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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
Date of Report (Date of Earliest Event Reported): February 22, 1999
LOWE'S COMPANIES, INC.
(Exact Name of Registrant as Specified in its Charter)
NORTH CAROLINA 1-7898 56-0578072
(State Of Incorporation) (Commission (IRS Employer
File Number) Identification No.)
Highway 268 East
North Wilkesboro, NC 28656
(336) 658-4000
(Address and Telephone Number of Registrant's Principal Executive Offices)
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ITEM 5. OTHER EVENTS.
On February 22, 1999, the Company issued a news release announcing the
fourth quarter and fiscal 1998 financial results. A copy of the news release
is attached as an exhibit to this filing.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
99.1(a) News release dated February 22, 1999 announcing fourth quarter
and fiscal 1998 financial results.
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 hereunto duly authorized.
LOWE'S COMPANIES, INC.
Date: February 22, 1999
By: /S/ KENNETH W. BLACK, JR.
Kenneth W. Black, Jr.
Vice President and
Corporate Controller
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EXHIBIT INDEX
Exhibit No. Description
99.1(a) News release dated February 22, 1999 announcing fourth
quarter and fiscal 1998 financial results.
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EXHIBIT 99.1(a)
February 22, 1999
For 6:30am EST Release
Contacts: Shareholders'/Analysts' Inquiries: Media Inquiries:
Robert Niblock 336-658-4860 Brian Peace
Carson Anderson 336-658-4385 336-658-4170
LOWE'S REPORTS RECORD FOURTH QUARTER EARNINGS
-- Net Earnings Increased 46% --
NORTH WILKESBORO, N.C. - Lowe's Companies, Inc. (NYSE: LOW), the nation's
second largest home improvement retailer, today reported record earnings of
$106.2 million for the fourth quarter ended January 29, 1999, a 46 percent
increase over the same period a year ago. Diluted earnings per share increased
43 percent to $0.30, up from $0.21 in the fourth quarter of 1997. For fiscal
1998, net earnings grew 35 percent to $482.4 million, compared to $357.5
million in fiscal 1997. Diluted earnings per share increased 32 percent to
$1.36 in fiscal 1998, up from $1.03 in fiscal 1997.
Cost of Sales in the fourth quarter included a LIFO credit of $17.9 million as
compared to a LIFO credit of $12.5 million in the same quarter last year. For
fiscal 1998, the company recorded a LIFO credit of $29.0 million compared to a
LIFO credit of $7.0 million for fiscal 1997.
As previously reported, sales for the quarter increased 21.6 percent to $2.92
billion, up from $2.40 billion in the fourth quarter of 1997. Sales at the
company's "comparable stores" (stores open in excess of one year) increased
8.2 percent during the quarter. Fiscal 1998 sales totaled $12.24 billion, a
20.8 percent increase over fiscal 1997 sales of $10.14 billion. Comparable
store sales increased 5.9 percent in fiscal 1998.
"In 1998, we identified three key initiatives to better serve our customers
installed sales, special order sales, and an enhanced focus on the commercial
business customer," said Robert L. Tillman, Lowe's Chairman and Chief
Executive Officer. "The success of these three initiatives has had a
meaningful impact on store performance and we anticipate further sales gains
as we continue to expand and improve these initiatives. In fiscal 1999, we
anticipate an approximately 18-20% increase in store square footage and are
expecting sales gains of approximately 20%."
During the quarter, Lowe's opened 36 new stores, bringing the company's total
store count to 484 stores in 27 states. Retail square footage grew to 43.4
million square feet, 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, general economic trends,
availability and development of real estate for expansion, fluctuation in
prices in commodities, the nature of competition and weather conditions, all
of which are described in greater detail in Lowe's 1997 Annual Report.
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Lowe's Companies, Inc.
Consolidated Statements of Current and Retained Earnings
In Thousands, Except Per Share Data
<TABLE>
<CAPTION>
Quarter Ended Year Ended
--------------------------------------------------------------------------------
January 29, 1999 January 30, 1998 January 29, 1998 January 30, 1998
Current Earnings Amount % Amount % Amount % Amount %
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $ 2,915,664 100.00 $ 2,397,568 100.00 $ 12,244,882 100.00 $ 10,136,890 100.00
Cost of sales 2,096,331 71.90 1,733,478 72.30 8,950,156 73.09 7,447,117 73.47
Gross margin 819,333 28.10 664,090 27.70 3,294,726 26.91 2,689,773 26.53
Expenses:
Selling, general and
administrative 534,187 18.32 440,229 18.36 2,118,149 17.30 1,754,780 17.31
Store opening costs 24,988 0.86 26,788 1.12 71,651 0.59 69,999 0.69
Depreciation 72,104 2.47 65,053 2.72 271,769 2.22 240,880 2.38
Interest 19,801 0.68 17,231 0.72 74,735 0.61 65,567 0.64
Total expenses 651,080 22.33 549,301 22.92 2,536,304 20.72 2,131,226 21.02
Pre-tax earnings 168,253 5.77 114,789 4.78 758,422 6.19 558,547 5.51
Income tax provision 62,041 2.13 42,282 1.76 276,000 2.25 201,063 1.98
Net earnings $ 106,212 3.64 $ 72,507 3.02 $ 482,422 3.94 $ 357,484 3.53
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Shares outstanding
(weighted average) 352,761 349,815 352,104 348,554
Basic Earnings Per Share $ 0.30 $ 0.21 $ 1.37 $ 1.03
Diluted Earnings Per Share $ 0.30 $ 0.21 $ 1.36 $ 1.03
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Retained Earnings
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Balance at beginning
of period $ 1,910,699 $ 1,502,212 $ 1,565,133 $ 1,245,888
Net earnings 106,212 72,507 482,422 357,484
Cash dividends (10,527) (9,586) (41,171) (38,239)
Balance at end of period $ 2,006,384 $ 1,565,133 $ 2,006,384 $ 1,565,133
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</TABLE>
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Lowe's Companies, Inc.
Consolidated Balance Sheets
In Thousands
<TABLE>
<CAPTION>
January 29, % January 30, %
1999 Total 1998 Total
--------------- ------ ------------- -----
<S> <C> <C> <C> <C>
Assets
Current Assets:
Cash and Cash Equivalents $ 222,709 3.5 $ 195,146 3.7
Short-Term Investments 20,343 0.3 16,155 0.3
Accounts Receivable - Net 143,928 2.3 118,408 2.3
Merchandise Inventory 2,104,845 33.2 1,714,592 32.8
Deferred Income Taxes 56,124 0.9 34,116 0.7
Other Current Assets 37,734 0.5 31,185 0.6
Total Current Assets 2,585,683 40.7 2,109,602 40.4
Property, Less Accumulated
Depreciation 3,636,917 57.3 3,005,199 57.6
Long-Term Investments 28,716 0.5 35,161 0.7
Other Assets 93,335 1.5 69,315 1.3
Total Assets $ 6,344,651 100.0 $ 5,219,277 100.0
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Liabilities and Shareholders' Equity
Current Liabilities:
Short-Term Borrowings $ 92,475 1.4 $ 98,104 1.9
Current Maturities of Long-Term Debt 99,019 1.6 12,478 0.2
Accounts Payable 1,133,177 17.9 969,777 18.7
Employee Retirement Plans 80,104 1.3 64,669 1.2
Accrued Salaries and Wages 112,749 1.8 83,377 1.6
Other Current Liabilities 247,820 3.9 220,915 4.2
Total Current Liabilities 1,765,344 27.9 1,449,320 27.8
Long-Term Debt, Excluding Current Maturites 1,283,092 20.2 1,045,570 20.0
Deferred Income Taxes 160,263 2.5 123,778 2.4
Total Liabilities 3,208,699 50.6 2,618,668 50.2
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Shareholders' Equity:
Preferred Stock - $5 Par Value, none issued - -
Common Stock - $.50 Par Value;
Issued and Outstanding
January 29, 1999 352,643
January 30, 1998 350,632 176,321 2.8 175,316 3.3
Capital in Excess of Par 983,217 15.5 892,666 17.1
Retained Earnings 2,006,384 31.6 1,565,133 30.0
Unearned Compensation-Restricted Stock Awards (30,387) (0.5) (32,694) (0.6)
Accumulated Other Comprehensive Income 417 0.0 188 0.0
Total Shareholders' Equity 3,135,952 49.4 2,600,609 49.8
Total Liabilities and Shareholders' Equity $ 6,344,651 100.0 $ 5,219,277 100.0
</TABLE>
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Lowe's Companies, Inc.
Consolidated Statements of Cash Flows
In Thousands
<TABLE>
<CAPTION>
January 29, January 30, January 31,
Fiscal Years Ended on 1999 1998 1997
----------- ----------- ----------
- -
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net Earnings $482,422 $357,484 $292,150
Adjustments to Reconcile Net Earnings to Net Cash
Provided By Operating Activities:
Depreciation 271,769 240,880 198,115
Amortization of Original Issue Discount 445 192 1,671
Increase in Deferred Income Taxes 14,337 7,637 17,043
Loss on Disposition/Writedown of Fixed and Other Assets 23,540 14,263 9,892
Changes in Operating Assets and Liabilities:
Accounts Receivable - Net (25,520) (846) (4,079)
Merchandise Inventory (390,253) (108,712) (338,803)
Other Operating Assets (6,313) 6,732 (4,788)
Accounts Payable 163,400 55,610 258,768
Employee Retirement Plans 75,508 60,527 59,736
Other Operating Liabilities 87,513 31,103 53,288
Net Cash Provided by Operating Activities 696,848 664,870 542,993
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Cash Flows from Investing Activities:
(Increase) Decrease in Investment Assets:
Short-Term Investments 19,848 25,773 98,754
Purchases of Long-Term Investments (19,866) (15,384) (27,259)
Proceeds from Sale/Maturity of Long-Term Investments 2,644 4,811 12,203
(Increase) Decrease in Other Long-Term Assets (18,528) (5,472) 3,456
Fixed Assets Acquired (928,040) (772,792) (677,160)
Proceeds from the Sale of Fixed and Other Long-Term Assets 38,202 31,183 11,615
Net Cash Used in Investing Activities (905,740) (731,881) (578,391)
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Cash Flows from Financing Activities:
Net Increase (Decrease) in Short-Term Borrowings (5,629) 17,199 64,288
Long-Term Debt Borrowings 296,159 265,795 -
Repayment of Long-Term Debt (15,458) (32,781) (17,662)
Proceeds from Stock Options Exercised 12,140 210 -
Cash Dividend Payments (50,757) (28,653) (34,709)
Net Cash Provided by Financing Activities 236,455 221,770 11,917
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Net Increase (Decrease) in Cash and Cash Equivalents 27,563 154,759 (23,481)
Cash and Cash Equivalents, Beginning of Year 195,146 40,387 63,868
Cash and Cash Equivalents, End of Year $222,709 $195,146 $ 40,387
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</TABLE>
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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 fourth quarter 1998, the Large stores contributed
83% of sales and 81% of operating profits. The following tables are intended
to assist the user 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 19,000 square feet
3. Medium : Average of 57,000 square feet
4. Large : Average of more than 100,000 square feet.
All stores in excess of 80,000 square feet.
Further, Large store sales are reported on both a comparable (same-store)
basis and new (open less than a year) basis. A relocated store is removed
from the comparable store computation until it has been open at least 12
months.
Fourth Quarter 1998
Table 1: Store Group Unit Totals, End of Fourth Quarter
1998 1997 1996
% of % of % of
Total Units Total Units Total Units
----- ----- ----- ----- ----- -----
Yards 7% 32 7% 32 6% 25
Small 6% 31 11% 49 15% 60
Medium 12% 58 17% 76 23% 93
Large Comp 53% 257 46% 203 36% 145
Large New 22% 106 19% 86 20% 79
----- ----- ---- --- ---- ----
Total 100% 484 100% 446 100% 402
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Table 2: Sales & Operating Profits* by Store Group, Fourth Quarter
1998 1997 1996
Sales O.P.* Sales O.P.* Sales O.P.*
----- ----- ----- ----- ----- -----
Yards 4% 3% 4% 3% 4% 4%
Small 3% 2% 5% 5% 8% 8%
Medium 10% 14% 16% 23% 24% 37%
Large Comp 61% 71% 54% 62% 45% 50%
Large New 22% 10% 21% 7% 19% 1%
----- ----- ---- --- ---- ----
Total 100% 100% 100% 100% 100% 100%
*Operating Profits before corporate expense and intercompany charges,
interest, LIFO and income taxes.
Fiscal Year 1998
Table 1: Store Group Unit Totals, Fiscal Year 1998 Average
1998 1997 1996
% of % of % of
Total Units Total Units Total Units
----- ----- ----- ----- ----- -----
Yards 7% 31 7% 29 6% 25
Small 9% 40 13% 55 18% 70
Medium 14% 67 20% 84 24% 95
Large Comp 51% 238 42% 180 33% 124
Large New 19% 88 18% 75 19% 74
----- ----- ---- --- ---- ---
Total 100% 464 100% 423 100% 388
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Table 2: Sales & Operating Profits* by Store Group, Fiscal Year 1998
1998 1997 1996
Sales O.P.* Sales O.P.* Sales O.P.*
----- ----- ----- ----- ----- -----
Yards 4% 3% 4% 3% 4% 3%
Small 4% 4% 7% 7% 10% 10%
Medium 12% 16% 19% 26% 25% 34%
Large Comp 59% 64% 51% 53% 42% 45%
Large New 21% 13% 19% 11% 19% 8%
----- ----- ---- --- ---- ----
Total 100% 100% 100% 100% 100% 100%
*Operating Profits before corporate expense and intercompany charges,
interest, LIFO and income taxes.
Lowe's Companies, Inc. is the second largest retailer of home improvement
products in the nation, serving over four million do-it-yourself retail and
commercial business customers weekly through 484 stores in 27 states.
Headquartered in North Wilkesboro, N.C., the 53-year old company employs over
65,000 people. More information on the company is available on Lowe's web
site at www.lowes.com.
