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 2, 2001
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 Companies, Inc.
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 Companies, Inc.
Employee Savings and Investment Plan
Form 11-K
February 2, 2001
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 Plan Benefits
as of February 2, 2001 and January 28, 2000.......................5
Statements of Changes in Net Assets Available for Benefits
for the Years Ended February 2, 2001 and January 28, 2000.........6
Notes to Financial Statements for the Years Ended
February 2, 2001 and January 28, 2000..........................7-12
Supplemental Schedules as of February 2, 2001
Form 5500, Schedule H, Part IV, Line 4i, - Schedule
of Assets Held for Investment Purposes at the End of
the Plan Year..................................................13
Form 5500, Schedule H, Part IV, Line 4j - Schedule
of Reportable Transactions.....................................14
Other Information................................................15
Independent Auditors' Consent....................................16
Note: The supplemental schedules listed above have been included as
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. Certain other supplemental
schedules have been omitted because no events requiring such
supplemental schedules to be filed occurred during the year ended
February 2, 2001.
2
Lowe's Companies, Inc.
Employee Savings and Investment Plan
Exhibit Index
Form 11-K for the Years Ended February 2, 2001 and January 28, 2000
Exhibit No. Description of Exhibit Page No.
1. Consent of Deloitte & Touche LLP, Independent Auditors.....16
______________________________________________________________________________
LOWE'S COMPANIES, INC. EMPLOYEE SAVINGS AND INVESTMENT PLAN
Financial Statements for the Years Ended February 2, 2001 and
January 28, 2000, Supplemental Schedules for the Year Ended
February 2, 2001 and Independent Auditors' Report
______________________________________________________________________________
4
INDEPENDENT AUDITORS' REPORT
To the Administrative Committee and Participants of
the Lowe's Companies, Inc. Employee Savings and Investment Plan:
We have audited the accompanying statements of net assets available for
benefits of Lowe's Companies, Inc. Employee Savings and Investment Plan
(the "Plan") as of February 2, 2001 and January 28, 2000, 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 that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
February 2, 2001 and January 28, 2000, 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 performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules 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
supplemental 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 2001 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
Charlotte, North Carolina
July 20, 2001
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LOWE'S COMPANIES, INC. EMPLOYEE SAVINGS AND INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
FEBRUARY 2, 2001 AND JANUARY 28,2000
______________________________________________________________________________
FEBRUARY 2, JANUARY 28,
____2001____ ____2000____
Assets
Investments (Notes 1,2,3,4 and 5):
Investments at fair value $234,134,964 $181,004,368
Investments at contract value 85,596,649 72,070,831
Total Investments 319,731,613 253,075,199
Receivables:
Employer's contribution 506,343 246,727
Participants contribution 1,372,094 599,886
Accrued interest and dividends - 372,655
Total Receivables 1,878,437 1,219,268
Total Assets 321,610,050 254,294,467
Liabilities - Other payables - (149)
Net assets available for benefits $321,610,050 $254,294,318
See accompanying notes to financial statements.
6
LOWE'S COMPANIES, INC. EMPLOYEE SAVINGS AND INVESTMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED FEBRUARY 2, 2001 AND JANUARY 28, 2000
______________________________________________________________________________
FEBRUARY 2, JANUARY 28,
_ 2001 _ 2000 _
Additions:
Investment income:
Net appreciation (depreciation) in fair
value of investments (Notes 1 and 3) $ 23,653,417 $(37,654,074)
Interest 5,899,556 4,376,500
Dividends 4,394,265 5,232,406
Total 33,947,238 (28,045,168)
Contributions (Note 1):
Employer's 13,544,552 11,518,727
Participants' 41,310,742 31,668,535
Total 54,855,294 43,187,262
Transfer from Eagle Hardware & Garden
Retirement Savings Plan (Note 11) 20,821,172 -
Transfers from the Employee Stock
Ownership Plan (Note 9) 1,301,476 3,840,050
Total 22,122,648 3,840,050
Total additions 110,925,180 18,982,144
Deductions:
Benefits paid to participants (Notes 1 and 6) (43,606,348) (45,658,302)
Investment expenses (3,100) (51,039)
Total deductions (43,609,448) (45,709,341)
Net increase (decrease) 67,315,732 (26,727,197)
Net assets available for benefits:
Beginning of year 254,294,318 281,021,515
End of year $321,610,050 $254,294,318
See accompanying notes to financial statements.
7
LOWE'S COMPANIES, INC. EMPLOYEE SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED FEBRUARY 2, 2001 AND JANUARY 28, 2000
1. DESCRIPTION OF THE PLAN
The following description of the Lowe's Companies, Inc. Employee Savings and
Investment 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 that provides for payroll deductions through which
eligible employees of Lowe's Companies, Inc. and subsidiaries (the plan
sponsor) may defer a specified amount of current income on a pre-tax basis
and additionally provides for employer matching of a portion of the employee
contribution.
Eligibility: An employee becomes eligible for participation in the Plan as
of the first day of the month coinciding with or next following the
completion of one year of continuous employment. An employee who terminates
service before qualifying and is subsequently rehired, becomes eligible to
participate in the Plan on the first day of either February or August
coinciding with or following the completion of at least 1,000 hours worked.
Participation in the Plan does not begin until an employee becomes eligible
and elects such participation. Employees covered by a collective bargaining
agreement are not eligible to participate in the Plan unless specifically
granted by their employment agreement. To date, no collective bargaining
agreements have been effective for any employees of the plan sponsor.
Contributions: Plan participants may contribute up to 10% of their base pay
into 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 2, 2001 and January 28,
2000). The Plan also accepts direct rollovers of a distribution paid by
another qualified retirement plan.
Participant Accounts: Each participant's account is credited with the
participant's contribution, the Company's contribution, and with any
investment fund earnings.
Vesting: All participants are 100% vested in the Plan at all times.
Investment Options: 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. Participants may
transfer existing fund balances in any of these funds at any time via a
telephone voice response unit or on an Internet web site. An election to
redirect the investment of contributions is made effective for the next
payroll. An election to change the investment of existing balances is
effected over a two-day period following the date of the instructions. The
balance in the fund from which assets are being transferred is "cashed out"
on the first day, and the resulting cash is invested in the new fund on the
second day. All matching contributions by the plan sponsor are invested in
the employer fund, which consists of investment contracts, and are not
directed by participants.
8
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 interest in his or her 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 are recorded on the
accrual basis.
Payments of Benefits: Benefits are recorded when paid.
Administrative Expenses: All administrative expenses are paid by the
plan sponsor.
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3. INVESTMENTS
The following presents investments that represent 5 percent or more
of the Plan's net assets.
February 2, January 28,
2001 2000 _
Met Life Insurance Company
Annuity Contract #25066, variable rate,
no maturity (Note 5) $ 22,122,161 $ 19,174,188
Met Life Insurance Company
Annuity Contract #13028, variable rate,
no maturity (Note 5) 63,474,487* 52,896,643*
Fidelity Magellan Fund 42,545,401 37,480,781
Lowe's Companies, Inc. Common Stock
2,915,780 and 2,796,962 shares respectively 156,985,595 124,639,289
* Nonparticipant-directed
During Fiscal 2000 and 1999, 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:
2000_ ___ 1999 _
Mutual Funds $ (1,817,471) $ (1,115,890)
Common Stock 25,470,888 (36,538,184)
$ 23,653,417 (37,654,074)
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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 non-participant directed
investments is as follows:
February 2, January 28,
2000_ __ 1999 _
Net Assets:
Annuity Contract (Note 5) $ 63,980,830 $ 53,423,190
Changes in Net Assets:
Contributions $ 13,544,552 $ 11,518,727
Income and dividends 4,421,010 3,295,570
Benefits paid to participants (7,407,922) (7,435,877)
$ 10,557,640 $ 7,378,420
5. INVESTMENT CONTRACTS WITH INSURANCE COMPANIES
The Plan has entered into two contracts with Metropolitan Life Insurance
Company ("MetLife") which maintains the contributions in a general account.
The accounts are credited with earnings on the underlying investments and
charged for participant withdrawals and administrative expenses. The
contracts are fully benefit responsive and therefore are 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 and administrative expenses.
There are no reserves against contract value for credit risk of the contract
issuer or otherwise. The contract rates on the employer fund ranged from
7.20% to 8.00% during the year ended February 2, 2001. At February 2, 2001,
the rate was 8.00%. The crediting interest rate is based on a formula
agreed upon with the issuer.
6. PLAN TERMINATION
While it has not expressed any intention to do so, the Company has reserved
the right to terminate the Plan. In the event the Plan terminates, the net
assets of the Plan will be allocated, as prescribed by the Employee
Retirement Income Security Act of 1974 and regulations issued pursuant
thereto, generally to provide each participant with his or her accumulated
account balance at that date.
7. RELATED PARTY TRANSACTIONS
Certain Plan investments represent funds managed by State Street Bank.
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 $3,916 and $2,241 for
the years ended February 2, 2001 and January 28, 2000, respectively.
The Plan provides an investment option, which invests primarily in Lowe's
Companies, Inc. ("Lowe's") common stock. As Lowe's is the Plan 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 Internal Revenue Code (IRC). The
Plan has been amended since receiving the determination letter. However,
the plan sponsor believes that the Plan is designed and is currently being
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 $1,301,476 and $3,840,050 for the years ended February
2, 2001 and January 28, 2000, 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 Employee Savings and Investment Plan (ESIP).
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 employer fund 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 employer fund.
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
Effective August 3, 2001, the name of the Plan will be changed from
the "Lowe's Companies, Inc. Employee Savings and Investment Plan" to
the "Lowe's 401(k) Plan."
Effective August 3, 2001, an employee will become eligible for
participation in the Plan as of the first day of the period coinciding
with or next following the date on which the employee completes 90
days of continuous service.
Beginning on 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.
13
LOWE'S COMPANIES EMPLOYEE SAVINGS AND INVESTMENT PLAN
FORM 5500, SCHEDULE H, PART IV, LINE 4i -
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT THE END OF THE PLAN YEAR
FEBRUARY 2, 2001
Identity of Issue Description of Shares/Par Cost Current
Investment Value Value
*Lowes Companies Inc. Common Stock 2,915,780 $90,518,768 $156,985,595
*State Street Bank Short Term 606,106 606,106 606,106
Investment-Money
Market Type Fund
Metropolitan Life
Insurance Company
#25066 Annuity Contract 22,122,161 22,122,161 22,122,161
Metropolitan Life
Insurance Company
#13028 Annuity Contract 63,474,487 63,474,487 63,474,487
American Century
World Mutual Fund Mutual Fund 255,597 3,419,594 2,714,435
American Century
Cap Porfolios Inc. Mutual Fund 120,156 717,787 783,417
Fidelity Equity
Income Mutual Fund 279,068 14,326,725 15,061,314
Fidelity Magellan Mutual Fund 349,449 38,795,214 42,545,402
Franklin Balance
Sheet Investment Mutual Fund 18,093 607,105 675,602
MFS Series Trust Mutual Fund 264,989 5,565,584 4,997,696
Safeco Mutual Fund 109,947 2,493,352 2,659,621
Vanguard Life
Conservative Mutual Fund 74,471 1,153,564 1,114,092
Vanguard Life
Moderate Mutual Fund 132,074 2,362,708 2,319,218
Vanguard Life
Growth Mutual Fund 184,176 3,843,588 3,672,467
TOTAL INVESTMENTS $250,006,743 $319,731,613
* Denotes permitted party-in-interest
14
LOWES COMPANIES EMPLOYEE SAVINGS AND INVESTMENT PLAN
FORM 5500, SCHEDULE H, PART IV, LINE 4j - SCHEDULE OF REPORTABLE TRANSACTIONS (UNAUDITED)
FEBRUARY 2, 2001
Series Transactions
Value of Asset
Description of Investment Purchase Price Selling Price Cost of Asset on Transaction Date Gain
State Street Bank and Trust
106 Purchases $70,587,398 $70,587,398 $70,587,398
State Street Bank and Trust
111 Sales $69,984,931 $69,984,931 $69,984,931
Metropolitan Life Insurance Company
#25066
97 Purchases $12,831,573 $12,831,573 $12,831,573
Metropolitan Life Insurance Company
#25066
41 Purchases $17,582,037 $17,582,037 $17,582,037
Lowe's Companies, Inc., common stock
167 Purchases $62,662,077 $62,662,077 $62,662,077
Lowe's Companies, Inc., common stock
201 Sales $56,295,246 $49,473,743 $56,295,246 $6,821,503
Fidelity Magellan, mutual fund
102 Purchases $16,135,275 $16,135,275 $16,135,275
15
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.
August 2, 2001 /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 Statement 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 20, 2001, appearing in and
incorporated by reference in this Annual Report on Form 11-K of Lowe's
Companies, Inc. Employee Savings and Investment Plan for the year ended
February 2, 2001.
/s/ DELOITTE & TOUCHE LLP
Charlotte, North Carolina
August 1, 2001