Lowe's is an American retail company based in Mooresville, Iredell County, North Carolina. The focus of business is on home improvement and household appliances. The company is listed in the Standard & Poorโs 100 stock index.
Lowe's was founded in North Wilkesboro, North Carolina in 1946. The company's shares have been traded on the New York Stock Exchange since 1961. Loweโs has 1,840 stores in 49 states across the United States and around 266,000 employees. The chain is also represented in Canada (33 branches) and Australia. In May 2015, the chain acquired 13 branches from Target Canada. Hardware store chain The Home Depot is Lowe's biggest competitor.
-1- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 31, 1997 OR [ ] 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 (I.R.S. Employer incorporation or organization) Identification No.) P.O. BOX 1111, NORTH WILKESBORO, N.C. 28656 (Address of principal executive offices) (Zip Code) (910)658-4000 (Registrant's telephone number, including area code) NONE (Former name, former address and former fiscal year, if changed since last report) 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. Yes X No . Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at October 31, 1997 Common Stock, $.50 par value 174,901,889 53 TOTAL PAGES
-2- LOWE'S COMPANIES, INC. - INDEX - PART I - Financial Information: Page No. Consolidated Balance Sheets - October 31, 1997 and 1996, and January 31, 1997 3 Consolidated Statements of Current and Retained Earnings - three months and nine months ended October 31, 1997 and 1996 4 Consolidated Statements of Cash Flows - nine months ended October 31, 1997 and 1996 5 Notes to Consolidated Financial Statements 6-8 Management's Discussion and Analysis of Results of Operations and Financial Condition 9-11 Independent Accountants' Report 12 PART II - Other Information 13 Item 6 (a) - Exhibits Item 6 (b) - Reports on Form 8-K EXHIBIT INDEX Exhibit 3 Restated and Amended Charter 14-52 Exhibit 10 Material Contracts 13 Exhibit 11 Computation of per share earnings 53
-3- CONSOLIDATED BALANCE SHEETS Lowe's Companies, Inc. and Subsidiary Companies Dollars in thousands <TABLE> <CAPTION> October 31, October 31, January 31, 1997 1996 1997 <S> <C> <C> <C> Assets Current assets: Cash and cash equivalents $28,539 $ 36,389 $ 40,387 Short-term investments 81,682 41,706 30,103 Accounts receivable - net 144,635 143,742 117,562 Merchandise inventory 1,907,188 1,572,956 1,605,880 Other assets 65,039 70,034 57,534 Total current assets 2,227,083 1,864,827 1,851,466 Property, less accumulated depreciation 2,867,989 2,301,584 2,494,396 Long-term investments 34,758 23,192 35,615 Other assets 43,622 50,211 53,477 Total assets $5,173,452 $4,239,814 4,434,954 Liabilities and Shareholders' Equity Current liabilities: Short-term notes payable $ 84,866 $66,854 80,905 Current maturities of long-term debt 12,240 10,719 22,566 Accounts payable 990,735 833,004 914,167 Employee retirement plans 49,486 41,457 60,770 Accrued salaries and wages 97,209 77,551 71,662 Other current liabilities 243,014 203,780 198,461 Total current liabilities 1,477,550 1,233,365 1,348,531 Long-term debt, excluding current maturities 1,049,898 740,760 767,338 Deferred income taxes 110,205 94,853 101,609 Total liabilities 2,637,653 2,068,978 2,217,478 Shareholders' equity Preferred stock - $5 par value, none issued - - - Common stock - $.50 par value; Issued and Outstanding October 31, 1997 174,901,889 October 31, 1996 173,030,089 January 31, 1997 173,403,639 87,451 86,515 86,702 Capital in excess of par 959,549 891,487 903,661 Retained earnings 1,502,212 1,199,763 1,245,888 Unearned compensation-restricted stock awards (13,480) (6,429) (18,434) Unrealized loss on available- for-sale securities 67 (500) (341) Total shareholders' equity 2,535,799 2,170,836 2,217,476 Total liabilities and shareholders' equity $5,173,452 $4,239,814 4,434,954 See accompanying notes to consolidated financial statements. </TABLE>
-4- CONSOLIDATED STATEMENTS OF CURRENT AND RETAINED EARNINGS Lowe's Companies, Inc. and Subsidiary Companies Dollars In Thousands, Except Per Share Data <TABLE> <CAPTION> Quarter Ended Nine Months Ended October 31, 1997 October 31, 1996 October 31, 1997 October 31, 1996 Current Earnings Amount Percent Amount Percent Amount Percent Amount Percent <S> <C> <C> <C> <C> <C> <C> <C> <C> Net sales $2,530,481 100.00 $2,193,239 100.00 $7,739,321 100.00 $6,558,745 100.00 Cost of sales 1,859,595 73.49 1,627,073 74.19 5,713,639 73.83 4,887,287 74.52 Gross margin 670,886 26.51 566,166 25.81 2,025,682 26.17 1,671,458 25.48 Expenses: Selling, general and administrative 420,037 16.60 356,074 16.24 1,260,101 16.28 1,036,967 15.80 Store opening costs 22,671 0.90 15,995 0.73 43,211 0.56 41,048 0.63 Depreciation 60,546 2.39 50,744 2.30 175,827 2.27 143,146 2.17 Employee retirement 15,728 0.62 16,254 0.74 54,449 0.70 46,976 0.72 plans Interest 15,046 0.59 10,540 0.48 48,336 0.63 35,844 0.55 Total expenses 534,028 21.10 449,607 20.49 1,581,924 20.44 1,303,981 19.87 Pre-tax earnings 136,858 5.41 116,559 5.32 443,758 5.73 367,477 5.61 Income tax provision 48,759 1.93 41,376 1.89 158,781 2.05 130,953 2.00 Net earnings $ 88,099 3.48 $ 75,183 3.43 284,977 3.68 236,524 3.61 __ Shares outstanding (weighted average) 174,762 172,954 174,135 165,853 Earnings per common & common equivalent share $0.50 $0.43 $1.64 $1.43 Earnings per common share - assuming full dilution $0.50 $0.43 $1.64 $1.39 Retained Earnings Balance at beginning of period $1,423,699 $1,133,216 $1,245,888 $988,447 Net earnings 88,099 75,183 284,977 236,524 Cash dividends (9,586) (8,636) (28,653) (25,208) Balance at end of period $1,502,212 $1,199,763 $1,502,212 $1,199,763 See accompanying notes to consolidated financial statements. </TABLE>
-5- CONSOLIDATED STATEMENTS OF CASH FLOWS Lowe's Companies, Inc. and Subsidiary Companies Dollars in Thousands <TABLE> <CAPTION> For the nine months ended October 31, October 31, 1997 1996 <S> <C> <C> Cash Flows From Operating Activities: Net Earnings $284,977 $236,524 Adjustments to Reconcile Net Earnings to Net Cash Provided By Operating Activities: Depreciation 175,827 143,146 Amortization of Original Issue Discount 112 1,643 Increase in Deferred Income Taxes 12,862 4,900 (Gain) Loss on Disposition/Writedown of Fixed and Other Assets 15,186 (1,588) Increase in Operating Assets: Accounts Receivable - Net (27,073) (30,259) Merchandise Inventory (301,308) (305,879) Other Operating Assets (11,814) (11,874) Increase in Operating Liabilities: Accounts Payable 76,568 177,605 Employee Retirement Plans 45,352 40,423 Other Operating Liabilities 74,910 64,140 Net Cash Provided by Operating Activities 345,599 318,781 Cash Flows from Investing Activities: (Increase)Decrease in Investment Assets: Short-Term Investments (39,956) 84,232 Purchases of Long-Term Investments (12,311) (11,648) Proceeds from Sale/Maturity of Long-Term Investments 2,172 11,688 (Increase) Decrease in Other Long-Term Assets (2,197) 803 Fixed Assets Acquired (538,235) (458,473) Proceeds from the Sale of Fixed and Other Long-Term Assets 18,986 17,168 Net Cash Used in Investing Activities (571,541) (356,230) Cash Flows from Financing Activities: Sources: Long-Term Debt Borrowings 265,743 - Net Increase in Short-Term Borrowings 3,961 50,237 Proceeds from Stock Options Exercised 145 - Total Financing Sources 269,849 50,237 Uses: Repayment of Long-Term Debt (27,102) (15,059) Cash Dividend Payments (28,653) (25,208) Total Financing Uses (55,755) (40,267) Net Cash Provided by Financing Activities 214,094 9,970 Net Decrease in Cash and Cash Equivalents (11,848) (27,479) Cash and Cash Equivalents, Beginning of Period 40,387 63,868 Cash and Cash Equivalents, End of Period $28,539 $36,389 See accompanying notes to consolidated financial statements. </TABLE>
-6- Lowe's Companies, Inc. and Subsidiary Companies Notes to Consolidated Financial Statements Note 1: The accompanying Consolidated Financial Statements (unaudited) have been reviewed by independent certified public accountants, and in the opinion of management, they contain all adjustments necessary to present fairly the financial position as of October 31, 1997, and the results of operations for the quarter and nine months ended October 31, 1997 and October 31, 1996, and the cash flows for the nine months ended October 31, 1997 and October 31, 1996. Note 2: Effective February 1, 1997, the Company adopted a 52 week fiscal year, changing the year end date from January 31 to the Friday nearest January 31. Each quarter of the 52 week fiscal year will contain 13 weeks except for the fiscal years with 53 weeks. Note 3: The Company has a cash management program which provides for the investment of excess cash balances in financial instruments which have maturities of up to three years. Investments with original maturities of three months or less when purchased are classified as cash equivalents. Investments with a maturity of between three months and one year from the balance sheet date are classified as short-term investments. Investments with maturities greater than one year are classified as long-term. At October 31, 1997, the Company has no drivative financial instruments. Note 4: Net interest expense is composed of the following ($ in thousands): Quarter ended Nine months ended October 31, October 31, October 31, October 31, 1997 1996 1997 1996 Long-term debt $ 9,217 $ 6,211 $24,102 $24,881 Capitalized leases 9,211 7,822 29,135 20,151 Short-term debt 1,314 915 6,372 2,617 Amortization of loan cost 169 114 373 314 Short-term interest income (2,183) (2,141) (5,870) (6,866) Interest capitalized on construction in progress (2,682) (2,381) (5,776) (5,253) Net interest expense $15,046 $10,540 $48,336 $35,844 Note 5: If the FIFO method of inventory accounting had been used, inventories would have been $80,116,000 higher at October 31, 1997, $83,676,000 higher at October 31, 1996 and $74,616,000 higher at January 31, 1997. Note 6: There were no stock options exercised in the quarters ended October 31, 1997 and 1996. In the nine months ended October 31, 1997, 12,000 stock options were exercised which resulted in proceeds of $145,000. There were no stock options exercised in the nine months ended October 31, 1996.
-7- Note 7: Property is shown net of accumulated depreciation of $758,615,000 at October 31, 1997, $575,751,000 at October 31, 1996 and $609,707,000 at January 31, 1997. Note 8: Supplemental disclosures of cash flow information ($ in thousands): Nine months ended October 31, 1997 October 31, 1996 Cash paid for interest (net of capitalized) $ 60,269 $ 50,337 Cash paid for income taxes 145,944 119,131 Non-cash investing and financing activities: Common stock issued to ESOP 56,636 43,907 Fixed assets acquired under capital lease 33,481 141,677 Conversion of debt to common stock - 256,798 Note 9: In January 1997, the Board of Directors authorized the funding of the Fiscal 1996 ESOP contribution primarily with the issuance of new shares of the Company's common stock. During the nine months ended October 31, 1997, the Company issued 1,492,300 shares with a market value of $57 million. Note 10: On May 9, 1997, the Company registered $350 million of Medium- Term Notes (MTN's) from a shelf registration filed with the SEC on November 8, 1996. As of October 31, 1997, the Company had sold $268 million of these MTN's to investors with final maturities ranging from September 1, 2007 to May 15, 2037, at interest rates ranging from 6.70% to 7.61%. Approximately 37% of the MTN's may be put at the option of the holder on either the tenth or twentieth anniversary date of the issue. Note 11: Earnings per common and common equivalent share is computed based upon the weighted average number of common shares outstanding during the period plus the dilutive effect of common shares contingently issuable from stock options. Earnings per common share - assuming full dilution reflects the potential dilutive effect of common share equivalents and the Company's 3% Convertible Subordinated Notes which were all redeemed or converted by July 22, 1996. In February 1997, Statement of Financial Accounting Standards No. 128, "Earnings per Share" (SFAS 128) was issued to simplify the standards for computing earnings per share (EPS) and make them comparable to international EPS standards. SFAS 128 is effective for periods ending after December 15, 1997 and can not be adopted at an earlier date. SFAS 128 will require dual presentation of basic and diluted EPS on the face of the statement of current earnings and a reconciliation of the components of the basic and diluted EPS calculations in the notes to the financial statements. Basic EPS excludes dilution and is computed by dividing net earnings by the weighted-average number of common shares outstanding for the period. Diluted EPS is similar to fully diluted EPS pursuant to APB Opinion No. 15. The Company will adopt SFAS 128 in the quarter and year ending January 30, 1998. Had the new standard been applied in the quarter and nine months ended October 31, 1997, basic and diluted EPS would not have been materially different from primary and fully diluted EPS under APB opinion No. 15.
-8- Note 12: Statement of Financial Accounting Standards No. 125, "Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities" (SFAS 125), became effective for transactions occurring after December 31, 1996. In October 1997, the Company entered into a new consumer credit card program agreement with the Monogram Credit Card Bank of Georgia (the Bank), a wholly owned subsidiary of General Electric Capital Corporation. Under the agreement, credit is extended to customers directly by the Bank and, therefore, the provisions of SFAS 125 are not applicable to the receivables associated with the consumer credit card program. Note 13: In June 1997, Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" (SFAS 130) was issued. SFAS 130 will require disclosure of comprehensive income (which is defined as "the change in equity during a period excluding changes resulting from investments by shareholders and distributions to shareholders") and its components. SFAS 130 is effective for fiscal years beginning after December 15, 1997, with reclassification of comparative years. The Company will adopt SFAS 130 in the year ending January 29, 1999. Had the new standard been applied in the quarter ending October 31, 1997, comprehensive income would be $36,000 and $408,000 higher than net earnings for the quarter and nine months ended October 31, 1997, respectively, due to the unrealized holding gains on available-for-sale securities. Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information" (SFAS 131) was also issued in June 1997. SFAS 131 will be effective for the Company in the fiscal year beginning January 31, 1998. SFAS 131 redefines how operating segments are determined and requires disclosure of certain financial and descriptive information about a company's operating segments. Management does not believe that the adoption of SFAS 131 will have a material impact on the Company's current disclosures of its one operating segment, home improvement retailing.
-9- MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS This discussion should be read in conjunction with the financial statements and the financial statement footnotes included in this Form 10-Q. For the third quarter ended October 31, 1997, sales increased 15% to $2.53 billion, net earnings increased 17% to $88.10 million and earnings per share (fully diluted) were $.50 compared to $.43 in the comparable quarter of last year. Comparable store sales were up 2%. For the large store group (more than 80,000 square feet), comparable store sales were up 4%. For the nine months ended October 31, 1997, sales grew 18% to $7.74 billion, net earnings increased 20% to $284.98 million and earnings per share (fully diluted) were $1.64 compared to $1.39 in the comparable period of last year. Comparable store sales were up 4% year to date, while large store comparable sales were up 6%. Sales in the third quarter increased primarily as a result of the addition of 5.2 million square feet of retail selling space at new and existing locations since last year's third quarter and the 2% comparable store sales increase. Sales gains experienced in plumbing, electrical, appliances, kitchen cabinets, home decor, paint and outdoor hardlines were all 20% or better. The Company experienced a 1% decrease in sales prices on comparable products compared to last year's third quarter. Gross margin was 26.51% of sales for the quarter ended October 31, 1997, versus 25.81% in last year's quarter. The increase in gross margin rate continues to reflect favorable changes in product mix and ongoing monitoring of store pricing disciplines. Gross margin for the nine months ended October 31, 1997, was 26.17% versus 25.48% last year. Selling, general and administrative expenses (SG&A) were 16.60% of sales in the third quarter versus 16.24% in last year's quarter. SG&A increased 18% compared to a 15% sales increase in the quarter. Sales levels falling short of expectations throughout the quarter resulted in stores' payroll not being leveraged by sales for the quarter. Management of general office expenses provided positive leverage for the quarter. For the nine months ended October 31, 1997, SG&A was 16.28% of sales versus 15.80% for the comparable period last year. The nine months' SG&A percent of sales was impacted by the same factors as the third quarter. For the quarter ended October 31, 1997, store opening costs were $22.7 million versus $16.0 million last year, representing costs associated with the opening of 19 stores this year (12 new and 7 relocated) compared to 17 stores last year (12 new and 5 relocated). Charges in this quarter for future and prior openings were $7.6 million compared to $3.1 million in 1996's third quarter. For the nine months ended October 31, 1997, store opening costs were $43.2 million versus $41.0 million last year, representing costs associated with the opening of 36 stores this year (22 new and 14 relocated) compared to 46 stores in the comparable period last year (34 new and 12 relocated). The increase i
-10- 1997 is primarily the result of the timing of store openings and the Company entering into larger metropolitan markets with heavier grand opening advertising and higher payroll costs. Depreciation was $60.5 million for the quarter ended October 31, 1997 and $175.8 million for the nine months ended October 31, 1997, increasing 19% and 23% over the respective comparable periods last year. The increases are due primarily to buildings, fixtures, displays, computer equipment and store equipment relating to the Company's expansion program. Employee retirement plans expense decreased 3% to $15.7 million for the quarter ended October 31, 1997. As a percent to sales, employee retirement plans expense was 0.62% compared to 0.74% for last year's comparable quarter. For the nine months ended October 31, 1997, employee retirement plans expense was up 16% to $54.4 million. Interest expense increased $12.5 million to $48.3 million for the nine months ended October 31, 1997. This is the result of increases of $4.1 million in the first quarter, $3.9 million in the second quarter and $4.5 million in the third quarter. Interest increased primarily due to medium-term notes issued during the second and third quarters and new capitalized building leases. The Company's effective income tax rate was 35.63% for the quarter ended October 31, 1997, compared to 35.50% for the comparable quarter last year. The effective rate was 35.78% versus 35.64% for the nine months ended October 31, 1997 and 1996, respectively. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities was $346 million for the nine months ended October 31, 1997 compared to $319 million for last year's first nine months. The increase resulted primarily from increased net earnings. The Company's working capital was $750 million at October 31, 1997 compared to $631 million at October 31, 1996 and $503 million at January 31, 1997. Property has increased as a result of the Company's plan to continue expansion of retail sales floor square footage by expanding into new markets and relocating from older, smaller stores to larger stores. The Company's 1997 capital budget is approximately $1 billion, inclusive of capital leases. Over 80% of the capital budget is for store expansion. The Company ended the third quarter with 425 stores and 33.7 million square feet of retail selling space, an 18% increase over selling space at October 31, 1996. Expansion plans for 1997 consist of approximately 65 projects with about 65% being new stores and the balance being relocations of existing stores, for approximately 6.2 million square feet of additional retail space. Approximately one-half of the 1997 projects will be leased. Expansion in the first nine months of fiscal 1997 included 22 new stores and 14 relocated stores representing 3.3 million square feet of new incremental retail space. Current plans are to finance the Company's 1997 expansion program through funds from operations, external financing and leases. The Company had $85 million of short-term borrowings at October 31, 1997 compared to $67 million at October 31, 1996 and $81 million at January 31, 1997. On May 9, 1997, the Company registered $350 million of Medium-Term Notes (MTN's) from its shelf registration filed with the SEC on November 8, 1996. As of October 31, 1997, the Company had sold $268 million of these MTN's to investors with final maturities ranging from September 1, 2007 to May
-11- 15, 2037, at interest rates ranging from 6.70% to 7.61%. Approximately 37% of the MTN's may be put at the option of the holder on either the tenth or twentieth anniversary date of the issue. IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS In February 1997, Statement of Financial Accounting Standards No. 128, "Earnings per Share" (SFAS 128) was issued to simplify the standards for computing earnings per share (EPS) and make them comparable to international EPS standards. SFAS 128 is effective for periods ending after December 15, 1997 and can not be adopted at an earlier date. SFAS 128 will require dual presentation of basic and diluted EPS on the face of the statement of current earnings and a reconciliation of the components of the basic and diluted EPS calculations in the notes to the financial statements. Basic EPS excludes dilution and is computed by dividing net earnings by the weighted-average number of common shares outstanding for the period. Diluted EPS is similar to fully diluted EPS pursuant to Accounting Principles Board (APB) Opinion No. 15. The Company will adopt SFAS 128 in the quarter and year ending January 30, 1998. Had the new standard been applied in the quarter and nine months ended October 31, 1997, basic and diluted EPS would not have been materially different from primary and fully diluted EPS under APB Opinion No. 15. In June 1997, Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" (SFAS 130) was issued. SFAS 130 will require disclosure of comprehensive income (which is defined as "the change in equity during a period excluding changes resulting from investments by shareholders and distributions to shareholders") and its components. SFAS 130 is effective for fiscal years beginning after December 15, 1997, with reclassification of comparative years. The Company will adopt SFAS 130 in the year ending January 29, 1999. Had the new standard been applied in the quarter ending October 31, 1997, comprehensive income would be $36,000 and $408,000 higher than net earnings for the quarter and the nine months ended October 31, 1997 due to the unrealized holding gains on available-for-sale securities. Statement of Financial Accounting Standards No. 131, "Disclosures about Segments of an Enterprise and Related Information" (SFAS 131) was also issued in June 1997. SFAS 131 will be effective for the Company in the fiscal year beginning January 31, 1998. SFAS 131 redefines how operating segments are determined and requires disclosure of certain financial and descriptive information about a company's operating segments. Management does not believe that the adoption of SFAS 131 will have a material impact on the Company's current disclosures of its one operating segment, home improvement retailing. FORWARD-LOOKING LANGUAGE This Securities and Exchange Commission Form 10-Q may include "forward- looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Although the Company believes that comments reflected in such forward-looking statements are reasonable, they are based on information existing at the time made. Therefore, it can give no assurance that such expectations will prove to be correct. Important factors that could cause actual results to differ from expectations include, but are not limited to, general economic trends, availability and development of real estate for expansion, commodity markets, and the nature of competition and weather conditions, all of which are described in detail in the Company's 1996 Annual Report.
-12- INDEPENDENT ACCOUNTANTS' REPORT The Board of Directors Lowe's Companies, Inc.: We have reviewed the accompanying consolidated balance sheet of Lowe's Companies, Inc. and subsidiary companies as of October 31, 1997, and the related consolidated statements of current and retained earnings for the quarter and nine months ended October 31, 1997 and 1996, and of cash flows for the nine months ended October 31, 1997 and 1996. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to such consolidated financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of Lowe's Companies, Inc. and subsidiary companies as of January 31, 1997, and the related consolidated statements of current and retained earnings and of cash flows for the year then ended (not presented herein); and in our report dated February 20, 1997, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of January 31, 1997 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. /s/ Deloitte & Touche LLP Charlotte, North Carolina November 11, 1997
-13- Part II - OTHER INFORMATION Item 6 (a) - Exhibits Exhibit 3 Amended and Restated Charter 14-52 Exhibit 10 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). Exhibit 11 Computation of per Share Earnings 53 Item 6 (b) - Reports on Form 8-K There were no reports filed on Form 8-K during the quarter ended October 31, 1997. SIGNATURES Pursuant to the requirements 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. December , 1997 \s\ Richard D. Elledge Date _________________ ________________________________ Richard D. Elledge, Senior Vice President and Chief Accounting Officer