Form 11-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 (Fee Required)
For the fiscal year ended February 1, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (No Fee Required)
For the transition period from to
Commission file number 1-7898
A. Full Title of the Plan and the address of the Plan, if different from that
of the issuer named below:
Lowe's 401(k) Plan
(Formerly Lowe's Companies Employee Savings and
Investment Plan)
B. Name of issuer of the securities held pursuant to the Plan and the address
of its principal executive office:
Lowe's Companies, Inc.
1605 Curtis Bridge Road
Wilkesboro, NC 28697
1
Lowe's 401(k) Plan
(Formerly Lowe's Companies Employee Savings and Investment Plan)
Form 11-K
February 1, 2002
Table of Contents
Page No.
Part I - Exhibit Index 2
Part II - Financial Information
Cover Page 3
Independent Auditors' Report 4
Statements of Net Assets Available For Benefits
as of February 1, 2002 and February 2, 2001 5
Statements of Changes in Net Assets Available for Benefits
for the Years Ended February 1, 2002 and February 2, 2001 6
Notes to Financial Statements for the Years Ended
February 1, 2002 and February 2, 2001 7-12
Supplemental Schedules as of and for the Year Ended
February 1,2002
Form 5500, Schedule H, Part IV, Line 4i - Schedule
of Assets (Held at End of Year) 13
Form 5500, Schedule H, Part IV, Line 4j - Schedule
of Reportable Transactions 14
Other Information 15
Independent Auditors' Consent 16
Note: The accompanying financial statements have been prepared for the
purpose of filing with Department of Labor's Form 5500. Supplemental
schedules required by Section 2520.103-10 of the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the
Employee Retirement Income Security Act of 1974, other than the
schedules listed above, are omitted because of the absence of the
conditions under which they are required.
2
Lowe's 401(k) Plan
(Formerly Lowe's Companies Employee Savings and Investment Plan)
Exhibit Index
Form 11-K for the Year Ended February 1, 2002
Exhibit No. Description of Exhibit Page No.
1. Consent of Deloitte & Touche LLP,
Independent Auditors 16
3
______________________________________________________________________________
LOWE'S 401(k) PLAN
(FORMERLY LOWE'S COMPANIES EMPLOYEE SAVINGS AND INVESTMENT PLAN)
Financial Statements as of and for the Years Ended
February 1, 2002 and February 2, 2001, Supplemental Schedules
for the Year Ended February 1, 2002, and Independent Auditors'
Report
______________________________________________________________________________
4
INDEPENDENT AUDITORS' REPORT
To the Participants and Administrator
of Lowe's 401(k) Plan:
We have audited the accompanying statements of net assets available for
benefits of Lowe's 401(k) Plan (the "Plan") as of February 1, 2002 and
February 2, 2001, and the related statements of changes in net assets
available for benefits for the years then ended. These financial statements
are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe our
audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of February 1,
2002 and February 2, 2001, and the changes in net assets available for
benefits for the years then ended in conformity with accounting principles
generally accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules listed in
the Table of Contents are presented for the purpose of additional analysis and
are not a required part of the basic financial statements, but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These schedules are the responsibility of the Plan's
management. Such schedules have been subjected to the auditing procedures
applied in our audit of the basic 2002 financial statements and, in our
opinion, are fairly stated in all material respects when considered in
relation to the basic financial statements taken as a whole.
/s/ DELOITTE & TOUCHE LLP
Hickory, North Carolina
July 16, 2002
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LOWE'S 401(K) PLAN
(FORMERLY LOWE'S COMPANIES EMPLOYEE SAVINGS AND INVESTMENT PLAN)
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
FEBRUARY 1, 2002 AND FEBRUARY 2, 2001
FEBRUARY 1, FEBRUARY 2,
2002 2001
Assets
Investments (Notes 1, 2, 3, 4, 5, and 7):
Investments, at fair value $ 372,575,387 $ 234,134,964
Investments, at contract value 85,056,779 85,596,649
Total Investments 457,632,166 319,731,613
Receivables:
Employer's contribution 617,451 506,343
Participants' contributions 1,850,624 1,372,094
Accrued interest and dividends 603,833 -
Total Receivables 3,071,908 1,878,437
Total Assets 460,704,074 321,610,050
Liabilities - Due to broker for securities
purchased 1,258,042 -
Net assets available for benefits $ 459,446,032 $ 321,610,050
See accompanying notes to financial statements.
6
LOWE'S 401(K) PLAN
(FORMERLY LOWE'S COMPANIES EMPLOYEE SAVINGS AND INVESTMENT PLAN)
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED FEBRUARY 1, 2002 AND FEBRUARY 2, 2001
FEBRUARY 1, FEBRUARY 2,
2002 2001
Additions:
Investment income:
Net appreciation in fair value
of investments (Notes 2, 3, and 4) $ 107,015,446 $ 23,653,417
Interest 5,225,422 5,899,556
Dividends 1,827,774 4,394,265
Net Investment Income 114,068,642 33,947,238
Contributions (Note 1):
Employer's 14,209,048 13,544,552
Participants' 48,545,998 41,310,742
Total Contributions 62,755,046 54,855,294
Transfer from Eagle Hardware & Garden:
Retirement Savings Plan (Note 10) - 20,821,172
Transfers from Lowe's Companies Employee
Stock Ownership Plan (Note 9) 2,147,280 1,301,476
Total Transfers 2,147,280 22,122,648
Total Additions 178,970,968 110,925,180
Deductions:
Benefits paid to participants (Note 1) (41,132,753) (43,606,348)
Investment expenses (Note 7) (2,233) (3,100)
Total Deductions (41,134,986) (43,609,448)
Net increase 137,835,982 67,315,732
Net assets available for benefits:
Beginning of year 321,610,050 254,294,318
End of year $ 459,446,032 $ 321,610,050
See accompanying notes to financial statements.
7
LOWE'S 401(k) PLAN
(FORMERLY LOWE'S COMPANIES EMPLOYEE SAVINGS AND INVESTMENT PLAN)
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 1, 2002 AND FEBRUARY 2, 2001
1. DESCRIPTION OF THE PLAN
The following description of the Lowe's 401(k) Plan (the "Plan") provides only
general information. Participants should refer to the plan document for a
more complete description of the Plan's provisions.
Effective August 4, 2001, the name of the Plan was changed from "Lowe's
Companies Employee Savings and Investment Plan" to "Lowe's 401(k) Plan."
General: The Plan, adopted effective February 1, 1984, is a defined
contribution plan covering substantially all employees of Lowe's
Companies, Inc. and subsidiaries (the "Plan Sponsor") who have completed 90
days of continuous service. The Fiduciary Committee of the Board of
Directors controls and manages the operation and administration of the Plan.
State Street Bank and Trust Company ("State Street") serves as the trustee of
the Plan. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA").
Contributions: Each year, participants may contribute up to 10% of their
pretax annual compensation, as defined by the Plan. The minimum weekly
contribution for full-time participants is $5 per week and the minimum
contribution for part-time participants is $2.50 per week. The first $5 per
week contributed is matched by the Plan Sponsor at the rate of 100% and
participant contributions in excess of $5 and up to 6% are matched at a rate
established by the Plan Sponsor's Board of Directors (25% for the years ended
February 1, 2002 and February 2, 2001). Contributions are subject to certain
Internal Revenue Code ("IRC") limitations. Participants may also contribute
amounts representing distributions from other qualified defined benefit or
defined contribution plans.
Participant Accounts: Individual accounts are maintained for each plan
participant. Each participant's account is credited with the participant's
contribution, the Company's contribution, and allocations of plan earnings,
and charged with allocations of plan losses and investment expenses.
Allocations are based on participant earnings or account balances, as defined.
The benefit to which a participant is entitled is the benefit that can be
provided from the participant's vested account.
Vesting: All participants are 100% vested in the Plan at all times.
Investments: The twelve investment funds to which participants may direct
their contributions include one fixed income fund, three life style funds,
two small-cap funds, two mid-cap funds, two large-cap funds, one
international fund, and a Lowe's Companies Stock fund. Prior to August 4,
2001, all matching contributions made by the Plan Sponsor were invested in
the employer fund which consisted of investment contracts and was not
directed by participants. Effective August 4, 2001, trust assets under the
Plan attributed to a participant's previously accumulated employer fund
balance and future matching contributions, will be invested in the investment
funds available under the Plan by the trustee as directed by participants.
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Payment of Benefits: On termination of service for any reason, a participant
receives a lump-sum amount equal to the value of the participant's vested
account.
The Plan allows for in-service withdrawals to participants under age 59-1/2
only in cases of financial hardship and such withdrawals must total at least
$1,000 and be approved by the Plan's record keeper or Plan Sponsor.
Participants who have attained age 59-1/2 are entitled to a one time
in-service withdrawal of all of their accumulated balances.
Plan Year: The plan year coincides with the fiscal year of Lowe's Companies,
Inc., which is the 52/53 - week period ending on the Friday closest to
January 31 of each year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting: The accompanying financial statements have been prepared
on the accrual basis of accounting in accordance with accounting principles
generally accepted in the United States of America.
Use of Estimates: The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and changes therein, and disclosure of
contingent assets and liabilities. Actual results could differ from those
estimates. The Plan utilizes various investment instruments. Investment
securities, in general, are exposed to various risks, such as interest rate,
credit, and overall market volatility. Due to the level of risk associated
with certain investment securities, it is reasonably possible that changes in
the values of investment securities will occur in the near term and that such
changes could materially affect the amounts reported in the financial
statements.
Investment Valuation and Income Recognition: Investments, other than the
investment contracts, are stated at fair value. Guaranteed investment
contracts are stated at contract value (See Note 5). Investments in common
stocks are stated at fair value based upon closing sales prices reported on
recognized securities exchanges on the prior business day. The mutual funds
are valued at quoted market prices, which represent the net asset values of
shares held by the Plan. Purchases and sales of securities are recorded on
a trade-date basis. Interest and dividend income is recorded on the accrual
basis.
Payments of Benefits: Benefits are recorded when paid.
Expenses: As provided by the plan document, administrative expenses
(excluding certain investment management expenses) of the Plan are paid by
the Plan Sponsor.
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3. INVESTMENTS
The following table presents investments that represent 5 percent or more of
the Plan's net assets available for benefits.
February 1, February 2,
2002 2001
Met Life Insurance Company
Annuity Contract #25066, variable rate,
no maturity (Note 5) $ 85,056,779 $ 22,122,161
Met Life Insurance Company
Annuity Contract #13028, variable rate,
no maturity (Note 5) - 63,474,488 *
Fidelity Magellan Fund 30,644,252 42,545,401
Lowe's Companies, Inc. Common Stock
6,533,045 and 5,831,560 shares,
respectively 298,560,157 156,985,595
* Nonparticipant-directed. Effective August 4, 2001, there are no
nonparticipant-directed funds.
During fiscal years 2001 and 2000, the Plan's investments (including gains and
losses on investments bought and sold, as well as held during the year)
appreciated (depreciated) in value respectively, as follows:
2001 2000
Mutual Funds $ (10,571,603) $ (1,817,471)
Common Stock 117,587,049 25,470,888
$ 107,015,446 $ 23,653,417
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4. NONPARTICIPANT-DIRECTED INVESTMENTS
Information about the net assets and the significant components of the
changes in net assets relating to the nonparticipant-directed investments
is as follows:
February 1, February 2,
2002 2001
Net Assets-
Annuity contract and receivables $ - $ 63,980,831
Changes in Net Assets:
Investment income $ 2,076,104 $ 4,421,010
Contributions 7,008,009 13,544,552
Benefits paid to participants (3,793,145) (7,407,922)
Transfers between funds * (69,271,799) -
$ (63,980,831) $ 10,557,640
*Transfers from the employer fund to the participant-directed funds.
5. INVESTMENT CONTRACTS WITH INSURANCE COMPANIES
The Plan has entered into a contract with Metropolitan Life Insurance Company
("MetLife") which maintains the contributions in a general account. The
account is credited with earnings on the underlying investments and is charged
for participant withdrawals. The contract is fully benefit responsive and
therefore is included in the financial statements at contract value as
reported to the Plan by MetLife. Contract value represents contributions made
under the contract, plus earnings, less participant withdrawals. There are no
reserves against contract value for credit risk of the contract issuer or
otherwise. The contract rates range from 6.05% to 8% for the year ended
February 1, 2002.
6. PLAN TERMINATION
Although it has not expressed any intent to do so, the Plan Sponsor has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions set forth in ERISA.
7. RELATED PARTY TRANSACTIONS
Certain Plan investments represent funds managed by State Street. State
Street is the trustee as defined by the Plan and, therefore, these
transactions qualify as party-in-interest transactions. Fees paid by the Plan
for the investment management services totaled $2,233 and $3,100 for the years
ended February 1, 2002 and February 2, 2001, respectively.
The Plan provides an investment option, which invests primarily in Lowe's
Companies, Inc. common stock. As Lowe's Companies, Inc. is the Plan's
sponsor, these transactions qualify as party-in-interest.
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8. TAX STATUS
The Internal Revenue Service has determined and informed the Company by a
letter dated June 13, 1995, that the Plan and related trust are designed in
accordance with applicable sections of the IRC. The Plan has been amended
since receiving the determination letter; however, the Plan Sponsor and the
plan administraror believe that the Plan is currently designed and operated
in compliance with the applicable requirements of the IRC. Therefore, no
provision for income taxes has been included in the Plan's financial
statements.
9. DIVERSIFICATION TRANSFERS
Diversification transfers from the Lowe's Companies Employee Stock Ownership
Plan ("ESOP") totaled $2,147,280 and $1,301,476 for the years ended February
1, 2002 and February 2, 2001, respectively. A member of the ESOP who has
attained age 50 and completed at least ten years of active participation in
the ESOP has the right to elect to have a portion of his or her capital
accumulation transferred to the Plan. An election to transfer must be made on
the prescribed form and filed with the ESOP committee within the 90-day
period immediately following the close of a plan year in the election period.
10. OVERDRAFT TRANSFERS
State Street Bank is authorized to transfer funds from the respective employee
funds in order to avoid overdrafts, which occur when money needs to be
transferred out according to participant investment elections. The transfers
are invested in the State Street Bank Short-term Fund. Any interest earned is
transferred to the respective employee funds.
11. PLAN MERGER
After the close of business on January 29, 2000, Lowe's Companies, Inc.
acquired Eagle Hardware & Garden, Inc. Effective January 29, 2000, Eagle
Hardware & Garden terminated the Eagle Hardware & Garden Retirement Savings
Plan (the "Eagle Plan"). Upon termination of the Eagle Plan, all of its
participants were immediately fully vested in the benefits provided pursuant
to the Eagle Plan, and the trustee of the Eagle Plan was directed to
distribute the assets of the Eagle Plan to the eligible participants.
Pursuant to the terms of the Plan, as amended, participants in the Eagle Plan
who continued in the employ of Lowe's Companies, Inc. were provided the
opportunity to transfer the distributions (including loans) from the Eagle
Plan to the Plan. Distributions of $20,821,172 were transferred from the
Eagle Plan to the Plan during the first five months of 2000. In addition,
the Plan was amended to provide service credit for eligibility and vesting for
Eagle Plan participants who subsequently became employees of Lowe's Companies,
Inc., as of the date of acquisition.
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12. SUBSEQUENT EVENTS
The Plan Sponsor announced on May 28, 2002 that the ESOP would be merged
into the Plan and certain amendments were adopted to enhance the Plan. The
changes are effective for fiscal 2002, and will be used to determine the
Plan Sponsor's retirement contribution during that year. The new
provisions will allow employees to contribute based on base pay, overtime,
commissions and bonuses as opposed to only base pay under the Plan's
current provisions. The provisions also increase the maximum participant
contribution from 10% to 50%. The formula for the baseline match has also
been changed to 100% on the first 1% of participant contributions and 25%
of the next 5% of contributions. Changes regarding employee contributions
and the matching formula will be effective as of June 22, 2002.
Participants in the ESOP will become fully vested in their accounts, and
all ESOP investments will be transferred to the Plan by September 30, 2002.
The Plan will also include a performance match feature similar in concept
to that of the ESOP based on the Plan Sponsor's performance. The
performance match for the Plan covering fiscal 2002 will be calculated
after the end of the fiscal year when earnings are officially released.
Subsequent to February 1, 2002, as of July 16, 2002, the value of Lowe's
Companies, Inc. common stock, which is an investment option within the
Plan, has decreased in value by approximately 18%.
13
LOWE'S 401(K) PLAN
(FORMERLY LOWE'S COMPANIES EMPLOYEE SAVINGS AND INVESTMENT PLAN)
FORM 5500, SCHEDULE H, PART IV, LINE 4i -
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
FEBRUARY 1, 2002
Identity of Issue, Description of Investment, Cost Current Value
Borrower,Lessor, Including Maturity Date,
or Similar Rate or Interest, Collateral,
Party Par or Maturity Value
* Lowe's Companies, Inc. Common Stock ** $ 298,560,157
* State Street Bank Short Term Investment-
and Trust Company Money Market Type Fund ** 3,760,538
MetLife EE #25066 Annuity Contract ** 85,056,779
American Century
World Mutual Mutual Fund ** 2,031,179
American Century
Cap Portfolio Mutual Fund ** 4,064,283
Fidelity Equity Income Fund Mutual Fund ** 13,844,230
Magellan Fund Mutual Fund ** 30,644,252
Franklin Balance
Sheet Mutual Fund ** 4,195,114
MFS Capital Mutual Fund ** 3,531,904
Safeco Growth Mutual Fund ** 3,376,929
Vanguard Conservative Mutual Fund ** 1,982,411
Life Strategy
Moderate Mutual Fund ** 2,868,758
Life Strategy
Growth Mutual Fund ** 3,715,632
TOTAL INVESTMENTS $ 457,632,166
* Permitted party-in-interest
** Cost information is not required for participant-directed investments and,
therefore, is not included.
14
LOWES 401(K) PLAN
(FORMERLY LOWE'S COMPANIES EMPLOYEE SAVINGS AND INVESTMENT PLAN)
FORM 5500, SCHEDULE H, PART IV, LINE 4j - SCHEDULE OF REPORTABLE TRANSACTIONS (UNAUDITED)
FEBRUARY 1, 2002
Series Transactions
Value of Asset
Description of Investment Purchase Price Selling Price Cost of Asset on Transaction Date Gain
State Street Bank & Trust
116 Purchases $ 59,495,817 $ 59,495,817 $ 59,495,817
State Street Bank & Trust
128 Sales $ 57,706,309 $ 57,706,309 $ 57,706,309
Metropolitan Life Insurance Company, #25066
118 Purchases $ 95,349,904 $ 95,349,904 $ 95,349,904
Metropolitan Life Insurance Company, #25066
141 Sales $ 32,312,823 $ 32,312,823 $ 32,312,823
Lowe's Companies, Inc., common stock
47 Purchases $ 51,909,675 $ 51,909,675 $ 51,909,675
Lowe's Companies, Inc., common stock
117 Sales $ 26,526,863 $ 21,466,598 $ 26,526,836 $ 5,060,265
Metropolitan Life Insurance Company, #13028
41 Sales $ 72,558,602 $ 72,558,602 $ 72,558,602
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Signatures
In accordance with the requirements of the Securities Exchange Act of 1934,
the Registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Lowe's Companies, Inc.
July 30, 2002 /s/ Kenneth W. Black, Jr.
Date Kenneth W. Black, Jr.
Senior Vice President and Chief
Accounting Officer
16
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Nos. 33-54497,
33-54499, 333-34631, and 333-36096 of Lowe's Companies, Inc. and subsidiaries
on Form S-8 of our report dated July 16, 2002, appearing in this Annual Report
on Form 11-K of Lowe's 401(k) Plan for the year ended February 1, 2002.
/s/ DELOITTE & TOUCHE LLP
Hickory, North Carolina
July 29, 2002