Lowe's 2015 Annual Report Download - page 39

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30
under the extended protection plan contracts, it is possible that actual results could differ from our estimates. In addition, if
future evidence indicates that the costs of performing services under these contracts are incurred on other than a straight-line
basis, the timing of revenue recognition under these contracts could change. A 10% change in the amount of revenue
recognized in 2015 under these contracts would have affected net earnings by approximately $22 million.
We have not made any material changes in the methodology used to reverse net sales and cost of sales related to amounts
received for which customers have not yet taken possession of merchandise or for which installation has not yet been
completed. We believe we have sufficient current and historical knowledge to record reasonable estimates related to the impact
to cost of sales for these transactions. However, if actual results are not consistent with our estimates or assumptions, we may
incur additional income or expense. A 10% change in the estimate of the gross margin rates applied to these transactions would
have affected net earnings by approximately $10 million in 2015.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
We speak throughout this Annual Report on Form 10-K in forward-looking statements about our future, but particularly in
“Management’s Discussion and Analysis of Financial Condition and Results of Operations”. The words “believe,” “expect,”
“will,” “should,” “suggest”, and other similar expressions are intended to identify those forward-looking statements. While we
believe our expectations are reasonable, they are not guarantees of future performance. Our actual results could differ
substantially from our expectations.
For a detailed description of the risks and uncertainties that we are exposed to, you should read the “Risk Factors” included
elsewhere in this Annual Report on Form 10-K to the United States Securities and Exchange Commission. 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 us or any person acting on our behalf are
qualified by the cautionary statements in this section and in the “Risk Factors” included elsewhere in this 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.
Item 7A - Quantitative and Qualitative Disclosures about Market Risk
In addition to the risks inherent in our operations, we are exposed to certain market risks, including changes in interest rates,
commodity prices and foreign currency exchange rates.
Interest Rate Risk
Fluctuations in interest rates do not have a material impact on our financial condition and results of operations because our
long-term debt is carried at amortized cost and consists primarily of fixed-rate instruments. Therefore, providing quantitative
information about interest rate risk is not meaningful for our financial instruments.
Commodity Price Risk
We purchase certain commodity products that are subject to price volatility caused by factors beyond our control. We believe
that the price volatility of these products is partially mitigated by our ability to adjust selling prices. The selling prices of these
commodity products are influenced, in part, by the market price we pay, which is determined by industry supply and demand.
Foreign Currency Exchange Rate Risk
Although we have international operating entities, our exposure to foreign currency exchange rate fluctuations is not material to
our financial condition and results of operations.