x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the quarterly period ended October 31,
2008
|
o
|
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 incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
1000
Lowe's Blvd., Mooresville, NC
|
28117
|
(Address
of principal executive offices)
|
(Zip
Code)
|
(704) 758-1000 | |
(Registrant's
telephone number, including area code)
|
Large
accelerated filer
x
|
Accelerated
filer
o
|
Non-accelerated
filer
o
|
Smaller
reporting company
o
|
CLASS
|
OUTSTANDING
AT NOVEMBER 28, 2008
|
|
Common
Stock, $.50 par value
|
1,469,449,361
|
•
|
Level
1 – inputs to the valuation techniques that are quoted prices in active
markets for identical assets or
liabilities
|
•
|
Level
2 – inputs to the valuation techniques that are other than quoted prices
but are observable for the assets or liabilities, either directly or
indirectly
|
•
|
Level
3 – inputs to the valuation techniques that are unobservable for the
assets or liabilities
|
Fair
Value Measurements at Reporting Date Using
|
|||||||||
Quoted
Prices in Active Markets for Identical Assets
|
Significant
Other Observable Inputs
|
Significant
Unobservable Inputs
|
|||||||
(In
millions)
|
October
31, 2008
|
(Level
1)
|
(Level
2)
|
(Level
3)
|
|||||
Short-term
investments
|
|||||||||
Available-for-sale
securities
|
$
|
412
|
$
|
122
|
$
|
290
|
$
|
-
|
|
Trading
securities
|
33
|
33
|
-
|
-
|
|||||
Long-term
investments
|
|||||||||
Available-for-sale
securities
|
466
|
-
|
466
|
-
|
|||||
Total
investments
|
$
|
911
|
$
|
155
|
$
|
756
|
$
|
-
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
(In
millions)
|
October
31, 2008
|
November
2, 2007
|
October
31, 2008
|
November
2, 2007
|
||||||||||||
Extended
warranty deferred revenue, beginning of period
|
$
|
456
|
$
|
373
|
$
|
407
|
$
|
315
|
||||||||
Additions
to deferred revenue
|
45
|
42
|
150
|
136
|
||||||||||||
Deferred
revenue recognized
|
(32)
|
(23)
|
(88)
|
(59)
|
||||||||||||
Extended
warranty deferred revenue, end of period
|
$
|
469
|
$
|
392
|
$
|
469
|
$
|
392
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
(In
millions)
|
October
31, 2008
|
November
2, 2007
|
October
31, 2008
|
November
2, 2007
|
||||||||||||
Liability
for extended warranty claims, beginning of period
|
$
|
17
|
$
|
18
|
$
|
14
|
$
|
10
|
||||||||
Accrual
for claims incurred
|
15
|
17
|
40
|
36
|
||||||||||||
Claim
payments
|
(13)
|
(9)
|
(35)
|
(20)
|
||||||||||||
Liability
for extended warranty claims, end of period
|
$
|
19
|
$
|
26
|
$
|
19
|
$
|
26
|
Three Months
Ended
|
Nine
Months Ended
|
|||||||||||||||
(In
millions, except per share data)
|
October
31, 2008
|
November
2, 2007
|
October
31, 2008
|
November
2, 2007
|
||||||||||||
Basic
earnings per share:
|
||||||||||||||||
Net
earnings
|
$
|
488
|
$
|
643
|
$
|
2,033
|
$
|
2,401
|
||||||||
Weighted-average
shares outstanding
|
1,459
|
1,470
|
1,456
|
1,490
|
||||||||||||
Basic
earnings per share
|
$
|
0.33
|
$
|
0.44
|
$
|
1.40
|
$
|
1.61
|
||||||||
Diluted
earnings per share:
|
||||||||||||||||
Net
earnings
|
$
|
488
|
$
|
643
|
$
|
2,033
|
$
|
2,401
|
||||||||
Net
earnings adjustment for interest on convertible notes, net of
tax
|
-
|
-
|
2
|
2
|
||||||||||||
Net
earnings, as adjusted
|
$
|
488
|
$
|
643
|
$
|
2,035
|
$
|
2,403
|
||||||||
Weighted-average
shares outstanding
|
1,459
|
1,470
|
1,456
|
1,490
|
||||||||||||
Dilutive
effect of share-based awards
|
5
|
7
|
6
|
8
|
||||||||||||
Dilutive
effect of convertible notes
|
-
|
20
|
11
|
21
|
||||||||||||
Weighted-average
shares, as adjusted
|
1,464
|
1,497
|
1,473
|
1,519
|
||||||||||||
Diluted
earnings per share
|
$
|
0.33
|
$
|
0.43
|
$
|
1.38
|
$
|
1.58
|
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
(In
millions)
|
October
31, 2008
|
November
2, 2007
|
October
31, 2008
|
November
2, 2007
|
||||||||||||
Long-term
debt
|
$
|
73
|
$
|
65
|
$
|
219
|
$
|
174
|
||||||||
Short-term
borrowings
|
2
|
3
|
9
|
4
|
||||||||||||
Capitalized
leases
|
7
|
8
|
24
|
24
|
||||||||||||
Interest
income
|
(11)
|
(10)
|
(32)
|
(34)
|
||||||||||||
Interest
capitalized
|
(10)
|
(22)
|
(25)
|
(30)
|
||||||||||||
Other
|
4
|
6
|
15
|
10
|
||||||||||||
Interest
- net
|
$
|
65
|
$
|
50
|
$
|
210
|
$
|
148
|
Nine
Months Ended
|
||||||||
(In
millions)
|
October
31, 2008
|
November
2, 2007
|
||||||
Cash
paid for interest, net of amount capitalized
|
$
|
287
|
$
|
199
|
||||
Cash
paid for income taxes
|
$
|
952
|
$
|
1,336
|
||||
Non-cash
investing and financing activities:
|
||||||||
Non-cash
property acquisitions
|
$
|
185
|
$
|
125
|
||||
Conversions
of long-term debt to equity
|
$
|
1
|
$
|
13
|
Three
Months Ended
|
Basis
Point Increase / (Decrease) in Percentage of Net Sales from Prior
Period
|
Percentage
Increase / (Decrease) in Dollar Amounts from Prior Period
|
||||||
October
31, 2008
|
November
2, 2007
|
2008
vs. 2007
|
2008
vs. 2007
|
|||||
Net
sales
|
100.00
|
%
|
100.00
|
%
|
N/A
|
1.4
|
%
|
|
Gross
margin
|
33.98
|
34.27
|
(29)
|
0.5
|
||||
Expenses:
|
||||||||
Selling,
general and administrative
|
23.23
|
21.63
|
160
|
8.9
|
||||
Store
opening costs
|
0.27
|
0.36
|
(9)
|
(23.5)
|
||||
Depreciation
|
3.29
|
2.94
|
35
|
13.5
|
||||
Interest -
net
|
0.56
|
0.43
|
13
|
30.0
|
||||
Total
expenses
|
27.35
|
25.36
|
199
|
9.3
|
||||
Pre-tax
earnings
|
6.63
|
8.91
|
(228)
|
(24.5)
|
||||
Income
tax provision
|
2.47
|
3.35
|
(88)
|
(25.4)
|
||||
Net
earnings
|
4.16
|
%
|
5.56
|
%
|
(140)
|
(24.0)
|
%
|
|
EBIT
margin
(1)
|
7.19
|
%
|
9.34
|
%
|
(215)
|
(22.0)
|
%
|
Nine
Months Ended
|
Basis
Point Increase / (Decrease) in Percentage of Net Sales from Prior
Period
|
Percentage
Increase / (Decrease) in Dollar Amounts from Prior Period
|
||||||
October
31, 2008
|
November
2, 2007
|
2008
vs. 2007
|
2008
vs. 2007
|
|||||
Net
sales
|
100.00
|
%
|
100.00
|
%
|
N/A
|
0.9
|
%
|
|
Gross
margin
|
34.34
|
34.58
|
(24)
|
0.2
|
||||
Expenses:
|
||||||||
Selling,
general and administrative
|
22.13
|
21.17
|
96
|
5.5
|
||||
Store
opening costs
|
0.18
|
0.21
|
(3)
|
(11.9)
|
||||
Depreciation
|
2.99
|
2.63
|
36
|
14.8
|
||||
Interest -
net
|
0.55
|
0.39
|
16
|
42.4
|
||||
Total
expenses
|
25.85
|
24.40
|
145
|
6.9
|
||||
Pre-tax
earnings
|
8.49
|
10.18
|
(169)
|
(15.8)
|
||||
Income
tax provision
|
3.17
|
3.85
|
(68)
|
(16.7)
|
||||
Net
earnings
|
5.32
|
%
|
6.33
|
%
|
(101)
|
(15.3)
|
%
|
|
EBIT
margin
(1)
|
9.04
|
%
|
10.57
|
%
|
(153)
|
(13.7)
|
%
|
Three
Months Ended
|
Nine
Months Ended
|
||||||||||||
Other
metrics:
|
October
31, 2008
|
November
2, 2007
|
October
31, 2008
|
November
2, 2007
|
|||||||||
Comparable
store sales changes
(2)
|
(5.9)
|
%
|
(4.3)
|
%
|
(6.5)
|
%
|
(4.3)
|
%
|
|||||
Customer
transactions (in millions)
|
179
|
173
|
577
|
558
|
|||||||||
Average
ticket
(3)
|
$
|
65.64
|
$
|
66.95
|
$
|
66.32
|
$
|
67.92
|
|||||
At
end of period:
|
|||||||||||||
Number
of stores
|
1,616
|
1,464
|
|||||||||||
Sales
floor square feet (in millions)
|
183
|
166
|
|||||||||||
Average
store size selling square feet (in thousands)
(4)
|
113
|
113
|
|||||||||||
|
(1)
We define EBIT margin as
earnings before interest and taxes as a percentage of sales (operating
margin).
|
|
(2)
We define a
comparable store as a store that has been open longer than 13
months. A store that is identified for relocation is no longer
considered comparable one
|
month prior to its relocation. The relocated store must then remain open longer than 13 months to be considered comparable. | |
|
(3)
We define average
ticket as net sales divided by number of customer
transactions.
|
|
(4)
We define average
store size selling square feet as sales floor square feet divided by the
number of stores open at the end of the
period.
|
Current
Debt Ratings
|
S&P
|
Moody’s
|
Fitch
|
Commercial
Paper
|
A1
|
P1
|
F1
|
Senior
Debt
|
A+
|
A1
|
A+
|
Outlook
|
Stable
|
Stable
|
Negative
|
Payments
Due by Period
|
||||||||||||||||||||
Contractual
Obligations
|
Less
than
|
1-3
|
4-5
|
After
5
|
||||||||||||||||
(In
millions)
|
Total
|
1
year
|
years
|
years
|
years
|
|||||||||||||||
Long-term
debt (principal and interest
amounts,
excluding
discount)
|
$ |
9,277
|
$ |
295
|
$ |
1,064
|
$ |
1,025
|
$ |
6,893
|
LOWE'S
COMPANIES, INC.
|
||
December
2, 2008
Date
|
/s/
Matthew
V. Hollifield
Matthew
V. Hollifield
Senior
Vice President and Chief Accounting
Officer
|
Exhibit
No.
|
Description
|
|
10.1
|
Lowe’s
Companies, Inc. Directors’ Deferred Compensation Plan
|
|
12.1
|
Statement
Re Computation of Ratio of Earnings to Fixed Charges
|
|
15.1
|
Deloitte
& Touche LLP Letter Re Unaudited Interim Financial
Information
|
|
31.1
|
Certification
Pursuant to Rules 13a-14(a) and 15d-14(a) Under the Securities Exchange
Act of 1934, as Amended
|
|
31.2
|
Certification
Pursuant to Rules 13a-14(a) and 15d-14(a) Under the Securities Exchange
Act of 1934, as Amended
|
|
32.1
|
Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
|
|
32.2
|
Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
|
|
|
TABLE
OF CONTENTS
|
Fiscal
Years Ended On
|
Nine
Months Ended
|
||||||||||||||||||||
January
30,
|
January
28,
|
February
3,
|
February
2,
|
February
1,
|
November
2,
|
October
31,
|
|||||||||||||||
2004
|
2005
|
2006
|
2007
|
2008
|
2007
|
2008
|
|||||||||||||||
Earnings:
|
|||||||||||||||||||||
Earnings
Before Income Taxes
|
$ |
2,908
|
$ |
3,520
|
$ |
4,496
|
$ |
4,998
|
$ |
4,511
|
$ |
3,858
|
$ |
3,247
|
|||||||
Add:
Fixed Charges
|
303
|
310
|
340
|
344
|
424
|
303
|
361
|
||||||||||||||
Less:
Capitalized Interest
|
(26)
|
(28)
|
(28)
|
(32)
|
(65)
|
(30)
|
(25)
|
||||||||||||||
Adjusted
Earnings
|
$ |
3,185
|
$ |
3,802
|
$ |
4,808
|
$ |
5,310
|
$ |
4,870
|
$ |
4,131
|
$ |
3,583
|
|||||||
Fixed
Charges:
|
|||||||||||||||||||||
Interest
Expense
(1)
|
$ |
224
|
$ |
220
|
$ |
231
|
$
|
238
|
$ |
301
|
$ |
212
|
$ |
262
|
|||||||
Rental
Expense
(2)
|
79
|
90
|
109
|
106
|
123
|
91
|
99
|
||||||||||||||
Total
Fixed Charges
|
$ |
303
|
$ |
310
|
$ |
340
|
$ |
344
|
$ |
424
|
$ |
303
|
$ |
361
|
|||||||
Ratio
of Earnings to Fixed Charges
|
10.5 |
12.3
|
14.1
|
15.4
|
11.5
|
13.6
|
9.9
|
•
Registration Statement No. 33-54497 on Form
S-8,
|
•
Registration Statement No. 33-54499 on Form
S-8,
|
•
Registration Statement No. 333-34631 on Form
S-8,
|
•
Registration Statement No. 333-75793 on Form
S-8,
|
•
Registration Statement No. 333-89471 on Form
S-8,
|
•
Registration Statement No. 333-36096 on Form
S-8,
|
•
Registration Statement No. 333-73408 on Form
S-8,
|
•
Registration Statement No. 333-97811 on Form
S-8,
|
•
Registration Statement No. 333-114435 on Form
S-8,
|
•
Registration Statement No. 333-137750 on Form
S-3ASR,
|
•
Registration Statement No. 333-138031 on Form
S-8,
|
•
Registration Statement No. 333-143266 on Form S-8,
and
|
•
Registration Statement
No. 333
-155748
on
Form S-
3ASR.
|
(a)
|
Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation;
and
|
(d)
|
Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information;
and
|
(b)
|
Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
|
December
2, 2008
|
/s/
Robert A. Niblock
|
|
Date
|
Robert
A. Niblock
Chairman
of the Board and Chief Executive
Officer
|
(a)
|
Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation;
and
|
(d)
|
Disclosed in this report any change in the registrant's internal control
over financial reporting that occurred during the registrant's most recent
fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
|
(a)
|
All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information;
and
|
(b)
|
Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
|
December
2, 2008
|
/s/
Robert F. Hull, Jr.
|
|
Date
|
Robert
F. Hull, Jr.,
Executive
Vice President and Chief Financial
Officer
|
1.
|
The
Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934;
and
|
2.
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
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1.
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The
Report fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934;
and
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2.
|
The
information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.
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