UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 11-K
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ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996] |
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For the fiscal year ended January 30, 2004 |
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or |
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| o | TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] |
| For the transition period from ________ to _________ | |
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Commission file number |
1-7898
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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
B. Name of issuer of the securities held pursuant to the Plan and the address of its principal executive
office:
Lowe's Companies, Inc.
1000 Lowe's Boulevard
Mooresville, NC 28117
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Lowe's 401(k) Plan
January 30, 2004 and January 31, 2003
Table of Contents
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Page No. |
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| Exhibit Index | 3 |
| Report of Independent Registered Public Accounting Firm | 4 |
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Statements of Net Assets Available For Benefits as of January 30, 2004 and January 31, 2003 |
5 |
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Statements of Changes in Net Assets Available for Benefits for the Years Ended January 30, 2004 and January 31, 2003 |
6 |
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Notes to Financial Statements for the Years Ended January 30, 2004 and January 31, 2003 |
7-10 |
| Supplemental Schedule as of January 30, 2004 | |
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11 |
| Signatures | 12 |
| NOTE: All other supplemental schedules required by 29 CFR 2520.103-10 of Rules and Regulations for Reporting and Disclosure under the Employment Retirement Security Act of 1974 are omitted because they are not applicable. |
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Lowe's 401(k) Plan
Exhibit Index
Form 11-K for the Year Ended January 30, 2004
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Exhibit No. |
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Description of Exhibit |
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23 |
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Consent of Deloitte & Touche, LLP |
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Plan Administrator and Participants in
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 January 30, 2004 and January 31, 2003, 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 standards of the Public Company Accounting Oversight Board
(United States). 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 that 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 January 30, 2004 and January 31, 2003, 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 schedule listed in the Table of Contents is presented for the purpose of additional
analysis and is not a required part of the basic financial statements, but is 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. This schedule is the responsibility of the Plan's management. Such schedule has
been subjected to the auditing procedures applied in our audit of the basic 2003 financial statements and, in our
opinion, is 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, 2004
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS LOWE'S 401(K) PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS LOWE'S 401(K) PLAN NOTES TO FINANCIAL STATEMENTS 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. 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 (the "Board") 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"). Plan Merger: On May 10, 2002, the Board voted to merge the Lowe's Companies Employee Stock Ownership Plan
(the "ESOP") into the Plan. Effective as of September 13, 2002, the Plan was amended and all assets of the ESOP,
totaling $1,996,025,444 were transferred to the Plan. Participants in the former ESOP were fully vested as of the
merger date and all ESOP investments were transferred into a segregated account within the Plan. Subsequent to
the transfer, participants could diversify their former ESOP investment into any of the Plan's twelve investment
options. The Plan Sponsor made no contributions to the ESOP in 2002 but instead made contributions to the Plan
based on a performance matching schedule, approved by the Board, as described below. Contributions: Effective June 22, 2002, each year, participants may contribute up to 50% of their pretax annual
compensation, as defined by the Plan, subject to the Internal Revenue Code limitations. Prior to June 22, 2002,
participants were allowed to contribute up to 10% of their pretax annual compensation. The minimum contribution
for participants is 1% of their pretax compensation. Effective June 22, 2002, the baseline matching contribution
(the "Baseline Match") under the Plan is as follows: the first 1% contributed is matched by the Plan Sponsor at the
rate of 100% and participant contributions in excess of 1% and up to 6% are matched at a rate of 25% after the first
anniversary of the participants date of hire. Prior to June 22, 2002, the first $5 per week contributed was matched by
the Plan Sponsor at the rate of 100% and participant contributions in excess of $5 up to 6% of the participant's eligible
salary were matched at a rate established annually by the Plan Sponsor's Board of Directors (25% for the Plan year
ended January 31, 2003). Participants may also contribute amounts representing distributions from other qualified
defined benefit or defined contribution plans. Performance Matching: Effective for the Plan year beginning February 2, 2002, the Board approved a performance
matching contribution (the "Performance Match") in addition to the above-mentioned Baseline Match for Plan
participants with three or more years of service and who are actively employed on the last day of the fiscal year for
which the Performance Match is being determined. The match amount is determined based on growth in the Plan
Sponsor's net earnings before taxes from the prior fiscal year. Currently, eligible participants could receive as much
as 350% of their Baseline Match based on earnings growth. The Performance Match is contributed on the second
Monday of April each year. During 2004 and 2003, the Board approved performance matching contributions for the
2003 and 2002 plan years to all eligible participants totaling approximately $63 million and $66 million, respectively
Participant Accounts: Individual accounts are maintained for each Plan participant. Each participant's account is
credited with the participant's contribution, the employer contribution, and allocations of Plan earnings, and charged
with benefit payments and 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.
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Vesting: All participants are 100% vested in the Plan at all times.
Investments: The 14 investment options to which participants may
direct their contributions include one fixed
income fund, three lifestyle funds, two small-cap funds, two mid-cap funds, four
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 are invested in the
investment funds available under the Plan
by the trustee as directed by participants.
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 the 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.
The Plan allows for a one-time in-service withdrawal to participants in the
former ESOP who have attained 20 or more
years of service with the Plan Sponsor. Eligible participants may withdraw 50%
of their former ESOP Account balance
by requesting a distribution through the Lowe's 401(k) Action Line. The
distribution may be transferred to either an IRA
or paid directly to the participant.
Plan Year: The plan year coincides with the fiscal year of Lowe's
Companies, Inc., which generally ends 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. Risks and Uncertainties: 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 net assets available for benefits and changes therein. 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 change 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 4). Investments in common stocks are stated at fair
value based upon closing sales prices reported on recognized securities exchanges on the prior business day. Mutual funds
are valued at quoted market prices, which represent the net asset values of shares held by the Plan. Money market funds are
valued at cost plus accrued interest, which approximates fair value. Purchases and sales of securities are recorded on a
trade-date basis. Interest and dividend income is recorded on the accrual basis. -9- Management fees and operating expenses charged to the Plan for investments in the mutual funds are deducted from income
earned on a daily basis and are not separately reflected. Consequently, management fees and operating expenses are reflected
as a reduction of net appreciation in fair market value of investments for such investments. 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. 3. INVESTMENTS The following table presents investments that represent 5% or more of the Plan's net assets available for benefits as of
January 30, 2004 and January 31, 2003:
During fiscal years 2003 and 2002, the Plan's investments
(including gains and losses on investments bought and sold,
as well as held during the year) appreciated (depreciated) in
value by $936,337,486 and ($555,582,966), respectively, as follows:
Fiscal Year
2003
Fiscal Year 2002 $ 26,053,638 $ (16,715,704) $ 936,337,486 $ (555,582,966) 4. INVESTMENT CONTRACT WITH INSURANCE COMPANY 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's
effective annual interest rate was 2.60% and 4.75% for the years ended January 30, 2004 and January 31, 2003, respectively. 5. 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.
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6. RELATED PARTY TRANSACTIONS
One of the
Plan's investments represents a money market fund 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 investment
management services were included as a reduction of the return earned on
each fund. Fees paid by the Plan for overdraft
expenses totaled $1,355 and $887 for the years ended
January 30, 2004 and January 31, 2003,
respectively.
At January
30, 2004 and January 31, 2003, the Plan held 43,798,543 and 48,053,267 shares,
respectively of common stock of Lowe's
Companies,
Inc., the sponsoring employer, with a cost basis of $537,335,693 and
$546,414,680 respectively. During the years
ended January 30, 2004 and January 31, 2003, the Plan recorded
dividend income of $5,000,268 and $2,441,980, respectively.
7. TAX STATUS
The Internal Revenue Service has
determined and informed the Plan Sponsor by a letter dated July 1, 2002, that
the Plan and
related trust were designed in accordance
with applicable regulations of the Internal Revenue Code. The Plan has
been
amended since applying for the
determination letter; however, the Plan Sponsor and the plan administrator
believe that the Plan
is currently designed and operated
in compliance with the applicable requirements of the Internal Revenue Code.
Therefore, no
provision for income taxes has been
included in the Plan's financial statements.
8. DIVERSIFICATION TRANSFERS
Diversification transfers from the former ESOP totaled $10,130,172 for the year
ended January 31, 2003. Prior to the merger of
the ESOP into the Plan, a member of the ESOP who had attained age
50 and completed at least ten years of active participation
in the ESOP had the right to elect to have
a portion of his or her capital accumulation transferred (i.e, "diversification
transfer")
to the Plan. An election to transfer must have been 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.
9. OVERDRAFT TRANSFERS
State Street is authorized to transfer
funds from the respective employee funds in order to avoid overdrafts, which
occur when
money needs to be transferred out of the
Plan to comply with participant investment elections. The transfers are
invested in
the State Street Bank Short-term Fund.
Any interest earned while investing in the State Street Bank Short-term Fund is
transferred to the respective employee
funds.
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Identity of Issue, Borrower,
Lessor, or Similar Party
Description of Investment, Including Maturity Date, Rate
of Interest, Collateral, Par or Maturity Value
Cost
Current Value * Permitted party-in-interest ** Cost information is not required for
participant-directed investments and therefore, is not included. -12- Lowe's 401(k) Plan July 28, 2004 /s/ Kenneth
W. Black, Jr. Date Kenneth W. Black,
Jr. Senior Vice
President and Chief
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LOWE'S 401(K) PLAN
JANUARY 30, 2004 AND JANUARY 31, 2003
JANUARY 30,
JANUARY 31,
2004
2003
Assets
Investments (Notes 1, 2, 3, 4 and 6):
Investments, at fair value
$2,494,680,352
$1,730,870,152
Investments, at contract value
95,517,211
88,958,215
Total
investments
2,590,197,563
1,819,828,367
Receivables:
Employer's contribution
63,687,442
67,083,158
Participants' contributions
3,418,862
2,810,533
Accrued interest and dividends
260,186
365,258
Total
receivables
67,366,490
70,258,949
Cash
-
26,371
Total
assets
2,657,564,053
1,890,113,687
LIABILITIES - Due to broker for securities purchased
1,319,907
1,203,242
NET ASSETS AVAILABLE FOR BENEFITS
$2,656,244,146
$1,888,910,445
See notes to financial statements
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YEARS ENDED JANUARY 30, 2004 AND JANUARY 31, 2003
JANUARY 30,
JANUARY 31,
2004
2003
ADDITIONS:
Investment income:
Net
appreciation in fair value of
investments (Notes 2 and 3)
$936,337,486
$
-
Interest
2,864,446
4,313,578
Dividends
6,690,481
3,455,435
Total investment income
945,892,413
7,769,013
Contributions (Note 1):
Employer's
91,297,091
86,915,551
Participants'
101,386,102
74,716,655
Total
contributions
192,683,193
161,632,206
Transfers from Lowe's Companies Employee Stock Ownership
Plan
(Notes 1 and 8)
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2,006,155,616
Total
additions
1,138,575,606
2,175,556,835
DEDUCTIONS:
Investment loss -
Net
depreciation in fair value of
investments (Notes 2 and 3)
-
(555,582,966)
Benefits paid to participants (Note 1)
(371,240,550)
(190,508,569)
Administrative expenses (Note 6)
(1,355)
(887)
Total
deductions
(371,241,905)
(746,092,422)
Net increase
767,333,701
1,429,464,413
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year
1,888,910,445
459,446,032
End of
year
$2,656,244,146
$1,888,910,445
See notes to financial statements
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AS OF AND FOR THE YEARS ENDED JANUARY 30, 2004 AND JANUARY 31, 2003
January 30,
January 31,
2004
2003
Lowe's Companies, Inc. common stock
43,798,543 and 48,053,267 shares,
respectively
$ 2,345,411,977
$ 1,642,460,666
Mutual funds
Common stock
910,283,848
(538,867,262)
LOWE'S 401(K) PLAN
FORM 5500, SCHEDULE H, LINE 4i -
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
JANUARY 30, 2004
* Lowe's Companies, Inc.
Common stock
**
$ 2,345,411,977
* State Street Bank
Short Term Investment - Money Market Type Fund
**
26,469,374
Metropolitan Life Insurance
Company, #25066
Annuity Contract
**
95,517,211
American Century - Twentieth
Century International Growth Fund
Mutual Fund
**
4,847,631
American Century Capital
Portfolios, Inc. Value Fund
Mutual Fund
**
9,601,334
American Century Ultra Fund Int.
Mutual Fund
**
562,687
Fidelity Equity Income Fund
Mutual Fund
**
21,158,033
Fidelity Magellan Fund
Mutual Fund
**
34,501,423
Franklin Value Investors Trust
Balance Sheet Investment Fund
Mutual Fund
**
13,433,460
Safeco Growth Fund
Mutual Fund
**
8,224,084
TRowe Price Mid Cap Growth
Mutual Fund
**
3,544,678
Vanguard 500 Index FD Admiral
Mutual Fund
**
2,179,389
Vanguard Life Strategy Fund
Conservative Growth Fund
Mutual Fund
**
8,042,358
Vanguard Life Strategy Fund
Moderate Growth Portfolio
Mutual Fund
**
8,240,249
Vanguard Life Strategy
Growth Fund
Mutual Fund
**
8,463,675
TOTAL INVESTMENTS
$2,590,197,563
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit
plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
Accounting Officer