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Included in the above reported results are charges related to long-lived asset impairments, which reduced pre-tax earnings for the first quarter by
Sales for the first quarter increased 2.4 percent to
"We executed well during the quarter, despite an unexpectedly prolonged winter in many areas of the country," commented
"Performance has improved in May which, together with our strengthening execution, gives us the confidence to reaffirm our sales and operating profit outlook for the year," Niblock added.
Delivering on the commitment to return excess cash to shareholders, the company repurchased
As of
A conference call to discuss first quarter 2014 operating results is scheduled for today (
Lowe's Business Outlook
Fiscal Year 2014 (comparisons to fiscal year 2013; based on U.S. GAAP unless otherwise noted)
- Total sales are expected to increase approximately 5 percent.
- Comparable sales are expected to increase approximately 4 percent.
- The company expects to open approximately 10 home improvement and 5 hardware stores.
- Earnings before interest and taxes as a percentage of sales (operating margin) are expected to increase approximately 65 basis points.
- The effective income tax rate is expected to be approximately 37.2%.
- Diluted earnings per share of approximately
$2.63 are expected for the fiscal year endingJanuary 30 , 2015.
The company raised its diluted earnings per share outlook for the year as a result of the lower tax rate, primarily the result of a settlement of prior year tax matters, offset by charges related to long-lived asset impairments in the first quarter.
Disclosure Regarding Forward-Looking Statements
This news release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 (the "Act"). Statements of the company's expectations for sales growth, comparable sales, earnings and performance, shareholder value, capital expenditures, cash flows, the housing market, the home improvement industry, demand for services, share repurchases, the Company's strategic initiatives and any statement of an assumption underlying any of the foregoing, constitute "forward-looking statements" under the Act. Although we believe that the expectations, opinions, projections, and comments reflected in these forward-looking statements are reasonable, we can give no assurance that such statements will prove to be correct. A wide variety of potential risks, uncertainties, and other factors could materially affect our ability to achieve the results either expressed or implied by our forward-looking statements including, but not limited to, changes in general economic conditions, such as the rate of unemployment, interest rate and currency fluctuations, higher fuel and other energy costs, slower growth in personal income, changes in consumer spending, changes in the rate of housing turnover, the availability and increasing regulation of consumer credit and of mortgage financing, inflation or deflation of commodity prices, and other factors which can negatively affect our customers, as well as our ability to: (i) respond to adverse trends in the housing industry, such as the psychological effects of lower home prices, and in the level of repairs, remodeling, and additions to existing homes, as well as a general reduction in commercial building activity; (ii) secure, develop, and otherwise implement new technologies and processes designed to enhance our efficiency and competitiveness; (iii) attract, train, and retain highly-qualified associates; (iv) manage our business effectively as we adapt our traditional operating model to meet the changing expectations of our customers; (v) maintain, improve, upgrade and protect our critical information systems; (vi) respond to fluctuations in the prices and availability of services, supplies, and products; (vii) respond to the growth and impact of competition; (viii) address changes in existing or new laws or regulations that affect consumer credit, employment/labor, trade, product safety, transportation/logistics, energy costs, health care, tax or environmental issues; and (ix) respond to unanticipated weather conditions that could adversely affect sales. In addition, we could experience additional impairment losses if the actual results of our operating stores are not consistent with the assumptions and judgments we have made in estimating future cash flows and determining asset fair values. For more information about these and other risks and uncertainties that we are exposed to, you should read the "Risk Factors" and "Critical Accounting Policies and Estimates" included in our Annual Report on Form 10-K to the
The forward-looking statements contained in this news release are based upon data available as of the date of this release or other specified date and speak only as of such date. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf about any of the matters covered in this release are qualified by these cautionary statements and the "Risk Factors" included in our Annual Report on Form 10-K to the
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Consolidated Statements of Current and Retained Earnings (Unaudited) |
||||||||||
In Millions, Except Per Share and Percentage Data |
||||||||||
Three Months Ended |
||||||||||
|
|
|||||||||
Current Earnings |
Amount |
Percent |
Amount |
Percent |
||||||
Net sales |
$ |
13,403 |
100.00 |
$ |
13,088 |
100.00 |
||||
Cost of sales |
8,645 |
64.50 |
8,533 |
65.20 |
||||||
Gross margin |
4,758 |
35.50 |
4,555 |
34.80 |
||||||
Expenses: |
||||||||||
Selling, general and administrative |
3,319 |
24.76 |
3,222 |
24.62 |
||||||
Depreciation |
373 |
2.78 |
352 |
2.69 |
||||||
Interest - net |
124 |
0.93 |
113 |
0.86 |
||||||
Total expenses |
3,816 |
28.47 |
3,687 |
28.17 |
||||||
Pre-tax earnings |
942 |
7.03 |
868 |
6.63 |
||||||
Income tax provision |
318 |
2.37 |
328 |
2.50 |
||||||
Net earnings |
$ |
624 |
4.66 |
$ |
540 |
4.13 |
||||
Weighted average common shares outstanding - basic |
1,015 |
1,088 |
||||||||
Basic earnings per common share (1) |
$ |
0.61 |
$ |
0.49 |
||||||
Weighted average common shares outstanding - diluted |
1,017 |
1,090 |
||||||||
Diluted earnings per common share (1) |
$ |
0.61 |
$ |
0.49 |
||||||
Cash dividends per share |
$ |
0.18 |
$ |
0.16 |
||||||
Retained Earnings |
||||||||||
Balance at beginning of period |
$ |
11,355 |
$ |
13,224 |
||||||
Net earnings |
624 |
540 |
||||||||
Cash dividends |
(183) |
(174) |
||||||||
Share repurchases |
(811) |
(972) |
||||||||
Balance at end of period |
$ |
10,985 |
$ |
12,618 |
||||||
(1) Under the two-class method, earnings per share is calculated using net earnings allocable to common shares, which is derived by reducing net earnings by the earnings allocable to participating securities. Net earnings allocable to common shares used in the basic and diluted earnings per share calculation were |
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|
||||||||||
Consolidated Statements of Comprehensive Income (Unaudited) |
||||||||||
In Millions, Except Percentage Data |
||||||||||
Three Months Ended |
||||||||||
|
|
|||||||||
Amount |
Percent |
Amount |
Percent |
|||||||
Net earnings |
$ |
624 |
4.66 |
$ |
540 |
4.13 |
||||
Foreign currency translation adjustments - net of tax |
8 |
0.06 |
- |
- |
||||||
Other comprehensive income |
8 |
0.06 |
- |
- |
||||||
Comprehensive income |
$ |
632 |
4.72 |
$ |
540 |
4.13 |
|
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Consolidated Balance Sheets |
||||||||||
In Millions, Except Par Value Data |
||||||||||
(Unaudited) |
(Unaudited) |
|||||||||
|
|
|
||||||||
Assets |
||||||||||
Current assets: |
||||||||||
Cash and cash equivalents |
$ |
658 |
$ |
1,081 |
$ |
391 |
||||
Short-term investments |
110 |
118 |
185 |
|||||||
Merchandise inventory - net |
10,515 |
10,274 |
9,127 |
|||||||
Deferred income taxes - net |
283 |
228 |
252 |
|||||||
Other current assets |
386 |
313 |
341 |
|||||||
Total current assets |
11,952 |
12,014 |
10,296 |
|||||||
Property, less accumulated depreciation |
20,617 |
21,257 |
20,834 |
|||||||
Long-term investments |
360 |
272 |
279 |
|||||||
Other assets |
1,300 |
1,188 |
1,323 |
|||||||
Total assets |
$ |
34,229 |
$ |
34,731 |
$ |
32,732 |
||||
Liabilities and shareholders' equity |
||||||||||
Current liabilities: |
||||||||||
Short-term borrowings |
$ |
- |
$ |
- |
$ |
386 |
||||
Current maturities of long-term debt |
47 |
47 |
49 |
|||||||
Accounts payable |
7,051 |
7,041 |
5,008 |
|||||||
Accrued compensation and employee benefits |
501 |
467 |
785 |
|||||||
Deferred revenue |
1,055 |
1,008 |
892 |
|||||||
Other current liabilities |
2,160 |
1,876 |
1,756 |
|||||||
Total current liabilities |
10,814 |
10,439 |
8,876 |
|||||||
Long-term debt, excluding current maturities |
10,080 |
9,026 |
10,086 |
|||||||
Deferred income taxes - net |
261 |
440 |
291 |
|||||||
Deferred revenue - extended protection plans |
730 |
717 |
730 |
|||||||
Other liabilities |
862 |
857 |
896 |
|||||||
Total liabilities |
22,747 |
21,479 |
20,879 |
|||||||
Shareholders' equity: |
||||||||||
Preferred stock - |
- |
- |
- |
|||||||
Common stock - |
||||||||||
Shares issued and outstanding |
||||||||||
|
1,012 |
|||||||||
|
1,088 |
|||||||||
|
1,030 |
506 |
544 |
515 |
||||||
|
- |
38 |
- |
|||||||
Retained earnings |
10,985 |
12,618 |
11,355 |
|||||||
Accumulated other comprehensive (loss)/income |
(9) |
52 |
(17) |
|||||||
Total shareholders' equity |
11,482 |
13,252 |
11,853 |
|||||||
Total liabilities and shareholders' equity |
$ |
34,229 |
$ |
34,731 |
$ |
32,732 |
||||
|
||||
Consolidated Statements of Cash Flows (Unaudited) |
||||
In Millions |
||||
Three Months Ended |
||||
|
|
|||
Cash flows from operating activities: |
||||
Net earnings |
$ 624 |
$ 540 |
||
Adjustments to reconcile net earnings to net cash provided by |
||||
operating activities: |
||||
Depreciation and amortization |
398 |
376 |
||
Deferred income taxes |
(67) |
(26) |
||
Loss on property and other assets - net |
24 |
5 |
||
Loss on equity method investments |
17 |
15 |
||
Share-based payment expense |
28 |
18 |
||
Changes in operating assets and liabilities: |
||||
Merchandise inventory - net |
(1,384) |
(1,674) |
||
Other operating assets |
44 |
(5) |
||
Accounts payable |
2,041 |
2,381 |
||
Other operating liabilities |
269 |
362 |
||
Net cash provided by operating activities |
1,994 |
1,992 |
||
Cash flows from investing activities: |
||||
Purchases of investments |
(163) |
(84) |
||
Proceeds from sale/maturity of investments |
157 |
89 |
||
|
(194) |
(196) |
||
Contributions to equity method investments - net |
(91) |
(73) |
||
Proceeds from sale of property and other long-term assets |
16 |
6 |
||
Other - net |
(5) |
(5) |
||
Net cash used in investing activities |
(280) |
(263) |
||
Cash flows from financing activities: |
||||
Net decrease in short-term borrowings |
(386) |
- |
||
Repayment of long-term debt |
(12) |
(11) |
||
Proceeds from issuance of common stock under |
24 |
40 |
||
Cash dividend payments |
(186) |
(178) |
||
Repurchase of common stock |
(910) |
(1,046) |
||
Other - net |
23 |
5 |
||
Net cash used in financing activities |
(1,447) |
(1,190) |
||
Effect of exchange rate changes on cash |
- |
1 |
||
Net increase in cash and cash equivalents |
267 |
540 |
||
Cash and cash equivalents, beginning of period |
391 |
541 |
||
Cash and cash equivalents, end of period |
$ 658 |
$ 1,081 |
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SOURCE