UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
(Mark
One)
|
x
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
|
For
the fiscal year ended February 2, 2007
|
|
|
or
|
|
|
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)
|
|
|
|
|
Registrant's
telephone number, including area code
|
704-758-1000
|
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 (NYSE)
|
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined
in
Rule 405 of the Securities Act.
|
x
|
Yes
|
o
|
No
|
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Exchange Act.
|
o
|
Yes
|
x
|
No
|
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 reports), and (2) has been subject to such filing requirements
for
the past 90 days.
|
x
|
Yes
|
o
|
No
|
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§229.405
of this chapter) is not contained herein, and will not be contained,
to the best of 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. x
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of “accelerated
filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check
one):
|
Large
accelerated filer x
|
Accelerated
filer o
|
Non-accelerated
filer o
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
|
o
|
Yes
|
x
|
No
|
As
of
August 4, 2006, the last business day of the Company's most recent second
quarter, the aggregate market value of the registrant’s common stock held by
non-affiliates of the registrant was $36.3 billion based on the closing sale
price as reported on the New York Stock Exchange.
Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date.
|
CLASS
|
OUTSTANDING
AT MARCH 23, 2007
|
|
|
Common
Stock, $.50 par value
|
1,510,309,351
|
DOCUMENTS
INCORPORATED BY REFERENCE
|
Document
|
Parts
Into Which Incorporated
|
|
|
Portions
of Lowe’s 2006 Annual Report to Shareholders
|
Parts
I, II and IV
|
|
|
Portions
of the Proxy Statement for Lowe’s 2007 Annual Meeting of
Shareholders
|
Part
III
|
-
INDEX -
|
|
|
||
|
PART
I
|
Page
No.
|
||
|
|
Item
1.
|
4-10
|
|
|
Item
1A.
|
10-11
|
||
|
Item
1B.
|
12
|
||
|
|
Item
2.
|
12
|
|
|
Item
3.
|
12
|
||
|
|
Item
4.
|
12
|
|
|
13
|
|||
|
|
|
|
|
|
PART
II
|
|
||
|
|
Item
5.
|
14
|
|
|
|
Item
6.
|
14
|
|
|
Item
7.
|
14
|
||
|
Item
7A.
|
14
|
||
|
|
Item
8.
|
14
|
|
|
|
Item
9.
|
14
|
|
|
|
Item
9A.
|
15
|
|
|
|
Item
9B.
|
15
|
|
|
PART
III
|
|
||
|
|
Item
10.
|
16
|
|
|
|
Item
11.
|
16
|
|
|
|
Item
12.
|
16
|
|
|
Item
13.
|
16
|
||
|
|
Item
14.
|
16
|
|
|
|
|||
|
PART
IV
|
|
||
|
|
Item
15.
|
17-21
|
|
|
|
|
|
|
|
|
|
22-23
|
|
Part
I
Item
1 - Business
General
Information
Lowe’s
Companies, Inc. and subsidiaries (the Company) is a Fortune
50 company and
the
world’s second largest home improvement retailer, with specific emphasis on
retail do-it-yourself (DIY) customers, do-it-for-me (DIFM) customers who
utilize
our installation services, and Commercial Business Customers. We offer a
complete line of products and services for home decorating, maintenance,
repair,
remodeling, and property maintenance. As of February 2, 2007, we operated
1,385
stores
in 49 states, with 157 million square feet of retail selling space.
Incorporated
in North Carolina in 1952, Lowe’s Companies, Inc. has been publicly held since
1961. Our common stock is listed on the New York Stock Exchange - ticker
symbol
“LOW.”
See
Item
6, “Selected Financial Data,” for historical revenues, profits and identifiable
assets.
Who
We Serve
We
serve
homeowners, renters and Commercial Business Customers. Homeowners and renters
primarily consist of do-it-yourselfers, those taking advantage of our installed
sales programs, and others buying for personal and family use. Commercial
Business Customers include repair and remodeling contractors, electricians,
landscapers, painters, plumbers, and commercial and residential property
maintenance professionals, among others.
To
meet
customers’ varying needs, we combine merchandise sales and service in categories
that are relevant to them. We offer a full array of home improvement products
in
the following categories: appliances, lumber, flooring, millwork, paint,
building materials, fashion plumbing, lighting, tools, lawn & landscape
products, hardware, seasonal living, cabinets & countertops, outdoor power
equipment, rough plumbing, rough electrical, nursery, home environment,
walls/windows and home organization.
Our
Stores
New
Store Expansion
Our
expansion strategy led to the opening of 155 stores in fiscal 2006 (151 new
and
four relocated) that included two primary prototypes:
a
117,000-square-foot (117K) store for large markets and a 94,000-square-foot
(94K) store to serve smaller markets. In fiscal 2007, we estimate that
approximately 80% of our growth will be comprised of 117K stores in larger
markets and approximately 20% of our growth will be comprised of 94K stores
in
smaller markets.
|
2006
|
|
2005
|
|
2004
|
|
|
Number
of stores, beginning of fiscal year
|
1,234
|
|
1,087
|
|
952
|
|
New
stores opened
|
151
|
|
147
|
|
136
|
|
Relocated
stores opened
|
4
|
|
3
|
|
4
|
|
Stores
closed (including relocated stores)
|
(4)
|
|
(3)
|
|
(5)
|
|
|
|
||||
|
Number
of stores, end of fiscal year
|
1,385
|
|
1,234
|
|
1,087
|
International
Expansion
In
June
2005, we announced expansion plans into Canada. Based on information obtained
through a thorough market assessment, we are adapting our U.S. business model
to
best meet the unique needs and attributes of the Canadian market. Plans are
to
open five to six stores in the Greater Toronto Area in the second half of
fiscal
2007.
In
January 2007, we announced expansion plans into Mexico. We expect to open
three
to five stores in Monterrey in fiscal 2009.
Investments
in Existing Stores
During
fiscal 2006, we continued our long history of investing in our existing stores
to create a more inviting shopping experience for our retail and Commercial
Business Customers. This included relamping our stores at regular intervals
to
ensure they remain bright, adding new displays, improving point-of-sale and
directional signage, adding more product selection, repainting our building
exteriors, and re-striping our parking lots. We categorize our
merchandising-related investments in our stores as follows:
4
Resets
Resets
are necessary to drive comparable store sales increases and keep our stores
fresh with new and innovative products. These resets involve the replacement
of
a particular product or vendor and do not require major changes in the store.
We
conducted hundreds of resets in fiscal 2006.
Remerchandising
In
fiscal
2006, we completed the remerchandising of 150 of our earlier format stores
to
make them more closely resemble our most current store prototypes. These
remerchandising efforts focused on moving entire departments, improving
adjacencies, and enhancing the shopability within the appliances, cabinets
&
countertops, flooring, fashion plumbing, paint, walls/windows, lighting,
home
organization, lumber and building materials departments. In addition, we
replaced or refurbished all of our selling centers, including the returns
and
customer service areas of these stores. All new interior graphics, signage,
and
way-finding materials were also added to increase shopability and brighten
the
atmosphere. Finally, we installed self check-out in all 150 of our
remerchandised stores. We were able to remerchandise these stores with minimal
disruption to our customers. We continuously make these investments to maintain
our best-in-class stores. These enhancements enable our stores to continue
to
deliver the sales performance we expect, and also offer customers the shopping
experience and environment they deserve.
Serving
Our Customers
Our
vision is to be our customers’ first choice for home improvement. To achieve
this vision, we continue to focus on excellent customer service, Everyday
Low
Prices, and innovative operational, merchandising, marketing and distribution
strategies. We believe customers’ perceptions of the quality of service
determine a retailer’s success or failure. Therefore, we are always looking for
ways to improve our level of service, optimize store labor and drive in-store
process improvement, build our talent pool, and enhance our sales culture.
The
following are several key initiatives we believe will continue to support
our
growth and success going forward.
Specialty
Sales
We
recognize the opportunity that our Specialty Sales initiatives represent
and the
importance of these businesses to our long-term growth. Our Specialty Sales
initiatives include three major categories: Installed Sales, Special Order
Sales
and Commercial Business Customer sales, internally referred to as the “Big 3.”
In addition, our effort to utilize e-Commerce to drive sales and conveniently
provide product information to customers is managed by our Specialty Sales
group.
Installed
Sales
We
offer
installation services in over 40 categories with flooring,
millwork and cabinets & countertops generating the highest sales. Our
Installed Sales model, which includes the separation of selling and
administrative tasks, allows our sales associates to shift their focus to
project selling, while project managers ensure that the details related to
an
installation job are efficiently executed. Installed Sales, which includes
both
product and labor, has proven to be a successful service initiative accounting
for approximately 6% of total sales in fiscal 2006. We also continue to refine
our offerings, including an ongoing test of an in-home selling model for
certain
Installed Sales categories.
Special
Order Sales
Our
Special Order Sales product offerings provide our customers the opportunity
to
select a wider assortment of product options beyond the approximately 40,000
we
carry in our stores. We are making the Special Order Sales process easier
for
customers by providing more product displays and electronic product catalogs
in
our stores, as well as on Lowes.com. We continue to enhance integrated design
tools and ordering systems storewide in order for customers to envision
projects, as well as to efficiently receive quotations and complete an
order.
Special
Order kiosks are available in departments such as appliances, walls/windows,
lighting, millwork, hardware, building materials, seasonal living, fashion
plumbing and tools for facilitating special orders in addition to what is
made
available on Lowes.com. Whether
these
kiosks are electronic or literature-based,
all facilitate the ability of customers to view product pictures, and special
order over a million products and parts.
Our
flexible fulfillment initiative is intended to allow for faster and more
efficient delivery of Special Order products to customers, while at the same
time manage our inventory investment. Under this approach, certain items
that do
not have enough individual store demand to be economically stocked in all
stores, but have sizeable demand across a group of stores, will be kept on
hand
in our distribution centers. This allows for fast shipment to our stores,
or in
some cases, direct shipment to a customer’s home. Our flexible fulfillment
initiative allows us to balance quickly satisfying customers’ needs with a
desire to minimize our inventory investment. We will continue to refine and
enhance this fulfillment option in fiscal 2007.
5
Commercial
Business Customers
Growth
in
sales to Commercial Business Customers remained strong in fiscal 2006. Our
focus
is to continue offering exceptional service to construction, residential
property management, and business maintenance customers. Because we understand
that time is money for these businesses, we continue to focus on ways to
tailor
our product and service offerings for these customers to quickly find what
they
need, when they need it.
In
order
to enable Commercial Business Customers to quickly access the products they
need, our stores are merchandised with high-volume, take-with product
appropriate for the season. We continue to evaluate and expand our contractor
packs, which are economical quantities of the items Commercial Business
Customers use most. In addition, Commercial Business Customers can phone
or fax
their orders in advance for pickup the same day or the next day, depending
on
the time of day the order is placed. For added convenience, we deliver to
job
sites seven days a week in most areas. We want to be a valued business partner
to Commercial Business Customers, so we ensure our LowesForPros.com site
features up-to-date articles, job estimators and business forms, e-newsletters,
statistics and other vital information that Commercial Business Customers
can
use for their business.
e-Commerce
Our
multi-channel capabilities enable customers to buy at the store or online.
Lowes.com is an information and e-Commerce destination for customers around
the
world. Our site facilitates customers researching, comparing and buying Lowe’s
products and services wherever
and whenever they desire. We offer
how-to and buying guides online to help customers make smarter, more informed
buying decisions and to empower them in their home improvement projects.
We also
offer customers the ability to check product availability at their local
store
and our direct-ship facilities, and offer store pick-up and hassle-free returns
regardless of where the product was purchased. As more and more people are
using
the internet to research the products they want, we continue to add content
to
our site and enhance our merchandise selection to meet their needs. We remain
committed to the internet as a channel for future growth.
Everyday
Low Prices
Our
customers do not have to wait for a sale to find a great value. We offer
low
prices every day. Our promise to customers is that if they find a lower everyday
or advertised price on an identical stock product at a local competitor,
we will
not just match that price, but we will beat it by 10%.
Credit
Financing
We
offer
a proprietary credit card for retail customers. In fiscal 2006, we launched
Lowe’s Project Card in all stores. Lowe’s Project Card provides a major project,
in-store financing solution to complement our Lowe’s Customer Revolving Credit
Card. Lowe’s Project Card provides consumers an APR as low as 7.99% (ranging
from 7.99% to 17.99%), credit lines up to $30,000 with repayment terms from
48
months to 120 months, and low fixed monthly payments. A project window allows
customers to purchase with no payments or interest accrual for a six-month
period after the first purchase.
We
feature proprietary credit programs for Commercial Business Customers. These
programs include a Lowe’s Business Account, which is ideal for small- to
medium-size businesses and offers minimum monthly payments; and Lowe’s Accounts
Receivable, which is ideal for medium- to large-size businesses that pay
in full
each month.
In
addition, we accept Visa®, MasterCard®, Discover® and American Express® credit
cards, as well as debit cards.
Self-Checkout
To
meet
customer expectations for convenience at all levels of the shopping experience,
we have self-checkout in approximately 400 of our stores. All product types
and
quantities are permitted, most tender types are accepted and the customer
interface is bi-lingual. Our plan for fiscal 2007 is to add self-checkout
to
over 250 additional stores, which includes stores that will be remerchandised
as
well as all new stores.
6
Our Products
A
typical
Lowe's home improvement store stocks approximately 40,000 items, with
hundreds of thousands of items
available through our Special Order Sales system. Each store carries a wide
selection of national brand name merchandise such as KitchenAid®, Samsung,
Whirlpool®, Pella®, Werner®, Kohler®, DeWalt®, John Deere, Troy-Bilt®,
Jenn-Air®, Bosch®
and
many
more.
Our merchandise selection provides the DIY retail, DIFM and Commercial Business
Customer a one-stop shop for products needed to complete home improvement,
repair, maintenance or construction projects. See page 42
of
Lowe’s 2006 Annual Report to Shareholders for the table summarizing sales by
product category for each of the last three fiscal years.
Lowe’s
Exclusives
In
many
product categories, customers look for a brand they know and trust to instill
confidence in their purchase. To further differentiate our offering, we carry
many brands that are exclusive to Lowe’s. These unique brands cover several
categories like paint, lighting, flooring, walls/windows, tools
and
more, and
give our
customers superior performance and results. Exclusive brand names such as
Premier Living™, Kobalt®, Portfolio®, Harbor Breeze®, Reliabilt®,
Perfect Flame™ and
Top-Choice® Lumber are found only at Lowe’s.
We
continue to cultivate and create strategic alliances with our vendor partners
in
an effort to enhance our market share where such partnerships are advantageous
to the customer, our Company and our vendors. We are also concentrating on
increasing the electronic exchange of item and order information with our
vendors, improving data integrity and reducing errors, leading to fewer returns
and order changes and a better overall customer experience.
Product
Sourcing
We
source
our products from approximately 7,000 merchandise vendors worldwide, with
no
single vendor accounting for more than five percent of total purchases.
Management believes that alternative and competitive suppliers are available
for
virtually all our products. Where product specifications and customer
preferences permit, we purchase directly from foreign manufacturers,
avoiding third-party importers. This provides savings for our customers and
both
brand building and gross margin improvement opportunities for Lowe’s.
Distribution
Network
To
efficiently move product from our vendors to our stores and maintain in-stock
levels, we own and operate 11 highly-automated regional distribution centers
(RDCs). The RDCs are strategically located in North Carolina (2), Georgia
(1),
Indiana (1), Pennsylvania (1), Texas (1), California (1), Ohio (1), Florida
(1),
Connecticut (1), and Wyoming (1). On average, each RDC serves 126 stores.
We
expect to open additional RDCs in Rockford, Illinois, and Lebanon, Oregon,
in
fiscal 2007, and are planning for an additional RDC in fiscal 2008.
We
also
operate 13 flatbed distribution centers to distribute merchandise that requires
special handling due to size or type of packaging such as lumber, boards,
panel
products, irrigation pipe, vinyl sidings, ladders and building materials.
We own
12 of these flatbed distribution centers, and we lease one flatbed distribution
center. We expect to open two additional flatbed distribution centers in
fiscal
2007.
We
also
operate four facilities to support our import business, Special Order Sales,
and
internet fulfillment. We own two of these facilities, and we lease two of
these
facilities. In addition, we utilize two third-party transload facilities.
These
facilities do not hold inventory, but are the first point of receipt for
imported products. The transload facilities sort and allocate products to
RDCs
based on individual store demand and forecasts.
On
average in fiscal 2006, nearly 70% of the stock merchandise we purchased
was
shipped through our distribution network, while the remaining portion was
shipped directly to stores from our vendors. In the fourth quarter of fiscal
2006, we reached nearly 75%.
Building
Our Brand
Television,
radio, newspaper, magazine, direct mail, sponsorships, internet, and in-store
programs all play a critical role in helping us reach customers. Each marketing
initiative is based on understanding customers in terms of demographics,
needs,
expectations, insights and beliefs as these relate to the home, home improvement
and business.
Broadcast
- Television, Radio
We
continued to utilize national television to build brand awareness and
positioning. We supplemented our national broadcast advertising in key markets
with local television and radio. National
radio was used to support major promotional events throughout the year, in
particular during key holiday weekends like the Fourth of July. We also
continued to foster relationships with
cable
network partners such as HGTV (Home and Garden Television), BET (Black
Entertainment Television) and Univision.
7
Print - Newspaper, Magazine
We
implemented an enhanced print plan in fiscal 2006 that included national
magazine advertising and ROP (Run of Press) newspaper ads. Circulars remained
a
critical avenue for reaching customers with our Everyday Low Price message
and
wide product and service selection.
Direct
to Consumer
In
fiscal
2006, we continued to refine programs to respond to the changing needs and
lifestyles of consumers. Through innovative database technology, we created
direct mail campaigns based on precise criteria such as purchase activity,
affinity group memberships, home purchases and sales, household demographics
and
even regional weather patterns.
Additionally,
an opt-in e-mail program links up with Lowe’s affinity groups, including
subscribers to our bi-monthly magazine Lowe’s
Creative Ideas®,
as
well as members of Lowe’s Woodworkers Club, Lowe’s Garden Club and Team Lowe’s
Racing Fan Club. This fosters an ongoing relationship with customers even
when
they are not in a Lowe’s store.
Multicultural
Marketing
We
continued to produce marketing and communications designed to reach specific
cultural segments, including the growing number of Hispanic and African-American
home improvement consumers. Print, direct mail, point-of-purchase materials
and
television are just a few of the channels through which we communicated with
these consumer groups. To make shopping easier for Hispanic customers, we
continued to expand bi-lingual store signage. At
the
end of fiscal 2006, nearly 78% of the stores had bi-lingual way-finding
signage.
Team
Lowe’s Racing
As
one of
the world’s fastest growing sports, NASCAR is an important part of building our
brand. We are the proud sponsor of Jimmie Johnson, the 2006 NASCAR Nextel® Cup
Series champion, and the #48 car, the #5 car in the Busch® Series, and Lowe’s
Motor Speedway. We also host hospitality events at various sites throughout
the
racing season, leveraging and further building membership in the Team Lowe’s
Racing Fan Club. In 2006, we continued to foster our relationship with Adrian
Fernandez, who drove in several NASCAR Busch® Series races for Lowe’s. In
addition, we teamed up with Adrian Fernandez and Fernandez Racing to field
the
#12 car in the 14-race Grand American Rolex Sports Car series.
Reaching
Out
We
believe community involvement extends beyond the boundaries of our stores.
Following are some examples of how we are partnering with respected
organizations to make a difference in communities and homes across
America.
Habitat
for Humanity
Lowe’s
is
a national partner with Habitat for Humanity International, helping provide
safe, affordable housing for thousands of working families. Lowe’s contributed
more than $5 million to Habitat projects in 2006 and Lowe’s employee volunteers
gave hands-on support at home sites coast-to-coast to help Habitat families
build their dreams.
Lowe's
is
also the national underwriter of Habitat for Humanity's Women Build program,
empowering women volunteer teams in the construction of Habitat homes. The
volunteers in this program built more than 50 homes in 2006.
American
Red Cross
As
a
national Disaster Relief partner with the American Red Cross, Lowe’s made it
easier for the Red Cross chapters to respond to disasters such as floods
and
tornadoes with much-needed supplies from local stores. We also worked
side-by-side with the Red Cross at hurricane fairs along the Gulf and East
coasts. In 2006, Lowe’s contributed more than $500,000 to the American Red
Cross, including customer and employee donations.
The
Home Safety Council
Founded
by Lowe's in 1993, The Home Safety Council is a nonprofit organization with
a
vision of creating safer American homes. In 2006, we, along with our vendors,
helped reach thousands of children and families with vital safety
information.
Lowe’s
Charitable and Educational Foundation
Founded
in 1957, the Lowe's Charitable and Educational Foundation (LCEF) has a long
and
proud history of contributing to grassroots community projects. LCEF's primary
philanthropic focus areas include community and public school improvement
projects, safe and affordable housing, and education scholarships. LCEF provides
funding only to
501(c)(3)
organizations in communities where we operate stores or distribution centers.
In
2006, LCEF awarded more than $15 million for community improvement projects
and
K-12 public school initiatives.
8
Lowe’s
Heroes
Lowe's
Heroes employee volunteers tackle local problems in their communities. In
2006,
Lowe’s stores worked with representatives from nonprofit organizations and
concerned individuals from their communities to help improve schools, build
Habitat for Humanity homes or address safety issues—making their communities
better places to live.
Lowe’s
Employee Relief Fund
Lowe's
Employee Relief Fund is dedicated to distributing emergency funds to our
employees who face financial hardships due to natural disasters, house fires
or
illness. The
Company matches employee donations to the Fund. Since 1999, Lowe’s
Employee Relief Fund has assisted more than 4,000 employees with more than
$5
million in funds.
Our
Market
We
estimate the size of the U.S. home improvement market to be approximately
$725
billion annually, $560 billion of product demand, and $165 billion of installed
labor opportunity. Data from a variety of primary and secondary sources,
including trade associations, government publications, industry participants
and
other sources was analyzed as the basis for our estimate. This estimate includes
import and export data and key end-use markets, such as residential repair
and
remodeling, and nonresidential construction and maintenance. This data
also includes a wide range of categories relevant to our business, including
major appliances and garden supplies.
As
we
continue to monitor economic data and the home improvement marketplace, there
are many indicators demonstrating continued strength in consumer demand for
the
products and services we offer. The key indicators we monitor include personal
income, employment growth, housing turnover and home ownership levels.
Demographic and societal trends also remain supportive of home improvement
industry growth.
| § |
Personal
disposable income continues to grow, which is supported by data from
the
March 2007 Blue Chip Economic Indicators™, which forecasts real disposable
income growth of 3.3% for calendar 2007, compared with 2.6% for
calendar 2006.
|
| § |
Employment
growth is a strong indicator of home improvement sales. The historically
low unemployment rate of 4.5% suggests Americans will likely be more
confident in calendar 2007 about employment prospects than in the
past
several years.
|
| § |
Housing
turnover has slowed from the record pace of calendar 2005, according
to
The National Association of Realtors®, but the most recent data suggests
encouraging signs of stabilization in housing turnover in calendar
2007.
|
| § |
Near
record U.S. homeownership levels provide an established customer
base for
home maintenance and repair projects. The vast majority of our customers
are homeowners and they are not willing to let what is often their
most
valuable financial asset deteriorate.
|
The
home
improvement retailing business includes many competitors. We compete with
a
number of traditional hardware, plumbing, electrical and home supply retailers,
as well as other chains of warehouse home improvement stores and lumberyards
in
most of our trade areas. In addition, we compete, with respect to some of
our
products, with discount stores, mail order firms, warehouse clubs and online
retailers. The principal competitive factors are customer service, location,
price, product and brand selection, and name recognition.
Information
Systems
We
are
continuously assessing and upgrading our information systems in an effort
to
support growth, augment new sales initiatives, control costs and enable better
decision-making. During the last several years, we have made a substantial
investment in developing and purchasing new computer systems.
We
have a
point-of-sale system, electronic bar code scanning system, various design
systems, a wired and wireless network, and dual UNIX servers in each of our
stores. These systems provide the stores with real-time perpetual inventory
information, support all in-store selling, provide labor management, and
provide
support for a variety of store administrative functions. In addition, these
store systems provide the customer support center functions, including inventory
replenishment, finance, human resources and merchandising with information
needed to support the stores. Store information is communicated to the customer
support center's central computers via a terrestrial based (MPLS) network
with
back-up provided by a satellite-based wide area network. These corporate
systems
provide customer checkout with automated credit card and check approval,
host a
variety of centralized design and specialty order systems for the stores,
provide store-based perpetual inventory information, provide sales performance
reporting, and support accurate processing of all store sales transactions.
In
addition to the store and corporate office computing infrastructure, we also
have significant computing capacity at each RDC to support these highly
automated facilities.
We
have
invested significant resources to safeguard sensitive employee and customer
information. We work closely with industry standards groups to incorporate
security best practices into our technology environment. Our state-of-the-art
data center provides many additional fail-safe features to improve system
availability and mitigate risks associated with unplanned outages. We expect
to
open a second Lowe’s owned and operated data center in fiscal 2007. This
facility will allow us to in-source our current disaster recovery capabilities
and provide more robust capabilities to support our future growth.
Employees
As
of
February 2, 2007, we employed approximately 157,000 full-time and 53,000
part-time employees, none of which are covered by collective bargaining
agreements. Management considers its relations with its employees to be
good.
Available
Information
Our
internet website address is: www.Lowes.com. Our annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K and amendments
to
those reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934, as amended, are made available free of charge
through our website as soon as reasonably practicable after such documents
are
electronically filed with, or furnished to, the Securities and Exchange
Commission.
We
are
exposed to a variety of risks and uncertainties. Most are general risks and
uncertainties applicable to all retailers, but some are more particular to
retailers serving the home improvement industry. Our operations may also
be
affected by factors that are either not currently known to us or which we
currently consider immaterial to our business. We describe below some of
the
specific known factors that could negatively affect our business, financial
condition and results of operations. All forward-looking statements made
by us
in this Annual Report to the Securities and Exchange Commission on Form 10-K,
in
our Annual Report to Shareholders and in our subsequently filed quarterly
and
current reports to the Securities and Exchange Commission, as well as in
our
press releases and other public communications, are qualified by the risks
described below.
Our
sales are dependent upon the health and stability of the general
economy.
General
economic factors and other conditions, both domestically and internationally,
may adversely affect the United States, the global economy and our financial
performance, including, but not limited to, acts of terrorism, developments
in
the war against terrorism in Asia and the Middle East, natural disasters,
increasing fuel and energy costs, inflation or deflation of commodity prices,
recession, consumer debt levels and the volatility of financial
markets.
Adverse
changes in economic factors specific to the home improvement industry may
negatively impact the rate of growth of our net sales and comparable store
sales.
Sales
of
many of our product categories and services are driven by housing turnover
and
activity level of home improvement projects. Many of those sales are to
consumers who are either doing the home improvement projects themselves or
using
our installation services, but many others are to professionals who are in
the
business of providing construction, renovation, and property maintenance
services. Rising interest-rates, reduction in the availability of credit,
increased heating and gas expenses, slowing housing turnover and slowing
home-price appreciation could limit consumers’ discretionary spending or affect
their confidence level and lead to reduced spending on home improvement
projects. The impact of these economic factors specific to the home improvement
industry would be exacerbated by a weak job market.
Unseasonable
weather and adverse weather conditions can negatively affect our net sales
and
comparable store sales.
Wet
and
cold weather, particularly during the spring and early summer months of the
year
when many of the products we sell are designed for outdoor use, are generally
detrimental to our sales and can make it difficult to sell seasonal merchandise.
Although the impact of adverse weather conditions is mitigated by the geographic
dispersion of our stores, unseasonable weather is a risk to the performance
of
our business in any given season or year.
Our
store expansion and relocation strategy depends upon our ability to successfully
open, relocate and operate new stores each year.
Our
growth in net sales depends to a substantial degree on successfully and
cost-effectively implementing our ongoing, aggressive expansion program.
We must
adapt our merchandising, marketing and distribution initiatives to new markets,
both domestically and, going forward, in Canada and Mexico. We also plan
to
increase the number of our stores in markets in which we currently operate.
Our
ability to open additional stores depends, in large measure, upon our ability
to
locate and acquire new store sites on acceptable terms. Local land use and
other
regulations restricting the construction of buildings in the formats with
which
we operate may affect our ability to open new stores in some markets. As
we
develop more new stores in metropolitan markets, we may incur increased costs
to
remediate environmental pollution on some of the sites we are redeveloping
that
was caused by previous owners of those sites. Increased real estate,
construction and development costs could also limit our growth opportunities.
Our ability to continue to expand our operations depends also on our ability
to
attract and retain a large and growing number of qualified employees. If
we are
unable to
10
open
new
stores at the rate we currently plan to do so and staff them with qualified
employees, the growth in our sales and our competitive position could be
adversely affected.
If
we
fail to hire, train and retain qualified managers, sales associates and other
employees we could lose sales to our competitors.
Customers’
perceptions of the quality of service provided by employees can determine
any
retailer’s success or failure. Competition for qualified store managers and
sales associates among retailers in the home improvement retailing business
is
intense, and if we fail to attract, train and retain qualified managers and
sales associates our financial performance could be adversely impacted.
Consumers shopping for goods and services for home improvement projects expect
to have sales associates serving them who are knowledgeable about product
categories located throughout our stores.
Excessive
turnover, which has historically been high among employees in entry-level
or
part-time positions, increases the risk that sales associates will not have
the
training and experience needed to provide competitive, high quality customer
service.
Our
Commercial Business Customers demand a higher level of customer service that
is
challenging to meet on a consistent basis.
Commercial
Business Customers in the home improvement industry expect to have their
business handled by commercial sales specialists with an even greater depth
of
knowledge about the products these customers need. If we fail to staff our
commercial sales desks with experienced and knowledgeable employees, we run
the
risk that we will lose Commercial Business Customers.
We
have many competitors, who, if we fail to execute our merchandising, marketing
and distribution strategies effectively, could take sales and market share
from
us.
We
operate in a highly competitive market for home improvement products and
services and have numerous large and small, direct and indirect competitors.
The
principal competitive factors in our industry include location of stores,
price
and quality of merchandise, in-stock consistency, merchandise assortment
and
presentation, and customer service. Our failure to respond effectively to
competitive pressures and changes in the retail markets could affect our
financial performance. Moreover, unanticipated changes in the pricing and
other
practices of our competitors, including the effects of competitor liquidation
activities, may impact our expected results.
An
unusual number of product liability or breach of warranty claims for defective
products could expose us to expensive claims and damage our standing with
our
customers.
We
are
exposed to product liability and product warranty claims relating to the
products we sell that could adversely affect our financial condition, results
of
operations and cash flows. Because we do not have direct control over the
quality of products manufactured or supplied to us by our vendors and because
we
self-insure for such product liability and warranty claims, we are exposed
to
risks relating to the quality of such products. Product liability claims
can be
expensive to defend and can divert the attention of management and other
personnel for significant periods, regardless of the ultimate outcome. Claims
of
this nature could also have a negative impact on customer confidence in the
products we stock and in our reputation.
Our
financial performance could suffer if we fail to properly maintain our critical
information systems or if those systems are seriously disrupted.
An
important part of our efforts to achieve efficiencies, cost reductions, and
sales and cash flow growth is the identification and implementation of
improvements to our management information systems to improve operations
such as
inventory replenishment systems, merchandise ordering, transportation, and
receipt processing. Our financial performance could be adversely affected
if our
management information systems are seriously disrupted or we are unable to
improve, upgrade, maintain, and expand our systems.
If
the domestic and international supply chain for the products we stock is
disrupted, our sales and gross margin would be adversely impacted.
We
source
the approximately 40,000 products we stock and sell from approximately 7,000
domestic and international vendors. We source many of those products directly
from foreign manufacturers. Political or financial instability among suppliers,
trade restrictions, tariffs, currency exchange rates and transport capacity
and
costs are beyond our control and could negatively impact our business if
they
seriously disrupted the movement of products through our supply
chain.
Our
inability to effectively manage our relationships with selected suppliers
of
brand name products could negatively impact our ability to differentiate
ourselves from competitors.
Part
of
our expansion strategy includes continued differentiation from competitors.
To
better distinguish our product offering, we form strategic relationships
with
selected suppliers to market and develop products under a variety of recognized
and respected brand names. The inability to effectively and efficiently manage
the relationships with these suppliers could negatively impact our business
plan
and financial results.
None.
At
February 2, 2007, we operated 1,385 stores in 49 states with a total of 157
million square feet of selling space. We are currently constructing
two
primary prototype stores, a 117K store for larger markets and a 94K store
used
primarily to serve smaller markets. Both prototypes include a lawn and garden
center, averaging an additional 31,000 square feet for 117K locations and
26,000
square feet for 94K locations. Of the total stores operating at February
2,
2007, approximately 86% are owned, which includes stores on leased land,
with
the remainder being leased from unaffiliated third parties. Approximately
50% of
our store leases are capital leases. We also own and operate 11 RDCs and
12
flatbed distribution centers for lumber and building commodities. We lease
and
operate one flatbed distribution center. We also operate four facilities
to
support our import business, special order sales, and internet fulfillment.
We
own two of these facilities, and we lease two of these facilities. In addition,
we utilize two third-party transload facilities. These facilities do not
hold
inventory, but are the first point of receipt for imported products. We own
our
executive offices, which are located in Mooresville, North Carolina. We also
own
and maintain offices in Wilkes County, North Carolina.
We
are a
defendant in legal proceedings considered to be in the normal course of
business, none of which, individually or collectively, are considered
material.
None.
EXECUTIVE
OFFICERS OF THE REGISTRANT
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.
|
Name
|
Age
|
Title
|
|
Robert
A. Niblock
|
44
|
Chairman
of the Board and Chief Executive Officer since 2005; President,
2003 -
2006; Executive Vice President, 2001 - 2003, and Chief Financial
Officer,
2000 - 2003.
|
|
|
|
|
|
Maureen
K. Ausura
|
51
|
Senior
Vice President, Human Resources since 2005; Corporate Vice President
of
Human Resources, Archer Daniels Midland Company, 2000 -
2005.
|
|
|
|
|
|
Gregory
M. Bridgeford
|
52
|
Executive
Vice President, Business Development since 2004; Senior Vice President,
Business Development, 1999 - 2004.
|
|
Michael
K. Brown
|
43
|
Executive
Vice President, Store Operations since December 2006; Senior Vice
President, Store Operations, 2001 - 2006.
|
|
|
|
|
|
Charles
W. (Nick) Canter, Jr.
|
56
|
Executive
Vice President, Merchandising since December 2006; Executive Vice
President, Store Operations, 2005 - 2006; Senior Vice President,
Store
Operations, 1999 - 2005.
|
|
Gaither
M. Keener, Jr.
|
57
|
Senior
Vice President, General Counsel, Secretary, and Chief Compliance
Officer
since 2006; Vice President, Deputy General Counsel, 2005 - 2006;
Vice
President, Associate General Counsel, 2003 - 2005; Vice President,
Assistant General Counsel and Assistant Secretary, 1999 -
2003.
|
|
|
|
|
|
Matthew
V. Hollifield
|
40
|
Senior
Vice President and Chief Accounting Officer since 2005; Vice President,
Corporate Accounts Payables 2002-2005. Vice President and Chief
Financial
Officer, Century Furniture Industries, 2000-2002.
|
|
|
|
|
|
Robert
F. Hull, Jr.
|
42
|
Executive
Vice President and Chief Financial Officer since 2004; Senior Vice
President and Chief Financial Officer, 2003 - 2004; Vice President,
Financial Planning & Analysis, 1999 - 2003.
|
|
|
|
|
|
Joseph
M. Mabry, Jr.
|
44
|
Executive
Vice President, Logistics and Distribution since 2004; Senior Vice
President, Distribution, 2003 - 2004; Vice President Global Services,
Wal-Mart Stores, Inc., 2002 - 2003; Regional Vice President of
Distribution, Wal-Mart Stores, Inc., 1998 - 2002.
|
| N. Brian Peace |
41
|
Senior Vice President, Corporate Affairs since 2006; Vice President, Corporate Communications, 1999 - 2006. |
|
|
|
|
|
Larry
D. Stone
|
55
|
President
and Chief Operating Officer since December 2006; Senior Executive
Vice
President Merchandising/Marketing, 2005 - 2006; Senior Executive
Vice
President Store Operations 2003-2005; Executive Vice President,
Store
Operations, 2001 - 2003.
|
|
|
|
|
|
Steven
M. Stone
|
45
|
Senior
Vice President and Chief Information Officer since 2003; Vice President
of
Information Technology Strategy, 2002 - 2003; Vice President of
MIS
Operations, 1999 - 2002.
|
Part
II
Item
5
-Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities
Lowe's
common stock is traded on the New York Stock Exchange (NYSE). The ticker
symbol
for Lowe's is “LOW”. As of March 23, 2007, there were 31,770 holders of record
of Lowe's common stock. The table, "Lowe's Quarterly Stock Price Range and
Cash
Dividend Payment", on page 44
of the
2006 Lowe’s Annual Report to Shareholders for the fiscal year ended February 2,
2007 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.
In
January 2005, the Board of Directors approved a program under which the Company
was authorized to repurchase up to $1 billion of the Company’s common stock
through fiscal 2006. In January and August 2006, the Board of Directors
authorized up to an additional $1 billion and $2 billion in share repurchases
through fiscal 2007 and 2008, respectively. The Company expects to implement
the
balance of the program through purchases made from time to time either in
the
open market or through private transactions, in accordance with regulations
of
the SEC. An insignificant number of shares were repurchased during the fourth
quarter of 2006. As of February 2, 2007, the total remaining authorization
under
the share repurchase program was $1.5 billion.
Item
6 - Selected Financial Data
See
pages
42 through 43 of
the Lowe’s 2006 Annual Report to Shareholders.
Item
7 - Management's Discussion and Analysis of Financial Condition
and Results of Operations
See
"Management's Discussion and Analysis of Financial Condition and Results
of
Operations" on pages 18
through 25
and
"Disclosure Regarding Forward-Looking Statements" on page 26
of
Lowe’s 2006 Annual Report to Shareholders.
Item
7A - Quantitative and Qualitative Disclosures about Market
Risk
See
"Quantitative and Qualitative Disclosures About Market Risk" on page
25
of
Lowe’s 2006 Annual Report to Shareholders.
Item
8 - Financial Statements and Supplementary
Data
See
"Report of Independent Registered Public Accounting Firm" of Deloitte &
Touche LLP on page 27,
the
financial statements and notes thereto on pages 28
through
41,
and the
"Selected Quarterly Data" on page 43
of
Lowe’s 2006 Annual Report to Shareholders filed as Exhibit 13
hereto.
Item
9 - Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure
None.
Item 9A - Controls and Procedures
The
Company's management, with the participation of the Chief Executive Officer
and
Chief Financial Officer, has evaluated the effectiveness of the Company’s
“disclosure controls and procedures”, (as such term is defined in
Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as
amended, (the “Exchange Act”)). Based upon their evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that, as of the end of the
period
covered by this report, the Company’s disclosure controls and procedures were
effective for the purpose of ensuring that the information required to
be
disclosed in the reports that the Company files or submits under the Exchange
Act with the Securities and Exchange Commission (the SEC) (1) is recorded,
processed, summarized and reported within the time periods specified in the
SEC’s rules and forms, and (2) is accumulated and communicated to the
Company’s management, including its principal executive and principal financial
officers, as appropriate to allow timely decisions regarding required
disclosure.
In
addition, based on that evaluation, no change in the Company’s internal control
over financial reporting occurred during the fiscal fourth quarter ended
February 2, 2007 that has materially affected, or is reasonably likely
to
materially affect, the Company’s internal control over financial reporting.
Management’s
report on internal control over financial reporting (as such term is defined
in
Rule 13a-15(f) under the Exchange Act) and the attestation report of Deloitte
& Touche LLP, the Company’s independent registered public accounting firm,
on management’s assessment of internal control over financial reporting are
included in Lowe’s 2006 Annual Report to Shareholders on pages 26
and
27
under
the headings, “Management’s Report on Internal Control Over Financial Reporting”
and “Report of Independent Registered Public Accounting Firm,” respectively, and
are incorporated herein by reference.
None.
Part
III
Information
required by this item is furnished by incorporation by reference to all
information under the captions entitled, "Election of Directors," "Information
Concerning the Nominees," "Information Concerning Continuing Directors,"
"Information about the Board of Directors and Committees of the Board," and
"Section 16(a) Beneficial Ownership Reporting Compliance" included in the
definitive Proxy Statement which will be filed pursuant to regulation 14A,
with
the SEC within 120 days after the fiscal year ended February 2, 2007 (the
"Proxy
Statement"). The information required by this item with respect to our executive
officers appears in Part I of this Annual Report on Form 10-K under the caption,
"Executive Officers of the Registrant. "
All
employees of the Company, including its Chief Executive Officer, Chief Financial
Officer and Chief Accounting Officer are required to abide by the Lowe's
Companies, Inc. and Subsidiaries Code of Business Conduct and Ethics (the
"Code"). The Code is designed to ensure that the Company's business is conducted
in a legal and ethical manner. The Code covers all areas of professional
conduct
including compliance with laws and regulations, conflicts of interest, fair
dealing among customers and suppliers, corporate opportunity, confidential
information, insider trading, employee relations and accounting complaints.
A
full text of the Code can be found at www.Lowes.com, under the "About Lowe’s,"
“Investors” and "Code of Ethics" captions. You can also obtain a copy of the
complete Code by contacting Shareholder Services at 1-888-345-6937.
We
will
disclose information pertaining to amendments or waivers to provisions of
our
Code that apply to our principal executive officer, principal financial officer,
principal accounting officer or controller or persons performing similar
functions and that relate to the elements of our Code enumerated in the SEC
rules and regulations by posting this information on our website at
www.Lowes.com. The information on our website is not a part of this Annual
Report and is not incorporated by reference in this report or any of our
other
filings with the SEC.
Item
11 - Executive Compensation
Information
required by this item is furnished by incorporation by reference to all
information under the captions entitled, "Compensation of Executive Officers"
and "Information about the Board of Directors and Committees of the Board
-
Compensation of Directors" included in the Proxy Statement.
Item
12 - Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
Information
required by this item is furnished by incorporation by reference to all
information under the captions entitled, "Compensation of Executive Officers"
and "Security Ownership of Certain Beneficial Owners and Management" included
in
the Proxy Statement.
Item
13 - Certain Relationships and Related Transactions, and
Director Independence
Information
required by this item is furnished by incorporation by reference to all
information under the captions entitled, "Related-Party Transactions" and
"Information about the Board of Directors and Committees of the Board - Director
Independence" included in the Proxy Statement.
Item
14 - Principal Accounting Fees and
Services
Information
required by this item is furnished by incorporation by reference to all
information under the caption entitled, "Fees Paid to the Independent
Accountants" included in the Proxy Statement.
Part
IV
Item
15 - Exhibits and Financial Statement Schedules
a)
1.
Financial
Statements
See
the
following items and page numbers appearing in Lowe’s 2006 Annual Report to
Shareholders:
|
Page(s)
|
|||
|
Report
of Independent Registered Public Accounting Firm
|
27
|
||
|
Consolidated
Statements of Earnings for each of the three fiscal years in the
period ended February 2, 2007
|
28
|
||
|
Consolidated
Balance Sheets at February 2, 2007 and February 3, 2006
|
29
|
||
|
Consolidated
Statements of Shareholders' Equity for each of the three fiscal years
in the period ended February 2, 2007
|
30
|
||
|
Consolidated
Statements of Cash Flows for each of the three fiscal years in the
period ended February 2, 2007
|
31
|
||
|
Notes
to Consolidated Financial Statements for each of the three fiscal
years in the period ended February 2, 2007
|
32-41
|
2.
Financial
Statement Schedules
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the
Board of Directors and Shareholders of Lowe’s Companies, Inc.
Mooresville,
North Carolina
We
have
audited the consolidated financial statements of Lowe’s Companies, Inc. and
subsidiaries (the “Company”) as of February 2, 2007 and February 3, 2006, and
for each of the three fiscal years in the period ended February 2, 2007,
management's assessment of the effectiveness of the Company's internal control
over financial reporting as of February 2, 2007, and the effectiveness of
the
Company's internal control over financial reporting as of February 2, 2007,
and
have issued our reports thereon dated April 3, 2007; such consolidated financial
statements and reports are included in the Company’s 2006 Annual Report to
Shareholders and are incorporated herein by reference. Our audits also included
the consolidated financial statement schedule of the Company listed in Item
15.
This consolidated financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on
our
audits. In our opinion, such consolidated financial statement schedule, when
considered in relation to the basic consolidated financial statements taken
as a
whole, presents fairly, in all material respects, the information set forth
therein.
/s/
Deloitte & Touche LLP
Charlotte,
North Carolina
April
3,
2007
17
SCHEDULE
II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
|
(In
Millions)
|
Balance
at beginning of period
|
Charges
to costs and expenses
|
Deductions
|
Balance
at end of period
|
|||||||||||||||
|
February
2, 2007:
|
|||||||||||||||||||
|
Reserve
for loss on obsolete inventory
|
$
|
104
|
$
|
-
|
$
|
(38)
|
|
(a)
|
|
$
|
66
|
||||||||
|
Reserve
for inventory shrinkage
|
113
|
455
|
(439)
|
|
(b)
|
|
129
|
||||||||||||
|
Reserve
for sales returns
|
54
|
1
|
(c)
|
|
-
|
55
|
|||||||||||||
|
Self-insurance
liabilities
|
571
|
674
|
(595)
|
|
(d)
|
|
650
|
||||||||||||
|
Store
closing liability
|
23
|
2
|
(6)
|
|
(e)
|
|
19
|
||||||||||||
|
|
|||||||||||||||||||
|
February
3, 2006:
|
|||||||||||||||||||
|
Reserve
for loss on obsolete inventory
|
$
|
77
|
$
|
27
|
(a)
|
|
$
|
-
|
$
|
104
|
|||||||||
|
Reserve
for inventory shrinkage
|
94
|
376
|
(357)
|
|
(b)
|
|
113
|
||||||||||||
|
Reserve
for sales returns
|
37
|
17
|
(c)
|
|
-
|
54
|
|||||||||||||
|
Self-insurance
liabilities
|
467
|
608
|
(504)
|
|
(d)
|
|
571
|
||||||||||||
|
Store
closing liability
|
24
|
9
|
(10)
|
|
(e)
|
|
23
|
||||||||||||
|
January
28, 2005:
|
|||||||||||||||||||
|
Reserve
for loss on obsolete inventory
|
$
|
61
|
$
|
16
|
(a)
|
|
$
|
-
|
$
|
77
|
|||||||||
|
Reserve
for inventory shrinkage
|
82
|
335
|
(323)
|
|
(b)
|
|
94
|
||||||||||||
|
Reserve
for sales returns
|
26
|
11
|
(c)
|
|
-
|
37
|
|||||||||||||
|
Self-insurance
liabilities
|
366
|
480
|
(379)
|
|
(d)
|
|
467
|
||||||||||||
|
Store
closing liability
|
19
|
16
|
(11)
|
|
(e)
|
|
24
|
(a):
Represents
increase/(decrease) in the required reserve based on the Company’s evaluation of
obsolete inventory.
(b):
Represents
the actual inventory shrinkage experienced at the time of physical
inventories.
(c):
Represents
increase in the required reserve based on the Company’s evaluation of
anticipated merchandise returns.
(d):
Represents
claim payments for self-insured claims.
(e): Represents
lease payments, net of sublease income.
18
|
3.
|
Exhibits
|
|
(3.1)
|
Restated
and Amended Charter (filed as Exhibit 3.1 to the Company's Form
10-Q dated
September 7, 2006 and
incorporated by reference herein).
|
|
(3.2)
|
Bylaws,
as amended (filed as Exhibit 3.1 to the Company's Form 8-K dated
January
26, 2007 and incorporated
by reference herein).
|
|
(4.1)
|
Indenture
dated April 15, 1992 between the Company and The Bank of New
York, as
successor trustee (filed as Exhibit 4.1 to the Company's Registration
Statement on Form S-3 (No. 33-47269) and incorporated by reference
herein).
|
|
(4.2)
|
Amended
and Restated Indenture, dated as of December 1, 1995, between
the Company
and The Bank of New York, as successor trustee (filed as Exhibit
4.1 on
Form 8-K dated December 15, 1995, and incorporated by reference
herein).
|
|
(4.3)
|
First
Supplemental Indenture, dated as of February 23, 1999, to the
Amended and
Restated Indenture dated
as of December 1, 1995, between the Company and The Bank of New
York, as
successor trustee (filed as Exhibit 10.13 to the Company's Annual
Report
on Form 10-K dated April 19, 1999, and incorporated by reference
herein).
|
|
(4.4)
|
Second
Supplemental Indenture, dated as of October 19, 2001, to the
Amended and
Restated Indenture dated as of December 1, 1995, between the Company
and The Bank of New York, as successor trustee (filed as Exhibit
4.1 on
Form 8-K dated October 25, 2001, and incorporated by reference
herein).
|
|
(4.5)
|
Third
Supplemental Indenture, dated as of October 6, 2005, to the Amended
and
Restated Indenture dated as of December
1, 1995, between the Company and The Bank of New York, as trustee,
including as an exhibit thereto a form of the Company’s 5.0% Notes
maturing in October 2015 and the Company’s 5.5% Notes maturing in October
2035.
|
|
|
|
|
(4.6)
|
Fourth
Supplemental Indenture, dated as of October 10, 2006, between
Lowe’s
Companies, Inc. and The Bank of New York,
as trustee (filed as Exhibit 4.5 to the Company’s Registration Statement
on Form S-3 (No. 333-137750) and incorporated
by reference herein), including as an exhibit thereto a form
of the
Company’s 5.4% Notes maturing in October 2016 and the Company’s 5.8% Notes
maturing in October 2036.
|
|
|
|
|
(4.7)
|
Indenture
between the Company and The Bank of New York, dated as of February
16,
2001 (filed as Exhibit
4.1 to the Company's Registration Statement on Form S-3 (No.
333-60434),
and incorporated by reference
herein).
|
|
(4.8)
|
Form
of the Company's 6 7/8 % Debenture due February 20, 2028 (filed
as Exhibit
4.2 on Form 8-K dated February
20, 1998, and incorporated by reference herein).
|
|
(4.9)
|
Form
of the Company's 6 1/2 % Debenture due March 15, 2029 (filed
as Exhibit
10.6 to the Company's Annual
Report on Form 10-K for the year ended January 29, 1999, and
incorporated
by reference herein).
|
|
(4.10)
|
Form
of the Company's 8 1/4 % Notes due June 1, 2010 (filed as Exhibit
4.2 on
Form 8-K dated June 8, 2000,
and incorporated by reference herein).
|
|
(4.11)
|
Form
of the Company's 2 1/2 % Liquid Yield Option Notes due February
16, 2021
(filed as Exhibit 4.2 to the
Company's Registration Statement on Form S-3 (No. 333-60434),
and
incorporated by reference herein).
|
19
|
(4.12)
|
Form
of the Company's Senior Convertible Notes due October 19, 2021
(filed as
Exhibit 4.2 on Form 8-K
dated October 25, 2001, and incorporated by
reference herein).
|
|
*(10.1)
|
Lowe's
Companies, Inc. Directors' Deferred Compensation Plan, effective
July 1,
1994 (filed as Exhibit 10.6
to the Company's Annual Report on Form 10-K for the year ended
January 29,
1999, and incorporated
by reference herein).
|
|
*(10.2)
|
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).
|
|
*(10.3)
|
Amendments
to the Lowe's Companies, Inc. 1994 Incentive Plan dated December
9, 1994
(filed as Exhibit 10.9
to the Company's Annual Report on Form 10-K for the year ended
January 29,
1999, and incorporated by reference
herein).
|
|
*(10.4)
|
Amendments
to the Lowe's Companies, Inc. 1994 Incentive Plan dated September
17, 1998
(filed as Exhibit
10.10 to the Company's Annual Report on Form 10-K for the year
ended
January 29, 1999, and
incorporated by reference herein).
|
|
*(10.5)
|
Amendments
to the Lowe's Companies, Inc. 1994 Incentive Plan dated December
4, 1998
(filed as Exhibit 10.11
to the Company's Annual Report on Form 10-K for the year ended
January 29,
1999, and incorporated
by reference herein).
|
|
*(10.6)
|
Lowe's
Companies, Inc. 1997 Incentive Plan (filed on the Company's Form
S-8 dated
August 29, 1997 (No.
333-34631) and incorporated by reference herein).
|
|
*(10.7)
|
Amendments
to the Lowe's Companies, Inc. 1997 Incentive Plan dated January 25,
1998 (filed as Exhibit 10.6
to the Company's Annual Report on Form 10-K for the year ended
January 29,
1999, and incorporated
by reference herein).
|
|
*(10.8)
|
Amendments
to the Lowe's Companies, Inc. 1997 Incentive Plan dated September
17, 1998
(filed as Exhibit
10.17 to the Company's Annual Report on Form 10-K for the year
ended
January 29, 1999, and incorporated
by reference herein).
|
|
*(10.9)
|
Lowe's/Eagle
Stock Option Plan (filed as Exhibit 4.2 on the Company's Form S-8
filed
April 7, 1999 (No. 333-75793)
and incorporated by reference herein).
|
|
|
|
|
*(10.10)
|
Lowe's
Companies, Inc. Employee Stock Purchase Plan - Stock Options for
Everyone,
as amended (filed as
Exhibit 10.1 to the Company’s Form 10-Q dated December 7, 2004 and
incorporated by reference herein).
|
|
*(10.11)
|
Lowe's
Companies, Inc. 2001 Incentive Plan (filed on the Company's Form
S-8 dated
November 15, 2001 (No.
333-73408) and incorporated by reference herein).
|
|
*(10.12)
|
Lowe's
Companies, Inc. Benefit Restoration Plan (filed on the Company's
Form S-8
dated August 8, 2002 (No. 333-97811)
and incorporated by reference herein).
|
|
*(10.13)
|
Form
of the Company's Management Continuity Agreement for Senior Officers
(filed as Exhibit 10.28 to
the Company's Annual Report on Form 10-K for the year ended February
1,
2002, and incorporated by
reference
herein).
|
20
|
*(10.14)
|
Form
of the Company's Management Continuity Agreement for Executive
Officers
(filed as Exhibit 10.2 to
the Company's Form 10-Q dated June 4, 2004, and incorporated by
reference herein).
|
|
*(10.15)
|
Lowe’s
Companies, Inc. Cash Deferral Plan (filed as Exhibit 10.1 to the
Company’s
Form 10-Q dated
June 4, 2004 and incorporated by reference herein).
|
|
*(10.16)
|
Lowe’s
Companies, Inc. Amended and Restated Directors’ Stock Option and Deferred
Stock Unit Plan (filed as Exhibit 10.1
to the Company’s Form 8-K dated June 3, 2005 and incorporated by reference
herein).
|
|
*(10.17)
|
Form
of Lowe’s Companies, Inc. Deferred Stock Unit Agreement for Directors
(filed as Exhibit 10.2 to the Company’s Form
8-K dated May 27, 2005 and incorporated by reference
herein).
|
|
*(10.18)
|
Form
of Lowe’s Companies, Inc. Restricted Stock Award Agreement (filed as
Exhibit 10.1 to the Company’s Form 10-Q dated
September 1, 2005 and incorporated by reference
herein).
|
|
*(10.19)
|
Lowe's
Companies, Inc. 2006 Annual Incentive Plan (filed as Exhibit 10.1
to the
Company’s Form 10-Q dated September 7,
2006 and incorporated by reference herein).
|
|
*(10.20)
|
Lowe's
Companies, Inc. 2006 Long Term Incentive Plan (filed as Exhibit
10.2 to
the Company’s Form 10-Q dated September
7, 2006 and incorporated by reference herein).
|
|
(13)
|
Portions
of the 2006 Lowe’s Annual Report to Shareholders for the fiscal year ended
February 2, 2007
|
|
(21)
|
List
of Subsidiaries
|
|
(23)
|
Consent
of Deloitte & Touche LLP
|
|
(31.1)
|
Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
|
(31.2)
|
Certification
Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
|
(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
|
|
|
*
Management contract or compensatory plan or arrangement required
to be
filed as an exhibit to this form.
|
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.
|
LOWE’S
COMPANIES, INC.
|
||
|
(Registrant)
|
||
|
April
3, 2007
|
By: /s/ Robert A. Niblock
|
|
|
Date
|
Robert
A. Niblock
|
|
|
Chairman
of the Board and Chief Executive Officer
|
||
|
April
3, 2007
|
By:
/s/ Robert F. Hull, Jr.
|
|
|
Date
|
Robert
F. Hull, Jr.
|
|
|
Executive
Vice President and Chief Financial Officer
|
||
|
April
3, 2007
|
By:
/s/ Matthew V. Hollifield
|
|
|
Date
|
Matthew
V. Hollifield
|
|
|
Senior
Vice President and Chief Accounting Officer
|
22
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report on
Form
10-K has been signed below by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated. Each of the directors of
the
Registrant whose signature appears below hereby appoints Robert F. Hull,
Jr.,
Matthew V. Hollifield and Gaither M. Keener, Jr., and each of them severally,
as
his or her attorney-in-fact to sign in his or her name and behalf, in any
and
all capacities stated below, and to file with the Securities and Exchange
Commission any and all amendments to this report on Form 10-K, making such
changes in this report on Form 10-K as appropriate, and generally to do all
such
things in their behalf in their capacities as directors and/or officers to
enable the Registrant to comply with the provisions of the Securities Exchange
Act of 1934, and all requirements of the Securities and Exchange
Commission.
|
/s/
Robert A. Niblock
|
Chairman
of the Board of Directors, Chief Executive
Officer
and Director
|
April
3, 2007
|
||
|
Robert
A. Niblock
|
Date
|
|||
|
/s/
Leonard L. Berry
|
Director
|
April
3, 2007
|
||
|
Leonard
L. Berry
|
Date
|
|||
|
/s/
Peter C. Browning
|
Director
|
April
3, 2007
|
||
|
Peter
C. Browning
|
Date
|
|||
|
/s/
Paul Fulton
|
Director
|
April
3, 2007
|
||
|
Paul
Fulton
|
Date
|
|||
|
/s/
Dawn E. Hudson
|
Director
|
April
3, 2007
|
||
|
Dawn
E. Hudson
|
Date
|
|||
|
/s/
Robert A. Ingram
|
Director
|
April
3, 2007
|
||
|
Robert
A. Ingram
|
Date
|
|||
|
/s/
Robert L. Johnson
|
Director
|
April
3, 2007
|
||
|
Robert
L. Johnson
|
Date
|
|||
|
/s/
Marshall O. Larsen
|
Director
|
April
3, 2007
|
||
|
Marshall
O. Larsen
|
Date
|
|||
|
/s/
Richard K. Lochridge
|
Director
|
April
3, 2007
|
||
|
Richard
K. Lochridge
|
Date
|
|||
|
/s/
Stephen F. Page
|
Director
|
April
3, 2007
|
||
|
Stephen
F. Page
|
Date
|
|||
|
/s/
O. Temple Sloan, Jr.
|
Director
|
April
3, 2007
|
||
|
O.
Temple Sloan, Jr.
|
Date
|
23