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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 3, 2001
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 Identification No.)
incorporation or organization)
1605 CURTIS BRIDGE ROAD, WILKESBORO, N.C. 28697
(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 August 31, 2001
Common Stock, $.50 par value 773,125,913
16
TOTAL PAGES
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LOWE'S COMPANIES, INC.
- INDEX -
Page No.
PART I - Financial Information:
Consolidated Balance Sheets - August 3, 2001 (Unaudited),
July 28, 2000 (Unaudited) and February 2, 2001 3
Consolidated Statements of Current and
Retained Earnings (Unaudited) - quarter and six months
ended August 3, 2001 and July 28, 2000 4
Consolidated Statements of Cash Flows (Unaudited) -
six months ended August 3, 2001 and July 28, 2000 5
Notes to Unaudited Consolidated Financial Statements 6-8
Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-12
Independent Accountants' Report 13
PART II - Other Information 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 16
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Lowe's Companies, Inc.
Consolidated Balance Sheets
In Thousands
(Unaudited) (Unaudited)
August 3, July 28, February 2,
2001 2000 2001
Assets
Current assets:
Cash and cash equivalents $629,293 $570,233 $455,658
Short-term investments 36,408 11,272 12,871
Accounts receivable - net 213,430 183,749 160,985
Merchandise inventory 3,651,191 3,167,436 3,285,370
Deferred income taxes 98,508 59,077 81,044
Other assets 216,241 185,528 161,498
Total current assets 4,845,071 4,177,295 4,157,426
Property, less
accumulated depreciation 7,829,205 5,932,792 7,034,960
Long-term investments 30,985 37,500 34,690
Other assets 162,131 94,992 131,091
Total assets $12,867,392 $10,242,579 $11,358,167
Liabilities and Shareholders' Equity
Current liabilities:
Short-term borrowings $100,000 $100,000 $249,829
Current maturities
of long-term debt 43,993 41,905 42,341
Accounts payable 1,910,317 1,691,471 1,714,370
Employee retirement plans 90,279 63,347 75,656
Accrued salaries and wages 181,197 138,060 166,392
Other current liabilities 820,145 624,008 662,410
Total current liabilities 3,145,931 2,658,791 2,910,998
Long-term debt, excluding
current maturities 3,291,605 2,217,006 2,697,669
Deferred income taxes 273,382 210,988 251,450
Other long-term liabilities 3,220 3,858 3,165
Total liabilities 6,714,138 5,090,643 5,863,282
Shareholders' equity:
Preferred stock - $5 par value,
none issued - - -
Common stock - $.50 par value;
Issued and Outstanding
August 3, 2001 772,749
July 28, 2000 765,574
February 2, 2001 766,484 386,374 382,786 383,242
Capital in excess of par 1,723,515 1,574,927 1,595,148
Retained earnings 4,043,810 3,201,989 3,518,356
Unearned compensation-
restricted stock awards (1,067) (7,580) (2,312)
Accumulated other
comprehensive income (loss) 622 (186) 451
Total shareholders' equity 6,153,254 5,151,936 5,494,885
Total liabilities and
shareholders' equity $12,867,392 $10,242,579 $11,358,167
See accompanying notes to unaudited consolidated financial statements.
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Lowe's Companies, Inc.
Consolidated Statements of Current and Retained Earnings (Unaudited)
In Thousands, Except Per Share Data
Three Months Ended Six Months Ended
August 3, 2001 July 28, 2000 August 3, 2001 July 28, 2000
Current Earnings Amount Percent Amount Percent Amount Percent Amount Percent
Net sales $6,126,726 100.00 $5,264,252 100.00 $11,403,091 100.00 $9,731,366 100.00
Cost of sales 4,409,018 71.96 3,812,225 72.42 8,191,854 71.84 7,031,223 72.25
Gross margin 1,717,708 28.04 1,452,027 27.58 3,211,237 28.16 2,700,143 27.75
Expenses:
Selling, general
and administrative 999,706 16.32 857,052 16.28 1,939,451 17.01 1,663,760 17.10
Store opening costs 28,470 0.46 27,852 0.53 64,262 0.56 53,637 0.55
Depreciation 124,571 2.03 98,495 1.87 243,649 2.14 191,983 1.97
Interest 42,614 0.70 26,224 0.50 83,940 0.73 52,237 0.54
Total expenses 1,195,361 19.51 1,009,623 19.18 2,331,302 20.44 1,961,617 20.16
Pre-tax earnings 522,347 8.53 442,404 8.40 879,935 7.72 738,526 7.59
Income tax provision 193,264 3.16 162,805 3.09 325,572 2.86 271,778 2.79
Net earnings $329,083 5.37 $279,599 5.31 $554,363 4.86 $466,748 4.80
Shares outstanding - Basic 771,667 765,458 770,042 765,234
Basic earnings per share $0.43 $0.37 $0.72 $0.61
Shares outstanding - Diluted 795,087 768,740 791,282 769,104
Diluted earnings per share $0.42 $0.36 $0.71 $0.61
Retained Earnings
Balance at beginning
of period $3,730,174 $2,935,756 $3,518,356 $2,761,964
Net earnings 329,083 279,599 554,363 466,748
Cash dividends (15,447) (13,366) (28,909) (26,723)
Balance at end
of period $4,043,810 $3,201,989 $4,043,810 $3,201,989
See accompanying notes to unaudited consolidated financial statements.
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Lowe's Companies, Inc.
Consolidated Statements of Cash Flows (Unaudited)
In Thousands
For the Six Months Ended
August 3, July 28,
Periods Ended On 2001 2000
Cash Flows From Operating Activities:
Net Earnings $554,363 $466,748
Adjustments to Reconcile
Net Earnings to Net Cash Provided By
Operating Activities:
Depreciation & Amortization 251,539 192,336
Deferred Income Taxes 4,375 5,106
Loss on Disposition/Writedown
of Fixed and Other Assets 27,196 15,813
Tax Effect of Stock Options Exercised 24,138 3,756
Changes in Operating Assets and Liabilities:
Accounts Receivable - Net (52,445) (35,848)
Merchandise Inventory (365,821) (355,075)
Other Operating Assets (54,743) (58,067)
Accounts Payable 195,947 124,525
Employee Retirement Plans 54,273 (38,667)
Other Operating Liabilities 173,543 201,644
Net Cash Provided by Operating Activities 812,365 522,271
Cash Flows from Investing Activities:
(Increase) Decrease in Investment Assets:
Short-Term Investments (19,990) 71,045
Purchases of Long-Term Investments (979) (10,673)
Proceeds from Sale/Maturity
of Long-Term Investments 1,400 -
Increase in Other Long-Term Assets (50,143) (21,494)
Fixed Assets Acquired (1,063,863) (974,317)
Proceeds from the Sale of Fixed
and Other Long-Term Assets 22,933 31,780
Net Cash Used in Investing Activities (1,110,642) (903,659)
Cash Flows from Financing Activities:
Net Increase (Decrease) in Short-Term Borrowings (149,829) 7,525
Long-Term Debt Borrowings 611,392 519,912
Repayment of Long-Term Debt (28,751) (47,840)
Proceeds from Employee Stock Purchase Plan 16,176 -
Proceeds from Stock Options Exercised 51,833 7,625
Cash Dividend Payments (28,909) (26,723)
Net Cash Provided by Financing Activities 471,912 460,499
Net Increase in Cash and Cash Equivalents 173,635 79,111
Cash and Cash Equivalents, Beginning of Period 455,658 491,122
Cash and Cash Equivalents, End of Period $629,293 $570,233
See accompanying notes to unaudited consolidated financial statements.
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Lowe's Companies, Inc.
Notes to Unaudited 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 3, 2001 and July
28, 2000, and the results of operations and the cash flows for the
six months ended August 3, 2001 and July 28, 2000.
These interim financial statements should be read in conjunction
with the financial statements and notes thereto included in the
Lowe's Companies, Inc. (the Company) Annual Report on Form 10-K for
the fiscal year ended February 2, 2001. The financial results for
the interim periods may not be indicative of the financial results
for the entire fiscal year.
Note 2: On May 25, 2001, the Company's Board of Directors approved a two-
for-one split of the Company's common stock. As a result,
shareholders received one additional share on June 29, 2001, for
each share held as of the record date on June 8, 2001. The par
value of the Company's common stock remained $.50. All financial
information presented, including per share data, has been adjusted
to reflect the effect of the stock split.
Note 3: Diluted earnings per share are calculated on the weighted average
shares of common stock as adjusted for the potential dilutive effect
of stock options and convertible notes at the balance sheet date.
The calculation is detailed below (in thousands, except per share
data):
Three Months Ended Six Months Ended
August 3, July 28, August 3, July 28,
2001 2000 2001 2000
Net earnings $329,083 $279,599 $554,363 $466,748
Weighted average number of
shares outstanding 771,677 765,458 770,042 765,234
Basic earnings per share $ 0.43 $ 0.37 $ 0.72 $ 0.61
Net earnings $329,083 $279,599 $554,363 $446,748
Tax-effected interest expense
attributable to 2.5% convertible notes (Note 8) 2,413 - 4,445 -
Net earnings assuming dilution $331,496 $279,599 $558,808 $446,748
Weighted average number of
common shares outstanding 771,667 756,458 770,042 765,234
Effect of potentially dilutive securities:
2.5% convertible notes 16,530 - 15,350 -
Employee stock option plans 6,890 3,282 5,890 3,870
Weighted average number of
common shares assuming dilution 795,087 768,740 791,282 769,104
Diluted earnings per share $ 0.42 $ 0.36 $ 0.71 $ 0.61
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Note 4: Net interest expense is composed of the following (in thousands):
Three Months Ended Six Months Ended
August 3, July 28, August 3, July 28,
2001 2000 2001 2000
Long-term debt $45,546 $28,882 $90,616 $51,272
Capitalized leases 9,964 10,352 20,299 20,691
Short-term debt 1,135 1,697 2,979 4,052
Amortization of loan cost 724 292 1,392 529
Short-term interest income (7,283) (8,659) (15,579) (13,569)
Interest capitalized on construction
in progress (7,472) (6,340) (15,767) (10,738)
Net interest expense $42,614 $26,224 $83,940 $52,237
Note 5: Property is shown net of accumulated depreciation of $1.8 billion at
August 3, 2001, $1.4 billion at July 28, 2000 and $1.6 billion at
February 2, 2001.
Note 6: Supplemental disclosures of cash flow information (in thousands):
Six Months Ended
August 3, 2001 July 28, 2000
Cash paid for interest
(net of capitalized) $ 115,388 $ 70,869
Cash paid for income taxes 238,461 179,059
Non-cash investing and
financing activities:
Common stock issued to ESOP 39,650 -
Fixed assets acquired under
capital lease 5,057 1,769
Note 7: In January 2001, the Board of Directors authorized the funding of
the fiscal 2000 ESOP contribution primarily with the issuance of new
shares of the Company's common stock. During the first six months
of fiscal 2001, the Company issued a total of 1,232,669 shares, with
a market value of $39.7 million to fund the fiscal 2000 ESOP
contribution.
Note 8: In February 2001, the Company issued $1.005 billion principal of
convertible notes at an issue price of $608.41 per note. Interest
will not be paid on the notes prior to maturity on February 16, 2021
at which time the holders will receive $1,000 per note, representing
a yield to maturity of 2.5%. Holders may convert their notes at any
time on or before the maturity date, unless the notes have been
purchased or redeemed previously, into 16.448 shares of the
Company's common stock per note. Holders of the notes may require
the Company to purchase all or a portion of their notes on February
16, 2004 at a price of $655.49 per note or on February 16, 2011 at a
price of $780.01 per note. On either of these
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dates, the Company may choose to pay the purchase price of the notes
in cash or common stock, or a combination of cash and common stock.
In addition, if a change in the control of the Company occurs on or
before February 16, 2004, each holder may require the Company to
purchase, for cash, all or a portion of their notes.
Note 9: On August 2, 2001, the Company completed a new $800 million senior
credit facility. The facility is split into a $400 million five-
year tranche, expiring on August 2, 2006 and a $400 million 364-day
tranche, expiring on August 2, 2002 Loans available under each
facility include base rate loans, Euro-Dollar loans and money market
loans. Each base rate loan bears interest on the outstanding
principle amount and is payable quarterly in arrears. The base
interest rate is the higher of the prime rate in effect or one-half
of one percent above the federal funds rate. Each Euro-Dollar loan
will bear an interest rate equal to the applicable margin plus the
applicable adjusted London Interbank Offered Rate for such period.
Money market loans shall bear interest on the outstanding principle
at a rate per annum equal to the money market rate quoted by the
bank making the loan. Sixteen banking institutions are
participating in the $800 million senior credit facility and, as of
August 3, 2001, there were no outstanding loans under the facility.
Note 10: Total comprehensive income, comprised of net earnings and unrealized
holding gains (losses) on available-for-sale securities was $329.2
and $279.7 million, compared to net earnings of $329.1 and $279.6
million for the quarters ended August 3, 2001 and July 28, 2000,
respectively. Total comprehensive income was $554.5 and $467.0
million, compared to net earnings of $554.4 and $466.7 for the six
months ended August 3, 2001 and July 28, 2000, respectively.
Note 11: In June 2001, the Financial Accounting Standards Board issued SFAS
No. 143, "Accounting for Obligations Associated with the Retirement
of Long-Lived Assets". SFAS No. 143 will require the accrual, at
fair value, of the estimated retirement obligation for tangible
long-lived assets if the company is legally obligated to perform
retirement activities at the end of the related asset's life. SFAS
No. 143 is effective for fiscal years beginning after June 15,
2002. Management is currently evaluating the impact of the adoption
of SFAS 143 and its effect on the Company's financial statements.
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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 and six months ended August 3, 2001. This
discussion should be read in conjunction with the financial statements
and financial statement footnotes that are included in the Company's
fiscal 2000 Form 10-K.
On May 25, 2001, the Company's Board of Directors approved a two-for-
one split of the Company's common stock. As a result, shareholders
received one additional share on June 29, 2001 for each share held as
of the record date on June 8, 2001. The par value of the Company's
common stock remained $.50. All financial information presented,
including per share data, has been adjusted to reflect the effects of
the stock split.
OPERATIONS
For the second quarter of fiscal 2001, sales increased 16% to $6.1
billion, comparable store sales for the quarter increased 1.7%, and net
earnings rose 18% to $329.1 million compared to last year's second
quarter earnings of $279.6 million. Diluted earnings per share were
$.42 compared to $.36 for the comparable quarter of last year. For the
six months ended August 3, 2001, sales increased 17% to $11.4 billion,
comparable store sales decreased 0.5%, and net earnings increased 19% to
$554.4 million compared to the first six months of fiscal year 2000.
Diluted earnings per share for the first six months of 2001 increased
16% to $.71 per share over the same period a year ago.
The sales increase during the second quarter was primarily
attributable to the addition of 14 million square feet of retail
selling space relating to new and relocated stores since last year's
second quarter. Stabilization in lumber and building material prices as
well as improved sales in most merchandise categories brought about the
comparable store increase.
Gross margin was 28.04% of sales for the quarter ended August 3, 2001
compared to 27.58% for last year's comparable quarter. Gross margin for
the six months ended August 3, 2001 was 28.16% versus 27.75% during the
first six months of 2000. The increase in margin rate for the second
quarter and the first six months of 2001 is primarily due to lower
acquisition costs through the line review process and additional
foreign sourcing, and favorable product mix changes.
Selling, general and administrative expenses (SG&A) were 16.32% of
sales versus 16.28% in last year's second quarter. SG&A increased by
17% compared to the 16% increase in sales for the quarter. The slight
increase in SG&A as a percent of sales is primarily attributable to
higher insurance and bank card costs offset by controlling and
leveraging payroll costs. During the first six months of 2001, SG&A
was 17.01% compared to 17.10% for the same period a year ago. SG&A
increased 16.6% during the first six months of 2001 compared to a 17.2%
increase in sales for this same period. This leverage was due
primarily to carefully controlling expenses, particularly store payroll.
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Store opening costs were $28.5 million for the quarter ended August
3, 2001 compared to $27.9 million last year, representing costs
associated with the opening of 23 stores during the current year's
second quarter (21 new and 2 relocated) compared to 22 stores for the
comparable period last year (15 new and 7 relocated). Charges in this
quarter for future and prior openings were $15.2 million compared to
$9.4 million in last year's second quarter. Store opening costs for the
six months ended August 3, 2001 were $64.3 million compared to $53.6
million last year. These costs were associated with the opening of 53
new stores and relocating 7 stores during the first six months of 2001
compared to 27 new stores and 9 relocated stores in the first six
months of 2000. The Company's 2001 expansion plans are discussed under
"Liquidity and Capital Resources" below.
Depreciation was $124.6 million for the quarter ended August 3, 2001
and $243.6 million for the six months then ended. This represents
increases of 26% and 27% over last year's comparable periods. These
increases were primarily due to additions of buildings, fixtures, displays
and computer equipment relating to the Company's ongoing expansion
program.
Interest expense increased from $26.2 and $52.2 million to $42.6 and
$83.9 million for the quarter and six months ended August 3, 2001,
respectively. Interest has increased during the current year's second
quarter primarily due to interest expense relating to the issuance of
$1.005 billion principal of convertible notes in February of 2001 as well as
interest on $500 million principal of 8.25% Notes issued in May of 2000
and $500 million principal of 7.5% Notes issued in December of 2000.
The increase in interest expense was partially offset by increases in
investment income and interest capitalized on construction projects.
The Company's effective income tax rate was 37.0% for the quarter and
six months ended August 3, 2001 and 36.8% for last year's second
quarter and first six months. The higher rate during 2001 is primarily
related to expansion into states with higher income tax rates.
LIQUIDITY AND CAPITAL RESOURCES
The primary sources of liquidity during the first six months of 2001
were cash flows from operating activities and certain financing
activities. Net cash provided by operating activities was $812.4
million for the six months ended August 3, 2001 compared to $522.3
million for the first six months of fiscal 2000. The $290.1 million
increase in the current year resulted primarily from an increase in net
earnings, increased accounts payable, and the funding of the Company's
ESOP with the issuance of common stock as compared to cash in the prior
year. The Company's working capital was $1.7 billion at August 3, 2001
compared to $1.5 billion at July 28, 2000 and $1.2 billion at February
2, 2001.
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 $1,063.9
million and $974.3 million for the six months ended August 3, 2001 and
July 28, 2000, respectively. At August 3, 2001, the Company operated
700 stores in 40 states with 74.5 million square feet of retail selling
space, a 22.3% increase over the selling space as of July 28, 2000.
Cash flows provided by financing activities were $471.9 million for
the six months ended August 3, 2001. For the six months ended July 28,
2000, cash flows provided by financing activities were $460.4 million. The
major source of cash from financing activities during the first six
months of 2001 and 2000
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involved long-term debt proceeds, partially offset by debt repayments and
cash dividend payments.
Property has increased as a result of the Company's plan to continue
its expansion of retail sales floor square footage by entering new
markets, increasing our market presence and by relocating smaller
format stores to larger ones. The Company's 2001 capital budget is
$2.7 billion, inclusive of approximately $286 million in operating or
capital leases. Approximately 89% of this planned commitment is for
store expansion and new distribution centers. Expansion plans for 2001
consist of approximately 115 stores (including the relocation of 12 to
13 smaller format stores). This planned expansion is expected to
increase sales floor square footage by approximately 18% to 20%.
Expansion in the second quarter of fiscal 2001 included 21 new stores
and 2 relocations representing 2.6 million square feet of new
incremental retail space. The Company also operates six distribution
centers. Construction continues on regional distribution centers in
Cheyenne, Wyoming and Findlay, Ohio. During the third quarter of 2001,
construction is scheduled to begin on a distribution center in Northampton
County, North Carolina.
In February 2001, the Company issued $1.005 billion principal of
convertible notes at an issue price of $608.41 per note. Interest will
not be paid on the notes prior to maturity on February 16, 2021 at
which time the holders will receive $1,000 per note, representing a
yield to maturity of 2.5%. Holders may convert their notes at any time
on or before the maturity date, unless the notes have been purchased or
redeemed previously, into 16.448 shares of the Company's common stock
per note. Holders of the notes may require the Company to purchase all
or a portion of their notes on February 16, 2004 at a price of $655.49
per note or on February 16, 2011 at a price of $780.01 per note. On
either of these dates, the Company may choose to pay the purchase price
of the notes in cash or common stock, or a combination of cash and
common stock. In addition, if a change in the control of the Company
occurs on or before February 16, 2004, each holder may require the
Company to purchase, for cash, all or a portion of their notes.
On August 2, 2001, the Company completed a new $800 million senior credit
facility. The facility is split into a $400 million five-year tranche,
expiring on August 2, 2006 and a $400 million 364-day tranche, expiring on
August 2, 2002. Loans available under each facility include base rate loans,
Euro-Dollar loans and money market loans. Each base rate loan bears interest
on the outstanding principle amount and is payable quarterly in arrears. The
base interest rate is the higher of the prime rate in effect or one-half of
one percent above the federal funds rate. Each Euro-Dollar loan will bear an
interest rate equal to the applicable margin plus the applicable adjusted
London Interbank Offered Rate for such period. Money market loans shall bear
interest on the outstanding principle at a rate per annum equal to the money
market rate quoted by the bank making the loan. Sixteen banking institutions
are participating in the $800 million senior credit facility and, as of August
3, 2001, there were no outstanding loans under the facility.
The Company believes that funds from operations, debt issuances,
leases and existing credit agreements will be adequate to finance the
2001 expansion plan and other operating requirements.
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MARKET RISK
As discussed in the annual report to shareholders for the year ended
February 2, 2001, the Company's major market risk exposure is the
potential loss arising from changing interest rates and its impact on
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 Company's market risk has not changed materially
since February 2, 2001 with the exception of new debt issued during
2001.
NEW ACCOUNTING PRONOUNCEMENTS
In June 2001, the Financial Accounting Standards Board issued SFAS
No. 143, "Accounting for Obligations Associated with the Retirement of
Long-Lived Assets". SFAS No. 143 will require the accrual, at fair
value, of the estimated retirement obligation for tangible long- lived
assets if the company is legally obligated to perform retirement
activities at the end of the related asset's life. SFAS No. 143 is
effective for fiscal years beginning after June 15, 2002. Management
is currently evaluating the impact of the adoption of SFAS 143 and its
effect on the Company's financial statements.
FORWARD-LOOKING STATEMENTS
This news release includes "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, as Lowe's
expands into major metropolitan markets, the availability of real
estate for expansion and its successful development may lengthen the
timelines for store openings, the availability of sufficient labor
to facilitate growth, fluctuations in prices and availability of
product, unanticipated increases in competition and weather
conditions that affect sales.
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INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors
Lowe's Companies, Inc.:
We have reviewed the accompanying consolidated balance sheets of Lowe's
Companies, Inc. and subsidiaries (the "Company") as of August 3, 2001
and July 28, 2000, and the related consolidated statements of current
and retained earnings for the three-month and six-month periods ended
August 3, 2001 and July 28, 2000 and consolidated statements of cash
flows for the six-months ended August 3, 2001 and July 28, 2000.
These financial statements are the responsibility of the Company's
management.
We conducted our reviews 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
auditing standards generally accepted in the United States of America,
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 reviews, we are not aware of any material modifications
that should be made to such consolidated financial statements for them
to be in conformity with accounting principles generally accepted in
the United States of America.
We have previously audited, in accordance with auditing standards
generally accepted in the United States of America, the consolidated
balance sheet of Lowe's Companies, Inc. and subsidiaries as of February
2, 2001, and the related consolidated statements of earnings,
shareholders' equity, and cash flows for the year then ended (not
presented herein); and in our report dated February 20, 2001, 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 February 2, 2001 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 15, 2001
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Part II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders
(a) - The annual meeting of shareholders was held May 25, 2001.
(b) - Directors elected at the meeting: Robert L. Tillman, Leonard L. Berry,
Paul Fulton, Dawn E. Hudson and Robert A. Ingram.
Incumbent Directors whose terms expire in subsequent years are: Kenneth D.
Lewis, Richard K. Lochridge, Claudine B. Malone, Thomas O'Malley, Peter C.
Browning and Robert G. Schwartz.
(c) - The matters voted upon at the meeting and the results of the voting
were as follows (Adjusted for the two-for-one stock split effective
June 29, 2001):
(1) Election of Directors: FOR WITHHELD
Robert L. Tillman 702,172,222 4,326,280
Leonard L. Berry 702,625,056 3,873,446
Paul Fulton 702,508,372 3,990,130
Dawn E. Hudson 702,493,028 4,005,474
Robert A. Ingram 702,529,546 3,968,956
(2) Proposal to approve the Lowe's Companies, Inc. 2001 Incentive Plan
FOR AGAINST ABSTAIN
627,265,590 75,567,508 3,659,552
(3) Proposal concerning global workplace standards
FOR AGAINST ABSTAIN
52,042,504 538,176,424 30,966,184
Item 6 (a) - Exhibits
(3.1) Restated and Amended Charter, May 25, 2001
Refer to the Exhibit Index on page 16.
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Item 6 (b) - Reports on Form 8-K
There were no reports filed on Form 8-K during the quarter ended
August 3, 2001.
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 14, 2001 /s/ Kenneth W. Black, Jr.
Date____________________ ___________________________________________
Kenneth W. Black, Jr.
Senior Vice President and Chief Accounting Officer
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EXHIBIT INDEX
Page No.
Exhibit 3.1 - Restated and Amended Charter, May 25, 2001 17 - 32