Lowe's 2004 Annual Report Download - page 27

Lowe’s 2004 Annual Report Page 25
Management’s Report on Internal Control Over Financial Reporting
Management of Lowe’s Companies, Inc. and its subsidiaries is responsible for establishing and maintaining adequate internal control over financial
reporting (Internal Control) as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Our Internal
Control was designed to provide reasonable assurance to our management and the board of directors regarding the reliability of financial reporting
and the preparation and fair presentation of published financial statements.
All internal control systems, no matter how well designed, have inherent limitations, including the possibility of human error and the
circumvention or overriding of controls. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect
to the reliability of financial reporting and financial statement preparation and presentation. Further, because of changes in conditions, the
effectiveness may vary over time.
Our management evaluated the effectiveness of our Internal Control as of January 28, 2005. In evaluating our Internal Control, we used the
criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.
Based on our management’s assessment, we have concluded that, as of January 28, 2005, our Internal Control is effective.
Deloitte & Touche LLP, the independent registered public accounting firm that audited the financial statements contained in this report, has
issued an attestation report on our management’s assessment of our Internal Control. This report appears on page 26.
Disclosure Regarding Forward-Looking Statements
Our Annual Report talks about our future, particularly in the “Letter to Shareholders” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations.” While we believe our estimates and expectations are reasonable, they are not guarantees of future
performance. Our actual results could differ substantially from our expectations because, for example:
* Our sales are dependent upon the general economic health of the country, variations in the number of new housing starts, the level of repairs,
remodeling and additions to existing homes, commercial building activity, and the availability and cost of financing. An economic downturn can
impact sales because much of our inventory is purchased by our customers for their discretionary projects, which can be delayed or avoided
altogether. In addition, weather may impact sales of product groups like lawn and garden, lumber, and building materials on a short-term basis.
* Our expansion strategy may be impacted by environmental regulations, local zoning issues, availability and development of land, and more
stringent land use regulations. Furthermore, our ability to secure a highly-qualified workforce is an important element to the success of our
expansion strategy.
* Many of our products, like lumber and plywood, are commodities whose prices may fluctuate erratically within an economic cycle.
* Our business is highly competitive, and as we expand to larger markets and utilize new sales channels such as the Internet, we may face new and
additional forms of competition.
* The ability to continue our everyday low pricing strategy and provide the products that customers want depends on our vendors providing a
reliable supply of products at competitive prices and our ability to effectively manage our inventory. As an increasing number of the products we
sell are imported, any restrictions or limitations on importation of specific products, or a failure to comply with laws and regulations of those
countries from which we import them, could interrupt our supply of imported inventory.
* Our commitment to increase market share and keep prices low requires us to make substantial investments in new technology and processes whose
benefits could take longer than expected to be realized and which can be difficult to implement and integrate.
All forward-looking statements speak only as of the date of this report or, in the case of any document incorporated by reference, the date of that
document. All subsequent written and oral forward-looking statements attributable to the Company or any person acting on the Company’s behalf
are qualified by the cautionary statements in this section. Lowe’s does not undertake any obligation to update or publicly release any revisions to
forward-looking statements to reflect events, circumstances or changes in expectations after the date of this report.