<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 April 30, 1999
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. EmployerIdentification
incorporation or organization) No.)
P.O. BOX 1111, NORTH WILKESBORO, N.C. 28656
(Address of principal executive offices)
(Zip Code)
(336) 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 May 28, 1999
Common Stock, $.50 par value 381,447,451
14
TOTAL PAGES
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LOWE'S COMPANIES, INC.
- INDEX -
Page No.
PART I - Financial Information:
Consolidated Balance Sheets - April 30, 1999,
May 1, 1998 and January 29, 1999 3
Consolidated Statements of Current and
Retained Earnings - three months
ended April 30, 1999 and May 1, 1998 4
Consolidated Statements of Cash Flows - three
months ended April 30, 1999 and May 1, 1998 5
Notes to Consolidated Financial Statements. 6-7
Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-12
Independent Accountants' Report 13
PART II - Other Information 14
Item 6 (b) - Reports on Form 8-K
<PAGE> -3-
Lowe's Companies, Inc.
Consolidated Balance Sheets
In Thousands
<TABLE>
<CAPTION>
April 30, May 1, January 29,
1999 1998 1999
<S> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents $1,047,632 $715,258 $228,874
Short-term investments 17,988 27,781 20,343
Accounts receivable - net 171,412 150,219 143,928
Merchandise inventory 2,775,794 2,253,401 2,346,092
Deferred income taxes 58,504 40,035 56,124
Other assets 80,232 57,172 49,021
Total current assets 4,151,562 3,243,866 2,844,382
Property, less
accumulated depreciation 4,289,230 3,430,701 4,085,798
Long-term investments 33,013 39,139 28,716
Other assets 114,211 66,487 105,508
Total assets $8,588,016 $6,780,193 $7,064,404
Liabilities and Shareholders' Equity
Current liabilities:
Short-term borrowings $92,475 $93,975 $117,075
Current maturities
of long-term debt 132,180 30,277 107,893
Accounts payable 1,715,441 1,427,003 1,220,543
Employee retirement plans 85,668 70,486 85,466
Accrued salaries and wages 127,230 83,625 123,545
Other current liabilities 445,713 377,248 269,734
Total current liabilities 2,598,707 2,082,614 1,924,256
Long-term debt, excluding
current maturities 1,722,316 1,504,909 1,364,278
Deferred income taxes 172,226 133,971 175,372
Other long-term liabilities 3,127 3,122 3,209
Total liabilities 4,496,376 3,724,616 3,467,115
Shareholders' equity
Preferred stock -
$5 par value, none issued - - -
Common stock -
$.50 par value;
Issued and Outstanding
April 30, 1999 381,235
May 1, 1998 370,064
January 29, 1999 374,388 190,617 185,032 187,194
Capital in excess of par 1,698,757 1,170,615 1,325,817
Retained earnings 2,227,816 1,727,783 2,114,248
Unearned compensation-
restricted stock awards (25,780) (27,900) (30,387)
Accumulated other
comprehensive income 230 47 417
Total shareholders' equity 4,091,640 3,055,577 3,597,289
Total liabilities and
shareholders' equity $8,588,016 $6,780,193 $7,064,404
See accompanying notes to consolidated financial statements.
</TABLE>
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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
April 30, 1999 May 1, 1998
Current Earnings Amount Percent Amount Percent
<S> <C> <C> <C> <C>
Net sales $3,771,919 100.00 $3,149,779 100.00
Cost of sales 2,764,829 73.30 2,319,276 73.63
Gross margin 1,007,090 26.70 830,503 26.37
Expenses:
Selling, general
and administrative 664,351 17.61 569,555 18.08
Store opening costs 18,210 0.48 12,395 0.39
Depreciation 77,920 2.07 68,848 2.19
Interest 23,307 0.62 21,639 0.69
Nonrecurring merger costs 24,378 0.65 - -
Total expenses 808,166 21.43 672,437 21.35
Pre-tax earnings 198,924 5.27 158,066 5.02
Income tax provision 73,966 1.96 57,339 1.82
Net earnings $124,958 3.31 $100,727 3.20
Shares outstanding - Basic 378,805 369,639
Basic Earnings Per Share $0.33 $0.27
Shares outstanding - Diluted 382,001 374,309
Diluted Earnings Per Share $0.33 $0.27
Retained Earnings
Balance at beginning
of period $2,114,248 $1,636,666
Net earnings 124,958 100,727
Cash dividends (11,390) (9,610)
Balance at end of period $2,227,816 $1,727,783
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> -5-
Lowe's Companies, Inc.
Consolidated Statements of Cash Flows
In Thousands
<TABLE>
<CAPTION>
For the Three Months Ended
April 30, May 1,
1999 1998
<S> <C> <C>
Cash Flows From Operating Activities:
Net Earnings $124,958 $100,727
Adjustments to Reconcile Net
Earnings to Net Cash Provided By
Operating Activities:
Depreciation 77,920 68,848
Amortization of Original Issue Discount 161 109
Decrease in Deferred Income Taxes (3,700) (7,860)
Loss on Disposition/Writedown of
Fixed and Other Assets 25,535 12,197
Changes in Operating Assets and Liabilities:
Accounts Receivable - Net (27,484) (31,811)
Merchandise Inventory (429,701) (335,976)
Other Operating Assets (30,820) (16,331)
Accounts Payable 494,898 391,121
Employee Retirement Plans 18,456 18,550
Other Operating Liabilities 183,849 145,129
Net Cash Provided by Operating Activities 434,072 344,703
Cash Flows from Investing Activities:
(Increase) Decrease in Investment Assets:
Short-Term Investments 2,916 (7,611)
Purchases of Long-Term Investments (6,554) (8,193)
Proceeds from Sale/Maturity of
Long-Term Investments 1,509 -
(Increase) Decrease in Other Long-Term Assets (28,975) 831
Fixed Assets Acquired (288,771) (177,686)
Proceeds from the Sale of Fixed
and Other Long-Term Assets 3,652 1,927
Net Cash Used in Investing Activities (316,223) (190,732)
Cash Flows from Financing Activities:
Net Decrease in Short-Term Borrowings (24,600) (4,129)
Long-Term Debt Borrowings 394,587 328,160
Repayment of Long-Term Debt (16,135) (7,122)
Proceeds from Stock Offering 348,299 -
Proceeds from Stock Options Exercised 10,148 4,871
Cash Dividend Payments (11,390) (19,196)
Net Cash Provided by Financing Activities 700,909 302,584
Net Increase in Cash and Cash Equivalents 818,758 456,555
Cash and Cash Equivalents, Beginning of Period 228,874 258,703
Cash and Cash Equivalents, End of Period $1,047,632 $715,258
See accompanying notes to consolidated financial statements.
</TABLE>
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Lowe's Companies, Inc.
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 April 30, 1999, and the
results of operations and the cash flows for the three months ended
April 30, 1999 and May 1, 1998.
These interim financial statements should be read in conjunction with
the financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the fiscal year ended January 29,
1999. First quarter financial results may not be indicative of the
financial results for the entire fiscal year.
Note 2 The Company completed its merger with Eagle Hardware & Garden, Inc.
(Eagle) on April 2, 1999. The transaction, which is valued at
approximately $1.3 billion, was structured as a tax-free exchange of
the Company's common stock for Eagle's common stock, and was
accounted for as a pooling of interests. The financial statements
and notes presented provide information on a combined basis for the
quarters ended April 30, 1999, May 1, 1998 and the year ended January
29, 1999.
Note 3 Diluted earnings per share are calculated on the weighted average
shares of common stock as adjusted for the dilutive effect of stock
options and convertible debt outstanding at the balance sheet date.
The weighted average number of shares, as adjusted for dilution, were
382,001,000 and 374,309,000 for the three months ended April 30, 1999
and May 1, 1998, respectively.
Note 4: Net interest expense is composed of the following (in thousands):
<TABLE>
<CAPTION>
Quarter ended
April 30, May 1,
1999 1998
<S> <C> <C>
Long-term debt $ 22,535 $ 18,486
Capitalized leases 10,337 10,022
Short-term debt 1,868 1,429
Amortization of loan cost 237 206
Short-term interest income (7,954) (5,784)
Interest capitalized on construction
in progress (3,716) (2,720)
Net interest expense $ 23,307 $ 21,639
</TABLE>
Note 5: Inventory is stated at the lower of cost or market using the last-in,
first-out inventory accounting method, except for the inventory held
by Eagle. Inventory held by Eagle of $271.4 and $220.3 million at
April 30, 1999 and May 1, 1998, respectively, is stated at the lower
of cost or market using the weighted average method of inventory
accounting. The Company's LIFO reserve was $38.6 million at April 30,
1999 and January 29, 1999 and $67.6 million at May 1, 1998.
Note 6: Property is shown net of accumulated depreciation of $1.1 billion at
April 30, 1999, $.9 billion at May 1, 1998 and $1.0 billion at
January 29, 1999.
<PAGE> -7-
Note 7: Supplemental disclosures of cash flow information (in thousands):
<TABLE>
<CAPTION>
Quarter ended
April 30, May 1,
1999 1998
<S> <C> <C>
Cash paid for interest (net of capitalized) $ 42,459 $ 28,723
Cash paid for income taxes 8,008 6,624
Non-cash investing and financing activities:
Common stock issued to ESOP 18,254 17,928
Fixed assets acquired under capital lease 3,709 3,937
</TABLE>
Note 8: In January 1999, the Board of Directors authorized the funding of the
Fiscal 1998 ESOP contribution primarily with the issuance of new
shares of the Company's common stock. During the first quarter of
Fiscal 1999, the Company issued 296,244 shares, with a market value of
$18.3 million.
Note 9: In February 1999, the Company issued $400 million of 6.5% Debentures
due March 15, 2029 in a private offering. The debentures were issued
at an original price of $986.47 per $1,000 principal amount, net of
the original issue discount and underwriters' discount. The
debentures may not be redeemed prior to maturity. In March 1999, the
Company issued 6,206,895 shares of common stock in a public offering.
The net proceeds from the offering were $348.3 million and were issued
under a shelf registration statement filed with the Securities and
Exchange Commission in December 1997.
Note 10:Total comprehensive income, comprised of net earnings and unrealized
holding gains (losses) on available-for-sale securities, was $124.8
and $100.6 million for the quarters ended April 30, 1999 and May 1,
1998, respectively, compared to reported income of $125.0 and $100.7
million for the first quarter of 1999 and 1998.
<PAGE> -8-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion summarizes the significant factors affecting the Company's
consolidated operating results and liquidity and capital resources during the
quarter ended April 30, 1999. This discussion should be read in conjunction
with the financial statements, and financial statement footnotes included in
the Company's most recent Form 10-K.
The Company completed its merger with Eagle Hardware & Garden, Inc. (Eagle)
on April 2, 1999. The transaction, which is valued at approximately $1.3
billion, was structured as a tax-free exchange of the Company's common stock
for Eagle's common stock, and was accounted for as a pooling of interests. As
a result, all current and historical financial information is presented on a
combined basis.
OPERATIONS
For the first quarter of fiscal 1999, sales increased 20% to $3.8 billion,
comparable store sales increased 6.7% and net earnings rose 24% to $125.0
million compared to last year's first quarter results. Diluted earnings per
share were $.33 compared to $.27 for the comparable quarter of last year.
First quarter 1999 earnings included a nonrecurring charge of $24.4 million
relating to the Company's merger with Eagle. Exluding the one-time charge,
diluted earnings per share would have been $.37 for the first quarter. The
charge reduced diluted earnings per share by $.04 for the first quarter.
The sales increase in the first quarter was attributable to the 7.9 million
square feet of retail selling space relating to new and relocated stores since
last year's first quarter and the 6.7% comparable store sales gain. Sales in
the Company's core businesses performed well during the first quarter. The
Company experienced its strongest sales increases in appliances, kitchen
cabinets, plumbing and electrical and home decor categories.
Gross margin was 26.70% of sales for the quarter ended April 30, 1999
compared to 26.37% for last year's comparable quarter. The increase in this
year's margin rate is prmarily due to favorable changes in product mix,
ongoing store pricing disciplines, leveraging of its distribution facilities,
and lower costs of product.
Selling, general and administrative expenses (SG&A) were 17.61% of sales
versus 18.08% in last year's first quarter. SG&A increased by 17% compared to
the 20% increase in sales for the quarter. Lower net advertising expense,
increased credit card program income and lower property writedowns contributed
to the positive leverage in SG&A for the first quarter.
Store opening costs were $18.2 million for the quarter ended April 30, 1999
compared to $12.4 million last year, representing costs associated with the
opening of 13 stores during the current year's first quarter (8 new and 5
relocated) compared to 10 stores for the comparable period last year (8 new
and 2 relocated). Charges in this quarter for future and prior openings were
$6.0 million compared to $4.9 million in last year's first quarter. The
current quarter also included a $2.2 million charge relating to Eagle's
adoption of the American Institute of Certified Public Accountants' ("AICPA")
Statement
<PAGE> -9-
of Postion 98-5, "Reporting on the Costs of Start-Up Activities". The
Company's 1999 expansion plans are discussed under "Liquidity and Capital
Resources" below.
Depreciation was $77.9 million for the quarter ended April 30, 1999,
representing an increase of 13.2% over the comparable period last year. The
increase is due primarily to additions of buildings, fixtures, displays and
computer equipment relating to the Company's expansion program.
Interest expense increased from $21.6 million to $23.3 million for the
quarter ended April 30, 1999. Interest has increased primarily due to interest
expense on debentures issued since last year's first quarter.
In the first quarter of 1999, the Company recorded nonrecurring costs of
$24.4 million relating to the merger with Eagle which consisted of $15.7
million relating to the writeoff of nonusable Eagle properties, $1.5 million
in future severance payments to former Eagle executives and $7.2 million in
direct merger costs such as accounting, legal, investment banker and other
miscellaneous fees.
The Company's effective income tax rate was 37.18% for the quarter ended
April 30, 1999 and 36.27% for last year's first quarter. The higher rate in
1999 is primarily related to the expansion into states with higher income tax
rates and the impact of non-dedcutible merger expenses.
LIQUIDITY AND CAPITAL RESOURCES
Primary sources of liquidity are cash flows from operating activities and
certain financing activities. Net cash provided by operating activities was
$434 million for the three months ended April 30, 1999 compared to $345
million for the first three months of fiscal 1998. The $89 million increase
in the current year resulted primarily from increased earnings, and increases
in accounts payable, net of increases in merchandise inventory. The Company's
working capital was $1.6 billion at April 30, 1999 compared to $1.2 billion at
May 1, 1998 and $920 million at January 29, 1999.
The primary component of net cash used in investing activities continues to
be new store facilities in connection with the Company's expansion plan. Cash
acquisitions of fixed assets were $289 million and $178 million for the three
months ended April 30, 1999 and May 1, 1998, respectively. At April 30, 1999,
the Company had 526 stores in 37 states and 49.4 million square feet of retail
selling space, a 19% increase over the selling space as of May 1, 1998.
Cash flows provided by financing activities were $701 million for the three
months ended April 30, 1999 compared to $303 million for the three months
ended May 1, 1998. The major cash components of financing activities in the
first three months of 1999 included the issuance of $400 million principal of
6.5% debentures and $348.3 million in net proceeds from a common stock
offering.
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
1999 capital budget is approximately $1.7 billion, inclusive of approximately
$214 million in operating or capital leases. More than 80% of this planned
commitment is for store expansion. Expansion plans for 1999 consist of
approximately 85 to 90 stores (including the relocation of 30 to 35 older,
smaller format stores). This planned expansion is expected to increase sales
floor square footage by approximately 18%. Approximately 15% of the 1999
projects will be leased and
<PAGE> -10-
85% will be owned. Expansion in the first three months of fiscal 1999
included 8 new stores and 5 relocations representing 1.3 million square feet
of new incremental retail space.
The Company believes that funds from operations, debt issuances, leases and
existing credit agreements will be adequate to finance the 1999 expansion plan
and other operating needs.
As discussed in the annual report for the year ending January 29, 1999, the
Company's major market risk exposure is the potential loss arising from
changing interest rates and its impact on long-term investments and long-term
debt. The Company's policy is to manage interest rate risks by maintaining a
combination of fixed and variable rate financial instruments. The risks
associated with long-term investments at April 30, 1999 have not changed
materially since January 29, 1999. Long-term debt has increased primarily due
to the issuance of $400 million principal amount of 6.5% Debentures due March
15, 2029. Disclosures of the Company's principal cash outflows for long-term
debt and related interest rates have changed since January 29, 1999 due to the
new fixed rate debt.
YEAR 2000
The Year 2000 problem arose because many existing computer programs and
embedded computer chips use only the last two digits to refer to a year. If
not addressed, computer programs that are date sensitive may not have the
ability to properly recognize dates in year 2000 and beyond. The result could
be a disruption of operations and the processing of transactions.
In 1997 and 1998, the Company completed an analysis of the impact and costs
relating to the Year 2000 problem and developed an implementation plan to
address information technology (IT), non-information technology (non-IT) and
third party readiness issues.
In preparing IT systems for the Year 2000, the Company has utilized both
internal and external resources. Contracted programming costs to convert the
Company's IT systems during 1997, 1998 and 1999 are estimated to total
approximately $5 million and are being expensed as incurred, the majority of
which had been incurred through April 30, 1999. Currently, over 99% of the
programs have been remediated. In addition, approximately $19 million of
computer hardware is being purchased to replace non-compliant computer
hardware. These purchases are substantially complete. The cost of new
hardware is being capitalized and depreciated over useful lives ranging from 3
to 5 years. Cash flow from operations is the Company's source of funding all
Year 2000 costs. The incremental cost to convert systems has been mitigated
by substantial investments in new computer systems over the past six years.
During this period, new computer systems have been developed or purchased
including, but not limited to, these applications: Distribution, Electronic
Data Interchange, Payroll and Human Resources, General Ledger, Accounts
Payable, Forecasting and Replenishment, and Supply Services. All of these new
systems are Year 2000 compliant. The Company's conversion of internally
developed legacy systems was completed by the end of fiscal 1998 with
certification testing planned to be completed by the Fall of 1999.
With respect to non-IT related risks, each functional area of the Company
is responsible for identifying these issues. Within each business function,
objectives are being prioritized and evaluated for risk of Year 2000 problems.
The assessment phase completed in April 1999. Contingency plans based on
those assessments have been developed and are being reviewed by the Companies'
senior management. Examples of potential non-IT risks of Year 2000 problems
would be power outages and
<PAGE> -11-
failures of communication systems, bar code readers and security devices. For
most of the Company's stores, back-up generators are already in place, which
would mitigate temporary power outages. By mid 1999, similar remediation
and/or contingency plans will be developed by the respective business
functions for non-IT Year 2000 risks impacting all high priority and critical
business objectives.
In regards to third party readiness, the Company mailed Year 2000
questionnaires to all identified third parties (merchandise vendors and other
entities with which the Company conducts business) in order to assess whether
they are Year 2000 compliant or have adequately addressed their system
conversion requirements. Of the approximate six thousand questionnaires
mailed, 41% of the recipients have currently responded. Presently, non-
respondents are being contacted by phone and our questionnaires are being
faxed to them requesting signed returns within 24 hours. The Company cannot
predict how many of the responses received may prove later to be inaccurate or
overly optimistic. To address this uncertainty, the Company is developing
contingency plans to address unanticipated interruptions or down time in both
the Company's and third parties' systems and services.
The Company is continuing to closely monitor adherence to the remainder of
its Year 2000 implementation plan and is currently satisfied that it will be
completed by Fall 1999. For the remainder of the project, the Company's
efforts will be devoted to five primary areas:
(1) certification testing of IT systems to ensure Year 2000 compliance,
(2) contingency plan development for business areas as well as IT systems,
(3) continued follow-up to questionnaires sent to third parties,
(4) replacement of certain older model personal computers and point-of-sale
equipment, and
(5) updating some of the purchased software packages with Year 2000
compliant upgrades.
If the Company encounters unforeseen complications or issues not previously
addressed in the comprehensive plan, additional resources from internal and
external sources will be committed to complete the project by the planned
completion time of Fall 1999. Since the use of these additional resources is
considered unlikely, no estimates as to their costs have been made at this
time.
Following completion of the merger on April 2, 1999, the Company began a
review of the Eagle Hardware and Garden subsidiary preparedness for the Year
2000. Preliminary findings are that the Eagle computer systems are
substantially Year 2000 ready. The remainder of this year will be focused on
developing contingency plans and upgrading point-of-sale software.
The Company believes that its compliance plan should mitigate any adverse
effect on its business from the Year 2000 problem. However, if:
(1) the implementation of the plan is not completed on time,
(2) the Company has failed to identify and fix material non-complying
equipment or software, or
(3) third parties are unable to fulfill significant commitments to the
Company as a result of their failure to effectively address their Year
2000 problems,
the Company's ability to carry out its business could be adversely affected.
For example, the Company believes that its most likely worst case scenarios
would involve the inability of the Company's IT and non-IT systems to process
transactions in the stores or on a regional or company-wide basis. If that
were to occur, the Company could be forced to process these transactions
manually. The volume of business the Company could transact, and its sales
and income, would be reduced until it was able to develop alternatives to
defective systems or non-complying vendors. These reductions could occur at
individual stores or in clusters of stores sharing defective systems or non-
complying vendors. The effect of any
<PAGE> -12-
failures on the Company's results of operations would depend, of course, upon
the extent of any non-compliance and its impact on critical business systems
and sources of supply, but could be significant.
NEW ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (SFAS 133) was issued in June
1998. SFAS 133 is effective for the Company in the year beginning January 28,
2001. SFAS 133 requires that an entity recognize all derivatives as either
assets or liabilities in the balance sheet and measure those instruments at
fair value. Management is currently evaluating the impact of the adoption of
SFAS 133 and its effect on the Company's financial statements.
FORWARD-LOOKING STATEMENTS
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 the
expectations reflected in such forward-looking statements are reasonable, 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, the nature of
competition, vendor supply, and weather conditions, all which are described in
detail in the Company's 1998 Annual Report.
<PAGE> -13-
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 (the "Company") as of April 30, 1999,
and the related consolidated statements of current and retained earnings, and
cash flows for the three-month periods ended April 30, 1999 and May 1, 1998.
These financial statements are the responsibility of the Company's management.
The accompanying consolidated financial statements give retroactive effect to
the 1999 merger of the Company and Eagle Hardware & Garden, Inc. which has
been accounted for as a pooling of interests as described in note 2 to the
consolidated financial statements.
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 the Company as of January 29,
1999 (not presented herein), prior to restatement for the 1999 pooling of
interests; and in our report dated February 19, 1999, we expressed an
unqualified opinion on those consolidated financial statements. The financial
statements of Eagle Hardware & Garden, Inc. for the year ended January 29,
1999 (not presented herein), were audited by other auditors whose report,
dated March 10, 1999, expressed an unqualified opinion on those financial
statements.
/s/ Deloitte & Touche LLP
Charlotte, North Carolina
May 11, 1999
<PAGE> -14-
Part II - OTHER INFORMATION
6 (b) - Reports on Form 8-K
A report on Form 8-K was filed on February 22, 1999 by the
registrant. Therein under Item 7, the company filed certain
exhibits in connection with the Registrant's offering of
$400,000,000 principal amount of 6.5% Debentures pursuant to its
Shelf Registration Statements on Form S-3 (File No. 333-14257 and
File No. 333-51865).
A report on Form 8-K was filed on March 5, 1999 by the registrant.
Therein under Item 5, the company filed a summary and exhibit in
connection with the Registrant's offering of 6,206,895 shares of
the Company's common stock, $.50 par value, pursuant to its
Registration Statement on Form S-3 (File No. 333-72905).
A report on Form 8-K was filed on April 5, 1999 by the registrant.
Therein under Item 5, the company filed a summary and exhibit in
connection with the consumation of the merger with Eagle Hardware &
Garden, Inc. pursuant to its Registration Statement on Form S-4
(File No. 333-72585).
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.
June 11, 1999 /s/ Kenneth W. Black, Jr.
Date __________________ ________________________________________
Kenneth W. Black, Jr.
Vice President and Corporate Controller
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