $196,879 $161,341
Adjustments to Reconcile
Net Earnings to Net Cash
Provided By Operating Activities:
Depreciation 115,282 92,402
Amortization of
Original Issue Discount 86 1,616
Increase
in Deferred Income Taxes 7,004 5,904
(Gain) Loss on Disposition/Writedown
of Fixed and Other Assets 10,397 (385)
Increase in Operating Assets:
Accounts Receivable - Net (31,985) (29,796)
Merchandise Inventory (143,051) (185,638)
Other Operating Assets (11,516) (13,960)
Increase
in Operating Liabilities:
Accounts Payable 52,265 117,776
Employee Retirement Plans 33,032 27,096
Other Operating Liabilities 73,498 88,319
Net Cash Provided by
Operating Activities 301,891 264,675
Cash Flows from Investing Activities:
Decrease (Increase) in Investment Assets:
Short-Term Investments (97,339) 66,166
Purchases of Long-Term Investments (4,547) (9,671)
Proceeds from Sale/Maturity
of Long-Term Investments 2,022 11,578
(Increase) Decrease in Other
Long-Term Assets (2,357) 329
Fixed Assets Acquired (321,741) (282,679)
Proceeds from the Sale of Fixed
and Other Long-Term Assets 7,594 8,426
Net Cash Used in Investing
Activities (416,368) (205,851)
Cash Flows from Financing Activities:
Sources:
Long-Term Debt Borrowings 142,028 -
Net Increase in Short-Term
Borrowings 3,470 8,417
Stock Options Exercised 145 -
Total Financing Sources 145,643 8,417
Uses:
Repayment of Long-Term Debt (16,812) (9,571)
Cash Dividend Payments (19,068) (16,572)
Total Financing Uses (35,880) (26,143)
Net Cash Provided by (Used in)
Financing Activities 109,763 (17,726)
Net (Decrease) Increase in Cash
and Cash Equivalents (4,714) 41,098
Cash and Cash Equivalents,
Beginning of Period 40,387 63,868
Cash and Cash Equivalents,
End of Period $35,673 $104,966
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> -6-
Lowe's Companies, Inc. and Subsidiary Companies
Notes to Consolidated Financial Statements
Note 1: The accompanying Consolidated Financial Statements (unaudited) have
been reviewed by independent certified public accountants, and in
the opinion of management, they contain all adjustments necessary
to present fairly the financial position as of August 1, 1997, and
the results of operations for the quarter and six months ended
August 1, 1997 and July 31, 1996, and the cash flows for the six
months ended August 1, 1997 and July 31, 1996.
Note 2: Effective February 1, 1997, the Company adopted a 52 week fiscal
year, changing the year end date from January 31 to the Friday
nearest January 31. Each quarter of the 52 week fiscal year will
contain 13 weeks except for the fiscal years with 53 weeks.
Note 3: The Company has a cash management program which provides for the
investment of excess cash balances in financial instruments which
have maturities of up to three years. Investments with original
maturities of three months or less when purchased are classified as
cash equivalents. Investments with a maturity of between three
months and one year from the balance sheet date are classified as
short-term investments. Investments with maturities greater than
one year are classified as long-term.
Note 4: Net interest expense is composed of the following ($ in thousands):
Quarter ended Six months ended
August 1, July 31, August 1, July 31,
1997 1996 1997 1996
Long-term debt$ 8,309 $ 8,908 $14,885 $18,671
Capitalized leases 9,914 6,652 19,924 12,328
Short-term debt 1,624 504 5,058 1,702
Amortization of
loan cost 115 97 205 200
Short-term
interest income (2,188) (2,504) (3,687) (4,725)
Interest
capitalized on
construction in
progress (1,769) (1,542) (3,095) (2,872)
Net interest
expense $16,005 $12,115 $33,290 $25,304
Note 5: If the FIFO method of inventory accounting had been used,
inventories would have been $80,247,000 higher at August 1, 1997,
$83,176,000 higher at July 31, 1996 and $74,616,000 higher at
January 31, 1997.
Note 6: Stock options exercised in the three-month and six-month periods
ended August 1, 1997 consisted of 8,000 and 12,000 shares,
respectively, resulting in proceeds of $69,000 and $145,000,
respectively. There were no stock options exercised in the three-
month and six-month periods ended July 31, 1996.
<PAGE> -7-
Note 7: Property is shown net of accumulated depreciation of $708,363,000
at August 1, 1997, $534,376,000 at July 31, 1996 and $609,707,000
at January 31, 1997.
Note 8: Supplemental disclosures of cash flow information ($ in
thousands):
Six months ended
August 1, 1997 July 31, 1996
Cash paid for interest
(net of capitalized) $ 38,305 $ 29,462
Cash paid for income taxes 81,005 49,352
Non-cash investing and
financing activities:
Common stock issued to ESOP 33,980 27,493
Fixed assets acquired under
capital lease 30,873 88,178
Conversion of debt to common stock - 256,798
Note 9: In January 1997, the Board of Directors authorized the funding of
the Fiscal 1996 ESOP contribution primarily with the issuance of
new shares of the Company's common stock. During the first half
of Fiscal 1997, the Company issued 895,152 shares with a market
value of $34 million. The remaining shares will be issued by the
end of the third quarter.
Note 10: On May 9, 1997, the Company registered $350 million of Medium-
Term Notes (MTN's) from a shelf registration filed with the SEC
on November 8, 1996. As of August 1, 1997, the Company had sold
$143 million of these MTN's to investors with final maturities
ranging from June 17, 2027 to May 15, 2037, at yields ranging
from 7.11% to 7.61%. Approximately 70% of the MTN's may be
put at the option of the holder on either the tenth or twentieth
anniversary date of the issue.
Note 11: Earnings per common and common equivalent share is computed based
upon the weighted average number of common shares outstanding
during the period plus the dilutive effect of common shares
contingently issuable from stock options. Earnings per common
share - assuming full dilution reflects the potential dilutive
effect of common share equivalents and the Company's 3%
Convertible Subordinated Notes which were all redeemed or
converted by July 22, 1996.
In February 1997, Statement of Financial Accounting Standards No.
128, "Earnings per Share" (SFAS 128) was issued to simplify the
standards for computing earnings per share (EPS) and make them
comparable to international EPS standards. SFAS 128 is effective
for periods ending after December 15, 1997 and can not be adopted
at an earlier date. SFAS 128 will require dual presentation of
basic and diluted EPS on the face of the statement of current
earnings and a reconciliation of the components of the basic and
diluted EPS calculations in the notes to the financial
statements. Basic EPS excludes dilution and is computed by
dividing net earnings by the weighted-average number of common
shares outstanding for the period. Diluted EPS is similar to
fully diluted EPS pursuant to APB Opinion No. 15. The Company
will adopt SFAS 128 in the quarter and year ending January 30,
1998. Had the new standard been applied in the quarter and six
months ending August 1, 1997, basic and diluted EPS would have
been the same as primary and fully diluted EPS under APB opinion
No. 15.
<PAGE> -8-
Note 12: Statement of Financial Accounting Standards No. 125, "Accounting
for Transfers and Servicing of Financial Assets and
Extinguishment of Liabilities" (SFAS 125), is effective for
transactions after December 31, 1996. The Company has entered
into a new consumer credit card program agreement with the
Monogram Credit Card Bank of Georgia (the Bank), a wholly
owned subsidiary of General Electric Capital Corporation.
Because credit will be extended directly by the Bank, the
provisions of SFAS 125 will not be applicable to the Company.
Note 13: In June 1997, Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income" (SFAS 130) was issued.
SFAS 130 will require disclosure of comprehensive income (which
is defined as "the change in equity during a period excluding
changes resulting from investments by shareholders and
distributions to shareholders") and its components. SFAS 130
is effective for fiscal years beginning after December 15, 1997,
with reclassification of comparative years. The Company will
adopt SFAS 130 in the year ending January 29, 1999. Had the new
standard been applied in the quarter ending August 1, 1997,
comprehensive income would be $219,000 and $372,000 higher than
net earnings for the quarter and six months ending August
1, 1997 due to the unrealized holding gains on available-for-sale
securities.
Statement of Financial Accounting Standards No. 131, "Disclosures
about Segments of an Enterprise and Related Information" (SFAS
131) was also issued in June 1997. SFAS 131 will be effective
for the Company in the fiscal year beginning January 31, 1998.
SFAS 131 redefines how operating segments are determined and
requires disclosure of certain financial and descriptive
information about a company's operating segments. Management
does not believe that the adoption of SFAS 131 will have a
material impact on the Company's current disclosures of its one
operating segment, home improvement retailing.
<PAGE> -9-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
This discussion should be read in conjunction with the financial
statements and the financial statement footnotes included in this Form 10-Q.
For the second quarter ended August 1, 1997, sales increased 14% to
$2.808 billion, net earnings increased 11% to $126.5 million and earnings per
share (fully diluted) were $.73 compared to $.67 in the comparable quarter of
last year. Comparable store sales were up 3%. For the large store group (more
than 80,000 square feet), comparable store sales were up 5%. For the six
months ended August 1, 1997, sales grew 19% to $5.209 billion, net earnings
increased 22% to $196.9 million and earnings per share (fully diluted) were
$1.13 compared to $.96 in the comparable period of last year. Comparable
store sales were up 5% year to date.
Sales in the second quarter were enhanced by the addition of 5.1 million
square feet of retail selling space at new and existing locations since last
year's second quarter. Significant sales gains came in appliances,
electrical, home decor, tools, nursery and gardening, and outdoor hardlines.
Average inflation in sales prices was flat.
Gross margin was 26.04% of sales for the quarter ended August 1, 1997,
versus 25.57% in last year's quarter. The increase in gross margin rate
continues to reflect the continuing shift in business from contractor to
retail, favorable changes in our product mix and ongoing monitoring of store
pricing disciplines. Gross margin for the six months ended August 1, 1997, was
26.01% versus 25.32% last year.
Selling, general and administrative expenses (SG&A) were 15.24% of sales
in the second quarter versus 14.73% in last year's quarter. SG&A increased 18%
compared to a 14% sales increase in the quarter. The unseasonably cool weather
in May 1997 and its effect on sales in that month and soft project sales
throughout the quarter resulted in stores' payroll not being leveraged by
sales for the quarter. For the six months ended August 1, 1997, SG&A was
16.13% of sales versus 15.60% for the comparable period last year. The six
months' SG&A percent of sales was impacted by similar factors which also
occurred in the month of April this year.
For the quarter ended August 1, 1997, store opening costs were $12.3
million versus $12.6 million last year, representing costs associated with the
opening of 9 stores this year (4 new and 5 relocated) compared to 14 stores
last year (12 new and 2 relocated). Charges in this quarter for future and
prior openings were $5.5 million compared to $3.3 million in 1996's second
quarter. For the six months ended August 1, 1997, store opening costs were
$20.5 million versus $25.1 million last year, representing costs associated
with the opening of 17 stores this year (10 new and 7 relocated) compared to
29 stores in the comparable period last year (22 new stores and 7
relocations).
Depreciation was $58.6 million for the quarter ended August 1, 1997 and
$115.3 million for the six months ended August 1, 1997, increasing 23% and
25% over the respective comparable periods last year. The increases are due
primarily to buildings, fixtures, displays, computer equipment and store
equipment relating to the Company's expansion program.
<PAGE> -10-
Employee retirement plans expense increased 14% to $19.5 million for the
quarter ended August 1, 1997. As a percent to sales, employee retirement
plans expense was 0.69%, unchanged from last year's comparable quarter. For
the six months ended August 1, 1997, employee retirement plans expense was up
26% to $38.7 million.
Interest expense increased $8.0 million to $33.3 million for the six
months ended August 1, 1997. This is the result of an increase of $4.1
million in the first quarter and an increase of $3.9 million in the second
quarter. Interest increased primarily due to medium-term notes issued during
the second quarter, new capitalized building leases and short-term interest
expense.
The Company's effective income tax rate was 35.77% for the quarter ended
August 1, 1997, compared to 35.58% for the comparable quarter last year. The
effective rate was 35.85% versus 35.70% for the six months ended August 1,
1997 and July 31, 1996, respectively.
LIQUIDITY AND CAPITAL RESOURCES
The uses of cash in the first six months have continued to lay the
groundwork for successfully implementing the Company's strategic plan. Net
cash provided by operating activities was $302 million for the six months
ended August 1, 1997 compared to $265 million for last year's first six
months. The increase resulted primarily from increased net earnings and less
expansion related increases in inventory levels offset by smaller increases in
accounts payable.
The Company's working capital was $673 million at August 1, 1997 compared
to $667 million at July 31, 1996 and $503 million at January 31, 1997.
Real property has increased as a result of the Company's plan to continue
expansion of retail sales floor square footage by expanding into new markets
and relocating from older, smaller stores to larger stores. The Company's
1997 capital budget is targeted at $1 billion, inclusive of capital leases.
Over 80% of the capital budget is for store expansion. Lowe's ended the
second quarter with 412 stores and 31.9 million square feet of retail selling
space, a 19% increase over selling space at July 31, 1996. Expansion plans
for 1997 consist of approximately 60 to 65 new stores with about 70% in new
markets and the balance relocations of existing stores, for approximately 6.2
million square feet of additional retail space. Approximately one-half of the
1997 projects will be leased. Expansion in the first half of fiscal 1997
included 10 new stores and 7 relocations representing 1.5 million square feet
of new incremental retail space.
Current plans are to finance the Company's 1997 expansion program through
funds from operations, leases, issuance of $58 million in common stock to our
ESOP and from external financing. The Company had $84 million of short-term
borrowings at August 1, 1997 compared to $25 million at July 31, 1996 and $81
million at January 31, 1997. On May 9, 1997, the Company registered $350
million of Medium-Term Notes (MTN's) from its shelf registration filed with
the SEC on November 8, 1996. As of August 12, 1997, the Company had sold $143
million of these MTN's to investors with final maturities ranging from June
17, 2027 to May 15, 2037, at yields ranging from 7.11% to 7.61%.
<PAGE> -11-
Approximately 70% of the MTN's may be put at the option of the holder on
either the tenth or twentieth anniversary date of the issue.
IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, Statement of Financial Accounting Standards No. 128,
"Earnings per Share" (SFAS 128) was issued to simplify the standards for
computing earnings per share (EPS) and make them comparable to international
EPS standards. SFAS 128 is effective for periods ending after December 15,
1997 and can not be adopted at an earlier date. SFAS 128 will require dual
presentation of basic and diluted EPS on the face of the statement of current
earnings and a reconciliation of the components of the basic and diluted EPS
calculations in the notes to the financial statements. Basic EPS excludes
dilution and is computed by dividing net earnings by the weighted-average
number of common shares outstanding for the period. Diluted EPS is similar to
fully diluted EPS pursuant to Accounting Principles Board (APB) Opinion No.
15. The Company will adopt SFAS 128 in the quarter and year ending January
30, 1998. Had the new standard been applied in the three months and six
months ending August 1, 1997, basic and diluted EPS would have been the same
as primary and fully diluted EPS under APB Opinion No. 15.
In June 1997, Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" (SFAS 130) was issued. SFAS 130 will require
disclosure of comprehensive income (which is defined as "the change in equity
during a period excluding changes resulting from investments by shareholders
and distributions to shareholders") and its components. SFAS 130 is effective
for fiscal years beginning after December 15, 1997, with reclassification of
comparative years. The Company will adopt SFAS 130 in the year ending January
29, 1999. Had the new standard been applied in the quarter ending August 1,
1997, comprehensive income would be $219,000 and $372,000 higher than net
earnings for the quarter and the six months ending August 1, 1997 due to the
unrealized holding gains on available-for-sale securities.
Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information" (SFAS 131) was also issued
in June 1997. SFAS 131 will be effective for the Company in the fiscal year
beginning January 31, 1998. SFAS 131 redefines how operating segments are
determined and requires disclosure of certain financial and descriptive
information about a company's operating segments. Management does not believe
that the adoption of SFAS 131 will have a material impact on the Company's
current disclosures of its one operating segment, home improvement retailing.
FORWARD-LOOKING LANGUAGE
This Securities and Exchange Commission Form 10-Q 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, they are
based on information existing at the time made. Therefore, it can give no
assurance that such expectations will prove to be correct. Important factors
that could cause actual results to differ from expectations include, but are
not limited to, general economic trends, availability and development of real
estate for expansion, commodity markets, and the nature of competition and
weather conditions, all of which are described in detail in the Company's 1996
Annual Report.
<PAGE> -12-
INDEPENDENT ACCOUNTANTS' REPORT
The Board of Directors
Lowe's Companies, Inc.:
We have reviewed the accompanying consolidated balance sheet of Lowe's
Companies, Inc. and subsidiary companies as of August 1, 1997, and the
related consolidated statements of current and retained earnings for the
quarter and six months ended August 1, 1997 and July 31, 1996, and of
cash flows for the six months ended August 1, 1997 and July 31, 1996.
These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical
procedures to financial data and of making inquiries of persons
responsible for financial and accounting matters. It is substantially
less in scope than an audit conducted in accordance with generally
accepted auditing standards, the objective of which is the expression of
an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to such consolidated financial statements for them to be
in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of Lowe's Companies,
Inc. and subsidiary companies as of January 31, 1997, and the related
consolidated statements of current and retained earnings and of cash
flows for the year then ended (not presented herein); and in our report
dated February 20, 1997, we expressed an unqualified opinion on those
consolidated financial statements. In our opinion, the information set
forth in the accompanying consolidated balance sheet as of January 31,
1997 is fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
/s/ Deloitte & Touche LLP
Charlotte, North Carolina
August 12, 1997
<PAGE> -13-
Part II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders.
(a)-The annual meeting of shareholders was held May 30, 1997.
(b)-Directors elected at the meeting: Leonard G. Herring, Carol A. Farmer,
Robert G. Schwartz, Robert L. Strickland, Paul Fulton and James F.
Halpin
-Incumbent Directors whose terms expire in subsequent years are: William
A. Andres, John M. Belk, Claudine B. Malone and Robert L. Tillman
(c)-The matters voted upon at the meeting and the results of the voting
were as follows:
(1) Election of Directors:
FOR WITHHELD
Class I:
Leonard G. Herring
147,488,359 592,126
Class II:
Carol A. Farmer
147,367,190 713,295
Robert G. Schwartz
147,394,457 686,028
Robert L. Strickland
147,493,732 586,753
Class III:
Paul Fulton
147,468,756 611,729
James F. Halpin
147,437,366 643,119
(2) Proposal to approve an amendment to change to a fixed board not to
exceed 15 members:
For 146,453,815, Against 736,014, Abstain 384,339.
(3) Proposal to approve the 1997 Incentive Plan:
For 141,589,433, Against 6,031,003, Abstain 460,049.
Item 6 (a) - Exhibits
Exhibit 11 - Computation of per share earnings
Item 6 (b) - Reports on Form 8-K
A report on Form 8-K was filed May 13, 1997 by the registrant. Therein
under Item 7, the Company filed certain exhibits in connection with the
Registrant's offering from time to time of its Medium-Term Notes, Series
B, at an aggregate initial offering price not to exceed $350 million
pursuant to its shelf registration statements on Form S-3 (file nos. 33-
51865 and 333-14257)
<PAGE> -14-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LOWE'S COMPANIES, INC.
September 12, 1997 \s\ Richard D. Elledge
Date_______________________ _____________________________________
Richard D. Elledge,
Senior Vice President and Chief Accounting Officer
<PAGE> -15-
Item 6 (a) - Exhibits
Exhibit 11 - Computation of per share earnings
Three Months Ended Six Months Ended
August 1, July 31, August 1, July 31,
1997 1996 1997 1996
Earnings per Common & Common Equivalent Share:
Net Earnings $126,496 $114,279 $196,879 $161,341
Weighted Average
Shares Outstanding 174,054 163,286 173,753 162,187
Dilutive Effect
of Common
Stock Equivalent 67 77 68 77
Weighted Average Shares,
as Adjusted 174,121 163,363 173,821 162,264
Earnings per Common &
Common Equivalent
Share $.73 $.70 $1.13 $.99
Earnings per Common Share - Assuming Full Dilution:
Net Earnings $126,496 $114,279 $196,879 $161,341
Interest (After Taxes) on
Convertible Debt - 1,703 - 3,614
Net Earnings,
as Adjusted $126,496 $115,982 $196,879 $164,955
Weighted Average Shares
Outstanding 174,054 163,286 173,753 162,187
Dilutive Effect of Common
Stock Equivalents 67 77 68 77
Shares Added if All Debt
Converted - 9,259 - 10,068
Weighted Average Shares,
as Adjusted 174,121 172,622 173,821 172,332
Earnings per Common Share
- Assuming Full
Dilution $.73 $.67 $1.13 $.96
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<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-30-1998
<PERIOD-END> AUG-01-1997
<CASH> 35,673
<SECURITIES> 135,826
<RECEIVABLES> 149,547
<ALLOWANCES> 0
<INVENTORY> 1,748,931
<CURRENT-ASSETS> 2,136,040
<PP&E> 2,719,711
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,935,821
<CURRENT-LIABILITIES> 1,462,838
<BONDS> 0
0
0
<COMMON> 87,155
<OTHER-SE> 2,345,791
<TOTAL-LIABILITY-AND-EQUITY> 4,935,821
<SALES> 5,208,840
<TOTAL-REVENUES> 5,208,840
<CGS> 3,854,044
<TOTAL-COSTS> 3,854,044
<OTHER-EXPENSES> 1,014,606
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 33,290
<INCOME-PRETAX> 306,900
<INCOME-TAX> 110,021
<INCOME-CONTINUING> 196,879
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> 196,879
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