UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
FORM 10-K
(Mark
One)
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x
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ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For the fiscal year ended
February 1, 2008
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or
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o
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TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For the transition period from
________ to _________
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Commission file number
1-7898
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LOWE'S COMPANIES,
INC.
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(Exact name of registrant as specified in its
charter)
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NORTH
CAROLINA
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56-0578072
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(State
or other jurisdiction of incorporation or organization)
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(I.R.S.
Employer Identification No.)
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1000 Lowe's Blvd., Mooresville,
NC
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28117
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant's
telephone number, including area code
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704-758-1000
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Securities
registered pursuant to Section 12(b) of the Act:
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Title
of each class
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Name
of each exchange on which registered
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Common Stock, $.50 Par
Value
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New York Stock Exchange
(NYSE)
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Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
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x
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Yes
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o
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No
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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.
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o
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Yes
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x
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No
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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.
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x
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Yes
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o
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No
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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. o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer," "accelerated filer,” and
"smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check
one):
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Large
accelerated filer x
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Accelerated
filer o
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Non-accelerated
filer o
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Smaller
reporting company o
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Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
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o
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Yes
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x
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No
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As of
August 3, 2007, 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 $31.9 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.
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CLASS
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OUTSTANDING AT MARCH 28,
2008
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Common
Stock, $.50 par value
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1,461,815,744
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DOCUMENTS INCORPORATED BY
REFERENCE
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Document
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Parts
Into Which Incorporated
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Portions
of Lowe’s 2007 Annual Report to Shareholders
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Parts
I, II and IV
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Portions
of the Proxy Statement for Lowe’s 2008 Annual Meeting of
Shareholders
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Part
III
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- INDEX -
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PART
I
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Page
No.
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Item
1.
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4-10
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Item
1A.
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10-12
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Item
1B.
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12
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Item
2.
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12
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Item
3.
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12
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Item
4.
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12
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13
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PART
II
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Item
5.
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14
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Item
6.
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14
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Item
7.
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14
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Item
7A.
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14
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Item
8.
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14
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Item
9.
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15
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Item
9A.
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15
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Item
9B.
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15
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PART
III
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Item
10.
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16
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Item
11.
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16
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Item
12.
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16
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Item
13.
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16
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Item
14.
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16
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PART
IV
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Item
15.
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17-21
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22-23
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3
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 1, 2008,
we operated 1,534 stores in 50 states and Canada, with 174 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, paint,
millwork, fashion plumbing, building materials, lighting, tools, lawn &
landscape products, hardware, seasonal living, cabinets & countertops, home
style & organization, rough plumbing, outdoor power equipment, nursery,
rough electrical and home environment.
Our
Market
Based on
the most recent comprehensive data available, which is from 2006, we estimate
the size of the U.S. home improvement market to be approximately $755 billion
annually, comprised of $585 billion of product demand and $170 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 data captures 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 variables that impact consumer demand for the products and
services we offer. Key indicators we monitor include housing
turnover, home ownership levels, real disposable personal income and
employment. We also monitor demographic and societal trends that are
indicators of home improvement industry growth. Currently, all of
these indicators suggest continued weakness in consumer demand.
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§
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Housing
turnover, which peaked in calendar year 2005, continues to slow
according to The National Association of Realtors®. Recent data
suggests that 2008 will remain challenging for housing
turnover.
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§
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According
to the U.S. Census Bureau, while U.S. home ownership levels have
declined somewhat from near-record levels over the past year, they remain
above their historical average. Home ownership provides 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.
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§
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Although
real disposable personal income continues to grow, it is projected to grow
at a slower pace this year than last. Real disposable personal
income growth is forecasted to be 2.1% for calendar 2008 compared with
3.1% for calendar 2007, as supported by data from the March 2008 Blue Chip
Economic Indicators™.
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§
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Employment
is an indicator of home improvement sales. The forecasted
average unemployment rate of 5.3% for 2008 from the March 2008 Blue
Chip Economic Indicators™ is higher than the 4.6% average seen in
both 2006 and 2007 and suggests that Americans will face relatively less
favorable employment prospects this
year.
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4
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 general merchandise 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.
Our
Stores
New
Store Expansion
Our
expansion strategy led to the opening of 153 stores in fiscal 2007 (149 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. As we continue our expansion and strive to maximize
our return on investment, we consider market demographics and land availability,
among other factors, to determine the appropriate prototype for a particular
market. In fiscal 2008, our growth will be comprised of 94K,
103,000-square-foot and 117K stores to meet the specific needs of each
market.
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2007
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2006
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2005
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Number
of stores, beginning of fiscal year
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1,385 | 1,234 | 1,087 | |||||||||
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New
stores opened
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149 | 151 | 147 | |||||||||
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Relocated
stores opened
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4 | 4 | 3 | |||||||||
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Stores
relocated
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(4) | (4) | (3) | |||||||||
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Number
of stores, end of fiscal year
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1,534 | 1,385 | 1,234 | |||||||||
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. We opened six stores in Canada in fiscal 2007, which are
our first stores outside the U.S., and will continue our Canadian expansion in
2008.
In
January 2007, we announced expansion plans into Mexico. We expect to
open our first stores in Monterrey in fiscal 2009.
Investments
in Existing Stores
During
fiscal 2007, we continued our long history of investing in our existing stores
to enhance the shopping experience for our retail and Commercial Business
Customers. This included relamping our stores at regular intervals to
ensure they remained 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 resets or
remerchandising.
Resets
Resets
are necessary to drive comparable store sales and keep our stores fresh with new
and innovative products. These resets involve the replacement of a
particular product or vendor, and generally do not require major changes in the
store. We conducted hundreds of resets in fiscal 2007.
Remerchandising
In fiscal
2007, we completed the remerchandising of 116 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,
lighting, home style & 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, self check-out was installed in all 116 of our
remerchandised stores. We continuously make these investments to
maintain our best-in-class stores. These enhancements enable our
stores to continue to offer customers the shopping experience and environment
they deserve, and also deliver stronger sales.
5
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.
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%.
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 2007. 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, whether electronic or literature-based, are available in various
departments throughout the store for facilitating special orders in addition to
what is made available on Lowes.com. These kiosks facilitate the
ability of customers to view product pictures, and special order hundreds of
thousands of products.
Our
Special Order Express 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 Special Order Express 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 initiative in
fiscal 2008.
Commercial
Business Customers
Growth in
total sales to Commercial Business Customers outpaced the Company average in
fiscal 2007. Our focus is to continue offering exceptional service to
repair/remodel, 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 or order online 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.
6
e-Commerce
Our
multi-channel capabilities enable customers to buy at the store or
online. Lowes.com is an information destination for customers around
the world and allows customers to buy online and ship anywhere in the
U.S. Our site facilitates customers researching, comparing and buying
Lowe’s products and services whenever and from wherever 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.
Credit
Financing
We offer
a proprietary credit card for retail customers. In addition, we offer
a 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.
We also
offer proprietary credit programs for Commercial Business
Customers. They 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.
See Item
8, “Financial Statements and Supplementary Data,” for a description of our
credit programs.
In
addition, we accept Visa®, MasterCard®, Discover® and American Express® credit
cards, as well as debit cards from all major networks.
Our
Products
Product
Sourcing
We source
our products from approximately 7,000 merchandise vendors worldwide, with no
single vendor accounting for more than six percent of total
purchases. Management believes that alternative and competitive
suppliers are available for virtually all our products. Whenever
possible, we purchase directly from manufacturers to provide savings for our
customers and gross margin improvement for Lowe’s.
In
addition to offering a wide selection of national brand name merchandise, we are
committed to building long-term value for Lowe’s through the development of
exclusive, proprietary brands where we focus on delivering the best quality, the
best value and recognizably differentiated products to meet our customers’ needs
and wants.
National
Brand Name Merchandise
In many
product categories, customers look for a brand they know and trust to instill
confidence in their purchase. 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®, Valspar®, Owens Corning® and many more. Our
merchandise selection provides the DIY, 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 2007
Annual Report to Shareholders for the table summarizing sales by product
category for each of the last three fiscal years.
Proprietary
Brands
To
further differentiate our offering, we carry many brands that are exclusive to
Lowe’s. These unique brands cover several categories like lighting,
flooring, home style & organization, tools and more, and give our customers
great quality and value. Exclusive brand names such as Premier Living™, Kobalt®,
Portfolio®, Harbor Breeze®, Reliabilt®, Perfect Flame™, Top-Choice® Lumber and
Utilitech™ are found only at Lowe’s.
Distribution
Network
To
efficiently move product from our vendors to our stores and maintain in-stock
levels, we own and operate 13 highly-automated regional distribution centers
(RDCs). The RDCs are strategically located in North Carolina (2),
Georgia, Indiana, Pennsylvania, Texas, California, Ohio, Florida, Connecticut,
Wyoming, Illinois and Oregon. On average, each RDC serves 118
stores. We expect to open an additional RDC in Pittston, Pennsylvania
in fiscal 2008. We also lease a third-party distribution facility to
serve our Canadian stores.
We
operate 14 flatbed distribution centers (FDCs) 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 and lease two of these FDCs. We
expect to open an additional FDC in Purvis, Mississippi in fiscal
2008.
We also
operate four facilities to support our import business, Special Order Sales and
internet fulfillment. We own two and lease two
7
of these
facilities. In addition, we utilize three 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 2007, over 72% of the stock merchandise we purchased was
shipped through our distribution network, while the remaining portion was
shipped directly to stores from our vendors.
Building
Our Brand
Customers
want Lowe’s to serve as a resource for products and projects to help them
maintain and enhance their homes and communities. Our Marketing and
Advertising programs, communicated via television, radio, newspaper, magazine,
direct mail, sponsorships, internet and in-store programs, all play a critical
role in cultivating this emotional and rational connection with the consumer.
Through an extensive understanding of our customers and their needs and
expectations, we deliver a message that will develop loyal customer
relationships and differentiate Lowe’s from other home improvement
sources.
Media
Investment
A
combination of national broadcast and cable television, supplemented by an array
of national magazines and internet banner advertising, provides the platform for
building brand awareness. We complement the national media investment in
key markets by local television and radio schedules. Newspaper circulars and ROP
(Run of Press) serve as the primary communication vehicle for retail messaging,
and regularly feature Lowe’s breadth of product selection, customer services and
Everyday Low Price positioning. Major promotional events receive network radio
support with a local radio overlay in key markets. We promote internet
access to Lowe’s retail advertising through the use of online banner
advertising. The Lowe’s brand has also been successfully integrated into
television programming, including the Oprah Winfrey show, Rate My Space on HGTV
and Indoors Out on the DIY network.
Direct
to Consumer Marketing
We
continue to refine programs to respond to the changing needs and lifestyles of
consumers. Through innovative database technology, we create direct mail
campaigns based on precise criteria such as purchase activity, affinity group
subscription(s), household demographics, regional weather patterns and even
consumers who are preparing to move, are in the process of moving or have
recently moved into a new home (“New Movers”). Despite the housing
slow-down, New Movers continue to spend considerably more on their previous and
new homes than the average homeowner. This behavior has helped guide the
decision to further invest in this particular consumer base over the course of
the next several years. As a result, Lowe’s has finalized a two-year agreement
with the United States Postal Service’s change of address program and will add
this to its multi-dimensional portfolio of direct mail tactics that speak to the
highly engaged New Movers. Additionally, opt-in e-mail programs line up with
Lowe’s affinity and education programs: Lowe’s Creative Ideas for Home and
Garden ®, Lowe’s Creative Ideas for Outdoor Living ™ and Lowe’s Creative Ideas
for Woodworkers ™. Membership in the Team Lowe’s Racing Fan Club and
participation in the Build-n-Grow children’s clinics creates another level
of engagement with our consumers both inside Lowe’s stores and beyond our
walls. Each of these varying acquisition and retention programs
creates loyal Lowe’s customers.
Multicultural
Marketing
Lowe’s
reaches its diverse communities and customer base in various manners, including
multicultural marketing and outreach to Hispanic, African-American and Asian
customers. For these cultural groups, Lowe’s executes advertising across
many media, including television, radio and print, in both English and native
languages. Some of the unique efforts include La Cancha Lowe’s, Lowe’s
Hispanic mobile marketing program providing fun to families at key soccer events
across the country; Lowe’s sponsorship of the CIAA’s annual Basketball
Tournament, the nation’s oldest black athletic conference consisting of ten
historically African-American institutions of higher education, that has
blossomed into one of largest collegiate post-season tournaments in the country;
and Lowe’s new Chinese, Korean, and Vietnamese language websites offering a new
way for many Asian consumers to learn more about home improvement.
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, back-to-back NASCAR Sprint®
Cup Series champion, the #48 car 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 2007, we continued to foster our relationship with Adrian
Fernandez, who drove in the NASCAR Busch® Series race in Mexico City for
Lowe’s. In addition, we teamed up with Adrian Fernandez and Fernandez
Racing to field the #15 car in the American Le Mans 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 our communities:
8
Habitat
for Humanity
Lowe’s is
a partner with Habitat for Humanity International, helping provide safe,
affordable housing for thousands of working families. Lowe’s
contributed more than $4 million to Habitat projects in 2007, and Lowe’s
employee volunteers gave hands-on support at home sites coast-to-coast to help
Habitat families build their dreams.
Lowe’s
also underwrites Habitat for Humanity’s Women Build program, empowering women
volunteer teams to construct Habitat homes. The volunteers in this
program built more than 90 homes in 2007.
American
Red Cross
As a
national disaster relief partner with the American Red Cross, Lowe’s made it
easier for Red Cross chapters to respond to disasters such as fires, floods and
tornadoes with much-needed supplies from local stores. We also worked
side-by-side with the American Red Cross at hurricane fairs along the Gulf and
East coasts. In 2007, 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. Thanks to a $3 million
contribution in 2007 from the Lowe’s Charitable and Educational Foundation, The
Home Safety Council 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 2007, LCEF awarded more than $19 million in
grants. Two specific initiatives of LCEF during 2007 were SkillsUSA
and Rebuilding Together.
In 2007,
Lowe’s took steps through LCEF to address the country’s growing skilled worker
shortage and “skills gap” by contributing $500,000 to SkillsUSA programs
nationwide. Thirty grants in 21 states received the first
SkillsUSA/Lowe’s $10,000 education grants supporting education program
enhancements and community service projects. Fifty-eight schools
received CareerSafe vouchers, demonstrating Lowe’s corporate commitment to job
site safety. Lowe’s has increased our commitment to SkillsUSA with a
pledge of $1 million for 2008.
Lowe’s
lives up to its tagline, “Let’s Build Something Together,” every
day. In 2007, LCEF launched a partnership with Rebuilding Together,
the nation’s largest all-volunteer home rehabilitation
organization. Grants ranging from $15,000 to $20,000 kicked off
rehabilitation projects in Long Island, N.Y., Orange County, Calif., and Broward
County, Fla., and LCEF pledged another $1 million in grants to Rebuilding
Together affiliates. Between fall 2007 and spring 2008, that $1
million was slated to finance at least 100 projects.
Lowe’s
Heroes
Lowe’s
Heroes employee volunteers tackle local problems in their
communities. In 2007, 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 5,300
employees with more than $6 million in funds.
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
substantial investments 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, support labor planning and
management, and provide support for a variety of store administrative
functions. In addition, these store systems provide the customer
support center organizations with information needed to support the
stores. Key customer support center groups using this information
include inventory replenishment, finance, human resources and
merchandising. 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 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 two state-of-the-art data centers provide many
additional fail-safe features to improve system availability and mitigate risks
associated with unplanned outages. Our second data center opened in
late 2007 and provides complete back-up to our primary facility. With
these two facilities, the Company is well positioned for future
growth.
Employees
As of
February 1, 2008, we employed approximately 160,000 full-time and 56,000
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 (SEC). The public may also read and copy any materials the
Company files with the SEC at the SEC’s Public Reference Room at 100 F Street,
NE, Washington, DC 20549. Information on the operation of the Public
Reference Room may be obtained by calling the SEC at
1-800-SEC-0330. The SEC maintains an Internet site, www.sec.gov, that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC.
Item 1A – Risk Factors
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 economy, the global economy and our
financial performance. These include, but are not limited to, periods
of flat economic growth or recession, volatility and/or lack of liquidity from
time to time in U.S. and world financial markets and the consequent reduced
availability and/or higher cost of credit to Lowe’s and its customers, slower
rates of growth in real disposable personal income, higher rates of
unemployment, higher consumer debt levels, increasing fuel and energy costs,
inflation or deflation of commodity prices, natural disasters, acts of terrorism
and developments in the war against terrorism in Asia and the Middle
East.
Adverse
changes in economic factors specific to the home improvement industry may
negatively impact the rate of growth of our total 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 on variable rate mortgages,
increasing mortgage delinquency and foreclosure rates, reduction in the
availability of mortgage financing and consumer credit, lower housing turnover,
home-price depreciation and increased heating and gas expenses could limit
consumers’ discretionary spending and affect their confidence level and could
lead to further 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 conditions and adverse weather events can negatively affect our total
sales and comparable store sales.
If
weather conditions are uncharacteristic of the time of year during any season,
they can hurt our sales by making it difficult to sell seasonal
merchandise. Although the impact of unseasonable weather conditions
is mitigated somewhat by the broad geographic dispersion of our stores, they
continue to be a significant risk to the overall performance of our business,
particularly when they occur
10
across a
broad region of the United States. Adverse weather events, such as a
prolonged and widespread drought, can hurt our sales of particular products as
well.
Our
store expansion and relocation strategy depends upon our ability to successfully
open and operate new stores each year.
Our
growth in total sales depends to a substantial degree on successfully and
cost-effectively implementing our ongoing expansion program. We must
adapt our merchandising, marketing and distribution initiatives to new markets
both domestically and as we continue to expand into 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 open
new stores at the rate we currently plan 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
success in serving the needs of Commercial Business Customers is dependent upon
our ability to attract and retain qualified commercial sales
specialists.
Commercial
Business Customers in the home improvement industry require that we have
well-trained commercial sales specialists at our project desks. By
doing so, we can better serve the needs of this customer on a consistent
basis. Our commercial sales specialists have a great depth of
knowledge about the products needed by Commercial Business
Customers. If we fail to staff our project 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 our products 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.
Item 1B – Unresolved Staff Comments
None.
Item 2 - Properties
At
February 1, 2008, we operated 1,534 stores in the United States and Canada with
a total of 174 million square feet of selling space. Of the total stores
operating at February 1, 2008, approximately 87% are owned, which includes
stores on leased land, with the remainder being leased from unaffiliated
third-parties. Approximately 49% of our store leases are capital
leases. We also own and operate 13 RDCs and 12 FDCs for lumber and building
commodities. We lease and operate two additional FDCs. We lease one
third-party distribution facility to serve our Canadian
stores. We also operate four facilities to support our import
business, Special Order Sales and internet fulfillment. We own two
and lease two of these facilities. In addition, we utilize three
third-party transload facilities, which do not hold inventory but are the first
point of receipt for imported products. We own one data center and
lease one data center that serve as hubs for our computer processing, critical
data storage and information technology systems. We own our executive
offices, which are located in Mooresville, North Carolina. We also
own and maintain offices in Wilkes County, North Carolina, and lease and
maintain offices in Toronto, Canada and Monterrey, Mexico.
Item 3 - Legal Proceedings
We are a
defendant in legal proceedings considered to be in the normal course of
business, none of which, individually or collectively, is considered
material.
Item 4 - Submission of Matters to a Vote of Security
Holders
None.
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
|
45
|
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
|
52
|
Senior
Vice President, Human Resources since 2005; Corporate Vice President of
Human Resources, Archer Daniels Midland Company, 2000 -
2005.
|
|
Gregory
M. Bridgeford
|
53
|
Executive
Vice President, Business Development since 2004; Senior Vice President,
Business Development, 1999 - 2004.
|
|
Michael
K. Brown
|
44
|
Executive
Vice President, Store Operations since December 2006; Senior Vice
President, Store Operations, 2001 - 2006.
|
|
Charles
W. (Nick) Canter, Jr.
|
57
|
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.
|
58
|
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
|
41
|
Senior
Vice President and Chief Accounting Officer since 2005; Vice President,
Corporate Accounts Payables 2002-2005.
|
|
Robert
F. Hull, Jr.
|
43
|
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.
|
45
|
Executive
Vice President, Logistics and Distribution since 2004; Senior Vice
President, Distribution, 2003 - 2004; Vice President Global Services,
Wal-Mart Stores, Inc., 2002 – 2003.
|
|
N.
Brian Peace
|
42
|
Senior
Vice President, Corporate Affairs since 2006; Vice President, Corporate
Communications, 1999 – 2006.
|
|
Larry
D. Stone
|
56
|
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
|
46
|
Senior
Vice President and Chief Information Officer since 2003; Vice President of
Information Technology Strategy, 2002 –
2003.
|
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
28,
2008, there were 31,941 holders
of record of Lowe's common stock. The table, "Quarterly Stock
Price Range and Cash Dividend Payment", on page 44 of the 2007 Lowe’s Annual
Report to Shareholders for the fiscal year ended February 1, 2008 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
following table sets forth information with respect to purchases of the
Company’s common stock made during the fourth quarter of 2007:
| Issuer Purchases of Equity Securities | ||||||||||||||||
|
(In
millions, except average price
paid per share)
|
Total
Number of Shares
Purchased
(1)
|
Average
Price Paid per Share
|
Total
Number of Shares Purchased as Part of Publicly Announced Plans or
Programs
|
|
Dollar
Value of Shares that May Yet Be Purchased Under the Plans
or Programs(2)
|
|||||||||||
|
November
3, 2007 – November 30, 2007
|
8.9 | $ | 22.66 | 8.8 | $ | 2,339 | ||||||||||
|
December
1, 2007 – January 4, 2008
|
5.3 | 23.62 | 5.3 | 2,214 | ||||||||||||
|
January
5, 2008 – February 1, 2008
|
- | - | - | 2,214 | ||||||||||||
|
As
of February 1, 2008
|
14.2 | $ | 23.02 | 14.1 | $ | 2,214 | ||||||||||
|
(1)
|
During
the fourth quarter of fiscal 2007, the Company repurchased an aggregate of
14,119,398 shares of its common stock pursuant to the share repurchase
program. The total number of shares purchased also includes a
nominal amount of shares repurchased from employees to satisfy the
exercise price of certain stock option
exercises.
|
|
(2)
|
On May 25, 2007, the Company’s Board of Directors authorized up to an additional $3 billion in share repurchases and extended the period of the share repurchase program through fiscal 2009. Although none are contemplated in the Company’s outlook for 2008 issued February 25, 2008, the Company expects to continue implementing the program through purchases made from time to time either in the open market or through private transactions during the extended period. |
Item 6 - Selected Financial Data
See page
43 of the Lowe’s 2007 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 2007 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 2007 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 42, and the "Selected Quarterly Data" on page 43 of Lowe’s 2007 Annual
Report to Shareholders.
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, no change in the Company’s internal control over financial reporting
occurred during the fiscal fourth quarter ended February 1, 2008 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 report of Deloitte & Touche
LLP, the Company’s independent registered public accounting firm, are included
in Lowe’s 2007 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.
Item 9B – Other Information
None.
Part
III
Item 10 – Directors, Executive Officers and Corporate
Governance
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 1, 2008 (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 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, "Executive Officer Compensation" 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, "Security Ownership of Certain
Beneficial Owners and Management" and “Equity Compensation Plan Information”
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, "Audit Matters - Fees Paid to the
Independent Registered Public Accounting Firm" included in the Proxy
Statement.
Part IV
Item 15 – Exhibits, Financial Statement Schedules
a) 1.
Financial
Statements
See the
following items and page numbers appearing in Lowe’s 2007 Annual Report to
Shareholders:
|
Page(s)
|
|||
|
Reports
of Independent Registered Public Accounting Firm
|
27
|
||
|
Consolidated
Statements of Earnings for each of the three fiscal years in the
period ended February 1, 2008
|
28
|
||
|
Consolidated
Balance Sheets at February 1, 2008 and February 2, 2007
|
29
|
||
|
Consolidated
Statements of Shareholders' Equity for each of the three fiscal years
in the period ended February 1, 2008
|
30
|
||
|
Consolidated
Statements of Cash Flows for each of the three fiscal years in the
period ended February 1, 2008
|
31
|
||
|
Notes
to Consolidated Financial Statements for each of the three fiscal
years in the period ended February 1, 2008
|
32-42
|
2.
Financial
Statement Schedule
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 1, 2008 and February 2, 2007, and
for each of the three fiscal years in the period ended February 1, 2008, and the
Company's internal control over financial reporting as of February 1, 2008, and
have issued our reports thereon dated April 1, 2008; such consolidated financial
statements and reports are included in the Company’s 2007 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
1,
2008
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
1, 2008:
|
|||||||||||||||
|
Reserve
for loss on obsolete inventory
|
$ | 66 | $ | 1 |
(a)
|
$ | - | $ | 67 | ||||||
|
Reserve
for inventory shrinkage
|
129 | 428 | (420) |
(b)
|
137 | ||||||||||
|
Reserve
for sales returns
|
55 | - | (4) |
(c)
|
51 | ||||||||||
|
Self-insurance
liabilities
|
650 | 820 | (799) |
(d)
|
671 | ||||||||||
|
Store
closing lease liability
|
19 | 4 | (12) |
(e)
|
11 | ||||||||||
|
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 lease 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 lease liability
|
24 | 9 | (10) |
(e)
|
23 | ||||||||||
(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/(decrease) 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 and adjustments, 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 February 1, 2008 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, (filed
as Exhibit 4.5 to the Company's Annual Report on Form 10-K dated April 3,
2007, and incorporated by reference herein) 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% Senior Notes maturing in October 2016 and the Company’s
5.8% Senior Notes maturing in October 2036.
|
|
|
|
|
(4.7)
|
Fifth Supplemental Indenture, dated as of September 11, 2007, between Lowe's Companies, Inc. and The Bank of New York, as trustee (filed as Exhibit 4.1 to the Company's Form 8-K dated September 6, 2007 and incorporated by reference herein), including as an exhibit thereto a form of the Company's 5.6% Senior Notes maturing in September 2012, the Company's 6.1% Senior Notes maturing in September 2017, and the Company's 6.65% Senior Notes maturing in September 2037. |
|
(4.8)
|
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). |
|
(4.9)
|
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).
|
|
(4.10)
|
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).
|
19
|
(4.11)
|
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).
|
|
(4.12)
|
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).
|
|
(4.13)
|
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 (included as Appendix B to the Company's Definitive Proxy
Statement on Form 14A filed April 12, 2007 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 as Exhibit 10.2 to
the Company's Form 10-Q dated December 12, 2007,
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).
|
| (12.1) | Statement Re Computation of Ratio of Earnings to Fixed Charges |
|
(13)
|
Portions
of the 2007 Lowe’s Annual Report to Shareholders for the fiscal year ended
February 1, 2008
|
|
(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.
|
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
1,
2008
|
By: /s/ Robert A. Niblock | |
|
Date
|
Robert
A. Niblock
|
|
|
Chairman
of the Board and Chief Executive Officer
|
||
|
April
1,
2008
|
By:
/s/ Robert F. Hull, Jr.
|
|
|
Date
|
Robert
F. Hull, Jr.
|
|
|
Executive
Vice President and Chief Financial Officer
|
||
|
April
1,
2008
|
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
1,
2008
|
||
|
Robert
A. Niblock
|
Date
|
|||
|
/s/
David W. Bernauer
|
Director
|
April
1,
2008
|
||
|
David
W. Bernauer
|
Date
|
|||
|
/s/
Leonard L. Berry
|
Director
|
April
1,
2008
|
||
|
Leonard
L. Berry
|
Date
|
|||
|
/s/
Peter C. Browning
|
Director
|
April
1,
2008
|
||
|
Peter
C. Browning
|
Date
|
|||
|
/s/
Dawn E. Hudson
|
Director
|
April
1, 2008
|
||
|
Dawn
E. Hudson
|
Date
|
|||
|
/s/
Robert A. Ingram
|
Director
|
April
1, 2008
|
||
|
Robert
A. Ingram
|
Date
|
|||
|
/s/
Robert L. Johnson
|
Director
|
April
1, 2008
|
||
|
Robert
L. Johnson
|
Date
|
|||
|
/s/
Marshall O. Larsen
|
Director
|
April
1, 2008
|
||
|
Marshall
O. Larsen
|
Date
|
|||
|
/s/
Richard K. Lochridge
|
Director
|
April
1, 2008
|
||
|
Richard
K. Lochridge
|
Date
|
|||
|
/s/
Stephen F. Page
|
Director
|
April
1, 2008
|
||
|
Stephen
F. Page
|
Date
|
|||
|
/s/
O. Temple
Sloan,
Jr.
|
Director
|
April
1, 2008
|
||
|
O.
Temple Sloan,
Jr.
|
Date
|
23