Lowe's 2014 Annual Report Download - page 21

Operating internationally presents unique challenges that have required us to adapt our store operations, merchandising,
marketing and distribution functions to serve customers in Canada and Mexico and to work effectively with our joint venture
partner in Australia.
A significant portion of our anticipated store growth over the next five years will be in Canada and Mexico. We are also in a
joint venture with Australia’s largest retailer, Woolworths Limited, to develop a network of home improvement stores for
consumers in Australia. Expanding internationally presents unique challenges that may increase the anticipated costs and risks,
and slow the anticipated rate, of such expansion.
We must comply with multiple laws and regulations that differ substantially in each country where we operate.
If we fail to comply with these laws, rules and regulations, or the manner in which they are interpreted or applied, we may be
subject to government enforcement action, litigation, damage to our reputation, civil and criminal liability, damages, fines and
penalties, and increased cost of regulatory compliance, any of which could adversely affect our results of operations and
financial performance. These laws, rules and regulations include import and export requirements, U.S. laws such as the
Foreign Corrupt Practices Act, and local laws prohibiting corrupt payments to governmental officials. Although we have
implemented policies and procedures to help ensure compliance with these laws, there can be no assurance that our employees
and third parties with whom we do business will not take actions in violation of our policies or laws. We may also be subject to
investigations or audits by governmental authorities and regulatory agencies, which can occur in the ordinary course of
business or which can result from increased scrutiny from a particular agency towards an industry, country or practice.
Changes in existing or new laws and regulations or regulatory enforcement priorities could adversely affect our business.
Laws and regulations at the local, regional, state, federal and international levels change frequently, and the changes can impose
significant costs and other burdens of compliance on our business and our vendors. Any changes in regulations, the imposition
of additional regulations, or the enactment of any new legislation that affect employment/labor, trade, product safety,
transportation/logistics, energy costs, health care, cyber-security, tax or environmental issues, could have an adverse impact,
directly or indirectly, on our financial condition and results of operations. Changes in enforcement priorities by governmental
agencies charged with enforcing existing laws and regulations can increase our cost of doing business. In addition, our
contracts with U.S., as well as state and local government entities, are subject to various procurement regulations and other
requirements, including audits and investigations, relating to their formation, administration, and performance, and we may be
adversely affected by changes in the regulations or negative findings from audits or investigations.
Future litigation or governmental proceedings could result in material adverse consequences, including judgments or
settlements.
We are, and in the future will become, involved in lawsuits, regulatory inquiries, and governmental and other legal proceedings
arising out of the ordinary course of our business. Some of these proceedings may raise difficult and complicated factual and
legal issues and can be subject to uncertainties and complexities. The timing of the final resolutions to lawsuits, regulatory
inquiries, and governmental and other legal proceedings is typically uncertain. Additionally, the possible outcomes of, or
resolutions to, these proceedings could include adverse judgments or settlements, either of which could require substantial
payments. None of the legal proceedings in which we are currently involved, individually or collectively, is considered
material.
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