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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended January 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission file number 0-94
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
incorporation or organization) identification No.)
P. 0. BOX 1111, NORTH WILKESBORO, N.C. 28656-0001
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (910) 658-4000
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on
Which Registered
Common Stock $.50 Par Value New York Stock Exchange
Pacific Stock Exchange
The Stock Exchange (London)
Securities registered pursuant to Section 12(g) of the Act: NONE
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 report(s), and (2) has been subject to
such filing requirements for the past 90 days.
Yes x , No .
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
State the aggregate market value of the voting stock held by non-affiliates of
the registrant as of April 4, 1997:
$5,463,773,846.
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.
Class: COMMON STOCK, $.50 PAR VALUE, Outstanding at April 4, 1997:
173,382,339 shares.
Documents Incorporated by Reference
Annual Report to Security Holders for fiscal year ended January 31, 1997:
Parts I and II. With the exception of specifically referenced information, the
Annual Report to Security Holders for the fiscal year ended January 31, 1997
is not to be deemed filed as part of this report. Proxy Statement for Annual
Meeting filed April 11, 1997: Part III.
Part I
Item 1 - Business
Reference is made to "Lowe's Profile" and table on the inside back
cover and to pages 1, 2, 3, 12 and 13 of the Annual Report to Security
Holders for fiscal year ended January 31, 1997.
Item 2 - Properties
At January 31, 1997, the Company operated 402 stores with a total of
30.4 million square feet of selling space. The current prototype large
store is a 100,000 square foot sales floor unit for smaller markets and
a 114,000 square foot sales floor unit for medium and larger markets,
each with a lawn and garden center comprising approximately 34,000
additional square feet. The Company also operates five distribution
centers and twelve smaller support facilities, four of which are reload
centers only for lumber and building commodities.
Reference is also made to the map and table on the inside back cover
and to notes 1, 4, 6 and 13 on pages 28, 29, 30 and 35 of the Annual
Report to Security Holders for fiscal year ended January 31, 1997.
Item 3 - Legal Proceedings
Reference is made to Note 14 on page 35 of the Annual Report to
Security Holders for fiscal year ended January 31, 1997.
Item 4 - Submission of Matters to a Vote of Security Holders
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
Pursuant to General Instruction G(3) of Form 10-K, the following list is
included as an unnumbered item in Part I of this Report in lieu of being
included in the Proxy Statement for the Annual Meeting of Stockholders to be
held on May 30, 1997.
The following is a list of names and ages of all of the executive officers of
the registrant indicating all positions and offices with the registrant held
by each such person and each person's principal occupations or employment
during the past five years.
Robert L. Tillman, 53
President and Chief Executive Officer since 1996; Senior Executive Vice
President and Chief Operating Officer, 1994 - 1996; Executive Vice
President, Merchandising, 1991-1994; Senior Vice President,
Merchandising, 1989-1991.
Robert L. Strickland, 66
Chairman of the Board since 1978.
Gregory M Bridgeford, 42
Senior Vice President and General Merchandise Manager since 1996; Vice
President and General Merchandise Manager, 1994 - 1996; Vice President,
Merchandising, 1989 - 1994.
Richard D. Elledge, 55
Senior Vice President and Chief Accounting Officer since 1996; Vice
President and Chief Accounting Officer, 1981 - 1996; Assistant Secretary
since 1991.
Lee Herring, 43
Senior Vice President, Logistics since 1996; Vice President, Logistics,
1993 - 1996; Vice President, Merchandising, 1985 - 1993.
William L. Irons, 53
Senior Vice President, Management Information Services since 1992;
Partner, Ernst & Young, 1987 - 1992.
W. Cliff Oxford, 45
Senior Vice President, Corporate and Human Development since 1996;
Senior Vice President, Corporate Relations, 1994 - 1996; Vice President,
Corporate Relations, 1984 - 1994.
Dale C. Pond, 51
Senior Vice President, Marketing since 1993; Senior Vice President,
Marketing and New Business Development, Home Quarters Warehouse, Inc.,
1991 - 1993.
David E. Shelton, 50
Senior Vice President, Real Estate/Engineering and Construction since
1997; Vice President, Store Operations, 1995 - 1997; Vice President,
Sales Operations, 1992 - 1995; Vice President, Training, 1986 - 1992.
Larry D. Stone, 45
Executive Vice President, Store Operations since 1996; Senior Vice
President, Sales Operations, 1995 - 1996; Vice President, General
Merchandising, 1992 - 1995; Vice President, Store Merchandising, 1989 -
1992.
William C. Warden, Jr., 44
Executive Vice President, General Counsel, Chief Administrative Officer
and Secretary since 1996; Senior Vice President, General Counsel and
Secretary, 1993 - 1996; Assistant Secretary 1985 - 1993; Partner,
McElwee, McElwee & Warden which served as General Counsel for the
Company, 1979 - 1993.
Gregory J. Wessling, 45
Senior Vice President and General Merchandise Manager since 1996; Vice
President and General Merchandise Manager, 1994 - 1996; Vice President,
Merchandising, 1989 - 1994.
Thomas E. Whiddon, 44
Executive Vice President and Chief Financial Officer since 1996; Senior
Vice President and Chief Financial Officer, 1995 - 1996 and Senior Vice
President and Treasurer, 1994 - 1995, Zale Corporation; Vice President
and Treasurer, Eckerd Corporation, 1986 - 1994; Partner, KPMG, Peat
Marwick, 1984 - 1986.
Part II
Item 5 -Market for the Registrant's Common Stock and Related Security Holder
Matters.
The principal market for trading in Lowe's common stock is the New
York Stock Exchange, Inc. (NYSE). Lowe's common stock is also listed
on the Pacific Exchange in the United States and the Stock Exchange
in London. The ticker symbol for Lowe's is LOW. As of January 31,
1997, there were 11,460 holders of record of Lowe's common stock. The
table, "Lowe's Quarterly Stock Price Range and Cash Dividend
Payment", on page 38 of the Annual Report to Security Holders for
fiscal year ended January 31, 1997 sets forth, for the periods
indicated, the high and low sales prices per share of the common
stock as reported by the NYSE Composite Tape, and the dividends per
share declared on the common stock during such periods. The Company
is party to certain agreements which may limit its ability to declare
dividends under certain circumstances.
Reference is also made to notes 11 and 12 on pages 33 and 34 of the
Annual Report to Security Holders for fiscal year ended January 31,
1997.
Item 6 -Selected Financial Data
Reference is made to page 37 of the Annual Report to Security Holders
for fiscal year ended January 31, 1997.
Item 7 -Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Reference is made to "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on pages 21 and 22 of
the Annual Report to Security Holders for fiscal year ended January
31, 1997.
Item 8 -Financial Statements and Supplementary Data
Reference is made to the "Independent Auditors' Report" on page 20
and to the financial statements and notes thereto on pages 25 through
36, and to the "Selected Quarterly Data" on page 37 of the Annual
Report to Security Holders for fiscal year ended January 31, 1997.
Item 9 - Disagreements on Accounting and Financial Disclosure
Not applicable.
Part III
Item 10 - Directors and Executive Officers of the Registrant
Reference is made to "Lowe's Board of Directors" on pages 18 and 19
of the Annual Report to Security Holders for fiscal year ended
January 31, 1997, and to Part I - Executive Officers of the
Registrant.
Item 11 - Executive Compensation
Reference is made to "Compensation of Executive Officers",
"Option/SAR Grants in Last Fiscal Year", "Aggregated Option/SAR
Exercises in Last Fiscal Year and Fiscal Year-end Option/SAR
Values", and "Long-term Incentive Plans - Awards in Last Fiscal
Year" included in the definitive Proxy Statement which was filed,
pursuant to regulation 14A with the SEC on April 11, 1997, and which
sections are hereby incorporated by reference.
The Company's Executive Compensation Program is comprised of the
following elements:
Base Salary
Salaries for Executive Officers are established on the basis of the
qualifications and experience of the executive, the nature of the job
responsibilities and salaries for competitive positions in the retailing
industry.
Executive Officers' base salaries are reviewed annually and are approved
by the Committee. Salaries of Executive Officers are compared with those of
comparable executive positions in the retailing industry throughout the United
States. The Committee uses the median level of base salary as a guideline, in
conjunction with the executive's performance and qualifications, for
establishing salary levels.
1994 Incentive Plan
The 1994 Incentive Plan was adopted to attract, motivate, retain and
reward the executives whose leadership and performance are critical to the
Company's success in enhancing shareholder value, to place further emphasis on
executive ownership of Company Stock and to assure deductibility of executive
compensation for federal and state income tax purposes.
The 1994 Incentive Plan authorizes the grant of stock options. The
option price cannot be less than the market price of the Company's Common
Stock on the date on which the option is granted. Consequently, stock options
granted under the 1994 Incentive Plan measure performance and create
compensation solely on the basis of the appreciation in the price of the
Company's Common Stock.
Stock appreciation rights (STARs) also may be granted under the 1994
Incentive Plan. STARs entitle the recipient to receive a cash payment based
on the appreciation in the Company's Common Stock following the date of the
award and, accordingly, measure performance and create compensation only if
the price of the Company's Common Stock appreciates.
Company Common Stock also may be issued under stock awards pursuant to
the 1994 Incentive Plan. All stock awards made through January 31, 1996, were
performance accelerated restricted stock (PARS) awards which provide that the
shares are subject to forfeiture and are nontransferable for seven years
following the award. Accelerated vesting is permitted if the Company achieves
certain financial objectives during the three- and five-year periods following
the award.
Stock awards made as of January 31, 1997, include both PARS and
Performance Stock Awards. The President/Chief Executive Officer, the
Chairman, and members of the President's staff were granted Performance Stock
shares. Other eligible senior and middle managers were granted PARS awards.
The Performance Share awards are subject to forfeiture and are nontransferable
unless the Company achieves specific performance objectives at the end of a
three-year period. The PARS awards are subject to forfeiture and are
nontransferable for five years following the award. Accelerated vesting is
permitted if the Company achieves certain financial objectives during the
three- and four-year periods following the award.
The Management Bonus Program is the final component of the 1994
Incentive Plan. The Management Bonus Program provides bonus opportunities
which can be earned upon achievement by the Company of preset annual financial
goals. No bonuses are paid if performance is below the threshold level of
corporate profitability. Additional bonus amounts are earned on a
proportionate scale up to 100% of the stated bonus opportunity if the preset
financial goals are met. Maximum bonuses were paid for the year ended January
31, 1995, because the Company's financial results exceeded the preset
performance goals. A partial bonus equal to 25.669% of the basic bonus
opportunity was paid for the year ended January 31, 1996, because financial
results exceeded the minimum performance threshold but were below the goals
established for full bonus payment. Maximum bonuses were again paid for the
year ended January 31, 1997, because the Company's financial performance
exceeded the preset performance goals.
Proposed 1997 Incentive Plan
The 1997 Incentive Plan was approved by the Compensation Committee and
the Company's Board of Directors on December 6, 1996, and is submitted for
shareholder approval. The purpose of the 1997 Incentive Plan is to provide
authorized shares to continue the objectives of the 1994 Incentive Plan: to
attract, motivate, retain, and reward the executives whose leadership and
performance are critical to the Company's success in enhancing shareholder
value, to place further emphasis on executive ownership of Company Stock, and
to assure deductibility of executive compensation for federal and state income
tax purposes.
Benefit Restoration Plan
The Benefit Restoration Plan was adopted by the Company in May 1990, to
provide qualifying executives with benefits equivalent to those received by
all other employees under the Company's basic qualified employee retirement
plans. Qualifying executives are those executives whose annual additions and
other benefits, as normally provided to all participants under those qualified
plans, would be curtailed by Internal Revenue Code restrictions, and who are
selected by the Committee to participate in the Plan. The Benefit Restoration
Plan benefits are determined annually. Participating executives may elect
annually to defer benefits or to receive a current cash payment.
Other Compensation
The Company's Executive Officers participate in the various qualified
and non-qualified employee benefit plans sponsored by the Company. The
Company makes only nominal use of perquisites in compensating its Executive
Officers.
Item 12 - Security Ownership of Certain Beneficial Owners and Management
Reference is made to "Security Ownership of Certain Beneficial
Owners and Management" included in the definitive Proxy Statement
which was filed pursuant to regulation 14A, with the SEC on April
11,1997, and is hereby incorporated by reference.
Item 13 - Certain Relationships and Related Transactions
Reference is made to "Information About the Board of Directors and
Committees of the Board", "Certain Relationships and Related
Transactions" included in the definitive Proxy Statement which was
filed, pursuant to regulation 14A, with the SEC on April 11,1997,
and is hereby incorporated by reference.
Part IV
Item 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K
a) 1. Financial Statements
Reference is made to the following items and page numbers
appearing in the Annual Report to Security Holders for fiscal
year ended January 31, 1997:
Pages
Independent Auditors' Report 20
Consolidated Statements of Current and Retained Earnings
for each of the fiscal years in the three year period
ended January 31, 1997 25
Consolidated Balance Sheets at January 31, 1997,
1996 and 1995 26
Consolidated Statements of Cash Flows for each of the
fiscal years in the three-year period ended
January 31, 1997 27
Notes to Consolidated Financial Statements for each
of the fiscal years in the three-year period ended
January 31, 1997 28-36
a) 2. Financial Statement Schedules
Schedules are omitted because of the absence of conditions under
which they are required or because information required is
included in financial statements or the notes thereto.
Part IV
a) 3. Exhibits
(3.1) Restated and Amended Charter (filed as exhibit 3(a) to the
Company's Form 8-K dated July 5, 1994 and incorporated by
reference herein).
(3.2) Bylaws, as amended.
(4.1) Rights Agreement dated as of September 9, 1988 between the
Company and Wachovia Bank and Trust Co., N.A., as Rights
Agent (filed as Exhibit 4.1 to the Company's Form 8-K
dated September 9, 1988 and incorporated by reference
herein).
(10.1) Lowe's Companies, Inc. 1985 Stock Option Plan (filed as
Exhibit C to the Company's Proxy Statement dated May 31,
1985 and incorporated by reference herein).
(10.2) Post Effective Amendment No. 1 to Lowe's Companies, Inc.
1985 Stock Option Plan (filed on the Company's Form S-8
dated June 23, 1987 (No. 33-2618) and incorporated by
reference herein).
(10.3) Lowe's Companies, Inc. 1989 Non-Employee Directors' Stock
Option Plan (filed as Exhibit A to the Company's Proxy
Statement dated June 9, 1989 and incorporated by reference
herein).
(10.4) Lowe's Companies, Inc. 1990 Benefit Restoration Plan
(filed as Exhibit 10.4 to the Company's Annual Report on
Form 10-K for the year ended January 31, 1991, and
incorporated by reference herein).
(10.5) Lowe's Companies, Inc. Stock Appreciation Incentive Plan
(filed as Exhibit 10.5 to the Company's Annual Report on
Form 10-K for the year ended January 31, 1992, and
incorporated by reference herein).
(10.6) Indenture dated April 15, 1992 between the Company and
Chemical Bank, as Trustee (filed as Exhibit 4.1 to the
Company's Registration Statement on Form S-3 (No. 33-
47269) and incorporated by reference herein).
(10.7) Indenture dated July 22, 1994 between the Company and
Wachovia Bank of North Carolina, N.A., as Trustee (filed
as Exhibit 4.1 to the Company's Registration Statement on
Form S-3 (No. 33-64560) and incorporated by reference
herein).
(10.8) Form of Indenture between the Company and Chemical Bank,
as Trustee (filed as Exhibit 4.1 to the Company's
Registration Statement on Form S-3 (No. 33-51865) and
incorporated by reference herein).
(10.9) Form of Indenture between the Company and Wachovia Bank of
North Carolina, N.A., as Trustee (filed as Exhibit 4.2 to
the Company's Registration Statement on Form S-3 (No. 33-
51865) and incorporated by reference herein).
(10.10) Lowe's Companies, Inc. Director's Stock Incentive Plan
(filed on the Company's Form S-8 dated July 8, 1994 (No.
33-54497) and incorporated by reference herein).
(10.11) Lowe's Companies, Inc. 1994 Incentive Plan (filed on the
Company's Form S-8 dated July 8, 1994 (No. 33-54499) and
incorporated by reference herein).
(10.12) Release and Separation Agreement dated November 9, 1995,
between the Company and Harry B. Underwood II (filed as
Exhibit 10 to the Company's Quarterly Report on Form 10-Q
for the period ended October 31, 1995, and incorporated by
reference herein).
(10.13) Amended and Restated Indenture, dated as of December 1,
1995, between the Company and First National Bank of
Chicago, as Trustee (filed as Exhibit 4.1 on Form 8-K
dated December 15, 1995, and incorporated by reference
herein).
(10.14) Form of the Company's 6 3/8 % Senior Note due December 15,
2005 (filed as Exhibit 4.2 on Form 8-K dated December 15,
1995, and incorporated by reference herein).
(10.15) Form of Subordinated Indenture between the Company and The
Bank of New York, Trustee (filed as Exhibit 4.2 to the
Company's Registration Statement on Form S-3 (No. 333-
14257) and incorporated by reference herein).
(11) Computation of per share earnings.
(12) Statement re computation of ratios
(13) Annual Report to Security Holders for fiscal year ended
January 31, 1997.
(21) List of Subsidiaries.
(23) Consent of Deloitte & Touche LLP
(27) Financial Data Schedule
b) Reports on Form 8-K
There were no reports on Form 8-K filed by the registrant during the last
quarter of the period covered by this report.
Part IV
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
/s/ Lowe's Companies, Inc.
Lowe's Companies, Inc.
April 25, 1997 By /s/ Robert L. Tillman
Robert L. Tillman
Date President, Chief Executive Officer
and Director
April 25, 1997 By: /s/ Thomas E. Whiddon
Date Thomas E. Whiddon
Executive Vice President
and Chief Financial Officer
April 25, 1997 By: /s/ Richard D. Elledge
Date Richard D. Elledge
Senior Vice President,
and Chief Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Chairman of the Board of
/s/ Robert L. Strickland Directors and Director 4/25/97
Robert L. Strickland Date
President, Chief Executive
/s/ Robert L. Tillman Officer and Director 4/25/97
Robert L. Tillman Date
Director
William A. Andres Date
/s/ John M. Belk Director 4/25/97
John M. Belk Date
/s/ Carol A. Farmer Director 4/25/97
Carol A. Farmer Date
/s/ Paul Fulton Director 4/25/97
Paul Fulton Date
Director
James F. Halpin Date
/s/ Leonard G. Herring Director 4/25/97
Leonard G. Herring Date
/s/ Petro Kulynych Director 4/25/97
Petro Kulynych Date
Director
Russell B. Long Date
/s/ Claudine B. Malone Director 4/25/97
Claudine Malone Date
/s/ Robert G. Schwartz Director 4/25/97
Robert G. Schwartz Date