Lowe’s Companies, Inc. (NYSE:LOW) , the world’s second largest home improvement retailer, has recently reported net earnings of $613 million for the 13-week period ended February 2, 2007, an 11.5 percent decline versus the 14-week period ended February 3, 2006. Diluted earnings per share declined 7.0 percent to $0.40 from $0.43 in the fourth quarter of 2005. For fiscal 2006, a 52-week year, net earnings grew 12.3 percent to $3.1 billion versus fiscal 2005, a 53-week year. Diluted earnings per share increased 15.0 percent to $1.99 in fiscal 2006.

Fourth quarter sales declined 3.7 percent to $10.4 billion for the 13-week period ended February 2, 2007 versus the 14-week period ended February 3, 2006. Fiscal 2006 sales increased to $46.9 billion, an 8.5 percent increase for the 52-week period ended February 2, 2007 versus the 53-week period ended February 3, 2006. Adjusting for the comparison to last year’s 14-week fourth quarter and 53-week fiscal year as well as the corresponding calendar shift, total sales increased approximately five percent to last year in the fourth quarter and increased approximately ten percent for the fiscal year. Sales at the company’s comparable stores, which were not affected by the calendar shift, declined 5.3 percent during the quarter and were flat for the year.

During the quarter, Lowe’s opened 58 new stores including 3 relocations. As of February 2, 2007, Lowe’s operated 1,385 stores in 49 states representing 157.1 million square feet of retail selling space, a 12.1 percent increase over last year.

A conference call to discuss fourth quarter and fiscal 2006 operating results is scheduled for today (Friday, February 23) at 9:00 a.m. EST. Please dial 888-817-4020 (international callers dial 706-679-3245) to participate. A webcast of the call will take place simultaneously and can be accessed by visiting Lowe’s website at www.Lowes.com/investor and clicking on Lowe’s Fourth Quarter and Fiscal 2006 Earnings Conference Call Webcast. A replay of the call will be archived on Lowes.com until May 20, 2007.

Lowe’s Business Outlook
First Quarter 2007 (comparisons to first quarter 2006)
* The company expects to open 15 new stores reflecting square footage
growth of approximately 11 percent
* Total sales are expected to increase 5 to 6 percent
* The company expects to report a comparable store sales decline of 2 to
4 percent
* Operating margin (defined as gross margin less SG&A and depreciation)
is expected to decline approximately 150 basis points
* Store opening costs are expected to be approximately $14 million
* Diluted earnings per share of $0.49 to $0.51 are expected
* Lowe’s first quarter ends on May 4, 2007 with operating results to be
publicly released on Monday, May 21, 2007

Fiscal Year 2007 (comparisons to fiscal year 2006)
* The company expects to open 150 to 160 stores in 2007 reflecting total
square footage growth of approximately 11 percent
* Total sales are expected to increase approximately 10 percent
* The company expects comparable store sales to be approximately flat to
up 2 percent
* Operating margin (defined as gross margin less SG&A and depreciation)
is expected to decline 70 to 80 basis points
* Store opening costs are expected to be $140 to $145 million
* Diluted earnings per share of $2.02 to $2.09 are expected for the
fiscal year ending February 1, 2008

With fiscal year 2006 sales of $46.9 billion, Lowe’s Companies, Inc. is a FORTUNE(R) 50 company that serves approximately 13 million customers a week at more than 1,375 home improvement stores in 49 states. Based in Mooresville, N.C., the 60-year old company is the second-largest home improvement retailer in the world. For more information, visit Lowes.com.

Lowe’s Companies, Inc.
Consolidated Statements of Current and Retained Earnings (Unaudited)
In Millions, Except Per Share Data

Quarters Ended
February 2, 2007 February 3, 2006
(13 Weeks) (14 Weeks)
Current Earnings Amount Percent Amount Percent

Net sales $10,406 100.00 $10,808 100.00

Cost of sales 6,719 64.56 7,023 64.98

Gross margin 3,687 35.44 3,785 35.02

Expenses:

Selling, general and administrative 2,335 22.44 2,303 21.31

Store opening costs 49 0.47 57 0.53

Depreciation 308 2.97 261 2.41

Interest - net 43 0.42 36 0.33

Total expenses 2,735 26.30 2,657 24.58

Pre-tax earnings 952 9.14 1,128 10.44

Income tax provision 339 3.25 435 4.02

Net earnings $613 5.89 $693 6.42

Weighted average shares
outstanding - basic 1,519 1,563

Basic earnings per share $0.40 $0.44

Weighted average shares
outstanding - diluted 1,549 1,600

Diluted earnings per share $0.40 $0.43

Cash dividends per share $0.05 $0.03

Retained Earnings
Balance at beginning of period $14,323 $11,544
Net earnings 613 693
Cash dividends (76) (46)
Share repurchases - -
Balance at end of period $14,860 $12,191

Years Ended
February 2, 2007 February 3, 2006
(52 Weeks) (53 Weeks)
Current Earnings Amount Percent Amount Percent

Net sales $46,927 100.00 $43,243 100.00

Cost of sales 30,729 65.48 28,453 65.80

Gross margin 16,198 34.52 14,790 34.20

Expenses:

Selling, general and administrative 9,738 20.75 9,014 20.84

Store opening costs 146 0.31 142 0.33

Depreciation 1,162 2.48 980 2.27

Interest - net 154 0.33 158 0.37

Total expenses 11,200 23.87 10,294 23.81

Pre-tax earnings 4,998 10.65 4,496 10.39

Income tax provision 1,893 4.03 1,731 4.00

Net earnings $3,105 6.62 $2,765 6.39

Weighted average shares
outstanding - basic 1,535 1,555

Basic earnings per share $2.02 $1.78

Weighted average shares
outstanding - diluted 1,566 1,607

Diluted earnings per share $1.99 $1.73

Cash dividends per share $0.18 $0.11

Retained Earnings
Balance at beginning of period $12,191 $9,597
Net earnings 3,105 2,765
Cash dividends (276) (171)
Share repurchases (160) -
Balance at end of period $14,860 $12,191

Lowe’s Companies, Inc.
Consolidated Balance Sheets (Unaudited)
In Millions, Except Par Value Data

February 2, February 3,
2007 2006
Assets

Current assets:
Cash and cash equivalents $364 $423
Short-term investments 432 453
Merchandise inventory - net 7,144 6,635
Deferred income taxes - net 161 155
Other current assets 213 122

Total current assets 8,314 7,788

Property, less accumulated
depreciation 18,971 16,354
Long-term investments 165 294
Other assets 317 203

Total assets $27,767 $24,639

Liabilities and shareholders’ equity

Current liabilities:
Short-term borrowings $23 $-
Current maturities of long-term
debt 88 32
Accounts payable 3,524 2,832
Accrued salaries and wages 372 424
Self-insurance liabilities 650 571
Deferred revenue 731 709
Other current liabilities 1,151 1,264

Total current liabilities 6,539 5,832

Long-term debt, excluding current
maturities 4,325 3,499
Deferred income taxes - net 735 735
Other long-term liabilities 443 277

Total liabilities 12,042 10,343

Shareholders’ equity:
Preferred stock - $5 par value,
none issued - -
Common stock - $.50 par value;
Shares issued and outstanding
February 2, 2007 1,525
February 3, 2006 1,568 762 784
Capital in excess of par value 102 1,320
Retained earnings 14,860 12,191
Accumulated other comprehensive
income 1 1

Total shareholders’ equity 15,725 14,296

Total liabilities and
shareholders’ equity $27,767 $24,639

Lowe’s Companies, Inc.
Consolidated Statements of Cash Flows (Unaudited)
In Millions

Years Ended

February 2, 2007 February 3, 2006
(52 Weeks) (53 Weeks)
Cash flows from operating activities:
Net earnings $3,105 $2,765
Adjustments to reconcile net earnings
to net cash provided by
operating activities:
Depreciation and amortization 1,237 1,051
Deferred income taxes (6) (37)
Loss on disposition/writedown of
fixed and other assets 23 31
Share-based payment expense 62 76
Changes in operating assets and
liabilities:
Merchandise inventory - net (509) (785)
Other operating assets (135) (38)
Accounts payable 692 137
Other operating liabilities 33 642
Net cash provided by operating activities 4,502 3,842

Cash flows from investing activities:
Purchases of short-term investments (284) (1,829)
Proceeds from sale/maturity of short-
term investments 572 1,802
Purchases of long-term investments (558) (354)
Proceeds from sale/maturity of long-
term investments 415 55
Increase in other long-term assets (16) (30)
Fixed assets acquired (3,916) (3,379)
Proceeds from the sale of fixed and
other long-term assets 72 61
Net cash used in investing activities (3,715) (3,674)

Cash flows from financing activities:
Net increase in short-term borrowings 23 -
Proceeds from issuance of long-term
debt 989 1,013
Repayment of long-term debt (33) (633)
Proceeds from issuance of common
stock under employee stock purchase plan 76 65
Proceeds from issuance of common
stock from stock options exercised 100 225
Cash dividend payments (276) (171)
Repurchase of common stock (1,737) (774)
Excess tax benefits of share-based
payments 12 -
Net cash used in financing activities (846) (275)

Net decrease in cash and cash equivalents (59) (107)
Cash and cash equivalents, beginning of period 423 530
Cash and cash equivalents, end of period $364 $423