Lowe's 2005 Annual Report Download - page 28

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฀ L O W E ’ S ฀ ฀2 0 0 5 ฀ ฀A N N U A L ฀ ฀R E P O RT
We฀speak฀throughout฀this฀Annual฀Report฀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฀health฀and฀stability฀of฀the฀general฀economy.฀
We฀monitor฀key฀economic฀indicators฀including฀personal฀income,฀employment฀
growth,฀housing฀turnover,฀and฀homeownership฀levels.฀In฀addition,฀changes฀in฀
the฀level฀of฀repairs,฀remodeling฀and฀additions฀to฀existing฀homes,฀changes฀in฀
commercial฀building฀activity,฀and฀the฀availability฀and฀cost฀of฀financing฀
can฀impact฀our฀business.
•฀฀Major฀weather-related฀events฀and฀unseasonable฀weather,฀particularly฀wet฀
and฀cold฀weather฀during฀the฀spring฀and฀early฀summer฀months,฀may฀impact฀
sales฀of฀seasonal฀merchandise฀and฀products฀designed฀for฀outdoor฀use฀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.
•฀฀Our฀business฀is฀highly฀competitive,฀and฀as฀we฀build฀an฀increasing฀percentage฀
of฀our฀new฀stores฀in฀larger฀markets฀and฀utilize฀new฀sales฀channels฀such฀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฀such฀products,฀political฀or฀
financial฀instability฀in฀some฀of฀the฀countries฀from฀which฀we฀import฀them,฀or฀a฀
failure฀to฀comply฀with฀laws฀and฀regulation฀of฀those฀countries฀from฀which฀we฀
import฀them,฀could฀interrupt฀our฀supply฀of฀imported฀inventory.
•฀฀Our฀goal฀of฀increasing฀our฀market฀share฀and฀our฀commitment฀to฀keeping฀our฀
prices฀low฀require฀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.
For฀more฀information฀about฀these฀and฀other฀risks฀and฀uncertainties฀that฀we฀are฀
exposed฀to,฀you฀should฀read฀the฀“Risk฀Factors”฀included฀in฀our฀Annual฀Report฀on฀
Form฀10-K฀to฀the฀United฀States฀Securities฀and฀Exchange฀Commission.฀All฀forward-
looking฀statements฀in฀this฀report฀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฀us฀or฀any฀
person฀acting฀on฀our฀behalf฀are฀qualified฀by฀the฀cautionary฀statements฀in฀this฀sec-
tion฀and฀in฀the฀“Risk฀Factors”฀included฀in฀our฀Annual฀Report฀on฀Form฀10-K.฀We฀do฀
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.
Disclosure฀Regarding฀Forward-Looking฀Statements฀
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฀limi-
tations,฀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฀
February฀3,฀2006.฀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฀February฀3,฀2006,฀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฀27.
Management’s฀Report฀on฀Internal฀Control฀Over฀Financial฀Reporting