Lowe's 2005 Annual Report Download - page 23
Download and view the complete annual report
Please find page 23 of the 2005 Lowe's annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.L O W E ’ S 2 0 0 5 A N N U A L R E P O R T
|
2 1
Long-LivedAssets
Description–Lossesrelatedtoimpairmentoflong-livedassetsarerecognized
whencircumstancesindicatethecarryingvaluesoftheassetsmaynotbe
recoverable.Weperiodicallyreviewthecarryingvalueoflong-livedassetsfor
potentialimpairment.Whenwecommittocloseorrelocateastorelocation,or
whenthereareindicatorsthatthecarryingvalueofalong-livedassetmaynot
berecoverable,weevaluatethecarryingvalueoftheassetinrelationtoits
expectedundiscountedfuturecashflows.Ifthecarryingvalueoftheassetis
greaterthantheexpectedundiscountedfuturecashflowsandthefairvalue
oftheassetislessthanthecarryingvalue,aprovisionismadefortheimpair-
mentoftheassetbasedontheexcessofcarryingvalueoverfairvalue.We
recordedlong-livedassetimpairmentchargesof$16millionduring2005.The
netcarryingvalueforrelocatedstores,closedstoresandotherexcessprop-
ertytotaled$63millionand$56millionatFebruary3,2006andJanuary28,
2005,respectively.
Judgmentsanduncertaintiesinvolvedintheestimate–Ourimpairmentloss
calculationsrequireustoapplyjudgmentinestimatingassetfairvaluesand
futurecashflows,includingestimatedsalesandearningsgrowthratesand
assumptionsaboutmarketperformance.
Effectifactualresultsdifferfromassumptions–Ifactualresultsarenotcon-
sistentwiththeassumptionsandjudgmentsusedinestimatingfuturecash
flowsandassetfairvalues,actualimpairmentlossescouldvarypositivelyor
negativelyfromestimatedimpairmentlosses.
OPERATIONS
Thefollowingtablesetsforththepercentagerelationshiptonetsalesofeach
lineitemoftheconsolidatedstatementsofearnings,aswellasthepercentage
changeindollaramountsfromtheprioryear.Thistableshouldbereadincon-
junctionwiththefollowingdiscussionandanalysisandtheconsolidatedfinancial
statements,includingtherelatednotestotheconsolidatedfinancialstatements.
BasisPoint Percentage
Increase/ Increase/
(Decrease) (Decrease)
inPercentage inDollar
ofNetSales Amounts
fromPriorYear1 fromPriorYear1
2005vs. 2005vs.
2005 2004 2004 2004
Netsales 100.00% 100.00% N/A 19%
Grossmargin 34.23 33.61 62 21
Expenses:
Selling,general
andadministrative 20.84 20.74 10 19
Storeopeningcosts 0.33 0.34 (1) 15
Depreciation 2.27 2.35 (8) 14
Interest 0.37 0.48 (11) (10)
Totalexpenses 23.81 23.91 (10) 18
Pre-taxearnings 10.42 9.70 72 27
Incometaxprovision 4.01 3.73 28 28
Netearnings 6.41% 5.97% 44 27%
BasisPoint Percentage
Increase/ Increase/
(Decrease) (Decrease)
inPercentage inDollar
ofNetSales Amounts
fromPriorYear fromPriorYear
2004vs. 2004vs.
2004 2003 2003 2003
Netsales 100.00% 100.00% N/A 18%
Grossmargin 33.61 31.03 258 28
Expenses:
Selling,general
andadministrative 20.74 18.09 265 36
Storeopeningcosts 0.34 0.42 (8) (4)
Depreciation 2.35 2.40 (5) 16
Interest 0.48 0.58 (10) (2)
Totalexpenses 23.91 21.49 242 32
Pre-taxearnings 9.70 9.54 16 20
Incometaxprovision 3.73 3.61 12 22
Earningsfrom
continuingoperations 5.97 5.93 4 19
Earningsfromdiscontinued
operations,netoftax – 0.05 (5) (100)
Netearnings 5.97% 5.98% (1) 18%
OtherMetrics 2005 2004 2003
Comparablestoresalesincreases2 6.1% 6.6% 6.7%
Customertransactions(inmillions) 639 575 521
Averageticket3 $67.67 $63.43 $59.21
Atendofyear:
Numberofstores 1,234 1,087 952
Salesfloorsquarefeet(inmillions) 140 124 109
Averagestoresizesquarefeet(inthousands) 113 114 114
Returnonbeginningassets4 13.1% 11.6% 11.6%
Returnonbeginning
shareholders’equity5 24.0% 21.3% 22.4%
1ThefiscalyearendedFebruary3,2006had53weeks.ThefiscalyearsendedJanuary28,2005and
January30,2004had52weeks.
2Wedefineacomparablestoreasastorethathasbeenopengreaterthan13months.Astorethat
isidentifiedforrelocationisnolongerconsideredcomparableonemonthpriortoitsrelocation.
Therelocatedstoremustthenremainopengreaterthan13monthstobeconsideredcomparable.
Thecomparablestoresalesincreasefor2005includedintheprecedingtablewascalculatedusing
salesforacomparable53-weekperiod.
3Wedefineaverageticketasnetsalesdividedbynumberofcustomertransactions.
4Returnonbeginningassetsisdefinedasnetearningsdividedbybeginningtotalassets.
5Returnonbeginningshareholders’equityisdefinedasnetearningsdividedbybeginning
shareholders’equity.
Fiscal2005ComparedtoFiscal2004
Forthepurposeofthefollowingdiscussion,comparablestoresales,compara-
blestoreaverageticketandcomparablestorecustomertransactionsarebased
oncomparable53-weekperiods.
Netsales–Comparablestoresales,ourongoingstoreexpansionandrelo-
cationprogramandcontinuedgrowthinourthreespecialtysalesinitiatives
werekeydriversofoursalesincreasein2005.Weopened150storesin
2005,includingthreerelocations,andendedtheyearwithstoresin49states,
includingourfirststoresinNewHampshire.Theadditionalweekin2005
resultedinapproximately$750millioninsalesandimpacted2005sales
growthbyabout2.1%.