Lowe's 2005 Annual Report Download - page 27
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CONTRACTUALOBLIGATIONSANDCOMMERCIALCOMMITMENTS
Thefollowingtablesummarizesoursignificantcontractualobligationsand
commercialcommitments:
PaymentsDuebyPeriod
ContractualObligations Lessthan 1-3 4-5 After5
(Inmillions) Total 1year years years years
Long-termdebt
(principaland
interestamounts,
excludingdiscount) $ 6,038 $ 176 $ 390 $ 793 $4,679
Capitalleaseobligations1 628 59 118 116 335
Operatingleases1 4,918 279 561 556 3,522
Purchaseobligations2 1,554 650 486 414 4
Subtotal–
contractualobligations $13,138 $1,164 $1,555 $1,879 $8,540
AmountofCommitmentExpirationbyPeriod
CommercialCommitments Lessthan 1-3 4-5 After5
(Inmillions) Total 1year years years years
Lettersofcredit3 $ 316 $ 315 $ 1 $ – $ –
Totalcontractual
obligationsand
commercial
commitments $
13,454 $
1,479 $
1,556 $
1,879 $
8,540
1Amountsdonotincludetaxes,commonareamaintenanceorinsurance.
2Representscontractsforpurchasesofmerchandiseinventory,propertyandconstructionofbuildings,as
wellascommitmentsrelatedtocertainmarketingandinformationtechnologyprograms.
3Lettersofcreditareissuedforthepurchaseofimportmerchandiseinventories,realestateandconstruction
contracts,andinsuranceprograms.
COMPANYOUTLOOK
Our2005fiscalyearcontained53weeks.Fiscal2006annualandfourthquarter
comparisonswillbenegativelyimpactedby52-versus53-weekand13-versus
14-weekcomparisons,respectively.Inaddition,our2006quarterlycomparisons
willbeimpactedbyashiftincomparableweeksto2005.Thisweekshiftposi-
tivelyimpactsfirstquarterandisoffsetbynegativeimpactsinthesecondand
fourthquarters.Our2006guidancecontemplatesthesefactors.
AsofFebruary27,2006,thedateofourfourthquarter2005earnings
release,weexpectedtoopen155storesduring2006,resultingintotalsquare
footagegrowthofapproximately12%.Weexpectedtotalsalestoincrease
13-14%andcomparablestoresalestoincrease5-6%.Operatingmargin,
definedasgrossmarginlessSG&Aanddepreciation,wasexpectedtoincrease
approximately20basispoints.Inaddition,storeopeningcostswereexpected
tobeapproximately$130million.Dilutedearningspershareof$4.03to$4.13
wereexpectedforthefiscalyearendingFebruary2,2007.
QUANTITATIVEANDQUALITATIVEDISCLOSURES
ABOUTMARKETRISK
Ourprimarymarketriskexposureisthepotentiallossarisingfromtheimpact
ofchanginginterestratesonlong-termdebt.Ourpolicyistomonitortheinter-
estraterisksassociatedwiththisdebt,andwebelieveanysignificantrisks
couldbeoffsetbyaccessingvariablerateinstrumentsavailablethroughour
linesofcredit.Thefollowingtablessummarizeourmarketrisksassociated
withlong-termdebt,excludingcapitalleasesandother.Thetablespresent
principalcashoutflowsandrelatedinterestratesbyyearofmaturity,excluding
unamortizedoriginalissuediscountsasofFebruary3,2006,andJanuary28,
2005.Variableinterestratesarebasedontheweighted-averageratesofthe
portfolioattheendoftheyearpresented.Thefairvaluesincludedbelowwere
determinedusingquotedmarketratesorinterestratesthatarecurrently
availabletousondebtwithsimilartermsandremainingmaturities.
Long-TermDebtMaturitiesbyFiscalYear
February3,2006
Average Average
Fixed Interest Variable Interest
(Dollarsinmillions) Rate Rate Rate Rate
2006 $ 5 7.58% $2 5.82%
2007 59 7.25 2 5.82
2008 6 7.86 – –
2009 1 7.51 – –
2010 501 8.25 – –
Thereafter 2,692 4.70% – –
Total $3,264 $4
Fairvalue $3,574 $4
Long-TermDebtMaturitiesbyFiscalYear
January28,2005
Average Average
Fixed Interest Variable Interest
(Dollarsinmillions) Rate Rate Rate Rate
2005 $ 605 7.31% $3 3.84%
2006 5 7.58 2 3.84
2007 59 7.25 2 3.84
2008 6 7.86 – –
2009 1 7.52 – –
Thereafter 3,025 4.49% – –
Total $3,701 $7
Fairvalue $3,967 $7