2014.12.31 11K 401(k)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 11-K

ý
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the year ended December 31, 2014
 
 
or
 
 
o
TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____

Commission file number
 
1-7898


A. Full title of the Plan and the address of the Plan, if different from that of the issuer named below:
Lowe's 401(k) Plan


B. Name of issuer of the securities held pursuant to the Plan and the address of its principal executive office:
Lowe's Companies, Inc.
1000 Lowe's Boulevard
Mooresville, NC 28117




LOWE’S 401(k) PLAN
- TABLE OF CONTENTS -

 
Page No.
 
 
 
 
 
 
 
 
 
 
Supplemental Schedules as of and for the year ended December 31, 2014
 
 
 
 
 
 
 
 
 
 
NOTE:
All other supplemental schedules required by Section 2520.103-10 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted because they are not applicable.


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Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Plan Administrator of and Participants in
Lowe’s 401(k) Plan

We have audited the accompanying statements of net assets available for benefits of Lowe’s 401(k) Plan (the “Plan”) as of December 31, 2014 and 2013, and the related statement of changes in net assets available for benefits for the year ended December 31, 2014. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Plan is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Plan's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2014 and 2013, and the changes in net assets available for benefits for the year ended December 31, 2014 in conformity with accounting principles generally accepted in the United States of America.

The supplemental schedules listed in the Table of Contents have been subjected to audit procedures performed in conjunction with the audit of the Plan's financial statements. The supplemental schedules are the responsibility of the Plan's management. Our audit procedures included determining whether the supplemental schedules reconcile to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental schedules. In forming our opinion on the supplemental schedules, we evaluated whether the supplemental schedules, including their form and content, are presented in compliance with the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, such schedules are fairly stated, in all material respects, in relation to the financial statements as a whole.

/s/ DELOITTE & TOUCHE LLP

Charlotte, North Carolina
June 26, 2015


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Lowe's 401(k) Plan
Statements of Net Assets Available for Benefits
 
 
 
 
 
December 31, 2014
 
December 31, 2013
Assets
 
 
 
Cash
$
1,026,920

 
$
2,330,009

Participant-directed investments at fair value
5,377,636,442

 
4,494,250,180

Receivables:
 
 
 
Due from broker for securities sold
2,532,289

 
2,508,358

Total receivables
2,532,289

 
2,508,358

 
 
 
 
Total assets
5,381,195,651

 
4,499,088,547

 
 
 
 
Liabilities
 
 
 
Due to broker for securities purchased
2,992,066

 
4,640,140

 
 
 
 
Net assets available for benefits at fair value
5,378,203,585

 
4,494,448,407

 
 
 
 
Adjustment from fair value to contract value for fully benefit-responsive stable value fund
(5,639,178
)
 
(5,601,549
)
 
 
 
 
Net assets available for benefits
$
5,372,564,407

 
$
4,488,846,858

 
See accompanying notes to financial statements.


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Lowe's 401(k) Plan
Statement of Changes in Net Assets Available for Benefits
 
Year Ended
 
December 31, 2014
Additions
 
Investment income:
 
Net appreciation in fair value of investments
$
1,002,127,451

Dividends
45,933,581

Interest
4,647,124

Total investment income
1,052,708,156

 
 
Contributions:
 
Participant contributions
235,034,508

Employer contributions
144,679,026

Total contributions
379,713,534

 
 
Total additions
1,432,421,690

 
 
Deductions
 
Benefits paid to participants
548,704,141

 
 
Total deductions
548,704,141

 
 
Net increase in net assets
883,717,549

 
 
Net assets available for benefits
 
Beginning of year
$
4,488,846,858

End of year
$
5,372,564,407

 
 
See accompanying notes to financial statements.

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Lowe's 401(k) Plan
Notes to Financial Statements

Note 1 - Description of the Plan

The following description of the Lowe's 401(k) Plan (the Plan) provides only general information. Participants should refer to the Plan document and summary plan description for more complete descriptions of the Plan's provisions.

General – The Plan, adopted effective February 1, 1984, is a defined contribution plan covering substantially all employees of Lowe’s Companies, Inc. and subsidiaries (the Plan Sponsor or the Company). An employee of the Plan Sponsor is eligible to participate in the Plan six months after the employee’s original hire date. The Administrative Committee of Lowe’s Companies, Inc. (the Administrative Committee), as appointed by the Board of Directors, controls the management and administration of the Plan. The Plan’s trustee and recordkeeper is Wells Fargo Bank, N.A (Wells Fargo). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA) and is a safe harbor-designed plan.

Contributions – Participants may elect to contribute 1% to 50% of their pre-tax compensation eligible for deferral (deferral compensation) to the Plan each year, subject to the limitations as defined in the Plan document. Such contributions are excluded from the participant’s taxable income for federal income tax purposes until received as a withdrawal or distribution from the Plan. Eligible employees must make an active election to participate in the Plan. Participants age 50 and older, or who reach age 50 during the Plan year, are eligible to contribute an additional pre-tax dollar amount per year in addition to the deferral contribution.

The Company makes a matching contribution (the Company Match) each payroll period to each participant's account equal to: 100% of the first 3% of deferral compensation each participant elects to have contributed to the Plan; plus 50% of the next 2% of deferral compensation contributed to the Plan; plus 25% of the next 1% of deferral compensation contributed to the Plan.

Participants may also contribute amounts representing eligible rollover distributions from other qualified plans. All contributions are subject to certain Internal Revenue Code (IRC) limitations.

Participant Accounts – Individual accounts are maintained for each Plan participant. Each participant's account is credited with the participant's contribution, the Company Match, and an allocation of Plan earnings. Participant accounts are also charged with withdrawals and an allocation of Plan losses. Allocations are based on participant earnings or account balances. The benefit to which a participant is entitled to is the benefit that can be provided from the participant’s vested account balance.

Vesting – Each participant shall at all times have a 100% vested interest in the balance of their account.

Investments – Participants may direct the investment of their contributions and/or account balances into various investment options offered by the Plan and may change investments and transfer amounts between funds daily. As of December 31, 2014, the 22 investment options to which participants could direct their contributions included: Lowe’s Companies, Inc. common stock; one stable value fund; 11 target retirement date funds (collective trusts); seven mutual funds consisting of two small-cap funds, one mid-cap fund, two large-cap funds, one intermediate-term bond fund, and one international fund; and two separately managed accounts which are privately managed investment accounts holding investments directly owned by the Plan, designed to mirror the performance of specific mutual funds. Excess cash is held in a non-interest bearing cash account.

The plan’s collective trust investments are designed to offer a diversified portfolio within a single fund that adjusts its underlying asset mix over time, decreasing exposure to equities and increasing exposure to bonds as each fund’s target retirement date approaches. There are currently no redemption restrictions on these investments.

Payment of Benefits – Subsequent to termination of service, a participant with a vested account value of $1,000 or less that has not elected to perform a direct rollover to an eligible retirement plan will automatically receive a lump-sum distribution equal to the participant’s vested account balance. If the vested account value is greater than $1,000, and less than $5,000, a participant may elect to receive a lump-sum distribution equal to the participant’s vested account balance. If the participant does not make such an election, the Plan performs a direct rollover to an individual retirement account designated by the participant or, if the participant has not designated an individual retirement account, to an individual retirement account designated by the Administrative Committee. If the vested account value is greater than $5,000, the participant’s vested account balance remains in the Plan and is not distributed without the participant’s consent until the participant reaches age 62. The Plan allows for in-service withdrawals to participants under age 59½ only in cases of financial hardship. Such withdrawals must total at least $1,000 and be approved by the Plan's recordkeeper or the Administrative Committee. Participants who have attained age 59½ are entitled to a one-time in-service withdrawal of their accumulated balances.

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The Plan allows for a one-time in-service withdrawal to participants in the former Lowe’s Companies Employee Stock Ownership Plan (the ESOP) who have attained 20 or more years of service with the Plan Sponsor. The ESOP was merged into the Plan effective September 13, 2002. Eligible participants may withdraw up to 50% of their former ESOP account balance by requesting a distribution through the Retirement Service Center. The distribution may be transferred to either an IRA or paid directly to the participant.

Forfeited Accounts – If a Participant has terminated service and the Administrative Committee is unable after a reasonable period of time, as determined by the Administrative Committee, to locate the Participant or Beneficiary to whom an account is distributable after making reasonable efforts to do so, then the Administrative Committee may declare the account to be a forfeiture. The Plan document permits the use of forfeitures to reduce the Company's matching contributions. The participant's forfeited account shall be restored as if there had been no forfeiture if the Committee is able to locate the participant at any time. Such restoration shall be made out of forfeitures occurring in the Plan year the participant is located. To the extent such forfeitures are not sufficient, the Company will make a special contribution in order to restore the participant’s account. At December 31, 2014 and 2013, forfeited accounts totaled $1,288,268 and $2,524,202, respectively. During 2014, employer contributions were reduced by $2,499,845 from forfeited accounts.

Plan Year – The Plan year is January 1 to December 31.

Note 2 - Summary of Significant Accounting Policies

Basis of Accounting – The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP).

Use of Estimates – The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and changes therein. Actual results may differ from these estimates.

Risks and Uncertainties – The Plan provides various investment options to its participants. Investment securities, in general, are exposed to various risks, such as interest rate risk, credit risk, and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term and that such change could materially affect the value of the participants’ account balances and the amounts reported in the financial statements.

Investment Valuation and Income Recognition – The Plan’s investments are stated at fair value. Fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. See Note 3 for discussion on fair value measurements.

Investment contracts held by a defined contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets available for benefits of a defined contribution plan attributable to fully benefit-responsive investment contracts because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan. The statement of net assets available for benefits presents the fair value of the investment contracts as well as the adjustment of the fully benefit-responsive investment contracts from fair value to contract value. The statement of changes in net assets available for benefits is prepared using the contract value basis.

Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Net appreciation includes the Plan’s gains and losses on investments bought and sold as well as held during the year.

Payments of Benefits – Benefit payments to participants are recorded upon distribution. There were no amounts allocated to accounts of persons who have elected to withdraw from the Plan, but have not yet been paid at December 31, 2014.

Administrative Expenses Administrative expenses of the Plan are paid by the Plan Sponsor as provided in the plan document.

Management Fees and Operating Expenses All investment management and transaction fees directly related to the Plan investments are paid by the Plan. Management fees and operating expenses charged to the Plan for investments are deducted

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from income earned on a daily basis and are not separately reflected. Consequently, management fees and operating expenses are reflected as a reduction of investment return for such investments.

Excess Contributions Payable The Plan is required to return contributions received during the Plan year in excess of the IRC limits. There were no excess contributions as of December 31, 2014. Excess contributions as of December 31, 2013 were insignificant.

Recent Accounting Pronouncements In May 2015, the FASB issued Accounting Standards Update No. 2015-07, Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) (ASU 2015-07). ASU 2015-07 removes the requirement to include investments in the fair value hierarchy for which fair value is measured using the net asset value per share practical expedient under ASC 820. ASU 2015-07 is effective for the Plan retrospectively for the year ending December 31, 2016 with early adoption permitted. Plan management is currently evaluating the impact of the pending adoption of ASU 2015-07 on the Plan’s financial statements.


Note 3 - Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative guidance for fair value measurements establishes a three-level hierarchy which encourages an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of the hierarchy are defined as follows:

Level 1 – inputs to the valuation techniques that are quoted prices in active markets for identical assets or liabilities
Level 2 – inputs to the valuation techniques that are other than quoted prices but are observable for the assets or liabilities, either directly or indirectly
Level 3 – inputs to the valuation techniques that are unobservable for the assets or liabilities

The following tables present the Plan’s participant-directed investments measured at fair value on a recurring basis as of December 31, 2014, and 2013, respectively:
 
 
 
Fair Value Measurements at Reporting Date Using
 
December 31, 2014

 
Level 1

 
Level 2

 
Level 3

Participant-directed investments at fair value:
 
 
 
 
 
 
 
Common stock
$
3,020,943,053

 
$
3,020,943,053

 
$

 
$

Mutual funds:
 
 
 
 
 
 
 
Large-cap
271,174,945

 
271,174,945

 

 

Mid-cap
259,831,806

 
259,831,806

 

 

Small-cap
126,743,978

 
126,743,978

 

 

Intermediate bond
44,092,017

 
44,092,017

 

 

International
126,562,674

 
126,562,674

 

 

Collective trusts:
 
 
 
 
 
 
 
Target retirement date
890,198,141

 

 
890,198,141

 

Separately managed accounts (1):
 
 
 
 
 
 
 
U.S. equities
345,867,354

 
345,867,354

 

 

International equities
969,254

 
969,254

 

 

Money market mutual funds
24,477,371

 
24,477,371

 

 

Corporate bonds
635,672

 
635,672

 

 

Galliard Stable Value Fund
266,140,177

 

 
266,140,177

 

Total participant-directed investments at fair value
$
5,377,636,442

 
$
4,221,298,124

 
$
1,156,338,318

 
$

(1) 
The balances included here represent the fair values of the underlying securities of the Diamond Hill Value Account and the T. Rowe Price Mid-Cap Value Account.

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Fair Value Measurements at Reporting Date Using
 
December 31, 2013

 
Level 1

 
Level 2

 
Level 3

Participant-directed investments at fair value:
 
 
 
 
 
 
 
Common stock
$
2,368,008,225

 
$
2,368,008,225

 
$

 
$

Mutual funds:
 
 
 
 
 
 
 
Large-cap
234,401,770

 
234,401,770

 

 

Mid-cap
230,839,028

 
230,839,028

 

 

Small-cap
129,151,139

 
129,151,139

 

 

Intermediate bond
41,507,585

 
41,507,585

 

 

International
129,486,822

 
129,486,822

 

 

Collective trusts:


 
 
 
 
 
 
Target retirement date
772,247,128

 

 
772,247,128

 

Separately managed accounts (2):


 
 
 
 
 
 
U.S. equities
303,571,861

 
303,571,861

 

 

International equities
14,486,694

 
14,486,694

 

 

Money market mutual funds
12,261,048

 
12,261,048

 

 

Corporate bonds
987,526

 
987,526

 

 

Galliard Stable Value Fund
257,301,354

 

 
257,301,354

 

Total participant-directed investments at fair value
$
4,494,250,180

 
$
3,464,701,698

 
$
1,029,548,482

 
$

(2) 
The balances included here represent the fair values of the underlying securities of the American Century Value Account and the T. Rowe Price Mid-Cap Value Account.

There were no transfers between Levels 1, 2 or 3 during any of the periods presented.

When available, quoted prices in active markets are used to determine fair value. When quoted prices in active markets are available, investments are classified within Level 1 of the fair value hierarchy. When quoted prices are not available, fair values are determined using pricing models, and the inputs to those pricing models are based on observable market inputs.

The Plan’s investments in common stock are valued based upon the closing price reported on the recognized securities exchange on which the individual security is traded. The Plan’s investments in mutual funds are valued at the quoted market prices, which represent the net asset values of shares held by the Plan. Mutual funds held by the Plan are open-ended mutual funds that are registered with the Securities and Exchange Commission and are deemed to be actively traded. The Plan’s investments in the separately managed accounts are valued based on the fair value of the underlying investments. The underlying investments consist of marketable securities and were valued based upon the closing price reported on the recognized securities exchange on which the individual security is traded. The Plan’s investments in the target retirement date funds were valued at the net asset value of units of a bank collective trust. Unit values are determined by the organization sponsoring such collective trusts by dividing the collective trusts’ net assets at fair value by its units outstanding at each valuation date. These funds were valued using the quoted prices of the underlying securities, which represent the net asset value of shares held by the Plan. The stable value fund held at December 31, 2014 and 2013, was valued at the net asset value of units of the collective trust. The net asset value is based on the fair value of the underlying investments held by the fund less its liabilities.


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Note 4 - Investments

The following table presents the fair value of investments that represent 5% or more of the Plan's net assets available for benefits as of December 31, 2014 and 2013:
 
December 31, 2014

 
December 31, 2013

Lowe's Companies, Inc. common stock (1)
$
3,020,943,053

 
$
2,368,008,225

Galliard Stable Value Fund (2)
266,140,177

 
257,301,354

Mutual fund - T. Rowe Price Mid-Cap Growth Fund (2)
259,831,806

 
230,839,028

(1) 
Represents a party-in-interest to the Plan. The Plan held 43,909,056 shares and 47,790,277 shares at December 31, 2014 and 2013, respectively.
(2) 
The balance at December 31, 2013 represents 5% or more of the Plan's net assets available for benefits, whereas the balance at December 31, 2014 represents less than 5% of the Plan's net assets available for benefits but has been included here for comparative purposes.

During the year ended December 31, 2014, the Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value by $1,002,127,451 as follows:
 
December 31, 2014

Common stock
$
851,430,071

Mutual funds:
 
Large-cap
20,506,935

Mid-cap
31,409,013

Small-cap
3,824,300

Intermediate bond
143,064

International
(5,210,126
)
Separately managed accounts
42,832,411

Collective trusts:
 
Target retirement date
57,191,783

Net appreciation in fair value of investments
$
1,002,127,451


Note 5 - Fully Benefit-Responsive Investments

The Galliard Stable Value Fund (the Fund) is a separately managed account sponsored by Galliard Capital Management Inc. (Galliard). The beneficial interest of each participant is represented by units, with each unit representing an equal undivided interest in the underlying assets. Unit values are calculated daily and reflect the investment experience of the assets on that day. All contributions, interest, dividend or other income is reinvested in the Fund on a daily basis. Participants ordinarily may direct either the withdrawal or transfer of all or a portion of their investment at contract value. Contract value represents contributions made to the Fund, plus earnings, less participant withdrawals and administrative expenses.

The Fund is an investment option that seeks to provide safety of principal and a stable credited rate of interest, while generating competitive returns over time compared to other comparable investments. The Fund invests in assets, typically investment grade fixed income securities or bond funds, and enters into wrap contracts issued by third parties. As of December 31, 2014, the Fund held five separate wrap contracts with insurance companies. A wrap contract is an agreement by another party, such as a bank or insurance company, to make payments to the Fund in certain circumstances. Wrap contracts are designed to allow a stable value portfolio to maintain a constant net asset value and protect a portfolio in extreme circumstances.


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The wrap contracts contain provisions that limit the ability of the Fund to transact at contract value upon the occurrence of certain events which include: a substantive modification of the Fund or its administration; the complete or partial termination of the Plan or its merger with another plan; the transfer of assets from the Fund directly into a competing investment option; the redemption of all or a portion of the interest in the Fund due to the removal of a specifically identifiable group of employees from coverage under the participating plan, the closing or sale of a subsidiary, the bankruptcy or insolvency of a plan sponsor, the merger of the plan with another plan, or the plan sponsor's establishment of another tax qualified defined contribution plan. Plan management believes that the occurrence of events that would cause the Fund to transact at less than contract value is not probable.

In the event the wrap contracts fail to perform as intended, the Fund’s net asset value may decline if the market value of its assets declines. The Fund’s ability to receive amounts due pursuant to these wrap contracts is dependent on the third-party issuer’s ability to meet their financial obligations, which may be affected by future economic and regulatory developments. The Fund is unlikely to maintain a stable net asset value if, for any reason, it cannot obtain or maintain wrap contracts covering all of its underlying assets.

The wrap contracts are contractually obligated to pay the principal and a guaranteed interest rate for a specified period. Such interest rates are reviewed on a quarterly basis for resetting. The crediting interest rate is based on a formula agreed upon with the wrap contract providers, but may not be less than 0%. The crediting rate of the contract will track current market yields on a trailing basis. Primary variables impacting future crediting rates of the Fund include the current yield, duration, and existing difference between market and contract value of the underlying assets within the wrap contract. The average yields earned by the Fund are as follows:
 
December 31, 2014

 
December 31, 2013

Based on actual earnings (1)
1.37
%
 
1.39
%
Based on interest rate credited to participants (2)
1.94
%
 
2.08
%
(1) 
Calculated by dividing the annualized earnings of all investments in the Fund by the period end fair value.
(2) 
Calculated by dividing the annualized earnings credited to participants in the Fund (the crediting rate) by the period end fair value.

Both the Plan and the wrap providers have the right to cancel the wrap contracts under certain circumstances. The wrap contracts contain termination provisions, allowing the Fund or the wrap providers to terminate with notice, at any time at fair value, and provide for automatic termination of the contract if the contract value or the fair value of the underlying portfolio equals zero. The wrap providers are obligated to pay the excess contract value when the fair value of the underlying portfolio equals zero. In addition, if the Fund defaults on its obligations under these wrap agreements, and such default is not corrected within the time permitted by these contracts, then the contracts may be terminated by the wrap provider and the Fund will receive the fair value as of the date of termination.

Note 6 - Plan Termination

Although it has not expressed any intention to do so, the Plan Sponsor has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions set forth in ERISA.

Note 7 - Exempt Party-In-Interest Transactions

Certain investments of the Plan include shares of common stock of Lowe’s Companies, Inc., the Plan Sponsor, shares of common stock of Wells Fargo, the Plan’s trustee and recordkeeper, and funds managed by Wells Fargo. Transactions in these investments qualify as exempt party-in-interest transactions. Fees paid for investment management services were included as a reduction of the return earned on each investment.

At December 31, 2014, and 2013, the Plan held 43,909,056 shares and 47,790,277 shares, respectively, of common stock of Lowe’s Companies, Inc., with a cost basis of $962,203,238 and $918,759,319, respectively. For the year ended December 31, 2014, the Plan recorded dividend income of $37,787,063 from these shares.

Note 8 - Tax Status

The IRS has determined and informed the Company by a letter dated August 7, 2014 that the Plan and related trust were designed in accordance with the applicable regulations of the IRC. The Plan has been amended since receiving the

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determination letter. However, Plan management believes that the Plan is currently designed and operated in compliance with the applicable requirements of the IRC, and the Plan and related trust continue to be tax-exempt. Therefore, no provision for income taxes has been included in the Plan’s financial statements.

GAAP requires Plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. Plan management has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2014, there are no uncertain positions taken or expected to be taken. The Plan has recognized no interest or penalties related to uncertain tax positions. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. Plan management believes it is no longer subject to income tax examinations for years prior to 2011.

Note 9 - Reconciliation of Financial Statements to Form 5500

The following is a reconciliation of the net assets available for benefits per the financial statements to the Plan's Form 5500 as of December 31, 2014 and 2013:
 
December 31, 2014

 
December 31, 2013

Net assets available for benefits per the financial statements
$
5,372,564,407

 
$
4,488,846,858

Adjustment from contract value to fair value for fully benefit-responsive stable value fund
4,323,637

 

Total net assets per the Plan's Form 5500
$
5,376,888,044

 
$
4,488,846,858


The following is a reconciliation of the net increase in assets available for benefits per the financial statements to the Plan's Form 5500 as of December 31, 2014 and 2013:
 
December 31, 2014

 
December 31, 2013

Net increase in net assets available for benefits per the financial statements
$
883,717,549

 
$
969,300,433

Net change in adjustment from contract value to fair value for fully benefit-responsive stable value fund
4,323,637

 

Net income per the Plan's Form 5500
$
888,041,186

 
$
969,300,433


The fair value adjustment represented the differences between contract values of certain fully benefit-responsive contracts within the Galliard Stable Value Fund as included in the statements of changes in net assets available for benefits for the year ended December 31, 2014, and the respective fair values of these contracts as reported in the Plan's Form 5500. All fully benefit-responsive contracts were reported at fair value per the Plan's Form 5500 as of December 31, 2014, with the exception of one underlying investment of the Galliard Stable Value Fund, which is held in the general account of Metropolitan Life Insurance Company and, therefore, is stated at contract value for Form 5500 reporting purposes.

Note 10 - Delinquent Participant Contributions

During the 2013 Plan year, salary deferral contributions in the amount of $1,230 for 35 participants were not deposited into the Plan within the time frame prescribed by the DOL. The failure to timely deposit these salary deferral contributions into the Plan is prohibited according to ERISA. In 2014, the Company reimbursed the Plan for the delayed deferral contributions in the amount of $1,230 plus lost interest related to the usage of funds.

During the 2014 Plan year, salary deferral contributions in the amount of $9 for one participant were not deposited into the Plan within the time frame prescribed by the DOL. The failure to timely deposit these salary deferral contributions into the Plan is prohibited according to ERISA. In 2015, the Company reimbursed the Plan for the delayed deferral contributions in the amount of $9 plus lost interest related to the usage of funds.


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Lowe's 401(k) Plan
EIN: 56-0578072
Plan No: 003
Form 5500, Schedule H, Part IV, Line 4i -
Schedule of Assets (Held at End of Year)
As of December 31, 2014
Identity of Issue, Borrower, Lessor, or Similar Party
Description of Investment, Including Maturity Date, Rate of Interest, Collateral, Par or Maturity Value
Cost
Current Value


EMPLOYER-RELATED INVESTMENTS:
 
 
 
*Lowe's Companies, Inc.
Common Stock
**
$
3,020,943,053

 
 
 
 
Total employer-related investments
 
 
3,020,943,053

 
 
 
 
COLLECTIVE TRUSTS:
 
 
 
Vanguard Fiduciary Target Retirement Institutional
Collective Trust
**
27,825,239

Vanguard Fiduciary Target Retirement 2010
Collective Trust
**
23,415,397

Vanguard Fiduciary Target Retirement 2015
Collective Trust
**
59,384,729

Vanguard Fiduciary Target Retirement 2020
Collective Trust
**
113,980,352

Vanguard Fiduciary Target Retirement 2025
Collective Trust
**
125,912,084

Vanguard Fiduciary Target Retirement 2030
Collective Trust
**
109,016,048

Vanguard Fiduciary Target Retirement 2035
Collective Trust
**
101,342,947

Vanguard Fiduciary Target Retirement 2040
Collective Trust
**
86,695,946

Vanguard Fiduciary Target Retirement 2045
Collective Trust
**
93,673,849

Vanguard Fiduciary Target Retirement 2050
Collective Trust
**
126,021,457

Vanguard Fiduciary Target Retirement 2055
Collective Trust
**
22,930,093

 
 
 
 
Total collective trusts
 
 
890,198,141

 
 
 
 
REGISTERED INVESTMENT COMPANIES:
 
 
 
American Funds Europacific Growth Fund
Mutual Fund
**
126,562,674

Eagle Small Cap Growth Fund
Mutual Fund
**
81,084,615

American Funds New Economy R6 Fund
Mutual Fund
**
100,875,097

PIMCO Total Return Fund
Mutual Fund
**
44,092,017

T Rowe Price Institutional Mid Cap Equity Growth Fund
Mutual Fund
**
259,831,806

T Rowe Price Small Cap Value Fund
Mutual Fund
**
45,659,363

Vanguard Institutional Index Fund
Mutual Fund
**
170,299,848

 
 
 
 
Total registered investment companies
 
 
828,405,420

 
 
 
 
SEPARATELY MANAGED ACCOUNTS:
 
 
 
Galliard Stable Value Fund:
 
 
 
*Wells Fargo Fixed Income Fund E
Collective Trust
**
20,072,140

*Wells Fargo Fixed Income Fund F
Collective Trust
**
85,411,449

*Wells Fargo Fixed Income Fund M
Collective Trust
**
26,876,505

*Wells Fargo Fixed Income Fund N
Collective Trust
**
26,835,497

*Wells Fargo Fixed Income Fund Q
Collective Trust
**
25,241,600

*Wells Fargo Short Term Investment Fund S
Collective Trust
**
30,211,862

Metropolitan Life Insurance Company
Insurance Company General Account
**
50,162,106

Metropolitan Life Insurance Company
Wrapper Contract
**
13,477

Total Galliard Stable Value Fund
 
 
264,824,636


13

Table of Contents

Lowe's 401(k) Plan
EIN: 56-0578072
Plan No: 003
Form 5500, Schedule H, Part IV, Line 4i -
Schedule of Assets (Held at End of Year)
As of December 31, 2014
Identity of Issue, Borrower, Lessor, or Similar Party
Description of Investment, Including Maturity Date, Rate of Interest, Collateral, Par or Maturity Value
Cost
Current Value

 
 
 
 
Diamond Hill Value Account:
 
 
 
Abbott Laboratories
Common Stock
**
5,895,144

American International Group, Inc.
Common Stock
**
6,031,717

Apple Inc.
Common Stock
**
3,409,086

Baxter International Inc.
Common Stock
**
2,410,142

Boston Scientific Corporation
Common Stock
**
4,058,475

Capital One Financial Corporation
Common Stock
**
3,939,286

Cimarex Energy Co.
Common Stock
**
3,836,140

Cisco Systems, Inc.
Common Stock
**
3,674,083

Citigroup Inc.
Common Stock
**
5,755,140

Comcast Corporation
Common Stock
**
3,979,486

Devon Energy Corporation
Common Stock
**
5,869,733

The Walt Disney Company
Common Stock
**
3,992,243

Dover Corporation
Common Stock
**
3,416,024

EOG Resources, Inc.
Common Stock
**
4,912,395

Eastman Chemical Co.
Common Stock
**
1,763,366

Express Scripts Holding Company
Common Stock
**
3,852,485

Franklin Resources, Inc.
Common Stock
**
2,891,421

Gannett Co., Inc.
Common Stock
**
2,558,232

The Goodyear Tire & Rubber Company
Common Stock
**
2,909,855

Illinois Tool Works Inc.
Common Stock
**
3,594,339

International Business Machines Corporation
Common Stock
**
3,144,624

JPMorgan Chase & Co.
Common Stock
**
5,776,134

Juniper Networks, Inc.
Common Stock
**
2,462,900

Kimberly-Clark Corporation
Common Stock
**
4,287,689

Linear Technology Corporation
Common Stock
**
1,995,000

Marsh & McLennan Companies, Inc.
Common Stock
**
4,135,590

McDonald's Corp.
Common Stock
**
1,477,181

Medtronic plc
Common Stock
**
5,939,894

MetLife, Inc.
Common Stock
**
2,441,623

Microsoft Corporation
Common Stock
**
4,605,982

Morgan Stanley
Common Stock
**
6,325,758

Occidental Petroleum Corporation
Common Stock
**
3,171,197

The PNC Financial Services Group, Inc.
Common Stock
**
4,496,271

Parker-Hannifin Corporation
Common Stock
**
4,286,298

Pfizer Inc.
Common Stock
**
5,897,785

Philip Morris International, Inc.
Common Stock
**
2,632,871

Praxair Inc.
Common Stock
**
1,935,626

The Procter & Gamble Company
Common Stock
**
6,456,459

Progressive Corp.
Common Stock
**
3,902,349

Prudential Financial, Inc.
Common Stock
**
4,942,734

Stryker Corporation
Common Stock
**
2,406,830


14

Table of Contents

Lowe's 401(k) Plan
EIN: 56-0578072
Plan No: 003
Form 5500, Schedule H, Part IV, Line 4i -
Schedule of Assets (Held at End of Year)
As of December 31, 2014
Identity of Issue, Borrower, Lessor, or Similar Party
Description of Investment, Including Maturity Date, Rate of Interest, Collateral, Par or Maturity Value
Cost
Current Value

Sysco Corporation
Common Stock
**
2,913,246

The TJX Companies, Inc.
Common Stock
**
4,179,608

3M Company
Common Stock
**
1,330,992

Twenty-First Century Fox, Inc.
Common Stock
**
3,091,382

United Technologies Corporation
Common Stock
**
6,797,650

V.F. Corporation
Common Stock
**
4,209,380

Vantiv, Inc.
Common Stock
**
2,446,310

*Wells Fargo & Company
Common Stock
**
1,978,454

Whirlpool Corp.
Common Stock
**
3,752,744

*Wells Fargo Advantage 100% Treasury Money Market Fund
Money Market Fund
**
4,868,343

Total Diamond Hill Value Account
 
 
197,037,696

 
 
 
 
T. Rowe Price Mid-Cap Value Account:
 
 
 
AVX Corporation
Common Stock
**
642,600

Abercrombie & Fitch Co.
Common Stock
**
346,544

ADTRAN, Inc.
Common Stock
**
861,100

Ally Financial Inc.
Common Stock
**
1,934,478

American Electric Power Co., Inc.
Common Stock
**
1,505,856

American Eagle Outfitters, Inc.
Common Stock
**
337,284

Applied Materials, Inc.
Common Stock
**
2,708,804

Archer-Daniels-Midland Company
Common Stock
**
1,206,400

Avalonbay Communities, Inc.
Common Stock
**
637,221

Avon Products, Inc.
Common Stock
**
670,446

Broadcom Corp.
Common Stock
**
1,078,917

C.H. Robinson Worldwide, Inc.
Common Stock
**
2,988,111

CIT Group Inc.
Common Stock
**
2,520,641

CNA Financial Corporation
Common Stock
**
1,900,661

Cablevision Systems Corporation
Common Stock
**
2,470,608

California Resources Corporation
Common Stock
**
380,741

Calpine Corp.
Common Stock
**
829,875

Cameco Corporation
Common Stock
**
1,537,617

Capitol Federal Financial, Inc.
Common Stock
**
1,191,096

CarMax Inc.
Common Stock
**
705,748

Cintas Corporation
Common Stock
**
2,368,888

The Clorox Company
Common Stock
**
708,628

Coach, Inc.
Common Stock
**
1,258,260

Commerce Bancshares, Inc.
Common Stock
**
686,751

Compania de Minas Buenaventura S.A.A.
Common Stock
**
539,184

CONSOL Energy, Inc.
Common Stock
**
1,092,063

Dean Foods Company
Common Stock
**
424,422

DreamWorks Animation SKG, Inc. Class A
Common Stock
**
401,940

Duke Energy Corporation
Common Stock
**
420,457


15

Table of Contents

Lowe's 401(k) Plan
EIN: 56-0578072
Plan No: 003
Form 5500, Schedule H, Part IV, Line 4i -
Schedule of Assets (Held at End of Year)
As of December 31, 2014
Identity of Issue, Borrower, Lessor, or Similar Party
Description of Investment, Including Maturity Date, Rate of Interest, Collateral, Par or Maturity Value
Cost
Current Value

E*Trade Financial Corporation
Common Stock
**
3,630,974

Expeditors International of Washington Inc.
Common Stock
**
1,405,215

Exterran Holdings, Inc.
Common Stock
**
1,081,656

Factset Research Systems Inc.
Common Stock
**
182,975

Fidelity National Financial, Inc.
Common Stock
**
1,889,031

Fidelity National Financial Ventures
Common Stock
**
195,207

First American Financial Corporation
Common Stock
**
2,715,390

First Horizon National Corporation
Common Stock
**
2,349,340

First Niagra Financial Group Inc.
Common Stock
**
1,508,127

FirstEnergy Corp.
Common Stock
**
4,359,472

Flowers Foods, Inc.
Common Stock
**
531,563

Franco-Nevada Corporation
Common Stock
**
585,361

The Gap, Inc.
Common Stock
**
450,577

Graham Holdings Company
Common Stock
**
604,597

Haemonetics Corporation
Common Stock
**
557,558

Harsco Corporation
Common Stock
**
933,166

Hasbro Inc.
Common Stock
**
296,946

HEALTHSOUTH Corp.
Common Stock
**
1,107,648

Hess Corporation
Common Stock
**
930,132

Hologic Inc.
Common Stock
**
2,607,150

Hospira Inc.
Common Stock
**
3,944,500

Houghton Mifflin Harcourt Company
Common Stock
**
470,117

Humana Inc.
Common Stock
**
1,105,951

KBR, Inc.
Common Stock
**
1,523,805

KLX Inc.
Common Stock
**
231,000

Kellogg Company
Common Stock
**
889,984

Kemper Corporation
Common Stock
**
1,426,345

Kohl's Corp.
Common Stock
**
2,630,824

The Kroger Co.
Common Stock
**
1,996,931

Legg Mason Inc.
Common Stock
**
917,964

Loews Corporation
Common Stock
**
798,380

Lonmin Plc
Common Stock
**
535,044

Louisiana-Pacific Corp.
Common Stock
**
1,059,840

ManpowerGroup Inc.
Common Stock
**
1,441,796

Marsh & McLennan Companies, Inc.
Common Stock
**
3,331,368

Mattel, Inc.
Common Stock
**
1,875,267

McCormick & Company, Incorporated
Common Stock
**
973,330

MeadWestvaco Corporation
Common Stock
**
1,660,186

Murphy Oil Corporation
Common Stock
**
1,348,884

NRG Energy, Inc.
Common Stock
**
2,231,460

Newmont Mining Corporation
Common Stock
**
1,583,820

News Corporation
Common Stock
**
1,863,972

Northern Trust Corporation
Common Stock
**
3,855,280


16

Table of Contents

Lowe's 401(k) Plan
EIN: 56-0578072
Plan No: 003
Form 5500, Schedule H, Part IV, Line 4i -
Schedule of Assets (Held at End of Year)
As of December 31, 2014
Identity of Issue, Borrower, Lessor, or Similar Party
Description of Investment, Including Maturity Date, Rate of Interest, Collateral, Par or Maturity Value
Cost
Current Value

PHH Corporation
Common Stock
**
1,571,776

PPL Corporation
Common Stock
**
225,246

Packaging Corporation Of America
Common Stock
**
1,717,100

Progressive Corp.
Common Stock
**
1,279,326

Quest Diagnostics Incorporated
Common Stock
**
2,052,036

Rayonier Inc.
Common Stock
**
2,039,620

The St. Joe Company
Common Stock
**
869,847

Scholastic Corporation
Common Stock
**
895,932

The Scotts Miracle-Gro Company
Common Stock
**
1,688,872

Seacor Holdings Inc.
Common Stock
**
465,003

Select Medical Holdings Corporation
Common Stock
**
1,687,680

Southwest Airlines Co.
Common Stock
**
1,151,104

Strayer Education Inc.
Common Stock
**
1,433,604

SunTrust Banks, Inc.
Common Stock
**
871,520

Sysco Corporation
Common Stock
**
3,210,921

Talisman Energy Inc.
Common Stock
**
2,625,399

Telephone & Data Systems Inc.
Common Stock
**
1,307,193

Tenet Healthcare Corporation
Common Stock
**
1,071,671

Textron Inc.
Common Stock
**
4,813,173

Thoratec Corp.
Common Stock
**
376,536

Tootsie Roll Industries Inc.
Common Stock
**
324,124

Tribune Media Company
Common Stock
**
699,309

Visteon Corporation
Common Stock
**
459,498

Vulcan Materials Company
Common Stock
**
2,543,751

Washington Real Estate Investment Trust
Common Stock
**
921,078

Weingarten Realty Investors
Common Stock
**
506,340

Westamerica Bancorp.
Common Stock
**
960,792

Weyerhaeuser Co.
Common Stock
**
1,826,801

WPX Energy, Inc.
Common Stock
**
2,302,740

Xylem Inc.
Common Stock
**
921,294

Zoetis Inc.
Common Stock
**
2,190,227

Grouple Bruxelles Lambert S.A.
Common Stock
**
197,852

Bunge Limited
Common Stock
**
3,545,490

Enstar Group Limited
Common Stock
**
259,913

Ingersoll-Rand Public Limited Company
Common Stock
**
253,560

Marvell Technology Group Ltd.
Common Stock
**
939,600

OneBeacon Insurance Group, Ltd.
Common Stock
**
278,640

White Mountains Insurance Group, Ltd.
Common Stock
**
2,331,407

Willis Group Holdings Public Limited Company
Common Stock
**
569,087

ASML Holding N.V.
Common Stock
**
537,317

Sankyo Co. Ltd.
Common Stock
**
323,025

Franco-Nevada Corporation (CAD)
Common Stock
**
448,377


17

Table of Contents

Lowe's 401(k) Plan
EIN: 56-0578072
Plan No: 003
Form 5500, Schedule H, Part IV, Line 4i -
Schedule of Assets (Held at End of Year)
As of December 31, 2014
Identity of Issue, Borrower, Lessor, or Similar Party
Description of Investment, Including Maturity Date, Rate of Interest, Collateral, Par or Maturity Value
Cost
Current Value

*Wells Fargo Advantage Treasury Plus Money Market Fund
Money Market Fund
**
19,609,028

UTi Worldwide Inc.
4.5%, $573,000 par, due 3/1/19
**
635,672

Total T. Rowe Price Mid-Cap Value Account
 
 
174,911,955

 
 
 
 
Total separately managed accounts
 
 
636,774,287

 
 
 
 
Total investments***
 
 
$
5,376,320,901

*    Permitted party-in-interest
**    Cost information is not required for participant-directed investments and, therefore, is not included.
***
All investments were stated at fair value as of December 31, 2014 with the exception of one underlying investment of the Galliard Stable Value Fund, which is held in the general account of Metropolitan Life Insurance Company and, therefore, is stated at contract value.

18

Table of Contents

EIN: 56-0578072
Plan No: 003
Form 5500, Schedule H, Part IV, Line 4a –
Schedule of Delinquent Participant Contributions
For the Year Ended December 31, 2014


 
 
 
Total that Constitute Nonexempt Prohibited Transactions
 
 
Participant Contributions Transferred Late to the Plan
 
Contributions Not Corrected
Contributions Corrected Outside VFCP
Contributions Pending Correction in VFCP
Total Fully Corrected under VFCP and PTE 2002-51
o
Check here if late participant loan contributions are included
 
$

$
1,239

$

$


19

Table of Contents

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the trustees (or other persons who administer the employee benefit plan) have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
LOWE'S 401(k) PLAN
 
 
 
June 26, 2015
 
By: /s/ Matthew V. Hollifield
Date
 
Matthew V. Hollifield
Senior Vice President and Chief Accounting Officer

20

Table of Contents

EXHIBIT INDEX
 
 
 
Exhibit No.
 
Description
 
 
 
23
 
Consent of Independent Registered Public Accounting Firm


21