LOWES COMPANIES INC - 10-Q Quarterly Report

Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Indicate by check mark
whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the
Exchange Act).

Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date.

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LOWE'S COMPANIES, INC. - INDEX -
			Page No.
PART 1 - Financial Information
	Item 1. Financial Statements

		Consolidated Balance Sheets - October 31, 2003 (Unaudited),
		November 1, 2002 (Unaudited) and January 31, 2003	3

		Consolidated Statements of Current and
		Retained Earnings (Unaudited) - three and nine months
		ended October 31, 2003 and November 1, 2002	4

		Consolidated Statements of Cash Flows (Unaudited) -
		nine months ended October 31, 2003 and November 1, 2002	5

		Notes to Consolidated Financial Statements (Unaudited)	6-10

		Independent Accountants' Report	11

	Item 2. Management's Discussion and Analysis of Financial Condition and		12-18
		Results of Operations

	Item 3. Quantitative and Qualitative Disclosures about Market Risk		19

	Item 4. Controls and Procedures		19

PART II - Other Information
	Item 6(a). Exhibits		20

	Item 6(b). Reports on Form 8-K		20

	Signature		21

	Exhibit Index		22

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Lowe's Companies, Inc. Consolidated Balance Sheets In Millions, Except Par Value Data
			(Unaudited) October 31, 2003	(Unaudited) November 1, 2002	January 31, 2003
Assets
	Current assets:
	Cash and cash equivalents		$ 1,196	$ 1,305	$ 853
	Short-term investments		126	92	273
	Accounts receivable - net		208	187	172
	Merchandise inventory		5,006	4,151	3,968
	Deferred income taxes		81	110	58
	Other assets		285	179	244

	Total current assets		6,902	6,024	5,568

	Property, less accumulated depreciation		11,425	9,648	10,352
	Long-term investments		119	10	29
	Other assets		229	129	160

	Total assets		$ 18,675	$ 15,811	$ 16,109

Liabilities and Shareholders' Equity
	Current liabilities:
	Short-term borrowings		$ -	$ 50	$ 50
	Current maturities of long-term debt		77	39	29
	Accounts payable		2,542	2,046	1,943
	Employee retirement plans		53	66	88
	Accrued salaries and wages		283	295	306
	Other current liabilities		1,568	1,291	1,162

	Total current liabilities		4,523	3,787	3,578

	Long-term debt, excluding current maturities		3,681	3,739	3,736
	Deferred income taxes		588	318	478
	Other long-term liabilities		21	9	15

	Total liabilities		8,813	7,853	7,807

	Shareholders' equity:
	Preferred stock - $5 par value, none issued		-	-	-
	Common stock - $.50 par value;
	Shares Issued and Outstanding
	October 31, 2003	786
	November 1, 2002	781
	January 31, 2003	782	393	390	391
	Capital in excess of par		2,176	1,981	2,023
	Retained earnings		7,293	5,587	5,887
	Accumulated other comprehensive income		-	-	1

	Total shareholders' equity		9,862	7,958	8,302

	Total liabilities and shareholders' equity		$ 18,675	$ 15,811	$ 16,109

See accompanying notes to unaudited consolidated financial statements.

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

	Three Months Ended				Nine Months Ended
	October 31, 2003		November 1, 2002		October 31, 2003		November 1, 2002
Current Earnings	Amount	Percent	Amount	Percent	Amount	Percent	Amount	Percent
Net Sales	$ 7,924	100.00	$ 6,415	100.00	$ 23,909	100.00	$ 20,373	100.00
Cost of Sales	5,460	68.90	4,450	69.36	16,560	69.26	14,283	70.11
Gross Margin	2,464	31.10	1,965	30.64	7,349	30.74	6,090	29.89
Expenses:
Selling, general and administrative	1,466	18.50	1,192	18.59	4,212	17.62	3,567	17.51
Store opening costs	37	0.47	28	0.43	82	0.34	88	0.43
Depreciation	193	2.44	159	2.48	557	2.33	458	2.25
Interest	42	0.53	44	0.69	136	0.57	137	0.67
Total expenses	1,738	21.94	1,423	22.19	4,987	20.86	4,250	20.86
Pre-tax earnings	726	9.16	542	8.45	2,362	9.88	1,840	9.03
Income tax provision	274	3.46	203	3.16	893	3.74	688	3.38
Net earnings	$ 452	5.70	$ 339	5.29	$ 1,469	6.14	$ 1,152	5.65

Weighted average shares outstanding - Basic	786		781		784		779
Basic earnings per share	$ 0.58		$ 0.44		$ 1.87		$ 1.48
Weighted average shares outstanding - Diluted	808		801		805		800
Diluted earnings per share	$ 0.56		$ 0.43		$ 1.84		$ 1.45

Retained Earnings
Balance at beginning of period	$ 6,865		$ 5,263		$ 5,887		$ 4,482
Net earnings	452		339		1,469		1,152
Cash dividends	(24)		(15)		(63)		(47)
Balance at end of period	$ 7,293		$ 5,587		$ 7,293		$ 5,587

See accompanying notes to unaudited consolidated financial statements.

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Lowe's
Companies, Inc.

Notes
to Consolidated Financial Statements (Unaudited)

Note 1: Basis of Presentation
- The accompanying Consolidated
Financial Statements (unaudited) have been reviewed by independent certified
public accountants and, in the opinion of management, they contain all
adjustments necessary to present fairly the financial position as of October
31, 2003, and November 1, 2002, the results of operations for the three and
nine
months ended October 31, 2003 and November 1, 2002, and cash flows for the
nine
months ended October 31, 2003 and November 1, 2002.

These interim financial statements should be read in conjunction with the
financial statements and notes thereto included in the Lowe's Companies,
Inc. (the "Company") Annual Report on Form 10-K for the fiscal
year ended January 31, 2003. The financial results for the interim periods
may not be indicative of the financial results for the entire fiscal year.

Note 2: Earnings Per Share - Basic earnings per share ("EPS")
excludes dilution and is computed by dividing net earnings by the
weighted-average number of common shares outstanding for the period. Diluted
EPS is calculated based on the weighted average shares of common stock as
adjusted for the potential dilutive effect of stock options and convertible
notes at the balance sheet date. The dilutive effect of the assumed
conversion of the $580.7 million Senior Convertible Notes, issued in October
2001, has been excluded from diluted earnings per share for the three and
nine months ended October 31, 2003 and November 1, 2002 because none of the conditions that would permit
conversion had been satisfied during the period. The calculation is detailed
below (in millions, except per share data):

Lowe's Companies, Inc. Consolidated Statements of Cash Flows (Unaudited) In Millions
		Nine Months Ended
		October 31, 2003	November 1, 2002
Cash Flows from Operating Activities:
	Net Earnings	$ 1,469	$ 1,152
	Adjustments to Reconcile Net Earnings to Net Cash Provided By Operating Activities:
	Depreciation and Amortization	571	472
	Deferred Income Taxes	87	(4)
	Loss on Disposition/Writedown of Fixed and Other Assets	23	17
	Stock-based Compensation Expense	28	-
	Tax Effect of Stock Options Exercised	21	20
	Changes in Operating Assets and Liabilities:
	Accounts Receivable - Net	(36)	(21)
	Merchandise Inventory	(1,038)	(540)
	Other Operating Assets	(41)	19
	Accounts Payable	599	331
	Employee Retirement Plans	(35)	16
	Other Operating Liabilities	389	573
	Net Cash Provided by Operating Activities	2,037	2,035

Cash Flows from Investing Activities:
	Decrease (Increase) in Investment Assets:
	Short-Term Investments	144	(24)
	Purchase of Long-Term Investments	(282)	(2)
	Proceeds from Sale/Maturity of Long-Term Investments	189	-
	Increase in Other Long-Term Assets	(87)	(22)
	Fixed Assets Acquired	(1,685)	(1,449)
	Proceeds from the Sale of Fixed and Other Long-Term Assets	50	29
	Net Cash Used in Investing Activities	(1,671)	(1,468)

Cash Flows from Financing Activities:
	Net Decrease in Short-Term Borrowings	(50)	(50)
	Repayment of Long-Term Debt	(21)	(45)
	Proceeds from Stock Options Exercised	111	81
	Cash Dividend Payments	(63)	(47)
	Net Cash Used in Financing Activities	(23)	(61)

Net Increase in Cash and Cash Equivalents		343	506
Cash and Cash Equivalents, Beginning of Period		853	799
Cash and Cash Equivalents, End of Period		$ 1,196	$ 1,305

See accompanying notes to unaudited consolidated financial statements.

-7-

Note
3: Property - Property is shown net of accumulated depreciation of $3.0
billion at October 31, 2003, $2.4 billion at November 1, 2002 and $2.5 billion at
January 31, 2003.

Note
4: Supplemental Disclosure

Supplemental
disclosures of cash flow information (in millions):


		Three Months Ended		Nine Months Ended
		October 31, 2003	November 1, 2002	October 31, 2003	November 1, 2002
Net earnings		$ 452	$ 339	$ 1,469	$ 1,152
Weighted average common shares outstanding		786	781	784	779
Basic earnings per share		$ 0.58	$ 0.44	$ 1.87	$ 1.48

Net earnings		$ 452	$ 339	$ 1,469	$ 1,152
Tax-effected interest expense attributable to 2.5% convertible notes		3	3	8	8
Net earnings assuming dilution		$ 455	$ 342	$ 1,477	$ 1,160
Weighted average common shares outstanding		786	781	784	779
Effect of potentially dilutive securities:
	2.5% convertible notes	17	16	17	17
	Employee stock option plans	5	4	4	4
Weighted average common shares assuming dilution		808	801	805	800
Diluted earnings per share		$ 0.56	$ 0.43	$ 1.84	$ 1.45

Note 5: Credit Arrangements
- The Company has an $800 million
senior credit facility. The facility is split into a $400 million five-year
tranche, expiring in August 2006, and a $400 million 364-day tranche,
expiring in July 2004, which is renewable annually. The facility is used to
support the Company's $800 million commercial paper program and for
short-term borrowings. Borrowings made are priced based upon market
conditions at the time of funding in accordance with the terms of the senior
credit facility. The senior credit facility contains certain restrictive
covenants, including maintenance of a specific financial ratio. The Company
was in compliance with these covenants at October 31, 2003. Fifteen banking
institutions are participating in the $800 million senior credit facility
and as of October 31, 2003, there were no outstanding loans under the facility.

In July 2003, the
Company terminated a $100 million revolving credit and security agreement
with a financial institution, which was scheduled to expire in November 2003.
The remaining outstanding balance of $50 million was repaid at the time of
termination.

Note 6: Comprehensive Income - Total
comprehensive income, comprised of net earnings and unrealized holding gains
(losses) on available-for-sale securities, was $451.9 and $339.1 million
compared to net earnings of $451.7 and $339.2 million for the three months
ended October 31, 2003 and November 1, 2002, respectively. Total
comprehensive income was $1,468.7
and $1,151.9 million compared to net earnings of $1,469.0 and $1,152.1 million for
the nine months ended October 31, 2003 and November 1, 2002, respectively.

Note 7: Accounting for Stock-Based Compensation
- The Company has three stock incentive plans which are described more fully
in Note 9 to the consolidated financial statements presented in the
Company's Annual Report on Form 10-K for the fiscal year ended January 31,
2003. Prior to fiscal 2003, the Company accounted for these plans under the
recognition and measurement provisions of Accounting Principles Board
("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," and
related Interpretations. Therefore, no stock-based employee compensation is
reflected in fiscal 2002 net income, as all options granted under those
plans had an exercise price equal to

the market value of
the underlying common stock on the date of grant.

Effective February 1, 2003, the Company adopted the fair
value recognition provisions of Statement of Financial Accounting Standards
("SFAS") No. 123, "Accounting for Stock-Based Compensation," prospectively
for all employee awards granted, modified or settled after January 31, 2003.
Therefore, in accordance with the requirements of SFAS No. 148, "Accounting
for Stock-Based Compensation-Transition and Disclosure," the cost related
to stock-based employee compensation included in the determination of net
income for the three and nine months ended October 31, 2003 is less than that
which would have been recognized if the fair value based method had been
applied to all awards since the original effective date of SFAS No. 123.
During the three and nine months ended October 31, 2003, the Company recognized
compensation expense totaling $13.0 million and $27.9
million, respectively, relating to stock options and awards granted in that period,
which generally vest over three years.

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The fair value of each option grant is estimated using the Black-Scholes
option pricing model. The assumptions used to determine the fair value
of options granted during the nine months ended October 31, 2003 have not
changed significantly from those disclosed in the Annual Report on Form 10-K
for the fiscal year ended January 31, 2003. The following table illustrates the effect on
net income and earnings per share if the fair value based method had been
applied to all outstanding and unvested awards in each period.


	Nine Months Ended
	October 31, 2003	November 1, 2002
Cash paid for interest (net of amount capitalized)	$ 168	$ 172
Cash paid for income taxes	726	512

Non-cash investing and financing activities:
Common stock issued to ESOP	-	79
Fixed assets acquired under capital lease	-	15

Note 8: Recent Accounting Pronouncements - In November 2002, the Emerging Issues Task Force ("EITF") issued EITF 02-16,

"Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor." EITF 02-16 provides guidance

for classification in the reseller's income statement for various circumstances under which cash consideration is received from a vendor by a

reseller. In addition, the issue also provides guidance concerning how cash consideration relating to rebates or refunds should be recognized

and measured. This standard became effective for the Company for all vendor reimbursement agreements entered into or modified after

December 31, 2002.

The Company has historically treated volume related discounts or rebates as a reduction of inventory cost and reimbursements of operating

expenses received from vendors as a reduction of those specific expenses. The Company's historical accounting treatment for these vendor

provided funds is consistent with EITF 02-16 with the exception of certain cooperative advertising allowances and in-store service funds

provided by third parties for which the costs are ultimately funded by vendors. The Company previously treated the cooperative advertising

allowances and in-store service funds as a reduction of the related expense. Under EITF 02-16, cooperative advertising allowances and

in-store service funds should be treated as a reduction of inventory cost unless they represent a reimbursement of specific, incremental, and

identifiable costs incurred by the customer to sell the vendor's product.

-9-

The Company reviewed its cooperative advertising agreements in order to determine if any of these funds would meet the specific, incremental

and identifiable criteria in EITF 02-16 and would therefore qualify for direct offset against the related expense.  These agreements do not

include proof of performance or specific substantiation requirements.  The agreements with the Company's vendors provide funds for general

Company advertising to drive customer traffic, which in turn, increases sales of the vendors' products.  Based on this analysis of our vendor

agreements and the guidance set forth in EITF 02-16, the Company believes that treating cooperative advertising funds as a reduction in the

cost of inventory and recognizing these costs as a reduction of cost of sales when the inventory is sold complies with EITF 02-16.



The Company reviewed its third party in-store service agreements in order to determine if any of these funds would meet the specific,

incremental and identifiable criteria in EITF 02-16 and would therefore qualify for direct offset against the related expense.  These agreements

with the Company's vendors provide funds for third parties to provide general merchandising functions within the Company's retail stores.

In analyzing third party in-store service funds, the Company determined that third party vendors providing these in-store services were

servicing multiple areas and products within the Company's retail stores. Neither we, nor the third party service providers have the ability

to specifically identify time spent on a merchandise vendor's products in multiple locations and match them to specific funds from merchandise

vendors.  Based on this analysis and the guidance set forth in EITF 02-16, the Company believes that treating third party in-store service funds

as a reduction in the cost of inventory and recognizing these costs as a reduction of cost of sales when the inventory is sold complies with

EITF 02-16.



The Company does not expect this accounting change to have a material impact on the fiscal 2003 financial statements since substantially all

of the cooperative advertising allowance agreements and in-store service reimbursement agreements for fiscal 2003 were entered into prior

to December 31, 2002.  The Company estimates that this one time change in accounting will reduce fiscal 2004 EPS by approximately

$0.12 per share and fiscal 2005 EPS by approximately $0.01 per share.  The $0.01 per share impact in fiscal 2005 represents the estimated

growth in cooperative advertising allowances and in-store service funds from fiscal 2004 to fiscal 2005.  This reflects the cooperative

advertising allowances and in-store service funds capitalized into inventory in 2005 less the $0.12 impact from 2004 that will be recognized

in 2005 as the inventory is sold.  There will be no impact on the Company's cash flows or the expected amount of funds to be received from

vendors.  The earnings impact of EITF 02-16 recognized in fiscal 2004 will not be recurring in subsequent years.  Earnings in these

subsequent years would be impacted only by future net changes in cooperative advertising programs and in-store service funds.



In January 2003, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 46 ("FIN 46"), "Consolidation of

Variable Interest Entities, an interpretation of ARB 51."  FIN 46 provides guidance on the identification and consolidation of variable interest

entities, or VIEs, which are entities for which control is achieved through means other than through voting rights. The provisions of FIN 46

are required to be applied to VIEs created or in which the Company obtains an interest after January 31, 2003.  For VIEs in which the

Company holds a variable interest that it acquired before February 1, 2003, the provisions of FIN 46 are effective for the fourth quarter of

2003. Due to the ongoing deliberations and clarifications by the FASB, we are still assessing the provisions of FIN 46.  However, the

Company does not expect the adoption of FIN 46 in the fourth quarter of 2003 to have a material impact on its financial position, results of

operations or cash flows.

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In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities." SFAS

No. 149 amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts, and

for hedging activities under Statement 133. This Statement is effective for contracts entered into or modified after June 30, 2003, except in

certain instances stated within SFAS No. 149 and for hedging relationships designated after June 30, 2003. The initial adoption of this standard

did not have a material impact on the Company's financial statements.



In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and

Equity." SFAS No. 150 improves the accounting for certain financial instruments that, under previous guidance, issuers could account for as

equity. The new Statement requires that those instruments be classified as liabilities in statements of financial position. This Statement is effective

for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period

beginning after June 15, 2003, except for mandatorily redeemable financial instruments of non public entities. The initial adoption of this

standard did not have a material impact on the Company's financial statements.



Note 9: Subsequent Event- On November 20, 2003, the Company entered into a definitive agreement to sell 26 commodity-focused locations

operating under The Contractor Yard banner (the "Contractor Yards").   The sale is expected to close in the fourth quarter of fiscal 2003.

Total assets included in the balance sheets relating to the Contractor Yards at October 31, 2003, November 1, 2002 and January 31, 2003

were approximately $122 million, $103 million and $98 million, respectively.  Total liabilities included in the balance sheets relating to the

Contractor Yards at October 31, 2003, November 1, 2002 and January 31, 2003 were approximately $25 million, $23 million and $21

million, respectively.  The gain or loss associated with the Contractor Yard transaction is not expected to exceed $0.01 in diluted earnings

per share.  The Company expects to account for this disposition as a discontinued operation in the fourth quarter of 2003.

-11-

INDEPENDENT ACCOUNTANTS' REPORT

To the Board of Directors and Stockholders of Lowe's Companies, Inc.

We have reviewed the accompanying consolidated balance sheets of Lowe's Companies, Inc. and subsidiaries (the "Company") as of

October 31, 2003 and November 1, 2002, and the related consolidated statements of current and retained earnings for the three-month and

nine-month periods then ended, and cash flows for the nine-month periods ended October 31, 2003 and November 1, 2002.  These interim

financial statements are the responsibility of the Company's management.

We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants.  A review of

interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible

for financial and accounting matters.  It is substantially less in scope than an audit conducted in accordance with auditing standards generally

accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a

whole.  Accordingly, we do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that should be made to such consolidated financial statements for them

to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance

sheet of Lowe's Companies, Inc. and subsidiaries as of January 31, 2003, and the related consolidated statements of earnings, shareholders'

equity, and cash flows for the year then ended (not presented herein); and in our report dated February 19, 2003, we expressed an unqualified

opinion on those consolidated financial statements.  In our opinion, the information set forth in the accompanying consolidated balance sheet as

of January 31, 2003 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

As discussed in Note 7 to the consolidated interim financial statements, the Company has changed its method of accounting for stock-based

compensation effective February 1, 2003.

DELOITTE & TOUCHE LLP

Charlotte, North Carolina

November 24, 2003

-12-

MANAGEMENT'S
DISCUSSION AND ANALYSIS OF

FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

This discussion summarizes the significant factors affecting the Company's consolidated operating results, liquidity and capital resources during

the three and nine months ended October 31, 2003. This discussion should be read in conjunction with the financial statements and financial

statement footnotes that are included in the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2003.

FORWARD-LOOKING STATEMENTS

The Company's quarterly report on Form 10-Q to be filed with the Securities and Exchange Commission talks about the future, particularly in

the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations." While the Company believes these

expectations are reasonable, the Company cannot guarantee them and this should be considered when thinking about statements made that are

not historical facts. Some of the things that could cause actual results to differ substantially from expectations are:



(1) The Company's sales are dependent upon the general geopolitical environment and economic health of the country, variations in the number

of new housing starts and existing home sales, the level of repairs, remodeling and additions to existing homes, commercial building activity, and

the availability and cost of financing. An economic downturn affecting consumer confidence in making housing and home improvement

expenditures could affect sales because a portion of the Company's inventory is purchased for discretionary projects, which can be delayed.



(2) The Company's expansion strategy may be impacted by environmental regulations, local zoning issues and delays, availability and

development of land, and more stringent land use regulations than traditionally experienced as well as the availability of sufficient labor to facilitate

growth.



(3) Many of the Company's products are commodities whose prices fluctuate within an economic cycle, a condition especially true of lumber

and plywood.



(4) The Company's business is highly competitive, and as it expands into new markets the Company may face new forms of competition, which

do not exist in some of the markets traditionally served.



(5) The ability to continue the everyday competitive pricing strategy and provide the products that customers want depends on the Company's

vendors providing a reliable supply of inventory at competitive prices.



(6) On a short-term basis, weather may affect sales of product groups like nursery, lumber, building materials and seasonal products.



(7)  The risk that the Company does not close The Contractor Yard transaction.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The following discussion and analysis of the results of operations and
financial condition are based on the Company's financial statements that
have been prepared in accordance with accounting principles generally
accepted in the United States of America. The preparation of these financial
statements requires management to make estimates that affect the reported
amounts of assets, liabilities, revenues and expenses and related
disclosures of contingent assets and liabilities. The Company bases these
estimates on historical results and various other assumptions believed to be
reasonable, the results of which form the basis for making estimates
concerning the carrying values of assets and liabilities that are not
readily available from other sources. Actual results may differ from these
estimates.

-13-

The Company's significant accounting polices are described in Note 1 to
the consolidated financial statements presented in the Company's Annual
Report on Form 10-K for the fiscal year ended January 31, 2003. Management
believes that the following accounting policies affect the more significant
estimates used in preparing the consolidated financial statements.

Merchandise Inventory

The Company records an inventory reserve for the loss associated with
selling discontinued inventories below cost. This reserve is based on
management's current knowledge with respect to inventory levels, sales
trends and historical experience relating to the liquidation of discontinued
inventory. Management does not believe the Company's merchandise
inventories are subject to significant risk of obsolescence in the
near-term, and management has the ability to adjust purchasing practices
based on anticipated sales trends and general economic conditions. However,
changes in consumer purchasing patterns could result in the need for
additional reserves. The Company also records an inventory reserve for the
estimated shrinkage between physical inventories. This reserve is primarily
based on actual shrinkage from previous physical inventories. Changes in
actual shrinkage from completed physical inventories could result in
revisions to previously estimated shrinkage accruals. Management believes it
has sufficient current and historical knowledge to record reasonable
estimates for both of these inventory reserves.

Vendor Funds

The Company receives funds from vendors in the normal course of business for a variety of reasons including purchase volume rebates,

cooperative advertising allowances, and third party in-store service related costs. Volume related rebates are recorded based on estimated

purchase volumes and historical experience and are treated as a reduction of inventory costs at the time of purchase. Vendor funds received

as a reimbursement of specific, incremental and identifiable costs are recognized as a reduction of the related expense. Cooperative advertising

allowances and in-store service reimbursements provided by vendors have historically been used to offset the Company's related expense.

However, under the guidance set forth in Emerging Issues Task Force (EITF) 02-16, "Accounting by a Customer (Including a Reseller) for

Certain Consideration Received From a Vendor," cooperative advertising allowances and in-store service funds should be treated as a reduction

of inventory cost unless they represent a reimbursement of specific, incremental, and identifiable costs incurred by the customer to sell the

vendor's product.

The Company reviewed its cooperative advertising agreements in order to determine if any of these funds would meet the specific, incremental

and identifiable criteria in EITF 02-16 and would therefore qualify for direct offset against the related expense.  These agreements do not include

proof of performance or specific substantiation requirements.  The agreements with the Company's vendors provide funds for general Company

advertising to drive customer traffic, which in turn, increases sales of the vendors' products.  Based on this analysis of our vendor agreements

and the guidance set forth in EITF 02-16, the Company believes that treating cooperative advertising funds as a reduction in the cost of inventory

and recognizing these costs as a reduction of cost of sales when the inventory is sold complies with EITF 02-16.

-14-

The Company reviewed its third party in-store service agreements in order to determine if any of these funds would meet the specific,

incremental and identifiable criteria in EITF 02-16 and would therefore qualify for direct offset against the related expense.  These agreements

with the Company's vendors provide funds for third parties to provide general merchandising functions within the Company's retail stores.  In

analyzing third party in-store service funds, the Company determined that third party vendors providing these in-store services were servicing

multiple areas and products within the Company's retail stores. Neither we, nor the third party service providers have the ability to specifically

identify time spent on a merchandise vendor's products in multiple locations and match them to specific funds from merchandise vendors.  Based

on this analysis and the guidance set forth in EITF 02-16, the Company believes that treating third party in-store service funds as a reduction in

the cost of inventory and recognizing these costs as a reduction of cost of sales when the inventory is sold complies with EITF 02-16.

The Company does not expect this accounting change to have a material impact on the fiscal 2003 financial statements since substantially all of

the cooperative advertising allowance agreements and in-store service reimbursement agreements for fiscal 2003 were entered into prior to

December 31, 2002.

Self-Insurance

The Company is self-insured for certain losses relating to worker's
compensation, automobile, general and product liability claims.
Self-insurance claims filed and claims incurred but not reported are accrued
based upon management's estimates of the aggregate liability for uninsured
claims incurred using actuarial assumptions followed in the insurance
industry and historical experience. Although management believes it has the
ability to adequately record estimated losses related to claims, it is
possible that actual results could differ from recorded self-insurance
liabilities.

Stock-Based Compensation

The Company has three stock incentive plans which are described more
fully in Note 9 to the consolidated financial statements presented in the
Company's Annual Report on Form 10-K for the fiscal year ended January 31,
2003. Prior to fiscal 2003, the Company accounted for these plans under the
recognition and measurement provisions of APB Opinion No. 25,
"Accounting for Stock Issued to Employees," and related
Interpretations. No stock-based employee compensation is reflected in 2002
net income, as all options granted under those plans had an exercise price
equal to the market value of the underlying common stock on the date of
grant. Effective February 1, 2003, the Company adopted the fair value
recognition provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation," prospectively for all employee awards granted, modified
or settled after January 31, 2003. Therefore, in accordance with the
requirements of SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure," the cost related to stock-based employee
compensation included in the determination of net income for the three
and nine months ended October 31, 2003 is less than that which would have been recognized
if the fair value based method had been applied to all awards since the
original effective date of SFAS No. 123. See Note 7 to the Consolidated
Financial Statements in this Form 10-Q for further description and disclosures in accordance
with the requirements of SFAS No. 148.

OPERATIONS

For the third quarter of fiscal 2003, sales increased 23.5% to $7.9 billion, comparable store sales for the quarter increased 12.4%, and net

earnings rose 33.3% to $451.7 million compared to last year's third quarter results. Diluted earnings per share were $0.56 compared to $0.43

for the comparable quarter of last year.  For the nine months ended October 31, 2003, sales increased 17.4% to $23.9 billion, comparable

store sales increased 6.5%, and net earnings rose 27.5% to $1.5 billion compared to the first nine months of fiscal 2002. Diluted earnings per

share increased 26.9% to $1.84 per share over the same period a year ago.

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The sales increase during the third quarter and first nine months of 2003 was primarily attributable to the addition of 12.9 million square feet of

retail selling space relating to new and relocated stores since last year's third quarter, as well as the increase in comparable store sales.   Sales in

the third quarter benefited from favorable weather that allowed the continuation of outdoor projects through the late summer and into the fall.  In

addition, increases in the wholesale prices of lumber and plywood during the quarter had a positive impact on sales in the quarter.  Consumer

disposable income increased due to lower Federal individual tax withholding rates and the Federal tax rebates distributed during July and August.

Further, purchases to prepare for and to repair damages caused by Hurricane Isabel in the mid-Atlantic region contributed to increased third

quarter sales.  Both customer traffic and average ticket improved significantly in the third quarter.



Several product categories generated above average performance during the third quarter, including lumber, building materials, seasonal living,

outdoor power equipment and home organization. Millwork, cabinets and appliances performed at approximately the overall corporate average.



Gross margin was 31.1% of sales for the quarter ended October 31, 2003 compared to 30.6% for last year's comparable quarter. Gross margin

for the nine months ended October 31, 2003 was 30.7% versus 29.9% for the first nine months of 2002.  The increase in the margin rate for the

third quarter is primarily due to better margin rates driven by lower inventory costs and lower inventory shrinkage, partially offset by negative

product mix.  The increase in the margin rate for the first nine months of 2003 is primarily due to lower inventory shrinkage and better margin

rates driven by lower inventory costs.



Selling, general and administrative expenses ("SG&A") were 18.5% of sales versus 18.6% in last year's third quarter. SG&A increased by

23.0% compared to the 23.5% increase in sales for the quarter. The leveraging during the third quarter was primarily due to lower payroll and

occupancy costs as a percentage of sales for fiscal 2003 as compared to fiscal 2002, partially offset by increased bonus estimates, insurance

costs and compensation expense relating to stock options recognized in the current quarter.  During the first nine months of 2003, SG&A was

17.6% of sales, versus 17.5% for the same period in the prior year.  This de-leveraging was primarily caused by compensation expense relating

to stock options recognized in the first nine months of 2003 of approximately $28 million, which resulted from the adoption of the fair value

recognition provisions of SFAS No. 123 prospectively for all employee awards granted or modified after January 31, 2003, as previously

discussed in Note 7 to the Consolidated Financial Statements.



Store opening costs were $37 million for the quarter ended October 31, 2003 compared to $28 million last year. This represents costs

associated with the opening of 38 stores during the current year's third quarter (36 new and 2 relocated) compared to 18 new stores for the

comparable period last year. Charges in the third quarter of 2003 and 2002 for future and prior openings were $5 million and $7 million,

respectively.  Store opening costs for the nine months ended October 31, 2003 were $82 million, compared to $88 million last year.  These

costs were associated with the opening of 83 stores during the first nine months of 2003 (79 new and 4 relocated), compared to 86 stores

during the first nine months of 2002 (81 new and 5 relocated). The Company's 2003 expansion plans are discussed under "Liquidity and

Capital Resources" below.



Depreciation was $193 million and $557 million for the quarter and nine months ended October 31, 2003, respectively.  This represents an

increase of 21.4% and 21.6% over comparable periods last year.  The increase is primarily due to the addition of buildings, fixtures, displays

and computer equipment relating to the Company's ongoing expansion program, the purchase of all the Company's financing leases and the

increase in the percentage of owned locations since last year's third quarter. At the end of the current year's third quarter, the Company owned

78% of total locations compared to 74% in the prior year's third quarter.

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Interest expense was $42 million for the quarter ended October 31, 2003, compared to $44 million last year.  For the nine months ended

October 31, 2003 and November 1, 2002, interest expense totaled $136 million and $137 million, respectively.



The Company's effective income tax rate was 37.8% for the quarter and nine months ended October 31, 2003, respectively, compared to

37.5% and 37.4% for last year's comparable periods, respectively. The higher rate during 2003 is primarily related to expansion into states with

higher income tax rates.

LIQUIDITY AND CAPITAL RESOURCES

The following table summarizes the Company's significant contractual
obligations as of October 31, 2003.

(In millions, except per share data)
	Three Months Ended		Nine Months Ended
	October 31, 2003	November 1, 2002	October 31, 2003	November 1, 2002
Net income, as reported	$ 452	$ 339	$ 1,469	$ 1,152

Deduct: Total stock-based employee compensation expense determined under the fair value based method for all awards net of related tax effects not reported in net income	(15)	(21)	(46)	(63)

Pro forma net income	437	318	1,423	1,089

Earnings per share:
Basic - as reported	$ 0.58	$ 0.44	$ 1.87	$ 1.48
Basic - pro forma	$ 0.56	$ 0.41	$ 1.81	$ 1.40

Diluted - as reported	$ 0.56	$ 0.43	$ 1.84	$ 1.45
Diluted - pro forma	$ 0.54	$ 0.40	$ 1.78	$ 1.37

Contractual Obligations	Payments Due by Period
(In millions)	Total	Less than 1 year	1-3 years	4-5 years	After 5 years
Long-term debt (net of discount)	$ 3,775	$ 55	$ 616	$ 68	$ 3,036
Capital lease obligations	785	61	119	118	487
Operating leases	3,296	215	424	418	2,239

Total contractual cash obligations	$ 7,856	$ 331	$ 1,159	$ 604	$ 5,762

x	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended October 31, 2003

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from ________ to _________

NORTH CAROLINA	56-0578072
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1000 Lowe's Blvd., Mooresville, NC	28117
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code	704-758-1000

Current Debt Ratings	S&P	Moody's	Fitch
Commercial paper	A1	P2	F1
Senior debt	A	A3	A

Outlook	Positive	Positive	Stable

Exhibit No.		Description
3(ii)		Bylaws of Lowe's Companies, Inc., as amended and restated September 11, 2003

31.1		Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


		LOWE'S COMPANIES, INC.






December 9, 2003 Date		/s/Kenneth W. Black, Jr. Kenneth W. Black, Jr. Senior Vice President and Chief Accounting Officer

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549