Summary
Lowe's Companies, Inc. (LOW) filed an 8-K on February 23, 2005, primarily to announce that its previously issued financial statements for fiscal year 2004 (quarterly reports and the annual report for fiscal year 2003) should no longer be relied upon. This is due to the need to restate prior period financial statements stemming from accounting errors related to leases. The restatement involves accelerating depreciation expense for lease assets to align their depreciable lives with initial lease terms and revising the calculation of rent expense for ground leases to include 'rent holiday' periods. Importantly, the company emphasizes that these adjustments are non-cash items and will not affect historical or future cash flows, sales, or comparable store sales. They also do not alter the total rent or depreciation expense over the lease term. The company, in consultation with its auditors and audit committee, believes there will be no further adjustments and no material non-compliance with financial reporting requirements due to misconduct.
Key Highlights
- 1Lowe's is restating prior financial statements due to accounting errors related to leases.
- 2Previously issued financial statements for fiscal 2004 (quarterly and FY2003 annual) are no longer reliable.
- 3The restatement involves accelerating depreciation on lease assets and adjusting rent expense for ground leases.
- 4These adjustments are non-cash and will not impact historical or future cash flows, sales, or comparable store sales.
- 5The total rent and depreciation expense over the lease term remains unchanged.
- 6The company consulted with its independent auditors (Deloitte & Touche LLP) and the Audit Committee.
- 7Lowe's believes there are no further adjustments expected and no material non-compliance due to misconduct.