Lowe's 2015 Annual Report Download - page 20

11
resolutions to, these proceedings could include adverse judgments or settlements, either of which could require substantial
payments. Additionally, defending against these lawsuits and proceedings may require a diversion of management’s attention
and resources. None of the legal proceedings in which we are currently involved, individually or collectively, is considered
material.
Our financial performance could suffer if we fail to properly improve and maintain our critical information systems or if those
systems are seriously disrupted.
An important part of our efforts to provide an omni-channel experience for our customers, we must invest in, maintain and
make ongoing improvements of our existing management information systems that support operations such as sales, inventory
replenishment, merchandise ordering, project design and execution, transportation, receipt processing and fulfillment. Our
systems are subject to damage or interruption as a result of catastrophic events, power outages, viruses, malicious attacks,
telecommunications failures, and we may incur significant expense, data loss as well as a well in customer confidence.
Additionally, we continually make investments in our systems which may introduce disruption. Our financial performance
could be adversely affected if our management information systems are seriously disrupted or we are unable to maintain,
improve, upgrade, and expand our systems.
Liquidity and access to capital rely on efficient, rational and open capital markets and are dependent on Lowe’s credit strength.
Our inability to access capital markets could negatively affect our business, financial performance and results of operations.
We have relied on the public debt markets to fund portions of our capital investments and the commercial paper market and
bank credit facilities to fund working capital needs. Our access to these markets depends on our strong credit ratings, the
overall condition of debt capital markets and our operating performance. Disruption in the financial markets or an erosion of
our credit strength or declines on our credit rating could impact negatively our ability to meet capital requirements or fund
working capital needs.
Our sales are dependent upon the health and stability of the general economy. Adverse changes in economic factors specific to
the home improvement industry may negatively impact the rate of growth of our total sales and comparable sales.
Many U.S. and global economic factors may adversely affect our financial performance. These include, but are not limited to,
periods of slow economic growth or recession, volatility and/or lack of liquidity from time to time in U.S. and world financial
markets and the consequent reduced availability and/or higher cost of borrowing to Lowe’s and its customers, slower rates of
growth in real disposable personal income that could affect the rate of growth in consumer spending, high rates of
unemployment, consumer debt levels, fluctuations in fuel and energy costs, inflation or deflation of commodity prices, natural
disasters, and acts of both domestic and international terrorism. Sales of many of our product categories and services are
driven by the activity level of home improvement projects. Although the housing market has been strengthened by favorable
interest rates and increasing home prices, the large number of households that continue to have little available equity, mortgage
delinquency and foreclosure rates that remain high, tight restrictions on the availability of mortgage financing, slow household
formation growth rates, and decreases in housing turnover through existing home sales, have limited, and may continue to
limit, consumers’ discretionary spending, particularly on larger home improvement projects that are important to the growth of
our business.
Item 1B - Unresolved Staff Comments
None.
Item 2 - Properties
At January 29, 2016, our properties consisted of 1,857 stores in the U.S., Canada, and Mexico with a total of approximately
202 million square feet of selling space. Of the total stores operating at January 29, 2016, approximately 86% are owned,
which includes stores on leased land, with the remainder being leased from third parties. We also operate regional distribution
centers and other facilities to support distribution and fulfillment, as well as data centers and various support offices. Our
executive offices are located in Mooresville, North Carolina. We own or lease substantially all of our property through the
wholly-owned subsidiary, Lowe’s Home Centers, LLC.
Item 3 - Legal Proceedings
We are, from time to time, party to various legal proceedings considered to be in the normal course of business, none of which are
considered material. We do not believe that any of these proceedings, individually or in the aggregate, would be expected to have a
material adverse effect on our results of operations, financial position or cash flows.