x
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
For
the fiscal year ended February 3, 2006
|
|
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
|
Title
of each class
|
|
Name
of each exchange on which registered
|
Common
Stock, $.50 Par Value
|
|
New
York Stock Exchange (NYSE)
|
x
|
Yes
|
o
|
No
|
o
|
Yes
|
x
|
No
|
x
|
Yes
|
o
|
No
|
Large
accelerated filer x
|
Accelerated
filer o
|
Non-accelerated
filer o
|
o
|
Yes
|
x
|
No
|
CLASS
|
OUTSTANDING
AT MARCH 31, 2006
|
|
Common
Stock, $.50 par value
|
775,806,897
|
Document
|
Parts
Into Which Incorporated
|
|
Portions
of Lowe’s 2005 Annual Report to Shareholders
|
Parts
I, II and IV
|
|
Portions
of the Proxy Statement for Lowe’s 2006 Annual Meeting of
Shareholders
|
Part
III
|
|
|
||
PART
1
|
Page
No.
|
||
|
Item
1.
|
Business
|
4-10
|
Item
1A.
|
Risk
Factors
|
10-11
|
|
|
Item
2.
|
Properties
|
12
|
Item
3.
|
Legal
Proceedings
|
12
|
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
12
|
Executive
Officers of the Registrant
|
13
|
||
|
|
|
|
PART
II
|
|
||
|
Item
5.
|
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity
Securities
|
14
|
|
Item
6.
|
Selected
Financial Data
|
14
|
Item
7.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
14
|
|
Item
7A.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
14
|
|
|
Item
8.
|
Financial
Statements and Supplementary Data
|
14
|
|
Item
9.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
14
|
|
Item
9A.
|
Controls
and Procedures
|
15
|
|
Item
9B.
|
Other
Information
|
15
|
PART
III
|
|
||
|
Item
10.
|
Directors
and Executive Officers of the Registrant
|
15
|
|
Item
11.
|
Executive
Compensation
|
15
|
|
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
16
|
Item
13.
|
Certain
Relationships and Related Transactions
|
16
|
|
|
Item
14.
|
Principal
Accountant Fees and Services
|
16
|
|
|||
PART
IV
|
|
||
|
Item
15.
|
Exhibits
and Financial Statement Schedules
|
17-21
|
|
|
|
|
|
|
Signatures
|
22-23
|
2005
|
|
2004
|
|
2003
|
|
Number
of stores, beginning of fiscal year
|
1,087
|
|
952
|
|
854
|
New
stores opened
|
147
|
|
136
|
|
125
|
Relocated
stores opened
|
3
|
|
4
|
|
5
|
Stores
closed (including relocated stores)
|
(3)
|
|
(5)
|
|
(6)
|
Contractor
Yards sold
|
-
|
|
-
|
|
(26)
|
|
|
||||
Number
of stores, end of fiscal year
|
1,234
|
|
1,087
|
|
952
|
§ |
Personal
income continues to grow, which is supported by data from the February
2006 Blue Chip Economic Indicators™, which forecasts real disposable
income growth of 3.4% for calendar 2006, compared with 1.4% in calendar
2005.
|
§ |
Employment
growth is a strong indicator of home improvement sales. The relatively
low
unemployment rate suggests Americans will likely be more confident
in
calendar 2006 about employment prospects than in the past several
years.
|
§ |
Housing
turnover is expected to continue at a historically high pace according
to
The National Association of Realtors®,
which forecasts calendar 2006 housing turnover to be the third strongest
year on record.
|
§ |
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.
|
Name
|
Age
|
Title
|
||
Robert
A. Niblock
|
43
|
Chairman
of the Board and Chief Executive Officer since 2005; President
since 2003;
Executive Vice President, 2001 - 2003, and Chief Financial Officer,
2000 -
2003.
|
||
Maureen
K. Ausura
|
50
|
Senior
Vice President, Human Resources since 2005; Corporate Vice President
of
Human Resources, Archer Daniels Midland Company, 2000 -
2005.
|
||
Gregory
M. Bridgeford
|
51
|
Executive
Vice President, Business Development since 2004; Senior Vice President,
Business Development, 1999 - 2004.
|
||
Charles
W. (Nick) Canter, Jr.
|
55
|
Executive
Vice President, Store Operations since 2005; Senior Vice President,
Store
Operations - North Central Division since 2004; Senior Vice President,
Store Operations - Northern Division, 1999 - 2004.
|
||
Matthew
V. Hollifield
|
39
|
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.
|
41
|
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.
|
43
|
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.
|
||
Ross
W. McCanless
|
48
|
Senior
Vice President, General Counsel and Secretary since 2003; Vice
Chairman,
Delhaize America, Inc., 2002 - 2003; Chief Executive Officer, Delhaize
America, Inc. and Food Lion, LLC, 1999 - 2002.
|
||
Larry
D. Stone
|
54
|
Senior
Executive Vice President Merchandising/Marketing since 2005; Senior
Executive Vice President Store Operations 2003-2005; Executive
Vice
President, Store Operations, 2001 - 2003; Executive Vice President
and
Chief Operating Officer, 1997 - 2001.
|
||
Steven
M. Stone
|
44
|
Senior
Vice President and Chief Information Officer since 2003; Vice President
of
Information Technology Strategy, 2002 - 2003; Vice President of
MIS
Operations, 1999 - 2002.
|
(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
(2)
|
Dollar
Value of Shares that May Yet Be Purchased Under the Plans or Programs
(2)
|
|||||||||
October
29, 2005 - November 25, 2005
|
4.2
|
$
|
66.12
|
4.2
|
$
|
226
|
|||||||
November
26, 2005 - December 30, 2005
|
-
|
-
|
-
|
226
|
|||||||||
December
31, 2005 - February 3, 2006
|
-
|
-
|
-
|
1,226
|
|||||||||
As
of February 3, 2006
|
4.2
|
$
|
66.12
|
4.2
|
$
|
1,226
|
|||||||
(1) |
During
the fourth quarter of fiscal 2005, the Company repurchased an aggregate
of
4,224,700 shares of its common stock pursuant to the repurchase program
publicly announced on January 28, 2005 (the “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
January 28, 2005, the Board of Directors approved the Program under
which
the Company is authorized to repurchase up to $1 billion of the Company’s
common stock. The Program expires at the end of fiscal year 2006.
In
January 2006, the Board of Directors authorized up to an additional
$1
billion in share repurchases through
2007.
|
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 3, 2006
|
28
|
||
Consolidated
Balance Sheets at February 3, 2006 and January 28, 2005
|
29
|
||
Consolidated
Statements of Shareholders' Equity for each of the three fiscal years
in the period ended February 3, 2006
|
30
|
||
Consolidated
Statements of Cash Flows for each of the three fiscal years in the
period ended February 3, 2006
|
31
|
||
Notes
to Consolidated Financial Statements for each of the three fiscal
years in the period ended February 3, 2006
|
32-41
|
||
Selected
Financial Data (Unaudited)
|
42-43
|
(In
Millions)
|
Balance
at beginning of period
|
Charges
to costs and expenses
|
Deductions
|
Balance
at end of period
|
|||||||||||||||
|
|
|
|
|
|||||||||||||||
February
3, 2006:
|
|||||||||||||||||||
Reserve
for loss on discontinued inventories
|
$
|
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 discontinued inventories
|
$
|
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
|
||||||||||||
|
|
|
|
|
|||||||||||||||
January
30, 2004:
|
|
|
|
|
|||||||||||||||
Reserve
for loss on discontinued inventories
|
$
|
52
|
$
|
9
|
(a
|
)
|
$
|
-
|
$
|
61
|
|||||||||
Reserve
for inventory shrinkage
|
83
|
296
|
(297
|
)
|
(b
|
)
|
82
|
||||||||||||
Reserve
for sales returns
|
18
|
8
|
(c
|
)
|
-
|
26
|
|||||||||||||
Self-insurance
liabilities
|
271
|
375
|
(280
|
)
|
(d
|
)
|
366
|
||||||||||||
Store
closing liability
|
16
|
12
|
(9
|
)
|
(e
|
)
|
19
|
3.
|
Exhibits
|
(3.1)
|
Restated
and Amended Charter (filed as Exhibit 3.1 to the Company's Form
10-Q dated
September 14, 2001 and
incorporated by reference herein).
|
(3.2)
|
Bylaws,
as amended (filed as Exhibit 3.1 to the Company's Form 8-K dated
January
28, 2005 and incorporated
by reference herein).
|
(4.1)
|
Indenture
dated April 15, 1992 between the Company and Bank One, N.A., Successor
Trustee to Chemical
Bank, as Trustee (filed as Exhibit 4.1 to the Company's Registration
Statement on Form S-3 (No.
33-47269) and incorporated by reference herein).
|
(4.2)
|
Amended
and Restated Indenture, dated as of December 1, 1995, between the
Company
and Bank One, N.A.,
formerly known as The First National Bank of Chicago (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 Bank One, N.A.,
formerly
known as The First National
Bank of Chicago (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 Bank One, N.A.,
formerly
known as
The First National Bank of Chicago (filed as Exhibit 4.1 on Form
8-K dated
October 25, 2001, and incorporated
by reference herein).
|
(4.5)
|
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).
|
(4.6)
|
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).
|
(4.7)
|
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).
|
(4.8)
|
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).
|
(4.9)
|
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).
|
(4.10)
|
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. Directors' Stock Option Plan (filed on the Company's
Form S-8 dated October 21, 1999
(No. 333-89471) and incorporated by reference herein).
|
*(10.3)
|
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).
|
*(10.4)
|
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).
|
*(10.5)
|
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).
|
*(10.6)
|
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).
|
*(10.7)
|
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).
|
*(10.8)
|
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).
|
*(10.9)
|
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).
|
*(10.10)
|
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).
|
|
|
*(10.11)
|
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).
|
*(10.12)
|
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).
|
*(10.13)
|
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).
|
*(10.14)
|
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).
|
*(10.15)
|
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).
|
*(10.16)
|
Release,
Separation and Consulting Agreement - Thomas E. Whiddon (filed
as Exhibit
10(iii)(A).1 to the
Company's Form 10-Q dated September 12, 2003 and incorporated by
reference
herein).
|
*(10.17)
|
Release
and Separation Agreement - William C. Warden, Jr. (filed as Exhibit
10(iii)(A).2 to the Company's
Form 10-Q dated September 12, 2003 and incorporated by reference
herein).
|
*(10.18)
|
Retirement
Agreement - Robert L. Tillman (filed as Exhibit 10.2 to the Company’s Form
10-Q dated December
7, 2004 and incorporated by reference
herein).
|
*(10.19)
|
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).
|
*(10.20)
|
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)
|
*(10.21)
|
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)
|
*(10.22)
|
Retirement
Agreement - Dale C. Pond (filed as Exhibit 10.1 to the Company’s Form 10-Q
dated June
8, 2005 and incorporated by reference herein).
|
*(10.23)
|
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).
|
(13)
|
Portions
of the 2005 Lowe’s Annual Report to Shareholders for the fiscal year ended
February 3, 2006
|
(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.
|
LOWE’S
COMPANIES, INC.
|
||
(Registrant)
|
||
April
6, 2006
|
By:
/s/ Robert A. Niblock
|
|
Date
|
Robert
A. Niblock
|
|
Chairman
of the Board, President and Chief Executive Officer
|
||
April
6, 2006
|
By:
/s/ Robert F. Hull, Jr.
|
|
Date
|
Robert
F. Hull, Jr.
|
|
Executive
Vice President and Chief Financial Officer
|
||
April
6, 2006
|
By:
/s/ Matthew V. Hollifield
|
|
Date
|
Matthew
V. Hollifield
|
|
Senior
Vice President and Chief Accounting Officer
|
/s/
Robert A. Niblock
|
Chairman
of the Board of Directors, President, Chief Executive Officer and
Director
|
April
6, 2006
|
||
Robert
A. Niblock
|
Date
|
|||
/s/
Leonard L. Berry
|
Director
|
April
6, 2006
|
||
Leonard
L. Berry
|
Date
|
|||
/s/
Peter C. Browning
|
Director
|
April
6, 2006
|
||
Peter
C. Browning
|
Date
|
|||
/s/
Paul Fulton
|
Director
|
April
6, 2006
|
||
Paul
Fulton
|
Date
|
|||
/s/
Dawn E. Hudson
|
Director
|
April
6, 2006
|
||
Dawn
E. Hudson
|
Date
|
|||
/s/
Robert A. Ingram
|
Director
|
April
6, 2006
|
||
Robert
A. Ingram
|
Date
|
|||
/s/
Robert L. Johnson
|
Director
|
April
6, 2006
|
||
Robert
L. Johnson
|
Date
|
|||
/s/
Marshall O. Larsen
|
Director
|
April
6, 2006
|
||
Marshall
O. Larsen
|
Date
|
/s/
Richard K. Lochridge
|
Director
|
April
6, 2006
|
||
Richard
K. Lochridge
|
Date
|
|||
/s/
Stephen F. Page
|
Director
|
April
6, 2006
|
||
Stephen
F. Page
|
Date
|
|||
/s/
O. Temple Sloan, Jr.
|
Director
|
April
6, 2006
|
||
O.
Temple Sloan, Jr.
|
Date
|